INTERBLUE CO2 PERMITS CONTRACT PUBLISHED, SANS

C O N F I D E N T I A L SECTION 01 OF 02 BRATISLAVA 000241

SIPDIS

STATE FOR EUR/CE L. LOCHMAN AND K. ERTAS

E.O. 12958: DECL: 05/29/2019
TAGS: PGOV KCOR SENV LO
SUBJECT: INTERBLUE CO2 PERMITS CONTRACT PUBLISHED, SANS
"CONFIDENTIAL DATA"

REF: A. BRATISLAVA 207

B. BRATISLAVA 195

Classified By: Keith Eddins, CDA,a.i., for reasons 1.4 b and d


1. (C) SUMMARY: New Environment Minister Viliam Turksy
(Slovak National Party - SNS) published the controversial
contract arranging for the sale of CO2 permits to the
U.S.-registered Interblue Group (ref A and B),but critical
information including the price and number of permits sold
was deleted from the released text. Prime Minister Fico said
he considers the matter settled: Tursky met the obligation to
release the contract and the figures were excluded because
they were "confidential data." Fico has proceeded with plans
to invest the sale proceeds in thermal insulation projects,
but the opposition and media show no sign of relenting in
their investigations. END SUMMARY.

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SALE NUMBERS STILL UNKNOWN; HUNGARIANS GOT BETTER PRICE?
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2. (U) As one of his first acts in office, new Environment
Minister Viliam Tursky complied with the PM's demand that the
Interblue contract be made public. Because "confidential"
sales figures were deleted from the released text, the exact
price and number of permits sold continues to be in dispute,
with speculation ranging from 10-15 million tons of permits
sold and sales receipts ranging from EUR 60 to 76 million.
The opposition claims the National Register of Emission
Quotas records 15 million tons of assigned amount unit (AAU)
CO2 permits sold last year, raising the possibility that a
second earlier sale may have occurred. MPs plan to conduct
another fact-finding inquiry at the Ministry of Environment
(MinEnv) on May 29.


3. (U) The opposition is also outraged by contract language
stipulating Interblue's option to further purchase excess
AAUs until 2012. Fico's statements that a more competitive
bidder would still be able to purchase excess Slovak AAUs
appears to be at odds with the propietary language in the
contract reserved for Interblue.


4. (U) Responding to requests by the Slovak media, the former
Director of the department in the Hungarian Ministry of
Environment responsible for the sale of CO2 permits (who left
the position in October 2008) said he was not willing to
negotiate with a party looking for less than EUR 12 per ton
for comparable permits when he was at the Ministry. This
price is well above the reported Interblue sale price of
around EUR 5-6 per ton. PM Fico continues to insist he has
received no "official" document showing Slovakia received a
noticeably lower price than its neighbors.

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PROCEEDS DEDICATED TO RESIDENTIAL INSULATION PROJECTS
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5. (U) Undeterred by the Interblue controversy, the Fico
government has already earmarked Interblue sale proceeds to
fund one of its economic crisis priority measures,
residential thermal insulation projects. Using the State
Housing Development Fund under the Ministry of Construction
and Regional Development (also an SNS Ministry),the GOS will
provide no-interest loans to homeowners to encourage a 20
percent efficiency increase in residential energy use.


6. (SBU) While there have been some concerns about exactly
how Interblue sale proceeds in the MinEnv Environmental Fund
would be transferred to the State Housing Development Fund,
the State Secretary at the Construction Ministry responsible
for the program told us he is confident the transfer can be
"administratively" arranged by the Ministry of Finance with
minimal new legislation necessary. He expects the program to
be fully functioning in three to four months.


7. (C) COMMENT: Despite Fico's insistence that the Interblue
case is closed, both the opposition and media have told us
they plan on continuing to press the Fico government on the
issue. The media has focused on the troubles the PM is
having with his SNS partners, including speculation that
Interblue sale proceeds dedicated to thermal insulation
projects will ultimately benefit SNS. (Could it really be a
coincidence that the children of SNS Chairman Jan Slota
opened Slovben, a polystyrene insulation business, in the
last several months?) Solidarity with Fico's other coalition
partner, HZDS (Movement for a Democratic Slovakia),is also

BRATISLAVA 00000241 002 OF 002


fraying on Interblue, with HZDS Chairman Vladimir Meciar
suggesting a criminal complaint should be filed. Meanwhile,
Interblue Group is now reportedly attempting a resale of AAUs
in New Zealand. We will continue to closely monitor this
case. END COMMENT.
EDDINS