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In Georgia, leaked contract shows Nenskra hydropower project to cost country USD 60 million a year

The report contradicts the claims of the Georgian government and JSC Nenskra, which have long maintained that the 280 MW hydropower plant is essential for Georgia’s energy security, arguing it would provide the country with considerably cheaper electricity.

But an analysis of the contract by Bankwatch member group in Tbilisi Green Alternative shows that the government has committed to buy electricity generated by Nenskra during its first 36 years of operation at a price that is on average double the current tariff for domestic electricity, and three times the price of electricity Georgia exports. This means that if the project materialises, it will generate losses of approximately USD 60 million every year for the public coffers.

Initially signed in August 2015 and amended in June 2017, the contract also reveals that the Georgian government has agreed to reimburse the company for any losses in case Nenskra fails to generate the anticipated amount of energy due to various hydrological reasons. This is not an unlikely scenario, given the projected impacts of climate change in the region, as well as the under-performance of earlier hydropower projects in Georgia like the Paravani, Dariali and Shuakhevi plants [2].

The new revelations add to earlier warnings about the financial viability of the billion dollar Nenksra project. The International Monetary Fund’s fiscal transparency report for Georgia from September 2017 [3] warned that the Nenskra project would pose serious risks to the country’s fiscal stability. The IMF’s findings were followed by a February 2018 World Bank analysis [4], commissioned by the Georgian finance ministry, which warned that the project could incur costs over EUR 1.8 billion between 2022 and 2041.

The report authors expect additional costs – beginning at EUR 113 million a year between 2023 and 2026 – due to worsening exchange rates. In addition, liabilities to Georgia’s electricity operator due to the energy surplus could reach USD 154.2 million by 2041, and the report also cautioned that the project’s costs could further increase with delays or unplanned expenses.

David Chipashvili, campaigner for Green Alternative, said: “The promises of energy security by the company and government officials about the grandiose Nenskra project have now confirmed to be out of touch with reality. Their motivations to sign an agreement that is so blatantly against the national interest remain a mystery.

International financial institutions considering the project, including the European Investment Bank, the European Bank for Reconstruction and Development, the Korean Development Bank, the Asian Development Bank, and the Asian Infrastructure Investment Bank, have long been aware of the outrageous terms in this contract. Now that it has finally been made public, they need to seriously re-think their engagement.”

For more information contact

David Chipashvili
Green Alternative, Bankwatch campaigner for Georgia
Email: dchipashvili@greenalt.org 

Notes

[1] http://rustavi2.ge/ka/news/135478

[2] https://bankwatch.org/project/hydropower-development-georgia

[3] https://www.imf.org/en/Publications/CR/Issues/2017/09/27/Georgia-Fiscal-Transparency-Evaluation-45274

[4] http://greenalt.org/wp-content/uploads/2018/09/Assessment_of_HPP_Cost_2018.pdf

Protests at pan-European motorway project as time runs out for key wildlife site

Over 40 senior members of the Friends of the Earth Europe network joined the protest in Kresna gorge ahead of their AGM in the region, and also met with the local civic platform which is campaigning against the motorway.

The Bulgarian government plans to build a part of the proposed Hamburg to Athens motorway through the Kresna gorge – identified as an exceptional European biodiversity hotspot due to its unique abundance and diversity of nature and wildlife.

Loss of wildlife in the gorge already breaches EU environment law. The motorway construction threatens the survival of many unique species in the gorge in breach of EU law, and is mired in corruption – despite being funded by the EU.

Both the European Environment Commissioner Karmenu Vella and more recently Commission President hopeful Frans Timmermans have failed to take action to halt nature loss in the gorge in line with EU law, and move the planned motorway section out of the nature hotspot. The local community is also staunchly against the project.

