Ministerial Council decides in the Tuzla 7 case

At its meeting yesterday, the Ministerial Council decided that Bosnia and Herzegovina breached its obligations under Energy Community law with regard to the Tuzla 7 project.  The public utility Elektroprivreda Bosne i Hercegovine intends to build a new lignite fired power plant in Tuzla financed by a loan of the Chinese Export-Import Bank. The Federation of Bosnia and Herzegovina issued a guarantee to secure this loan. The national State Aid Council decided that the terms under which this guarantee was granted does not involve State aid. The Energy Community Treaty includes a principle prohibition of State aid in Article 18.

Following up on a Reasoned Request by the Secretariat and having heard its Advisory Committee comprised of five independent lawyers, the Ministerial Council decided yesterday that the decision of the State Aid Council was in breach of Article 18 of the Energy Community Treaty, as the guarantee was not issued on commercial terms.  

The Ministerial Council’s verdict concludes a long procedure which included cooperation with the State Aid Council of Bosnia and Herzegovina as well as a mediation process. Bosnia and Herzegovina must now rectify the breach.

“Yesterday’s decision is a landmark for the Energy Community. It is now clear that Contracting Parties of the Energy Community must apply the same level of scrutiny as the European Union in verifying direct or indirect support granted to undertakings in the energy sector. It is equally clear that the Energy Community institutions can, and will, enforce this obligation by infringement actions.” says Dirk Buschle, Deputy Director and Legal Counsel of the Secretariat.