Environmental and Social Management System Manual. Uzbekistan: Affordable Rural Housing Program

Transcription

1 Affordable Rural Housing Program (RRP UZB 50022) Environmental and Social Management System Manual April 2017 Uzbekistan: Affordable Rural Housing Program Prepared by the Ministry of Economy of Uzbekistan for the Asian Development Bank.

2 ABBREVIATIONS ADB Asian Development Bank EA EMP ESMS ESMSC FI HIRDIP IA IB IEE MMU MOE MOF NBU PIAL PIU PCB QQB QQI RBL RCM SCEEP SPS TA ZVOS executing agency Environmental Management Plan environmental and social management system Environmental and social Management Systems Coordinator financial intermediary Housing for Integrated Rural Development Investment Program implementing agency Ipoteka Bank Initial Environmental Examination Management and Monitoring Unit Ministry of Economy Ministry of Finance National Bank of Uzbekistan prohibited investment activities list Project Implementation Unit participating commercial bank Qishloq Qurilish Bank Qishloq Qurilish Invest results-based lending Resolution of Cabinet of Ministries State Committee for Ecology and Environmental Protection Safeguard Policy Statement technical assistance initial environmental examination report This environmental and social management system manual is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEMS MANUAL A. Introduction and Background 1. The proposed Affordable Rural Housing Program (ARHP or RBL program) for a $500 million loan under a results-based lending (RBL) modality will support construction of houses in housing complexes (massifs)/subprojects in 9 of the 13 regions (Bukhara, Fergana, Karakalpakstan, Kashkadarya, Khorezm, Namangan, Samarkand, Surhandarya, and Tashkent ), working with three commercial banks (Qishloq Qurilish Bank [QQB], National Bank of Uzbekistan [NBU], and Ipoteka Bank [IB]), as the financial intermediaries. ADB-supported interventions will add value through (i) improved sustainability of rural housing financing through bank and financial sector reforms in housing finance; (ii) institutional strengthening of government procurement systems; (iii) institutional strengthening of government performance monitoring systems; (iv) improved transparency and equity, including social and gender equity, in prioritizing and selecting beneficiary families; (v) introduction of climate change risk assessments into the rural housing sector, together with capacity building of regional governments on climate change risk factors and site selection; and (vi) strengthened capacity of relevant government agencies and local government personnel in gender issues, program management, service delivery, and monitoring and evaluation (M&E). 2. The executing agency (EA) will be the Ministry of Economy (MOE). QQB, NBU, IB, and Qishloq Qurilish Invest (QQI) engineering company, will be the implementing agencies (IAs). A dedicated management and monitoring unit (MMU), which will replace the program implementation unit (PIU) of the Housing for Integrated Rural Development Investment Program (HIRDIP), will be set up within MOE. The MMU will have the mandate to monitor the RBL program, conduct regular implementation reviews, and report on disbursement-linked indicators (DLI) progress and achievements. The MMU will have the mandate to coordinate across the different ministries and state entities involved in the rural housing program. Close cooperation will be maintained with the Ministry of Finance (MOF) and the State Committee for Architecture and Construction (SCAC). B. Environmental Safeguards 3. The RBL program is classified as Category B for environment 1 with the program including a financial intermediary (FI) element. Rapid environmental assessments of sample sites indicate that construction of housing complexes will generate only minor impacts on the environment, which are expected to be temporary and local in nature and can easily be mitigated. An initial environmental examination of each proposed housing site will be carried out by QQI and documented in an Initial Environmental Examination (IEE) Report ( ZVOS ) in accordance with national regulations and procedures. C. Climate Change Impacts 4. Climate change impacts under various projected scenarios are likely to be variable for various agro-ecological zones of the country. As presented in Uzbekistan s Second Communication to UNFCC, all regions in Uzbekistan are vulnerable to the impacts of climate change. The impacts may be in terms of temperature extremes; variability in the magnitude, frequency, and timing of precipitation (rain and snow); rapid glacial melt that may result in flash floods, mudflows, and landslides; and shortages in the supply of drinking water. Currently, no 1 Asian Development Bank Safeguard Policy Statement. Manila.

