Bijeljina, November 29, 2025 – Chinese companies, both state-owned and private, have in recent years become key players in the energy sector of Bosnia and Herzegovina. From the construction of coal-fired thermal power plants to large hydro and solar projects, investments from China bring hundreds of millions of euros of capital, but also raise controversies about transparency, contract terms, and impacts on the local environment. The Dabar hydropower plant – the largest such project in the last several decades – illustrates the scale of China’s presence and the challenges that accompany it.

Chinese state and private players in BiH’s energy sector

Chinese investments and loans in BiH increased sharply after 2019, making China one of the largest partners in the sectors of energy, transport, and the metal industry. According to data from American researchers, about 3 billion USD of Chinese capital has been invested in BiH – including 610 million USD of direct investments from 2019 to 2021 and 2.44 billion USD in loans from 2010 to 2022. While the European Union is tightening controls on Chinese investments, in BiH such checks barely exist, which opened the door for Chinese companies to become de facto the main financiers, creditors, and contractors of new energy facilities.

Among the leading Chinese actors in BiH dominate large state corporations backed by Beijing. China Gezhouba Group Corporation (CGGC), a construction giant for hydroelectric projects, is the main contractor for the Dabar Hydropower Plant. Dongfang Electric Corporation (DEC) participated in the construction of the Stanari Thermal Power Plant, the first postwar thermal plant in BiH, and also cooperates on the solar power plant project near Bileća. Also present are China National Aero-Technology International Engineering (AVIC-ENG) – partner for the hydropower plants on the Bistrica River and the planned Buk Bijela HPP – and China International Water & Electric (CWE), which earlier submitted an offer to finance 85% of the Dabar HPP project. Chinese companies also appear in the renewable sector: the state conglomerate Norinco International has expressed interest in building a 125 MW solar plant near Stolac (an investment of ~110 million euros) by acquiring the local concession-holding company. Almost all of these firms rely on the support of Chinese state banks, primarily Exim Bank and the China Development Bank, making it clear that Beijing officially stands behind China’s expansion into the region’s energy sector.

Key projects and contracts: from Stanari to Dabar HPP

Chinese investors have been involved in some of the largest energy projects across BiH in the past decade:

TE Stanari (300 MW) – The first newly built thermal power plant in BiH since the 1980s, completed in 2016, was built in cooperation between the private company EFT and Chinese partners. The project is worth around 550 million euros, partly financed by a loan from the China Development Bank. The contractor was the Chinese firm Dongfang Electric, with participation of domestic capital (EFT of Vuk Hamović). Stanari is operational today, but controversies followed regarding favoritism toward the investor and a loss of at least 100 million KM for the RS budget through concessions by the authorities during implementation.

TE Tuzla Block 7 (450 MW) – Announced as the largest postwar investment in BiH’s power sector (worth around 722 million euros), this project was developed by Elektroprivreda BiH with the Chinese company Gezhouba as the main contractor and an Exim Bank loan (repayment period 15 years with a 5-year grace period). The contract was signed in 2019, but construction never started. First, the American company General Electric withdrew from supplying equipment, after which the Chinese consortium could not fulfill the agreed conditions, and the FBiH Government ordered the termination of the contract. This case illustrates the technological and regulatory risks Chinese projects may face in BiH. A similar fate befell the planned Banovići TPP (350 MW), for which the Banovići coal mine signed a strategic partnership with Dongfang Electric worth 450 million euros, but the project never moved beyond early announcements, partly due to China’s shift toward stopping overseas coal financing in 2021.

HE Dabar (160 MW) – The largest hydroelectric project in BiH and one of the largest in the Balkans in the last 30 years. This project worth about 338 million euros (661 million KM) represents the crown of Chinese engagement in renewables in BiH. In May 2020 a contract was signed with the Chinese company Gezhouba Group, with the RS Government guaranteeing 85% of the value (loan from Exim Bank of China) and the participation of Elektroprivreda RS with 15%. Works officially began only in June 2023 with the laying of the foundation stone, after years of preparation and delays. Dabar is part of the wider “Upper Horizons” system in eastern Herzegovina, which also includes future HPPs Bileća and Nevesinje. According to the plan, Dabar will produce about 285 GWh of electricity annually, and an additional ~265 GWh will be generated thanks to its water in the downstream plants Trebinje 1, Trebinje 2, and Dubrovnik. The deadline for completion is 46 months, i.e. 2027, when grid connection is expected.

