While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
The full scope of the company’s network expansion is yet to be specified but the bulk of the existing distribution network is situated in urban or peri-urban areas traversing populated and otherwise disturbed areas. As such, there is no specific application of PS 5: Land Acquisition and Involuntary Resettlement; PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; or PS 8: Cultural Heritage. The procedures by which the company will address any situation that requires application of these PSs is described in the narrative of PS 1 below. PS 7: Indigenous Peoples is not applicable as Indigenous Peoples meeting the criteria established by the World Bank Group have not been identified in Uganda to date.

This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability. The company’s operations have limited environmental and social impacts, and these are site-specific, temporary and not significant. Impacts associated with the proposed expansion of existing operations can be avoided or mitigated by adhering to recognized performance standards, operating procedures, guidelines and design criteria as described in the following sections.

Key issues related to this project include: the prevention of fatalities and injuries to operations staff, contractors and the general public resulting from exposure to energized transmission lines; management of the disposal of PCB contaminated transformer oil; disposal of chemically treated wooden utility poles and improvement of waste management practices through consistent implementation of an environmental management system.

Information on how these issues are being addressed by the company to comply with IFC’s Performance Standards is contained in the following paragraphs, which update the Environmental and Social Review summaries of IFC’s previous investments in Umeme:
ifcextapps.ifc.org/ifcext/spiwebsite1.nsf/78e3b305216fcdba85257a8b0075079d/4a855f53aa1249ea85257b9b0059b01a?opendocument
http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS25788 and http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS32795).

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. IFC’s review concluded that the project will be implemented and operated in accordance with Performance Standards objectives, without any additional action to be included in an ESAP.

Policy: In October 2012, Umeme’s Board of Directors formally adopted an Environmental and Social Responsibility Policy, committing its management to minimizing the adverse impacts of its operations on the environment and the health and safety of its customers, stakeholders and employees. To achieve these commitments, the company has revised its Environmental, Health and Safety (EHS) management system to meet the requirements of IFC’s Performance Standards and Ugandan legislation.



Organization and Staffing: Umeme has an Environmental Safety and Governance (ESG) Committee at the corporate level. (EHS matters are managed by Umeme’s Safety Department. The department consists of the Head of Safety, Safety Leader who oversees the activities of the 4 Regional Safety advisers who support Umeme operations staff at the district level; a Contractor Safety Adviser dedicated to appraising, pre-qualifying and monitoring contractor safety compliance; 3 Safety Auditors who monitor and assess the overall company compliance with the Safety standards ; an Environmental Adviser dedicated to improving awareness of environmental issues among Umeme staff and promoting sound waste management practices in Umeme’s operations.



Identification of Risks and Impacts: The company has a process to identify environmental and social risks associated with major network expansion. An Environmental Impact Assessment (EIA) is required by law for every new sub-station as well as for substantial refurbishments of existing sub-stations and development of new distribution lines. EIAs must be approved by the National Environmental Management Agency (NEMA) before development can be undertaken. Umeme engages NEMA-approved independent environmental consultancies for all its EIA requirements and the Environmental Advisor coordinates and supervises the work of the consultants. Typical issues associated with network expansion include containment of oils via appropriately sized bund walls and sumps to prevent surface and groundwater contamination, and the installation of fire barriers between transformers. The company commissions environmental audits when sub-stations are being refurbished, in order to identify and address historical issues such as oil-contaminated soils. NEMA issues a compliance agreement once audits are submitted, together with a work plan outlining action items. Environmental mitigation measures defined in approved EIAs are supervised by the EIA consultants during construction.



To date, the company has not encountered issues related to adverse impacts on biodiversity largely because it has been rehabilitating an existing distribution network. Umeme sources all utility poles predominantly from Forest Stewardship Council-certified suppliers. Any direct impacts resulting from future greenfield expansion requiring new transmission line rights-of-ways and substations will require EIA studies and appropriate management plans undertaken by independent consultants as descri
bed above. The company’s Environmental Advisor will screen all proposed future greenfield expansions and ensure that PS 6 requirements and objectives are met in the development of the new infrastructure.



Umeme has a well-established procedure for the acquisition of land. In the case of new sub-stations, land is purchased on a willing buyer/willing seller basis at 100 % of the market price. The process of acquisition is as follows: a) identification of the area where a substation is to be constructed; b) identification of the land around this area that is available (on sale); c) identification of the landowner(s) and verification of Certificates of Title in the Land Registry; d) valuation of the land by private valuers and negotiation with the landowner; e) signing of a purchase agreement and transfer of title deed once Umeme and the landowner(s) agree on a purchase price; and f) payment of the landowner(s) and transfer of ownership to Umeme via the land registry.



