Key E&S issues relating to the project are summarized below along with specific information on how potential impacts and risks are to be addressed by the Company. ERC has conducted an independent and comprehensive Environmental and Social Impact Assessment (ESIA), along with supporting studies, and has carried out considerable stakeholder engagement in relation to the project. The ESIA contains a framework E&S management program that outlines the measures to be taken in order to manage E&S issues identified by the assessment. The framework management program will be further developed and finalized as project planning continues and upon implementation of this program along with the mitigation measures summarized below and included in the attached Action Plan, the project will comply with E&S requirements, namely the laws and regulations of Egypt, IFC’s Performance Standards on Social and Environmental Sustainability and the applicable IFC environmental, health and safety guidelines.
Performance Standard 1: Social and Environmental Assessment and Management Systems
To comply with Egyptian regulatory requirements and, as part of the project permitting process, ERC commissioned Cairo University’s Centre for Environmental Research and Studies to prepare a preliminary Environmental Impact Assessment (EIA) for the project. The preliminary EIA was granted approval by the Egyptian Environmental Affairs Agency (EEAA) in 2007.
In early 2008, ERC commissioned a multi-disciplinary team of Egyptian and international E&S specialists to upgrade the preliminary EIA and prepare a detailed Environmental and Social Impact Assessment (ESIA) for the project. The scope of the ESIA was extensive and the program of work conducted to support the assessment and the methodologies used were in accordance with international standards and the assessment guidelines of potential lenders to the project. This was confirmed by an independent environmental consultant (ERM) commissioned by the lenders to review the work carried out by ERC and its consultants.
The detailed ESIA was completed in December 2008 and is attached to this summary. The ESIA covered potential impacts and risks for the whole project life-cycle from site preparation and construction through operations, to the decommissioning of the facility. To support the assessment, wide ranging environmental and socio-economic baseline information in the project’s area of influence was gathered and recorded. As the project location is in a densely populated urban area, particular emphasis was placed on socio-economic baseline data which was gathered through extensive household interviews and questionnaires as well as during the community consultation events carried out to support the ESIA program. A health baseline survey was conducted in conjunction with the socio-economic baseline data gathering in order to establish a representative sample of the health status in the local communities already exposed to existing industrial activities in the area. The data will be used to determine the pre-project health baseline conditions in the local communities that may potentially be affected by the project. E&S impacts and risks were also considered in the context of the cumulative effects of the new facility in relation to the current activities underway in the industrial area, in particular, in relation to the operations at the existing CORC refinery. Cumulative impact assessment was supported by additional studies including air and noise dispersion modeling and transport impact assessment.
The ESIA contains a framework E&S management plan that sets out how E&S impacts and risks identified by the assessment will be managed and monitored through the project life-cycle. The framework plan outlines the management program to be further developed for the project through a project E&S Management System and is supported by early E&S planning in relation to the management of specific issues such as community relations, community safety, traffic management, waste management and E&S performance monitoring. The framework plan contains commitments to develop a comprehensive series of E&S policies to safeguard employees, the local communities and the environment. These include employment policies, an HSE policy and social policies and these, along with the full E&S management program, plans and procedures continue to be developed concurrent with the wider project development planning. The management program for construction will be in place prior to the start of construction work. A separate management program for operations will be developed before the start of ERC facility operations.
Key to the construction phase management program will be the management and monitoring of the EPC contractor by ERC. The responsibility for compliance with the ESIA findings including E&S management commitments and management planning are included in the EPC contract agreement. The EPC contractor is considerably experienced in the design and construction of similar projects internationally. They operate an environmental management system in accordance with the international ISO 14001 standard requirements and have developed a project HSE plan for the construction program. Alignment of the EPC contractor planning (and other project sub-contractor plans) with project requirements will be managed and monitored closely by ERC through a series of contractor control plans that detail the specific control and mitigation measures to be implemented by the contractor in accordance with their contractual obligations.
