28649 - Linea Clave

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Environmental & Social Review Summary

Project Number

28649

Company Name

Linea Clave International S A

Date ESRS Disclosed

Apr 15, 2010

Country

Dominican Republic

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 23, 2010
Signed : Jun 25, 2010
Invested : Nov 8, 2010

Sector

Natural Gas Distribution

Industry

Metals and Mining

Department

Gbl Infrastructure & Natural Resources

Project Description

Linea Clave International, S.A. is the first natural gas distribution company in the Dominican Republic providing compressed natural gas and liquefied natural gas to industrial clients. In almost three years of operations as sole player in the natural gas market, via its “virtual pipeline” technology, LC has established itself as the pioneer and leader in natural gas distribution in the country, with a solid reputation of technical expertise and operational reliability.
LC’s business plan includes continuing to grow its industrial client base and expand its line of business to supply natural gas to hotel clusters, power generation companies, and the vehicular sector. To support its expansion plans, the company has signed agreements with highly reputable international technology providers for the supply of equipment to handle, transport and distribute both compressed natural gas (CNG) and liquefied natural gas (LNG) to the local market. LC sources its gas supply from AES LNG import terminal through medium to long term CNG and LNG supply contracts.
The project involves the acquisition of CNG and LNG handling, storage, and transport equipment to service existing and potential clients.

Overview of IFC's Scope of Review

IFC’s appraisal of this project consisted of a review of environmental, social, health and safety, and labor (EHS) information provided by Linea Clave International, S.A (“LC” or “company”). Additionally, in October 2009 an IFC’s Environmental Specialists performed two day site visit to LC’s facility, as well as AES’s port and LNG and CNG facilities, and some of the company’s existing clients. IFC’s appraisal included a detailed review of LC’s environmental and social impact assessment (ESIA) and its environmental, social and health and safety management plans and procedures for the CNG facility.

E & S Project Categorization and Applicable Standard

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

PS1: Social and Environmental Assessment and Management Systems.
PS2: Labor and Working Conditions.
PS3: Pollution Prevention and Abatement.
PS4: Community Health, Safety and Security.
The following PSs have not been triggered by the Project:
PS5: Land Acquisition and Involuntary Resettlement – The project does not require any additional land acquisition. LC’s facilities are located in a 10,560-m2-industrial plot, fully owned by AES. No land acquisition issues are expected.
PS6: Biodiversity Conservation and Sustainable Natural Resource Management – the project is located within an industrial highly-intervened-peri-urban area, with no ecological or conservation value.
PS7: Indigenous Peoples - the project is located within an industrial highly-intervened-peri-urban area, and will not affect indigenous people or territories.
PS8: Cultural Heritage - the project is located within an industrial highly intervened-peri-urban area, with no archeological and cultural value.

Environmental and Social Mitigation Measures

PS1.- Social and Environmental Assessment and Management Systems.

Prior to its installation, the company performed a complete environmental and social impact assessment (ESIA) in November 2006. The ESIA determined that the potential environmental and social impacts and risk where limited and proposed a series of standard environmental management plans to mitigate such impacts and risks. This EIA was presented to the Dominican Republic Environmental and Natural Resources Secretariat and approved via Environmental License No 00563-07 on February 2007.

Most environmental, social, and health and safety impacts associated with the project are incremental impacts of LC’s CNG business expansion and continuity, including (a) noise, discharge, and emissions associated with the natural gas compression facilities, (b) methane emissions from fugitive leaks from regular loading operation and maintenance, and (c) any potential risk to community health, safety, and security associated to the exposure of communities to hazards from natural gas leaks and/or explosions, as a result of accidents in the cylinders transportation process, loading and unloading operation or their final use. The incursion in the LNG distribution business is not expected to increase the environmental footprint and direct impacts associated with LC’s operation. However the LNG business will add complexity to LC’ operation, including EHS risk management, as there will be increased environmental, social, and health and safety risks associated with increased interaction with AES LNG facility, loading and unloading operations, and emergency preparedness and spill prevention and control plans.
The company does not have a formal EHS Policy or an EHS Management Department/Unit with the specific mandate to assess, manage, respond, and report on EHS activities, as well as community engagement, disclosure, and communication plan. Given the current start-up nature of the business, the EHS impacts and risk are still of limited nature and therefore the existing stage of development of the EHS plans and procedures is understandable and acceptable. At any case, LC does have written EHS procedures that are closely followed, and their application is audited for compliance every six months by AES environmental and safety specialists. Furthermore, as part of the EIA process, the company developed a set of plans and procedures to manage these potential impacts and risks. These procedures include (a) mechanism to identify EHS impacts and risks, (b) pollution prevention and control program – See PS3, (c) program for land erosion and vegetation cover protection, (d) community communication and environmental education program, (e) fire protection and control, (f) emergency preparedness and contingency plan, and (g) monitoring program.

