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. The mandated 30 day disclosure period commences from the date the ERS and SPI are made available to the local stakeholders or the date on which an announcement in a local and a national daily is made pertaining to public availability of the ERS and SPI, whichever is later.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because 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. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor and site visits to the Company’s operational units at Hulu Ganga – I, Alupola & Hapugastenne and proposed/under construction sites at Magal Ganga, Hulu Ganga – II & Arattana. The following potential environment, health and safety and social aspect of the project (s) were analyzed: - environmental, social, and health and safety management systems; - permitting requirements; - source and volumes of water required including efforts to minimize water use; - source of power and energy, including fuel storage if applicable; - air emissions from existing and new sources and corrective actions needed to ensure - compliance with local and World Bank Group (WBG) emissions limits; - ambient air quality and noise impacts on nearby receptors; - recycling and treatment of process effluent and waste water; - hazardous materials management; - occupational health and safety programs and performance; - fire and life safety and emergency response; - minimization, recycling and disposal of solid and hazardous wastes; - biodiversity conservation; - involuntary resettlement and R&R; - corporate social responsibility efforts, including HIV/AIDS awareness; and - timely reporting on environmental and social performance to IFC.

The sponsor has presented plans to address these impacts to ensure that the proposed project will comply both with host country laws and regulations and with World Bank group (WBG) environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. Environmental, social, and health and safety management systems: While EcoPower has undertaken a number of initiatives in the areas of environmental, social development and occupational health and safety (discussed below), these initiatives are not based on an overall management system. The Company recognizes the need for such a system and will in a phased manner, within a timeframe to be agreed with IFC, develop and implement an environment and occupational health and safety management system across the entire corporation. Permitting requirements: The environmental clearance granted by the Central Environment Authority (CEA), Government of Sri Lanka, has stipulated conditions pertaining to protection of rock boulders, availability of water for downstream users, noise pollution, monitoring (surface water, flora and fauna, river bank erosion and sediments), safety, transport of equipment and material, disposal of wastes, blasting operations, erosion and surface drainage, disposal of liquid and solid wastes, fire safety and ecology. EcoPower will demonstrate compliance on these aspects and its plans for the same have been detailed at relevant sections below. Source and volumes of water required including efforts to minimize water use: Consumption of water at the plant sites is small as water is only used for domestic purposes. The water is sourced from local springs. EcoPower will have the domestic consumption water tested to demonstrate compliance with WBG guidelines (WHO standards) and will monitor the groundwater level at appropriate and relevant locations, to comply with CEA requirements. Source of power and energy, including fuel storage if applicable: The power requirement at operating units is sourced from the grid and no other form of energy is used. However, at the construction sites, the source of power is a diesel generator (DG) set. Fuel for the DG is stored in barrels on unpaved open ground without any secondary containment. EcoPower will require the contractors, as part of its contract agreements, to construct appropriate facilities for storage of fuel at such construction sites. Air emissions from existing and new sources and corrective actions needed to ensure compliance with local and World Bank Group emissions limits: There are no significant point source or fugitive air emissions at any of the operating units. However, at the construction sites, there is emission from DG sets and fugitive emissions from blasting, as well as ambient dust from excavated earth stored/transported at site. EcoPower will require the contractors undertaking construction work to ensure DG set emissions comply with Government of Sri Lanka norms. Further, EcoPower will require the contractors to undertake appropriate measures to minimize fugitive emissions from blasting and stored and/or transported excavated earth. Ambient air quality and noise impacts on nearby receptors: As part of its construction contracts at construction sites, EcoPower will require contractors to undertake benchmark ambient air quality monitoring, to demonstrate compliance with WBG guidelines. Also, where required, the Company will require construction contractors to undertake appropriate measures like sprinkling of water on access roads as also stacked earth, to comply with WBG requirements and CEA stipulations. The Company will undertake benchmark testing of ambient noise level, at all operational plant locations, to demonstrate compliance with WBG and CEA requirements. Moreover, as part of contractors’ obligations at construction sites, EcoPower will require contractors to undertake benchmark testing of noise levels in relevant areas (e.g., in proximity to the DG set, compressor, breakers and other such equipment) to demonstrate compliance with WBG and CEA guidelines. Where required, EcoPower will require these contractors to undertake appropriate measures to comply with the WBG requirements. Where blasting at night is proposed, EcoPower will seek an express consent from the local community prior to commencing blasting at night. EcoPower will demonstrate to the local community, the mitigation of noise and vibration impact of blasting by conducting a sample blast in their presence at night. Recycling and treatment of process effluent and waste water: No process effluents are generated at the operational plants. Sanitary wastewater is treated and disposed through septic tanks. However, water generated by construction work and excavations is discharged directly into streams or on ground surface. At a minimum, it is expected that this water contains high total suspended solids (TSS). EcoPower will require contractors, as part of its contract agreements, to comply with WBG and CEA Guidelines for waste water discharges into surface water bodies. Hazardous materials management: At the tunnel construction site, ammonia, charge and detonators used for blasting are kept at a magazine managed by the local police. Daily requirements of