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NGOs condemn EBRD financing of biodiversity destruction in Croatia

Zagreb — Croatian environmental organisations Zelena akcija/Friends of the Earth Croatia, the Croatian Biospeleological Society, Transparency International Hrvatska, Srđ je naš, Baobab, Eko Zeleno Sunce, Brodsko ekološko društvo-BED, Center for Environment (B&H), Eko-Zadar, WWF MedPO and regional organisation CEE Bankwatch Network have described as “extremely irresponsible” the approval yesterday by the European Bank for Reconstruction and Development of a EUR 123 million loan for the construction of the Ombla underground hydropower plant near Dubrovnik. [1]

The project, planned by Croatian electricity company HEP, has attracted numerous criticisms on environmental, economic and procedural grounds. It will be situated in an area designated for protection under the EU’s Natura 2000 network due to its valuable cave fauna [2], but its impact on the Natura 2000 site has not yet been assessed.

“HEP is obviously in a great hurry to get this project approved and signed – such a hurry that there is no time to wait for the Natura 2000 impact assessment to be done and no time to carry out a new environmental impact assessment instead of one that dates from 1999”, commented Jagoda Munic of Zelena akcija. “That HEP is trying to get all the documentation and permits in place before Croatia enters the EU and is subject to stricter environmental standards is unfortunately not surprising” she continued, “but the EBRD, as a primarily European public institution [3], should know better than to prematurely approve a project that has not fulfilled the legal requirements. [4]

Croatia’s entry to the EU is not the only deadline that is looming. On 4 December Croatia will be holding parliamentary elections, and the main opposition coalition has already pledged not to go ahead with the Ombla project if it is elected. [5] The hurried approval is presumably an attempt to bring the project to as advanced a stage as possible before the election threatens its future.

One of the reasons for the widespread scepticism about the Ombla hydropower plant is the leaked technical due diligence report carried out by consultants for the EBRD from September this year, which found that the project was technically risky and that it could only be implemented if heavily subsidised by the government or by raising electricity prices. [6] The EBRD and the project sponsor HEP later claimed that this version of the report had only inadvertently been labelled final and that once the consultant better understood the project, the conclusions changed in its favour. [7]

“All in all the Ombla project raises more questions than answers, and in approving it, the EBRD is sending completely the wrong messages to Croatia,” concluded Karst expert Ivo Lučić, Ph.D. “The bank claims that the project will promote best corporate practices, but so far all it has promoted is the destruction of cave fauna and habitats and cutting corners on environmental legislation. On top of that, the project is likely to have a cross border influence on watersheds in Bosnia and Herzegovina, which is not yet fully understood – one more argument against this premature approval by the EBRD.”

For more information, contact:

Jagoda Munić
Zelena akcija/Friends of the Earth Croatia
+385 (0)98 1795 690.

Jana Bedek
Croatian Biospeleological Society
+385 (0)91 5761 172


Dr. Ivo Lučić
Karst expert
+385 (0)98 347 669


Notes for editors

1. For a description of the project see http://www.ebrd.com/pages/project/psd/2011/42219.shtml

2. Including five species of protected bats, the eccentric-looking proteus anguinus or human fish, and several endemic species of aquatic cave snails.

3. The EBRD is 60 percent owned by the EU and its Member States. Other shareholders include the US, Canada, Australia, New Zealand, Japan and the bank’s beneficiary countries in eastern Europe and the Former Soviet Union.

4. Last week Zelena akcija filed an official complaint about the Ombla project and its non-compliance with Croatian legislation and the EBRD’s own Environmental and Social Policy to the EBRD’s Project Complaint Mechanism. The complaint can be found here: https://bankwatch.org/publications/official-complaint-ebrd-ombla-hydropower-project-croatia

5. http://www.kukuriku.org/plan21/pitanja-i-odgovori/he-ombla/

6. The exact quotes are: “Undertaking the project in full, as designed at present, carries a high risk of the project not achieving its objectives” and that “the project fails to recover both investment outlays and recurrent costs, in fact yielding a considerable cost in commercial terms …. the project could only be implemented if it was heavily subsidized by the government”. (Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011)

