Seven years have passed since the Belgrade-based “Novosti” sensationally announced with the headline “Chinese Entering Gacko 2!” that the largest post-war investment in Republika Srpska was entirely certain and would generate its first kilowatts in 50 months.
87 months later, we can state that the Chinese, although very interested in investments in this part of Europe, are not interested in Gacko. They are not interested in the cement factory or the gypsum plant that were mentioned as accompanying facilities alongside the construction of the second block of the thermal power plant in Herzegovina.
Entity Government as the Main Negotiator
For Mirko Šarović, who at that time was the Minister of Foreign Trade and Economic Relations of Bosnia and Herzegovina and for a while the national coordinator for cooperation with China, the key reason for the project’s failure lies in the unpreparedness of the local authorities.
“The platform, which I will call ‘China +17,’ through which the Chinese established cooperation with the countries of Southeast and Central Europe, including some EU member states and Western Balkan countries. In some countries, the cooperation was successful, and several projects were realized, primarily in Serbia. In Bosnia and Herzegovina, not to the same extent, although projects were announced for various reasons, sometimes due to the unpreparedness of local authorities, including in the energy sector, which was a particular focus of the Chinese side”, says Šarović, adding that the ministry he led at the time was the contact point through which the Chinese established contact.
“But for Gacko, the main negotiator was mostly the Government of Republika Srpska, and they used the opportunities provided by the Ministry of Foreign Trade at the level of Bosnia and Herzegovina very little. They were announced, there were sensational headlines, the Chinese came, they have the technology, they have enormous experience, but no agreement was reached. The negotiations between the Government of Republika Srpska and the Chinese side stalled”, says Šarović, but he does not want to speculate on why the negotiations failed.
He emphasizes that he regrets that this project was not realized while insisting on adhering to ecological standards.
“We need to look at what our interest is. We must not forget that 4,500 people die here annually due to pollution, while in Sweden, for example, it is 43”, says Šarović.
Everything Stalled at the First Step
Twice, the Minister of Energy of Republika Srpska, Petar Đokić, signed an agreement for the construction of the Gacko 2 Thermal Power Plant with two Chinese companies, CAIDC and CMEC from the “Poly Group”.
The first signing occurred in early April 2017. After signing, he stated that the project was worth around one billion BAM and that the block would have an installed capacity of at least 300 megawatts. Minister Đokić emphasized that the agreement was a result of the visit of the President of Republika Srpska, Milorad Dodik, to China.
The Vice President of CMEC Corporation, Zigang Tong, stated at the time that Republika Srpska had taken the first step in cooperation with China regarding the construction of Gacko 2.
“Signing the agreement means that our work has already begun. We have already formed a working team and wish to start the work by the end of the year. I hope that the ‘Gacko 2’ project will bring great benefits to Republika Srpska”, was announced by the Government of Republika Srpska.
The second signing of the agreement in Banja Luka on December 12 of the same year was preceded by an article in the Belgrade-based “Novosti”, which pompously announced the investment of the century.
“We expect the signing of the contract and the completion of the construction work on Gacko 2 in about 50 months. When built, Gacko 2 will produce about 50 per cent of the electricity in Republika Srpska. The deal with the Chinese companies is the most favourable for Republika Srpska”, was stated to “Novosti” by the Gacko Thermal Power Plant.
Furthermore, it was said that the construction of Gacko 2 would also ensure the opening of hundreds of new jobs, as well as a cement factory and gypsum plant as part of the new thermal power plant. The management structure of Gacko 2, when built, will be 51 per cent for Chinese companies and 49 per cent for Republika Srpska.
“Construction work on Gacko 2 will likely be completed ten months earlier, and around 1,000 workers are expected to be on the construction site, of which about 400 will be from Republika Srpska. When the new thermal power plant becomes operational, the old one will be ‘retired.’ According to ‘Novosti’ sources, the Chinese are fully financing the work, and the new thermal power plant meets the most demanding global environmental standards”, wrote Novosti at the time.
The signing was attended by the then Prime Minister, Željka Cvijanović, and the Executive Director of RiTE Gacko, Srđan Milović. We tried to find out from him what turned out to be the main obstacle to the announced investment and why the Chinese withdrew, but our efforts were unsuccessful. Milović did not respond to our calls.
Without Serious Intentions
It wasn’t just the state level that was bypassed in the plans and negotiations. The announcement that the Chinese would build Gacko 2 also caught the municipal leadership by surprise.
