Electricity

Kosovo* ordered to compensate contractor over scrapped thermal power plant project Kosova e Re

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Prishtina (photo: Leonhard Niederwimmer from Pixabay

Published

October 10, 2023

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Published:

October 10, 2023

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The International Court of Arbitration has ruled that Kosovo* must pay compensation to power generation company ContourGlobal over the cancelled project to build the Kosova e Re thermal power plant, according to an announcement from the Ministry of Economy of Kosovo*.

Kosova e Re, one of the last projects for the production of electricity from coal in the Western Balkans, was halted in 2020. The projected capacity of the power plant was 450 MW, and the investment was valued at about EUR 1.3 billion. A similar fate, according to recent reports, could befall the Tuzla 7 project in Bosnia and Herzegovina.

According to the Ministry of Economy, the court noted that the Kosova e Re project and the contracts signed with ContourGlobal, which was at the time based in the United States, were never in favor of Kosovo*.

The contract envisages compensation of EUR 20 million for ContourGlobal and EUR 8 million for Kosovo*

The amount of compensation that should be paid by Kosovo* was determined in advance under the contract, which was signed in 2017.

The predetermined compensation for ContourGlobal of about EUR 20 million, compared with EUR 8 million envisaged for Kosovo*, demonstrates how unequal the contract was, according to the ministry.

In March 2020, the company announced it was abandoning the thermal power plant project in Kosovo*, citing “the political situation.” The move followed the election of the government headed by Albin Kurti, while the contract was signed with the administration led by Ramush Haradinaj.

Implementing the project would have cost Kosovo* multiple times more than the unfavorable ruling

The company’s decision to withdraw from the project, according to the ministry, was fortunate given the high price of electricity under the contract and the ambition of Kosovo* to produce clean, affordable energy for citizens and industry.

Implementing the project would have cost Kosovo* multiple times more than the unfavorable arbitration ruling, the ministry said.

Kosovo* will now consider other legal remedies available, including filing a lawsuit with the competent court in London to seek the annulment of the arbitration ruling, according to the ministry.

The Kosova e Re project had encountered a number of problems even before it was stopped in March 2020. The World Bank decided not to finance it, while the Secretariat of the Energy Community launched a dispute over state aid for the project.

* This designation is without prejudice to positions on status and is in line with UNSCR 1244/99 and the ICJ Opinion on the Kosovo declaration of independence.
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