7. See the EBRD and HEP explanation at: https://bankwatch.org/documents/EBRDresponse-OmblaHPP-07Nov2011.pdf

Updated on November 23 to include one more organisation in the list of signatories

European public banks must disengage with Egypt’s military junta

In light of the violence against civilians on the streets of Egypt today, CEE Bankwatch Network is requesting that the European Investment Bank and the European Bank for Reconstruction and Development immediately cease discussions and negotiations with the Egyptian government and authorities on all levels about potential financial involvement in the country until the Supreme Council of the Armed Forces (SCAF) cedes power to civilian leaders, the country has a legitimately-elected civilian government in control of the army, and military trials come to an end.

In spite of repeated warnings from local and international civil society groups [1], the two European institutions have rushed into cooperation with the SCAF-controlled interim government, without a legitimate civilian government first in place. While the EIB and EBRD are mandated to promote democracy in Egypt, they have collaborated for the last year with military rulers “guilty of abuses in some cases worse than those committed under Hosni Mubarak.” [2]

At the same time as the Egyptian military was ruthlessly imprisoning activists for simply expressing discontent with the political situation in the country, the EBRD organised together with the interim government a conference in Cairo on investment opportunities in Egypt [3]. During the October 26 event, Jonathan Charles of the EBRD declared that as long as “Egypt remains committed to democracy” the EBRD „will continue to be supportive” and have a lot of policy dialogue with the current leaders. [4]

Bankwatch International Affairs Director Petr Hlobil says, “With over 30 people now dead in the streets of Cairo at the hands of the military council’s security forces, it is impossible for the EIB and EBRD to still claim that the Egyptian leadership is committed to democracy. It is time for the two banks to withdraw from the country until a civil government is in place and acknowledge that it was a mistake to recklessly and hastily engage the military junta.”

For more information, contact:

Petr Hlobil
International Affairs Coordinator
CEE Bankwatch Network
petrh AT bankwatch.org
+420-603 154 349

Notes for the editor

1. See Bankwatch and Counter Balance press release: https://bankwatch.org/news-media/for-journalists/press-releases/keep-european-public-banks-out-mediterranean-region-say-ng

and Arab NGOs statement: https://bankwatch.org/news-media/for-journalists/press-releases/civil-society-groups-arab-region-say-western-financial-aid

2. Read Amnesty International study: http://www.amnesty.org/en/news/egypt-military-rulers-have-crushed-hopes-25-january-protesters-2011-11-2

3. Description of conference on EBRD website: http://www.ebrd.com/pages/news/press/2011/111024b.shtml

4. Read more statements from the EBRD during the conference: http://www.thedailynewsegypt.com/banking-a-finance/ebrd-ready-to-work-with-civilian-democratic-government-in-egypt.html

NGO coalition urges EBRD not to finance destruction of national park in Macedonia


Skopje – A coalition of more than 30 Macedonian and international NGOs [1] are calling on the European Bank for Reconstruction and Development (EBRD) not to finance Boskov Most hydro power plant in north-western Macedonia [2]. The project would seriously damage Mavrovo national park, the largest in the country and a potential Natura 2000 site, while at the same time being envisaged to produce a relatively small amount of electricity to be used only for the stabilization of the national energy system.

The 70 MW Boskov Most HPP would be located in the Mavrovo National Park, the area with the richest biodiversity value in Macedonia. Construction is being planned right at a time when the value of the national park is being re-assessed and the park re-proclaimed. The project promoter, Macedonian state owned power company ELEM, is asking the EBRD to financially support the HPP project without taking into account the fact that legal processes connected to the statute of the park are incomplete and a Strategic Environmental Assessment for planned hydro projects in this area is lacking.

According to the environmental NGOs opposing the project, the Environmental Impact Assessment already performed for the project – and on which the EBRD relies for its decision — is faulty. Among its shortcomings, it fails to properly explain the risks posed by the project for the Balkan lynx, which survives in Macedonia exactly at the spot where Boskov Most is planned while being extinct in other neighboring countries.

