Last week, the Kosovo Civil Society Consortiums for Sustainable Development, KOSID, announced it is suing the Kosovo government for building a third coal power plant without giving affected communities a chance to engage in public consultations over its environmental impact, as required by Kosovo law.

This announcement was made on March 14 during a conference at the EU Resource Center in Prishtina, named Energy sector developments in post-World Bank withdrawal.

The building of the 500-megawatt (MW) coal-fired Kosova e Re Power Plant, KRPP, suffered a huge set back last October when the World Bank announced that was withdrawing its lending support to the project.

It did so because the World Bank “required through our bylaws to go with the lowest cost option and renewables have now come below the cost of coal,” said Jim Yong Kim, the World Bank president at the time.

The Kosovo government has, nevertheless, pursued the construction of this project, giving ContourGlobal, the US-UK-listed company, the environmental consent to build this plant. According to KOSID, the government signed a Power Purchasing Agreement that violates the Energy Community Treaty signed by Kosovo in Athens in 2005.

Haki Abazi, cofounder of KOSID, criticized the decision to go ahead with this plan in the face of other options available to Kosovo.

“There is no such thing as clean coal or clean coal-fired power plants,” he said, adding that “the World Bank would not have withdrawn if coal were clean and non-polluting.”

“KOSID is not just criticizing but also providing other options for Kosovo’s energy shortage and these options are based in a four-point plan that offers an economically and environmentally sustainable solution,” he continued.

He went on to elaborate the KOSID plan, which requires that “first, we have to stop investing in any new coal in Kosovo, which is 97 per cent reliant on coal generating energy; the second point is increasing energy efficiency; the third point entails support for deploying renewables such as household solar panels, wind turbines and so on,” said Abazi.

The fourth point, said Abazi, is allowing the newly built energy transmission line between Kosovo and Albania to operate, something that is in line with the Energy Athens treaty signed in 2005.

“This treaty stipulates utilizing the region’s capacities rather than building power plants in each country. This energy interconnection with Albania would enable reasonable prices in the region and would also avoid the need for building power plants in each country,” he said.

Janez Kopac, head of the Vienna-based Energy Community Secretariat, highlighted in an opinion piece published on Monday that Kosovo is indeed the most coal-reliant country in the entire Western Balkans.

“At a time when the EU strives to achieve net-zero greenhouse gas emissions by 2050, coal still represents 97 percent of electricity generation in Kosovo,” he wrote in Euroactiv.

The Kosovo government is nevertheless determined to build the third power plant, although the source for financing this project remains uncertain.  

Lack of public debate over environmental consent

Arber Kadriu, a legal officer with BIRN who drafted the lawsuit on behalf of KOSID, explained during the March 14 conference that there have been serious violations in the granting of environmental consent to ContourGlobal, the single bidding company who was given permission to construct the plant through a lucrative contract.

“We have sued the Ministry of the Environment based on the fact that it has violated the Kosovo law on Environmental Impact Assessment [EIA], since it did not make the environmental consent it gave to ContourGlobal available for public consultation,” explained Kadriu.

Article 20 of the Law on EIA reads: “The main conclusions and recommendations, included in the EIA Report and the proposal decision for environmental consent shall be subject to public debate.”

“I have studied all the documents received from the Ministry of Environment and noticed that the environmental consent never went through the public discussion process as article 20 of the EIA law stipulates,” stressed Kadriu.

Pippa Gallop, research coordinator at CEE Bankwatch Network, a leading watchdog NGO network that oversees the funding of projects that affect the environment in Central and Eastern Europe, has backed the law suit.

“It’s shocking in this day and age that the Kosovo government issued environmental consent for a new lignite power plant without consulting the public about the environmental impact study at all,” Gallop told Prishtina Insight. “This is one of the most blatant violations of the EU’s EIA Directive we’ve seen in the Western Balkans in recent years.”

Assisted by Bankwatch, KOSID sent a complaint to the Energy Community Secretariat in Vienna in February, the body which monitors the implementation of the Energy Community Treaty in countries in east and southeastern Europe.

Under the Energy Community Treaty, Kosovo is legally bound to apply the EU Environmental Impact Assessment Directive. This means the public must be consulted about the environmental impact of certain projects. Even today, the environmental impact assessment study for KRPP is not publicly available for communities that will be affected, something that Gallop criticized.

