The Project was assigned Environmental Category "A" and the following two safeguard policies were triggered: Environmental Assessment and Involuntary Resettlement. At appraisal, environmental risks were recognized relating to the possibility of oil spills from the underwater fuel line, and an emergency oil spill action plan was developed in the event that such an emergency did occur. Oil spill containment equipment (e.g. booms) was acquired and practical training on its use was undertaken with qualified instructors and in coordination with the Port Authority of Vlore. If an oil spill were to occur when discharging fuel to the power plant it would be detected immediately and pumping through the fuel line would be suspended, and the emergency plan would be set in motion (ICR p. 7).
During construction adequate measures were taken to avoid environmental degradation, and the onshore work sites were walled off (ICR p. 7). Compensatory measures were taken with respect to tree felling by a replanting program.
In May 2007, shortly after the Engineering, Procurement and Construction contract was awarded but before construction had begun, the Inspection Panel registered a Request for Inspection by the Civic Alliance for the Protection of the Bay of Vlore to focus particularly on the following concerns about the Albania Power Sector Generation and Restructuring Project (Inspection Panel Report No. 49504):
- The air and water emissions from the thermal power plant as well as the oil terminal located in the Bay’s waters and its potential oil spills, might have negative polluting impacts on the tourism industry in the Vlore area, on the employment of the local population and on the fishing industry.
- The Environmental Assessment misrepresented the physical characteristics of the Project site. The proximity of the project site to the Narta Lagoon, which is a protected area and a sanctuary to important animals, and plants that might be adversely affected by the Project.
- The Bank failed to take into account the future cumulative environmental impact of additional generating units as well as the other industrial investments already approved by the Government in the vicinity of the Project.
- The project design allowed for and implied the expansion of capacity of the thermal power plant, which might amplify its negative impacts.
- The selected project area has important archaeological, cultural and historical significance that were overlooked and not assessed during Project preparation and appraisal.
- The project’s economic and risk analyses were not adequate or consistent with applicable Bank policies and procedures. The risks and potential negative impacts on tourism activities and revenues for the Bay of Vlore and nearby communities were not taken into account and analyzed by the Project.
- The Requesters asserted that no adequate public consultation was carried out during the preparation of the Project, in violation of Bank policy. They claim that the few meetings on the project were not properly announced, that the information provided at them was incomplete, and that these meetings were a simply formality as they took place after the Project site had already been selected and approved by Government authorities.
The Panel found that certain specific concerns expressed by the Requesters regarding environmental and natural/cultural heritage impacts were not born out by the facts examined. Among these, for instance, were Requesters’ concerns regarding adverse impacts on the Narta Lagoon and Natural Habitat, on the air quality, or the pollution by thermal power plant’s anticipated atmospheric emissions. Thus, the Panel concluded that the Bank Management was correct in its determination that the Bank Policy 4.04 on Natural Habitats was not triggered by the Vlore Project. Also, one of the main cultural risks feared by the Requesters regarding the presence of archaeological remains under the specific site of the plant was not born out either, as later excavations demonstrated.
However, the Panel found that the Project preparation and appraisal activities carried out by the borrower and respectively by the Bank were in non-compliance with the following Bank Policies: Project Appraisal (OMS 2.20); Environmental Assessment (OP/BP 4.01); Economic Evaluation of Investment Operations (OP/BP 10.04); Cultural Property (OP/BP 11/04); and Project Supervision (OP/BP 13.05). Non-compliance included: (i) failure to fully consult the local population; (ii) failure to produce a comprehensive environmental assessment; (iii) the total absence of a social impacts analysis; (iv) overlooking the high touristic potentials for Vlore’s further development; and (v) omitting the requisite economic evaluation the project’s economic opportunity costs and externalities.
The Inspection Panel's Progress Report (June 22, 2010, report No, 55634) noted good progress by the Bank's Management in all key areas requiring action according to the earlier report, including:
(i) Project oil spill prevention and response equipment and plans were put in place with training ongoing;
(ii) a continuous emissions monitoring system was installed and will begin reporting to the public when plant operations commence;
(iii) no chance finds of archeological or cultural value have were found;
(iv) the utility company (KESH) has taken following steps to engage the public: (i) tasking “Eco Watch” a civil society organization to interface with the public on environmental monitoring questions; (ii) establishment of an Energy Education Center at the Vlore Plant for public awareness-raising; and (iii) signing of a collaboration agreement between the Vlore Plant and the Regional Education Directorate of Vlore;
(v) the Bank Management would support Albania with an Institutional Development Fund capacity-building grant called "Strengthening Aarhus Convention Implementation for Albania" to help Albania meet its commitments for public consultation under the Aarhus Convention (i.e. the international Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters);
(vi) strengthening of the social assessment in the Europe and Central Asia region through a new training program (launched in May 2010) for Task Team Leaders and the Regional Management Team on social safeguards and sustainability. This training would focus on the application of safeguards and use of effective consultation as key factors in successful and sustainable projects;;
(vii) no Category A project has gone to the Board requesting a waiver of the provisions of OP 4.01 regarding a conflict of interest on the Environmental Impact Assessment since October 22, 2009;
(viii) to improve external communications by the World Bank office in Tirana, the project task teams working in Albania were recommended to make use of external affairs specialist expertise in the management of project communications; and
(ix) safeguards lessons learned from this Inspection Panel case have been shared with staff.
At appraisal, land acquisition was expected to involve about 0.8 hectares and no resettlement was expected. The ICR (p. 7) reports that the land acquisition was limited to about 0.8 hectares with no resettlement and no impact on natural habitats and cultural properties. However, it does not discuss whether there was compliance with the Bank policies. (OP 4.12).