4 2 climate change risk assessment is undertaken in any of the regions. It is imperative that climate change risk screening be undertaken as part of the site selection process so that the sites which may be vulnerable to major threats and at high risk are avoided and sites with medium or low risk are included with climate change adaptation and mitigation measures incorporated in design and construction. The exact adaptation and mitigation interventions will depend on the nature and magnitude of projected impacts as reflected in the climate change risk analysis. Given the importance of climate change risk screening, it was agreed that Uzhydromet would undertake climate change risk analysis for the ARHP sites. Uzhydromet will also be included as a member in the regional site selection commission and its role formalized. While Uzhydromet does have some capacity to undertake climate change risk screening, there is a need for further enhancement of this capacity through provision of state of the art equipment, necessary software for more accurate and site-specific scenario analysis, training, and dissemination of information for public awareness. See Appendix 1 for Climate Change Risk Screening and Possible Adaptation and Mitigation Options. D. Involuntary Resettlement Safeguards and Indigenous Peoples Safeguards 5. All land in Uzbekistan belongs to the state; citizens only have user rights. Thus, all housing complexes will be located on land owned by the state and classified for residential use and as reserve land for at least 2 years prior to selection. When agricultural plots become less fertile, these revert to the state and are reclassified as reserve land for housing. The RBL program will not involve any involuntary resettlement (IR); to ensure this, a checklist will be used to exclude any project site that may involve IR impacts. As regards impact on indigenous peoples, the country does not have indigenous peoples communities as defined in ADB s Safeguard Policy Statement (SPS 2009) for operational purposes. The proposed RBL program has accordingly been classified as category C for Involuntary Resettlement and Indigenous Peoples. The screening checklist for IR in Attachment 2, Group C includes exclusions such as expropriation, physical and economic displacement, loss of income sources, displacement of renters or lease holders, state land involving informal settlers, and restrictions on legally designated parks or protected areas. E. ADB Safeguard Policy Statement 6. The ADB SPS and the Operations Manual section on safeguard policy require that all IAs have an Environmental and Social Management System (ESMS) in place. This ESMS manual has been prepared to provide guidance to the IAs to (i) avoid adverse impacts of subprojects on the environment and people, where possible; (ii) minimize, mitigate, and/or compensate for adverse subproject impacts on the environment and people when avoidance is not possible; (iii) avoid subprojects with high risk of projected climate change and ensure mitigation for medium risk subprojects; and (iv) maximize opportunities for environmental and social benefits. This ESMS manual covers (i) environmental safeguard (ES) policies, (ii) screening, categorization, and review procedures for subprojects encompassing environmental and climate change risk assessments; (iii) legal framework for environmental management; (iv) EA/MMU role in ESMS coordination monitoring and reporting including organizational structure, staffing, and capabilities in managing environmental and social safeguards, and training requirements; (v) ESMS due diligence assessment of the IAs; and (vi) ESMS development and implementation guidance including templates and appendixes. The ESMS manual will also provide guidance to the MMU of the EA in reviewing, endorsing, and reporting on compliance with the ESMS.

5 3 F. Legal Framework in Uzbekistan for Environmental Safeguards Management 7. The following laws and resolutions and decrees of the Cabinet of Ministers set out the requirements for environmental assessments in Uzbekistan: (i) Law On Nature Protection (1992), (ii) Law On Environmental Expertise (2000), and (iii) Resolution No. 491 About Environmental Expertise (2001), as amended 2009 (Decree No. 152/5 June 2009). The above mentioned laws require that environmental impact assessments are carried out for planning construction and rehabilitation activities prior to funding. Resolution No. 491 describes the initial environmental examination report (IEE/ZVOS) that states the risk category of the activity to be prepared by the business owner for review by the State Committee for Ecology and Environmental Protection (SCEEP). The SCEEP then issues its opinion on the risk classification and recommends mitigation measures for adverse impacts and issues the environmental clearance and permit, which is valid for 3 years. 8. Resolution No. 491 provides the list of activities for which IEE/ZVOS must be carried out. The list divides activities into four environment risk classes: high (Class 1), medium (Class 2), low (Class 3), and low with local impact (Class 4). The activities listed under Classes 1 and 2 essentially correspond with the environment A category of ADB s SPS, while activities listed under Classes 3 and 4 are substantially equivalent to the environment B or C category of the SPS See Appendix 2 for an elaboration of relevant laws and regulations. G. Role of the Executing Agency and the MMU in Coordination of ESMS Operations 9. Responsibility for coordination of ESMS operations of the four IAs rests with MOE, the EA for ARHP. As stated above, the PIU established under HIRDIP, will be replaced by an MMU. The MMU will assist the EA in implementation of program activities, including ESMS coordination. Under the ARHP, the MMU will be responsible for consolidation and compilation of Annual Environmental Safeguards Monitoring Reports, which will be based on an Annual Environmental Safeguards Monitoring Report submitted by QQI and the Annual Environmental Safeguards Compliance Report of the three PCBs in accordance with their respective ESMSs. 10. Under HIRDIP, the PIU gained experience in reviewing annual ESMS performance reports before submitting them to ADB. However, the PIU did not acquire experience in (i) coordinating ESMS establishment and operations by QQI and the PCBs; (ii) on-site environmental inspection during program implementation; (iii) consolidating annual safeguard monitoring reports into a single report based on the reports from the IAs; and (iv) knowledge and additional responsibility for safeguard compliance under the RBL modality. 11. With technical assistance (TA) support to be provided to the MMU, the successor of the PIU, effective ESMS operations can be ensured. The TA will be needed for the duration of program implementation on a regular, albeit intermittent, basis. An appropriately qualified consultant will be assigned to the MMU to provide the services two times each year in two parts. Under the first part, the consultant will undertake training of the MMU staff to enable it to effectively coordinate the establishment and monitoring of the ESMS of the four IAs. During this phase, the MMU, with the assistance of the national consultant, will also coordinate training of the relevant staff in the four IAs in the development, establishment, and operation of their respective ESMSs. The training program will consist of a set of training materials for different target groups, and delivery of different training modules for the MMU and the IAs ESMS Coordinators and their field staff, as well as the local authorities involved in the State Affordable Rural Housing Program. In the second phase, the consultant will assist the MMU and the IAs in the assessment of environmental performance and preparation of annual environmental reports. Assistance will also

