Kosova e Re power purchase agreement challenged at Energy Community

Kosovar and international non-governmental organizations have filed an official complaint to the Energy Community’s (EnC) dispute settlement mechanism, challenging the legality of the power purchase agreement (PPA) for the planned Kosova e Re coal power project, which is currently awaiting ratification by the Kosovo* parliament, Bankwatch has said on its website.

The complaint was filed by Balkan Green Foundation, GAP Institute, Group for Legal and Political Studies, INDEP and CEE Bankwatch Network. In June last year, the EnC also announced that several elements of the PPA constitute state aid.

In 2015, the Kosovo* government chose power company ContourGlobal in a tendering procedure to build the 500 MW Kosova e Re thermal power plant (TPP).

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

According to Bankwatch, 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 EUR 80/MWh, which is much higher than current electricity prices in the region.

In addition, when the electricity is not needed, the state still guarantees an “availability payment” to the company, and it has committed to pay ContourGlobal’s network fees, reimburse it for a take-or-pay agreement that it signed with the state-owned lignite mine, and provide the land for the power plant to the company for a token fee of EUR 10.

Cost for consumers and taxpayers still unknown

Visar Azemi from Balkan Green Foundation has said that EUR 80/MWh would be bad enough, but that with all these additional fees, no-one seems to know how much all this will end up costing consumers and taxpayers.
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, he said.

“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 EnC and European Commission to make sure it doesn’t get ratified, for the sake of Kosovo’s consumers and taxpayers.”

Agron Demi from Gap Institute said the authorities’ first priority should be to reduce the large electricity losses in the distribution system due to technical losses and non-payment of bills, because almost a third of Kosovo’s electricity is lost in this way. And, after that, they should increase the renewables share, he added, according to Bankwatch’s news release.