Importantly, the assessment argues that the HPP would have an overall positive impact on the environment by producing less CO2 emissions compared to if the same amount of electricity were produced from fossil fuels. However, argue the green NGOs, this is a tendentious assessment: the energy produced by the HPP would be used for the stabilization of the energy system in the country and would not come with any practical reduction in fossil fuel usage in Macedonia.

“By investing in Boskov Most HPP, the EBRD is sending the wrong message to Macedonia,” explains Ana Colovic Lesoska, Bankwatch Macedonian national campaigner. “Such a decision literally tells our government that it is acceptable to go around proper legal processes. We would instead expect the EBRD to truly assist Macedonia in our path towards the EU and support the protection and preservation of nature and biodiversity, an important goal of the EU member states. The EBRD ought to put this project on hold until all legal processes regarding the national park are finalized.”

For more information, contact:
Ana Colovic Lesoska
Bankwatch Macedonian National Coordinator
ana AT bankwatch.org
+389 72 72 61 04

Notes for the editors:

1. Read the NGO letter and see the list of signatories at: https://bankwatch.org/sites/default/files/letterEBRD-BoskovMost-28Oct2011_0.pdf

CEE Bankwatch Network is also planning to submit a complaint letter to the EBRD’s Project Complaint Mechanism. According to the NGO, investing in this project would be counter to the Bank’s own policies.

2. The EBRD Board of Directors is scheduled to approve a 65 million Euros loan for the construction of Boskov Most HPP on November 8. The total cost of this project is estimated at 84 million Euros and the developer is Macedonian state owned power plant company ELEM.

EBRD project summary document: http://www.ebrd.com/pages/project/psd/2011/41979.shtml

NGOs call on the EBRD not to finance “high risk” underground HPP in Croatia


Zagreb — Croatian and international environmental organisations have today called on the European Bank for Reconstruction and Development (EBRD) not to go ahead with a planned EUR 123 million loan for the Ombla hydropower plant near Dubrovnik in Croatia, due to be approved by the bank’s Board of Directors on November 8. [1] In an open letter to the bank, the organisations point to ecological, economic, and procedural problems with the plans, which even the consultants hired by the EBRD to assess the project have described as “high risk”.[2]

“The hydropower plant planned by the Croatian electricity company HEP would involve flooding a cave with high biodiversity value [3] that is due to be protected as part of the Natura 2000 biodiversity network when Croatia enters the European Union. Several important studies are still missing and the Environmental Impact Study is more than 10 years old. It’s an obvious example of rushing to finish destructive projects quickly before Croatia can be held accountable under EU environmental legislation,” said Jana Bedek of the Croatian Biospeleogical Society. “It is shocking that a public bank like the EBRD is considering financing this kind of foul play,” she added.

“However bats and salamanders are not the only ones in danger here. The plant would be built in karst rock formations that are like a Swiss cheese. No one fully understands what is connected to what, and trying to plug these carries a high risk of failure and unintended effects on connected water systems,” added karst expert Dr. Ivo Lucic.

Adding to concerns about the project’s environmental impacts, the EBRD’s consultants Tractabel Engineering and Projektni Biro Split have concluded that “the project fails to recover both investment outlays and recurrent costs, in fact yielding a considerable cost in commercial terms …. the project could only be implemented if it was heavily subsidized by the government”. Their report goes on to add that increasing electricity prices by 200 percent could also solve the problem [4], a move not likely to be welcomed by the Croatian public.

“It is hard to find anything to say in favour of the Ombla project,” concludes Jagoda Munic of Friends of the Earth Croatia. “Considering the high environmental risks, we believe it is unjustified to cause significant disturbance to a proposed Natura 2000 habitat for a project that may never go further than the first stage, in which no electricity would be produced. We therefore ask the EBRD to withdraw from the project.”

For more information contact:

Jana Bedek
Croatian Biospeleological Society
+385 (0)91 5761 172

Dr. Ivo Lučić
karst expert
+385 (0)98 347 669

Jagoda Munić
Zelena akcija/Friends of the Earth Croatia
+385 (0)98 1795 690.

