Coal Supply Agreement VERBUND-GKB Up To Mid-2004


After three years of difficult negotiations triggered by the liberalization of the electricity market, GKB-Bergbau and VERBUND-Austrian Thermal Power GmbH & CoKG (ATP), formerly Draukraft, have now reached an agreement based on the ElWOG and "stranded costs" regulations issued by the minister for economic affairs on the reorganization of the coal supply contract of 1977.

The agreement, which was signed by the two contracting parties at the beginning of June, stipulates the supply of brown coal by GKB-Bergbau only up to June 30, 2004 (not up to the end of 2008) – however, at the frozen rate of 1999.

This revision brings an end to the largest potential danger for the historic mining company in western Styria; GKB-Bergbau was in danger of debt overload in the medium term due to the ever increasing claim vis-à-vis ATP.

Although the approximately 240 employees took the legal certainty with relief at a works meeting on Friday, they actually had to accept the early shutdown of brown coal strip mining. With the agreement that was just reached, the closure of GKB-Bergbau, which means the loss of an important employer in this region, was inevitably fixed for the year 2004.

ATP also regrets this development, which is a result of the liberalization. At a works meeting on Friday, the approximately 100 employees of the Voitsberg power plant location were informed that the power production will be shut down in the year 2006 at the latest, which also means an early loss of jobs.

The contracting parties have not yet reached an agreement on the open amount of 21.1 million EUR for coal supplied between 09-01-2000 and 09-30-2001. For this period, ATP is entitled to receive – according to the "stranded costs“ regulations – plant subsidies for coal deliveries or the power plant of Voitsberg from all Austrian grid operators and, therefore, wishes to pay the outstanding debts for the coal deliveries to GKB-Bergbau only after receipt of these subsidies. So, whereas the mining company needs this amount for the forthcoming closure works and recultivation, ATP is not willing to answer for the money for the defaulting grid operators. The action pending in this matter at the commercial court of Vienna has not yet been concluded.

With an orderly withdrawal from mining in the county of Voitsberg in mind, hopes are that this point at issue will be solved soon, i.e. through payment of the stranded costs charge by the defaulting grid operators (after all the bulk of this sum has already been paid to the grid operators by the end users).