Guarantee for the Tuzla 7 coal power plant found to be illegal State aid

  • Legal
  • State Aid
  • Electricity
5 July 2022

On 29 June 2022, the State Aid Council of Bosnia and Herzegovina annulled its decision from 2018 where it found that a guarantee granted by the Federation of Bosnia and Herzegovina in favour of the Export-Import Bank of China for a loan by the latter to the public utility Elektroprivreda BiH d.d. Sarajevo for the Tuzla 7 coal power plant project does not constitute State aid. Following the argumentation by the Secretariat in an infringement case against Bosnia and Herzegovina (Case ECS-10/18), the State Aid Council now decided that the guarantee constitutes illegal State aid which the Federation’s Ministry of Finance is obliged to recover.

This decision of the State Aid Council settles the infringement procedure launched by the Secretariat in 2019 and formally terminated by a decision of the Ministerial Council in 2021. In that decision, the Ministerial Council found that Bosnia and Herzegovina failed to comply with its obligations under Article 18 the Treaty, the prohibition of State aid. The State Aid Council reopened the procedure by its own motion. By rendering its decision, 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 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. 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,” said Dirk Buschle, Head of Legal and Deputy Director at the Secretariat.

Following the State Aid Council’s decision, Bosnia and Herzegovina is under an obligation to comply with the recovery order and withdraw the guarantee.