The beginning of the end for coal era is slowly but steadily covering more and more countries in Europe. Latest news about ending support for fossil fuel projects from one of the largest investment banks in the world, European Investment Bank, confirms the facts that financing and investing in coal projects, i.e. powerplants stands very unsafe and uncertain. Despite all that, the government in Bosnia and Herzegovina does not put into reconsideration their own beliefs regarding unsustainable business of mines and powerplants. One of the examples of bad management, denial and looking the other way from apparent increasing operational debts is the Ugljevik mine and power plant.
Written by: Dejan Tovilović, Capital.ba for Center for Environment
In 2019 “Ugljevik” mine and power plant was associated with many affairs regarding public procurement and staff policy, and considering all this, one may assume that their financial report at the end of the year won’t make them very proud. After reporting profit of 1,36 million BAM in semi- annual report, only in the next three months things went downhill, so in September they reported loss of 913.567 BAM. Companies debts reached 178,7 million BAM whereof long-term ones are 119,9 million BAM. In last five years, biggest state manufacturer of electrical energy in Republic of Srpska had positive operating result only in 2016, but nevertheless the number of employees kept on growing finally with the end of August this year with 1.943 employees.
|Year||Financial result||Number of employees
|2019 (za 9. mjeseci)||-913.567||1943|
In the meantime poor results didn’t worry the management, that didn’t show any will for cutting costs. So, at the moment they are in the procedure of public procurement of business gifts in value of 50.000 BAM. From the provider they asked for men and women leather wallets, belts, purses, ceremonial ties made of microfiber, etc. Just for cakes supply they spent approximately 40.000 BAM.
Just to remind, their business didn’t even satisfy Luka Petrović, CEO of Republic of Srpska Electrical Utility (ERS) who in the end of 2018. submitted criminal charges against management of RiTE Ugljevik for malpractice management. The company’s management denied these allegations.
To recover their public image, they put a public tender for direct marketing for 20.000 BAM. The job was granted to “Alternativna televizija” in Banja Luka.
Charges for suspicious purchases
Besides many problems in business, Transparency International in B&H, submitted this April a notification to the Agency for Public Procurement in B&H, due to suspicion of deliberate evading transparent procedure during the cooperation with company Građapromet from Bijeljina. For years they purchased consumer goods from them without even one transparent procedure of public procurement. Administration of the mine made 73 contracts ranging to 6000 BAM and avoided issuing a tender, although sharing procurements is legally forbidden.
Problems keep piling up
Problems for Ugljevik in 2019 kept piling up and new one came in form of verdict from District Court in Bijeljina which determined Supervisory board unlawfully relieved from duty director Đorđe Popović, annulling their decision regarding the dismissal.
Popović was dismissed after last year election when he and few other directors found themselves in the group that then president of RS Milorad Dodik called “mangup (rascal)”.
He succeeded to prove on court that his alternation was illegal, and the court ordered that he may return to duty, but Supervisory board of RiTE “Ugljevik” by simplified procedure in February made a new decision of dismissal. Court also ruled this decision as illegal. Besides this, Popović has one more dispute with “Ugljevik” worth over 36.000 BAM.
They are missing 10 million BAM
Management confirmed they are in bad financial situation , currently in tender for three loans for financing companies obligations. They requested for 4 million BAM to be paid in 15 days, 3 million in a month and 3 more million in within 45 days from concluding the loan agreement. Latest information do show that the loan in which they should just for interest pay about 1 million BAM, hasn’t been realized.
The future is expensive and uncertain
RiTe “Ugljevik” will have to pay 460 million BAM in next twenty years for expenses of new facility for flue-gas desulfurization on the actual power plant which will be put into operation next month. It is a system that is supposed to eliminate 98% of sulfur dioxide from power plants gases, and thus had invested 160 million BAM of loan that needs to be paid.
New facility increases the company’s expenses for almost 36 million BAM
The coal powerplant in Ugljevik already costs the economy of B&H more than 2,1 billion BAM annually. That is the half of total damages of pollution from all thermal power plants in B&H, as stated in the Study of Energy Community from 2013. In the same document it is stated that the new facility for desulfurization increases expenses for almost 36 million BAM, because of monthly loan rate of 11 million BAM and around 24,7 million BAM will be spent for managing new facility and its maintenance.
