Damages of EUR 23.5 million claimed for hydro project

Lawyer firm Baroš, representing concessionaire HES Vrbas a. d., said its claim for damages from the Government of the Republic of Srpska is legitimate and that its initiatives for the resolvement of the dispute have been ignored by the authorities, Buka portal reported.

The government in Banja Luka received no official claim for damages related to the contract for the construction of two hydropower plants on the Vrbas river, the entity’s energy ministry said earlier, adding the conditions to terminate the contract are „very complicated”. HES Vrbas had said it sent its statement on the termination on September 29, while the damages claim for BAM 46 million (EUR 23.5 million) was reportedly filed on October 19.

The agreement on the construction of the 48.5 MW Krupa hydropower plant and the 37.2 Banja Luka – niska facility was signed in November 2004, and valued at EUR 164.7 million. The concession period was supposed to be 25 years, after four and a half years of construction. Under the pressure of a subsequent public campaign by a coalition of over 30 non-governmental organizations, and almost 20,000 signatures in a petition, the Banja Luka City Assembly adopted a resolution in 2005 to oppose the project, which made it unfeasable, according to the Center for Environment (CZŽS), an environmentalist group. It issued a statement in early October, praising the termination of the contract. Center for Environment claims the community had been excluded from the concession granting process 11 years ago and that several entity laws were broken at the time.

The company, registered in Krupa na Vrbasu, claims it fulfilled all its obligations from the contract, and that one fifth from the damages claim relates to what it invested, while the rest is for revenue lost in the last five years when the power plants were supposed to be active. The lawyers, asked by Buka’s reporters on the issue concerning the environment, said the Republic’s interest is above local interest.

International arbitration will probably resolve the dispute, even though HES Vrbas is still ready to negotiate, Al Jazeera agency’s portal reported, adding the company is owned by investors from Slovenia, Serbia and Germany. The government granted a concession to Hidroelektrane na Vrbasu a. d. from the town of Mrkonjić Grad to build the Bočac 2 hydro power plant, which interferes with the concession, according to lawyer Predrag Baroš. He underscored the other contract places the burden of a damages claim from HES Vrbas on that operator, and that this means Srpska’s government recognizes its responsibility. The energy ministry denies it is in breach of contract, stressing HES Vrbas failed to respond to many of its objections. The company was never able to close the financial construction for the project, the energy ministry said, according to Al Jazeera, which added details of the contract are still unknown.

Miodrag Dakić from the Center for Environment said Srpska was entitled to about EUR 7.67 million, but that the sum is negligible in comparison to the investor’s profit. Furthermore, there was an issue of the effect on the quality of Banja Luka’s drinking water, but now Vrbas river canyon is saved, he said. However, Dakić admits the same cannot be said of the entity’s budget, and adds there are hundreds of concessions for hydropower projects which were never launched.