Republic of Srpska: KfW loan for Hrgud wind park approved by Assembly, opposition disputes it

Assembly of the Republic of Srpska approved a EUR 60 million loan from the German Development Bank KfW for the construction of Hrgud wind farm. The opposition’s NDP party says it would appeal to the Constitutional Court because it considers the decision illegal.

State-owned utility Elektroprivreda (ERS) was granted a 50-year concession for the construction and operation of Hrgud wind farm in Berkovići municipality a year ago. The total investment value of the project amounts to EUR 64,5 million, out of which EUR 4,5 million comes from ERS own funds, and the rest is provided through a loan from the KfW, agency Srna reports.

48 MW Hrgud wind farm will produce 126 GWh of electricity per year. Five square kilometers farm will be located in a village of Hrgud, 1.000 meters above sea level. Return on investment is expected in 15 to 20 years, depending on the pace of production and credit payments.

The credit has a 15 years payback period, including four years of a grace period. The fixed interest rate will be set upon final payment, and will be no less than one percent annually plus KfW margin.

President of the opposition NDP party Dragan Čavić said he would appeal to the Constitutional Court for alleged violations of the law.

“In this decision it was determined what will be the lowest interest rate, which is contrary to the Law on borrowing, debt and guarantees, which clearly states that any decision on the debt should contain information on the maximum interest rate,” Čavić said after the session of the Assembly.

The total value of green energy projects being developed in the Republic of Srpska exceeds EUR 600 million.