Bosnia and clean technologies: Why was Block 7 blocked

By Sead Omeragić

Where is the development of Bosnia and Herzegovina heading, and will our country, for who knows what time, become a victim of outdated technologies?  

The FBiH Government on November 10, 2017, gave its consent to the proposed Project Partnership Agreement between Elektroprivreda BiH d.d. Sarajevo and a consortium of Chinese companies, as well as the Engineering, Procurement, and Construction Contract for Block 7 in Tuzla with a capacity of 450 MW. The final loan agreement for Block 7, worth 613 million euros, with a 20-year term and a 5-year grace period, was signed at the "16+1 Initiative" Summit in Budapest.

For the signed Agreement to enter into force, Parliament had to provide a guarantee for this loan. The Agreement was never considered in the FBiH Parliament. It will obviously not be considered before the elections. The Chinese are now urgently seeking a signature or they will withdraw. Why has the confirmation of this largest investment been delayed for almost three years? Where were the obstacles? Perhaps because the Chinese offer was not the only one?    

In early December 2015, the authorities in Sarajevo received an offer from the USA worth more than one and a half billion convertible marks for projects in the energy sector. The offer was mediated by a citizen of Bosnia and Herzegovina, an extremely capable businessman. American investors stated in the offer that it concerned state-of-the-art technology in the field of power plant construction, with the lowest emissions of CO2 and NOx gases, along with high quality and reliability of energy production. The least negative impact on the environment was guaranteed.

The stance of state bodies on this offer was absent. It arrived while the Chairman of the Council of Ministers of BiH, Denis Zvizdić, was visiting China in November 2015 and discussing the construction of Block 7 in Tuzla with local investors. It remains unclear whether the American offer was thoroughly reviewed by the Council of Ministers.

Although a lot of time has passed, it should be said that the construction of energy facilities is thoroughly and long-term reviewed. These are expensive and strategic investments, so neither investors nor countries are in a hurry.     

What did the Americans offer? The Federation's task would be to invest ten percent of its participation in the project, or for an already interested business partner from Turkey to do so. The remaining obligations would be financed by the banking sector from the USA. In the second case, the entire financial structure would be closed by a foreign partner, using the capacities for 20 years.   

Europe's development projects envisage the construction of 108,000 megawatts of power plants. Of this, as much as 4,000 MW is planned for construction in Bosnia and Herzegovina, in the locations of Tuzla, Doboj, Ugljevik, Gacko, Kakanj, Bugojno, and Tomislavgrad.

The project offered by the Americans in one of the two power plants has a capacity of 565 megawatts, which is 115 MW more than the Block 7 project offered by the Chinese. The price of that Chinese project is 855 million dollars, and according to available data, it was 15 percent more expensive than the American one.

In the entire region, BiH will have the most electricity generation facilities. In Croatia, the Plomin C thermal power plant is planned, in Montenegro in Pljevlja, in Serbia near Obrenovac, and in Obilić in Kosovo. In BiH, in addition to the existing five, the construction of four new thermal power plants is planned. This is precisely why it is necessary to think exclusively about cleaner technologies and to demand them unconditionally for Bosnia and Herzegovina. 

Europe has been warning us for years about the pollution caused by current thermal power plants. The two power plants offered by the Americans, it is claimed, use sophisticated energy technology. On the other hand, technology from the East could cause problems with standardization according to European regulations.

The two American power plants would be delivered immediately, and construction would be feasible in just 18 months. In the standard procedure, it takes about 8 years for power plants to become operational. It is claimed that the savings on this investment would amount to about 1.2 billion dollars. Employment for about 4,000 people would be secured.

We contacted some Tuzla energy experts, but they were unwilling to talk about these projects. Tuzla has long been endangered by the huge amounts of toxic waste from its Thermal Power Plant. This is another sign that Block 7 must offer modern, clean technology. It should also be known that the investment would practically pay for itself in a maximum of five years, which speaks volumes about the economic viability of this project.

The problem is also of a different nature and concerns the inconsistency of this government. If they signed this project at a serious economic gathering, and then boasted about this investment for years, why did they spend the entire mandate without formally confirming the loan guarantee for this investment in the Federal Parliament? It is now clear that decisions must wait for the elections.