26500 - AllainDuhanganII

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Environmental & Social Review Summary

Project Number

26500

Company Name

AD HYDRO POWER LIMITED

Date ESRS Disclosed

Dec 8, 2007

Country

India

Region

South Asia

Last Updated Date

Nov 9, 2022

Environmental Category

A - Significant

Status

Completed

Previous Events

Approved : Feb 21, 2008
Signed : Apr 23, 2008
Invested : Sep 29, 2009

Sector

Large Hydro - Renewable Energy Generation

Industry

Infrastructure

Department

Regional Industry - INF Asia & Pac

Project Description

AD Hydro Power Limited (ADHPL or the project) involves the construction, operation and maintenance of a 192MW run-of-the-river hydro-electric merchant power plant in the Kullu district of Himachal Pradesh and the construction of a 174km, 220kV transmission line for evacuating power to the regional grid. The project will utilize the perennial flows of the Allain and Duhangan rivers, and combine the flows through two underground tunnels to feed a single powerhouse near Prini Village. The project is one of the first private hydropower plants financed on a merchant basis in South Asia.

IFC financing was approved by IFC’s Board on September 28, 2004 and project construction began in early 2005 with the plan of commissioning by June 2008. However, as of end October 2007, the project is behind schedule and is now expected to be commissioned in two stages, with ADHPL projecting the Allain component to start operation in June 2009 and the Duhangan component in January 2010. ADHPL is seeking additional financing from IFC to partially cover cost over-runs of the project.

Overview of IFC's Scope of Review

The investment involves additional financing to support the completion of 192 MW Allain Duhangan Hydro Power project in Himachal Pradesh, India. IFC disclosed its environmental and social review of the original project in December 2003 and the project was approved for financing by the IFC Board in September 2004. Apart from the cost and completion schedule, the original project has not changed. Therefore, IFC’s original environmental and social review remains valid and precedent.

In addition to its ongoing environmental and social monitoring of the project, IFC undertook a separate environmental and social review to assess the project in relation to IFC’s Social and Environmental Sustainablility Policy and Performance Standards, which were introduced in April 2006, nearly 18 months after the original project was approved by IFC’s Board. IFC''s environmental and social review consisted of:

- a physical inspection of all project construction sites;
- interviews with locally elected officials and their predecessors, representatives of local women’s organizations and individuals belonging to project-affected communities;
- interviews with the team of IFC''s Independent Engineer, including the team''s Environmental Consultant; and
- a review of the status of the company''s implementation of its Environmental and Social Management and Monitoring Plan.

E & S Project Categorization and Applicable Standard

The original IFC investment (No. 11632) preceded the development of IFC’s Policy and Performance Standards on Social and Environmental Sustainability. IFC’s review of this proposed additional investment indicates that the Project is being managed in a manner consistent with its Policy and 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 Resources Management
- PS8: Cultural Heritage

The findings of IFC’s review confirm that there are no impacts related to PS7: Indigenous Peoples.

This is a Category A Project according to IFC’s Procedure for Environment and Social Review of Projects. The environmental, health, safety and social (EHSS) issues associated with this project that were identified in the original Project review included: land acquisition and compensation; fisheries and riverine hydrology; loss of forests and common property resources such as grazing land; environmental and social impacts of the influx of a temporary construction work-force; environmental management of construction activities; worker health and safety during project construction and operations phases; employment of child labor during construction; dam safety; international waterways and the cumulative impacts of river basin development.

IFC’s ongoing review and supervision of the existing investment in ADHPL (since construction commenced in 2005) has shown the EHSS performance of the project is, for the most part, sound, especially given the size and complexity of the construction, coupled with the challenges of the site’s terrain and geology. IFC’s Independent Engineer also reports quarterly on environmental, social and health and safety aspects of the project.

Environmental and Social Mitigation Measures

PS1 - Environmental Assessment and Management Systems: IFC’s assessment considered: ADHPL’s original environmental and social assessment of the project as well as its capacity to manage its environmental, health and safety performance in the construction and operation of its facilities; ADHPL’s compliance with national and local permitting requirements; and ADHPL’s engagement with local communities regarding environmental, health and safety performance and corporate social responsibility.

