Croatia: Refund claims to Bosnia and Serbia for lost profits from electricity exports from old times investments into power generation facilities

4. November 2014. / SEE Energy News

Between the two countries there are many open questions, one of the biggest is the issue of companies ‘property in neighboring countries. Croatian side claim that there is a huge debt of Serbian Electric Power Industry (EPS) to Croatian power company HEP for investments in manufacturing facilities on the territory of Serbia during communism.

In the late seventies Croatian HEP invested about 120 MEUR of loans in the construction of TPP Nikola Tesla 6 and mine Tamnava, and it is estimated that the debt has grown in the meantime. In addition to the refund claim HEP has right on to preferential electricity purchase from that power plant. Over 12 and half years21.9 TWh of electricity should have to be supplied from this power plant to Croatia, which is more than the total annual consumption of the entire state during the year. In the market, the price of this electricity quantity currently stands at 963 MEUR! Croatia and other former socialist republics were invested in the construction of HPP Djerdap, and during the conversation on succession also raised the question of that investment.

We did not get detailed information about HEP’s contacts with the EPS. An engineer testified for “Slobodna Dalmacija” few years ago that Management of HEP was not ready to solve the problem about electricity from Nikola Tesla despite the good will of EPS, while at the same time was imported electricity at exorbitant prices from Serbia.

Croatia has a little more luck, about the return on investment in Bosnia and Herzegovina, which shows that the problem can be solved if there is political will. In this country, Croatia has invested in the construction of TPP Kakanj, TPP Tuzla and TPP Gacko. HEP has already taken 5.2 TWh of electricity at a cost of 34 EUR per MWh from TPP Kakanj and TPP Tuzla. The electricity from these plants ended in Mostar Aluminum Plant, which is on the exhale.

With the electricity delivery from TPP Gacko, in which HEP invested 200 MEUR, there is a problem because there are claims of Republika Srpska on HEP. In fact, HPP Dubrovnik supplieswith water from the reservoir Bileca near Trebinje. A contract was made when the plant was buildingand on that basisBiH was entitled to a large amount of electricity, which HEP did not seem to deliver by the projected rate. Both HEP and Republika Srpska now see its interest in the construction of HPP Dubrovnik 2, but interventions in the flow of the Trebisnjica are considered as environmentally sensitive because they could have a bad impact on the Neretva.

Intensive negotiations on resolving mutual claims were conducted during 2012th; in the meantime, the activities seem to be extinct.

With an annual consumption of around 18 TWh of electricity and production that covers 60% to 70% of the needs,Croatia is a European champion in the import of electricity. But history has shown that the best is to build the energy security on its own territory and therefore it should continue with planned construction of power plants and learn from mistakes. Croatian medias demand a more determined commitment of the Government and HEP about return on investment and electricity exports which belongs to HEP.

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