Thermal power plant Ugljevik halts production due to lack of coal

Thermal power plant Ugljevik in the Republic of Srpska has halted electricity production due to a lack of coal. The suspension is reportedly causing daily losses of BAM 550,000 (EUR 281,000), equivalent to the cost of 5 GWh of electricity, while citizens of Ugljevik were left without district heating.

The management of state-owned RiTE Ugljevik, which operates a coal mine and the thermal power plant, blames those who ran the company in previous years, claiming they did almost nothing to facilitate land expropriation and mine expansion, forcing the thermal power plant to use lower-quality coal.

The fact that the facility has already operated for 220,000 hours, exceeding its designed operating life, combined with the use of lower-quality coal, has made it inevitable to increase coal consumption by at least 20%, the management claims in a statement.

Restarting production at Ugljevik will cost about BAM 100,000, Žurnal learned. The news website added that the cost will be even higher if the parent holding, state-owned power utility Elektroprivreda Republike Srpske (ERS), fails to deliver the contracted amounts of electricity.

At the end of last year, RiTE Ugljevik had an accumulated loss of BAM 193.55 million (around EUR 99 million), and it posted a net loss of BAM 29.9 million (EUR 15.3 million) for January-September 2024.

The production halt at Ugljevik could result in electricity imports at exorbitant prices

An unnamed source familiar with the situation told the media outlet that if the production halt at Ugljevik continues, and other producers in the Republic of Srpska fail to produce enough electricity, ERS would have to purchase electricity at exorbitant emergency prices. Last year alone, several mines in the Republic of Srpska, one of the two political entities of Bosnia and Herzegovina, exported coal worth as much as BAM 1.5 billion, according to the article.

Ugljevik is the largest emitter of SO2 in the Western Balkans, despite having a desulfurization unit that cost at least EUR 85 million to install. The unit has suffered technical difficulties, with the operator recently admitting it was taken offline, partly due to the economic burden it posed.

Ugljevik is obliged to supply a third of its output to Slovenia

Another major burden on Ugljevik is last year’s ruling of an arbitration panel in Belgrade, which ordered it to pay EUR 67 million in compensation to Slovenian state company Holding Slovenske elektrarne, along with EUR 58.2 million in interest. In addition, RiTE Ugljevik is obliged to deliver a third of its electricity to the Slovenian company for as long as the thermal power plant is in operation.

In the statement regarding the production halt, the Ugljevik management expressed hope that, with the support of the Government of the Republic of Srpska, the entity’s Ministry of Energy and Mining, and ERS, it will overcome the challenges, in the interest of the entity’s energy security and the several thousand people whose livelihoods depend on the company in one way or another.