Albania: Kurum Hydro-01/Bradashesh
Local residents of Bradashesh
$44.91 million A Loan
IFC has one active project with Kurum International (“Kurum”) in Albania, a steel producing company that successfully bid for 4 hydroelectric power plants (HEPPs) – Uleza, Shkopeti, Bistrica I, and Bistrica II – that were privatized by the Albanian government. According to IFC, the investment will be to finance (i) the acquisition of the HEPPs; and (ii) the estimated EUR 10 million rehabilitation investment of these power plants. Through this Project, Kurum contemplates reducing its electricity purchase costs, and to secure reliable electricity sourcing in order to continue its operations without major disruptions. The project is classed as a Category B.
In June 2015, a complaint was lodged with CAO by several local residents who live in close proximity to Kurum’s steel plant. The complainants raise concerns about air pollution produced by the plant operations.
On the basis that energy generated from the HEPPs will potentially power the steel plants, the complaint was deemed eligible for further assessment in July 2015 and an assessment trip conducted in September 2015. During the CAO assessment the parties agreed to engage in a CAO facilitated dispute resolution process. In December 2015, the complainants and the company agreed to a set of ground rules to guide the process. The Assessment Report and Ground Rules/Framework Agreement can be found via the “View Documents” link below.
The parties agreed to address the major issues raised in the complaint, which they categorized as (i) air quality issues; (ii) noise issues; (iii) social issues concerning perceived lack of investment by Kurum in community development. As part of the dispute resolution process, Kurum committed to a number of investments to improve air quality and noise levels, and parties agreed to a participatory environmental monitoring activity to include community members in monthly monitoring activities within Kurum’s operational site, conducted by an environmental monitoring agency accredited by the Albanian government.
Following the participatory monitoring exercise, community members indicated an interest in working with the company to develop a joint fact-finding process, led by an international monitoring agency or expert, to improve transparency in the design and implementation of the monitoring process to look at questions related to the company’s alleged environmental impacts in the industrial area. Kurum indicated that the current monitoring process was being conducted by an accredited environmental monitoring agency, who were producing quarterly reports delivered to the respective Albanian institutions. At a final joint meeting in February 2018, Kurum committed to provide feedback to CAO regarding the possibility of a joint fact-finding process. Absent feedback from Kurum on their position since February 2018, or an agreement to enter a joint fact-finding process, CAO concluded the dispute resolution process. Per CAO’s Operational Guidelines for complaints that are not amenable to, or cannot be resolved through, dispute resolution, the case has been transferred to CAO Compliance for appraisal of IFC’s performance related to the project.
In August 2019, CAO released a compliance appraisal report. Upon review of IFC’s documentation, it is not clear that IFC’s decision to invest was made on the basis of a full understanding of the E&S risk mitigation framework for the investment. However, considering measures taken by IFC and its client to mitigate adverse pollution impacts of the client’s steel production facility, and the lack of clarity on the application of IFC’s E&S standards to the client’s steel production activities, CAO concludes that a compliance investigation is not the appropriate response to this complaint. As a result, the complaint is closed.
In August 2019, CAO completed a compliance appraisal of the complaint. The outcome of this appraisal was a decision to close the case.
Status as of August 09, 2019