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Secret Chinese deal on Bosnia-Herzegovina coal plant must be urgently stopped, say NGOs

The call follows surprise news on the signing of a construction contract for the Ugljevik 3 plant between the Chinese company China Electric and the Polish-Chinese Sunningwell International LTD(1), neither of whom were publicly known to be participating in the project until now.

The concession for the project has been held since 2013 by Comsar Energy, apparently owned by Dagestan billionaire Rashid Serdarov. In 2020 Republika Srpska’s Concession Commission stated that the concessionaire was not fulfilling its obligations (2) but did not recommend action to tackle the issue.

“The Ugljevik 3 project has plagued energy sector planning for many years, and the authorities tacitly allow the investor to violate all possible contracts and laws. Now suddenly Chinese companies appear from nowhere to save another dirty project that was doomed from the start. We are asking the Republika Srpska Government why it has not yet terminated the contract with Comsar Energy, and why it is even considering a new coal project in this era?” said Majda Ibraković from the Center for the Environment.

Earlier this year, the Government of Republika Srpska unjustifiably extended Comsar Energy’s concession for construction and operation of Ugljevik 3 from 30 to 44 years (3), despite the fact that the concession agreement was violated on several occasions, because permits were not obtained or preparation works started. Previously, the same Government allowed Comsar Energy to increase the capacity of Ugljevik 3 to 700 MW, contrary to Republika Srpska’s Energy Development Strategy.

Wawa Wang from Just Finance International added: “Allowing its state-owned enterprise(4) to undertake a new coal project contravenes China’s climate pledge to address the growing coal fleet in the Balkans and other BRI countries enabled by Chinese companies and state funds(5). China has not only avoided addressing concerns by NGOs and the UN special rapporteurs (6) on the undermining of legal requirements enabled by Chinese financed Bosnian coal projects, but also greenlighted a new project – once again – without a valid Environmental Impact Assessment.“

The Center for Environment has several times addressed the Republika Srpska Government and the Ministry of Energy and Mining with requests for information on the basis for extending the concession and increasing the installed capacity, but so far has not received a concrete and justified answer from the institutions. 

 

Contacts:

Majda Ibraković, Center for Environment, Bosnia and Herzegovina

majda.ibrakovic@czzs.org 

+387 65379917

Wawa Wang, Just Finance International Programme, VedvarendeEnergi, Denmark

ww@ve.dk

+45 8194 9469 (Signal) 

Pippa Gallop, CEE Bankwatch Network

pippa.gallop@bankwatch.org

+385 99 755 9787

Skype: pippa.gallop

Notes for editors:

  1. Capital.ba, 29 June 2021, https://www.capital.ba/kinezi-preuzimaju-ugljevik-3-od-rasida-serdarova
  2. Republika Srpska Concession Commission annual report for 2019, 2020. https://koncesije-rs.org/wp-content/uploads/2021/01/2019-izvjestaj-lat.pdf
  3. Capital.ba, 11 February 2021, https://www.capital.ba/vlada-produzila-serdarovu-koncesiju-za-te-ugljevik-3-na-44-godine/
  4. Sinomach WeChat account, 24 June 2021, https://mp.weixin.qq.com/s/n5qYPMlWX096lVwbA3ZUCg
  5. China financed over USD 43 billion in overseas coal projects since 2000, https://www.bu.edu/cgef/#/all/EnergySource 
  6. https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=26016

European bank challenged on human rights credentials

See our new “No time to celebrate: a breakthrough for human rights is needed after 30 years of the EBRD” report here.

Established in 1991 to rebuild the economies of eastern Europe and the former Soviet Union, the EBRD has since expanded to include North Africa but remains the only bank of its kind with a mandate to promote democracy and the rule of law.

Last year EBRD investments reached a record high of EUR 11 billion. But the countries that received the lion’s share are Turkey and Egypt, two places where respect for human rights and democratic governance is on the backslide. 

