The Dominican Republic National Committee to Combat Climate Change (CNLCC) has written to French Bank Societe Generale, among others, over their funding of the new Punta Catalina coal plant. A contract was signed by the bank on 23 December 2015, just 11 days after the Paris Agreement on climate change was concluded at COP21. The coal project is mired from corruption allegations in Brazil affecting the firm contracted to build the plant, plus transparency allegations in the Dominican Republic, and against the wishes and needs of the local population in Peravia Province (south).
The letter (PDF)(en) to Societe Generale, dated 6 April 2016, asks for clarification of contractual arrangements and states:
"There are a number of significant risks involved in this project, including:
1. Allegations of corrupt practices connected with the tendering process for the project persist, as do growing concerns about the financial burden the project could represent for taxpayers.
2. Environmental and health impacts for the local population and the associated risk of social conflict.
3. The threat posed to the climate in general and to Société Générale’s credibility as a supporter of urgent climate action."
The 770 megawatt coal-fired Punta Catalina power station project is being promoted by the Dominican Corporation of State Electrical Companies (CDEEE). The project includes the construction of a coal terminal with a capacity of 80,000 tonnes, as well as related facilities such as conveyors, cooling water systems and water treatment, and a power substation. Total cost is calculated at USD$2 billion, although there are allegations this is an inflated estimate.
On 31 December 2015 Société Générale participated in the disbursement of $200 million, the first instalment of a total amount of financing from European lenders for the Punta Catalina project expected to reach $632.5 million. Other European banks funding the project include Deutsche Bank, ING, Santander and UniCredit.
However, the contract was dependant on a related loan agreed with the National Bank for Economic and Social Development of Brazil (BNDES) to co-finance the project, and this money has not been received due to corruption allegations in Brazil.
"You should be aware that BNDES is currently unable to execute this loan as it is being investigated by the Attorney General of the Federal Republic of Brazil for its role in a corruption scandal involving Petrobas and alleged influence peddling." advises the letter.
Under the contract with the European Banks the initial payment received by the Government of the Dominican Republic should have been returned by 31 March 2016.
The CEO of Dominican Republic’s State-owned Electric Utility (CDEEE), Ruben Jimenez Bichara, commented on the delay in the construction of the Punta Catalina coal-fired power plant, being built by Brazilian firm Odebrecht. He advised that it was 'an internal process in Brazil, which in his view, is politically-motivated, with “distorted” information' according to a report in Dominican Today.
In February 2016 the The National Committee to Combat Climate Change (CNLCC) asked Justice minister Francisco Dominguez to immediately open an investigation into the ties between the allegedly ballooned costs of the coal-fired plants at Punta Catalina, the Brazilian contractor Odebrecht and political adviser Joao Santana since 2012, during the administration of Dominican Republic’s ruling party (PLD).
“This is all part of an ‘all-inclusive’ that benefits the existing public-private mafia in both countries,” the group said, and called the scandal 'Joaogate." reported the Dominican Today website.
Dominican president Danilo Medina met with Brazil's Foreign Minister last year and was warned that an investigation was underway into the links and malicious behavior of Odebrecht overvaluing the Punta Catalina coal plants by around one billion dollars and influence-peddling in the BANDES bank loan for the project.
There are also allegations made in January 2016 by prominent Dominican attorney Namphi Rodriguez, a specialist in constitutional law, that the so-called "hidden contract" to build two coal-fired power plants violates the Constitution and the Public Procurement Law. He argues that it was an attempt to turn a power of attorney from president Danilo Medina into an authorization, ignoring the principles of transparency, objectivity, equality and publicity, reports Dominican Today.
In March 2016 Energy and Mines minister Antonio Isa argued that the Punta Catalina coal-fired plants will lead to lower electricity costs and lower greenhouse gas emissions, but that coal generation wasn't the ideal model, for which renewable energies must be developed.
"It will replace others that spew more (greenhouse gases), obsoletes, apart from improving the cost of the energy matrix, making it more feasible. But that is not the model we're going to copy, we will now wager on cleaner renewable energy," Isa said. He identified a need for renewable energy funding. "A funding mechanisms must be created to encourage investment in such to development."
The argument for building new coal plants, or gas plants for that matter, is spurious as renewable energy generation systems continue to fall in price. Once built these coal plants will continue to emit Greenhouse Gases for their expected lifetime operation of 40 years. If closed early, they will be stranded assets costing the Dominican state, while the contract builders and banks pocket the profits from the loans to build the project.
Local Community opposes coal plants
The local community expressed their opposition in October 2014 at Bani city Hall. They articulated that the local population lacks drinking water and irrigation, despite increased dam levels. Instead of rationalizing water, it is all diverted to the city of Santo Domingo. The new coal plants are also likely to rely on this water supply to the detriment of local farmers.
At Bani Town Hall people argued that under the pretext of solving the blackouts, the pollution from the coal-fired plants will pose a threat to people’s health, the environment, farming and livestock in the province.
"Neither Bani nor other Peravia province communities have been given the opportunity to decide whether to suffer pollution’s consequences caused by the plants being built at Punta Catalina. The authorities have made no effort to seek less-polluting fuels other than coal for these plants," they said reported Dominican Today.
