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Police investigates irregularities at TES 6 in Slovenia

Ljubljana, Slovenia — The Slovenian police confirmed June 7 that it was looking into allegations of mismanagement at coal plant Sostanj, including serious questions over the building of new lignite block TES 6.

The investigation comes after Slovenian minister of economy Darja Radic declared in April she would personally bring to the attention of the police and public prosecutor information from a confidential governmental report which indicated that there were serious suspicions of corruption and illegalities in the management of the TES 6 project.

CEE Bankwatch Network and Slovene NGO FOCUS are calling on the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) to review their plans to provide 650 million euros in loans for the new 600 MW block at Sostanj. The two banks are planning to provide half of the necessary investment to construct TES 6.

„It is startling to see that the EIB and the EBRD have committed over half a billion euro of taxpayers’ money to TES 6 without properly scrutinizing the management practices of the developers,” comments Bankwatch energy and climate coordinator Piotr Trzaskowski.

„The two banks have not listened to warnings that the project would prevent Slovenia from cutting down its greenhouse gas emissions to meet EU 2050 climate goals,” added Trzaskowski. „They have not listened when Slovenian NGOs complained about lack of transparency and about the absence of any evaluation of alternatives to this project. But they are obliged to listen now when the police stepped in: European public money cannot be thrown into projects suspected of corruption and breach of law.”

For more information

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

Piotr Trzaskowski
Energy and climate coordinator, CEE Bankwatch Network
Tel: +48 22 892 00 86
piotr.trzaskowski at bankwatch.org

Notes for the editors

1. The EIB has committed to lending 550 million euros and the EBRD 100 million euros for the construction of TES 6. The loans form part of a larger 1.2 billion euros project to replace low efficiency units with a new 600 megawatt (MW) sixth unit, all of them powered by one of the least efficient and most polluting energy sources, lignite. In 2050 projected carbon dioxide emissions from operation of Unit 6 at Sostanj would swallow Slovenia’s entire greenhouse gas emissions quota for all the sectors within planned reduction targets for 2050 (if Slovenia cuts emissions by 80 percent – a minimum according to the European targets of 80-95 percent ). It also clearly contradicts EC’s recent „Roadmap for moving to a competitive low-carbon economy in 2050”, which calls for almost full decarbonisation of the enery sector by 2050.

2. See CEE Bankwatch Network and FOCUS letters to the EIB (https://bankwatch.org/documents/EIB_letter_govreport_20110504.pdf) and the EBRD (https://bankwatch.org/documents/EBRD_letter_govreport_20110504.pdf)

3. See details about the report of the Slovenian Ministry of the Economy: http://www.vlada.si/si/medijsko_sredisce/sporocila_za_javnost/sporocilo_za_javnost/article/130_redna_seja_vlade_rs_16831/

EBRD should change mandate to prioritise people and the environment, says Bankwatch


Astana, Kazakhstan – After twenty years of promoting market economies in central and eastern Europe, the European Bank for Reconstruction and Development needs to move swiftly and genuinely towards prioritising social justice and transition to energy efficient, renewable energy based economies if it wants to bring real benefits to the region, says a new policy paper from CEE Bankwatch Network issued on the occasion of the EBRD annual meeting in Astana May 20 (1).

“One of the central elements of the EBRD’s mandate has been market promotion, interpreted by the bank to mean privatisation and liberalisation as ends in themselves,” explains Pippa Gallop, Bankwatch research co-ordinator. “The bank has acted on the assumption that promoting market economies is sufficient to eventually bring prosperity and well-being to entire societies. But this axiom has taken a severe battering over the years, particularly during the recent financial crisis. The whole direction of transition in the post-socialist context is now under question, but what is certain is that the EBRD cannot postpone any longer making social and environmental concerns as important as its economic agenda.”

The analysis shows that many projects promoted by the EBRD, while scoring highly on promoting the private sector, create problems for local people or the environment. Examples include the Baku-Tblisi-Ceyhan pipeline and coal investments in Mongolia. In other cases analysed by Bankwatch, EBRD investments in private equity firms, supermarkets or real estate, while not directly worsening the local situation on people or environment, are questionable as effective uses of public development finance. Bankwatch calls on the EBRD to provide clear measurements of the real, on-the-ground impacts from its investments, rather than merely justifying projects with its market promotion mantra.