In the case of new power line installation, Umeme pays compensation for way-leaves, i.e., the right to use another person’s land for construction purposes. The company pays compensation for the crops that are destroyed during construction plus a certain percentage of the market price of the land as a disturbance allowance. This compensation is a legal requirement in Uganda, i.e., that in addition to the assessed compensation; a disturbance allowance is paid as compensation for an ‘involuntary sale’. The disturbance allowance is 30% of the assessed amount if the land is to be used within six months of notifying the landowner and 15% otherwise. The process of acquisition of way-leaves is as follows: a) survey of the proposed power line route; b) identification of the landowners along the proposed power line route; c) notification of the landowners of the plan to construct a power line through their land; d) seeking of landowners’ consent for the construction of a power line through their land; e) assessment of compensation; f) signing of way-leave agreements; and g) payment of compensation by Umeme.



Land acquisition is generally an uncomplicated process, although there are occasional complaints or disputes over compensation amounts that are dealt with via a dispute resolution process. If these isolated cases cannot be dealt with via the valuers or through discussions between landowners and Umeme, aggrieved parties may take the matter to the courts. These procedures are consistent with IFC’s requirements related to land acquisition.



Monitoring and Reporting: The Safety Department establishes EHS Key Performance Indicators (KPIs) each fiscal year and reports on the achievement of these indicators to the ESG Board Committee on a quarterly basis, and to IFC via an Annual Environmental & Social Monitoring Report.



In addition, the Safety Department conducts regular internal EHS audits covering a wide range of topics including: buildings; environment management; staff welfare; pe
rsonnel protective equipment; public safety; internal communication and training; documentation and reporting; fire prevention and protection; supervision and monitoring; staff appointments; and plant and equipment maintenance and isolation procedures. Regular external audits are conducted by NEMA during the course of new sub-station or distribution line installation.

Human Resources Policies and Procedures: Umeme currently employs 1,394 staff of which 1,060 are males and 334 are females and only 7 are expatriate staff. About 98.4% (1,371) of the staff are permanent and only 16 are non-permanent. Umeme’s Human Resources (HR) Department carries out annual market surveys to ensure the wage and benefits packages offered to employees are competitive. Data as at 30 June 2016





Umeme has a comprehensive Human Resources Manual, which is provided to all employees on joining. Terms of reference, remuneration, working hours, overtime rates, sick pay and termination notices are highlighted in each employee’s appointment letter. These terms are further explained during induction training. The manual contains conditions of service including the disciplinary code and severance pay arrangements in the event that retrenchment is necessary.



Workers’ Organization: The Company has a collective bargaining agreement with the Uganda Electricity & Allied Workers Union, in accordance with the Labor Unions Act of 2006. Approximately 500 or one-third of Umeme employees are union members.



Non-discrimination and Equal Opportunity: Umeme is an equal opportunity employer and abides by all statutory requirements of the Ugandan labor law. The company does not discriminate on the basis of HIV-AIDS status, color, tribe, sex, disability, religion or political opinion.



Grievance Mechanism: The company has a clearly defined formal and robust grievance mechanism for all workers. The mechanism, which is contained in the HR Manual, provides for a procedure whereby any employee can e-mail the directors to make their complaints known, after failing to get redress from within the company systems and procedures.



Protecting the Work Force: Umeme does not make use of child labor and/or forced labor in its operations. All employees must be at least 18 years of age to quality for a job with Umeme. The company uses identity documents to verify age at the time of engagement.



Occupational Health and Safety (OHS): Umeme places great emphasis on OHS of its staff and contractors. Nine members of the Safety Department completed the International Certificate of Occupational Safety and Health administered by the UK National Examinations Board in Occupational Health and Safety (NEBOSH). The Safety Department has improved its screening of contractors and applying an OHS compliance system to its contractors and major suppliers, which provides an ongoing assessment of their OHS readiness and performance. This assessment has also been built into the procurement process, as a pre-qualification criterion. Umeme is also considering the adoption of OHSAS 18001, and progress of this process will be communicated to the IFC as part of the required Annual Environmental & Social Monitoring Reports.



