Electricity

Kosovo* shelves US-backed gas pipeline project

Kosovo shelves US backed gas pipeline project

Photo: IlyaYurukin from Pixabay

Published

October 5, 2021

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Published:

October 5, 2021

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After the Government of Kosovo* suspended the development of a gas pipeline from Greece and North Macedonia, its top officials claimed the project could be revived if calculations show it is feasible. The United States earlier earmarked a USD 200 million grant through its agency MCC.

Prime Minister of Kosovo* Albin Kurti rejected the accusations from opposition parties that he is damaging the relations with the United States of America by canceling a gas pipeline project. He stressed that the government didn’t abandon the endeavor and noted that it needs to conduct studies and obtain more information.

Kosovo* suspended the development of the project. Gas was supposed to come from Greece and North Macedonia via the Trans-Adriatic pipeline. The US earmarked a USD 200 million grant through its Millennium Challenge Corp. (MCC) and its branch Millennium Foundation Kosovo (MFK).

The US is pushing for gas pipeline via TAP but also for a gas power plant and LNG terminal in Vlora in Albania

Other sources are being considered as well. The Western Balkans Investment Framework (WBIF) and European Bank for Reconstruction and Development (EBRD) are involved in preparing a gas interconnection with Albania. A gas power plant project is under development with US fossil fuel giant ExxonMobil in Vlora, where a liquefied natural gas (LNG) terminal is supposed to be built.

Rizvanolli: Funds can still be used for energy storage, grid upgrades, labor force training

Minister of Economy of Kosovo* Artane Rizvanolli claimed the grant isn’t lost and that the funds would be directed to other energy projects that would be developed. She said, as quoted by Kosovo.Energy, the focus would be on energy storage, electricity network and smart grid solutions, and skills for the labor force, especially women.

Renewables are the primary goal regardless of other sources

“Is it better to use gas as a source that emits carbon dioxide, but less than burning coal, or is it better to aim for a straightforward transition to renewable energy sources? It is not clear at the moment, and this is something that we will study in the coming months”, Rizvanolli stressed. She said renewables are the primary goal regardless of other sources.

The minister pointed out the project could be eventually continued and added the funds from the MCC weren’t explicitly intended for gas infrastructure. In that case, she asserted that Kosovo* counts on a loan from the EBRD and a grant from the WBIF. Rizvanolli said the decision had to be made because of allocating funds for the next fiscal year.

Power plant project was included in gas infrastructure plan with MCC

According to the minister, the plan envisaged the construction of a 250 MW gas power plant but the electricity demand in the winter is five times higher. Furthermore, it would take until 2029 to put the facility into operation, she asserted.

The unit would be built under a public-private partnership, and USD 100 million from MCC’s grant would cover one-quarter of the sum, Rizvanolli said. She pointed to high costs, including for gas infrastructure and the rise in electricity prices, and revealed potential investors weren’t interested or that they demanded unfavorable terms for a deal.

Kosovo* depends on its coal-fired thermal power plants Kosova A and Kosova B for 95% of its electricity. The current plan is to upgrade them both. The deal for a new coal plant with ContourGlobal was scrapped last year.

* 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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