UT1 is one of a few remaining large hydropower projects to be developed in Nepal that is not in a sensitive or protected watershed. The project involves less than one hour of storage and will be operated in true run-of-river mode; there are no critically endangered or endangered species or habitats impacted, and land acquisition is limited to approximately 108 Hectares (ha) of mostly public land and circa 36 structures. Potential impacts include, but are not limited to: contribution of further fragmentation of the Trishuli river aquatic ecosystem and alteration of the natural river flow regime; land acquisition resulting in economic displacement of about 154 families and physical displacement of 12 families, mostly belonging to recognized Indigenous Peoples (IP) communities; social and environmental impacts associated with the expected influx of workers and job-seekers into the area during the construction phase; and potential direct and indirect impacts to the Langtang National Park (LNP), a nationally recognized protected area. Furthermore, as the basin is experiencing rapid hydropower development, with multiple hydropower projects already in operation and other planned for construction in the foreseeable future, there could be significant cumulative impacts that if unmitigated could result in the complete conversion of the Trishuli aquatic ecosystem. UT1 will be the facility with the highest generation capacity in the Trishuli watershed, and thus its potential contribution to the cumulative impacts could be significant. More detail on key risks and impacts is provided in the PS 1 section below. Based on these risks and impacts, the project has been categorized A according to IFC’s Policy on Environmental and Social Sustainability.                                                

   E&S Impact Assessment Process: The project was assessed in accordance with GoN’s requirements in the Regulatory ESIA that was submitted to the Ministry of Environment on 25th June 2012. In 2013-14, as a component of IFC InfraVentures participation, an international consulting firm was hired to conduct an environmental and social gap analysis of the Regulatory ESIA to identify areas of non-conformance with IFC Performance Standards (PS) and related World Bank Group Environmental, Health and Safety Guidelines. This gap analysis resulted in a Supplementary ESIA prepared to international standards in 2014 by a consortium composed of the Nepali E&S consulting firm NESS and the Canadian firm ESSA Technologies Ltd. The Regulatory ESIA and Supplementary ESIA studies assessed project alternatives and the likely direct and indirect impacts of project construction and operation on site and across the area of influence, cumulative impacts that the project will contribute to in the watershed, and the impacts of Associated Facilities. This report included the appendices: Complementary Social Baseline; Complementary Environmental Baseline; GIS Mapping and Spatial Analysis; rapid Cumulative Impact Assessment; Environmental Flows Assessment (preliminary); Construction Environmental and Social Management Plan (CESMP) and proposed environmental and social supplemental actions needed to close any remining gaps.

As an integral component of the supplemental actions in 2014, a Land Acquisition and Livelihood Restoration Plan (LALRP) was prepared by a consortium of NESS and international consulting firm ERM in early 2015, incorporating a review of the land acquisition process up to that date, and proposing actions to close gaps (including retrospective assessment and closure). This effort also included an assessment of the impacts on Indigenous Peoples (IP) and applicability of the Free Prior and Informed Consent (FPIC) requirement under PS7; and the preparation of Stakeholder Engagement and Community Consultation and Communication Management Plan (SEP) including a Grievance Mechanism, and an Indigenous Peoples Plan (IPP).

However, the 2015 earthquake had devastating impacts in the Project’s area of influence, resulting on most of the Project Affected Peoples (PAP) being resettled to temporary camps for earthquake displaced people, significantly changing the social landscape, and making it virtually impossible to separate Project-specific social impacts and related compensating measures from humanitarian help and post-earthquake relief and reconstruction efforts. The impact and the mitigation measures proposed and implemented prior to the earthquake (both at individual and community level) lost relevance due to the devastating impacts of the earthquake. To understand the changes and the overall new social context, upon the request and with guidance from IFC, the Company commissioned ERM to conduct an updated gap assessment. This gap assessment included a review of all project documents, a 10-day site visit and extensive stakeholder consultations and provided detailed suggestions and recommendations to update the social baseline as well as the LALRP, SEP, and IPP.

Finally, at the end of 2017 and once the key project documents were either signed or solidly under way (PDA and PPA), NWEDC selected ERM to consolidate all prior impact assessments and supplemental and complementary studies into a single Non-Technical ESIA Report (Updated ESIA), along with an updated Environmental and Social Management System (ESMS) Framework and Environmental and Social Management and Monitoring Plans (ESMMP) Framework, including a Social Impact Management Framework. These documents were subjected to an Early Disclosure in 1Q2018 and finalized after extensive consultation with a diverse group of stakeholders and are now disclosed with this ESRS in their final versions.

Key ESHS impacts and risks identified in the assessment process, and their respective mitigation measure, are discussed in more detail in the relevant sections of this ESRS but generally include: economic and physical displacement of members of a nationally recognized Indigenous Peoples group; potential impacts to the Langtang National Park (LNP) due to limited conversion of forest land in its buffer zone; conversion of natural riparian and aquatic habitat in the 10.7-km dewatered section of the Trishuli River; impacts on local communities due to large-scale labor influx during project construction; excavation and disposal of soil and rock cuttings; occupational and community health and safety risks associated with construction and excavation works; and potential cumulative impacts due to hydropower development in the Trishuli River watershed.

Cumulative Impacts: To date, there are six hydropower projects operating in the Trishuli River basin, ranging from 1.6 to 24 MW, and 18 others with approved Construction Licensed, ranging from 2 to 216 MW. Of the latter group, UT1 is the only with financing from Development Finance Institutions and it will be the facility with the highest weir and greatest generation capacity in the Trishuli watershed and could thus significantly contribute to cumulative impacts, in particular the fragmentation of the river’s aquatic ecosystem and alteration of stream/sediment flows. The supplementary ESIA included a rapid Cumulative Impact Assessment (RCIA) following good international practice. After an extensive stakeholder engagement process, this assessment identified the key Valued Environmental and Social Components (VEC) that will likely be affected by multiple cascading hydropower project in the same river, namely habitat fragmentation of the Trihsuli river, impairing upstream migration of snow trout to their spawning grounds, alteration of natural river flow dynamics and increased / competing pressures on water uses therefrom, and modification of the Trishuli natural sediment load patterns. This RCIA proposed specific management measures to be included within UT1’s environmental and social management and monitoring plan (ESMMP) to mitigate the Project’s contribution to the key potential cumulative impacts of selected VECs. The sections that follow, make reference to the proposed measures UT1 designed to manage its contributions to potential cumulative impacts.

Furthermore, as stated above, the IFC advisory service team has engaged the Company, the GoN, other hydropower existing or future developers in the Trishuli Watershed, universities, and civil society organizations as well as a team of local and international consultants, in a cumulative impact assessment and management process at the Trishuli watershed level, with the ultimate goal of consolidating a multi-stakeholder platform to manage the cumulative impacts and risks associated with multiple and cascading hydropower projects existing or planned for the Trishuli River Basin. This effort has involved extensive stakeholder consultation with stakeholder in the definition of the VECs, and collection of additional seasonal hydrological, hydraulic, hydro-morphological and ecological data (including environmental DNA -eDNA) along the river. This data will be used to prepare a decision-making tool based on DRIFT (Downstream Response to Impose Flow Transformations) that will be the key instrument guiding the management and trade-off analysis of this still-forming multi-stakeholder platform. NWEDC is committed to actively participate in the assessment and coordinated management of cumulative impacts at the watershed level (ESAP Action #7). IFC Sustainable Hydro Advisory activities on the consolidation of this multi-stakeholder platform have continued. The most recent stakeholder meeting took place in early December 2018 and resulted in the overall agreement on the updated CIA and the proposed management strategy. The Executive Summary of the updated CIA is included in the ESIA Addenda (2019) and the complete report will be disclosed in the IFC Hydro Advisory site, once it has been formally shared with different stakeholders in its final form. (https://www.ifc.org/wps/wcm/connect/Industry_EXT_Content/IFC_External_Corporate_Site/Hydro+Advisory)

