October 17 (SeeNews) - Bosnia's state aid council has dismissed the doubts of the Energy Community regarding the lawfulness of a loan guarantee issued to power utility Elektroprivreda BiH (EPBiH) for the construction of a new unit at Tuzla thermal power plant (TPP).
The decision was made in accordance with the Bosnian regulations in the field of state aid, as well as the EU rules, the state aid council, the body tasked with state aid control in Bosnia, said in a statement on Tuesday.
The Vienna-based Energy Community has sent a letter to the members of the state aid council regarding the state support for the construction of Unit 7 of Tuzla TPP after complaints were received from the Aarhus Center and the CEE Bankwatch Network for the potential non-compliance with EU rules, Bosnian media reported earlier this week.
In August, the government of Bosnia's Federation entity said it decided to provide a guarantee for 613.99 million euro ($709.7 million) loan from China's Ex-Im Bank, which power utility EPBiH will use to finance the construction of a 450 MW Unit 7 at the existing Tuzla TPP. The loan covers 85% of total cost of the project, which will be carried out by China's Gezhouba Group Company Limited and Gunagdong Electric Power Design Institute.
A violation of the Energy Community Treaty can be established only in accordance with the Energy Community rules for resolving disputes, the council said.
The assessment of the financial stability of the economic entity to which Bosnia's Federation government provides a loan guarantee does not cover all relevant criteria of the European acquis communautaire, that is, the Law on State Aid System, the Energy Community said in its letter.
In November 2016, EPBiH said it had signed a framework deal with Ex-Im Bank for the construction of the new unit at Tuzla TPP. According to Bosnian media reports, European Union credit institutions have declined to finance the project as it fails to meet the bloc's strict environmental requirements.
The Federation is one of two autonomous entities that form Bosnia and Herzegovina. The other one is the Serb Republic.
($ = 0.865121 euro)