IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors.

The Summary of Project Information (SPI) provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a category B project, according to IFC''s Procedure for Environmental and Social Review of Projects because (i) a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria, and rather (ii) positive environmental impacts are expected due to reduction of technical distribution losses and implementation of environmental actions. The review of the Project consisted of appraising technical, environmental and social information submitted by Union Fenosa, including "Environmental Due Diligence" report prepared for EBRD by KMPG Russia, dated September 1999. The following potential environmental, health and safety, and social issues of the Project were analyzed:

• compliance with Moldovan environmental regulation
• corporate environmental management system
• reduction of GHG emissions by reducing technical distribution losses
• management of mineral oils in transformers, etc. (including PCB analysis)
• wastewater treatment
• hazardous waste handling and disposal
• safety management
• water discharge
• electromagnetic field
• right-of-way acquisition for new high-voltage lines (110 and 35 kV)
• Sponsor’s environmental policy and capacity

The Sponsor has presented Environmental Action Plans (EAPs) to address these issues to ensure that the proposed Project will, upon implementation of the specific measures agreed, (i) comply with the applicable host country laws and regulations, World Bank/IFC requirements and European Union standards and (ii) improve the environmental and social performance of the Borrowers. The information about how these issues will be addressed by the Sponsor and the Project is summarized in the paragraphs that follow.

• Compliance with Moldovan environmental regulation

All the environmental requirements and relevant permits for the operation of the distribution companies are compiled and integrated in their Ecological Passports, which are reviewed regularly by the regional environmental inspectors and the central authorities of the Ministry of Environment. All the three companies have effective Ecological Passports and consequently, they are in compliance with the environmental requirements of Moldova.

• Corporate environmental management system

Although each distribution company has relevant staff handling environmental issues, there is no corporate environmental management system, and Union Fenosa agreed in the EAPs to establish an Environmental Management System at each distribution company by January 2004.

• Reduction of GHG emissions by reducing technical distribution losses

The three distribution companies currently experience high level of technical and commercial losses. As one of the positive impacts of the Project, the technical loss is expected to be reduced from 10.7% in 2000 to 9.5% in 2004. This reduction is estimated to reduce Greenhouse Gas emissions by 30,000 tons of CO2 per year after 2005.

• Management of mineral oils in transformers, etc. (including PCB analysis)

Significant amount of mineral oils are being used and handled at the three distribution companies especially for transformers, high voltage switches and hydraulic operations. No special management procedures exist or are being followed for the handling of mineral oils. The companies have not measured PCBs or other toxic compounds in those oils. Union Fenosa has proposed in the EAPs to (i) implement PCBs analysis as part of the transformer rehabilitation program (i.e. by 2004) and if its contamination is confirmed, then (ii) replace and dispose PCBs-contaminated oils (when equipment is replaced or by 2010 at the latest).

• Wastewater treatment

The three companies produce wastewater mainly from the vehicles washing facilities and from general room washing uses. The wastewater treatment units are either small, inefficient or out of operation. Union Fenosa has proposed in the EAPs to install wastewater treatment system including oil separators for the vehicles washing areas by January 2003.

• Hazardous waste handling and disposal

The hazardous solid waste in the times of former Soviet Union used to be collected centrally for appropriate disposal. In the recent years, the three distribution companies have had to store the hazardous solid waste such as mercury lamps and batteries within the premises temporarily, until the authorities establish a new disposal site. Union Fenosa has proposed in the EAPs to improve storage facilities and carry out proper disposal of hazardous solid waste already stored in the facility by January 2002.

• Safety management

The "Environmental Due Diligence" report concluded that the management of health and safety issues within the three distribution companies is on a fairy satisfactory level. On the other hand, the report identified that electrocution accidents occurring among the general public at the companies’ facilities are increasing at an alarming rate. Union Fenosa has proposed in the EAPs to implement measures of impeding access of the general public to the equipment, especially children or potential thieves (primarily of transformer oil). These include improving the structure of fencing and proper marking of the substations by January 2005.

• Water discharge

Drainage and treatment of waters from open areas are not adequate. Construction of a wastewater treatment plant and a separate drainage network for the collection of the precipitation water from the open areas where it is polluted by oil or other pollutants was proposed by the "Environmental Due Diligence" report. Union Fenosa is examining how this issue is best incorporated in the EAPs.

• Electromagnetic field

The "Environmental Due Diligence" report identified that RED Chisinau received complaints from some residents living underneath the 110kV lines about health effects caused by electromagnetic field, and concluded that a couple of investigations carried out did not confirm any adverse effect to people living underneath the 110kV lines. Consultations with those residents are ongoing by RED Chisinau, and under the new management of Union Fenosa, these will continue more effectively.

• Right-of-way acquisition for new high-voltage lines (110 and 35kV)

The five-year investment plan for the three companies does not include any development of new high-voltage lines. RED Chisinau had obtained an approval in 1994 for development of about 4km 110kV line within the city of Chisinau, which may involve resettlement of people, but Union Fenosa confirmed that there is no plan to develop this.

• Sponsor’s environmental policy and capacity

Union Fenosa has established Environmental Policy consisting of various principles including to guarantee that everyday activities are performed in accordance with the legislation in force, to study the technical and economic feasibility of minimizing the environmental impacts, to promote environmental management system, and to maintain a system of open communication with the legislative bodies and other social organizations. Based on the Environmental Policy, Union Fenosa has also established Code of Conduct consisting of elements including implementation of an Environmental Management System, integration of environmental factors into planning of new projects, establishment of communication channels in keeping with the social environment. The involvement of Union Fenosa in implementing the Project is expected to assist the Borrowers in improving their environmental and social performance.

Accordingly, IFC concludes that the proposed Project will meet the applicable World Bank/IFC environmental and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed Environmental Action Plans.

IFC will evaluate the Project''s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the Project covering: (i) the status of implementation of any measures contained in the Environmental Action Plans; and (ii) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.