PS1: Social and Environmental Assessment And Management Systems:

- While the Sponsors recognize the importance of social, environment, occupational health and safety (SEHS) aspects associated with UEPL’s and Labriz Resort’s operations, these aspects have not been managed under a structured SEHS management system both in UEPL’s Maldives operations and at Labriz Resort. Typically each resort’s management identifies and manages the social and environmental aspects associated with the resort operations. This has resulted in differential levels of SEHS management at the various resorts. UEPL and Labriz Resort will: (a) put in place a corporation wide applicable SEHS management system (SEMS), which is certified to an internationally recognized standard, with IFC Performance Standards appropriately incorporated; and (b) appoint a fulltime appropriately qualified senior executive at the UEPL corporate level, for oversight of SEHS aspects to ensure consistent application of the SEMS across both Labriz Resort’s and UEPL’s resorts and operations.

Typically, UEPL assesses SEHS aspects and impacts of its operations in the context of meeting regulatory requirements.

- However, a structured and comprehensive social and environmental assessment, consistent with IFC Performance Standards, will be undertaken as a starting point in implementation of the SEMS in UEPL. In the case of Labriz Resort, which is located in a critical habitat, an Environmental Impact Assessment (EIA) was undertaken in April 2005, before construction of the resort, by SIGMA – Ove Arup and Partners. Labriz Resort’s EIA while meeting the national requirements was not fully consistent with IFC Performance Standards. Further, the resort has since been constructed and has been in operation since December 2006. In view of these two facts, Labriz Resort’s management commissioned ERM Johannesburg and carried out a third party Gap Analysis and Scoping Study (SEHS Gap Audit), and has developed a plan of action to make its operations fully consistent with IFC Performance Standards.

- Towards meeting IFC Performance Standards provisions, Labriz Resort will: consult with key stakeholders to define SEHS objectives to be achieved by the resort; identify in consultation with stakeholders, the key parameters to be monitored on an ongoing basis to demonstrate both beneficial outcomes/attainment of SEHS objectives as also no measurable adverse impact resulting from the resort’s operations; establish the baseline for these parameters; implement the measures for improving SEHS outcomes as detailed in the ESAP and the action plan developed pursuant to the SEHS Gap Audit; and put in place a SEHS management system to effectively develop, implement, monitor and report programs designed to achieve the SEHS objectives defined for the resort.

- UEPL will, under the company-wide applicable SEMS, also implement procedures for: (a) ensuring that contractors engaged by the resorts (for various work including construction, pest management, waste management etc) meet relevant provisions of UEPL’s SEMS; (b) environmental, occupational health and safety training of employees and contract workers; (c) recording, investigation and reporting of social, environmental, occupational health and safety incidents including those involving contractors’ labor/workers; (d) periodic monitoring and assessment of social, environmental, occupational health and safety performance; (f) internal and external audits and implementation of corrective action; (g) management review of the management system; and (h) periodic reporting of social, environmental, occupational health and safety performance to Universal’s Board of Directors, regulators and investors.

PS2: Labor and Working Conditions:

- UEPL employs in all about 2950 persons in its operations in Maldives and Labriz Resort presently employs about 325 permanent staff members comprising 135 Seychellois and 191 expats. The UEPL has in place HR Policies and Procedures that are compliant with national requirements as defined in the “General Terms and Conditions (GTC) of Employment” for its operations in Maldives. At Labriz Resort, the HR Policies and Procedures are defined in the “Employee Handbook” made available to all employees. These HR Policies and procedures detail the terms of employment, wages and overtime, holidays and leaves, promotion and progression, staff facilities, standards of conduct, health and safety, protection of company property and information, grievance redress procedure, disciplinary procedure, separation/termination and equal opportunity and non discrimination. Terms of employment and conditions of work are communicated to employees through the employment contract and also by making available the HR Policies and procedures.

- Both UEPL and Labriz Resort need to upgrade their respective policies to make these consistent with IFC Performance Standard 2, particularly: the disciplinary procedure; inclusion of specific timeframe for various steps in the grievance redress procedure; provision for protection of confidentiality and non retribution in the grievance redress procedure; implementation of procedures to maintain full legal documentation for all employees who are below 18 years of age; and maternity leave provision in the Labriz Resort’s HR Policy.

