Igman Konjic Lent Money to Energoinvest - Exclusive Gas Importer for FBiH

By: Almir Bečarević

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The Audit Office of Institutions in FBiH published a report on the audit of Energoinvest dd Sarajevo. The Office described in detail the financial situation of this company, with a particular focus on the dispute with the Hungarian transporter FGSZ. The Office concluded that the contract with FGSZ was still in effect during the transition to the TurkStream pipeline, and that the FBiH Government had instructed companies to remain on the supply route through Hungary until the contract expired, i.e., until 2023.

However, as this story is now under the jurisdiction of SIPA, I will focus on the details of the report that are passing quietly, but which shed new light on the company's business and could jeopardize the supply of natural gas to FBiH.

I will quote a part of the report: “Losses up to the amount of capital as of 31/12/2021 are stated in the amount of KM 224,270,660 and exceed the stated share capital by KM 3,549,635. There are encumbrances on the Company's real estate with an estimated value of KM 73,018,604. The current liquidity ratio is 0.59, which indicates that the Company is unable to meet its due financial obligations in a timely manner with its current assets. These circumstances raise doubts about the Company's ability to continue operating indefinitely, which was not disclosed in the financial statements, and therefore they were not prepared in accordance with the Law on Accounting and Auditing in FBiH (points 7.2.3 and 7.5 of the Report)”.

As can be seen, the auditors warn that the timely settlement of due financial obligations is in question. In order for Energoinvest to be able to meet its obligations in any way, it has concluded several loan agreements with banks to maintain the company's current liquidity.

Now we come to the shocking fact that, in addition to banks, Energoinvest concluded a short-term loan agreement with the company “Igman” dd Konjic in the amount of KM 750,000 with a maturity of 90 days. This loan was not repaid by 31/12/2021. This means that Igman Konjic, a munition factory, lent money to Energoinvest to maintain its current liquidity. Money was lent to the exclusive gas importer who is responsible, or should be, for the procurement of gas for FBiH. At the same time, Energoinvest's total short-term liabilities amount to KM 121,360,553, and besides GRAS and the mines, it is difficult to find a company with such short-term liabilities.

The FBiH Government awarded the gas import business to a company that borrows money from a munition factory, thereby putting FBiH in a hostage situation for the upcoming heating season. It is now crystal clear why Energoinvest did not purchase additional necessary quantities of gas, and why the Sarajevo heating plants switched to fuel oil, because it did not have money for regular operations, let alone for purchasing additional quantities of gas.

Finally, one hopes that someone from the FBiH Government will read this report and understand the predicament in which the citizens of Sarajevo and the entire energy sector could find themselves.

Excerpt from the report:

“Short-term liabilities are stated in the amount of KM 121,360,553 and relate to: short-term financial liabilities (KM 23,954,006), operating liabilities (KM 89,320,470), liabilities for salaries, benefits and other employee payments (KM 4,035,341), other liabilities (KM 1,854,450), VAT liabilities (KM 951,165) and other taxes and duties (KM 1,245,121). Short-term financial liabilities (KM 23,954,006) relate to: domestic loans (KM 4,900,011), short-term portion of long-term loans (KM 3,056,115) and other financial liabilities (KM 15,997,880). For financing working capital and maintaining current liquidity, the Company uses short-term loans from: Privredna banka d.d. Sarajevo (KM 2,200,000), Union Banka d.d. (KM 1,550,000) and Razvojna banka FBiH (KM 800,000).

Also, on 21/5/2021, the Company concluded a short-term loan agreement with the company “Igman” d.d. Konjic in the amount of KM 750,000 with a maturity of 90 days. The maturity date was changed by contract addenda, and as of 31/12/2021, the remaining debt on the loan was stated in the amount of KM 350,000.”