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We're cross-posting this blog from our colleagues at Counter Balance which describes some of the urgent new developments and controversies engulfing the TAP gas project in Italy. TAP is a BankTrack Dodgy Deal, and it remains to be seen which private banks are waiting in the wings to participate in the project. An EBRD green light for the project is viewed as essential for private bank involvement. Yet, as this new blog details, the multi-lateral is becoming further bogged down in persistent project problems which have not been resolved for some years now.
After months of suspense and hesitations, the new Italian government is finally settled in Rome and didn’t wait long to fire out some first juicy declarations. Based on a ‘political contract’ between the 5star Movement and the Northern League, the government’s patchwork agenda envisages to re-discuss planned big infrastructure projects – one of the strong points pushed by the 5stars during the electoral campaign.
This is the context of last week’s shock declaration by the new Italian Environment Minister Sergio Costa on the Trans Adriatic Pipeline (TAP), the Southern Gas Corridor western leg that would land in Melendugno, Southern Italy. The mega-pipeline has gained quite some international attention for the relentless protests it generated among the impacted local communities.
Indeed, in a U-turn from the previous government’s stance, the newly-installed minister didn’t hesitate to tell the media the project looks “pointless” in the framework of the new government’s energy policy and falling gas demand. Rediscussing the destiny of TAP will be a priority for the government, said Costa, who – with his solid “technical” rather than political background – was chosen by the pro-environment 5stars to join the team of the self-defined “government of change”.
But the new minister is not the only one looking into TAP at the moment. For example, TAP is now the subject of a public investigation by the public prosecutor of Lecce, Southern Italy, concerning the controversial authorisation and fulfilment of its environmental impact assessment (EIA).
The controversial investigation file, highly pushed for by the local authorities representing the communities opposing the project, was recently re-opened following a complaint by eight local mayors concerned about the dangerous impacts the construction of the mega pipeline is having on their territories.
Far from just a local affair, this investigation touches upon respect of European laws and the communities’ concerns have been echoed across Europe and beyond by civil society organisations, activists and solidarity groups opposing the Southern Gas Corridor in particular for its potentially devastating impacts on the climate and the environment.
It’s no coincidence then that the investigation digs especially into the EIA procedure of TAP and its permit for the Italian section, which would allegedly fail to comply with the requirement to consider the environmental impacts of the project as part of the much bigger Southern Gas Corridor – as Italian law and the respective European directive establish for such cases. Looking into alleged fraud and forgery, the investigation will also shed light on the alleged project violation of the EU directive on industrial risk, the so called ‘Seveso Directive’. Experts appointed by the public prosecutor are currently working on a technical report that would provide the background information for the case.
No good news for the project promoter – the Trans Adriatic Pipeline AG company – which after the relief of last February’s long-awaited decision by the European Investment Bank (EIB) to grant a EUR 1.5 billion loan to the project, now suddenly has to face the new government’s challenge, plus the hot potato of the re-opened EIA investigation.
But the EIA procedures are not the only controversial issue with the highly contested pipeline. TAP scored the record for highest number of complaints filed to the complaint mechanism of the EIB before the loan approval – of which a large number came from Italy. Still, the bank did not seem to treat this sensitive issue as it should deserve, failing on important due diligence practices such as sending its staff on the ground to listen to the voices of the impacted communities.
Such environmental and social issues connected to TAP are now all the more important, as another European public financial institution is soon to discuss a public loan to TAP.
The European Bank for Reconstruction and Development (EBRD) had scheduled for June 20th the vote of a EUR 500 million loan to the project, which could be matched with an extra EUR 700 million loan by a number of private banks aiming to cover the project’s risk through various forms of public guarantees from the EU member states. But the project no longer appears on the Board’s agenda for this month’s meeting, leaving uncertainty on when the vote is going to happen.
Indeed, in order to move ahead with the loan, the London-based EBRD should prove among other things that TAP is in compliance with its environmental and social standards, and with higher international standards and best practices. A hard task, as shown by two independent evaluations claiming that the project fails to comply with the Equator Principles and best international standards: one published last year by the private banks watchdog BankTrack, and the other carried out by Ramboll Environ, a private consultancy firm commissioned by the TAP promoter itself, which published the damning report on its website.
The bank did organise a visit “on the ground”, as we learned from Marco Potì, the mayor of Melendugno, the town where a fierce popular resistance is opposing the construction of TAP. But the EBRD, too, failed to address the delicate issues with the project as it should have.
In March 2018, the bank had been informed by a municipality commission about the above-mentioned complaint filed to the public prosecutor on violations of the law involving TAP operations.
A few weeks later, then, the mayor of Melendugno was approached by the Rome office of the Italian executive director at the EBRD, who tried to arrange meetings of the EBRD management with him and with the other local authorities (the province of Lecce and the region of Apulia). Rather than visiting the village where the actual construction is taking place, though, and trying to hear the voices of those impacted by the project, the bank rather proposed a formal meeting in the ‘safer’ location of neighbouring Lecce, the biggest town in the area.
“By refusing to travel the last 20km south of Lecce, in a 2300 km trip from London, the EBRD delegation missed the opportunity to acquire very relevant information about the Trans Adriatic Pipeline case.”
No doubt, the protest against the TAP in Italy is among the broadest, most rooted and informed in the history of opposition to mega projects in Europe. The EBRD’s decision not to acknowledge such resistance goes way beyond the disappointment of the village of Melendugno.
The TAP protest has since the beginning portrayed itself as a popular resistance and by using the slogan “not here not anywhere”, its people have not just challenged this mega-project for its local environmental impacts: their resistance challenges a model rooted in mega infrastructure associated with violations of human rights and support to authoritarian regimes like Azerbaijan and Turkey. It denounces corruption and money laundering, like in the case of the Azerbaijani Laundromat scandal that crashed upon the entire European scene of political parties and institutions allegedly infiltrated by the ‘consensus machine’ moved by Azerbaijan.
What is then at stake, beyond a new set up of geopolitical alliances? There are billions of euros in expected profits from the European gas market in the making, where gas trading companies like Socar, Fluxys, Enagas, Snam – all part of the TAP consortium – want to have a slice.
We add our voices to those of the people of Melendugno, calling on the EBRD to carry out a proper investigation and independent assessment of the project – and not simply buy the arguments of the project promoter – before voting to give out hundreds of millions of euros to such a controversial project. As we understand that such assessment has not taken place yet, we call on the bank and its shareholders to postpone the discussion until such times as the assessment – together with the outcome of the investigation by public authorities – will be completed.