Based on IFC’s review of the project PS 5: Land Acquisition and Involuntary Resettlement is not applicable as the project is focused on replacement / maintenance of exiting powerlines and thus will not result in the acquisition of private land or the need to conduct resettlement from public land. PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources does not apply because the project does not involve the installation of new infrastructure or additional disturbance to ecological receptors. PS7: Indigenous Peoples is not applicable as there are no indigenous peoples in the project area, as per the definition used by the World Bank Group; and PS8: Cultural Heritage is not applicable as the project is not located in the area of known historical or cultural significance and does not impact any known cultural heritage.    

 This is a Category B project according to IFC’s Policy on Environmental and Social Sustainability as the E&S impacts associated with the project are limited, generally project-specific and can be addressed through the implementation of good international industry practices. 

Key E&S issues identified include a lack of E&S risks integration in the corporate risk management; presence of toxic polychlorinated biphenyls (PCBs) in old ENA transformers; historical PCB contamination of soil and potentially groundwater; high rate of accidents related to hazardous electrical exposures to workers and members of community; historical illegal dwellings and structures in protection zones of existing substations and powerlines’ right-of-way (ROW); and potential impacts on biodiversity (mainly through birds’ electrocution and collision with wires).

The Phase 1 ESAP focuses on strengthening of the Company's capacity and implementing systematic approach to management of environmental and social risks, formalizing internal procedures for screening and scoping projects against national legislation and Lenders requirements; improving management of hazardous substances and hazardous wastes; strengthening E&S requirements for contractors and strengthening internal HR procedures. ENA has achieved good progress in implementing the ESAP. Phase 2 ESAP will focus on closing out the pending action items agreed for Phase 1 and include additional items, based on the findings of IFC due diligence, outlined below. 

 Environmental and Social Management Systems:

ENA manages the environmental and social (E&S) aspects of its operations in accordance with relevant national requirements and is currently incorporating international best practices into its management approach.

ENA has established an Integrated Management System (IMS) and is currently accredited to ISO 9001, ISO14001, ISO45001 & ISO50001 (ISO 9001, 14001 & 45001 are company-wide accreditations whilst ISO 50001 covers only ENA’s transmission lines). During 2019 an ISO certification surveillance audit was conducted by an international, independent auditor in which ENA retained its certification with only minor corrective actions being recorded.

Environmental & Social Risks and Impacts: As outlined within Armenia’s Law on Environmental Impact Assessment and Expertise (2014), projects are required to be assessed according to a two-stage process: (i) the preliminary stage, which include screening and categorization as category A, B, or C according to activity type, however, there is no official screening process defined in the legislation other than the list of activities specified; and (ii) a main examination phase, where Category A and B projects are further examined.

ENA have appointed an Environmental Expert who is responsible for screening all project activities against relevant legal requirements and ensuring compliance. It should be noted that activities related to the current investment program do not involve any works that would require full environmental and impact assessments per Armenian or IFC’s requirements as only minor reconstruction works of the existing 110kV transmission lines are expected.

ENA is currently implementing two project level risk identification and assessment processes:

-          An IMS risk assessment framework which is utilised for the identification of operational, occupational health & safety, social & environmental and information security risks, their impact assessment and development of control measures to manage identified risks; and

-          A ‘Rapid Environmental and Social Assessment’ (RESA) which has been developed to screen projects against national and EBRD & ADB EIA criteria.

ENA confirmed that all projects implemented under lender financing are screened via the RESA. ENA utilizes external consultants to conduct biodiversity screening although a clear process related to the identification of international recognized biodiversity areas and subsequent implementation of mitigation hierarchy measures has not been clearly defined.  This will be addressed in ESAP 1.2 (1).  

Management Program

ENA has established an Integrated Management System (IMS) which incorporates their ESMS and consists of approximately 900 internal IMS plans & procedures The IMS includes a combination of operational plans & procedures and related supporting documents to manage E&S issues. Key E&S documents include an ESMP, Waste Management Plan, Stakeholder Engagement Plan, Incident Management Procedure etc.  