“The environmental impact assessment study has to be available, there has to be a clearly set out commenting period, and the Ministry of Environment and Spatial Planning has to show how it has taken public comments into account. None of the above were done in this case,” Gallop added.

The Minister of Environment and Spatial Planning,  Fatmir Matoshi, who participated as a panelist in the KOSID conference last week, urged the Kosovo courts to deal with the lawsuit.

“Our Ministry has not yet been officially notified about the lawsuit, however, I publicly appeal to the courts to address this lawsuit with urgency,” he said.

“The environmental consent that was granted to ContourGlobal does not mean that they can start operating, we as a ministry will be responsible to see if all the environmental conditions are met,” added Matoshi.

However, when urged by the panelists to revoke the environmental consent based on the lack of public consultations, the minister retorted that this project is the best available option and if consent is revoked, a hefty penalization would ensue.

“[Revoking the environmental consent] is going to be problematic, because we can get penalties from the investor,” he said, referencing the internationally criticized power purchasing agreement that Valdrin Lluka, the economy minister, signed with ContourGlobal last year.

Matoshi and Lluka come from the same party, AKR, that is run by Kosovo foreign minister Behgjet Pacolli.

The construction of the coal power plant was backed by Kosovo Prime Minister  Ramush Haradinaj, who defended the project amid criticism from opposition parties at a parliamentary session last May.

“Even if this government falls down, do not vote this project down [KRPP] because this is in the interest of our children, we can not depend for our energy from neighbors that do not recognize us and do not love us,” he said.

“Yes, it would be much better if we could rely on energy sources such as hydropower, solar and everything that is less polluting, but coal is the resource we have and we will base our [energy] on coal,” he concluded.

To its credit, the Kosovo government published the contract that it signed with ContourGlobal. It is clear from the contract that the Kosovo budget would have to heavily subsidize the coal-based energy produced by ContourGlobal.

The contract promises to give ContourGlobal free high quality coal. The liginite in Kosovo is of such low quality that it must be processed to reach the necessary standard for the use in the power plant.

The contract supplies free water to ContourGlobal for the purpose of cooling the plant. It also covers the displacement costs for the people who live next to the open coal pits, as well as picks up their healthcare bill caused by dust and emissions that come from any coal plant.  

On top of this, once the plant is operational, according to this agreement, Kosovo would be required to buy the energy from ContourGlobal at an exponentially higher price than the current price of energy in Kosovo, which is 80 euros per MWh.

This was confirmed by Ymer Fejzullahu, head of tariffs at the Energy Regulatory Office, ERO, during the conference.

“The ERO has conducted a preliminary assessment which estimated an increase of over 50 per cent in the price of electricity,” said Fejzullahu.

Concerns about the hike in price were raised by the Energy Community in Vienna last year, who considers the subsidy as a form of “state aid” and a breach of EU energy free market regulations.

The Energy Community will now have a new complaint on their hands to decide on, as Gallop of Bankwatch pointed out.

“The people of Kosovo have been stripped of their right to be informed about the project’s impact and to participate in the assessment process,” said Gallop. “We hope the Energy Community will soon confirm that this is a breach of the Treaty and require that the consent is canceled.”

Dajana Berisha from the Forum for Civic Initiative, FIQ, who is also cofounder of KOSID, has been engaged with the villagers of Obiliq municipality where the power plants are based since 2013. She explained the dangers of not talking to the communities.

“Inhabitants of Hade [village in Obiliq] in particular will be affected by the building of the new power plant. A public pledge has been made to them that they will be properly displaced and compensated,” she said.

“They live a few meters away from where the coal is being dug to feed the current and future power plants, so they should have been moved a long time ago,” Berisha said.

Berisha assisted the communities of Obiliq with a legal complaint to the World Bank Inspection Panel in 2016. After a team from Washington DC came to inspect, they ruled in favor of the communities who “lost their land, livelihoods and wellbeing” through the forced displacement.

Ragip Graicevci, the representative of Hade village who participated in the March 14 conference, asked Environment Minister Matoshi not to pursue the project.

“Most people in our community are sick from cancer and suffer from respiratory diseases, so please don’t pursue building us yet another source of cancer,” said Graicevci.

As a response to this, Minister Matoshi replied that “we can’t stop capital projects like Kosova e Re due to 200 homes in Hade.”      

