A Czech minister has called for an investigation into the sale of carbon allowances by Sanjeev Gupta’s steel operations in the country, saying the metal tycoon’s company has broken its promise not to do so.
Lubomir Zaoralek, the Czech Minister of Culture, said in a statement posted on his ministry’s website Friday that he would request an investigation into the transaction.
“Today, I learned that Liberty Ostrava had broken its promise and sold emission allowances worth more than Kcs 1 billion to Romania on the night of April 29 to 30,” he said. he declares.
A proposal to sell the carbon credits sparked controversy in the Czech Republic, with unions protesting the plan, fearing the plant would lose funds to modernize its operations.
The dispute comes amid growing concerns over the fate of GFG, Liberty’s parent company, which scrambled to refinance operations after its main lender, Greensill Capital, collapsed in March.
GFG has confirmed that the plant has sold 1 million emission allowances, estimated at 40 million euros, to the group’s sister plant, Liberty Galati, in Romania.
“The purchase was made at today’s market price, which will be paid to Liberty Ostrava immediately, with the option for them to buy back the allowances at a lower price in the future,” GFG said.
“An initial legal proposal to monetize part of the company’s excess allocation, with multiple measures to protect Ostrava’s business, was needlessly hampered by unions and the Czech government earlier this month,” GFG added, noting that it had since successfully ported the amended transaction.
The European carbon emissions trading system is part of its policies to combat climate change.
Large polluters, such as steel mills, receive a certain amount of carbon allowances free of charge each year. Credits are tied to individual factories and issued every February. Companies must surrender enough allowances to cover every tonne of emissions by the end of April of the following year.
It is understood that Liberty Ostrava currently has emission allowances worth approximately Kcs 5.6 billion. Earlier this month, the Financial Times reported that its sister factory in Romania was facing a carbon credit deficit. The market price for these allowances is currently at a historically high level.
Gupta’s metallurgical conglomerate, GFG Alliance, purchased the country’s largest steel plant in July 2019 from ArcelorMittal.