- The UEPL and Labriz Resort both have Occupational Health and Safety (OHS) policies in place at their operations in Maldives and in Seychelles respectively. However, these OHS policies and their implementation need to be further improved through: specifying health and safety measures for each operating unit; staff education and training; and through regular audits. The OHS policies do not include formal procedures to record accidents/incidents, investigate them and implement corrective actions. UEPL and Labriz Resort will, as part of their respective SEMS, put in place a OHS management system certified to an appropriate international standard. Further, both in UEPL’s and Labriz Resort’s operations, use of Personal Protective Equipment particularly in the maintenance workshops needs to be improved. While the various resorts, including Labriz Resort have fire safety systems in place, there is significant variability in the systems implemented and it needs to be improved in several of the resorts. Moreover, though staff is trained in the use of firefighting equipment, structured fire response plan needs to be put in place. UEPL is in the process of upgrading worker accommodation and to meet good international industry practice, it will adhere to relevant benchmarks mentioned in the IFC –EBRD Worker Accommodation Handbook. Adequate worker living quarters/accommodation have been provided at Labriz Resort.

PS3: Pollution prevention and abatement:

- UEPL and Labriz Resort, have implemented one or more of the following measures for pollution prevention and resource (water and energy) conservation which include co-gen on the villa cooling and water heating system, heat recovery from air conditioner exhaust, waste heat recovery from the generator facility for water heating, replacement of incandescent lamps with compact florescent lamps, planned waste heat capture, measures to improve operational and other measures. While there is significant variability in the measures implemented by UEPL’s resorts, UEPL will, as part of the SEMS put in place procedures to harmonize across all of its resorts the various innovations and good practices implemented at its resorts. Further, UEPL resorts and Labriz Resort already collect a large amount of water and energy data daily, which they will use to establish operational efficiency benchmarks for water, energy and waste.

- Typically in any resort, the activities that could potentially impact the environment (whether through routine activity or from an accidental event) include: handling, storage and use of hydrocarbons; chemical storage and handling; pesticide handling and use; maintenance of resort machinery; incineration of waste material; discharge of effluent to the marine environment; storage and handling of solid waste material; emissions from diesel generator (DG) sets, incinerators and boilers; and guest and staff leisure activities in the terrestrial and marine environments. While UEPL’s resorts and Labriz Resort demonstrate good housekeeping measures as regards management of these aspects, formal resort wide environment management plans will be put in place as part of the SEMS. In particular Labriz, Resort will, as part of the SEMS, map the sources of pollution, pollution pathways and receptor sensitivity and implement a set of formalized mitigation and/or abatement measures as part of a resort level Environmental Management Plan.

- Emissions and Discharges at UEPL’s Maldives Resorts: The DG sets at UEPL’s resorts in Maldives range from about 1 MVA to 3.6 MVA. Boilers at almost all of the resorts are diesel/liquid fuel based, however UEPL is in the process of implementing a program on waste heat recovery boilers. UEPL’s resorts in Maldives, with the exception of Kuramathi resort do not have incinerators. UEPL has commenced replacement of the existing single chamber incinerator at Kuramathi resort with an upgraded two chamber incinerator. Further, to mitigate risk of any impacts from incinerator operations, UEPL will implement procedures to ensure that: (a) incineration temperature is monitored and kept at design levels; and (b) no plastics or hazardous waste is incinerated. Water at all of UEPL’s resorts in Maldives is sourced from the ocean (outside the coral reef/lagoon), is desalinated by the reverse osmosis (RO) process and the RO brine is discharged into the ocean (outside the coral reef/lagoon area) as well. Typically, water consumption at each resort depending upon the size ranges between 150 to 500 m³/day. Each resort has a sewage treatment plant in place. The treated sewage is partly used on premises for gardening and the balance is discharged in the ocean outside the reef area. Refrigerant gases used vary between the resorts but these are consistent with the host country requirements under Montreal Protocol. Pest management is outsourced to contractors and UEPL will implement a program to: ensure that all resorts identify and phase out WHO Class I (highly hazardous) and II (moderately hazardous) pesticides, if they are used at any of the resorts; and introduce integrated pest management and integrated vector management. In view of the size of the islands (typically less than 2 Km²), the terrain (flat sand islands) and scale of resort operations, material impact on ambient conditions is not expected at UEPL’s Maldives resorts.

