Bankwatch

Home > Archives for Press release

Press release

Destructive hydropower project in Macedonia loses its only source of funding


Skopje, Prague – After a five years long campaign, Eko-svest, Front 21/42 and CEE Bankwatch Network welcome the cancellation [1] of a EUR 65 million loan from the European Bank for Reconstruction and Development (EBRD) intended for the Boškov Most hydropower project in Macedonia. As a result this controversial project is now highly unlikely to be realised.

In a statement posted last week on the EBRD’s website, the bank said that the loan agreement had been valid for five years but “conditions for disbursement were not met.”

Ever since plans for the Boškov Most hydropower project emerged, Macedonian and international environmental groups have repeatedly warned [2][3] of the detrimental ramifications this 68 MW hydropower dam inside the Mavrovo National Park could have for the fragile ecosystem and unique wildlife.

In particular, the project could severely threaten the already critically endangered Balkan lynx as well as several aquatic ecosystems and their species. In December 2015, the Standing Committee of the Bern Convention, the European wildlife treaty, called on the Macedonian government to suspend its plans [4] for establishing the Boškov Most and Lukovo Pole hydropower projects until the potential cumulative environmental impacts of these projects, as well as 19 other smaller hydropower projects across the Mavrovo National Park are fully assessed. Shortly after this resolution was issued, the World Bank decided to withdraw its support to the Lukovo Pole project.

Ana Colović Lesoska, Director of the Macedonian center for environmental research and information Eko-svest, said: “We expected the EBRD to have withdrawn from the project much earlier, even in 2013, when the independent expert report [5] came out as a result of our complaint to the bank’s Project Complaint Mechanism [6], stating that the EBRD had breached its own procedures when approving the project in 2011.”

Aleksandra Bujaroska from the Macedonian environmental lawyer association Front 21/42 said: “We regret that the Macedonian government haven’t properly implemented Strategic Environmental Assessment for the planned hydropower projects and wasted so many years and so much public money trying to push through a project which was never environmentally sound. Boškov Most raised environmental controversies from the beginning, having in mind that 80% of the project area is located in Mavrovo National park. In 2015 the Macedonia Administrative Court decision stated that the Macedonian Ministry of Environment had granted the license back in 2012 on the basis of an inadequate and incomplete environmental impact assessment and has therefore violated existing national environmental law.”

Fidanka McGrath, Bankwatch EBRD co-ordinator, said: “It was about time. This is now the second large hydropower project in the Balkans from which the EBRD had to withdraw, after the Ombla project in Croatia in 2013. We hope that this cancellation sends a strong signal to the bank to back off from protected areas and to reconsider the sustainability of large dam projects that cause irreversible biodiversity loss and the destruction of unique habitats.”

For more information please contact:

Ana Colovic Lesoska
Director, Eko-svest
ana@bankwatch.org
+389 72 726104

Aleksandra Bujaroska
Environmental lawyer
Front 21/42
aleksandra.bujaroska@front.org.mk
+389 78433713

Notes

[1] http://www.ebrd.com/work-with-us/projects/psd/boskov-most-hydro-power-project.html

[2] https://bankwatch.org/bwmail/62/pressure-mounts-ebrd-quit-macedonian-dam-folly

[3] https://bankwatch.org/publications/boskov-most-hydropower-plant-macedonia

[4] https://bankwatch.org/news-media/for-journalists/press-releases/macedonia-urged-suspend-controversial-hydropower-project

[5] http://www.ebrd.com/downloads/integrity/Boskov_CRR.pdf

[6] http://www.ebrd.com/downloads/integrity/Boskov_complaint_7.11.2011.pdf

World Bank’s controversial TANAP loan is bad news for human rights and climate action

Yesterday, the World Bank’s board of directors approved two USD 400 million loans, to Azerbaijan and to Turkey, to develop the Trans Anatolian Pipeline (TANAP), the centrepiece of the Southern Gas Corridor project. CEE Bankwatch Network and Counter Balance are deeply concerned that the decision to channel such large amounts of money to Europe’s biggest fossil fuels project could exacerbate the already dismal human rights situation in both Azerbaijan and Turkey, and undermine the global efforts to tackle the climate crisis.