6 4 be provided to the MMU initially to consolidate the individual IAs annual environmental report into a single report for submission to the MOE and ADB. The consultant will also undertake samplebased audits on the operation of individual IAs ESMS in the third and fifth year of implementation. H. Current Environmental and Social Management Systems (Due Diligence) of the Implementing Agencies 1. Qishloq Qurilish Invest (QQI) 12. Policy Framework: When it was formed in 2009, QQI was a subsidiary of QQB. After the issuance of Presidential Decree No. 116 of 1 May 2013, QQI became independent of QQB. QQI acts as technical supervising engineer and is responsible for procurement of services (construction contractors), materials, and equipment. QQI follows the national guidelines in environmental management. As the key agency responsible for management of construction contracts of housing complexes/subprojects, QQI follows and implements national policies, legislation, and guidelines for environmental management, which include (i) the Law On Nature Protection (1992), (ii) the Law On Environmental Expertise (2000), and (iii) Resolution of Cabinet of Ministers No. 491 About Environmental Expertise (2001) as amended 2009 (Decree No. 152/5 June 2009). The above mentioned laws require that environmental impact assessments are carried out for planning construction and rehabilitation activities prior to funding. Resolution No. 491 describes the initial environmental examination report (ZVOS) that also classifies the risk category of the activity to be prepared by the business enterprise (QQI) for each housing complex/subproject for review and endorsement by the SCEEP. 13. QQI did not establish or operate a program-specific ESMS during the implementation of HIRDIP. Instead, the agency followed SCEEP recommendations pertaining to environmental safeguards compliance. Under ARHP, however, QQI will develop, establish, and operate an ESMS. 14. Screening, Categorization, and Review: Initial screening is undertaken by the hokimiyat (local government) in consultation with regional technical agencies. The screening process of selection of housing complexes/subprojects is applied to ensure that any sites that are classified as Class 1, 2, or 3 under the national regulations are excluded. QQI is not directly involved in screening housing complexes/subprojects. However, as a member of the regional site selection commissions, the role of QQI initially under Presidential Decree No of 3 August 2009 was to determine the demand and marketability of the proposed site and make sure that the criteria for selection are strictly followed. Once a site has been selected, QQI undertakes an initial environmental examination (IEE/ZVOS) with the assistance of consultant/s in accordance with national guidelines and submits the same to SCEEP for review and issuance of a Conclusion and approval of construction at the proposed site. 15. Monitoring and Reporting: A QQI staff member as the Technical Auditor who has specific TOR approved by SCAC for certification of construction materials, monitoring and supervising the qualifications of the contractors employees, controls the construction process, monitors compliance with design standards and environmental compliance requirements. Contracts with construction contractors contain provisions for worker safety and water contamination. He/she is at the housing complex/subproject on a daily basis, monitors progress, and submits a progress report every ten days; every two weeks he/she submits an invoice of the contractor for payment. In his report the Technical Auditor makes sure that environmental protection laws and recommendations are followed, especially with respect to dust generation. However, he/she does not file a specific report on environmental compliance.

7 5 16. Organizational structure and staffing: The agency is headed by a General Director, who is responsible for day to day management. The General Director is assisted by a Chief Engineer and two Deputy General Directors, one for Finance and Economy and the other for Procurement. One staff member is responsible for environmental management as the Environmental Coordinator, who will be designated as the Environmental and Social Management Systems (ESMS) Coordinator under ARHP. He/she communicates with regional branch offices of QQI and facilitates preparation of IEEs/ZVOS for the proposed sites and submission of IEEs/ZVOS to regional SCEEP for review and approval. 17. Training Program: QQI has provision for staff training and development but does not include a specific provision for environmental management. With responsibility for improved environmental compliance in accordance with an ESMS, there will be a need for training and skills development. Technical assistance support will be needed to enhance their environmental management awareness, environmental safeguards compliance skills, and monitoring and reporting skills. The training should include 5 persons at headquarters and all technical supervisors (about 300 persons) in the regions. 18. Actions required for ESMS: QQI will: (i) Update environmental safeguards compliance policies and procedures in accordance with national policies and regulations and formally establish an ESMS to the satisfaction of ADB. The ESMS shall, among other things, include (a) a prohibited investment activities list (PIAL); (b) an exclusion list, classified as (i) environment category A equivalent to Decree No. 152/5 list Class 1 and Class 2; and (ii) environment category B equivalent to Decree No. 152/5 list Class 3 and Class 4 which are excluded based on the Environmental and Climate Screening Process; (c) a template for improved quality of IEEs/ZVOS; (d) an appropriate monitoring mechanism for environmental safeguards compliance for each housing complex/subproject; (e) regular monitoring and reporting of environmental safeguards compliance in accordance with an environmental management plan (EMP) in the IEE/ZVOS and recommendations in the Conclusion for housing construction issued by the regional SCEEP (to be included in the bid documents for construction contractors); and (f) preparation and submission to MOE, the EA, of an annual report in accordance with a template provided in the ESMS; (ii) enhance the capacity of the designated ESMS Coordinator and the staff at the headquarters and the regions to ensure that they are capable and adequately trained in fully implementing the ESMS including identifying and executing recommended measures as presented in the EMP and the Conclusion issued by the regional SCEEP in accordance with the applicable laws and regulations of Uzbekistan and the SPS. 19. QQI will ensure that the following are excluded from ARHP loan financing: (i) all subprojects included in the project PIAL; (ii) all subprojects falling under A-category (ADB categorization) or Class 1, 2, and 3 (Uzbekistan categorization under Decree No. 152/5); (iii) all subprojects with activities or significant risks as identified in the Environmental and Climate Change Risk Screening Process; (iv) all subprojects with involuntary resettlement; and (v) all subprojects with mining activities.

