Key issues related to this investment include Enso’s capacity to: undertake adequate environmental and social impact assessments and manage the environmental, social, health and safety (ESHS) risks and impacts associated to the acquisition, engineering, construction and operation of hydropower projects and associated facilities (e.g. access road, transmission line), particularly those related to construction management, determination of ecological flow and biodiversity impact mitigation; and effectively consulting and engaging with project-affected communities.
The Sponsor will ensure that the proposed investment will, upon implementation of the specific agreed measures, comply with Albanian and IFC Performance Standards on Social and Environmental Sustainability, and relevant IFC Environmental, Health and Safety (EHS) Guidelines. The information about how the Sponsor will manage the ESHS risks and impacts
Performance Standard 1: Social and Environmental Assessment and Management Systems
Social and Environmental Policy: Enso’s Environmental Policy – Draft V201 states that (i) Enso commits to a sustainable and respectful development of its projects with the intention to create value for the project areas and their community members while minimizing the impact on the environment, (ii) Enso’s focus lies on protecting the natural resources by using them respectfully for the improvement of the energy supply in the individual region or country, and (iii) Enso takes care to meet not only the minimum local requirements, but to set benchmarks based on common practice and environmental standards, and furthermore, to safeguard these standards in all levels of its activities and participations. This forms a broad framework for Enso’s investment in hydropower projects.
Impact Identification: Enso has its internal environmental process manual as part of investment process handbook. This includes a list of key potential impacts of hydropower plants that Enso considers. As for direct impacts, Enso’s key potential impacts list include: water management (flood water, residual water, water quality, sanitation, irrigation, drinking water supply); operating supplies and consumables (hazardous materials); waste management including waste disposal; and transport (noise, exhaust emissions, land erosion, land compaction, oil waste). As for indirect impacts, Enso’s key impacts include: river morphology (bed load transportation, flood protection); storage basin morphology (siltation, flushing); habitat (fauna, flora); recreation area (tourism, agriculture).
As for the first identified hydropower project which will be developed by Enso – Lengarica Small Hydropower Plant (8.9MW), Enso reviewed the previous ESIA (Environmental and Social Impact Assessment) prepared prior to Enso’s involvement, and updated the ESIA in line with good international industry practice. This updated ESIA (June 2011) was conducted with support by Technical Assistance Facility of the Green for Growth Fund (GGF) (
http://www.ggf.lu/). GGF was established to promote energy efficiency and to reduce CO2 emissions in the targeted region (south eastern European countries including Albania) with support by international finance institutions including European Investment Bank, KfW, EBRD and IFC.
As for the second possible hydropower project to be developed by Enso, Enso is reviewing the existing ESIA (February 2009) prepared as part of the license application to meet Albanian requirements prior to Enso’s involvement, and plans to update the ESIA to ensure that the mitigation measures and quality of assessment be in line with good international industry practice, Enso’s E&S policy and IFC Performance Standards. Since it is a cascade of five small hydropower plants, cumulative impacts will be assessed in the updated ESIA (ESAP Action No. 5).
Management: Enso has a system to manage potential environmental and social risks and impacts in four different stages of hydropower project development – acquisition, engineering, construction and operation.
During “acquisition” stage, Enso participates in only projects that are fully environmentally and socially acceptable. Enso reviews ESIAs (Environmental and Social Impact Assessments) for completeness and E&S sustainability, and if determined necessary, an update will be prepared. Enso’s main environmental principles for acquisition stage include residual water, fish passing requirements, evaluation of special environmental zones or species, special protection valuable zones, and no-go evaluation of social impacts.
During “engineering” stage, Enso adopts all possible measures to minimize environmental impacts, and applies Enso principles when local requirements do not exist. Main principles include: to conduct initial environmental examinations, to define guaranteed water discharge, to adopt fish passing measures where necessary, to define a pilot fish if there is no local definition, to consider and protect special environmental zones or species, to update ESIA where necessary, to adopt and implement EMP (Environmental Management Plan) for construction and operational phases, to specify requirements for contractors on EHS, to conduct public consultation and provide information.