The Safety Department ensures that Personal Protective Equipment (PPE) is provided to all employees, free of charge and replaced when damaged or has deteriorat
ed through use or age. Standard specification for all PPE types is established by the Safety Department in consultation with the users. Electrical competence is the cornerstone of Umeme’s safety program, but the company also organizes driver training, safety briefings and tool box talks on a wide range of subjects.



The company continues to maintain the annual KPIs for Health and Safety for engineering operations and non-operational offices. These KPIs are reported monthly and are embedded into the annual bonus scheme and form part of the appraisal process. In addition, safety awards have been introduced to enhance performance in all sections of the company. Awards are given to the best performing sections. The Department maintains a comprehensive database of Lost Time Accidents among employees and contractors that allows analysis of OHS trends and performance. This information forms part of monthly reports covering all aspects of the company’s safety management system. Recordable incidents include fatalities, lost time incidents, restricted work incidents and medical treatment incidents. The current Lost Day Accident Rate/Million Man Hours is about 1.5 compared to about 4.3 in the previous reporting cycle – January to December 2014. Two fatalities also occurred in 2014.



When there is a workplace injury, formalized systems of review (root cause analysis) are used, with the objectives to identify the type of risk, nature of the accident, injured area of the body, causes of the accident, and areas of follow-up which are allocated to individuals and tracked until completed. Based on records reviewed, measures necessary to prevent recurrence, which include training of workers, are systematically identified and implemented as appropriate.

Pollution Prevention: Umeme applies specific pollution prevention and control measures plus waste management practices that are supported by robust procedures and consistent with good practice. Transformer oil (or insulating oil) spillage, waste handling and materials storage have been identified as key environmental aspects for Umeme to manage from a pollution control standpoint. Focal areas include Umeme’s 33 kV/11kV substations and main operations depots. Substations vary considerably in age and state of rehabilitation, ranging from brand new to decades old, and from original condition to rehabilitated condition. A number of substations have been refurbished since the 1990s using German, Japanese and Swiss bilateral funding and World Bank multilateral funding. Substations typically comprise of a fenced in area, manned by a security guard housed in a small on-site building and one or two power transformers.



The Company currently has more than 79 large power transformers, each containing significant volumes of transformer oil (averaging 4 tons), as well as more than 10,300 smaller distribution transformers containing roughly 300 liters of transformer oil each. Umeme maintains a basic transformer oil treatment re-generation unit which allows for periodic heat treatment of this oil to remove impurities.



Oil spillage from transformers is a common feature at substations, although volumes vary. The main issues associated with transformer oil spillage are potential contamination of soils, groundwater and surface water, and the potential presence of polychlorinated biphenyl (PCB) contamination in the transformer oil. To prevent or minimize contamination from spillage, the Engineering Department ensures that all new and refurbished sub-stations are fitted with bunded oil sumps located below the transformers which can handle a minimum of 110 % of the total oil capacity of the transformers. In addition, plugs on the majority of distribution transformers have been welded shut to avoid oil theft and a progressive program of fencing all ground mounted transformers country-wide is being implemented to prevent loss of oil due to theft and vandalism. The Safety Department also ensures that refilling and maintenance procedures are robust and prevent spillages.



In addition to the above, Umeme carries out soil contamination surveys in all its substations to determine transformer leakages into the environment after which appropriate mitigation measures are developed and implemented. Only minor spillages were identified in the last round of surveys carried out in 2015. In addition, a joint inspection of the new transformer repair yards was recently carried out with NEMA to determine compliance with key environmental requirements as stipulated in contracts. Umeme received a satisfactory rating from this inspection.



Since 2012Umeme has been implementing a management plan to collect and destroy suspected PCB-containing transformer oil through its program
of rehabilitation or replacement of transformers in use. Designated Umeme employees are trained in PCB handling and provided with adequate PPE. In line with NEMA recommendations three transformer repair facilities were selected through an open bidding process in 2015. The three facilities are NEMA approved and are reportedly equipped to ensure the safe handling of transformer oils through an approved NEMA procedure. The procedure involves blending of transformer oil with saw dust followed by incineration at 800 and 1,400 degrees Celsius. Saw dust acts as a fuel in the process of incineration to achieve complete combustion. The generated ashes from the incinerator are collected and disposed of in an engineered landfill. Umeme will audit these facilities periodically against the agreed upon NEMA disposal procedure.