8 6 2. Qishloq Qurilish Bank (QQB) 20. Policy Framework. QQB was established in 2009 on the basis of Joint-Stock Commercial Bank "Galla Bank". The main founders of the Bank were the Ministry of Finance and the Fund for Reconstruction and Development of the Republic of Uzbekistan. In accordance with the Decree of the President of the Republic of Uzbekistan dated 30 March 2009 number PP-1083, the main activities of QQB are targeted at development and improvement of rural populated areas. In terms of its policy framework, QQB follows the relevant environmental policies, legislation, and regulations of the Republic of Uzbekistan. 2 QQB ensures that construction of the houses is compliant with the relevant environmental regulations. 21. Screening, Categorization, and Review. Screening, categorization, and review is guided by the relevant policies and legislation and regulations of the Republic of Uzbekistan, referred to above. QQB utilizes two types of screening: (i) environmental screening in accordance with national environmental policies and guidelines and (ii) social prioritization as required under the national rural housing program. The documents required for approval of financing include: (i) the Decree of the Hokim; and (ii) the SCEEP expertise clearance (Conclusion). 22. Monitoring and Reporting. Environmental compliance monitoring is undertaken by the relevant branch of the bank on a regular basis as part of monitoring the construction progress. Monitoring reports are compiled on the basis of the information provided by the regional branches. These reports also form the basis for the preparation of Annual Reports by the respective regional branches representatives. 23. Organizational structure and staffing: There are two persons in the External Relationship Department of QQB. The Head of Construction Control and Control Measurements Division of the Rural Construction Credit Department (RCCD) is the ESMS Coordinator (ESMSC). He/she is assisted by a technical Specialist who is directly responsible for implementing the ESMS. 24. Training program: QQB conducts regular trainings to strengthen implementation of the ESMS and allocates funds for building staff capacity as part of the bank s business plan. In collaboration with NBU, one training workshop for environmental and gender aspects was organized in QQB and attended by 45 staff of QQB and 30 staff of NBU as well as the PIU of HIRDIP. 25. Actions required for ESMS: QQB will: (i) update its ESMS policies and procedures and the existing ESMS to the satisfaction of ADB. The ESMS shall include, among other things, (a) an appropriate monitoring mechanism for environmental safeguards compliance for each housing complex/subproject; (b) regular monitoring and reporting of environmental safeguards compliance in accordance with an environmental management plan (EMP) in the IEE/ZVOS and recommendations in the Conclusion for housing construction issued by the regional SCEEP; (c) third party monitoring mechanism for selected housing complexes/subprojects corresponding to a minimum of 10% of all housing complexes/subprojects funded in one year; and (d) preparation and 2 The main applicable laws and regulations of the Republic of Uzbekistan include the Law On Nature Protection (1992), the Law On Atmospheric Air Protection (1996), the Law On Environmental Expertise (2000), the Law On Protected Natural Areas (2004), the Law On Ecological Control (2013), and Cabinet of Ministers Resolution No. 491 dated 31 December 2001.

9 7 (ii) submission to MOE, the EA, of an Annual Report in accordance with a template provided in the ESMS; and enhance the capacity of the designated ESMS staff who are capable and adequately trained in fully implementing the ESMS including identifying and executing recommended measures as presented in the EMP and the Conclusion issued by the regional SCEEP in accordance with the applicable laws and regulations of Uzbekistan and the SPS QQB will exclude from ADB loan financing: (i) all subprojects included in the project PIAL; (ii) all subprojects falling under A-category (ADB categorization) or Class 1, 2, and 3 (Uzbekistan categorization under Decree No. 152/5); (iii) all subprojects with activities or significant risks as identified in the Environmental and Climate Change Screening Process; (iv) all subprojects with involuntary resettlement; and (v) all subprojects with mining activities. 3. National Bank of Uzbekistan (NBU) 27. Policy Framework: NBU was established by a Decree of the President of the Republic of Uzbekistan in September The bank finances projects ensuring in-depth structural reconstruction of the economy. With respect to the national rural housing program, NBU is guided by The Technical procedure of financing and lending for individual housing construction in rural areas by standard designed approved by NBFEA of the Republic of Uzbekistan. In terms of its policy framework, NBU, similarly as QQB, follows the relevant environmental policies, legislation and regulations of the Republic of Uzbekistan, referred to earlier. NBU ensures that construction of the houses is compliant with the relevant environmental regulations. 28. Screening, Categorization, and Review: Screening, categorization, and review is guided by the relevant policies and legislation and regulations of the Republic of Uzbekistan, referred to above. NBU adopts two types of screening: (i) environmental screening in accordance with national environmental policies and guidelines and (ii) social prioritization as required under the national rural housing development program. The documents are required for approval of financing include: (i) the Decree of the Hokim; and (ii) the SCEEP expertise clearance (Positive Conclusion). 29. Monitoring and Reporting: Environmental compliance monitoring is undertaken by the relevant branch of the bank on a regular basis as part of monitoring the construction progress. Monitoring reports are compiled on the basis of the information provided by the regional branches. During the preparation of monitoring reports, special attention is paid to noise, waste management, sanitation, and hygiene. These reports also form the basis for preparation of Annual Reports by the respective regional branches. 30. Organizational structure and staffing: In NBU, under the Department of Agricultural Lending, there are 2 specialists in charge of implementation of the ESMS. The Deputy Head of the department is the ESMS Coordinator, assisted by a senior technical specialist. They collect the monitoring data and prepare consolidated reports. 31. Training program: NBU conducts regular trainings to strengthen implementation of the ESMS and allocates funds for building staff capacity as part of the bank s business plan. In collaboration with QQB, one training workshop for environmental and gender aspects was

