# Stig–Kostolac railway: EPS paid for work that was never done Category: Money and deals Period: from Sep 2017 Outcome: Indictment filed (as of 11 Jul 2024) For an industrial railway from Stig station to the Kostolac B Thermal Power Plant, EPS paid the contractors Italiana Costruzioni and Bauwesen 95 percent of the $13.5 million invoiced, and according to BIRN much of the railway was never finished. Prosecutors put the unlawful gain at around $7.46 million. After six people were arrested in February 2023, prosecutors Bojana Savović and Jasmina Paunović were taken off the case. An indictment against ten defendants from July 2024 was not confirmed, and the Prosecutor's Office for Organised Crime, which was assigned the case in November 2025, says it is still drafting a new one. ## The contract and the unfinished railway The track, around 22 kilometres long, was meant to carry coal to the new unit of the Kostolac power plant, part of a project funded by a loan from China's Exim Bank. The $14 million contract went in 2017 to a consortium of Italiana Costruzioni and Lazarevac-based Bauwesen, and a month after work began Bauwesen, according to BIRN, took over all the obligations. Supervision went to the CIP Transport Institute under an 80 million dinar contract, and reports certifying that the work had been done to standard were also signed by EPS engineers; on the strength of those reports the bank released tranches and EPS paid the contractors. BIRN journalists found an empty, weed-covered stretch and rusted equipment along the route. ## What the expert assessment found According to an expert report obtained by BIRN, the damage is $7.5 million: $3.5 million for poorly executed works and four million dollars for works that were not carried out at all. The contractor obtained gravel, which under the tender it could have taken free of charge from the Drmno pit, at a price well above the market price, and EPS approved the payments; charges were also made for thousands of hours of machine work from machines that were not engaged. According to Radar, when EPS established that part of the ‘completed’ railway does not exist, it called in a bank guarantee of €3.5 million and reported the case to the prosecutor's office. Bauwesen is now in bankruptcy, and in 2021 EPS hired it again to transport coal from Kostolac, a €35 million job. ## Arrests and the case taken away The Prosecutor's Office for Organised Crime opened the case in October 2019 on a complaint from EPS's internal control unit. Two years later it handed the case over to the Higher Public Prosecutor's Office in Belgrade. On the orders of prosecutor Bojana Savović, police arrested six people on 22 February 2023, among them employees of Kostolac and CIP and former directors of the contractors. The same day, Higher Public Prosecutor Nenad Stefanović took the case away from Savović. A week later he also took it from Jasmina Paunović, who had been investigating financial malpractice. The prosecutor's office claimed that Savović had been moved at her own request and had been dragging out the pre-investigation proceedings. Paunović says she was given no explanation and that the investigation was cut short as it was „getting close to the tip of the iceberg“. ## Indictment against ten On 11 July 2024, the Special Anti-Corruption Department of the Higher Public Prosecutor's Office indicted ten defendants from the contractor firms, EPS and CIP for unlawful gain of $7,458,019.71, money laundering and tax evasion. According to BIRN, only two engineers from EPS were charged, and no one from its management. The construction expert witness resigned because the geodetic survey had been carried out by a firm that is not on the register of court experts. Prosecutors and legal experts BIRN spoke to believe that an indictment based on such findings could be overturned. ## Jurisdiction dispute The prosecutor's office proposed that the indictment be taken over by the organised crime department of the Higher Court in Belgrade, because the gain exceeds 200 million dinars. According to Insajder, the court's anti-corruption department declared that it lacked jurisdiction, the Special Court sent the indictment to the Prosecutor's Office for Organised Crime in March 2025, and in October 2025 that office asked the Special Court to declare that it, too, lacked jurisdiction. In November 2025, the Supreme Court assigned the case to the Special Court and the Prosecutor's Office for Organised Crime. In March 2026, the Prosecutor's Office for Organised Crime replied that the