-Comsar receive green light from RS authorities to increase the power of TPP Ugljevik 3, although this contradicts the RS Energy Development Strategy and Energy Community treaty policies.
-RS authorities obstruct the offer made by Russian ZIO corporation to build new TPP blocks with their funds and pay off their investment through surplus electricity produced by the new blocks
-The earlier plan for ERS to buy Sardarov’s concession is at a standstill, but not yet abandoned, however a new financing model is required because RS Electricity company is unable to receive loans
Despite not being in compliance with the Concession Agreement, the Government of Republika Srpska allowed Comsar Energy to increase the power of the planned TPP Ugljevik 3 to 700 MW contrary to the RS Energy Development Strategy and Energy Community policies. Authorities of Republika Srpska are extending their cooperation with the Russian oligarch Rashid Serdarov in order to increase the value of the concession and justify the high price that Elektroprivreda RS plans to pay for the purchase of the concession after the Russian corporation ZIO – Podolsk Fabrika for Mechanical Engineering” was rejected, that wanted to build “Ugljevik 3 “without interest, revealed the portal CAPITAL.
Approved increase of TPP power capacity and a new Environmental Impact Study
Specifically, Comsar asked the RS Government to increase the power of the thermal power plant from 600 MW to 700 MW, and to approve the development of a new Environmental Impact Study for the purpose of obtaining an environmental permit.
The request to increase the power capacity of the thermal power plant is in contradiction with the RS Energy Development Strategy, as it states that a power plant of 600 MW is envisaged in Ugljevik, but also with the policies of the Energy Community treaty adopted by RS, which relate to the production of energy from renewable energy sources.
Nevertheless, government of RS allowed Comsar to continue the project implementation process.
Thus, three months ago, the Ministry of Physical Planning, Construction and Ecology of RS issued, at the request of “Comsar”, a decision permitting that company to obtain an Environmental Impact Study for the project of construction of new units of TPP “Ugljevik 3” 2×350 MW.
Comsar submitted the Preliminary Environmental Impact Assessment which were commented on by RS institutions and the Municipality of Ugljevik.While the Ministry of Agriculture, Forestry and Water Management and the Ministry of Energy evaluated the Comsar’s study as acceptable and stated that it was necessary to conclude an Annex to the Concession Agreement in order to increase the power of TPP, the Ministry of Health and Social Welfare and Ugljevik Municipality pointed out the shortcomings of the “Comsar” assessment.
“The Government of Republika Srpska has awarded a concession for the construction and use of the Ugljevik 3 TPP to Comsar energy Republika Srpska for a period of 30 years. The concession contract was concluded in December 2013, and in February 2016 an annex to the contract was signed extending the construction deadlines, while the installed capacity of the facility remained the same. Bearing in mind the provisions of the Law on Concessions, the Ministry points out that it is necessary to amend the Concession Agreement for the construction and use of the thermal power plant in the part of the installed capacity of the plant (2×350 MW)”, stated the Ministry of Energy and Mining.
The opinion of other institutions shows that the construction of the TPP has a significant impact on human health, water and air quality, and the Ministry of Health has echoed the stance of the World Health Organization which call for up switch to “green” sources, and that for other facilities, which are of public interest, the most stringent environmental protection conditions must apply.
In Ugljevik municipality’s opinion, it is stated that the construction of the TPP completely disrupted the morphology of the terrain, landscape is changing climatic factors, disrupting the hydrological regime, negatively affecting the flora and fauna, and that the biggest problems were the relocation of the population, the impact on health, noise and dust…
New environmental permit required due to BiH agreement with EC: A new environmental permit for Ugljevik 3 is needed because of an agreement signed in 2018 between BiH and the Energy Community regarding an environmental impact study of the planned TPP Ugljevik 3, in which BiH has committed not to use the existing permit and that the environmental impact assessment process will return to a repeat procedure. This agreement came about after Center for Environment filed a complaint with the Energy Community Secretariat in 2014 regarding this project. Prior to appealing to this European body, in 2013, the Center for the Environment initiated an administrative dispute against the Decision on the issuance of an environmental permit issued by the RS Ministry of Physical Planning, Construction and Ecology. The district court dismissed the lawsuit, after which the Center for Environment appealed this decision to the RS Supreme Court in 2015. The appeal was upheld by this authority in 2017, annulling the Environmental Permit Decision and returning it for reconsideration. The Ministry then issued a new environmental permit, which did not implement the RS Supreme Court’s decision. On this occasion, CfE initiated a new administrative dispute over the newly issued ecological permit for the plant. All of these disputes ended with the aforementioned agreement reached between BiH and the Energy Community in 2018 on the Ugljevik 3 case.
