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A critical examination of the investment proposals for Unit 6 of the Sostanj Power Plant

The Holding Slovenske Elektrarne (HSE), owner of the Termoelektrarna Šoštanj power plant (ŠTPP) in Slovenia, has commissioned a plan to construct a new unit at this plant. The proposed Unit 6 will replace Units 4 and 5 and be fired using lignite from the nearby Velenje mine. The first investment plan was submitted in 2005 and subsequently adapted in 2006 and 2009 to qualify for loans from the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD). In 2011 a fourth revision of the investment plan was drafted, which was required as the EIB requested a state guarantee. The Slovenian “Decree on the uniform methodology for the preparation and treatment of investment documentation in the field of public finance” requires certain rules to be followed for a state guarantee of this nature. One of these specific rules concerns the expected rate of return on investments, which must exceed 7%. 

As with any investment plan, calculations crucially depend on the assumptions made with respect to the future development of costs and benefits. The CEE Bankwatch Network and Focus, association for sustainable development, asked CE Delft to review the investment plan for the new lignite-fired unit of the Šoštanj plant and investigate whether the crucial variables have been correctly assessed. This report analyses the investment plan and evaluates the assumptions regarding the future which underpin it.

Authors CE

Sander de Bruyn
Harry Croezen
Maarten Afman
Geert Warringa

Delft, November 2011

A critical examination of the investment proposals for Unit 6 of the Sostanj Power Plant


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