While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

PS1 Social and Environmental Assessment and Management Systems;
PS2 Labor and Working Conditions;
PS3 Pollution Prevention and Abatement;
PS4 Community Health, Safety and Security;
PS5 Land Acquisition and Involuntary Resettlement;
PS6 Biodiversity Conservation and Sustainable Natural Resource Management;
PS7 Indigenous Peoples; and
PS8 Cultural Heritage.

The Project was categorized as A mainly because of the economic displacement of 682 households and the physical displacement of 60 households by the Kribi component (53 from the associated 100 km 225 kV transmission line, and 7 households from the 216 MW reciprocating engine gas-fired power plant site) and the environmental and social risks and impacts of the Sanaga Sud gas project, especially the biodiversity impacts. Other issues include: thirty families of indigenous peoples who will experience limited impacts on their use of resources due to the Kribi 100 km 225 kV transmission line; energy efficiency and greenhouse gas emissions; pollution prevention and abatement typical to the type of proposed thermal power plant (e.g., air emissions, water supply and effluent, noise, hazardous and non-hazardous waste, occupational safety).

The Company has presented their assessment of the Project’s environmental and social impacts and risks and their plans to mitigate those impacts and risks. IFC has reviewed their assessment and plans and concludes that, upon implementation of their proposed plans and IFC E&S Supplemental Action Plan (SAP), the Company is developing the Project in accordance with the IFC’s Performance Standards on Social and Environmental Sustainability (“PS” or “Performance Standard”). Findings of the IFC’s review and conclusions are summarized for each applicable PS in the paragraphs below.

PS1 SOCIAL AND ENVIRONMENTAL ASSESSMENT AND MANAGEMENT SYSTEMS:

KPDC, as an affiliate of AES Sonel, has demonstrated its commitment to carry out the Project in accordance with AES Sonel’s Environmental and Social Policy (January 17, 2005), Cameroonian environmental regulations, and IFC’s Performance Standards. The Company carried out Environmental and Social Impact Assessment (“ESIA”) for the Project by retaining independent experts including a UK-based consulting firm (Scott Wilson) and a Cameroon-based archaeological expert (Institut de recherche pour le développement). In addition, a Resettlement Action Plans (“RAP”) and a Community and Indigenous Peoples Plan (“CIPP”) were prepared for the Project. Archaeological surveys were conducted at the Kribi site.

Five alternative sites were reviewed for the Kribi project using technical, economic and environmental and social criteria, including proximity to the electricity transmission network, length of the required gas pipeline, need for an access road, number of people to be resettled, availability of cooling water, and general environmental setting. Mpolongwe 1 site was selected as the best option for the Kribi plant location. The transmission line corridor was designed, to the extent possible, parallel to the existing 90 kV line and the existing highways between Edéa and Kribi.

AES Sonel reviewed the long-term power demand and supply situation and generation expansion options, and determined that a gas-fired thermal power generation capacity of 216 MW at Kribi site is the next least cost options for the Southern Integrated Grid (“SIG”). For the Kribi site, both gas engines and gas turbines were reviewed as combustion technology options. The original ESIA was prepared based on the simple-cycle gas turbine option, submitted to the Ministry of Environment and Protection of Nature, and approved in April 2007. This was supplemented by an Addendum ESIA prepared in October 2007 in case reciprocating engines fueled by natural gas with diesel as a back-up fuel were selected in the final design. Impacts of using back-up diesel fuel oil were assessed in the Addendum ESIA.

The Kribi project is the first Cameroonian gas-fired power plant being developed in close coordination between KPDC and SNH/Perenco, who is developing the upstream Sanaga Sud gas field to extract, process and deliver gas to the Kribi power plant. The Sanaga Sud gas field is located at about 15 km offshore, northwest of Kribi, and has been selected by SNH to be developed in parallel for the supply of gas to the Kribi plant. A separate ESIA was prepared by SNH/Perenco with assistance from a Netherlands-based environmental consulting firm (Royal Haskoning). The report was prepared in November 2006 and was approved by the Ministry of Environment and Nature Protection in 2007. Royal Haskoning also prepared a separate ESIA and Resettlement Action Plan for the pipeline from the Central Processing Facility to the Kribi site, which are currently in draft form.

