Blog entry

Is there room for informal waste pickers in Serbia’s new waste management system?

The European Bank for Reconstruction and Development (EBRD) and French Development Agency (ADF) co-financed upgrade of Serbia’s waste management system is poised to collide with the country’s informal waste collectors. As Serbia prepares its new solid waste management system and begins to close municipal dumpsites across the country, these informal and formal waste pickers face the loss of their livelihoods. The human rights violations which occurred as a result of the Belgrade’s Vinča project should not be repeated.

Waste pickers – the unsung heroes of recycling

Recycling has historically been a low priority for public companies in Serbia, as evidenced by the Serbian Environmental Protection Agency’s most recent report on waste management between 2011 and 2020. It found that 80 per cent of the 2.9 million tons of municipal waste in 2020 ended up in unsanitary landfills, including garbage dumps and illegal landfills.

Waste collectors are thus key stakeholders in recycling in Southeastern Europe. The bulk of informal waste collectors are self-employed individuals that collect recyclables from the street, homes, businesses, or waste dumps and sell them to scrap dealers or municipal waste companies. A GIZ study estimated that Roma men and women account for up to 80 per cent of Serbia’s overall recycling effort, which means that they recycle between 10 to 30 per cent of the total garbage created. Their labour has immediate positive environmental, economic, and social impacts on cities and towns.

Despite all this, Roma waste collectors are discriminated against and criminalised as a result of laws prohibiting street picking in Serbia’s cities and towns. At the same time, once the landfills close, they are also pushed out of formal and informal picking of recyclables.

The upgrade of the solid waste management system needs to take into account the contribution of Roma collectors if it is to achieve the recycling target of 35 percent by 2030. Otherwise, the narrow focus on limiting landfilling will likely result in the displacement of primarily Roma people who often live in informal settlements on and near the landfills.

Perils of the EBRD co-financed modernisation of waste management

The Serbia Solid Waste Programme is a multi-site EUR 150 million project planned to be co-financed fifty-fifty by the EBRD and ADF. It will fund the closure of municipal dumpsites and develop seven regional waste management centres serving more than 29 municipalities, as well as a multi-regional primary sorting system. In total, 15 municipal dumpsites are planned to be closed, as waste is redirected to seven new regional waste management centres.

Before the project is implemented, the EBRD requires environmental and social assessments, including baseline studies and socioeconomic surveys to help determine a plan for any necessary resettlement and livelihood restoration for people affected by the project.

Yet the studies presented so far for the project’s impacts might not do the affected communities justice. For example, Bankwatch found that several of the local municipal dumpsite had already been closed, putting into question the integrity of any present or upcoming baseline studies on the formal and informal waste pickers working there and the potential for their loss of livelihood or preparation of restoration strategies.

In November 2021, Bankwatch commissioned an independent analysis of the environmental and social impact assessment for the Kalenić sub-project by international, Serbian and local Roma experts. They found that the timelines for action lack consistency and transparency. The reviewers noticed that several controlled dumpsites had stopped operating already, or functioned as informal transfer stations as of December 2021, which is not consistent with the timeline in the project documentation. It is unclear what has happened to informal recyclers who once worked on landfills that have since been unofficially closed. They were involved in extracting, cleaning, transporting and marketing recyclables which were not captured in any other way.

What’s more, the analysis shows that the affected waste pickers are often not informed about the projects in a timely and transparent manner. The reviewers could not confirm that the Roma coordinators working in the 11 municipalities of the Kalenić sub-project had received any updates on the project as of December 2021.

Some collectors and their families had been previously informed that something would happen to their livelihoods between 2019 and 2020, but they were not informed that the project had been delayed. These families continue to believe that their livelihoods were unaffected and that the entire project was cancelled.

Even the project’s requirement of a 30-day notice to affected communities seems extremely short. Affected waste pickers should be informed about landfill closures and livelihood restoration initiatives as early as possible in the process, as their livelihoods – and, in some cases, their housing – depend on access to landfills.

It is equally important that the impact assessments capture the varied potential social consequences of these projects for women and entire households engaged in recycling. Oftentimes, men extract waste from the streets or dumpsites, while women, children and the elderly process it before it is sold. Hence, opportunities to improve the life of impacted households, such as ensuring better access to education or health services, should meet their different needs. However, these questions are not given due consideration in the Kalenić project documents.