All contractors are required to implement and adhere to ENA’s ESMS.  This requirement is stipulated within EHS provisions included within their individual contracts.

Contractor Management

ENA have implemented measures to strengthen their ability to manage contractors EHS performance. Such measures include EHS inclusions within contractors & vendors bidding processes, with EHS requirements being included within tender documents etc.   EHS provisions are part of the contracts, including reporting requirements on EHS and adherence to ENA’s internal EHS procedures.

ENA’s EHS representative has the right to inspect contractors working areas and stop works at any time if unsafe condition is observed.

Organizational Capacity & Competency

ENA have an organizational structure for environmental, safety and social matters. The structure includes one environmental specialist who sits within the ENA Technical Department under the Technical Director and the Head of Safety and Sustainability. 

ENA has established an Integrated Management System (IMS) and Audit department comprising a head of department and a head of IMS Implementation Unit. The purpose of the audit unit is to undertake routine monitoring of all ENA sites and report on their compliance with the ESMS. Within each site branch an employee is responsible for HSE and environmental issues.

ENA’s current board has not assigned a board member responsible for oversight of E&S risks nor has an HSE committee or E&S steering committee been established. As outlined within ESAP 1.1 ENA shall include in the board scope of work the E&S Mandate; integrate E&S aspects into company’s strategy and assign one of the board members to provide oversight of the E&S risk management.

Emergency Preparedness & Response

The company has developed Emergency Preparedness and Response procedures which are currently being updated to include emergency scenarios related to the transport and storage of hazardous waste.

Land Acquisition and Involuntary Resettlement

Phase 2 projects will not involve land acquisition or resettlement as the majority of the works to be completed are replacement / maintenance works. Some facilities (substations), less than 10, need to expand their footprint somewhat.  These locations have been identified and they are located on government land free of any occupation which will be transferred to ENA from the state.

Therefore, the project is not expected to result in PS5 related impacts. However, there are legacy issues of informal households/ structures historically constructed within ENA’s protection zones or Right-of-Ways, which have been identified and placed into an inventory. As outlined in ESAP 1.2 (2), ENA will conduct a risk assessment and, if there is a need for economic or physical displacement because of health and safety risks, ENA will develop Resettlement Action Plans in line with PS5 requirements those impacted and potentially displaced as a result, and collaborate with the Government to achieve outcomes that meet PS5 objectives .

In line with ESAP item ESAP 1.2 ENA will upgrade their Land acquisition and Resettlement Framework (LARF) to be fully aligned with PS5 requirements and apply it in the event that any displacement is required in the future either as required by the Government or as result of the operations of ENA.

Biodiversity Conservation and Sustainable Management of Living Natural Resources

Operation, modernization and maintenance of ENA’s grid pose risks to biodiversity. Two of the main potential impacts are bird mortality through electrocution or collision, and habitat loss, disturbance, and displacement of wildlife during maintenance or modernization works. ENA has a process in place to identify and avoid or mitigate impacts in legally protected areas. However, ENA’s ESMS does not take into account risks to areas that are not legally protected but are internationally recognized for biodiversity and risks that overhead lines pose to birds from electrocution and collisions. Since these potential impacts at the time of IFC’s appraisal concern undefined assets, PS6 is not determined to apply at this stage. As agreed in the ESAP 1.2 (1), ENA will update the their existing ESMS to included mechanisms to ensure that project activities are adequately screened, assessed and identified risks to biodiversity are appropriately mitigated. Mitigation measures are will be incorporated into facilities / infrastructure engineering & design and contractor tender procedures in line with PS6 requirements. Particular attention is to be made to both Protected Areas & Key Biodiversity Areas, as well as potential impacts to birds.

Monitoring & Review

ENA have established procedures and allocated resources, including an internal audit department, to monitor and measure the effectiveness of their management systems. In addition, there are scheduled formal internal audits and spot audits conducted by ENA personnel. These audits cover technical, environmental, health and safety issues. ENA management receives audit results and there is a formal process of reviewing, responding and closing the report’s findings through a corrective action system.

