- PS1: Social and Environemental Assessment and Management Systems
Social and Environmental Management System:
Currently, the environmental responsibility is managed in a distributed manner amongst the concerned departments of each company (e.g. Procurement and Maintenance) to follow departmental procedures in line with the company’s environmental policy. KEC plans to create dedicated structures for the environmental management at EDCO and IDECO. The Environmental Heads of the two companies, once assigned, will have a solid reporting line within the respective company and will also have a separate reporting line to KEC’s Technical and Regulatory Compliance Head. The KEC’s Technical and Regulatory Compliance Head will ensure that both companies coordinate their efforts, align their policies and will also communicate with external environmental stakeholders. KEC will also engage an international consultant to provide technical and regulatory support, including advice on compliance with World Bank Group’s Environmental, Health and Safety (EHS) guidelines, as well as international best practices.
Social and Environmental Assessment:
As part of the overall due diligence for acquiring the two companies, KEC retained an international consultant (Sinclair Knight Merz – SKM) to carry out technical due diligence including environmental, health and safety performance. SKM in general concluded that the distribution networks of the two companies are relatively young, and as such are in good condition. They also stated that substations inspected have secure fences, locked gates and permanent guards, and have oil bundings around transformers to minimize risks of ground contamination from oil spill.
The areas of environmental, health and safety concerns, recommendations, and opportunities identified by SKM included the following:
- Some substations and distribution lines have insufficient safety clearance between live conductors and other conductors, and between live conductors and earth;
- review of safety clearances in substations and line clearances where MV and LV circuits cross is recommended;
- No evidence of PCBs existing in transformers but EDCO was recommended to ensure that US EPA threshold of 50ppm is used to verify non-existence;
- Some indoor substations have Halon fire extinguisher, but there are no warning signs to indicate any Halon release;
- Since Halon is a ozone layer depleting substance under Montreal Protocol, EDCO was recommended to make efforts to phase out the use of Halon fire extinguishers;
- SF6, a greenhouse gas regulated under the United Nations Framework Convention on Climate Change, is used as insulation in switchgears; and
- 5% of concrete poles may have serious corrosion problems due to high salt concentrations in the ground. A program of pole replacement is recommended (EDCO).
Facilities to be developed under the project are not expected to have significant environmental or social impacts. Existing road shoulders are used as its principal right-of-way for development of distribution network. There are no specific environmental regulations in Jordan concerning the electricity distribution activities. The KEC’s Technical and Regulatory Compliance Head will continue to monitor laws and regulations on environmental issues and advise EDCO and IDECO with any changes in environmental regulation, and Environmental Heads of EDCO and IDECO will ensure that relevant social and environmental assessments will be conducted where specific risks and impacts are identified in accordance with IFC Performance Standards on Social and Environmental Sustainability.
Management Program:
KEC has presented plans to address the areas of concerns identified by the SKM Technical Due Diligence and to implement, in coordination with the Environmental Heads of EDCO and IDECO, recommended actions, as summarized in the attached ESAP. Details are explained in the sections of IFC Performance Standards 2, 3 and 4 in this document.
Organizational Capacity:
EDCO and IDECO have experienced technical staff to operate the distribution networks. As mentioned above, KEC plans to create dedicated structures for the environmental portfolio in each EDCO and IDECO, including appointment of dedicated Environmental Head, reporting to its management as well as to KEC’s Technical and Regulatory Compliance Head. Safety aspects are being managed by General Safety Section under the Internal Audit Department of each company.
Training:
At EDCO, 60 trainees a year are trained at NEPCO (National Electric Power Company – the transmission company in Jordan) training center including linesmen, cable jointers, substation staff. They also provide training for their engineers in the NEPCO training center as well as other external training programs for the engineers and other employees, covering technical, financial, administrative, and IT skills. IDECO also has a good culture of training and development providing similar training opportunities to employees as EDCO has. Both companies have limited training programs on environmental aspects. KEC plans to help EDCO and IDECO to unify and standardize the training policy and strengthen EHS training programs.
Community Engagement:
EDCO and IDECO have been carrying out good community engagement activities through operation of the electricity distribution business. KEC plans to strengthen community engagement activities upon completion of the acquisition through establishment of dedicated environmental management structure, and appointment of Environmental Head for each company.
