INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA10730 Public Disclosure Copy Date ISDS Prepared/Updated: 09-Oct-2014 Date ISDS Approved/Disclosed: 30-Jun-2014, 10-Oct-2014 I. BASIC INFORMATION 1. Basic Project Data Country: Nepal Project ID: P146344 Project Name: Nepal: Grid Solar and Energy Efficiency (P146344) Task Team Rabin Shrestha Leader: Estimated 15-Sep-2014 Estimated 09-Dec-2014 Appraisal Date: Board Date: Managing Unit: GEEDR Lending Investment Project Financing Instrument: Sector(s): Other Renewable Energy (70%), Energy efficiency in Heat and Power (15%), Transmission and Distribution of Electricity (15%) Theme(s): Infrastructure services for private sector development (100%) Is this project processed under OP 8.50 (Emergency Recovery) or OP No 8.00 (Rapid Response to Crises and Emergencies)? Financing (In USD Million) Public Disclosure Copy Total Project Cost: 138.00 Total Bank Financing: 130.00 Financing Gap: 0.00 Financing Source Amount BORROWER/RECIPIENT 8.00 International Development Association (IDA) 130.00 Total 138.00 Environmental B - Partial Assessment Category: Is this a No Repeater project? 2. Project Development Objective(s) The project development objectives (PDOs) are to: (i) increase electricity supply to the NEA grid through grid-connected solar farms; and (ii) reduce NEA’s distribution losses in pilot distribution centers. 3. Project Description Page 1 of 9 The proposed project consists of two components: (a) Grid-connected Solar Farms Development; and (b) Distribution System Planning and Loss Reduction. The total cost estimated for the proposed Project is US$ 138.0 million, including interest during construction, physical and price contingencies. Public Disclosure Copy Grid-connected Solar Farms Development (US$ 54.0 million). This component will support (a) design, supply, construction, commissioning, operation and maintenance (O&M) of grid connected solar farms of 25 MWp capacity to supply electricity directly to NEA’s distribution network, through an engineering, procurement, and construction (EPC) contract; (b) hiring of an Owner’s Engineer (OE) to support NEA to procure the EPC contract and supervise its execution; and (c) incremental operating cost and capacity building. The solar farms will be built using conventional solar photovoltaic (PV) technology nearby the Kathmandu valley. Electricity generated will be supplied directly without electricity storage facilities, at 11kV medium voltage (MV) level, to the existing substations of the NEA. A number of candidate sites, including the two existing hydropower plants (Devighat and Trishuli) owned by the NEA, are identified with sufficient areas for installation of the solar farms through a screening process based on criteria such as land ownership by NEA, size of areas, intensity of solar radiations, daily sunshine durations, shadows, and topographic and geological conditions. Bid documents for the EPC contract is scheduled for issuance in November 2014 and signing of the contract is expected in March 2015. O&M services for 5 years from the date of commission will also be included in the EPC contract. The O&M services include supply of spare parts, preparation of an O&M manual and training of the NEA’s engineers for O&M. An OE (or individual consultants) will be hired to assist NEA in bid evaluation, construction supervision, acceptance test, commissioning, and reviewing the O&M Manuals. The capacity building program includes hiring of consultants for independent bid evaluations, and training of NEA staff on project management and O&M of solar farms. Distribution System Planning and Loss Reduction (US$ 84.0 million). This component will support: (a) preparing the Distribution Master Plan (DMP); (b) preparing the Distribution Loss Reduction Master Plan (DLRMP); (c) preparation and implementation of pilot loss reduction projects in Public Disclosure Copy selected distribution centers of NEA following recommendations of the DLRMP; and (d) capacity building for distribution system planning at both NEA’s distribution center and corporate levels. The component will help redress the high system losses in the country, enhancing NEA’s capacity in distribution system planning and management, and enhancing on-grid and off-grid planning coordination for rural electrification. Following recommendations of the DLRMP, investment for system loss reduction will be piloted in a number of distribution centers of the NEA, which may include: (i) replacing conductors of distribution feeders or building new distributions lines to reduce line losses; (ii) adding or replacing distribution transformers to maintain voltage levels and reduce transformer losses; and (iii) adding capacitor banks to compensate reactive power to manage voltage levels. The capacity building programs may