US power generation company ContourGlobal has cancelled its plans to build a 500-megawatt (MW) coal-fired power plant in Kosovo (Kosovo e Re), citing the unfolding political situation after the resignation of former Prime Minister Ramush Haradinaj in July.
In December 2017, the Kosovan Government had signed a 1.3 billion euro contract with ContourGlobal for the construction of the new plant, after reaching an agreement with the company in 2015. The construction deal was the first major project since the Balkan country declared its independence in 2008.
Former Prime Minister Ramush Haradinaj saw the investment as a big opportunity that would have helped Kosovo’s economic growth rise up to seven per cent annually and create workplaces for thousands of people. Mr Haradinaj praised the project for strengthening Kosovo’s energy independence preventing the need for electricity imports from neighbours.
However, the construction of the power plant has been beset by a number of issues and controversies from the start. Civil groups accused the government of violating public procurement law by approving a single bid in the tender to construct Kosovo e Re.
A report of the Institute of Energy Economics and Financial Analysis suggested that the new power plant would have increased the overall price of electricity in Kosovo by at least 33.8 per cent and by as much as 50 per cent placing a needless long-term burden on the country’s economy.
Another major setback came in October 2018, when the World Bank, previously pledging support for the project by providing substantial funding for technical assistance and upfront development costs, decided to quit the project due to concerns over the falling cost-competitiveness of coal prices.
The World Bank’s announcement was followed by political changes the year after, when Mr Haradinaj, a long-time proponent of the project, resigned from his position after being summoned for questioning as a suspect by a special court in The Hague investigating alleged war crimes.
The newly elected political leadership stated its reluctance to continue support for the construction deal. In the campaign period, now-Prime Minister Albin Kurt clarified that he was planning to maintain Kosovo’s existing power plants, but promised to withdraw from the contract that was concluded with ContourGlobal.
Kosovo is still heavily reliant on coal. The current system consists of two coal-fired power plants, known as Kosovo A and Kosovo B, that produce over 95 per cent of the country’s electricity generation.