IMPACT OF SMALL HYDROPOWER PLANTS- ENVIRONMENTAL DAMAGE AND HIGH-NET-WORTH INDIVIDUALS From dry riverbeds to overflowing wealth of the ruling party protégés

It seems that nothing can deter the government to milk extra millions of Euros out of its tax payers through bloated electricity bills. The proposed small hydro plants are minuscule in tackling the country's current power deficit while looming environmental damage is a way too costly. 

The Balkan countries have been known for long time for their breath taking landscapes and pristine lakes, rivers and mountain springs. Nevertheless those sceneries lose ground in many places to dry river beds and extinct animal and plant species. In return, the small hydropower business owners get rich at the expense of nature and law-abiding tax payers. Builders, bankers and governments have visions of some 3,000 small hydro plants dotted from Slovenia down to Albania. If their dreams come true there will be dire consequences for the most valuable Balkan asset- water resources.

Under the pretense of developing renewable energy sources with almost insignificant capacity to meet the country’s needs, the state treasury will award millions through concession deals that will further enrich those around the ruling clique in Montenegro. Some bankers in the Balkans will join hands with the forces that fight the nature. The pattern of behaviour is almost identical in the whole region.

The Balkan River Defence organisation claims that it’s high time to stop the havoc. Its representatives will tour Albania, Macedonia, Montenegro, Bosnia and Herzegovina, Croatia and Slovenia within a month to ring alarm bells. The Balkan free river flows are habitats to 69 animal species that exist nowhere else and some 40% of Europe’s snails and clams inhabit the same rivers.

Slovenian biologist Rok Rozman is the founder of Balkan River Defence. He spoke to the Montenegrin Investigative Reporting Centre (CIN-CG) and the Weekly Monitor. He says that “Three thousand dams (high and small) are to be constructed on the rivers stretching from Slovenia down to Albania. If this happens the local population and Europe will lose the last pristine free flowing rivers. On the other hand, in the northern and western part of Europe more than 3,000 dams will be removed. That speaks for itself“. He says that hydro plants are not considered green and renewable sources of energy anymore as many studies showed their destructive impact on environment, habitats and sustainable life.

“The whole picture is rather clear. The new dams will not help the region generate more electricity or turn it green in terms of renewable energy. This is actually about money laundering and corruption. International funds and big hydro companies are restricted from building in their respective countries hence they come to the Balkans where corruption is widespread and the EU regulations are not enforced. Therefore, we cannot accept to lose the last European oasis of wild life so that just a few can become wealthier than ever”- says Rozman.

International organisations EuroNatur and RiverWatch presented the Financing for Hydropower in Protected Areas of Southeast Europe study in March this year. It was presented together with local Balkan partners and the study has references to 3,000 new dams. It further states that since 2005 the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank Group have provided loans and guarantees worth 727m € for 82 hydropower plants in the Balkans. That includes 37 projects in protected areas of national parks and Natura 2000 areas. The money provided by commercial banks is what enables controversial projects. It’s hard to keep the track of their financing but the study’s authors came up with 158 cases of which 55 occurred within protected areas. Austrian Erste & Steiermaerkische Bank and Italian Unicredit Group lead the charge in project financing with 28 projects each. In the section related to Montenegro there are references to the First Bank of the ruling Djukanovic family which finances the renewable energy sources there.

According to the Ministry of Economy there are 20 operating small hydropower plants in Montenegro. Five of them are owned by the national power company (EPCG), 2 are joint venture of the EPCG and Norwegian NTE while 13 are operated by private companies. Altogether there will be 53 small hydropower plants as a result of vetted concession deals.

Most of those plants are run by companies closely linked to the ruling clique. The people in Montenegro’s northern communities staged many protests lately amidst growing discontent with small hydropower. They accused the government of stealing the water from them and called for ban on further constructions.

“The whole river is taken away from us. It’s gone into big tubes. Four power plants have been constructed here, all the way from the river’s spring down through our community”- said in the interview for CIN-CG and the Monitor Vesko Davidovic, the community chairman in Sekular, a small place in the north of Montenegro.

It’s pretty much the same in Plav, another northern community, where two small plants were erected on the nearby rivers. The locals moan about the calamity that has descended upon them- dry riverbeds and all fish extinct.

“We foiled the plant construction twice as the environmental study was returned for further elaboration” says Nikola Vemic of the Donja Bukovica Environmentalists. “It was written by someone half illiterate” he said to CIN-CG and the Weekly Monitor. He further explains that his movement organized two protests that were attended by hundreds of people. “We brought experts from Serbia, Croatia and Scotland who refuted the claims of those who denied any adverse effects on the ecology” continues Vemic.

