China to lend $732m for Bosnian coal-fired plant upgrade

China‘s ExIm Bank is to lend €613m ($732m) to Bosnia to build a new unit at a coal-fired power plant after inking a deal this week at a Central European-Chinese summit in Hungary.

The funding is conditional on Parliamentary approval.à‚ 

Bosnian utility Elektroprivreda BIH (EPBIH) plans to add the 450 MW unit to its 715 MW Tuzla plant (pictured), which runs on brown coal and lignite and was commissioned in 1978.

EPBIH also plans to add an eighth 300 MW unit to the six-unit plant, with a provisional construction start date of 2023.

A contract to build the $1.6bn seventh unit was awarded in 2014 to a consortium including China Gezhouba Group and Guandong Electric Power Design, but the project has suffered from delays including a court challenge to its environmental permit and cost revisions based on feasibility assessments.à‚ 

According to a statement from Bosnian Prime Minister Denis Zvizdic, the project marks the beginning of a series of similar ventures with China.

Chinese firms are reportedly looking to fund more than €3bn in energy and infrastructure projects in Bosnia as European support for coal-fired power dries up.

However, environmental groups have objected to the collaboration with China over concerns that Bosnia’s plant operators will need to spend more to meet European emissions standards when it joins the EU. The country’s application for membership has been under consideration since last year.

Public finance monitoring group CEE Bankwatch Network called the loan “rushed” and said the project is “far from ready”. à‚ 

Ioana Ciuta, energy co-ordinator with CEE Bankwatch, said: “The fact that there’s an occasion to sign this loan agreement doesn’t make the project ready, quite the opposite ” it is without the Parliament’s approval and haunted by legal and procedural challenges.

“The environmental permit is still being challenged in court, there is no energy permit, and the loan guarantee has not been approved by the State Aid Council.”

Image credit: MoserB/Wikimedia Commons

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