The Kosovo Energy Corporation, KEK, a public company, uses ten to 11 million tons of coal a year to cover Kosovo’s own energy needs, which means that the country’s reserves are potentially enough to cover its power needs for about a thousand years.

Kosovo’s Energy Strategy, which the Ministry of Economic Development published in 2013, says the three basins contain about 12 billion tons of coal.

Kosovo is estimated to be home to the world’s fifth largest reserves of brown coal, or lignite. The most important reserves are the Kosovo, Dukagjini and Drenica Basins.

The ministry responded only by repeating that the government would enter into negotiations with the company but did not reply to BIRN’s specific questions about the project and concerns about a potential monopoly.

BIRN also contacted the Ministry of Finance on whose proposal the government approved Envidity's request.

BIRN contacted Envidity to comment on these claims. While the company confirmed receipt of the questions, it did not reply by time of publication.

While Envidity still has to await approval of the deal by parliament before moving forward with the exploration, some maintain that - by granting the company research rights over such a wide area - Kosovo has effectively given it a monopoly to exploit the country’s rich coal reserves.

The investigation shows that the Kosovo government previously amended the Law on Mining to allow coal research rights to be granted without a public tender, one month before Envidity submitted its request.

A BIRN investigation can reveal that Kosovo’s government in August approved giving the Canadian-based energy firm Envidity Energy Inc - chaired by retired US General Wesley Clark - the right to search for coal on more than a third of Kosovo’s total territory.

Envidity Energy Inc first submitted an application to drill across the Dukagjini region for previously undiscovered coal reserves in April 2012.

However, Selvete Grajcevci, from the Independent Commission for Mines and Minerals, KPMM, an independent body that reports directly to the Kosovo parliament, told BIRN at the time, in June 2012, that Envidity would not obtain a licence.

“For the time being, we cannot issue the licence to Envidity because the Law on Mines and Minerals treats energy minerals differently. There should be a government call, opening a tender process for this,” Grajcevci said.

Envidity goes for wide area

Map shows the areas which Envidity aims to explore.

A year after it first attempted to obtain a licence to explore Kosovo’s coal reserves, Kosovo Envidity Energy LLC, the local branch of the Canadian parent company, submitted a request to the KPMM on May 20 2013 for three licenses to search for coal and bitumen in Kosovo.

The licenses would grant the company the right to explore reserves of coal, as well as ascertain their quality and quantity.

BIRN has obtained documents showing that Envidity requested research licenses for an area covering 3,483 square kilometres, more than a third of the entire territory of Kosovo.

The three licenses The first request of Envidity Energy LLC for licenses to research in the region of Vushtrri included the towns and cities of Pristina, Skenderaj, Gllogvc and Podujevo, covering some 327 square kilometres. The second request was for the region of Vitia, including the towns of Lipjan, Fushe Kosova, Kacanik, Shtime and Ferizaj, covering 876 square kilometres. The third requested license for coal and bitumen research was for region of Dukagjini, covering 2,279 square kilometres and including the municipalities of Klina, Prizren, Decan, Peja, Istog, Gjakova, Rahovec, Malisheva, Mamusha, Skenderaj, Junik and Suhareka.

The areas that Envidity sought to explore are known as coal basins which, according to the government’s energy strategy, contain 12 billion tons of coal.

In a meantime, just a month before Envidity submitted its three requests, the government, then led by the current Kosovo President, Hashim Thaci, amended the Law on Mining and Minerals to allow the authorities to grant research licenses without a public tender.

Article 18 of the Law says licenses for research or exploitation dealing with energy minerals may only be issued after the conduct of an open, transparent and competitive tender.

But, on April 18, 2013, the government amended the law, stating that a tender would no longer be required if there were “reasons directly related to the need to ensure the security of the energy supply”.

The amendment further stated that, in such cases, the government would be in charge of deciding whether there was any public interest in issuing such licenses to a specific investor.

The government’s decision must then be approved by parliament, however.

Following approval by parliament, the law obliges the KPMM to award the necessary licenses to the investor.

The KPMM initially postponed making a decision on Envidity’s requests. In August 2015, it informed the company that it would first seek approval from the government and the parliament.

While the project could have been approved earlier, the June 2014 general elections in Kosovo put the company’s requests on hold.

Following those elections, Kosovo spent six months in a political stalemate without a government being formed, as Thaci and his Democratic Party of Kosovo, PDK, were unable to muster a majority.

After the PDK and the Democratic League of Kosovo, LDK, formed a government in December 2014, with the LDK leader Isa Mustafa as Prime Minister, the company was then required to make a presentation to Mustafa’s ministers, which it did in April 2015.

