Tuzla Thermal Power Plant

From Global Energy Monitor
(Redirected from Tuzla-B power station)

Tuzla Thermal Power Plant is a 715-megawatt (MW) coal-fired power station in Bosnia-Herzegovina.

Two additional units have been proposed. The expansion is also known as Tuzla B.

However, given recent project setbacks, the full expansion is considered shelved and likely cancelled.

Location

The undated satellite photo below shows the power station near Tuzla.

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Background

The plant is owned and operated by Elektroprivreda BiH, a publicly owned power utility. Construction of the plant commenced in 1959. Commissioning of two 32 MW generating units took place in 1963 and 1964. Both of these units (units 1 & 2) have since been decommissioned. In 1966 the 100 MW Unit 3 was commissioned. This unit was rebuilt and modernised in the late 1990s after the Bosnian War. Two 200 MW units (units 4 & 5) were commissioned in 1971 and 1974 respectively. The 215 megawatt Unit 6 was commissioned in 1978.[1]

In early 2022, a proposal was made to extend the operation of Unit 4 until 2028. The Energy Community Secretariat said this was "a clear breach of the obligations of Bosnia and Herzegovina under the Energy Community Treaty".[2]

Coal supply

The power station was estimated to consume approximately 3.3 million tons of brown coal and lignite a year. Elektroprivreda BiH stated on its website that coal for the plant was sourced from "Kreka (Dubrave, Šikulje, Mramor and Bukinje) and Banovići for Units 1-6, and brown coal from coal mines Đurđevik and Banovići for Unit 7."[1]

Expansion

Elektroprivreda BiH proposed a seventh and eighth unit of 450 MW each. On its website, Elektroprivreda BiH stated that the power station had received an environmental permit and construction was scheduled to begin in 2014 and end in 2018.[3]

In May 2011, EPBIH stated that China National Electric Engineering CO., Ltd (CNEEC) expressed interest in Unit 7, a 450 MW expansion. However, Reuters noted that the Swiss energy firm Alpiq had also bid to become a "strategic investor" in the plant.[4]

In April 2014, Hitachi decided to pull out of the process to build the $1.16 billion Tuzla unit, citing political unrest in Bosnia. A Chinese consortium, which includes China Gezhouba Group and Guandong Electric Power Design, was the sole bidder to build the 450 MW unit.[5]

According to a long-range plan released in May 2014 by Elecktroprivreda BiH, the new units would begin construction in 2015 and 2023 respectively and go online in 2019 and 2027 respectively. The plan stated unit 8 would be 450 MW.[6]

On August 30, 2014, China Gezhouba Group Co. (CGGC) signed the EPC contract to build the 450MW unit 7. The company was applying for permits.[7] It was later found the plant would not be economically feasible, and in May 2016, an annex to the contract was signed, which brought the cost down to EUR 722 million. In November 2016, a framework agreement on financing the plant through the China Exim Bank was signed, but the actual financing contract was not signed.[8][9]

In March 2022, contract negotiations were ongoing.[10] In June 2022, the expansion project was described as "increasingly uncertain".[11]

New permit issued

After Tuzla 7’s initial environmental permit expired in November 2015, a new one was issued in July 2016. NGO Ekotim filed a court case challenging the permit in September 2016. In October 2016, Ekotim also submitted a complaint to the Energy Community since the environmental permit did not require the application of the Industrial Emissions Directive to the plant, as required of new plants.[8]

Loan details

In November 2017, the Bosnia government indicated a loan contract for the proposed unit 7 from the Export and Import Bank of China (China Eximbank) could be signed soon, provided the State Aid Council also gives its consent for loan guarantees. The plant was expected to be built by China Gezhouba Group and Guangdong Electric Power Design.[12]

On November 27, 2017, Bosnia secured a 613 million euro (US$732 million) loan from China’s Exim bank for construction of unit 7.[13] With the loan, Elektroprivreda then hired three Chinese companies – Gezhouba Group and Guandong Electric Power Design Institute (both of China Energy Engineering Corporation) and Dongfang Electric – to construct the plant.[14] IJ Global also reported that JP Elektroprivreda BiH would be committing US$134.92 million in equity toward the project.[15]

The loan guarantee was cleared by the the State Aid Council of Bosnia and Herzegovina in July 2018, but in September 2018, the Energy Community Secretariat requested the Federal Parliament not to approve the guarantee, after concluding that the guarantee would not be in line with EU law, given that it contains elements of State aid, or subsidies, which are not allowed under the EU Energy Community Treaty.[16]

In September 2018, it was reported that Gezhouba Group, Guandong Electric Power Design Institute, and Dongfang Electric of China were pulling out of the project, after failing to get approval for the plant from the Federation of Bosnia and Herzegovina.[14]

