The state hired the auditing agency Deloitte to prepare a financial analysis, which would serve as a platform for negotiations on the termination of contracts with several concessionaires of small hydropower plants (SHPs). The agency prepared one version of the calculation, but due to the coronavirus pandemic, elections and a change of government, the final version was never delivered.
This was stated yesterday in the Commercial Court by the former Minister of Economy. Dragica Sekulić, who was heard as a witness in a court case that the private “Normal Company” is leading against the state due to the halting of the construction of the small hydropower plant “Meteh” on the Komarača River in Plav. Judge Vladimir Bulatović scheduled the next hearing for April, and called the owner of "Normal Company" as a witness Žarko Burić.
This private company filed a lawsuit against the state at the end of 2020, after the DPS lost the elections, due to the termination of the contract for the construction of the Meteh small hydropower plant, in order to compensate for damages and lost profits, but also to establish that the state does not have the right to collect a bank guarantee of 150.000 euros. According to the financial expert's findings, the actual damage for this project is 998,7 thousand euros, while the lost profits are estimated at 9,7 million euros.
“Normal Company” filed a lawsuit against the “Bistrica Clean Energy” consortium - of which Burić is the majority owner, but the disputes were later separated. “Normal” changed its name to “Professional Construction” in July last year, in which Burić is now an authorized representative and a member of the board of directors.
The locals were also a problem
Sekulić said that the Government reached a conclusion on the amicable termination of the contract with the concessionaires in 2019, but that there was no clear plan on how they would be compensated, which is why Deloitte was hired. She explained that the contracts had three phases, the first involved preparing project documentation and obtaining a building permit, the second involved building the facility and obtaining a usage permit, while the third was related to use.
"I am aware that the prosecutor prepared the project documentation and informed the Government that he had been issued a building permit. However, the Ministry of Finance informed me that certain decisions on the expropriation of land, which was an obligation of the state, were annulled. I think I was informed that the Administrative Court annulled the building permit and I think the reasons were precisely the annulled decisions on the expropriation. Along with these problems, problems arose caused by the resistance and opposition of the local population to the construction of the small hydropower plant...", Sekulić emphasized and added that these problems created the intention in the Government to enter into an amicable termination of the contract with the concessionaires.
Sekulić stated that they knew that amicable termination of the contract would be more favorable for the state than unilaterally and conducting legal disputes, that they were aware that "Normal Company" was investing in the project, so they hired "Deloitte" to conduct an analysis. She added that this process was not completed during her mandate, but that the essence of the amicable termination was to avoid deadlines, payment of guarantees and disputes...
Sekulić served as minister from November 2016 to December 2020.
She added that they invited "Normal" to negotiations based on the Government's conclusion, but that this did not suspend the rights and obligations from the contract, and that they prepared an annex to the contract through which the deadlines would be postponed and negotiations would begin - but that the document was not signed.
"Discussions were held with the prosecutor, but in order to collect the documentation needed for Deloitte, formal negotiations were never held on harmonizing obligations in the event of amicable termination of the contract, precisely because we did not have an analysis prepared," she stated.
Deputy protector of property and legal interests of the state Radomirka Raičević emphasized that from the letter from the Ministry of Capital Investments from September 2021, it follows that "Normal Company" rejected the annex to the contract.
Lawyer “Normal company” Philip Jovovich stressed that the company would not have submitted investment certificates and other documentation if they had rejected the annex, but rather wanted to negotiate its content. He added that there was no response to "Normal's" urgent requests, and that it was clear from the information exchanged that the state was not ready for negotiations.
Talks were held with the prosecutor, but for the purpose of collecting documentation for Deloitte, so formal negotiations were never held on harmonizing obligations in the event of amicable termination of the contract, precisely because we did not have an analysis prepared, said Sekulić.
"Normal" claims that the Government admitted guilt in 2019, but that no agreement was reached
"Normal Company" received the construction permit for the small hydropower plant "Meteh" in February 2017, and it was annulled in March 2019 by a ruling of the Administrative Court due to the negligence of the Plav State Real Estate Administration in the expropriation of the land.
This is stated in the lawsuit filed by this company, which "Vijesti" had access to, and that their new requests for a license were rejected.
They claim that in October 2019, the Ministry of Economy was in charge of negotiations on the termination of the concession contract, and that the state acknowledged the basis for the damage caused - but no agreement was reached on its amount.
They state that at the beginning of 2020 they were asked to submit data on the money invested in the project, and in June of the same year, a statement on the annex to the contract. "Normal" adds that they submitted the documentation and requested the continuation of negotiations, while the Ministry of Capital Investments tried to collect the bank guarantee at the end of 2020 because "Normal" did not meet the deadlines from the contract, in the amount of 150.000 euros.
"The plaintiff proposes that the Commercial Court issue a ruling that the defendant pay the amounts for actual damages with statutory default interest starting from the occurrence of each individual expense for investment in the realization of the concession, as compensation for lost profits with interest from the date of the expert's findings," the lawsuit states, which also challenges the state's right to collect the guarantee.
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