The EPC contractor will have an HSE organization consisting of a team of E&S professionals on site during the construction program. ERC will continue to hire personnel to deliver the key project functions as the project planning develops. This will include the recruitment of an HSE manager that will lead the ERC HSE organization through the construction program and that will also prepare the organization for operations. ERC will also use E&S support and expertise from the design and construction project management Contractor that will deploy on site HSE personnel. In relation to community issues, ERC has had a community relations team on site for two years working from a dedicated community relations office at the future ERC facility location. The team currently consists of one community relations manager and three community liaison officers. All have long-standing experience of the local area and the community liaison officers received extensive training from national and international social scientists with respect to their roles and responsibilities in relation to effective community engagement and communication techniques. In addition to their ongoing community engagement responsibilities, the team has been active in the identification of all potential project stakeholders in the local area and was central to the socio-economic data gathering for the baseline studies. The community relations team is also responsible for the identification of community needs and possible community development initiatives for ERC funding, the communication, follow-up and administration of ERC’s community grievance mechanism as well as support during employee induction training in matters relating to the local community. Complimentary and qualified community relations officers will be established in the construction contractor organization for the duration of the construction program. An ERC community relations team will remain in place for facility operations.
ERC is in the process of developing its employee induction and training plan to ensure that ERC policies and procedures in relation to E&S will be familiar to all site based personnel before construction starts.
Performance Standard 2: Labor and Working Conditions
Employment conditions for ERC and those of the project construction contractors will follow Egyptian labor laws including regulations with respect to working hours, overtime payments, vacation and other benefits and compensation policies. Employment regulations and requirements have been agreed between ERC and the EPC contractor and are included in the EPC contract.
Implementation of ERC’s Human Resources policy and procedures will be the responsibility of the ERC Human Resources manager. ERC employment planning will coordinate both company and contractor employment strategies and the development of ERC’s human resources policy and procedures are ongoing. Policies and procedures will include measures to ensure conformance with ILO core labor standards, promote a non-discriminatory and equal opportunities working environment and ensure safe working conditions for ERC and contractor employees. The policies and procedures will be shared with all employees as part of the new employee orientation process in relation to their specific responsibilities and also on their individual rights under their employment contract and the law. Individual conditions of employment will be communicated through a written contract to be issued at the time of employment. There will be no informal workers used and the minimum age for employment on the project will be 18 years old.
Collective bargaining is in place in Egypt where labor rights and labor organizations are governed by labor law. ERC will have a grievance procedure in place which will include processes for receiving applicable grievances in person, in writing and by phone. ERC’s contractors will be held responsible for their fair and appropriate handling of employee grievances and this will be subject to monitoring by ERC’s Human Resources manager.
An evaluation system will be in place to check labor laws are being followed by all sub-contractors to the project.
The number of employees required for operation of the ERC facility once constructed is approximately 700. During construction up to 10,000 people will be needed at peak times. ERC will work actively with their contractors to promote local access to project employment in both the construction and operational phases of the project. To do this ERC has established conditions to ensure fair and transparent recruitment procedures are used for all positions. Community employment targets have been set for the EPC contractor. Early indications suggest that the necessary technical skills required for the project construction program may be scarce in the communities closest to the project site. However, it is expected that about 90% of the construction workforce will be made up of Egyptian nationals with a target of 30% of these individuals to be sourced from the local area. During operations the workforce will be made up of greater than 95% Egyptian nationals. ERC has been working with local community NGO’s to develop training needs and vocational training programs for the local community that will assist the EPC contractor in achieving the community employment targets.
Whether or not a workers accommodation camp will be necessary for the construction program has not yet been defined. It is expected that the vast majority of the workforce will live in existing accommodation in the greater Cairo area and will commute to work, however there remains the possibility that a construction camp may be required to house foreign workers that will be involved during various stages of the construction program. If it is found that such a camp is necessary, ERC will commission a full ESIA for the camp facilities so that impacts and risks are appropriately identified and mitigation measures may be applied.
