Gacko II, Bosnia and Herzegovina
State-owned utility Elektroprivreda Republike Srpske, together with China Machinery and Engineering Corporation (CMEC) and Emerging Markets Power Fund, plans to build a new 350 MW lignite power plant in Gacko, near the town’s existing plant, and in December 2017 a Memorandum of Understanding was signed to move the project forward.

Stay informed
We closely follow international public finance and bring critical updates from the ground.
Background
State-owned utility Elektroprivreda Republike Srpske, together with China Machinery and Engineering Corporation (CMEC) and Emerging Markets Power Fund, plans to build a new 350 MW lignite power plant in Gacko, near the town’s existing plant, and in December 2017 a Memorandum of Understanding was signed to move the project forward.
As is too often the case in southeast Europe, there has been no convincing analysis proving that this plant is needed or that it would be the best way to provide Bosnia-Herzegovina’s energy supply in the coming years.
In April 2018 an analysis by economist Damir Miljević showed that fatal flaws in the input data make it highly likely the plant will generate losses. Three out of the main data inputs for the official feasibility study – the price of coal, electricity sales price, and the price of CO2 – are unrealistic:
-
- A realistic price of coal is mentioned in the study as just over EUR 18 per tonne – yet the amount used in the calculation is much lower, around EUR 13.3 per tonne.
- The Study foresees export of all the electricity generated, at a price of EUR 50 per MWh, except in exceptional cases when 30% would be sold on the domestic market at EUR 19.90 per MWh. There no evidence that the electricity would find a market and that it could be sold at this price – which is higher than the real export price in recent years. Moreover, the scenario including 30% of electricity being sold domestically is not even examined in the calculation – if it was it would show that the plant is unprofitable.
- A CO2 price of EUR 5 per tonne is mentioned in the text, but not included in the feasibility calculation. Including even this very low CO2 price in the calculation would take the plant into the realm of unprofitability.
- A realistic price of coal is mentioned in the study as just over EUR 18 per tonne – yet the amount used in the calculation is much lower, around EUR 13.3 per tonne.
The analysis concludes that although the official feasibility study for Gacko II claims it would generate profit of around EUR 23 million per year, with more realistic input data, a loss of minimum EUR 1.15 million per year looks more likely.
Gacko II is one of no fewer than five new coal power plants being pushed forward in Bosnia-Herzegovina, in addition to the 300 MW Stanari plant which went online in 2016. It is clear that not all of the projects can go ahead but so far the authorities are backing all of them, irrespective of the costs. However, as of January 2022, the project does not appear to have moved forward significantly and seems unlikely to go ahead.
Latest news
Παγκόσμια πορεία υψηλής αβεβαιότητας και διακινδύνευσης
Bankwatch in the media | 16 May, 2022Η πραγματικότητα, που βιώνουν οι σύγχρονες κοινωνίες, αποτελεί την καλύτερη αποτύπωση των συνθηκών, που δημιουργούνται
Read moreЕко-свест: Во Новаци скоро и да нема денови со здрав воздух
Bankwatch in the media | 3 May, 2022Собраните измерени податоци ги споредивме со законските граници, но и со тие препорачани од Светската здравствена организација како …
Read moreBalcanii de Vest se reîntorc la cărbune. Războiul din Ucraina a schimbat datele problemei
Bankwatch in the media | 22 April, 2022Planurile de a abandona lignitul au trecut în plan secund în Balcanii de Vest, deoarece războiul din Ucraina a schimbat datele problemei.
Read moreRelated publications
Summary of the study: ‘Identification and analysis of potential sustainable heating solutions in Pljevlja, Montenegro’
Study | 25 October, 2021 | Download PDFIn order to address high levels of air pollution in Pljevlja, Montenegro, the municipality’s heating supply must become more sustainable. Although Montenegro’s 2030 Energy Strategy proposes the development of district heating systems based on biomass,
Western Balkan coal power plants polluted twice as much as those in the EU in 2019
Briefing | 12 July, 2021 | Download PDFThe non-compliance of Western Balkan coal power plants with the emission limits enshrined in the Energy Community Treaty is reflected in the region’s high sulphur dioxide (SO2), nitrogen oxides (NOX) and dust emissions. This briefing looks mainly at th
Pollution of land, surface and groundwater near the slag and ash disposal site of Tuzla thermal power plant
Study | 18 December, 2020 | Download PDFFrom 1 March – 31 August 2020, an analysis of water and soil samples was conducted in the area of influence of the closed slag and ash disposal sites in Tuzla, Bosnia and Herzegovina (BiH) – Plane, Divkovići I, Divkovići II, Drežnik and Jezero I – as w