Management Plans and Programs: As an integral part of the Environmental and Social Management System prepared as part of the ESIA process, NWEDC has an ESHS Policy compliant with GIIP and PS1. In addition, the Company has developed a number of procedures and management plans aimed at addressing the potential ESHS impacts and risks of the Project. The Company has enhanced its ESMS framework for alignment with IFC’s Performance Standards (PS), in a manner that is commensurate with the potential risks and impacts of the Project. The ESMS includes management plans and procedures to address existing and future ESHS impacts and risks from the Project and assigns clear responsibilities to the EPC and/or NWEDC ESHS Management Unit.  The Regulatory ESIA, Supplementary ESIA, and Update ESIA and ESIA Addenda contain environmental, social, management and monitoring plans (ESMMPs) to be adopted by NWEDC during the construction and operation phases. These ESMMPs cover all the relevant aspects of the PSs, and include, but are not limited to management plans for: Occupational Health & Safety; Worker Accommodations; Employee Code of Conduct; Spoil Management and Disposal; Clearing, Grading Underground Excavation; Sediment and Erosion Control; Stockpiles, Quarries, and Borrow Pit; Rock Cutting; Water Quality, Solid and Hazardous Waste and Wastewater; Materials Handling and Storage; Blasting and Explosives; Spill Prevention and Response; Emergency Preparedness and Response; Site Safety and Security; Labour Influx; and Biodiversity Management Plan (BMP). These ESMMPs will be supported by a series of cross cutting plans aimed at managing identified social impacts and risks, which have been compiled under a single Social Management Framework and include, but are not limited to: Community Engagement and Grievance Redressal Mechanism Plan; Land Acquisition and Livelihood Restoration Plan (LALRP); Local Benefits Sharing Plan; Nepal Employment and Skill Training; Indigenous Peoples Plan (IPP) and Cultural Heritage Management Plan.

Sponsor ESHS Capacity and Organizational Structure: The sponsors have been very open to and supportive of the Lenders’ ESHS recommendations to date. NWEDC has a small ESHS Management Unit in place comprising a Senior Manager and four ESHS staff, which will be expanded once the project advances into the main construction phase. Similarly, the EPC has also a small dedicated ESHS team composed of three professionals to be permanently based on site. Even though these teams are committed, they lack experience on large hydropower projects being developed to international E&S standards. Therefore, NWEDC will bring a Director-level professional familiar with IFC/WB PS, ADB Safeguards requirements, and ESHS good international industry practices, to head a Sustainability and External Relations unit that would “own” and manage environmental, social, labor and human resources, occupational health and safety and external communications at the NWEDC / owners level (ESAP Action #1). This Director will be supported by international consulting firms and will develop an ESHS Compliance Registry (ESAP Action #2) covering all the different local, ESIA and Lenders’ requirements. Furthermore, this Director will also ensure that all the components of the Construction ESMMPs (ESAP Action # 3) and Operational ESMMPs (ESAP Action #4) that are under the direct or shared responsibility of NWEDC are developed in further detail and included within the Company’s ESMS. Since early construction has already started, and upon the request from the Lenders, the Company developed an “abbreviated preconstruction works” CESMMP, tailored to the activities expected to be underway prior to main construction works start.

The Company also include comprehensive and detailed ESHS clauses in the EPC contract, to ensure that EPC contractor understands and budgets / staff appropriately. These clauses include, but are not limited  to: (i) fish ladder and eflow valves are included as integral components of the headworks, (ii) CESMMP matches the one in the ESIA – e.g. erosion and pollution control, process and domestic wastewater, solid and hazardous waste treatment, dust and noise, opening of new RoWs; (iii) workers Code of Conduct, (iv) OHS, HR/labor laws and local hiring practices, (v) workers accommodations; (vi) community liaisons & grievance redress mechanism, among others. These detailed ESHS contractual clauses will allow the Company to legally enforce compliance of the EPC and O&M contractors with the CESMMP and OESMMP, respectively. As an integral component of its ESMS, the Company has agreed that the Owner’s Engineer will have ESHS personnel permanently on site to monitor EPC’s compliance with the ESHS contractual requirements and payments will be subjected to ESHS clearances from the Owner’s Engineer as well as from NWEDC’s ESHS Senior Manager.

Monitoring and Review: The CESMMP and OESMMP that are annexes to the Updated ESIA disclosed together with this ESRS, provide extensive details on resource / emission / discharges, KPI / parameter, frequency, and responsible entity to monitor and report compliance with mitigation measures outlined in these management plans. NWEDC ESHS Management Unit staff as well as Owner’s Engineer ESHS staff will undertake regular on-site monitoring and associated record keeping, including supervision of ESHS compliance from EPC and subcontractors. Additionally, multiple independent external environmental and social supervision activities are expected. The Lenders will continue to be supported by the IESC which will supervise Project compliance with  ESHS requirements and ESAP on regular basis through construction, commissioning, and operations until the loan is fully paid. Furthermore, the GoN has also required the constitution of a panel of expert or Project Review Panel (PRP) which includes environmental, social, and dam safety internationally recognized members that will serve as supervisor and compliance advisor on behalf of the GoN.                                                

  Project construction is planned to last five years and is expected to employ approximately 1,090 skilled, semi-skilled, and unskilled workers during peak construction. The actual number of workers on site will vary, ranging from around 500 persons in the first six months of construction, to less than 150 persons in the last six months. The EPC contractor (DKJV) will supervise seven construction works packages, making use of an as-yet unspecified number of local and foreign sub-contractors. The project commissioned a skills mapping exercise to identify the range of locally available skills. Based on project skill requirements and the present skills level of local communities, it is expected that most of the skilled workforce will come from other districts of Nepal and expatriates. It is expected that many unskilled and semi-skilled workers will be drawn from the villages located within or close to the project footprint (subject to the availability of suitable candidates), prioritizing members of project affected families. During operations, the project is expected to have a staff complement of 72 employees.

Human Resources Policies and Procedures: NWEDC has included a requirement in its EPC and O&M contracts for key contractors to develop Human Resources (HR) policies and procedures governing labor and working conditions, consistent with Nepali and lender requirements. All employees and contracted workers will be issued with individual contracts of employment detailing conditions of service. Temporary and permanent accommodation will be provided by NWEDC and its contractors in a manner consistent with a Workers Accommodation Plan that will cover key aspects of workers accommodation per the IFC-EBRD guidance note (August 2009) on worker accommodation processes and standards (ESAP Action #8). Construction workers who are not locally based will be housed in one of three worker accommodation camp sites spread across the project footprint. The location of these camps has shifted following the 2015 earthquake to avoid locations potentially at risk from earthquake- or rain-induced landslides. During operations, NWEDC will accommodate all staff on site.

Workers Organizations, Non-Discrimination & Equal Opportunity and Grievance Mechanism: As this is a greenfield project there are currently no workers’ organizations in NWEDC. It is unlikely that such organizations will become active until the operations phase of the project, as construction will be undertaken by a fluctuating contractor-dominated workforce. Nonetheless, NWEDC and its EPC and O&M contractors will not deter workers from joining workers’ organizations at any stage, should they choose to do so (as will be explicitly noted in the Human Resource policies and procedures of the company and EPC). NWEDC is committed to non-discrimination and equal opportunity and this will be reflected in the project’s HR policy and associated procedures. The company will not make use of child or forced labor, in accordance with Nepali law and Lenders’ requirements, and will ensure that its contractors do not either, as indicated in the project ESMMP and relevant sections of the EPC and O&M contracts. As required in the ESMMP, NWEDC will ensure that the EPC contractor establishes a worker grievance mechanism which will be made available to all project personnel (ESAP Action #9). This mechanism will be explained to all workers as part of their formal induction, including details of how the mechanism works and how grievances can be made. Worker grievance records will be retained at head office for future analysis and monitoring by government authorities and/or Lenders.

