EU urged not to fund coal mine project in Serbia

20 July 2011, EuObserver

A pending decision by the European Bank for Development and Reconstruction (EBRD) to pay €80 million for the expansion of Serbia’s largest coal mine has caused uproar among environmentalist groups and the local community.

The EBRD funding, due to be decided on next Tuesday in London, would allow the Serbian state-owned energy company EPS to purchase new extraction equipment for its expanding coal mine in the Kolubara basin, some 70 km south of Belgrade.

“Ironically they call the project ‘environmental improvement’ – but if it’s about extending pits and extracting lignite more efficiently, how is this helping the environment?” said Piotr Trzaskowski from the central and eastern European Bankwatch Network – an NGO monitoring how public funding is being used in the energy sector.

Serbia is already 70 percent dependent on coal to generate its electricity and more than half of the country’s electricity is produced in power plants based in the Kolubara basin.

“It is scandalous that having in mind the EU goals of making countries less carbon dependent, this project based on public money would finance the dirtiest of all energy sources and make Serbia even more dependent on coal,” Trzaskowski said.

The expert also noted that as it is a state-owned company, EPS is very close to the government, so the interests of the coal industry are much better represented in Belgrade’s policy-making apparatus than any cleaner and greener energy alternatives.

Meanwhile, state prosecutors launched an investigation earlier this year into the company’s mine managers at Kolubara. They were suspected of leasing equipment at vastly inflated prices and of selling coal cheaply to intermediaries, who then made significant profits selling it on to power stations.

A recent internal audit at EPS also revealed unjustified increases in expenditures to the benefit of private companies, according to a letter CEE Bankwatch wrote to the EBRD urging it to postpone its investment decision.

A similar call comes from the local community from Vreoci, a village set to be relocated in order for the mine to be expanded.

In a letter sent to the EBRD, the Vreoci villagers point to “corruption and misuse of funds aimed for relocation of the people in Vreoci, violation of the laws and the Serbian Constitution and delays in the implementation” of the relocation plan.

“People in Vreoci are confused, they live in uncertainty and in fear, as the media have produced a picture of their totally groundless opposition to relocation which is at the end endangering electric energy security and production of the electric energy in the whole Serbia,” the letter reads.

The villagers, set to stage a protest in front of the EBRD office in Belgrade on Friday, are particularly upset by the fact that the local cemetery is already being levelled down and exhumations are being carried out without the consent of the families. Heavy police presence has blocked access to the cemetery and church.

“Citizens are in fear that more then half of our deceased will be forgotten, not evidenced, not respected and excavated violently without right on exhumations and church ceremony,” they write.