10255 - Pamir Energy Development

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Environmental Review Summary

Project Number

10255

Company Name

OAO PAMIR ENERGY COMPANY

Date ERS Disclosed

Feb 22, 2002

Country

Tajikistan

Region

Central Asia and Turkiye

Environmental Category

B - Limited

Status

Active

Previous Events

Approved : Jun 27, 2002
Signed : Sep 16, 2002
Invested : Jul 21, 2003

Sector

Large Hydro - Renewable Energy Generation

Industry

other

Department

Gbl Infrastructure & Natural Resources

Project Description

The project is the rehabilitation, upgrading, and operation of existing power generation, transmission and distribution facilities in Gorno Badakhshan Autonomous Oblast (GBAO), Tajikistan -- currently operated by the national electrical utility Barki Tajik -- for a period of 25 years. The basic project concept was developed by IFC in conjunction with the Aga Khan Fund for Economic Development (AKFED), which will be the controlling shareholder. Technical, economic, and environmental studies for the project were undertaken by Electrowatt-Ekono of Zurich, funded under IFC Swiss trust funds.

The cornerstone of the project is the completion of the Pamir I run-of-river hydroelectric plant near Khorog, the administrative capital of GBAO, by installing two additional turbines to bring the installed capacity of the plant to the planned total of 28 MW; and building a regulating structure at Lake Yashilkul – the source of the Gunt River that powers the Pamir I plant – to allow release of additional water during the winter to ensure sufficient water flows for energy production. The Pamir I plant was largely constructed in the 1980s and the first two of four planned units were put into service in 1996.

Environmental and Social

IFC and the technical consultant have assisted the sponsor in the preparation of plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow.

The sponsor will create the Pamir Energy Company (PamirEnergy), which will assume control of all existing electricity generation, transmission and distribution facilities in GBAO. The facilities include: the Pamir (28 MW at completion), Khorog (8 MW), and 10 more, smaller power plants that have a combined capacity of about 6 MW. There are 14 substations, 435 km of 35 kV and 990 km of 10 kV transmission lines, and 1160 km of low voltage lines. The utility will serve about 200,000 people in the GBAO region.

HEALTH, SAFETY AND ENVIRONMENT UNIT

PamirEnergy will establish a Health, Safety and Environment (HSE) unit at project headquarters in Khorog to implement the project’s Environmental Monitoring and Management Plan (EMMP). This HSE Unit will have three principal functions:

To monitor the compliance of PamirEnergy and all contractors employed by PamirEnergy with IFC social and environmental safeguard policies and guidelines;
To administer research activities undertaken by contractors on behalf of the project (e.g., Lake Yashilkul fisheries and floodplain monitoring) and coordinate the results of those activities with the impact mitigation activities to which the project is committed (e.g., compensation payments to herders for possible diminished floodplain pasture – see below); and,
To promote the project’s potential for direct local development impacts by coordinating the project’s research and community outreach efforts with the activities of other developmental organizations operating in GBAO.

The EMMP for the Pamir Energy Project has six interrelated components: 1) Health, Safety and Environmental Monitoring; 2) Yashilkul Lake Level Monitoring; 3) Floodplain Monitoring; 4) Compensation Distribution and Monitoring; 5) Yashilkul Fisheries Monitoring; and 6) Community Outreach. A description of each of these components follows:

Health, Safety and Environmental Monitoring
The principal task of the HSE Unit will be the regular monitoring of the project’s compliance with IFC’s social and environmental safeguard policies and guidelines. PamirEnergy will be responsible for incorporating these policies and guidelines into all contracts related to the engineering and construction of project facilities as well as in its standard operating procedures for those facilities.

PamirEnergy will train and appoint an HSE manager to each facility who will be responsible for enforcing workplace safety and good housekeeping in compliance with the guidelines on site. PamirEnergy will provide the HSE Unit Engineer and other relevant personnel with participant training in prevailing international standards for occupational health and safety as required. The Engineer, in turn, will provide preliminary and refresher training to all facility HSE managers annually.