A comprehensive environment and social impact assessment and management plan was prepared for the original project by an independent consultant in accordance with the World Bank Group Safeguard policies and environmental, health and safety guidelines. The complete set of Category A documentation, in both English and Hindi was released locally and to the World Bank InfoShop in August 2003. As a result of several proposed changes to the project design, a revised and updated set of Category A documentation was released locally and to the World Bank InfoShop in December 2003. Issues raised by various stakeholders during the public consultation process, were collated and incorporated into an Addendum to the revised ESIA Report (Addendum), which was released locally and to the World Bank InfoShop in September 13, 2004. All of these documents can be accessed from the original project disclosure through the following link: Project #11632

Environmental Management Systems: ADHPL has deployed an EHSS management team at the project site to implement the project’s Environmental and Social Management and Monitoring Plan (ESMMP) since the project’s construction commenced in full in 2005. The team has grown to 58 members including eight community liaison personnel, 12 environmental personnel, 21 safety patrol officers and a 13-member health team supervised by an assistant General Manager who reports directly to the Project-in-Charge. One of the environmental officers has received training from the State Pollution Control Board to conduct air and water quality monitoring. Nearly 80 percent of the team’s staff has been recruited from among the project-affected villages.

Members of the team monitor project construction sites around-the-clock for compliance with health and safety standards and to guard against encroachment on local natural resources including forest, water sources and agricultural land surrounding construction sites. A comprehensive monitoring regime of all parameters, as outlined in the project’s ESMMP, has been established. The team monitors parameters for a variety of receptors including air and water quality monitoring, surface water run-off, and biodiversity.

The project submits EHSS monitoring reports to IFC on a quarterly basis. IFC, in turn, conducts regular supervision visits to the project site to confirm the accuracy of information provided in those reports. In addition, an Independent Engineer has been retained by the project to report to IFC on compliance with technical specifications and work schedules. The Independent Engineer’s team includes an Environmental Consultant charged with monitoring the project’s compliance with the ESMMP. Issues of non-compliance raised by the Independent Engineer are addressed directly by project management.

Compliance with Permitting Requirements: ADHPL has obtained and maintained requisite permits from all concerned government agencies for the construction of the project. The company has reported one instance of unsanctioned use of forest land for which it has been fined by the Himachal Pradesh Forest Department. As with all diversion of forest land for project use, ADHPL will provide resources to support compensatory reforestation within the project area in accordance with Forest Department requirements.

As part of its ESMMP, and prior to first disbursement, ADHPL established a formal Grievance Redressal Mechanism made up of representatives of local elected bodies (panchayat), project management team and eminent persons from within the project area. This mechanism provides for appeals to a higher level body that includes representatives of the district administration within which the project is located as well as senior management of the project. In many cases, project-affected communities have shown a preference for presenting grievances as well as requests for assistance directly to ADHPL management, either through the Community Liaison function of the EHSS Cell or through direct appeals to senior project managers.

A small number of stakeholders have chosen to by-pass the Grievance Mechanism and bring motions directly before the state High Court. Three such petitions have been made and the Civil Writ Petition of September 11, 2007 resulted in a temporary suspension of project construction until a court-appointed body could assess the motion and advise the High Court on its assessment. The specialist government committee appointed to visit the project site and investigate the issues, has advised the Court that the suspension should be lifted, noting actions required for ADHPL to achieve compliance with committee recommendations. ADHPL is cooperating with the Court’s requirements.