10 8 organized in QQB and attended by approximately 30 staff of NBU, with 45 staff of QQB, as well as the PIU of HIRDIP. 32. Actions required for ESMS: NBU will: (i) update its ESMS policies and procedures and the existing ESMS to the satisfaction of ADB. The ESMS shall include, among other things, (a) an appropriate monitoring mechanism for environmental safeguards compliance for each housing complex/subproject; (b) regular monitoring and reporting of environmental safeguards compliance in accordance with an environmental management plan (EMP) in the IEE/ZVOS and recommendations in the Conclusion for housing construction issued by the regional SCEEP; (c) third party monitoring mechanism for selected housing complexes/subprojects corresponding to a minimum of 10% of all housing complexes/subprojects funded in one year; and (d) preparation and submission to MOE, the EA, of an Annual Report in accordance with a template provided in the ESMS; and (ii) enhance the capacity of the designated ESMS staff who are capable and adequately trained in fully implementing the ESMS including identifying and executing recommended measures as presented in the EMP and the Conclusion issued by the regional SCEEP in accordance with the applicable laws and regulations of Uzbekistan and the SPS NBU will exclude from ADB loan financing: (i) all subprojects included in the project PIAL; (ii) all subprojects falling under A-category (ADB categorization) or Class 1, 2, and 3 (Uzbekistan categorization under Decree No. 152/5); (iii) all subprojects with activities or significant risks as identified in the Environmental and Climate Change Screening Process; (iv) all subprojects with involuntary resettlement; and (v) all subprojects with mining activities. 4. Ipoteka Bank (IB) 34. Policy framework, organizational structure, and staffing: Ipoteka Bank (IB) was founded in 2005 and provides a range of banking services to clients. Its services for private clients include consumer and mortgage loans, payment cards, deposits, and international money transfers. Services for corporate clients include cash and payment services, loans for working capital, leasing, guaranties, and financing investment projects in foreign currency. The credit policy of the bank sets out screening and categorization requirements. The credit policy has an element regarding environment safeguards requirements. As supporting documents required for processing of the loan application, the credit policy requires submission of environmental documents in accordance with national regulations for Initial Environmental Examination/ZVOS. 35. Screening, categorization, and review: Currently, screening and categorization are based on the national requirements. Request on providing Appraisal is based on national legislation, particularly on Resolution of the Cabinet of Ministers No. 491 (December 2001). The credit officer reviews the potential home owner s application and after collecting all necessary documents may conduct a site visit to assess the project s general environmental conditions, among other issues. There is no written instruction or guidelines on how visual environmental assessment needs to be done.

11 9 36. Monitoring and Reporting: Monitoring of loan disbursement is being conducted quarterly by the monitoring department using a check list. There is a track record system available but environment aspects are not fully covered in the checklist. There is no technical guideline available for environmental monitoring and reporting. 37. Organization and Staffing: There is a department on coordination and monitoring of investment activities and a department on construction activities. Both departments are indirectly involved in the environmental safeguard element in the loan underwriting and management. Currently, there is no designated environment safeguards staff assigned in either relevant department. 38. Training program: The bank human resources policy requires training of the staff on an annual basis. There is an established training system in the bank which includes internal and external training programs. Internal training provides updates on banking regulations and related disciplines. External trainings provided by the Central Bank and the Uzbekistan Banking Association, which trains trainers and provides updates on national law and regulation relevant for the banks. Environmental related trainings are not provided in the current program. Also, every 3 years the bank conducts a staff attestation program. 39. Actions required for ESMS: IB will: (i) Update environmental safeguards compliance policies and procedures in accordance with national policies and develop and establish an ESMS to the satisfaction of ADB. The ESMS shall include, among other things, (a) an appropriate monitoring mechanism for environmental safeguards compliance for each housing complex/subproject; (b) regular monitoring and reporting of environmental safeguards compliance in accordance with an environmental management plan (EMP) in the IEE/ZVOS and recommendations in the Conclusion for housing construction issued by regional SCEEP; (c) third party monitoring mechanism for selected housing complexes/subprojects corresponding to a minimum of 10% of all housing complexes/subprojects funded in one year; and (d) preparation and submission to MOE, the EA, of an Annual Report in accordance with a template provided in the ESMS; and (ii) enhance the capacity of the designated ESMS staff who are capable and adequately trained in fully implementing the ESMS including identifying and executing recommended measures as presented in the EMP and the Conclusion issued by the regional SCEEP in accordance with the applicable laws and regulations of Uzbekistan and the SPS IB will exclude from ADB loan financing: (i) all subprojects included in the project PIAL; (ii) all subprojects falling under A-category (ADB categorization) or Class 1, 2, and 3 (Uzbekistan categorization under Decree No. 152/5); (iii) all subprojects with activities or significant risks as identified in the Environmental and Climate Change Screening Process; (iv) all subprojects with involuntary resettlement; and (v) all subprojects with mining activities. I. ESMS GUIDANCE FOR IMPLEMENTING EA (MMU) AND IAs 1. EA s Management and Monitoring Unit (MMU)

