Bosnia/Republika Srpska Exclusive: Comsar Energy Cyprus-Swiss- Russia Co New TPP Ugljevik Project in RS, Revealed Or Another Side of the PR Story?
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Bosnia/Republika Srpska exclusive: Comsar Energy Cyprus-Swiss- Russia Co new TPP Ugljevik project in RS, revealed or another side of the PR story? Even before the war, there was a plan to build a power plant at Ugljevik with four units generating 300 megawatts (MW) each. Each unit was to consist of a furnace which produces electrical energy by burning coal to power a generator. The units need additional infrastructure that includes: cooling towers, transmission lines, chimneys, chemical labs, pumps and many other elements. The first unit, the only one to be completed so far, was built with the help of the Slovenian power authority in the 1980s. In place of the Slovenians, the government started doing business with Sardarov. His Cypress-based firm, Comsar Energy Group Ltd. which was named Comsar Energy Ltd at the time, asked the RS Government for a permit to build two new units in the existing power plant, and for a license to start mining coal reserves needed for their operation. Center for investigative journalism from Bosnia conducted an wide scope investigations which reached new facts in TPP Ugljevik project. In northwest Bosnia and Herzegovina (BiH) lies Ugljevik, a small mining town in which brown coal (called ugalj in Bosnian), has been excavated for more than a hundred years. Most of the coal ends up as fuel in the boilers of Public Company Ugljevik Mine and Power Plant (RITE) which produces electrical energy under the Republika Srpska (RS) Power Authority. Until March 2011, the company had the exclusive right to mine coal. This changed when the RS government, RITE’s majority owner, accepted a letter of intent from a firm owned by Russian billionaire Rashid Sardarov. The letter asked for a concession license to mine coal as well as a concession for building and the use of new thermal energy units in Ugljevik which would be connected to the power grid of the state power plant. The RS Government approved higher mining quotas for the foreign investor than it had for its own company, RITE Ugljevik. This led to a series of protests by RITE’s union whose leaders say that the public company could run out of coal before it has reached its expected lifespan of 25 years. After the only unit of the public company shuts down, the two other units will continue to operate. Their majority owner is Sardarov who plans to build them. Four interviewees told the reporters from the Center for Investigative Reporting (CIN) in Sarajevo that it was a covert privatization of the energy sector. “In the RS, the one who gets hold of the energy sector shall hold the reigns of power,” said Aleksandar Golijanin, a geologist who used to work for the RS Power Authority and today is a legislator with the opposition Party of Democratic Progress in the RS National Assembly. Litigation with Slovenians Even before the war, there was a plan to build a power plant at Ugljevik with four units generating 300 megawatts (MW) each. Each unit was to consist of a furnace which produces electrical energy by burning coal to power a generator. The units need additional infrastructure that includes: cooling towers, transmission lines, chimneys, chemical labs, pumps and many other elements. The first unit, the only one to be completed so far, was serbia-energy.eu Bosnia/Republika Srpska exclusive: Comsar Energy Cyprus-Swiss-Russia Co new TPP Ugljevik project in RS, revealed or another side of the PR story? Bosnia/Republika Srpska exclusive: Comsar Energy Cyprus-Swiss- Russia Co new TPP Ugljevik project in RS, revealed or another side of the PR story? built with the help of the Slovenian power authority in the 1980s. Construction of the first unit cost $395 million. Slovenians invested one-third of the money. The investment was to be paid back by exporting power to Slovenia. RITE Ugljevik’s paperwork states that the same principle was going to be used to build the second unit; Slovenia invested $60 million of the total $180 million needed. The war halted both the construction and the supply of power to Slovenia, which has never resumed. The management of Slovenian Power Authority has filed a lawsuit against RITE Ugljevik demanding 1.4 billion KM in remedies. The case has not yet been litigated, and Slovenian officials refuse to discuss it. In place of the Slovenians, the government started doing business with Sardarov. His Cypress-based firm, Comsar Energy Group Ltd. which was named Comsar Energy Ltd at the time, asked the RS Government for a permit to build two new units in the existing power plant, and for a license to start mining coal