In addition to the above, Umeme has increased the number of transformers that are marked PCB safe to about 6,400 out of a total of about 10,300 distribution transformers – about 62% of all transformers on the network. Umeme also obtained PCB test kits to screen PCB contaminated transformers timeously.



Hazardous Materials: Aside from transformer oil, Umeme uses few hazardous materials. Small quantities of paint and thinners are kept in the Engineering Center, in a ventilated, locked area. No fuel is stored by Umeme; re-fuelling and maintenance of the fleet of Umeme trucks and Umeme motorcycles is outsourced to third party providers such as Shell and Total. No pesticides are used in way-leaves and no burning of vegetation in these way-leaves is undertaken.



Solid Waste Management: Umeme generates two dominant solid waste streams, namely old transformers and treated utility poles. Typically, the transformers are stored at Umeme’s main depot before being sold to registered scrap metal dealers. In the event that transformers are found to contain PCBs, both the oil and the transformer carcass are transported for disposal at the NEMA approved government facility in Nakasongola. Such transformers are not sold to scrap dealers as Umeme’s transformer repair yards do not have the capacity to rid transformers of PCBs.Umeme makes use of its used oil transport and disposal trucking manifest. The manifest is signed by the originator, transporter and by the disposal facility.



Treated wood utility poles are now predominantly sourced from Uganda. These poles have been pressure treated with one of two sorts of heavy duty wood preservatives, which protect the wood from decay fungi and wood attacking insects such as termites and borers, as well as improving weather resistance. Chromated Copper Arsenate (CCA, also referred to by its main global trade name ‘Tanalith’) is a water-based compound with a greenish tint comprised of a mixture of copper, chromium and arsenic salts. Creosote is a black oily substance distilled from coal tar, comprised mainly of polycyclic aromatic hydrocarbons (PAHs) but also containing phenols and cresols. Although Um
eme does not have its own wood treatment plants, the disposal of treated poles poses certain challenges.



Umeme has been progressively replacing rotten poles from its network. Although replacement is a normal process in any distribution network, Umeme faces particular volume challenges due to factors such as the dilapidated state of the distribution network, Uganda’s hot, wet climate and historic procurement of inadequately treated poles. There is currently no effective strategy for the safe disposal of these old poles. Good industry practice involves one of three main options, namely: a) land filling in a sealed site; b) high temperature incineration; or c) controlled recycling for uses that exclude burning on open fires and close skin contact. The first two options are currently not feasible in Uganda. Umeme has made efforts to collect the poles and issue to individuals free of charge; contractors were required to cut the poles into 2 m sections to preclude re-use in the network, and to return the sections to Umeme.



In practice, the company continues not to possess sufficient storage space to collect the poles and as a result they have been allowed to be collected by contractors and the general public. This practice may pose health risks, as described below under PS 4: Community Health, Safety and Security. However, there is continual improvement in terms of compliance with the approved pole disposal process, with Customer Service Engineers, Project Managers and the Contractor Safety Advisor overseeing the implementation of the process. The accountability for poles disposed of using the pole disposal form is now part of the terms and conditions for approval of payments to contractor firms. It should be noted that this particular challenge is faced throughout the region and also in developed country markets where it has been managed in different ways by different agencies.



Greenhouse Gas (GHG) Emissions: Umeme’s GHG emissions are relatively insignificant, and associated almost entirely with fuel consumption by the Company’s fleet of motor vehicles. Total annual consumption for this fleet in 2015 was approximately 221,635 liters of diesel. This amounts to emissions of about 600tons CO2 equivalent per annum.

Community Health and Safety: Umeme has significantly reduced the number of public fatalities associated with failure of its network. No public fatality was recorded in 2015 (compared to 2 fatalities in 2014) due to failure of distribution network condition. Since 2009, Umeme has succeeded in reducing these fatalities from an average of 12.75 per year (2005-2008) to an average of three per year. This has been largely achieved through the company’s progressive refurbishment of its network.



In addition to the above, there has also been a 20% decline in public fatalities due to network interference and domestic electrical wiring faults. There were 47 such public fatalities in 2012 compared to 28 in 2015 and 10 as at June 2016. This is mainly due to implementation by Umeme of a number of safety strategies of mitigating risks associated with third party activity. These initiatives include stakeholder engagements with local leaders, construction companies, events companies; and sensitization through school and community visits, safety text messages, radio announcements and school safety clubs. In 2015 Umeme undertook about 8,400 school talks and about 7,900 community presentations, which was supported by the use of the new SMS platform, print media, radio and television. In addition, 106 school safety clubs were established in high risk areas. Working with local education authorities, electricity safety programs are discussed as part of extra curriculum for primary schools. This is delivered by teachers after being trained by Umeme personnel.