Government approval obtained

Kosovo government. Photo: Beta

On August 25, on the proposal of the Finance Ministry, the government duly approved Envidity’s request to explore the country’s coal reserves and forwarded it to parliament.

War hero in Kosovo Wesley Clark commanded Operation Allied Force in the Kosovo War during his term as Supreme Allied Commander Europe of NATO from 1997 to 2000. In his last assignment, as Supreme Allied Commander Europe, he led NATO forces to victory in Kosovo, “saving 1.5 million Albanians from ethnic cleansing”, he wrote, referring to the 1999 war in Kosovo. The retired US general remains a hero to Kosovo Albanians and streets are named after him in Peja, Prizren, Vushtrri and Ferizaj as well as a driving school in Fushe Kosovo. According to his biography on the Envidity website, he retired from the US Army after 38 years as a “four-star general”. He joined the 2004 race for the Democratic Party presidential nomination but withdrew after winning only the Oklahoma state primary, later endorsing the eventual Democratic nominee, John Kerry. Clark was considered a potential candidate for the Democratic nomination in 2008 but instead endorsed Senator Hillary Clinton. After Clinton dropped out of the Presidential race, he endorsed Barack Obama.

The government’s decision was made based on the earlier decision of Kosovo’s Public-Private Partnership Committee that approval of Envidity’s request was in the national interest.

If parliament now also approves the project, the government will then form a team to start negotiations on an agreement with the company.

“The team will be established only after we receive approval from the Assembly. This is consistent with the Government’s decision,” the Finance Ministry wrote in its reply to BIRN.

Parliament’s Commission for Economic Development was due to discuss the Envidity project on September 6, but this meeting was postponed in the absence of a quorum.

The company’s power-point presentation, submitted to the commission and obtained by BIRN, explained in detail the technology it expects to use in the project and the method of oil production.

The director of KPMM, Ramiz Krasniqi, told BIRN that if parliament approves the project, KPMM will give out the necessary licenses in accordance with the law.

“If the Government and Assembly decide [to approve the requests], the company should apply to KPMM for a research license with a two-year term. The company must submit the program and dynamics of research,” Krasniqi explained.

“If the research is completed successfully, the company then applies for the license of use,” he stated.

He added that while the company had applied to explore a huge surface area, when applying for a usage license, it could pinpoint more exact areas where mining activities would be carried out.

Concerns about a monopoly

Kosovo lignite mine field. Photo: Dren Pozhegu/Flickr

Lorik Haxhiu, a Kosovo-based expert on energy and energy resources and one-time manager of the Kosova C project, [the project for a new power plant to be built by ContourGlobal, a New York-based power company] says if Envidity obtains all the licenses it seeks, it will have obtained almost exclusive rights over Kosovo’s coal.

“If any company applies for research licenses in all the areas surveyed earlier and the surrounding wider areas, this raises doubts about the company’s goals,” Haxhiu told BIRN.

“Under the applicable laws, whoever has a license to research also holds the exclusive right to obtain the license for exploitation,” he noted.

The Law on Mines and Minerals indeed determines that the holder of the research license has the right to apply for a usage license.

“The research licensee has the right to require and obtain the license for use … if it fulfills the conditions set out in the Vth part of this Law,” paragraph 8, article 20, in the law says.

The license for use of energy minerals such as coal has a maximum duration of 30 years.

However, under article 30, the law says the licensee can request 15 more years, making a total of 45 years.

According to Haxhiu, past explorations of Kosovo’s coal reserves have already proved and categorized the existing lignite deposits in terms of quantity, quality and usage conditions.

“This means that those areas of Kosovo that are ready for specific investment based on the use of lignite are [already] established,” Haxhiu said.

He noted that any serious investor wanting to work in one of the areas would have access to that information.

“The investor then presents the specific project to the institutions to obtain permission for research or exploitation, approvals and environmental permits, and other permits they might need,” Haxhiu explained.

Haxhiu noted that researching reserves is an expensive business. In order to explore the territory Envidity has applied for, the company will have pay 3.5 million euros in the first year, 7 million in the second year and 10 million euros in the third of exploration.

“If any company wants a license for research an area of 3,483 square kilometres, it is expected to spend a minimum of 10 euros per hectare in the first year, 20 euro per hectare in the second year and 30 euros per hectare in the third year,” Haxhiu noted. Such research requires a total investment of around 150 million euros, he recalled.

The Law on Mines and Minerals provides that research license can be issued for a period of two and three years. Furthermore, although the law provides opportunities for the licensee to request additional time, the condition then is that the initial research surface must be halved.