Bosnia region picks RWE unit as best bidder for hydro project

* Project cost estimated at $553.5 mln

* Negotiations set to end in September

* EPRS utility to hold 25 pct stake in the project

SARAJEVO, July 27 (Reuters) - The energy ministry of Bosnia's Serb Republic said on Friday it had shortlisted RWE Innogy, a unit of German utility RWE, to build four hydro-power plants on the Drina river with a combined capacity of 238 megawatts.

The company was among three bidders - which also included Greek state-run utility PPC and China International Water and Electric Corp - that placed bids for a 51 percent stake in the 450 million euros ($553.5 million) project.

"RWE Innogy is seen as the most serious candidate for the future strategic partnership and it has met all criteria, so the government has decided to start further negotiations with this company," the ministry said in a statement.

It added that negotiations for the Upper Drina project should wrap up by the end of September.

Under the terms, power utility EPRS of Bosnia's Serb Republic will hold a 25 percent stake in the joint venture with the remaining stake offered to a strategic partner chosen by the government.

Bosnia gets 40 percent of its electricity from hydro power, with the rest coming from coal-fired plants, making the Balkan country one of the few in the region capable of exporting power. Its neighbours rely on imports to cover between 30 and 50 percent of their consumption. ($1 = 0.8130 euros) (Reporting By Maja Zuvela; Editing by Michael Kahn and David Holmes)