Four multilateral development banks are considering finance for the Southern Gas Corridor project, which could get as much as USD 9.4 billion in public money. The World Bank’s loans approved yesterday are the first to support one of the project’s three pipelines.

“The World Bank has already postponed the vote on the loan at least once. But yesterday’s decision comes at a time when Turkey’s ongoing martial law means intensifying crackdown on journalists and civil society, thus preventing vital public scrutiny of the largest infrastructure project in the country,” says Anna Roggenbuck, Bankwatch’s EIB Policy Officer.

Ahead of the vote on the loan, Bankwatch, Counter Balance and 37 other international civil society groups sent an urgent letter to the World Bank’s directors, warning the project is in breach of the bank’s own policies.

The TANAP consortium has already received nearly 600 complaints from communities affected by the project. But the wide gaps between Turkish legislation and the World Bank’s standards on resettlement, as detailed in the letter, raise serious concerns about the ability of such loans to help mitigate the impacts on people living along the pipeline route.

In addition, a report released by Bankwatch last week exposed the trail of corruption behind 15 of the companies hired to build the Southern Gas Corridor pipelines. In Turkey, all subcontractors hired by the state-owned energy firm Botas for the project have close ties to Erdogan’s AK Party. According to the report, top executives in two of these companies have been convicted in two major corruption scandals. The Turkish Supreme Court overturned the rulings, clearing most defendants, but much of the evidence remains in publicly accessible.

“It is hard to see how the World Bank’s support to this project will benefit in any way citizens in Azerbaijan and Turkey. Such financing is at odds with any development logic since it mainly reinforces the reliance of both countries on revenues linked to fossil fuels for the autocratic regimes in place,” says Xavier Sol, Director of Counter Balance.

“European public banks should not take the approval of the World Bank’s loans as a green light for their own financing. For instance, the European Investment Bank, which now considers a EUR 1 billion loan to TANAP and another EUR 2 billion loan to the Trans Adriatic Pipeline, is legally obliged to comply with the European Charter for Fundamental Rights, and to ensure all its operations are in line with Article 21 of the EU treaties including the promotion of human rights and the rule of law,” says Counter Balance’s Xavier Sol.

The European Bank for Reconstruction and Development (EBRD) is also considering loans to the two pipeline projects.

“The EBRD has publicly announced it conditions its own decision on these loans on improvement in Azerbaijan’s human rights situation, as prescribed by the Extractive Industries Transparency Initiative in October. The EBRD must not interpret the World Bank’s hasty decision as a nod to its own loans,” says Bankwatch’s Anna Roggenbuck.

For more information please contact:

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar@bankwatch.org
Mobile: +48 509970424 Office: +48 91 831 5392
Twitter: @RoggenbuckA

Xavier Sol
Director, Counter Balance
xavier.sol@counter-balance.org
+32 2 893 08 61
Twitter: @xavier_sol

Revealed: the EU’s flagship energy project is built by companies with a legacy of corruption

No less than 15 firms contracted to build the Trans Adriatic Pipeline (TAP) and the Trans Anatolian Pipeline (TANAP), the two main sections of the so-called Southern Gas Corridor, have been implicated in various forms of corruption in the past, according to a CEE Bankwatch Network report published today.

Note: This press release has been amended to correct several errors that have been idenfitied after publication.
Read a statement about those changes >>

The full report can be found here: https://bankwatch.org/risky-business

Using publicly available information on companies contracted to build the two main sections of the Southern Gas Corridor in Italy, Greece and Turkey, the report reveals how many of them have a worrying history of corruption. In several cases, construction companies and their executives have been convicted on different charges, or they are currently facing criminal investigation and prosecution.

