Kolubara B lignite-fired power plant, Serbia

The Kolubara B thermal power plant site is situated near Kalenic village, 60 km south-west of Belgrade, at the northern side of the Tamnava Open Cast Mine. The decision to build the 2x350 MW plant was taken in 1983 and construction started in 1988. Construction progressed slowly until 1992, when work was suspended due to sanctions against Serbia. At this stage about 40 percent of the facility had already been constructed, partly with the assistance of a World Bank loan.

In 2011 the results of an international tender were announced, in which Italian utility Edison was the only company to submit a bid. Edison's offer was accepted, and a joint venture agreement signed with Elektroprivreda Srbija on the development of the Kolubara B project in June 2011.

The fact that some of the facility had already been constructed meant that technical questions arose relating to whether the plant could meet the latest EU standards. For example the agreement stated that the plant would have a net efficiency of 37 percent, but the EU's Best Available Techniques Reference Document stipulates that new lignite-fired plants using pulverised lignite technology should have an efficiency level of minimum 42-45%. The emissions limit values in the 2012 environmental impact assessment were not in line with the EU Industrial Emissions Directive.

In the meantime in July 2011 the European Bank for Reconstruction and Development (EBRD) approved an EUR 80 million loan to provide new equipment for the Kolubara lignite mines. (For more information about the project see here).

Although in March 2012 the EBRD announced that it was considering investing in the Kolubara B plant, on 6 September 2013, it confirmed to Bankwatch by e-mail that it was no longer examining participation in the Kolubara B project [1] after a full year of corruption cases related to the Kolubara complex and complaints to the Bank’s Project Complaint Mechanism.

This announcement was shortly followed by the news on 9 September 2013 that early that day the police had arrested former director of the Kolubara Mining Basin Nebojsa Ceran and former financial director Ljubisa Nekic, businessman Radoslav Savatijevic, and several other individuals. The arrestees are suspected of fraud in land expropriation proceedings around the Kolubara mine.

An additional risk to this project is the fact that the Environmental Impact Assessment (EIA) study for Kolubara B expired in July 2014. This is caused by inactivity of investors. The legal provisions envisage concrete activities on the investors’ side or permitting activities in time frame of two years. None of these took place, therefore the study now expired.

Given these risks, investments in Kolubara at the present time should be approached with caution. However in the future, provided that the integrity and environmental legacy issues in the company are adequately addressed, we believe there are rich opportunities for renewable energy projects such as solar or sustainable biomass production on rehabilitated land at the site. Some reforestation projects have been undertaken on some parts of the site, but the majority remains open for rehabilitation.

Notes

1. The relevant section reads:

“Please let me confirm that we have not been working actively on this project in the last two years. We have also informed the client that, should the project become active again, it will have to be assessed against the new energy strategy which has far more stringent rules and would make our possible participation very difficult.”