ERC will establish a health and safety (H&S) at work policy for the project along with a specific health and safety plan for the construction program, followed by a health and safety plan specific to operations.
The EPC contractor will be responsible for developing the detailed H&S procedures to be followed by the construction workforce. The EPC contractor will implement safe working practices at the construction site and will demonstrate compliance with policies and procedures through a monitoring program that will record and routinely report performance to ERC. As described above, the EPC contractor has developed an HSE plan for the construction program describing the processes that will be followed, the HSE personnel that will be on site and the procedures to be developed. Construction site H&S risks will be identified using job safety analysis procedures and other industry standard methods to define appropriate measures that will be adopted to avoid or eliminate defined hazards and risks. The contractor will conduct H&S induction training for all site personnel. Specific training will be provided as required to ensure that personnel have the necessary skills to identify hazards and carry out their work responsibilities safely. Procedures will include the development of records so that safety statistics can be monitored and tracked and that all incidents and near misses may be investigated and specific site procedures amended where necessary to prevent re-occurrence of any incidents.
Potential emergency scenarios will also be identified by ERC in conjunction with the EPC contractor and adequate emergency response arrangements will be developed for implementation. This will include provisions for a trained and equipped emergency response team to be ready to respond to emergency events. It is planned that the ERC facility will combine with the existing emergency organization currently in place at the Mostorod industrial site to provide an enhanced emergency response across the industrial area.
Health checks will be made on workers prior to starting work to establish fitness for work and regular worker health checks will continue through the construction program to monitor workers health. A health service facility will be provided at the project construction site.
Specific risks to the workforce (including the workforce in adjacent facilities) as a result of a major accident such as fire or explosion at the ERC facility was considered by a quantitative risk assessment. The results showed that risks while significant were typical of refinery operations and within manageable levels. The potential for escalation was also assessed and recommendations provided in relation to detailed layout design including blast loads on main process units.
H&S plans and procedures specific to the operation of the ERC facility will be developed as the construction program advances. As with the construction program the specific measures to be adopted, the H&S organization for operations and emergency response arrangements will be based on hazards and risks identified for the operational phase using standard industry techniques. Fire and life safety protection systems and control facilities will meet international standards for refining operations.
Performance Standard 3: Pollution Prevention and Abatement
The ERC facility design is based on Best Available Technology. The facility design has been specified with a high energy efficiency factor, the larger heaters for example have been selected with fuel efficiencies of approximately 90%.
Only natural gas, or gas produced in the facility processes (refinery gas), will be used as a fuel at the ERC facility. Sulfur will be removed from the refinery gas by the facility processes. The existing CORC refinery processes crude oils with an average sulfur content of up to 2% and a high yield of sulfur remains in the atmospheric residue that is the feedstock for the ERC plant. In the ERC processes sulfur will be converted to hydrogen sulfide which is removed from the gas stream and sent to the sulfur recovery unit where it is converted to elemental sulfur. The sweetened gas is then sent to the facility fuel gas system. In addition to the low sulfur content in the fuel gases, all heaters will be specified as low NOx burners and power will come from the national grid. As such all routine point source emissions from the ERC facility will meet Egyptian regulations, IFC guidelines for petroleum refining operations and EU standards. Stacks will be fitted with Continuous Emissions Monitoring (CEM) equipment that will monitor compliance. In addition, all the gas generated in the processes will be utilized. There will be no-routine steady-state flaring at the ERC facility. The flare will be used for maintenance and emergency flaring only.
While the ERC facility will meet international standards for emissions, the facility will also contribute to the cumulative emissions in the industrial area where the air shed is already significantly degraded. However, once operational the ERC facility will bring positive cumulative effects to the local air quality as the high sulfur atmospheric residue from the CORC refinery that will be used as the ERC facility feedstock will no longer be available to CORC as a heavy fuel oil for their heater burners. The CORC facility will therefore completely changeover to natural gas and refinery gas for fuel sources. An air dispersion model was run to predict the combined impacts of emissions from ERC facility and CORC refinery operations following the changeover and when compared to the emissions from the current CORC operations an improvement in air quality around the industrial zone was predicted with significant reductions in ground level concentrations in ambient air of SO2 found and also reductions in ambient NOx and particulate matter concentrations.