During “construction” stage, Enso supports SPVs (Special purpose vehicles) in monitoring the EHS measures undertaken by the general contractor. Every general contractor will be required to provide their EHS concept, which needs to be approved and confirmed by the project management of the SPV and Enso management. Enso will check the general contractor’s compliance with the EHS rules on a regular basis, and the general contractor will be required to provide regular reports to Enso management. Enso will ensure that EHS requirements, including the one required by ESIAs, are properly incorporated into EMPs (Environmental Management Plans) which will be included as part of the contracts with general contractors and subcontractors. Main principles for Construction stage include flood protection measures, measures for perpetuation of irrigation and drinking water, EMP as a basic requirement in the contracts, EHS management system for construction site, EHS reporting and continuous inspection by Enso, priority in hiring local workforce, and proper dissemination of project information to project affected communities.
During “operation” stage”, SPVs will conduct continuous monitoring and reporting on EHS issues on a regular basis and reports will be submitted to Enso. Each SPV will be required to define EHS needs within the yearly budgeting process and prepare EHS statement for the previous year. EHS yearly statement will contain statistics on production, accidents, incidents, EHS measures under taken, and improvements and outlooks for the coming years. Operating staff will be involved in the construction phase and trained on technical and EHS aspects to ensure smooth transition from construction to operational phase. Operating staff will be trained on a yearly basis. Main principles during Operation stage will include yearly EHS statement, EMP – reporting on a quarterly basis and by incident, measurement plan in line with yearly budgeting, and dissemination of project information to project affected communities.
Organization: Enso (or Enso Hydro GmbH) is an investment vehicle to develop hydropower projects in Albania, and will have a minimal staff. The technical team working for the Project is placed in the Enso GmbH entity (different from Enso Hydro GmbH) which is a management company working with Enso based on Management Agreement. At this moment, the managing director of Enso GmbH, and the head of technical back office of Enso GmbH are handing E&S issues related to potential hydropower projects. A local administration director of Enso GmbH is handling community relations. Many of the positions in the organizations will be filled as the projects evolve. Enso’s environmental process manual which is being finalized will clarify the responsibilities and reporting lines of officers in charge of E&S issues, including SPVs (ESAP Action No.1).
Monitoring and Reporting: During construction phase of projects, contractors will be required to provide regular EHS monitoring reports to SPVs, and SPVs will report to Enso management. During operational phase of projects, SPVs will monitor EHS performance of projects and report to Enso on a quarterly basis. SPVs will also prepare annual EHS statement containing statics on production, accidents, incidents, measures taken, improvements as well as outlook for the coming years.
Performance Standard 2: Labor and Working Conditions Human Resources Policy: Enso has limited number of officers (about 10 officers) at this moment, and they are based in Austria. As each individual hydropower project is determined to move forward, Enso will work with SPVs (Special purpose vehicles, still to be established) to implement projects. SPVs will manage contractors for both construction and operational phases. Enso will work with SPVs and relevant contractors to ensure that Albanian operations comply with not only the Albanian labor code but also Enso’s corporate HR Policy and practices. In its application to Albanian operations, Enso will ensure that their HR Policy and practices will include requirements of IFC’s performance Standard 2 – Labor and Working Conditions including HR policy, Working relationship, Working condition and terms of employment, Workers’ organizations, Non-discrimination and equal opportunity, Retrenchment, Grievance Mechanism. This is specified as ESAP No. 2.
Occupational Health and Safety: Enso’s environmental principles include its commitment to supporting health and safety management system on site. During construction of hydropower projects, Enso will support SPVs in monitoring of the health and safety measures and performance of each project’s general and subcontractors. Enso will also require health and safety monitoring reports and conducts inspection to ensure that workers are provided with a safety and healthy working conditions. During operation of projects, Enso will require each SPV to define health and safety needs during budgeting process, ensure that necessary health and safety training will be provided to workers on a yearly basis.