Notes for editors

1/ Read the NGO letter to the EBRD at:
https://bankwatch.org/publications/open-letter-requesting-ebrd-withdraw-ombla-hydroelectric-plant-project

2. “Undertaking the project in full, as designed at present, carries a high risk of the project not achieving its objectives”. Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011, p.9-10.

3. There are five species of protected bats and Proteus anguinus, the cave salamander (IUCN Red List (VU); FFH Directive: Annex II, IV; Bern Convention: Annex II), Troglocaris anophthalmus, the cave shrimp (IUCN Red List (VU)) and Congeria kusceri, the cave clam (FFH Directive: Annex II, IV).

Among other cave species four taxa are found only in the cave Vilina špilja – Ombla izvor, and nowhere else in the world: Horatia knorri, Lanzaia kusceri, Plagigeria nitida angelovi (all three are aquatic cave snails) and Eukonenia pretneri, the cave palpigrade.

Proof that the cave is far from being fully explored came in 2009 with the discovery of a new Genus of terrestrial isopod in the cave.

4. Tractabel Engineering; Projektni Biro Split: Ombla Hydropower Project – European Bank for Reconstruction and Development – Technical Due Diligence – Final Report Rev. C September 2011, p. 122-123.

Art installation at Berlaymont denounces banking on coal


Photos from the installation are below. More images (and higher resolutions) are available on the photographers Flickr profile.

Brussels – With an art installation that symbolizes EU citizens locked in a polluted environment, the Slovenian artist Marko Kumer Murč and Slovene environmentalists from Focus protest against European public and private banks pouring hundreds of millions of euros into a new lignite plant in their country, at Sostanj. Many Slovenians oppose this project and the Slovenian parliament has just refused to support a state guarantee for the banks’ loans. The action is supported by the international NGOs Banktrack and CEE Bankwatch Network, which are campaigning against the project.

The installation consists of a metal cube filled with smoke inside which several mannequins are trapped, with no way of escaping, representing an environment in which people are trapped in pollution. Outside of the cube, several volunteers dressed up in suits represent the bankers and politicians that support and invest in this project, thus keeping the people stuck in an unhealthy environment.

“We, the people who do not want this plant near our homes, who will inhale its fumes for decades, have tried in many ways to say we do not want it,” explains Murč. “No one really listens and this makes us angry. Finally, my art installation represents this anger and sadness crystallized. We must be heard.”

A new 600 MW lignite plant is planned to be built at Sostanj, in north-west Slovenia. The costs of the plant are estimated at 1.3 billion Euros, and 750 million Euros out of this amount are to be covered with loans from the European Investment Bank (the largest amount), the European Bank for Reconstruction and Development, and several private Western banks, including KA Finanz AG (Austria), Landesbank Hessen-Thuringen Girozentrale (Germany), Societe Generale (France), Caja de Ahorros y Monde de Piedad de Madrid (Spain), and Unicredit (Italy).

By 2050, together with all other EU members, Slovenia will have to reduce its overall CO2 emissions by at least 80 percent. The new block at Sostanj alone would take up almost all of the country’s emissions allowance if the required reduction is achieved. [1] In practice, this means that either Slovenia gives up the idea of building this plant or it will have to break its emissions reduction commitments as an EU member.

The Sostanj project is controversial not only for environmental reasons. Earlier this year, the Slovenian government issued a report in which it raised serious questions over the economic viability of this project. Additionally, the report brought allegations of corruption against the management at Sostanj. The Slovenian police are currently conducting an investigation into the corruption claims.

The Slovenian government failed to provide a state guarantee for the EIB loan before it had to step away in September, which motivated a group of parliamentarians to trigger a procedure for adopting a law on state guarantee for the EIB loan. This month, however, the Slovenian parliament refused to pass the proposed law on state guarantee for the EIB loan for this plant. This gave a clear signal that now is a time for the European public and private banks to reevaluate their involvement in a project that is marred by corruption, economic and environmental concerns.

