In 2008, EFT won a 30-year concession to set up the coal-fired plant at Stanari which will have a yearly output of 2,000 gigawatt-hours.
EFT will finance the remaining funds of EUR500m for the project work from its own equity, reported Reuters.
The plant will use coal from the nearby Stanari mines, which EFT reopened in 2005.
Once it is connected to the grid, the plant will also create employment in Bosnia.
EFT has selected China-based power equipment manufacturer Dongfang Electric to provide equipment and carry out construction for the plant.
With low sulfur emissions, the plant is expected to comply with the stringent European Union emissions standards.
The Stanari plant is expected to begin operations by the end of 2015 or in the beginning of 2016.
