The Government of Republika Srpska has repeatedly granted extensions for the construction deadlines. The investor, EFT Group, continued additional soil testing and obtained renewed permits from the Government of Republika Srpska in 2018, with amendments to the original concession agreement, extending the concession period from 30 to 50 years.
The investigative team of Inforadar
The Ulog Hydroelectric Power Plant on the Neretva River, as seen on the sign at the construction site entrance, was supposed to be completed two months ago, specifically on June 19, 2023. The construction, which was repeatedly delayed, was initially scheduled for December 20, 2019, but the machines were only set in motion the following summer. The construction permit was issued by the Ministry of Spatial Planning, Construction, and Ecology of Republika Srpska. The 30-year concession for construction was awarded to the company “EFT”, owned by Vuk Hamović, the largest electricity trader in the region, who has two companies in Republika Srpska. Meanwhile, without an adopted report in the Government of Republika Srpska, the concession was extended to 50 years. The concession was granted without any permits.
Citizens and environmental associations have warned about the danger of building the hydroelectric power plant several times since the beginning of the controversial and environmentally hazardous project. The planned projects in this area include the 35 MW Ulog Hydroelectric Power Plant and a system of seven smaller hydroelectric power plants that constitute the Upper Neretva Hydropower System.
These hydroelectric power plants will transform a significant portion of the upper part of the river, a section of about 30 km, into a series of dams, pipelines, and reservoirs interconnected with each other. Research conducted in this area from 2021 to the present has concluded that nature in all the locations where research was conducted remains untouched or nearly untouched, including the surrounding coastal and valley forest ecosystems. For the abundance of certain species or groups of species, many scientists have said they have never seen anything like it or have rarely seen it on the European continent.
“The Center for the Environment initiated the declaration of the Protected Habitat Neretva in 2021 to provide adequate formal protection for this highly valuable area. The process is currently ongoing, and the Study for the Declaration of the Protected Habitat Neretva has been submitted to the Ministry of Spatial Planning, Construction, and Ecology of Republika Srpska. We expect this ministry to continue with the procedure for declaring this protected area”, said Jelena Ivanić from the Department for Energy and Climate Change of this Center.
Environmental organizations have filed an official complaint against Bosnia and Herzegovina with the Secretariat of the Bern Convention on the Conservation of European Wildlife and Natural Habitats at the Council of Europe. They stated that Bosnia and Herzegovina violated several provisions of the Bern Convention on the Conservation of European Wildlife and Natural Habitats by granting permits for the Ulog hydroelectric power plant and the “Upper Neretva” mini hydroelectric power plants in Herzegovina. In their complaint to the Bern Convention, more than a hundred plant and animal species would be affected by the construction of the Ulog hydroelectric power plant and seven small hydroelectric power plants in the upper Neretva region.
This project is located near the centre of a candidate “emerald area” in the upper Neretva region, and the planned “Upper Neretva” mini hydroelectric power plants are literally situated within that area. Emerald areas are those places that are significant for the protection and preservation of wild plant and animal species and their habitats.
Jelena Ivanić from the Center for the Environment stated to Inforadar that: “Environmental organizations, including the Center for the Environment, Aarhus Center Sarajevo, Riverwatch, Euronatur, ClientEarth, and the CEE Bankwatch Network, have filed a complaint against Bosnia and Herzegovina with the Secretariat of the Bern Convention on the Conservation of European Wildlife and Natural Habitats due to the lack of protection for the upper course of the Neretva River from the planned eight hydro-energy facilities”.
Furthermore, from the beginning, this project has faced issues with property rights related to private landowners whose land is being expropriated. For the needs of this project, private parcels are being expropriated from the locals, and the offered price is five times lower than the market price. Under pressure, most have agreed to sell their properties at a price of 2 convertible marks per square meter. However, Petar Govedarica did not agree to this. While the hydroelectric investors had not yet appeared on the site, he had planned to build tourist facilities.
Photo: PETAR GOVEDARICA
Nevertheless, their land was taken away. The government of Republika Srpska ordered the expropriation of the disputed land, even though the Govedarica family never accepted this decision or signed an expropriation order. Their property was taken with the assistance of the RS police.
Interestingly, older residents of Ulog still remember that geological surveys were conducted before the war, and it was then stated that this location did not meet the conditions for dam construction due to poor geological conditions. The results of the geological surveys have still not been made public to this day. What is known is that a decision was made to shift the dam site by approximately 60 meters.