- Emission to air at Labriz Resort is from 4 x 725 kVA DG sets (3 x 725 kVA operational at all times) and from two incinerators, which are used for disposal of wet, dry and some biomedical waste. While DG set emissions are not monitored, design emissions from DG set with the exception NOx are within IFC emission guideline limits. Design NOx emissions from the DG set exceed IFC limits. An inspection of the incinerator area at Labriz Resort indicated that the area is well maintained but there is no instrumentation in place to monitor incineration temperature. Incinerator stack is 11.7 m high and the incinerators are located at a relatively higher location as compared to the resort and the IDC village. The incinerator ash is disposed off in a pit on the island. Labriz Resort will carry-out a onetime full characterization of the incinerator ash. Further, Labriz Resort management will upgrade the incinerator to meet good international industry practice emission norms including putting in place provisions for monitoring incinerator temperature. The refrigerant gases used in Labriz Resort meet host country requirements under Montreal Protocol.

- Water at Labriz Resort, about 400 m³/day, is sourced from Grande Riviere, a stream on the island, which also serves the IDC village and the residual water flows into wetlands on the island. While treated stream water is the primary source of water, Labriz Resort also has a 200 m³/day RO system to desalinate sea water in dry season and as required. The resort has a 380 m³/day sewage treatment plant in operation. Treated sewage, is partially used on land for irrigation and balance is discharged into deep sea/ocean. Labriz Resort will upgrade the Sewage Treatment Plant to meet national standards on Phosphates, BOD and suspended solids in the treated sewage, which exceed host country standards. Pest management at Labriz Resort is outsourced to a licensed/authorized contractor. One of the pesticides used is a WHO Class II (Moderately Hazardous) pesticide but the resort management has worked with the pesticide contractor to limit the zones of pesticide application.

However, the resort will phase out use of WHO class II pesticides and also put in place an Integrated Pest Management plan.

- Waste handling at UEPL’s resorts and also in Labriz Resort is generally adequately managed with recyclables, hazardous, non hazardous and non combustible waste being stored and disposed off at appropriate locations, which are Tilafushi Island in Maldives and the main island (Mahe) in Seychelles. Typically, the garden refuse is stock piled on the islands, in some resorts it is shredded and vermi-composted but at Labriz Resort it is left on the mountain side. Notwithstanding this, both at UEPL and Labriz Resort, there is no inventory of hazardous or recyclable waste for the resort, and where waste is sent off the Island, no waste manifest documentation exist. Coupled with this no formalized procedures for collecting handling, storing and disposing of waste exist at Labriz Resort. Management of hazardous wastes needs to be improved both at UEPL’s Maldives resorts and at Labriz Resort. In particular, both UEPL and Labriz Resort must implement a program to: (a) label, segregate and store all hazardous wastes under secondary containment; and (b) maintain records of all hazardous waste generated and disposed. Management of scrap yard needs to be improved.

- Ambient Air Quality is not monitored on the Labriz Resort island, however, the EIA predicted, that with 1 x 725 kVA DG set operation, NOx levels in the ambient at some sensitive receptors on the Silhouette island would exceed corresponding IFC Guideline limits. Further, based on the EIA predictions, it is anticipated that with continuous operation of 3 x 725 kVA DG sets, annual average NOx levels in the ambient at some sensitive receptors would exceed corresponding IFC guideline limits. Labriz Resort will implement measures including increasing DG set stack height as recommended by the EIA and/or secondary control techniques so as to bring down the ambient NOx levels to within IFC guideline limits. While the resort has implemented several measures to avoid/minimize risk of material impact on the ambient conditions, monitored data on baseline and subsequent ambient conditions has not been collected. However, the resort management will, in consultation with stakeholders, develop and implement a monitoring program as part of the SEMS, to demonstrate no measurable adverse impact on ambient conditions.

PS4: Community health, safety and security:

- UEPL’s resorts in Maldives do not typically have any community resident on the islands where the resorts are located. Hence, community health, safety and security aspects are not relevant in UEPL’s Maldives resorts. However, at the Labriz Resort, IDC village, comprised of 100 households, is located in the vicinity of the resort on the same island. Labriz Resort’s activities do not pose any significant risks to the IDC Village in terms of health and safety or security. Moreover, Labriz Resort maintains a fully equipped clinic for the benefit of the guests, staff and IDC Village. Health drives and awareness campaigns occur regularly in the IDC Village. The Silhouette Island has an emergency response procedure for tsunami, cyclone or flood disasters. Labriz resort will also develop emergency response plans for fire and external security threats.

