Hungarian investor confirms secret deal with Elektroprivreda RS

(Patria) - Hungarian company "Lugos Renewables" (LREN) will be the majority owner of a solar power plant worth over 50 million euros, which is to be built near Trebinje.

This was confirmed to Radio Free Europe (RSE) in a written response by Istvan Halasz, the company's general director.

Halasz also told RSE that the company signed a confidentiality agreement with Elektroprivreda Republike Srpske regarding certain details of the contract.

Transparency International in BiH has repeatedly warned about the fact that the contract details are secret.

According to documents seen by RSE, the Hungarians will own 70 percent of the shares in the company "Solarna elektrana Trebinje 1" (Solar Power Plant Trebinje 1), as well as the concession, which was originally granted to "Elektroprivreda RS" (ERS), one of the three public electricity distribution companies in BiH and the founder of the power plant.

The value of the stake owned by the Hungarians is slightly over five million KM (about 2.5 million euros).

The organization Transparency International (TI) BiH says that ERS refused to provide them with the contract through which the Hungarian investor obtained the concession for the power plant, and that LREN obtained it without public bidding.

The authorities of the BiH entity Republika Srpska announced that the solar power plant in Zupci near Trebinje would be the largest in the region, and construction was supposed to start in the spring of this year.

The start of construction awaits the decision of the Competition Council of BiH, which must approve the acquisition of the majority stake. This body – which protects and promotes market competition in the country – told RSE that the case is still in process.

According to the BiH Competition Law, companies that merge, or if one gains majority ownership over another, are obliged to report it to the Competition Council of BiH.

What does the Hungarian company say?
The company explains that the solar power plant started as an ERS project, after which ERS contacted them, and they "began negotiations for long-term cooperation".

"We joined the project in April 2021 as a team of experts, whose goal was to build the power plant to the highest standards. We later redesigned the project and sent a letter of intent which was jointly signed on June 21, 2021," LREN stated.

They claim that the new project concept also means one of the largest solar power plants in the Balkans, which will produce green, carbon-neutral, and sustainable energy.

"During the project development, the details of the purchase agreement were agreed upon, and a share purchase agreement was signed. The result is that Lugos and ERS are joint owners of the company 'Trebinje 1 d.o.o.', with Lugos holding 70 percent and ERS 30 percent," the company said.

They add that the approval of the contract is still pending before the Competition Council, and that it "is taking longer than anyone expected", but that after approval, the registration of the new ownership structure in the Court will follow.

"Depending on the approval process, we plan to start construction in the second quarter of 2023, with completion expected at the end of 2024," LREN estimates.

They state that in accordance with existing agreements, there is a valid electricity purchase agreement between the power plant and the electricity distributor, ERS.

"This ensures a long-term, sustainable, and beneficial electricity supply for the market of Republika Srpska," the Hungarian company assesses.

They remind that the confidentiality agreement, regarding certain contract details, is part of it, and that both contracting parties have accepted it.

The company's official website states that LUGOS Renewables Kft. (LREN) was founded in 2012 with its headquarters in Budapest, the capital of Hungary.

It is emphasized that it is an investment company operating in more than five countries (not specified which), specializing in project development, with project rights and management of solar parks.

The description also highlights that they own a solar park with a capacity of over 50 megawatt peak (MWp – a measure of solar energy in the photovoltaic industry used to describe the nominal power of a unit), and have successfully developed solar parks with a total capacity of over 2500 MW in Hungary and abroad.