EBRD to suspend Ombla loan disbursement until further eco studies are completed

28 November 2011, Croatian Times

The European Bank for Reconstruction and Development (EBRD) has said it would not disburse the recently-approved 123.2 million Euro loan for construction of the Ombla hydropower plant near Dubrovnik before the environmental impacts of the project are assessed.

“In reaching its decision to support the project, the EBRD has acknowledged the environmental challenges that were raised during the due diligence process and public consultation,” the Bank writes in a statement.

“The Bank will work closely with Hrvatska Elektroprivreda (HEP) to ensure the project is implemented in line with national legislation as well as the relevant EU directives. In particular, an additional biodiversity study will be undertaken on the project?s potential impact on the integrity and conservation objectives of the proposed Natura 2000 sites and a biodiversity management plan will be prepared. The proceeds of the EBRD loan for the construction works will not be disbursed until a satisfactory study and biodiversity management plan is agreed with Hrvatska Elektroprivreda.”

Several environmental NGOs together with the regional organization CEE Bankwatch Network criticized EBRD?s decision to approve the loan for a project that could have devastating impact on locan environment. Jana Bedek from Croatian Biospeleogical Society said the project would flood a cave with high biodiversity value due to be protected as part of Natura 2000 biodiversity network when Croatia enters the European Union.

Bankwatch EBRD coordinator Fidanka Bacheva McGrath says she is not sure why the rush to approve the loan.

“How can the EBRD predict the outcome of the study – what if it concludes that the project is incompatible with Natura 2000 aims? Moreover, the EBRD should ensure that no preparation works are started before the studies are finalised and consulted with the public.”

EBRD says that while it recognizes technical and environmental challenges the project entails, it believes the project is important to further develop Croatia?s renewable energy generation capacity, while also having significant benefits for the people of Dubrovnik.

Nandita Parshad, Director for Power and Energy Utilities at the EBRD Nandita Parshad said the Bank is committed to “ensuring the project is implemented in line with our agreed Environmental and Social Action Plan.”