State guarantee vote for TES 6 overshadowed by OLAF corruption investigation

A state guarantee law supporting the construction of a 600 MW lignite plant at Sostanj in Slovenia (TES 6) was passed this week despite allegations of corruption against the management of the company remaining unsettled. Even more, the European Anti-Fraud Office (OLAF) recently opened an official investigation into TES 6. (1)

The Slovenian parliament adopted Wednesday July 18 a state guarantee law necessary for the disbursement of four fifths of a 550 million euro loan from the European Investment Bank for the construction of a new unit at coal plant Sostanj.(2) The European Bank for Reconstruction and Development had expressed an intent to lend an additional 100 million euros for the project, with the two public banks together set to cover half of total costs. (3)

The state guarantee law was voted for by an unimpressive 29 parliamentarians (only 59 out of the total of 90 MPs were present at the vote, and of those present 20 opposed the law and 10 abstained). The law on state guarantee might still be put on hold next week if opponents of the project manage to collect 2.500 signatures to start the referendum initiative to reject the law.

More importantly, the state guarantee law was voted without important allegations of corruption and fraud raised earlier this year by a State Commission for the Prevention of Corruption (4) being properly investigated by national authorities. Investigations into corruption and fraud at TES 6 started by the National Investigations Office and local police had not been completed at the time of the vote.

Significantly, the European Anti-Fraud Office (OLAF) announced in June that it would open its own investigation into the corruption and conflict of interest allegations at TES 6. The EIB and the EBRD too are at the moment conducting their own internal investigations into the corruption allegations.

“The EIB and the EBRD could think that the approval of the state guarantee will allow them to finally move ahead with disbursing the payments,” comments Bankwatch energy coordinator Piotr Trzaskowski. “But this is far from the truth: the EIB and the EBRD cannot escape the responsibility of sorting out the corruption and fraud accusations related to this project. Only the completion of the banks’ own internal investigations and the finalisation of investigations by OLAF and the Slovene police can ascertain whether the two European public banks have been involved in an investment marred with illegalities.”

“With all the existing pressures to move ahead with the project, the EIB and the EBRD should not forget that opposition of Slovenians to this plant is strong,” adds Barbara Kvac, Head of the Climate Change Program at Slovenian NGO Focus. “The referendum could provide an opportunity for people to voice their concerns related to health, corruption and climate change which have so far been ignored by their own parliament. There are so many reasons to abandon this project that only blindness or indeed corruption can make it go further.”

Notes for the editors:

(1) Read the letter from OLAF announcing the opening of an investigation into corruption at TES 6: https://bankwatch.org/sites/default/files/Slovenia%20Investigation.pdf
(2) The state guarantee law asks for the following conditions to be met if the Slovenian budget is to guarantee the loans offered to TES 6 by the international banks:

• The investor must negotiate with all suppliers with the aim to lower the costs from NIP 4 (4th investment program; 1.302.747.010 euros);
• PV Coalmine Velenje and TES must sign a contract on the long-term supply of lignite at the maximum price of 2,25 EUR/GJ before the state guarantee is issued;
• The investor must ensure the project will be finished in accordance with the agreed timeline;
• The investor must ensure all the conditions are met for achieving an internal rate of return of the project in line with the sectoral energy policy;
• The investor must limit the CO2 emissions in line with investment program (NIP 4);
• The investor must sign a contract with two Slovenian ministries (finance and energy) to guarantee that the above conditions are fulfilled;

The parlimentary committee responsible for the law asked TES to prepare a new peer-reviewed investment program (NIP 5). This program has to be checked by an independent and technically competent reviewer. NIP 5 will be used to determine whether the government’s conditions are met.

(3) Read more about TES 6 and the involvement of the European banks here: https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia
(4) Read more about the findings of the State Commission and their report here: https://bankwatch.org/news-media/for-journalists/press-releases/dirty-french-slovenian-connection

For more information, contact:

Piotr Trzaskowski
Bankwatch energy corrdinator
piotrt@bankwatch.org
0048509162988

Barbara Kvac
Head of Climate Change Program
Focus Slovenia
Barbara@focus.si
00386 40 722 149