Untouchable Matan Mato Žarić: Investment cycle of Elektroprenos BIH or 288 million KM for party companies

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Photo: Bljesak

Elektroprenos BIH under the leadership of a prominent HDZ operative in the energy sector of BIH Matan Mato Žarić has started a new investment cycle. The company, which for years has been one of the primary sources of funding for the ruling parties, continues the practice of awarding tenders worth millions, to companies linked to the HDZ, SNSD and SDA. However, the question also arises for whose interests are Elektroprenos BIH building the transmission network?

Writes: Predrag Blagovčanin

Political relations at the level of Bosnia and Herzegovina were also reflected in the work of Elektroprenos BIH, the only joint company owned by Republika Srpska and FBIH. In that context, the conflict between the coalition partners HDZ BIH and SDA in 2018 led to the blockade of the work of this company, more precisely the blockade of 180 million KM on the account of Elektroprenos BIH.

Officially, the blockade was caused by the lack of consent of the Bosniak staff that Matan Žarić, after the expiration of his mandate, continues to perform the duty of the ‘first man’ of this company. The most vocal in unblocking the funds of Elektroprenos BIH and the stay of Matan Žarić, besides the HDZ, were also the representatives of Republika Srpska.

Thus, the Prime Minister of RS, Radovan Višković, has repeatedly said that Bosnia and Herzegovina is threatened with energy collapse if millions of funds for investments and the work of Elektroprenos are not unblocked.

“When you are late in investing, since you have been blocked for 19 months, you are not investing a single mark in development, which means that our electric-power sector, especially the transmission network, is endangered to such an extent that it threatens us that we are left with no electric energy in the 21st century. “

Of course, Bosnia and Herzegovina did not experience an energy collapse, and in mid-May 2020, the prime ministers of FBIH Fadil Novalić and RS Prime Minister Radovan Višković agreed to unblock this state-owned company.

Žarić remains in position, and after the adoption of the financial plan of Elektroprenos BIH, 200 million KM from the account of this company, as well as the ERBD loan, become operational.

After establishing the agreement in a statement for the media, Matan Žarić pointed out that Elektroprenos BIH must replace the complete control telecommunication system, build a series of substations and procure dozens of energy transformers individually estimated at several million KM.

On the foundations of corruption: Matan’s energy courts

According to available data, Žarić, the key HDZ energy staff for decades, until the beginning of the war in BiH, worked as the head of the Sector for Electrical Maintenance and the position of the president of the Socialist Youth Union at the UNIS Jablanica factory.

With the founding of HDZ BIH, Matan Mato Žarić became the president of this party in Jablanica, and based on political merits as well as those in the HVO, after the war, he was positioned as the director of JP Parkovi prirode Blidinje. Shortly afterwards, he was appointed Minister of Civil Affairs and Communications in the Council of Ministers.

He entered the electric-power sector in March 1999, when he became the General Manager of JP Elektroprivreda HZHB. For the period of the first mandate in the position of the General Director of the EP HZHB, corruption scandals are connected, which brought the public closer to the modus operandi of extracting millions of KM from public institutions.

In the report on the special audit of Elektroprivreda HZ HB back in 2003, it was established that Matan Žarić illegally paid Dragan Čović 1500 KM per month for “expert counselling services”. Also, it is important to emphasize that in this period, HDZ institutions, as well as companies owned by the staff of this party, did not pay for electricity like the company Soko Mostar.

Matan Žarić transferred 1.45 million KM to the company founded by HDZ “Mondo” to finance the campaign and buy real estate, and together with the current president of HDZ Dragan Čović, he found himself on the dock for the process of illegal privatization of Eronet.

After a ten-year trial before the competent court in Mostar, Dragan Čović, Marinko Gilja, the current director of the EP HZHB, as well as then members of the Board of HT Mostar Ivan Bačak, Vladimir Šoljić, Slavica Josipović, Neven Đukić and Matan Žarić were acquitted of illegal privatization.

The reason for the acquittal is a procedural error of the competent Prosecutor’s Office. Namely, the indictment was filed nine months after the statute of limitations expired.

In the period between performing his duties in Elektroprivreda HZHB and Elektroprenos BIH, Matan Žarić was also an employee of the company Dalekovod Mostar, owned by the former giant Dalekovod dd Zagreb. After returning to the EP HZHB, the former company of Matan Žarić annually received jobs worth 20 million KM from this electric power company.

By coming to the helm of Elektroprenos BiH, Žarić will show even more lavish tender talent. In that context, the analysis of awarded tender contracts at the very beginning of the investment cycle of Elektroprenos BIH with a total value of 288 million KM is very interesting.

Dalekovod Mostar: 7 employees 16.8 million KM in circulation

The construction of transmission lines or substations worth several million KM is divided into the operational areas of Elektroprenos BIH, OP Mostar, OP Sarajevo and OP Banja Luka, so based on the geographical position as well as the ruling party within these three “regions” can hypothetically conclude which companies will win the tender.

With officially seven employees, the company led by Ante Landeka managed to position itself as the primary contractor for Elektroprenos BIH and Elektroprivreda HZHB in the operational area of Mostar.