12 As stated earlier, the MMU, as the key coordinating agency of MOE, the EA, will be responsible for coordination of (a) ESMS development by QQI and the three PCBs, (b) review and endorsement of each ESMS by the MOE, and information provided to ADB, and (c) coordination of ESMS operations by the IAs. In addition, the MMU will also be responsible for facilitating training for capacity building of the IAs to ensure that they have adequate capacity to undertake implementation of their respective ESMSs. In addition, the MMU will (a) validate and confirm adherence to site selection criteria, (b) ensure environmental and social due diligence for the housing complexes at various stages of development, (c) review and consolidate annual safeguards monitoring reports and submit to ADB for disclosure, and (d) facilitate application of the grievance redress mechanism as and when warranted. 42. Currently, no climate change risk assessment is undertaken in any of the regions. Given the projected climate extremes in the country, it is imperative that climate change risk screening be factored into the site selection process. This would ensure that the sites that may be at high risk are avoided and in case of medium risk sites, if no alternatives are available, climate change adaptation and mitigation measures are put in place as part of the design. The exact adaptation and mitigation interventions would depend on the nature and magnitude of projected impacts as reflected in the climate change risk analysis. It has been agreed that Uzhydromet will undertake climate change risk analysis for sites proposed for housing complexes/subprojects. Uzhydromet will also be included as a member in the regional site selection commissions and its role formalized. 2. ESMS Guidance for IAs (QQI and the PCBs) 43. Guidance documents presented in this manual include (i) a draft ESMS for QQI, together with needed templates and appendixes, presented in the next section; (ii) suggested annotated outlines for ESMS for the three PCBs that satisfy the national environmental safeguards compliance requirements and are consistent with SPS 2009 are presented in the subsequent section together with relevant templates and appendixes. Based on the guidance provided in this manual, QQB and NBU will update their current ESMSs to reflect these requirements, whereas IB will develop, establish, and operationalize its ESMS. Each ESMS, once endorsed by MOE, will be subject to approval by the respective Board of Directors of each IA.

13 11 ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM (ESMS) OF QQI I. INTRODUCTION 1. In accordance with Presidential Resolution No of 3 August 2009 "On Additional Measures to Expand Housing in Rural Areas", Qishloq Qurilish Invest (QQI) was set up as the supervisory agency for construction of individual houses in rural areas under the national program for housing for integrated rural development; QQI was set up as a subsidiary of Open Joint Stock Commercial Bank (OJSCB) "Qishloq Qurilish Bank" with registered capital of 1,000 million Uzbek Soum (UZS). In compliance with the approved Decree of the Cabinet of Ministers 280 dated 26 September 2009 and the Provision on the process of realizing individual housing construction, QQI was assigned responsibility for complete scope of works in the sphere of housing constructions according to approved standard design in turn-key condition. In accordance with the Resolution of the Cabinet of Ministers 116 dated 1 May 2013, "On additional measures to ensure the effective implementation of the Program for the construction of individual housing of standard design in rural areas, the company was transformed into a limited liability company with an authorized capital of 4,000 million UZS. Its mandate is defined in the 2009 Decree and its Charter. QQI s main role is to (i) manage and supervise (as an agent of the Hokimiyat and/or the home buyers) the construction of new rural housing, new/rehabilitation of rural community facilities, and access to rural infrastructure; (ii) undertake study of the rural housing market, and prepare a strategy for site selection and development that is based on national design standards for rural community development, rural housing and rural community facilities (social and commercial), and development of other related rural infrastructure services; (iii) support Hokimiyats in packaging and initiating competitive procurement of turnkey contracts for new rural housing and new/rehabilitation of rural community facilities; and (iv) facilitate appropriate handover of completed new houses to home buyers, and new/rehabilitation rural community facilities to operating organizations. 2. QQI has a regional office in each region and one in Karakalpakstan. The regional offices are responsible for organization of tenders in the fields and construction quality assurance. During 2013 the total number of contractor organizations having signed contracts with QQI was 998. QQI and the design institutes (QQL), in accordance with the agreements signed with contractor organizations, carry out technical supervision during construction implementation. In accordance with the defined requirements the construction quality control is carried out in various phases of construction and should be properly documented. Progress and quality of construction are measured against the work program, schedule of works and designs, and specifications. Reporting includes presentation of the monitoring results to the MOE for review and onward reporting to ADB, the PCBs, and the Executive Body of QQI. 3. Under HIRDIP, in line with its mandate, QQI managed and supervised the construction of new rural housing, new/rehabilitation of rural community facilities, and access to rural infrastructure from the initial stages of feasibility study through construction with the involvement of PCBs until handover of houses to home buyers, and new/rehabilitation rural community facilities to operating organizations. QQI also undertook environmental management through the development of IEEs/ZVOS for each proposed housing complex/subproject, and secured its endorsement by the regional SCEEP. Under HIRDIP, however, QQI did not develop and establish an environmental and social management system (ESMS) but followed the national guidelines and the recommendations in the IEE/ZVOS and the Conclusion given by the regional SCEEP.

