Croatia: Impact of HEP new power generation projects, a lesson to HEP’s transparency for HPP and Plomin C TPP and example of bad stakeholder relations management resulted in failure, report

10. June 2013. / SEE Energy News

“The greens” didn’t ruin HPP Ombla but the project was crushed by itself because it was lead out of expert rules, ignoring the law and basic rules of stakeholder relations management. The new management of HEP has put things in its place what is commendable and the new challenge is in front of them- competition for TPP Plomin C strategic partner election.

HEP broke up a credit contract for construction of HPP Ombla what put this project off from the list of priorities. This news could surprise only those who didn’t follow the project lately. New winds occurred in HEP after ending of Zlatko Koracevic management and the first person for investment, Tomislav Seric whose company PBS worked on studies for HPP Ombla.

The new Managing President, Tomislav Seric, has put things in its place rationally and decided that there is no sense to spent money on the project which maybe won’t be accomplished at all. As they say, HEP is now “ready to addition adjustment of project documentation for HPP Ombla with current domestic and European rules for nature protection and procedures in ecology network for the purpose of the environment protection highest standards’ use”. HEP’s employees have had an attitude that they made their business so the state needs to do its own and to issue them positive opinion for it.

If HEP wants to follow procedure prescribed by the Law for Nature Protection, it needs to protect ecology network and then to make a document named “The main estimation of the ecology network influence” because there is 600m2 in total that project in the scope of ecology network  Natura 2000 refers to. This can last for months and decision for the document will give the expert Commission. If commission determines that compensation measures are also measures for protection of biodiversity suggested by the Main Estimation, the project HPP Ombla can go farther. But if we determine that biodiversity will be seriously damaged by the project then the project of prevalent public interest will be launched. It estimates if biodiversity or common use is more important than project realization. This procedure can be launched while EU Commission estimates in the scope of biographic seminars if Croatia had determined limits of ecology network objectively and this can last three years which is probably the reason for HEP’s quitting credit. This procedure can prolong the construction lunching indefinitely but its outcome is uncertain partly because of project exchange and new issuance of location and construction licenses. There are no examples of construction of new HPPs in EU ecology network so HPP Ombla can be the first EU underground HPP and the first HPP object constructed in ecology network. There are al lot of precedents for only 1,6% of HEP’s own production which HPP Ombla brings. So the decision of the new Management of HEP is as logic as possible and we should regret time and effort put in the project which was not believed by experts in the house! 51 million HRK has been spent for needs of this project so far and additional 26 projects and detailed projecting of the plant are arranged. These projects need to be respected so this expense is over mentioned 1,8 million EUR which has been used for not withdrawing credit so far. If the project had been done transparently from the beginning, this wouldn’t happen so HEP can learn from this so much if it wants to. Stakeholder relations and media relations are special case study and bad example which requires a special analysis.

HEP can start to direct all its efforts in production projects that are achievable like TPP Plomin C and HPP Kosinj-Senj where required licenses need to be issued. Competition for issuance of required licenses for TPP Plomin C is in progress and HEP needs two bids at least so it can negotiate for better conditions. Competition is set so HEP gives its strategic partner a location: complete construction, managing and maintenance of the plant, electricity trade, coal supply and even decommission of TPP Plomin 1 and solving the question of quotas for CO2 while it obligates to buy 50% of produced electricity minimum. It is correct that HEP does not have this amount of money or experience to construct plant with ultra super critical parameters, but it is successfully managing TPP Plomin 2 in partnership with RWE for years and it can dispatch with the contained object! HEP’s abdication from the responsibility can result with very high sale electricity price that strategic partner can offer. This model can be questionable and we can wonder why we let foreign company to construct sensitive energy object in Croatia and to earn well if it is cheaper for HEP to buy electricity abroad?! If there existing competition for TPP Plomin C does not succeed, we won’t blame ecologists like in case of HPP Ombla where perception that the green have ruined the project exists, even though this is not correct. HPP Ombla is ruined by itself. The new management of HEP has shown seriousness and responsibility to the space and money it uses what need to be rewarded. Therefore, HEP needs to deal with competition documentation for TPP Plomin C and to change competition conditions in order to realize this project successfully.

Source; HEP/Croatian news agencies/NGO Alliance Zagreb/Serbia Energy SEE desk analysis

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