Occupational Health & Safety: The project CESMMP specifies the requirements of a worker health & safety management plan to be prepared by the EPC contractor to address the health and safety of construction workers, project staff and nearby communities. The outline CESMMP lays out the content for this plan, including sections dedicated to high risk activities such as tunneling, blasting and working in or over the river course. The EPC contractor will be responsible for preparing a Landslide Stabilization Plan that assesses the geological hazards of constructing the access road – the primary cut-and-fill activity for the project - which includes measures for controlled blasting, temporary and permanent slope stabilization, and other appropriate measures to ensure the health and safety of construction workers and nearby communities.The CESMMP requires the EPC contractor to avoid accidents through requirements including controls over construction site work safety, blasting, traffic management, and other risks posed by project works, and covers related matters such as the use of appropriate personal protective equipment (PPE). These requirements have been incorporated into the EPC and O&M contracts. The EPC and O&M contractors will also be contractually required to monitor and enforce project health and safety plans, and to supply key personnel for the management of worker health and safety risks. Given the worker safety risks associated with large-scale hydropower construction activities in this remote, landslide-prone area and in a regional context where health and safety matters are frequently not prioritized by local contractors, NWEDC will commission periodic independent audit of contractor health and safety performance. These audits will start within the first year of mainstream project construction activities and should continue at least once a year and ensure compliance against Nepalese and international requirements (ESAP Action #10 and ensure that key recommendations are implemented.

A permit to work system will be established to ensure that potentially hazardous work is carried out safely. All workers will be provided with basic health and safety training during induction, including use of appropriate PPE. Additional job-specific training will be given on how to conduct tasks with specific health and safety risks such as welding, use and storage of explosives and hazardous chemicals, working with live equipment, tunneling, electromagnetic field safety measures, working at height, working on or near water, crossing water courses and road safety. NWEDC’s oversight teams, including Owner’s Engineer, will ensure that the EPC and O&M contractors maintain a central record of occupational incidents, accidents and diseases and that corrective measures are taken to prevent recurrence. Each site will have a Foreman employed by the contractor who will be qualified in OHS and first aid and who will be responsible for management of all health and safety issues on their site. The Foreman will carry out daily site walkovers to identify hazards and take action based on their findings. They will report incidents and accidents to the Owner’s Engineer and NWEDC’s ESHS Senior Manager. NWEDC’s ESHS Senior Manager will also be mandated to carry out monitoring of sites and workers’ accommodation and hold site meetings with Foremen to discuss health and safety improvements, compliance with PPE requirements and other OHS issues as they arise.

Workers Engaged by Third Parties: As noted above, the main construction contract comprises seven work packages, which will be overseen by EPC contractor DKJV. The EPC contract clearly specifies that DKJV is responsible for ensuring all project E&S requirements are met by its subcontractors and ensuring that “flow down” language is included in all subcontracts it signs. Key requirements passed down/through include, for example: having a suitable Human Resources policy and procedures, issuing individual worker contracts stipulating conditions of service, developing a worker accommodation plan in accordance with IFC guidance, establishing a worker grievance mechanism and establishing a code of conduct, worker health and safety plan and an emergency preparedness and response plan. Contractors and sub-contractors will be made aware of their role in ensuring the project meets both Nepali and Lenders’ standards on labor and working conditions. One important requirement is that the EPC contractor develops and implements a Worker Code of Conduct (ESAP Action #11) that emphasizes the importance of appropriate behavior, respect for local communities and customs, and compliance with all Nepalese and Lenders’ requirements. Each employee/worker shall adhere to the Code of Conduct, once she/he has signed the contract to work for the project. The Code of Conduct as well as all other CESMMP requirements will also apply to all subcontractors and will need to be referenced by the EPC contractor in all subcontracts; it will be made available to local communities at the information centers to be established for the project and will at a minimum address the key topics outlined in the Construction ESMMP.  

   Water Quality: Workers’ facilities and accommodations will generate black and grey wastewater. Other liquid wastes from the Project will include runoff from work areas (e.g. batch plant drainage typically has high pH) and tunnel drilling process water (e.g. water used to cool the drill bit and intercepted groundwater are typically very high in suspended sediments). The Project may also impact water quality by land disturbance; spoil and muck disposal; rock cuttings and seepage from tunnel construction, solid and hazardous material use/waste disposal; wastewater discharges; and increase in water temperatures at the reservoir and the dewatered reach. The EPC contractor will be responsible for preparing and implementing a Wastewater Management Plan and a Water Quality Management Plan, which per the CESMMP include: provision of on-site wastewater treatment plant or community septic system for domestic wastewaters for the construction and operational workforce; provision of storm-water and tunnel drilling water runoff settling ponds, use of oil/water separators, and ensure appropriated treatment prior to discharge. Rock cuttings may be potentially acid generating (PAG), although based on the geology of the project area, as characterized by the drill cores collected to date, PAG rock is not anticipated. A Rock Cuttings Management Plan is included in the CESMMP, under the responsibility of the EPC to assure any risk of acid rock drainage is managed in compliance with GIIP. This plan will be used to evaluate the geologic formation through which the tunnelling will occur for the potential presence of sulphide and other PAG rock, pro-active testing of the rock to confirm the lack of PAG minerals, and will have a plan in place to manage any PAG rock that may be encountered.

Solid Waste and Hazardous Materials and Waste Management: The project will require the excavation of approximately 2.7 million cubic metres of rock and soil material. Approximately 0.3 million cubic meters will be reused and/or replaced, but ultimately the project will require to dispose approximately 2.4 million cubic metres of rock cuttings, spoil, and muck in a total of 9 spoil disposal areas identified in the ESIA.  Most of these spoil disposal areas are located adjacent to the Trishuli River to avoid steep slopes and impacts to forest and agricultural land. Furthermore, construction activities will use a variety of hazardous materials, including petroleum, oils, and lubricants, paints, cleaning materials, and explosives, and generate a variety of solid and hazardous wastes (e.g. debris, waste cement, packing materials, iron bars, waste oil) and domestic (e.g. food wastes) sources. Per the CESMMP, the EPC contractor will be responsible for preparing and implementing a Spoil Handling and Disposal Management Plan which requires careful siting of the spoil disposal areas to ensure the sites are located in areas that are not susceptible to erosion or future landslides, are outside the floodplains, and will avoid impacting any existing irrigation ditches. Similarly, per the CESMMP, the EPC contractor is also required to prepare and implement a Spill Prevention and Response Management Plan, and Solid and Hazardous Material and Waste Management Plan, which will define measures to properly handle, store, reuse, recycle, and/or properly dispose any of the generated wastes.

Sediment Management and Erosion Control: The Trishuli River is glacier/snow fed, resulting in a cold turbid water conditions, especially during the monsoon season. Hydropower projects can cause sediments to accumulate upstream of the dam, which deprives the diversion reach and tailrace of sediment. This can sometimes result in channel erosion downstream of a dam as the river attempts to re-establish its natural equilibrium. Given the design and expected operation of UT1, the overall effect of the project on sediment transport is likely only to slightly magnify the natural fluctuations in sediment movement and turbidity between the monsoon and dry seasons, which is characterized by long periods between large sediment transport events occurring during monsoon. In order to manage this risk, NWEDC will develop a Sediment Management Plan, which will provide details on the procedures and timing for flushing sediments from the de-sander and the reservoir to maintain the aquatic integrity of the Trishuli River (ESAP Action #12). Effective sediment management is especially critical for the diversion reach as it will experience both a reduction in flow (i.e., a reduction in sediment transport capacity) as well as receive the sediment flushed from the reservoir and the de-sander. The Sediment Management Plan will specifically limit flushing of the de-sander to periods when spillage is occurring to supplement the sediment transport capacity of the eflow. Based on the particle size of the sediment in the de-sander, the O&M Contractor will calculate the flow in the diversion reach required to transport the sediment through the diversion reach, and de-sander flushing will only be allowed when flows exceed this critical flow threshold. Sediment in the reservoir will be flushed by opening the gates. Reservoir flushing will only occur during the monsoon season when sediment loads are the highest, but also when flows should be sufficient to transport most of the accumulated reservoir sediment through the diversion reach. 