“Many Slovenians oppose having a new lignite plant in our country and would prefer investments in energy efficiency and renewables,” says FOCUS’ Lidija Zivcic. “The European Union is committed to reducing its carbon emissions and some Western European countries are taking measures to limit fossil fuels use. It is deeply wrong that, while Western European countries are starting to clean up the mess in their own backyards, their private banks and EU-sponsored public banks try to make a profit out of building a new coal plant that would choke us Slovenians for decades. We want these banks to get out of this project and the time to pull out is now!”

For more information, contact:

Lidija Zivcic
Senior expert, FOCUS association for sustainable development
Tel: +386 15154080
lidija AT focus.si

Mel Denes
European Coal Finance Campaign Coordinator, Banktrack
Tel: +32 (0)488 697756
mel.denes AT netwerkvlaanderen.be

Notes for the editors:

1. Information about the new plant and how much environmental damage it would produce can be found at:
https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia


Photos by: Pieter Delputte

Three new Czech incinerators to burn EU regional funds

Prague- CEE Bankwatch Network has learnt that the Czech Republic is planning to use 80% of regional funds dedicated to big waste projects for 2007-2013 [1] for the construction of new incinerators, which are three times more expensive than alternative waste management solutions.

The Czech Republic plans to build three new incinerators with EU regional funds available for big waste management projects in the current EU budget (2007-2013). According to information provided to CEE Bankwatch Network by the Czech State Environmental Fund, a mechanical-biological waste treatment plant (MBT, the more ecological alternative for waste disposal) would be three times cheaper per installed ton capacity to build than incinerators. This difference will eventually be passed on to the households in price for waste management.

180 million Euros of the incinerators’ cost are to be subsidized from EU regional funds, if the Czech application is accepted. By comparison, six new MBTs that the country plans to build as well, and which represent a much more ecological option, will require only 43 million Euros in EU subsidies. [2]

Incinerators are not only three times more expensive but they also produce toxic waste and they are significant sources of air pollution. Furthermore, because they burn waste without any previous sorting, they destroy valuable resources contained in waste. Mechanical-biological treatment plants, on the other hand, enable the recovery of materials contained within the mixed waste and facilitate the stabilisation of the biodegradable component of the material.

“Incinerators are extremely expensive facilities,” says Bankwatch waste campaigner Ivo Kropacek. “Support for such overpriced projects from taxpayer money is not clever. This is thrice true in the case of incinerators, which are three times more expensive than other methods of dealing with municipal waste.”

Bankwatch calls on the European Commission not to allow the Czech Republic to use EU money in such a counter-productive way, which additionally goes against EU waste legislation [3]. Cheaper and more sustainable solutions clearly exist and they must be promoted. [4]

Furthermore, considering that the new Cohesion Policy regulations published last month by the Commission do not exclude the use of EU regional funds for harmful projects in the next EU budget 2014-2020 [5], Bankwatch encourages the European Parliament and Council to amend the regulation texts so that incinerators are explicitly excluded from the types of projects that can be financed with EU money after 2014.

For more information, contact:

Ivo Kropacek
CEE Bankwatch Network waste campaigner
ivo.kropacek AT hnutiduha.cz
Tel: +420 604 207 302

Notes for the editors:

1. Member States are at the moment allowed to submit applications for major waste projects continuously, based on the so-called XVth call under operational programme environment (OP Environment), lasting
from January 4, 2010, until June 30, 2011. This call has been opened specifically for big waste projects such as incinerators or
mechanical-biological treatment plants.

2. A table of the projects can be downloaded at https://bankwatch.org/documents/incineratorsCZtable.pdf

3. The EU waste hierarchy, included by the European Commission in all its legislative proposals this year, from the Cohesion Policy regulations to the Resource Efficiency Roadmap published earlier this year, asks for prevention of waste production first and foremost, reuse and recycle as much as possible, and only if no other solutions are found, allows for the disposal of waste.

4. CEE Bankwatch Network encourages the application of the EU waste hierarchy. However, when no alternative to waste disposal exists, we argue that small MBTs are preferable to incinerators.

5. For a better understanding of the Cohesion Policy regulation texts, see: https://bankwatch.org/checklist-eu-cohesion-policy