There are no Chinese workers on the construction site, contract details are hidden

DABAR HPP CONSTRUCTION: 

For almost 12 years, the authorities in the Republic of Srpska have been announcing the start of construction work on the Dabar HPP. The project financed by Chinese loans will be carried out by Chinese companies. The only question is when. The recent visit of the Prime Minister of the RS, Radovan Višković, to China should accelerate the resolution of the financing problem. The information about the credit conditions and guarantees given to the Chinese bank is not known to the public even today.

Although the Chinese company China Gezhouba Group Corporation (CGGC) announced that construction work on the Dabar Hydroelectric Power Plant could begin at the beginning of March, there are no works and no Chinese workers at the construction site. At the current five active construction sites, only workers from Banja Luka company Integral inženjering are present.

In the middle of 2016, this company was chosen as the only bidder in a tender worth 131 million marks for the construction of supply and access tunnels, the entrance building of HPP Dabar and research and design works during construction.

The job of professional supervision, worth 3.3 million marks, was awarded to a member of the Intergral inženjeringa corporation, the Institute for Construction IG Banjaluka. We previously wrote extensively about the connection of this company with the authorities in the RS.
The cooperation agreement signed in March last year confirmed that the companies Elnos BL and Voith Hydro will participate as partners in the contract with the Chinese company CGGC, which is the main contractor of the Dabar HPP construction project. Already in April 2022, the World Bank announced sanctions against the parent company Voith Hydro Holding GmbH & Co. KG and its subsidiaries in Germany and China for corrupt activities on projects in Pakistan and the Democratic Republic of Congo

Miloš Ivanišević from the public company Hidroelektrana Dabar tells Žurnal that the works carried out by Integral inženjering should be fully completed in the next year, while the start of construction of other facilities in the Dabar HPP system is scheduled for this year.
- It is expected that the Chinese company CGGEC will be introduced to the business in about a month, two from that day, the deadline for the execution of all other works is 4 years, says Ivanišević.
Since 2019, the authorities in Republika Srpska have announced the arrival of a Chinese company and the start of construction work on the Dabar HPP in a month or two. Even today, HPP Dabar is optimistic and expects the work to start soon and the arrival of Chinese workers, as the Journal has learned, it is not realistic that this will happen this year.

When asked why the works are delayed even though it is already the end of April, business advisor and economic analyst Zoran Pavlović says that it is very likely that, if there is no Chinese at HPP Dabar, it means that Republika Srpska, that is, Elektroprivreda RS, did not meet the conditions for them to start their own activity.

- The fact that the prime minister of the RS went to China probably has something to do with the attempt to provide some form of guarantee in the form of bonds of the Republika Srpska. So it is very likely that the companies that won the execution of the work on HPP Dabra will not start the activity until they receive an advance payment with a guarantee. The standard of Chinese banks, which prescribe the conditions for financing projects implemented by Chinese companies outside China, includes 15 percent advance payment, 85 percent project credit, with a repayment plan and a guarantee, says Pavlović.

Let us remind you that the Prime Minister of the RS Radovan Višković paid an official visit to China at the beginning of April this year, where, among other things, he agreed on ways to finance the construction of the Dabar HPP. The reason for the visit of the Prime Minister of the Republika Srpska, Radovan Višković, to China and the increasingly frequent financing of projects with Chinese loans was explained earlier by the President of the Republika Srpska, Milorad Dodik.

- If it can't be done with the EU, it can be done with someone else, and I'm glad that we have great contacts and great cooperation with Chinese companies, said Dodik.

Economic analyst Svetlana Cenić in an interview with Žurnal says that the reason for Republika Srpska's turning towards China is very simple - because there is no money.

- She turns to anyone from whom she could get money, and on the other hand, China is an excellent blackmail for the West to say: here we behave the way we behave, we are a pain in the ear for everything, we insult, block, but give us money. That's a great way for him to say if you don't give, it's the West, here we go to the Chinese, says Cenić.

What is controversial about Chinese loans?

When it comes to Chinese loans, past practice in other countries has shown that the Chinese require the lending countries not to disclose the terms of the loans. In the cases of Greece and Montenegro, the public learned only later that in case of inability to repay the loan, China has the right to claim ownership or the right to use state property from these countries. Chinese loans often come with milder conditions, which is very attractive for representatives of the Republika Srpska authorities at times when European creditors have denied them money.

Analyst Zoran Pavlović says that whenever someone runs into a loan that exceeds repayment possibilities, as was the case with Montenegro, he must be aware of the potential risk that he may be in a position to give up some of his property.
However, the biggest problem when it comes to Chinese loans is the lack of transparency. The public is not familiar with the terms and guarantees for Chinese loans. Economic analyst Svetlana Cenić believes that this works in the hands of domestic politicians.

- The Chinese can ban and grant whatever they want in their country... In my country, for my public funds, they don't have that right. It is a matter of ours who hide it. Why? Because they agree to anything just to get money, says Cenić.

However, Pavlović believes that it is unlikely that the Montenegrin scenario will happen in Bosnia and Herzegovina - that the Republika Srpska finds itself in a situation where it cannot repay Chinese loans.

- That scenario will not happen because the inflows based on VAT are such that the RS can also borrow on the domestic market, to supplement if funds are missing in the budget, says Pavlović.

Chinese banks probably analyzed the portfolio related to the placement of bonds on the Vienna and London stock exchanges and concluded that these bonds can be a guarantee, explains Pavlović.
- The budget situation of the Republika Srpska is not threatened to the extent that the media or even the opposition portray it as, the inflows that are realized on the basis of VAT are significant. It is a pity that we do not have a more rational behavior of the Government in terms of costs and spending on projects that are not profitable, says Pavlović.

At the end of March, the President of Republika Srpska, Milorad Dodik, confirmed that he had received assurances that the Chinese government had decided to accept Republika Srpska's bonds as a guarantee instrument. Palović warns that bonds should not be confused with mortgage loans. According to him, in order to get a better credit impression with investors, the description of the bonds can state the possibility that if there is no payment, something that is owned by Republika Srpska more than 51 percent can be demanded.

For economic analyst Svetlana Cenić, the problem is transparency, because the public does not know what the guarantees for Chinese loans are, and therefore "everything that is not announced, not told and not shared with the public, means that it is being done under the grain".