As per IFC, the Government of Albania (Government) seeks to liberalize its energy sector so as to enhance private sector participation and to monetize/realize the value of its generation assets. IFC has been appointed by the Government on the privatization of a series of hydropower plants (HPPs): 1) Ulza HPP and Shkopeti HPP on River Mat; 2) Bistrica I HPP and Bistrica II HPP on River Bistrica; and 3) Lanabregas HPP.  IFC is assisting the Government to maximize privatization proceeds from the sale of the HPPs and also to ensure the plants are rehabilitated and efficiently operated by the new owner so as to improve the country’s generation system. IFC is managing roughly $820,000 in trust funds for the project.

In January 2013, a complaint was filed with CAO by the Environmental Center for Development Education and Networking (EDEN) in Albania. The complaint raises specific concerns about perceived resultant impacts of privatization of the formerly Government-operated hydropower plants. It is claimed that the privatization will potentially lead to a reduced pool of energy for direct disposal to the national electricity utility, Korporata Electroenergjetika Shqiptare (KESH) and subsequently force KESH to start buying energy on the global market to meet consumers’ demand. The resultant impacts of the privatization project cited in the complaint include, but are not limited to: continued energy shortages and blackouts; an inevitable rise in electricity tariffs for consumers; and negative environmental impact of the operations of the private steel company, which they believe has now acquired the HPPs.  Furthermore, the complainants argue that IFC’s due diligence of the Advisory Services project is flawed. They are of the opinion that IFC did not conduct appropriate social and environmental impact assessments of the project and the process(s) lacked transparency.

CAO found the complaint eligible for further assessment in January 2013 and conducted an assessment of the complaint with the relevant parties.  Having finalized the assessment, CAO confirmed that the Complainant wished to trigger CAO’s compliance function in addressing the complaint.  This decision was made with a clear understanding of both options available, and having due regard to the current political climate in Albania.  CAO's Assessment Report is available at the links below in English and Albanian and provides an overview of the assessment process, including a description of the project, the complaint and the assessment methodology. 

CAO completed the appraisal in March 2014.  Having considered available information on the potential adverse environmental and social impact of the project in light of the issues raised by the complainant and the application of relevant IFC policies, standards and procedures, CAO finds that this complaint does not warrant further investigation. As such, CAO has decided to close the case.