Elektroprivreda Republike Srpske (ERS) rejected the request from Transparency International in BiH (TI BIH) to provide the contract that enabled the Hungarian company Lugos Renewables (LREN) to acquire 70 percent ownership of the public enterprise “Solar Power Plant Trebinje 1”. Through this contract, the Hungarian investor obtained the concession for building a solar power plant without public bidding under conditions that ERS refuses to disclose to the public. In their response to TI BIH, ERS management states that this contract has not yet been concluded, but only “its content has been determined.”
In any case, regarding the determined content of the contract, ERS has established that there is an exception to the Law on Access to Information which includes confidential interests of third parties, and after conducting a public interest test, it was determined that the information is not of public interest, ERS officials state and add that the Hungarian investor does not agree to make the contract content public.
How did the Hungarian investor obtain the concession?
The concession for building a solar power plant in Trebinje was awarded to Elektroprivreda RS on October 19, 2020, without a public call, as the RS Concessions Law allows for contracts to be awarded through a negotiated procedure if an unsolicited proposal comes from a public enterprise performing activities of general interest. According to the concession agreement, ERS was supposed to complete the entire project, valued at over 100 million KM, by October this year.
However, this public enterprise apparently had no intention of building this solar power plant because just ten days later, ERS established the company “SE Trebinje 1” at its address, to which the concession was first transferred, and then 70 percent of that company was transferred to the Hungarian company LREN. This way, the Hungarian investor was introduced into this business without public bidding, and the conditions under which the entire project will be financed and implemented are being hidden from the public.
To make everything possible to implement, first the RS Concessions Commission had to approve the transfer of the concession agreement from ERS to the new company “SE Trebinje 1”, which is legally possible if “ERS cannot implement this project due to financial or other reasons“. Before approving the transfer of this concession, according to regulations governing this area, the Commission had to examine the financial condition of the new concessionaire “SE Trebinje 1”, as well as evidence of its technical equipment, previous work, and proof of secured financial resources.
In May 2021, the Commission approved the transfer of the concession to the new company “SE Trebinje 1”, which had revenues of only 800 marks in 2021. Therefore, TI BIH requested from the Commission evidence determining the financial condition of this company and proof that it has secured financial resources.
Then, as stated in the response to TI BIH from “SE Trebinje 1”, the Government of Republika Srpska approved on December 30, 2021, the transfer of 70% of shares in that company from ERS to Hungarian LREN.
Under what conditions was LREN brought into the business?
Since ERS refuses to disclose the content of the contract with the Hungarians, it is officially impossible to verify the claims from the contract that appeared in public, according to which ERS transferred 70% ownership to the Hungarian investor for about 5 million KM, which is the value of the concession and technical documentation related to investment. It states that Hungarian LREN still has the right to sell back to ERS the 70% share at a price that will amount to 16 million marks, if two conditions are not met. One is to sign an annex to the concession agreement and extend the construction deadline for the solar power plant, which expires in October this year, by 24 months, and the second is to fulfill obligations from Article 16 of the concession agreement.
According to the content of the original concession agreement provided to TI BIH by the RS Ministry of Energy and Mining, Article 16 refers to securing bank guarantees amounting to 4% of the project value (over 4 million KM), by which the concessionaire guarantees to fulfill the contract obligations.
Given that the company “SE Trebinje 1” refuses to publish the content of the current concession agreement, it is not known whether the mentioned annexes have been signed. In response to TI BIH, the company’s director also states that the Hungarian investor does not agree to make the concession agreement public.
The disclosure of all conditions under which this significant project is being built is particularly important due to negative experiences with similar projects, such as the construction of HPP Bistrica where ERS transferred the concession to this company, sold 90 percent of shares to Laktaši-based company Kaldera Company for 6.8 million KM, and then repurchased 51 percent of that company for 10.6 million KM.
 rejected the request from Transparency International in BiH (TI BIH) to provide the contract that enabled the Hungarian company Lugos Renewables (LREN)){kind=link}