Contractors: Contractors are selected through the bidding process, and EHS requirements are included in tender documents. EHS provisions are part of the contracts, including reporting requirements on EHS and ENA’s internal EHS procedures to be followed (on asbestos, working at height, waste management, etc.)  ENA’s EHS representative has the right to inspect the site and stop works at any time if unsafe condition is observed. After each inspection a formal report is produced.

 Armenia fully endorses the ILO core labor standards and they are incorporated in the national labor laws.  Hereby the core labor standards, as defined in Performance Standard 2 are guaranteed for employees at companies like ENA, which strictly follow the legal requirements.

Human Resources Policies and Procedures

The company has developed a Human Resources Management Policy (procedure) in line with Armenian Labor Law and IFI requirements. The policy states the company’s commitments in all human resources areas including employees’ selection, training and education and career development. The employee rights and entitlements (including those pertaining to wages, working hours, overtime arrangements and compensation, benefits etc.) are communicated at employment and documented in individual work agreements signed with each employee as well as in a Collective Labor Agreement.

Working Conditions and Terms of Employment

ENA have a Collective Work Agreement in line with the Armenian Labor Law in place which addresses wage and benefits, wage deduction, hours of work, breaks, rest days, overtime arrangements and compensation, 

Pay levels are determined based on the job description of the position and considers the level of required professional qualifications and responsibilities. The salary rate of each employee (position) is set by recommendation of the head of each unit and by order of the General Director. Employee compensation contractually set and cannot be altered due to employee discipline or quality of work - any changes in salary must only be made upon the agreement of both parties involved.

Workers’ Organization

ENA’s workers established their trade union in 2003. The percentage of union members is close to 100%. Its longstanding chairman was interviewed during the IFC’s appraisal in 2018. Relations with management appear to be positive and constructive. The Collective Agreement, which was signed in 2009, with the latest updates made from 2017, is respected by the company’s management. The CA contains 14 articles on social support and benefits agreed with the company’s management beyond the national Labor Code guarantees. Trade union is declared to provide assistance to workers in resolving of work-related grievances. The highest turnover rate (slightly above 10%) is among inspectors of electric consumption (approximately 2,000 employees).Turnover rate among key technical staff is around 1%.

Non-discrimination and Equal Opportunity

As per the Human Resources Management Policy, the working relationship is based on equal treatment and non-discrimination based on criteria including gender, age, nationality, race, religion, political affiliation, social origins, and family conditions. Wage levels are set in the Collective Work agreement and are determined based on education, position, specific requirements and responsibilities for the position and experience. These are in line with nondiscrimination principles and are not in correlation the gender, nationality, religion or other personal aspects of the employees.

Of the 6,857 total direct employees at ENA, 843 (12.3%) are women, 576 of which are employed as engineering staff and 258 are employed as technical staff.  Two women have roles on the ENA board and also hold senior management positions.

The company will assess and revise their HR policy, materials and training to encourage male and female applicants and improve female retention and promotion. It will also include a focus on preventing and responding to gender-based violence/harassment for women workers, and in local communities affected   project activities.

Child and Forced Labor

All employees in the company, as well as employees of contracted companies, must be of legal working age as defined by the Armenian legislation and the International Labour Organization (ILO).

ENA’s Human Resources Management Policy states that their ‘human resource department member must reject all minor persons when selecting employees, and ensure this requirement be written into contracts between the company and contracting companies’. 

Retrenchment

ENA staff members have been reduced from 7,800 in 2017 to 6,900 at present. In light of optimization of staff resources, ENA management expects to reach 6,700 headcounts in 2021 and 6,400 in 2024, corresponding to a planned retrenchment of 500 persons in coming years. The previous “wave” of retrenchment occurred in 2016-2017, when 800 people were dismissed. The workers that were retrenched were given 2 years for requalification and finding other vacancies in Tashir Group or alternative sources of employment. ENA provided individuals, which have been retrenched with 1-year salary following a redundancy package, which is far beyond the local Labor Code, which requires that employees who are retrenched or made redundant to be given two months’ notice. ENA’s trade union was actively involved in the process and reportedly there were no major grievances, nor were there any retrenchment-related claims brought to the court. 

