9981 - Manila North Tollways Project

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Environmental Review Summary

Project Number

9981

Company Name

Manila North Tollways Corporation

Date ERS Disclosed

Aug 14, 2000

Country

Philippines

Region

East Asia and the Pacific

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Sep 14, 2000
Signed : Jul 7, 2001
Invested : Feb 10, 2003

Sector

Highway Operations (Includes Toll Roads)

Industry

Infrastructure

Department

Regional Industry - INF Asia & Pac

Project Description

The project consists of the expansion, rehabilitation, maintenance and operation of the North Luzon Expressway ("NLE") an existing 82-km toll road tolled for 20 years through a closed tolling system. The NLE is located along an important corridor to the north of Manila. The strong growth of economic activities and population in this region has led to robust traffic increases on the NLE; the road is also in a poor condition due to lack of proper maintenance; the section near Manila is highly congested. Once the entire expressway becomes operational, it will begin to reduce transport costs, improve vehicular and passenger movements, promote tourism and enhance economic and industrial activities in Subic, Clark, and other growth corridors. Indirectly, the project can also alleviate poverty through increased employment opportunities in and around the developing urban centers.

The project is to be implemented by a joint venture company, Manila North Tollways Corporation ("MNTC"). In April 1998, MNTC signed a Supplemental Toll Operation Agreement ("STOA" or the "Concession") with the Grantor, which replaces the original TOA. The STOA extends the original TOA''s 30-year concession period, set to expire in 2007, to December 31, 2030. It specifies the following works to be carried out in three phases: Phase I: expansion and rehabilitation of the existing NLE, and construction of the 8 km Tipo-Subic expressway in the Subic Bay area; Phase II: construction of a 29 km road connecting the southern end of NLE with the Metro Manila C-5 expressway; and Phase III: construction of a 64 km expressway connecting the northern end of NLE with the Subic Bay area.

At this stage, only Phase I (hereby defined as "Project") is to be financed and implemented: the Tipo-Subic expressway was completed in 1996; certain advance design and construction works of the NLE have commenced. Full construction is expected to start as soon as financing for the Project is assured. Construction is expected to be completed by the end of 2002. Major works include construction of four new interchanges and one overpass, rehabilitation of nine existing interchanges and three existing toll plazas, rehabilitation and widening of 22 bridges and 31 overpasses and installation of a toll collection system, traffic management and telecommunications equipment.

Environmental and Social

1. Environmental Impact Assessment/ Alternatives Analysis. Individual environmental impact studies were prepared and submitted to the Philippine Department of Environment and Natural Resources. These Environmental Impact Statements (EIS) and Initial Environmental Examination (IEE) documents were also submitted and reviewed by IFC, together with the Summary Initial Environmental Examination (SIEE - dated May 2000). An Addendum Report that includes the environmental management and monitoring plan (EMMP) and traffic management plan was also submitted to IFC to supplement the EIA/IEE documents.

2. The following conclusions have been drawn for:

Segments 1, 2, and 3

(i) Improvement works along the mainline in Segments 1, 2, and 3 will be within the right of way (ROW), towards the existing median and outside shoulders;

(ii) A comprehensive Traffic Management Plan has been prepared to ensure minimal and controlled disturbance to vehicular traffic along the NLE;

(iii) Environmental Compliance Certificates (ECC) for all segments have been obtained -Balintawak-Tabang Section of the NLE (May 1995); San Fernando-Sta. Ines section of the NLE (October 1995); (Burol-San Fernando section of the NLE (July 1996);

(iv) An environmental monitoring scheme must be followed (see below). Provision has been made for self-monitoring of the project by the Contractor as well as third parties in order to ensure protection and enhancement of the environment.

For Segment 7:

(i) An inventory of the forest reservation area was undertaken in order to ensure sustainability of the protected watershed. Project location and design carefully considered the high environmental quality of the watershed;

(ii) Although located inside a protected area, an ECC was granted by the DENR in June 1995; the alignment was within the Multiple Use Zone which allows construction of paved roads;

(iii) Potential adverse impacts were mitigated during the construction phase as well as during operations. Independent environmental consultants performed an environmental audit in 1999. It states "the present condition of different biotic and abiotic ecosystems strongly shows positive signs of recovery from the unavoidable adverse impacts of construction";

(iv) Culverts and bridges were constructed not only for drainage purposes but to allow mobility and provide safety to

Aetas

(indigenous people) and wildlife;

(v) 47 occupants of government land were affected by the project, all of whom were compensated for lost assets (plants and trees, in all cases, and houses in 10 cases). The Municipal Provincial Assessment Bureau assessed the value of the houses and other structures and the Bureau of Agriculture determined the value of crops;

(vi) Payments for compensation/improvements were settled before commencement of construction activities. A total of Peso 4.4 million was paid to the 47 occupants;

(vii) A requirement of the ECC was that slopes were to be vegetated to stop soil erosion. There are limited areas where this has not been successful and MNTC is currently analyzing how this might best be addressed.

For the Interchanges and Toll Plazas:

(i) Design criteria took into consideration minimal disturbance to human settlement and favorable topographic and geologic characteristics. Land requirements for the original design were approximately 71 hectares; this has now been significantly reduced to approximately 41 hectares.

(ii) ECCs for all Interchanges and Toll Plazas located in Region III have been obtained (February 1999), as well as for those within the National Capital Region (July 3, 2000).