Management Program: KPDC has develop an Environmental and Social Management Plan (ESMP)that encompasses all aspects of mitigation, management, monitoring and institutional measures that KPDC will undertake. This management plan is based on final project design specifications and was developed by KPDC prior to starting construction and operation. IFC will require that KPDC update the ESMP to include actions in the IFC Environmental and Social Supplemental Action Plan.. The plant will employ a maintenance program that consists of preventive, predictive, and planned maintenance. The maintenance program will be managed using specialized software developed by Wärtsilä. Preventive maintenance plans are established based on standard industry practice coupled with equipment history and overhaul schedules.

During the construction phase of the Kribi project, about 550 to 600 workers are expected to be employed. Due to the vicinity of the town of Kribi (9km from the Kribi site) and the northern end of the transmission line being at Edéa, it is anticipated that the majority of the construction workers will live in these existing towns or nearby villages, so that no new accommodation will be required for the Project.

Organization and Training: KPDC was established as an affiliate of AES Sonel to develop the Project, and as such will be the OM contractor with technical assistance provided by AES. KPDC has an environmental and social team within KPDC to implement the management program in close coordination with the EPC contractor, Wärtsilä, and the corporate HSE Department of AES Sonel. Kribi will be the first gas-fired power plant in Cameroon. KPDC will design the necessary environmental, health and safety training programs in close coordination with AES Sonel.

Monitoring: The management program for the Project includes the ESMP, RAP and CIPP. AES Sonel has a corporate environmental auditing system, and KPDC’s performance in implementing these programs will be monitored by such systems. Qualified and experienced external experts are retained to carry out / verify relevant monitoring information (e.g., air quality and emissions, thermal efficiency performance, evaluation of the archaeological properties if found during construction period).

Reporting: As part of the already established environmental management system of AES Sonel, the effectiveness of KPDC’s management program will be reviewed periodically by the management of AES Sonel and KPDC. All the actions included in the management program (EMP, SMP, RAP and CIPP) are disclosed to the affected communities. The status of RAP will go through an independent and post implementation audit to ensure that residual concerns / grievances are appropriately handled.

PS2 LABOR AND WORKING CONDITIONS:

Human Resources: The Kribi project will be owned and operated by KPDC, which will be in turn be majority owned by AES. KPDC will put into place a Human Resources Policy and management structure to meet the requirements of PS2. This policy and management structure will be based on those of AES Sonel. IFC has reviewed and found the AES Sonel policy, the “Convention Collective d’Enterprise AES Sonel,” and programs to be acceptable and consistent with PS2 requirements. AES Sonel’s human resource policy includes non-discrimination and equal opportunity provisions. Workers at AES Sonel are represented by a union, and collective bargaining is evident. The same approach toward freedom of organization and collective bargaining will be applied to KPDC.

Occupational Health and Safety: KPDC will put in place the same international good practice health and safety policies and programs, and employee training programs, as are currently used by AES Sonel. These policies and programs are monitored, evaluated and managed by AES Sonel. AES Sonel’s experience rate with lost time accidents (in which at least one day of work was lost) per 100,000 hours worked is .23. This figure is below the average, .93, for all industries in, for example, the United Kingdom according to the Safety Health Environment Intra Industry Benchmarking Association. While AES Sonel is seeking constant improvement in health and safety standards, the current accident rate is comparable to industrialized world rates. KPDC will need to manage and monitor the performance of contractors and sub-contractors on the construction site for the Kribi plant and along the transmission line.

PS3 POLLUTION PREVENTION, RESOURCE CONSERVATION AND ENERGY EFFICIENCY:

Pollution Prevention, Resource Conservation and Energy Efficiency: The Kribi power plant will use reciprocating gas engines. It will be the first gas-fired power plant in Cameroon, and is expected to effectively supplement the hydro-dominated power generation of the region.