As outlined in the ESAP 2.1, prior to the planned retrenchment in future, the company will prepare a Retrenchment Policy and formal Retrenchment Action Plan in accordance with PS2.

Workers Grievance Mechanism

In 2017 the company adopted Grievance Mechanism Procedure, which is incorporated into new management system and include both external and internal grievances. There are various channels available, including internal e-mail. The procedure says that anonymous grievances shall be recorded and reported with other grievances to facilitate continuous improvement. 20 calendar days are given to communicate the outcome(s) with the submitter of the grievance. Interviews with HR and Trade Union representatives indicate that formal claims are rare and problems are solved without utilizing formal procedures. As outlines in ESAP 2.7 ENA will update the grievance procedures to encourage registering grievances that are resolved outside the formal grievance process to allow for identification of systemic issues by the corporate management team. No outstanding work-related complaints against the company were identified during the appraisal. 

As outlined in ESAP 2.7. ENA will update the grievance mechanism to include specific treatment of harassment/gender-based violence (GBV) grievances and provide specific training to grievance offices and general awareness for employees on harassment/GBV.

Protecting the Work Force

Occupational Health and Safety

The company is certified with ISO 45001. A comprehensive set of OHS policies and procedures have been developed. At the central office the OHS aspects fall under the Department of Technical Safety and Reliability, which include 7 employees (head, deputy head, 3 OHS specialists, 1 environmental specialist, 1 fire safety specialist). There are in total 40 in-house OHS inspectors overviewing safety standards in ENA’s branches throughout the country.

Despite a certified system in place, twelve (12) serious occupational health and safety incidents have been reported in the period between July 2017 and August 2019, including nine (9) fatalities, which also affected members of the public and contractors. All the reported incidents are electrocution or arc flash related. The company doesn’t perform their own internal accident investigations and rely on the external police investigations when fatalities occur. This approach may limit the organization from identifying root causes, removing the actual causes and prevent recurrences.

To address high incident rates, EBRD put forward a Corrective Action Plan (CAP) and facilitated a training program to ENA (postponed due to Covid-19 outbreak) the completion of these actions are outlined in ESAP 4.1, In addition, IFC’s OHS specialist has reviewed the full set of related ENA’s procedures and proposed a number of improvements related to incident management; contractors management; OHS KPIs; personal protective equipment, etc. IFC in close coordination with EBRD will continue to closely work with the company on this matter.

Covid-19: ENA has developed OHS procedures on how to manage Covid-19. Medical grade masks, hand sanitizer & gloves are provided to all members of their work crews. Members of the public are prohibited from entering ENA’s offices and other facilities. Workers >60 yrs. have been instructed to work from home. No job losses have occurred to date due to Covid-19. If workers have flu like symptoms or otherwise feel ill they have been instructed to stay home and are receiving full salary.

Workers Engaged by Third Parties

Employment conditions for workers employed by contractors are to be consistent with requirements outlined within ENA’s Human Resources Management Policy.

Supply Chain

As outlined within PS1, the company includes EHS inclusions within contractors & vendors bidding processes, with EHS requirements being included within tender documents etc.  ENA will further implemented processes to identify, manage, and monitor environmental, social, health & safety, risks and track performance of project key suppliers and vendors.               

 Resource Efficiency:

ENA has developed and is implementing an ISO 50001 energy management system although to date only ENA’s transmission lines have been certified.

GHG: Direct GHG emissions of ENA are minimal (fuel and use of Sulfur Hexafluoride (SF6) as a gas insulator for electrical switching equipment and transformers). Indirect emissions are associated with the company’s purchase of electricity from generating companies. Indirect carbon emissions reduction could be achieved by reduction of ENA’s technical and commercial losses.

Pollution Prevention

Waste Management:

Several different waste streams are produced by ENA that are classified as hazardous (PCB contaminated oils and equipment, asbestos, etc.). However, previously there were no suitable facilities in the country to manage these hazardous wastes. Accordingly, ENA constructed their own hazardous waste storage facility where materials can be stored until suitable and cost-effective options for the disposal of these wastes can be realized.

