Negotiations about state guarantee for the Tuzla 7 project end without agreement

6 December 2019

The Secretariat and representatives of the Federation of Bosnia and Herzegovina yesterday terminated their negotiations related to the planned coal-fired power plant Tuzla 7 without having reached an agreement. The negotiations became futile after the Federal Minister of Finance on 19 November 2019 signed a guarantee agreement without prior clarification of compliance with Energy Community State aid rules.

Upon request of the Federation of Bosnia and Herzegovina, the Secretariat on 31 July 2019 had agreed to explore possibilities to settle the dispute with Bosnia and Herzegovina concerning a state guarantee issued by the Federal Ministry of Finance on behalf of the Federation of Bosnia and Herzegovina. The guarantee secures a loan by the Export-Import Bank of China to the public utility Elektroprivreda BiH d.d. Sarajevo, a prerequisite for the utility to construct the Tuzla 7 plant. A dispute had been initiated by the Secretariat earlier by an Opening Letter in Case ECS-10/18. The Secretariat is of the opinion that the decision by the State Aid Council of Bosnia and Herzegovina of 23 July 2018, which considered the guarantee as not involving any State aid, was taken in contravention of the applicable Energy Community rules.

The Secretariat thanks Dr Herman Verbist, mediator appointed by the Dispute Resolution and Negotiation Centre, for his great commitment to the negotiation process and his excellent facilitation services.

In Scope:

  • Bosnia and Herzegovina Bosnia and Herzegovina