Bosnia/Republika Srpska exclusive report: Power utility of Republika Srpska sued for 920MEUR, Slovenian power utility claims lost profit from undelivered electricity and CEZ for lost investments

Published on 8. August 2014., SEE Energy News

“Electric Power Industry of Slovenia”seeks 715 MEUR from the” Electric Power Industry of Republika Srpska”, 57 MEUR from small shareholders, and 58 MEUR from CEZ. The second biggest claim of 57 MEUR which threatens RS Electric Power Industry is from investment funds against RITE Gacko for the investment of Czech Electric Power Industry (CEZ). Republika Srpska is an entity in Bosnian federation, its RS Power utility company is independently managed.

Litigations for damages in the amount of 920 MEUR were initiated against the joint holding company “Electric Power Industry of Republika Srpska” and its subsidiaries, excluding potential penalties and costs of legal proceedings.

“Elektrogospodarstvo Slovenia-development & engineering Maribor “submitted the biggest complaint which seeks compensation of 740 MEUR from the Electric Power Industry of Republika Srpska, for undelivered electricity, based on the joint venture in Ugljevik. Only for the calculation of interest since 1995^th until today Slovenia seeks an additional 35MEUR.

Higher Commercial Court in Banja Luka on March 14^th this year, confirmed the previous decision of the District Court of Bijeljina rejecting the Slovenia claim on RITE Ugljevik.

Slovenia on February 24^th 2014^thsubmitted its request to BiH institutions for amicable settlement of the dispute through negotiation, on which the RS Electric Power Indusrty, by order of the Ministry of Industry, Energy and Mining, submitted a response to Slovenia that “their claim still is moot because there is no realistic assumptions of the such mechanisms activation”.

The second biggest claim of 57 MEUR threaten RS Electric Power Industry is from investment funds against RITE Gacko for the investment of Czech Electric Power Industry (CEZ). Funds as minority shareholders of RITE Gacko seek the decision annulment of the Assembly of Shareholders of RITE Gacko on acceptance of the Agreement on the Implementation of the Draft Estimates of the assetsvalue and rights of RITE Gacko.

The third method that could jeopardize operations of RSElectric Power Industry is initiated arbitration proceedings in Vienna which CEZ launched against RITE Gacko with a claim of 59 MEUR. The arbitration is ongoing.

Also independent auditing company “Deloitte” paid attention at all of these lawsuits, which gave its opinion for 2013^th to “Electric Power Industry of Republika Srpska “.

The auditor has warned the management that they had electricity distribution losses of 474 GWh or 13.29% during last year.

Electric Power Industry, says the auditor, invested in the project of Hydropower plant “Buk-Bijela” worth 11 MEUR, but given that “during the past years there has not been significant progress in the construction of this power plant,it is not possible to determine when and whether the entire project will be completed”.

Why opinion with reserve- Electric Power Industry did not collect 151 MEUR for electricity!

The auditor gave an opinion with a reserve to RS Electric Power Industry because, as stated in the report, the accounts receivable at the end of last year amounted to 151 MEUR and rescheduled receivables of 21 MEUR, however, the audit could not assure the accuracy of this data.

“Since we did not get a satisfactory number of independent confirmation of thesituation, and there are differences in the responses that are not compliant, we have not been able to see the state of receivables in other auditing procedures from the customer and rescheduled claims”,according to the audit report.