Friends of the Earth Europe director Jagoda Munić said: “We are facing a global ecological crisis that demands governments urgently change track. Driving a motorway through one of Europe’s top wildlife zones, at EU taxpayers’ expense, shows a dinosaur mentality that in today’s age is no longer acceptable. Since European law is clearly broken it is essential that the European Commission starts immediate proceedings to stop the destruction of our nature.”

Friends of the Earth has repeatedly asked Environment Commissioner Vella and Commission Vice-President Timmermans to intervene against the Bulgarian government. With just weeks left of their mandate, and with Timmermans hoping to be the next Commission President, time is running out to save the gorge before the start of major construction works. Bulgarian civil society has produced viable alternative routes for the motorway that would bypass the gorge.

Za Zemiata/Friends of the Earth Bulgaria nature campaigner Desislava Stoyanova said: “Bulgaria is blessed with extraordinary and irreplaceable nature that is threatened by projects like this EU-funded motorway through Kresna Gorge. Civil society is the core of our democracy, and our government must listen to our calls for the rule of law to be followed and this motorway to be routed away from this protected wildlife site.”

New study finds climate and energy plans at odds with EU targets for circular economy and emissions reductions

The new report ‘Up in smoke’ is available here.

The NECPs in Bulgaria, Hungary, Latvia, Poland and Slovakia include large incinerators with energy recovery, the conversion of combined heat and power plants to co-fire waste with coal or biomass or the co-incineration of waste at cement kilns and nearly obsolete power plants. Yet the plans lack strong and credible policies aimed at finding alternatives to deliver cleaner waste management and heating systems, in spite of recommendations from the Commission in its European Semester and early warning procedure [1].

As burning waste generates significant amounts of greenhouse gas emissions, and energy recovery from incineration has long been demonstrated to achieve considerably lower greenhouse gas savings than recycling, the resource management measures in the NECPs miss important opportunities for climate-friendly spending.  

In Bulgaria, the rate of emissions reductions from waste slowed when the country began incineration and will further decrease if more incinerators are built as planned in the NECP. Poland and Hungary face a similar situation, where investments in incineration will slow down recycling rates and therefore greenhouse gas emissions in the waste sector are expected to rise: in Poland, such emissions are set to triple by 2030.

The study also identifies significant risks that waste-to-energy measures will crowd-out financing for recycling schemes, as in Bulgaria, where the EUR 189 million Sofia incinerator is expected to use up more than a quarter of the country’s EU funds for waste management, and in Poland, where the Gdansk incinerator accounts for around half of the country’s total EU funds available thus far for the sector.

Izabela Zygmunt, Bankwatch campaigner with Polish Green Network, said, “A circular economy is good for the climate and for economies, but the proposed energy and climate plans in our countries will slow progress on achieving it. These NECPs would haemorrhage money on more expensive and unsustainable technologies that lock in waste management solutions incompatible with EU targets.’

Raphael Hanoteaux, Bankwatch EU policy officer, said, “Both the Commission and Parliament proposed a ban on investments for waste incineration in the post-2020 EU Cohesion Funds. But these Member States are headed in the wrong direction, even though more affordable and climate-friendly solutions are eligible for future EU funds. These unsustainable investments are a dangerous trend that goes against the Paris Agreement and the 2050 net-zero objective.”

For more information contact

Izabela Zygmunt, campaigner
Bankwatch and Polish Green Network
Email: izabela.zygmunt@bankwatch.org

Raphael Hanoteaux, EU policy officer
Bankwatch
Email: raphaelh@bankwatch.org

Notes

[1] European Commission, Early warning for Member States at risk of missing the 2020 target of 50% preparation for re-use / recycling for municipal waste

Bosnia-Herzegovina: Environmental permit for Buk Bijela hydropower plant cancelled

A renewal of an earlier permit issued in 2013, the cancelled permit was issued by the Republika Srpska Ministry for Spatial Planning, Construction and Ecology in May 2018, after which the Aarhus Centar submitted its complaint in June 2018 regarding procedural deficiencies.

