Victory for civil society as EBRD cancels loan for controversial Croatian dam

Zagreb, May 28 – Croatian electricity company HEP and the European Bank for Reconstruction and Development (EBRD) have cancelled a EUR 123 million loan contract for the controversial Ombla underground hydropower plant near Dubrovnik, HEP has announced yesterday.

The EBRD financing would have covered the biggest bulk of the EUR 152.4 million estimated to be needed for construction.

The project had attracted widespread criticism from civil society groups and experts due to its impacts on the Vilina Cave – Ombla Spring protected area, which is home to 68 identified cave species, of which as many as 14 species are endemic to this site alone.

Uncertainties about the technical and economic credentials added to the widespread criticism of the project, as did the chaotic project development procedure, including the the use of an old 1999 Environmental Impact Assessment and public consultations taking place only as a cosmetic measure long after the legal permits had already been issued.

The EBRD's board approved the loan for the project in November 2011, on the condition that a nature impact assessment was completed before disbursement. The study was published in March this year and showed the project could harm many of the 68 identified cave species, including the endemic ones.

"The EBRD's involvement in the Ombla hydropower plant has from the start been a story of insufficient scrutiny and cutting procedural corners, and we are relieved that the bank has finally had the sense to withdraw," said Jagoda Munic, President of Friends of the Earth International and Biodiversity Programme Co-ordinator at Zelena akcija/Friends of the Earth Croatia.

"However, it is frustrating that more than a year and a half has been wasted that could have been spent on developing energy efficiency and sustainable renewable energy projects instead of flogging this dead horse."

"The EBRD is currently undertaking a revision of its Energy Operations Policy as well as its Environmental and Social Policy, and we hope that it will take a long hard look at what needs to be learned about the sustainability of hydropower projects and adherence to EU law as a result of this debacle of a project," added Pippa Gallop of CEE Bankwatch Network.

For more information, contact:

Jagoda Munic
Zelena akcija/ Friends of the Earth Croatia
Mobile: +385 (0) 98 1795 690

Pippa Gallop
CEE Bankwatch Network
pippa.gallop@bankwatch.org