EU's Hahn concerned about China Exim Bank loan for FBiH energy project 'Block 7'

EU's Hahn concerned about China Exim Bank loan for FBiH energy project 'Block 7'

EU's Hahn concerned about China Exim Bank loan for FBiH energy project 'Block 7' Izvor: Tanjug / Dragan Kujundžić

I am very surprised by the large majority decision of the Federation of Bosnia and Herzegovina (FBiH) entity's House of Representatives on a public guarantee in favour of China’s Exim Bank loan for Tuzla Thermal Power Plant's Block 7, the EU-Commissioner for European Neighbourhood and Enlargement Negotiations, Johannes Hahn, tweeted on Tuesday evening.

According to him, this raises serious questions “not only about Bosnia's commitment to international treaties and European rules under the Energy Community Treaty but also about the choice of the energy technology as well as about a sound cost-benefit analysis in a responsible and transparent manner.”

 Last week, the FBiH Parliament adopted several decisions needed for the beginning of the construction of Block 7, which is supposed to substitute the already dated blocks 1, 2, 3 and 4, which are due to shut gradually by 2027.

The 450 MW Block 7 will cost the FBiH whooping €870 million, but, as the FBiH Prime Minister, Fadil Novalic, said – the FBiH entity has no alternative because the scenario of it running out of power by 2027 is real.

This would compromise the entire energy system of the country, and the consequences of this scenario would be devastating for the country.

When it comes to reasons why Bosnia signed a loan contract with a Chinese bank and not an EU one, only one dominated the negotiations – high interest-rates from EU banks caused by Bosnia's weak economy and unfavourable political situation. The Chinese Exim Bank, on the other hand, bullishly, offered highly favourable repayment conditions which the FBiH government could not resist.

Hahn added that FBIH representatives probably have good reasons for their decision and that they will be able to explain this to their citizens.

“Issues like environmental impact assessments, state aid and public procurement procedures will certainly be closely looked at during the opinion process,” the EU official said, probably hinting at the EU Commission's opinion on Bosnia's candidate status application which was formalised by the submission of answers to the Commissions Questionnaire on the state of affairs in the country.

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