- The Data Journalists reveal the scathing document from the European Commission’s Directorate General for Regional and Urban Policy (DG REGIO), which lists 31 “blows” to the Greek government.
- An “accusation” for serious design flaws, excessive operating costs to be paid by municipalities and citizens, violations of European regulations, manipulated data, illegal state aid, waste in a NATURA site, and the lack of a public authority to manage the project.
By Aris Chatzigeorgiou
The government has been proven incapable of securing a 70-million-euro subsidy for the waste management project in the Peloponnese region. In a document containing 31 severe observations, the European Commission’s Directorate-General for Regional and Urban Policy (DG REGIO) rejects the request for European funding for a project already inaugurated by Prime Minister Kyriakos Mitsotakis, built by TERNA Energy with taxpayers’ money and already paid for by the citizens.
The lost subsidy has been announced since the integrated waste management project in the Peloponnese was put out to tender as a public-private partnership (PPP) in 2011, during the first bailout agreements. TERNA Energy was identified as the provisional lowest bidder as early as 2013, the contract was signed in 2018, but it was officially activated amid much fanfare during the pandemic in 2021. Ironically, the Mitsotakis government admitted even then that the project would start without European funding, as the Commission had been raising objections since 2020. Four years later, despite promises that the necessary measures would be taken, the funding application is again “suspended” and the 70 million euros will be missing from other projects that the “executive state” announces at every opportunity.
Data Journalists present the damning document ( pdf ) in its original form as it was received by the Greek authorities last March (27/3/24), only to be hidden away in a drawer. DG REGIO states unequivocally that it is “suspending” the review of the application (note: the same action was taken in the summer of 2020) and demands answers to 31 questions within two months. These questions reveal the serious design flaws, including the operating costs that municipalities and citizens will bear, the violation of European regulations, and the lack of a public authority to manage it:
(pdf )
PPP without the public sector
Before answering the 31 questions, DG REGIO addresses the basic principle, emphasizing that a public-private partnership does not mean that the private investor does everything: “According to Greek legislation, the entity responsible for the coordination, planning, implementation, and operation of the Integrated Solid Waste Management (ISWM) system is the Waste Management Agency (FODSA Peloponnese).” This agency includes all municipalities in the Peloponnese region and is chaired by Giannis Smyrniotis, who held the same position in 2013. “However, since 2012, due to a lack of technical, administrative, and organizational capacity, FODSA Peloponnese has transferred its rights and obligations to the administration of the Peloponnese region through a programmatic agreement.” The Commission continues:
For the project to be sustainable and properly managed, FODSA Peloponnese must have full ownership of the investment and the necessary administrative capacity to oversee all technical, financial, and organizational matters related to the investment. This includes ensuring the professional management (day-to-day operations, maintenance) of the three Waste Processing Units (WPU), the two Transfer Stations (TS), and the three Landfills (LF), as well as other planned investments (15 TS and two Biowaste Units).
This is where the criticism of those who despise the public sector comes in: “Even if a significant part of the actions is based on cooperation with private companies, the aforementioned tasks will require considerable technical, financial, and organizational capacity. Because currently “FODSA is considered to be incapable of successfully implementing and managing the PPP project” (section A.4.1 of the application), it is important to demonstrate that FODSA Peloponnese is acquiring the capacity to ensure the sustainability of the project”.
Lack of trust
DG REGIO’s subsequent remarks indicate a complete lack of trust, as the document not only demands a timetable for the delivery of the project from the Peloponnese region to FODSA, and especially before the Commission makes its final decision on funding. It also demands:
- FODSA’s board of directors and each municipality individually to confirm in writing their decision to undertake the project and “all obligations arising therefrom.”
- FODSA and the municipalities must also confirm in writing that they approve the pricing policy outlined in the cost-benefit analysis and “will implement it as described”.
- A written confirmation that “the waste collected and delivered to the processing facilities (quantities, composition) will correspond to the projections included in the financial analysis.
In particular, some municipalities are already refusing to pay the tariffs imposed by TERNA Energy and the Commission is aware that this may lead to the costs being covered by public funds through “state aid”. They also know that the current design does not lead to a reduction in the amount of waste being landfilled rather than recycled, as required by European regulations.
DG REGIO wants to fund a project that not only benefits the private investor, but also serves the interests of citizens and the environment. For this reason, it is requesting
- The final organization chart of the Peloponnese Waste Management Authority (FODSA Peloponnese), including the number of staff and job titles, and a timetable for achieving full operational capacity.
- The current number of staff and their qualifications (noting a significant shortage of staff).
- It emphasizes that there is “insufficient information on the existing administrative and financial capacity of FODSA Peloponnese to set and collect entry fees from beneficiary municipalities and to make payments to the Region”.
- It requests information on “the tariffs, the collection rate from the municipalities and the payments made to the Region over the last two years” and clarification on whether “any municipalities have outstanding debts”. It requests “confirmation of the sound financial status of FODSA Peloponnese (cash flow, net income, debt).
