Bankwatch

Home > Archives for Press release

Press release

State guarantee vote for TES 6 overshadowed by OLAF corruption investigation

A state guarantee law supporting the construction of a 600 MW lignite plant at Sostanj in Slovenia (TES 6) was passed this week despite allegations of corruption against the management of the company remaining unsettled. Even more, the European Anti-Fraud Office (OLAF) recently opened an official investigation into TES 6. (1)

The Slovenian parliament adopted Wednesday July 18 a state guarantee law necessary for the disbursement of four fifths of a 550 million euro loan from the European Investment Bank for the construction of a new unit at coal plant Sostanj.(2) The European Bank for Reconstruction and Development had expressed an intent to lend an additional 100 million euros for the project, with the two public banks together set to cover half of total costs. (3)

The state guarantee law was voted for by an unimpressive 29 parliamentarians (only 59 out of the total of 90 MPs were present at the vote, and of those present 20 opposed the law and 10 abstained). The law on state guarantee might still be put on hold next week if opponents of the project manage to collect 2.500 signatures to start the referendum initiative to reject the law.

More importantly, the state guarantee law was voted without important allegations of corruption and fraud raised earlier this year by a State Commission for the Prevention of Corruption (4) being properly investigated by national authorities. Investigations into corruption and fraud at TES 6 started by the National Investigations Office and local police had not been completed at the time of the vote.

Significantly, the European Anti-Fraud Office (OLAF) announced in June that it would open its own investigation into the corruption and conflict of interest allegations at TES 6. The EIB and the EBRD too are at the moment conducting their own internal investigations into the corruption allegations.

“The EIB and the EBRD could think that the approval of the state guarantee will allow them to finally move ahead with disbursing the payments,” comments Bankwatch energy coordinator Piotr Trzaskowski. “But this is far from the truth: the EIB and the EBRD cannot escape the responsibility of sorting out the corruption and fraud accusations related to this project. Only the completion of the banks’ own internal investigations and the finalisation of investigations by OLAF and the Slovene police can ascertain whether the two European public banks have been involved in an investment marred with illegalities.”

“With all the existing pressures to move ahead with the project, the EIB and the EBRD should not forget that opposition of Slovenians to this plant is strong,” adds Barbara Kvac, Head of the Climate Change Program at Slovenian NGO Focus. “The referendum could provide an opportunity for people to voice their concerns related to health, corruption and climate change which have so far been ignored by their own parliament. There are so many reasons to abandon this project that only blindness or indeed corruption can make it go further.”

Notes for the editors:

(1) Read the letter from OLAF announcing the opening of an investigation into corruption at TES 6: https://bankwatch.org/sites/default/files/Slovenia%20Investigation.pdf
(2) The state guarantee law asks for the following conditions to be met if the Slovenian budget is to guarantee the loans offered to TES 6 by the international banks:

• The investor must negotiate with all suppliers with the aim to lower the costs from NIP 4 (4th investment program; 1.302.747.010 euros);
• PV Coalmine Velenje and TES must sign a contract on the long-term supply of lignite at the maximum price of 2,25 EUR/GJ before the state guarantee is issued;
• The investor must ensure the project will be finished in accordance with the agreed timeline;
• The investor must ensure all the conditions are met for achieving an internal rate of return of the project in line with the sectoral energy policy;
• The investor must limit the CO2 emissions in line with investment program (NIP 4);
• The investor must sign a contract with two Slovenian ministries (finance and energy) to guarantee that the above conditions are fulfilled;

The parlimentary committee responsible for the law asked TES to prepare a new peer-reviewed investment program (NIP 5). This program has to be checked by an independent and technically competent reviewer. NIP 5 will be used to determine whether the government’s conditions are met.

(3) Read more about TES 6 and the involvement of the European banks here: https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia
(4) Read more about the findings of the State Commission and their report here: https://bankwatch.org/news-media/for-journalists/press-releases/dirty-french-slovenian-connection

For more information, contact:

Piotr Trzaskowski
Bankwatch energy corrdinator
piotrt@bankwatch.org
0048509162988

Barbara Kvac
Head of Climate Change Program
Focus Slovenia
Barbara@focus.si
00386 40 722 149

MEPs call for responsible new EBRD mining strategy

Brussels – The new mining strategy of the EBRD risks contradicting the EU Resource Efficiency Roadmap and responsible mining principles, argue 22 MEPs in an open letter to European Commissioners which asks the EC to take a more active role in improving the EBRD mining strategy currently under review. (1)

“The EBRD is right in drafting a new mining strategy as raw materials policy is climbing to the top of political agendas,” says German MEP Reinhard Butikofer, the initiator of the open letter. “But this strategy must be in line with EU objectives and standards. The EBRD has financed coal mining without taking responsibility for coal-combustion’s contribution to climate change. This is not only short-sighted but at odds with the EU’s very own climate agenda.”

