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Serbian “OneGiga” Solar Power Project Cancelled; Lawsuit Threatened

A 1 GW solar photovoltaic (PV) project which would have seen 100 10-MW solar power plants built in Serbia has been cancelled by its developer, Securum Equity Partners International Ltd of Malta. The company claims the Serbian government violated an agreement signed by both parties by failing to provide the promised 3,000 ha of land for the project by the agreed deadline, and says it plans to sue.

Securum says it will file suit with the International Court of Arbitration in London for €160 million in damages. The project, dubbed OneGiga, would have cost €175 billion to build and was planned for completion by December 2015.

Initial Support

In a statement, the company said both Serbia’s Ministry of Environment, Mining and Spatial Planning and its Ministry of Economics and Regional Development had initially sent letters of support regarding the project. A framework agreement laying out mutual rights and obligations between the Serbian Republic and Securum was signed in November 2011, and a memorandum of understanding was signed in May 2012. In April 2012 Securum incorporated a new company in Belgrade, the Onegiga Solar Park Incubator, to develop the Serbian project.

In October 2012, Securum and Serbia signed a legally binding umbrella agreement under which Serbia committed to providing at least 3,000 ha of land for the project in one of its high-insolation regions, no further than 1 km from a power transmission network, for a lease period of at least 60 years. And in November Securum says it submitted its land requirements, specifying land with no high shade-generating trees; a flat surface or, at most, a 5 percent gradient; not over 500-600 metres above sea level; and easy access to public roads.

Land Problems

In late November 2012 Serbia delivered a list of 30,000 potentially suitable ha in the southern part of the country. However, after a technical evaluation of some of the land plots Securum says it concluded that most failed to meet its criteria, informing the government that in order to meet its construction deadline it would consider other sites, including several open pit mines suggested by the Ministry of Energy. In January 2013 Securum inspected the two mine sites and expressed its interest in them. But after sending a letter requesting one of the sites to be officially allocated, Securum says it received no response.

In March 2013 Securum says its lawyers tried to contact the relevant ministries, but received no answer – so the law firm sent a letter to the energy minister, Zorana Mihaljovic, who replied that the two sites had not been officially offered and that what Securum had believed was an inspection had actually been organized as a tourist visit, with “no official purpose to identify any land plots from the two open pit mine sites to be suitable for solar parks construction.”

Securum says it then requested a new list of sites within 15 days, and sent an analysis which, it said, showed that only 135.5 ha of the original 30,000 were suitable for the project. The majority of the land, the company said, was located in flooded zones, mountain peaks, national parks or urban locations, leading Securum to conclude that the government had “randomly chosen” the land.

Missed Deadlines

In mid-June the energy minister responded, saying that “the Ministry of Energy will give its support in finding land appropriate for the realization of the solar park.” Said Securum, “The answer clearly shows that seven months after the deadline fixed in the agreement, the Ministry of Energy was still in search of land for the realization of the OneGiga Project.”

In a July letter, the Ministry claimed that Securum had failed to provide both requested bank guarantees and timely technical specifications for the land, despite numerous reminders. When the company did finally send its land analysis in November, the Ministry said, it was not adequate. The Ministry also said it had provided detailed maps of southern Serbia marking out transmission lines. In sum, the Ministry said that despite its best efforts, Securum had failed to find the offered land adequate, and so there was no use in continuing with the proceedings.

Securum called the letter "completely irrational" and said it "contained only fabricated arguments."  In particular, according to the company's legal team, because Serbia did not agree to provide a bank guarantee, it had been agreed by both parties that none would be provided from either side. In response to the Ministry's letter, Securum notified the government that it was terminating the project.

The Ministry of Finance and Economy said Serbia had put "more than its best efforts" toward finding suitable land. Serbia will not seek compensation from Securum for the cancellation.

Lead image: Magnifying glass over a map of Serbia, via Shutterstock

Read more solar energy news here.

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Tildy Bayar is a journalist focusing on the energy sector. She is a former Associate Editor on RenewableEnergyWorld.com and Renewable Energy World magazine.

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