Following intensive pressure of environmental activists, the House of Representative (lower house of the FBH Parliament) of the Federation of Bosnia and Herzegovina (“FBH”) adopted the Declaration on Protection of Rivers (“Declaration”). The main goal of the Declaration is to completely ban the construction of small hydro power plants (“SHPPs”) in the FBH.
For the ban to become effective, the FBH needs to amend the existing legislation. The FBH House of Representatives gave a three-month deadline to the FBH Government for analysis and drafting of the amendments to the current legislation needed for implementation of the Declaration and ban.
Furthermore, the Declaration provides that the Government of FBH should review all SHPPs, including in development, construction or operational phase, and deliver the results of the review to the Parliament for further consideration. Further actions of the Government are pending.
While the development is still new, it is already clear that the implementation of the reforms will have a negative impact on numerous investors, which have invested significant funds in the development of the SHPPs in the FBH, and may result with various disputes/claims against the FBH authorities.
Republic of Srpska (“RS”) has followed the example of the FBH. Although it still hasn’t banned the construction of SHPPs, it has enacted a set of measures that seem to have a similar goal. Specifically, the RS National Assembly instructed the RS Government to draft a proposal of measures for the review of all concession agreements and the status of activities envisaged by the latter, to temporarily suspend the initiatives for construction of new SHPPs until finalization of the aforementioned review, and to reassess and amend the incentive system for energy produced from SHPPs.
