THE INSPECTION PANEL OFFICEMEMORANDUM 39714 DATE: May 2,2007 TO: Mr.Paatii Ofosu-Amaah, Vice President and Corporate Secretary, SECVP FROM: DilekBarlas, Acting Executive Secretary, IPN 88120 @* h I , EXTENSION: c SUBJECT: Requestfor Inspection ALBANIA: PowerSector GenerationandRestructuringProject (IDA CreditNo. 3872 ALB) Attached for distribution to the Executive Directors and Alternates please find a Memorandum from the Chairperson o f the Inspection Panel entitled "Requestfor Inspection - ALBANIA: Power Sector Generation and Restructuring Project dated May 2,2007. Enclosures INTERNATIONALBANK FORRECONSTRUCTIONAND DEVELOPMENT INTERNATIONALDEVELOPMENT ASSOCIATION THE INSPECTIONPANEL 1818 HStreet, N.W. Telephone: (202) 458-5200 Washington, D.C. 20433 Fax : (202) 522-0916 USA. Email: ipanel@worldbank.org EdithBrownWeiss Chairperson IPNREQUEST RQ07/03 May 2,2007 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND ALTERNATES OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION Requestfor Inspection ALBANIA: PowerSector GenerationandRestructuringProject (IDA Credit No. 3872ALB) Pleasebe advised that on April 30, 2007, the Inspection Panel (the "Panel") received a Request for Inspection (the "Request") related to the above-mentioned Project. The Panel registered the Request for Inspection in the Panel's Register on May 2, 2007, as provided in paragraph 17 of the Panel's Operating Procedures. It also delivered a copy of the Request to the President of IDA pursuant to paragraph 17 of the IDA Resolution that established the Panel. Enclosedfor your information are: (1) a copy of the Notice of Registration; and (2) a copy of the transmittal Memorandum to the President. Enclosures INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE INSPECTIONPANEL 1818 H Street, N.W. Telephone: (202)458-5200 Washington, D.C.20433 Fax (202) 522-0916 ' U.S.A. Email: ipanel@worldbank.org IPNREQUEST RQ07/03 May 2,2007 NOTICE OF REGISTRATION Re:Requestfor Inspection Albania: PowerSector Generationand RestructuringProject (IDA Credit No. 3872 ALB) On April 30, 2007, the InspectionPanel (the "Panel") received a Requestfor Inspection (the "Request"), dated April 30, 2007, related to the Power Sector Generation and Restructuring Project (the "Project") financed by the International Development Association (IDA) (Credit No. 3872 ALB). The Requestwas submittedby Mr.Lavdosh Ferruni, on behalfo f the Civic Alliance for the Protection of the Bay of Vlora (CAPBV). On May 2, 2007, the Panel received subsequently a second document containing evidence of authority o f Mr. Ferruni to represent eight persons who live in the city o f Vlore and who claim to be affected by the Project. ' The development objective o f the Project i s "to achieve signiJicant improvement in power systemperformance through: (a) priority investments to increase domestic thermal generation; and (b) measures to implement sector reforms and institutional strengthening."2 The objective is to be achieved through two Project components: a combined-cycle power station; and technical assistance and training. The first component includes the ``construction of a combined-cycle power station more Thermal Power Plant) at a six-hectare Greenfield site about 6 km north of Vlore adjacent to an oil tanker terminal" and the "rehabilitation of the adjacent oil tanker terminal, and connection to the transmission network. " The second component includes the "provision of technical assistance to the Albanian Power Corporation (KESH) for the implementation of the 1 These eight persons, Civic Alliance for the Protectiono f the Bay o f Vlora (CAPBV) and Mr.Ferruni, collectively hereinafter referred to as the "Requesters". * ProjectAppraisal Document on a Proposed Credit inan amount of SDR 16.9 million (US$25 million equivalent) to Albania for the Power Sector Generation and Restructuring Project, dated February 17,2004, hereinafter "PAD', pg.2. 1 Project, improvement of operation of KESH and sector reforms and provision of training to KESHinprocurement and environmental management."3 According to the Request, "if built, the Vlore Thermal Power Plant will destroy environment, tourism, safe Jisheries, natural habitat, ecosystem, coral colonies as well as the unique historical and cultural signijkance of the entire Mora Bay and Narta Lagoon. 114 The Request states that, "the Environmental Impact Assessment, in which the Bank has based its loan, refers only to one thermal power plant of 100 M,while in the decision of the GovernmentNo. 610 dated 09/21/2004 - which the Bank is or should have been aware of - it is explicitly written that it is agreed to reach a capacity of 300 MW in next phases. " The Request further indicates that "the Government approved (Law No. 9231 dated 05/13/2004)just one kmfar from Vlore Thermal Power Plant a concessional agreement of building of large oil storage deposit in the VloraBay. " According to the Request, "the procedures concerning the more Thermal Power Plant were already found in violation of Article 4 of the Aarhus Convention on Access to Information, Public Participation and Access to Justice, as determined by the Aarhus Convention Compliance Committee in its Draft Finding and Recommendations of March 23, 2007." The Requesters have confirmed that they contacted Bank Management on several occasions.' However they are not satisfied with the answers and explanations provided. The Requesters assert that the Bank Management failed to consider the fact that: "(a) the Project is based on the material misrepresentation of the site; (6) the Environmental Impact Assessment upon which the Bank's loan was based was misleading, illegal and wrong; and (c) the Bank's procedure leading to the Project is in violation of Albania's laws on environment, public participation, cultural heritage and Environmental Impact Assessment, as well we the EUs laws and guidelines."6 The above claims may, inter alia, constitute non-compliance by the Bank with various provisions o f the following operational Policies and Procedures: OMS 2.20 Project Appraisal OP/BP 4.01 EnvironmentalAssessment OP/BP 4.04 Natural Habitats OP/BP 4.12 Involuntary Resettlement OP/BP 10.04 EconomicEvaluationo f Investment Operations OPN 11.03 Management of Cultural Property inBank-Financed Projects OP/BP 13.05 Project Supervision Development Credit Agreement betweenAlbania and International Development Association for Power Sector Generation and Restructuring Project dated April 6,2004, pg.14. 