Serbia exclusive: WB financed water pumping project Kolubara mines which triggered tentions between Gov and EU, another view of looking

5. February 2015. / News Serbia Energy

In the previous days, an article of the journalist non-governmental organization BIRN (Balkan Investigative Reporting Network), raised a great hue and cry in our (non-)democratic society which is still (not) governed by basic human rights, the right to freedom of expression also being among them.

  1. The Lack of Knowledge about the Mining Production Technology

The first among the large number of errors made by the journalists from BIRN is that they attacked the authorities in the EPS and the Government of the Republic of Serbia, because the procedure of pumping out water from the Open Pit Mine Tamnava – West Field had been started only after seven months, and not immediately after the cessation of floods.

From the very beginning of the article being as such, it is obvious that the BIRN journalists are not familiar with the subject matter about which they want to write. They believe that the technology of pumping out water from an open pit mine is like the technology of pouring water from one vessel to another, in which, through a network of hoses, pipes and pumps we are only transferring water from one space into another.

Such way of looking at things is correct in layman’s terms; however, laymen do not work in the mines but professional engineers. They know that by the very fact that water entered their open pit mine, it has partially disturbed the land morphology, perhaps even activated certain landslides. Therefore, it is also legally required that, before any activity in an open pit mine (which is also called a floating hole), a main or a supplemental design be prepared, in which it will be described how and in which manner an activity is to be done – this time, the dewatering of mine.

 Preparation of such project, regardless of the emergency, requires time!

The next mistake we come across is the design issue. In the Republic of Serbia, designs can be prepared only by the companies, institutes and faculties possessing a license obtained from the competent Ministry. Accordingly, it is them who are responsible if something goes wrong with their design.

Thus, the company ”VAN-HEK“  could not participate in this segment of the job although they certainly have the knowledge, but not the license, too. They could give suggestions about the manner in which the design should be done, but the main decision about their implementation is up to the designer himself.

This is where we come to the next error made by the BIRN journalists, and this is that, according to our standards, the investor, the designer and the contractor have to be separate legal entities which, in case of problems occurring during project execution, will be responsible each for his own part of the job.

Therefore, even if the company ”VAN-HEK“ did the design for dewatering, it could not be the executor of this project, too. This is another important limiting factor for this company’s participation in the dewatering of the OPM “Tamnava“.

Further along, I would like to dwell a little more on a detail concerning the designs (without which it is impossible to work), a detail which simply strikes my eye, and which was overlooked by journalists from BIRN.

This is the comparison between the purchase of electricity meters by emergency procedure and the dewatering of the open pit mine.

It is simply incomprehensible to me that my colleagues did not understand that the electricity meters destroyed in the flood are no other than spare parts, like a car tire. It is very simple to order them because, like a car tire, they have their specifications that have already been determined by the design (in this case, for electricity supply). Therefore, at any moment, the authorities can react and replace them very easily.

On the other hand, floods and landslides (landslip activation) happen very rarely in open pit mines. When they happen, they change the state in the open pit mine and the production technology to a large extent, which requires new project documentation. This again leads to a reduced production…

For these reasons, in the former SFRY, great attention was paid to the observance of technological processes, particularly in mining. Therefore, should an accident occur in a mine, which is found by a competent inspector to have been due to human factors, very easily and quickly, the judge imposes very heavy penalties to a whole chain of responsible persons, which sometimes even reaches the designers themselves.

The Tender

The tender itself, by which a project is executed, is announced on the basis of project documentation. At best, this should be the Main Design which, among other things, contains all the details concerning project execution as well as the approximate price of project execution. Therein, project phases with time limits are precisely scheduled, on the basis of which the authorized supervisor (who can be the investor himself in the case of minor projects, or a separate legal entity in the case of mayor projects) controls the contractor. On the basis of the fulfilment of phases stated in the design, the investor pays or penalizes the contractor.

It is for the above stated reasons that, in Serbia, because of “emergency“, tenders are very often announced on the basis of the general design. Unlike the previous one, this design can also be called an organized wish list, which, like any other wish list, often leads to problems in the implementation of the project itself. The problems which the investor and the contractor have during the implementation of a project based on a tender based on the general design are usually solved “along the way“, through various Annexes to Contracts, when the contractor gets acquainted to the main design.

What is important when applying general designs to tenders is that the general design creator (the person who wrote it) is not responsible for its accuracy. Thereby, this person is also not responsible for the accuracy of the document in material, technological and financial terms.

In all terms, a serious investor must possess project documentation when requesting money from a bank on the basis of which the bank will know whether to approve of the loan for project funding. The bank will also know exactly when and how much funds it will invest in the implementation of the approved project – thereby also carrying out control over the project.

In this case, the World Bank emerged as the ”responsible project financier“ who (to a certain extent) took care of the claimant, who was not exactly known for being responsible. Together, they announced the tender won by a company in accordance with the conditions written in the design.

In this segment, before problematizing the tender winner himself, I would like to add one fact, which the BIRN journalists lost sight of.

If project documentation is good and the main design has been prepared in detail, any skilled and licensed person, with a bit of experience, can execute the project. The supervision over the executor is carried out by the supervisory authority, and on the basis of the design. Therefore, the thesis related to the experience of the company who has won the tender is also shot down.

Tender Winner

Now, we come to the part which was very clumsily problematized by the journalists from BIRN, because they did not have basic knowledge about the structure of the EPS and other associated public enterprises, which were included in the EPS until recently.

What they did not ask themselves, though they should have, is: ”How come that the consortium led by Južna Bačka has won the job of dewatering the OPM “Tamnava“ – West Field, and not any of the EPS’s demerged companies involved in this activity?“

To a large extent, this question would have solved the problem that the BIRN newspaper office was facing. Namely, until the demerger, there were companies in the EPS which had been involved in the dewatering of open pit mines for decades. “GEORAD“ from Kostolac is also one of these companies.

Although this company was quite devastated in the previous period, it still protects the OPM “Drmno” from ground waters very efficiently, which has been one of the company’s main roles since its very creation. But today, this same company, which is necessary for the operation of the OPM ”Drmno“, and which used to be an integral part of the EPS’s company in Kostolac, applies for tender.

Is it here that the problem lies? That a future buyer should not find the company too expensive? Or that the necessity of such companies, which have been demerged from the EPS by a political decision so as to push other companies in, be demonstrated?

These are all the questions that the BIRN journalists did not ask, though they could have.

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