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New Energy signed the contract with the Ministry of Energy and Mining of Republika Srpska, where Tadic was working at the same time as a driver for minister Petar Djokic.
But despite the fact that New Energy has missed all three deadlines in the contract, the ministry has not terminated the contract and plans to approve new deadlines, while the company has not suffered any consequences due to the delays.
The company has changed its co-ownership structure, with two Croatian citizens becoming its co-owners. But even after the change of ownership, none of the concession-holders or investors informed municipality officials in Han Pijesak about their progress or made any contact with them, while the Republika Srpska entity ministry responsible rejected one of the company’s requests for a technical permit that it needed.
According to the concession contract, New Energy was due to complete the construction of the small hydropower plant in May 2020, but the municipal authorities confirmed to BIRN Bosnia and Herzegovina that there has been no communication between the concession-holders and the municipal authorities in Han Pijesak since the contract was signed in May 2018.
Mayor Vlado Ostojic said that no representatives of New Energy have come to the municipality or filed requests to obtain a construction permit or other necessary approvals and documents “which should have been done in the first two contract years”.
“We are not familiar with the construction, because nobody has addressed or informed the municipality [of Han Pijesak] about the beginning of the work, the contractors, the deadlines or the construction contract,” Ostojic said.
According to the concession contract, which the ministry previously provided to BIRN Bosnia and Herzegovina, one year after the signing and the beginning of the contract period in May 2018, New Energy was due to finish the first phase of the project – to secure funding, prepare the planning documentation and obtain a construction permit and other permissions. Under the contract, the construction of the small hydropower plant should have begun in May 2019, and in May 2020 New Energy should have already started to pay a concession fee. However, as of October 2020, construction work had not started yet.
In an interview in March this year, before the coronavirus pandemic hit the country, company co-owner Goran Tadic said work was ongoing to start building the small hydropower plant.
“I think the operating licence will be issued soon and the construction will start soon,” Tadic said.
According to the contract, if there is a delay in any of the three phases, the contract can be terminated and default interest charged for the failure to pay the concession fee.
But the Ministry of Energy and Mining of Republika Srpska told BIRN Bosnia and Herzegovina that, instead of terminating the contract, it was contemplating signing an annex to extend the deadlines.
Meanwhile however, the Ministry of Spatial Planning, Construction and Ecology of Republika Srpska said that it had refused to issue a permit to New Energy.
At the time of signing the contract, Tadic was a driver at the Ministry of Energy and Mining and a member of the Socialist Party, which means that Petar Djokic is deciding on how the ministry will deal with a concession obtained by his driver, who is also a member of a political party which he heads. Djokic sent messages to BIRN Bosnia and Herzegovina’s journalists saying that he would answer questions if they were sent to the ministry’s official email address. But no replies came.
BIRN BiH previously published an investigation on how New Energy received the concession. Video: BIRN BiH, archive
Since the start of the project, New Energy, which was registered in Obudovac, near Samac, has changed its co-owners. Company director Dani Tanic was replaced by his mother Sladjana Tanic, who has become the co-owner of 20 per cent of its shares. The 20 per cent share owned by German citizen Thomas Andreas Müller, who was also one of the founders, has been evenly distributed between Croatian citizens Tonci Panza and Grgur Mihael Gostrec. Other shareholders include Tadic, who owns 40 per cent of the shares, and Cvijetin Djordjic with a 20 per cent share.
Tadic did not want to speak about the new co-owners of the company in which he still owns the biggest individual share, and declined to talk when contacted again for comment about the request for new deadlines.
Co-owners don’t know each other
In a telephone interview with BIRN Bosnia and Herzegovina, Panza said he has been partners with Djordjic in a renewable energy sources business, Adria Wind Power, for more than two decades.
In the interview in March this year, Panza confirmed that he and Gostrec had “bought shares” in New Energy “from a foreign co-owner who no longer participated in the project”. At the time he expressed the expectation that the construction of the small hydropower plant should start “some time before the end of the year, if everything goes well”.
As his link to New Energy, he cited his interest in renewable energy sources and Cvijetin Djordjic, with whom he co-owns the Adria Wind Power company in Croatia.
“That is the only link. I have no other links. Mr. Djordjic is the co-owner of Adria Wind Power. And he asked me to get involved in the company to help on the basis of my experience, knowledge and funding opportunities in order to get this done as soon as possible. There’s nothing spectacular about it,” Panza said.
When asked about the other co-owner from Croatia, Grgur Mihael Kostrec, Panza said Grgur’s late father was also a co-owner of Adria Wind Power.
According to the public business registry in Croatia, Adria Wind Power was founded in 1999. The registry lists Tonci Panza as the director and the only employee in 2018 and 2019. Panza’s name was mentioned in the context of the construction of wind power plants in Croatia back in early 2000s, as a pioneer in the field.