include: (i) provision of instruments and proven software and training for distribution system loss identification and reduction planning; and (ii) development of a Geographic Information System (GIS) database with information/data of locations and details regarding the NEA’s existing generation, transmission, and distribution facilities (including specifications); grid connected customers (households, industries, commercials, institutional customers, etc.); potential customers in grid-covered areas; potential demands in not grid-covered areas; among others, for distribution system / rural electrification master planning. The GIS database is critical for on- and off-grid rural electrification planning, loss reduction planning, and distribution Page 2 of 9 system and customer management. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Public Disclosure Copy The list of candidate locations identified for initial screening are: • Devighat Hydropower Plant: Devighat Hydropower Plant, located at Devighat in Nuwakot, with an installed capacity of 14.1 MW and annual design generation of 144 GWh, was commissioned in 1984 and rehabilitated and upgraded to 15 MW in 2011. It lies on the right bank of Trishuli River and is approximately 10 km downstream of Trishuli hydropower station. In this hydropower plant, there are 4 areas suitable for installation of solar panels: i) Raatmatay Area, ii) Keraghari, iii) Staff Quarter Area, and iv) Forebay Ground Area. All these areas have good sunshine hours from 7:30 AM to 5:30 PM. All these areas are less than 1.5 km away from the tapping point (a substation in the power plant area) with 11kV transmission line to evacuate electricity to be generated by the proposed solar farm project. These areas are owned by NEA and are free of land ownership issues. • Trishuli Hydropower Plant: Trishuli Hydropower Plant, located approximately 10 km upstream from Devighat Hydropower Plant, with an installed capacity of 24 MW and annual design generation of 163 GWh, was commissioned in 1967. In this hydropower plant, there are 3 areas suitable for installation of solar panels: i) Trishuli 2 Area 2, ii) Trishuli 5 Area, and iii) Reservoir Pond Area. All these areas have good sunshine hours from 7:00AM to 4:30PM, and are less than 3.3 km away from the tapping point (a switchyard in the power plant area) with 11kV transmission line to evacuate electricity to be generated by the proposed solar farm project. • Pharping Site: This is the first hydropower plant developed in Nepal, which has been declared as a National Heritage. Recently, centenary year was celebrated. The power plant (106 years after construction) has not been generating electricity for a few years due to decrepitude. The candidate site is in steep slope and facing the south direction, near the power house. There is an 11kV transmission line, which evacuates electricity generated by the power plant to the nearest substation. Public Disclosure Copy The monument (a triangular tower) on the top of another hill, on the west side in front of the candidate site, may cause shadow on significantly large areas and make the suitable areas for the solar panel installation narrower. • Markhu 1: Land was legally acquired and transferred in the name of NEA. There are quite old residences and a guest house. The site is located at lakeside of the reservoir of Kulekhani hydropower plant (60MW storage type). Sun light is available from 8:00 to 16:00 during winters and 8:00 to 17:30 during summer seasons. The land is quite flat, but narrow (it could be good for 1 to 2 MW). Houses on the site need to be demolished. The nearest substation at Kulekhani 2 hydropower station, which is about 15 km away. • Markhu 2: This site is located a few hundreds meter away from Markhu 1 site. Although the boundary of NEA’s land was unclear at the site, the land is the larger than Markhu 1 and Parphing and seems suitable for the solar system installation facing the South direction. The site is located at lakeside of the reservoir of Kulekhani hydropower plant. The land consists of the slope to reservoir and flat land facing the south direction. The site could be enough for 5 MW solar panel installations, if NEA owns all of the area. NEA needs to identify exact size of the site on a topographic map. • Other sites selected for screening are Sunkoshi Hydropower Plant, Sundarijal Hydropower Plant, Middle Marshyangdi Hydropower Plant, and Panauti Hydro Power Plant. Page 3 of 9 5. Environmental and Social Safeguards Specialists Drona Raj Ghimire (GENDR) Public Disclosure Copy Parthapriya Ghosh (GSURR) 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes The policy is triggered because the activities/ BP 4.01 interventions proposed under the Project may have low impacts on the natural environment and human