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Environmental groups launch legal challenge against Kosovo coal project

Five environmental groups – Balkan Green Foundation, GAP Institute, Group for Legal and Political Studies, INDEP and CEE Bankwatch Network – have submitted an official complaint to the Energy Community dispute settlement mechanism challenging the legality of a power purchase agreement for a planned 1.3 billion-US dollar coal-fired power plant in Kosovo.

The complaint alleges that the 20-year power purchase agreement, signed by the Kosovar government with ContourGlobal in December 2017, fails to comply with Energy Community Treaty rules on state aid because it provides ContourGlobal a range of benefits that give it an unfair advantage over other energy producers.

The environmental groups claim that the contract would also put an unbearable strain on the state budget and Kosovar electricity consumers as it guarantees that a state-owned company will buy all the electricity generated by ContourGlobal at a “target price” of 80 euros/MWh – much higher than current electricity prices in the region.

“No-one seems to know how much all this will end up costing consumers and taxpayers,” said Visar Azemi from Balkan Green Foundation. “Many people in Kosovo can’t afford to pay for their electricity bills even now, so there is no chance they can absorb these increases. The state is going to end up emptying its already modest budget into the pockets of ContourGlobal.”

“To say the Kosovar government has made a terrible mistake would be an understatement,” added Pippa Gallop of CEE Bankwatch Network. “Whatever caused them to sign this absurd contract, it is up to Kosovo parliamentarians, the Kosovar public, and international bodies like the Energy Community and European Commission to make sure it doesn’t get ratified, for the sake of Kosovo’s consumers and taxpayers.”

“The most painful part is that almost a third of Kosovo’s electricity is lost from the distribution system due to technical losses and non-payment of bills, so the priority should be fixing this and upping the renewables share, not throwing money we don’t have at yet another coal plant”, concluded Agron Demi from Gap Institute.

On May 3, ContourGlobal selected a consortium of General Electric subsidiaries to build the 500 MW plant, which is designed to meet almost half of Kosovo’s power demand.