Greece

Among the companies identified in the report are three Greek firms – Ellaktor (through its subsidiary Aktor), J&P Avax, and GEK Terna – that are considered by authorities in Greece to be part of a cartel which operated in the construction sector for nearly 30 years. Companies in this cartel are alleged to have taken turns winning large public tenders and then dividing them among themselves.

Aktor was contracted to build, together with French company Spiecapag, 215 kilometres of the pipeline, mostly in Greece, even though the Leonidas Bobolas, CEO of its mother company Ellaktor, has long been on the authorities’ radar.

In 2015, Bobolas, whose name appeared on the ‘Lagarde list’ of potential tax evaders, paid EUR 1.8 million in bail after he had been arrested in Greece on suspicion of money laundering and tax evasion. In May 2016 the Cypriot authorities issued a second European Arrest Warrant against him.

Siemens, who is to supply the TAP project with six gas turbine turbo compressor units, is also said to have taken part in the same cartel. The German firm has a history of corruption in Greece, primarily in connection with a major scandal that came to be known as “The black cash of Siemens,” in which it allegedly bribed state officials.

Italy

In Italy, three of the companies contracted by TAP for the construction of the pipeline, or their past subcontractors, have had affiliations with mafia groups in the past. One of them, Bonatti Group, was hired to build a 760 kilomteres section of the pipeline in Greece, while in Italy a company it had hired in the past has had its public contract suspended for its links to organised crime.

Turkey

Turkey’s state owned energy firm Botas is the company responsible for the construction of the TANAP project, and all of the main subcontractors in the pipeline project have close ties to the ruling AK Party.

Botas has been implicated in at least two major corruption scandals, where bribery has played a central role in winning public tenders. Among those convicted in these two scandals were top executives in Botas and in some of its subcontractors for the TANAP project, as well as senior officials in the Ministry of Energy and Natural Resources which partly controls Botas. The Turkish Supreme Court later overturned the rulings, clearing most of the defendants, but much of the evidence remains in the public domain.

An interactive presentation of the contractors building the two pipeline projects can be found here: https://bankwatch.kumu.io/risky-business

The Southern Gas Corridor, a 3500 kilometre long set of pipelines, is intended to bring 10 billion cubic meters of natural gas from Azerbaijan to Europe, and 6 billion cubic meters of gas to Turkey.

Priced at USD 45 billion, this is the most ambitious energy project the EU is currently promoting, and four of the world’s largest public banks – including the European Investment Bank and the World Bank – are considering record loans for both TAP and TANAP.

The Southern Gas Corridor has been listed under the EU’s ‘Projects of Common Interest’ (PCI), a status that allows faster and simpler permitting procedures as well as privileged access to European public funding. Italian authorities are currently investigating former MEP Luca Volonté who is suspected to have received a EUR 2.4 million bribe from the Azerbaijani government – money that has allegedly helped secure the Southern Gas Corridor’s PCI listing.

“Channelling billions of euros in public funds to dodgy companies – all in the name of so-called energy security – is this the legacy Europe wants?” says Mark Fodor, Bankwatch’s Executive Director.

“Public lenders such as the European Investment Bank and the European Bank for Reconstruction and Development should seriously consider whether they are willing to entrust their largest ever loans to companies that have a history of bribery, tax evasion and mafia connections,” says Anna Roggenbuck, Bankwatch’s EIB Policy Officer.

For more on Bankwatch’s campaign on the Southern Gas Corridor see: https://bankwatch.org/our-work/projects/southern-gas-corridor-euro-caspian-mega-pipeline

For more information please contact:

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar@bankwatch.org
Tel.: +48 509970424
Twitter: @RoggenbuckA

Mark Fodor
Executive Director, CEE Bankwatch Network
mark.fodor@bankwatch.org
Tel.: +36 (1) 216 7297/5
Twitter: @markfodor_bwn

The EU bank’s dubious overseas development experience shows it cannot be a key player in Europe’s response to the plight of refugees – report

The EIB is increasingly given a prominent role in the EU’s response to the so-called refugee crisis stretching the bank’s operations well beyond its current mandate for overseas investments. Yet, a new report by Counter Balance and CEE Bankwatch Network takes a closer look at projects the EU’s house bank has been financing outside Europe to find a dismal track record on a range of issues from transparency to human rights. This, the report authors say, should serve as a warning sign for the European Parliament and Council as they consider boosting the bank’s mandate.