The Engineer will also regularly inspect all transmission facilities, including transmission lines, sub-stations and transformers to ensure that they are safe and maintained in accordance with IFC guidelines. As part of its public education efforts, the HSE Unit will raise public awareness about electricity safety and encourage consumers to report problems to the Unit.

Lake Level Monitoring
Information on lake level is essential for two reasons:

To determine actual project impacts on floodplain productivity during the project’s construction phase as a basis for awarding compensation to adversely affected herders; and
To monitor the availability of water for energy production during the project’s operation phase.

Lake level monitoring is currently being carried out by the government Meteorological Observatory in Khorog. According to the information obtained on the occasion of the consultants'' visit to Khorog in early April 2001, this monitoring has been resumed recently, after a number of years of interruption. However, at that time no recent data were available. The plant itself will require a reliable lake level monitoring, and for this purpose the necessary device will be installed at the outlet control structure.

Floodplain Monitoring
The potential impact of the project on the two floodplains at Lake Yashilkul (Somon and Marjinoy) could negatively affect the livelihood of the local population. If so, PamirEnergy will have to provide compensation to the farmers dependent on the floodplain resources. Monitoring of the floodplain vegetation will be carried out to determine if, and the extent to which, such compensation is required. A preliminary agreement has been reached with the Botanical Institute of Khorog University, which has already started the monitoring of the floodplain vegetation. This monitoring program will consist of installation of permanent sample plots for identifying productivity, phytosociological analysis of the vegetation, and determining the production of available biomass available for making hay and for winter pasture. An annual report will be made in autumn of whether a reduction in productivity has been detected. Compensation payments be made before the onset of winter, since hay will have to be bought in time.

Compensation
The HSE Unit will coordinate the research and monitoring activities of the Flood Plain Monitoring component and assess the need to purchase hay stocks to compensate herders for diminished production of the Yashilkul floodplains. This assessment will take place after the hay harvesting season in August during the project construction period and for at least two years after construction is complete. The HSE Unit will provide cash compensation directly to the cooperative farms that utilize the floodplains for grazing and hay production. The compensation payments will be calculated on the basis of the number of head of livestock maintained by the members of each cooperative farm (including animals that they own independent of the farms) and any short-fall in hay production estimated by the Floodplains Monitoring component. The HSE Unit will audit each cooperative farm receiving compensation to ensure that the requisite hay stocks are purchased, and the Unit will monitor the distribution of hay stocks throughout the winter to ensure that needs of the cooperative members are met. At present, it is not possible to estimate the impact of the project on the productivity of the floodplains until the drawdown of the lake is undertaken. For this reason, a compensation contingency fund of $50,000 to cover a five year period has been proposed as part of the HSE Unit budget. This amount is based on a “worst-case” scenario calculated according to current livestock holdings and an average current price of hay per ton as reported by the managers of cooperative farms surveyed in March/April 2001.

Fisheries Monitoring
The fisheries in Lake Yashilkul are a potential resource for use by the local population. Problems for exploitation and in access to markets presently prevent the use of this resource, but there is a potential for development. The project, by altering the lake level, can affect fisheries by disturbing or destroying spawning grounds, which would affect reproduction; and by reducing the primary productivity in the lake and therefore directly or indirectly reducing the nutrition base for the fish population. In order to monitor this potential impact, a fish population survey will be carried out, which will comprise compilation of available information on the fish species inhabiting the lake, springtime survey of spawning sites, and analysis of the condition of the fish.

A preliminary agreement has been reached with the University of Khorog for carrying out field work and reporting. As with the proposed floodplain monitoring, the fisheries monitoring has already started ahead of the construction works to establish reliable baseline data against which project impacts can be assessed. Since the population living in the project area does not fish Lake Yashilkul, there will be no compensation associated with any decline in the lake’s fisheries. However, the data produced can be used later on in order to decide whether there is actually a potential for developing the fisheries as an economic resource.