Free, Prior and Informed Consultation: For investment projects that have potentially significant adverse impacts, IFC requires its clients to conduct free, prior and informed consultation with communities affected by those projects and to enable the informed participation of affected communities in those consultations. From 2001, ADHPL management had been in discussion with local villagers and responsible government agencies related to land acquisition and access to proposed construction sites. The independent ESIA consultants began a series of focus group meetings with villagers throughout the project area in early 2003 as part of a stakeholder identification and issues assessment process for the project’s environmental documentation. Four public meetings were held over the course of the next fifteen months to address public concerns about the environmental and social impacts of the project. ESIA documentation was made available to all stakeholders in English and Hindi and, in consultation with IFC, the project management retained a series of nationally recognized, independent environmental and social rights advocates to convene these public meetings. All meetings were videotaped and minuted, and the minutes were made available to the affected population through local government offices. The extent of the project’s public disclosure and consultation is unprecedented in the Indian hydropower sector.

PS2 - Labor and Working Conditions: IFC’s assessment considered ADHPL’s operations with regard to fair, safe and healthy working conditions in construction and operation of facilities. The project’s current workforce is approximately 1200 people. All major civil and electro-mechanical contractors maintain fixed labor camps for their non-supervisory workforce and private accommodations for supervisory workforce. Labor camps are satisfactorily serviced (water, sanitation, electricity and catering services) and maintained. Non-resident casual laborers employed by a large number of local contractors for road construction and minor civil works occupy temporary shelters close to work sites. No services are provided to this workforce as the majority of non-resident workers are transient and move their camps from place to place – typically to land rented from private households by contractors – as work progresses. In addition to the regular EHSS staff, the project has employed 20 contract personnel to monitor contractor compliance with the project’s EHSS guidelines at all construction sites within the Duhangan component where the employment of casual laborers remains intensive. These personnel are dedicated to monitoring the effective implementation of guidelines for the protection of the workforce, including the prevention of children from entering active work sites. The company has addressed issues of children present at worksites by establishing a crêche for the children of non-resident working families employed as casual laborers.

Each of the major civil and electro-mechanical contractors maintains satisfactory standards of worksite health and safety, monitoring worker exposure to hazardous working conditions (e.g., air quality in tunnels), enforcing the use of personal protective equipment and the observance of traffic safety protocols in the operation of heavy equipment. The project’s EHSS team deploys safety officers across all major construction sites. Because of the transient nature of the workforce, the team faces persistent challenges in enforcing reasonable standards of workplace safety among the casual labor force.

Three of India’s largest labor unions are active among the entire project work force. Union representatives ensure wages are consistent with statutory requirements and advocate for worker protection and benefits at the work site. Union representatives meet regularly with project management. Grievances raised are addressed by project management directly with its contractors.

ADHPL’s human resources management system has been modeled on the HR management framework established by its parent company, the Bhilwara Group. That system is governed by a policy that is consistent with the ILO declaration on fundamental principles and rights at work. The Group’s HR policy includes components related to: guidelines for recruitment, selection and continuity in service; standardized skill competencies; performance appraisal; career progression; professional development; rewards and recognition; and professional ethics.

PS3 - Pollution Prevention and Abatement: IFC’s assessment considered ADHPL’s capacity to manage construction waste as well as the storage and handling of hazardous materials used in the construction of facilities. The EHSS management team is responsible for ensuring the project meets all environmental, health, safety and social compliance requirements of the Government of India, World Bank Group policies and guidelines, and commitments made directly to communities within the project area. Since the commencement of construction, the team has managed to progressively improve general housekeeping and solid waste management at all construction sites to a satisfactory standard. The team oversees the collection, segregation and sale of recyclable solid waste and the project has installed a high temperature, dual-chamber electric incinerator for the disposal of non-recyclable solid waste. ADHPL has recently installed a wastewater treatment plant to service the project’s administration building and housing colony. Treated wastewater is recycled for use in dust control, irrigation and sanitary waste disposal. The EHSS team maintains a well equipped laboratory for measuring stack emissions from diesel generators and the incinerator as well as water quality sampling to ensure compliance with Central Pollution Control Board standards.

Tunneling muck disposal continues to challenge the project as the volume of material exceeds the capacity of available disposal sites. Measures are in place to control overflow and run-off from existing dumping sites onto slopes and into streams, and to store excess muck until it can be used for back-filling at a number of the major civil-works sites before the end of the calendar year, 2007.