Thus, in the past two years, the company Dalekovod Mostar has signed contracts worth approx. 5.4 million KM with Elektroprenos BIH. Of course, the fact that Matan Žarić was an employee of this company during his career, was not an obstacle to engaging in the construction of infrastructure facilities of the transmission network.

We tried to find out from the management of Dalekovod Mostar how the company with 7 employees and the official revenue in 2020 of 16.8 million, manages to realize demanding projects in 2020, however, they did not answer our inquiries until the publication of this text.

What is visible according to the available documentation is that Dalekovod Mostar is participating in tenders worth millions of KM in a consortium with the company Umel Dalekovodmontaža Tuzla.

We remind you that the prosecutor’s office of Tuzla Canton filed an indictment against the director of this company, Nedžad Ašćerić, in November 2018 due to a well-founded suspicion that he committed the criminal offence of abuse of office and authority, which was confirmed by the Tuzla Municipal Court.

Enver Malagić, director and owner of Malcom doo, also received his share of the investment “cake” in the second part of the Federation of BiH under the control of the SDA party. In August, November and December this year, independently and in a consortium, this company signed contracts worth 7.5 million KM without VAT for the procurement of transformers for the substations Živinice, Ilijaš, Maglaj, Gračanica and Jelah.

Media reports from the pre-war Sarajevo shoemaker, Enver Malagić, link him to the former prime minister and current energy consultant Edhem Bičakčić. It was this acquaintance that opened the channel for lucrative jobs in the power industry. Millions of tenders have created a multimillion-dollar empire, and today the company Malcom doo, in addition to dealing with public companies in the field of energy, is investing in the construction of residential and commercial buildings in Sarajevo.

How the company Malcom and its owner Enver Malagić accumulated multimillion profit is best shown by the data from the audit reports of Elektroprivreda BIH from the second half of the 2000s.

The auditor’s finding on the operations of Elektroprivreda BIH problematizes the procurement of concrete pillars worth 6,457,619 KM, which was awarded to the company Malcom, regardless of the fact that the bidder with a 2.5 million lower bid was eliminated.

To make the nonsense bigger, two competitors’ bidders dropped out of the tender, from which Malcom bought concrete poles, which it later sold to Elektroprivreda BIH. In 2007, the company Malcom doo had a turnover of around 12 million KM with Elektroprivreda BIH.

Why is Milorad Dodik not withdrawing from Elektroprenos BIH?

Milorad Dodik’s announcements about the withdrawal of RS from joint institutions, primarily the judiciary and the armed forces, did not include the announcement of withdrawal from Elektroprenos BIH. The reasons may be sought in the millions of KM envisaged by the investment cycle as well as the ownership structures of companies that are already winning lucrative jobs in tenders of this company owned by both entities.

In the operational area of Banja Luka, the company Kaldera Company in the period from March 16, to October 20, this year, according to the data of the Public Procurement Agency, it signed independently or in a consortium tender agreement with a total value of approximately 15.5 million KM without VAT.

Kaldera Company, once 100% owned by Laktaši businessman Milenko Čičić, has been associated with SNSD President Milorad Dodik for years. The ties between Milenko Čičić and Milorad Dodik are reflected in the loans of the RS Investment and Development Bank, the scandal of buying state capital in “Agroprom Bank” and embezzlement related to the concession company “Hidroelektrane Bistrica”.

We remind you that Republika Srpska first sold the concession company Hidroelektrane Bistrica to the company Kaldera Company for 6.8 million KM, and at the end of 2019, it bought it completely for 20 million KM.

Shortly after Republika Srpska’s acquisition of Hidroelektrane Bistrica, 65% of Kaldera Company’s ownership was bought by Prointer Banja Luka, which has been linked to Milorad Dodik and his son Igor Dodik for years.

After creating an absolute monopoly on tenders for IT equipment both in RS institutions and at the state level, which is reflected in the data of 150 million KM worth of signed tender contracts, the company Prointer focused on the energy sector, which they confirmed in a statement for the media after taking over the majority stake in Kaldera Company.

“We decided to take this step in the first place because we estimated that there is room in our business sector to perform in other sectors such as energy. In that context, we were looking for an adequate partner with whom we could share the knowledge and best practices we have, and Kaldera was our choice. ” The director of Prointer, Bojan Vulić, stated for Capital.ba.

That they succeeded in their intention to take over lucrative jobs in the energy sector is shown by the million-dollar contracts signed with Elektroprenos BIH as well as with Elektroprivreda RS.

Cost-effectiveness of power plants: TS Šipovo

In the period until 2018, under the leadership of Matan Žarić, Elektroprenos BIH financed the construction of four substations TS Šipovo, TS Čitluk, TS Gradiška and TS Tuzla, three which served as a unique opportunity for political promotion.

However, the example of the construction of the Šipovo substation shows how Elektroprenos BIH invests in energy facilities and raises the question of the economic profitability of the construction of oversized energy facilities.