In spite of commendable progress made by the EBRD in energy efficiency investments in recent years, such laudable efforts are likely to be undermined by other EBRD energy investments, argues Bankwatch. The bank’s lending for renewables pales in comparison with its lending for fossil fuel-based projects, and in fact EBRD lending for fossil fuel-based projects increased significantly between 2006 and 2009.

“The post-socialist region is one of the most carbon intensive in the world, so it is crucial that the bank prioritises investments that help reduce carbon intensity and increase the share of renewable energy in our economies,” argues Fidanka Bacheva-McGrath, Bankwatch EBRD coordinator. “Rather than planning to rely on carbon markets in our region as a solution for this problem, while continuing to put money in large oil and gas infrastructure, the EBRD should phase out fossil fuel lending and radically increase its investments in energy efficiency and renewables.”

“After two decades of activity in the post-socialist region and after expressing a strong interest for expanding its mandate to North African countries, there is no better time for the EBRD to reevaluate its mission,” added Pippa Gallop. “If the bank wants to continue its mandate in central and eastern Europe, it should only do so if it promotes, through all its actions, a transition to environmentally sustainable, socially just, renewable energy-based societies rather than just market economies.”

Notes for the editors:

(1) Read the CEE Bankwatch Network report “Are we nearly there yet? Dilemmas of transition after 20 years of EBRD’s operations” at:
https://bankwatch.org/documents/Are_we_nearly_there_yet_EBRD.pdf

For more information, contact:

Fidanka Bacheva-McGrath,
Bankwatch EBRD coordinator
fidankab at bankwatch.org
mob: +359 899 876 095

Pippa Gallop
Bankwatch research coordinator
pippa.gallop at bankwatch.org
mob.: +385 99 755 97 87

Slovenian government drops support for Sostanj coal plant; European public banks must follow suit


Ljubljana, Slovenia — CEE Bankwatch Network and Slovene NGO FOCUS are calling on the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) to review their plans to provide 650 million euros in loans [1] for the controversial 600 MW TES 6 block at Slovenian lignite plant Sostanj. The call comes after the Ljubljana government announced last month that it will not grant a state guarantee for the EIB 440 million euros first tranche until the economic efficiency of the project is improved [2].

“The Slovenian government’s decision was motivated by a damning report on the management of TES 6 issued on April 14 by the Ministry of the Economy,” explains FOCUS senior expert Lidija Zivcic. “The report clearly shows that calculations about the economic viability of the project have been done superficially, with potential gains grossly overestimated. In addition, it has been shown that decisions about the management of the plant have been taken in an untransparent manner and without respecting public procurement rules, making them susceptible to corruption.”

“The Minister of the Economy found these issues serious enough to send the report to the Commission for the Prevention of Corruption, the General Police Directorate and the public prosecutor,” added Zivcic. “In these conditions, our government is right to suspend any plans for budget support for the plant.”

According to the report of the Ministry of the Economy [3], the economic viability of the sixth block at Sostanj is much more vulnerable to external factors such the prices of coal, electricity and carbon emission allowances than the main investor TES (Termoelektrarna Sostanj) showed in the investment plan. If either lignite or carbon allowance prices increase by just 10 percent or electricity prices decrease by 10 percent as compared to the levels projected by TES, the 1.2 billion investment into TES 6 becomes unprofitable, the Ministry of the Economy has calculated.

“We have known from the beginning that the new block at Sostanj is a bad investment in terms of the sustainability of the Slovenian energy sector, as it would make it impossible for the country to meet its climate targets over the next decades,” comments Piotr Trzaskowski, Bankwatch climate and energy coordinator. “But now we have also learnt that the project is very risky from a financial point of view. The EIB and the EBRD should need no additional reasons to withdraw all European public money from this project right now.”