A review of the EBRD’s mining strategy shall happen by the end of 2012, with a first draft of the document published in April considered disappointing by environmental NGOs monitoring the bank, primarily because it continues to allow for financial support for coal mining despite opening up new coal resources being one of the main contributors to climate change. (2)

“What we also want to see is a genuine inclusion of civil society, particularly of potentially affected communities, in the decision-making over the future mining policy of the EBRD,” says Bankwatch EBRD coordinator Ionut Apostol. “The process of drafting the mining strategy is not open enough even though this document will impact in important ways the direction of development of countries in Central and Eastern Europe.

“The EBRD needs to make sure that it avoids to repeat mistakes from the past, specifically putting too much emphasis on intensive exploitation of natural resources as a supposed means of development,” Apostol added. “Too often, intensive resource extraction has been undertaken because of the existence of undemocratic regimes, fraud, corruption or weak environmental standards in the EBRD countries of operation; it hasn’t benefited local populations, on the contrary, it has contributed to putting these countries on unsustainable paths.”

The EBRD operations cover nine of the new EU member states and all accession and neighbouring countries that are also main commercial partners of the Union. The EU and EU member states own around 60 per cent of EBRD shares. In the last ten years, the EBRD has facilitated investments of around EUR 2 billion Euro in the mining sector.Notes for the editors:

(1) Read the open letter from the 22 Members of the European Parliament addressed to 3 Commissioners here: https://bankwatch.org/publications/greens-call-active-efforts-european-commission-ensure-improved-ebrd-mining-strategy
(2) Read the EBRD draft mining strategy at: http://www.ebrd.com/downloads/policies/sector/draft-mining-strategy.pdf
Read the Bankwatch reaction to the EBRD mining strategy: https://bankwatch.org/news-media/for-journalists/press-releases/ebrd-fresh-plans-show-intent-pour-more-public-money-coal
(3) Examples of harmful mining projects currently in the EBRD’s pipeline:
https://bankwatch.org/our-work/projects/kolubara-lignite-mine-serbia
https://bankwatch.org/our-work/projects/mining-boom-mongolia

For more information, contact:

Ionut Apostol
CEE Bankwatch Network EBRD coordinator
ionut@bankwatch.org
0040721251207

Anelia Stefanova
CEE Bankwatch campaigns coordinator
anelias@bankwatch.org

MEP vote on EU budget is test of climate commitment

Brussels, Belgium – A European Parliament committee vote tomorrow (Wednesday July 11), with a major bearing on EU budget spending for the 2014-2020 period, must reject the re-classification of fossil fuels as ‘low-carbon’, urged environmental groups today.

Failure to do so would permit these drivers of climate change to be awarded potentially billions of euros of EU taxpayers’ money intended solely for energy efficiency and renewable energy, say CEE Bankwatch Network and Friends of the Earth Europe.

Markus Trilling, EU Funds coordinator for CEE Bankwatch Network and Friends of the Earth Europe, said: “Any inclusion of fossil fuels within EU funding streams specifically dedicated to combat climate change would make a mockery of the European Parliament’s pro-climate aspirations. If EU taxpayer support for fossil fuels is granted now it will lock us in to dirty energy dependence for decades beyond 2020.”

Wednesday’s voting in the regional development committee of the European Parliament will focus on a new set of regulations that will govern the EU Cohesion Policy funds for the 2014-2020 budgetary period. The vote is regarded as having a strong bearing on final budget 2014-2020 decisions scheduled for the end of the year. The run-up to the vote has seen more than 3,000 amendments tabled – from all parties – to a draft text published last year by the European Commission.

The Commission’s proposals among other things earmarked an improved EUR 17 billion for energy efficiency and renewable energy projects in the 2014-2020 period.

Yet this has been undermined by a proposal – to be voted on tomorrow – from Polish MEP Jan Olbrycht to include oil and gas transit and storage infrastructure among the investments to be financed with funds specifically earmarked for low-carbon measures under the European Reconstruction and Development Fund, part of the Cohesion Funds. (1)

Markus Trilling commented: “Tomorrow’s vote will give an important sense of how committed MEPs are to ensuring that these funds contribute to EU environmental targets, the creation of green jobs and enhanced economic opportunities.

