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OPINION

Panel Discussion: Forum 2015 - Pathology of a Delay

Jan-Peter Olters

December 17, 2012

FORUM 2015—PATHOLOGY OF A DELAY
PANEL DISCUSSION, DECEMBER 17, 2012

Jan-Peter Olters
Country Manager
World Bank Office in Kosovo

Available also in Shqip 

I am very grateful to Forum 2015 for its invitation to today’s event and the authors of the Pathology of a Delay for their contribution to the energy debate in Kosovo. I have to admit, I like the study’s content a whole lot better than the—admittedly catchy—title, referring to the study of the nature, origin, progress, and cause of a disease. In fact, I’ll argue in the following that the delays, which undoubtedly occurred, were healthy and in Kosovo’s interest.

There is no doubt that the definition of an energy strategy in Kosovo has taken a whole lot longer than originally expected, involving a long series of delays, some of which—with the benefit of hindsight—were probably avoidable. But many of them were the consequence of either learning or developments entirely outside of Kosovo’s control. The study presented here today is, in many ways, more an analysis of domestic factors having caused delays in the implementation of an energy strategy in Kosovo and, as such, slightly narrower than would be appropriate.

We are, where we are today, because of reasons spelt out in the Forum study and those that were de-emphasized. The very intensive—you said “polarized”—debate about energy options in Kosovo needed to be had, as the country has suffered considerably from ill-thought-through decisions taken decades ago. During the same period of time fell (i) the dramatic changes in the external economic environment, following the global financial crisis of 2008–09 and the euro sovereign debt crisis as of 2010; (ii) the global debate on climate change and required corrective measures to be taken; and (iii) the increased political relevance and applicability of EU Directives, including environmental ones, (as signatory to the Energy Community Treaty).

The debate on Kosovo’s energy perspective is one with at least three joint objectives over half a dozen dimensions. Given the inherent complexity of the challenges, with interlinked trade-offs across the various dimensions, there is no one perfect energy strategy that would allow Kosovo—or, for that matter, any of the neighboring countries—to generate reliably a sufficient amount of inexpensive and clean energy. If it existed, such a strategy would have been implemented a long time ago.

On the objectives—and the need to achieve them jointly—, I believe, there has never been a real dissonance among the various stakeholders. It is clear that Kosovo needs (i) the secure and reliable supply of energy, against projections of increasing demand for energy; (ii) electricity to be provided, and investments to be realized, at prices that are affordable for households and firms and without risks to the country’s macro-fiscal stability; and (iii) a strategy that takes into consideration and minimizes negative effects on the environment, health, and the lives of citizens affected directly or indirectly by energy generation.

Most of the debates have been sparked off by different views on one or several of the various dimensions—and I am thinking here of the technological, environmental, economic, social, financial, legal, and political ones. Here, we have seen, unfortunately, overdrawn characterizations of viewpoints, motivations, and presumed influence. One of them related to the not particularly constructive coal-only vs. renewable-only confrontation, which was never at the core of the debate but made for nice newspaper headlines in Kosovo and elsewhere.

That said, one could rephrase the beginning of the last paragraph on page 15 (the second paragraph on the same page in the Albanian version) and put it on its head, with both versions being equally valid: Kosovo cannot fully rely on coal for electricity generation. No country will any longer. Hydro, wind, and other forms of renewable sources of energy contain generation potentials that will bring increasingly tangible changes to the country’s energy supply composition. And my colleagues and I also agree with the following statement that the introduction of renewables would make the energy sector more diversified, more decentralized, and a lot cleaner.

Against this backdrop, I find today’s Forum 2015 study particularly helpful in that it shows the extent to which the energy debate has evolved from the beginning. Not everybody seems convinced, but today’s strategy reflects (i) increased global comprehension of respective costs and benefits of various energy alternatives; (ii) a clearer understanding of Kosovo’s ability to attract foreign investment of the quality required, including investors’ ability to bring to Kosovo the best available technology; and (iii) the plethora of valid inputs from all sides.

An outcome with as little coal as possible but as much as absolutely needed, with technologies that will be consistent with all relevant environmental EU Directives, with the objective of, and commitment to, closing the highly inefficient and terribly polluting Kosovo A power plant by 2017, with a tendering process that is open, international, and transparent, with a careful assessment of environmental and social impacts, with a concomitant effort in providing the required legal and infrastructure framework, including feed-in tariffs, that would allow for the maximum amount of renewable energy, with a focus on demand management and energy efficiency, the reduction in commercial and technical losses, regional energy integration especially with hydro-reliant Albania, with the involvement of all stakeholders and intensive international oversight, with the pragmatic decision to respond to investor and civil society requests to separate Kosovo B from the Kosova e Re tendering package, and, not least, with the government’s interest in collaborating closely with the World Bank in cleaning up toxic legacies and investing in energy efficiency and renewable energy, water security in central Kosovo.

In short, we can now take full advantage of the delays and implement the current energy strategy. This is a strategy that is the result of—and reflects the convergence of—numerous, dissimilar viewpoints. Most elements have now fallen into place, allowing Kosovo to implement—with private sector involvement—state-of-the-art investments in all segments of economically viable sources of energy that are consistent with EU environmental standards. With the current strategy, the government—but also the World Bank—are accountable vis-à-vis citizens in Kosovo, the private sector and investors to respect the standards set by the EU, a critical condition for support from the World Bank and other development partners.

For as long as you do not view the Ministry of Economic Development not a local actor, we agree principally with all general recommendations in the study, assuming that the separation of the Kosova e Re and Kosovo B tendering packages is captured in recommendation 4. What are the alternatives? The prolonged reliance on Kosovo A? Opportunistic investments in extractive industries following non-competitive bidding processes, without external oversight of technologies applied, including their consistency with European standards, and impacts had on the environment and social conditions?

In many ways, it is my reading and understanding that the delays have proven constructive and in the interest of Kosovo’s welfare. The best is sometimes the worst enemy of the good. Kosovo’s evolving energy strategy has been confronted with various real-life “stress tests”, including the ones on the global climate change debate and the global economic crises. I believe that today’s strategy reflects concerns on all dimensions (maybe not to 100 percent, but to a great extent), and it serves the three objectives. The inputs of active stakeholders have been reflected in the final strategy.

I believe, we are only one step away from an Analysis of a Delay—what went wrong, what remained right, and what has evolved? With this, I am really looking forward to the ensuing discussion.