health. The Project during construction requires clearing up of sites, dismantling of existing structures, excavations, which have impacts (though minimal) to physical and biological environment. Potential concerns during operation include management wastes (e.g. glass, chips, photo-voltaic cells from solar farm), as well as visual intrusion. Each activity will be subjected to environmental screening and site specific EMP prepared to address the relevant environmental impacts. Natural Habitats OP/BP 4.04 No No. Forests OP/BP 4.36 Yes The alignments of MV lines for connecting solar farms with the grid and for piloting loss reduction in selected distribution areas are not-known. Hence there is possibility that some MV lines fall in the forest. Besides, NEA has planted trees within the premises of several of the candidate Public Disclosure Copy sites. These trees need to be cut. Hence, this policy is triggered. Pest Management OP 4.09 No Project does not envisage use of pesticide. Physical Cultural Resources OP/ Yes This policy is triggered because screening of BP 4.11 candidate sites done as part of ESMF preparation indicates existing local cultural sites in and around the NEA premises where solar farms are proposed. Cultural site may also be located near the transmission lines, locations of which are not- known. Site specific EMP (prepared under OP 4.01), where necessary, will provide relevant mitigations to protect PCR. The ESMF contains broad guidelines for handling Chance Find PCR. Indigenous Peoples OP/BP 4.10 Yes Social screening suggests presence of indigenous community around the project site. Vulnerable Community Development Plan will be prepared for the final project site as suggested in ESMF. Page 4 of 9 Involuntary Resettlement OP/BP Yes Though no private land acquisition is envisaged 4.12 as all solar panels will be installed on land owned by NEA, OP 4.12 has been triggered as there Public Disclosure Copy could be land acquisition related to project intervention which has not been envisaged yet such as widening of approach roads.. The ESMF prepared by the project includes Resettlement Policy Framework. Social impact assessment will be carried out for the finalized site and a Resettlement Action Plan if required will be prepared based on social impact assessment results. Safety of Dams OP/BP 4.37 No Project neither support dam construction, nor depend on existing dam. Projects on International No Project does not affect quantity and quality of Waterways OP/BP 7.50 international water body. Projects in Disputed Areas OP/BP No Project is not located in disputed area. 7.60 II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: Highly significant environmental and social impacts are unlikely given the type of activities (installation of solar PV panels without battery for power storage, short 11 kV transmission lines for connecting to national grid), and locations within NEA’s own premises. Small scale Public Disclosure Copy excavation is needed for making space for solar farm. High risks activity or locations are avoided through ineligibility criteria / negative list. The project is, hence, environmental Category B as expected adverse environmental impacts are limited in scale (site specific), largely reversible and can be readily addressed through readily available mitigation measures. The potential adverse issues/ impacts are associated with site clearing (shrub vegetation removal) & excavation, waste management and management of labor camps. Most of the impacts are limited to the construction phase and are temporary in nature. The construction period impacts vary depending on site and activity, and may include localized soil erosion, pollution of water & land, dust & air pollution, noise, occupational health & safety, and loss of vegetation. Potential environmental concerns of the solar farms during the operational stage are related to management wastes that may contain glasses, chips and photo-voltaic cells. Except for the visual quality, operational phase impact has negligible footprint. Specific issues related to component 2 are PCB in the transformer and dismantling of the existing conductors. PCB based transformer and capacitor bank are not permitted. The construction as well as operational phase impacts can be mitigated/ offset by good housekeeping measures, a site specific environment management plan (EMP) that contains clearly defined, contractually agreed mitigation measures and implementation arrangements, linked with construction supervisions are deemed sufficient to address related impacts. While the Project is expected to benefit local communities, the implementation of certain subprojects could lead to some adverse social impacts. Social screening conducted for the Page 5 of 9 potential project area suggests that there is