IFC Approves Management Action Plan in Investigation of Baynouna Solar Project in Jordan

For over a decade, the IFC has been a significant player in supporting Jordan’s renewable energy sector, which has witnessed substantial growth.

The International Finance Corporation (IFC) Board of Directors has officially approved a comprehensive Management Action Plan (MAP) in response to a thorough investigation of IFC’s investment in the Baynouna Solar Energy Project in Jordan. The investigation was conducted by the Compliance Advisor Ombudsman (CAO), IFC’s independent accountability body, after a complaint was raised by the Al Balqa tribes regarding the social and environmental impacts of the solar energy project.

For over a decade, the IFC has been a significant player in supporting Jordan’s renewable energy sector, which has witnessed substantial growth. The corporation has mobilized more than $900 million in renewable energy investments, which contributed to a broader impact of $4 billion in the sector. The Baynouna Solar Energy Project, which was backed by a $260 million investment from IFC, is a monumental achievement in Jordan’s transition to renewable energy. Located in the desert of the Jordanian countryside, the 200-megawatt solar photovoltaic plant is one of the largest of its kind in the country. This solar plant generates enough electricity to meet the annual needs of approximately 160,000 homes and reduces the country’s carbon dioxide emissions by offsetting 4 percent of the country’s energy consumption.

However, the project's development and operation were met with controversy, especially after a complaint was filed in 2020 by members of the Al Balqa tribes. These tribes claimed that they had not been adequately consulted about the use of the land on which the solar plant was built. The tribes, who had historically used the land for grazing livestock and cultivating fodder, alleged that the project resulted in significant economic displacement, loss of livelihoods, and exclusion from traditional land usage. They further claimed that IFC and its client, Masdar Baynouna Solar Energy Company, failed to establish a proper project-level grievance mechanism and had not sufficiently engaged with affected stakeholders, including herders and other tribal groups.

The CAO investigation, which concluded in October 2024, identified several shortcomings in IFC's environmental and social (E&S) policy compliance, both during the pre-investment due diligence phase and throughout project supervision. One of the key findings was that IFC’s due diligence did not adequately address the scale and potential impacts of the project. Specifically, it was found that IFC did not require the client to conduct a comprehensive assessment of land use, traditional land rights, or the socio-economic conditions of local communities. Additionally, the stakeholders consulted were not representative of all those affected by the project, with particular neglect of tribal groups and herders who relied on the land for their livelihoods.

The investigation also highlighted that during the operational phase of the project, IFC's supervision was insufficient in addressing stakeholder engagement concerns, documenting complaints, and disclosing how the project was handling grievances. As a result, the Al Balqa tribes and herders were not properly compensated for their displacement, and their access to traditionally used land was lost without appropriate restoration measures.

In response to these findings, IFC acknowledged that the project would have benefited from more detailed socio-economic baseline data collection and a more extensive consultation process. IFC’s Director for the Middle East, Pakistan, and Afghanistan, Khawaja Aftab Ahmed, expressed the corporation’s commitment to improving future engagements and outlined that the approved Management Action Plan would help address these issues moving forward. "We appreciate the willingness of both the complainants and the client to engage with IFC in this process and look forward to future cooperation in implementing the forthcoming social impact assessment," Ahmed said.

The Management Action Plan outlines several crucial steps to address the identified issues and ensure that future projects are more in line with IFC’s environmental and social performance standards. These measures include:

1. Social Impact Assessment: A comprehensive assessment will be carried out by the project’s client to provide conclusive information about those affected by the project. This assessment will also include the identification of any mitigation measures that are aligned with IFC’s Performance Standards.

2. Livelihood Restoration Plan: If the social impact assessment identifies economic displacement resulting from the project, a livelihood restoration plan will be developed to help those impacted by the loss of their land and resources.

3. Enhanced IFC Procedures: Prior to the approval of the MAP, IFC has also updated its Environmental and Social Review Procedure. The new guidelines are designed to improve internal processes, clarifying the requirements for identifying and analyzing the feasibility of mitigating social and environmental risks in future projects.

CAO’s Director General, Janine Ferretti, welcomed the measures outlined in the MAP and underscored the importance of rigorous social impact assessments during the due diligence process. She also highlighted CAO’s role in monitoring the implementation of the MAP and ensuring that the concerns of affected communities are properly addressed. "We welcome IFC’s commitment to work with its client to complete this assessment and ensure project-level action to identify a pathway for remedy for the Al Balqa tribes and herding communities," Ferretti stated.

CAO will continue to monitor the execution of the Management Action Plan and publish progress reports on IFC’s website, providing transparency and accountability for the steps being taken to remedy the situation and prevent similar issues in the future.

This case underscores the growing importance of conducting thorough social and environmental assessments in large-scale development projects. It also highlights the need for more inclusive consultation processes and grievance mechanisms to ensure that all affected communities, including indigenous and tribal groups, are properly considered in the development of major infrastructure projects. Through the implementation of the MAP and ongoing oversight, IFC and its partners aim to set a stronger precedent for responsible investment in Jordan’s renewable energy sector and beyond.