4Requestfor Inspection, letter datedApril 30,2007, para. 3, p.1 5Letter to Orsalia Kalantzopoulos andNadir Mohammed dated June 20,2005; letters to Shigeo Katsu during the year of 2006 by Dr.Anna Kohen, Honorary Citizen of Vlora and Honorary Member of Civic Alliance for the Protection ofthe Vlora Bay; andmeetings inTirana with Orsalia Kalantzopoulos, Nadir Mohammed and Arlene Fleming. Requestfor Inspection, letter datedApril 30,2007, para. 5, p.2 2 Until further notice, all communications with the Requesters in connection with the Request will be sent to Mr.Lavdosh Ferruni as the representative o f the Requesters. Pursuant to paragraph 17 of the Panel's Operating Procedures (the `Operating Procedures'), Iam notifying you that Ihave, on May 2,2007, registered this Request inthe InspectionPanel Register. Inaccordance with paragraph 18 of the IDA Resolutionthat established the Panel (`Resolution'), paragraphs 2 and 8 o f the "Conclusions of the Board's Second.Review of the Inspection Panel'' (the `1999 Clarifications'), and paragraph 18 (d) of the Operating Procedures, Bank Management must provide the Panel, no later than June 1, 2007, with written evidence that it has complied, or intends to comply, with the Bank's relevant policies and procedures inrelationto the above-referenced Project. The subject matter that Management must deal with in a response to the Request i s set out in paragraphs 3 and 4 of the 1999 Clarifications. After receiving the Management response, the Panel will, as outlined in the 1999 Clarifications and as provided by paragraph 19 of the Resolution, "determine whether the Request meets the eligibility criteria set out inparagraphs 12 to 14 of the Resolution and shall make a recommendation to the Executive Directors as to whether the matter should be investigated." The Requesthas beenassignedIPNRequest Number RQ07/03 Yours sincerely, Mr.LavdoshFerruni Civic Alliance for the Protectiono fthe Bay o f Vlora Sami Frasheri, p20/10 Tirana Albania Mr.PaulD.Wolfowitz President InternationalDevelopment Association Room MC12-750 The Executive Directors and Alternates InternationalDevelopment Association 3 " I OY/WL7 Civic Alliance for the Protection of the Bay of Vlora (CAPBV) Aleanca Qytetare per Mbrojtjen dhe Zhvillimin e Gjirit te VlorBs Zyra Vlore; Lagjja Hajro Cakem, p2rball2 shtepise s2 Beut Zyra Tirane; Rr Sam1Frasheri P20/10 Tel/fax 250575 E: mail; Iferruni@icc-al.org; infoo@vloranerrezlk.org; www.VlpraNeRrezik.org To: Executive Secretary, The InspectionPanel 1818HStreet, NW, Washington, DC 20433, USA F ~ N o202-522-0916; . 1.I,Lavdosh F e r n s o d e h a l f o fthe Civic Alliancefor the Protectionofthe Bay of Vlora (CAPBV)that represents a sizable number o f local residentsliving inVlora andthe area knownas Treport Beach present the following complaint before the Inspectional _.__ il_l___ ~*.*w.*k" -0- Panel .CAPBV's and my address are attachedbelow. 2. We have suffered, or are likelyto suffer, harmas a result ofthe World Bank`s failures . or omissionsinthe Vlora Thermal Energy Power Plantproject [TEPP] [Project IDPO 775261to be located inTreport, Vlora, Albania, 3. Describe the damage or harmYOU are sufferinp or are likely to suffer from the project or program: Ifbuilt, the Vlora TEPP will irrepiirably destroy environment, tourism, safe fisheries, natural habitat, ecosystem, coral colonies as well as the uniquehistorical and cultural significance ofthe entire Vlora Bay andNartaLagoon. Inshort, it will destroy our past, present andfuture. 4. [List (ifknown) the World Bank'soperational polices YOU believe have not been observedl. We believe the Bankhasviolatedpolicies concerning environment, public participation, cultural heritage, the requirement for full compliance with Albania's domestic laws. There is violation of the WorldBank's own guideline for new thermal power plants.(This guideline says: "When there is reasonablelikelihood that inthe mediumterm the power plant will be expandedor other pollutionsources will increase significantly, the analysis should take account o fthe impact of the proposed plantdesign both immediately and after probable expansion incapacity or inother sources of plantof 100MW, while inthe decision of government No. 610 dt. 21.9.2004-whichthe pollution"). The EIA, inwhich the Bankbased its loan, refers only to one thermal power Bankis or should have been awareof it is explicitly written that itis agreedto reacha - capacity of 300 MW innext phases. Also the government approved (Law No. 923Idt. 13.5.04) just one kmfar from TEP Vlora a concessionalagreement of buildingoflarge oil storage deposits inthe Vlora Bay. 5.We have complained to WorldBank staff onthe following occasions: Letter to Orsalia Kalantzopoulos'andNadir Mohammed, on date 20 June 2005l; various letters to Mr. Shigeo Katsu duringthe entire year of 2006 by Dr.Anna Kohen, Honorary Citizenof Vlora andHonorary Member of Civic Alliance for the Protection o f the Vlora Bay', meetings inTirana with Ms.Orsalia Kalantzopoulos, Mr.Nadir Mohammad, Ms.Arlene I