Unfavorable Conditions: If the Chinese Build Block 7, Citizens in FBiH Will Pay 30 Percent More for Electricity

If Block 7 of the Tuzla Thermal Power Plant is built in the way the federal authorities plan in cooperation with the Chinese company China Gezhouba Group Coupan, the price of electricity for households in FBiH will increase by about 30 percent. This is claimed by energy experts, writes the Patria News Agency.

However, if the construction of Block 7 is abandoned, FBiH will have to import electricity very soon, which will also affect the increase in electricity prices in this Bosnian-Podrinje entity.

Experts warn that the construction of Block 7 in Tuzla is necessary, but not under the conditions planned by the federal authorities.

As things stand, the China Development Bank will provide Elektroprivreda BiH with a loan for the construction of Block 7, worth 700 million KM. The repayment period is 15 years. Elektroprivreda BiH would repay the money. Along with the money, the Chinese would also send Chinese companies to BiH to build this thermal block instead of domestic companies.

Such an agreement between Elektroprivreda BiH and the Chinese company China Gezhouba Group Coupan was signed in May this year, at the Sarajevo Business Forum. On the same day, experts declared the agreement unfavorable. They warned that Elektroprivreda BiH needs a partner for the construction of Block 7, not an unfavorable loan.

The former director of Elektroprivreda BiH, Edhem Bičakčić, believes that the construction of Block 7 in this manner is too expensive and that other financing models for the construction of Block 7 should be sought.

- The construction of Block 7 is necessary. In fact, this would involve replacing the existing blocks, which were built about 50 years ago and are worn out. I don't know many details about the agreement, but I see that this way is unacceptable. Too expensive. If we couldn't repay the loan, the Block would belong to the Chinese – says Bičakčić in a comment for Patria.

Another former director of Elektroprivreda BiH, Amer Jerlagić, believes that this way of building Block 7 is not good. If Block 7 is built as envisioned by Elektroprivreda BiH and China Gezhouba Group Coupan, Jerlagić believes, a megawatt of electricity produced from Block 7 will have to cost at least 56 euros for the production to be profitable. For comparison, the price of a megawatt of electricity on the market in BiH currently costs between 28 and 33 euros.

- Who would buy expensive electricity from Elektroprivreda BiH? No one but the citizens – believes Jerlagić.

The first tender for the construction of Block 7 was issued in 2008. It received 37 bids, and the bid from the German energy company EnBW was assessed as the best, with which the Government of the Federation of BiH subsequently signed a Protocol on financing and exploitation of a new energy facility in Tuzla.

The Protocol stipulated that EnBW would finance the construction of the thermal block, with the produced electricity being shared in a 50:50 ratio between EPBiH and EnBW.

After EnBW recouped its investment, the thermal block in Tuzla would remain 100% owned by EPBiH. This agreement was never realized, again due to political disputes. The media reported that the SDA blocked the construction of Block 7 in order to overthrow the then president of SBiH and member of the Presidency of BiH, Haris Silajdžić, and his Minister of Energy, Vahid Hećo.

In the second tender for the construction of Block 7 in 2010, the Swiss energy company Alpiq won. This tender was also annulled.

In recent years, world-renowned companies such as Japan's Hitachi Ltd. and a consortium led by Toshiba Corporation have also shown interest in the construction of Block 7.

However, they soon abandoned the idea of investing in Tuzla, as they assessed the investment as unprofitable for them. German SIEMENS, Cobra from Spain, Cengiz company from Turkey, AFAKO S.A. from Poland, Hrvatska elektroprivreda... were also interested in the construction of Block 7 in Tuzla. Their offers were also assessed as unfavorable.

The construction of the Tuzla Thermal Power Plant began in 1959. The first block was completed four years later, in 1963. All construction work on the Tuzla Thermal Power Plant was completed in 1978. Block 6 was reconstructed in 2013, extending its lifespan. Previously, Blocks 1 and 2 were shut down. The plan is to shut down blocks 3, 4, and 5 by 2027, as they are worn out, and to put the modern Block 7 into operation by then. Construction work on this block has not even begun, writes NAP.