When asked how it happened that they were now involved in small hydropower plant business, given that they had previously dealt with wind power plants, Gostrec answered: “We are broadening our horizons.”
Goran Tadic. Photo: Night wolves
In a telephone interview in July, Gostrec confirmed that construction work had not yet begun, and that everything was “still in the decision-making phase”.
He explained he had got involved in the project in a “friendly” way, “to help out”.
“That is relatively close, so I can go there quickly to do a check-up, if we ever build anything,” he said.
He confirmed he did not know Tadic or “who else is in the New Energy company”.
“There are several of us. (…) I do not know all the co-owners. (…) I do not know Tadic. (…) Honestly, I do not know who that is,” Gostrec said.
Besides being a driver to Republika Srpska’s Minister of Energy and Mining, Petar Djokic, Tadic is one of founding members and used to be vice-president of the Bosnian branch of the Night Wolves bikers’ club, which originates from Russia, where its members are known for their strong support for President Vladimir Putin, who has attended their rallies.
Panza was not aware of the Night Wolves link. He said he was “not interested whether someone is pro-Russian, pro-Serbian, pro-Croatian”.
“I only have the basic information. I do not know [Tadic] too well, nor do I know the history. I know that a co-owner from Germany asked me to participate instead of another German citizen. That is what we did. That is all I know. In principle, it does not interest me. What does it matter if someone is pro-Russian? What is wrong with that? Russia is not bad,” Panza said.
Panza and Gostrec were not willing to talk about the expired deadlines from the concession contract for building the Nevacka hydropower plant. Panza answered BIRN’s phone call and promised to return the call later, but he has not done so. Gostrec has not answered BIRN’s calls or messages.
As BIRN Bosnia and Herzegovina has previously reported, the idea for construction of the hydropower plant originated from the UNIS TOK company back in 2014, as the company owner, Sead Dzafic, the current mayor of Kalesija, said at the time. His company prepared a study and submitted it to the Ministry of Energy and Mining. Not long afterwards, Petar Djokic became the minister. UNIS TOK did not receive a response to its initiative for years.
The government of Republika Srpska started the process to award the concession contract to build a 1.25 megawatt hydropower plant in Nevacka in April 2017. The invitation to tender issued by the Ministry of Energy and Mining stated that UNIS TOK would have up to a ten per cent advantage in scoring over other applicants. Despite that, Dzafic did not apply for the tender.
The contract was granted to New Energy, which at the time had no previous experience in building small hydropower plants. In an earlier interview, Tadic confirmed to BIRN Bosnia and Herzegovina that the company had not had any previous contracts and had been registered right before the concession award.
Jelena Ivanic of the Environmental Centre, which monitors the building of small hydropower plants, among other things, says that the Nevacka example shows that “concessions are a field with many shortcomings, which needs to be improved”.
“Concessions are awarded to companies without offices or contact details on their websites. Those are often companies with no references, which actually get the concession as their first job in that field. That was the case here as well,” Ivanic explained.
Environmental Centre activists have previously called for minister Djokic’s dismissal after the National Assembly had failed to adopt a moratorium on small hydropower plants.
Government of Republic of Srpska. Photo: EPA / MIKKO PIHAVAARA
No penalties for construction delays
The New Energy company was registered in May 2017 – the month after the government of Republika Srpska made its decision to start the concession award procedure.
BIRN Bosnia and Herzegovina has previously reported that the concession contract was signed shortly after New Energy had changed its central office address – it moved from Brcko to Obudovac, near Samac in Republika Srpska. As Brcko is located outside Republika Srpska, the company could not have signed the contract for the hydropower plant if it was based there.
At the company’s address in Obudovac, where according to the register of companies, New Energy and another company are located, BIRN Bosnia and Herzegovina’s journalists who visited in March 2019 were not able to find the office or employees of New Energy.
Staff members of another company registered at the same address said at the time that New Energy “is just registered at this address” and received mail there. Besides basic information, no other data about the company could be found by BIRN Bosnia and Herzegovina’s journalists on specialist business websites. The company also has no website, Facebook page or any other presence on the internet.
According to official documents related the tender for the concession to build the Nevacka hydropower plant, which is held by Republika Srpska’s Ministry of Energy and Mining, the criteria for assessing the bids included means to ensure that investments are made and deadlines for the preparation of project documentation and the construction of the small hydropower plant are met.
The contract signed on May 14, 2018 sets out clear deadlines and specifies what happens if they are breached, including the possibility that the contract with New Energy can be terminated if there is a delay in construction, which has not even started even though more than two years have passed since the contract’s signing.
Goran Tadic’s company was also due to provide a bank guarantee for three per cent of the total contract value of 3.31 million Bosnian marks – in other words, a bank guarantee for 99,300 Bosnian marks for a period of 26 months.
Under the contract, the guarantee could have been activated in case of a delay in any phase of the project. The Ministry of Energy and Mining confirmed to BIRN Bosnia and Herzegovina that New Energy had provided “a work execution guarantee”, but did not answer additional questions about the activation of the guarantee by the time of publication of this article.