Finally, Bankwatch stresses its concerns in light of previous experience in Serbia with an EBRD-financed waste management project that resulted in the eviction of Roma families who worked and lived on the Vinča landfill. The new Serbian National Solid Waste Programme should address concerns similar to those that the displaced Roma families from Vinča faced in 2018, such as affordable housing, access to education, and income generation.

We call on the EBRD to ensure that the rights and livelihoods of the most vulnerable and marginalised affected people will be protected before the project goes any further.

EU Taxonomy proposal welcomed by CEE governments, spells trouble for energy transition

Last year, the EU approved its first set of rules defining sustainable investments – part of what is commonly known as the EU taxonomy – meant to support the EU’s effort to become carbon neutral by 2050. Even this set of rules was controversial due to its weak rules in areas like bioenergy and forestry.

But worse was to come, as the European Commission, under pressure from EU Member States, sidelined the findings of its own expert group and in early February released its proposal for a second set of criteria – this time on fossil gas and nuclear power.

Instead of accelerating the demise of these damaging energy sources, the Commission has instead undermined the credibility of its own taxonomy by proposing to allow them to be labeled as ‘transitional’ sources and therefore implicitly accepting them as sustainable.

EU governments and the European Parliament have until early June to study the proposal before deciding whether to adopt or reject it. But decision makers in central and eastern Europe have already applauded the Commission’s proposal to greenwash gas and nuclear, effectively confirming concerns that this policy could open the door to energy projects that would hamper the energy transition already underway in these countries.

Hungary

“It is a big victory for the V4 countries,” said Attila Steiner, Hungary’s State Secretary for Circular Economy Development, Energy and Climate Policy at the Ministry of Innovation and Technology. In an interview with Magyar Nemzet he argued that nuclear energy is not only “key for Hungary” but essential for the entire EU’s climate neutrality quest.

The Hungarian government remains keen to build the Paks 2 nuclear power plant, although there are currently delays with permitting, planning and financing – supposedly from Russia – for the project.

In Hungary and beyond, nuclear power has been subject to a strong PR push in the last few years but still suffers from several fundamental issues, including the facts that no country has truly solved the issue of long-term nuclear waste disposal, that uranium has to be imported and that uranium mining is a highly dangerous business. Nuclear safety issues remain hotly debated, and even if these can be resolved, this still leaves nuclear’s enormously high costs and very long project development time. The IPCC has made it clear that we have now only around a decade to halt dangerous climate change, and any nuclear plant whose planning begins now will be built too late to make a difference.

At the same time, Hungary has long enjoyed cheap Russian gas that’s imported and stored in the country, then distributed throughout Europe, and there are plans for a new cross-border gas interconnector. “The EU’s recognition of the contribution of natural gas to sustainability is also a priority for our region: it is a fast solution that is much cleaner than coal,” Steiner said about the Taxonomy proposal.

This echoes a claim frequently made in favour of gas – that it is at least ‘better than coal’. At the point of combustion, this may be true, but the fact remains that methane leaks during extraction and transportation can render gas even more climate-damaging than coal under certain circumstances. And all the evidence points towards methane emissions having been drastically underestimated until now, making it imperative to stop building new gas infrastructure.

Bulgaria

Like Hungary, the Bulgarian parliament has supported the inclusion of fossil gas and nuclear power in the EU’s sustainable investment taxonomy. With multiple large scale, expensive gas projects relying on EU financing as well as plans to expand the country’s nuclear power capacities, the parliament is more than happy to see these energy sources classified as ‘green’.

Even as deals with alternative gas supplies are falling through as a result of alleged contract breaches, the Prime Minister, Deputy Prime Minister and Energy Minister are keen to see Bulgaria’s gas projects receive so-called green financing to lessen the country’s reliance on Russian gas imports.

On nuclear power, the government is divided on whether to enlarge the Kozloduy power plant or to build additional plants, but there is overarching support for increasing the share of nuclear in Bulgaria’s energy mix. An EU Taxonomy that allows for the expansion of nuclear power with public money essentially keeps both options on the table.

Poland

The inclusion of fossil gas and nuclear power in the Commission’s proposal also appears to meet the expectations of the Polish government which plans to boost the development of these energy sources in the coming years.

