ERS ends NGA contract for Bosnia’s Mrsovo hydropower project as redesign and permitting delays persist

Bosnia and Herzegovina’s long-delayed Mrsovo hydropower project has entered another phase after state-owned utility ERS moved to terminate its contract with Turkish contractor NGA and said it will seek a new partner. The restart underscores how technical redesign requirements and permitting gaps can compound financing pressure in infrastructure projects that have already consumed significant public and concession-related funds.

Contract termination tied to technical redesign disputes

ERS Director Luka Petrović said the termination was driven by unresolved technical and contractual problems that made continuing under the existing terms unfeasible. The project has already faced repeated delays and substantial financial commitments, including a 20 million euro advance payment to the contractor and 35 million euros previously spent to acquire the concession from Comsar Energy.

The dispute centered on required redesign of key infrastructure components. The original design relied on flood calculations using a 500-year water level standard. Regulators later imposed a stricter requirement based on a 1,000-year flood scenario, which affected major structures including the dam and the river diversion system. ERS said the resulting design revisions would increase costs and change technical specifications, while the contractor refused to take on these additional requirements—leading to a breakdown in cooperation.

Preparatory work stalled by lack of regulator-aligned documentation

Preparatory works had begun on site, including studies and planning for a diversion tunnel intended to redirect the Lim River during construction. However, ERS said the project could not progress to the permitting stage because updated documentation aligned with regulatory standards had not been secured.

ERS concluded that attempting to modify the inherited contract would introduce financial uncertainty and increase the risk of further delays. It therefore terminated the agreement and initiated legal proceedings against NGA, while emphasizing that the hydropower project itself remains active.

Another restart for a project repeatedly reshaped by earlier concession arrangements

While authorities maintain that the plant will ultimately be completed, Mrsovo’s development history highlights persistent execution challenges linked to earlier agreements. The project was first launched in 2014 amid high expectations, then relaunched in 2023 after the state assumed control of the concession—yet it still has not moved beyond early stages.

The final cost implications of the required design changes remain uncertain because updated technical proposals have not yet been submitted. ERS expects new bidding procedures later this year, which should clarify both the financial scope and timeline for completing the 36.8 MW Mrsovo hydropower facility.