BiH’s EU Membership Jeopardized: China-Funded Coal Plant Project ‘Surprises’ Brussels

Written by | Friday, March 15th, 2019

The Tuzla coal power project that Bosnia and Herzegovina (BiH) is supporting financially and politically might thwart the small Balkan country’s EU membership prospects. EU Enlargement Commissioner Johannes Hahn commented that he was “surprised” by the decision made by the Bosnian Parliament early this month, which gave support to the project. The commissioner further said that the project “raises serious questions not only about BiH’s commitment to international treaties and European rules under the Energy Community Treaty but also about the choice of the energy technology”.


Lawyers from the Bosniak-Croat federation – one of the two entities set up following the 1992-995 war – gave a green light to the loan that will secure 614 million euros in financing provided by a Chinese bank. The money will cover the construction of a new 450 MW lignite coal unit. Yet, the power plant project is threatening Bosnia’s EU membership dream as an EU membership automatically assumes a membership on the Energy Community, an international organization composed mainly of candidate countries who team up to expand the EU’s internal energy market throughout southeast Europe.


The EU’s energy watchdog already urged a Bosnian regional parliament in September last year not to approve a government guarantee for a China Exim Bank loan. This comes at a time when the countries of the Balkans are increasingly turning to China for funding, while the EU, the World Bank and other institutions cut back on financing coal-based projects. Chinese firms are already implementing a series of projects in the region, chiefly in the energy sector, and worth around €3.8 billion in Bosnia alone. Environmentalist groups oppose the coal projects with China’s involvement, saying they do not meet EU rules and could further exacerbate the already high levels of air pollution, while also exposing the cash-strapped BiH to costly plant upgrades once it joins the EU.


Members of the Energy Community need to stick to the EU’s strict state aid guidelines one of which says that loan guarantees cannot be more than 80% of the grant’s total value while BiH is planning to cover the full amount plus the interest and related costs. The plan has also encountered internal opposition from BiH’s environmental groups. Denis Zisko of Bosnia’s Centre for Ecology and Energy commented that “by giving almost unanimous support to a document that is clearly not in line with the Energy Community State aid acquis, parliamentarians once again demonstrated utter irresponsibility with regard to the international obligations of our country”.


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