reserves needed for their operation. The construction and management of new units, the investor proposed, was to be turned over to a new joint firm, Comsar Energy Republika Srpska (CERS), of which Sardarov’s firm would own 90 percent, while the RS government, that is RITE Ugljevik, would own 10 percent. The RS government accepted the proposal nine days later and CERS was incorporated four months later. Sardarov’s firm wired 10.5 million KM to the government for the incorporation equity, while RITE Ugljevik transferred the land for the building of the new units to the new firm. The land was worth 1 million KM, and RITE also added to it 100,000 KM in cash. The new firm also got the right to use the existing infrastructure. Comsar Energy Group Ltd invested an additional 53 million KM in CERS. This reduced the state power plant’s ownership in the joint company to 1.8 percent, but it still kept the right to 10 percent of the profits, according to the latest amendment to the CERS contract. The RS government and Sardarov realized that because of the pending litigation with Slovenia it was not possible to continue the construction of the second unit, so they decided to move ahead and build units three and four. Meanwhile, the investor was allowed to use existing infrastructure of the state power plant, although it was also the subject of litigation with the Slovenians. Partners, but not of their own will While the RS government has approved these arrangements, the RITE Union does not agree with the government’s moves and fears that the power plant will end up with insufficient coal reserves. RITE director Žiko Krunić, however, said the government owns the facility and has the right to makes these decisions. CERS also received a concession to mine two coal deposits: Baljak and the site called “Delići and Peljave-Tobut” in 2011. Research indicates the sites contain at least 68 million of tons of coal, according to CERS paperwork, which indicates plans to mine about four million tons of serbia-energy.eu Bosnia/Republika Srpska exclusive: Comsar Energy Cyprus-Swiss-Russia Co new TPP Ugljevik project in RS, revealed or another side of the PR story? Bosnia/Republika Srpska exclusive: Comsar Energy Cyprus-Swiss- Russia Co new TPP Ugljevik project in RS, revealed or another side of the PR story? coal annually. At the current price of coal, (around 60 KM per ton), that would be worth about 240,000,000 KM per year. Along with this, CERS asked the government for permission to mine at Ugljevik-East, which led to several strikes and protests by members of the RITE Union, who consider the site theirs. For years, the power plant has been trying to secure a new source of coal because the fuel is about to run out at its current mine, Bogutovo Selo. The union’s paperwork shows that RITE failed twice in its efforts to secure a concession to mine at Ugljevik East, in 2008 and 2011. The RS Government made promises to RITE but a deal was never concluded. The government has divided the Ugljevik site in a 30 percent-70 percent split. Ugljevic-East, the smaller parcel, contains an estimated 21 million tons of coal. The larger parcel, Ugljevic- East II, contains an estimated 50 million tons. Ugljevik-East was allotted to the state power plant, while the larger Ugljevik-East II went to CERS. The workers at RITE Ugljevik warn that 21 million tons of coal from Ugljevik-East I will not be sufficient to meet the needs of the power plant for the next 25 years. RITE mines 1.5 million tons of coal a year. Workers also say Sardarov got much better mining terms than RITE did. In a call to strike in July 2013, the union claimed that the terms granted to Sardarov were not realistic. They said that in fact, in mining Sardarov would have to remove nearly twice as much soil as was spelled out in his contract, and that there was no space provided for depositing the waste dirt. After the division of the original Ugljevik-East site, the government had put out a public call for call for applications for the concession license, noting that the site’s production was going to fuel the new plant. The union says the government made it clear that CERS was to get additional points or a 10 percent bonus because it came up with a sole-source contract. RITE Ugljevik Management did not even submit a bid. Predrag Aškrabić, the chairman of the RS Commission for Concessions, rejects the notion that RITE Ugljevik sought a concession license for Ugljevik-East site for years. “They just presented their requests as a beginning of their interest. They haven’t submitted the paperwork at all, even though they were supposed to. Only (…) last year they submitted complete paperwork after the government had split the exploitation field in two parts,” said Aškrabić.