vinaròs

Spanish authorities ordered to pay back €17.3m to customers charged for maintenance costs in their bills

Indignation at the Castor Project has increased due to the €1.35 billion payment issued by the Spanish Government to Escal UGS, the company behind the controversial offshore gas platform. The amount will be charged through gas bills to consumers over the next 30 years, starting on April 2016, making individual citizens pay the private-business bailout, partially funded through €1.4 billion worth of bonds from the European Union. This business project failed after a gas injection caused almost 1,000 small earthquakes in Southern Catalonia and northern Valencia. The Spanish Executive has been forced to compensate the company due to clause 14 of the 2008 Royal Decree, according to which the state would pay for the bailout in the event of the project failing to come to completion. 

On Friday, the Spanish Government approved the €1,350 million compensation to Escal UGS, the company behind the controversial Castor Project, a submarine facility built to store 1.3 billion tonnes worth of gas reserves off the Ebro Delta coast. This project failed after it was found to have caused almost 1,000 small earthquakes. This amount will be financed through increased tariffs to gas consumers over the next 30 years, resulting in public compensation for a private investment. The Spanish Government is obliged to pay the developer Escal UGS, because of a clause in the 2008 Royal Decree whereby the State would agree to compensate the company should the project be unable to be completed. An appeal of this law was rejected by the Spanish Supreme Court last October. The Spanish Government has argued that this solution is cheaper than operating the project. The Catalan Government however, which had opposed the project from the start, has appealed this decision to the Constitutional Court.

The Spanish Government plans to compensate €1.35 billion to the companies behind the failed Castor project, the off-shore gas storage facility built off the coast of Vinaròs, a Valencian town near the Catalan border. The company Escal UGS, controlled with a 66.7% stake by ACS, filed a claim in July last year for the €1.6 billion cost. The project which funded with €1.4 billion worth of bonds issued by the European Investment Bank in a controversial new funding scheme, was forced to temporarily stop a few weeks after it began in September last year, after it was found to be responsible for almost 1,000 earthquakes in Catalonia's Ebro Delta.  However, due to a clause from 2008 in the agreement, Escal was legally entitled to compensation. The Spanish Government tried to free itself of this obligation, but last October the Supreme Court allowed it. This decision has been highly controversial and will cause further political, financial and ecological earthquakes.

A series of earthquakes measuring between 2 and 4.2 on the Richter scale have been affecting the coast of southernmost Catalonia and northernmost Valencia in the last few weeks but particularly since last weekend. All the evidence suggests that the Castor offshore gas reservoir is behind the earthquakes. In 2009, the Spanish Government approved the building of an underground gas reservoir located under the sea bed, some 20 kilometres offshore from the Ebro Delta and Vinarós, using the cavity in the rock from a former oil field. Madrid approved the project without an earthquake risk report, despite a formal petition from the Catalan Government. Now, geologists, the Spanish Industry Ministry and the company admit that the injection of gas into the rock could be triggering the earthquakes. Activities have been stopped and the Public Prosecutor’s Office is investigating the case.

The Spanish Government had initially authorised the demonstration in the Valencian Country (also called Valencian Community). However, on Monday, two days before the peaceful event, the Sub-Delegation of the Spanish Executive in the Province of Castelló, decided to ban the human chain in its territory for “security reasons”. The ‘Catalan Way towards independence’ is a peaceful human chain that calls for Catalonia’s independence from Spain, and is inspired by the ‘Baltic Way’. It will cross Catalonia from north to south, a distance of 400 kilometres. In other Catalan-speaking territories, which were many years ago under Catalan rule such as the Valencian Country or the French Catalonia, human chains will also be organised by local organisations.