The EBRD in theory follows a ‘more for more, less for less principle,’ meaning that investment volumes decrease where there is a deterioration of freedoms. 

In reality, the bank has nearly doubled its investments in Turkey from EUR 1 billion in 2019 to EUR 1.7 billion in 2020 during a deepening human rights crisis that saw a massive erosion of civil liberties.

The report surveys bank lending in countries where respect for democracy is at its lowest: Belarus, Egypt, Turkmenistan, Turkey and Uzbekistan. A case study on Ukraine questions the EBRD’s approach of investing in the private sector.

It provides case evidence of EBRD clients benefiting from a weak rule of law, dysfunctional judicial systems and the perks of crony capitalism through fast-tracked permitting, sectoral monopolies, tax breaks, state grants and all sorts of other state interventions. 

Land confiscation organised by the state has left farmers destitute and exploited at the hands of new corporate players. Police are sent to quash protests against oligarchs, while dependent courts are used to intimidate critics through strategic lawsuits against public participation. 

Fidanka McGrath, EBRD policy officer with CEE Bankwatch Network, said, “The EBRD can and should do more to promote democracy and protect human rights. We call on the EBRD to improve its policy dialogue with authoritarian governments, to strengthen the integrity checks and the application of its human rights safeguards.”

Kate Watters, executive director of Crude Accountability, said, “Thirty years of engagement with an authoritarian regime like Turkmenistan has failed to produce a market economy, pluralism, or democratic reforms. We call on the EBRD to sincerely and seriously return to Article 1 as a founding principle of engagement and hold the Turkmen government accountable for its gross violations of human rights.”  

Umida Niyazova, executive director of Uzbek Forum for Human Rights, said, “EBRD’s investments in Uzbekistan’s cotton sector give reason for concern. Companies that have historically been linked to serious labor rights violations, including forced child and adult labor, have been awarded multi million dollar loans without sufficient social and environmental due diligence. In a country where civil society and independent trade unions are seriously constrained, there must be more checks and balances before approving funds.”

Leslie Piquemal, senior EU advocacy representative with CIHRS, said, “The EBRD must implement its ‘more for more, less for less’ principle in countries of operations. Egypt is in blatant non-compliance with the EBRD’s political mandate. The country’s tens of thousands of political prisoners, systematic use of torture, and frequent enforced disappearances attest to that. To uphold its mandate and protect its over 7 billion euros’ investment in Egypt, the Bank should invest political capital in human rights, the rule of law and democratic governance.”

 

For more information contact

Fidanka McGrath, EBRD policy officer

CEE Bankwatch Network

Email: fidankab@bankwatch.org

 

Kate Watters, executive director 

Crude Accountability

Email: kate@crudeaccountability.org

 

Umida Niyazova, executive director

Uzbek Forum for Human Rights

Email: umida.niyazova@gmail.com 

 

Leslie Piquemal, Senior EU Advocacy Representative

Cairo Institute for Human Rights Studies (CIHRS)

Email: leslie@cihrs.org

 

Notes

The report “No time to celebrate: a breakthrough for human rights is needed after 30 years of the EBRD” is available here https://bankwatch.org/publication/no-time-to-celebrate-a-breakthrough-for-human-rights-is-needed-after-30-years-of-the-ebrd

The report is prepared by CEE Bankwatch Network, Cairo Institute for Human Rights Studies (CIHRS), Cotton Campaign, Counter Balance, Crude Accountability, Ecoaction and Ekodom, with the support of the Defenders in Development Campaign and endorsed by the following organisations https://bankwatch.org/wp-content/uploads/2021/06/No-time-to-celebrate-endorsements.pdf.

