25151 - Tanzania Railway

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Environmental & Social Review Summary

Project Number

25151

Company Name

Tanzania Railway Corporation

Date ESRS Disclosed

Jun 22, 2007

Country

Tanzania

Region

Africa

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jul 26, 2007
Signed : Sep 15, 2007
Invested : Jun 11, 2008

Sector

Rail Transportation

Industry

Infrastructure

Department

Gbl Infrastructure & Natural Resources

Project Description

IFC''s loan will support the rehabilitation and development of the former TRC system in Tanzania. The railway in Tanzania has historically served as a vital lifeline for a large population in Tanzania and its landlocked neighboring countries. Tanzania has two railway systems, the Tanzania Railway Corporation (TRC) and the Tanzania Zambia Railway (TAZARA). TRC operates on the Central Transport Corridor (CTC), connecting the Port of Dar Es-Salam (DSM) with major urban centers and inland rural areas and serving the central and northern parts of the country as well as transit traffic from the eastern side of the Democratic Republic of Congo (DRC), Burundi, Rwanda, Uganda (the CBRU Countries). TAZARA originates from the outskirts of DSM and principally serves Zambian traffic and some domestic traffic in Southern Tanzania on the Southern Transport Corridor (STC). In addition to these two operators, there is a third operator called Trans Africa Railway Corporation (TARC) which track access rights to operate international transit traffic originating from Southern Africa and transshipped at KIDATU from TAZARA to TRC railway networks, TARC has not moved any transshipment cargo in the year 2006.

TRL’s rehabilitation and development program will be executed in five, five-year phases over the life of the concession. The first phase, to be partially funded by IFC, will include:

- the rehabilitation of fixed infrastructure including primary and secondary track renewals, ballasting, bridge rehabilitation, and signaling and telecommunication upgrading,
- purchasing of track maintenance equipment and trolleys,
- capital repairs of rolling stock, and
- initial working capital requirements.

Overview of IFC's Scope of Review

The rehabilitation, development, and operation of the approximately 2,700 route-km Tanzania Railways Corporation (TRC) network currently operated by TRC, a parastatal enterprise of the Government of Tanzania (GOT), is being concessioned to a special purpose company, Tanzania Railways Limited (TRL), set up by a consortium led by RITES Limited of India (RITES or the Concessionaire), selected through an international competitive tender process.

RITES is a public limited company under the Ministry of Railways, Government of India, and has experience in over 62 countries, including railway operations experience in Africa for over 25 years. The objective of the concession is to improve the management, operation and financial performance of the rail network by granting exclusive rights to TRL for the provision of freight and passenger services and operation and maintenance of the concession assets for the duration of the concession. The 25-year concession was awarded in March 2006 and formal handover of the operations is expected following closing of financing. It is proposed to extend an IFC project finance loan to TRL to support its first five year investment program.

IFC’s Environmental and Social review of this project focused on the social, labor, and environmental components of the project that will be the responsibility of the private operator from the date the Concession is formally handed over. The Concession provides that all pre-existing environmental and social liabilities will remain the responsibility of the conceding authority, while the Concessionaire would take over operation and maintenance of the railway. The World Bank supported the concession process as part of the Central Transport Corridor Project and other initiatives. More specifically, the World Bank’s engagement in this process includes:

- Funding of rails, sleepers, and related materials for the renewal of :

(a) 158 km of mainline track between Itigi and Tabora and
(b) other priority sections as identified by the Concessionaire;

- Preparation of Environmental and Social Assessments for the Itigi to Tabora renewal project, and an Environmental Management Plan and a Resettlement Action Plan for the TRC system;
- Financing of cleanup and resettlement costs based on the above studies; and
- Technical advisory services and training to TRC to facilitate the handover process.

The GOT is taking responsibility for the retrenchment of staff not needed by the concessionaire, and past environmental and social liabilities.

IFC is relying on support by the World Bank to ensure that its Safeguard Policies are met related to retrenchment and other social mitigation of railway staff, as well as the relocation of people and businesses that have encroached on the rights-of-way as required to provide a safe corridor for railway traffic. As the GOT is responsible for mitigation of environmental shortcomings, IFC’s review also considered the capacity of RITES to support the GOT in these matters and to achieve environmental compliance in a reasonable timetable.