To remind you, the initial work began in the summer, exactly 13 years ago, in 2010, with the construction of access roads. The Ulog Hydroelectric Power Plant with a capacity of 35 MW, a 53-meter-high dam, and a 2.7 km-long outlet tunnel is the farthest downstream of the planned power plants on the Neretva River. In the summer of 2012, the main contractor was the Chinese company Sinohydro, which is known for bribery of officials and illegal business practices, leading to it being blacklisted by the World Bank.
This company, along with EFT, negotiated a “turnkey” construction system at the time. Natural resources of Bosnia and Herzegovina were thus handed over to foreigners and suspicious companies, directly due to the responsibility of ministers in the RS government that issued the construction permit in April 2013. The project was planned with an average annual production of 85,000 megawatt-hours of electricity and was presented as being worth around 120 million KM. Although the works were planned to be completed by the end of 2016, and the power plant was supposed to be connected to the grid in early 2017, this did not happen.
The government of Republika Srpska repeatedly granted extensions for the construction deadlines. Meanwhile, due to rockslides, two tragedies occurred in July 2013, resulting in the loss of two workers from “Prijedorputevi”. Despite these incidents, the investor, EFT Group, continued with additional soil investigations and received renewed permits from the government of Republika Srpska in 2018. Amendments were made to the original concession agreement, and the concession period was extended from 30 to 50 years, as previously mentioned.
The funds for the construction of the Ulog Hydroelectric Power Plant were initially planned to be obtained through a loan from the China Development Bank (CDB). However, negotiations with creditors, specifically the CDB, for obtaining financial resources did not yield results. Consequently, the concessionaire used its own financial resources to continue and intensify the construction of the facility. In the end, as of December 31, 2019, approximately €23.2 million had been invested in the Ulog HPP project, as mentioned in the still-unadopted report. This information was officially released by the company after failing to reach an agreement on project financing with institutions in the People’s Republic of China. However, Synohydro remained the main contractor. The initial works on the Ulog HPP began in the summer of 2020.
When asked why the Chinese bank did not want to finance a project involving Chinese companies, EFT responded arrogantly, stating, “The conditions were not suitable for us”.
The truth is that the Chinese company Synohydro has faced penalties and criticism from the Chinese government for its poor work and questionable business practices in African countries. It is widely known that this company has a poor reputation worldwide. Even the African Development Bank (AfDB) placed the mentioned company on its blacklist and prohibited them from participating in all projects financed by the AfDB. The company has been involved in multiple suspicious projects in African countries such as Zambia, Kenya, and Zimbabwe, where it secured a $533 million contract. Audits revealed that the tender value was artificially inflated twice in Uganda, where Synohydro disregarded project requirements for road construction.
The Office for the Fight Against Corruption stated in its report that these were illegal contracts and evidence of a corrupt relationship between this company and local political figures. For years, many governments of several countries and representatives of organizations have accused this company of corruption, fraud, misappropriation of budget funds, low-quality construction work, and unfair partnerships, as highlighted in reports by the Anti-Corruption Office. With such business blemishes, Synohydro can only secure new projects, even worth millions, in the Balkans. In Bosnia and Herzegovina, the company has been involved in several questionable projects, and it will also be building a tunnel from Pale to the municipality of East Sarajevo, as confirmed by the mayor of East Sarajevo, Ljubiša Ćosić.
Photo: Chinese in Istočno Sarajevo
The contractor and the controversial investor seem to be indifferent to the concerns raised by activists regarding the harmful impact of this project. These concerns range from the way environmental and construction permits were issued to the fact that the Neretva River has become the most endangered river in this part of Europe due to this construction.
When asked about the reactions of the Energy Community to the harmful effects of the construction, the investor responded, “We have no comments on reactions that oppose projects based solely on their impact on the environment, without analyzing how and to what extent the projects affect the environment and what benefits they bring”. This response reflects the way authorities in this country disregard the well-being of their citizens in favour of global tycoons, even selling what is most valuable – the health of people and animals – while ignoring the fact that science has spoken. For instance, the promised asphalt road to Ulog has not been laid even after all these years. It was just a smokescreen for the few remaining residents of this small town, located about 20 kilometres from Kalinovik, whose mayor, Milena Komlenović, may not want to or be able to discuss these matters.