Low Recycling Rates – Increased Revenue
The Commission highlights the flawed design of the entire project. It states that it is subsidizing projects where 50% of the total waste is processed so that the remaining 50% is recycled separately (source separation with 5 separate streams for garden-kitchen biowaste, paper, plastic, glass, metal). However, the project under construction will process 190,000 tons per year, which is more than 50% of the 280,000 tons produced. This means more income for the private investor, who will process more tons, but also additional costs for the citizens and the environment. It, therefore, calls for a “timetable for adapting the plant to increased recycling”. It also emphasizes that the goal of diverting 22% of waste to sanitary landfills by 2035 is too high and goes beyond the European acquis (the goal for the circular economy is 10%).
At the time the application was submitted, only one Waste Management Facility (WMF) was operational in Arcadia, which was ceremonially inaugurated by Mr. Mitsotakis in November 2023. Something is amiss, however, as the Commission asks for “actual data” on the quantities and types of waste arriving at the WMF gate, as well as data on recycling and sanitary landfilling, to compare them “with the targets set in the current contract with the operating company.
Manipulated Data
The Commission notes inaccuracies in the data submitted in the funding application, which gives a distorted picture. It is noted that the declaration of 40,004 tons of recycled waste is incorrect, as more than half (21,349 tons) is delivered to the WMFs without prior separate collection. Therefore, the recycling rate of 18,655 tons remains low at around 10%.
The funding application includes a projection that the recycling of organic waste will increase from 18,655 tons to 68,223 tons by 2025. However, “there is no mention of additional investments that would justify the increase of 50,000 tons within one year,” it says somewhat ironically.
Unveiling Inconsistencies in Waste Management Strategies
To encourage the separate collection of recyclable waste, specific incentives are used internationally. One of these is that municipalities pay a higher fee if they deliver mixed waste. However, DG REGIO points out that in the Peloponnese, “the planned entry fee to the waste treatment facility does not distinguish between mixed and separately collected waste. In reality, the entry fee seems to provide a lower bill for municipalities delivering large quantities, including mixed waste, which seems counterproductive,” it stresses. Obviously, they ignore that in Greece the strategy is to increase the income of the investors…
Indirectly, the Commission also suggests that important information is being withheld. As noted above, the funding request mentions two transfer stations; however, the study includes an additional 15 stations that are not included in the Integrated Waste Management Plan but will be funded by European funds. “You are invited to explain why these transfer stations are not included in the options analysis and to further explain their operation and integration into the project under consideration,” says DG REGIO.
Garbage in the NATURA area
The European Commission is raising an issue regarding the installation of one of the plants (MBT Lakonias) in a NATURA site, which has led to local reactions and appeals. This MBT was inaugurated last April by the Minister of Environment, Th. Skylakakis, but DG REGIO notes that the documents it has received “lack information on nearby Special Protection Zones and assessment of cumulative impacts with other projects” and requests a “revised version of the NATURA 2000 statement in line with the European Commission’s guidelines and the Habitats Directive”.
Excessive costs for households
The European Commission also finds that the burden on households from the operation of the waste management system exceeds the affordability threshold. This burden comes from municipal fees paid through electricity bills, and the document states that “residential tariffs exceed 1% of average disposable income of households for most of the reference period”, which is 29 years. Additional information is requested on this issue, following an earlier finding that the private investor was favored. The document notes that a previous analysis included “double counting of investment expenditures,” which has now been corrected. However, these investment and operating costs determine the costs and profits, and the new analysis states that “the calculation of the rate of return for the private sector partner cannot be validated” because “information on revenues (quantity and price of recyclable materials and energy for sale) or an analysis of operating and management costs is not provided. It is therefore requested that the relevant information be provided and that “the documentation be updated as necessary”.
The “Integrated Waste Management of the Peloponnese with PPP” project was officially announced on January 4, 2012, with a budget of 150 million euros, European funding of 66 million euros, and an operating period of 28 years, including two years for the construction of the facilities. When the first unit was inaugurated by Kyriakos Mitsotakis in November 2023, the announcements mentioned an investment of 167 million euros, with 65 million euros of European funding. At the inauguration of the second unit in Lakonia in April 2024, the European funding was announced to be 70 million euros.
TERNA Energy was selected as a provisional contractor in 2013, during the term of regional governor Petros Tatoulis, and the projects were considered a “national challenge” by the then Minister of Environment Giannis Maniatis (now a candidate for the European Parliament with PASOK), the then Secretary General of the Ministry Nadia Giannakopoulou (now a PASOK MP), and the then representative of the European Commission George Kremlis (special advisor to Prime Minister Kyriakos Mitsotakis). However, the investment remained at a standstill for years due to significant disputes and appeals, while P. Tatoulis reported obstacles even within the New Democracy party.
The contract was finally activated in 2021 without secured European funding, although at that time the Secretary-General for Waste Management, Manolis Grafakos (who remains in the same position), thanked the Europeans for their financial support.
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