Montenegro’s government refers to 2009 EU Directive to justify the small hydro power businesses. The aforesaid directive instructs the member states to provide at least 20% of power from renewable sources by 2020. The government of Montenegro moved up the notch to 33%.

The hydropower businessmen often refer to Europe as a model stating that 24,000 small plants operate there. Moreover they cite that Norway uses 100% of its hydro potential, France and Italy are at 86% each while Germany and Austria stand at 88%.

“However, we must keep in mind that it’s not the same thing to encourage small hydropower facilities in Western Europe and the Balkans. The West European rivers are not in the free flow anymore while it’s quite the opposite in the Balkans”- explains Vuk Ikovic, a biologist with the Organisation KOD. He adds that “rivers on which hydropower facilities in Montenegro are erected are just rivulets compared to many big European rivers. To capture and redirect a small river into several km of tubes is nothing but a crime against life and nature”.

Milija Cabarkapa of the Green Home NGO says that it’s difficult to define major environmental problems when it comes to small hydropower facilities. “Aquatic animal populations like fish, insects, leech etc. will suffer decline. Many species are forced to migrate and readjust. If they survive, it will take a decade or more to fully repopulate. Some habitats will be lost for good“.

He explains that dams prevent the upstream migration of fish and other creatures. “Tributaries are fish spawning areas and since small hydropower facilities are usually build on the tributaries of big rivers the fish cannot reproduce anymore. The small hydro facilities are proposed on all larger tributaries in Montenegro which will thus ensure the destruction of the fish spawning sites and substantially decrease the fish stocks” says Cabarkapa.

The Coalition 27 which gathers many NGOs from Montenegro and Croatia recently called for moratorium on all further concession deals and review of those already approved. They claim that most permits were approved without the required criteria and in the absence of environmental case studies, strategic guidelines and spatial planning details.

“No one has done a proper evaluation of the ecosystem of the rivers which are planned for hydropower business and that is the worst problem” says in the interview for CIN-CG/Monitor Aleksandar Perovic who heads the Ozone Environmental Movement. He elaborates the importance of rivers for local communities, their way of life, irrigation, fishing and tourism. However everything is irrelevant when selfish interests of a few come to the fore.

“The authorities declare the small hydropower projects a matter of public interest without any serious analysis. That is preposterous indeed. We lose drinking water there which is the most important natural resource by all world standards” points out Perovic.

Biologist Ikovic agrees that Montenegro hasn’t bothered to order a study which should assess the small hydropower impact on the environment and public health and he finds it a big problem. “The small hydro plant projects were done to conform to the interests of just a few privileged while the public interests are completely ignored. The concessionaire is given the whole river basin so that he alone decides where to build while ecological, spatial planning and agricultural standards and criteria must comply to the desires of investors” says Ikovic.

He explains that environmental protection standards are nothing but clichés. “To truly implement those standards is considered an ‘act against the state’ since the small hydropower plants is declared a ‘public interest’. Furthermore, the privileged investors already committed their money hence it ‘makes no sense’ to give up at this stage regardless of bad consequences for the nature and the people. Thereby the authorities prove that they are in bondage to the investors” claims Ikovic.

The Environmental Protection Agency (EPA) states that ecological assessment consists of three phases which include the preliminary review about the need for ecological assessment, the scope and content of the assessment study (optional) and the approval of the same. Asked if anyone was denied construction permit the Agency referred to the case of the Djuricka Hydropower Plant in Plav as the investor (Plava Hidro Power) failed to define the sanitary zone protection thus making the nearby water spring vulnerable.

It is obvious that environmental approval is no obstacle to the investors so far. The assessment summaries contain usual wording that “no adverse effects are expected in regard to the environment and biodiversity”. Environmentalists and local population protest for years as those assessments have proved false.

The Ministry of Economy says that no hydropower permits are planned for this current year “except for reconstruction of the present facilities and irrigation networks. So we are talking only of the facilities that cannot pose a threat to the environment. Furthermore, everything done so far complies with the current regulations and thus there’s no need for extraordinary reviews”. The Ministry reinstates that the moratorium will last throughout 2019.