 

Commission must apply spending rules to EU recovery funds before greenlighting national plans

A Bankwatch analysis of the draft spending plans in eight countries of central and eastern Europe finds significant gaps between what Member States propose and what the Commission requires.   In particular, states miss the 37 per cent threshold for total spending in favour of a green transition and to prove that investments will ‘do no significant harm’. These national plans also make use of loopholes to include funding for fossil gas, while allocating paltry sums to address Europe’s worsening biodiversity crisis.  Christophe Jost, EU policy officer with CEE Bankwatch Network, said, “This is not a box ticking exercise. If the plans are not in line with EU rules on climate and biodiversity, then the Commission must send Member States back to the drawing board. We cannot fail to prepare for a green and just transition.”  Dan Thomson, biodiversity policy officer with CEE Bankwatch Network, said, “The ‘do no significant harm’ principle is supposed to be a rigorous and effective tool to ensure investments do not harm climate or nature. Yet, in many cases Member States have failed to properly apply this principle, opening the door for approving harmful measures that will severely impede the achievement of the EU’s climate and biodiversity objectives.”    For more information contact:  Christophe Jost, EU policy officer, CEE Bankwatch Network  Email: christophe.jost@bankwatch.org  Daniel Thomson, EU Policy Officer for Biodiversity, CEE Bankwatch Network  Email: daniel.thomson@bankwatch.org 

Billions of EU recovery money to support fossil fuels

A Bankwatch survey of the recovery plans [1] in Bulgaria, Czechia, Poland, Romania and Slovakia reveals gas investments totalling more than EUR 2 billion. Countries heavily dependent on coal, like Poland, Czechia or Bulgaria, consider fossil gas as a potential replacement, or a ‘bridge’ fuel, irrespective of gas’s contribution to climate breakdown. While Member States are required to comply with a ‘do no significant harm’ principle to demonstrate how a proposed recovery measure will not impact climate or nature, loopholes exist in the fund’s regulation that permit recovery money for fossil fuels projects. This goes against the recent recommendations of the IEA [2], which called for an immediate end to investments in the extraction of fossil fuels and a rapid decrease in their usage. The briefing can be found here Investments in fossil gas boilers are one of the most common measures proposed by several Member States, including Czechia, Slovakia, and Poland. Slovakia plans to allocate approximately EUR 50 million for gas boilers as a way to address energy poverty. However, the data from Slovak agencies shows that fossil gas is actually the most expensive fuel source compared to wood and heat pumps. Meanwhile, Bulgaria intends to spend EUR 244 million on a gas pipeline project Bulgartansgaz. The pipelines are supposed to transport ‘low-carbon’ gases – biogas and hydrogen, blended at different ratios with fossil gas – primarily to coal-based thermal power plants. The project will cause a coal-to-gas transition, locking Bulgaria into fossil gas dependency.

Anelia Stefanova, Energy Transformation Area director at CEE Bankwatch Network, said: “A long-lasting recovery is incompatible with funding for fossil fuels. Gas projects for climate change mitigation and grants to expand the gas supply throw a life line to an otherwise stranded asset.” For additional information please contact: Anelia Stefanova Energy Transformation Area director, CEE Bankwatch Network Email: anelias@bankwatch.org Mobile: +39 3338092492   Notes: [1] Bankwatch briefing “The role of gas in the recovery and resilience plans” https://bankwatch.org/publication/the-role-of-gas-in-the-recovery-and-resilience-plans  [2] IEA’s report “Net Zero by 2050” https://www.iea.org/reports/net-zero-by-2050 

Uneven progress towards green recovery as EU members submit spending plans to access EUR 672 billion fund

A Bankwatch and EuroNatur survey [1] of plans in Bulgaria, Czechia, Estonia, Hungary, Latvia, Poland, Romania and Slovakia finds that while better measures are still needed to bring the recovery plans fully in line with EU strategies on climate and biodiversity protection, the countries that have made the most progress towards the EU Green Deal involved the public in the planning process.   With a 30 April deadline for submitting the plans to the European Commission, Member States are obliged to allocate at least 37 per cent of total spending for a green transition and to prove that investments will ‘do no significant harm’. 