The report can be found here:
https://bankwatch.org/sites/default/files/going-abroad-EIB.pdf

A blog post with more details can be found here:
https://bankwatch.org/news-media/blog/here-be-dragons-how-eu-banks-development-finance-overlooks-people-risk

The European Investment Bank’s (EIB) 2014-2020 External Landing Mandate (ELM) is currently undergoing a mid-term review by EU institutions – and the European Commission has been the first to release its contribution.

On this occasion, the Commission is seeking to dramatically expand the EIB’s overseas operations by granting the bank extra EUR 3 billion in guarantees under its ELM. The Commission is also proposing to add EUR 2.3 billion in guarantees under this mandate – in total EUR 5.3 billion in guarantees – to address forced displacement that has led people fleeing war and persecution to embark on long, dangerous trips to reach Europe.

For this purpose, the EIB’s proposed “Resilience Initiative” is intended to mobilise billions of euros in private investments in the private and public sectors in the western Balkans and the Middle East and north Africa over the next four years. Yet, the increased guarantee ceilings do not include any concrete provisions to ensure the effectiveness of the bank’s operations.

In addition, the EIB is also set to become a key player in the Commission’s proposal for an “External Investment Plan,” an all-out investment offensive in Africa and in the European Neighbourhood regions meant to stem migration.

But the new report, examining how the EIB has delivered on its ELM so far, reveals that the bank’s lending outside the EU has been plagued by a range of fundamental problems.

The findings presented in the report raise serious concerns about the EIB’s overseas development role including transparency and access to information practices, the bank’s approach to tax evasion and tax dodging, enforcement of sustainability standards, and human rights due diligence.

The EIB still does not have a human rights policy or proper human rights assessment and monitoring system at project level, the report notes, and the bank has repeatedly failed to guarantee sufficient and meaningful community participation in projects it supports.

Based on conclusions from a range of cases, the report also offers a series of detailed recommendations for improving the bank’s performance in a way that can support the EU’s international policies and priorities.

Nevertheless, the report authors warn, the EIB clearly lacks the relevant expertise, capacity and experience required to realise the stated objectives of its Resilience Initiative such as access to education, water and sanitation for the most vulnerable.

Ana-Maria Seman, campaigner at CEE Bankwatch Network and co-author of the report, says:
“The EIB simply lacks the human centred approach that is required for implementing such humanitarian and development projects, especially when it is done through private sector investments.”

Anna Roggenbuck, EIB Policy Officer at CEE Bankwatch Network and co-author of the report, says:
“EU governments, who are shareholders of the EIB, and the European Commission have failed to ensure the bank addresses existing systemic problems in the bank’s external mandate, and now they want to expand it. Until these issues are seriously tackled, no additional guarantees should be given to expand the EIB’s mandate.”

Aleksandra Antonowicz-Cyglicka, campaigner at CEE Bankwatch Network and co-author of the report, says:
“The lack of a human rights policy and proper due diligence at the EIB makes possible strengthening authoritarian regimes, which will do little to help local communities, especially those facing displacement. Europe can surely offer better.”

Xavier Sol, Director of Counter Balance and co-author of the report, says:
“It is seriously questionable whether the EIB, whose business model is geared towards large energy and transport infrastructure projects and indirect support to small and medium enterprises, is really best placed to offer assistance to refugees and host communities.”

For more information contact:

Anna Roggenbuck
EIB Policy Officer, CEE Bankwatch Network
annar@bankwatch.org
Tel: +48 91 831 5392
Twitter: @RoggenbuckA

Xavier Sol
Director, Counter Balance
xavier.sol@counter-balance.org
+32 2 893 08 61
Twitter: @xavier_sol

Ana-Maria Seman
Campaigner, CEE Bankwatch Network
anamaria.seman@bankwatch.org
+40 726 328 802
Twitter: @anna_seman

Overblown job promises in southeast Europe’s coal sector show the need for a just transition – report

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.

