PS1 Social and Environmental Assessment and Management Systems.
EISA is a start-up company, which was created to identify, design, structure and invest in renewable energy projects. The Pando and Monte Lirio Hydroelectric Plants (PyML) constitutes the first such project, and therefore EISA is still in the process of development of its organizational structure. Under the recently created structure, the Division of Sustainable Development and Human Resources (DSDHR) is responsible for managing EHS and HHRR issues, and reports directly to EISA’s General Manager. Currently, this Division is staffed only with the Director who is in the process of recruiting a total of 2 professional, and has direct strategic support and advisory provided by external environmental, social, health and safety (EHS) consultants. For EHS technical aspects this Division currently manages several external consulting contracts, including (a) EIA for the TL and (b) aquatic and terrestrial base-line and monitoring protocol development. This Division is also in-charge of developing all the EHS policies and detailed procedures outlined herein, assure training and correct implementation by EPC and other sub-contractors, and execute corrective measure and sanctions in case of non-compliances.
In the years 2002-03 two separate Environmental and Social Impacts Studies for Pando and Monte Lirio were developed. These studies were presented to the local environmental authorities, Autoridad Nacional del Ambiente (ANAM), and after several iterations and the submission of two additional documents with complementary information, in July 2004 the Projects obtained their respective Environmental Licenses. These EIAs were developed at a very early stage of the development, and essentially identified the main environmental and social impacts associated with the projects, and outlined the environmental and social mitigation measures and plans that would need to be developed as the project advanced. The EIA for the TL is currently under revision by the ANAM and the Environmental License is expected during the fourth quarter of 2009.
The EIAs did not identify any significant environmental or social impact or issue that would require major management efforts, but outlined, however, a series of tasks that must be completed to appropriate dimension the impacts and risks, and design effective mitigation measures and plans thereof. Besides the typical impacts and risks associated with a new construction and civil works (e.g. air and noise emission, wastewater and solid and hazardous waste generation, etc – PS3), the main environmental and social impacts identified during the EIA process are: (a) modification of the hydrological and sediment load dynamics of the CVR, (b) potential negative impacts on aquatic ecosystem, including the potential net loss of species with particular water quality and flow needs (e.g. spawning, migration, visual feeders, etc), or the invasion of exotic species as a result of changed hydrologic dynamic (e.g. free flowing vs still waters in reservoir), (c) potential increase in erosion processes due to both, the daily fluctuation associated with the Pando reservoir (@ up to 5 meters) and to increased access, construction activities, and human intervention, (d) potential negative impacts on terrestrial ecosystems as a result of the modifications on the CVR basin at the project direct and indirect impact area. (e.g. access roads, ancillary facilities, tunnels, transmission lines), (e) potential impacts on socio-economic dynamics in an economically depressed area of the country (e.g. initial increase of employment and wages, attraction of migrant workers, increase public service needs and costs, etc), (f) potential impacts on touristic activities, (g) potential impacts and risk associated to the construction of the tunnels and the operation of TBM and other heavy equipment and machinery (PS2), (h) socio-economic impacts associated with land acquisition and land-use changes thereof (PS5), (i) potential loss of archeological sites/ artifacts (PS8), (j) potential indirect impacts to indigenous peoples migrant crop workers, that have been reported to occasionally and in small numbers seek employment in the project influence area (see PS7 above), and (k) dam safety and emergency and community preparedness downstream (PS4).
The Company, in coordination with the Lenders, has developed comprehensive plans of action to comply with all the environmental and social management tasks established in the EIAs and to meet IFC EHS Performance Standards as well as other Lenders requirements (See attached ESAPs).
