Kolubara B lignite fired power plant in central Serbia

EnergyProjectsSouth-East European INDUSTRIAL Мarket - issue 2/2012

The EBRD is at the preliminary stage of considering the financing for the construction of the new 750 MW Kolubara B lignite fired power plant in central Serbia that would replace a number of obsolete power generation units in the country. As a signatory to the Energy Community Treaty, Serbia is committed to comply with EU environmental standards for the energy sector by the end of 2017.

EPS, the Serbian state owned power utility, is actively working to rehabilitate and improve existing power plants to ensure that they comply with the EU’s environmental standards by this deadline, but a number of plants will have to be closed. The Serbian government and EPS therefore initiated a tender process to select a private investor to construct, finance and operate 750 MW of replacement capacity at the Kolubara B site next to the Kolubara lignite mining basin, 40 kilometres from Belgrade.

Following an international tender procedure the Italian utility Edison submitted a bid, which was accepted, and accordingly signed a joint venture agreement with EPS on the development of the Kolubara B project in June 2011.

The Project will be the first significant private sector investment in Serbia’s power generation sector. At present EPS dominates the Serbian power sector, and with the exception of some small renewable energy projects, the electricity sector is state owned. The Project will set a template both for further private investments in the power sector and more widely for private involvement in public infrastructure in Serbia. It will result in reduced carbon intensity of Serbia’s generation and therefore avoided greenhouse gas emissions.  It will set a benchmark for the renewal of Serbia’s and the West Balkans’ generating infrastructure.

The Project will be an A-category project for the purposes of the Bank’s Environmental and Social Policy. It will therefore require a comprehensive Environmental and Social Impact Assessment and extensive public consultation, taking into account the views of all stakeholders. This project is at a very preliminary stage and the environmental and social due diligence has not yet started. This PSD will be updated and expanded once EBRD has determined the scope of the due diligence.

Text source: EBRD; Picture source: Bankwatch