Under the pretext of cost rationalization, the state-owned power utility ERS has cancelled a €1.8 million tender for the feasibility study of the Ustibar hydropower plant (also known as Mrsovo 2). The move followed three failed attempts to award the contract to a consortium led by Serbia’s Energoprojekt Hidroinženjering, working alongside the local Waterworks Institute.
Although ERS considered this consortium the only acceptable bidder, each of their contract wins was successfully challenged by another bidder, the local company CPK. CPK contested the awards on three separate occasions before the Complaints Review Office of Bosnia and Herzegovina, initially questioning Energoprojekt’s bank guarantees, followed by its references, and finally the qualifications of its staff.
With no resolution in sight and repeated procedural setbacks, ERS decided to terminate the procurement process entirely. It cited limited budget allocations in planning documents and compliance with internal cost-cutting policies as the reasons for the cancellation.
However, the decision has drawn criticism. Observers have pointed out inconsistencies in ERS’s cost-saving narrative, noting that while it abandons a strategic infrastructure study due to financial constraints, the utility continues to approve high-cost projects such as the construction of a new office building in Ljubinje and significant spending on advertising campaigns.