Monitoring and Reporting:
KEC will ensure that EDCO and IDECO will undertake a technical and safety audit on an annual basis. KEC’s Technical and Regulatory Compliance Head will also audit the current procurement policies of EDCO and IDECO which include:
- prohibition of procuring equipment containing Polychlorinated Biphenyls (PCBs); and
- recommendation to procure completely sealed circuit breakers that are filled with SF6 gas, and ensure that they are kept updated based on international best practices in this field.
In addition, KEC plans to commission annual environmental and safety reports of EDCO and IDECO and publish them on KEC’s website.
- PS2: Labor and Working Conditions
Working Conditions and Management of Worker Relationship:
Based on the ratified ILO Conventions that guide the IFC Performance Standard 2, Jordanian Labor Law provides an adequate framework for protection of the basic rights of workers. Workers have the right to establish and join unions, which exercise their rights to bargain collectively. Labor disputes are usually resolved through mediation or arbitration. Labor law prohibits employers from dismissing a worker during a labor dispute.
EDCO and IDECO have the dedicated Human Resources (HR) Department for management of labor issues. KEC plans to sponsor training sessions for both EDCO and IDECO which will include HR issues and practices. The HR Departments of both companies follow relevant HR-related regulations and instructions and provide benefits and incentives to their workforce. Employees of both companies are covered by a heath insurance policy and accident & life insurance policy (EDCO) or a health insurance system performed by the company itself in coordination with the representatives of the labor union and the accident insurance system (IDECO). KEC intends to outsource all health and accident insurance for consistency and efficiency.
Both companies have positive labor relationships, and have no major labor strikes or disputes. The labor committees and the companies have always succeeded in reaching mutually agreeable resolutions for all issues. EDCO employees elect a committee to represent the company in the electricity labor union (Jordanian Electricity Workers Association). The committee members participate in EDCO’s committees on health insurance, social insurance and housing, which are also involved in important decisions related to employees’ benefits. Similarly, IDECO maintains a strong and co-operative working relationship with the Jordanian Electricity Workers Association. KEC plans to promote the continuation of positive labor relationship on a corporate and industry level.
KEC does not have any retrenchment plans as part of the acquisition of the two companies.
Occupational Health and Safety:
Both EDCO and IDECO have a dedicated safety section under the Internal Audit Department. The companies have established a work process for health and safety operations specific to electric power distribution operation. The process includes the general rules of:
- no live work on distribution network (EDCO) or live line works on distribution networks only by qualified staff who was trained adequately and dead line works only by trained workers (IDECO),
- only trained and certified workers are allowed to install, maintain and repair electric equipment,
- work permission is given upon certain procedures and exams,
- workers should wear the proper company supplied safety clothes including helmet, safety shoes, gloves and safety belt. Incidents reports are issued regularly to analyze the causes and prevent occurrence of repeated incidents.
At EDCO, technical workers start their training at the NEPCO (National Electricity Power Company) training center for six months on all the fundamental technical & safety issues. Afterwards, the trainees complete training at the relevant site for another 18 months, during when the trainees complete the training on practical safety issues. At IDECO, technical workers get their basic qualification at official vocational centers, through which they complete the training on practical safety issues. KEC intends to unity and standardize the training policy and program for both companies. Internal incident reports are produced at both companies. KEC plans to commission an annual safety report on EDCO and IDECO and publish it on its website.
Safety clearance between live conductors and other conductors and safety risks to workers:
The SKM Technical Due Diligence Reports identified that there are areas of concern at some substations with regard to safety clearances between live conductors and other conductors, and between live conductors and earth. These clearance issues present a risk of electrocution for workers. They also identified that the working space in some substations is not good, and there are safety risks that will need to be assessed before any works are undertaken. SKM recommended that a review is conducted on safety clearances in substations and line clearances where MV and LV circuits cross. KEC plans to carry this out and implement necessary corrective actions by appropriately allocating resources to annual CAPEX budget for approval by the regulator.
Non-Employee Workers:
Both companies have a policy of not contract with any third party that is not a member of the Contractors Association. The Association ensures that the working conditions of the third party comply with relevant Jordanian labor laws.
- PS3: Pollution Prevention and Abatement
Pollution Prevention, Resource Conservation and Energy Efficiency:
Environmental issues for an electricity distribution company are normally limited to construction and maintenance of right-of-way for distribution lines, electric and magnetic fields from distribution lines, management of hazardous materials such as PCBs (polychlorinated biphenyls) and SF6 (sulfur hexafluoride), wood preservatives for wooden poles, use of pesticides for maintenance of right-of-way of distribution lines, and visual impacts of distribution lines. SKM reviewed the environmental performance of EDCO and IDECO and did not identify any major environmental risks except for some recommendations on the area of PCBs, SF6, Halon etc.