“If MEPs decide to lump fossil fuels into the same ‘climate-friendly’ category as energy efficiency and renewables they would deliver a stunning coup for the multi-billion profit-making oil and gas companies. At the same time they would be serving up another slap in the face to EU taxpayers and setting in train a disaster for future generations.”

For more information, contact:

Markus Trilling
EU Funds coordinator
CEE Bankwatch Network and Friends of the Earth Europe

Tel: +32 484 056 636
Email: markus.trilling AT foeeurope.org

Notes for editors:

1. More background on Jan Olbrycht’s proposal and its significance for the decision-making process over the next EU budget is available at: https://bankwatch.org/news-media/blog/fossil-fuels-rebranded-low-carbon-also-cohesion-policy-discussions

Europe’s leaders must not subsidise fossil fuels with next EU budget, say NGOs

Luxembourg — Ahead of discussions this week about how the next one trillion euros EU budget will be spent, EU ministers are being urged to get rid of provisions that would allow public money to subsidise the fossil fuels industry.

An open letter [1] endorsed by more than 20 leading environment groups comes in response to the draft negotiating text for Tuesday’s General Affairs Council. At this meeting EU Members States will make decisions on the investment priorities under the next 2014-2020 Cohesion Policy funds, [2] building on a proposal prepared by the European Commissions last year [3].

The groups have concerns that two provisions within the regulation on the European Regional Development Fund [4] will pave the way for projects involving oil, gas and even coal or carbon-intensive technologies like carbon capture and storage and the exploitation of shale gas [5]. A significant portion of these funds has previously been earmarked under the Commission’s proposal for measures to decarbonise the European economy and contribute to achieving long-term EU climate objectives.

Markus Trilling, EU funds campaigner for CEE Bankwatch Network and Friends of the Earth Europe said “We can’t afford to let subsidies for fossil fuels slip in the back door, nor can we afford investments that will lock us in to carbon-intensive energy system and maintain our dependency on fossil fuels for decades. Instead, the EU budget should invest in energy savings and shift our energy systems towards renewables.”

For more information, contact:

Markus Trilling
EU Funds campaigner
CEE Bankwatch Network/Friends of the Earth – Europe
Mobile: + 32 484 056 636

Notes

1. Read the open letter here
https://bankwatch.org/sites/default/files/Letter-June-GAC.pdf

2. According to the European Commissions proposal Cohesion Policy funds for the period 2014-2020 will account for EUR 336 bln of the next seven-year, EUR 1025 bln multiannual financial framework, the EU budget.

3. Read more about the European Commission’s proposals for the next EU budget published last year
https://bankwatch.org/checklist-eu-cohesion-policy

4. The European Regional Development Fund is one of the main regional funds within the EU budget, aimed at decreasing disparities among European regions.
http://ec.europa.eu/regional_policy/thefunds/regional/index_en.cfm

5. The two provisions read as follows: “developing smart gas and power distribution, storage and transmission systems” and “promoting the use of high-efficiency co-generation of heat and power.”

Member States stepping back from EU’s low-carbon investment agenda

Brussels – Representatives of EU Member States meeting tomorrow in Brussels intend to promote the financing of gas distribution, storage and transmission from Cohesion Policy funds meant for low-carbon measures in the next EU budget. Such support for gas would mean the EU’s dependency on fossil fuels will continue for decades, undermining global efforts to combat climate change.

At their meeting in Brussels tomorrow, member state ambassadors to the EU (1) have to agree on their position on investment priorities for the next round of Cohesion Policy funds (2014-2020) set out by the European Commission last year (2). While the Commission’s proposal intended that a significant financial contribution from EU funds goes to the decarbonisation of European economies, member states are now trying to include “developing smart gas and power distribution, storage and transmission systems” (3) among the measures to be financed from the European Regional Development Fund (4), even though ERDF was one of the instruments that was supposed to promote the EU 2020 climate targets to reduce CO2 emissions.

This unexpected promotion of fossil fuel subsidies from the EU budget comes weeks after a similar proposal from the REGI (Regional Development) Committee of the European Parliament. Jan Olbrycht, a Polish MEP who will lead the negotiations with the Council on the next regional funds from the Parliament side, proposed last month to include oil and gas transit and storage infrastructure among the investments to be financed with funds specifically earmarked for low-carbon measures from the ERDF. (5)

“This jointly promoted resurrection of carbon intensive energy sources is threatening the EU’s economies even in the medium-term”, comments Markus Trilling, CEE Bankwatch Network and Friends of the Earth Europe EU funds coordinator. “Subsidising gas today means not only that we crowd out financing opportunities for new renewables and energy savings, which need the subsidies more, but also that we lock in our economies into fossil-fuel dependency for three-four decades to come. Simply put, we are willingly choosing to further intensify the current climate crisis.”