But Polish energy companies have their own reservations. For one, the requirement that new gas-fired power plants do not exceed the capacity of the coal plants they are meant to replace is considered a significant challenge.

Wojciech Dąbrowski, head of state-owned energy giant PGE also opined, that the requirement for a coal exit date in the national energy and climate plan for energy installations to be considered sustainable is a serious problem. He argued that a decision on Poland’s coal exit date is “beyond the scope of corporate decisions that can be made by boards of [energy] companies”.

Czechia

In Czechia, the Commission’s Taxonomy proposal has been much better received by both the government and the industry than the text’s earlier draft, if only because the final version included some of the amendments the Czech government had earlier asked for.

Environment minister Anna Hubáčková stated that she is “glad that the European Commission had listened to our requests in large part. What is important and positive at the moment is that both nuclear energy and natural gas are considered by the taxonomy to be sustainable activities and investments necessary for a sustainable energy system.”

The Czech Heating Association welcomed the cancellation of the proposed timeline for blending of decarbonised gases but remained unsatisfied with the requirement to replace fossil gas in new power and heating plants with hydrogen or biomehane by the end of 2035. The Association wrote this requirement is “too ambitious given the expected lack of technological readiness and sufficient availability of low-emission and renewable gases in this time horizon.”

Romania

The inclusion of fossil gas in the EU taxonomy is likely to spur the wrong kind of investments. In Romania, this could breathe new life into gas drilling in the Black Sea and catalyse the construction of multiple new gas-fired power plants in the coming years, including a 475MW plant at Turceni and a 850MW plant at Ișalnița that Romanian energy company Oltenia Energy Complex has been planning. Just these two projects are expected to cost over EUR 800 million.

“Romania needs to use natural gas as a transition fuel, in order to ensure our energy security, energy minister Virgil Popescu said on the day the Commission released the Taxonomy proposal. He also argued that “decarbonation without nuclear is not possible.”

Later in February Romanian Prime Minister Nicolae Ciucă also claimed nuclear energy has a role to play in the country’s energy transition. Specifically, he expressed support for the operationalization of two nuclear energy units in the Cernavoda power plant and the refurbishment of another, as well as for the acceleration of building small modular nuclear reactors, following a contract Romania had signed with U.S. firm NuScale.

In reality, however, Romania’s energy transition has already been stagnant for at least five years, and prioritising fossil gas over renewable energy would necessarily impede the decarbonisation process.

In the end, no-one except the gas and nuclear industries win from including these sources in the taxonomy. CEE decision-makers might favour them for now but any further investments in these sectors will come at a prohibitively high price, in financial, environmental, path dependency and geopolitical terms.

It is now up to the EU’s more progressive Member States and the European Parliament to reject the Commission’s counterproductive proposal and ensure the taxonomy’s credibility is not eroded even further.

A forward looking energy strategy at the Asian Infrastructure Investment Bank

The AIIB’s Energy Sector Strategy is far from being green. In the past the bank has approved several projects that have caused serious impacts on communities and caused concern for allied civil society groups. Currently the bank is considering financinf for the Nenskra Hydropower Project in Georgia, the Tamakoshi V Hydroelectric Project in Nepal and the Southern Chattogram and Kaliakoir Transmission Infrastructure Development Project in Bangladesh. All these projects can cause serious social, environmental, climate and human rights risks.

For these reasons, a number of civil society groups have urged the AIIB to stop these investments, together with those in fossil fuels by aligning its portfolio with the Paris Agreement. The groups also argue for support to ‘scientifically-sound’ renewable energy. Across its portfolio, the bank should uphold its commitment to transparency and ensure the sustainability of its energy investments for nature, people and climate.

Read the full letter here.

Towards a people-powered, green transformation in Almaty

With its polluted air, chaotic construction and lack of green spaces, Almaty is very much like many cities in Central Asia: it needs to improve the living conditions for its residents. To achieve this, the city is greatly in need of sustainable investments.

The investments are coming, as the ‘green economy’ was named as a priority for EBRD funding in Kazakhstan, with the bank announcing that already 40 per cent of its portfolio in Kazakhstan in 2021 was for green projects. At the same time, the protests in the country at the start of the year demonstrated the frustration of Kazakhstan’s people with the lack of democratic reforms and decision-making that does not incorporate the needs and concerns of the public.