The report can be downloaded from here:
https://bankwatch.org/sites/default/files/coal-jobs-fraud.pdf

An infographic comparing labour productivity between mines across the region and those of other countries can be found at:

Infographic: The great coal jobs fraud

A blog post with a closer look at some of the mines can be found here:
https://bankwatch.org/news-media/blog/deceptive-promises-new-jobs-coal-sector-dont-help-workers-communities-or-climate

In a first analysis of its kind for the region, Bankwatch’s report explores promises about future jobs in the coal mines and power plants of southeast Europe [1]. The findings show that talk about increasing employment, or even securing the current levels, are in most cases completely unfounded.

The most striking example is the 500 MW Kosovo e-Re power plant. Representatives of ContourGlobal, the only bidder for the project, have been cited in the media claiming 10,000 new jobs will be created during the construction phase, and the plant’s operation could offer employment to 500 people. The new report, however, estimates that, based on recent experience with the Stanari power plant in Bosnia-Herzegovina, the construction of the Kosovo e-Re power plant would require just around 1,600 workers, many of which are likely to be foreign specialists. And if built, the plant is unlikely to employ more than 200 workers.

The report’s conclusions add to growing evidence that coal is also fast becoming a financial liability, in addition to its dire impacts on both public health and the climate.

Most of the mines and power plants in the region are state-owned and are struggling to make a profit. The authors of the report warn that, having committed to join a regional electricity market, the countries can no longer rely on subsidies as a life support for the ailing coal sector.

Around the world, employment in the renewable energy sector continues to rise, the report states, and with the Paris Agreement coming into force earlier this month, the prospects for clean energy investments are bigger than ever. At the same time, governments must make sure that a well-managed, inclusive and just transition takes account of education and training on sustainable energy technologies for workers, as well as plans for decommissioning and rehabilitation for coal mines, power plants and ash dumps. All these have to involve workers and their communities if they are to have any chance of succeeding.

“The fact that southeast Europe’s coal sector will never return to current levels of employment is a massive elephant in the energy policy room. Instead of sleepwalking into a social disaster it’s high time for the authorities to stop pretending and start developing a just transition for workers and their communities who depend on coal”, says Pippa Gallop, Research Co-ordinator at Bankwatch and co-author of the report.

Ioana Ciuta, Energy Co-ordinator at Bankwatch, and co-author of the report says: “Seven EU countries are already coal-free and a growing number of others are making concrete plans to phase out coal. Policy makers have to acknowledge that the demise of coal is inevitable, and it is their responsibility to ensure that workers in the industry are not the ones to pay the price when it eventually shuts down.”

For more information contact:

Pippa Gallop
Research Co-ordinator, CEE Bankwatch Network
pippa.gallop@bankwatch.org
+385 99 755 9787

Ioana Ciuta
Energy Co-ordinator, CEE Bankwatch Network
ioana.ciuta@bankwatch.org
+40 724 020 281
Twitter: @unaltuser

Notes to editors

[1] The report covers Bosnia and Herzegovina, Greece, Kosovo*, Macedonia**, Montenegro, Romania and Serbia.
* According to the UN, Kosovo is “under the United Nations Interim Administration Mission in Kosovo (UNMIK) established pursuant to Security Council Resolution 1244.”
** According to the UN, the official name for Macedonia is “The former Yugoslav Republic of Macedonia”.

New South East Europe NGO scorecard report shows mixed progress towards a sustainable energy sector


Belgrade, Podgorica, Pristina, Sarajevo, Skopje, Tirana, Zagreb – Progress – albeit uneven – is being made towards increasing sustainability in South East Europe’s energy sector, according to a new scorecard report launched today by a group of NGOs (1). CO2 emissions, electricity losses and energy intensity have all seen decreases in most countries in the region, but less progress has been made on increasing the share of solar and wind energy and tackling corruption.

