Thermo Plant TEŠ 6 going forward
The law that enables the government to issue the Šoštanj coal-fired power plant TEŠ a guarantee for a EUR 440m loan from the European Investment Bank (EIB) took effect on Wednesday. Yet before the loan guarantee agreement for a new generator is signed, TEŠ and the government need to close an accord listing the conditions for the guarantee.
The conditions set down in the contract, to be signed by TEŠ and the ministers of finance and energy, include the price of the project, the purchase price for the coal TEŠ will buy from the Velenje coal mine, the deadline for the project's completion, the expected returns on investment and the cap on CO2 emissions.
The most important is the price of the project - which must not exceed the current price tag of EUR 1.3bn - and the price of coal, which should not go over EUR 2.25 per gigajoule.
The loan guarantee agreement with the EIB is signed by the finance minister on behalf of the state.
The TEŠ loan guarantee act was passed by the National Assembly on 18 July and was signed into law by President Danilo Türk on Monday after an initiative for a referendum against the law failed.
Generator 6 at TEŠ is to produce 3,500 gigawatt hours of electricity a year. The trial operation is set to complete in November 2014. The life-span of the new generator is 40 years.
The biggest energy project in Slovenia to date, TEŠ6 has been raising fierce controversy from 2004 when the general assembly of TEŠ endorsed the development plan that included generator 6.
The project's costs have ballooned from an initial estimate of EUR 600m to EUR 1.3bn, which provoked suspicions of corruption and criminal investigation into alleged wrongdoing is still under way.
The investment has also raised environmental concerns, with environmentalists arguing that the generator will lock Slovenia into dependence on fossil fuels for decades.
But its supporters have argued that the project will secure Slovenia's energy sufficiency and that the new generator will be more environment-friendly than the old ones it will replace.