For instance, in compliance with the EIA’s environmental management plans and the ESAPs, the company has developed an extensive terrestrial and hydro-biological baseline measurement protocol, to assess water quality and aquatic/terrestrial community of the PyML area of influence. To date, two extensive sampling events have taken place, and it is expected that at least three sampling events will occur prior to construction commencement. Once construction starts, hydro-biological samples will continue to be performed every three months and will continue until at least one year after the start of operations. The plants are expected to operate run-of-river, assuring the downstream minimum flow (“ecological flow”) of 10% of the annual average flow, which are 1.17 m3/sec and 1.79 m3/sec for Pando and Monte Lirio, respectively. During dry months, the plants might generate a larger proportion of their energy during peak hours (by means of the daily regulation system provided by the Pando dam), which would generate a relatively larger daily flow fluctuation downstream from the Monte Lirio powerhouse, vis a vis rainy months. However, for the most part, daily operation will be constant and therefore flow fluctuations are not expected to be of significance. Additionally, impacts of any fluctuations in daily flows will be buffered by the contributions of the Rio Colorado, Rio Cotito and Quebrada Santa Clara downstream from Pando’s oulet, and from Rio Candela downstream from Monte Lirio’s outlet. Furthermore, downstream flow fluctuation impacts, if any, will also be buffered by the Bajo de Mina HPP which is located about 12 kilometers downstream of the Monte Lirio tailrace and is currently under construction.
The Company is in the process of consolidating a series of management plans and programs which include (a) construction environmental inspection and monitoring program, (b) access roads improvement and erosion control measures, (c) ecological flow maintenance and monitoring program, (d) riverbed protection and erosion control, (e) reforestation program, (f) upper CVR basin management plan, (g) hydrological monitoring program, (h) sediment load and bottom-discharge monitoring program, (i) water quality and aquatic community monitoring program, (j) archeological prospection and recovery, (k) tourism development program, (l) Information and Community Relations Plan (ICRP), and (m) easement, right-of-way (ROW), and access permit program.
Per the EIA and Panamanian environmental Executive Decree 206 (2006) that regulates the environmental impact assessment process, EISA will hire (a) a full-time internal Environmental Inspector that will directly report to the Director of Sustainable Development and HHRR and will assure day-to–day compliance with the environmental, social, and occupational health and safety policies, plans and procedures, and (b) an external consulting firm registered and approved by ANAM, to assess compliance with the EIAs, the Environmental Licenses, and plans and procedures determined thereof. Additionally, during construction, the Sponsors will need to present to the ANAM quarterly environmental compliance reports.
The Company will consolidate the EIAs and respective management plans of the individual projects (e.g. Pando. Monte Lirio, TL) in a single environmental and social management framework, identifying synergies and accumulated impacts/risks (e.g. access road, quarries, transportation activities, workforce issues, etc), and assuring coordination and common approach to EHS issues among the different contractors and subcontractors. This framework will outline clear responsibilities for EHS management at the Corporate Level (e.g. policy and procedures development, community/public relation and stake-holders negotiation, monitoring, supervision, and reporting) and at the Execution/Operation Level (e.g. EPC contractors, construction manager, environmental inspection, pollution control, among others).
Cumulative Impacts: In partnership with some other private companies, the GoP is planning to develop as many as 14 hydropower concessions, seven (7) of which have Government-approved EIAs. Out of these seven, only two have started construction; the rest are still in different stages of development. The El Alto project, which is being developed by Hydro Caisán, S.A, would be the next hydropower facility downstream of Monte Lirio; it has not started construction yet and it would include a reservoir with a 1.14 million m3 storage capacity and its head pond is planned to be located at the same elevation as the Monte Lirio tailrace. The two projects for which construction has already started, are located further downstream from El Alto and are being developed by Ideal Panama: Bajo de Mina (which dams is located 8 km downstream from Monte Lirio powerhouse) and Baitun. Even though each individual project is expected to have limited and localized environmental and social impacts that can be managed by applying standard EHS good practice and procedures, there is the need to evaluate the accumulated impacts in the CVR basin, should all these projects eventually materialize. Even though the CVR is highly intervened by human activity (mostly agricultural), it still is a free flowing river and thus provides a riparian-riverine environment which will be modified to a highly regulated body of water, composed of one small-to-medium size dam after another. ANAM performed a very exhaustive regional hydrology review and water balance for the CVR, and it provides a good degree of comfort that at least there is enough water to develop all the projects that currently hold concessions, while continuing to satisfy other water uses in the watershed (e.g. irrigation, recreational).