“The only meeting we had regarding these investments was with representatives of a German-Turkish company, who were interested in the second phase of the thermal power plant but were also interested in the cement factory. They literally said that the cement factory as an investment did not interest them; it would be useful for building the thermal power plant, and after completing the block’s construction, they would hand it over to the state and sign the transfer of ownership. According to their research, considering the road infrastructure and the population, meaning the small number of cement consumers in the vicinity, the cement factory would be unprofitable. However, it would be interesting from the perspective of the Gacko 2 and HE ‘Buk Bijela’ investments, whose construction would require a massive amount of cement and would be profitable while it lasted. They said that, because of this, after completing the construction, they would hand over the ownership to the local community or the state. They seemed serious and were courteous enough to notify the mayor that they were interested in doing something in Gacko. We never saw the Czechs and Chinese; they never came to the municipality. They never invited us from the municipality to any meeting”, recounts former Deputy Mayor of Gacko and current councillor Radoica Antunović, adding that all meetings were held outside Gacko.
“Gacko was completely excluded from it. To me, everything we heard seemed completely unserious. It felt like someone was joking with us, and not for a moment did I think anything would come of it. I don’t know why this is being done, whether someone profits from all this, probably yes. But I can’t figure out how and why, or if it’s just election talk. As for Gacko, I can see the only benefit is that this story is being exploited in a campaign”, Antunović evaluates and adds:
“Who knows who these Chinese are? It’s the same as with the Avtovac barracks. They had no serious intention of doing anything. I think it’s just some farce. Probably some new company is being formed, and then it has its directors, so someone can get a job there”.
TE Gacko – Development and Investment in Trebinje Sports and Catering
The need for Chinese involvement in such a scenario is questioned by the company “Thermal Power Plant Gacko – Development and Investment”, which is currently celebrating its first anniversary.
Established without any employees, with two directors—Igor Milojević and Petar Marković—tasked with preparing complete documentation to be ready for investors whenever they appear.
In the meantime, the company has spent two million BAM, and so far, has invested in sports in Trebinje. Since energy is needed for activities, they paid 5,000 BAM to a Trebinje restaurant for catering services (as seen in the picture).
“According to available data from the Public Procurement Portal, since the registration of this contracting authority in public procurement procedures, nearly 2 million KM has been spent. Seventeen public procurement procedures have been successfully concluded, including 2 open procedures and 15 direct agreements, which are inherently non-transparent”, explains Slobodan Golubović, editor of the Tender Monitoring Portal.
“In terms of open procedures that have been conducted, two out of three initiated procedures have been concluded. Both concluded procedures are characterized by having received only one bid from the same company—RADIS D.O.O. Istočno Novo Sarajevo—and a large number of complaints that led to multiple amendments to the tender documentation. This indicates at least two risks. The first and foremost is possible rigging of the job by prior agreement, and the second is ignorance and/or an unserious approach to preparing the public procurement procedure”, says Golubović, who monitors public procurements across over 700 contracting authorities throughout Bosnia and Herzegovina.
“Regarding the direct agreements that have been realized so far, it is evident that most of them are at the legal limit for using this type of procedure (6,000 KM). Besides purchases that are objectively essential for the functioning of the contracting authority, there are also those that are clear abuses and undermine the public procurement system, similar to other major contracting authorities in the energy sector, such as advertising through the Athletic Club Leotar and the Basketball Club Leotar”, highlights Golubović, concluding that “TE Gacko – Development and Investment” has continued the tradition and adopted all the negative characteristics of its “relatives” from the energy sector.
Responsible Person Not Answering
Although listed as the responsible person in the documents, Igor Milojević—acting director of TE Gacko—Development and Investment, did not respond to calls or messages from “Direkt”, leaving us without information on whether preparations for the development of Gacko have been completed, whether any new Chinese investors interested in Gacko’s energy potential are expected, and what is happening with the website for which nearly 6,000 BAM were paid but which we were unable to locate.
Radoica Antunović is completely certain that the story is over.
“Even if the political option I represent were involved in all this, I believe that investments in Gacko 2 are impossible given the power dynamics and what is being aimed for. Now, the construction of any thermal power plant is impossible, I am convinced of that. What would make me happy and what I would have liked to see done over the years is that this thermal power plant was maintained, its operational life extended, that the mine was not closed, that it was functioning as it should, and I think it is something that could work in Gacko for the next ten, maybe twenty years. What I would advocate for is investment in the existing plant and mine, to keep everything under our ownership rather than privatizing it”, says Antunović.
