IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s 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 implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
As required under the previous IFC’s transaction, the Group documented overarching E&S policies at corporate level and developed an Environmental and Social Management System (ESMS) which covers its subsidiaries, including the LMI Utilities and the previously financed solar PV project. Going forward, (i) SFI will adopt the principles of the existing ESMS in order to develop its own tailored policies and ESMS, consistent with Good International Industry Practices (GIIP) and the IFC Performance Standards (PS); and (ii) prior to engagement of the EPC contractor, and as part of the selection criteria, SFI will share evidence that the winning bidder has an existing ESMS in place that will enable its activities and that of its contractors to operate in accordance with IFC requirements. This ESMS will need to be tailored to the specific risks of the project. (ESAP #1)
In line with Ghanaian regulation, an Environmental and Social Impact Assessment (ESIA) is underway to secure necessary permits from the regulatory authority before commissioning. The scope of this ESIA was defined for the first phase of the project and covers primarily power distribution within the Dawa Industrial Park. The significant potential impacts identified up to this point are mainly those related to construction activities, such as occupational health and safety issues, noise and air pollution, soil erosion, visual impacts, waste generation, dust, traffic incidents associated with transportation of materials and equipment, labor influx and community health and safety. It is anticipated that due to the passive nature of solar PV plants, the overall impact during the operation phase will be limited.
No land acquisition risk was identified given the Solar PV farm and the portion of the power evacuation line will be located within the Dawa Industrial Park, a property acquired by LMI Holdings from a local family in 2022, on a willing buyer-willing seller basis.
The ESIA however does not provide an appropriate level of details on some key aspects such as, the project zone of influence, the power evacuation line to the Dawa substation, the type of contracting arrangements and the required E&S oversight, social risks and impacts associated with labour and working conditions, energy and resources use, and solar equipment supply chain. To meet IFC PS requirements, SFI will (i) agree with IFC revised Terms of Reference (ToRs) to prepare an updated ESIA, compliant with PS and WBG EHS Guidelines to be disclosed on IFC’s disclosure page prior to construction, along with the remaining project appraisal findings; (ii) further update the ESIA and resulting E&S Management Plans (ESMPs) once the grid optimization study is completed, to cover the scope of the power evacuation line to the Tema Industrial Zone via the Gridco transmission line and any additional technical components; (iii) agree with IFC on contractor selection criteria in accordance with the IFC approved ESIA and the Loan Agreement requirements (ESAP #2a).
In addition, SFI will familiarize itself with labor risks (forced labor and child labor) associated to the solar PV supply chain. The ESMS developed under ESAP#1, will include a section on supply chain management including a responsible sourcing policy, mapping and risk assessment of PV solar suppliers, specific measures to be implemented in case mapping reveals potential exposure to forced labor and the inclusion of appropriate clauses in procurement notices and contracts with solar PV module suppliers. Per contract, SFI will be entitled to change PV solar suppliers if issues are found and left unresolved. It will also establish and implement a supply chain management system to identify, manage and remediate supply chain risks associated with forced labor, child labor as well as any other significant safety issues and environmental impacts in relation to PV solar module and component suppliers. (ESAP #2b).
The draft ESIA incorporates E&S mitigation measures related to air quality, dust, biodiversity, workplace safety and water quality among others. These plans were not designed in proportion to the scope and scale of the proposed project and are labelled as ‘provisional’ with the intent to be further updated prior to construction. At the same time, as a member of the ‘LMI Utilities’, SFI is expected to adopt and implement ESMPs agreed with IFC as part of the previous transaction, including the incorporation of legally binding E&S clauses in the EPC and subcontractors’ terms of appointment to ensure compliance with the requirements of the ESMPs, local regulations and IFC PS requirements. Going forward, SFI will develop fit-for-purpose ESMPs to include as a minimum (i) a construction management plan (CMP) proportional to the scope and scale of the project, consistent with the general requirements of IFC PS1 and the findings of the updated ESIA per ESAP#2, (ii) a ‘Contractor and Subcontractor Management and Monitoring Plan’ (CMMP) covering the construction and operation phases respectively, as already implemented by the other subsidiaries, which will include monthly monitoring requirements to assess adherence to local labor laws, PS requirements, and project labor and working conditions. (ESAP #3a)
In addition, as indicated under ESAP #1, SFI will also require the contractor to have project specific ESMPs prior to the start of construction, consistent with the principles of the “IFC’s Good Practice Note: Managing Contractors' Environmental and Social Performance”. (ESAP #3b)
Currently, the Group’s Environment, Health and Safety (EHS) manager is responsible for EHS management across all the subsidiaries. Considering the additional E&S risks and the larger scope of E&S oversight required for the project, SFI will appoint a dedicated competent EHS resource, to oversee the ESMS implementation for the proposed project, including contractors’ E&S performance, and to serve as the primary point of contact for the construction contractor E&S personnel. Relatedly, the contractor will be required to have the necessary organizational capacity in place to manage E&S risks associated with construction and oversee the ESMP implementation. (ESAP #4)
The Group’s Human Resource (HR) function has oversight responsibilities over current and future subsidiaries and affiliates. The function is also responsible for monitoring the effectiveness of HR policies to ensure compliance. In accordance with current practice, per ESAP#4, the Group will allocate a HR Business Partner to cover SFI’s HR administration and oversight roles.