The report is available at:
https://bankwatch.org/publications/sustainable-energy-how-far-has-south-east-europe-come-last-five-years

The scorecard, covering seven countries (2) and comparing data from 2010 and 2014/2015, aims to complement the European Commission’s annual progress reports – launched tomorrow. It looks beyond the adoption of legislation to examine concrete changes during the last five years.

Among the findings are:

  • CO2 emissions per capita from fuel combustion decreased between 2010-2014 in all countries except Bosnia and Herzegovina and Albania. Serbia’s drop may however have been the result of the 2014 floods.
  • Croatia has the most wind and solar power in the region, with 5.5% of electricity from wind in 2014. Solar generation was at 35 GWh in 2014 – however it has used only a tiny fraction of its potential.
  • Transmission and distribution losses dropped between 2010-2015 in all countries except Albania.
  • Kosovo is the most coal-dependent country in the region, with 97% of electricity from coal in 2014. Macedonia and Serbia are second and third, with 69.5% and 64.8% respectively of their electricity from coal. For comparison, the EU generated 26.3% of electricity from coal in 2014.
  • Energy intensity – the amount of energy needed to produce a unit of GDP – dropped between 2010-2014 in all countries except Bosnia and Herzegovina and Albania.
  • Between 2010-2015 all countries except Macedonia and Albania improved their scores in Transparency International’s Corruption Perceptions Index – but only slightly.

“It’s reassuring to see that several countries in the region have shown themselves capable of reducing per capita greenhouse gas emissions from fuel combustion. However Serbia and Bosnia-Herzegovina’s underperformance is likely to soon become a liability if they don’t take swift action” commented Dragana Mileusnić of Climate Action Network Europe.

“Finally we can see that some progress is being made on energy wastage through transmission and distribution losses and inefficient use in most of the region, but why is Albania failing to take advantage of these low-hanging fruits? Such investments are win-win, there is no excuse to keep haemorrhaging energy”, added Lira Hakani of EDEN Center, Albania.

“It’s disappointing to see that in spite of high interest from investors, there is still hardly any wind and rooftop solar power in the region. All the countries have renewable energy targets to meet by 2020 and solar and wind are two of the energy sources that could still be increased by then if there is political will”, concluded Sonja Risteska of Analytika, Macedonia.

For more information, contact

Ana Ranković
SEE SEP Network Coordinator
E-mail: Ana-Fractal@seechangenet.org
Mob:+381 63 180 33 33

Pippa Gallop
Research Co-ordinator, CEE Bankwatch Network
E-mail: pippa.gallop@bankwatch.org
Mob:+385 99 755 9787

Notes for editors:

(1) South East Europe Sustainable Energy Policy (SEE SEP) is a project with 18 CSO partners from across the region (Albania, Bosnia and Herzegovina, Croatia, Kosovo*, Macedonia**, Montenegro and Serbia) and the EU. The SEE SEP project aims to empower CSOs and citizens to better influence policy and practice towards a fairer, cleaner and safer energy future in SEE. The report is supported by the following groups:

SEE Change Net
Analytica (Macedonia)
ATRC (Kosovo)
CEKOR (Serbia)
CPI (Bosnia and Herzegovina)
CZZS (Bosnia and Herzegovina)
DOOR (Croatia)
EDEN (Albania)
Ekolevizja (Albania)
Eko-Svest (Macedonia)
Forum for Freedom in Education (Croatia)
Fractal (Serbia)
Front 21/42 (Macedonia)
Green Home (Montenegro)
MANS (Montenegro)
WWF Adria
CEE Bankwatch Network
CAN Europe

(2) Albania, Bosnia and Herzegovina, Croatia, Kosovo*, Macedonia**, Montenegro and Serbia.

* According to the UN, Kosovo is “under the United Nations Interim Administration Mission in Kosovo (UNMIK) established pursuant to Security Council Resolution 1244.”
** According to the UN, the official name for Macedonia is “The former Yugoslav Republic of Macedonia”.