ANAM, with the support of the IADB, is the process of developing a comprehensive Cumulative Impact Assessment (CIA) to determine the mitigating measures and control plans to assure the accumulated impacts are appropriately assessed and managed. The first milestone towards the development of a CIA for the CVR was completed in November 2009: “Preliminary Study of the Appropriate Framework to Assess the Cumulative Impacts of the Hydroelectric Developments planned for the CVR”. This study indicates that the principal potential accumulated impacts associated to the hydroelectric development of the CVR are (a) hydrological modifications of the CVR, including changes on natural seasonal flow fluctuations, changes in water quality, and the sediment transport dynamics, (b) geo-morphological changes in the CVR watershed as a consequence of deforestation, agriculture, and the sustained increase in erosion processes resulting from land-use changes, (c) fragmentation and potential degradation of natural habitats as a consequence of the hydrological and geo-morphological modification noted above, (d) interference with free movement of animal species that currently migrate up and down the CVR in different stages of their lifecycle, such a migratory fish which migrate upstream during breeding season, or the neo-tropical river otter which moves up and down the stream for feeding and foraging purposes (“barrier effect”), and (e) potential socio-economic impacts including impacts on existing and future uses of the waters of the CVR for human consumption, agriculture, commercial or touristic activities (e.g. whitewater rafting). The study proposes a series of activities that the GoP and ANAM must develop to gather enough technical information to be able to appropriately assess the cumulative impacts and establish management measures at the watershed level, including the generation of hydro-biological data to determine the flow that must be kept along the river bed to preserve its ecological integrity. There is also a recommendation to develop a CVR Coordinating Committee composed of representatives from the GoP, local governments, NGOs and civil society, universities, and expert advisors, as well as the representatives from the private sponsors of hydroelectric development in this watershed, to develop an integrated approach to appropriately asses and manage the cumulative environmental and social impacts associated with the transformation of the CVR from a free flowing riparian environment to a highly regulated body of water.
With regard to PyML, the study notes that because these two projects are located higher up in the CVR basin and upstream of larger hydroelectric plants and associated reservoirs, their contribution to the accumulated hydrological and geo-morphological modification of the CVR is not expected to be significant, nor their potential impacts on the sediment load to the drinking water treatment plant at Baru or to the estuarine environment at the Pacific Ocean. This study also notes that whitewater drafting activities are likely to disappear from the CVR once all the projects are constructed, however it points out that PyML will not contribute at all to this impact as rafting activities take place downstream from Monte Lirio’s powerhouse. According to the study, the most significant potential contribution to the cumulative impacts that PyML could present at the watershed level are (f) sediment load and erosion during construction activities and (g) barriers effect to free movement of fauna along the CVR. These two impacts have been adequately identified in the EIA process of PyML, and the company has developed plans to manage such impacts. However, they emphasize that erosion control measures as well as the creation of pass-ways or mechanisms for fish and other animals to move up and downstream from the dams would only be effective if (h) implemented by all developers in a coordinated manner, (i) with the support of civil society, local governments and NGOs, and (j) under the clear guidance and close supervision of ANAM.
PS2 – Labor and Working Conditions.
The Director of Sustainable Development and Human Resources is mandated to manage all HHRR and Occupational Health and Safety issues, and is in-charged with setting up the relevant HHRR policies and procedures, as well as the Occupation Health and Safety policies, plans, and procedures. This Director will also be responsible for supervising compliance with occupational health and safety policies, plans and procedures and will gather monthly compliance and accidents/incident data from the EPC contractors, and prepare quarterly occupational health and safety reports to EISA management. These reports will be included as part of the compliance reports to be presented to ANAM and the Lenders.