The project will require approximately 120,000 cubic metres of aggregate material for construction purposes, which will be obtained from four quarry/borrow pits in the project area. These aggregate materials will be stockpiled at various locations within the construction area. These land and water construction activities have the potential to cause erosion and sedimentation and increase turbidity in the Trishuli River. The EPC contractor is responsible for developing and implementing the Clearing, Grading, Underground Excavation, and Sediment and Erosion Control Management Plan, the Landslide and Slope Stabilization Management Plan, a Stockpiles, Quarries and Borrow Pits Management Plan, and a Water Quality Management Plan which identify measures to control runoff, prevent erosion, and retain fine sediments onsite; remove and retain any topsoil for use in rehabilitation at closure; provide retaining walls/gabions; provide appropriate erosion and sediment control, including routing drainage through sediment traps prior to release; prohibit the disposal of spoils and mucks at unauthorised locations; conduct regular training and awareness programmes for drivers transporting muck and spoil to designated site; stabilize, revegetate, and rehabilitate the spoil disposal sites once capacity is reached using stockpiled topsoil to the extent possible.

Air Quality: Project construction will involve use of construction vehicles for vegetation clearing, excavation, grading, drilling, blasting, and other activities; and various construction facilities (e.g. quarries, crushers, and batching plants). In addition, diesel generators will be used to provide power for the worker camps and other construction facilities. These will all result in the release of fugitive dust as well as vehicular and power generation emissions. Landscape conditions (e.g. the gorge) will tend to limit the dispersion of fugitive dust, the duration of the impact will be temporary (i.e. construction period), and no communities are expected to be significantly affected, with the exception of Mailung which is the community closest to the access road. The project is located in an area with generally good air quality, but is located adjacent to a national park, so any increase in pollution levels will be minimized to the extent feasible in accordance with the WBG Environmental, Health, and Safety Guidelines as defined in the proposed management of fugitive dust and vehicular/power emissions which are under the responsibility of the EPC contractor, and which are both covered in the Air Quality Management Plan, of the CESMMP.

Fugitive dust emission will be controlled by spraying water as needed on dirt roads, cut area, soil stockpiles or fill material; placing gravel on access roads near communities to reduce generation of fugitive dust; covering materials during transport; enforcing appropriate speed limits within construction site and along dirt roads near communities; fitting concrete batching plants, asphalt plants, and mixing stations with approved dust control devices; using high-efficiency dust suppression system for crushers operated at the site; and stabilizing disturbed areas after construction with vegetation or other materials.

Vehicular use and temporary power generation will generate carbon monoxide (CO), sulphur dioxide, nitrogen dioxide, and particulate matter (PM10 and PM2.5). None of these point or fugitive sources of emissions will meet the criteria to be considered significant (see WBG Environmental, Health, and Safety Guidelines). These emissions will not result in the exceedance of international air quality standards (e.g. World Health Organization Ambient Air Quality Guidelines) and will be limited in duration to the construction phase. The EPC Contractor will be responsible for controlling vehicular and power emissions by providing regular maintenance of vehicles in accordance with manufacturer specifications; and reducing vehicle idling time to a minimum.

Climate Change: The project is not expected to produce significant quantities of GHGs (exceeding 100,000 tCO2eq/yr) because emission sources are limited and the relatively small footprint of the project (e.g. only 2.1-hectare reservoir). During construction annual GHG emissions from the 5MW diesel generator for the project will only total approximately 12,000 tCO2eq/yr. Similarly, based on calculations outlined in the ESIA the amount of GHG generated for concrete production is negligible.

On the other hand, once operational, the project will be generating an estimated 1,427 gigawatt hours of clean renewable energy annually, which will help offset climate change by avoiding the GHG emissions associated with the equivalent amount of power generated from a fossil-fuel-fired power plant. As a result, the Project’s net GHG emissions are estimated to be around 420,000 tCO2eq/ year.

Climate Risk Assessment (CRA): NWEDC performed climate change risk assessment for the project, which identified that the greater climate change risks to UT1 are: increase in extreme streamflows, including floods; changes to rain, snow and snow melt; changes in streamflow and effects on sedimentation and landslides; and increase mosquito transmitted disease risks. Increases in extreme streamflows could jeopardize the physical integrity of the headworks and decreases in low season flows could jeopardize the financial viability of the project. Even though climate risk assessment is still an evolving science, and there are many uncertainties associated with this analysis, the CRA determined that the project risks to climate change impacts are low, and concluded that the weir and foundation designs assuming 10,000 year floods of 3,779 m3/s was quite conservative and weir and foundation design are “climate proof”.  The study seems to suggest that expected future temperature increases of <3 degrees Celsius (°C) could result in increased streamflow as a result of increased snow/glacier melt and greater rainfall, which would allow for greater power generation during low flow months than is currently anticipated.                                                

   Key community health, safety and security risks associated with this project include dam and road safety considerations (especially given the post-earthquake status of the project area), slope stability, blasting impacts, traffic safety and various matters related to the likely influx of workers, job-seekers and camp followers into the project area. The baseline study conducted indicated that the project site and surrounding area are seismically active with intense micro-seismicity activities and are also located in a steep landslide-prone area where the occurrences of landslides was accelerated by the 2015 earthquake. Slopes which have loose exposed rocks due to landslides pose ongoing risk, especially during periods of heavy monsoon rains. The area was severely damaged by the latest earthquake in 2015 and its aftershocks, leading to both community and construction worker fatalities in the project vicinity. Considering the above, various project structures including the dam structure, tunnels and powerhouse have been designed to withstand a maximum credible earthquake, and several key components (e.g. powerhouse, worker accommodation camp sites) were relocated and/or moved underground.

Infrastructure and equipment design and safety: The weir structure will be 101 m across and 29.5 m high, from river bed to the crest. Although the area downstream of the project is not densely inhabited and mostly composed of agricultural lands or community managed forests, the project has performed a standard dam break study and has committed to constructing the dam in accordance to best industry practices. The community safety risk associated with the sudden release of water from the project impoundment is considered to be low as the project will be operated in a true run-of-river mode and as a result only has a small reservoir (2.1 ha) with a low water volume. In addition, there are no low-lying settlements located downstream which might be susceptible to potential dam failure impacts. After the 2015 earthquake, project design was modified to take into account better defined seismic hazards. For example, the Independent Engineer specified a Maximum Credible Earthquake of 0.83 g, for a 3,000-year recurrence period based on a Deterministic Seismic Hazard Analysis, changes in landscape conditions (e.g. landslides), and to optimise engineering aspects of the dam. Also, the ESIA and Climate Risk Assessment note that even though Glacier Lake Outburst Flood (GLOF) risks in the basin are low, an increase in temperature over the years may increase the likelihood of such events. The dam design has also been upgraded to withstand a 10,000-year flood event with a combination of spillway gates and an emergency spillway overflow. The revised dam design will be reviewed by both the Independent Engineer and a project Panel of Experts required under Nepali regulations. NWEDC is also requiring the EPC and O&M contractors to prepare and implement detailed Emergency Preparedness and Response Plans for the construction and operations phases, respectively, in consultation with potentially affected communities downstream. Indicative content for these plans has been incorporated into the outline CESMMP disclosed alongside this review summary. During project operations, NWEDC will be required to have the structural integrity of the dam inspected regularly by qualified experts (ESAP Action #13) and at a minimum every 5 years. Additionally, it must be highlighted that the World Bank completed a technical cooperation with the GoN to develop a Nepal Dam Safety guidance. An initial proposal to the GoN was consolidated in the final report on “Nepal Dam Safety - Advisory Support to Improve Readiness for Hydropower Preparation: Steps to Improved Hydropower Dam Safety” which is attached as an annex to this ESRS. This cooperation provided guidance for the GoN to achieve the development of world class, modern, risk informed dam safety standards that would ensure the planned future development of hydropower in the country comprehends and mitigates the risks associated with earthquakes, floods and other dam safety hazards.