Other projects – The Chinese have expressed interest in a number of other energy ventures. The RS Government signed a memorandum with AVIC-ENG for the construction of the Buk Bijela HPP (93 MW on the Drina River, ~195 million euros), but implementation awaits a resolution of environmental permit issues and cooperation with neighboring Serbia. The Bistrica hydropower plants (three small derivation HPPs totaling ~45 MW) are also being built by AVIC-ENG through a contract worth 102 million euros; the project, however, is burdened by lawsuits from environmental groups over concerns about the quality of environmental impact studies. In renewables, besides the mentioned Bileća and Stolac solar parks, Chinese investors have also considered the Kamengrad wind park near Sanski Most (Chinese Energy China and China Energy Engineering signed a letter of intent in 2017 for a TPP/wind project worth over a billion euros), but that project never materialized. Importantly, Chinese President Xi Jinping announced in 2021 the cessation of building new coal power plants abroad – since then practically all TPP plans in BiH with Chinese involvement have been put on hold or canceled, redirecting China’s focus toward hydro and solar investments.

The Dabar hydropower plant – a symbol of Chinese investment in BiH

Dabar HPP, located on the Zalomka river basin in eastern Herzegovina, has become an emblematic example of Chinese presence. This 160-megawatt plant is being built in partnership between Elektroprivreda RS and the Chinese company Gezhouba, within the global “Belt and Road” initiative, as emphasized by the Chinese ambassador Ji Ping at the groundbreaking ceremony. The Chinese side participates not only as a contractor but also as a creditor – Exim Bank of China is financing 85% of the costs with full guarantee from Republika Srpska. According to Luka Petrović, director of ERS, the total value of around 340 million euros for 159 MW of installed capacity is considered a favorable price below market value, given the expected annual production.

But the implementation is accompanied by controversies. The details of the contract with the Chinese and the credit arrangement have been declared secret – the management of Hydropower Plants on Trebišnjica (HET) refused to publish these documents even after FOIA requests. The Center for Environment from Banja Luka sued ERS for hiding the construction contract for Dabar HPP and the loan agreement, warning that the public has no knowledge of how far the reservoir will extend and which villages will be flooded. Residents of the Nevesinje area are divided – some hope for compensation for expropriated land, while most fear long-term environmental impacts and threats to water sources. On the ground, works have been in full swing since the summer of 2023: the main intake tunnel has been excavated (built by the domestic company Integral Engineering), and Chinese workers are preparing the foundations of the dam and the machine hall.

Chinese workers engaged in the construction of Dabar HPP – the largest hydroelectric project in BiH. Around one hundred workers from China are currently working at the site along with about thirty domestic workers, and the plan is to increase the number of locally employed workers during the next phases. The project is financed by Chinese institutions with RS guarantees, illustrating the model of Chinese investment in the Balkans.

RS authorities state that Dabar HPP is a “project that will revive Herzegovina” with a constant source of electricity and a doubling of HET’s production after completion of the Upper Horizons system. However, experts and activists warn that without full transparency and adherence to environmental standards, this project may become an example of bad practice. It is already followed by delays (the idea of Dabar HPP is decades old, and the foundation stone was placed only in 2023) and suspicions of a “non-transparent deal behind closed doors.” All of this makes Dabar HPP a test for Chinese business operations in BiH: will it justify the announcements or confirm the fears of those who criticize Chinese investments?

Business practices of Chinese companies: non-transparency and challenges

The inflow of Chinese capital into BiH is often accompanied by controversies. Loans from Chinese state banks usually come with strict confidentiality clauses, so the authorities do not disclose their terms to the public. Only later does information emerge about potentially risky provisions – such as those recorded in Greece and Montenegro – that in case of non-repayment, China could demand control over the state’s strategic assets. In BiH the biggest problem is the lack of transparency: the public is denied key information about guarantees and obligations to Chinese creditors, which, according to analysts, benefits corrupt domestic politicians.

