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Kolubara B lignite-fired power plant, Serbia


The existing Kolubara A power plant.

The Kolubara B thermal power plant site is situated near Kalenic village, 60 km south-west of Belgrade, at the northern side of the Tamnava Open Cast Mine. The decision to build the 2x350 MW plant was taken in 1983 and construction started in 1988. Construction progressed slowly until 1992, when work was suspended due to sanctions against Serbia. At this stage about 40 percent of the facility had already been constructed, partly with the assistance of a World Bank loan.

In 2011 the results of an international tender were announced, in which Italian utility Edison was the only company to submit a bid. Edison's offer was accepted, and a joint venture agreement signed with Elektroprivreda Srbija on the development of the Kolubara B project in June 2011.

The fact that some of the facility had already been constructed meant that technical questions arose relating to whether the plant could meet the latest EU standards. For example the agreement stated that the plant would have a net efficiency of 37 percent, but the EU's Best Available Techniques Reference Document stipulates that new lignite-fired plants using pulverised lignite technology should have an efficiency level of minimum 42-45%. The emissions limit values in the 2012 environmental impact assessment were not in line with the EU Industrial Emissions Directive.

In the meantime in July 2011 the European Bank for Reconstruction and Development (EBRD) approved an EUR 80 million loan to provide new equipment for the Kolubara lignite mines. (For more information about the project see here).

Although in March 2012 the EBRD announced that it was considering investing in the Kolubara B plant, on 6 September 2013, it confirmed to Bankwatch by e-mail that it was no longer examining participation in the Kolubara B project [1] after a full year of corruption cases related to the Kolubara complex and complaints to the Bank’s Project Complaint Mechanism.

This announcement was shortly followed by the news on 9 September 2013 that early that day the police had arrested former director of the Kolubara Mining Basin Nebojsa Ceran and former financial director Ljubisa Nekic, businessman Radoslav Savatijevic, and several other individuals. The arrestees are suspected of fraud in land expropriation proceedings around the Kolubara mine.

An additional risk to this project is the fact that the Environmental Impact Assessment (EIA) study for Kolubara B expired in July 2014. This is caused by inactivity of investors. The legal provisions envisage concrete activities on the investors’ side or permitting activities in time frame of two years. None of these took place, therefore the study now expired.

Given these risks, investments in Kolubara at the present time should be approached with caution. However in the future, provided that the integrity and environmental legacy issues in the company are adequately addressed, we believe there are rich opportunities for renewable energy projects such as solar or sustainable biomass production on rehabilitated land at the site. Some reforestation projects have been undertaken on some parts of the site, but the majority remains open for rehabilitation.

Notes

1. The relevant section reads:

“Please let me confirm that we have not been working actively on this project in the last two years. We have also informed the client that, should the project become active again, it will have to be assessed against the new energy strategy which has far more stringent rules and would make our possible participation very difficult.”

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Latest developments


 

Press release | March 29, 2017

A new Bankwatch analysis examining ten coal-fired power plant projects across the Western Balkans finds that, once the cost of carbon emissions allowances are factored in, they could become a serious liability for both the companies involved and the public. Moreover, only a few feasibility assessments for coal power plants in the region are publicly available, and most of those have failed to properly take carbon costs into account, the briefing authors note.

Blog entry | November 14, 2016

Now is the time for southeast Europe to start an inclusive and just transition away from lignite, argues new Bankwatch research.

Press release | November 14, 2016

Promises for new jobs in south-east Europe’s coal sector are exaggerated, a new Bankwatch report reveals. Hardly any coal operations across the region are economically viable, and as a result many coal workers, especially in the mines, are set to lose their jobs, even if the plans for countless new power plants materialise. Governments, coal workers and their wider communities need to work together towards a just transition.

Blog entry | May 27, 2016

Last year in the EU, 12.8 GW of wind power capacity was installed – more than any other electricity generation source. This means that wind can now generate 11.4% of the EU electricity consumption in a normal wind year, according to Wind Europe. At the same time Belgium and Scotland have shut down their last coal plants, signalling the golden days of coal are far behind them.

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Press release | May 26, 2016

Western Balkan countries are planning investments in wind power, but these are being heavily outweighed by their investments in coal plants, according to a CEE Bankwatch Network analysis launched today. The region’s governments are actively planning 2800 MW of new coal plants but allowing only around 1166 MW of wind power plants to be built.

Publications

Briefing | March 29, 2017

This briefing analyses ten coal-fired power plant projects across the Western Balkans and finds that, once the cost of carbon emissions allowances are factored in, they could become a serious liability for both the companies involved and the public.

Briefing | November 14, 2016

Coal is the single biggest contributor to global climate change. But governments and investors planning new coal capacities have a range of flimsy arguments why coal would be the best or the only alternative. This briefing busts a number of myths surrounding coal, such as "coal is cheap", "alleviates poverty" or "coal is clean".

Study | November 14, 2016

This report reveals how and why promises for new jobs in south-east Europe’s coal sector are exaggerated. Hardly any coal operations across the region are economically viable, and as a result many coal workers, especially in the mines, are set to lose their jobs, even if the plans for countless new power plants materialise. Governments, coal workers and their wider communities need to work together towards a just transition.

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Briefing | May 26, 2016

All the Western Balkans countries have committed to increase their share of renewable energy by 2020 to reach between 25 and 40 percent of their energy mix, as part of their obligations under the Energy Community Treaty. Yet this is far from obvious when examining their investment plans for new power generation capacity. Governments are actively planning to build 2800 MW of new coal plants with construction cost of at least EUR 4.5 billion. In contrast, these countries are only planning to build around 1166 MW of wind power plants, at an estimated cost of EUR 1.89 billion.

Briefing | February 1, 2016

As part of its new EUR 200 million loan to the Serbian electricity company EPS, the European Bank for Reconstruction and Development aims to assist with “identifying opportunities to improve environmental, safety, social, and labour governance and capacity, and on helping EPS to develop a more strategic approach to managing these issues”. As outlined in this briefing, so far the EBRD's fifteen-year partnership with EPS has not brought visible improvements in company practices and it is high time for the bank to prove that its engagement can add value.