The project is accessed by the existing Betrawati to Mailung River Road, which was damaged by landslides triggered by the 2015 earthquake. GoN is currently rehabilitating this road by removing landslide materials and constructing gabion and masonry walls to stabilize the hillsides. As described earlier, the project involves construction of 11.8 km of access roads from Mailung Khola up to the project dam, half of which has already been completed and repaired post-earthquake. This road is located in steep valley areas susceptible to landslides, and therefore NWEDC will require the EPC contractor to commission an independent review of the dam site, reservoir areas, and existing roads for hazards / stability conditions and prepare a Landslide Stabilization Plan (ESAP Action #14). This plan will assess the geological hazards of construction and includes measures for controlled blasting, temporary and permanent slope stabilization, and other appropriate measures to ensure the health and safety of construction workers and nearby communities. In addition to landslide risks, project-related traffic can pose a safety risk to nearby communities and thus the EPC contractor is being required to prepare and implement a Traffic Management Plan, the content of which has been specified in the CESMMP outline, e.g. measures such as providing educational materials to nearby residents and schools to inform children about traffic safety, establishing and policing speed limits for all traffic, especially in proximity to villages, provision of training to all staff with driving responsibilities to sensitize them to potential safety risks such as children playing, livestock, and driver fatigue and provision of warning signs and speed bumps. Dust from unpaved roads can also be a nuisance to local residents and degrade air quality. As stated under PS3, the contractor will spray unpaved roads to control dust, especially during the dry season.

The project will involve significant blasting for the construction of tunnels and other underground facilities and for the 11.8 km access road.  The EPC contractor is committed to preparing a Blasting and Explosives Management Plan and a Noise and a Vibration Management Plan, including pre-blasting assessment of nearby structures to confirm any reports of structural damage. Indicative content for these plans has been developed during the ESIA and is contained in the CESMP outline.

Influx / Community exposure to disease: The expected influx of workers and job-seekers into the project area poses a number of community health and safety risks, such as the spread of communicable diseases, potential increases in crime rates locally, risk of conflict between local communities and newcomers over jobs or cultural differences, and inadequacy of water and sanitation arrangements to handle increased numbers of people residing locally. Whilst construction impacts are not unknown in the project area – due to construction of a GoN hydropower plant immediately downstream of UT-1, and the ongoing construction of the UT-1 access road and the new ‘Army Road’ linking Nepal to China – it is expected that the magnitude of these impacts will be greater than previously experienced. Even though, the local communities are aware of these risks and nevertheless seem keen to benefit for associated economic opportunities posed by influx, further consultation and engagement will be part of the consultation and engagement process. Based on ESIA findings, the company and its contractors are committed to implement a range of measures to manage the potential adverse impacts of population influx into the project area, as reflected in the CESMMP, EPC contract and related documents. Key mitigation measures include adopting a Worker Code of Conduct, providing a community awareness program on sexually transmitted diseases, maximizing the use of local labor, providing support to local schools, health clinics and the local District Police office, providing adequate water and wastewater treatment to meet project demands without affecting local community systems, building awareness amongst non-local workers regarding respect for local traditions, culture, and religious practices and regulating access to worker camps and potentially hazardous work areas. IFC is considering providing advisory services-based client support during the early construction phase to train construction workers and EPC team members on gender violence risks associated with worker influx.

Security personnel: Security arrangements will be managed by the EPC and O&M contractors during the construction and operations phases, respectively. Security-related risks are considered to be low in the project area, which has low crime rates and no identified risk of violence or use of firearms. Access to construction sites, tunnels, workers’ accommodation and the powerhouses during operation will be controlled by fences, gates and security guards. It is anticipated that the contractors will make use of unarmed private security contractor personnel to safeguard the project and workforce. As per (ESAP Action #15), NWEDC will ensure that the EPC contractor undertakes a security risk assessment appropriate to the type of risks posed locally, and conducts appropriate checks to ensure that the selected security contractor / personnel do not have a history of past abuse. Security personnel will be trained in the appropriate use of force and the community and worker grievance mechanisms will be used to ensure that any complaints related to the conduct of security personnel are properly investigated. Army personnel carrying weapons will oversee the transport and storage of explosives on site, as required under national requirements and implemented at other hydropower construction sites across Nepal. These personnel are not expected to interact with local communities directly.    

   Although the project will have impacts on both aquatic and terrestrial Natural Habitat there are no critically endangered or endangered species or critical habitats impacted. As identified in the assessment process, the main potential project impacts on the aquatic ecosystem will be: (i) barrier effect / impediment of the dam to aquatic connectivity including upstream fish movement; (ii) change in aquatic habitat quality from reduced river flows along the 10.7-km diversion reach (dam to tailrace outlet); (iii) potential entrainment of fish at the intake, and (iv) alteration of the natural sediment regime. No impacts are predicted on aquatic habitat upstream of the dam since the project is a true run-of-river with a limited reservoir. The main impacts related to the terrestrial ecosystem will be (v) conversion of 2.6 ha of natural forest cover and 4.16 ha of cultivated land in the buffer zone of the Langtang National Park (LNP), where the weir will be anchored and one of the labor camps be built, (vi) conversion of approximately 78.6 ha of land on the west bank of the Trishuli River, where most of the project components will be built, mainly consisting of Community Forests -forest under management by local communities- and agricultural or marginal lands, and (vii) temporary disturbance to terrestrial flora and fauna, as a result of construction works. The project followed the mitigation hierarchy to avoid and reduce their impacts on biodiversity, including eflow release and the construction of a fish ladder at the dam to facilitate fish migration, extensive monitoring of fish biology and movements, and adaptive management as deemed necessary to achieve No Net Loss of biodiversity within the project area.

Aquatic natural habitat: Knowledge about fish species and aquatic biodiversity in the Trishuli sub-basin is limited due to the basin’s remote location and fast flowing waters. NWEDC has sponsored extensive studies of the aquatic biodiversity of the river in order to provide baseline data from which to design their mitigation measures. In addition to a 2012 survey done for the Regulatory ESIA, NWEDC carried out 12 monthly surveys of the Trishuli River aquatic ecosystem (fish, habitat, and water quality) over one year (August 2013-July 2014) as part of the Supplementary ESIA work. These surveys were done at five sites along a 15-km reach of the river, from upstream of the dam to downstream of the powerhouse site. Two additional surveys were conducted in 2016 after the earthquake to evaluate if any changes had occurred and to strengthen data on fish migration. A total of seven fish species were documented, but the Common Snow trout (Schizothorax richardsonni – known locally as Buche Asala) was the strongly dominant species throughout the year (99% of the survey catch). The other species were caught infrequently in small numbers. The data indicate that the Common snow trout migrates upstream during the early monsoon in March-May, spawns upstream and in smaller tributaries of the Trishuli such as the Mailung, and then young fish return downstream in September-October to overwinter. The cold and fast flowing water upstream and within the UT1 dewater reaches, are not ideal for the snow trout, thus only a small population of fish migrate through or live within the project area. More species and much higher abundance of fish is found downstream of the powerhouse where water temperatures are warmer.

Downstream Flow/ Habitat loss: During project operations, a total of 10.7 kilometres of river between the dam and the powerhouse (diversion or dewatered reach) will receive a reduction in flows. Nepali regulations require a minimum environmental flow release of ten percent (10%) of the minimum monthly annual flow which would equate to 3.86 m3/s all year (based on the lean season historical minimum monthly average annual flow of 38.6 m3/s). As a recommendation of the original ESAP provided as a component of the supplementary ESIA, NWEDC commissioned a preliminary Environmental Flow (eFlow) Assessment in 2016, which considered seasonal fish use of the dewatered river section and minimum river flow requirements, as well as the effect of these flows on project revenue, seeking a balance between ecosystem maintenance and project financial viability. Based on this assessment, NWDEC determined that 10% of the mean monthly flow for each month should be adequate to maintain aquatic habitat within the diversion reach. During the five wettest months of the year (May to October), the total release from the dam down the diversion reach will be between 53-86% of the natural average monthly flow as the water spills over the dam. This is expected to have minimal impact on the aquatic habitat. During the six driest months of the year from December to April, however, the eFlow releases will be 10% of the month’s mean, ranging from 3.86 m3/s (February – March) up to 8.0 m3/s (November - December). To further quantify the potential impacts of these flow modifications on fish populations and overall ecological integrity of the Trishuli river in the diversion reach, IFC required a detailed eFlow study to be performed by international experts. This study concluded that the planned eFlow will not permanently alter the ecological conditions of the diversion reach, particularly since water temperatures are low and the area is not a preferred habitat for aquatic fauna. The resulting lower flow may actually enhance aquatic habitat conditions for aquatic fauna by reducing velocities and the torrentiality of the river and increasing water temperatures.

