Tuzla Block 7: Advisory Board Confirms – Guarantee for Block 7, Impermissible State Aid

(Patria) - The Energy Community Secretariat yesterday announced that the Advisory Board has submitted its official opinion in the case against Bosnia and Herzegovina. The case concerns the guarantee of the Federation of Bosnia and Herzegovina for a loan taken by Elektroprivreda BiH from China's Eximbank, for the construction of Block 7 of the Tuzla Thermal Power Plant, the Aarhus Center Tuzla announced.

The Advisory Board confirmed the Energy Community Secretariat's argument that the State Aid Council's decision is not in line with European Union rules on state aid, and that the guarantee for the loan for Block 7 constitutes state aid. The Advisory Board's opinion is required as a final step before the Council of Ministers of the Energy Community member states makes a decision on this matter on November 30.

"This is yet another confirmation that Block 7 of the Tuzla Thermal Power Plant has no future. It remains to be seen whether individual government representatives and Elektroprivreda will continue to play with the money of the citizens of Bosnia and Herzegovina and stubbornly rush towards ruin at all costs," stated Denis Žiško from the Aarhus Center Tuzla. The project for the construction of Block 7 of the Tuzla Thermal Power Plant is in serious trouble also due to the withdrawal of General Electric from supplying equipment as defined by the signed contract.

The contractor, Gezhouba, is offering alternative Chinese technology, and the FBiH authorities are currently considering whether to abandon the project or risk continuing the project with unknown Chinese technology.

"The construction of Block 7 of the Tuzla Thermal Power Plant is presented as a development opportunity for the Federation of BiH, but it will actually be a millstone around its neck," added Pippa Gallop from the CEE Bankwatch network.
"The assumptions included in the feasibility study are absolutely unrealistic, and there is no way Block 7 will be profitable. This news from the Energy Community is another reason to abandon the project and develop sustainable alternatives."

The State Aid Council of Bosnia and Herzegovina determined in 2018 that this guarantee does not contain elements of state aid, however, the Aarhus Center BiH association and the CEE Bankwatch network disagreed. In September 2018, they submitted a request to the Energy Community to investigate the compliance of the guarantee with the rules of the Energy Community Establishment Agreement, and the Energy Community Secretariat opened proceedings against Bosnia and Herzegovina in March 2019.