Since EISA is a small start-up company the expected number of permanent employees is limited to approximately 10. The rest of services will be outsourced. Prior to Board Approval, EISA will present to the Lenders its HHRR policy and procedures, which will be developed to comply with PS2, and will include, as a minimum: (a) prohibition of any type of child and/or forced labor, (b) the implementation of equal opportunity and non-discriminatory hiring and promotion policies, (c) description and full disclosure of the workers/employees rights and duties, including freedom of association and collective bargain, (d) articulation of preferential hiring to members of the local communities and specially of the communities directly affected by the Project, and (e) a non-retaliatory Grievance Mechanism to received and process any employees complains or work related conflicts or issues. This division will develop clear position descriptions, with qualifications and training needs, as well as competitive compensation and benefit packages. Compliance with these policies and procedures will also be mandatory to all EPC contractors and subcontractors. As a matter of fact, the standard EPC contracts have already incorporated specific language requiring compliance with local Labor Laws and IFC PS2.
Construction is expected to last approximately three years. During construction EISA will be managing two large EPC contracts, one with SELI to build the tunnels, and a second one with Cobra that will perform the rest of the construction, including all access roads and the transmission line. The total workforce during peak construction is expected to be 700 full-time workers, Cobra will work two 8-hour shifts six (6) days per week and SELI 24-hours shifts seven (7) days per week. The work force composition is expected to be approximately 75% unqualified construction labor, and 25% qualified/ specialized professionals. All of the work force is expected to come from near-by towns and cities, and no dormitories will be built at the construction camps. Specialized professionals brought from outside the local towns, will be hosted in near-by hotels or existing rental houses/apartments. Workers will be provided with transportation from-and-to El Volcan, in-and-out of their respective shifts.
EISA has developed the company’s occupational health and safety policy and plans and procedures. These procedures (a) identify the risks and hazards associated with each task / activity, (b) define the qualifications, training, restrictions, and personal protection equipment (PEP) required for each task, (c) describe the expected procedures to document near-misses, LTI and/or any other indicators, (d) outline mechanisms to handle breaches in compliance and/or any misconduct, (e) develop the appropriate corrective measures to avoid repeat accidents / incidents, and (f) define the emergency response mechanism, including medical evacuation to near-by health centers and coordination with local authorities, fire-department, ambulances and hospitals. These policies and procedures will be mandated to all EPC contractors and sub-contractors, and clear sanctions will be defined in their contracts in cases of negligence and/or compliance breaches.
PS3 – Pollution Prevention and Abatement.
Environmental pollution and control measures associated with PyML are most relevant during the construction phase. The most complicated aspect of pollution management and control will be associated with the disposal and treatment of the solid and liquid waste from the excavation of the tunnels. An estimate of 212,372 m3 of sediments will be excavated, and the amount of liquid waste is uncertain, as it will greatly depend on the soil characteristic and on how much water is found in the excavation process. Other potential sources of pollution are those typically associated to the civil works such as (a) air, dust emissions, vibration and noise from earth movements, and the operation of vehicles and heavy equipment, (b) hazardous waste generation, (c) domestic wastewater and solid waste from construction camps, and (d) increase erosion and sediment runoff from access roads.
During operation, the most relevant source of contamination would be the generations of solid, liquid and hazardous waste form power-house maintenance, and noise from the operation of the turbines. Prior to the start of construction EISA will present detail Pollution Prevention and Control Plans and measures associated to the project, outlining: (e) expected sources of pollutants including air emission, noise, wastewater and solid and hazardous waste, and tunnel excavation materials, refuse, effluents, muddy waters, etc., (f) proposed emission and discharge standards to be applied, (g) pollution control and mitigation measures, (h) spill prevention and emergency response plan, and (i) monitoring and reporting procedures. Hazardous materials (including pesticides) will be stored and handled in compliance with the Panamanian hazardous substance code (Norma COPANT 43-2001), and wastewater discharges must meet DGNTI-COPAINT 35-2000 regulating effluent discharge to surface and ground water bodies.
GHG: This project will result in an overall reduction of the climate footprint of Panama’s energy matrix, since it is providing hydroelectric power into the grid. The Project is expected to reduce greenhouse gas emissions by an estimated 116,000 tCO 2 per year. EISA has contracted an independent consultant to perform a study to identify whether the Company is eligible to register under the Carbon Credit Registry and to explore potential placement alternatives of Carbon Reduction Certificates (“CERs”) in the European markets or under the CDM should there be a market after 2012.
