Only artillery ammunition factory in BiH on verge of collapse, US partners furious

Pretis, located in Vogošća near Sarajevo, was a key part of the former Yugoslavia’s military industry and is among the few factories that managed to maintain production and secure foreign markets, including the American one, after the country’s breakup.

Pretis’s success lay in its production of 155mm mortar, artillery and tank shells manufactured to NATO standards.

As local media in BiH, the current price of one such shell has reached up to $6,000, and it is expected to rise further after NATO members agreed at a recent summit in The Hague to increase defence spending to 5% of GDP.

While global conflicts and higher defence budgets have created a golden opportunity for BiH’s military industry, Pretis has proven unable to seize it.

The Bosniak-Croat shared Federation entity's government is the majority shareholder in Pretis, while last year the American company Regulus acquired just over 40% of shares. Regulus also purchased around 25% of shares in Binas, a factory in Bugojno that produces explosives.

To boost production at Pretis, the American side secured a $100 million contract for ammunition delivery with a US company. However, Pretis has fulfilled only 25% of that order so far. In response, the Americans sent a warning letter to the Federation’s Minister of Industry, Vedran Lakic, blaming the situation on mismanagement and warning that the current state of affairs is unsustainable.

Will Somerindyke, the head of Regulus, wrote to Lakic stating that 40 ammunition supply contracts are currently on hold, despite some buyers having already made advance payments.

Pretis and Binas are in a catastrophic state at a time when they should be achieving their best results, the letter reads, adding that, according to available information, this is due to a combination of utter incompetence and corruption.

Responsibility for the mismanagement has been directed at former Pretis director Alma Zulic, a member of the Bosniak Party of Democratic Action, who led the company for ten years before being dismissed in May at the insistence of the American investors. However, her successor, Ajdin Kupus, has so far failed to turn the situation around.

A recent audit found that Pretis has just over €500,000 in its account, while its debts exceed €188 million. The audit also revealed that most of the advance payments Pretis received for shell deliveries were spent on items unrelated to production.

The US law firm Torridon, representing Regulus, sent a letter to Federation Prime Minister Nermin Niksic, expressing concern over the mismanagement, which it says is damaging Pretis’s operations at a time when the US and its allies are in urgent need of artillery ammunition.

These issues have strategic and commercial consequences for relations between Bosnia and Herzegovina and the United States, the letter said.

The Federation government has not commented on the situation at Pretis or on the warnings from the US.

In the meantime, US President Donald Trump has announced the introduction of a 30% tariff on all products exported from BiH to the US, a move that is expected to further complicate matters.