ERS plans a capital injection of 218 million euros to finance the construction of the Dabar hydroelectric power plant
The electricity utility Elektroprivreda Republike Srpske (ERS) is planning a capital increase of 218 million euros in its subsidiary Hidroelektrane na Trebišnjici to raise funds for the construction of the 160 MW hydroelectric power station in Dabar.
The capital injection would not result in a takeover of hydropower producer Hidroelektrana na Trebišnjici (HET), according to the company’s statement.
The decision to raise capital will be discussed at a general meeting scheduled for January 21.
The 222.8 million euro contract for the construction of the Dabar hydroelectric power plant has been signed with a Chinese construction company
HET owns HPP Dabar, the company in charge of building the facility. HPP Dabar signed a €228 million contract in May 2020 with Chinese China Gezhouba Group Co. for the design, construction and commissioning of HPP Dabar. In December 2021, HPP Dabar signed a loan agreement with the Export-Import Bank of China.
The €189 million loan represents 85% of the investment. HPP Dabar stated in its capital increase request that it needed to secure the remaining 15%, but also all other funds for the implementation of the project.
HPP Dabar claims that it is necessary to provide 108 million euros for the completion of the project
The company responsible for the project estimates the sum required at 108 million euros, a combination of 15% of the value of the contract with the Chinese bank, funds for the construction of tunnels, expropriation, bonuses loan insurance and guarantees from the Government of the Republic of Srpska for a loan.
Existing shareholders have the right of first refusal
Existing shareholders have the right of first refusal, and if they do not use it, the remaining shares will be subject to a public offer on the Banja Luka Stock Exchange, the draft decision on the capital injection states.
The share price for shareholders is EUR 0.15 and the recapitalization will be declared successful if at least 60% of the offered shares are purchased.
Majority shareholders of HET are controlled by the government
The main shareholders of HET are ERS (65%), the management company of the pension reserve fund of the Republic of Srpska (10%), the investment fund management company Kristal invest (5.3%) and the Restitution Fund of the Republic of Srpska (5%).
It should be noted that ERS had previously launched a tender for a loan of 50 million euros, but without success. The company recently received approval from the Entity Government to issue bonds on the Vienna Stock Exchange and obtain funds for the construction of the Dabar hydroelectric power station and the hydroelectric power stations on the Bistrica River.
HET: capital injection is not privatization
Some media in BiH interpreted the capital injection decision as a privatization of HET, so the government of the Federation of BiH reacted by recommending the electricity utilities Elektroprivreda BiH (EPBiH) and EPHZHB to participate in the recapitalization.
ERS has already provided money for the capital injection to save at least 65% of the shares
ERS has already obtained the necessary funds for the capital injection and the use of the right of first refusal, which will provide at least the existing percentage of ownership, HET said.
HPP Dabar estimated annual production at 272 gigawatt hours and expressed hope that the facility would be commissioned in 2025.
The planned hydroelectric plant is part of the Upper Horizons project, which aims to reduce flood risk, improve water supplies and increase electricity production.