The Serb Republic makes up Bosnia along with the Muslim-Croat Federation, and their rivalry has virtually blocked the work of the central government in past months as well as reforms needed for integration into Europe.
The two regions jointly own the Elektroprenos power grid operator. Bosnian Serbs, who tried last year to establish a separate grid, have boycotted the company's work for more than a year.
In contrast to Bosnian Muslims and Croats who aspire for a more centralised state, the Bosnian Serbs want to maintain a high autonomy of their region at the expense of the state.
In an attempt to ensure the continued operation of Elektroprenos, international peace envoy Valentin Inzko extended the mandate of the company's board, which expired last year, and ordered the board to appoint a new general director.
Inzko has sweeping powers to impose laws and dismiss officials when he views the peace process as being obstructed.
The Serb Republic government said in a statement that Inzko had overstepped his authority and that it would not accept his decisions. The government ordered Serb board members to boycott the work of the company until the shareholders have agreed on how to resolve the problems in Elektroprenos.
Inzko has said that his decisions were only technical and necessary to ensure public services to citizens.
His spokesman said on Thursday that the international community was also protecting its investment in the reconstruction and modernisation of the energy infrastructure in Bosnia after the war.
"Any withdrawal from Elektroprenos BiH is illegal. Nobody will have any benefit from the pullout," spokesman Frano Maroevic told a news conference in Sarajevo. Maroevic said that Inzko will decide whether to take any further steps by the end of the week.
(EurActiv with Reuters.)
