A Czech minister has demanded an investigation into the sale of carbon emission rights by Sanjeev Gupta’s steel operations in the country, saying the metal tycoon’s company had broken its promise not to do so.
Lubomir Zaoralek, the Czech Minister of Culture, told a statement posted on his department’s website Friday that would call for an investigation into the transaction.
“Today I learned that Liberty Ostrava had broken her promise and had sold in Romania the emission rights worth more than Kcs1bn on the night of April 29-30,” he said.
A proposal to sell carbon credits has sparked controversy in the Czech Republic, with unions protesting the plan amid fears the plant will lose funds to modernize its operations.
The dispute comes amid growing concerns about the fate of GFG, Liberty’s parent company, which has struggled to refinance its operations following the collapse of its main lender, Greensill Capital, in March.
GFG confirmed that the plant had sold 1 million emission rights, estimated at 40 million euros, to the group’s sister plant, Liberty Galati, in Romania.
“The purchase has been made at the current market price, which will be paid immediately to Liberty Ostrava, with the opportunity that you can repurchase the rights at a lower price in the future,” GFG said.
“An initial legal proposal to monetize a proportion of the company’s excess allocation, with multiple measures to protect Ostrava’s business, was unnecessarily obstructed by unions and the Czech government earlier this month,” he said. add GFG, noting that he had since managed to carry out the modified transaction.
The European carbon emissions trading scheme is part of its policies to tackle climate change.
Large pollutants, such as steel, receive a certain amount of carbon diets for free each year. Credits are linked to individual plants and are issued every February. Companies must deliver enough rights to cover each ton of emissions by the end of April of the following year.
It is understood that Liberty Ostrava currently has emission rights worth about 5.6 billion Kcs. Earlier this month, the Financial Times reported that its sister plant in Romania was facing carbon credit deficit. Currently, the market price of these rights is at an all-time high.
Gupta’s metal conglomerate, GFG Alliance, bought the country’s largest steelmaker in July 2019 from ArcelorMittal.