The investor, the state-owned Elektroprivreda Republike Srpske (ERS), had failed to request a renewal of the permit within the legally-defined deadline, meaning that the Ministry was obliged to cancel the permit because construction had not begun within four years of the initial permit being issued.

Likewise, no new public consultations were held either in Bosnia-Herzegovina, or in Montenegro, even though the reservoir would stretch to the Montenegrin border, and such consultations are required by both the Aarhus and Espoo Conventions. The initial 2012 consultations were poorly advertised, and the comments submitted by civil society groups  in Bosnia-Herzegovina and Montenegro were not taken into account.

The environmental assessment study claims that there would be no impact on the UNESCO-protected river Tara, without providing any evidence. Considering that the Tara is the main tributary of the Drina and that the reservoir would extend to the Montenegrin border, impacts like disrupting the movement of species up and downstream are inevitable and need to be examined.

The Coalition for the Protection of Rivers in Bosnia-Herzegovina [1], of which the Aarhus Center is a member, said in a statement: ”The Buk Bijela project has been fought since the 1970s because of its impacts on the protected Tara Canyon in Montenegro, which is on the UNESCO World Heritage list and is part of the Durmitor National Park. The Drina is also the most important habitat of the endangered Danube Salmon, found only in some of the cleanest rivers in the Danube basin of southeast Europe. The area has also developed tourism based on rafting and fishing, so building any kind of dam on a river would damage the quality of the water, biodiversity and tourism.”

The Buk Bijela dam, the uppermost of numerous dams planned on the Drina, is being promoted by ERS, at an estimated cost of around EUR 200 million. In July 2017 a memorandum was signed with China’s State Aero-technological International Engineering Corporation (AVIC-ENG), with the hope that the project would be financed by Chinese state banks.

“The Coalition for the Protection of Rivers in Bosnia-Herzegovina will continue its activities to counter plans for the construction of over 300 new hydropower plants planned on almost all our rivers. The Drina has rich potential beyond hydropower, and this is becoming more obvious as the years pass. It is time to strengthen models of development that will not harm nature and the people who live along the river. This powerful river deserves our attention and care and we hope that in the end all the hydropower plants planned on the Drina will be cancelled“, concludes the Coalition.

Contact

Nina Kreševljaković
Aarhus Resource Center BiH
+387 (0) 62616326

Pippa Gallop
CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 (0)99 755 9787

Notes for editors

[1] More information about the coalition can be found at: http://rijekebih.org/

Bulgarian villagers call on the EBRD to ensure fair resettlement by coal company it finances

CEE Bankwatch Network and Za Zemiata are today launching a multimedia story featuring videos with locals from Beli Bryag, who are explaining the enormous psychological pressure they have been under for almost a decade, as the coal mining company attempting to resettle them is refusing to offer proper compensations – while the date of the expropriations is drawing closer.

“In the past years, the pressure from the mines affects our psychological state and health. You can tell by the colour of my hair that we are growing old very fast,” Petar Tenev, one of the featured villagers, explains.

Beli Bryag is set to be torn down by 2023 to expand one of the coal mines feeding into a plant in the Maritsa East complex, the largest in Bulgaria. The Maritsa East mines need to resettle the villagers, but the company is offering too low compensations, which villagers say do not allow them to purchase similar homes in nearby settlements.

The European Bank for Reconstruction and Development (EBRD), a public multilateral bank, has given a grant to the Maritsa East mines in 2014 [2], and later on has extended two loans for the issue of bond stocks to the Bulgarian Energy Holding, the mother company of Maritsa East. [3]

Because the bank has higher resettlement standards than those applied in Bulgaria, villagers have turned to the bank’s complaints mechanism to help settle their dispute with the company over the level of compensation. While the bank’s mechanism has sent in mediators, more than a year has passed with no resolution since the mediation process started.

