SARAJEVO, Sept 18 (Reuters) - Shareholders of Bosnian power utility EPBiH gave the go ahead on Tuesday for construction of a China-backed coal-fired unit, which will be the largest postwar energy project in the Balkan state.
The Balkans are increasingly turning to China for funding as the European Union, World Bank and other institutions cut back on financing coal-based projects.
China Gezhouba Group and Guandong Electric Power Design will build the 450 megawatt (MW) unit in the city of Tuzla at a cost of 1.8 billion Bosnian marka ($1.1 bln), to replace three outdated units at the 715 MW plant.
EPBiH said its shareholders approved on Tuesday a set of decisions aimed at expediting construction of the unit.
The project will be financed via a 1.2 billion marka loan from the state-funded Export Import Bank of China while the remainder will be provided by EPBiH.
The Chinese loan will be repaid over 20 years, including a five-year grace period. The project is expected to be completed within 56 months, the shareholders’ assembly said.
The new unit will generate 2,740 gigawatt hours (GWh) of electricity and around 390 GWh of thermal energy a year and will increase EPBiH’s power generating capacity by 26.7 percent.
Chinese firms are implementing projects in the Balkans, mainly in the energy sector, and worth around 3.8 billion euros ($4.5 billion) in Bosnia alone.
Environmentalists object to the coal projects planned with China, saying they do not meet EU rules and could add to already high levels of air pollution, while also exposing cash-strapped Bosnia to costly plant upgrades once it joins the EU.
EPBiH shareholders, however, said the new unit at Tuzla will reduce greenhouse gas emissions there by up to 20 times compared to emissions from ageing units.
Bosnia obtains 40 percent of its electricity from hydropower, while the rest comes from coal-fired power plants. ($1 = 0.8539 euros) (Reporting by Maja Zuvela; Editing by Susan Fenton)