Kharkiv Metro Extension

Between January and April 2019, the EIB Group Complaints Mechanism (EIB-CM) received complaints from five individuals. The complaints relate to the involuntary resettlement process taking place in the context of the construction of a metro line extension and associated stations as part of the Kharkiv Metro Extension project in Ukraine. The allegations mainly concern compensation.

The EIB-CM issued its Initial Assessment Report in May 2019. With regard to one of the complainants who is a user (and not an owner unlike the four other complainants): the EIB-CM found that she was a person who is negatively affected by the project and as such “is eligible for compensation, livelihood restoration and/or other resettlement assistance” as per Standard 6 of the EIB Environmental and Social Standards. The EIB-CM recommended to the Bank services to closely guide the City Council/Promoter in addressing her situation as soon as possible.
As of March 2020, the situation of this complainant was not fully resolved. Therefore, the EIB-CM recommended to the services to continue working closely with the City Council (in collaboration with the Promoter) and agree on the way forward, taking into account the concerns of the complainant about the degree of security and legal protection offered with the alternative accommodation proposed by the City Council. The EIB-CM will follow up within the next three months from the issuance of its Conclusions Report.

With regard to the four other complainants: The EIB-CM further assessed the allegations related to the adequacy of the monetary compensation during the investigation phase. As far as the valuation methodology is concerned, overall the total compensation package was found to include important aspects of fair compensation; it also includes specific elements that can be considered good practice in the context of involuntary resettlement (application of an involuntary resettlement compensation factor and application of an inflation factor).

Nevertheless, the EIB-CM identified specific issues related to the determination of the total compensation package. First, there is an indication that the market value of the affected property was underestimated by the valuation company. Moreover, in view of the EIB environmental and social (E&S) standards, compensation for certain types of losses/impacts was found to be missing or inadequate in the total compensation package (e.g. compensation for the loss of perennial plants as well as for certain types of losses -other than land and residential building).

The EIB-CM concluded that the determination of the total compensation package of the complainants was not fully in line with the EIB E&S standards. The EIB-CM recommended that the Bank continue following up with the City Council (in collaboration with the Promoter) to ensure that the full compensation package provided to the complainants is fair and at full replacement cost. The EIB-CM will follow up on this recommendation within the next 12 months from the issuance of its Conclusions Report.

Finally, the EIB-CM made suggestions for improvement in its Initial Assessment Report and Conclusions Report: (i) to provide continuous technical guidance to both the City Council/Promoter in the areas of establishing an effective grievance redress mechanism at project level, and carrying out meaningful stakeholder engagement and consultation regarding resettlement (as required under EIB Standards 6 and 10); (ii) need to ensure the Resettlement Action Plan is as clear and comprehensive as possible and request for an update if needed; and, (iii) need to mobilise technical assistance resources in the area of social development if needed.