In the presence of the then Prime Minister of RS Željka Cvijanović, Matan Žarić and the mayor of Šipovo Milan Kovač, a substation was officially put into operation, the construction of which cost 4.6 million KM.

The tender for the construction of this facility was won by the company Elektroobnova Banja Luka, and Elektroprenos BIH clearly specified in the tender documentation that the location of the 110x / 20 KV Šipovo substation would be built within the Čajevec company. Due to the circumstances, this company is owned by Milan Kovač, a prominent SNSD member, mayor and one of the most loyal cadres of Milorad Dodik.

On that occasion, the Director of Elektroprenos BIH Mate-Matan Žarić pointed out that there was no double power supply or sufficient power supply in Šipovo, and that the built substation enables further expansion of the industry.

Elektroprenos BIH refused to explain to us the reason why they specified that the location of the Šipovo substation would be within the Čajevec factory and under what conditions they realized this contract.

Also, from June 2021, more precisely 7 months, Elektroprenos BIH refuses to answer the official inquiry of the portal tačno.net about the statistical loads on this substation, which could show how justified its construction is.

Although announced as one of the investments that will contribute to the development of the economy in Šipovo and Mrkonjić Grad from this time distance, the question arises whether the investment of 4.6 million KM has its economic justification.

The reason is the loads on the transformers, which according to the Independent Operator of the BiH system in the time interval in 2020 only exceeded the hourly loads of 5000 kW / h on several occasions, while the loads on the second transformer of this transformer station do not exist at all. Regardless of the modern infrastructure in the period from 2017 until today, as well as the announcement of Matan Žarić, the city of Šipovo and this region, unfortunately, failed to impose themselves as an economically prosperous region.

Apart from the wood processing industry, the most important of which are companies owned by SNSD chief Milan Kovać, this region was also interesting to investors in the hydro potential of the Pliva and Janja rivers.

In that context, on the territory of the municipality of Šipovo, the construction of 11 small hydroelectric power plants with individual power over 250 KW is planned.

Given the devastation of nature as well as the growing resistance of the local population, the planned construction of several small hydropower plants was abandoned. However, the small hydropower plants built so far reveal a very interesting ownership structure, which today uses the energy infrastructure of Šipovo and this region in the best possible way.

Thus, at the very entrance to the town of Šipovo, there is a small hydroelectric power plant, Glavica, owned by the company BBB doo Šipovo. With the annexes to the contract, the power of this power plant was increased from 0.9 MW to 1.473 MW, and in 2018, 90% of its ownership share will be bought by the company Mo Herc doo from Mostar.

Mo Herc doo is a company created specifically for the project of building a residential and commercial building on the site of the former privatized “Mljekara” in the centre of Mostar. According to the data from the court register, the owners of the company that built the residential complex with 16,900 m2 are prominent cadres of HDZ and HVO.

Brano Markić, professor at the Faculty of Economics, University of Mostar, owner of OIL AC and Antonio commerce and occasional consultant of EP HZHB, Damir Vrljić, Emir Ćorić, Franjo Sivrić, Ivan Knezović owner of Sik doo and Ilija Vrljić, HVO general and one of the richest people in Herzegovina.

In addition to this small hydropower plant, whose expensive electricity is subsidized by the citizens of the RS entity through the payment of renewable energy fees (the revenue of this hydropower plant was 540,000 KM last year). Professor Brano Markić, whose business empire was also built by lucrative tender deals with the University of Mostar and other institutions headed by HDZ cadres, recognized the profitability of investing in renewable energy sources.

So, in 2019, he invested in the construction of the photovoltaic power plant Antonio Commerce and OIL AC with a total capacity of 300 KW. With the money collected from the fees paid by the citizens of the Federation of BiH, the expensive electricity from these solar power plants is purchased by the Federal Operator for Renewable Energy Sources and Efficient Cogeneration.

The foundations of the future of our children are in clean energy and Končar

Zoran Žarić, project consultant for the construction of solar photovoltaic power plants in FBIH, the son of Matan Mate Žarić, was appointed director of Končar’s representative office in Mostar in September this year.

In this position, he replaced Miroslav Ćorić, a HDZ cadre from the 1990s, to whom scandals such as the privatization and sale of the property of the former Mostar giant “SOKO” are connected together with Dragan Čović.

Zoran Žarić, along with his academic career at the Faculty of Mechanical Engineering, Accounting and Electrical Engineering of the University of Mostar, also built his career through the position of Head of the Special Measurements Service of the Mostar Operational Area in Elektroprenos BIH.

According to unconfirmed information from the Tačno.net portal, 90% of the equipment that is installed in the energy facilities of Elektroprenos BIH is equipment manufactured by Končar Zagreb. We tried to confirm these allegations in the directorate of this institution.

We are still waiting for an answer to our questions regarding the equipment of the manufacturer Končar as well as the details of the competition in which Matan Žarić’s son is employed by Elektroprenos BIH.

In the second part of the text on the electricity sector in BiH, we will write about the legalization of illegally allocated dynamic quotas for solar power plants and the role of HDZ staff in creating monopolies for selected electricity producers financed from electricity bills of FBIH citizens.