Drina river hydro JVs of Republika Srpska, between energy giants RWE and italian Secci Energia

29. November 2012. / SEE Energy News

RS Assembly members gave support, to the construction of four hydro power plants on Drina. Legal signatories to this agreement are the Ministry of Economy, Energy and Mining, Electric Power Industry of RS and German RWE. According to the contract, the project of construction of four hydro power plants on Drina will be realized by the BOT principle (Build-Operate-Transfer), and after the expiration of the concession agreement (the duration of which is not specified), what was built would belong to the RS government, which, after the expiration of the concession contract gets HPP: Buk Bijela, Foca, Paunci and Sutjeska. The project installed capacity of the four plants is almost 410 MW. Next step for Republika Srpska is middle Drina river hydro power plants investment project with italian Secci Energy and Serbian Energy company.

According to the Agreement, which was concluded between RWE and institutions of the RS, it is obvious that there are intentional or unintentional omissions, which have not defined the core issue: how many years of concession RWE gets for the use of four HPP that they built?

Furthermore, during the formation of the joint venture, the Board of directors will consist of five members, three representatives of the majority of capital from RWE and one from the “Electric Power Industry of RS” and one from the Government of this Bosnian entity. Decisions will be made by simple majority, which means that the management control is in the hands of the German partner.

According to the contract, the project of construction of four hydro power plants on Drina will be realized by the BOT principle (Build-Operate-Transfer), and after the expiration of the concession agreement (the duration of which is not specified), what was built would belong to the RS government, which, after the expiration of the concession contract gets HPP: Buk Bijela, Foca, Paunci and Sutjeska. The project installed capacity of the four plants is almost 410 MW.

Also, the RS government is not the majority owner, but it’s RWE at a ratio of 60:40 percent. All four HPP will enter into separate concession agreements with RWE. On the effective date of this contract, the German partner in favor of the Government of the RS as a bank guarantee has to pay 1, 9 million  as a bank guarantee , to the Government of RS on account in Nova Banka. All electricity produced in the HPP will be sold at the market price in domestic and international markets.

Even though the media announced that the concession agreement would last 30 years, while the profit from the sale of electricity at a market price in domestic and foreign markets would be shared, it is not clear why these infamous 30 years were not specified in the contract.

Professor  dr. Alex Milojevic, director of the Institute of Economics of the RS has no answer to this question either.

“If it is not clearly defined in the contract, the concession can be given for 30, or 300 years. On the other hand, the management structure is such that in any case RS does not have a say. In accordance with the basics of capital and market, I doubt that the profit will be evenly distributed like the ownership structure, he said for ” Free Bosnia “.

What caught his eye too was the fact that “the liquidation of the Electric Power Industry of RS” has been mentioned dozens of times in the contract, which has about 80 pages. Is this a prelude to privatization of “Electric Power Industry of RS”, which Germans are interested in according to our unofficial sources?

“This is simply a sale of all natural resources, including I believe even the” Electric Power Industry of RS” Milojevic said.

However, the RS Government put restrictions in the contract under Article 2, Item 3 and item 4, for the middle and lower course of the river Drina. The reason is more than obvious. Negotiations over the concession for the construction of three HPP are already underway with the Italian company Seci Energia.

An even more valuable energy project estimated at 800 million Euros is planned on middle Drina, and it will be conducted by Electric Power Industries of RS, Serbia and Italy together. The project includes construction of three hydro power plants – Dubrava, Tegare and Rogačica with total capacity of 320 MW and annual output of 1200 gigawatt-hours of electricity, which would be bought out entirely by the Italians. According to the established principles of investment in the joint venture which would manage the power plants, the Italian company “Seci Energia” would have a 51 percent share, and Electric Power Industries of RS and Serbia a 24.5 percent each.

What is the answer and is there any, regarding the concession contracts, that are deemed harmful by Hamed Mesanovic, a member of the Commission for Concessions of BH, and that are an issue for Montenegro as well?

Professor Milojevic announced that he will appeal about the constitutionality of the agreement adopted by National Assembly of RS to the Constitutional Court of RS and BH.

“Then I will forward a draft law on criminal responsibility of the RS Government and MPs who give their consent to such contracts that are harmful to the people of Republic Srpska and Bosnia and Herzegovina to the Assembly of RS”, announces Milojevic.

The whole conundrum about HPP construction and billions worth of investment, one should bear in mind that Montenegro has not yet given approval for the construction of the “Buk Bijela” on the part of Drina which is at the border crossing point between BH and our neighbors.

Draženka Becirovic, a spokeswoman for the Ministry of Economy and Energy of the Government of Montenegro, confirmed to our paper that our neighbors have requested access to all the documents proving that the construction of the HPP will have a detrimental impact on the eco-system around the Drina on Montenegrin territory. Also, they forwarded a letter to the BH Embassy in Montenegro saying they do not allow construction until possible harmful effects on the ecological system around the Drina have been considered.

“Also, we insist on trilateral meetings with representatives of Serbia and Republic Srpska. We have declared Montenegro to be an eco-state and it is our right, which was confirmed by the European Commission according to the European Charter on Environment Protection to protect our interests” Bećirović was clear.

Economists in RS warn against such contracts, Montenegrins protect their own, Serbians theirs, environmentalists theirs … It remains unclear who protects the interests of the state of Bosnia and Herzegovina?

Source Serbia Energy Magazine

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