Bosnia gets €613mn Chinese loan for Tuzla coal-fired power plant expansion

Bosnia gets €613mn Chinese loan for Tuzla coal-fired power plant expansion
By bne IntelliNews November 28, 2017

Chinese Exim Bank is to lend Bosnian energy company Elektroprivreda BiH (EPBiH) €613mn to fund the construction of the seventh unit at the Tuzla coal-fired power station, EPBiH said in a statement on November 27. 

The Chinese funding, agreed during the China-Central Europe summit in Budapest, could allow the project to finally get off the ground, as it has been delayed for several years mainly because it lacked financing. 

The new unit will be built, as well as funded, by Chinese companies; back in 2014 EPBiH selected a consortium of China Gezhouba Group and Guandong Electric Power Design to build the new unit after the original frontrunner, Hitachi, pulled out. 

The total cost of building the new unit, which will have capacity of 450MW, will be €722mn. Exim Bank’s loan will be extended for 20 years with a five-year grace period, the Bosnian utility said. 

“JP Elektroprivreda BiH will continue intensive activities for obtaining a guarantee from the Government of the Bosnian Federation and referring the loan agreement to parliamentary procedure,” the statement added, indicating there could still be regulatory hurdles ahead. 

The Tuzla expansion is just one of several coal-fired power plants being planned in Bosnia — most of them with Chinese funding. The government is keen to invest into new capacity both to replace ageing infrastructure and to further increase exports; Bosnia already produces more electricity than it consumes at home. 

However, with no less than five new coal power plants either being considered or under construction, there are concerns about the economic viability should several move forward to the construction stage. In particular, the existing Tuzla power plant is just 30km from a planned new power plant at Banovici. Both are expected to be funded by Chinese state banks. 

“It is very unlikely that two plants within just a few kilometres of one another can both be feasible, yet the [Bosnian Federation] government has so far supported both projects,” says a May 2017 Bankwatch report.

 

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