PS4 – Community Health, Safety and Security.
According to most classifications, Monte Lirio would be considered a small dam and Pando a mid-size to large dam. Even though the area downstream of the Project is not densely inhabited and mostly composed of agricultural lands, as part of the engineering design the company has performed a standard dam safety and breakage study, and will assure to construct the dams in accordance to best industry practices. The design has been reviewed by the Lenders Independent Engineer. It is estimated that in case of a dam failure at Pando, the reservoir volume would be released within 10 minutes; and would generate an increase in water level elevation up to a maximum of three meters at the Monte Lirio plant outlet. With the domino failure of Monte Lirio dam, the total stored volume released is assumed to be 1,400,000 m³, resulting in an increased elevation at the Monte Lirio plant outlet of about four meters. There are no dwellings or structures located close to the river along its course from Pando to Monte Lirio, and therefore the damage in case of dam failure at Pando would be probably minimal.
To account for climate change-related impacts, the dams are designed for flows from a 10,000-year-return period flood without overtopping and were designed for the Maximum Credible Earthquake, equivalent to the 1/2500 year ground motion. Additionally the Information and Community Relations Plan (ICRP) will contemplate (a) disclosure of information on Dam Safety, Breakage Risk, and Bottom Discharge operations among the potentially affected parties, and (b) design, disclose and socialize with the potentially affected communities or parties an Early Warning and Emergency Response Plan, which includes community participation and assures to protect and preserve human life, third party properties (e.g. livestock, crops, land, buildings), and company assets, in that order of priority. Furthermore, to avoid any safety risks to nearby communities and/or people that may be visiting the area, EISA will install access control and warning signs in the project’s facilities (e.g. intake structures and power house; tailrace area etc).
During construction, there will be a very clear Code of Conduct to all EISA and EPC employees associated to their interaction with near-by communities and towns, especially in activities involving transportation and operation of heavy machinery in public roads. All drivers and operator of heavy machinery will be required Defensive Driving training, and heavy traffic will be scheduled to avoid school children in public roads. Additionally, via its Information and Community Relations Plan (ICRP), EISA will implement grievance mechanisms to attend and resolve any complains or concerns that the affected communities may face during the construction. (e.g. accidents, dead/lost domestic animals or livestock, damage to crops, dust / respiratory illness / complaints, etc).
PS5 – Land Acquisition and Involuntary Resettlement.
The project requires the acquisition of a total of 67.2 hectares of land, and the lease and/or right of way (ROW) easement of approximately an additional 96.6 hectares for the TL, roads, borrow and aggregate areas, and other ancillary facilities. All the land acquisition negotiation processes has been progressing smoothly, and even though the Sponsors could resort to expropriation, they are seeking to achieve negotiated settlements based on market values. The lands required for the Project involve a total of 15 landowners and as of September 2009 approximately 80% of the required land had already been purchased by EISA, and the remaining 20% was in the final negotiation stages. For the TL ROW easement, negotiations are currently taking place with a total of 44 landowners, but either verbal or written authorization has been granted. No issues are expected, and not a single property will be impacted in its totality by the project or the TL, and thus, the project is not expected to economically displace any peasant or seasonal crop workers. No physical displacement or relocation of homes or dwellings or any construction is expected.
The only potential significant impact on an economic activity could be associated with some of the whitewater and rafting tour operators. The project direct footprint area is not suitable for rafting and the existing rafting routes in the CVR are further downstream beyond the el Alto and Bajo de Minas projects. EISA will include the whitewater tour operators as an integral part of the Tourism Development Plan required in the EIA.
PS6 Biodiversity Conservation and Sustainable Natural Resource Management.
