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State Aid Council revokes the approval of a loan for the Tuzla 7 lignite plant in BiH

Four years after approving a public guarantee for the Tuzla 7 lignite plant in Bosnia and Herzegovina, the State Aid Council is taking a step back, finding that the loan approved from the Export-Import Bank of China to the utility group Elektroprivreda does not constitute State aid.

This decision settles an infringement procedure launched by the Energy Community Secretariat in 2019 and formally terminated by a decision of the Ministerial Council in 2021. In that decision, it was stated that Bosnia and Herzegovina failed to comply with its obligations under Article 18 of the Treaty, the prohibition of State aid.

Now, the State Aid Council did not only remedy the breach identified by the Ministerial Council but also ensured compliance with the State aid acquis and aligned its decision with the European State aid enforcement standards.  

“The decision makes us confident that European law will prevail and non-compliance can be rectified by responsible national authorities even in cases where important interests are at stake,” commented Dirk Buschle, Head of Legal and Deputy Director at the Secretariat. “By correcting its previous decision, the State Aid Council of Bosnia and Herzegovina established itself as a credible enforcer of national and Energy Community rules on State aid. The Secretariat will support the implementation of the decision.”

Bosnia and Herzegovina is in the spotlight also for endorsing the extension of the Tuzla 4 and Kakanj 5 coal-fired thermal power plant operations past the allowed time limits, namely until 2028.

The two plants concerned are already at the end of their 20,000 hours limit. As already emphasised by the Energy Community Secretariat earlier in March, the operation beyond this time limit has a negative impact on the interest of all citizens in Bosnia and Herzegovina as air pollution is responsible for severe health and environmental damages, including premature deaths due to respiratory diseases and also cause extremely high costs that societies have to bear as a whole.

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