Air quality impacts: the Kribi project air quality impacts were assessed for nitrogen dioxide (NO2) - when fueled by natural gas as the main fuel - as well as for sulfur dioxide (SO2) and Particulate Matter (PM) - when fueled by back-up diesel fuel. Back-up diesel fuel would be used during maintenance and periods of interrupted gas supply. It is currently estimated that back-up diesel fuel would be used less than 1% of total annual operating hours. The Stack Height Assessment dated November 2009 concluded that with a stack height of 32 m both IFC and WHO guidelines requirement for 1 hour concentration of NO2 would be met, furthermore, the annual mean SO2, NO2, and PM10 would also satisfy IFC requirements.

Noise: KPDC will incorporate appropriate noise mitigation measures into the final project design to ensure that the noise levels comply with the WHO ambient noise criteria, the World Bank Group and IFC noise guidelines at relevant noise receptors.

Water use and effluent: The Kribi site does not have any existing local potable water distribution system. The water for construction and operation will come from boreholes. Potentially contaminated wastewater will be collected and treated prior to being discharged to a soak-away system or to the streams surrounding the plant site in compliance with the World Bank Group, and IFC effluent guidelines.

Hazardous Materials Safety: For delivery of back-up diesel fuel to the Kribi project site, KPDC will require fuel suppliers to ensure that delivery of those hazardous materials by trucks are conducted safely in accordance with good international industry practice. KPDC will ensure that the onsite storage facilities and practice of those liquid fuels are safe and regularly monitored to minimize safety risks to the surrounding communities.

Electromagnetic Fields (“EMF”): The Kribi project ESIA concludes that EMF levels will be within recognized international limits even below the transmission line and the right-of-way (“ROW”) of 30 meters to be established for the Kribi project will further reduce the potential EMF exposure of any occupied buildings.

Greenhouse Gas (“GHG”) emissions: The Project is predicted to emit approximately 763, 994 ton CO2/year based on annual capacity factor of 90% (the average is 60% but the upper limit was used for more conservative estimate), gross engine’s heat rate of 7997 kJ/kWh on Lower Heating Value basis (LHV), and carbon emission factor of 56,100 kgCO2/TJ (on LHV) for natural gas (2006 IPCC Guidelines). The CO2 emission performance is estimated at 403,768 gCO2/kWh whilst Cameroon’s thermal power generation is currently oil based with average of about 725 gCO2/kWh for oil-fired generation (2005-2007 average according to 2009 International Energy Agency statistics); the Kribi project will therefore help to reduce thermal generation’s carbon emission intensity through gas utilization. KPDC will monitor thermal generating efficiency and annually quantify and evaluate GHG emissions performance for the Project.

Emergency Preparedness and Response: KPDC has develop, in coordination with Wärtsilä, the site emergency preparedness and response plans, including typical measures for reciprocating engine gas-fired thermal power plant, and to effectively respond to emergency situations to minimize risks and impacts to the environment and the surrounding communities.

PS4 COMMUNITY HEALTH, SAFETY AND SECURITY:

KPDC will adopt good international industry practices including vehicle safety management, to ensure that health and safety risks to the affected communities are minimized and ensure and monitor that Wärtsilä does the same.

KPDC will retain security contractors to provide security to safeguard its personnel and property at Kribi site. Necessary training and monitoring and screening of those security contractors will be conducted in accordance with good international industry practices as already established at AES Sonel.

PS5 LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT:

Economic and Physical Displacement: According to the census carried out by the Company, 682 households will be affected by the acquisition of the 16 ha land from the Government of Cameroon (GoC) to build the Kribi plant (requiring 4.7 ha) and the switchyard (requiring 2.3 ha) and securing corridor for the 100 km Kribi – Edéa transmission line. Most project-affected households are expected to be impacted by economic rather than physical displacement. The 682 households own a total of 56 plots of titled land, 982 plots with crops and 88 buildings. Sixty households with 386 people will need to be physically relocated. The Company’s consultants carried out a baseline study using a sample of 250 households.

