NGOs condemn EBRD financing of biodiversity destruction in Croatia
November 23, 2011
Zagreb -- Croatian environmental organisations Zelena akcija/Friends of the Earth Croatia, the Croatian Biospeleological Society, Transparency International Hrvatska, Srđ je naš, Baobab, Eko Zeleno Sunce, Brodsko ekološko društvo-BED, Center for Environment (B&H), Eko-Zadar, WWF MedPO and regional organisation CEE Bankwatch Network have described as “extremely irresponsible” the approval yesterday by the European Bank for Reconstruction and Development of a EUR 123 million loan for the construction of the Ombla underground hydropower plant near Dubrovnik. 
The project, planned by Croatian electricity company HEP, has attracted numerous criticisms on environmental, economic and procedural grounds. It will be situated in an area designated for protection under the EU's Natura 2000 network due to its valuable cave fauna , but its impact on the Natura 2000 site has not yet been assessed.
“HEP is obviously in a great hurry to get this project approved and signed – such a hurry that there is no time to wait for the Natura 2000 impact assessment to be done and no time to carry out a new environmental impact assessment instead of one that dates from 1999”, commented Jagoda Munic of Zelena akcija. “That HEP is trying to get all the documentation and permits in place before Croatia enters the EU and is subject to stricter environmental standards is unfortunately not surprising” she continued, “but the EBRD, as a primarily European public institution , should know better than to prematurely approve a project that has not fulfilled the legal requirements. 
Croatia's entry to the EU is not the only deadline that is looming. On 4 December Croatia will be holding parliamentary elections, and the main opposition coalition has already pledged not to go ahead with the Ombla project if it is elected.  The hurried approval is presumably an attempt to bring the project to as advanced a stage as possible before the election threatens its future.
One of the reasons for the widespread scepticism about the Ombla hydropower plant is the leaked technical due diligence report carried out by consultants for the EBRD from September this year, which found that the project was technically risky and that it could only be implemented if heavily subsidised by the government or by raising electricity prices.  The EBRD and the project sponsor HEP later claimed that this version of the report had only inadvertently been labelled final and that once the consultant better understood the project, the conclusions changed in its favour. 
“All in all the Ombla project raises more questions than answers, and in approving it, the EBRD is sending completely the wrong messages to Croatia,” concluded Karst expert Ivo Lučić, Ph.D. “The bank claims that the project will promote best corporate practices, but so far all it has promoted is the destruction of cave fauna and habitats and cutting corners on environmental legislation. On top of that, the project is likely to have a cross border influence on watersheds in Bosnia and Herzegovina, which is not yet fully understood - one more argument against this premature approval by the EBRD.”
For more information, contact:
Zelena akcija/Friends of the Earth Croatia
+385 (0)98 1795 690.
Croatian Biospeleological Society
+385 (0)91 5761 172
Dr. Ivo Lučić
+385 (0)98 347 669
Notes for editors
1. For a description of the project see http://www.ebrd.com/pages/project/psd/2011/42219.shtml
2. Including five species of protected bats, the eccentric-looking proteus anguinus or human fish, and several endemic species of aquatic cave snails.
3. The EBRD is 60 percent owned by the EU and its Member States. Other shareholders include the US, Canada, Australia, New Zealand, Japan and the bank's beneficiary countries in eastern Europe and the Former Soviet Union.
4. Last week Zelena akcija filed an official complaint about the Ombla project and its non-compliance with Croatian legislation and the EBRD's own Environmental and Social Policy to the EBRD's Project Complaint Mechanism. The complaint can be found here: http://bankwatch.org/publications/official-complaint-ebrd-ombla-hydropow...
6. The exact quotes are: “Undertaking the project in full, as designed at present, carries a high risk of the project not achieving its objectives” and that “the project fails to recover both investment outlays and recurrent costs, in fact yielding a considerable cost in commercial terms …. the project could only be implemented if it was heavily subsidized by the government”. (Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011)
7. See the EBRD and HEP explanation at: http://bankwatch.org/documents/EBRDresponse-OmblaHPP-07Nov2011.pdf
Updated on November 23 to include one more organisation in the list of signatories
Two European public banks are currently reviewing their energy lending policies. We call for an end to coal subsidies.