Construction was completed in October 2019. The site is located 48 km away from Yerevan, on 100 x 80 m land plot owned by ENA, approximately 3 km away from Myasnikan village (4,500 residents). In addition to PCB-contaminated equipment (decommissioned transformers and switches) and oil, ENA will use it as temporary storage for mercury lamps; lead-acid batteries; and asbestos. ENA has received all required licenses / permits for the use of this facility although additional permits are required to utilize their own vehicles to transport hazardous wastes.  ENA is currently in the process of gaining the required permits.

ENA currently utilize licensed external companies to transport and treat / dispose their non-hazardous & recyclable waste. ENA have audited these companies and their facilitates meet national requirements.

A waste management procedure & waste volumes register has been developed although comprehensive ‘waste tracking’ is not being conducted. ENA will developed a waste tracking system aligned with industry best practice as outlined within ESAP 3.2  

Hazardous Materials:

ENA has approximately 9000 electrical transformers of varying ages, the majority of which were produced prior to 1989 and are potentially contaminated with polychlorinated biphenyls (PCBs). An estimated 1000 of the 9000 electrical transformers were procured and installed post 2005 and are not thought to be contaminated.

To verify the PCB-contamination status of each transformer, oil samples are required to be collected and tested for the presence of PCBs. A PCB sampling and testing campaign has been developed by ENA and during 2019 samples from 1200 transformers have been analyzed at the Armenian Ministry of Ecology’s laboratory. Of the 1200 samples tested, 21 reported PCBs concentrations elevated above 50ppm which means that they are classified as a ‘PCB transformer’ or ‘PCB Contaminated’ according to USEPA definitions. A testing campaign completed prior to 2019 identified 8 other transformers with PCB concentrations elevated above 50ppm.

All transformers tested containing PCB concentrations above 50ppm are marked with a red label. All those under 50ppm are marked with a green label.  The testing completed to date identified samples as having PCB concentrations above or below 50ppm although it did not report on the actual PCB concentration.  ENA are currently retesting all samples which initially reported concentrations elevated above 50 ppm to determine their actual PCB concentration.

The transformers that have been tested are listed in an inventory by ENA. In addition to the inventory,  ENA is currently developing a ‘infrastructure passport’ program in which each piece of equipment (including transformers) will be inspected and issued with a ‘passport’ which will contain key information related to the equipment’s current status (type, how much oil contained, PCB testing results, bunding integrity, fencing / security measures, vegetation etc.).

ENA stated that they will test the remaining potentially contaminated transformers although a testing regime / schedule has not yet been developed.  This will be addressed as per ESAP 3.1 (1). 

A clear strategy, including treatment & disposal options, estimated budgets and timeframes, for the transformers which contain elevated concentrations of PCBs has not been developed. This will be addressed as per ESAP 3.1 (2). 

Site inspections conducted by an Independent Environmental & Social Consultant (IESC) engaged during Phase I of this project noted areas of potential historical environmental contamination related to past practices and transformers without secondary containment.

ENA is currently developing a ‘infrastructure passport’ program in which each piece of equipment (including transformers) will be inspected and issued with a ‘passport’. This process will evaluate the condition of secondary containment measures and identify visual signs of contamination.

As per ESAP 3.3, ENA will develop a contaminated sites inventory which identifies all locations of likely historical contamination (soil & groundwater) and quantifies and delineates contaminant concentrations and volumes of contaminated materials. Intrusive investigation techniques may be required if areas of significant contamination or potential sensitive receptors are identified.   The inventory shall include a risk assessment which ranks identified locations based on the ‘source-pathway-receptor’ pollutant linkages approach.

Based on the risk assessment, remediation action plans (including defined budgets) shall be developed and remedial actions implemented for high risk contaminated sites to avoid or minimize significant adverse impacts on human health and the environment.               