No green urban development without public participation

In 2019 Almaty joined the EBRD Green Cities initiative. The program will help the city develop a Green City Action Plan (GCAP) in order to deal with its major environmental challenges and define the focus for green investments. In 2019, the city presented the GCAP inception report to the public and held a number of public consultations. According to information from the EBRD, the next round of public consultations will take place in mid-March this year.

To help city residents better understand the GCAP process and inspire their participation in shaping their city’s greener future, Bankwatch developed a citizen’s guide on participation in the Green Cities programme.

One of Almaty’s Green Cities central projects is the Almaty Electric Public Transport. A EUR 58.9 million investment should be provided by the EBRD to Almatyelectrotrans (AET), the municipal company, to modernise the trolleybus fleet in Almaty with 190 electric, energy-efficient trolleybuses. The project aims to support both green and inclusive objectives of the EBRD, which the bank says will lead to the reduction of greenhouse gas emissions as well as will “support the Inclusive objective through (i) policy dialogue to seek a limited exemption from licensing laws for trolleybus drivers, which especially affect women’s access to jobs, (ii) inclusive HR practices to increase female participation in the workforce for trolleybus drivers and the executives level, and (iii) development and delivery of internally accredited trolleybus driving training programme for new employees out of which at least 35 per cent will be women.”

A question of governance

But residents of the Kairat district in Almaty keep asking a question about Almatyelectrotrans (AET), the EBRD’s client in this project. Kairat residents claim that Almatyelectrotrans violates the national law and their right to a clean and healthy environment by organising a bus depot. The depot was set up near residential houses without a proper sanitary zone, which produce noise and exhaust all day long.

Unable to resolve this issue with Almatyelectrotrans, local residents supported by local NGO Green Salvation decided to address their grievances to the EBRD.

The EBRD responded to residents’ concerns that the project’s scope is not related to the bus depot. It is not clear why the bank is hiding behind the issue of the project “scope”, when according to the Banks’ Environmental and Social Policy it has committed to appraising the client’s “business activities”, to ensure that clients respect human rights and address adverse human rights risks linked to their operations.

The EBRD, however, also added that it looked into the matter and agreed with AET to include an action point in the project’s Environmental and Social Action Plan for the company to relocate the bus depot from Kairat by the end of 2022.

These EBRD efforts to resolve the grievances of Kairat residents are appreciated. Green Salvation on behalf of local people have asked the bank for a meeting to receive more information with regards to the milestones in the bus depot’s relocation and for transparency and public engagement in the implementation of the measure. Residents need more information about the next steps with the process and guarantees that the EBRD will monitor closely if AET will keep its promises and will relocate the bus depot in a timely and participatory way.

Bus depot near residential buildings in Kairat microdistrict

Trust in local authorities

AET, as a municipal company, did not disclose information about the bus depot upon residents’ requests. Previously residents received promises for the relocation of the bus fleet by the end of 2021. Now the promise is for the end of 2022, but they have not received any documents or opportunities for dialogue with authorities or the company.

Therefore, the EBRD should require its client AET to disclose the detailed plan of the bus depot relocation with clear and concrete milestones and to initiate a dialogue with residents affected by its operations. This will contribute to building the client’s capacity with regards to transparency and dialogue with city residents.

Green transformation with and for people

Developing sustainable solutions is possible only when it is done in an inclusive way. From the EBRD’s description of inclusiveness, it appears this is limited to the workforce of the company but excludes public transport service users and residents affected by the company’s operations, like those living in Kairat. EBRD funding to promote green initiatives in Kazakhstan and elsewhere should be grounded in practices of inclusive participation and effective disclosure. The EBRD should also ensure its clients’ capacity to respect human rights and the rule of law in accordance with the bank’s policies. Otherwise, the projects that have a green tag will do so in name only.

Reaching net-zero emissions in cities cannot be achieved without just and democratic reforms that earn the support of the public and affected people. It’s time for the bank and other financiers to see the broader picture of poverty and inequality, affordability of goods and services and overconsumption. These are just a few issues affecting climate investments that need decisive action.

Believing in climate action as a joint cause, Bankwatch together with its partners developed an easy step-by-step guide about citizen participation in green investments of the EBRD. We believe that genuinely green projects are developed together with state authorities and residents, and those will have a lasting and sustainable effect.