In addition to this, ERC has also agreed to provide equipment to the existing CORC refinery and PPC facilities that will result in environmental improvements. In relation to improved air emissions, this includes the provision of low NOx burners to the CORC refinery whenever new heater burners are requisitioned by CORC. The burner replacement program will be ongoing as part of the refinery’s routine maintenance and may result in the replacement of up to 200 burners. This will result in a gradual improvement in ambient NOx levels in the local area over time. ERC will also provide portable gas emission detection meters enabling CORC to establish a “Leak Detection and Repair Program” that will significantly reduce fugitive emissions at the CORC facility. Fugitive losses from the floating roof tanks at PPC will also be significantly reduced through the provision by ERC of double seals on these tanks.
An ambient air quality monitoring program, designed in accordance with international standards, will be implemented to routinely measure air quality in proximity to the refining operations. The monitoring program will begin during the early construction activities so that baseline conditions in the industrial area can be determined before the start-up of operations at the new ERC facility and expected improvements to the existing degraded airshed can be demonstrated.
Greenhouse gas contributions from the facility will be routinely monitored and recorded during operations. Based on design information currently available approximate annual emissions of CO2 at the ERC facility will be 700,000 tonnes. The commitment to BAT will provide higher energy efficiency and this will optimize conditions in relation to CO2 emissions. Once operational, the ERC project will also bring additional reductions in greenhouse gas contributions from the Mostorod complex as CORC converts from oil to gas for heater fuels as well as through the reduction of fugitive emissions from CORC and PPC.
Additional wider benefits from ERC in relation to improved air emissions will result from the low sulfur fuels that will be produced by the ERC facility through significant reductions in background SO2, particularly from road traffic. Overall it is estimated that ERC will remove over 90,000 tonnes of sulfur from the atmospheric residue feedstock each year which translates to an average reduction in SO2 emissions from combustion sources of over 500 tonnes every day.
The ERC facility has an inherently quiet design that will contribute to limited noise disturbance outside the site boundary. A noise model assessment carried out to support the ESIA program concluded that the cumulative noise contributions from the ERC facility when it is in operation were insignificant in relation to background noise with no increase over the existing background noise levels predicted at communities closest to the facility. A monitoring campaign at the facility boundaries will confirm the project compliance with Egyptian standards and IFC guidelines and if noise is found to exceed the predicted levels, additional mitigation measures for noise sources such as sound barriers would be provided. Noise monitoring will also be routinely carried out during the facility construction program and measures will be taken to minimize noise disturbance where necessary.
ERC facility water needs will include cooling water as well as process injection water and water for the facility boilers for steam generation. Raw water will be taken from the Ismailia Canal which runs adjacent to the facility using the existing water intake for the CORC refinery. In a change from the CORC refinery process, where water is used for cooling on a once-through basis, ERC will use a series of cooling water towers, circulation pumps and, chemical injection equipment to recycle the water as far as possible. The water once used for processing at ERC will then be sent to the CORC refinery for further use.
During operations, waste water from the ERC facility will include process waters and sanitary wastewaters. Sour water generated from the process will be sent to the ERC sour water stripper where acid gases including hydrogen sulfide will be removed and sent to the sulfur recovery unit. The stripped water along with other process waste water streams will be sent to ERC’s waste water treatment plant for treatment and final disposal. Sanitary wastewater will also be sent to the wastewater treatment plant. As part of the agreed environmental improvements to the CORC refinery, ERC will be providing upgrades to the existing waste water treatment plant at CORC by providing a tertiary treatment plant. The design specification for the waste water treatment has been based on achieving compliance with standards and the ESIA predicts that once treated the final effluent will meet Egyptian standards and IFC guidelines. ERC will provide on-stream waste water effluent monitoring equipment on the waste water effluent discharge to monitor compliance].