However as the company continues to grow and expands its business, the extent and magnitude of the potential environmental and social impacts, as well as the complexity of the EHS risks will increase. Therefore, as conditions to its investment, the IFC will (a) require LC to update the existing environmental assessment and management plans to include the LNG business; (b) require the creation of a formal EHS unit (per the EIA Gerencia de Seguridad y Ambiente) within LC’s operation structure, to consolidate the EHS operational manual and procedures (system), assure compliance with the existing environmental management plans, as well as those associated with the expansion into the LNG business; and (c) recommend Line Clave becomes ISO 14001 and OSHAS 18001 certified within a period of approximately 2 years.

PS2.- Labor and Working Conditions.

Human Resources (HR): LC has a small HR department with only a few procedures and a very succinct HR policy. The size and sophistication of the HR department is commensurate with magnitude and complexity of LC’s operation and HR needs. At the time of IFC’s appraisal (Oct 2009) the company had a total of 38 employees, including a total 17 drivers/drivers assistants/maintenance personnel. As the business expands, LC’s personnel is expected to increase by 2 people for each additional client, thus potentially increasing to no more than 60 employees within the next two years. Most employees are local hires, of which about 60% are under the operations department and carry-out the functions of logistics, drivers, driver assistants, and maintenance. All employees are hired following the Dominican Republic’s Workers Code (Código del Trabajo), which includes prohibition of any type of discrimination in the selection and promotion process, nor any type of forced or child labor. Furthermore, the Dominican Republic legally protects the workers’ rights to form unions and negotiate collectively. The IFC detected no evidence of restriction for employees to form unions, and the company is in the process of consolidating a workers cooperative.

Occupational Health and Safety (OHS): The main EHS concerns for this type of operations are associated with OHS and potential explosions and fire risks. LC’s EIA included a Fire Protection and Control Program compliant with Dominican Republic regulations and in-line with good industry practice. The company maintains a fire protection trained crew, and well maintained fire extinguishers.

LC has a very detailed procedure (Operative Manual - MO.001) that outlines all the risks and precaution associated with “virtual pipeline”. This procedure includes personal safety protection equipment and safety training, as well as step-by-step description of the CNG loading into the 1,400 cmd mobile cylinders or “MATS”, transportation, and delivery to the client. This procedure also includes all the different types of potential malfunctioning and trouble-shooting thereof. It also provides a clear definition/categorization of the potential types transportation accidents, including (i) those with and without truck turnover, (ii) with and without damage to the MATS, (iii) those with natural gas leaks, (iv) those involving fires, and (v) those involving third parties. In all cases this procedure describes the steps to prevent such accidents, and how to proceed and document them if and when they occur.
LC facilities and equipment comply with international standards and best safety practices for the industry, including American, Argentinean and European regulations. The company has relied on Argentinean Gas Industry standards for design and operation of the CNG facilities, such as NAG 125 (Safety Norms for the conditioning, treatment and processing of Natural Gas), NAG-126 (Safety Norms of Natural Gas Compression Plants), NAG 201 (Norms and Recommendations for Use of Natural Gas in Industrial Installations), and NAG 123 (Norms for Security Color Coding for Installations and Places of Work), to name a few. These are comparable to international standards for the industry (http://www.enargas.gov.ar/MarcoLegal/Normas/Grupo_I.php). Furthermore, for its expansion of their existing CNG business LC has purchased fuel tanks that comply with the requirements of ANSI/CSA NGV2, US DOT FMVSS 304, the Canadian standard B51, ECE R110, and other international (ISO) standards. Similarly, for the incursion in LNG distribution operations, LC’s equipment complies with the internationally recognized quality and control regulations, and has obtained ISO 9001 and ASME certifications. All interconnecting pipes between modules are seamless fully welded pipes according to API standards.

