No excuses for the EIB to finance Sostanj

Ljubljana — The Slovenian parliament has ratified today – in an extraordinary session, right before the start of the Christmas holidays – the state guarantee contract between the European Investment Bank and the Slovenian government for a 440 million euros loan for the construction of a new coal unit at Sostanj.

After the Slovenian government too approved the state guarantee on 6 December, the parliament vote is the last step needed for the EIB to disburse the money. The management of the bank is now expected to make a final decision on the disbursement. However, the EIB also has to take into account that there is an ongoing OLAF (European Anti-Fraud Office) investigation into allegations of corruption against the management of the new block.

The new block at Sostanj is estimated to cost 1.3 billion euros, and could not be constructed without the 550 million euros promised by the EIB (110 million have been paid already) and an additional 200 million euros expected to come via the European Bank for Reconstruction and Development (EBRD).

“Under no circumstances should the EIB disburse the remaining 440 million euros to Sostanj – this is one of the worst investments to support from European public sources,” comments Lidija Zivcic from Slovenian NGO Focus.

“The emissions from the 600 MW lignite block would prevent Slovenia from meeting its 2050 climate targets, and the corruption investigation concerning the management of the project has still not been completed by OLAF,” adds Zivcic. “Disbursing money before the conclusion of this ongoing investigation is not only highly risky for the bank but it could also make the EIB breach its own internal policies and thus be seen as an improper use of EIB funds.”

“Additionally, the economic viability of the project is highly questionable. The Slovenian government has failed to make sure its own recommendations for energy investments are met; moreover, it is clear that the project as it is right now will never bring profit if the EU 2050 decarbonisation roadmap is respected,” adds Nina Stros from Greenpeace in Slovenia. “If we also consider the extreme social costs that burning lignite causes, it is hard to see any reason for the bank to support this project.”

The European Investment Bank, the EU house bank, has this autumn launched a process of reviewing its energy lending policy in order to align it better with EU climate goals.

“Climate science says it loud and clear that we cannot be investing any more in fossil fuel infrastructure as of today,” comments Pippa Gallop from CEE Bankwatch Network. “Putting this money into Sostanj right now, as the EIB is revising its loans in the energy sector, is a slap in the face for people who believe that the EIB is engaging in an honest process to clean up its lending. Financing such a damaging project is inadmissible behaviour coming from a public bank.”

Notes for the editors:

1. Read an independent assessment of the economic viability of the new plant, showing Sostanj is not a solid investment:
https://bankwatch.org/sites/default/files/Sostanj-TES6-economics.pdf

And an analysis of the conditions posed by the Slovenian authorities on the constructors (unlikely to be met):
https://bankwatch.org/news-media/blog/financial-alchemy-slovenias-energy-sector-still-results-lignite-not-gold

2. Slovenian state commission for the prevention of corruption says conditions for corruption were present in the awarding of the equipment contract for the new plant to Alstom and says works should not go ahead until allegations are cleared:
https://bankwatch.org/sites/default/files/StateCommissionReport-corruption-TES6-23Feb2012.pdf

3. OLAF opens investigation into the allegations of corruption:
https://bankwatch.org/sites/default/files/Slovenia%20Investigation.pdf

4. Operating TEŠ6 will result in emissions of 3.4 mt CO2 per year, which is equivalent to almost all of Slovenia’s emissions in 2050 (if it cuts emissions by 80 percent – a minimum according to the European targets of 80-95 percent).

5. The European Investment Bank, the EU house bank, has a mandate to further EU objectives, including when it comes to climate change policies.
http://www.eib.org

For more information, contact:

Lidija Zivcic
Focus Slovenia
lidija at focus.si
+386 5 907 13 26

Nina Stros
Greenpeace Slovenia
nina.stros at greenpeace.si
+386 40 871 530

Pippa Gallop
CEE Bankwatch Network
pippa.gallop at bankwatch.org
+385997559787