During construction there will be water required for sanitary needs and dust suppression as well as for hydrotesting of equipment and tanks before they go into operation. Construction water needs will also be sourced from the Ismailia canal but this is not expected to negatively affect this water source. The principal waste water during construction will be sanitary waters and treatment and disposal of these construction related sanitary waters has not yet been fully defined. The option selected will be in accordance with effluent standards and a monitoring program will be developed to monitor compliance.
During operations the facility will generate industrial hazardous and non-hazardous wastes as well as domestic wastes. A waste management plan specific to the control of wastes generated during operations will be developed before ERC facility operations begin. A preliminary waste management plan containing procedures to be followed during construction has been prepared and this will be further developed prior to the start of the construction activities. All wastes will be strictly controlled and the plan will define waste management procedures to be implemented so as to ensure storage, treatment and disposal of all wastes will be in accordance with national legislation. Only government approved facilities will be used for waste treatment and disposal and Chain-of-Custody and Duty of Care procedures will be employed for all waste streams leaving the site location.
The new ERC facility will be constructed south of the CORC refinery in an area currently occupied by CORC and three local fuel distribution companies. The existing CORC facilities at this site include a large fabrication workshop and apartments which will be demolished and the workshop relocated to a plot to the north of the CORC refinery. The fuel distribution facilities at the ERC location consist of above ground and underground storage tanks and associated piping as well as loading areas. These facilities will also be demolished and removed before ERC construction. They have been in operation for several years and as such the soils and groundwater in the area are contaminated. A study is underway to evaluate the quantity and extent of contamination as well as to design plans for remediation of the site that ERC will implement.
Groundwater monitoring wells are available to monitor groundwater quality at the facility and a program of testing will be developed during the construction program. Additional groundwater monitoring wells will be provided in the future as necessary.
There is a risk of the presence of asbestos containing materials or PCB laden transformer fluids at the facilities scheduled for demolition. This will be carefully monitored so that specific specialist measures for the handling and disposal of these materials may be implemented if they are found at the site location.
Performance Standard 4: Community Health, Safety and Security
The technology to be used for the ERC facility and the facility configuration and layout will be based on internationally accepted refinery practice. The technologies selected for the major process units are based on Best Available Technology which have been used in refineries for many years and have been proven to be safe. Additional safety measures will include hazard emissions detection; alarm systems; pressure relief devices; emergency isolation valves; and, shutdown equipment in accordance with international design codes.
In addition to the health and safety of ERC’s workforce the health and safety of the communities near to the ERC facility is of paramount importance to ERC. Major risks to the surrounding communities from the facility were assessed by quantitative risk assessment. The risk assessment considered worst-case scenarios such as explosion, fire and leaks based on the facility layout and technology to be used and found that, in the event of such an incident, off-site risks to the public were considered to be negligible. The risk assessment considered location of the ERC facilities in land to the north of the CORC refinery (which was the originally designated site) and in the plots to the south. In both cases risks were shown to be contained within the facility boundaries. However, following community consultations, it was decided to select the southern plot as the site for the new facility, as concerns were raised in relation to a perceived danger to a school and residences closest to the north plot. The north plot will be used by the three distribution companies and CORC for storage, workshops and administration buildings. The south plot is adjacent to agricultural land to the east that is used for university research and will act as an additional “buffer zone” to the communities. The conclusions of the quantitative risk assessment will be confirmed by an updated assessment to be carried out once the final design of the facility is better defined.
ERC’s emergency response planning for their activities will be developed in conjunction with CORC and PPC’s existing arrangements and will involve the local authorities. ERC will assist the local authorities in the preparation in the development of community preparedness planning in the event of a major accident. The ERC community relations team will also provide assistance to the local communities’ health providers in relation to emergency planning.
