Banovici lignite power plant, Bosnia and Herzegovina

The 350 MW Banovići coal power plant project is being developed alongside the existing Banovići mine just a few kilometres away from Tuzla by the predominantly state-owned RMU Banovići (Banovići Brown Coal Mines). The power plant would be a greenfield facility and a cement plant is also planned nearby. This project is in direct competition with the Tuzla 7 lignite power plant.

The Banovići brown coal power plant is planned at the site of the existing Banovići mine and is to be built by China’s Dongfang, the same company which built the Stanari plant. Banovići started as a 300 MW project but halfway through the tender it was changed to 350 MW.

Mystery economics

The project’s economics have been kept under wraps and no feasibility study is publicly available. Banovići’s Director stated in a July 2016 interview that the generation cost would be EUR 50/MWh. However, former EPBIH Director Amer Jerlagić cast doubt on this figure and stated that neither the Banovići nor the Tuzla 7 plants appear feasible given the low prices on the European electricity wholesale market. This opinion has also been confirmed by the current Director of EP BIH, Bajazit Jašarević, who admitted that both the Tuzla 7 and Banovići plants are currently unfeasible.

Financing has not been confirmed but is being sought from the Industrial and Commercial Bank of China (ICBC). The project is supposed to cost EUR 405 million. It also appears that a guarantee by the Federation of BiH government would be required, raising questions about compliance with state aid rules under the Energy Community Treaty.

Compliance with Industrial Emissions Directive not ensured by the environmental permit

A second environmental permit was issued for the Banovići power plant in early 2016, but failed to cover numerous issues and prescribe precise mitigation measures.

NGO Ekotim therefore filed a court case seeking to annul the environmental permit in April 2016.

The permit also failed to specify that the EU Industrial Emissions Directive - obligatory for new plants under the Energy Community Treaty - needs to be followed by the new plant. Ekotim therefore also submitted a complaint to the Energy Community Secretariat in July 2016.

Scarce water resources

For Banovici it is planned to expand the existing Ramići lake into a larger reservoir. However the lake is small and would need significant expansion, and it is not clear that the runoff from the surrounding hills could provide enough water. Another issue is the structural soundness of the earth dam which is planned to hold back the water at Ramići.

Initial proposals included using water from the Turija river to fill the reservoir during dry periods, however this would then deprive Modrac, and thus the Tuzla power plant and the people of Tuzla, of a significant source of water.

More recent proposals have focused on taking water from Lake Breštica which is located in the Spreča river basin, but this would have the same result. The issue remains unsolved. For this reason Ekotim filed a court complaint against the environmental permit for the reservoir in April 2016.

An AlJazeera report on the situation of the "Hostages of Coal" infrastructure in Tuzla and Banovici (local language ony).