The Russians want Comsar’s concession and to build a power plant without interest
CAPITAL found out that the Russian consortium ZIO, which is an association of Russian companies within the Joint Stock Company Podolskaya Fabrika for machine building, agreed to overhaul the existing thermal power plants in Ugljevik and Gacko, and offered to buy a concession from Serdarov and build a TPP in the way to import all the necessary equipment and parts to build two new blocks.
ZIO was ready to vouch for the equipment it would install during the overhaul of two existing thermal power plants, during which the power and life of the thermal power plants would be increased. Repayment is provided through the delivery of electricity that would be obtained through modernization. In addition, the Russians would build a new thermal power plant on a concession awarded to “Comsar”, for which they would receive an incentive from Russian institutions and banks to export. The power plant would pay off via electricity production.
Republika Srpska would become the owner upon repayment and thus receive the thermal power plant without interest.
“Everything was agreed three months ago, only waiting for the verification of the agreement, and then the Russians came out with an estimate of how much Serdarov and Comsar have invested so far in Ugljevik 3. Everything was estimated at BAM 30 million, which is much less than previously estimated – when Elektroprivreda RS wanted to buy a concession for BAM 180 million, “said a source included in the negotiations to CAPITAL portal.
The difference in estimate is not surprising given that the value of BAM 180 million was obtained from one domestic company commissioned by Serdarov, which is said to have used methodology that best suited him. According to the source, all negotiations with the Russians came at the behest of the Serb member of Bosnia and Herzegovina Milorad Dodik, and the Russians were left perplexed by this intentional development.
The earlier plan of ERS to buy off Serdarov’s concession, which CAPITAL revealed, is also stalled, but it has not been abandoned yet, however a new model of realization or financing is required because the exposure of Elektroprivreda RS is large and it is not able to borrow.
“Elektroprivreda RS”: By May we will know if we are buying Comsar’s concessions
Considering that Elektroprivreda RS considered the possibility of buying concessions from Comsar last year, when asked whether they would buy them or abandon the intention, ERS said that this would be known by May.
“With the Ten-year development plan of MH” Elektroprivreda Republika Srpska “for the period 2019-2029. the construction of production facilities with installed capacity of 1,000 megawatts from renewable energy sources is planned. The plan also left the possibility of extending the working life of existing thermal power plants and / or construction of a new or replacement units. The final decision if the development will take place on old or new thermal power plants will be made after specialized testing and research done by scientific institutions, which will be completed by May this year”, they told CAPITAL at Elektroprivreda.
They added that, as far as financing is concerned, there are several sources commonly known in economic and financial procedures. Also, they pointed out, because of the complexity of realization of energy investments, possible models were defined so that investments could be started as soon as possible.
“It is a continuous process and several energy facilities outside the ERS are currently being analyzed and evaluated. After the implementation of these activities, facilities that are found to be of interest to “Elektroprivreda” will be notified in detail”, the ERS generally replied.
Considering that the Government and ERS have not yet given up on the intention to give Serdarov 180 million KM, instead of terminating the non-compliant concession contracts, it is assumed that Serdarov is acquiring Studies and licenses so that the price to be paid will eventually be rated as justified.
Requested position by FBiH, Serbia, Croatia and Montenegro: The RS government has ensured that it has complied with all procedures and obligations and, in accordance with the ESPO Convention on Environmental Impact Assessment in a Transboundary Context, sent a notice to all possible affected parties, the governments of the countries in the region, Brcko. District and Federation of BiH. The governments of Serbia, Croatia and Montenegro have been asked for an opinion, but the RS Government has stated that the position of those countries was not received by the day of adoption of the Decision authorizing Comsar to prepare an Environmental Impact Study. The opinion of the countries of the region was requested because of a dispute before the Energy Community, initiated after an appeal by Center for Environment , where it was found that the opinion of the surrounding states was not sought in the preparation of the earlier study.