Given the project is still in its early development stages, there is no emergency preparedness and response plan. SFI will adopt the emergency preparedness and response procedures documented by the other subsidiaries. The EPC contractor will be required to prepare and implement its site-specific emergency response plans (EPRP) as part of ESAP#3.
LMI’s subsidiaries have implemented EHS monitoring and reporting requirements to the Group as part of the previous IFC transaction, to measure effectiveness of the ESMS and support continuous performance (including contractors’ EHS audits). Likewise, the ESMS required under ESAP#1, will include a framework for monitoring SFI’s and its contractors’ E&S performance against regulatory requirements of the Ghanaian Environmental Protection Agency (EPA) and applicable IFC PS, and will include key performance indicators (“KPIs”) to be tracked. The ESMPs developed as part of the project’s ESIA update, the CMP and CMMP will be the primary tools for project-level E&S performance monitoring.
PS2: Labour and Working Conditions
The workforce during the construction phase is estimated at 115 workers with only 15 direct workers. Under the project, the contractor’s engagement will extend to the operation and maintenance phase for a period of 2 years. About 20% of the contractor’s staff will be retained for the operations phase but SFI will maintain its direct staff for the lifetime of the project. The contractors will not construct workers housing for the construction phase as the unskilled and semi-skilled workers will be sourced from the local community. Skilled staff will be housed in the existing housing market. However, the company will construct 10 units to accommodate core power plant staff.
The project will connect to the existing substations within Tema and Dawa Industrial Parks, owned and operated by EPCL. The upcoming feasibility studies on the grid optimization will determine the additional construction and operational phase staff requirements for the Contractor and EPCL.
SFI will comply with LMI Group HR Policies that have a commitment to compliance with local laws, as well as compliance with policies and standards in the international business environment. The HR policies, employment terms and conditions are based on local labour laws and are broadly aligned with IFC requirements, with the exception of the gaps outlined below. The LMI Group’s Employee Handbook which will also apply to SFI staff, outlines relevant working terms and conditions and is availed during the employee induction phase. Company policy commitments including the staff code of conduct, disciplinary actions, performance management, learning and development, succession planning, terminations (dismissal, retirement, redundancy, resignation and death).
To supplement the commitments in the LMI Group HR Policies and Procedures, SFI will document policies and procedures on freedom of association and collective bargaining; operation and maintenance of company owned workers housing; prohibition of child and forced labor for its direct and third-party workers; in compliance with local laws and PS 2 requirements. SFI will also integrate mechanisms for implementation of these provisions in its internal policy documents for its direct staff, and in the contract templates for third-party workers. (ESAP #5).
SFI will adopt the working terms and conditions as laid by the Group. The Group’s HR Manual, employee’s handbook and contracts outline the expected hours of work, overtime arrangements, compensation and benefits, salary and wage payment, leave (annual, sick, maternity, paternity). Workers are provided with contracts that outline their engagement terms as well as stipulated working hours, confidentiality policies, statutory deductions, and notification addresses.
SFI will adopt the Group’s Non-Discrimination Policy, which affirms the commitments to fair conditions and prohibits discrimination. The employee handbook also outlines the mechanisms for staff to report discrimination incidences, information on investigation approaches and provides management commitments against retaliation for staff who use this mechanism. The manual also outlines the recruitment, performance review, promotion and termination policies, and procedures to further promote transparency and non-discrimination in company-employee relations.
None of the Group’s staff are members of applicable unions but the professional staff are voluntary members of professional associations. As part of ESAP #5, SFI will document policy statements on freedom of association and will not restrict the workers’ rights to develop alternative mechanisms for expressing their grievances and to protect their rights on working conditions and terms of employment. SFI will not seek to influence or control these mechanisms.
The LMI Group anti-harassment policies cover general harassment, sexual harassment and disability harassment and outline the channels for reporting of general harassment as well as sexual harassment and harassment against persons with disability. SFI will document a workers grievance redress mechanism and make this accessible to its workers and allow for prompt resolution of workers concerns. The mechanism will also provide for receipt and resolution of grievances on multiple platforms including anonymous grievances and will allow for specific measures for identification and management of complaints related to gender-based violence and sexual harassment (GBV&SH). (ESAP #6)
The bulk of the project staff will be contracted workers engaged by the contractor for the construction and operation phases of the project. SFI will integrate labour requirements including specifications for occupational health and safety, child labour and forced labour into the project contracts. The clauses will include representations for audit, remedial action and where no improvement on significant non-compliances is observed, exit by SFI (ESAP #7).
