(Adds further details, background)
SARAJEVO, Nov 27 (Reuters) - Bosnia secured a 613 million euro ($732 million) loan from China’s Exim bank on Monday to help Bosnian utility EPBiH build a new generating plant at its Tuzla coal-fired power station, EPBiH said in a statement. The deal was signed during a two-day summit of China and Central European countries in Hungary, attended by Chinese Premier Li Keqiang.
In 2014 EPBiH picked a consortium which included China Gezhouba Group and Guandong Electric Power Design, to add the 450 megawatt (MW) generating unit, one of the largest investments in the Balkan country’s energy infrastructure, but the project has been delayed by red tape and negotiations over financing it.
EPBiH said the loan will be repaid over 20 years, including a five-year grace period, adding it will also have to be approved by a regional parliament. The utility said it will provide 109 million euros for the remainder of the project cost.
“Apart from being the prime investment into the energy sector of Bosnia, it (the contract) also marks the beginning of a series of projects we plan to carry out with ... China,” Bosnian Prime Minister Denis Zvizdic said in a statement.
As the European Union, the World Bank and other institutions cut back on coal financing, Balkan states are encountering difficulties in securing finance for their projects, prompting Chinese institutions and contractors to step in.
They are increasingly boosting their presence and showing a willingness to take bigger risks than European rivals in a potentially lucrative market with good links to the EU and scope for prices to rise.
In Bosnia alone Chinese companies are considering energy and infrastrucutre projects worth more than 3 billion euros.
Environmentalists have been objecting to the coal projects planned with China, saying they do not meet the latest EU emission directives and may add to the already high air pollution while also exposing cash-strapped Bosnia to having to make costly upgrades to the plants once it joins the EU. ($1 = 0.8377 euros) (Reporting by Maja Zuvela Editing by Susan Fenton, Greg Mahlich)