IRM Compliance Review VLORË THERMAL POWER GENERATION PROJECT April 2008

Background €40m sovereign guaranteed loan, EBRD approved June 2004 (co-financed) WB EIA process and consultation under way prior to EBRD involvement WB site selection study and consultation completed (October 2002) before EBRD Concept Review (June 2003) Complaint received April 2007, EAR approved October 2007, CR approved April 2008

Grounds of Complaint EP Section I, paras. 1-3: ‘sustainable development’ EP Section II, para. 6: ‘precautionary approach’ EP Section II, para. 11 and Section III, para. 26: information disclosure and public consultation (Annex 2) EBRD Policy on Cultural Property – World Bank OPN No

Sustainable Development Article 2.1 vii EBRD Agreement; EP Section I, para. 2 – sustainable development EP Section I, para. 2 – inter-generational equity EP Section I, para. 3 – broad understanding of ‘environment’ Specific obligations re projects - EIA

Precautionary Approach EP Section II, para. 6 – natural biodiversity resources Conceptual (though uncertain) approach to environmental decision-making (standard- setting; clean technology, etc.) Specific obligations re projects – EIA (EP Section III, para. 14 – ‘precautionary approach to assessment of env. Impacts’ –(i) identification of risk / requirement for EIA –(ii) broadest possible range of impacts studied

Information Disclosure and Public Consultation EP Section II, para. 11: ‘enabling dialogue with stakeholders’ – Aarhus Convention EP Section III, para 26: meaningful public consultation re EIA projects, re design, location, technology, timing, etc. (Annex 2 – consultation at each stage of EIA)

Precedential Issues ‘material violation’: seriousness of consequences / significant harm Determination of substantive / procedural requirements of general principles: sustainable development; intergenerational equity; precautionary approach; EIA Relevance of interpretive decisions – ACCC interpretation of Aarhus Convention requirements EBRD should take active steps to ensure adequacy of measures taken by co-financiers

Findings Adequacy of EIA: –SEETAC Review of 2003 Final EIA; 2004 EIA Addendum; requirements of Albanian legislation; undertakings re EMP; EP Section III, para. 16; EU and intl. standards (WB / Espoo) –Scrutiny of impacts: tourism, fisheries, coral, cultural property, Narta Lagoon –Screening for EIA (300 megawatts) –Broad consideration of impacts (location, mercury

Findings Public Consultation –EBRD relied on WB public consultation re plant location –ACCC concluded Albania failed to comply with Art. 6, paras. 3, 4 and 8 due to unclear circumstances re public meeting of October 2002 (announced, meeting records, etc.) –ACCC expressed further concerns re meetings of April 2003 and September 2003 –ACCC determination: once decision taken (re location), public involvement in later stages of decision cannot meet requirements of Aarhus Conv –EBRD Env Dept Guidance re meaningful consultation –Material violation warranting remedial changes to EBRD practices and procedures (but not in scope or implementation of the Project)

Findings Cultural Property –Little evidence provided of historical or religious significance of site –Issue not raised during scoping of EIA –Investigation by WB Inspection Panel – no evidence, monitoring of ‘chance finds’ during construction excavations only practical option –Appropriate for WB Inspection Panel to complete investigation (identical safeguard policy – OPN 11.03) – IRM RP 15 ‘avoid duplication’ –‘wait and see’ – material violation would not affect scope or implementation of Project; measures taken

Proposed Remedial Changes to EBRD Practices and Procedures Recruitment of necessary personnel prior to entry into force of new ESP Guidance / procedures on cultural property Requirements re records of public consultation Guidance note re all aspects of ESP, incl. EIA Mechanisms for inter-institutional communication in co-financed projects Improved role of Resident Offices