PS3.- Pollution Prevention and Abatement

LC’s activities and proposed investment plans will result in the direct replacement of more polluting fuels (e.g. fuel oil or diesel by industrial clients and hotels, gasoline by vehicles) by natural gas, which is likely to result in improved air quality in LC’s area of influence. Furthermore, IFC support to LC’s growth is expected to result in greater efficiency and a significant reduction in the climate footprint (GHG emission contributions) of the Dominican Republic energy matrix.

The limited environmental footprint that will result from LC’s activities can be managed with standard pollution prevention and control practices. LC activities use an average of 800 gal/day of process water, and have an average consumption 6,500 of light fuels, including diesel, gasoline and CNG. Furthermore, Linea Clave generates 250 gal/day of wastewater and a very limited quantity of solid and/or hazardous waste. The EIA includes extensive pollution prevention and control programs typical for this type of operation including but not limited to (a) noise abatement and control, (b) air emission control and monitoring, (c) solid waste management, and (d) treatment and disposal of liquid effluents. Solid waste and waste water treatment and disposal, is managed by AES, according to best industry practices. The EIA also describes an environmental monitoring program that includes periodic monitoring of noise and equipment exhaust emissions, as well as wastewater discharges and solid waste generation.

PS4.- Community health and Safety and Security.

All gas distribution projects present certain inherent risks due to the potential for accidental gas leaks and subsequent explosions or fires, and the “virtual gas pipeline” technology is not any different. LC’s use of proven global technologies and its culture of giving health and safety the outmost priority, has helped to mitigate these intrinsic risks. To-date, there have been no accidents with fatalities, and only one accident involving a truck turn-over as described below. The safety design and construction of all facilities (including at customers’ premises) is overseen and checked for safety by LC’s technical experts. Going forward LC will continue to adopt world class CNG and LNG distribution technologies, provided by respected and experienced suppliers. IFC’s requirement to strengthen the EHS function, by creating a discrete EHS department/unit will also contribute to mitigate these risks. Furthermore, in addition to a SCADA computerize and on-line monitoring system of all trucks, MATS, and transportation activities, the company continuously monitors the performance of the installed equipment at the customers’ premises through weekly visits by engineering personnel, and offers all the equipment post-installation support and maintenance services. This continuous on-line and physical monitoring has helped LC ensure reliability and safety of gas supply, and prevents accidents involving clients or other third parties.

Emergency Preparedness and Response: The ESIA includes the description of extensive emergency preparedness and response plan, and contingency planning. Specific procedures have been written to define the required response in case of fires, hurricanes, and leaks and spills, as well as chain of command during and after the event. This plan includes the relevant telephones that must be contacted in cases of emergencies such as Civil Defense, the closest fire department, police, red cross, among others. Once the EHS management unit is in place, the emergency preparedness and response as well as the contingency plans will be consolidated, and updated to include LNG business. These plans will include third parties and nearby governments and communities as applicable. Since its starts of operation LC has suffered only one accident, which involved a truck turning over at a curve. This accident was immediately detected, the contingency plan activated, resulting in no-fatalities, no gas leak, explosion or fires.

Stakeholder Engagement

During the EISA process the company held two public meetings in August 2006, with the participation of approximately 200 people each. During these meetings the participants had an opportunity to understand the nature of LC activities, the limited associated EHS impacts and risk, and the company’s plans to mitigate and/or manage such impacts and risk. Additionally, participants had a chance to express their concerns and doubts, and inquiry about opportunities for themselves and their communities. The EIA reports general understanding and acceptance, documents no opposition, and outlines the design and implementation of a community relations and education program. The latter has the objective of developing and implementing an internal and third party (community) training on the social, environmental, occupational health and safety, and emergency and contingency plans and procedures. Prior to first disbursement the IFC will require the consolidation of this community relations and education program, which must include a formal mechanisms for stakeholders to express their concerns / complains about LC’s activities, and the company’s procedures to timely and adequately provide response to such request (grievance mechanism).

**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.

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