As they told us in RiTE “Ugljevik”, annual expenses for this operating system will cost approximately 15 million BAM. This means that untill year 2039, when the closing of the power plant is estimated, only in this purpose 300 million BAM will be invested.
“That will proportionally effect increasement of manufacturing price of electrical energy from this electricity production facility”, as claimed by RiTE “Ugljevik”.
Keep in mind that this facility makes up more than third of electrical energy production in Republic of Srpska which means it is almost impossible that the price of manufacturing rises, yet price for consumers stays the same. It is important to emphasize that the price increase is just a reflection of the real price of electricity obtained from coal. This price was held artificially low by concealing real costs of pollution, ignoring expenses thorugh bad management, corruption, excessive and party employment.
Chernobyl of Europe
Ugljevik power plant is one of the biggest air polluters in Europe and from consequences of its work hundreds of people die or get sick every year. In the beginning of this year published data stated that this facility emits more sulfide dioxide (SO2) than all German power plants together. (https://www.env-health.org/wp-content/uploads/2019/02/Chronic-Coal-Pollution-report.pdf). Only in 2016 poison emissions caused 635 deaths, 1.689 cases of bronchitis in children and adults, 494 hospitalizations and 192.236 lost work days. One of the leading European organizations dealing with protection of the environment and health “Health and environment alliance” called this power plant “Chernobyl of Europe”.
770 million euro law suit over-head
Besides hundreds of millions of BAM that will be invested into reducing the pollution, things for RiTE Ugljevik could go even worse because of the law suit of 770 million euros launched by Power Industry of Slovenia. Namely, Slovenians want payment of their investment in construction of the power plant from period before the war, which was planned to be compensated with electricity shipment that didn’t happen and, all this according to the Agreement on reciprocal improvement and protection of investments. The procecess started in 2016 and the ending is estimated in 2022. Ugljevik mine and power plant, ERS and Ministry of Industry and Mining made all possible actions in collecting relevant documents needed for the legal team.
Not to ignore the rest of the law suits, that up to this October sum to 22, and ask for 10,37 million BAM more.
Center for Environment: Solving only one part of the problem
In Center for Environment they say that besides enormous investments only part of the problem will potentially be solved regarding the pollution, that, in addition comes very late, which is just one another symptom of lack of planned and timely approach of the electroenergetic sector development to environmental issues. No matter of the use of technology for air purification, greenhouse gases are still present and the problem with mine emission as well (forest usurpation and degradation, dust emission and surface water and groundwater pollution) deposit of slag and ash and emission of greenhouse gases from the power plant.
These problems are a consequence of decades of neglecting important problems and outdated approach to development of the energy sector. Decades of poisoning our environment and citizens caught up together with economic consequences, which we see in debts that keep growing each day and also in investments that would be far more effective if only they had been done at the right time. However, now is the time to look to the future and accept the fact that new energy era is coming – energy from renewable sources is becoming more and more available, and taxes on carbon dioxide are destroying any kind of economic calculation for thermal power plants”, stated Center for Environment.
The right plan of energy transition is absolutely needed for the development of alternatives on the state level in which all details considering transition on sustainable sources of energy will be made. At the same time special attention goes to social and economic consciences of transition, that will have impact on the population which currently depends on power plants.
All the above said, shows how electricity made from coal besides numerous ecological and health consequences is becoming economically unprofitable comparing it to more and more affordable price of electric production from renewable sources.
Nevertheless, Bosnia and Herzegovina plans to invest billions of BAM in next few years in dirty energy, only virtually declaring acceptance of European legislation and accessing European Union, while that same Europe is turning its back to fossil fuel projects.
Remark: This article is part of the series made in cooperation with Center for Environment and portal Capital.ba. The series combines investigative journalism and the Center’s work on promotion of transforming the energy system in B&H, in cooperation with many partner organizations from Western Balkans, Europe and the world. These articles are just one more contribution to the campaign “Stop dirty Energy because future is renewable”, which has a goal to bring attention of citizens, experts, competent institutions and other social stakeholders on alarming situation of the environment and unsustainability of existing energy systems in Bosnia and Herzegovina. Attitudes and requests made in this campaign, towards competent institutions in B&H are:
* we expect institutions to finally start respecting undertaken international obligations considering energy and environment protection;
* we ask that in economic analysis of new energy production capacities the real costs of energy production are shown ( including the damage made to people’s health and environment);
* we ask to stop the plans for the construction of new TPPs and turn to energy efficient and renewable sources of energy.