On March 7, 2019, the Bosnia-Herzegovina Federal House of Representatives approved a loan guarantee for EUR 614 million from the China Exim Bank loan for the Tuzla 7 coal power plant. The House of Peoples still had to vote on the final stage of approval. According to the NGO Bankwatch, the loan approval was illegal:[16]

"Under the Energy Community Treaty, Bosnia-Herzegovina must follow EU rules on subsidies in the energy sector. Among other things, in most cases state guarantees may only cover maximum 80 percent of the total loan amount. The proposed guarantee for Tuzla 7, however, covers 100 percent of the loan, plus interest and other associated costs. There are circumstances in which this is allowed, but, as a September 2018 complaint to the Energy Community by the Aarhus Resource Centre and Bankwatch argued, the relevant conditions are not fulfilled in this case."

On March 26, 2019, the Energy Community Secretariat announced that it was officially opening a dispute settlement procedure on the planned Federal guarantee for a EUR 614 million loan from the China Eximbank to build the Tuzla 7 coal plant. The procedure could potentially lead to temporary suspension of financing by EU banks.[17]

In November 2019, a consortium comprising Slovenia's NLB Banka, Italy's Intesa Sanpaolo, and Russia's Sberbank bid to provide €74 million to Elektroprivreda Bosne i Hercegovine (EPBIH) to part-finance the Tuzla 7 coal plant. The consortium was the only bid received for the project.[18] It was subsequently confirmed to NGOs that this loan was agreed by the banks, coming just before Intesa Sanpaulo announced in April 2020 that it would no longer provide financing to new coal power projects. NGOs also raised concerns that NLB Banka shareholder the European Bank for Reconstruction and Development, despite having ended its own financing for coal projects under its Energy Sector Strategy of 2013, failed to prevent NLB's financing for Tuzla 7.[19]

In June 2022, the guarantee granted by the Federation of Bosnia and Herzegovina was deemed illegal by the State Aid Council. The decision settled the infringement case launched in 2019. The elements of "state aid", as highlighted Energy Community Secretariat, were considered a failure to comply, and Bosnia and Herzegovina was ordered to withdraw the guarantee.[20]

GE withdrawal

In June 2021, General Electric – which was to supply equipment for the new unit – withdrew from the project reportedly due to pressure from the European Union, which had taken a position not to support the construction of any coal-fired power plants. The contract signed between EPBiH and the Chinese consortium building the plant, led by Gezhouba, specified the list of approved subcontractors, including GE. In response, Gezhouba was requesting an amendment to the signed contract, but authorities say it was not possible because it was adopted by the Federal Government, requiring a renegotiation process and re-approval by the appropriate institutions. According to Serbia Energy, the FBiH Government had already adopted an alternative plan if the Chinese consortium would not be able to fulfill its obligations, namely to extend the life of the existing TPP Tuzla and Kakanj Thermal Power Plant coal-fired units.[21]

In September 2021, company representatives said EPBiH was willing to continue construction because the project had no alternative. The Chinese partners in the EUR 700 million project expressed a similar stance, announcing readiness to finish the project.[22]

Energy Community loan decision

However, in November 2021, the Ministerial Council of the Energy Community confirmed that the state guarantee for the public loan for Tuzla 7 is illegal under the Energy Community Treaty. The Bosnian Federation had issued a loan guarantee in 2017 to enable the entity to borrow €614 million from the Export Import Bank of China to finance the project. The ruling followed a complaint to the Energy Community submitted by the Aarhus Center Sarajevo and Bankwatch in September 2018. Denis Zisko of the Aarhus Centre Tuzla reacted to the ruling, saying: "The loan guarantee for Tuzla 7 has been confirmed as illegal and [lead contractor] Gezhouba cannot fulfil its contract. What more do Bosnia and Herzegovina’s decision-makers need to make them drop this fantasy project?"[23]

Opposition

Local communities have been impacted by coal operations in Tuzla for more than 50 years, during which time they have seen their homes and lands become gradually encircled by huge lakes filled with coal ash and slag – the byproducts of burning coal. Their crops began drying up and their water has become undrinkable. There was extensive local opposition to the Tuzla 7 expansion, backed up by environmental groups.

The Coal of Tuzla: An attack on life

In December 2020, the Center for Ecology and Energy released a report revealing the extent of local land and water contamination from toxic substances such as cadmium, lead, nickel and chromium. In the first drinking water analysis to be carried out since the Tuzla complex began burning coal in the 1960s, from March to August 2020 the Center for Ecology and Energy conducted testing of water and soil samples near slag and ash disposal sites in Tuzla – Plane, Divkovići I, Divkovići II, Drežnik and Jezero I – as well as wastewater samples from the active ash disposal site Jezero II and samples from six water wells. In total, 23 water samples and two soil samples were analyzed.

