Bosnia and Herzegovina: TPP Tuzla unit 7 project still uncertain

, SEE Energy News

The realization of the project for the construction of unit 7 at coal-fired thermal power plant Tuzla is uncertain because Chinese partners are seeking contract revision due to the withdrawal of a subcontractor – US company General Electric (GE). Unit 7 was announced as a great development opportunity for the country and the largest post-war investment worth more than 700 million euros, which was supposed to be realized with the help of credit funds that the Federation of Bosnia and Herzegovina (FBiH) took from the Chinese Eximbank. The Chinese consortium led by Gezhouba Group Company Limited has been selected as the contractor.

However, the FBiH Government was recently informed by the Supervisory Board of EPBiH that the Chinese partner is requesting an amendment to an agreement previously approved by the Federal Government, the FBiH Parliament and the BiH Council of Ministers. Changing any detail of that agreement would involve a renegotiation process and re-approval by these institutions.

FBiH Minister of Energy, Mining and Industry Nermin Dzindic said that If the Chinese partner can keep all the elements that were defined within the original contract, FBiH Government is in favor of continuing this project, but it has to be approved by the FBiH Parliament as well. Now it is up to the Gezhouba Group to determine if it is technically possible to complete the project within the given framework.

In early June, Bosnian media reported that General Electric canceled its cooperation with the Chinese contractor, and the contract signed between EPBiH and the Chinese consortium specifies the list of approved subcontractors, including GE. General Electric was to supply equipment for the new unit. General Electric withdrew from the project due to pressure from the European Union, which has taken a position that does not support the construction of any coal-fired power plants. In November 2017, EPBiH signed a loan agreement with Chinese Exim Bank for financing the construction of unit 7 at TPP Tuzla on the sidelines of a meeting of the heads of Governments of China and 16 Central and East European countries held in Budapest. The net agreed price under the EPC contract is 722.35 million euros (without VAT). The maturity of the loan from China’s Exim Bank is 20 years, with a 5-years grace period. The loan will cover 85 % of the investment, while the remaining 15 % will be provided from EPBiH’s own funds. TPP Tuzla has 6 units with overall output of 715 MW. New unit 7 will be replacement capacity for units 1 and 2 (32 MW each), which have already been shut down and units 3 (100 MW) and 4 (200 MW) which should be put out of operation in 2018, but will most likely continue to operate until 2020. When unit 7 is completed, it will provide almost a quarter of electricity produced by EPBiH.