Bosnia approves temporary funding for BHANSA amid Viaduct arbitration fallout

The temporary financial support will allow BHANSA to maintain operations and cover its ongoing obligations, Vinko Malnar, head of the Air Traffic Controllers Union in Bosnia and Herzegovina, confirmed to N1. He said that BHANSA has been allocated 60,108,155 Bosnian marks (approximately €30.7 million) and that the decision imposes a temporary obligation on BiH institutions to ensure the agency's operational continuity.

The decision, sent by the Council of Ministers on Friday, will be published on Wednesday in the Official Gazette of Bosnia and Herzegovina. BHANSA management has already submitted its monthly funding request to the Ministry of Finance in accordance with its adopted financial plan and past execution.

Malnar emphasised that the funds are temporary and will be returned once BHANSA’s accounts are unfrozen.

Frozen accounts and financial crisis

BHANSA is facing a severe financial crisis following the decision by Eurocontrol—on the order of a Belgian court—to freeze payments due to the agency for managing Bosnian airspace. This enforcement action stems from a 2022 arbitration ruling in favour of Viaduct, a Slovenian construction company whose dispute is unrelated to BHANSA’s activities but has had major consequences for the agency.

Due to the account freeze, BHANSA was forced to reduce staff salaries by 20%. Without temporary funding, the functionality of Bosnian airspace and airports across the country would have been at serious risk.

Background on the Viaduct case

Bosnia and Herzegovina is grappling with significant legal and financial fallout after losing an arbitration case to Viaduct. The Washington-based tribunal ordered BiH to pay €40 million in damages, a debt that is growing daily due to interest penalties.

Viaduct has since launched enforcement actions targeting state property, including the Central Bank of Bosnia and Herzegovina, further complicating the situation.

The dispute stems from Rthe epublika Srpska government’s 2004 decision to grant a concession to Viaduct’s subsidiary HES Vrbas for the construction of hydropower plants on the Vrbas River. That same year, however, RS authorities awarded a separate concession for the Bocac 2 hydropower plant, effectively blocking Viaduct’s original project. The company initiated arbitration in 2014, arguing that the contract had been wrongfully terminated.

The tribunal ruled in Viaduct’s favour, obliging BiH to pay €40 million. Due to accumulating daily penalty interest of 18,000 marks (approx. €9,200), the total debt has now surpassed €70 million.

A 2017 agreement signed by then-RS Prime Minister Zeljka Cvijanovic unconditionally committed the RS government to cover all financial penalties arising from the case. However, the payment has not yet been made.

State budget amendments and delays

The situation is further aggravated by the delay in finalising a state budget to cover the Viaduct debt. The BiH Presidency returned the draft budget for revisions, which had envisioned settling the debt using profits from the Central Bank of Bosnia and Herzegovina.

Meanwhile, BHANSA employees have again seen their salaries cut by 20% this month. As legal interest continues to mount, pressure is growing on state institutions to resolve the crisis.