September 24, 2018 / 11:13 AM / 3 months ago

Poland's last coal project gets another approval despite objections

WARSAW, Sept 24 (Reuters) - Shareholders in Polish state-run utility Enea have approved a plan to build a 1 gigawatt (GW) coal-fuelled power plant in Ostroleka in north-east Poland, despite objections by environmentalists.

The plan to build the plant was initially revived by Energa , another state-run energy group, in 2016 in response to a government policy to keep using coal as the basic source of energy over the long term.

Enea joined the project later that year and the company’s shareholder vote on Monday follows a similar one in Energa three weeks ago.

The plant, which is expected to be completed in 2023 at a cost of 6 billion zlotys ($1.64 billion), has been opposed by environmentalists who say it only strengthens Poland’s reliance on coal and is not economically justifiable.

“(We) have put the directors of Energa and Enea on notice of the increasing risk of legal action if they proceed with the ill-conceived Ostroleka C project,” Environmental lawyers ClientEarth, said in a statement.

“If built, the plant is projected to be permanently unprofitable,” they added.

Poland’s conservative Law and Justice (PiS) party won the 2015 election partly on promises to sustain the traditional coal industry and put in place laws to prevent new investment in windfarms.

But as part of a wider plan to ease tensions with the EU, which has criticised the PiS over its politicisation of the judiciary, and in light of falling coal production and rising costs of coal-based power generation, Poland has changed its stance on green energy.

As a result, the Ostroleka plant will be the last coal-fuelled one built in Poland, the energy ministry said last year.

Through international litigation firm Boies Schiller Flexner, ClientEarth has warned Energa and Enea that their ongoing actions risk breaching board members’ fiduciary duties of due diligence and acting in the best interests of the company and its shareholders.

“Energa and Enea should abandon this project – it is an indefensible gamble with shareholders’ money and a major misstep in climate terms”, said ClientEarth lawyer Peter Barnett.

The state owns 51.5 percent of Enea’s shares. ($1 = 3.6563 zlotys) (Reporting by Agnieszka Barteczko; Editing by Kirsten Donovan)

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