Environmental & Social Review Summary
Project Number
9129
Company Name
Panama Canal Railway Company
Date ESRS Disclosed
Feb 5, 2010
Country
Panama
Region
Latin America and the Caribbean
Last Updated Date
Dec 31, 2016
Environmental Category
B - Limited
Status
Completed
Previous Events
Approved : Jun 25, 1999
Signed : Nov 12, 1999
Invested : Dec 20, 1999
Sector
Rail Transportation
Industry
Infrastructure
Department
Gbl Infrastructure & Natural Resources
Project Description
Environmental Review Summary (ERS)
Project Name PANAMA: PANAMA CANAL RAILWAY COMPANY
Region Latin America and Caribbean
Sector Infrastructure
Project No. 009129
1. The former government-owned railway in Panama provided a cross-isthmus connection between the Atlantic and Pacific Oceans, linking the Port of Balboa near Panama City and the Port of Cristobal near Colon. In February 1998, the government of Panama passed into law the concession contract that granted the Panama Canal Railway Company (PCRC) the right to redevelop and operate the railway for a 25-year initial term, renewable for an additional 25 years. Resumption of rail service in Panama will be a major positive impact to the transportation resources of the country. PCRC is a joint venture between Kansas City Southern Industries, Inc. (KCSI), a major U.S. railroad company, and Lanco International, Inc., the parent company of Mi-Jack Products, Inc., the major U.S. manufacturer of intermodal equipment and operator of intermodal terminals.
2. Railroad properties were turned over to PCRC in June 1998. The project is a 2-year initial investment program to completely renovate the entire 47-mile rail network; construct a 3.5-mile spur line to Colon''s container port area east of the city; construct intermodal terminals next to the ports on both coasts; lease rolling stock; and purchase terminal equipment. Construction will commence in early 1999 with the building of dock facilities in Colon to receive construction materials, followed by the main construction program.
3. During operation, PCRC will receive containers from the port operators on both the Atlantic and Pacific coasts, load at one near-dock railroad intermodal terminal, transport via rail service across the isthmus to the other near-dock terminal, unload, and connect with a vessel. For domestic delivery and delivery to the Colón Free Trade Zone, containers will be loaded onto trucks at both intermodal terminals for delivery to the final destination. Operations are planned to commence in late summer 2000 with a total of two train sets, each consisting of ten articulated cars equipped for carrying double-stacked containers and a locomotive at each end. Initially, about three trains in each direction each day will take about 1½ hours for the cross-isthmus trip. A single track will be used with a passing siding at the midpoint. Speeds will be 40 to 50 miles per hour over most of the route.
4. Although not part of this project, PCRC envisages future passenger service on its track by a third party that would furnish and maintain the equipment for the passenger service. Future activities are also expected to include development of land conveyed to PCRC as part of the concession. Investment needs for future development are also not part of this proposed project.
5. This is a category B project according to IFC’s environmental and social review procedure because specific impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental, and social information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s staff. The following potential environmental, health and safety impacts of the project were analyzed:
· implementation of an environmental management program for system renovation and operation;
· displacement of small businesses, residences and transients for railroad facilities;
· labor issues and severance packages for former railroad employees;
· protection of natural areas and cultural property;
· liability for site contamination from past railway operations and on newly-acquired properties;
· noise from train operations;
· handling and disposal of solid and liquid wastes and hazardous chemicals;
· vegetation management on the right-of-way;
· public safety and emergency response programs;
· employee training and health and safety programs; and
· public consultation and disclosure.
An Environmental Impact Assessment (EIA) for the initial phase of construction and operation of the railroad was prepared (in both Spanish and English) in May 1998. PCRC is awaiting final approvals from Autoridad Nacional del Ambiente (ANAM), the Panamanian environmental regulator. PCRC has also prepared a Resettlement Plan for the project, which is consistent with IFC policies. The EIA, Resettlement Plan, and other information provided by PCRC address the above issues and demonstrate that the proposed project will comply with applicable governmental and World Bank requirements. The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.