Viktor Berishaj, a sustainable development researcher with BIRN, explained that Hade villagers are deliberately being left isolated, while the coal mine is being dug around their homes, simply to keep the costs of this project down.

BIRN, the NGO who publishes Prishtina Insight, is also one of the cofounders of KOSID.

A government minister, who prefers to remain anonymous, told BIRN after this conference, that they suspect KOSID will “lose this legal battle.”

Such suspicions were aired during the public discussions in the conference.

“We know how this functions, they [government] will pick up the phone and tell the court to annul this lawsuit because they need to move forward with the project,” said Abazi, distrustful of the Kosovo legal system which is criticized in numerous reports for being corrupt.

“We are talking about a company [ContourGlobal] that will ultimately have a bigger budget than the entire government of Kosovo, so of course it is questionable if our justice system will be able to calculate the real cost that Kosovo citizens will pay for this project, through wasting our water resources, polluted air, damage to the land and the cost of public health because of coal,” Abazi said.

The problems with financing of the coal plant

ContourGlobal told the Kosovo government in a public meeting on January 21 that in order to get enough funds to build this plant, the company is in contact with two banks, Overseas Private Investment Corporation, OPIC, which is the United States government’s development finance institution, and the Japan Bank for International Cooperation, JBIC.

Steve Herz, Senior International Policy Advisor for the US NGO Sierra Club, explained that “no international financial institution will want to be seen as ‘bottom feeding’ off of projects that the World Bank has rejected, particularly where the Bank has publicly concluded that the project makes no economic sense for the host country.”

“Funding this project would simply make JBIC and OPIC look like they are only interested in supporting their own bottom lines instead of the people of Kosovo,” Herz continued. “Plus, the fact that Kosovo C already has a number of legal problems associated with it will also make it very difficult to clear these institutions’ due diligence processes.”

Questions regarding the financial guarantees that the Kosovo government has to provide for ContourGlobal’s investment were raised by Bedri Hamza, Kosovo’s finance minister in the January 22 meeting.

“What is the nature of guarantees [that we need to give as government]? For how long will we have to guarantee these funds [roughly 400 million euros]? This involves additional state aid, and all the players involved in this project must consider the price of this financing and how will this be covered,” said Hamza.

Hamza reminded all the government ministers in the meeting that financial legislation in Kosovo implies that the guarantee will be treated as public debt. Any such guarantee requires approval from two thirds of the voters in the Kosovo Assembly.

The government coalition led by Haradinaj does not have two thirds of the votes in the Assembly currently. For this guarantee to be approved, it has to be supported by opposition parties.

One of the two leading opposition parties, Vetevendosje, was clear it will not support the construction of this plant.

“We have been vocal about the damages that come from this project [KRPP] since 2015 when it was first presented to us,” said Glauk Konjufca, the head of Vetevendosje parliamentary group. “Now it is clear that the World Bank also does not want to be involved in this initiative which has risks and carries [financial and environmental] damages.”

“We are asking the government to withdraw from the project and withdraw all the licences it has given to it,” he continued. “Not only would we vote against the loan guarantee, but we consider that if a government dares to bring it to a vote, it should not be surprised if a criminal case is raised against such a government one day.”

The other opposition party, LDK, was more reserved.

“We don’t have any official information from the Government of Kosovo, nor from other institutions, on the financing structure of Kosova e Re, after the withdrawal of the World Bank. When we receive this official information we can analyze its effects and consequences and take a position on the financing structure for Kosova e Re,” said Besjan Mustafa, spokesperson of LDK.

Ultimately, the financial structure of the plant’s construction depends largely on the decisions of other banks to provide the loan guarantee that the World Bank withdrew from last year.

Steve Herz of the Sierra Club highlighted that “as the World Bank concluded, investment in any new coal plant does not make financial sense for the people of Kosovo, since more cost effective alternatives are readily available.”

“And given that clean, renewable energy sources and storage options will continue to become much cheaper over time, if Kosovo were to move forward with a coal plant, there is a high risk that the plant would never recover its costs and the people of Kosovo would pay the price,” added Herz.

Dajana Berisha, who was hosting the conference, confirmed that Valdrin Lluka, Kosovo economy minister and Bernhard Haider, the representative of ContourGlobal in Kosovo, were both invited to the conference but did not accept the invitation.