3. Environmental Management and Monitoring Plan. MNTC bears responsibility for ensuring that the Project complies with conditions stipulated in the ECC and meets all mitigation and monitoring requirements described in the IEE/EIS. Compliance with the ECCs and the implementation of the EMMP (included as an addendum to the SIEE) are to be carried out through MNTC’s contractor, Leighton Contractors (Asia) Limited (LCAL) during the construction phase, and the O & M Company during operations. The contractor has delivered to MNTC an Environmental Action Plan (EAP), which is currently being reviewed by MNTC. A copy of the EAP will be provided to IFC. Implementation will be based on Philippine environmental laws and corresponding policies and guidelines of the World Bank Group. An environmental consultant experienced in EIA/ monitoring of infrastructure projects will be engaged by MNTC to periodically audit the implementation of the EMMP. The IFC will rely on these reports.

4. Air quality. A number of infrastructure projects are proposed within the NLE corridor over the next 5 to 10 years. To combat deteriorating air quality, the Philippine Clean Air Act was enacted in 1999; national ambient air quality guidelines including minimum/maximum permissible levels have therefore been set by the DENR; emission standards for the approval of motor vehicles will also be effective by 2003; leaded fuel will be phased out by February 2001. Air quality monitoring systems will be established through MNTC’s contractors for the construction and operation phases of the project; appropriate standards to be adopted for the monitoring of air quality (and noise) are included within the EMMP.

5. Employee Health and Safety and Training Programs. The IFC requires MNTC through MNTC’s contractors (LCAL during construction and the Operations and Maintenance company during operations) to outline a management system for the health and safety of employees including written policies and procedures; an emergency plan as well as the provision of equipment for the prevention and combat of oil, chemical spills and fires as well as major accidents is also required. This issue is particularly critical given the extensive area of agricultural land abutting the road, and the number of local rivers used for irrigation.

6. Retrenchment. Manila North Tollways Operation and Maintenance Corporation, the operator for the Project, will train and employ a significant number of personnel to staff the works of toll collection, maintenance, supervision and management of the completed toll road. MNTC will, in addition, create many new jobs during the Project’s construction phase. Prior to the end of the construction phase, all staff of the existing operator of the NLE PNCC (Philippine National Construction Corporation, the current operation company) will be given an opportunity to qualify for re-employment within Manila North Tollways Operation and Maintenance Corporation. To accommodate the transition, PNCC is undertaking a program of retrenchment. Employees who qualify for re-employment by the new operator will be compensated for loss of seniority and related benefits, whilst non-qualifying individuals, or those who elect not to be re-employed, will receive full redundancy payment. The cost of this retrenchment program will be heavily subsidized by MNTC, by way of a lump-sum payment to the affected employees of PhP150 million (or approximately US$3.75 million). Since the current staffing forecast of Manila North Tollways Operation and Maintenance Corporation is broadly in keeping with that of PNCC’s (resulting in a total reduction in overall staffing size from approximately 900 persons to approximately 800 persons) this arrangement will offer compensation to the affected personnel considerably in excess of minimum legal requirements. Tripartite negotiations with the workers’ union and the supervisor’s union have been successfully concluded and respective agreements have been executed.

7. Right of Way – Land Acquisition and Resettlement. Under the Concession, the Grantor (the Toll Regulatory Board--TRB), acting on behalf of the Government of the Philippines, is responsible for delivery of the ROW. Whilst MNTC is afforded exclusive right of way over the affected land, the Government is and remains its owner. All costs incurred, including amounts paid for land acquisition and relocation of squatters, is also the responsibility of the TRB.

8. MNTC, under the guidance of the TRB, has prepared a Resettlement Action Plan (RAP) to meet World Bank Group''s requirements under OD 4.30, Involuntary Resettlement. The plan addresses issues related to the expropriation of privately owned land and the relocation of people and structures that have encroached upon the existing highways or that occupy the land to be acquired for the project. Approximately 41 hectares need to be acquired in addition to the 620 hectares of ROW already on hand, from approximately 120 landowners. Based on information from the TRB, about 28 landowners occupy the land to be acquired, of which 24 must relocate. In addition, 5 business tenants along the Tabang Toll Plaza and 25 stallholders in the illegal market at Malinta are to be compensated by TRB. Also, TRB will negotiate the possible adjustment of the area occupied by the tricycle and jeepney operators at Meycauayan within the same property. The RAP establishes entitlements for each category of people affected, and defines procedures to mitigate adverse social impacts.

9. The IFC will invest on the basis that a mechanism is facilitated whereby compensation measures for loss of land and other assets will meet World Bank Group policy requirements under OD 4.30 - Involuntary Resettlement. IFC will monitor the outcome of this process.

10. With respect to the level of compensation for land, the following approach will be taken:

If the Market Value of the lot to be taken for the project (as determined by an accredited or licensed independent appraiser, acceptable to IFC) is below "zonal value plus 10%", TRB will offer in writing to purchase the property at an amount that will be at least equal to the Market Value (the transaction may actually be done at a negotiated value in between the "market value" and the "zonal value + 10%") ; and

If the Market Value of the lot to be taken for the project is above "zonal value plus 10%", then TRB will seek a revaluation/reaffirmation of the Zonal Valuation from the Bureau of Internal Revenue. If the (updated) "zonal value + 10%" is lower than the Market Value, then MNTC or its sponsors will undertake to top-up the difference.

11. If the owner refuses the offer at market value, Philippine laws and procedures will be followed and the judicial decision respected.

12. Public Consultation and Disclosure. Public consultation was conducted for Segment 7 due to the greenfield nature of the project and the sensitive nature of negotiations with the Aetas (forest dwellers). This was undertaken successfully. Philippine law does not require public consultation for the rehabilitation works that will be carried out for Segments 1, 2 and 3. MNTC has, however, begun a public information program and has consulted individually with a range of project affected people, including local municipality and Barangay representatives. A summary of consultations is included in the RAP.

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 any measures contained in the Environmental [and Social] Action Plan[s] and (ii)] 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.

Environmental and Social Documentation

File Name	Actions
RAP-Aug11.doc
RAP Annex 3 & 4.doc

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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