“The EBRD must ensure that its client, the Maritsa East Mines, will do right by the people of Beli Bryag. If the dispute is not settled this year, people’s property will be expropriated. If they do not get better compensations than what the company currently offers, they will be kicked out of their homes in a shameful way, deprived of their livelihoods from vegetable gardens, farming land and animals, separated from the community they’ve lived their entire lives in, probably thrown into debt,” comments Genady Kondarev from Za Zemiata.

“This is a far cry from the good practice and international standards on resettlement that the EBRD committed to. Villagers of Beli Bryag put a lot of hope in the EBRD, not just to kick off a dispute settlement process but also to ensure it is completed in a fair manner,” says Kondarev.

Notes for the editors:

[1] As per a decision by the Maritsa East mining company board.

[2] http://www.marica-iztok.com/en/page/description-77-4.html

[3] https://www.ebrd.com/news/2016/ebrd-backs-bulgarian-energy-holding-bond.html and https://www.ebrd.com/news/2018/ebrd-invests-100-million-in-bulgarian-energy-holdings-sevenyear-bonds.html

See the multimedia story
Download videos/photos

Legal challenge mounted against Kosovo coal project’s “absurd” contract

The complaint alleges that the 20-year power purchase agreement, signed by the Kosovar government with ContourGlobal in December 2017, [3] fails to comply with the Energy Community Treaty rules on state aid because it provides ContourGlobal a range of benefits that give it an unfair advantage over other energy producers.

The contract would also put an unbearable strain on the state budget and Kosovar electricity consumers as it guarantees that a state-owned company will buy all the electricity generated by ContourGlobal at a “target price” of EUR 80/MWh – much higher than current electricity prices in the region.

In addition, when the electricity is not needed, the state still guarantees an “availability payment” to the company, and it has committed to pay ContourGlobal’s network fees, reimburse it for a take-or-pay agreement that it signed with the state-owned lignite mine, and provide the land for the power plant to the company for a token fee of EUR 10.

“EUR 80/MWh would be bad enough, but with all these additional fees, no-one seems to know how much all this will end up costing consumers and taxpayers. Many people in Kosovo can’t afford to pay for their electricity bills even now, so there is no chance they can absorb these increases. The state is going to end up emptying its already modest budget into the pockets of ContourGlobal”, explains Visar Azemi from Balkan Green Foundation.

“To say the Kosovar government has made a terrible mistake would be an understatement”, added Pippa Gallop of CEE Bankwatch Network. “Whatever caused them to sign this absurd contract, it is up to Kosovo parliamentarians, the Kosovar public, and international bodies like the Energy Community and European Commission to make sure it doesn’t get ratified, for the sake of Kosovo’s consumers and taxpayers.”

“The most painful part is that almost a third of Kosovo’s electricity is lost from the distribution system due to technical losses and non-payment of bills, so the priority should be fixing this and upping the renewables share, not throwing money we don’t have at yet another coal plant”, concluded Agron Demi from Gap Institute.

Contacts

Visar Azemi
Balkan Green Foundation
visar.azemi@balkangreenfoundation.org
Mob: +386 49 728 019

Agron Demi
Gap Institute
agron@institutigap.org
Mob: +383 49 609 704

Pippa Gallop
CEE Bankwatch Network
pippa.gallop@bankwatch.org
Skype: pippa.gallop
Mob: +385 99 755 9787 (email or Skype preferred)

Notes for editors

[1] Balkan Green Foundation, GAP Institute, Group for Legal and Political Studies, INDEP and CEE Bankwatch Network

[2] http://www.mzhe-ks.net/en/news/the-government-signs-agreements-for-kosova-e-re-power-plant#.XM6x8kOxXeQ

[3] Republic of Kosovo Ministry of Economic Development: The government signs Agreements for “Kosova e Re” Power Plant, 20 December 2017.

[4] The contracts are available here

[5]  In 2016, nearly 30 percent was lost from the distribution system through technical losses and non-payment (around half each), and much more is wasted through lack of energy efficiency measures.