A coal-fired power station in Pristina, Kosovo. Is World Bank funding the building of a new coal-fired power plant in Kosovo? Photo by: Andreas Welch / CC BY-NC-SA

New York-based company ContourGlobal expects to begin building a new coal-fired power plant in Kosovo in as little as 18 months according to a report published by Reuters Wednesday. A new power plant would create jobs and limit power cuts in the country. ContourGlobal Executive Vice President Garry Levesly told Reuters that the project had received backing from the World Bank.

But how far has the World Bank actually gone to support the project?

The idea that the U.S. taxpayer-funded global financial institution would finance a coal-fired power plant in Kosovo riled up environmental organizations such as the Sierra Club that advocate for clean energy alternatives in Kosovo — especially since both World Bank President Jim Yong Kim and U.S President Barack Obama made commitments to finance coal power only when no other alternatives were viable.

“Such a move spoils World Bank President Dr. Jim Yong Kim’s record of five years of coal-free investments and contradicts the Bank’s own stated commitment to only back greenfield coal in ‘rare circumstances,’” wrote the Sierra Club in a statement following the Reuters report.

The environmental group asserts that cleaner energy alternatives in Kosovo would be “cheaper, cleaner and create more jobs.”

However, despite the assertion that the World Bank is backing construction of a new coal-fired power plant, the financial institution has not formally committed any financing for such a project.

What the bank is doing is considering a partial risk guarantee for investors in the region that could be applied to ContourGlobal and construction of a coal-plant only if the project is approved by the Kosovo government and if the Kosovo government is unable to finance the project for any unforeseen reason. The purpose of a partial risk guarantee is to assure investors of payment.in poor investment climates like Kosovo.

The partial risk guarantee that the World Bank has agreed to consider is for $58 million, but it has not gone through any formal approval by the board. If approved, the chances that it would be called for are low — no private sector partial risk guarantee has ever been called for.

Currently Kosovo’s Ministry of Economic Development is running an international competitive bidding process for the building of a new coal plant that would replace the Kosovo A power plant — often described as one of the worst polluters on the continent. The Kosovars received one bid, which was from ContourGlobal.

The World Bank is financing an environmental and social impact assessment to look at the cumulative impact of shutting down the old plant and building something new. This is meant to inform the World Bank and other stakeholders before a decision is made whether to invest.

“No decision has been taken on the Kosovo power project and no decision will be taken until all of the environmental, social and technical analyses have been conducted and consulted with the public, and our shareholders have given the project their due consideration,” a World Bank official wrote to Devex in an email.

Still, as Devex reported last month, the World Bank’s decision to even consider a partial risk guarantee for such a project and undergo an environmental and social impact assessment is concerning for climate and environmental organizations.

“We hope they go through the process and realize [financing a coal-fired power plant] is a mistake and there is a better way,” Andrew Linhardt, associate Washington representative for the Sierra Club told Devex.

According to a World Bank official, the draft environmental and social impact assessment is expected to be ready for a series of consultations by May.

What do you think of the World Bank’s involvement in Kosovo? Is the financial institution crossing a boundary that unnecessarily threatens to instigate a dirty energy project? Or is it simply showing support for a poor investment environment such as Kosovo? Leave us a comment below.

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About the author

  • Jeff Tyson

    Jeff is a former global development reporter for Devex. Based in Washington, D.C., he covers multilateral affairs, U.S. aid, and international development trends. He has worked with human rights organizations in both Senegal and the U.S., and prior to joining Devex worked as a production assistant at National Public Radio. He holds a master's degree in journalism from Columbia University and a bachelor’s degree in international relations and French from the University of Rochester.