Alpiq's $1.1 bln investment in Bosnia may be halted

Thu Oct 21, 2010 2:51pm BST

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* Bosnia region energy plans halt until new cabinet is formed

* Move could put in jeopardy a planned $1.1 bln Apiq bid

* Top utility says parliament's decision questionable

* Political bickering may delay a formation of new cabinet

By Maja Zuvela

SARAJEVO, Oct 21 (Reuters) - A regional Bosnian parliament decision to halt strategic power sector investments until a new cabinet is formed may hold up investment by Swiss energy firm Alpiq (ALPH.S) in a Bosnian coal-fired plant.

Alpiq has bid to invest $1.1 billion to construct a new 450-megawatt unit in the northern coal-fired plant Tuzla needed to help meet future demand.

The outgoing parliament of Bosnia's Muslim-Croat federation decided late on Thursday to halt all investments by two regional power companies until a new government is formed following elections earlier this month.

But the voting results in Bosnia, which is made up of the Muslim-Croat federation and the Serb Republic, point to continued political deadlock that could delay the formation of a new government.

Some deputies have voiced concern about transparency of projects planned by the Sarajevo-based Elektroprivreda BiH (EPBiH) and Mostar-based Elekroprivreda HZHB (EPHZHB).

"In the past, the parliament has had bad experience with decisions by lame-duck governments," said Slavisa Sucur of the largest opposition Social Democratic Party (SDP), which has emerged as the strongest party in the federation after the vote.

The investment into the Tuzla plant is part of a 10-billion Bosnian marka ($7.1 billion) government investment plan into the power sector by 2018, which also includes construction of new and overhauls of existing power plants with a combined capacity of 2,791 MW.

"The parliament move is questionable," said EPBiH General Manager Amer Jerlagic. "The company carries out activities that are part of an energy sector strategy approved by this same parliament few months ago."

Jerlagic said that EPBiH should in two days complete the evaluation of Alpiq's bid but that any future moves, such as negotiations with the bidder, will depend on the government, which may further delay and put the project in jeopardy.

Parliament deputies have said that all public procurement procedures relating to investments that exceed one third of the majority state-owned utilities' book value should be halted.

Jerlagic said he expected the cabinet to decide soon on the issue but added that some procedures, such as power export deals, should go ahead as planned.

The new plants and upgrades of existing ones aim to avert power shortages stemming from overhauls of major power plants and would provide for energy independence in a country that is the sole electricity exporter in the emerging Balkans. ($1=1.41 Bosnian marka) (Editing by Adam Tanner)

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