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Banovici lignite power plant, Bosnia and Herzegovina

The 350 MW Banovići coal power plant project is being developed alongside the existing Banovići mine just a few kilometres away from Tuzla by the predominantly state-owned RMU Banovići (Banovići Brown Coal Mines). The power plant would be a greenfield facility and a cement plant is also planned nearby. This project is in direct competition with the Tuzla 7 lignite power plant.

The Banovići brown coal power plant is planned at the site of the existing Banovići mine and is to be built by China’s Dongfang, the same company which built the Stanari plant. Banovići started as a 300 MW project but halfway through the tender it was changed to 350 MW.

Mystery economics

The project’s economics have been kept under wraps and no feasibility study is publicly available. Banovići’s Director stated in a July 2016 interview that the generation cost would be EUR 50/MWh. However, former EPBIH Director Amer Jerlagić cast doubt on this figure and stated that neither the Banovići nor the Tuzla 7 plants appear feasible given the low prices on the European electricity wholesale market. This opinion has also been confirmed by the current Director of EP BIH, Bajazit Jašarević, who admitted that both the Tuzla 7 and Banovići plants are currently unfeasible.

Financing has not been confirmed but is being sought from the Industrial and Commercial Bank of China (ICBC). The project is supposed to cost EUR 405 million. It also appears that a guarantee by the Federation of BiH government would be required, raising questions about compliance with state aid rules under the Energy Community Treaty.

Compliance with Industrial Emissions Directive not ensured by the environmental permit

A second environmental permit was issued for the Banovići power plant in early 2016, but failed to cover numerous issues and prescribe precise mitigation measures.

NGO Ekotim therefore filed a court case seeking to annul the environmental permit in April 2016.

The permit also failed to specify that the EU Industrial Emissions Directive - obligatory for new plants under the Energy Community Treaty - needs to be followed by the new plant. Ekotim therefore also submitted a complaint to the Energy Community Secretariat in July 2016.

Scarce water resources

For Banovici it is planned to expand the existing Ramići lake into a larger reservoir. However the lake is small and would need significant expansion, and it is not clear that the runoff from the surrounding hills could provide enough water. Another issue is the structural soundness of the earth dam which is planned to hold back the water at Ramići.

Initial proposals included using water from the Turija river to fill the reservoir during dry periods, however this would then deprive Modrac, and thus the Tuzla power plant and the people of Tuzla, of a significant source of water.

More recent proposals have focused on taking water from Lake Breštica which is located in the Spreča river basin, but this would have the same result. The issue remains unsolved. For this reason Ekotim filed a court complaint against the environmental permit for the reservoir in April 2016.

An AlJazeera report on the situation of the "Hostages of Coal" infrastructure in Tuzla and Banovici (local language ony).


Latest developments


Campaign update | February 15, 2017

A new coal-fired power plant in Bosnia-Herzegovina will have adhere to stricter air quality standards, according to a new ruling by the Energy Community Secretariat.

The decision comes in response to a complaint filed by the environmental NGO Ekotim regarding the environmental permit enabling the construction of the 350 MW Banovići power plant in north-eastern Bosnia-Herzegovina.

The complaint, filed in July 2016, claimed that the Federal Ministry of Environment and Tourism had failed to require pollution limits as obliged under the Energy Community Treaty.

Blog entry | November 14, 2016

Now is the time for southeast Europe to start an inclusive and just transition away from lignite, argues new Bankwatch research.

Press release | November 14, 2016

Promises for new jobs in south-east Europe’s coal sector are exaggerated, a new Bankwatch report reveals. Hardly any coal operations across the region are economically viable, and as a result many coal workers, especially in the mines, are set to lose their jobs, even if the plans for countless new power plants materialise. Governments, coal workers and their wider communities need to work together towards a just transition.

Press release | October 17, 2016

Sarajevo-based environmental watchdog Ekotim has submitted on Friday (October 14) an official complaint to the Energy Community dispute settlement mechanism (1) due to lax pollution limits for a new Chinese-backed 450 MW unit at the Tuzla coal power plant in Bosnia and Herzegovina.

Blog entry | September 27, 2016

China cuts coal at home but state owned companies and banks drive new coal expansion overseas, despite top level promises of green growth for developing countries, writes Beth Walker from China Dialogue.


Briefing | November 14, 2016

Coal is the single biggest contributor to global climate change. But governments and investors planning new coal capacities have a range of flimsy arguments why coal would be the best or the only alternative. This briefing busts a number of myths surrounding coal, such as "coal is cheap", "alleviates poverty" or "coal is clean".

Study | November 14, 2016

This report reveals how and why promises for new jobs in south-east Europe’s coal sector are exaggerated. Hardly any coal operations across the region are economically viable, and as a result many coal workers, especially in the mines, are set to lose their jobs, even if the plans for countless new power plants materialise. Governments, coal workers and their wider communities need to work together towards a just transition.

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Briefing | July 31, 2016

Bosnia and Herzegovina, Serbia, Montenegro and Romania all plan new lignite power plants during the next few years. In contrast, most EU countries are giving up building new coal plants and seven EU states are already coal-free. Since the European Investment Bank, the European Bank for Reconstruction and Development and the World Bank have virtually halted lending for new coal power plants, most of them are due to be financed by Chinese state banks – ExIm Bank and the China Development Bank.

Briefing | May 26, 2016

All the Western Balkans countries have committed to increase their share of renewable energy by 2020 to reach between 25 and 40 percent of their energy mix, as part of their obligations under the Energy Community Treaty. Yet this is far from obvious when examining their investment plans for new power generation capacity. Governments are actively planning to build 2800 MW of new coal plants with construction cost of at least EUR 4.5 billion. In contrast, these countries are only planning to build around 1166 MW of wind power plants, at an estimated cost of EUR 1.89 billion.