For more information:

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

Piotr Trzaskowski
Energy and climate coordinator, CEE Bankwatch Network
Tel: +48 509162988
piotr.trzaskowski at bankwatch.org

 

Notes for the editors:

1. The EIB has committed to lending 550 million euros and the EBRD 100 million euros for the construction of TES 6. The loans form part of a larger 1.2 billion euros project to replace low efficiency units with a new 600 megawatt (MW) sixth unit, all of them powered by one of the least efficient and most polluting energy sources, lignite. In 2050 projected carbon dioxide emissions from operation of Unit 6 at Sostanj would swallow Slovenia’s entire greenhouse gas emissions quota for all the sectors within planned reduction targets for 2050 (if Slovenia cuts emissions by 80 percent – a minimum according to the European targets of 80-95 percent). It also clearly contradicts EC’s recent „Roadmap for moving to a competitive low-carbon economy in 2050”, which calls for almost full decarbonisation of the enery sector by 2050.

2. See CEE Bankwatch Network and FOCUS letters to the EIB and the EBRD:
https://bankwatch.org/publications/letter-ebrd-and-eib-should-review-involvement-sostanj-due-serious-shortcomings-projects

3. See details about the report of the Slovenian Ministry of the Economy: http://www.vlada.si/si/medijsko_sredisce/sporocila_za_javnost/sporocilo_za_javnost/article/130_redna_seja_vlade_rs_16831/

Vinci concession exposed as cover for oligarchs and tax havens in Russia’s first road PPP


An opaque web of offshore companies and oligarchs behind the controversial Moscow–St. Petersburg motorway public-private partnership provides new grounds for the Russian government to re-examine the project, according to new research by CEE Bankwatch Network and the Movement to Defend Khimki Forest, published today. [1]

“The concession-holder – the North West Concession company (NWCC), led by French construction giant Vinci – consists of a whole network of companies, ending up in the British Virgin Islands, where it is impossible to obtain information about shareholders”, explains Pippa Gallop, Bankwatch’s Research Co-ordinator. “These complex set-ups seem to be aimed at hiding the true beneficiaries of NWCC’s lucrative contract, which is unacceptable enough in any case but especially in a publicly funded infrastructure project.”

“Nevertheless, the research has confirmed the involvement of Prime Minister Putin’s reported associate Arkady Rotenberg [2]“, she continues. “This obviously raises questions about the integrity of the 2008 tender process, in which only one bidder qualified, and about the Russian government’s December 2010 decision to continue with the disputed routing through Khimki Forest near Moscow, after President Medvedev had called a halt to preparatory works in late August.”

A new agreement for the EUR 1.5 billion [3] first section of the Moscow–St. Petersburg motorway (km 15-58) public-private partnership is due to be signed with concession-holder the North West Concession Company – led by French construction giant Vinci – in May.

“The Russian public deserves answers to the questions raised by the research before it considers going any further with the project”, said Mikhail Matveev of the Movement to Defend Khimki Forest. “The government must re-examine its choice of concessionaire, and disclose the concession agreement and whole ownership structure of the company, if this project is to bring benefits to anyone other than the company owners.”

For more information, contact:

Mikhail Matveev
Movement to Defend Khimki Forest (English and Russian)
Mobile + 7 965 392 28 14

Pippa Gallop
CEE Bankwatch Research Co-ordinator (English)
Mobile +385 99 755 97 87

Notes for editors:

1. The report about the Vinci concession and its shareholders can be downloaded from the Bankwatch website at https://bankwatch.org/sites/default/files/Vinci_oligarchs_taxhavens_Khimki.pdf

2. Bloomberg: Putin’s Judo-Playing Friend Says Premier Didn’t Help Him Win Gazprom Deals, 28 April 2010

Reuters: Putin’s judo partner jumps in Russia’s rich list, 15 February 2011

3. European Investment Bank project document, 11.11.2009: http://www.eib.org/projects/pipeline/2007/20070489.htm

Ignoring Chernobyl lessons: How EU ‘energy security’ expands nuclear industry in Ukraine

Kiev — On the 25th anniversary of the Chernobyl nuclear catastrophe, while the world still struggles with the aftermath of the Fukushima disaster, CEE Bankwatch Network issues a startling report showing how plans of the Ukrainian government to build 22 new nuclear reactors and extend the lifetime of old Soviet reactors are indirectly supported with European public money as part of the long-term EU energy security strategy.

“Since the Fukushima crisis started, we have seen EU leaders order nuclear stress tests in European and neighboring countries, Germany halting activities at reactors on its territory and Italy moving in a similar direction,” comments Iryna Holovko, Ukrainian national coordinator at Bankwatch. “Nevertheless, no one is speaking about the EU indirect support for the massive nuclear expansion envisaged by the Kiev government. European leaders seem to be so interested in securing cheap Ukrainian electricity imports that they choose to ignore the enormous risks associated with such a development.”

