This is an early stage corporate investment in a holding company that will acquire, own, operate and maintain operational road assets in India. However, at this stage the pipeline of road assets/projects that the Road Holdco will invest in is not known. In such investments, IFC expects that the company will have in place an ESMS, including a screening procedure, to ensure that the portfolio of road assets that the Road Holdco acquires is operated, maintained, monitored and managed in accordance with IFC Performance Standards. While some of the individual operating road assets that the company will acquire may have limited risks and impacts, IFC is treating this investment as a category A project according to IFC’s Procedure for Environmental and Social Review of Projects since: (a) the sector in which the Road Holdco will operate, roads and highways, is potentially high risk; (b) the company does not have a known pipeline of projects and the risks and/or impacts associated with them are not known at this stage. However, the assets to be acquired may have impacts of varying significance on one or more aspects that are contemplated in the PSs 2 through 8; and (c) some of the road assets to be acquired, particularly those that have been in operation for less than one year, may have residual/balance land and right of way (RoW) acquisition underway with potential for economic and/or physical displacement, or impacts on indigenous peoples (IPs), natural habitat, or cultural heritage.

While all Performance Standards (PSs) are applicable to this Project, IFC’s due diligence indicates that  PS 6 ‘Biodiversity Conservation and Sustainable Management of Living Natural Resources and PS 7 ‘Indigenous Peoples’ are not considered applicable to the first identified investment prospect and as such are not covered below, it is likely that one or more of these PSs will be applicable to future sub-projects.

The SPV has 38 employees and more than 300 contract workers. The contract workers are employed through 10 different contractors for activities like security, RoW maintenance, road maintenance, emergency services and toll collection. The SPV has a human resource (HR) procedures manual, which is applicable to all the employees of the company. Post-acquisition, the SPV’s HR policies and procedures need to be upgraded to meet PS2 particularly through: policy commitment to equal opportunity, workforce protection, retrenchment and compliance with legal requirements; implementation of an employee grievance redress mechanism and enabling contract workers to access an effective grievance mechanism; strengthening of procedures for obtaining assurance on contractor compliance; improving worker accommodation; and enhanced occupational health and safety oversight, including training as also accident/incident investigation and corrective action procedures.

The Road Holdco is expected to have no more than 25 employees directly on its rolls. However, the company will have employees in the subsidiary companies in which the operating road assets will be housed. The toll collection and other operation and maintenance activities will likely be outsourced to specialized service providers. The company will develop and implement a human resource (HR) manual in accordance with PS2 provisions covering its employees and those in the subsidiary companies, including procedures relating to compliance with applicable labor laws, attendance and working hours, leaves, conduct and discipline, employee grievance redress, wage and compensation, training and development, equal opportunity and nondiscrimination,  collective bargaining, avoidance of harassment, working age, management of contractor/service provider, contractor/service provider compliance with statutory labor requirements, ensuring service provider/contractors’ employees access to a grievance mechanism and other terms of employment. The company will make available the HR manual through intranet to all employees. The company will also through provision of handbook and training programs communicate the HR policies to employees and workers that do not have access to intranet. The company will employ appropriately qualified HR professionals in the Road Holdco and each of the subsidiary companies. The company will implement appropriate audit procedures to obtain assurance on statutory compliance by subsidiary companies, including on compliance of the contractors/service providers with applicable labor laws.

The company will, as part of the ESMS, put in place operational control procedures in line with GIIP for activities with identified OHS risks. The ESMS will also include asset specific procedures which will be developed based on the ESDD findings. In addition, the ESMS will have: a health and safety (H&S) Policy; H&S objectives; roles and responsibility allocation; safety committee composition and procedures; safety induction and training procedures; contractor/service provider safety evaluation and control; asset safety investigations (daily/weekly); audits; accident investigation, reporting and corrective action procedures; and safe work procedures for various activities that exposes employees and contract workers to hazardous conditions. The safe work procedures will be backed by corresponding check lists for onsite physical situation checks. The company will: monitor and promote accident and incident prevention though use of lead and lag indicators; use of safety risk mitigation hierarchy in risk evaluation and accident prevention; have a work permits system; undertake mock drills and have an emergency response plan; and  have quarterly internal audits both by corporate and cross asset teams. The company will provide personal protective equipment (PPE) to all employees, including contractors’ labor and will also have a program to undertake periodic medical examination of workers. The Road Holdco will ensure availability of doctors or para-medical staff or access to emergency medical facilities and ambulance together with facilities for administering first aid. In case the company decides to set up employee or worker accommodation, it will in accordance with IFC Performance Standards, set out a set of guideline specifications for such accommodation.