Comsar: The investment continues
They are not talkative at Comsar and they point out that the investment is continuing.
“I cannot comment at this stage, I can only say that the investment in the construction of the Ugljevik 3 thermal power plant is continuing and we expect the investment to continue soon”, Sinisa Majstorovic, director of Comsar RS, told CAPITAL.
Asked if the investment continues with Comsar as an investor or with someone else, he said that he could not provide other information but that “it is only important that the investment continues.”
He did not want to talk about when the annex to the Concession Agreement could be signed to account for the increase in power of the TPP.
According to earlier official announcements by representatives of Comsar Energy, the construction of the Ugljevik 3 TPP was supposed to start five years ago and be completed by the end of 2016.
Center for Environment: A surprising lack of strategy and transparency
Majda Ibrakovic from Center for Environment tells CAPITAL that it is surprising how much different information exist between the Government, Elektroprivreda and other actors in Ugljevik 3 case.
“There are two basic problems here: first is the stubborn insistence on coal-fired power plants despite all economic, health and environmental consequences. Another problem is the frivolous approach of all actors and the apparent lack of transparency and energy strategy. The RS Electric Power Company has recently stated that it is turning to renewable energy sources, so it is utterly cynical to plan for new blocks of thermal power plants that will enslave B&H’s economy, population and environment over the next 35 years. Our government is clearly not thinking about energy in the long term, which is incomprehensible and very irresponsible, since energy is a sector where investments are huge and long-term planning is crucial. These are harmful consequences that we and our children will eventually pay for with our money and health, because the way things are currently being done, it is obvious that the approach and planning is just in terms of a political mandate”, she said.
She added that mines and thermal power plants, after all, represent a significant electorate that can be easily manipulated with.
“After all, in this as well as in all other projects of thermal power plants, the question arises as to who will buy that electricity and to whom it is planned to be marketed, when we know that there was a big change in the end of the last year – the supply of electric energy from coal in the EU was reduced by 24%, with energy prices from renewables going down, thus making fossil fuel energy even less attractive. To whom does it pay off to invest in energy that costs more and more money which ever way you look at it?”, questions Majda.
Government gives Serdarov extended exploitation for Mrsovo HPP: On December 30, 2019, the Government of the RS adopted the Decision establishing the conditions for the extension of the deadline for which the concession for the construction of HPP Mrsovo on the Lim River was granted.The decision establishes the conditions for the extension of the concession and defines that it will be done by negotiation and on the request of Comsar Energy Hidro Banja Luka.The term for which the concession has been awarded can be extended to a period of up to 50 years, in which case the investor is obliged to pay a one-time concession fee of KM 193,150.According to the Decision, the Ministry of Energy and Mining should conduct the negotiated procedure within 60 days and submit to the Government the Proposal of the Annex to the Concession Agreement.The deadline expires in early April this year.In August 2018, CAPITAL announced that Comsar Energy is requesting the RS Government to extend the concession for construction and use of TPP Ugljevik 3 for an additional 15 years, and for HPP Mrsovo from 30 to 50 years, threatening by suspending investments.
Note: This article is part of a series written in cooperation of the Centre for Environment and portal Capital. The series connects investigating journalism with the work of the Centre for Environment, on transforming the electro energetic system of Bosnia and Herzegovina, with the cooperation of many partner organisations from the West Balkans, Europe and the world. The articles are one of the many contributions of the “Stop dirty energy campaign, because the future is renewable”, which has the goal of raising awareness of the public, experts, government institutions and other social circles, of the concerning state of our environment and unsustainable existing energy systems in Bosnia and Herzegovina. The opinions and demands of this campaign towards the institutions in B&H:
*We expect institutions to finally begin to honour their international obligations in the fields of energy and environment preservation.
*We are requesting that, in economic assessments of future energy production projects, the true prices of using energy resources are displayed (including the damage done to the citizens health as well as the environment) while deciding on new projects.
*To cease all plans on constructing new thermal power plants, but turn to energy efficiency and renewable energy sources, abiding the principles of fair transition.