The Bosnian Serb government signed a deal Monday with the Energy Financing Team for the London-based group to build a EUR660 million thermal power plant.
"We expect EFT to engage a significant number of workers during the plant's construction and later strengthen the energy potential of Republika Srpska," Bosnian Serb Prime Minister Milorad Dodik was quoted as saying by the SRNA news agency after the signing of the agreement.
The investment, one of the biggest in Bosnia's energy sector, was for the construction of a 410 megawatt plant in Stanari, close to the northeastern town of Doboj, the government said earlier.
Under the 30-year concession deal, EFT was obliged to build a plant that would produce 3,000 gigawatts of electrical power a year, which would amount to a quarter of Bosnia's total electrical output.
Annual income from the plant, which is due to be completed by 2012, was estimated at EUR153 million.
EFT - an energy, trading and investment group specializing in western, central and southeastern Europe - bought a 72-percent stake in a Stanari lignite mine in May 2005.
The thermal power plant is to be built in the vicinity of the mine.
Post-war Bosnia comprises the Serb-run Republika Srpska and Muslim-Croat Federation, two entities with their own governments.