Bosnia likely to end deal with Chinese consortium on Tuzla 7 coal plant construction

Bosnia likely to end deal with Chinese consortium on Tuzla 7 coal plant construction
Elektroprivreda BiH has been planning for years to build a new unit at the Tuzla coal-fired power plant. / Elektroprivreda BiH
By Denitsa Koseva in Sofia October 9, 2023

The government of Bosnia & Herzegovina’s Muslim-Croat Federation could end a contract with Chinese consortium between China Gezhouba Group Company Ltd. and China Energy Engineering Group Guangdong Electric Power Desing Institute Co. Ltd. on the construction of a seventh unit of the Tuzla coal-fired power plant, the state-owned Elektroprivreda BiH (EPBiH) said in a press release on October 9.

So far, the Federation’s government has sent three warnings to the consortium that it will end the contract unless the implementation of the project is launched.

A contract on the construction of Tuzla 7 was signed with the Chinese consortium back in 2014. However, in September 2020 the consortium informed EPBiH that the producer of the key equipment had given up the project. By the end of 2021, the consortium proposed alternative producers but they were not accepted by Bosnia.

EPBiH launched new talks with the consortium on the possible replacements but none of them had the required references, EPBiH noted.

The Bosnian Federation has been preparing to build a new 450 MW unit at the Tuzla coal-fired power plant to replace units 3 and 4 that are due to be shut down. However, the government has been embroiled in a long dispute with the Energy Community secretariat over what the latter considers to be state aid for the project.

In July 2022, the government decided to shelve the plans for Tuzla 7 as the Chinese consortium had not proposed an acceptable replacement company to build the key equipment.

The construction of new coal fired power plants in Bosnia and other Western Balkan countries is a controversial issue, given the need to reduce greenhouse gas emissions. 

Harmful emissions from the coal power plants in the Western Balkans increased in 2022, according to the latest Comply or Close report from NGO Bankwatch released in June.

The energy watchdog also commented that as pressure increases on countries in the region to abandon coal plants and international financial institutions (IFIs) step away from financing fossil fuel projects, these plans are looking increasingly unclear.