Additionally, suspicions of corruption and favoritism accompany many projects. Media have written about connections between Chinese companies and local power brokers: an example is Vuk Hamović (EFT) and his dealings with the Chinese in RS – from Stanari to the Bileća solar plant – where the concession was allegedly arranged in his favor. The Chinese company DEC itself, a partner in these projects, was the subject of an investigation by China’s anti-corruption agency in 2015 due to bribes received by its leadership. Chinese firms often obtain projects without open international competition, through direct agreements or single-bid tenders. In the case of Dabar HPP, the tender for the initial works (tunnel) in 2016 was won precisely by Gezhouba as the sole bidder for a job worth 131 million KM, and later the Chinese joined the rest of the project through intergovernmental agreements.

The efficiency of implementation is also mixed. On the one hand, Chinese companies possess enormous capacity and experience: Gezhouba is among the world’s largest dam builders (participating in the construction of 4 of the 8 tallest dams in the world). After initial delays, works on Dabar are now proceeding “according to planned dynamics,” and Stanari was built within the intended timeframe. On the other hand, delays are common in the preparatory phase due to problematic procedures and financial negotiations – RS authorities had been announcing the arrival of Chinese workers and the beginning of Dabar construction since 2019, but construction sites remained empty until mid-2023. Similarly, the Tuzla 7 project lost nearly a decade in announcements before it collapsed due to technological and political obstacles.

Challenges also appear in environmental standards and corporate social responsibility. Chinese firms are globally criticized for violating environmental regulations and labor conditions: an example is Norinco, criticized for the environmental impact of the Sendou coal plant in Senegal, poor working conditions in Zambia, and hydropower projects in Ethiopia that displaced local populations. In BiH environmental associations have raised their voices against several Chinese investments – from the blocked Buk Bijela project (flooding of the Drina canyon) to the mentioned Bistrica and Dabar HPPs – claiming that impact studies are often conducted pro forma and without public participation. Recently several lawsuits were filed against the permits for HPPs on the Bistrica River, one of which has already been upheld in court.

In short, the Chinese business model has brought BiH much-needed investments, but “profitable deals are characterized by questionable loans, non-transparency, and suspicion of corruption,” as one analysis describes them. Authorities, especially in the RS entity, increasingly turn to China due to lack of financing from the West, and even as a bargaining chip in political maneuvering with the EU. In doing so, China strengthens its influence, while local actors hope for quick profits – but the question remains: at what cost to the public interest?

Project costs – Chinese offers between savings and risk

The financial aspect of Chinese investments is often presented as favorable, but requires careful consideration. The Dabar HPP is being built for about 340 million euros, which is roughly 2.1 million euros per megawatt of installed capacity. For a hydro project in difficult terrain, this can be considered a reasonable figure – ERS officials claim this is “below any price on the market” for such capacity. By comparison, the smaller, unbuilt Vranduk HPP (20 MW) was contracted at around 100 million euros with European companies before they withdrew, indicating that Chinese firms enter projects that others deem unprofitable.

In thermal energy projects, Chinese offers are also aggressive: Tuzla 7 of 450 MW was agreed for 722 million euros, i.e. about 1.6 million euros per MW – a relatively low price compared to European construction standards, which is why the Chinese loan and involvement were initially accepted. Stanari cost around 550 million euros for 300 MW, roughly 1.8 million euros/MW, with technology fully supplied by DEC. Lower costs are partly due to cheaper Chinese equipment and the massive experience of these companies (which shortens construction time), but it must be noted that “cheap” does not mean risk-free. In the case of Tuzla 7, it turned out that the Chinese offer did not cover critical components according to EU standards – they depended on subcontractor General Electric, which led to termination. Thus, potential savings can be canceled out if the project fails to meet technical or environmental criteria.

Another dimension of the cost is loan conditions. Chinese state lenders offer relatively short repayment periods (e.g. 15 years for Tuzla 7 with 5 years grace), meaning that the repayment burden will fall during the period when the project is only just coming online. Also, potential penalties in case of early termination or inability to repay are often unknown to the public. In the worst case, BiH could find itself indebted for projects that do not operate at full capacity (due to market or regulatory changes), while the loan remains an obligation. Therefore, economists warn that the full life-cycle cost of Chinese investments must be considered, including long-term financial implications and potential environmental remediation costs. Chinese offers often come as turnkey packages – fast construction and financing – while the subsequent costs (maintenance, emissions, community impacts) remain with domestic authorities and citizens.