The European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) have already provided EUR 650 million to support several transmission infrastructure projects to provide an outlet for electricity from Ukrainian nuclear power plants.

Last year, two new projects were launched by the EBRD and backed with grants from the EU’s Neighbourhood Investment Facility: the “second backbone” ultra high-voltage (UHV) corridor and the NPP safety upgrade project. By 2018, when it is expected that the “second backbone” could realistically be put into operation, seven of twelve Ukrainian nuclear reactors connected with “second backbone” should already have been closed down. Yet the Ukrainian government plans to extend their lifetimes, and this is where EBRD financing for the NPP safety upgrade project enters the picture. The project makes no sense without the lifetime extensions.

“The EU cannot continue to play a double game, insisting on nuclear safety at home, while securing electricity imports at the expense of unsafe nuclear expansion in neighbouring countries,” says Holovko. “The EU and international financial institutions should immediately stop the practice of back-door subsidies to Ukraine’s nuclear sector. Halting nuclear expansion is in the interest of both Ukrainians and Europeans: nuclear risks know no borders.”

Read the report at:
https://bankwatch.org/documents/IgnoringChernobylsLessons.pdf

For more information, contact:

Iryna Holovko
Ukrainian National Coordinator, CEE Bankwatch Network
iryna AT bankwatch.org
m: +38 050 647 67 00

Time is running out for EU decisive action on resource efficiency, warns Bankwatch


Brussels — As the European Commission prepares to launch the Roadmap for a resource-efficient Europe [1], CEE Bankwatch Network warns that EU climate targets cannot be achieved in the absence of binding energy efficiency [2] and sectoral resource efficiency targets, backed up by appropriate financial support.

“Over the past months, we have learnt that without more decisive action, the EU energy efficiency target for 2020 could be missed by almost half. It is therefore urgent that the resource efficiency Roadmap introduces stricter conditionalities on member states,” comments Bankwatch resource campaigner Marijan Galovic. “Additionally, resource efficiency needs to be streamlined in all EU financial instruments, from the EU Budget to loans by the European Investment Bank and the European Bank for Reconstruction and Development.”

According to Bankwatch, some of the technological solutions prioritised at EU level squander scarce public resources on investments which are not beneficial for the long-run. For example, carbon capture and storage (CCS) does not reduce energy consumption in the long-term and implies a continued reliance on dirty energy production like coal mining. Importing and processing uranium for nuclear energy from non-EU countries also increases the energy dependence and vulnerability of the EU.

At the same time, the great potential of resource and energy efficiency measures remains unfulfilled. Over 550,000 net new jobs could be created if targets for recycling municipal waste would be raised from 50 to 70 percent and made compulsory. [3] In central and eastern Europe, energy efficiency measures could reduce between 40 to 60 percent of emissions coming from buildings, which in their turn account for 40 percent of all GhG emissions in Europe.

“The European Commission needs to make sure available EU and national funds are used intelligently, to reduce energy consumption, rather than to provide short-term fixes which lock us in high consumption, resource intensive patterns,” added Galovic. “This means mainstreaming energy and resource efficiency measures in all EU policies and making sure that financial resources are used in line with the EU waste hierarchy which emphasises the prevention of waste production.”

For more information, contact:

Marijan Galovic
CEE Bankwatch Network resource campaigner
Mobile: +385 988 499 82

Markus Trilling
CEE Bankwatch Network EU Funds coordinator
Mobile: + 32 484 056 636

Notes for the Editors:

1. The European Commission is preparing a Roadmap for a resource-efficient Europe as part of the resource-efficient Europe Flagship Initiative of the Europe 2020 Strategy. The period of public consultation in view of the Roadmap ended on April 22.

2. The EU has set out the goal of improving energy efficiency in the block by 20 percent by 2020, but has so far failed to make this objective binding for member states.

3. Friends of the Earth Europe (2010): More Jobs, Less Waste (pdf)

EC Communication on a resource-efficient Europe – Flagship initiative under the Europe 2020 Strategy (pdf), January 2011

Bankwatch letter to Environment Commissioner Potocnik (pdf)