| LONDON, March 8
LONDON, March 8 Europe's two biggest public
banks agreed funding for a lignite-fired power plant in
Slovenia, sparking criticism from pressure groups which have
questioned the way the project was awarded and its pollution
The European Investment Bank (EIB) and the European Bank for
Reconstruction and Development (EBRD) approved 650 million euros
($843.8 million) in funds for a revamp of the plant, which will
lead to a 30 percent increase in the electricity it produces.
The EIB said on Friday it had "taken the necessary legal
measures regarding its loan to ensure that the project is fully
in line with the EIB policies," without providing further
But pressure groups slammed the move, saying the use of
lignite, the most polluting form of coal, contradicts the EU's
aim to move to low-carbon energy and saying the decision had
been made before a probe by the European Anti-Fraud Office is
"Despite the damaging climate impact, the embarrassing
corruption scandal and the questionable economic viability of
the project, the EIB and EBRD signed the deal with the
Slovenians and couldn't see (themselves) ... pulling out," said
Bankwatch, which monitors how European multilateral banks spend
public money, and environment campaign group Greenpeace.
The EIB acknowledged that the project is being investigated
by several EU and national agencies.
"The EIB is closely following these ongoing investigations
and has taken the necessary legal measures regarding its loan to
ensure that the project is fully in line with the EIB policies
as well as with the national and EU legislation," the EIB said.
A Slovenian anti-corruption commission report, published in
February last year, found a "high risk of corruption and
conflict of interest" in the tender offer to revamp the Sostanj
It added that a member of the technical commission appointed
by Slovenian power company Termoelektrarna Sostanj (TES) worked
for an energy engineering company partly owned by SOL
Intercontinental, which acts as a distributor in Slovenia for
French engineering company Alstom, which won the
contract to build the power station.
This indirect link raised concerns that Alstom could have
obtained information on competing offers, the 2012 report added.
Alstom reiterated previous denials of wrongdoing.
"The process was an open bid procedure, we do not see a
possibility for competitors to have seen the competing bids," a
spokeswoman for the company said. "No consultancy fees have been
paid for the Sostanj project."
The decision by Europe's two largest multilateral banks to
back the Slovenian project is the latest in a string of loans by
the institutions to coal-fired power stations in Europe, partly
to reduce their dependence on energy imports.
In recent years power plants in Bosnia, Bulgaria, Kosovo,
Poland and Turkey, some of which have easy access to domestic
supplies of coal, have been loaned money by the EIB or EBRD.
But climate campaigners claim the investments will lock in
high levels of carbon emissions for decades.
The EU, which funds the EIB, has a goal to cut greenhouse
gas emissions 20 percent by 2020 from 1990 levels, a target that
could be deepened if other large emitters agree to slash carbon
But even in Germany, the EU's richest member state, new
lignite-fired generation has come online in the past year and
will benefit from weak carbon prices in the bloc's emissions
($1 = 0.7703 euros)
(Additional reporting by Marja Novak-Vogric in Llubljana;
Editing by David Holmes)