In February 2015 the citizens of Paya township in Peravia Province (south), which would be the community most affected by the ash from the coal-fired plants being built at Punta Catalina, held a protest organised by the Paya Development and Defense Committee (CODEPA) and supported by the Peravia Province Health, Environment and Agriculture Defense Committee, the Marco A. Cabral Canal Rescue Committee, the Banilejos Farmers Federation (FECABA), the Popular Bloc and other Paya, Bani and Peravia Province organizations.
They complain that some houses haven’t gotten a drop of water in their homes for more than one year.
“While the state spends hundreds of millions of dollars in a coal plant to crucify the people of Paya, various community sectors don’t receive water for not having a few thousand pesos to repair Pay’s aqueduct and because the government has yet to finish the Provincial aqueduct where they have squandered more than five billion pesos and now turns out that not a single penny appears to conclude it,” the organization said according to a Dominican Today Report.
The National Committee to Combat Climate Change (CNLCC) urged in their letter to Societe Generale in April 2016 to reconsider involvement in the project.
"We also urge Société Générale to seriously reconsider its involvement in the Punta Catalina coal plant project, and ultimately end your support for it. This, we believe, should start with the provision of a public commitment stating that your institution will not participate in the forthcoming scheduled payments for the construction of the project. " says the letter.
Coal out of synch with Dominican Republic 2030 vision
The Dominican Republic submission (PDF) to the UNFCCC outlines a vision for 2030, but this sustainable development vision does not fit with building new coal plants for electricity.
The INDC states a target Reduction of 25% of base year emissions (2010) by 2030. "This reduction is conditional upon favorable and predictable support, feasible climate finance mechanisms, and corrections to the failures of existing market mechanisms".
The proposed level is ambitious. The Dominican Republic is a middle-income country, however, it faces a number of development challenges, such as: poverty, education, health, security, etc., that exacerbate the challenge of adaptation and decoupling emissions from the economy.
In terms of emissions, the Dominican Republic represents less than 0.1% of global emissions. Per capita emissions are below the average for Latin America and the Caribbean region (4.9 tCO2e). However, the emissions trends of some economic sectors are important, especially transport, energy, manufacturing and construction, waste and agriculture.
It is obvious Dominican Republic needs development assistance with renewable energy to help meet it's 2030 vision and supply electricity to meet demand and avoid the current blackouts that occur. Building coal plants does not help either the country and it's population, or the global community, in meeting emissions reduction targets.
Clearly funding a coal plant in the circumstances of corruption surrounding the main Brazilian contract builder, the questionable transparency arrangements in the Dominican Republic, and against the local community needs should be heeded.
“Coal’s OK on the other side of the world” @SocieteGenerale in DominicanRepublic we say NO! https://t.co/USYGOF1C0K pic.twitter.com/0Mvl8hRXPZ
— Amis de la Terre FR (@amisdelaterre) April 6, 2016
Paris: Société Générale occupied over #panamapapers tax haven disclosures
Société Générale has also come in for extensive criticism for their unconscionable financial behaviour using tax havens and setting up offshore shell companies in association with Panamanian law firm Mossack Fonseca for clients to avoid taxation liability and perhaps engage in taxation fraud. This is despite assurances to a French Senate committee that the bank wouldn't be doing business in any OECD "grey" listed states.
In Paris, activists with Attac France occupied the private bank Société Générale over disclosures in #panamapapers regarding tax haven administration of shell companies in helping hide money and avoid tax that could be spent to create jobs and on social and environmental programs.
"The British banking giant HSBC and its subsidiaries alone account for more than 2,300 of the companies, and UBS accounts for more than 1,100. Other big banks doing business with Mossack Fonseca included Société Générale (979 companies), the Royal Bank of Canada (378), Commerzbank (92), and Credit Suisse (1,105)." reports the ICIJ Panama Papers investigation.
Attac France denounced the involvement of the bank in the "Panama Papers" scandal and called for the blocking of 103 private Société Générale agencies throughout France in a media release (fr).
"We call for these actions openly, in the spirit of nonviolent action and civil disobedience, respecting the people while showing our determination to change this injustice. We are committed to continue these actions until the government finally take the measures necessary to end tax evasion." the Attac statement says.
They accused French banks of organizing tax evasion on an industrial scale. Each year there is a massive amount of euros missing from the state budget due to fraud and tax evasion, Attac says. This money could create hundreds of thousands of jobs in response to social and environmental emergencies.
"How many scandals before Hollande holds to his promise in 2012: 'prohibit banks to operate in tax havens'" ? See 2012 tweet below by @fhollande:
Aucune banque française ne pourra plus avoir d'activité dans les paradis fiscaux. #FH2012
— François Hollande (@fhollande) February 15, 2012
Stephanie Lamy (@WCM_JustSocial) reports in a tweet that @SocieteGenerale CEO Frédéric Oudéa worked with Nicolas Sarkozy when the latter was Minister of Finance. Very cosy.
In 2012 @SocieteGenerale CEO Frédéric Oudéa promised a senatorial commission that the bank wouldn't be doing business in OECD "grey" list states tweeted Lamy.
You can read Societe General reaction to the Panama Papers in a media release (en).
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