Community Outreach
As part of the project’s overall environmental monitoring and management plan, IFC and the technical consultants have proposed to the sponsor to establish a Community Outreach component to educate the public through media campaigns and community meetings about the need to reduce non-technical losses from illegal connections and non payment.

In addition to public education, the sponsor may take on a more developmental role in promoting electricity use and creating linkages with ongoing community and enterprise development initiatives in GBAO through the Community Outreach component. Such initiatives may include: i) promoting the adoption of affordable energy efficient technology, such as improved lighting, cooking and heating equipment, among electricity consumers; ii) promoting extension of the electricity grid to unserviced communities by utilizing community participation in the construction of the transmission and distribution network in order to reduce costs; and iii) promoting the capacity of communities to manage their power resources for the benefit of all members including the support for public services (e.g., schools, hospitals and health clinics), for vulnerable groups within the community, and for the benefit of community-based enterprises.

SAFETY OF DAMS

Lake Yashilkul was formed by a landslide that dammed two tributaries to the Gunt River many hundreds of years ago. During their technical assessment of the project, IFC''s consultants determined that the rubble and boulder dam is stable and can be considered safe. A separate Dam Safety Study has been carried out to confirm this assessment.

CULTURAL PROPERTY

Successive environment and social assessments have identified no cultural property of any significance in or near areas that will be affected by project activities. Two Kirgiz graves identified in the project area will be preserved.

IMPACTS ON DOWNSTREAM WATERWAYS

The Pamir hydroelectric plant and associated regulating structure at Lake Yashilkul is an ongoing scheme, which will now be completed by the private operator. Additional diversion of water to the final two units in the power plant will not have significant impact on the Gunt River inasmuch as a minimum ecological flow will be maintained in the short reach of the river between the intake and tailrace structures. To the extent that all diverted water is returned to the Gunt River from the power plant after use, the project will have no impact on the water''s downstream use.

The regulating structure at Lake Yashilkul will enable full utilization of the plant''s 28 MW of generating capacity during winter months. This will affect the river flow in two ways – an increase in winter discharge by 10 m3/sec, during the low discharge period, and a compensating decrease in summer discharge to ensure the refilling of Lake Yashilkul by snowmelt. Based on available monitoring data at the site and downstream for the Pianj River below its confluence with the Gunt River, these changes will be within natural fluctuations and will not have significant impacts.

Increased turbidity in the Gunt River resulting from construction activities will be minimized by the Pamir plant’s existing sedimentation trap – a settlement pond adjacent to the intake structure. Appropriate mitigation measures will be incorporated into construction operations to reduce turbidity and mitigate any adverse impacts on fisheries in the Gunt River upstream of the intake structure. Sediment that is carried by the main stem of the Gunt River beyond the power plant will be disbursed well before the Gunt enters the much larger Pianj River.

ELECTRICITY TARIFFS

The project will result in the gradual increase of electricity tariffs in order to support the rehabilitation of the system and ensure an improved and reliable level of service. While the projected cost per-unit of electricity will remain far below the norm, steps have been taken to minimize the economic impact of tariff increases on the project area population. With the support from the Swiss Government, complemented by the World Bank (IDA), the Government of Tajikistan will implement a set of "lifeline tariff measures" to enable poorer residential customers afford a graduated tariff increase, phasing out over a ten year period, while meeting the project financial requirements. At the end of this period, a basic lifeline tariff for the poorest households will be retained, with Government support.

ANALYSIS OF ALTERNATIVES

An assessment of energy alternatives was made as part of the project evaluation in 1999. Options addressed included fossil fuels, biomass, animal dung, hydropower, and other renewables. This analysis confirmed the proposed expansion of the Pamir hydroelectric plant as the economic and environmentally preferable option.

Conclusion & Monitoring

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 measures contained in the Environmental Management and Monitoring Plan; 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 outlined above. Periodic site supervision visits will also be conducted.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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