no likelihood of private land acquisition for solar farms as all installations will be on land already owned by NEA. However, some portion of these land plots is encroached. The screening result shows that encroachers are largely cultivators and few Public Disclosure Copy houses. There could also be potential adverse impact though limited if any approach road needs to be widened or if roads right of way is not enough to erect or rehabilitate 11 kV distribution lines. Potential adverse impacts may include loss of (i) land (temporary or permanent), (ii) livelihood, (iii) access to private or community property, etc. Site selection could be locally controversial among directly affected people and other stakeholders. The Environmental and Social Management Framework (ESMF) prepared for the Project acknowledges these issues and integrates the measures for addressing them in the project implementation process. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: A large scale solar farm could be a visual obstacle, and thus this aspect will be considered during preparation of detailed site plan of the solar farm. The candidate project sites visited during preparation are neither in visual impact sensitive areas nor overlooked by significantly populated area. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. Nine sites within NEA’s own territory have been identified as potential candidate for the solar farms. NEA is collecting relevant technical, social and environmental information for comparison of the sites. Final selection of the site will be made during early stage of implementation followed by detailed engineering: avoiding or minimizing adverse environmental and social impacts will be one of the guiding principles of site selection. ESMF provides ineligibility criteria/ negative list in order avoid significant impacts/ issues. Community around the potential sites will be consulted while finalizing the site(s). 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Public Disclosure Copy Solar farm sites as well as distribution loss reduction sites are not-known at the time of preparation. Hence, borrower has prepared an Environmental and Social Management Framework (ESMF) for use during implementation. The ESMF aims to: (i) ensure the social and environmental sustainability of investments; (ii) ensure compliance with national environmental and social legislation; and (iii) ensure compliance with the World Bank’s Environmental and Social Safeguards Policies. The candidate sites have been visited by social and environmental consultant in the process of preparing the ESMF. The ESMF has been prepared considering the applicable World Bank social and environmental safeguard policies and country’s legal requirements. The ESMF provides guidance; define process/procedures, institutional responsibilities for assessing and managing the potential environmental and social risks and impacts that may come up during implementation and throughout the project cycle. It identifies potential social and environmental risks and proposes generic mitigation measures. The ESMF identifies negative (ineligible) activities. Each subproject will be subjected to detailed environmental and social screening, and appropriate level of environmental and social assessment. Specific Environmental Management Plan will be prepared for each site and activities. The ESMF provides sample Terms of Reference and reporting structures for compliance with the ESA requirement. The ESA will determine the risk and mitigation measures needed for the sub-project, including the preparation of detailed Environmental Management Plans (EMP) and Social Impact Assessment and/or Resettlement Page 6 of 9 Action Plan (RAP); Vulnerable Community Development Plan (VCDP) as applicable. ESMF requires internal and periodic external monitoring. Routine environmental and social Public Disclosure Copy supervision and monitoring will be done by the respective Site Management Office, which, once in a month, submits status/progress report to central PMT Office. The environmental and social expert of PMT (deputed from ESSD) will carry out periodic (two-monthly) internal safeguard compliance monitoring, verify report submitted by site office and submits its own report to central PMT Office at NEA which shares the report with the World Bank. NEA will also engage an external agency for mid-term and end term evaluation of the ESMF application and compliance with social and environmental safeguard requirements. The primary responsibility of coordinating work related to social and environmental safeguards will rest with the Project assisted by the Environment and Social Studies Department (ESSD). Currently ESSD is working on several Bank funded projects. ESSD over a period of time has acquired skill and experience to address social and environmental safeguard issues. The Project will establish an Environmental and Social Management Unit (ESMU). The ESMU will be staffed with specialized social and environment professionals either hired from the marked or on deputation from ESSD. ESSD, though, operates from central office; it establishes field offices at every project site headed by senior professional as part of ESMU. ESMU model will be followed as NEA is following this model in other projects as well and this is functioning satisfactorily. