Government and EBRD Negligent While Hydropower Plants Destroy Nature

According to a study of CEE Bankwatch Network, at least to small hydropower plants in Albania financed by the European Bank for Reconstruction and Development (EBRD) have been constructed without oversight, leading to considerable damage to the environment and the surrounding communities.

The two Albanian hydropower plants visited by CEE Bankwatch Network in June 2017 are in Rrapun, Librazhd, and Tërnova, Bulqiza.

The study states that in Albania there is almost a complete lack of oversight from the Albanian authorities. This has led to obvious violations of national and international laws and regulations.

The report is highly critical of the EBRD’s funding practices in both cases, allowing the construction of hydropower plants in protected natural zones without proper study and monitoring

According to Igor Vejnovic, one of the study’s authors,

Our research shows that so-called small hydropower plants have large impacts. It is high time for financiers to stop investing in any industrial activity in ecologically sensitive areas.

Ana Colovic Lesoska, a biologist and one of the researchers, added:

Both European Bank for Reconstruction and Development and European Investment Bank will revise their lending policies in 2018. We expect them to introduce no-go zones for financing hydropower in line with the recommendations of the International Union for Conservation of Nature (IUCN).

The two hydropower plants are not the only problematic projects funded by the EBRD in Albania. Another poignant example is the dysfunctional power plant in Narta.

Excerpts from the report:

Rrapun 1 & 2

The Rapuni 1 & 2 hydropower plants are situated on the Qarrishtë river that flows entirely through the Shebenik-Jabllanicë National Park. The area is under extreme pressure from hydropower development: concessions for hydropower plants have been awarded within the borders of the National Park.

Rapuni 1 & 2 have been built as a cascade, starting with the intake of Rapuni 1, followed by the Rapuni 1 powerhouse and the Rapuni 2 intake, which are joined, and ending with Rapuni 2 powerhouse close to the confluence with the Rapuni river. However, the impact of the project does not end there – a concrete tunnel diverts all the tailwater from the Rapuni 2 powerhouse to another project – Rapuni 3 & 4. Together they dry up much of the riverbed all the way to Librazhd. […]

Although built in a biodiverse and sensitive area, no full Environmental Impact Assessment procedure for this project was carried out. Allegedly, a “Summary Report of Environmental Impact Assessment” was submitted to the Ministry of Environment, Forestry and Water Administration for approval. A detailed Environment Management Plan as well as Environmental Mitigation Plan was again, allegedly, prepared and submitted with the EIA Report. Environment Permit No. 440 was issued on June 9, 2008. However, an information request submitted to the National Environment Agency of Albania resulted in an answer that the Summary report is not available. In response to a request to the EBRD, the bank stated that the Rapuni project was categorised B and hence was not subject to environmental and social impact assessment under EBRD requirements. […]

The field visit documented at least three conflicts with community water rights, which are a consequence of the lack of water in the Rapuni river: a cornflour mill owned by the Shkurti family close to the confluence of the Qarrishtë with the Rapuni, a hamlet of 5 houses close to the Rapuni 3 dam, and the village of Togez that is more downstream, overall affecting hundreds of households. Only the first case is directly attributable to connecting Rapuni 2 with Rapuni 3 & 4. The EBRD has acknowledged the problem and has recommended the immediate release of more water, so that mill can resume operation, as well as compensation to the owner, without specifying the process or the amount. As of 15 November 2017, neither of these two commitments was fulfilled.

It is worth noting that the Rapuni 3 & 4 project, that operates illegally by not releasing residual flow into the river bed, although not financed by the EBRD, is financed by the National Bank of Greece (NBG), the bank owned by the Hellenic Financial Stability Fund. Apart from breaching ecological flow standards, the project has damaged the houses in the village of Togez without proper compensation. It is also on the boundary of the Kuturman natural reserve, a nominated Emerald site. […]

The EBRD’s monitoring carried out in previous years did not identify the problem with the corn flour mill. It did identify issues with the fish passes. Also, it is not clear if the Bank has noticed the tunnel between Rapuni 2 and Rapuni 3 & 4. But it is certain that such a connection was not a part of the original project that was financed by the EBRD.

The fact that the EBRD did not require an EIA according to EBRD standards – although the project is in a National Park – is also worrisome and might have led to some of the issues such as insufficient residual flow. There is therefore also no assessment of cumulative impacts with Rapuni 3 & 4, although at the time when the loan was awarded (2011) the concession for Rapuni 3 & 4 had already been signed.

This example shows how operating in a weak governance context can expose the bank to reputational risk. Even if the Bank didn’t have any control over whether the two projects would be connected, it cannot ignore the fact that its client significantly changed the project design and it has ended up de facto financing part of the same scheme that is operating illegally and extremely damaging to the environment and local communities.


The Ternove project has been developed as a joint venture between Canadian and Albanian capital. The companies claim to be implementing good ecological practices. […] It is a major infrastructure project, yet it wasn’t subject to a full EIA within the EBRD approval process. […]

The field visit identified major issues with erosion and deforestation. The whole penstock runs above ground and is surrounded by eroded hillsides, mainly consisting of clay soil. The central section of the pipeline in particular is affected by erosion, to the extent that it seems there is a risk of landslides.

Deforestation has resulted from the excavation work carried out to make space for the penstock. The excavation for the pipeline foundations, access roads and electricity lines also removed tree and vegetation cover. The company was fined several times for cutting trees without permission.79 The status of these infringements is not clear, and there was no feedback to the Bulqizë office of the State Inspectorate of Environment and Forestry about the status of the fine.80 The area is known for its pristine beech forests81 that sustain a population of brown bears82 as well as different endemic plant species.83

Poor construction practices continue in the area of the intake: below the access road leading from the Black Lake (Liqeni i Zi) to Liqeni i Bardhë, excavated rocks could be seen simply dumped in the woods. The same road is followed by a feeder channel that brings sediment from Liqeni i Bardhë into Liqeni i Zi.

The EBRD’s consultants visited the area in July 2017. The monitoring report is not public but the EBRD has shared some of the main points with Bankwatch. The main findings confirmed that the company needs to reforest and rehabilitate the area including the area around Fusha e Zogut lake and that there is a risk of sediment inflow so that sediment traps need to be built. The company’s deadline to reforest the area is by the end of 2018 and to build the sediment traps by the end of 2017. […]

The EBRD assigned this as an environmental and social category B project. This means that it was under less scrutiny about its potential impacts than a category A project would have been. This categorisation is questionable from the point of view of the complexity of the project as well as the status of the Black Lake as a Monument of Nature.

In addition, less information about monitoring is available, as according to the EBRD “per EBRD’s Public Information Policy, the Bank does not disclose the full ESAPs (Environmental And Social Action Plans) on category B-projects as these often contain commercially sensitive information”.

Prior to commencing the works, the project promoter Teodori 2003 sh.p.k did not consult the local population despite the fact that the hydropower scheme potentially limits the community’s access to water. Such steps contradict the environmental and social requirements of the EBRD.