6. Organizationally, PCRC''s present focus is on design and construction, and the operations structure is yet to be finalized. Design and construction management has been contracted to the Panama-based unit of an experienced U.S.-based railroad design firm. KCSI is currently providing environmental support services to PCRC on an advisory basis. A PCRC staff member will, among other duties, be assigned to manage environmental, health and safety operations, with the continued assistance of KCSI personnel. PCRC, KCSI, and Mi-Jack Products, Inc. are drawing up various plans for the initial operation of the railroad.
7. Because the project is primarily the reconstruction of railroad facilities on existing alignment, new land requirements for the rail line itself are low. Most of the former railroad will be rehabilitated in place within the existing 90-meter right-of-way. Three miles of the main line will be relocated to a previously developed but never used alignment. Total length of the rehabilitated line will be about 47 miles. Construction of a new 3.5-mile spur line to the container terminal area east of Colon will require new alignment over about half its length. Additional land required for the two intermodal terminals and some of the railroad''s shops and yards was provided by the Government of Panama or was purchased from a previous concessionaire.
8. PCRC has prepared and will implement a Resettlement Plan for land to be expropriated for the project and for small businesses, residents, and transients who are displaced. The Resettlement Plan is publicly available in-country and at the World Bank InfoShop. For operational safety, reconstruction of the main line will result in displacement of several small businesses in the Balboa and Corozal areas near Panama City. To mitigate the impact of sudden relocation, PCRC will allow the businesses to continue to operate under short-term leases until construction activities require the sites to be vacated. The businesses are expected to relocate to commercial sites in the immediate area. Construction of a new highway overpass by the Ministry of Public Works and the PCRC spur to the Colon container terminals (which will pass under the new overpass) will require displacement of three businesses; PCRC will assist in the relocation or compensation of the businesses. The PCRC spur to the container terminals will also require the removal of two multifamily housing structures that house 86 individuals. PCRC and the residents are discussing a range of resettlement options that will allow most to remain in the neighborhood. Transients using old railroad facilities for shelter will be provided with government assistance in relocating. IFC will include the satisfactory implementation of the Resettlement Plan as a condition of disbursement.
9. Construction of an emergency tail track initially proposed on an old rail line in Colon has been deferred to a later phase of the project when it can be better integrated with plans for redevelopment of the area. In later phases of the project, PCRC will develop portions of a tract of land in the Corozal area that contains an occupied historic structure, Morgan House, and adjoining botanic garden located on a hill on the property. Any resettlement involved in later phases of the project will be undertaken by PCRC in accordance with IFC policies.
10. The former railroad ceased operations about 6 months ago. Staff employed by the former railroad operator was terminated in accordance with a retrenchment package that had been developed for other privatizations in Panama. PCRC has since rehired selected management, operation, and maintenance staff for its current operations, and will rehire others as its staff grows to the 80 personnel needed for initial operations. PCRC will give preference to qualified former employees and Panamanian citizens in its hiring.
11. The existing 47-mile alignment passes along the boundary of Soberania National Park and Camino de Cruces National Park and through the Gatun Recreational Area. The 90-meter wide right-of-way is sufficient for rehabilitation and operation of the proposed single-track main line and the eventual construction of a second track. Minor widening of the right-of-way may be required at some locations for curve straightening, and land requirements will be coordinated with the park authorities. Construction of a 3.5 mile link from the main line to the container terminals near Colon will require the filling of mangrove and other wetland areas. The quality of the affected areas is already low due to adjacent developments and there are no environmentally-preferable alternatives.
12. There are no known historical or archeological sites located along the railroad right-of-way. PCRC will include provisions in construction contracts for the management of any sites or artifacts found during the construction program, and will coordinate its actions with the Direccion de Patrimonio Historico (Historical Heritage Directorate) of Panama. Land and buildings transferred to PCRC as part of the concession includes one historic structure, Morgan House. PCRC will manage the development of this property with due regard for its historic character.
