Bosnia-Herzegovina politicians defy investigation to approve Chinese loan guarantee for coal power plant
The Federation of Bosnia-Herzegovina Parliament looks set to approve a loan guarantee for a EUR 614 million China Exim Bank loan for the Tuzla 7 coal power this Thursday, 28 February, , despite an ongoing Energy Community investigation into its compliance with State aid legislation.
26 February 2019
The Energy Community Secretariat, which is currently examining the case, has in response issued a warning that the Parliament must not approve the loan until its investigation is complete. 
The guarantee was cleared by the the State Aid Council of Bosnia and Herzegovina in July 2018,  but in September 2018, the Energy Community Secretariat requested the Federal Parliament not to approve the guarantee , after its initial examination of the case indicated that the guarantee would not be in line with EU law.
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 per cent of the total loan amount.
The proposed guarantee for Tuzla 7, however, covers 100 per cent of the loan, plus interest and other associated costs. There are circumstances in which this is allowed, but, as a September 2018 complaint to the Energy Community by the Aarhus Resource Centre and Bankwatch argued, the relevant conditions are not fulfilled in this case. 
“Using public money to support a new coal power plant is unacceptable in any case, but especially when it is most likely illegal,” said Denis Žiško of the Centre for Ecology and Energy, Tuzla. “Tuzla 7, if built, would sentence Bosnia-Herzegovina to decades of more pollution and greenhouse gas emissions and is highly likely to generate economic losses. Parliamentarians must not support new coal plants in any way, but must instead act to reduce energy wastage and to use our renewable energy potential”.
“The Energy Community has issued a clear warning that Bosnia-Herzegovina is about to dive headlong into non-compliance with EU law. If the country is serious about its European future, this warning must be headed. This is not just a matter of legal compliance but also of making the clean energy transition a reality and saving public money from being spent on a polluting and obsolete industry,” stated Pippa Gallop of CEE Bankwatch Network.
For more information, please contact
Centar za ekologiju i energiju
Mob: +387 61 140 655
CEE Bankwatch Network
Mob: +385 99 755 9787
Notes for editors
- Decision No. UP/I 03-26-1-42-4/18 of dated 23 July 2018
- The letter from the Energy Community Secretariat
- For more information, see here
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