14 12 II. ENVIRONMENTAL SAFEGUARDS MANAGEMENT 4. Under ARHP, QQI is establishing this ESMS for its environmental safeguards compliance operations under the program. The objectives of the QQI ESMS are to (i) avoid adverse impacts of subprojects on the environment and people, where possible; (ii) minimize, mitigate, and/or compensate for adverse subproject impacts on the environment and people when avoidance is not possible; (iii) avoid subprojects with high risk of projected climate change and ensure mitigation for medium risk subprojects; and (iv) maximize opportunities for environmental and social benefits. The ESMS will be endorsed by the Executing Agency (EA), the Ministry of Economy (MOE), and then be subject to approval by the QQI Supervisory Board. 5. In ensuring compliance with national environmental safeguards requirements consistent with SPS 2009, QQI continually endeavors to ensure and enhance effective environmental management practices in all its construction activities with a special focus on the following: (i) Ensuring that applicable environmental safeguard requirements are met for all housing complexes/subprojects; (ii) Undertaking construction of the housing complexes/subprojects only when they are designed and maintained in a manner consistent with applicable environmental safeguard requirements; (iii) Integrating environmental and climate change risk into its internal risk management analysis; (iv) Ensuring appropriate consultation and transparency in all its activities; (v) Working together with construction contractors in close consultation with PCBs to put into practice applicable environmental safeguard requirements; and (vi) Promoting development and establishment of housing complexes/subprojects with enhanced environmental and social benefits. 6. This policy will be communicated to all staff and operational employees of QQI for their understanding and application in QQI s operations. A. Potential Environmental Impacts and Climate Change Risks 7. Based on site selection criteria, any construction activities that may generate significant and irreversible environmental impacts or may be located in the vicinity of ecologically sensitive or critical habitats will not be included in the program. Site selection is undertaken by a commission which includes representatives of the SCEEP to make sure that no environmentally sensitive sites or sites that may generate significant or irreversible environmental impacts are selected. Construction of houses in various housing complexes/subprojects may result in minimal or moderately adverse environmental impacts. Adverse environmental impacts will be temporary, limited to the period of construction, localized within construction sites, and can be mitigated through appropriate construction practices. 8. To mitigate the risk arising from high environmental impact that IAs may be unable to manage, the IAs will exclude from ADB loan financing the subprojects listed in the Prohibited Investment Activities List (PIAL). The IAs will also exclude any activities in the housing complexes/subprojects that are classified as (i) environment category A equivalent to RCM No. 491 list Class 1 and Class 2; and (ii) environment category B equivalent to RCM No. 491 list Class 3 and Class 4 which are excluded based on the Environmental and Climate Screening Process. 3 3 All investments in housing complexes/subprojects using ADB funds will be screened against the Environmental Exclusion list, which is a part of the IAs ESMS.

15 13 9. To ensure an appropriate level of compliance with national environmental safeguards requirements, an IEE/ZVOS is commissioned by QQI with the assistance of appropriately qualified consultant/s and submitted to the regional SCEEP. The IEE/ZVOS will document all such impacts and recommend mitigation measures to be followed under an environmental management plan (EMP) integral to IEE/ZVOS. The EMP in the ZVOS and the recommendations of SCEEP for environmental compliance measures for housing complexes will be included in the bid documents for construction contractors. Moreover, the proposed sites will be screened for climate risk and sites that are at high risk of projected climate change impacts will be avoided. However, proposed sites with medium risk will be considered for inclusion in the program as long as appropriate mitigation and adaptation measures, recommended by Uzhydromet, are integrated into the design of the housing complexes. Institution of energy efficiency measures in design and construction will contribute to mitigation of climate change impacts. III. ENVIRONMENTAL AND SOCIAL MANAGEMENT PROCEDURES A. Screening and Categorization 10. At the initial stage of identifying sites for a proposed housing complex/subproject, the Environmental and Social Management (ESMS) Coordinator 4 (or other designated staff) will apply the exclusion requirements in the PIAL (Attachment 1). Any proposed housing complex/subproject that involves a prohibited activity/ies will not be considered. Once it is confirmed that the project is not in ADB s PIAL, the ESMS Coordinator (or other designated officer) will undertake screening and categorization in accordance with national regulations and the Environmental, Climate Change, and Involuntary Resettlement Screening Process (Attachment 2) and exclude sites accordingly. The environmental and climate change screening process is designed to guide QQI in the rapid assessment of potential environmental impacts and climate change risks. The screening process will ensure that only housing complex/subproject sites that fall under Class 4 of the national regulations are included for development under the ARHP. 11. On this basis, the ESMS Coordinator will indicate the applicable environmental safeguard requirements for the housing complex/subproject as stipulated by relevant national regulations. The ESMS Coordinator, through the QQI regional representative or construction manager at the site, will assure that the housing complex/subproject home buyers are fully aware of the applicable requirements as presented in the table below. 4 The ESMS Coordinator (or other designated staff) can be a full time officer or a consultant of QQI.

