The collapse of the Ugljevik and Gacko thermal power plants is not a surprise, but rather a predictable epilogue of decades of neglect and the absence of serious investment, while the political elites of Republika Srpska (RS) were more devoted to blocking state institutions than to the stability of the electricity system, it it stated in the analysis of the state of the energy sector in Bosnia and Herzegovina (BiH). It is noted that operational stoppages at the thermal power plants have exposed not only outdated equipment, but also a deep dependence on electricity imports, which costs RS millions.
From electricity exporter to energy importer
Until recently, a stable electricity supply was one of the key assets of the authorities, and that RS was one of the largest exporters of electrical energy in the region.
“The burden of the arbitration ruling (related to the Ugljevik thermal power plant) and the dispute with Slovenia have further strained this sector. One third of the electricity produced is now redirected to a former partner from that former (Yugoslav) republic, with whom the Mine and Thermal Power Plant (RiTE) Ugljevik was jointly built with shared funds before the war,” the analysis states.
Ugljevik as a symbol of a captured state
It is assessed that RiTE Ugljevik today represents an “ideal example of how energy policy in RS has been turned into a private business for a handful of people, rather than an instrument of public interest.” It is added that the Russian oligarch Rashid Serdarov, through the company “Komsar Energy,” was for years granted a concession over key land and future mining sites, accompanied by promises of hundreds of millions of euros in investments.
“The real result, however, is a hole in the balance sheets and a thermal power plant that does not have enough coal for even a single shift,” the analysis states, assessing that instead of managing a strategic resource, the authorities accepted a model in which the public company bears the risk while the private partner extracts the profit. Previously, a purchase of “Komsar” was agreed between the Russian oligarch Rashid Serdarov and the RS government in a total amount of 240 million BAM (more than 140 million euros).
So far, around 180 million has been paid (more than 80 million BAM), and it is indicative that the budget for 2026 does not envisage payment of the remaining debt of 60 million BAM (more than 30 million euros).
It is noted that “Komsar has laid bare the nexus of government, concessions and party capitalism,” pointing out that the RS Government defended this arrangement for years as a “strategic partnership,” although it was clear that this was a case of “classic capture of a public resource.”
“Within this framework, Ugljevik is not merely a technological problem, but a political project in which energy security is deliberately sacrificed for the interests of concessionaires close to those in power,” the analysis concludes.
From coal to lithium – the same pattern, a new raw material
It is further stated that while the thermal energy model is “bursting at the seams,” RS is turning to lithium, that the Swiss company ArCore is seeking a concession on Majevica, promising raw materials for the German battery industry, while at the same time provoking protests in Tuzla and Semberija due to fears of pollution and the “sale of Majevica.”
“On one side, coal feeding failed thermal power plants, on the other, lithium sought by foreign giants such as ArCore and Rock Tech on Majevica. Activists warn that these are not isolated projects, but a pattern of devastation of the sensitive Jadar-Majevica ecosystem, with cross-border pollution that does not recognize administrative boundaries,” it is emphasized.
The Federation of BiH (FBiH) and a blocked energy transition
In the FBiH, one of the key infrastructure investments – the Southern Gas Interconnection – has been blocked for years due to a political dispute over the headquarters of the company that would manage the project. The Croatian side insisted on a new company headquartered in Herzegovina, while parties based in Sarajevo refused to give up on having the existing public company BH-Gas take over the job.
They point out that the American takeover of the project practically cut through years of blockage, but more as a geostrategic maneuver than as the result of domestic consensus. The United States (U.S.) is offering the development of a gas pipeline up to 170 kilometers long and access to an LNG terminal. The Minister of Foreign Affairs of BiH, Elmedin Konakovic, assessed the U.S. offer as extremely favorable, with an open admission that domestic actors can hardly reach an agreement on their own.
While the U.S. is offering a solution for infrastructure, the analysis states, the FBiH is simultaneously struggling with rising unemployment and the outflow of labor. The latest data from the Tax Administration of the FBiH confirms a drop in employment of more than 10.000 jobs in 2025 alone.
The past year in BiH was also marked by concessions, but not through smart resource management and the collection of fees that would strengthen budgets, but rather through new financial blows to public coffers. It is pointed out that “amateur management of the state has once again come due,” although a large part of the public will claim that it was a “skillfully executed deal” through which 100 million BAM in compensation were extracted.
“When we received that lawsuit from the Slovenians, I saw that the RS authorities had made such legal mistakes that not even a second-year law student would have done so,” said the then Attorney General of BiH, Mladjen Mandic, also describing a meeting with two representatives of the Slovenian company Viaduct. “They offered a settlement, an out-of-court agreement of one million euros to be paid as compensation,” Mandic says, noting that the request was rejected.
The epilogue was the payment of 100 million BAM (more than 50 million euros) to the Slovenian company on the basis of an arbitration ruling. The dispute with Viaduct, thus, as emphasized in the analysis, “grew from a legal soap opera into a symbol of BiH’s inability to protect its own interests.”
“The debt has grown to more than 100 million BAM, while at the same time other concessions, especially for renewable energy sources, remain trapped in the jaws of entity-level rivalry,” it is stated.
Bleak forecasts for 2026
The analysis warns that forecasts for 2026 are bleak without a radical shift in public policies, assessing that the Southern Gas Interconnection has the potential to stabilize supply in the FBiH and support GDP growth, but only if it is integrated into a broader strategy of integrating the electricity system at the level of the entire country.
“Natural gas delivered by pipelines is the only cost-effective option. The Southern Interconnection will not save BiH. On the contrary, we will pay for it four times more than the existing one, because it involves ‘liquefied gas’ (in liquid form),” says Banja Luka-based economist Zoran Pavlovic.
A crossroads: investments or collapse
Thermal power plants in RS are facing a clear crossroads, the analysis writes: “Either they will be the subject of serious investment and restructuring, or their uncontrolled shutdown will produce even greater costs and instability.”
It is assessed that lithium concessions must either be abandoned or redefined so that priority is given to public health, environmental protection, and real added value for the domestic economy.
“Otherwise, BiH will remain caught in the matrix of a mining colony – a country that sells its resources at bargain prices while leaving its citizens pollution, debt, and permanent energy and social insecurity,” the analysis concludes, Federalna writes.