Project Design and Resettlement Planning: As previously noted, site selection for the power plant site at Kribi took into account the number of people who would be displaced. The routing of the transmission line right of way (ROW) has tried to avoid or minimize impacts on houses, farm land and plantations. AES Sonel has developed a RAP acceptable to IFC. A cut-off date for eligibility to receive compensation and benefits was established based on the signing of a decree by the Minister of State Property and Land Tenure authorizing the census by the Compensation Evaluation Commission. People who will lose more than 50% of their land will be offered compensation or replacement land nearby. Those losing less than this amount will receive compensation or replacement land in proportion to the amount of land lost. Following World Bank Group policy, people will be encouraged to take replacement land rather than compensation. People who choose to take compensation will be provided with training and counseling on how to manage their money. For households who will have to move as a result of the Project, KPDC is offering to build a new house of better quality or larger size within the same community. People may also choose cash compensation at full replacement cost for the loss of their buildings. KPDC is facilitating access to new land for project-affected people. At the power plant site and along most of the ROW, local consultations indicate that the project-affected people are not concerned about acquiring replacement land. Where the ROW passes through a densely populated area before entering the substation in Edéa, local residents expressed concerns about being able to find new land for crops and housing. KPDC is ensuring access to land in this area.

Consultations and Grievance Mechanism: Consultations were carried out through a series of focus groups. A summary of the RAP in French and English will be available to local communities, and the Company will carry out further consultations on the contents of the RAP and CIPP. Grievances involving project-affected people and the Company will be addressed through a designated Company grievance officer, who will ensure that the grievance will be addressed within a 14-day period. If not, the ESIA and RAP Coordination Unit (“ECRU”) will take responsibility for the grievance and ensure that is resolved within 14 days. People will still be able to take grievances to court if they are unsatisfied with the Company’s grievance process. The two RAPs establish a monitoring and evaluation framework for ensuring that the RAP activities are carried out.

Evaluation and Monitoring: Additional evaluation and monitoring will be carried out to ensure that the overall objectives of PS5 are met with respect to livelihood restoration. Project affected people will also receive benefits from the Project through the CIPP, which includes provisions to support community development projects not only for the Bakola people (see the discussion under PS7), but also other impoverished community members indirectly affected by the Project.

PS6 BIODIVERSITY CONSERVATION AND SUSTAINABLE NATURAL RESOURCE MANAGEMENT:

Cameroon is known for its areas of high biodiversity value, which are still intact in many parts of the country. As part of preparing the ESIA for the Kribi project, biodiversity specialists from Scott Wilson undertook a reconnaissance of fauna and flora and a socio-economic survey to assess the value of the habitat within the project’s area of influence and to propose mitigation measures.

The Kribi project ESIA states that the plant site and the transmission line corridor are both situated within the disturbed habitats along the corridor of the Edéa / Kribi highway and the existing 90 kV transmission line. The ESIA uses two methods to establish the flora status of the Kribi project area: (i) a rapid botanical survey and (ii) a tree plots survey. The Kribi project plant site is described as an area of 16 ha consisting of recent scrubby fallows, old fallow and patches of disturbed forest, noting that fallow areas are generally covered with pioneer vegetation and have a low conservation value, and that the patches of natural forest have been heavily disturbed. The ESIA concludes that the conservation value of the project sites is very low, due primarily to the level of existing disturbance resulting in a severely degraded habitat, and to none of the identified species requiring special protection. The faunal assessment of the project area was undertaken primarily through discussions with local hunters, supported by observation along the transmission line route and visits to bush meat markets. The ESIA concludes that the fauna of the Kribi project area has a very low conservation value. In conclusion, the ESIA states that the habitats within the Kribi project area are either subsistence agricultural areas or severely degraded forest, and overall impacts on the habitat are minor.

The ESIA for the Sanaga Sud gas project, on the other hand, observes that protected species are present among the terrestrial fauna and flora of the project areas, i.e., in the 25 ha of forest land allocated to develop the CPF next to the Eboudawaé village, and also, that protected marine species (marine turtles, dolphins and whales) may be present in the project area. The villagers of Eboudawaé rely on fishing and hunting for general livelihood, and the potential for impacts on the villagers from changes to the natural environment related to the Sanaga Sud gas project has already been identified. The ESIA proposes various mitigation measures, and Perenco is fully committed to implement these measures to minimize the project’s impacts, in accordance with Perenco’s Environmental Policy.