Enso has an instruction document for employees titled “Safety instruction” as part of its Employee Instruction Manual. This instruction document covers fire protection, on-site construction, use of machinery and equipment, and vehicles. Enso will apply this to workers of SPVs and relevant contractors. Enso has a document titled “Requirements for Contractors” environmental, health and safety requirements. Contractors will be required to prepare a health and safety plan describing site organization and responsibilities, contractor’s requirements and follow-up system for use of personal safety equipment, qualifications, certification and training of personnel for special duties such as lifting and welding, special safety regulations and procedures fully approved and certified by local authorities as well as dedicated to the project for handling, storage and safety measures for explosive material and blasting procedures. This requirement will be incorporated into contractors with general contractors and subcontractors. Performance Standard 3: Pollution Prevention and Abatement
As described under Performance Standard 1, Enso identified various environmental standards addressing key environmental potential risks of developing hydropower projects. Key areas of small scale hydropower projects for pollution prevention and abatement includes construction impact mitigation (excavation for tunnel construction, reuse of excavated soils and rocks, proper disposal of excess soils and rocks, measures to minimize river water contamination), management of hazardous materials and wastes, management of heavy equipment and transportation vehicles, measures to minimize land erosion. For each project, a detailed environmental management plan will be prepared to address potential impacts, mitigation measures, monitoring parameters and implementation responsibilities.
For the Enso’s first hydropower project (Lengarica 8.9MW), various specific mitigation measures are posed as part of Environmental Management Plan. For construction phase, these include removal of sewage and wastes, reuse of excavated material (stones and crushed stones) from tunnel construction, safe storage of explosives, covering of loaded trucks for dust minimization, use of non-peak traffic hours, keeping earth mass for terrain filling and flattening, planting trees for terrain systematization, protection walls to prevent landslides. For operation phase, use of equipment certified in EU to minimize noise emissions, collection of recyclables, appropriate storage of oils and other hazardous materials to minimize soil and water pollution risks, maintenance of stabilized residual flow in the river.
Lengarica project (8.9MW) is estimated to generate 30.27 GWh per year. Enso prepared a Project Idea Note (PIN) for Clean Development Mechanism application on April 6, 2011. This PIN describes that the preliminary (still not validated by an independent entity) results indicate a Combined Margin (CM) Grid Emission Factor (GEF) in the range of 0.1 to 0.2 tCO2/MWh, and based on a conservative assumed GEF of 0.1 tCO2/MWh, the Lengarica project is estimated to reduce 3,027 tCO2-equivalent per year.
Performance Standard 6: Biodiversity Conservation and Sustainable Natural Resources Management
Small scale hydropower projects are normally be developed in remote mountainous rural areas where projects may have impacts on biodiversity. As described under PS1 above, Enso manage selection, design and construction of projects to minimize impacts on biodiversity. With regard to Lengarica hydropower project, the updated ESIA identified that Lengarica river repsents an area with high biodiversity value. About 8 km portion of Lengarica river will have a reduced flow because of the water intake to generate electricity. Guaranteed minimum flow was selected as 20% of the minimum flow of the dry periods (0.2 m3/s). The Lengarica river has an annual average natural flow of 4.74 m3/s, with monthly average flow ranging from 0.9 m3/s to 7.86 m3/s. The updated ESIA states that “the residual water flow of 0.2 m3/s can protect different functions of the river, providing habitats for plants, wildlife and aquatic species. In line with good international industry practice, IFC Performance Standards, and Enso’s E&S policy, a robust biodiversity monitoring program will be implemented where necessary.
Updated ESIA for Lengarica hydropower project identified that the project area includes an existing hot spring (Benja Thermal Waters). Enso is designing the project to minimize impacts on the existing hot spring by adjusting the location of the power house. A hydrological study was conducted to assess project’s impacts on the existing hot spring. Further strengthened hydrological study was recommended by the updated ESIA and Enso will carry this out prior to IFC’s investment (ESAP No.4).
Lengarica river has a natural canyon of high natural scenic value. Enso designed the Lengarica project to avoid impacts on the canyon. The location of the regulator was adjusted to avoid impacts on the natural canyon.
At Mati river, fishing is conducted by local villagers. Updated EISA for Mati hydropower project will analyze biodiversity value of the project area and design the project to avoid or minimize project’s impacts.
Performance Standard 8: Cultural Heritage
At both Lengarica and Mati river areas, there exist ancient bridges of high historical value. Enso is fully aware of the need to protect those bridges. For Lengarica, Enso adjusted the location of the tunnel exit to avoid impacts on the ancient bridge. For Mati, Enso will also make necessary adjustments to the locations and design of the project’s structures to avoid impacts on the bridge. In line with good international industry practice, a chance find procedure will be developed to manage cultural heritage if found during construction activities.
