Guest post: Resettlement process for Kosovo Power Project does not comply with international standards

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Arguments against the World Bank-financed Kosovo Power Project (KPP) often highlight the costs and negative impacts of building the 600 MW Kosovo C coal-fired power plant while investments in energy efficiency would be more feasible as Kosovo still wastes a large amount of the electricity being produced. What may be less known internationally is that also resettlement is a problematic issue connected to the project.

The Government of Kosovo is currently preparing to involuntarily displace over 7000 people to make way for an open pit lignite mine as part of the Kosovo Power Project. [1] A report [2] commissioned by the Kosovo Civil Society Consortium for Sustainable Development (KOSID) and authored by Dr. Ted Downing, president of the International Network on Displacement and Resettlement (INDR) shows that the government’s preparations do not comply with international involuntary resettlement standards, including those of the OECD and the World Bank itself that are a precondition for the project to obtain international financing.

The World Bank management provided the Kosovo agencies with a noncompliant legal, policy, and institutional safeguarding scaffolding to guide the anticipated displacement. The Kosovo government willingly complied.

Multiple mistakes were and continue to be made, most importantly related to the requirement to prepare a full resettlement plan required by the World Bank’s Operational Policy on Involuntary Resettlement (OP 4.12). Such a resettlement plan can only in very limited situations be substituted with an abbreviated, resettlement policy framework. Yet this is precisely what has been prepared for the Kosovo Power Project.

In the report (pdf), KOSID points out that such a shortcut of a policy framework is not applicable and a resettlement plan for the entire displacement must be prepared.

Other shortcomings include:

1. The preparations overestimated the institutional capacities of the government.
2. The preparations fail to align the project with the international policy’s prime objectives of assuring involuntary resettlement is a development project, with livelihood restoration, benefit sharing, meaningful consultation and participation.
3. Lacking focus on the primary objectives, the costs of involuntary resettlement are seriously miscalculated and underestimated, raising investment costs, thereby delaying the profitability phase of the overall KPP. Prudent applicants for the private concessionaire, financiers, government, civil sector and those threatened with displacement should request a recalculation of a fully compliant involuntary resettlement component for the lifespan of the project. These costs should be folded into a revision of the projects’ overall investment costs.
4. The uncertain structure of the project financing also creates downstream, political risks for the government, potentially seeding a future exacerbation of existing civil discord and political unrest. Cost overruns to complete the resettlement will be paid through increases of electricity prices, not by the government or the private concessionaire, leading to future conflicts between Kosovo electricity consumers and those being displaced.

After millions of dollars in technical assistance, this analysis shows the proposed resettlement policy framework is little more than a weakly disguised cash compensation plan that closely follows the failed patterns of the former government-owned mining company.

In sum, the World Bank management and the Kosovo government are responsible for constructing an unreliable safeguard framework that will cause delays and added costs to the KPP project. Their poor decisions have increased, rather than decreased the financial, environmental, social and health risks for Kosovars, their government, investors and, foremost, those threatened with forced displacement.

Notes:

1. The project envisages replacing the Kosovo A Power Station with a rehabilitated existing power plant (Kosovo B) and a new power plant (Kosovo C) as well as the development of a mine.

2. The report was presented today during a roundtable on resettlement organised by KOSID, unfortunately without the participation of World Bank representatives.

Visar Azemi: World Bank did not have time to join the meeting @WorldBank @visarazemi @KOSIDInfo #resettlement

— KOSID (@KOSIDInfo) February 3, 2015