Bosnia seeks to avert loss of KfW funds in wake of HPP Salakovac project pullout
Bosnia and Herzegovina March 9, 2018
Bosnia and Herzegovina’s (BiH) Finance and Treasury Minister Vjekoslav Bevanda has organized a meeting with representatives of German development bank KfW and power utility Elektroprivreda BiH (EPBiH) in an attempt to prevent the suspension of multi-million projects in BiH financed by the German government, after EPBiH decided to abandon a project to reconstruct hydropower plant (HPP) Salakovac.
“Minister Bevanda and KfW’s management have been informed that public company Elektroprivreda BiH has decided to give up on the HPP Salakovac construction project, which has already been agreed, with envisaged credit funds of EUR 45 million and a EUR 1 million grant,” the BiH Finance and Treasury Ministry said in a statement following the meeting with KfW Office Bosnia and Herzegovina Director Matthias Schmidt-Rosen and other KfW representatives, which was also attended by representatives of the German Embassy and the Government of the Federation of BiH (FBiH).
The reconstruction of HPP Salakovac is envisaged under intergovernmental agreements concluded in 2011 and 2012, and obligations under these agreements expire at the end of 2019, which means that if the loan agreement is not signed by then, Bosnia and Herzegovina will lose millions in funding, according to the statement.
“That is more than enough reason to organize a meeting with representatives with the Government of FBiH, Elektroprivreda BiH, and KfW in order to find solutions through substitute projects or the continuation of existing ones,” Bevanda said.
According to the statement, participants in the meeting concluded that representatives of the Government of FBiH and EPBiH will resume negotiations with KfW in order to find the best possible solution.
Bevanda also said that the Finance and Treasury Ministry will do everything it can to avert a loss of funds, jeopardizing strategic projects, or disrupting long-standing cooperation with the German government and KfW, adding that he expects the same from other institutions concerned with the project.
Bevanda noted that the ministry’s cooperation with KfW and the German government is extremely significant and successful in view of eight ongoing projects worth a total of EUR 336 million.