Climate Change Program
For more information about CIEL's Climate Change Program, contact Niranjali Amerasinghe.
International Finance Corporation to be audited for its involvement in privatizing Kosovo's electricity grid
Compliance Advisor Ombudsman will undertake an audit of project after a complaint on IFC's involvement was received from Kosovo's Energy Union
For Immediate Release
23 May 2012
WASHINGTON, D.C.—The International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, has been providing advice to the Government of Kosovo on how to privatize its energy sector. The IFC project is part of a larger World Bank involvement, which also includes the development of a new coal mine and coal-fired power plant. The decision of the Compliance Advisor Ombudsman (CAO)—the IFC's independent grievance mechanism—to audit the IFC's involvement in the project comes as a result of a complaint filed by Kosovo's Independent Energy Union in August 2011. The Inspection Panel of the World Bank has just last month registered a complaint regarding the coal mine and plant.
The complaint that was filed by Kosovo's Independent Energy Union (SPEK) raised serious concerns about the IFC's failure to consider the project's impacts on the workforce, in violation of its own environmental and social policies. It is estimated that privatization of the electricity grid in Kosovo will result in the retrenchment of around 30% of employees within the first three years of the project implementation. In addition, it will contribute to the creation of a monopoly, jeopardizing Kosovo's ability to introduce competition in this field in the future as required by EU rules on competition for the energy market. Furthermore, privatizing the grid will result in dramatic increases of electricity tariffs, making it more difficult for people to access affordable energy in Europe's poorest nation. The CAO has decided to audit the project to determine if the IFC can ensure that the impacts and outcomes of its Advisory Services projects are consistent with its policies.
"SPEK is very satisfied with CAO's decision to audit IFC's work on this project. We are convinced that specific IFC policies in force have not been implemented properly in this project. We hope that the audit will emphasize the deficiencies in the project and that IFC will undertake the necessary measures to solve the problems that arise from the project implementation in due time in Kosovo, whilst informing its future involvement in similar projects," said Izet Mustafa of Kosovo's Independent Energy Trade Union (SPEK).
Kosovar Civil Society Organizations supported the complaint. Nezir Sinani of Institute for Development Policy points out that "IFC's involvement in the project was undertaken without proper due diligence. As such, we support the CAO's decision to audit IFC about their way of doing business in this case. We will continue to support SPEK along the way until a final decision of the audit is made available."
Chad Dobson, Executive Director of the Bank Information Center, emphasized that "Communities don't know that IFC uses its own funds to provide advice to the public and private sector through its Advisory Services. The IFC does not provide much information about Advisory Services projects, and even less about their environmental and social impacts." Dobson continued, "It is encouraging to see CAO step in and undertake an audit for this project which will have great implications for all of IFC's Advisory Services projects."
The World Bank is also engaged in supporting Kosovo's plan to build a new coal-based power plant and privatize the existing coal power plant. The project would lock the country into coal-based energy production for the next 40 years. As a result, it has been strongly opposed by Kosovo's CSOs. The Bank has been requested to shift Kosovo's approach from investing in coal towards diversifying its energy market and investing in renewables and energy efficiency.
"The World Bank needs to be held accountable for failing to adhere to its own policies designed to protect local communities, like those in Kosovo," said Niranjali Amerasinghe from the Center for International Environmental Law. "This project would significantly extend the lifespan of dirty power generation in Kosovo, resulting in devastating environmental and health impacts to an area that is already heavily contaminated."
"The World Bank is restraining the economic and environmental progress of Kosovo by subsidizing dirty, dangerous, and outdated fossil fuel projects," added Justin Guay of Sierra Club. "The World Bank's own former chief clean energy czar Dan Kammen has clearly shown clean energy alternatives that create more jobs than the dirty coal plant the World Bank Group is pushing."
The project will result in an increase of pollution in the small nation. Pollutants proven to cause or contribute to serious cardiovascular and respiratory illnesses such as heart disease and asthma, as well as neurological and developmental disorders, will directly impact the surrounding communities. In addition to the high levels of toxic pollutants that would be produced by this proposed facility, the project will have significant impacts on water - an added challenge in an environment already strained for water supply.
Niranjali Amerasinghe, Center for International Environmental Law, Phone: 202.742.5857, Email: firstname.lastname@example.org
Erica Straton, Bank Information Center, Phone: 202.737.7752, Email: email@example.com
Justin Guay, Sierra Club, Phone: 202.664.6460, Email: firstname.lastname@example.org
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