- Russian oligarch Serdarov leaves Republika Srpska after 14 years with unfinished projects and full pockets
- Mandić: The concessionaire did not even build a chicken coop, and the government should have terminated the contract
BANJA LUKA – By prioritizing the interests of foreign investors over its own, Republika Srpska has put itself in a position where it must now pay hundreds of millions BAM to reclaim its natural resources, which it could have used for free.
Due to deals made behind closed doors with a Russian oligarch, the authorities have jeopardized Srpska’s energy stability and put the largest electricity producer – the Ugljevik thermal power plant (RiTE Ugljevik), which generates over 30% of the total electricity – at risk of shutting down.
RITE Ugljevik lost an arbitration dispute worth 245 million BAM against the Slovenian electricity company and, in addition, must supply one-third of its electricity output to them until the end of its operational lifespan.
This means that Srpska, once an exporter, has now become an electricity importer. Moreover, there is uncertainty as to whether Srpska can even count on the remaining two-thirds of Ugljevik’s power production, as it no longer has coal to fuel its boilers.
The energy system of Srpska is on the brink of collapse. Once the only electricity exporter in the former Yugoslavia, Srpska’s power company is now forced to maintain supply through expensive electricity imports. The cost, of course, is passed on to citizens in the form of ever-increasing prices, highlighting how crucial Ugljevik's stability is for the entire region. It also raises the question of why someone was willing to gamble with such an important resource.
Serdarov in a Position to Blackmail Srpska
About 50 million tons of coal, enough to power the Ugljevik thermal power plant for 25 years, remains unused in the “Ugljevik–East 2” deposit. In 2013, this deposit was granted under a concession to the company Comsar Energy Republika Srpska (CERS), majority-owned by Russian oligarch Rashid Serdarov.
This coal was meant to be used in a power plant that the businessman from Makhachkala, Dagestan, never built. Yet, this did not stop Srpska’s government from repeatedly accommodating him.
Despite his inaction, he will be handsomely compensated for the pile of permits and paperwork he accumulated, as the government has decided to purchase Comsar through its state-owned company Gas-Res, thereby acquiring the coal mining concession.
When Srpska will finally regain something it could and should have kept for itself remains unknown, as does the total cost of this transaction and its funding sources.
Unofficial information and expert assessments commissioned by Comsar to strengthen its negotiating position suggest that the total sum could reach around 300 million BAM.
By deciding to purchase the company, the government has calmed down the workers in Ugljevik thermal power plant, but time is not on the side of Srpska’s largest electricity producer.
How Serdarov Was Gifted a Coal Mine
Rashid Serdarov was brought to Republika Srpska by Duško Perović, the current head of Srpska’s representative office in Moscow.
After being introduced to Milorad Dodik, then the president of Republika Srpska, all doors within the government were opened to him.
Serdarov's arrival in Bosnia was preceded by a letter of intent, published by Capital at the time, which he sent to the government in 2011.
In it, he claimed to have secured €400 million for the construction of a power plant and the opening of a mine, promising that everything would be completed in a very short time.
His letter specifically emphasized that local labor and companies would be engaged in the project.
Following this, in May 2013, a public call for concession awards was announced and signed by the then Minister of Industry, Energy, and Mining, Željko Kovačević.
The call stated that the coal would be used for a new power plant (Ugljevik 3) and estimated the deposit’s value at 443.6 million BAM.
This natural wealth was given to Serdarov for a one-time fee of 2.59 million BAM, along with an obligation to pay an annual revenue-based fee of at least 3.2%.
The expected benefits of the project, as outlined in the public call, included balanced economic development, particularly in northeast Srpska and Ugljevik, the creation of new jobs, employment of local labor, and increased budget revenues.
However, none of these benefits happened. The project never materialized, despite strong government support for the investors.
For example, the latest contract annexes protected Comsar from unilateral termination by Srpska in case of non-fulfillment of obligations.
Former BiH legal representative Mlađan Mandić says he has never seen anything like it.
He explains that a concession contract must not include a clause favoring one party, as this is illegal.
“The concessionaire in this case did not even build a chicken coop, so the Republika Srpska government should have terminated the contract and awarded the concession to RITE Ugljevik,” he argues.
According to him, no contract is irreversible.
“This annex contradicts good faith and legal norms. There is no contract that cannot be terminated, nor should any contract clause place one party in an unfair position, as that is illegal,” Mandić concludes.
Comsar was also granted permission to sell coal for commercial purposes, in addition to energy production.
The government demonstrated its loyalty in 2016 when it agreed to three contract annexes with CERS, pledging to delay EU environmental regulations that could have harmed the concessionaire.
When Serdarov threatened to withdraw in 2018, his concession was extended from 30 to 44 years.
In 2019, RS authorities also allowed him to increase Ugljevik 3’s planned capacity to 700 MW, despite this being against the official energy strategy of Srpska and the policies of the Energy Community of Southeastern Europe.
Due to the publication of this information, Duško Perović openly threatened the CAPITAL portal and its chief editor, Siniša Vukelić.