Republika Srpska moves ahead of its neighbours in virtually halting hydropower subsidies for new plants

In September 2019, we published our report Who Pays, Who Profits? which revealed that between 2009 and the end of 2018, at least 380 small hydropower plants (below 10 MW) were built in the Western Balkans, bringing the total number of installations to at least 488. This boom was fuelled by feed-in tariffs, which had been disproportionately directed towards hydropower.

In fact, in 2018, small hydropower received around 70 per cent of renewables incentives but generated only 3.6 per cent of overall electricity.

Feed-in tariffs have been widely used across Europe to stimulate the growth of renewable energy, as they guarantee the purchase of electricity from a certain number of electricity producers at a fixed price, set high enough to offer an investment incentive.

But instead of using them to attract investments in new technologies and bring down their costs, Balkan governments stuck to what they knew and what well-connected construction companies knew how to build, and largely subsidised hydropower. Some wind power, and in Serbia also biogas was supported, but solar power hardly at all, and as a result, solar capacity in the region is still negligible.

By the end of 2020, no fewer than 598 hydropower plants of less than 10 MW (15 MW in Albania) were online compared to 108 in 2009 – in other words, 490 new plants had been built.

532 of the plants were part of incentives schemes. This includes some older ones which had been rehabilitated, which is why the figure is larger than the number of plants built.

Figure 1 - Number of hydropower plants <10 MW per country (<15 MW in Albania) 2009 and 2020 — Figure 1 – Number of hydropower plants <10 MW per country (<15 MW in Albania) 2009 and 2020

Feed-in tariffs must be phased out for all but the smallest plants

Under the Energy Community Treaty, the Western Balkan countries have to apply EU state aid rules. In 2015 the Treaty Secretariat issued policy guidelines underlining the need to apply the Commission’s 2014-2020 energy and environment rules, which would include stopping new feed-in tariffs for all but the smallest plants – below 500 kW for hydropower – and introducing a system of auctions and premiums.

Renewable electricity would be sold on the market and producers who win in auctions would be able to receive a premium in case the market price was lower than the price they had pledged in the auction. This system is meant to continue to support renewables development while limiting the cost to consumers.

Countries are free to choose what type of renewables they most need to support, as long as they don’t unfairly discriminate between technologies. Given the favouritism towards hydropower so far in the region, the widespread damage it has caused, and the fact that it is a mature technology whose costs are not falling, governments should stop incentivising it.

Mixed progress on removing hydropower support

As the countries had geared up their renewables legislation and incentives systems towards meeting their 2020 renewables targets, it made sense to have this new system in place by 2020, yet in reality none of the countries did so fully. Even those which changed their rules, like North Macedonia and Albania, left non-compliant feed-in tariffs in place for new small hydropower.

What now for the Western Balkans’ renewables incentives schemes?

At the end of 2020 both Kosovo and the Federation of Bosnia and Herzegovina (FBIH) appeared to have stopped awarding new feed-in tariffs, but progress since then towards more efficient and environmentally acceptable renewable energy policies in the region has been mixed.

After long delays, Republika Srpska has now seized the chance to introduce a more efficient incentives system via its law on renewable energy that was adopted last week. After blatantly favouring hydropower in its previous incentives scheme, it has finally limited them, so that only new plants below 150 kW will be able to receive feed-in tariffs, and larger hydropower plants will not be eligible to participate in auctions. The next step will be to ensure prompt implementation of the law and avoid hidden subsidies via eg. loan guarantees for larger plants such as Dabar and Buk Bijela.

Serbia, after years of inaction, moved forward the most, by adopting a new renewables law that moves to an auctions and premiums-based scheme for all but the smallest plants. However there has recently been political pressure against the energy minister, so it is unclear whether this will continue. It is particularly crucial to make progress on encouraging prosumers and on launching solar auctions.

Montenegro has finally taken decisive action to stop awarding feed-in tariffs, cancelled several small hydropower concessions, and started to encourage household solar, but urgently needs to progress with larger wind and solar projects which are sorely needed to replace the Pljevlja coal plant. It needs to avoid getting distracted by the Komarnica large hydropower plant and ideas about gas plants, which would cause a new fossil fuel lock-in.

