The State Aid Council of Bosnia and Herzegovina annulled its decision from 2018 where it found that a guarantee granted by the Federation of Bosnia and Herzegovina (FBiH) in favor of the Export-Import Bank of China for a loan by the latter to power utility EPBiH for the Tuzla 7 coal power plant project does not constitute state aid. Following the argumentation by the Energy Community Secretariat in an infringement case against Bosnia and Herzegovina, the State Aid Council now decided that the guarantee constitutes illegal State aid which the Federation’s Ministry of Finance is obliged to recover.
This decision of the State Aid Council settles the infringement procedure launched by the Secretariat in 2019 and formally terminated by a decision of the Ministerial Council in 2021. In that decision, the Ministerial Council found that Bosnia and Herzegovina failed to comply with its obligations under Article 18 the Treaty, the prohibition of State aid. The State Aid Council reopened the procedure by its own motion. By rendering its decision, the State Aid Council did not only remedy the breach identified by the Ministerial Council, but also ensured compliance with the State aid acquis and aligned its decision with European State aid enforcement standards.
Head of Legal and Deputy Director at the Secretariat Dirk Buschle said that the decision means that the European law will prevail, and non -compliance can be rectified by responsible national authorities even in cases where important interests are at stake. By correcting its previous decision, the State Aid Council of Bosnia and Herzegovina established itself as a credible enforcer of national and Energy Community rules on state aid. The Secretariat will support the implementation of the decision.
In late 2020, US General Electric (GE), which was supposed to manufacture and design a key piece of equipment, withdrew from the project, and this was subsequently done by the German Siemens, who was supposed to be the replacement. The US company was supposed to deliver a boiler and a steam turbine generator, but GE announced that it intends to withdraw from the coal energy market. The Chinese investors, China Gezhouba Group Company (CGGC) and China Energy Engineering Group (GEDI), then looked for an alternative at Siemens, but the company also turned them down. the Chinese are offering to continue with the realization of the project, while the equipment should be manufactured and delivered by Shanghai Boiler Works and Shanghai Electric Group instead of western companies. The project remains in limbo since.