“Tell your owner that if he mentions Comsar one more time, he will have major problems in life. Remember that—you can write down what I said, feel free to record the conversation,” shouted the head of the Republika Srpska Representative Office in Moscow during a phone call with our journalist, revealing his nervousness over failing to leave any significant achievements behind.
The relevant prosecutor's office did not recognize any elements of a criminal offense in these threats, so the complaint against him was dismissed.
Interestingly, Perović remained with “Comsar” until 2022, when he formally left the company. His departure coincided with the first announcements from the Government of Republika Srpska about purchasing the company and its concession.
“Comsar” provided various justifications for its lack of progress in building the power plant.
They claimed they faced difficulties because their owner was from Russia, that banks refused to finance the project due to its lack of environmental acceptability, and that they were frequently subjected to inspection controls.
It is noteworthy that several years ago, Milorad Dodik blamed the workers of “RiTE Ugljevik” for the failure of the investment.
“I regret that the irresponsible behavior of certain people, primarily those in the RiTE Ugljevik labor union, contributed to weakening Mr. Serdarov's interest in building the power plant. It could have been completed a long time ago,” Dodik said in February 2020.
Serdarov transferred millions to “Comsar Energy RS” accounts
Documents from “Comsar,” which CAPITAL reviewed, suggest that Serdarov intended to invest money in the region.
On multiple occasions, through foreign banks, he transferred a total of approximately 60 million BAM to “Comsar” accounts. However, this amount is five times less than what he is now demanding from Republika Srpska to relinquish the concession.
According to the information we obtained, the largest transfer occurred in November 2013, when he deposited as much as 52.93 million BAM into a CERS account via a bank transaction.
Additionally, from December 2014 to November 2015, the parent company “Comsar Energy Group Limited” from Nicosia loaned about eight million BAM to its subsidiary in Republika Srpska.
These were short-term loans, and the agreements stipulated that the claims would be converted into the company’s capital in Republika Srpska if they were not repaid within the specified period.
Bulletproof Mercedes for Dodik
Where did all the money go? Authorities claim most was spent on permits and documentation.
However, documents show that Comsar’s management was far from frugal.
For instance, in 2011, they purchased a bulletproof Mercedes S600 L Guard worth over 1 million BAM from Stuttgart.
The car was later rented to the RS Ministry of Internal Affairs for VIPs and government guests but was ultimately used by Milorad Dodik.
Despite its investments, Comsar Energy RS has reported losses every year, with a cumulative deficit exceeding 27 million BAM by 2023.
By the time this article was published, Comsar had not responded to our request for comment.
The company was founded on July 14, 2011. Serdarov transferred the founding capital of 900,000 BAM through a company from Cyprus, while RiTE Ugljevik contributed 100,000 BAM.
According to the latest extract from the business registry, “Comsar Energy Group Limited” owns 98.4 percent of the company, while RiTE Ugljevik holds a negligible 1.6 percent.
It is worth noting that “Comsar Energy RS” is not the only project of Russian oligarch Rašid Serdarov that the Government of Republika Srpska decided to buy.
In 2023, Republika Srpska’s power supply company “Elektroprivreda” took over the company “Comsar Energy Hidro” for an undisclosed amount, which holds the concession for the construction of the “Mrsovo” hydroelectric power plant on the Lim River in Rudo. The year before, “Hidroelektrane na Drini”, which is a part of Elektroprivreda, bought the failed “Comsar” hotel in Rudo for 2.3 million BAM.
Reviving the Idea of Buying “Comsar” and the Concession
In January of this year, the Government announced plans to purchase “Comsar,” and the President of Republika Srpska promised that the entire process would be completed in 15 days.
This removed the workers of RiTE Ugljevik from the streets, as they had been protesting for several days, demanding that the concession should be returned to this public enterprise.
However, this has not yet happened. Given that Dodik has been involved from the beginning and has since been convicted by the Court of Bosnia and Herzegovina, it is not to be ruled out that the ongoing process against him has influenced the delay in the entire procedure.
The Minister of Energy and Mining of Republika Srpska, Petar Đokić, has not disclosed further details.
“The process is ongoing. The people responsible for this task are dedicated to it and work on it every day. Activities are carried out in accordance with what the regulations require,” the minister said to Capital.
He was not more forthcoming when asked about the total sum allocated for these purposes, and we did not receive a response regarding how the relations between “Gas-Res” and RiTE “Ugljevik” will be regulated.
“A revision of the ‘Gas-Res’ study needs to be carried out, and we need to define a preliminary financial value for the project from our side. At this moment, no one can speak about it, not even me. There are several ways in which financial resources will be secured, but that is something we will address in the coming period,” said Đokić.
The minister claims that when awarding the concession, it was ensured that the operation of the existing power plant would not be jeopardized and that coal reserves in other areas of the Ugljevik basin are being sought.
However, he adds, it is questionable whether mining activities in Ugljevik over the last 15 years have been going in that direction.