At the same time, the Commission recommends that countries follow the ‘partnership principle’ when preparing the plans in order to improve quality and public ownership. As of February most plans were kept secret, and consultations with the public were rare [2]. Eyeing the April deadline, governments started to open the planning process, and better measures for nature and climate protection ensued. For example, after initial hiccups, Poland set up a commission of elected-officials, civic groups and members of the public to monitor the formulation of the spending plans. In Latvia, green groups petitioned the Ministry of Finance with concerns about dubious forestry practices and the production of bio methane, resulting in the country dropping these from its plan. Although it brought in stakeholders only at the end of March, Czechia significantly increased allocations for energy efficiency and green transport infrastructure in lieu of motorways. 

Conversely, where the plans have been negotiated with little to no public involvement, investments at odds with these EU strategies are recurring [3].

Recommendations from biodiversity experts in Bulgaria were rejected out of hand, with the government instead funding irrigation and dam infrastructure that would jeopardise wetland health, despite the country being one of the most biodiverse in the union. In the third version of the Bulgarian recovery plan even more public funds are dedicated to a megaproject for fossil gas transmission, while the number of beneficiaries of a residential renewables programme was reduced. In Estonia, the government plans measures that disregard conservation and a decreasing carbon sink, in spite of recommendations from the Commission and environmental groups. And Hungary recently received an ‘EU cash award’ [4] for its failure to earmark properly recovery funds for energy efficiency and biodiversity.

Daniel Thomson, EU policy officer for biodiversity at Bankwatch, said “Seeing people power improve the recovery plans highlights just how much can be achieved with active public participation. One wonders what might have been if the plans were opened up from the outset. Now the European Parliament and the Commission must get the right safeguards in place so there is as much attention to the recovery of the economy as there to the resilience of climate and nature.”

Gabriel Schwaderer, Executive Director at EuroNatur, said, “Providing transparency on the disbursement of EUR 672 bn is not only beneficial for obvious democratic issues, but it has proven to be decisive to bring in some positive examples preserving or restoring biodiversity. It is now up to the decision makers to deliver on thorough assessments.”

Teodóra Dönsz-Kovács, EU Funds campaigner at NSC-Friends of the Earth Hungary, said, “Biodiversity is key to recovery, and Hungary devoting just one tenth of one per cent for nature is inexcusable. We also need grants to support household energy efficiency renovations and a clearer financial set-up to help local, renewable energy communities access funding. We provided recommendations on the over-400-page draft plan, and improvements are possible if these are considered.” 

For more information contact Daniel Thomson  EU policy officer for biodiversity CEE Bankwatch Network daniel.thomson@bankwatch.org  

Anja Arning Head of Communications EuroNatur
anja.arning@euronatur.org +49 7732 927213

Teodóra Dönsz-Kovács EU Funds campaigner NSC-FoE Hungary
donsz.kovacs.teodora@mtvsz.hu +36 30 458 0730 

Notes

[1] The country analyses are available at http://bankwatch.org/eu#RRF

[2] A survey of how the spending plans were being prepared in 20 Member States, February 2021 https://bankwatch.org/press_release/building-back-better

[3] A list of harmful proposals found the national recovery and resilience plans is available here https://bankwatch.org/blog/last-chance-for-member-states-to-include-biodiversity-in-recovery-plans

[4] More information about measures in Hungary and elsewhere in the bloc are available from CAN Europe’s ‘EU Cash awards’ https://www.cashawards.eu/

Complaints on controversial motorway project in Bosnia and Herzegovina trigger EBRD inquiry as forced expropriations begin in South Mostar

Local residents who stand to be affected by the section of the Corridor Vc planned between Mostar and Pocitelj in Bosnia and Herzegovina (BiH) submitted a complaint to the EBRD in January 2020. In response, the Bank’s Independent Project Accountability Mechanism (IPAM) acknowledges in its report that the selection of the route might have excluded and marginalised local communities and plans further investigation [1].

