Bosnia’s Serb Republic has decided to cancel its strategic partnership contract it with Germany’s RWE Innogy for the construction of the EUR 460mn Upper Drina hydropower project, the Republic’s energy ministry said on May 31. The decision was taken at a cabinet meeting earlier in May because of a disagreement between the parties involved in the project.

Under the contract, RWE Innogy, the Republic’s government and government-controlled power producer Elektroprivreda RS were required to meet all outstanding conditions within an agreement time framework in order to launch of the project, the ministry said in a statement. The government, however, decided to cancel the deal since the partners did not agree on these issues until April 23, 2013, as stipulated in the contract.

The statement did not elaborate on the issues of dispute. It said that if one of the sides of the contract decides to unilaterally cancel it, it does not owe the other one any lost profit or compensation.

RWE and Elektroprivreda RS were due to form a 60/40 joint venture to implement the project and it is likely they did not agree on some of the joint venture parametres.

Under a contract signed in September 2012 the parties planned to jointly build four hydropower plants – Buk Bijela, Foca, Paunci and Sutjeska of combined 260 MW. The plants were expected to generate an overall 760 GWh of electricity annually. The preparation of the project’s feasibility study should take less than two years, after which the construction would start.

The deal was seen as one of the major projects in the Republic’s and Bosnia’s energy sector in recent time. It was expected to contribute to their energy independence and economic growth.

The construction of the two bigger plants - Buk Bijela and Foca, was expected to start in Sep 2014 and Mar 2015, respectively, and take some six years to complete including the building of the Paunci and Sutjeska plants.