Chinese business model in BiH: loans, equipment, labor, and local partners

The combination with which Chinese companies operate in BiH usually includes a state loan, imported equipment, their own labor force, and local partners as intermediaries. The model is seen in almost all projects:

Financing through borrowing – Instead of classic foreign investments, these are more often loans that will be repaid by public companies or governments. The contract for Dabar HPP is structured so that Exim Bank provides the loan, and Republika Srpska guarantees repayment. Experts call this more credit expansion than investment: China deploys its capital with guarantees, and BiH receives the facility while increasing its debt. The positive aspect is that it secures money for large projects that would otherwise struggle to find financing, but the negative is that the public remains indebted and the borrowing is often kept away from public scrutiny.

Technology and equipment from China – Chinese firms mostly bring their own equipment and materials, from turbines to steel structures. Reliance on Chinese technology helps keep offers cheap, but raises questions of compatibility with EU standards and spare parts. In the case of Stanari, all equipment was imported from China, while for Tuzla 7 a similar arrangement was planned before complications with the western supplier. The advantage is that domestic companies are not burdened with procurement, but the downside is minimal technology transfer to the local industry.

Labor: Chinese workers vs. domestic workers – At construction sites of Chinese projects, the presence of workers from China is noticeable. Currently around 100 Chinese and 30 local workers are working at Dabar HPP; the Chinese contractor plans to bring up to 180 of its workers but promises to include over 300 local workers in later phases. In the early stages construction work relies on Chinese labor due to specific skills or simply because the contractor prefers its own workforce. This reduces the immediate benefit for local employment and sometimes leads to cultural/language barriers on site. Only later, under public pressure or due to the nature of work, more local workers and subcontractors get involved.

Local partners and political ties – Almost no major Chinese arrangement in BiH proceeds without a domestic intermediary. Whether it is a private investor like EFT in Stanari, an entity-level power utility, or a private company holding a concession (such as the Nikolić family in the case of the Stolac solar plant), Chinese companies enter joint projects rather than acting independently. Often these local partners are close to centers of power: Integral Engineering in RS receives subcontracts (tunnels for Dabar), while in FBiH the Tuzla 7 project was only possible with the consent of the federal government and a guarantee from the FBiH Parliament. This approach facilitates obtaining permits and political support, but opens space for under-the-table deals – local partners can reap enormous benefits with minimal investment, while the risks are shifted to the state.

Ultimately, the Chinese model in BiH represents a fusion of economic and political interests. Chinese firms bring capital and construction experience, while domestic actors see opportunities for infrastructure development they cannot finance themselves. However, the lack of transparency and potential dependence on Chinese loans raise concerns: economist Svetlana Cenić states that authorities turn to China because they have no other source of fresh finances, but also that China serves as a means of pressure toward the West. “They turn to anyone from whom they can get money, and China suits them well to threaten the West,” says Cenić, alluding to the geopolitical dimension of these deals.

Conclusion

Chinese investments and construction ventures are already significantly influencing the energy sector of Bosnia and Herzegovina. Projects like the Dabar HPP symbolize what Chinese partnership offers – major infrastructure momentum with a financial injection – but also serve as a warning about what such arrangements may hide behind the scenes. On the one hand, BiH gains the chance to build power plants and roads it has planned for years, while other investors withdraw. On the other hand, the cost of this development is measured not only in millions of euros of debt, but also in public trust: from closed contracts and possible ecological consequences, to the question of whether the promised benefits will reach the wider community or only a narrow circle of the privileged.

China’s presence in BiH’s energy sector will continue to grow, especially in renewables after the abandonment of coal. It is crucial for domestic institutions to learn lessons from past experiences – to insist on transparency, compliance with regulations, and protection of citizens’ interests. Only then can projects like the Dabar hydropower plant truly be a “historic success,” rather than yet another undertaking whose true cost future generations will uncover.

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