- UEPL and Labriz Resort employ security guards, who are well trained. UEPL and Labriz Resort will, with a view to bringing uniformity across all of its resorts, as part of the SEMS, put in place formal procedures for ensuring that: past records of security personnel employed are screened; security personnel have clear objectives and permissible actions laid out; security personnel are trained in avoidance of human rights violations, use of fire arms and handling various situations with clear procedures; security incidents are recorded, investigated and corrective action implemented; bona fide complaints against security personnel are investigated/disciplinary actions implemented; and there is a grievance mechanism for aggrieved members of community or employees in the event of a violation of the code for security personnel.

PS 6: Biodiversity Conservation and Sustainable Natural Resources Management;

- Apart from the built-up areas of the Labriz Resort’s footprint, the IDC village and jetty area, much of the rest of Silhouette Island comprises natural habitat with the presence of some alien invasive species (notably the Calice Du Pape, Albizia and Cinnamon trees, the Indian Mynah and the common house gecko). The nature of the resort’s operations means that the potential for negative impacts on natural habitat is limited. Notwithstanding this, the following were noted as potential sources for habitat impact: (i) accidental spills during storage, handling or use of hazardous materials; (ii) littering on the beach or island interior due to careless hikers; (iii) emergency release of brine discharge from the desalination plant; (iv) resort lighting and guest traffic on La Passe beach, which is nesting habitat for marine turtles; (v) pesticide use, in particular bioaccumulation in freshwater habitats of importance to threatened and rare turtle species. On the positive side, the resort’s construction and operation have improved the main wetland as it was rehabilitated, returning ecosystem functioning and facilitating the re-introduction of the threatened, endemic mud turtle. These and other activities were carried by the Nature Protection Trust of the Seychelles (NPTS), a conservation non-governmental organization that is supported by the resort.

- The entirety of Silhouette Island qualifies as critical habitat, and the area containing the Labriz Resort and its immediate surroundings where resort-related activities take place (e.g., SCUBA diving, ferry to Mahe, hiking) are sited within this critical habitat designation. Silhouette Island qualifies as critical habitat for the following reasons (i) located in internationally recognized area of high biodiversity value (i.e., contains Alliance for Zero Extinction site, Silhouette Island is a Key Biodiversity Area and an Important Bird Area); (ii) habitat required for the survival of Critically Endangered and Endangered species; (iii) area having special significance for endemic and restricted-range species; (iv) presence of key ecosystem services.

- Silhouette Island is also located in a legally protected marine park (IUCN Protected Area Management Category II), which is managed by the Seychelles National Park Authority (SNPA). In the near future 93 percent of the terrestrial portion of the island will also be gazetted as a national park. The Labriz Resort and Grande Barbe beach, which is located on the opposite side of the island, will fall outside of the designated park areas. While no management plans have yet been developed for the protected areas, the resort operations will have to be managed to minimise potential impacts and to be aligned with the protected areas management objectives. With respect to the marine national park, the resort does not allow motorised waters sports. The PADI diving centre on the island prohibits guests from touching or interfering with marine life during a dive.

- The IUCN Red-listed Critically Endangered [CR] and Endangered [EN] species that occur within or very near to the project’s direct footprint and thus have the potential to be directly impacted by the Labriz Resort are as follows: CR-listed sheath-tailed bat (Coleura seychellensis), CR-listed yellow-bellied mud turtle (Pelusios castanoides intergularis) and the CR-listed hawksbill marine turtle (Eretmochelys imbricate). The bat and the mud turtle also have an extremely restricted-range. A number of other CR and EN species are also located on Silhouette Island but are found in upland habitats on Mount Durban, beyond the project’s footprint (e.g. CR-listed East African black mud turtle [Pelusios subniger parietalis], a number of IUCN CR and EN-listed snail species found only on one or two islands in the Seychelles [e.g, Moominia willii, Pachnodus oxoniensis, Paludomus ajanensis, Priodiscus spinatus] and three tree species (CR-listed Drypetes riseleyi, EN-listed Pisonia sechellarum, CR-listed Trilepisium gymnandrum).

- There are several endemic and restricted-range trees (i.e., Grisollea thomassetii, Piper seychellarum), frogs (i.e., Sechellophryne pipilodryas, Silhouettia silhouettae) and snails (e.g., Pachnodus lionneti, Nesokaliella intermedia) that occur on Silhouette and that are not listed as CR or EN on the IUCN Red List. These also qualify Silhouette Island as critical habitat, although they do not occur within the footprint of the Labriz Resort.

