Bosnia and Herzegovina's power provider Elektroprivreda BiH will have to pay €16.4 million in damages for a failed tender for a hydroelectric power plant, which was to have been built on the River Bosna, local media said on Tuesday citing a ruling by the International Court of Arbitration.

Elektroprivreda BiH will have to pay the €16.4 million in damages to the Austrian Strabag company, which was selected to build the hydroelectric power plant on the River Bosna together with the Croatian Koncar company.

The Elektroprivreda BiH Management Board has confirmed receipt of the court ruling, handed down in January.

This amount includes the money which Strabag, as the main contractor, was required to pay as a bank guarantee to win the tender and the costs incurred before its withdrawal from the project.

This is a wrong and shocking decision by the arbitration tribunal, the Klix news website quoted Elektroprivreda as saying. The company is now considering possible steps.

The 19.6-megawatt Vranduk power plant on the River Bosna should have been Elektroprivreda's largest investment after the country's 1992-1995 war, with an annual output of 100-gigawatt hours of electricity. The project should have been realised with a loan from the European Bank for Reconstruction and Development. Work formally began in 2016 and was to have finished in 2019.

However, shortly after the groundbreaking ceremony, Strabag requested a review of the contract based on the estimate that the actual cost of work was higher than planned. Elektroprivreda rejected the request and then entered into negotiations with Končar so that it would become the main contractor. The negotiations failed, the contract was terminated and the dispute went to arbitration. It remains uncertain whether the power plant will be built at all.