February 21, 2014
The findings of a visit to the EBRD sponsored Patos Marinza oil field in Albania show how local development and investments in resource extraction often do not go hand in hand. The case provides valuable lessons for the revision of the EBRD’s safeguard policies.
by David Hoffman, cross-posted from the Bankwatch blog
I first visited Albania in 2007. I went there to dig a bit more into a thermal power plant financed by both the World Bank and the European Bank for Reconstruction and Development near the coastal town of Vlore, a popular tourist destination. In spite of fierce opposition from locals and formal grievances lodged with the investors (pdf), the power plant was constructed anyway, and now sits unused, collecting cobwebs and interest on the country’s outstanding debt repayments.
Things have changed rapidly though in and around Vlore: haphazard construction continues unabated, with once towering beachfront hotels demolished to make way for equally large yet apparently unused condominiums. The shift, I’m told, coincides with the shifting political landscape and the subsequent patronage to the favoured property developers of the moment.
But the more things change, the more some things stay the same. Fast-forward more than half a decade, and both the EBRD and IFC are at it again, financing another controversial energy project near Vlore: the extraction of oil at the Patos Marinza fields by the Canadian company Banker’s Petroleum.
Patos Marinza is one of the largest, and oldest, onshore oil fields in Europe. Oil was first discovered in 1928, and because of this long history of extraction, the area around Patos Marinza suffers from heavy pollution. That’s why a portion of the loan from the banks is intended to clean up the area (and typical of the EBRD, its loan is called the ‘Patos-Marinza Environmental Remediation and Development’ project, even though just USD 6 of 100 million extended to the company is to be used for remediation, and hardly any of that has even been drawn).
Our visit highlighted that while Banker’s had done quite a bit to improve its facilities for extracting oil, it wasn’t immediately clear what was being done to benefit both the environment and the locals living in the immediate proximity of the oil wells.
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Making the unseen visible
Just as in the case of the power plant at Vlore, locals have lodged a formal complaint at the World Bank, alleging among other things that Banker’s drilling activities have led to increased seismic activity. An investigation by the IFC’s Compliance Advisor Ombudsman is ongoing, and in the meantime, a formal working group has been established to investigate the source of the increased seismicity.
But what struck me most about the attention being paid to issues happening underground (and for the most part, unseen) was the conditions it created for inaction on the very visible unemployment and pollution blighting the residents of Patos-Marinza, issues that residents repeatedly raised during the trip. And if Banker’s security had had its way, the issues would have remain unseen, as shortly after arriving, we were unwelcomingly escorted out of the area by a caravan of security vehicles.
Prior to the heavy-handed guards removing us from the villages, we spoke with about twenty residents in the nearby village of Kallmi, all of whom were unemployed. A former employee of the state-owned oil company Albpetrol, from whom Banker’s is taking over the oil fields, explained that men who had technical training and worked in the fields could not find work with Banker’s, complaining that ‘hundreds’ had sent CVs not only to Banker’s but also the different subcontractors building things like roads.
When it was noted that Bankers has a hiring policy in place to give preference to former Albpetrol employees, the man dismissed it, reiterating that he knew not one of his former colleagues that was now employed by Bankers. Another migrant worker explained that upon returning from Greece, he had nowhere to send his children because the school was in such disrepair.
These types of investments – roads, schools and the like – came up often as the kinds of social programmes that Banker’s should support. As one man put it, social programmes ‘that made sense.’ He referred to his arrangement with Banker’s, where he rents the company land of oil extraction, and they in turn teach him how to care for tomatoes. The programme is of little use however, since the man already knows how to care for tomatoes, and he no longer has any land on which to grow the tomatoes. Along with other projects like the recently-constructed health centre and a programme for pruning trees, what the community wants and what why company constructs are entirely two different things.
There is no god that could live here
Even after just a few hours on site at Patos Marinza, the effects of breathing polluted air were noticeable: discomfort in the throat, a slight irritation resulting in eyes watering. For those who call the area home, the situation is taking its toll. Locals in Kallmi complained that there are significant amounts of air pollution, particularly early in the morning, and in the neighbouring village of Jagodina, others confirmed that ‘heavy’ air in the mornings, leading to problems with breathing. Locals say that an inoperable pipeline leaks methane, and the slag pits evaporate in the summer, further deteriorating the air quality. When asked about the conditions of the slag pits, one man alluded to an Albanian saying, ‘There is no god that could live there’.
Lessons learned for the future policy
This week in Sofia, the EBRD will hold its penultimate public consultation about the future of its safeguards policies. Colleagues from Albania who were present during our trip to Patos Marinza will present the mission, and we hope that this case will provide some lessons learned for the bank as it moves forward in revising in its safeguard policy. Otherwise it is possible that the next trip to Albania will be to visit another environmentally and socially-destructive EBRD energy investment.