He claims that “Comsar” has already invested a great deal of money in this project, which can be easily proven.
According to Đokić, the company did not benefit from the fact that energy conditions in Europe and beyond have changed significantly.
Since 2015, Europe has been increasingly pushing to phase out coal as an energy source and move towards renewable sources such as water, solar, and wind power, and this commitment remains today.
“It was difficult to find financial institutions willing to provide loans for the construction of coal-fired thermal power plants. ‘Comsar’ faced these problems and challenges. As a company, they couldn't resolve them, even though we provided them with all the support we could as Republika Srpska,” Đokić says.
He concluded that the investor was not well protected and that the Government of Republika Srpska acted correctly in the decisions it made regarding him.
Regarding the ongoing negotiations, “Gas-Res” provided only a few brief sentences that reveal essentially nothing.
“At this stage, we cannot provide more information while negotiations are ongoing. We are acting in accordance with our authorization and coordination with the Government of RS. At this stage, we can say that discussions on this project are taking place according to a certain dynamic, through the exchange and analysis of business documentation,” they stated.
Interestingly, Duško Perović returns to the story here, as he is the president of the supervisory board at “Gas-Res,” and his shadowy influence is such that no significant decisions can be made without him.
His decisions are final and automatically implemented, and those who oppose them are usually quickly pushed out of the company, according to our sources.
Member of Parliament Slaviša Marković says it is scandalous that Perović now appears as a kind of savior in Ugljevik, as, in his opinion, he is the main generator of the problem.
“It is scandalous that the people who advocated for the concession, specifically Duško Perović, who was part of the concession agreement and a signatory alongside ‘Comsar,’ is now moving to the Supervisory Board of ‘Gas-Res,’ which the government is obligating to purchase the concession-holding company,” says Marković.
He asserts that the highest ranks of the Republika Srpska government are behind the story of “Comsar” and its purchase.
“The question arises whether the interests of individuals and private entities are prioritized over the interests of society. If this thermal power plant shuts down, and it is close to doing so, Ugljevik will become a dead municipality, as 80 to 90 percent of the population works and depends on the mine,” he says.
Economically Irrational and Legally Questionable
Economist Zoran Pavlović believes that the investor should be compensated for what he has invested, and there is nothing controversial about that, but any additional compensation would go against the interests of Republika Srpska and its citizens.
It is clear, he says, that no one is interested in protecting the citizens of Republika Srpska.
“Here we are talking about negotiations for the purchase of coal at its price, even though it was provided free of charge through the concession. This is economically irrational and legally questionable, as the amounts being discussed have nothing to do with costs. The coal has not been mined or touched; it remains the property of Republika Srpska, even though it is under concession,” he says.
To make matters worse, he notes, the situation in the energy sector of Republika Srpska is complicated.
Hydropower production is declining due to hydrology issues, and coal, which is essential for thermal power plants, is being exported in large quantities to neighboring Serbia.
“It’s incredible when we know how big a problem we have with coal mining and the demand for it. This situation is such that we would need to find top experts who could give us an answer on how to return the concession to our ownership without any extortion, because what is happening is extortion,” concludes Pavlović.
Alarming Situation in the Mine
The heavy machinery of the “Ugljevik” mine and thermal power plant (RiTE) has been collecting the last available amounts of coal from exhausted surface pits.
“Our reserves are at a minimum; we are mining in corners and edges, but it’s poor-quality coal mixed with dirt. We’ve reached the boundary with Serdarov’s field, which we are not allowed to touch. We have coal until April, and after that, may God help us,” says Jelenko Marinković, a dump truck driver who has worked at the mine since 1996.
He says the whole story was planned and agreed upon before the public call for the concession was issued in 2013, specifically when the “Ugljevik-East” deposit was divided into two parts.
The first, poorer part, where exploitation is coming to an end, was awarded to RiTE “Ugljevik,” while the second part was given to “Comsar.”
“They consciously gave us the part of the surface mine that is not profitable, while Serdarov got the part that is profitable for exploitation. We warned that the exploitation field is not a piece of cheese to be cut, but no one listened,” he says.
However, Marinković claims that anyone who raised their voice and opposed this idea was gradually pushed aside by the management.
“The key to survival for the people here is in the mine and the power plant, which are the backbone of the energy sector in Republika Srpska. That’s why it’s beyond my comprehension what is being done to us,” he concludes.
Although negotiations regarding the purchase of “Comsar” are still ongoing, and no one dares to speak about the final price that will be paid, the winner is already known.
Rašid Serdarov has not fulfilled the obligations set by the contract, and from this whole story, he will walk away with much more money than he invested, as he will sell Republika Srpska a business that, instead of building a thermal power plant, has been reduced to selling a heap of paperwork that will cost Republika Srpska dearly.
Although he initially committed to an interview, the director of RiTE Ugljevik, Diko Cvjetinović, ultimately declined to discuss the matter. Similarly, the president of the company’s trade union, Boban Benović, initially agreed to speak but after became unavailable for comment.