IFC has a $8.6 million equity investment in a holding company in Albania established by Enso Hydro, an Austrian company specializing in investments in small and medium-scale hydropower plants. One of the hydro projects Enso has invested in is the Mati hydropower plant, a concession for a cascade of 5 small hydro projects with a total installed capacity of 29.8MW, in the downstream area of Mati river basin in the Mat region, Albania.

On March 20, 2019, a complaint was submitted to CAO by an individual on behalf of community members from various villages surrounding the town of Klos, in the province of Mat, Albania. The complaint raises environmental and social concerns mainly related to water shortage and impact on agricultural activity, rural development, and tourism.

CAO found the complaint eligible for further assessment on May 1, 2019. During the assessment, there was a lack of consensus amongst the parties to engage in a CAO dispute resolution process. Given that CAO dispute resolution is voluntary, the complaint was referred to CAO’s Compliance function for appraisal in accordance with CAO’s Operational Guidelines.

In February 2020, CAO released its compliance appraisal report. CAO concluded that IFC’s approach to the review and supervision of the Mati HPP project in relation to the issues raised in the complaint does not meet the threshold of raising substantial concerns regarding Environmental & Social (E&S) outcomes and/or issues of systemic importance to IFC that would warrant a compliance investigation at this stage. In reaching this conclusion, CAO considered the depth of IFC’s pre-investment E&S review of the project, whether it adequately considered client commitment and capacity to meet IFC’s Performance Standards, and IFC’s supervision of the client’s actions in relation to the Mati HPP given it was still at the concept development stage. Further, the client does not have in place the studies needed to proceed with the project and to raise financing to move the project forward. The uncertainty as to the likelihood of the Mati project to be developed and constructed also contributed to this decision. Hence, CAO has decided to close this case.

Should the project proceed toward construction in the future, the E&S framework for the investment would require the client to produce an Environmental and Social Impact Assessment (ESIA) in accordance with IFC standards. CAO’s decision to close this case at appraisal does not preclude the complainants from filing a new complaint should their concerns not be adequately addressed through a future ESIA.