The dirty French-Slovenian connection

Slovenian state anti-corruption body claims ALSTOM could have benefited from corrupt acts to get deal to build new lignite plant at Sostanj.

Ljubljana – The Slovenian government today announced its conditional support* for granting a state guarantee for a loan from the European Investment Bank for the construction of a new 600 MW block at the lignite plant at Sostanj [1]. The government’s announcement came in spite of serious warnings issued this week by the State Commission for the Prevention of Corruption that acts of corruption could have influenced the awarding of the contract to French company ALSTOM and that the law on the state guarantee itself was initially drafted by employees of HSE, the owner of the Sostanj power complex [2].

“The Commission for the Prevention of Corruption sent a strong signal to our government not to continue promoting TES 6 until corruption and unlawful lobbying allegations are cleared and proper safeguards are in place to avoid such practices in the future,” comments Lidija Živčič from Slovenian group Focus [3]. “Considering the seriousness of the concerns raised by the Commission, any responsible decision-maker should support putting a moratorium on the construction of the new plant until the propriety of the management of TES 6 is properly investigated by official bodies.”
 
The Slovenian Commission for the Prevention of Corruption concludes that “the project (TES 6) is designed and implemented in a non-transparent manner, lacks supervision and is burdened with political and lobbying influences, and as a result there has been (and still is) a high risk of corruption and conflict of interest.”
 
The Commission notes that both the technical commission implementing the public procurement for TES 6 and the group negotiating the contract included employees of CEE Inženiring za energetiko in ekologijo d.o.o., which has close business links with ALSTOM. As a consequence, „conditions for corruption” were created, as ALSTOM „could have had access to complete information about the offer of the competitive supplier”. The main competitor possibly disadvantaged by these circumstances was German company Siemens [4].
 
Additionally, the report states, Slovenian lobbying regulation has been breached as the authors of the proposed law on state guarantee for an EIB loan for TES 6 are members of economic entity HSE, the owners of the Sostanj energy complex. A state guarantee law needs to be passed by the Slovenian parliament in order for TEŠ 6 to cash in EUR 440 million our of the EUR 550 million loan from the EIB needed to cover a part of the 1.3 billion euros cost of the new block [5]. 4/5 of the EIB loan is to be guaranteed by the Slovenian state, with the remaining one fifth guaranteed by private banks.
 
„The two European public banks, EIB and EBRD, who plan to finance half of the costs of TES 6, cannot turn a deaf ear to the call of the Slovenian Commission for the Prevention of Corruption,” says Bankwatch’s Piotr Trzaskowski. „Not deferring their loans at this moment would mean that the EIB and the EBRD are not interested in checking whether the allegations of corruption are true. In fact, they should use this opportunity to withdraw from a project which, apart from being based on possible unlawful actions, also stands in blunt contradiction with the EU long-term climate policy both banks must support.”

Investigations into the possible unlawful acts at TES 6 have already been opened at the National Investigations Office and at the Police in the town of Celje. The Commission for the Prevention of Corruption has also called on the Slovenian Prosecutor General to establish a special group for further investigating this case.
 

For more information contact

 
Lidija Zivcic
Senior expert, Focus association for sustainable development
tel: +38641291091
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

 
* The Slovenian government announced its support for the state guarantee law if the list of conditions below is met (referring stricly to the economic viability of the project and respecting terms from the investment plan):

• 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 TEŠ 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).

1. Slovenia plans to build a new 600 MW unit for the Sostanj lignite power plant (TES6) which would replace the power plant’s existing units 1-4 and possibly 5. Its promoters argue with increased efficiency, but in fact, this one lignite power plant alone will swallow up almost the country’s entire carbon budget by 2050. Read more about the project at:
https://bankwatch.org/our-work/projects/sostanj-lignite-thermal-power-plant-unit-6-slovenia

2. The commission report can be downloaded (in Slovenian) at:
http://www.kpk-rs.si/download/t_datoteke/2724

An unofficial English translation is available at:
https://bankwatch.org/sites/default/files/StateCommissionReport-corruption-TES6-23Feb2012.pdf

3. Already in November last year the European Commission was informed by Focus about irregularities in the procurement procedure for the project. The full text of the complaint can be found here:
https://bankwatch.org/sites/default/files/Complaint-EC-SostanjPublicProcurement-02Nov2011.pdf

4. Consortium SIEMENS AG, which included Hitachi Power Europe GmbH and SIEMENS d.o.o.

5. Loans from the European Investment Bank (EUR 550 million) and the European Bank for Reconstruction and Development (EUR 100 million) add up to more than 50% of the overall costs of the investment.