these materials are issued by the magazine and taken to the site. Storage and handling of hazardous materials such as lubricants/hydraulic oils, as well as management of spills require significant improvement both at operational and construction sites. At construction sites, EcoPower will require contractors, under its contract with them, to develop and deploy appropriate procedures and construct facilities for storage, handling of oils/lubricants and management of spills. Moreover, EcoPower will undertake the same at its operational units. In addition, at its operational sites, EcoPower will make available personal protective equipment (PPE) to all workers handling hazardous materials, enforce use of PPE provided, increase training of employees handling hazardous materials, and provide washing stations in material handling areas. Furthermore, EcoPower will ensure that all necessary antidotes for accidental exposure are available and readily accessible. At construction sites, EcoPower will require the contractors, as part of its agreement with the contractors, to undertake the above measures. EcoPower will contact transformer suppliers to ascertain whether transformer oils contain PCBs. In the event that the presence of PCBs is confirmed, the company will undertake appropriate measures to remove and dispose of used transformer oil in a manner consistent with national requirements and internationally accepted practice. Occupational health and safety programs and performance: At present no formal system for managing occupational health and safety exists within EcoPower. Occupational health and safety issues that were noted during the site visit, and which EcoPower proposes to redress, include: - At most operational locations, PPE have been procured but not issued to employees. EcoPower will distribute and enforce the use of PPE at its operational units and require contractors, under its contract with them, do the same at construction sites. - At its Alupola plant EcoPower has appropriate procedures for emergency response developed and displayed. However, at other plant sites, EcoPower at present has no procedures in place for handling of hazardous materials and wastes, or on safe working practices. EcoPower will develop such procedures, display them prominently at relevant locations and conduct training of employees on the same, within a time frame to be agreed with IFC. - There is considerable fugitive particulate matter emissions at the tunnel site (Magal Ganga) and the other construction sites. EcoPower will require the contractor to make available appropriate PPE and enforce its use. Further, at the tunnel site, EcoPower will require the contractor to install an appropriate ventilation system, within a time frame to be agreed with IFC. - At some locations (e.g. Hapugestenne), moving parts were exposed and unguarded, pits had no hand rails and no ladders were provided for climbing into/out of pits. EcoPower will ensure that all exposed moving parts are guarded, handrails are provided around pits and appropriate ladders are provided for climbing into and out of such pits. - EcoPower will construct appropriate pathways along all its facilities to ensure safe access to all sites pertaining to its project. Fire and life safety and emergency response: EcoPower has not developed and displayed emergency response procedures (for fire, electrocution, spills etc). EcoPower will develop such procedures, display them prominently at relevant locations, conduct training of employees on the same and periodically conduct drills. Minimization, recycling and disposal of solid and hazardous wastes: Waste oil from the diesel generator (DG) set and other mobile/stationary mechanical equipment at both construction and operational sites, is sometimes poured on the ground. In view of the nature of the terrain (which is hilly) and the proximity of several streams in the area, this raises risk of contamination of such surface water bodies besides contamination of soil. Also, hazardous materials like lubricants are stored in uncontained areas on open unpaved ground. EcoPower will store waste oil in drums/car-buoys in an appropriately contained area, until such time as they are able to dispose of these to a recycler, secure landfill or incinerator. Moreover, waste oil is often taken by persons from the local community for pest treatment of timber used by them for structural purposes. Given the toxic nature of these oils, EcoPower (or its contractors) will refrain from handing over the oil to persons from local community for any use. Biodiversity conservation: Excavated earth and rocks are currently stacked in and around the construction sites and significant area is often cleared for movement/storage of equipment and material. EcoPower will, within a timeframe to be agreed with IFC, develop a plan for post construction phase rehabilitation of the area affected by the construction work to comply with WBG guidelines and CEA stipulations. Moreover, EcoPower will ensure that the earth dumps at construction sites are protected against erosion in the monsoon rains. Involuntary resettlement and R&R: In most cases, EcoPower subleases land for its facilities from tea plantation companies. EcoPower has only purchased land (from private owners) for the facilities at Hulu Ganga I & II. Moreover, the land acquired comprises only a 6m wide right of way (ROW) which, coupled with sparse population in the vicinity of existing/proposed sites (usually beyond 700 m), has resulted in avoidance of involuntary resettlement issues. Along the channels and pipelines, EcoPower has provided appropriate crossovers to mitigate any loss of access. Corporate social responsibility efforts, including HIV/AIDS awareness: EcoPower has earmarked SLR 200,000 per annum for Corporate Social Responsibility work at each of the sites. The projects to be undertaken with these funds are identified by local communities in the vicinity of the sites. EcoPower proposes to prepare a play ground for the local school children at Magal Ganga and a new stream crossover bridge at Alupola. Most of the workers are local laborers, whose income has increased on account of the projects. The skilled workers have been brought from Colombo or other cities and they have been provided accommodation. IFC has agreed to provide details of its IFC Against AIDS program to EcoPower. Timely reporting on environmental and social performance to IFC: EcoPower will submit Annual Environmental and Social Monitoring Reports (AMRs) within 90 days of the end of its financial year.

This ERS contains the full environmental and social documentation prepared for the project.

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

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: ongoing performance of project-specific environmental, health and safety [and social] activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.