Construction of the Banjaluka - Prijedor highway: The contract made in favor of Chinese investors violates state aid rules

That the contract is disputed and to the detriment of the citizens of Republika Srpska was confirmed at one time by Prime Minister Radovan Višković himself, admitting that when the highway is completed, the RS will pay the Chinese company 30 million marks per year as a fee for use. Also, the media previously mentioned information that in the contract, it was stated that the Government of RS will pay a certain amount from the budget in case the highway does not have a sufficient flow of vehicles, which is necessary for it to be economically justified from the point of view of the Chinese company. In addition to being obviously harmful to the citizens of Republika Srpska, the contract is not in accordance with the Law on the State Aid System in Bosnia and Herzegovina.

Namely, this law regulates the general conditions for allocation, control of allocation and use, approval and return of illegally allocated state aid, list of state aid and reporting on it, with the aim of establishing and ensuring competitive market conditions as well as fulfilling obligations under concluded international agreements.

Article 12 of the Law on the State Aid System states that "state aid providers shall promptly notify the competent authorities for the implementation of this law on the status of planned and existing state aid if it undergoes significant changes and submit an application for the approval of such aid to the said authorities".

An employee of the Council for State Aid confirmed in a phone conversation for SPIN Info that they did not receive an application for approval of state aid for the construction of the highway. He also says that each case is different and that he cannot provide more information without concrete documentation.

The provider of state aid, in this case the Government of the RS, can grant state aid to the Chinese company only after approval by the Council, in accordance with the law. Since the application has not yet been received, the state aid granted in this way is considered illegal.

 

In the case of a subsequent application, which is an exception in the sense of the law, and eventual non-approval of state aid, measures are taken to recover illegally granted aid from the beneficiary.

 

The amount of aid to be returned includes the used amount of state aid increased by default interest. Interest is charged starting from the day the illegal aid was put to use until the day its amount is returned.

That the construction of the highway is subject to this law is also clear from Article 4 of the Law on the State Aid System in Bosnia and Herzegovina, which states that the state aid system does not apply to the financing of infrastructure with public funds, if the use of that infrastructure is not charged to its users, with considering that the use of the highway is charged, it is clear that it is subject to the law, which was also recognized by the Council.

"If a commercial activity is carried out, a charge is made, in that sense it would affect the market, but again I say that the four cumulative conditions must be met for something to be state aid", said the Council.

 

Abuse of position and conflict of interest?

It is unclear why the request was not sent for consideration, given that the Government of the RS also has its own representatives in the competent bodies. It is particularly interesting that the chairperson of the Council for State Aid of BiH is Radmila Čičković from Trebinje, the former general director of Elektroprivreda RS.

Namely, it once decided on the permissibility of state aid to Elektroprivreda RS, and of course the said aid was assessed as permissible. Radmila Čičković signed the decisions approving state aid for the construction of HPP Dabar and the decisions of Elektroprivreda RS. Čičković provided the company where she worked with guarantees for enormous credit debts.

"It is clear that Čičković, as a staff member of Luka Petrović, was assigned to the Council to approve aid to Elektroprivreda. We do not know how the Secretariat of the Energy Community will react to this and whether it is aware of this fact and the obvious conflict of interest", says our interlocutor.

Analyst Zoran Pavlović previously told the media, regarding the construction of the multimillion-dollar Dabar HPP project, that whenever someone runs into a loan that exceeds their ability to repay, as was the case with Montenegro, they must be aware of the potential risk that they may be in a position to give up some of his property.

 

 

The state aid system is one of the conditions prescribed by the Stabilization and Association Agreement

The government circumvented the law. If the government's state aid was approved, as well as for other multimillion-dollar projects and guarantees, it could happen as in the case of the construction of Block 7 of the Thermal Power Plant in Tuzla, when the Energy Community disputed the decision of the Council for State Aid of BiH, which did not consider the guarantee for its construction state aid.

 

The Council later annulled the aforementioned decision and issued a new one, which establishes that the FBiH Government's guarantee is not in accordance with the Law on the State Aid System.

 

We remind you that the obligation to pass the Law on the state aid system in BiH and the establishment of an independent body that will control the allocation of state aid in accordance with EU rules is prescribed in Article 71 of the SAA. Bearing in mind the fact that BiH received candidate status, we can also expect the EU to ask the competent institutions in BiH to investigate this case and point out the obligation to comply with the state aid rules prescribed by the SAA.

The public does not know why the Government of the RS decided to break the law and give state aid on their own without the approval of the competent institutions, why the contract is being hidden, why they even ignored the court decisions after the Transparency International lawsuit ordering the publication of the contract. Everything casts doubt on numerous irregularities related to the construction of this highway.

It Transparency International BiH told SPIN Info that the general practice of the Government and other institutions in the Republika Srpska recently is not to publish information, and there is even a noticeable decline in the proactive publication of those information for which this was the practice before.

"In this specific case, it is disputed that even though there is public interest and a great interest of the general public, as well as court rulings, they are not respected for the sake of the "financial interest" of a third party. The government and the ministry seem to forget that they have to serve the citizens of Republika Srpska, not Chinese contractors. However, it is generally known that where there is a lack of transparency, the corruption risks are usually greater, and this kind of behavior by the authorities only undermines even greater suspicion that this public contracting was done to the detriment of the public interest and public funds", concludes Damjan Ožegović from TI in an interview for our portal.

It is obvious that the Government of Republika Srpska, apart from deadlines and unreliable Chinese partners, is playing with millions when it comes to the construction of the Banja Luka-Prijedor highway. With a number of non-transparent actions related to this important project, and by violating regulations and laws, they care about the protection of Chinese investors, and not the citizens in whose interest they should be working. Spin info