The PyML projects are located in the upper middle basin of the CVR watershed, which consists mainly of highly intervened agricultural private lands and pastures, with patches of secondary riparian forest and shrubs. No critical habitat is expected to be impacted. However, even though the direct impact area is within a very modified landscape, the CVR can be considered a Natural Habitat as it still supports biological communities largely composed of native animals and plants, and it has managed to conserve its primary ecological functions. The list of species reported in the EIA presents some endemic or endangered species found in the Parque Internacional La Amistad, and it states that it is possible that some of them could be present in the project area, as these species are widely distributed in the region. Ecological baseline data on terrestrial and aquatic ecosystems indicate that all of the species found are widely distributed in the area, and no habitat or species of critical or unique importance will be affected. However, field samples have reported the presence of several species that will require customized mitigation or management strategies, mainly three species of migratory fish, the Neo-tropical River Otter (Lontra longicaudis), and the Palm tree (Zambia faichildiana). The latter is a palm tree listed under CITES due to its exploitation as an ornamental plant, but there is a lot of local experience on the replanting and natural regeneration of this species.
The migratory fish species, include the Chompipe (Brachyrhaphis terrabensis) and the mountain mullet “Lisa” (Agnostomus monticola) which are known to migrate along the river as part of their life cycles. The mountain mullets live their adult life in freshwater, and young and juveniles migrate down to estuarine environment in the Pacific Ocean. They usually spawn during the rainy season, and are oviparous, producing pelagic non adhesive eggs. The Lisa as well as the other migratory fish species will require (a) the construction of migratory pass-ways that would allow adults to reach their reproductive and spawning grounds upstream and juveniles to swim downstream to the estuary, and (b) a monitoring program to assure the effectiveness of such pass-ways. EISA currently has proposed the installment of pilot fish pass-ways structures based on similar structures used in other hydroelectric projects in Panama, which will be tested during the three years of construction.
The otter is classified on the 2009 IUCN Red List as "Data Deficient", and suspected as threatened, but too little is known of the species. Even though its distribution is reported from Mexico to Uruguay, there is limited information to assess if the animal is globally threatened or not. Mitigation measures are focused at no net loss, and the declaration of the PyML project area as an “Otter Sanctuary”. Additionally, the Company will use best efforts to coordinate with the Smithsonian and other scientific institutes and environmental organizations, and further research to understand this animal''s range in Panama and help design a conservation strategy for the species, which would include an important community education / awareness component.
Adaptive Management: It must be noted that EISA is proposing several mitigation measures which are based on limited hydro-biological data and an extensive literature review. The plants are expected to operate run-of-river, assuring the downstream minimum flow (“ecological flow”) of 10% of the annual average flow, which are 1.17 m3/sec and 1.79 m3/sec for Pando and Monte Lirio, respectively. During the three years of construction, EISA is planning to strengthen the hydro-biological data, and pilot some of the mitigation measures (e.g. migratory fish pathways, otter population surveillance/study/sanctuary, availability of otter food supply to flow fluctuations, water quality, aquatic biota monitoring, etc) to make sure the “minimum flow” indeed is appropriate to preserve the ecological integrity of the river. The Company is proposing to define the final mitigation/compensations measures as more information is generated.
The closest protected areas to El Volcan and the Project are the Parque Internacional La Amistad and Parque Nacional Volcán Barú which are outside the Project area of influence, and the Lagunas de Volcán, which are located about 80 meters higher that the Pando reservoir and have no connection to the CVR. As required by the EIA, the sponsors are developing both, a reforestation program and a management plan for the upper CVR basin that will assure to avoid any potential impact of the project in the upper CVR watershed.
Furthermore, during the baseline development process, the company has found that within the area of influence of Pando there is forested section, that even though it still is secondary forest, it seems to host quite a wide diversity of birds and mammals. Due to its difficult and steep cliffs access this area has managed to remain in fairly good conditions regardless of the increase pressures associated to the continued expansion of the agricultural frontier. This area will not be flooded by the reservoir, and originally the company had not intentions of acquiring it. However, EISA is currently considering purchasing this plot of land, to protect it and include it as part of the Tourist Development Plan as a potential ecotourism site.