Besides environmental problems, there are growing concerns about financial feasibility of the small hydropower businesses and whether the state and the ordinary people benefit at all. The legislation has prescribed new renewable energy tax that applies to all electricity bills. The tax was quadrupled in 2017. The renewable energy companies are given incentives and the government guarantees the purchase of all generated electricity in the next 12 years. Furthermore, as of last year there is no more VAT on delivery of products and services related to 10 MW capacity plants for investments exceeding half a million Euros.

“The small hydropower business is among the best examples of the ‘enslaved state institutions’ which must conform to the interests of just a few at the expense of national interests” says Ines Mrdovic of MANS nongovernmental organization in the interview with CIN-CG/Monitor. She points out that common people foot the bills and thus enable profits of the regime’s elite in the country that doesn’t have enough hospitals, kindergartens, schools, community centres…

„Lip service to renewable energy actually serves to disguise the lucrative businesses of those close to the DPS leader Milo Djukanovic and his party clique. The Montenegro Hydro Energy is a striking example that only those favoured by the regime can enter such lucrative deals. The aforesaid company had in store the feasibility study for the hydro plant in Berane the whole year before the tender announcement. No surprise, the company turned up as the best bidder. Later the government extended the concession deal deadlines on several occasions. When the construction was finally over there was nothing there for the local population. Moreover, the locals have even been deprived of the river itself and got nothing in return- points out Mrdovic.

MANS came up with the data that the tax payer money in the form of government subsidies account for more than a half of the revenues of the small hydropower businesses. Now those same companies paid 12 times fewer money in the form of concession fees from 2014 to 2017. The overall revenue of the small hydropower businesses exceeded 9 million Euros of which the subsidies accounted for 4.7 million. The companies paid back to the treasury only 430,000 Euros in concession fees. MANS cited the National Action Plan in regard to renewable energy and came up with a figure of 27 million Euros of tax payers money to be paid by 2020 in the form of electricity subsidies to small hydro businesses.

The Ministry of Economy replied to us that “those so called analysis ignore the value of investments in 13 facilities which amount to 40 million Euros. Moreover the overall revenue is not the profit. The revenue covers for amortization, operational costs and concession fees. Furthermore, those 4.7 million of subsidies over two and a half years reduced the electricity import by 3 million Euros, created 80 jobs, strengthened local economy and provided further infrastructure development over there”.

The Ministry of Economy’s calculation is pretty interesting as Montenegrin households spent 200 million Euros of electricity each year so in two and half years that would be half a billion Euros. Thus the cited 4.7 million accounts for less than 1% of the total bill while the generated electricity in the small hydropower facilities barely exceeds 1% of the total production. The problem is that tax payers finance the subsidies in millions of Euros for the small plants while the share of the small hydropower in the overall electricity production is negligible.

As a consequence the Ministry has recently announced the change of policy. "The government has no plans to provide financial incentives to new investors when it comes to renewable energy sources but will seek investors who will accept the market risks" says the Ministry of Economy.

Nicely said but no answer yet on how long the government proteges will continue to rip the tax payer through subsidies. On the other hand the search for new investors (through other incentives) will keep the whole environment vulnerable and without protection.

“The Tara River with its canyon, the basin of the Moraca River, Lake Scutari and the Bojana River are still among the most preserved ecosystems in Europe“- points out Rozman. “When you see lobbists and super rich who dare to assault all that paradise it is hard to stay calm. I am not sure if Montenegrins are aware of all that beauty that surrounds them and what it could mean for sustainable tourism. On the other hand the avarice has only one goal- to exploit and make more money without any qualms. No community can sustain such devastation in the long run“.

River basins carved up by DPS inner circles

MANS (NGO Affirmation Network) took a closer look at the renewable energy companies that build small hydropower facilities and found out that most of them are related to President Milo Dukanovic and his DPS.

The BB Hidro is the company of Dukanovic’s son Blazo and has been awarded two concession deals. His first cousin Milovan Maksimovic will also build two small plants while Vuk Rajkovic, Milo Djukanovic’s best man signed four concessions deals.

Tomislav Celebic, another wealthy and controversial investor close to Montenegro’s ruler is in the same business. A consortium made of Oleg Obradovic, Ranko Ubovic and Aleksandar Mijajlovic, all from the so called Cafe Grand group, has built 6 small hydropower plants and they have signed concession deals for another 13.

The Kronor is a company of Zarko Buric, Zeljko Miskovic and Predrag Bajovic who is a family member of the earlier Prime Minister Igor Luksic. They built one hydropower plant a year ago.

