Kolubara lignite mine, Serbia

Quick facts

Planned investment: development of a new field in the lignite open pit mine in the Kolubara mining complex (located 60km south of Belgrade, spanning over 600 square kilometres)

Loans: European Bank for Reconstruction and Development (EBRD) - EUR 80 million; German development Bank KfW (EUR 65 million loan plus a grant of EUR 9 million).

Corruption: Several high ranking employees were under arrest in 2011. Allegations of corruption against the project promoter EPS are under official investigation.

Loan approved: The EBRD approved the loan without proper time to assess the loan's impacts on the local population and the Serbian energy sector.

The Serbian energy sector - dominated by lignite and the company EPS

The state-owned energy provider Elektroprivreda Srbije (EPS), owner of the Kolubara mining complex (via its daughter company RB Kolubara), dominates the Serbian energy sector:

• 69% of total electricity generation in Serbia is based on lignite (2010). 75% of the lignite production is coming from the Kolubara basin.
• Power plants within the Kolubara/Obrenovac thermal and mining complex produce more than 50 percent of Serbian electricity.
• The vertically integrated power company has a monopoly in lignite mining, electricity generation and distribution throughout the country.

The company becomes even more powerful through close personal connections between ruling political parties and the EPS management, allowing EPS to influence political decision on the Serbian energy sector to its own advantage. The Strategy for the development of the energy sector in Serbia until 2015 for instance clearly favours the interests of EPS and its coal business.

Future prospects for the energy sector

Lignite, mined in opencast pits, remains one of the main fuels for power generation within the long-term development plans of EPS.

According to official assessments the Kolubara basin has still 2.1 billion tonnes of lignite at disposal in its underground layers. Depending on the dynamics of exploration, Kolubara is expected to produce coal for another 50 years.

Power plants within the Kolubara complex already produce more than 50 percent of Serbian electricity.

More controversies around Kolubara

Corruption in Kolubara

In October 2011, 16 current and former members of the EPS management, including directors of the Kolubara mining complex, were arrested for embezzlement.

The case was already under investigation when the EBRD approved the Kolubara loan and Bankwatch made sure the EBRD was informed. But instead of waiting for the results of the police investigation, the EBRD chose to rush into the loan.

Resettlement of local communities

Local communities are not against coal exploration as such but they are fighting the expropriation of properties and are tired of the pollution from decades of coal development in the Kolubara complex.

Barosevac

Directly affected by the EBRD's project is the Barosevac community. The EBRD's project summary document (PSD) states:

Land acquisition and resettlement was substantially completed in 2008 in line with Serbian legal requirements.

That this isn't the case proved a Bankwatch fact-finding mission to Kolubara in summer 2011:

• The Barosevac cemetery has not been removed - a precondition for opening the EBRD supported mining field C. None of the landowners have given their consent for the removal of graves.
• 21 Barosevac households so far not included in the resettlement plans are located only 50 meters from the open pit mine. Despite the heavy impacts from the mining operations (for instance cracks in their homes), these households are not to be resettled and will not receive compensation.

Vreoci

An AlJazeera reportage on the issues surrounding resettlement near the Kolubara mines (local language only).

To further develop another mining field in Kolubara (field D), EPS tries to have 1180 households in the village of Vreoci resettled.

Villagers agreed with the Serbian government, that the village will be resettled collectively, but so far, no concrete plans have been established.

Instead, the Kolubara company offers insufficient compensation to households individually. Families are under pressure, live in unhealthy conditions and have been stigmatised in the Serbian media.

In summer 2011, authorities began to excavate bodies from the village's cemetery, ignoring objections by inhabitants and the fact that no agreement had been reached.

The EBRD points out that their loan is not connected to field D. The bank therefore does not feel responsible to ensure a fair resettlement in Vreoci.

But the director of fields C and D has stated in an interview with our campaigner that those fields are technologically and geologically interconnected and that their conceptual separation would be artificial.

Is there a way forward?

The only proper solution to the range of problems with Kolubara would be not to finance the project at all. Instead, the EBRD could identify investments that counter the dominance of lignite in the Serbian energy sector and that help to increase the share of renewable energy in the country (currently only about 1%, excluding large hydro installations).

In case of the Kolubara investment, the least we ask of the EBRD is to make sure EPS respects the agreement with local communities, prepares a detailed plan for the collective resettlement of Vreoci and offers adequate compensation for families in Barosevac.

For more information, contact Zvezdan Kalmar, the Bankwatcher from Center for Ecology and Sustainable Development (CEKOR), Serbia, monitoring the project's development.