The ministry also said that a concession fee would be paid “after the construction of the facility and the start of its commercial operation”. The contract specifies that the concession fee should be paid after the start of a period of usage which according to the plan begins two years after the start of the contract.
Petar Đokic. Photo: N1
Ivanic said she thinks that concession-holders have been given favourable treatment in terms of the deadline extension, causing costs for the entity budget.
“Many concession contracts have not been terminated although the deadlines have not been met and investors have not fulfilled their obligations,” she said.
But the Ministry of Energy and Mining said that the concession-holder stated it “was not able to meet the specified deadlines as it was necessary to perform additional hydrological measurements which lasted a year. This led to delays in preparation of project documentation”.
The Ministry insisted that “the preparation of the documentation is in its final stage”.
“The outbreak of the coronavirus pandemic and the declaration of [a state of] emergency in Republika Srpska affected the dynamics of the concession-holders’ work and their inability to respect the contract deadlines,” the ministry stated.
It also said that it was working on a contract annex which would extend the construction deadline as per a request by New Energy.
In the case of New Energy, minister Djokic runs the ministry which will decide on how to deal with a concession awarded to a driver, who is a member of the same political party as him and is employed at his ministry.
Under Republika Srpska’s Law on Conflict of Interests, a conflict of interest is defined as any situation in which a private interest exists which could affect the unbiased and objective performance of duties, explained Ivana Korajlic, executive director of Transparency International Bosnia and Herzegovina.
“If we only consider the definition of private interest provided by the law, a situation like this one would have to be considered a conflict of interest, but the commission deciding on this issue interprets the law restrictively,” she said, explaining that the law mentions restrictions pertaining to close relatives and members of the same household, but does not mention drivers.
When deciding on New Energy’s request for a technical planning permit that it needed, another ministry did not share the optimism of the one in which Tadic is employed.
The Ministry of Spatial Planning, Construction and Ecology said it could not provide BIRN Bosnia and Herzegovina with its decision related to the New Energy concession in October due to its employees’ shift plan during the pandemic, but confirmed that the company did not get the ministry’s approval for a so-called location conditions permit.
“On the basis of a concession contract, the New Energy company filed a request for issuance of a planning permit for construction of a small hydropower plant, but its request was rejected,” the Ministry of Spatial Planning, Construction and Ecology said.
In June 2019, the director of Republika Srpska’s Commission for Concessions, Radenko Djurica, told journalists in Banja Luka that his “colleagues are checking the concession-holder [New Energy]”.
“That is why I cannot say whether the company has the permits and approvals from the relevant institutions,” Djurica was quoted as saying by the Buka website.
In its response to BIRN’s first inquiry, the Commission for Concessions explained that only the government of Republika Srpska, or more specifically the Ministry of Energy and Mining, could terminate the concession contract.
“The commission can, based on the minutes of an inspection of the concession-holder’s work and the implementation of the concession contract, if non-compliance with the contract is observed, forward the said minutes to the concession authority for further action, with possible suggestions related to the observed irregularities in the implementation of the concession contract in question,” it said.
In a recently-adopted annual report on the work of the commission in 2019, there is no special mention of the delays in the implementation of the hydropower concession by New Energy.
The commission has confirmed that New Energy requested an extension of the concession contract deadline due to a delay related to a company that is working on technical documentation and a delay in getting all the necessary permits, adding that the commission gave its consent on September 22, 2020.
As stated in the contract, the deadlines specified in the contract could be breached on the grounds of force majeure, which includes an epidemic, which was given by the commission as one of the reasons for the project’s delay. New Energy should have informed the ministry if it wanted to use this reason for a deferral.
The ministry has not answered an additional inquiry from BIRN Bosnia and Herzegovina about when and for which reasons New Energy asked for a deadline postponement .
As stated in the contract, the bank guarantee for the satisfactory completion of the work should have expired 26 months after the signing of the contract, in summer 2020.
The commission confirmed that consent it gave for the extension of the concession contract deadline also deals with sending a new bank guarantee with the deadline of October 2022. It further addresses the signing of annexes to the contract in which the second phase of the project is extended from 12 to 36 months and the period of usage of the small hydropower plant is reduced from 18 to 16 years.
Terminating a contract after a company invested significant financial resources in a concession intended to help Republika Srpska’s development and attract foreign and domestic investments which would benefit the community and Republika Srpska itself “could lead to legal consequences for Republika Srpska”, the commission told BIRN Bosnia and Herzegovina .
It also said that it is monitoring 405 concession agreements, 101 of which are for small hydropower plants and that “for clear, objective reasons, the commission is not physically able to check the work of all concession-holders”. It said that it checks concessions in chronological order and that the New Energy concession, granted in 2018, is relatively recent and therefore has not been checked yet.