Bosnia's $1.1 bln deal for China-backed coal-fired plant under threat

Aerial view of the thermal power plant in Tuzla, Bosnia and Herzegovina April 21, 2021. REUTERS/Dado Ruvic/File Photo

SARAJEVO, July 15 (Reuters) - A Chinese-backed deal to help Bosnian utility EPBiH expand its Tuzla coal-fired power plant has run into problems following General Electric's (GE.N) withdrawal from the project, a senior Bosnian official told Reuters on Thursday.

Nermin Dzindic, industry and energy minister in the government of Bosnia's autonomous Bosniak-Croat Federation, made the comments following the publication of documents about the $1.1 billion project on Sarajevo news portal Klix last week.

EPBiH picked China Gezhouba Group (600068.SS) and Guandong Electric Power Design in 2014 to build a 450 megawatt (MW) unit in Tuzla at a cost of 1.8 billion Bosnian marka ($1.1 billion) to replace three ageing units at the 715 MW plant.

The documents released by Klix said the Chinese partners had informed EPBiH in January that GE was dropping out and offered alternative subcontractors, but EPBiH rejected the proposed replacement companies.

"In this way, the contractor was left without the nominated subcontractor for the boiler, turbine and generator," Dzindic said, adding that the government had passed the information on to parliament to decide on the next steps.

GE did not immediately respond to requests for comment about the Bosnian project.

GE announced in September that it would stop making coal-fired power plants as the U.S. industrial conglomerate focuses more on renewable sources of power generation.

According to the same documents released by Klix, EPBiH said it would break the contract, which is estimated to be the biggest post-war energy investment in Bosnia, unless the government and parliament propose a different solution.

The Chinese backers had proposed two companies based in Shanghai to provide the equipment GE would have contributed.

EPBiH officials declined to answer Reuters questions about the subject.

China's Exim bank [RIC:RIC:EXIMC.UL] agreed to finance 85% of the project with EPBiH putting up the remaining 15%. Construction was supposed to begin in July last year but was delayed due to the coronavirus pandemics.

Countries in the Balkans which heavily rely on coal for power production have been increasingly turning to China for funding as the European Union, World Bank and other institutions cut back on financing coal-based projects.

Additional reporting by Ivana Sekularac in Belgrade; Editing by David Clarke

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