Chinese companies have been dominating Bosnia and Herzegovina’s highways and renewable energy sector for years. Apart from their involvement in major infrastructure projects, they are particularly active in constructing wind power plants and investing in wind parks. One of the most well-known projects in the country is the wind park Ivovik located between Livno and Tomislavgrad. However, Chinese firms are already focusing on future ambitious projects, such as the wind park in Eastern Herzegovina, situated in the mountains between Stolac and Berkovići.
The Chinese are now considered the most likely investors, greatly assisted by the Germans who had been recognized as serious partners for many years. However, this month saw official confirmation of their withdrawal from the joint project. Elektroprivreda of Republika Srpska now holds full control, and given the strong political relations between politicians from Republika Srpska and Serbia with China, it would not be surprising to see Chinese companies and workers involved not only in constructing highways through Herzegovina but also in the hinterland of Stolac.
According to some announcements, the Hrgud wind park was scheduled to go online five years ago, in 2019. However, to date, there is nothing on the Hrgud mountain site, as confirmed by the hercegovina.info team.
“Elektroprivreda of Republika Srpska has also received official confirmation that Germany has withdrawn from financing the Hrgud wind power plant, as anticipated. However, this development will not deter Elektroprivreda of Republika Srpska from completing the project. In the meantime, new investors have emerged. Specifically, a delegation led by Ambassador Berjan from China, along with representatives of Chinese energy companies, recently visited Elektroprivreda of Republika Srpska. They expressed keen interest in investing in renewable energy sources and projects of Elektroprivreda of Republika Srpska, with a strong focus on the Hrgud wind park. Initial discussions have commenced, and optimism surrounds the potential for a positive outcome”, said for hercegovina.info Ana Bokonjić Buha, spokeswoman of Elektroprivreda of Republika Srpska.
Chinese debt or Chinese investment
“When it comes to the announcement of Chinese involvement in the Hrgud Wind Park project, public information does not clarify whether this involves a loan arrangement or if Chinese investors are becoming new concessionaires, i.e. whether Elektroprivreda is selling ownership shares to the Chinese partners.
I believe that strategic investments in the electric power sector in a serious state should be managed by a state-owned enterprise. This approach ensures that the state maintains a monopoly in this crucial sector, allowing it to invest and generate income to fund further development initiatives.
If the issue concerns Elektroprivreda acquiring new credit debt from Chinese banks, I cannot provide a more specific response without first understanding the terms of the credit agreement, except the fact that I am sorry that Republika Srpska and Elektroprivreda Republika Srpska are in such financial state that borrowing seems necessary for implementation of any project, and that regular budget financing is to a great extent realized through very unfavorable loans. This situation reflects a longstanding negligent approach in Republika Srpska”, said for hercegovina.info Nenad Abramović, major of Berkovići municipality on whose territory is the mountain itself, including the potential wind park Hrgud.
Withdrawal of Germans
“Two years ago, the German government announced the withdrawal of credit for the construction of the Hrgud Wind Park in the municipality of Berkovići, citing sanctions imposed on Republika Srpska and its leadership. As a local politician who has served as the head of Berkovići municipality for 12 years, I prefer not to comment directly on the sanctions themselves, although my stance aligns with that of the Serb Democratic Party, of which I am a member.
What I am trying to emphasize is that Elektroprivreda RS had sufficient time to execute the project even before the sanctions and the withdrawal of German KFW bank involvement. This is evidenced by Elektroprivreda RS signing a Concession Agreement with the Government of RS for the Hrgud Wind Park construction as early as September 2015. According to the concession contract, the Hrgud Wind Power Plant should have been operational by the end of 2018, well before the sanctions against Republika Srpska were announced. On the other hand, it raises questions how the same project, with the same creditor, is progressing on schedule in neighboring Mostar (FBiH), while facing delays in Republika Srpska. The German government financed the construction of two wind farms simultaneously: Hrgud (Berkovići, Republika Srpska) and Podveležje (Mostar, FBiH). Therefore, I believe that the main reasons for the Hrgud Wind Park project not being realized lie in the incompetence and irresponsibility of Elektroprivreda RS”, continues major of Berkovići Municipality.
Environmental acceptability of future wind park Hrgud
“When discussing the environmental acceptability of the Hrgud Wind Park construction project, the municipality of Berkovići maintains that adherence to all relevant legal norms governing environmental regulations is essential. The project’s environmental acceptability must be substantiated by an environmental impact study, and it is crucial for competent institutions, including the municipality of Berkovići, to provide a favorable opinion on this matter”, concluded Nenad Abramović for our portal.
Berkovići is just one among several small municipalities across Republika Srpska grappling with budgetary challenges, where any project delays impede local development. The population, including the number of young people, is decreasing in Berkovići accompanied by shrinking budgetary resources, exacerbating the accumulation of serious local problems. As emphasized by municipal mayors, including Berkovići’s mayor, there are occasions when basic needs such as healthcare cannot be adequately met.
Another pressing issue is the consistently low revenue from Value Added Tax (VAT), which hit a remarkably low point last year. The external debt of Republika Srpska continues to increase steadily, despite the collection of VAT. Under Bosnia and Herzegovina law, VAT revenues are firstly allocated to servicing foreign debts.
Hungarians as a cover for Chinese?
The Minister of Energy and Mining of Republika Srpska, Petar Đokić, affirmed during meetings with Hungarian officials in Budapest the commitment to enhance cooperation between Republika Srpska and Hungary through joint investments in energy and mining sectors.
Đokić emphasized the significance of this development, especially in light of RS terminating its dealings with the German KFW bank. This opens up opportunities for establishing new relationships, particularly in the construction of the Hrgud wind park, which is strategically important project for Republika Srpska and its utility company, Elektroprivreda of Republika Srpska (ERS).
“The Hungarian side will further scrutinize all the documents provided to them concerning the Hrgud wind power plant. This includes evaluating the feasibility study and other crucial parameters essential for assessing the project as to be sufficiently motivated to establish a partnership between Srpska and Hungary, specifically between ERS and the Hungarian company MVM”, said Đokić.
According to him, other energy projects were also under consideration, such as the Trebinje solar power plant and additional solar projects. The Hungarian side will finalize their decision following further consultations and analyses.
The Hrgud site is situated in the southern region of Bosnia and Herzegovina, specifically in Herzegovina (entity Republika Srpska), approximately 50 km north of Trebinje and about 30 km south of Mostar. Based on year-long tests, it has been determined that the average annual wind speed ranges between 6.1–8.1 m/s at the proposed location for the wind turbines, positioned at a height of 79.5 m.
Hrgud is situated in a mountainous region, occupying land designated for agriculture, animal husbandry, and forestry. It is not located within a nature reserve or protected area.
According to the feasibility study and site conditions, the project intends to install 16 wind turbines. The analysis considered three different types available on the market.
The projected investment for constructing the Hrgud wind farm amounts to approximately 64 million Euro.