new indictment was still being drafted. The Higher Public Prosecutor's Office says no time was lost and that Savović and Paunović did not prepare the indictment, and it accuses Paunović of having dismissed a criminal complaint during the pre-investigation. ## Participants - [Bauwesen (Bauvezen)](https://odgovornost.rs/en/organizacije/bauwesen): According to the indictment, its responsible persons also billed EPS for railway works that were either not carried out or not carried out properly (responsible) - [Italiana Costruzioni](https://odgovornost.rs/en/organizacije/italiana-costruzioni): According to the indictment, responsible persons at its Belgrade branch, acting as the contractor, obtained about $7.46 million together with others (responsible) - [CIP Transport Institute](https://odgovornost.rs/en/organizacije/saobracajni-institut-cip): As technical supervisor of the railway construction, it signed reports certifying that works had been properly completed when they had not been carried out (responsible) - [Electric Power Industry of Serbia (EPS)](https://odgovornost.rs/en/organizacije/eps): As the client, it paid the contractors 95 percent of the invoiced amount for a railway that was not completed; its engineers signed the work reports (responsible) - [Nenad Stefanović](https://odgovornost.rs/en/osobe/nenad-stefanovic): On the same day prosecutor Savović ordered arrests in the railway case, he took the case away from her, and then from prosecutor Paunović as well (responsible) - [Bojana Savović](https://odgovornost.rs/en/osobe/bojana-savovic): She ordered arrests in the railway case, and the case was taken away from her the same day (harmed) - [Jasmina Paunović](https://odgovornost.rs/en/osobe/jasmina-paunovic): She handled the part of the case concerning financial fraud, and the case was taken away from her a week after the arrests (harmed) - [Ministry of Internal Affairs of the Republic of Serbia](https://odgovornost.rs/en/organizacije/mup-srbije): The Service for Combating Organised Crime arrested six people suspected of falsely certifying work on the railway (investigation and courts) - [Public Prosecutor's Office for Organised Crime](https://odgovornost.rs/en/organizacije/jtok): It opened the case in 2019 and handed it over to the Higher Public Prosecutor's Office; it has been in charge of the case again since November 2025 and has not yet finished a new indictment (investigation and courts) - [Higher Public Prosecutor's Office in Belgrade, Special Department for Combating Corruption](https://odgovornost.rs/en/organizacije/vjt-beograd): It indicted ten defendants over abuses in the construction of the railway and proposed that the case be sent to the organised crime department (investigation and courts) - [Higher Court in Belgrade](https://odgovornost.rs/en/organizacije/visi-sud-beograd): Its anti-corruption department declared itself without jurisdiction to confirm the indictment, and the Special Court sent it to the Organized Crime Prosecutor's Office (investigation and courts) - [Supreme Court](https://odgovornost.rs/en/organizacije/vrhovni-sud): It settled the dispute over jurisdiction and assigned the case to the Special Court, and thus to the Organized Crime Prosecutor's Office (investigation and courts) ## Sources - [Insajder: Arrests at EPS: six people suspected of embezzling seven and a half million dollars (VIDEO)](): 22 Feb 2023 - [N1: Prosecutor removed after arrests over damage to EPS](): 23 Feb 2023 - [BIRN / Balkan Insight: Stig–Kostolac railway paid for but never finished](): 1 Aug 2024 - [Insajder: No new indictment yet over abuses at EPS, three years after the prosecutors preparing it were moved to another department](): 20 Mar 2026 - [Nova.rs: Prosecutor's office lied that prosecutor Savović misjudged the damage: EPS partly recovered its money from a bank guarantee](): 24 Feb 2023 - [Radar: Indictment finally filed in the EPS case](): 21 Jul 2024 - [Danas: Higher Prosecutor's Office: Charges over multimillion abuses in building the Stig–Kostolac railway](): 11 Jul 2024 - [Insajder: Response of the Belgrade Higher Public Prosecutor's Office to claims made in an Insajder TV report and a portal article](): 21 Mar 2026 - [021.rs: Ten people indicted for costing Serbia $7.5 million](): 11 Jul 2024 - [Vreme: A 14.4 million dinar tender: Why is EPS paying to fight “negative narratives”](): 27 Jul 2026 --- Source: Odgovornost, https://odgovornost.rs/en/afere/pruga-stig-kostolac As of: 5 Nov 2026 Licence: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/deed.en)