Croatia: RWE management role in TPP Plomin

21. April 2015. / SEE Energy News

The Thermal Power Plant Plomin consists of two blocks, with the capacities of 115 and 210 megawatts. The Block 1 was built in 1969, whereas the block 2 was built in 2000. The owners of the thermal power plant are the German RWE Power and the Electric Power Industry of Croatia (HEP), with 50 percent shares. HEP Generation and the TPP Plomin have concluded a multi-annual contract on managing and maintaining the Block B. The contract is envisaged to last until 2020.

Although they had been expected to, and they had even been considered the front runners in the tender in advance, RWE did not submit a bid for constructing the third block of the power plant Plomin, a project worth around 800 million euros. This initiated rumors that RWE was giving up because of the economic unprofitability of the project.

However, it was explained in RWE that the development strategy envisaged the suspension of further investments in the electricity obtained from coal, considering that the company had a high share of coal-fired thermal power plants in its portfolio. The director of RWE Croatia, Ralf Blomberg, explained that investing into such new facilities would mean a risk increase and it would affect the company’s credit rating. Blomberg added that they considered this project a good one and that they were ready to work on it.

In September 2014, Marubeni in consortium with Alstom was chosen as the best bidder for constructing Plomin C. The bid of the consortium of the Spanish Abeinsa and the South Korean Daewoo was second-ranked. The Italian Edison also submitted a valid Bid in the tender.

All three bidders possess adequate technology and they are financially strong enough so as to carry through the project, conceived in the way that enables HEP to be protected from taking financial risk. The task of the strategic partner is to secure the funding, and in the case of Marubeni, cheap capital could come from the two Japanese development banks.

The first phase of the negotiated procedure with Marubeni was concluded at the end of February this year, by signing the Exclusivity Agreement with respect to other Bidders. By this agreement, the possibility is created for fulfilling the preconditions for finalizing the transaction documents.

The opponents of the project Plomin C, primarily environmental associations, claim that the project is environmentally damaging, but also that the electricity generated by the thermal power plant will be two times more expensive than the one currently found on the market. Greenpeace activists claim that the economic interest of the strategic partner can exist only if the long-term purchase of electricity at high prices is guaranteed by a secret contract, whereat the difference in price will be paid by the citizens. They remark that coal, ”the dirty energy generating product that Croatia does not have“ needs to be imported so that the thermal power plant could operate. The data that Marubeni has been involved in two major corruption scandals and has recently paid a one-million fine for giving bribes is also stated as an argument against the project.

On 29th March, the citizens of Labinština voted on the construction of Plomin C in the local advisory referendum, which has been declared unsuccessful, considering that the turnout was lower than 50 percent. This has been a “hot” topic in the Croatian media – the “Greenpeace” activists have been trying to represent the referendum as their victory, with the argument that of the 35 percent of voters, 94 percent have expressed their opposition to the construction of the thermal power plant.

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