PS4 - Community Health, Safety and Security: IFC’s assessment considered ADHPL’s capacity to manage the impacts of the construction and operations of facilities, including: movement of vehicles to and from construction sites, operation of construction equipment, containment of dust, noise and other nuisance factors; and control of public access to construction sites. All project structures, including upstream water storage structures, have been designed in accordance with internationally accepted engineering standards for structural integrity that account for the geomorphologic conditions of Himalaya. The project’s Independent Engineer reviewed and certified all structural designs prior to commencement of construction and inspects all project works against design specifications on a quarterly basis.

The project has fulfilled its commitments to ensure the security of the local population faced with the influx of a large construction workforce. Unarmed security guards man check posts at major civil works sites, along access roads and at labor camps throughout the project area to ensure both the security of the work sites as well as that of the surrounding communities. Blasting schedules are well established and publicized throughout the project area. Project management has established a police post at Prini, the most populous village in the project area. There has been no major compromise of public security in the project area since the commencement of construction and relations remain amicable between the communities and the construction workforce.

The project has established a fully equipped medical center at Prini and health posts at the major civil works sites. The clinic and health posts are open to the entire project workforce as well as the local population.

The EHSS Team maintains a staff of community liaison personnel to ensure that project management stays informed of, and satisfactorily addresses community complaints or issues related to project infringement on local security or social welfare.

PS5 - Land Acquisition and Involuntary Resettlement: IFC’s assessment considered the ADHPL’s capacity to manage the potential economic displacement of occupants and/or users of land acquired for the construction and operation of facilities. No physical displacement has resulted from the project. Families from whom the project has acquired land have been compensated at rates significantly greater than prevailing market rates. Provisions made in the Project’s Resettlement Action Plan for special assistance to vulnerable families affected by land take (e.g., the provision of alternative land, assistance with the uprooting and replanting of fruit trees) have not been availed by any affected household. The project’s community liaison team addresses complaints of damage to crops, orchards and other property by community members swiftly and fairly.

PS6 - Biodiversity Conservation and Sustainable Natural Resources Management: IFC’s assessment considered ADHPL’s capacity to manage anticipated impacts on the natural environment of the project area. The project’s EHSS team is responsible for enforcing the measures specified in the ESMMP to protect wildlife and forest resources in the project area. Team members are deployed to the project’s remoter construction sites to discourage poaching and illegal use of firewood. The project requires all contractors to supply their labor camps with kerosene for cooking and electricity for heating to reduce the demand on local wood and biomass resources.

Since the approval of the project by the concerned government authorities, ADHPL management has paid approximately Rs 145 million in fees to the Himachal Pradesh State Forest Department for compensatory reforestation and improvement of the catchment of the Allain and Duhangan streams. In addition, the project management has taken the initiative to allocate additional funds for the implementation of forest plantation through local women’s groups throughout the project area.

ADHPL’s application to increase the forest land diverted to the project by 9.55 ha from 37.62 ha to 47.17 ha has recently been approved by the Ministry of Environment and Forestry.

A number of stakeholders remain concerned about the impact of the project’s diversion of the Duhangan stream on downstream requirements for drinking water and irrigation. Project management has demonstrated in a series of public meetings that sufficient water will be released to the Duhangan stream, and augmented by the streams tributaries downstream of the project’s intake structure, to meet the most optimistic projections of downstream water demand. Project management’s position has been confirmed by a succession of independent and government-sanctioned studies. To allay the concerns of villagers in the Duhangan catchment, ADHPL management has built protective structures for natural springs supplying those villages as well as a supplementary piped water system. Preliminary results of a multi-year riverine ecology study undertaken as part of the ESIA indicate that the minimum (environmental) flow in the Duhangan to which the project is committed for release downstream of the diversion structure is sufficient to maintain the ecological integrity of the stream. The precise minimum volumes of water required in the Duhangan stream are still a subject of an ongoing Court led review.