13. The government’s concession arrangements left many of the former railroad’s facilities at its base in Panama City outside the rail concession area. However, PCRC’s concession includes several areas under US Military and Panama Canal Commission control that will be turned over to the PCRC prior to the end of 1999, when the US Military relinquishes control of all Panama Canal Commission and Military Areas to the Government of Panama. As required by the concession, Autoridad de la Region Interoceanica (ARI), the Canal Zone redevelopment authority, will work with PCRC on an inspection of all properties that will be turned over. Following the inspection the government and PCRC will identify the sites requiring environmental remediation and establish a plan, to be reviewed by IFC, for completing any required remediation at the government’s cost. Plan development is currently underway.
14. Part of the route is through residential and commercial areas of Panama City and Colon. Construction activities will be confined to daylight hours in these areas to mitigate construction noise. Noise impacts of operation will be an unavoidable impact for residents living near the railroad. Implementation of the project will result in noise from about 10 trains per day by the year 2005, and residents'' perception of these trains will be different from the former operations (mostly slow speed freight trains in the later years). PCRC’s use of modern train equipment and welded rail, together with the removal of old crossings and switches, will greatly reduce potential noise impacts.
15. Existing warehouse buildings in Panama City will be converted for storage and locomotive and car repair shops, and new maintenance facilities will be constructed in Gamboa and at the Colon intermodal terminal. During operation, the equipment leasing company will provide maintenance of locomotives. Diesel fuel for the locomotives will be provided by an outside supplier directly to the onboard tanks. Handling and disposal of solid and liquid wastes and hazardous chemicals will be in accordance with good industry practice and Panamanian regulations.
16. PCRC’s right-of-way maintenance will include a program for vegetation control along the roadbed and right-of-way. Vegetation will be controlled by a combination of on-track brushcutting equipment and use of herbicides sprayed from a rail mounted vehicle. Personnel applying the herbicide will be provided with appropriate protective equipment. PCRC will design its program to be consistent with World Bank guidelines for herbicide handling and application and with requirements of the Panama Canal Commission (PCC).
17. The proposed train-based container shuttle service will be markedly different from the former operations of a general freight railroad. PCRC recognizes that good signaling and implementation of a public awareness program will be required for safe operation at grade crossings. There are currently 23 grade crossings on the main line track, including major arteries in Balboa and Colon. Unnecessary crossings will be eliminated where possible, and all remaining and new crossings will be equipped with lights and barriers as appropriate.
18. The rail alignment traverses environmentally sensitive areas throughout its length, including the Panama Canal and national parks. PCRC will develop and implement comprehensive plans for day-to-day operations and emergencies based on good industry practice and Panamanian requirements. Preliminary versions of the Emergency Response Plan, Stormwater Pollution Prevention Plan (SW3P), Oil Management and Spill Response Plan, and Organic Waste Contingency Plan were included in an appendix to the EIA. The PCC has such plans in place for its operations, including emergency response staging sites that are adjacent to PCRC''s right-of-way. PCRC will coordinate the development of its plans with PCC and Panamanian agencies. PCRC personnel will be trained to handle the necessary first responses to a major emergency, including securing the area affected by the emergency, protection of the public and the proper notification of public authorities and emergency services.
19. PCRC will develop employee training and health and safety programs based on established railroad industry practices. Key elements will include clear policies, effective procedures, employee training and management oversight. Use of personal protective equipment will be mandatory.
20. PCRC and its consultants have conducted extensive consultation with government agencies and other interested groups during both the concession process and preparation of the EIA. The existence of a project to rehabilitate the railroad is widely known and supported within Panama as a result of media and other exposure. ANAM, the agency responsible for the EIA process, will disclose the EIA (newspaper notice and availability at ANAM''s library) prior to its final approval.
21. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that, with the implementation of the Resettlement Plan and the mitigation contained in the EIA, the proposed project is being designed to meet Government of Panama requirements, and World Bank policies, and environmental, health and safety guidelines.
22. IFC will monitor PCRC''s ongoing compliance with World Bank policies and guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC by the sponsor and by conducting periodic site reviews during project supervision.
Environmental and Social Mitigation Measures
Broad Community Support
Related SII