Barrier effect/ Habitat fragmentation: The ESIA and CIA reported loss of aquatic habitat connectivity as the most significant contribution of UT1 to the potential cumulative impacts associated with the development of multiple cascading hydropower plants in the Trishuli river. Fish movement within and through the diversion reach could be impacted by reduced river flows during the dry season months particularly at the onset of fish migration (March-April) and fish movement upstream will be impeded by the dam. Per IFC’s requirement, during the March-May 2016 lean season, the company commissioned an intensive fish sampling campaign, to improve understanding of the migration pattern of the Common snow trout and other fish species and to start to develop metrics to document No Net Loss of biodiversity. The objective of this campaign included determination of: (i) migratory behaviour and hydro-morphological needs for such migration to occur (e.g. onset, timing, flow, depth and temperature needs), (ii) identification of spawning sites in the dewater segment as well as upstream from the weir or other tributaries in the project’s area of influence, and (iii) preferred substrate type and hydro-morphological characteristics of spawning ground (e.g. flow, depth, velocity). Additional fish ecology, hydro-morphological studies, and a connectivity assessment at the dewatered reach were performed from April to October of 2018 to capture both lean and pre-monsoon seasons, including testing novel environmental DNA (eDNA) approaches. These analyses indicate that the proposed eFlow should be sufficient for the Common snow trout and other fish species to move through the diversion reach at a water depth of 0.8 m which is expected to be provided by the proposed eFlow. The results from these studies are summarized in the ESIA Addenda.

Aquatic Ecology Management: The project will manage and mitigate their impacts on aquatic habitats and species primarily through (i) provision of mechanisms for upstream and downstream fish passage, (ii) de-sander and regulated flushing of de-sander and reservoir, (iii) close monitoring of fish movement through the project area, and (iv) implementation of adaptive management as needed. The project commissioned an international expert to design a fish ladder for the dam to facilitate upstream migration of Common snow trout and other migratory fish species. Downstream fish passage, also designed by the fish expert, includes fish passage over the spillway and away from the intake, with a sloped spillway and a deep pool designed to enhance survival of fish, fry and eggs passing downstream. NWEDC will submit the proposed design of the headworks and fish ladder to the Lenders for their review and approval prior to the initiation of construction of the headworks.  This submittal shall include a detailed description of the way the fish ladder is proposed to be built, maintained, and operated, and demonstrate that the fish ladder will be operational for, and able to withstand, the expected range of Trishuli River flows (ESAP Action #21). Fish movement through the ladder and the diversion reach will be closely monitored. NWEDC will hire an international Fish Monitoring Expert to design and guide the monitoring program (ESAP Action #22). If monitoring data reveal that the fish are not able to pass through the area or the ladder, additional mitigation actions will be undertaken, including creating deeper channels or removing barriers within the dewatered reach and modification of the fish ladder or attraction flow. Fish hatcheries and trap and trucking will also be considered as needed.

The project design includes a de-sander to trap coarse sediments from reaching the turbines and periodically flushing them into the diversion reach. The project’s operational regime includes periodic flushing flows to move accumulated sediment downstream to prevent the reservoir from filling with sediment. These flushing flows will restore the fine sediment inputs to the diversion reach and tailrace, but not occur at the same frequency or volume as the natural sediment transport cycle. As noted under PS3 section the project’s O&M contractor will develop a Sediment Management Plan that provides details on the procedures and timing for flushing sediments from the reservoir and de-sanders, especially in terms of maintaining the aquatic integrity of the diversion reach.

The project will also study and monitor fish and aquatic habitat within the diversion reach to ensure No Net Loss of biodiversity.

Terrestrial Habitat: Site clearance, construction of project infrastructure and reservoir inundation will result in the direct and permanent modification of about 105 ha of Modified Habitat. Most of the affected land (78.6 ha) is contained within six community forests on the western slope of the Trishuli river, which are actively managed by Community Forest Users Groups (CFUGs) for timber production and the harvesting of non-timber products, and can generally be considered degraded forest or Modified Habitat. Any decrease in fauna biodiversity and ecological function caused by construction-related disturbances is predicted to be temporary and minor. Furthermore, as a requirement to the local environmental licensing process for ESIA approval, the Company inventory the totality of the trees to be affected. Post-earthquake, there have been a series of modifications that have increased the project’s terrestrial footprint in forested land as well as in the LNP buffer zone. This has implied a series of additional requirements and permits dispersed among different authorities – (DOED, MOEP, MOF). As part of the Compliance Registry, NWEDC will ensure to specifically note and obtain all approvals for the totality of any additional project facilities terrestrial footprint in both forested land or located in the LNP (ESAP Action #19). This shall include a full inventory of trees to be cut and revised forest clearance (if required) as per Ministry of Forest requirement and R&R plan (required by DOED). These inventoried trees will be compensated on a 1:2 ratio; and also following local requirement, any tree removed during construction that had not been inventoried or accounted for will need to be compensated on a 1:25 ratio.

Lantang National Park (LNP): Langtang National Park, gazetted in 1976, is located on the northeast side of the Trishuli basin, covering 170,000 ha. The Trishuli River forms the western border of LNP. Approximately 3,000 households depend on LNP resources for their livelihoods, with the majority being Tamang who live, farm and raise cattle within the park. Around 4500 people living within LNP, the majority of them of Tamang ethnicity; the town of Dhunche, the administrative center of Rasuwa District, is located within the boundaries of LNP, as are many scattered residences. The Statement of Significance of the LNP Management Plan (2012-2017) specifically articulates its role in conserving the watershed and protecting tributaries that feed the Trishuli river, which “are highly important sources for drinking water in Kathmandu Valley, hydropower generation, and irrigation”, thus reflecting that from its enactment, the LNP was conceived to provide ecosystem services to downstream hydropower development.  Out of the 170,000 ha that constitute the LNP -including its buffer zone- a total of only 6.77 ha (< 0.01%) will be impacted by UT1; 2.61 ha of Natural Habitat at the headworks for anchoring the weir to the east banks of the river, and 4.16 ha of cultivated Modified Habitat for the construction of the new worker camp. These 6.77 ha are located in the LNP buffer zone and do not constitute core habitat for any of the valuable species encountered in the park, and will be compensated land-for-land by acquiring 2.6 ha of new land to be annexed to the park. Per the local requirements, the affected forested Natural Habitat will need to be compensated on a 1:1 basis, by NWEDC purchasing and donating land to be annexed to the LNP.  As part of the ESAP Action # 20, the company has committed to provide the location and description of land proposed for donation to LNP. This shall include a final consultation with the LNP and the Nepal Department of Forests to document that it has satisfactorily completed all required compensation and mitigation relating to LNP and Nepal forest clearing regulations and that ownership of the land has been transferred to LNP. Further mitigation actions for terrestrial habitat and LNP are included in the Biodiversity Management Plan (BMP) of the ESIA and ESIA Addenda and will be an integral component of the detailed final BMP.