The additional biodiversity review by IFC showed four habitats (near shore pelagic waters, sandy shoreline, coastal humid forest, mangrove lagoon) of the Sanaga Sud gas field project area harbor World Conservation Union (“IUCN”) listed species which inhabit, migrate and / or breed in these habitats. However, these habitats are not deemed to be critical to the widespread survival of these specifies because (i) all the recognized IUCN-listed species are of a relatively or very wide distribution and therefore the magnitude of the impacts within the project area is comparatively small and could not be said to be of global significance, and (ii) many of those species will probably continue to exist alongside development if appropriate mitigation measures are put in place. For example, careful forest management can reduce deforestation, and careful hydrocarbon leak mitigation and anti-poaching programs can minimize impacts on marine turtles. Based on these, the habitats are not considered as Critical Habitat under PS6. Careful mitigation measures and environmental management, as proposed in the Sanaga Sud gas field project ESIA, are essential to limit biodiversity impacts, particularly risks concerning hydrocarbon leaks.

As part of providing a partial risk guarantee, the World Bank has required the GoC to carry out a detailed biodiversity study and regional environmental assessment to ensure that the broader biodiversity management framework is strengthened to ensure the regional environmental protection of the Kribi area. The outcome of the World Bank’s requirements is expected to help improve the effectiveness of the environmental mitigation measures being proposed for various projects in the Kribi area including biodiversity offsets to compensative for loss of habitats. The regional environmental assessment report, dated February 2008, was disclosed at World Bank’s website.

PS7 INDIGENOUS PEOPLES:

Impacts and Avoidance of Impacts on Traditional Bakola Lands: Bakola people (also known as “Pygmies”) reside in the area of the Kribi-associated transmission line. The World Bank Group has recognized Bakola as an Indigenous People because of their attachment to and traditional dependence on forest resources that is distinct from the farming- and fishing-based activities of their neighbors. The Project will impact thirty families through a loss of medicinal herbs, which are important to Bakola livelihood, and rattan, which is important to the construction of dwellings, in the ROW. The total area of impact will be approximately 78 hectares of secondary forest spread over 65 kilometers of a 30 meter ROW next to the Edéa-Kribi highway. The Bakola will be able to get the same forest resources, but will need to travel a greater distance. Because these resources are spread throughout the forest, no alternative route can be found that will avoid impacting on at least some of these resources. The proposed route minimizes the impact because of the proximity to the road. Two family of Bakola will have crop land directly impacted by the transmission line ROW, an impact that will be addressed under the provisions of PS 5. No physical relocation of the Bakola is involved.

Community and Indigenous Peoples Plan: The Company has prepared a CIPP that addresses the mitigation of the impacts described in the previous paragraph. The primary activity of the CIPP will be to assist the project-affected Bakola in identifying and protecting their land tenure in all of the lands that they use and in obtaining identity cards, which are required for voting in elections. The plan was developed using a socio-economic baseline study, and with the free, prior and informed consultation with the four communities. The consultations included semi-structured discussions with separate groups of chiefs (for the four villages), men, women and youths. These consultations ultimately led to the formulation of an action plan that addresses the negative project impacts. With this plan, the Project will meet the requirements of PS7.

Cultural Resources: No specific instances of impact on Bakola cultural resources were identified during prior consultations. Should, however, specific cultural resources be identified within the defined ROW during ongoing consultations or construction, the Company will establish through consultation with the Bakola communities appropriate measures for their removal. Potential impacts on other cultural resources are described in the section on PS 8 Cultural Heritage.

PS8 CULTURAL HERITAGE:

An archaeological survey of the Kribi power plant site has identified archaeological evidence of human artifacts. As a result, the Company will have an archaeologist present at the Project site during the stripping of the cover to identify and help to remove finds according to the Company’s chance finds procedure and using accepted international techniques. The chance finds procedure will also be applied to the transmission line.