Encroachment on transmission line way-leaves is another source of accidents and fatalities in the Umeme network. Way-leaves for power distribution in Uganda do not belong to the utility company or state, as is the case in many other countries, although unimpeded access to these way-leaves may be sought for maintenance purposes. As a result, there is widespread encroachment of houses and businesses into these way-leaves, much of which cannot easily be successfully challenged in court. This encroachment raises the risk level associated with line breakage and can lead to electrocution if people are not mindful of activities conducted beneath power lines. Theft is also a risk for Umeme, involving everything from transformers to conductors (power lines), transformer oil, power – via illegal connections – and other saleable items. This has historically been a problem involving both external and internal stakeholders, and as a result Umeme is tackling the problem via a variety of means including: night patrols of transmission corridors by the Company’s security contractors; anonymous hot-lines for people to report vandalism and theft; and prosecution of thieves.



Although regarded as a significant problem area by Umeme, benchmarking in East Africa has shown that Umeme’s public fatality frequency rate in relation to the size of its network is the lowest in the region. Although there are pockets of high-risk networ
k, which Umeme targets for rehabilitation purposes, network dilapidation problems are both common and geographically dispersed, meaning that network-related risks to the community are not amenable to immediate trouble-shooting efforts and are likely to persist for several years until the bulk of the network has been overhauled.



Decentralization of safety management and increased oversight of contractor operations has had a positive impact on staff and contractor fatalities. The company introduced technical solutions to complement its public awareness campaigns, e.g., bulk metering points to control connections and bundled conductors to prevent illegal connections via contact with un-insulated conductors.



The Safety Department regularly engages other utility companies within the region to share lessons learned in the management of EHS. Umeme remains a member of the Power Institute of East and Southern Africa and participates regularly in meetings in which quality, safety and environment management are discussed. The last such meeting was held in Malawi in 2015.



Security Personnel: The security arrangements of 2009/2012 have remained the same with the same security companies being deployed but with changes in their scope and areas of operations. The new contracts for the security companies have the relevant IFC Performance Standards embedded in their contracts.The security companies are subjected to a degree of screening by the Uganda Police Force. Following advice from the Uganda Police Force, guards are armed at senior staff residences and at locations where cash is handled. To date, there have been no armed robberies or incidents involving the use of guns by these guards. All guards have radios. The main security issue for Umeme is theft of equipment, disposables and power. Cable and power line theft has increased significantly since 2009, notwithstanding the replacement of copper conductors (power lines) with lower value aluminum conductors.



Umeme no longer uses the Uganda Police Force for security arrangements at its facilities. However, in situations where illegal connections are being dismantled or power cut off after illegal use, the Uganda Police Force may be asked to accompany Umeme employees to ensure their safety and security. As well, a Deputy Superintendent Police Officer has recently been seconded from Uganda Police Force to strengthen the Company’s physical asset security across the country.

Stakeholder engagement related to infrastructure development is conducted by independent EIA consultants, as part of the mandatory EIA process in Uganda. Every EIA involves discussions with local government leaders, adjacent land owners, and the district engineer and district planner. Feedback from these parties is incorporated into the planning process as appropriate.

Umeme maintains a 24 hour call center to receive customer complaints, reports of electricity theft and any other issues affecting its network. The Company pledges to make any emergency situation safe within 20 minutes.

At the corporate level, Umeme’s public communication program utilizes a wide range of media such as targeted radio programs, safety stalls at trade shows, news posters, adverts in newspapers and the use of an SMS platform introduced in 2013. A key element of Umeme’s communication program is the education of members of the public, and especially children (through school-based safety programs), of the dangers associated with electricity and the tampering with transmission and distribution infrastructure and equipment. As noted above the company undertook about 8,400 school talks and about 7,900 community presentations on electrical safety in 2015.

Contact Person: Marie Nassiwa
Company Name: Umeme Limited
Address:2nd Floor Rwenzori House, Plot 1 Lumumba Avenue
Email: mailto:marie.nassiwa@umeme.co.ug
Phone: 0312360617

Broad Community Support is not applicable for this project

IFC''''s Review concluded that the project will be implemented and operated in accordance with Performance Standards objectives, without any additional action to be included in an ESAP.