Ugljevik III lignite power plant, Bosnia and Herzegovina
The concession for Ugljevik III near Bijeljina in Republika Srpska, Bosnia and Herzegovina, is held by Russian billionaire Rashid Sardarov’s Comsar Energy.
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Chinese contractors – but no financing
The initial plan was for the plant to be built by the China Power Engineering and Consulting Group Corporation (CPECC). China Development Bank representatives were present at the signing of an agreement between CPECC and the Republika Srpska authorities, indicating that the bank may be interested in financing, however this was never confirmed and media reports indicate that CPECC has dropped out of the project.
A twist occurred in June 2021 when it was reported that China Electric and the Polish-Chinese Sunningwell International Ltd had signed a construction contract for the project, despite the fact these companies had not been previously named as part of the project.
This was expected to result in Chinese financing for the project. However, in September and October 2021 respectively, China pledged to not build new coal-fired power plants abroad at the UN General Assembly and the EU-China Climate Dialogue. In January 2021, in response to a Diplomat article, Sunningwell issued a statement confirming that Chinese loans would not be available for the project.
Despite the project companies putting on a brave face, it is now unclear who could finance the project as China has been the only one willing to back coal in the region in recent years.
A chronology of legal troubles
In July 2017 the project seemed to reach a dead end when the Supreme Court of the Republika Srpska Entity cancelled the environmental permit based on a court challenge by the Center for Environment from Banja Luka.
However, the Ministry of Spatial Planning, Construction and Ecology responded by issuing another permit without repeating the environmental impact assessment process. This second permit was also challenged in court by the Center for Environment, but the process was never concluded because the permit was annulled due to a complaint to the Energy Community.
The complaint was made in December 2014 because the environmental impact assessment was missing key information and the data on likely emissions of SO2, NOx and dust were false.
This led to the Energy Community opening a dispute settlement procedure, which in November 2018 resulted in Bosnia and Herzegovina agreeing not to use the environmental permit, and officially annulling it in June 2019.
However, a new environmental impact assessment was approved at the end of January 2022. It was successfully challenged by the Center for Environment and the court annulled the approval in December 2022 due to deficiencies in the transboundary consultation process. However, the Ministry for Spatial Planning, Construction and Ecology challenged the court’s decision at the Republika Srpska Supreme Court.
Before the court decision, during 2022 the Ministry had also issued a new environmental permit based on the later annulled environmental impact assessment decision. The Center for Environment also challenged this successfully, with the court annulling the permit in July 2023.
Instead of waiting for the Supreme Court’s decision on the environmental assessment, the Ministry re-approved the environmental assessment in early 2023, without repeating the consultation process. Again the Center for Environment challenged the decision in court. After the July court ruling on the environmental permit, the message seemed to have got through, and the Ministry issued a conclusion suspending the permitting process until the Supreme Court makes a decision. But in early October 2023, it changed its mind and issued yet another environmental permit for the project.
In August 2018, local media reported that Comsar was threatening to give up the project unless an extension of the concession from 30 to 45 years was granted, together with a reduction of the capacity from 600 MW to 350 MW, because the plant would otherwise be unprofitable.
In June 2019 it was reported that Republika Srpska’s state-owned electricity company, Elektroprivreda Republike Srpske (ERS), planned to buy off Comsar Energy’s concession for Ugljevik III. The likely cost has been cited at around EUR 90 million. Quite why ERS would buy off the concession rather than the government simply annulling it is far from clear. But in February 2021 it was reported that the concession had been extended from 30 to 45 years instead, despite Comsar not fulfilling its part of the contract.