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Stakeholders include all Affected Persons (APs,) including vulnerable households (Adivashi/ Janajati and disadvantageous groups, project beneficiaries, political party representatives, community leaders, and representatives of community based organizations; representatives from recipient wards, local NGOs, and Officials of NEA and relevant government agency Public Disclosure Copy representatives. During the preparation of ESMF, NEA carried out formal and informal consultations with various groups. Field level consultations were carried out in 10 different locations around the proposed candidate solar farm sites. The ESMF requires consultations at each site during implementation stage through focus group discussions (FGDs), public meetings, community discussions, and in- depth and key informant interviews. Disclosure: The ESMF has been disclosed in NEA/Project web site on June 13, 2014 (Available at: http://nea.org.np/publications.html). Executive Summary is in process of being translated into local language and then willthen will be disseminated to subproject sites. The ESMF will be made available to the concerned DDCs and VDCs/ Municipalities once sites are selected. B. Disclosure Requirements Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank 13-Jun-2014 Date of submission to InfoShop 16-Jun-2014 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Page 7 of 9 "In country" Disclosure Nepal 13-Jun-2014 Comments: Public Disclosure Copy Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank 13-Jun-2014 Date of submission to InfoShop 16-Jun-2014 "In country" Disclosure Nepal 13-Jun-2014 Comments: Indigenous Peoples Development Plan/Framework Date of receipt by the Bank 13-Jun-2014 Date of submission to InfoShop 16-Jun-2014 "In country" Disclosure Nepal 13-Jun-2014 Comments: If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) Yes [ ] No [ ] NA [ ] Public Disclosure Copy report? If yes, then did the Regional Environment Unit or Practice Yes [ ] No [ ] NA [ ] Manager (PM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated Yes [ ] No [ ] NA [ ] in the credit/loan? OP/BP 4.11 - Physical Cultural Resources Does the EA include adequate measures related to cultural Yes [ ] No [ ] NA [ ] property? Does the credit/loan incorporate mechanisms to mitigate the Yes [ ] No [ ] NA [ ] potential adverse impacts on cultural property? OP/BP 4.10 - Indigenous Peoples Has a separate Indigenous Peoples Plan/Planning Framework Yes [ ] No [ ] NA [ ] (as appropriate) been prepared in consultation with affected Indigenous Peoples? If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ] Practice Manager review the plan? Page 8 of 9 If the whole project is designed to benefit IP, has the design Yes [ ] No [ ] NA [ ] been reviewed and approved by the Regional Social Public Disclosure Copy Development Unit or Practice Manager? OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/ Yes [ ] No [ ] NA [ ] process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Yes [ ] No [ ] NA [ ] Practice Manager review the plan? OP/BP 4.36 - Forests Has the sector-wide analysis of policy and institutional issues Yes [ ] No [ ] NA [ ] and constraints been carried out? Does the project design include satisfactory measures to Yes [ ] No [ ] NA [ ] overcome these constraints? Does the project finance commercial harvesting, and if so, Yes [ ] No [ ] NA [ ] does it include provisions for certification system? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the Yes [ ] No [ ] NA [ ] World Bank's Infoshop? Have relevant documents been disclosed in-country in a public Yes [ ] No [ ] NA [ ] place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ ] No [ ] NA [ ] responsibilities been prepared for the implementation of Public Disclosure Copy measures related to safeguard policies? Have costs related to safeguard policy measures been included Yes [ ] No [ ] NA [ ] in the project cost? Does the Monitoring and Evaluation system of the project Yes [ ] No [ ] NA [ ] include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed Yes [ ] No [ ] NA [ ] with the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Name: Rabin Shrestha Approved By Sector Manager: Name: Julia Bucknall (SM) Date: 10-Oct-2014 Page 9 of 9