- Established in 1997, NPTS has an active presence on the Silhouette island with a research facility located immediately outside of the Resort’s grounds. Conservation scientists of NPTS have been conducting ecological research on Silhouette Island since the early 1990s. This organization is responsible for the re-introduction program of the yellow-bellied mud turtle and the East African black mud turtle on Silhouette and for protection and rehabilitation of the sheath-tailed bat. The Labriz Resort has provided some financial and in-kind assistance to NPTS’s activities. It is generally agreed amongst the environmental agencies and conservation organizations that both the mud turtles and the sheath-tailed bat are benefitting from the efforts of NPTS and the support provided by Labriz Resort.

- Of particular concern with respect to the hawksbill turtle is the impact of tourists on the nesting potential of La Passe beach and the impacts of resort lighting on the turtle hatchlings. Although the preferred nesting site is Grande Barbe beach, located on the opposite side of the island, a limited number of turtles do nest regularly at La Passe beach. The resort has endeavored to mitigate such impacts, but further action will be required given the critical habitat designation.

- Regarding ecosystem services on Silhouette Island, freshwater from a natural spring in the mountain is used to supply the Labriz Resort’s and the IDC Village’s water demand, and therefore provides a key provisioning service. The spring and resultant stream is one of a few tributaries of the Grande Riviere which flows out to sea near the resort. The stream’s sustainable yield is currently unknown. It was indicated that the spring’s flow reduces for approximately three months a year such that it cannot supply the resort and village’s water demand. In this scenario, the Labriz Resort operates its desalination plant. In the last four years of operation, this arrangement has not revealed any ecological impact on the Grande Riviere or associated riverine wetlands. The coastal vegetation/dunes complex provides a key regulating service of erosion and flood control and thus maintenance of the marine shore line. The beneficiaries of this service are the local IDC community that co-inhabits La Passe and the resort itself. The aesthetic value of the La Passe also provides a cultural ecosystem services as the area is valuable for ecotourism (and, in fact is being utilized as such by the resort). The beneficiaries of this service are the IDC community, the Labriz Resort and the Government of Seychelles.

In order to ensure no measurable adverse impact on Silhouette Island, Labriz Resort will implement the following measures: (i) additional on-site mitigation with respect to the lighting and improves the nesting potential of La Passe Beach; (ii) development of an ecological sensitivity map to further inform appropriate on-site mitigation measures; (iii) baselines and follow-up monitoring of the sheath-tailed bat and the two mud turtles; (iv) marine survey (as per recommendations of a team of Scientific Committee) in project footprint area, hawksbill turtle frequentation map and follow-up hawksbill monitoring; (v) implementation of a biodiversity offset measure for the hawksbill turtle (to be identified); (vi) aquatic monitoring of on-site freshwater habitats; (vi) exploration of options to reduce pesticide accumulation and improve bat habitat in consultation with conservation scientists; (viii) maintenance of the dune crest vegetation on La Passe Beach and removal of alien vegetation, (x) further support to on-going activities of NPTS; and, (xi) determine the spring’s sustainable yield. With respect to the legally protected area, an additional program will be identified which are aligned with the conservation aims including any future management plan for the marine park. The additional program will be selected in consultation with relevant governmental stakeholders and those of the conservation community.
- Regarding invasive alien species, during construction the resort kept a nursery of indigenous plants which were later used during rehabilitation and re-vegetation. Accidental introduction of alien invasive species is always possible and the resort complies with the requirements of the IDC in this regard. Known aliens species on the island are the Calice Du Pape Albizia and Cinnamon trees, the common house gecko and the Indian Mynah.

PS 8: Cultural Heritage.

- No sites of archaeological, cultural or historic significance were destroyed during the construction of the Labriz Resort. As part of the Labriz Resort’s operations, however, the historic Dauban Grande Case was restored and is currently used as a restaurant.

Other culturally significant sites occur on the Silhouette island. These include the Dauban Family Mausoleum, the cemetery and the Arabian graveyard. There are no direct interactions between the resort and these sites. Indirectly, guests of the resort who go for walks or hikes may come across one or more of these sites. Labriz Resort will implement a procedure of periodic checks at these culturally significant sites to identify and mitigate, if any, adverse impacts due to its operations, tourist or other activities.