Biodiversity Management Plan (BMP): NWEDC has started to develop, and as a requirement to financing, will finalize a Biodiversity Management Plan (BMP). The BMP will include all the forestry, wildlife and terrestrial habitat management plans described in the ESIA documentation and local licenses, as well as the updated Environmental Flow Management Plan (EFMP). This BMP shall also include a concrete Biodiversity Evaluation and Monitoring Program (BEMP) with metrics and KPI to demonstrate No Net Loss of both terrestrial and aquatic Biodiversity. Additional mitigation actions and details will be added to the BMP by the Fish Monitoring Expert as well as LNP official and consulted local experts, and modified throughout construction and operations as needed. The detailed BMP will be finalized prior to first disbursement and can be updated until project commissioning. This BMP will be consistent with GIIP and PS6 requirements. (ESAP Action #23)     

Other Ecosystem Services: UT-1 will build an underground tunnel beneath the northwest slope of the Trishuli River valley that roughly parallels the course of the river. As noted in the ESIA documentation, there are 46 unique springs or seeps (referred as ‘water-points’) in the region of the proposed Project, some which are used for drinking purposes, irrigation, and animal feeding. The construction of UT-1 tunnel has the potential to cause groundwater drawdown, which could affect some of these waterpoints. Upon the request of the IFC, NWEDC performed a Drawdown Hazard Index study (DHI, Dematteis et al. 2001), which is a screening-level drawdown risk assessment, ranking springs at risk from high to low risk of suffering from drawdown due to tunneling and subterraneous perforations (see ESIA Addenda 2019).  DHI values associated with each water-point indicate that forty-six springs are rated at having low or medium risk of partial drawdown, with no water-points receiving a negligible or high-risk warning. As the study indicated that several of the Medium Risk rated springs are used for agricultural or serve as a source of domestic water for some villages (e.g. Thanku – Springs #6 and 7; Phulbari – Springs #12, 13,14,15, 16 Haku Besi – Spring #17; and Gogone – Springs #33, 34, 35, 36, 37, and 42), as a requirement to IFC’s financing NWEDC will monitor flow in the medium risk rated springs during tunnel construction to detect if project tunnelling is affecting flow in springs. If a change in flow is detected that cannot be attributed to changes in precipitation, then NWEDC should inspect the tunnel and provide supplemental grouting.  If supplemental grouting does not mitigate the impact, NWEDC should provide alternative water supply for the affected households (ESAP Action #24). 

   Affected communities of IPs include the villages of Haku Besi, Thangu, Phoolbari, Sanu Haku, Thullu Haku, Gogone, Tiru, Nesing and Mailung, as well as the hamlet of Gumchet as well as members of the Guptepakha Community Forest User Group (CFUG) which will be slightly impacted by the project’s newly aligned (1.1 km) transmission line segment. Residents of these villages are considered Project Affected Peoples (PAPs) for the purposes of PS 7, including former residents currently displaced by the earthquake. As discussed in the PS 5 section above, establishment of the UT1 project involves direct impacts on the land and natural resources of 154 families, more than 94 % of whom are ethnically Tamang. As the vast majority of affected households are IPs and the remainder are mainly Dalits, a vulnerable ethnic group, all residents of the affected settlements will be treated as IPs for the purposes of PS 7-related mitigation measures. The Tamang ethnicity is recognized under Nepal’s constitution as an indigenous nationality, or Adivasi Jana­jati. The group has its own language, traditional customary practices, distinct cultural identity, social structure, and oral or written history, as recognized by the National Foundation for Development of Indigenous Nationalities Act (NFDIN 2002).

Project impacts on IPs include, among others, acquisition of Government-owned lands administered by six CFUG’s, which triggers Free, Prior, Informed Consent requirements under PS 7. In addition to these impacts, which are summarized above in the PS 5 section, the affected IP communities also use (or used, prior to the earthquake) the Trishuli River for various purposes, e.g. minor fishing activities, cattle watering, and minor irrigation by a few households. Reduced flows in the diverted reach of the river could adversely impact these activities in future, assuming that earthquake-impacted families continue to move back into the project footprint area.

FPIC is a Lender requirement and not required under Nepalese regulations. The original Government decision to develop a hydropower project at this location and the subsequent acquisition of affected IP lands in 2012-13 pre-date Lenders’ involvement and were thus not subjected to an FPIC process, although a Forestry Department-led agreement paved the way for acquisition of CFUG-administered land in 2013. The project’s FPIC requirement was confirmed by lenders in 2015, though the impact of the 2015 earthquake combined with delays in obtaining a signed Power Purchase Agreement (PPA) led to the formal FPIC process only being initiated in Q1 of 2018. A credible international expert and a reputable Indigenous Peoples Organization (IPO) were engaged to help design and implement a PS 7-compliant FPIC process for the project. The IPO was NEFIN, the Nepal Federation of Indigenous Nationalities, an umbrella organization (NGO) with a recognized national mandate for representing IP interests.  A six-month period of intensive FPIC discussions ensued, building on stakeholder engagement efforts which had been ongoing for 5-6 years. This culminated in affected IP communities consenting to the Project in signed agreements dated November 1, 2018. The three main parties involved in the FPIC process were the affected IP communities, NWEDC, and local Government (Ward-level) representatives.

The FPIC process sought, and achieved, consent from affected IP communities based on a negotiated package of project mitigation measures and benefits. These measures and benefits have been incorporated into an Indigenous Peoples Plan (IPP), an update of which is disclosed along with this ESRS.  NWEDC will make financial and technical provision for full implementation of the commitments incorporated into the IPP, including funding for agreed programs, logistical support for regular IPP implementation meetings and appointment of an external (expert) monitor (ESAP Action #25).

The social and economic realities of the UT-1 project area present several challenges. Impacted IP communities, already vulnerable before the 2015 earthquake, were significantly impacted by it. Nearly all of their homes were badly damaged or rendered unsafe, and access to remaining land and productive assets was interrupted. The earthquake left residents of project-affected villages scattered across several IDP camps outside the project footprint, a process which is now being gradually reversed. This is also currently one of the first FPIC processes for a large-scale private power project in Nepal, and as such there was no local precedent to follow. In addition, earthquake- and PPA-related delays have meant that the FPIC process has started at a relatively advanced stage of project development. These issues are being managed, to the extent feasible, via (i) the use of an international social expert with relevant expertise to guide the FPIC process (described above); (ii) partnering with NEFIN to ensure the capacity and interests of affected IP communities are supported/represented; and (iii) involving GoN representatives in the process.   

Based on recently obtained transmission line routing, a small number (6) of IP families may be impacted and mitigation measures will be addressed in a LALRP addendum, as discussed above. Impacts on Guptepakha CFUG, with c. 200 members) which administers the Government-owned forest land through which the transmission line will be route are expected to be very minor. This is because interruption to resource use related to erection of 6 transmission towers is expected to be of low significance. Nevertheless, such impacts trigger a consent process under PS 7 requirements and NWEDC will therefore seek the consent of members of this CFUG well prior to construction of the transmission line (3 years after mainstream project construction begins, ESAP Action #26). Consent will be based on compensation of affected families (6 in total) and communal benefits offered at the CFUG level to offset any project-related impacts on CFUG resource usage. The consent process will be appropriately scaled given the extent of impacts involved and associated agreements will be documented and disclosed in an annex to the IPP in due course.  

    Potential project impacts on cultural heritage were investigated during the project ESIA process, which included consultations with stakeholders living within and adjacent to the project footprint. During these consultations, one cremation site previously used by Dalits – a marginalized ethnic group – was identified on the west bank of the Trishuli River between the dam site and powerhouse locations. However, the site has reportedly not been used in many years and other sites further downstream are now preferred. Although no other potential cultural heritage impacts were identified by the ESIA, the EPC contractor is required to prepare and implement a Cultural Heritage Management Plan (as per the outline provided in Appendix B of the ESMMP). This plan will include the following measures to avoid any potential adverse impact on cultural heritage: (i) implementation of a Chance Finds procedure in the event that an unknown cultural heritage site is found during construction; (ii) ensuring that this procedure is widely socialized and understood by the construction workforce; and (iii) require the EPC contractor to maintain an active community engagement program so that issues such as potential loss of access to shrines or grave sites are raised by means of the community grievance mechanism. A community representative will be present during any cultural heritage-related investigations, and any additional sites identified during construction will be plotted on a map and protected as appropriate. The management plan outlined in the CESMMP and the proposed worker code of conduct described in the PS 2 section above provide for training and sensitization of workers with respect to local cultural aspects.   

