The state power utility ESM has signed a three-year contract with Kosovo's state energy corporation KEK, giving it a concession at the Obilic mine and the right to extract around three million tonnes of coal over the next 36 months. The contract was signed by ESM director general Lazo Uzuncev and KEK director general Gramos Hasani.

The key number is the fixed price - 24.4 euros per tonne for the whole duration of the contract, with precisely defined quality parameters. A fixed price in energy means one thing: protection from market swings, at the cost of gaining nothing if prices fall.

What ESM promised

The company's calculation is specific. Burning Kosovo coal will increase the efficiency of the thermal power plants and deliver an additional 800 gigawatt-hours of electricity a year and revenue of around 57 million euros. Further savings are expected from a reduced need for heavy fuel oil.

There is an environmental calculation too. An annual reduction in CO2 emissions of 923,000 tonnes thanks to less coal burned, plus another 55,980 tonnes from lower fuel oil use.

That is the paradox worth naming: importing better coal is being sold as an environmental gain. Technically it is true - higher-quality coal means less mass burned for the same electricity. But it is still a calculation inside coal, not a way out of it.

70 percent of the electricity comes from thermal plants

Uzuncev gave the figure that explains the whole operation. Around 70 percent of total annual electricity production - now and for the next three years - comes from the thermal power plants.

Estimated annual coal purchasing needs, topping up domestic production, come to around 1.4 million tonnes: 600,000 tonnes for the Oslomej plant and 800,000 tonnes for the Bitola plant.

The constraint is called Blace

This is where the contract collides with geography. The Blace border crossing allows a daily transit of at most 120 lorries, or around 3,000 tonnes of coal a day. The realistic maximum annual quantity that can arrive from KEK is around 800,000 tonnes.

So: the requirement is 1.4 million tonnes, the maximum flow is 800,000. The contract covers a good part of the gap, but not all of it - and not because of the price or the quantity in the mine, but because of one border gate.

The coal and what is in it

The Kosovo basin at Obilic ranks among Europe's largest deposits of high-quality lignite. Laboratory testing showed low sulphur and ash content and an average calorific value of around 1,950 kilocalories per kilogram.

That fits the range the boilers at the Bitola and Oslomej plants were designed for - a calorific value of 1,800 to 2,400, sulphur below one percent and ash below 20 percent. In other words, this is not coal that will have to be adapted to, but coal that matches the existing equipment.

The contract is not in force yet

By the end of August at the latest, ESM has to publish a tender under the public procurement law to select the economic operator that will carry out the extraction, quality analysis, loading, transport, freight forwarding and unloading at the storage yards of both power plants.

Only once that selection is finalised and the operator is brought into work does the contract with the Kosovo partner formally enter into force. In other words - the signature is on paper, but execution depends on a tender that still has to be issued.

That is the point where contracts like this usually slow down. It is worth watching whether the tender really is published by the end of August.