The Cantonal Court in Sarajevo has annulled two decisions made by the Federal Ministry of Environment and Tourism regarding the proposed construction of the Vranduk and Janjici hydropower plants. These projects, with a combined capacity of 36 MW, are being developed by the state-owned power utility EPBiH and are planned to be built on the Bosna River, near Zenica.
The court ruled that the 16 MW Janjici project cannot proceed without obtaining a new environmental permit. This follows a challenge by the Aarhus Centre of Bosnia and Herzegovina, which contested the Ministry’s 2021 decision to extend the validity of the existing permit. The court found that the Ministry’s justification lacked legal grounds and criticized the Ministry for overlooking the ecological significance of the Janjici area, which is home to several protected species, including otters. The court emphasized that due to the project’s complexity and the expiration of the previous permit, a fresh review in line with current environmental regulations was necessary.
Additionally, the court revoked the environmental approval for the 20 MW Vranduk hydropower plant, granted in 2023. The court found that the Ministry had violated several provisions of Bosnia and Herzegovina’s environmental protection laws. It also ruled that public rights to information and participation in environmental decisions were disregarded, in violation of the Aarhus Convention. Moreover, the environmental impact assessment for Vranduk was deemed insufficient, with previous risk evaluations and expert opinions being ignored during the permitting process.
In 2022, German Development Bank (KfW) confirmed that it had withdrawn from the Janjici hydropower project and would no longer provide financing. A loan agreement worth 30 million euros between KfW and EPBiH, signed in 2014, was meant to fund the construction of the 13.3 MW Janjici plant, expected to generate over 68 GWh of electricity annually.
The project faced further setbacks in 2022 when the International Arbitration Court in Brussels ruled in favor of the Austrian company Strabag in a dispute with EPBiH over the construction of the Vranduk plant. The court ordered EPBiH to pay Strabag compensation totaling 16.4 million euros, including 5.7 million euros for a bank guarantee and around 410,000 euros for costs related to the guarantee. The arbitration also determined that EPBiH should pay an additional 7.8 million euros for other costs. However, the court did not award Strabag compensation for lost profits, as it was unable to prove that it would have earned a profit from the contract.
The dispute between EPBiH and Strabag began in 2017 when construction on the Vranduk plant was halted after Strabag requested additional funding, which EPBiH refused. Strabag subsequently terminated the contract and filed for international arbitration. The disagreement centered around the project’s rising costs, with Strabag seeking a 2.5 million euro increase due to unexpected expenses, while EPBiH contended that the necessary building permits had not been obtained when construction began in 2016.