Notes for the editors:

(1) COREPER are the ambassadors of member states to the European Union. While COREPER meetings rarely make headlines, the position taken by this body tomorrow will provide the fundamental guidance for the General Affairs Council deciding on the next EU budget June 26. Details about tomorrow’s meeting here:
http://eu2012.dk/en/Meetings/Coreper-PSC/Jun/COREPER-II-14-6

(2) Read more about the European Commission’s proposals for the next EU budget published last year:
https://bankwatch.org/checklist-eu-cohesion-policy

(3) No mentions of gas support from ERDF funds existed in the Commission proposal; gas support is currently being pushed by some member states of the EU. The gas insertions appear in a draft prepared for the COREPER meeting tomorrow seen by Bankwatch.

(4) The ERDF if one of the main regional funds, aimed at decreasing disparities among European regions. http://ec.europa.eu/regional_policy/thefunds/regional/index_en.cfm

(5) Read more about the Olbrycht proposal and its significance for the decision-making process over the next EU budget:
https://bankwatch.org/news-media/blog/fossil-fuels-rebranded-low-carbon-also-cohesion-policy-discussions

For more information, contact:

Markus Trilling
EU Funds Coordinator
CEE Bankwatch Network and Friends of the Earth Europe
markus.trilling AT bankwatch.org

The EU’s electricity imports from neighbouring countries: at what cost?

Kiev — Despite being the place of one of the most terrifying nuclear accidents in the world, Ukraine is currently working on expanding the lifespan of 13 of its old Soviet-style reactors, with electricity exports to the European Union in mind. In a study published today, CEE Bankwatch Network is revealing how the EU and its financing institutions are promoting electricity imports to the EU which are likely to have highly damaging consequences for the exporting countries.

Entitled “A Partnership of Unequals” (1), the study is made up of a series of case studies from Ukraine, Georgia and the Western Balkans, which raise concerns about how EU’s plans to import electricity from these countries could negatively affect the exporters.

In Ukraine, the European Bank for Reconstruction and Development and Euratom are currently planning to finance with up to 300 million euros each safety upgrades at all Ukrainian nuclear reactors, some of which would not be necessary unless the reactors’ lifespan is extended. In another EBRD financed project, an ambitious ultra high-voltage transmission line, called the Second Backbone Corridor, will link four nuclear power plants and two pumped storage plants into a continuous line and connect them with Europe. (2)

“By supporting Ukraine’s ambitions to increase electricity exports from its nuclear power plants to the EU, European decision-makers are giving the Ukrainian government an extra incentive to go ahead with prolonging the life of old reactors, thus increasing overall nuclear risks in the region and pushing aside renewables and energy efficiency improvements in Ukraine,” says Iryna Holovko, campaigner at the National Ecological Centre of Ukraine. “At a time when a number of European countries are choosing a nuclear-free future, no European money should be spent on supporting nuclear outside the EU.”

In the case of Georgia and the Western Balkans, the main source of electricity targeted for export to the EU is hydro power. The EBRD is financing transmission lines and large hydro power plants in these countries, presenting hydro power as sustainable energy, when in fact if done improperly it can have damaging effect on biodiversity and water systems. Additionally, linking hydro development to exports to the EU from the start means that much of the countries’ renewables potential will be used to meet EU clean energy targets, making it more difficult for these countries themselves to meet any targets when demanded of them.

“While electricity exports are a normal activity, the problem arises when the exporting countries have lower environmental, social and safety standards than the importing countries, and when exporting energy reduces the exporter’s ability to develop its own renewable energy. At this point electricity exports become an energy grab”, commented Pippa Gallop, CEE Bankwatch Network.

Notes for the editors:

(1) The study can be downloaded at:
https://bankwatch.org/sites/default/files/partnership-of-unequals.pdf

(2) Read more about EU and EBRD investments in the Ukrainian nuclear industry at:
https://bankwatch.org/our-work/projects/nuclear-power-plant-safety-upgrades-ukraine and https://bankwatch.org/our-work/projects/second-backbone-corridor-high-voltage-electricity-transmission-lines-ukraine

For more information, contact:

Iryna Holovko
NECU Ukraine
iryna at bankwatch.org
+38 050 647 67 00

For Western Balkans issues:

Pippa Gallop
Bankwatch research coordinator
pippa.gallop at bankwatch.org
+385 99 755 9787