Kosovo, too, has made the first step by halting the feed-in tariff scheme for new plants. It is also doing better than others in the region with regard to connecting prosumers. It now needs to move forward with new renewables legislation to set a predictable incentives framework for the period until 2030 as well as making sure that planned solar and wind projects move forward.

North Macedonia, declaratively a frontrunner in sustainable energy, seems to have stalled in the last year and urgently needs to finally stop awarding new feed-in tariffs for small hydropower.

Albania’s solar and wind auctions need to start showing on-the-ground results, and the country must stop offering incentives for hydropower, particularly feed-in tariffs for plants under 2 MW.

The FBIH incentives system has to be completely overhauled, starting by cancelling the two decisions made in 2021 to extend the 2020 feed-in tariff quotas. The draft law on renewable energy must be publicly consulted as soon as possible, and adopted. But in parallel, stronger action needs to be taken regarding the conduct of the Operator for renewable energy, as the new Director is failing to increase its transparency, and public trust can hardly be restored by the timid corrective measures from the audit report mentioned above.

Overall, progress is being made towards cutting hydropower subsidies, but far too slowly in some of the countries. In fact, while North Macedonia, Albania and the Federation of Bosnia and Herzegovina continue to allow hydropower incentives that are not in line with the European Commission’s 2014-2020 Guidelines, new Guidelines entered force in January which lower the threshold for feed-in tariffs even further – to 400 kW until 2026 and 200 kW after that. These Guidelines have also now been endorsed by the Energy Community.

With increasing damage from hydropower and public resistance, as well as increasing evidence of its climate vulnerability, it’s high time to work more on saving energy and increasing the share of appropriately-sited solar and wind.

This publication was produced in collaboration with EuroNatur and RiverWatch in the frame of the Save the Blue Heart of Europe campaign, with financial support from MAVA Foundation.

No resolution for Ukrainian villagers after three years of negotiations with agro-giant MHP

In June 2018, residents of the villages of Olyanytsya, Zaozerne, and Kleban submitted complaints to the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) on the environmental and social harm of MHP’s operations and requested dispute resolution for these problematic issues.

MHP’s subsidiary, ‘LLC Vinnytska Poultry farm’, has a huge poultry production complex in Vinnytska oblast. It produces around 200 million broiler chickens annually. The rapid increase in and resulting high concentration of industrial facilities in the area became one of the main reasons for the local residents’ complaints. They connected various problems with the expanding operations of MHP, such as a decrease in the water levels of local wells, deterioration in water quality, contamination of soil and air, and damage to infrastructure by the use of heavy vehicles on village roads.

Local residents were concerned about MHP’s attitude towards communities: the company didn’t organise meaningful community consultations before building new farms or expanding the enterprise. Local residents felt pressured during the meetings and did not have an opportunity to express their fears freely. Other concerns were about MHP employees’ safety at work and MHP’s impacts on local residents.

The issues were not only around protection of the environment. The company’s contractors drive their trucks on the village road, which is not designed for a large number of heavy vehicles. In addition to noise, residents experienced strong vibration and later began to observe the appearance of cracks on the walls of their houses. Even after the construction of the bypass road, which was supposed to divert traffic from the village of Olyanytsya, people continued to complain that vehicles serving MHP still traveled on the village road.

Locals hoped that the company, which promotes itself as one of Ukraine’s leaders in environmental protection, would have no problem resolving the issues raised in the complaint.

Concerns of the complaints

Studies show that high level of nitrates and other chemicals are common in places close to livestock farms. This affects the quality of the soil, causes the flowering of nearby water bodies, harms biodiversity, and makes groundwater unfit for consumption. Drinking water with high levels of nitrates increases the risk of health issues in the thyroid gland and circulatory system. Moreover, it increases the risk of cancer, and it also affects the physiological and mental development of children, especially infants.

Last summer, a team from the non-governmental organisation Ecoaction went on an expedition ‘In Search of Clean Water’ to check the quality of the water in the wells and reservoirs of 14 different communities in ten regions of Ukraine. The villages of Olyanytsia, Zaozerne and Kleban in the Vinnytsia region, whose representatives complained about the negative impacts of MHP’s operations, were also inspected and showed disappointing results.