Since its privatization in 2001, and engagement with multilateral development institutions to raise finance for their capital expenditure program in 2006, AES Sonel has established an engagement process for affected communities to carry out development of new generating plants, substations and transmission lines, in line with good international industry practice including IFC’s Performance Standards. Disclosure of assessment information to and consultations with affected communities are being conducted by AES Sonel and KPDC in compliance with the Cameroonian Legislation, as set out in the EIA Decree No 2005/0577 of February 23, 2005, as well as international good practice.

Extensive public consultations were held in February – March 2006, and again in January 2010 for the Kribi project, which involves acquisition of the 17 ha for the plant site as well as securing 100 km corridor for the 225 kV transmission line. During these meetings, both KPDC and Scott Wilson described the potential impacts of the Project, including both components, and made it clear to the audiences that the purpose of the meetings was to receive public comments on the Project. KPDC and Scott Wilson also made it clear that the comments would be taken into consideration in the final ESIA and action plans. Evidence that comments from project-affected people can be found in the environmental and social documents, e.g., measures in the RAP concerning land availability around Edéa and measures in the CIPP to ensure greater Bakola participation in elections. As part of preparing the ESIA for the Kribi project, AES Sonel’s team together, with the team from Scott Wilson, had numerous field visits to undertake baseline studies and public consultation. Two public meetings were held with the Divisional chiefs of Edéa and Kribi and several public meetings were conducted with 25 affected villages in February and March 2006. In addition, informal consultations and meetings with various stakeholders are being held on an ongoing basis. Detailed records of public consultation meetings were included in the ESIA report. In addition, the ESIA validation procedure carried out by the Ministry of Environment and Protection of Nature (MINEP) included a 2 week public audiences in 9 project area localities conducted in February 2007. The ESIA report was put at the disposal of the visitors, who had the opportunity to read it, ask for clarification from the AES Sonel staff present, and record their comments in the books made available. One month prior-notice was given, and sensitization through radio, TV and other media was carried out throughout the process. Overall, nearly 2000 people visited the lecture rooms during that process, the greatest number ever scored by MINEP for a validation procedure.

KPDC was established in 2007 as an affiliate of AES Sonel, and has strengthened its own community engagement team to implement the RAP, CIPP, as well as full EMP and SMP of which framework was proposed in the ESIAs.

SNH/Perenco Cameron will install the 17.5 km pipeline from their Central Processing Facility to the Kribi power plant site. Although the responsibilities are clearly defined between SNH/Perenco and KPDC in developing the Sanaga Sud gas project facilities and the Kribi project facility, KPDC’s community engagement team recognizes the need to have good coordination with the community engagement team with SNH/Perenco team to maintain the overall community support by the villagers in the same area of the project influence and to minimize unnecessary grievances from the affected communities.

IFC concludes that KPDC has engaged with the affected communities, and has dedicated resources to ensure that conditions of free, prior and informed consultation (FPIC), a provision of IFC’s Performance Standards that is applicable to this Project, are present. Furthermore, IFC has in discussions with affected communities concluded that there is evidence of broad community support for the Project. In accordance with the AES Sonel’s Environmental and Social Policy, Cameroonian environmental impact assessment requirements, and IFC’s Performance Standards, KPDC has strengthened its community engagement to meet the requirements of FPIC.

The complete set of Category A documentation is also available locally at the following locations:

-Douala
KPDC / AES Sonel
Address: 63 Avenue de Gaulle
Douala, Cameroon

-Yaounde
Address: Ministry of Environment and Protection of Nature

Any enquiries and/or comments about the Project may be directed to:

Mr. Jeremie Bitanga
Title: Kribi Project Sub Director
Kribi Power Development Company / AES Sonel
Address: 63 Avenue de Gaulle
Douala, Cameroon
Tel: +237 34 43 47 14
Fax: +237 34 42 22 47
e-mail: Jeremie.bitanga@aes.com