Active Mixed AidData Chinese Aid

ICBC provides EUR 259.25 million loan for 350 MW Banovići Thermal Power Plant Project

€259.25M EUR

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Brown Coal Mines Banovići (RMU Banovići)
Country	Bosnia and Herzegovina
Start Date	Jul 01, 2016
End Date	Aug 02, 2028
Duration	4,415 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`66348`

Grant Description

ICBC provides EUR 259.25 million loan for 350 MW Banovići Thermal Power Plant Project In November 2015, Brown Coal Mines "Banovići“, joint-stock company (or RMU Banovići) — a state-owned company — and Dongfang Electric Corporation Limited (DEC) signed a strategic cooperation agreement regarding the 350 MW Banovići Thermal Power Plant Project.

In the event that it was awarded an EPC contract for the 350 MW Banovići Thermal Power Plant Project, DEC agreed to make efforts to facilitate a syndicated loan from China Eximbank, ICBC and Raiffeisen Bank International AG to cover 85% of the of the cost of the EPC contract. RMU Banovići and DEC later signed an EPC contract on November 24, 2015.

Then, in July 2016, a project financing agreement was signed by RMU Banovići, ICBC, and DEC.

ICBC reportedly agreed to provide an EUR 259.25 million loan that would finance 85% of the cost of an EUR 305 million commercial contract between RMU Banovići and DEC.

📋 Loan / Grant Terms

💰 Loan Amountreportedly carries the following borrowing terms: a 15 year maturity

📅 Maturity15 years

⏳ Grace Period4 years

The borrower was also reportedly required to buy a credit insurance policy from Sinosure.

However, this project subsequently encountered a variety of implementation difficulties and its overall cost escalated to EUR 412.4 million.

As of 2018, RMU Banovići and ICBC seemed to be renegotiating their financing agreement and potentially involving a broader set of banks. An environmental permit was issued for this project on January 11, 2016.

However, in February 2017 the EU Energy Community ruled that the Banovići Thermal Power Plant would be considered a new plant under the Industrial Emissions Directive (IED) Chapter III, and would therefore need to comply with the stricter emission limit values for plants that entered operation after January 2, 2019, requiring amendments to the permit for the plant issued by the Ministry that did not specify this requirement.

The decision came in response to a July 2016 complaint filed by the environmental NGO Ekotim.

In December 2017, the Federal Ministry for Spatial Planning in Bosnia-Herzegovina decided not to issue a new construction permit for the 350 MW Banovići Thermal Power Plant Project, noting that several key issues such as water supply, coal supply, wastewater, flue gases and ash disposal had not been resolved.

A lawsuit challenging the plant's environmental permit from the Federal Ministry of Environment and Tourism, issued in January 2016, was ongoing.

Then, on May 21, 2019, it was reported that the Government of the Federation of Bosnia and Herzegovina (FBiH) had tasked the EPBiH (the state-owned power utility) ‘to accelerate all activities related to the projects for the construction of new units at existing coal-fired thermal power plants Tuzla (unit 7) and Kakanj (unit 8), as well as the project for the construction of Banovici [Thermal Power Plant] near the coal mine of the same name.’ In September 2019, RMU Banovici was denied a water permit for the coal plant, on the grounds that the application did meet the required conditions for a planned water reservoir.

📋 Staff Comments

The Chinese project title is 巴诺维奇火电站项目 or 巴诺维奇火电站项目建设 or 巴诺维奇项目尚 or 波黑巴诺维奇电站超临界350MW循环流化床机组总承包项目 or 波黑巴诺维奇电站项目 or 巴诺维奇电站项目. The Bosnian project title is TE Banovići or Termoelektrana Banovići or Termoelektranu Banovići, blok 1-350 MW or TE Banovići Blok 1 - 350 MW.
In July 2018, local media reports indicated that the total value of the Banovići Thermal Power Plant Project had increased to 405 or 412.4 million euros, of which 85% would be funded by a syndicate of Chinese banks and the remaining 15% and a syndicate of local banks. However, as of July 2018, the project had not yet started because the credit line from the local syndicate of banks had not been guaranteed. This issue merits further investigation.
The November 2015 strategic cooperation agreement can be accessed in its entirety via https://www.dropbox.com/s/8rkyrge1112y8y8/Sporazum_14.10%20TE_Banovic.pdf?dl=0.
The November 2015 strategic cooperation agreement suggests that China Eximbank may have co-financed this project with ICBC. This issue warrants further investigation.
The other 15% of the commercial contract cost may have been financed by Raiffeisen Bank International AG. This issue warrants further investigation.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.

📚 Sources & References

Banovići Thermal Power Plant Project
Construction permit denied for Banovići coal power plant in Bosnia and Herzegov
Dogovoreno finansiranje 85% izgradnje TE Banovići - Slijede pregovori sa domaćim bankama
波黑巴诺维奇电站超临界350MW循环流化床机组总承包项目成功签约
波黑巴诺维奇电站超临界350MW循环流化床机组总承包项目成功签约
Energy and Infrastructure
波黑联邦议会批准葛洲坝集团为最大电站承包商
Predstavnici kompanije Dongfang Electric Corporation u Vladi FBiH
SPORAZUM O STRATEŠKOJ SARADNJI
IGH signed the Contract for Supervision Services during construction of the TPP Banovići
Banovici lignite power plant
Bosnia and Herzegovina
Početak izgradnje TE Banovići do kraja godine, puštanje u rad 2021.
TERMOELEKTRANA BANOVIĆI
巴诺维奇项目尚未得到波黑财团担保
Bosnia's Banovici to conclude loan deal with ICBC shorty, works on TPP seen starting mid-2016 - govt
Construction of Banovici TPP in Bosnia to start by end-2017 - report
Priprema za izgradnju termoelektrane Banovići
The issuance of approval for the construction of the Banovići Thermal Power Plant was refused
Banovici power station
BiH; Gušenje zbog političkih oponenata: Isplativija izgradnja Bloka 1 TE Banovići
Politika blokira investicije zbog ličnih sukoba
Početak izgradnje TE Banovići do kraja godine, puštanje u rad 2021
Kina financira termoelektrane na ugljen koje zagađuju i Hrvatsku
Press materijal
Predstavnici kompanije Dongfang Electric Corporation u Vladi FBiH
TPP Banovići in efforts to ensure financial closure
Bosnia: Chinese Dongfang continues its European energy market development
中国—中东欧国家领导人苏州会晤经贸成果
TERMOELEKTRANA
SASTANAK UPRAVE RUDNIKA BANOVIĆI I PREDSTAVNIKA DONGFANG ELECTRIC CORPORATION
USAGLAŠENI STAVOVI FINANSIRANJA TERMOELEKTRANE U BANOVIĆIMA
Termoelektrana Banovici Potpisano Mandatno pismo ismedju Rudnika i kineske ICBC banke
THERMAL POWER PLANT BANOVIĆI
Meeting of Banovi Rudnik Management and Dongfang Electric Corporation Representatives, harmonized Positions of Financing the Thermal Power Plant in Banovici
巴诺维奇项目尚未得到波黑财团担保
IZVJEŠTAJ O RAZVOJU FEDERACIJE BIH 2016
Report prepared by Dr Jens Bastian for the European Bank for Reconstruction and Development (with funding from the Central European Initiative)
IFLR 1000 Energy and Infrastructure 2017
SPORAZUM O STRATEŠKOJ SARADNJI Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.