Bosnia’s state-owned power utility, EPBiH, has successfully recovered the full advance payment of 126.5 million euros from the Chinese contractor after terminating the contract for the construction of Unit 7 at the Tuzla coal-fired thermal power plant.
The unit 7 project, which has attracted significant public interest, faced delays and issues from the beginning. EPBiH management exercised caution in communicating the status of the project to avoid misinformation while ensuring effective negotiations and protecting the company’s interests. Now, the utility has decided to share the results of the negotiations.
The Engineering, Procurement, and Construction (EPC) contract for the 450 MW Unit 7 at Tuzla, valued at over 700 million euros, was signed in August 2014 with two Chinese contractors: China Gezhouba Group Company and China Energy Engineering Group Guangdong Electric Power Design Institute Co. In June 2020, EPBiH made an advance payment of 126.5 million euros to the contractor. However, in August 2020, the contractor informed EPBiH that it was unable to fulfill the contract due to issues in procuring key equipment from General Electric.
By January 2023, the contractor had still not met its contractual obligations or provided any alternative solutions. In response, the previous EPBiH management, with the approval of the FBiH Government, issued three warnings to the contractor, signaling the potential termination of the contract. The final warning was given in July 2023, setting a 90-day deadline for the contractor to fulfill its obligations.
After taking office in August 2023, the current management of EPBiH hired a renowned international legal team to protect the company’s interests. Despite the contractor’s continued failure to meet its obligations, EPBiH, with prior approval from the FBiH Government, officially terminated the contract in December 2023 and began negotiations for an amicable resolution of the outstanding issues.
Following months of negotiations, EPBiH successfully recovered the full 126.5 million euros advance payment, marking a resolution to the long-standing issue.