The SPV does not have in place a structured O&M phase environment management and monitoring plan.  There is drain clogging and solid waste litter buildup in RoW and on the median. Post-acquisition, the company will require the SPV to put in place specific procedures in line with GIIP for: RoW and drain maintenance; management of storm water run-off; management of solid waste and litter; reuse of material in maintenance activities; management of hazardous and other waste;  control of emissions from hot mix plant, spill control and management of pollution risk from resurfacing activities. While the SPV is not undertaking pest management and pesticide application, given that these herbicides/pesticides may have to be used for RoW maintenance, the SPV will be required to put in place procedures for pest management, and use of pesticides and herbicides that meets GIIP. Further, the SPV will need to commence monitoring ambient noise levels and ambient air quality at sensitive receptors post-acquisition.

In case of Road Holdco assets where an ESMP is prepared pursuant to the ESDD findings, site specific pollution prevention and mitigation measures associated with such assets will be identified during the environmental assessment. However, for all other assets, the company will include in its ESMS procedures, practices aligned with GIIP, including WBG EHS Guidelines, for: equipment/material selection and operation to meet emission and energy efficiency norms; recycling and reuse of material in resurfacing; timing of maintenance activities to minimize pollution risk; management of emissions and discharges to air, water and soil from maintenance and rest areas; fugitive dust suppression and sweeping; provision of oil water separators as required; management of hazardous materials and wastes;  storm water runoff and drainage management; minimization of noise impact on communities resident in the vicinity; erosion control; sediment control measures in natural watercourse/river/stream; collection, treatment and disposal of wastes and wastewater from maintenance facilities, rest areas, food parks, parking lots and offices; collection, segregation and sale of recyclable solid waste; use of pesticides and herbicides; management of pest, weed and RoW maintenance; ambient condition norms; emissions norms for hot mix plants; and overall housekeeping. The company will contractually require and ensure that its contractors also adhere to the Road Holdco’s standards. The company will implement an appropriate monthly monitoring and reporting program, including monitoring of ambient air quality and noise levels, particularly at sensitive receptors.

The SPV’s stretch of road has since 2008 seen a significant increase in accidents both fatal and non-fatal. The ESDD has identified some potential risks that may be contributing to the increasing accident rate. These include: parking of several multi-axle vehicles in the carriageway even though a hard shoulder and truck laybye areas have been provided; wrong-side driving; inadequate signage at potential conflict points; and inadequate patrolling. While this list is only indicative, to comprehensively understand the root causes for the increasing accident rate, post-acquisition, the Road Holdco will require the SPV to undertake a detailed analysis of the entire stretch and implement appropriate measures based on the findings in consultation with the concessioning authority. The ESDD has also identified en masse cattle movement across the carriage way at some locations at specified times of the day as a risk. Post-acquisition, the company will require the SPV to implement an Emergency Response Plan and an automated information system like Highway Traffic Management System (HTMS). SOS services are not provided along the entire corridor except for emergency contact numbers are displayed at various locations. The number of underpasses provided is as per the Concession Agreement. Post-acquisition, the company will ensure that appropriate cross over provisions are made at crossing points in line with objectives of the permits. .   Safety signage and infrastructure related to cattle movement areas, pedestrian crossing areas, and in school children movement areas is currently inadequate. In addition to addressing the above identified areas for improvement, the SPV will be required to implement a community safety awareness campaign for the nearby communities. There are 60 security personnel deployed, some of them armed but formal procedures to screen security personnel at the time of their selection, their training and procedures to redress grievances/complaints against security personnel is not in place at the SPV. These will be put in place.  

The company will, as part of the ESMS, implement procedures to minimize community health and safety risks, including among other measures, ensuring safe corridors and crossings for pedestrian movement, other accident prevention measures like appropriate speed limits, speed control devices near crossings, appropriate signage, access controls, roadside lay byes, rest areas, real time warning systems and other good international industry practices. The company will deploy security personnel and will develop and implement 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 abusive  conduct and the use of fire arms; security incidents are recorded, investigated and corrective action implemented; bona fide complaints against security personnel are investigated and appropriate disciplinary actions are implemented; and there is a grievance mechanism for aggrieved members of community or employees or contract labor, in the event of a violation of the code for security personnel.

The Road Holdco ESMS will include procedures in accordance with PS 8 provisions to mitigate any negative impacts on cultural heritage. In cases where an ESMP is developed, it will include a chance find procedure, including for finds of archaeological (prehistoric), paleontological, historical, cultural, artistic, and religious values, as well as unique natural environmental features that embody cultural values, such as sacred groves.

There are two religious structures that lie along the alignment of the SPV service road at two separate locations. These have as yet not been relocated. Consequently, the service road has not been completed at these two locations. The SPV is in discussions with the concessioning authority for the service road stretch obstructed by these two religious structures be carved out of the road asset. Post-acquisition, if these two structures have to be relocated, these will be relocated in consultation with the affected communities or their representatives and the concessioning authority, in accordance with PS8. Further, there are also several other religious structures and an archaeologically important structure, parts of which lie within the RoW though well away from the carriageway. The Company will, in consultation with the concessioning authority, ensure that impacts if any on these are also mitigated in accordance with the PS8 provisions.