The European Union has urged Bosnia and Herzegovina to re-open and re-examine a decision to guarantee a Chinese loan to power utility EPBiH for the construction of a new unit at the Tuzla coal-fired power plant, as the guarantee would violate EU energy subsidy rules.
The Energy Community started to look at the project after numerous complaints by environmentalists and NGOs, which claimed that the federal government’s guarantee could be illegal.
“We invite the parliament not to approve a guarantee which may constitute illegal state aid. Such approval could lead to lengthy and costly recovery procedures. Besides, the secretariat may have to open infringement procedures against Bosnia pursuant to the Energy Community Dispute Settlement Rule,” the Energy Community said in a statement.
Western Balkan countries are increasingly turning to China for funding as the EU, World Bank and other lenders cut back on financing coal-based projects. Chinese-backed projects in Bosnia and Herzegovina alone are worth around 3.8 billion euros.
Chinese Gezhouba Group and Guandong Electric Power Design were picked by EPBiH in 2017, in order to replace three ageing units with a 450 MW plant in the city of Tuzla, at a cost of 900 million euros, the largest ever energy investment in Bosnia and Herzegovina.