IFC examined the following key documentation as part of its review:

- Project Appraisal Document for an International Development Association credit to the United Republic of Tanzania for the Central Transport Corridor Project, March 31, 2004
- Request for Technical and Financial Proposals, Tanzania Railways Corporation Concession, Volume 2: Information Memorandum, June 2004
- Gibb Eastern Africa, Environmental Audit for the Tanzania Railway Corporation
- SMEC International Pty Ltd, Environmental Impact Assessment, Central Transport Corridor Project, Railway Rehabilitation Project – Itigi to Tabora, prepared for Tanzania Railways Corporation, April 2005
- Scott Wilson, Resettlement Action Plan, prepared for Tanzania Railways Corporation, April 2007
- RITES Limited, Feasibility Report for the Tanzania Railways Corporation Concession, May 2007
- CANAC INC., Draft Report – Technical Audit Study for the Tanzania Railway Concession, prepared for IFC, June 14, 2007

E & S Project Categorization and Applicable Standard

While all of IFC’s Performance Standards (PS) are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts that must be managed in a manner consistent with the following five Performance Standards; details of impact management are provided later in this note:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security, and
- PS5: Land Acquisition and Involuntary Resettlement

As explained below, the remaining three PSs are not applicable or minimally relevant:

- PS6: Biodiversity Conservation and Sustainable Natural Resource Management: Steel sleepers (crossties) are used throughout the TRC system, and use of wood products is minimal. No rail network expansions are planned, so no new effects on protected areas or species will occur. The system transports only minor amounts of forest products (less than 1% of total tonnage).

- PS7: Indigenous Peoples: Although there are more than 120 ethnic groups in Tanzania, the Resettlement Action Plan did not identify the presence of Indigenous Peoples as a factor in resettlement planning. As the service area and facilities of TRC are already established and will not be expanded or modified as a result of the concessions, no effects on Indigenous Peoples are anticipated.

- PS8: Cultural Heritage: Although many of the facilities to be taken over by TRL are historic, no historic heritage is expected to be adversely affected by the renovation and operation of the railway network. Any chance finds will be addressed under local regulatory requirements.

The key environmental and social aspects of the private-sector component include management program for system renovation and operation; labor policies and practices; land use management; pollution from train operations; solid and liquid waste management; risk assessment of the transportation and disposal of hazardous materials; future vegetation management of the right-of-way; spill prevention and emergency response; and employee and public safety.

Other issues that are being addressed by the World Bank through the Transport Sector Support Program include economic or physical displacement of people from or adjacent to rights-of-way as well as encroachments during system renovation and operation; socioeconomic impact of workforce retrenchment; and site contamination from past operations and its remediation. The World Bank’s engagement has included support for an environmental audit of the railway’s existing operations and a Resettlement Action Plan to address right-of-way encroachments due to increased urbanization and unplanned settlements, as well as implementation assistance to the GOT. IFC is relying on support by the World Bank to ensure that its Safeguard Policies are met related to these actions, and IFC’s review has considered the capacity of the private operator to support the GOT in these matters and to achieve compliance in a reasonable timetable.

This is a Category B project according to IFC’s Environment and Social Review Procedure because potential environmental or social impacts attributable to the private project are limited.

Environmental and Social Mitigation Measures

- PS1: Social and Environmental Assessment and Management Systems

TRL is a special purpose company established solely for the rehabilitation, development, and operation of Tanzania’s railway network (managed by TRC). During the current pre-handover phase, management systems are being developed by RITES’ project implementation team, and TRL will implement a defined social and environmental management system at takeover. IFC will make a satisfactory management system a condition of its disbursement. The Environmental Management Plan developed as part of the EIA for the Itigi to Tabora Rehabilitation Project (see above) will be an important reference.

As a condition of the concession, TRL is required to obtain a license for railway operation from the Surface and Marine Transport Regulatory Authority (SUMATRA) of the GOT. A Comprehensive Railway Safety Plan and an EIA Study Report are required to be prepared by the Concessionaire as part of its application.

- PS2: Labor and Working Conditions

As noted, TRL is a special purpose corporation set up for this project. As such, TRL will need to build upon existing systems within TRC and develop its own human resources as well as occupational health and safety policies and procedures with respect to the requirements of Tanzanian regulations and Performance Standard 2. A draft of TRL’s policies and procedures will be reviewed by IFC before disbursement. The project sponsor, RITES, has previously provided advisory services to TRC on human resource management and training for a five year period under a World Bank funded technical assistance program.