As a condition of IFC’s additional financing of the project, ADHPL will prepare construction demobilization and landscape restoration plan as a supplement to the Project’s Environmental and Social Management and Monitoring Plan. This supplemental plan will provide the details and timetable for a systematic restoration of the project area landscape following the completion of all civil works and the evacuation of all construction sites, including muck disposal sites, materials lay down areas and labor camps.

PS7 – Indigenous Peoples: The inhabitants of the project area share traditions, language and an agro-pastoral way of life common to the entire western Himalaya that are distinct from those of the populations inhabiting the Punjab and Gangetic Plain regions of the country. Nonetheless, the population of the project area and the wider Kullu Valley are fully integrated into the social, commercial and political life of northern India. As such, PS 7 has not been considered applicable to IFC’s investment in ADHPL.

PS8 - Cultural Heritage: The project has demonstrated respect for the religious sentiments of the project area population through protection and enhancement of sacred sites (e.g., ponds and groves) in consultation with community members and support for local religious festivals and ceremonies.

Stakeholder Engagement

ADHPL management has maintained amicable and productive relations with the majority of the project area population since the commencement of construction. The project has disbursed nearly Rs 60 million in small-scale infrastructure works throughout the area including: improvement of irrigation canals; construction of piped water systems and bath houses; paving of village pathways; installation of street lighting; and the construction and improvement of school and health care facilities. In addition, the project has granted approximately 3,500 separate contracts to project area contractors amounting to approximately Rs 700 million for transport, heavy equipment, hauling and construction labor providing a considerable boost to local employment in the entire Manali sub-district. A recent Indian government regulation, promulgated since the project began, requires all infrastructure projects to contribute funds equivalent to 1.5% of project cost for administration by a Local Area Development Committee (LADC). As a result, the project has committed Rs 150 million to the Kullu District government that is intended to supplement the budgets of all local community development line departments (e.g., public works, agriculture, forestry and irrigation). Many of the commitments made by the project Sponsor to local area development can therefore no longer be directly implemented by the project’s management. While representatives of the company and the communities within the project area are represented on the LADC, there is a general concern among project area residents about the LADC’s ability to deliver on these original commitments.

Despite the developmental benefits of the project, there remains persistent opposition to the project among a number of local environmental organizations who have petitioned the Himachal Pradesh High Court claiming violations of legal procedures in the implementation of construction works. The High Court has not made a final ruling on the merits of these petitions but through interim orders and specialist government committee notices the High Court has consistently found in favor of the project proceeding. Many of the same petitioners have sought the intercession of the IFC/MIGA Compliance Advisor Ombudsman to review IFC’s support for the project. The CAO’s office has been monitoring the project since October 2004 and has undertaken a succession of missions to the project area to broker an agreement between these complainants and the project management. In December, 2006, the CAO’s office compiled a “Commitments Register” – a compendium of all commitments to mitigate the impacts of the project and support local community development made by project management. These commitments were gathered from project documentation including the ESIA Addendum and the Environmental Management and Monitoring Plan. The CAO translated the Commitments Register for circulation among the Complainants and other stakeholders in the project area. ADHPL project management provides a monthly status report on the fulfillment of these commitments to the CAO’s office and regularly updates communities within the project area on the status of its commitments in meetings with local and district government representatives. A copy of the most recent Commitments Register is being made available locally and will be published to the IFC disclosure website along with this Environmental and Social Review Summary.

During the appraisal for this repeat project, IFC held numerous meetings with members of the project area population, including village elected leaders past and present, women’s groups, local contractors and the general public. While admitting to strong apprehensions about the impacts of the project at its inception, the majority of those canvassed expressed satisfaction with project management for its operations and the benefits that the project has brought to the area.

Client Documentation

File Name	Actions
ADHPL Commitments Register Update December 1st 2007.pdf

**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.

Projects

Environmental & Social Review Summary

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

Press-Release

Related SII

Client Documentation

Similar Projects

Information on E&S Complaints and Grievance Mechanisms

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