The general view of the coal-fired power plant 'Kosova B' in the town of Obilic, Kosovo, 31 December 2021. PHOTO: EPA-EFE/VALDRIN XHEMAJ.

Kosovo to Pay Over 20 Million Following Arbitration Loss to ContourGlobal

The Government of Kosovo is facing a mandatory compensation payment exceeding 20 million euros after losing an arbitration case against the American company 'ContourGlobal,' which was responsible for the construction of the "Kosova e Re" coal-fired power plant.

The Government of Kosovo has officially lost the arbitration case against ‘Contour Global,’ resulting in an enforced compensation payment of over 20 million euros.

Arsim Zuka, a lawyer at the State Advocacy, confirmed this to BIRN.

“The State Advocacy has accepted the final decision of the International Court of Arbitration [ICA],” he said.

Zuka added, “The Arbitration’s ruling mandates the Republic of Kosovo to pay ‘ContourGlobal’ the sum of 20,053,125.63 euros.”

He emphasized that the State Attorney’s Office and the contracted legal representative have analyzed the final arbitration decision and according to Zuka the decision will be challenged in the civil court in the United Kingdom.

ContourGlobal was signed a 1.3 billion euro contract for the construction of the 500 MW coal power plant in December 2017, by Kosovo Government, under the leadership of former Prime Minister Ramush Haradinaj, after an agreement was reached with the company in 2015. 

In March 2020, the company announced its withdrawal from the project, citing its future plans to abstain from coal projects. It also highlighted the political changes that had occurred in Kosovo as a factor, referring to the lack of political support in Kosovo for the project.

“As a result of the political situation in Kosovo since July, our development project is incapable of reaching its required milestones by the required project completion date in May 2020, so the project cannot proceed,” the report of ContourGlobal read.

The construction of the power plant has been beset by a number of issues over the years. In October 2018, the World Bank confirmed it would not support the project, stating that it would be against their by-laws to do so, with the cost of renewable energy sources being lower than coal.

ContourGlobal filed a lawsuit against Kosovo in 2020 in the Court of International Arbitration, alleging non-compliance with the contract. 

A contract that lost political support

The contract with ContourGlobal was signed by the Haradinaj Government in December 2017. In June 2018, the American company initiated a tender for the construction of Kosovo’s third power plant, named “Kosova e Re.” This energy project, boasting a capacity of 500 megawatts, was initially projected to cost 1.3 billion euros.

The agreement with ContourGlobal was seen as one of the largest foreign investments in Kosovo. However, this ambitious project ultimately remained unfinished.

The contract was opposed by deputies and political parties, as well as civil society representatives, as investment in coal based power plants was not in line with the green energy objectives. 

The contract fulfillment deadline was in May 2020. In the event that one of the parties failed to meet their contractual obligations, they would be subject to fines.

Kosova e Re coal power plant has been on the agenda of the Kosovo Government since the idea for its construction was first conceived in 2005. 

The new power plant was expected to replace the capacities of Kosovo’s older coal-fired power plants, Kosova A and B, which have been operational since 1962 and 1983 respectively, and have been criticized for their significant contribution to Kosovo’s air pollution levels.

During the campaign for the October 6 parliamentary elections organized following Haradinaj’s resignation, now-Prime Minister Albin Kurti stated his intention to terminate the contract with Contour Global and maintain Kosovo’s existing coal-burning power plants, calling this an “imposed solution.”

“It is not our choice,” Kurti said of maintaining Kosova A and B during the October election campaign debates. “There is no way to replace the energy deficit through efficient energy supplies. This is what our experts say.”

In March 2019, the Kosovo Civil Society Consortium for Sustainable Development, KOSID, (of which BIRN Kosovo is a founding member) announced it was suing the government over the project due to irregularities during the granting of environmental consent for the plant’s construction.

In March of this year, KOSID won the court case and the Basic Court of Prishtina obliged the Ministry of Environment, Spatial Planning and Infrastructure to cancel the consent it gave the company to build the third coal-fired power plant in Kosovo.

and 06/10/2023 - 15:26

06 October 2023 - 15:26

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