Recent developments in the ongoing dispute between Slovenia and Bosnia and Herzegovina regarding the Ugljevik coal power plant have led to a significant pause in arbitration proceedings. The Slovenian utility, Elektrogospodarstvo Slovenije, has agreed to suspend international arbitration valued at approximately €665 million, following a proposal from the Government of the Republic of Srpska (RS), along with the state utility ERS and RiTE Ugljevik. This move aims to facilitate negotiations towards a potential settlement.
The arbitration case arose from unpaid obligations related to electricity deliveries, particularly interest on power that RiTE Ugljevik failed to pay. Tensions escalated after Slovenian courts upheld Elektrogospodarstvo Slovenije’s claims, affirming its entitlement to compensation. In an effort to resolve the matter amicably, Slovenia indicated a willingness to consider writing off around €30 million if an agreement on the remaining debt could be reached.
A deadline of 6 February 2026 has been established for progress in negotiations, beyond which proceedings at the International Centre for Settlement of Investment Disputes (ICSID) would resume, potentially escalating compensation claims to nearly €700 million. Management at RiTE Ugljevik has expressed optimism about finalizing a third agreement that would address outstanding liabilities, with expectations for resolution by the end of April.
Petar Đokić, RS Energy and Mining Minister, emphasized that the current arrangement mitigates significant financial risks, as a full arbitration award could have approached €700 million. He reassured that the RS Government is committed to meeting its obligations primarily through RiTE Ugljevik and ERS, with state intervention being a last resort. A formal settlement would lead to the withdrawal of the arbitration case, effectively concluding this prolonged dispute.
Historically, Elektrogospodarstvo Slovenije played a crucial role in financing the construction of the Ugljevik plant and holds rights to one-third of its output. The breakup of Yugoslavia disrupted power deliveries, resulting in legal disputes first in Belgrade and subsequently at ICSID. The Belgrade court’s ruling favored the Slovenian firm, mandating payment of principal and interest while reaffirming the obligation to resume deliveries as long as operations continue at the plant.
Minister Đokić noted that approximately 20% of the total debt recognized by judicial authorities has already been repaid, indicating some progress towards resolving this long-standing issue.