Prior to engagement of the contractor, and as part of the selection criteria, SFI will share evidence that the winning bidder has an ESMS that will enable its activities and that of its contractors to operate in accordance with IFC requirements for workers engaged by third parties and will undertake a labor practices due diligence screening of shortlisted contractors and their primary suppliers for the solar modules under its CMMP as specified under ESAP #3. This will include screening for potential unfair labor practices in the supply chain. SFI will also develop a Local Recruitment Management Strategy to facilitate monitoring and audit of the contactor’s efforts to recruit local community members and to minimize the risks related to project induced in-migration. (ESAP #8).
As part of its ESMS and ESMPs and based on the updated ESIA, per ESAP #1 to #3, SFI will develop an Occupational Health and Safety (OHS) Program for its staff, commensurate with the risks arising from its operations. The selected EPC contractor, similarly, will develop and implement a formal Occupational Health and Safety (OHS) program as informed by project and site-specific supplementary health and safety risk assessment and integrate the program into its ESMS. Procedures and documentation under the OHS program will be consistent with relevant WBG EHS Guidelines and GIIP. The adopted safety measures will include practices to facilitate medical examinations for employees. (ESAP #9)
PS3: Resource Efficiency and Pollution Prevention
The 1st phase of the project with a capacity of 50 MWp is estimated to generate 75 GWh/ year, with greenhouse gas emission reductions of 43,800 tCO2e per year using a grid emission factor of 0.3 tCO2e/MWh.
Water will be sourced from permitted onsite borewells for both the construction and operation phases. Based on its experience with the previous project, SFI anticipates that water demand during the construction of the power plant, will be around 41,000 litres daily. The ESIA indicates that the impact of water extraction on availability for neighboring communities will be minor and will only last for the duration of construction. The contractor will further assess this impact as part of the revised ESIA (per ESAP#2) and will use the findings to develop a water management plan and enable efficient use of water during construction, consistent with EHS Guidelines and GIIP (ESAP #10).
During the operational phase, water will primarily be required for solar panel cleaning and for sanitation purposes. Total water requirements during this period is anticipated to be around 210,000 liters/years.
As underlined in the ESIA, the main pollution risks will arise during the construction phase and will range from minor to moderate impacts on air quality, water quality, and soil erosion. As part of the ESMP (per ESAP#3), the EPC Contractor will develop and include relevant mitigation measures in the CMP and CMMP and define performance criteria consistent with the findings of the upgraded ESIA and SFI’s ESMPs and aligned with EHS Guidelines and GIIP.
Potential ambient noise nuisance is estimated to be minor considering the distance to the Whuapa village, which is the closest sensitive receptor, at a 600m distance. Waste generated during project construction activities will be managed by contractors in accordance with the waste management plan to be developed as part of the CMP per ESAP#3. Operational phase waste is expected to be limited and will be managed in alignment with the waste management procedure implemented by the other subsidiaries and agreed with IFC. Wastewater from panel cleaning will be non-hazardous as no cleaning chemicals will be used, and thus, will be disposed of in the stormwater drains of the industrial zone. No material pollution risks are anticipated in the construction of the electricity transmission line.
PS4: Community Health Safety and Security
As indicated above in section PS1, the proposed site will be developed within a company-owned concession and the closest settlements is located more than 600m away. Transportation routes to be used for equipment and locally sourced raw materials will pass through or in proximity to existing settlements. As part of ESAP #2 and #3, the contractor will undertake supplementary road safety and fire safety risk assessments and integrate applicable measures into the community health and safety plan, consistent with the requirements of IFC PS4 and the EHS Guidelines. The assessment will cover risks from the project compound (including waste management, air and water pollution, and clean water provision), as well as the power evacuation line and road safety. SFI oversight under the CMMP will also cover Community Health and Safety components. The contractor Stakeholder Engagement Plan (See ESAP #11) will cover strategies to provide for communication processes with local communities and requisite external grievance management process.
The site will be manned by unarmed guards contracted from a third-party security service provider. SFI will require the contractor to undertake due diligence review on all potential service providers at procurement stage to check for past human rights violations and to undertake a security risk assessment. The findings will inform the ESMP to prepare a security management plan consistent with the principles of PS4, with respective responsibilities at SFI and the contractor’s level. SFI will further ensure that (i) the security staff are issued with a code of conduct to guide their engagement with the community and visitors, and (ii) the service provider’s contract includes requirements for continuous training of security personnel, and an allowance for periodic audit by SFI The contractor’s staff will be required to sign Codes of Conduct covering SFI’s expectations on workers’ behavior in their interaction with the local communities. The Codes of Conduct will be presented in clear, unambiguous language and will outline the responsibilities of workers and company management in observance of human rights. (ESAP #11).