  The Stakeholder Engagement Plan (SEP) developed for the project by ERM is being disclosed along with this review summary. This SEP lists key stakeholder groups and their degree of influence on project outcomes, outlines stakeholder engagement activities undertaken to date as well as those planned in future, lays out responsibilities for ongoing project-related engagement, describes key concerns identified by stakeholders to date, and describes the project’s community grievance redress mechanism.

Settlements directly affected by project-related land acquisition and/or impacts on houses and other structures include Haku Besi, Thangu, Phoolbari, Nesing, Sanu Haku and Thullu Haku in the upstream area and Gogone, Tiru and Mailung in the downstream area. All of these villages have been located on the west / right bank of the Trishuli River. Gumchet, a small settlement comprised of families belonging to one extended household, is located on the opposite (east / left) bank of the river, and has been impacted by noise and blasting caused by road construction on the opposite side of the river valley. Many of these settlements are remote and hard to access, in particular following the 2015 earthquake, and most of those located upstream are not currently accessible at all by road. The most significant other settlement near the project area is Dhunche, the administrative center of Rasuwa District, which is located within the Langtang National Park, just above and outside of the project-affected river valley. Besides the residents of these local settlements and the IDP camps established after the 2015 earthquake, key stakeholders consulted with to date have included local government representatives of these settlements, district and national representatives of various government ministries and departments, conservation authorities in charge of the Langtang National Park, NGOs and CSOs involved in post-earthquake rehabilitation efforts and various potential lenders. 

NWEDC undertook project land identification and survey activities during 2009 to 2010. This was followed by public meetings held in the villages of Mailung, Gogone, and Haku Besi in 2012 in the context of the local ESIA study. Two formal meetings were also conducted in relation to the acquisition of Guthi land. NWEDC representatives and local villagers of Haku Besi met on 19 January 2013 to discuss the rates and terms of transfer of tenancy rights. Subsequently a meeting was held at NWEDC’s office in Kathmandu between Guthi land tenants of Haku Besi and NWEDC. Further public meetings were held in September-October 2012 in the villages of Mailung, Haku Besi, and Gogone with various stakeholders. Project-related information was disclosed, including the location of the key facilities, land requirements, potential community benefits and compensation rates for the land to be acquired. Land acquisition-related meetings continued in February 2013 once project land had been measured. Following the completion of the Regulatory ESIA study, a public hearing was held in March 2013 to present ESIA findings and agree on a final compensation package. Meetings were also held with the District Administration and Department of Forest Research and Survey to finalize compensation rates and the land procurement process.

The project next engaged with the community as part of the Supplementary ESIA process in 2014. Further consultations followed in 2015 during development of the original Land Acquisition & Livelihood Restoration Plan, involving CFUGs, affected women, vulnerable persons, youth groups, and several government departments involved in the land acquisition process and potential future livelihood restoration activities. Earthquake relief was provided in 2015 to the villages of Mailung, Gogone, and Tiru, which were the most severely impacted. In 2016, ERM was recruited to undertake an environmental and social gap analysis and status assessment of the project within the Area of Influence, including consultation in relation to the status of relief efforts and changes in socioeconomic conditions in the project area. As part of the LALRP reformulation process in 2017, focus group discussions and key informant interviews were undertaken with certain key stakeholder groups. Finally, in 2018, additional meetings have been held in order to acquire land for relocated project infrastructure, to present the final draft ESIA documentation and to initiate the Free, Prior, Informed Consent (FPIC) process described above under PS 7.

Some key concerns raised by local communities to date include compensation-related concerns relating to the nature and quantum of cash compensation paid out to affected families (some of which are addressed in the updated LALRP report disclosed with this review summary); the level of representation of all affected families in the original Sarokar samiti (project committee) initially established for UT-1; the awarding of early access road construction works to contractors from outside of the project area; a perceived lack of preferential treatment during these early works for project affected families; an expressed need to improve local policing capacity once construction begins to keep the project area safe; and a series of wishes and expectations relating to community benefits to be offered by the project once mainstream construction begins. A report commissioned by the Lawyers Association for Human Rights of Nepalese Indigenous Peoples (LAHURNIP) in 2017 expressed several criticisms of the project, including allegations of insufficient attention having been paid to community engagement activities; a lack of consultation in Tamang language despite the presence of certain illiterate people who were reportedly unable to understand Nepali; insufficient involvement of women and vulnerable groups; lack of an FPIC process; land acquisition and compensation-related problems and questions regarding the degree of representation afforded by local committees. These concerns were addressed by the project and its consultants via the FPIC process and via the updated ESAP disclosed together with this review summary. One of the key documents agreed between IP communities and NWEDC when consent was achieved is the ‘demands framework agreement’, which explicitly recognizes a series of key community concerns and expectations pertaining to project development.

Grievance Redress: An external stakeholder Grievance Redress Mechanism (GRM) was instituted by the project in 2016 to provide a forum for the community and other stakeholders to voice their concerns, queries, and issues. This mechanism is described in the project SEP and is currently under implementation, providing stakeholders with a single channel through which concerns can be raised and responses received. To ensure that the GRM is working optimally, NWEDC will ensure that community grievances captured via the GRM are logged in a database, that responses are tracked until closed out, and that related grievance records are maintained for analysis and discussion (ESAP Action #5). Responsibility for implementation of this mechanism currently resides with NWEDC’s Social Manager and two Community Liaison Officer (CLOs), both of whom are locals and one of whom comes from a project-affected family. The company currently operates a small office nearby the project area where grievances may be raised in person or by phone. Once the main construction phase begins, NWEDC will hire additional CLOs (including at least one female Tamang speaker) and will ensure that the EPC contractor hires sufficient CLOs to properly manage community-project relations during the construction period (ESAP Action #6). The EPC community liaison team will include both female and Tamang-speaking officers.  

   Nepal Water & Energy Development Corporation

Mr. Min Young Kim

Managerial Director

+977 1 4412229

admin@nwedc.com.np

Block B, 3rd Floor, Four Square Complex

Naxal, Police Head Quarter Area

admin@nwedc.com.np

Kathmandu, Nepal

www.nwedcpcl.com       

   IFC has reviewed the project’s Informed Consultation and Participation (ICP) and Free, Prior and Informed Consent (FPIC) processes and outcomes and has concluded that ICP has been demonstrated for the project and that the consent obtained on November 1, 2018, was consistent with PS 7 objectives. This review was based on project documentation, field visits, interactions with affected IP communities and their leaders, discussions with the ESIA consultants and Ward (local Government) Chairs as well as interactions with the international FPIC expert and IPO NEFIN who facilitated the process.

The six-month FPIC-focused process built on 5-6 years’ of project stakeholder engagement. It was assessed to have been free of coercion or intimidation, conducted and concluded prior to a final decision (by NWEDC and Lenders) whether to proceed with the full construction phase of the project, to have resulted in affected communities being reasonably well-informed about key project risks and benefits, and concluded in a satisfactory written consent agreement understood and designed in part by affected IP communities. The process was found to be facilitated by credible third parties, an FPIC expert and an IP umbrella organization (NEFIN) representing IP rights. It was deemed to have been designed in a culturally appropriate manner by a credible international expert (anthropologist) and to have involved capacity-building of participants. The process was observed to have involved significant elements of Good Faith Negotiation, as required under PS 7. The process was the first of its kind in Nepal and it is anticipated that some of the lessons learned will be shared with GoN, other developers and CSOs to promote good practice in Nepal. Ongoing monitoring of implementation arrangements and outcomes related to the Indigenous Peoples Plan have been incorporated into the ESAP and will be crucial to maintaining the project’s social license to operate.