A project-related retrenchment program is not envisioned, as the concessionaire, TRL will be able to select those staff it requires for the operation of the concession from existing staff at all levels in TRC. TRL is required to engage former TRC staff on terms that are at least equal to those which they enjoyed under TRC, and to finalize the process within two years of takeover. TRL plans to operate the system with about 3,400 staff, less than one-half of the pre-privatization level. TRC staff are represented by the Tanzania Railways Workers Union, and most rail operations staff are members. The union has participated in the development of the retrenchment program. A limited number of expatriate experts will be used initially, to be phased out gradually through localization. Specialist consultants will be used for operational efficiency improvement and training projects. TRL will implement continuous training of staff and plans to introduce performance based incentive schemes to foster staff self-improvement.

- PS3: Pollution Prevention and Abatement

The current environmental compliance status of TRC is detailed in the audit report referenced above. The main areas of concern at railway stations and freight yards are solid and liquid waste management, and the lack of appropriate and approved disposal alternatives. A detailed Environmental Management Plan (EMP) to be developed by TRL will present the needed actions and investments to comply with GOT regulations and IFC’s Performance Standards within a reasonable timetable. The EMP developed as part of the Itigi to Tabora Rehabilitation Project EIS will be a source document.

The GOT will retain responsibility and bear the cost for mitigation of past environmental contamination. These liabilities occur primarily at shops and warehouses, stations and depots, and along the track network. The audit revealed oil pollution around TRC’s workshop facilities, but relatively limited in area and extent. TRL’s Environmental Management Plan for its activities (see above) will include actions to support the GOT in the implementation of cleanup actions.

- PS4: Community Health, Safety and Security

TRC’s operations are currently constrained by the conditions of its track network and the lack of funding for its safety and training programs. Derailments and accidents involving the public are common. Reduced speeds on many track sections and general unreliability due to derailments are also a significant business issue. Safety has therefore been a key element of RITES’ pre-takeover planning. A Chief Safety Manager, reporting to the TRL Managing Director, will direct the staff to ensure the requisite safety in accordance with the Safety Plan. TRL’s draft Safety Plan includes a safety policy and objectives, organizational arrangements for plan implementation, procedures for emergency response and investigation, safety considerations in procurement, and monitoring, record keeping, and reporting.

- PS5: Land Acquisition and Involuntary Resettlement

Increased urbanization and the growth of unplanned settlements around TRC’s operational land encumber the right-of-way, reduce train speeds and create unsafe conditions for the public. While there will be little additional right-of-way required for rehabilitation of the network, relocations of encroaching people and their infrastructure will be required. The associated encroacher relocation plan is being put in place with the support of the World Bank, and the Resettlement Action Plan (RAP) for this activity was finalized in April 2007.

TRC’s operational land includes a railway right-of-way of 30 meters on either side from the center of the railway track in rural areas, and 15 m on either side in urban areas. Minor railway lines and sidings with low traffic and slow speeds will utilize a separation distance of 3.5 m. Implementation of the RAP will be timed to occur with other track work to minimize disruption to the communities.

Stakeholder Engagement

Detailed social and environmental due diligence was undertaken as part of pre-privatization activities by the World Bank and the GOT. The World Bank’s Project Appraisal Document (PAD) was disclosed on the Bank’s website (see link below). Retrenchment and staff retirement programs proposed for TRC were discussed with the labor union representing TRC employees. Resettlement action planning for the TRC network during 2005 was accompanied by consultation with interested and affected parties.

TRL has not yet taken over operations of the rail network, and its engagement with the community has, of necessity, been limited. As part of its environmental and social management system, to be implemented upon takeover of the railway system, TRL will establish a formal community engagement program for those aspects of its business where it interfaces with the community. Engagement will be proactive and include a grievance procedure.

Link to the World Bank’s Project Appraisal Document: Tanzania - Central Transport Corridor Project

Main client contact:

Mr. S.K. Seth
Group General Manager
RITES Bhavan, 1, Sector-29
Gurgaon – 122001, India
skseth@rites.com
TEL: +91-124-257-1630

www.rites.com

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

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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