The beginning of construction of the Vranduk hydro power plant on the River Bosna in central Bosnia and Herzegovina was marked at a ceremony on Thursday, and the new EUR 57-million plant will be built by Austria's Strabag and Croatia's Koncar.
The 20-MW power plant is expected to generate 100 GWh of electricity annually.
"This is the start of large-scale projects that will turn Bosnia and Herzegovina into a big construction site," the collective presidency's chairman Bakir Izetbegovic said at the ceremony.
According to some plans, the Croat-Bosniak entity (the Federation) is set to invest a billion euros in power plants in the next five years.
The Vranduk project will be partly financed from profits of the Federation's power provider Elektroprivreda and partly by loans.
The plant will be designed and equipped by Koncar and will be built by Strabag, and is scheduled to start operating by the end of 2019.
Currently, Bosnia uses only 40% of its water potential for electricity production, and its electricity production industry is heavily based on coal.
The Federation's energy minister Nermin Dzindic hopes that activation of water-based potential could help Bosnia to generate at least 22,000 GWh of power annually.