Case

On 26 March 2019, the Secretariat sent an Opening Letter to Bosnia and Herzegovina for non-compliance with the State aid acquis. The Secretariat takes the preliminary view that Bosnia and Herzegovina failed to comply with its obligations under the Treaty, in particular Article 18 and 19 thereof, because the State Aid Council incorrectly assessed the State aid character of a guarantee granted for a loan to the Tuzla 7 project.
 

Reasoning

In its Opening Letter, the Secretariat assess the State Aid Council’s decision regarding a public guarantee granted in favour of the Export-Import Bank of China for a loan by the latter to the public utility Elektroprivreda BiH d.d. Sarajevo for the Tuzla 7 project. This guarantee has been found by the State Aid Council of Bosnia and Herzegovina not to contain elements of State aid.

The Secretariat came to the preliminary conclusion that the State Aid Council’s assessment does not comply with the State aid acquis and the guarantee for the Tuzla 7 project constitutes State aid in the sense of Article 18(1)(c) of the Treaty.

Procedure

By sending an Opening Letter, the Secretariat initiates a preliminary procedure, the purpose of which is to give Bosnia and Herzegovina the opportunity to react to the allegation of non-compliance with Energy Community law within two months and to enable the Secretariat to establish the full background of the case.

According to Articles 7 and 17 of the Rules of Procedure for Dispute Settlement, interested parties may be granted access to the case file and may submit written observations on the present case to the Secretariat during the preliminary procedure. All requests for information on this case should be addressed to the Deputy Director / Legal Counsel of the Secretariat at [email protected] or +43 1 535 2222 24 and should make reference to the case number ECS-10/18.

Steps taken

On 16 January 2020, the Secretariat sent a Reasoned Opinion to Bosnia and Herzegovina for non-compliance with the State aid acquis to follow up on its Opening Letter of 26 March 2019.

After unsuccessful termination of a mediation process, the Secretariat maintains its findings in the Opening Letter. In the Reasoned Opinion, it reiterates its view that by the State Aid Council incorrectly assessing the State aid character of a guarantee granted for a loan to the Tuzla 7 project, Bosnia and Herzegovina fails to comply with its obligations under the Treaty, in particular Article 18 and 19 thereof.

Reasoning

The Secretariat came to the conclusion that the State Aid Council’s decision regarding a public guarantee granted in favour of the Export-Import Bank of China for a loan by the latter to the public utility Elektroprivreda BiH d.d. Sarajevo for the Tuzla 7 project does not comply with the State aid acquis and the guarantee for the Tuzla 7 project constitutes State aid in the sense of Article 18(1)(c) of the Treaty.

Procedure

Bosnia and Herzegovina is requested to rectify the issues of non-compliance with Energy Community law identified in the Reasoned Opinion within a time-limit of two months. Depending on the reply from Bosnia and Herzegovina, the Secretariat may submit the case to the Ministry Council for a decision on the non-compliance of Bosnia and Herzegovina with Energy Community law

On 26 June 2020, the Secretariat submitted a Reasoned Request to the Ministerial Council in Case ECS-10/18, following the failure of Bosnia and Herzegovina to rectify the breach identified by the Secretariat.

Steps taken

After having considered the opinion of the Advisory Committee, which upheld the Reasoned Request, the 19th Ministerial Council took a decision regarding the failure of Bosnia and Herzegovina to comply with its obligations under the Treaty, in particular Article 18 thereof.

In Article 1 of the Decision, the failure is described in detail. Article 2 of the Decision stipulates that Bosnia and Herzegovina shall take all appropriate measures to rectify the breach identified and ensure compliance with Energy Community law immediately.

Procedure

Bosnia and Herzegovina is asked to report regularly to the Secretariat and the Permanent High Level Group about the measures taken in 2022. The ministers invited the Secretariat to initiate the procedure under Article 92 of the Treaty if the breach is not rectified by 1 July 2022.

On 1 July 2022, the Ministry of Foreign Trade and Economic Relations informed the Secretariat that on 29 June 2022, the State Aid Council of Bosnia and Herzegovina annulled its decision from 2018, and following the Secretariat’s argumentation in this case, decided now that the guarantee constitutes illegal State aid which the Federation’s Ministry of Finance is obliged to recover. This decision remedies the breach identified by Ministerial Council Decision 2021/03/MC-EnC.