Construction activities will result in some community disturbance and nuisance, mainly in relation to noise, dust and project-related traffic. Noise will be continually monitored and mitigation measures applied where necessary which may include the erection of temporary noise barriers, the scheduling of the noisiest activities during daylight hours and the notification of residents prior to the specific activities. Dust suppression methods such as dampening down working areas will be employed. Traffic volumes to transport workers, equipment and materials to the construction site will be considerable. A detailed traffic impact assessment was conducted to establish the traffic volumes required and its impact in relation to the existing situation, the possible transportation routes and to define traffic management measures to be employed that will reduce impacts; these include infrastructure upgrades, optimum route selection and vehicle management as well as the staggering of working hours and optimum site access provisions. A preliminary traffic management plan has been developed and this will be updated for implementation prior to the construction program. Project–related vehicles will be modern and they will be continuously monitored to ensure their quality to minimize noise and vehicle emissions.
Hazardous materials will be safely transported to and from site using vehicles and procedures that are in accordance with international standards during both construction and operations. Storage of hazardous materials will also follow international standards whereby adequate, secure and fully contained storage facilities in separate designated areas will be used on site. Sulfur pellets will be stored in roofed silos on-site prior to transportation from site for sale.
Security arrangements for the project are not yet defined but will be developed in conjunction with the Egyptian authorities. Security procedures and training requirements will take into account the engagement principles and guidelines contained in the UN Code of Conduct for Law Enforcement Officials, the UN Basic Principles on the use of Force and Firearms by Law Enforcement Officials and the Voluntary Principles on Security and Human Rights.
PS5. Land Acquisition and Involuntary Resettlement
The ERC facility will be located south of the CORC refinery in land currently occupied by CORC and three fuel distribution companies. The permanent land area required for the ERC facility is around 200,000 square meters. As previously described, the original plot designated for the ERC facility was to the north of the CORC facility. The land in this north plot was purchased by ERC on a voluntary commercial basis from a ceramics company operating in land adjacent to the plot, but following community consultations the purchased plot was swapped for land to the south of the CORC facility where the ERC facility will be constructed. As referred to above, the existing facilities currently on the south plots will need to be demolished and this will involve demolishing three CORC apartment buildings that are currently used as residences by 20 CORC employees and their families (107 individuals). The families will be relocated to a new modern apartment block provided by ERC close to the industrial area. The existing apartments are in poor condition and the new apartments will provide improved living conditions and have better access to local amenities. A resettlement action plan has been prepared for this relocation that outlines the resettlement program in terms of process, schedule and approach and includes procedures to be implemented in relation to communications, grievances and the documentation required to record steps taken and verify the satisfactory completion of the relocation process. A relocation working group made up of representatives from the residents themselves, ERC and CORC will be set up to oversee the relocation process.
No resettlement will be necessary at the north plot.
In addition to the permanent land required for the Project facilities, it is also necessary for ERC to obtain temporary access to around 250,000 square meters of land for the construction contractor to use as a lay-down area for equipment and materials during the construction period. The lay-down area is located to the west of the ERC site on the opposite side of the Ismaila Canal and has been leased on a voluntary commercial basis. The area is currently vacant land used as an informal dump for mainly construction rubble and materials. A small strip of land in the middle of the area is used by a local farmer and ERC will divide the lay-down area into two so that the farmer can continue farming the land. In addition, local residents use a small path through the vacant lot for access. ERC will ensure that a path is provided in the design of the lay-down area so that access may continue during the construction program.
ERC commissioned extensive social investigations of the lay-down area to establish if informal waste collectors from the neighborhood would be economically displaced by the temporary use of the lay-down area during the construction program. The studies involved in-depth analysis of the informal waste-based livelihoods in Cairo, informal waste recycling, the waste supply chain and the valuation of wastes. The final study concluded that ERC’s use of the vacant land as a lay-down area will have no economic impact on the livelihood of informal waste collectors in the area.