Furthermore Stefan Savic, a national football team player and a member of the Hydro Bjelojevic Consortium has ventured into the hydro business. Igor Masovic, a local DPS board member in Andrijevica and the mayor’s brother own 2 hydropower facilities.

Two small power plants operate under the management of the MN Power. The company’s owner is the wife of Nenad Micunovic, a nephew of controversial businessman Branislav Brano Micunovic .

Vanished into draft tubes

There are four small hydropower plants erected on the Sekular River and the river flows only in the draft tubes.

Vesko Davidovic who heads the Sekular Communuty Centre reminds that the investor pledged to pave the roads there. “He paved them indeed but his heavy vehicles subsequently destroyed the same roads. The Hydro Energy Company makes millions of Euros in Sekular but the local population reaps only a few benefits”. He says that 20 locals have been employed by the investor, which is a good thing. They mainly work as security and maintenance staff. After many protests the investor finally installed a gauge to regulate the minimal discharge of water so to keep the river alive. The investor promised to stock what is left of the river with young fish.

Davidovic admits that the locals were naive when they believed the DPS (the ruling communist party) promises and assurances after signing the concession deal with the Hydro Energy Montenegro in 2012.

“My advice to other villages where they plan to erect power plants is to define every little detail in contracts. Maybe just one power facility wouldn’t be such a terrible thing but this is too much. They took the whole river away from us“.

Monastery’s hydropower plant

The first run-of-the-river (ROR) small hydropower plant was constructed by the Moraca Monastery of the Diocese of Montenegro and the Littoral. It utilizes the run of the river flow leading to electricity-generating turbines. It’s considered a cleaner power. It was opened in 2009 when the then president of Montenegro Filip Vujanovic cut the ribbon together with the Archbishop Amfilochius.

“We utilize the water flow which springs on the monastery’s land. The plant has a capacity of 12kW and we use the generated power for the monastery’s facilities“ says Abbot Raphael.

He points out that the monastery itself financed the project having obtained all the necessary permits from the authorities. However the government doesn’t subsidise the project. “There was another plant erected during WW2 bellow the present one and the water mill. The partisans had a command post there. The plant was operating until after the war while its turbine is now stored in the school”. The mini plant generates 60,000 kW a year and is connected to the power grid- says the abbot. At the end of each year the monastery’s electricity bill is deducted for the amount of electricity that the power grid gets from the mini plant.

Recently it was reported that the Diocese will build another mini plant near the Moraca Monastery but Abbot Raphael says that for the time being “it’s just an idea” because they are out of money.

Serbian revolt against the new generation of rogue lords

The population around the Old Mountain in Serbia staged a large scale revolt last week over the plan to build no fewer than 50 hydropower plants in the area. The public discontent spread to the Lim River area, Rzava and other adjacent places. The regime controlled media deliberately ignored the news and kept reporting about the “historic” visit of President Aleksandar Vucic to Kosovo.

In 2013 the Serbian government approved locations for 120 companies which will build hydropower facilities. The Land Registry Office designated 870 locations for small hydro plants. The overall capacity of those plants will be under 1% of the overall electricity production.

Dr Ratko Ristic is the dean of the Faculty of Forestry in Belgrade who sent an open letter to the Pirot City Council. Pirot’s vicinity is designated a building area for small hydro plants. Dr Ristic warned that small hydropower plants are very controversial saying that “There are serious debates in the European Parliament about the accomplishments of small hydropower, especially in protected mountainous areas. The power plants cause adverse effects to the environment, especially in the alpine regions of Austria, France, Italy and Germany. Most complaints are related to ecosystem degradation, fragmentation of fish habitats and increased level of erosion. The European Commission issued an order to Romania to review the small hydropower sustainability concept. The country erected over 500 facilities in a short period of time and has thereby harmed its mountainous aquatic ecosystems. It is proposed to remove tariff incentives for the electricity produced in small hydro plants and to let them operate in the open market terms. It is highlighted that small hydro plants generate small quantities at the expense of rising environmental costs“.

Professor Ristic commented in the interview for NIN magasine that the construction of 8 small hydropower plants in Albania, Croatia and Macedonia caused the extinction and/or endangerment of unique and protected fish species. It also caused water supplying problems to local communities and road-related intense soil erosion. He pointed out that the only beneficiaries of those projects would be investors, suppliers and corrupt government officials.

The main investors in Serbia are people close to the regime. The best known example is Nikola Petrovic, the best man of President Aleksandar Vucic. Sadly the same pattern of entrepreneurship is seen elsewhere in the Balkans.

Predrag NIKOLIĆ