Analyses revealed record rates of nitrate pollution in wells – the worst of all the studied sites in the country. At the maximum allowable level of nitrate contamination up to 50 milligrams per liter (mg/L), both rapid and laboratory tests showed excess nitrate levels in almost half of the 19 tested wells, often reaching 150 mg/L, three times more than the maximum allowable level.

Still, it is difficult to determine the source of pollution with this type of research. Results only show that there are problems with water quality in these villages, which could pose a danger to their inhabitants.

According to local residents, there are also problems with the availability of water due to high water consumption by MHP’s enterprises. After being used in poultry production, the water is treated at water treatment plants, but the villagers could get neither data on consumption, nor data on water treatment and quality from MHP during negotiations with the company. Meanwhile, forecasts show that due to climate change, water runoff in the Southern Bug basin, which includes rivers in the Vinnytsia region, will be reduced by a third, and in some months even up to 45 per cent.

How villagers tried to negotiate with MHP

MHP has received more than half a billion euros in loans from multilateral development banks for its projects. In particular, it received more than USD 300 million from the IFC, EUR 275 million from the EBRD and EUR 85 million from the EIB. In their policies, these banks set high environmental and social standards for the projects they finance, and promise that they will be implemented in a sustainable and just way. Communities impacted by such projects can address their grievances to the banks’ accountability mechanisms. Affected people can raise grievances about the projects’ non-compliance with environmental and social standards, as has been the case with MHP. The procedures of the accountability mechanisms provide two ways to resolve complaints:

problem solving (mediation) – the parties to the conflict can sit down at the negotiating table to find mutually acceptable solutions with the independent mechanisms of the banks serving as their facilitators, or
compliance review – experts from the mechanisms come directly to the impacted area, investigate the situation and determine whether the bank has adhered to its policies when assessing and monitoring the project.

Communities in Vinnytska oblast chose the first option. In June 2018, they asked the banks’ independent accountability mechanisms to facilitate a dialogue on the issues they linked to MHP activities. They were advised by three non-governmental organisations: Ecoaction, CEE Bankwatch Network and Accountability Counsel. The mediation process lasted more than three years, during which the community and the company tried to find common ground, and the non-governmental organisations provided advice and support to the complainants. But the mediation produced no final agreement, because MHP decided to withdraw from the process. MHP’s withdrawal also halted a pilot study of the impact of its heavy vehicles on the destruction of buildings in Olyanytsya, which the parties had been preparing together within the mediation process.

Will the problems be resolved?

Before the mediation, all involved parties signed a memorandum outlining the rules of the process. Because locals felt constant pressure from the company, in part due to cases of retaliation, the parties also signed additional agreements to guarantee the confidentiality of the process and the identities of negotiators, as well as the prohibition of retaliation against each other. In addition, neither party had the right to disclose details about this process.

During these three years, MHP has been able to actively build its image as a ‘green’ company that cares about people. But advertising in the media, funding for charitable foundations, the organising of festivals, and even ‘environmental’ awards do not help the environment and the local communities in Vinnytska oblast. The communities continue to worry about the stench of chicken manure; the destruction of houses in Olyanitsa; and the health problems people have linked to air, water and soil pollution.

The independent accountability mechanism of the EBRD has already presented a problem solving report, and the IFC’s mechanism will do so soon.* Afterwards, the banks’ independent mechanisms should decide to close the complaint or proceed to plan B – compliance review. As part of the compliance review, the mechanisms will gather evidence and decide whether MHP projects have violated the banks’ environmental and social policies. If violations are proven, EBRD and IFC management will develop a plan to mitigate the damage, and the mechanisms will monitor its implementation.

However, only the company can decide whether or not to solve these problems, as the banks cannot impose any penalties or sanctions on the company at this time. The locals hope to finally achieve justice: that the impacts of MHP on the environment will be fully investigated and disclosed, and the company itself will improve its practices.

(*) Since this blog post was originally published in Ukrainian, the Office of the Compliance Advisor/Ombudsman (CAO), the IFC’s accountability mechanism, published its report (1 February 2022). It can be found here.

Original in Ukrainian: Вінниця проти Юрія Косюка – як вінничани борються за чисту воду та повітря – Новини України (zn.ua)

In Russian: Винница против Юрия Косюка – как винничане борются за чистую воду и воздух – новости Украины (zn.ua)

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