Bosnia: Construction of Unit 7 TPP Tuzla, the largest investment of EP BiH and Chinese investors could reveal the biggest affair

11. May 2016. / SEE Energy News

Council of Ministers of Bosnia and Herzegovina gave support to Chinese investors for the construction of Unit 7 of TPP Tuzla. From the introduction of this idea, when Memorandum of understanding was signed in Belgrade on December 17, 2014, the public of Bosnia and Herzegovina did not have any additional information.

All that is known about this giant project is that it is around KM 1.5bn worth. Elektroprivreda BiH would have to pay 15 percent, Chinese Exim bank 85 percent. Repayment period is 15 years. All other details, including the interest rate, are unknown.

Experts warned that even with those information it is clear that the original contract between Elektroprivreda and Chinese partners will have to be amended report local Bosnian medias.

When cooperation was signed several years ago, it was calculated that MW of electricity was worth around KM 100, and a GW of coal could have been bought for about KM 4. However, prices have changed so that electricity price is now KM 80, and coal price is around KM 6. Thus, it is highly disputable whether there would be any profit at all.

As Amer Jerlagic, the former director of Elektroprivreda BiH stated, the continuation of this Project is uncertain. He added that the supplier took advantage of being the only one selected so he raised prices compared to market. Also, the investment itself would not be cost-effective taking into consideration changed financial conditions.

There are many unanswered questions regarding this project. It would be nice to hear how was it possible to conclude commercial contract without obtaining the founder’s consent prior to its conclusion. It is further unclear how JP Elektroprivreda BiH, 100 percent state-owned could have concluded any commercial contract before publishing procurement in order to select the best tenderer.

With all those ambiguities it is not clear why commercial contract was signed if Elektroprivreda BiH should obtain loan and which obligations Elektroprivreda BiH assumed by this contract.

The interesting fact is that joint work stream was founded between Elektroprivreda BiH and Chinese Consortium for project implementation, even though there was a commercial contract according to which contracted parties had to act.

Council of Ministers of Bosnia and Herzegovina gave support to Chinese investors for the construction of Unit 7 of TPP Tuzla. From the introduction of this idea, when Memorandum of understanding was signed in Belgrade on December 17, 2014, the public of Bosnia and Herzegovina did not have any additional information, transmits Serbia-energy.eu

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