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Energy Community terminates settlement talks with Bosnia on Chinese loan guarantee

Energy Community terminates settlement talks with Bosnia on Chinese loan guarantee Tuzla TPP Author: MoserB Licence: Public domain

SARAJEVO (Bosnia and Herzegovina), December 9 (SeeNews) - The Energy Community said it failed to reach an agreement with Bosnia regarding the loan guarantees the country has granted to China's Ex-Im Bank for the construction of a new unit at Tuzla coal-fired power plant. 

The negotiations became futile after minister of finance of Bosnia's Federation entity on November 19 signed a guarantee agreement without prior clarification of compliance with Energy Community state aid rules," the Energy Community said in a press release on Friday. 

In August 2018, the government of Bosnia's Federation entity said it decided to provide a guarantee for a 614 million euro ($679.3 million) loan from China's Ex-Im Bank, to be used to finance the construction of a 450 MW Unit 7 at the existing Tuzla lignite-fired power plant. The loan will finance 85% of the total cost of the project.

In March, the Energy Community Secretariat sent an open letter to Bosnia, saying it has found that the assessment made by the country's State Aid Council is not in compliance with the state aid acquis, and that the guarantee for the Tuzla thermal power plant (TPP) project constitutes state aid. However, Bosnia and Herzegovina's State Aid Council has found that this guarantee does not contain elements of state aid.

In April, the upper house of the parliament of Bosnia's Federation confirmed the loan guarantee granted to China's Ex-Im Bank. 

On July 31, the Energy Community Secretariat agreed to explore possibilities to settle down the dispute with Bosnia upon the request of Bosnia's Federation. 

The Federation is one of two autonomous entities that form Bosnia and Herzegovina. The other one is the Serb Republic.

($ = 0.903806 euro)

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