Arbitration panel determines total damages that TPP Ugljevik in BiH owes to Slovenia

RiTE Ugljevik, the firm operating the Ugljevik coal mine and 300 MW thermal power plant in Bosnia and Herzegovina, has to pay an additional EUR 58.2 million in damages to Slovenia’s state-owned Elektrogospodarstvo Slovenije Razvoj in Inženjering (EGS-RI).

In mid-July, the Arbitration Council in Belgrade ruled that RiTE Ugljevik, a subsidiary of state-controlled power utility Elektroprivreda Republike Srpske (ERS), has to pay EUR 67 million in damages to EGS-RI.

So, the total sum has reached EUR 125.2 million.

The Slovenian firm invested in the construction of Ugljevik in the 1980s. The power plant failed to deliver electricity in exchange as agreed. Slovenia and BiH were both part of Yugoslavia, which fell apart in the early 1990s.

According to Capital.ba, almost two months ago the Arbitration Council also determined the interest sum for the period when the electricity was supposed to be delivered – from June 2011 to December 2021.

RiTE Ugljevik was ordered to pay EUR 58.2 million within 30 days, according to the new ruling.

The dispute started in 2014

RiTE Ugljevik also has to supply one third of the electricity that it produces to EGS-RI until the end of its operation, at prices that the two parties would later determine.

Of note, the Ugljevik coal plant is one of ERS’s pillars because together with 300 MW Gacko it secures 56% of the company’s power output.

The legal dispute began in 2014 when EGS-RI initiated two arbitration proceedings for compensation for the violations of two agreements on the construction and use of TPP Ugljevik. The Slovenian entity has initiated arbitration proceedings before the International Center for Settlement of Investment Disputes – ICSID in Washington, with a claim of EUR 770 million, and the Arbitration Council in Belgrade, for EUR 695.1 million.

Cvijetinović: A solution will be found by the end of the year

Of note, Slovenian state-owned power utility Holding Slovenske Elektrarne (HSE) represented EGS-RI in the process.

Diko Cvijetinović, acting director of RiTE Ugljevik, expects the solution for the EUR 125.2 million in debt and the supply of electricity to EGS-RI to be found by the end of the year.

The Government of the Republic of Srpska and ERS are participating in the negotiations, and an agreement is near, Cvijetinović said.

The Republic of Srpska is one of the two entities making up Bosnia and Herzegovina. The other one is called the Federation of BiH.