The results show that the wastewater at the active Jezero II ash landfill was alkaline toxic water containing quantities of cadmium, lead, nickel and chromium which exceed the prescribed limit values. This type of wastewater should not be discharged into surface water without treatment or come into contact with underground water. Out of the six water wells tested during the analyzed period, water from only two of them could be considered completely safe to drink according to Bosnian national standards. The analysis also discovered that the soil on the closed waste disposal sites of Plane and Drežnik, which were used for agriculture, contained concentrations of nickel between 6 and 12 times above the prescribed limits, and concentrations of chromium and cadmium between 1.6 and 4 times higher. These heavy metals, even in small quantities, tend to bioaccumulate over time, eventually leading to chronic, degenerative changes on important body organs: the liver, bones, spleen and brain.[24]

Project Details for expansion

  • Sponsor: Elektroprivreda BiH
  • Parent company:
  • Developer: China Gezhouba Group, Guangdong Electric Power Design
  • Location: Tuzla, Federation of Bosnia and Herzegovina
  • Coordinates: 44.52, 18.606111 (exact)
  • Status: Units 7-8: Shelved
  • Capacity: 900 MW (Units 7&8: 450 MW)
  • Type: Supercritical
  • Start date:
  • Coal Type: Lignite
  • Coal Source:
  • Source of financing: Unit 7: US$882 million loan from the Export-Import Bank of China;[25] €74 million (US$90.5 million) loan from NLB Banka, Intesa Sanpaolo and Sberbank;[19] US$134.92 million in equity from JP Elektroprivreda BiH[15]

Resources and articles

References

  1. 1.0 1.1 "Thermal-power plant Tuzla," Elektroprivreda BiH website, accessed September 2012
  2. "Thermal-power plant Kakanj," Elektroprivreda BiH website, accessed September 2012
  3. "Unit 8 TPP 'Kakanj,'” Elektroprivreda BiH, accessed May 2014
  4. Maja Zuvela, "China's CNEEC eyes Bosnia's $584 mln coal-fired unit", Reuters, May 30, 2011
  5. "Hitachi exit means consortium sole bidder for $1.16bn coal plant," Power Engineering, April 23, 2014
  6. "Dugoročni plan razvoja Elektroprivrede BiH do 2030. sa Strategijskim planom," Electroprivreda Bosne i Hercegovine, May 29, 2014, p. 142
  7. "CGGC signs EPC contract for thermal power project," CGGC, September 10, 2014
  8. 8.0 8.1 "Tuzla 7 lignite power plant, Bosnia and Herzegovina," Bankwatch, accessed May 2017
  9. "Critical economic analysis of the Tuzla thermal power plant unit 7 project," Bankwatch, December 16, 2014
  10. "News," Esotech, February 15, 2022
  11. "Chinese Extract Raw Materials From BiH: Thousands of cubic meters of logs are being bought en masse," Zurnal, June 7, 2022
  12. Ioana Ciuta, "Race to the bottom: dire air quality worsens as BiH government mulls new coal plant at Tuzla," Bankwatch, November 22, 2017
  13. "UPDATE 1-Bosnia secures $732 mln energy loan from China's Exim bank," Reuters, November 27, 2017
  14. 14.0 14.1 "Chinese Pull out From Building Bosnian Power Plant," Balkan Insight, September 19, 2018
  15. 15.0 15.1 "Preview of Tuzla Thermal Power Plant Unit 7 (450MW)," ijglobal, accessed October 2020
  16. 16.0 16.1 "Bosnia-Herzegovina Federal parliament guarantees Chinese coal plant loan in contempt of EU law," Bankwatch, March 8, 2019
  17. "Energy Community opens infringement procedure against Bosnia-Herzegovina over illegal Tuzla 7 state aid," Bankwatch, March 26, 2019
  18. "European banks must not support a "new Šoštanj 6" in Bosnia-Herzegovina, warn NGOs," Bankwatch, accessed January 2020
  19. 19.0 19.1 "How the BRI and the availability of Chinese finance weakens the rule of law in the Western Balkans," European Network of Corporate Observatories, December 2020
  20. "Guarantee for the Tuzla 7 coal power plant found to be illegal State aid," Energy Community, July 5, 2022
  21. "Bosnia and Herzegovina: General Electrics cancelled deal for TPP Tuzla unit 7 project," SEE Energy News, June 11, 2021
  22. "EPBIH ready to continue construction of Tuzla 7 coal project," Balkan Green Energy News, September 13, 2021
  23. "Loan guarantee for Bosnia’s Tuzla 7 coal plant confirmed as illegal," bne IntelliNews, December 1, 2021
  24. "Pollution of land, surface and groundwater near the slag and ash disposal site of Tuzla thermal power plant," Center for Ecology and Energy, December 2020
  25. "China's Global Energy Finance," Boston University, accessed October 2018

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