Use of public money to support Tuzla 7 coal power plant must be investigated, shows new complaint

The Federation of Bosnia-Herzegovina Government has already approved a guarantee for a EUR 614 million loan from the China Export-Import Bank and is trying to rush it through the Parliament before general elections on 7 October.

However, under the Energy Community Treaty, Bosnia-Herzegovina must follow EU rules on subsidies in the energy sector. Among other things, in most cases state guarantees may only cover maximum 80 percent of the total loan amount.

The proposed guarantee for Tuzla 7, however, covers 100 percent of the loan, plus interest and other associated costs. There are circumstances in which this is allowed, but Aarhus Resource Centre and Bankwatch argue that the relevant conditions are not fulfilled in this case.

“Given the extremely complicated nature of legislation on subsidies, the mere fact that the State Aid Council of Bosnia-Herzegovina approved this guarantee within eight working days of receiving the request from the Federal Ministry of Finance casts doubt on the quality of the assessment”, said Nina Kreševljaković of the Aarhus Resource Centre, Sarajevo.

“Using public money to support a new coal power plant is scandalous and deserves much more in-depth scrutiny than this. It will lock us into 40-plus more years of health-damaging pollution, greenhouse gas emissions and most likely economic losses too. The Energy Community needs to examine the case before any further steps are taken and Parliamentarians need to resist the pressure to approve the guarantee”, she added.

“Since 2017, China has required Chinese entities operating overseas to observe the laws and regulations of host countries, as well as international best practices to mitigate known risks, through its ‘Guidance on Promoting the Green Belt and Road’. China must cease financing consideration for the project while investigation on illegal state aid is underway,” stated Pippa Gallop of CEE Bankwatch Network.

For additional information please contact:

Nina Kreševljaković
LL.B. Aarhus Resource Centre Sarajevo, Bosnia-Herzegovina
admin@aarhus.ba
+387 33/660 588

Pippa Gallop
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 97 87
Skype: pippa.gallop

Notes for editors:

The Energy Community Treaty entered force in 2006 and aims to create a common energy market between the EU and the Western Balkans, Ukraine, Moldova and Georgia. As well as implementing EU energy legislation, Contracting Parties must also implement selected EU environmental and competition legislation. For more information, see www.energy-community.org