Page 1 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 01/11/2011 Report No.: AC5830 1. Basic Project Data Country: Ukraine Project ID: P096586 Project Name: UA - ENERGY EFFICIENCY Task Team Leader: Gary Stuggins Estimated Appraisal Date: December 20, 2010 Estimated Board Date: May 17, 2011 Managing Unit: ECSSD Lending Instrument: Specific Investment Loan Sector: District heating and energy efficiency services (100%) Theme: Climate change (70%);Other environment and natural resources management (20%);Other financial and private sector development (10%) IBRD Amount (US$m.): 200.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 0.00 0.00 Environmental Category: F - Financial Intermediary Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) Yes [ ] No [X] 2. Project Objectives The project development objective is to contribute to energy efficiency by industrial and commercial companies, municipalities and municipally-owned enterprises and energy service companies by facilitating financial intermediaries to finance energy efficiency investments 3. Project Description The proposed Bank Loan to UkrEximBank will be a Financial Intermediary Loan (FIL) with a [Variable Spread (VSL)] denominated in Euros with [level] repayment of the principal. The IBRD funds will be utilized by UkrEximBank to directly finance eligible sub-projects and provide subsidiary loans to other "participating banks" (PBs) for energy efficiency sub-projects, with a guarantee by the GoU. The FIL approach was chosen to support a sustainable approach to financing energy efficiency projects which are typically very profitable and therefore lend themselves to commercial finance practices Page 2 4. Project Location and salient physical characteristics relevant to the safeguard analysis As the proposed loan is through a financial intermediary UkrEximBank and participating financial intermediaries (PBs), the project sites will be at various locations throughout Ukraine. 5. Environmental and Social Safeguards Specialists Mr Dmytro Glazkov (ECSS2) 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X 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: Given the focus of this project and scope of the sub-projects, it is expected that the majority of sub-projects would fall into Category B or C. Category A subprojects are not excluded from possible financing as they might have large Energy Efficiency gains. Appropriate measures to mitigate environmental impacts, monitor sub-projects are put in place to ensure full compliance with Bank and Ukrainian Environmental Reqirements by the borrowers. All sub-projects to be financed under the EEP will be subject to an environmental review process utilizing the procedures described in the Environmental Assessment Framework (EAF). This EAF is intended to provide those responsible for assessing the viability of sub-projects simple step by step guidelines/procedures to ensure that the sub-projects receive the required attention from an environmental and social point of view. UEB and PBs will be required to follow these procedures as part of the overall appraisal of sub-borrowers/sub-projects. UEB will provide final screening of all sub-project including environmental safeguards before clearing them and submitting for World Bank No Objection. These procedures are consistent with both the environmental policies and regulations of the Government of Ukraine and the Bank (OP/BP 4.01 Environmental Assessment, Social Assessment Procedure). Sub-project investments supported by the project involve modifications or system improvements within existing facilities. Sub-projects which could necessitate land acquisition are not anticipated. In the unlikely event that a sub-project that requires land acquisition is proposed for financing, it must be documented that land acquisition was Page 3 made on a willing seller - willing buyer basis and that the land purchased did not require the displacement of encroachers or informal land users. Sub-project investments which necessitate land acquisition leading to involuntary resettlement will not be financed under this project. Similarly, sub-projects for which technical success is linked to other interventions or investments which do require involuntary resettlement will not be supported by the project. An example of a possible Category A project is an existing Cement Plant that is designed to change from a wet to a dry process, cutting the energy use in about half. The World Bank will keep full responsibility for prior review of all Category A sub- project EIAs and Executive Summaries of EIAs for any category A sub-projects will be provided to the World Bank Board. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Implementation of Energy Efficiency Projects by FIs will have positive environmental impacts, through reduced energy consumption and air pollution. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N/A 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. UkrEximBank has adequate capacity (including an Environmental Engineer and two staff who attended in 2008 WB Safeguards training workshop in Georgia and one in Moldova) and are performing well in this capacity at EDP 2 Project. They have been satisfactorily following the environmental guidelines embedded in EDP 2 project and will be working with environmental guidelines in form of Environmental Assessment Framework document were embedded in the Project's Operational Manual. Therefore UkrEximBank has qualified technical staff for assuring compliance with Ukrainian environmental assessment safeguards. However, they and PBs have all indicated that they wish additional training to develop their skills to implement any additional requirements of the EAF which are needed to satisfy World Bank environmental policies. These additional responsibilities include: screening in accordance with World Bank criteria; providing Sub-borrowers with guidance in EA/environmental management plan (EMP), Environmental Info Sheet preparation, and supervision and reporting activities. The World Bank project team will conduct safeguards training to UkrEximBank and the PBs technical staff in these aspects during the project launch mission. The project team environmental specialist will provide the dedicated safeguards staff of the UkrEximBank and PBs a series of training sessions on implementation of the EAF during project preparation, loan effectiveness, and for their first few sub-project applications. The project team environmental specialist will organize one day to two day workshops (depending on number of participants) which would be a very efficient and cost-effective way of training, providing hands-on experience and building capacity. The potential environmental impacts to be associated with the anticipated sub-projects are either minor or negligible. Therefore, these arrangements are considered acceptable. Page 4 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders are UkrEximBank, the Borrower, the participating private commercial banks, and industrial companies who are going to be the sub-borrowers for the EEP loans. There are expected to about 20-30 sub-loans in various sectors of the economy. These are not known ex-ante. The environmental safeguards will be done through an Environment Assessment Framework included as part of the EEP Operations Manual and will be monitored by the private banks as per the sub-loans applications package and by the Borrower as part of project implementation and sub-loan approval process. The environmental screening process will identify the environmental category of the planned sub-projects and recommend the environmental mitigation procedures as and if required. A public consultation meeting was held on September 28, 2010 and notifications of the meeting were posted in the reputable Governmental newspaper #Uriadovyi Courier# (The Governmental Courier) on September 1, 2010, inviting the interested stakeholders to participate. The English language version of the EAF and the Minutes of the public consultation meeting were disclosed at the Infoshop on October 28, 2010. The short overview of EAF is presented in Annex 10 of PAD and full document is included as an annex to OM. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Yes Date of receipt by the Bank 08/26/2010 Date of "in-country" disclosure 10/28/2010 Date of submission to InfoShop 10/28/2010 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Page 5 * If the project triggers the Pest Management and/or Physical Cultural Resources, 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 (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Yes If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Yes Are the cost and the accountabilities for the EMP incorporated in the credit/loan? N/A The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Yes Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? Yes All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Yes Have costs related to safeguard policy measures been included in the project cost? N/A Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Yes Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Yes Page 6 D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Gary Stuggins 01/05/2011 Environmental Specialist: Mr Dmytro Glazkov 12/14/2010 Social Development Specialist Mr Frederick Edmund Brusberg 01/05/2011 Additional Environmental and/or Social Development Specialist(s): Approved by: Regional Safeguards Coordinator: Ms Agnes I. Kiss 01/05/2011 Comments: Sector Manager: Mr Ranjit J. Lamech 01/07/2011 Comments: