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) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank 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 environmental and social review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental, and social information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s staff. The following potential environmental, health, and safety impacts of the project were analyzed: - management of resort operation waste streams and emissions; - management of resort operation impacts on the marine environment, including coral reefs and marine fauna; - life and fire safety of resort guests and employees; and - employee occupational health and safety.

Taj MPL has presented plans to address these issues to ensure that its resorts will, upon implementation of specific measures agreed, operate in a manner that complies with applicable host country laws and regulations and World Bank requirements. The detail about how these issues will be addressed by Taj MPL is summarized in the paragraphs that follow. The Taj properties conform to the Maldivian tourism model of “one island, one resort” and are fully licensed by the Maldivian authorities responsible for various aspects of resort operations, including the National Security Service for life and fire safety, and the Tourism Ministry, for compliance with government environmental performance standards. The Taj Coral Reef, operated since 1997, occupies an island with an area of 37,000 square meters. Built facilities accommodate up to 128 guests and a permanent management and staff of 108. The number of guest units are evenly divided between beach bungalows and “water” bungalows (i.e., built on piers over the water and connected to land by boardwalks). The resort has an extensive house reef in close proximity to the island. For this reason, the resort is popular with scuba divers and it maintains a large in-house diving operation. The Taj Exotica is a renovated property operated by Taj MPL since 1998. Re-opened in July 2002, it is a luxury resort that accommodates a maximum of 128 guests in 64 units, most of which are water bungalows. Another 150 management and staff are resident on the island. The island has an area of 40,000 sq. meters and is situated in a large lagoon. Because the island does not possess an extensive house reef, guest are transported by the small in-house diving operation to common diving and snorkeling sites away from the resort. - Management of Water, Wastewater and Sewage – Both resorts utilize a reverse osmosis sea water treatment system for potable water supply while utilizing sea water for toilet flushing. At Taj Exotica, all waste water and sewage is pumped to a sewage treatment plant where sludge is separated and the remaining liquid is treated with chlorination and carbon filtration before being discharged to the sea. Taj Coral Reef stores rainwater for irrigation and outdoor showers/foot washing. It also relies on a soak pit system for guest units and staff quarters. The leaching of nutrients from the soak pits and migration from the atol’s subtrata to surrounding seawater may have adverse impacts on the coral reef and fishlife. The attached corrective action plan outlines a timeframe for the company to mitigate this impact. - Solid Waste Management – Both resorts follow sound solid waste management practices. Paper products are incinerated in high-temperature controlled environments. All kitchen waste (including the contents of grease traps), glass and intractable waste (e.g., PET drinking water bottles and stryofoam packaging) are stored and removed bi-weekly by local contractors for disposal at a public solid waste facility on Tilafushi Island, near Malé, as is the sewage treatment plant sludge from Taj Exotica. Both resorts follow permissable practice of dumping fish and other food waste in deep sea. - Energy Use – Both resorts utilize diesel generator sets for all electricity requirements. Taj Exotica maintains four units (2 x 500 kVa, 1 x 300 kVa, and 1 x 225 kVa) and Taj Coral reef maintains four units (2 x 375 and 2 x 168). Operation of the units are staggered according to electricity demand to conserve fuel and maximize operational efficiencies. Operators are not required by Maldivian authorities to monitor stack emissions. Energy conservation at both resorts is limited to guest room “key cards” in room lighting and air conditioning. LPG is used by both resorts for cooking fuel although Taj Coral Reef also operates a diesel-fueled oven in its kitchen. - Hazardous Materials Management – Both resorts follow sound practice in the handling and storage of hazardous materials including diesel fuel and petrol, LPG, pesticides, kitchen and laundry chemicals. Both resorts outsource kitchen and laundry supplies to a Sri Lankan company (EcoLab) that provides training and information to staff on the appropriate use of cleaning chemicals through its affiliate in Malé. Similarly, both resorts out-source pest management services with Malé-based companies that follow WHO guidance on the non-use of restricted and banned chemicals. While both resorts practice some form of non-chemical pest control, greater efforts could be made to replace the use of chemical pesticides with organic pest management practices. Both resorts operate air conditioners and other refrigeration units that utilize R-22 coolant. This coolant is an ozone depleting substance that, in accordance with the Montreal Protocol, will be phased out of use in Asia by the end of the decade. The attached corrective action plan outlines a timeframe for the company to meet this requirement. - Life and Fire Safety – Both resorts have adequate fire prevention infrastructure including signage, annunciators, equipment and trained staff. Taj Exotica guest units, staff quarters, public areas and service areas are equipped with fire extinguishers and smoke detectors that report to a central control point that is manned around the clock. A nominated staff fire brigade is supplied with a water pump on a wheeled carriage that can be delivered to any point in the resort within 10 minutes. Taj Coral Reef guest units, staff quarters, public areas and service areas are equipped with fire extinguishers but lack smoke alarms or any centralized alarm system. The piped water system for garden irrigation throughout the resort can be utilized for fire-fighting. Both resorts out-source the maintenance and servicing of fire safety equipment to a Malé-based company (AntiFire) that also provides training to resort staff on a bi-annual basis. All resorts in Maldives are inspected on an annual basis for compliance with government fire safety regulations by the National Security Service. Neither resort has experienced a fire incident during their operating life. IFC requires certification that public facilities for which it provides financing meet its Life and Fire Safety Guidelines. The attached corrective action plan outlines a timeframe for the company to meet this requirement. - Resort Environmental, Health and Safety Management – Both resorts follow sound practices for the management of the natural environment, including beach erosion, protection of surrounding coral reef, and the control of noise and light pollution that would adversely affect marine life. Dive operations are out-sourced to established and reputable contractors having multiple operations in the Maldives (Delphis Diving Center at Taj Exotica, Blue In at Taj Coral Reef). Each operation provides awareness training to novice divers and snorklers on diving etiquette and protection of the coral reef environment. All dives, whether on house reefs or off-island common dive sites, are supervised by a dive operation staff member. Both resorts maintain a small fleet of passenger and service powercraft for inter-island transport and operations. These craft are inspected annually by the National Security Service. Recreational sporting equipment (sail boats, wind surfers, fitness equipment) is well maintained and regularly inspected by dedicated resort staff. High standards of occupational health and safety are maintained at both resorts and, apart from some lapses in general “back-of-the-house” housekeeping at Taj Coral Reef, employees and guests are provided with a safe environment on-shore as well as off.

Taj MPL Corrective Action Plan attached as separate document.

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 mitigation measures that are outlined in the attached Corrective Action Plan.

IFC will evaluate Taj MPL's compliance with the applicable environmental and social requirements during the lifetime of the investment by reviewing the annual monitoring reports (AMRs) covering: - the status of implementation of the Corrective Action Plan; and, - ongoing environmental and social performance of Taj MPL's activities. Periodic site supervision visits may also be conducted.