At EDCO, underground cables instead of overhead lines are used in tourist areas (especially in dead sea area and Aqaba city) to mitigate the visual impact of distribution lines. Both EDCO and IDECO design its substations with due consideration to landscape views to mitigate the visual impacts of their facilities.
On energy efficiency, an opportunity for reduction of technical loss is not significant for both companies since their performance appear to be good.
Wastes:
EDCO and IDECO do not have disposal process for hazardous materials. Both companies use SF6 containing circuit breakers but since they are relatively new, they do not expect to replace them in another 12 years or so. Disposal of all other non-hazardous materials are made through licensed purchasers. KEC plans to have EDCO and IDECO create and adopt a waste management plan for both hazardous and non-hazardous wastes.
Hazardous Materials:
- SF6:
EDCO and IDECO started to use circuit breakers containing SF6 since early 2000s. Because SF6 is a greenhouse gas with a significantly higher global warming potential, its emissions during maintenance or disposal of the equipment needs to be carefully managed. KEC plans to have its Environmental Head create and cause to adopt a disposal process for hazardous material at both EDCO and IDECO that is in line with international best practices in the field.
- PCBs:
SKM’s Technical Due Diligence Reports concluded that “PCBs were not present in significant quantities in transformers (EDCO)” and “There was no evidence of the existence of PCB in operational or stored distribution transformers (IDECO)”. SKM, however, recommended EDCO to ensure that its transformers comply with the US EPA threshold of 50 ppm. The procurement policies of EDCO and IDECO prohibit procurement of hazardous materials which includes PCBs. A World Bank’s recent report “The Hashemite of Jordan – Strategic Options for Energy Sector Development: A Policy Note, May 31, 2005” stated that transformers with PCB exist at some of the power stations in Jordan. Although this statement is for power stations, and not substations, this may suggest that PCBs might be present in some old transformers in Jordan even in distribution sector. Considering all these, especially the SKM recommendation, IFC suggested, and KEC has agreed, that EDCO and IDECO will establish a PCB screening procedure to verify that transformers procured before the procurement policies prohibiting PCBs became effective do not contain PCBs of 50ppm or over. The procedure will also include a treatment / disposal program in case PCBs of 50ppm or over are found.
Halon:
EDCO uses Halon fire extinguishers. IDECO also uses one Halon fire extinguisher. Jordan is a signatory of Montreal Protocol on Substances that Deplete the Ozone Layer and therefore obliged to phase out the use of Halons, among other ozone depleting substances. SKM suggested EDCO to make efforts to phase out the use of Halon fire extinguishers. KEC will support this recommendation and a follow-up action is included in the ESAP.
Emergency Preparedness and Response:
Major substations have emergency communication infrastructure, fire protection measures, and oil spill prevention equipment, to respond emergency situations. KEC, through strengthening EHS management structure of the companies will ensure that EDCO and IDECO will update and maintain emergency preparedness and response plans.
Greenhouse Gas Emissions:
Due to the limited potential for further reduction in technical loss for the distribution networks, there does not seem to have significant potential for displacement of GHG emissions from the generation sector.
- PS4: Community Health, Safety and Security
Minimum safety clearance of distribution lines and public safety:
KEC will ensure that EDCO and IDECO will take all reasonable steps to protect general public and property from injury and damage that may be caused by the EDCO and IDECO facilities and equipment when carrying out their electricity distribution business. The Electricity Regulatory Commission (ERC) had established regulations for the required safety clearance between the electrical live networks and the buildings or lands as to avoid or minimize the effect of electro magnetic field and to ensure safety of the general public. These regulations on the safety clearance were issued since 2003, and EDCO and IDECO have been applying these for construction of new facilities.
On the existing facilities, SKM’s Technical Due Diligence Reports identified that:
- at a number of locations where Low Voltage conductors cross below Medium Voltage lines, the clearance between the lines is insufficient to meet international standards;
- Some remotely located Low Voltage substations do not have copper bonding straps implying that in some instances the substation or transformer may not be earthed.
Where distribution lines do not comply with the minimum safety clearance, the current approach being taken by the companies is to either move the electrical lines or compensate the affected land. KEC’s Environmental Head will continue to monitor laws and regulations and advise EDCO and IDECO on maintaining compliance with community safety related issues. This will include addressing the areas of concerns identified by SKM and develop ways to minimize risks to community safety.