Building the motorway in the valley would in particular impact the property and livelihoods of Serb war returnees, who have rebuilt their lives in the south Mostar area in the last two decades. Vujadin Berberović, president of the Serb returnee association in Mostar, described in conversation with Bankwatch [2] how after the war he started to rebuild his family’s burnt down vineyard: “Five years ago, all this was interrupted with the first information that the potential route of Corridor Vc could pass through this beautiful valley.” Berberović, who recently passed away, was deeply involved in the fight to get the community’s voices heard among decision-makers [3].

IPAM’s report stressed that “particularly relevant to the investigation would be to identify if the Client took the necessary actions to ensure that Serb returnees were not disadvantaged in the resettlement process, were fully informed and aware of their rights and were able to benefit from the resettlement opportunities and benefits”. According to the Bank’s safeguards policy, ethnic minorities should have been treated as vulnerable groups that require additional protection and consultations. 

In February 2021 the Bank approved its latest contribution to the Corridor Vc project – a EUR 60 million loan. The decision was made despite the ongoing assessment of the complaints, which contain serious allegations about the way the bank and JP Autoceste, the Federation of BiH’s road company, have been sidelining the local communities, in breach of the EBRD’s standards.

A recent Bankwatch report [4] described how company representatives have trespassed on affected people’s property, and organised public presentations only after the final route had been selected – a far cry from the meaningful public participation required by EBRD policy. In an earlier assessment published by the EBRD’s accountability mechanism, both the Bank and JP Autoceste commented that the route selection was a done deal and further public consultations would be unlikely to reverse the decision [5].

The selection of the current route, moved from an uninhabited ridge into the valley south of Mostar, where it would run through villages and fertile agricultural land, was not properly consulted with the local communities, nor justified.

The EBRD’s Accountability Mechanism’s report states that it is not clear ”if the final design is ready nor whether studies and surveys have been initiated, however it is relevant to say that due to limitations faced during the appraisal, these studies need to be undertaken prior to start of construction”.

Amna Popovac, a representative of local complainants said: “Recent developments on the ground show that the EBRD and JP Autoceste are not waiting for the investigation to take its course, but moving ahead to inflict irreparable harm on local communities by starting expropriation procedures. We are convinced the IPAM will eventually recommend that the EBRD and JP Autoceste should listen to the local communities and reconsider the alternative route.”

Fidanka Bacheva-McGrath, Bankwatch EBRD policy officer said, “IPAM has already identified that a number of studies on the risk and adverse impacts to the health and safety of the affected communities had to be undertaken prior to start of construction, however, they were missing. In addition IPAM found that the project may have caused, or may be likely to cause, direct or indirect and material harm to local people. In view of this, the EBRD should suspend project implementation until IPAM concludes its investigation and the additional studies are done and consulted with affected people.”

 

The Bankwatch report is available here: Connecting or Dividing? The South Mostar section of Corridor Vc in Bosnia and Herzegovina

 

For more information

Fidanka McGrath

EBRD policy officer, CEE Bankwatch Network

Email: fidankab@bankwatch.org

Mobile: +359 87 730 3097

 

Amna Popovac

Representative of local complainants

Email: amna.popovac@gmail.com

Mobile: +38761130717

 

Notes for editors

[1] Compliance Assessment Report from the EBRD’s Independent Project Accountability Mechanism, 27 April 2021 https://www.ebrd.com/work-with-us/projects/ipam/2020/06.html 

[2] Video “At a crossroads – Corridor Vc motorway project”
https://www.youtube.com/watch?v=cpwxjlA7Cn8&ab_channel=Bankwatch 

[3] Vujadin Berberović, local activist who campaigned against Corridor Vc in Bosnia and Herzegovina, passes away https://bankwatch.org/press_release/vujadin-berberovic 

[4] Connecting or Dividing? The South Mostar section of Corridor Vc in Bosnia and Herzegovina https://bankwatch.org/publication/connecting-or-dividing-the-south-mostar-section-of-corridor-vc-in-bosnia-and-herzegovina 

[5] Assessment Report from the EBRD’s Independent Project Accountability Mechanism, January 2021 https://www.ebrd.com/work-with-us/projects/ipam/2020/06.html