 Community Health and Safety

Key hazard to community health and safety most directly related to ENA’s operation is the risk of electrocution from direct contact with high-voltage electricity or from contact with tools, vehicles, ladders, or other devices that are in contact with high-voltage electricity. In addition to use of signs and barriers, education and public outreach to prevent public contact with potentially dangerous equipment are key preventive measures. This will be addressed as per ESAP 4.2.

Electromagnetic fields maximum voltage level at ENA’s networks us 110 kV, while magnetic fields are a concern for 330 kV voltage levels.

Hazardous Materials Management and Safety

ENA will start transportation of hazardous wastes to its own hazardous waste storage facilities once they receive transport licenses from the authorities. Transportation of hazardous wastes and its disposal may pose a risk to community. ENA is currently developing emergency response plans related to transporting hazardous wastes (spills, vehicle roll overs, etc) as part of the licensing process.

Community Exposure to Disease

As detailed within PS1, ENA have developed specific procedures to manage current Covid-19 pandemic focused on ensuring the safety of their employees and local communities.

ENA have supplied and require their employees to utilize PPE including Medical grade masks, hand sanitizer & gloves.  Members of the public are prohibited from entering ENA’s offices and other facilities.

Security Personnel

ENA outsources security function to the long-established private company. There are 140 locations where security is required due to strategic importance of the objects (each requiring 4 guards per shift). In total there are about 760 contracted security guards (none of which are armed) working at ENA’s facilities. Reportedly, there were no security accidents or any allegations of abusive acts of security personnel in the past.               

 Under the requirements of EBRD/ADB the Stakeholder Engagement Plan (SEP) was developed and adopted by ENA in 2017. According to Armenian legislation, stakeholders and the public are required to be notified of public consultations 10 days before the consultation takes place (through announcements in local and national newspapers; ENA’s website; announcements posted in public places; announcements made by local authorities; and other sources). To give ample notice to all affected stakeholders, the company agreed in its SEP to increase this to 30 days. After the consultation takes place, stakeholders including the public have two days to submit any additional comments or concerns to ENA through the established communication channels that are detailed in the public announcement. All documents will be disclosed on ENA’s website (www.ena.am) and the Ministry of Nature Protection’s website (www.mnp.am) and accessible by the general public at the time the consultation is announced.

All Public consultations will be coordinated through ENA’s Public Relations (PR) Department with local authorities in any communities affected by project activities.

The current SEP has a strong emphasis in regard to engagement activities required during the ESIA process although provides little detail related to ongoing engagement to be conducted throughout the life cycle of the company’s operations.  As outlined in ESAP 4.3, the SEP will be updated to ensure that it is fully aligned with IFC PS and to ensure a process of ongoing consultation is implemented.

ENA’s SEP currently outlines their community grievance mechanism (CGM) processes. 

A Grievance form is available on ENA’s website with instructions on submitting the form to ENA. ENA is tracking all comments or complaints received related to customer service as well as to the EIA consultation process. ENA has 10 days to respond to any petitions submitted through the channels.  ENA reports quarterly to the Public Services Regulatory Commission on the nature of the grievances received, the Company’s response and the dates of the communications. ENA has 10 days to respond to any petitions submitted through the ENA hotline, mail or by email channels.

Based on information obtained from the company, E&S related grievances are rare (2 reported in 2019) and mainly are related to noise and vibration from transformers. In such cases, noise measurements are carried out by an independent laboratory. Based on the received complaints, in several cases the company has replaced transformers.

ENA’s current community grievance mechanism is not completely aligned with IFC requirements and a  review completed during the appraisal has identified potential areas of improvement As outlined in ESAP 4.4, ENA will update and disseminate the community grievance mechanism and will ensure that project affected people, not having access to the grievance format on ENA website will also have access to raise grievances.  The CGM will be able receive and address complaints of sexual harassment or gender-based violence between employees/contractors and members of the community. This will include a mechanism that ensures confidentiality and, where possible, effective referrals to support services or the provision of support services. The grievance mechanism must identify specific response methods for any complaints involving the sexual exploitation of or sexual violence against children.