Energy Community challenges state aid to Kosova e Re

The Energy Community Secretariat said it has sent a so-called opening letter to Kosovo* with the intention to resolve the dispute regarding the backing for the project of a coal-fired power plant of 450 MW.

The international institution claims the stimulus for Kosova e Re is “per se illegal state aid” as the authority responsible for the matter hasn’t been notified. The report cites energy and availability payments over 20 years under the power purchase agreement, the sale and transfer of the plant site under market value, a state guarantee, an exemption from value-added tax, and coverages of several charges and costs.

The case, launched after a preliminary probe, is filed under ECS-4/19. The Energy Community’s top panel said the initial procedure opens the way for the government in Prishtina to respond in two months at most. At the same time, the secretariat will “establish the full background.”

Interested parties can submit observations about the contracts for Kosova e Re in the early stage of the process. A complaint was filed half a year ago by Balkan Green Foundation, GAP Institute, Group for Legal and Political Studies, INDEP and CEE Bankwatch Network. Environmental activists have been opposing coal exploitation and utilization.

The report cites energy and availability payments over 20 years under the power purchase agreement, the sale and transfer of the plant site under market value, a state guarantee, an exemption from value-added tax, and coverages of several charges and costs

The World Bank concluded in August of last year that ContourGlobal Plc’s agreement with the local authorities for the construction of another thermal power plant mean excessive expenses and the rise in total capacity above the optimal level. The international finance organization later withdrew support for the project in Kosovo*.

In the document, the facility’s electric load is projected at 450 MW, though in other official accounts it is 500 MW. The most affordable strategy would be to phase out coal-fueled power production.

The Kosovo Energy Corporation (KEK) recently got a EUR 76 million grant from the European Union’s Instrument for Pre-accession Assistance or IPA for a project to reduce air pollution from the Kosovo B power plant, which uses lignite. The fuel is abundant in Serbia’s breakaway province.

The new power plant, estimated at EUR 1.3 billion, was supposed to replace Kosovo A, built in 1963. ContourGlobal would transfer ownership to the government in 20 years.