16 14 Table Showing Government and ADB Safeguard Requirements Environmental Safeguards Government /ADB Safeguard Requirement Not Allowed to Be Funded Allow to Be Funded Safeguard Requirements Government Resolution No. 491/31 December 2001 and Decree No. 152/5 June 2009 Class 1, 2, and Class 3, and Environmental Exclusion list Class 4 Obtain the environmental clearance from the regional State Committee for Nature Protection (SCEEP) prior to requesting funding from [Name of PCB]. ADB Safeguard Requirements1 (Environment) Category A and Environmental Exclusion list Category B and C INVOLUNTARY RESETTLEMENT Submit the environmental clearance or certificate (Conclusion issued by the regional SCEEP) for housing complex/subproject not listed in Decree No. 152/5 and not in the Environmental Exclusion List. For subproject/s with expansion activity, to obtain the compliance permits or certificates from the SCEEP as required by the national regulations applied for the existing facilities Follow SPS 2009 requirements for FI operations on monitoring and reporting ADB Safeguard Each proposed subproject will be screened using a screening checklist Requirements 2 (Involuntary to exclude any housing complexes/subprojects with potential resettlement) involuntary resettlement impacts. INDIGENOUS PEOPLES CATEGORY C, HENCE IP SAFEGUARDS ARE NOT APPLICABLE B. Due Diligence 12. Once the checklists and the verification work are completed by QQI, the housing complex/subproject site will be subjected to the initial environmental examination (IEE)/ZVOS process. QQI will engage an expert (consultant/firm) to undertake environmental examination and preparation of an IEE/ZVOS report. The preparation of the IEE/ZVOS will follow the Annotated Outline (see Attachment 3 for an Annotated Outline for a housing complex/subproject) and will be based on desk review of relevant information and site visit/s. QQI will ensure that all relevant information about the proposed site is made available to the consultant/firm to clearly demonstrate responsiveness to the applicable environmental safeguard requirements. An IEE/ZVOS report will be prepared for all housing complex/subproject sites and the results of environmental due diligence will be reflected in the report. Among other things, the IEE/ZVOS will include drawings of the proposed housing complexes/subprojects, a map of the affected area, and an environmental management and monitoring plan (EMP). QQI will include the EMP in the ZVOS and the recommendations of SCEEP for environmental compliance measures in the bid documents for construction contractors. The preparation of the IEE/ZVOS report will ensure adequate and meaningful stakeholder (affected people) consultation as well as public disclosure through appropriate media (QQI website) in a language easily understood by the stakeholders (Russian or Uzbek). Stakeholders will be given at least 15 calendar days to respond and provide

17 15 feedback. Based on the stakeholder feedback, the IEE/ZVOS will be revised and submitted to the regional SCEEP. The regional SCEEP will review the IEE/ZVOS, take into account the initial report by the district representative of the SCEEP, and undertake sites visits, if necessary, and make recommendations to the regional site selection committee in its Conclusion. The Conclusion, among other things, will include recommendations for environmental safeguards compliance in accordance with the EMP as presented in the IEE/ZVOS or a revised EMP should that be necessary on account of environmental management and monitoring recommendations of the SCEEP Conclusion. 13. The QQI regional representative ESMS Coordinator will conduct site visits and then submit due diligence briefing note to the QQI ESMS Coordinator and keep it in the housing complex/subproject files. The QQI regional representative should be able to demonstrate responsiveness with regard to the applicable environmental requirements. A suggested outline of environmental safeguards due diligence inspection checklist is provided in Attachment 4. C. Compliance Monitoring and Reporting 14. QQI will follow the environmental monitoring Compliance requirements as presented in the EMP endorsed by the regional SCEEP. QQI will ensure compliance with the recommendations regarding avoidance of adverse environmental impact and mitigation actions where such impacts are unavoidable in the pre-construction, construction, and operational phases of the housing complex/subproject development in accordance with the EMP. In this context, necessary clauses will be included in the construction contracts to ensure such compliance. The QQI ESMS Coordinator (or other designated staff) will (i) communicate with the regional branch managers of QQI and confirm from time to time that the construction contractor/s are undertaking the obligations of compliance with all applicable environmental safeguard requirements; and (ii) on behalf of QQI promptly report to the EA through the MMU any actual or potential breach of the compliance requirements after becoming aware of it. Compliance with environmental safeguard requirements in the EMP will be subject to regular inspections by the regional/district SCEEP inspectors. The regional QQI branch managers will prepare a quarterly environmental safeguards compliance report (Attachment 5) and submit it to the QQI ESMS Coordinator for review. The QQI ESMS Coordinator (or other designated staff) will review the quarterly report, visit the site, if deemed necessary, to confirm the compliance with the EMP requirements as presented in the regional branch manager s quarterly report. At the end of each year, the QQI ESMS Coordinator will prepare an annual environmental safeguards compliance report, using a similar template (Attachment 5) and submit the same to the EA/MMU. 15. The EA/MMU will evaluate the environmental performance of QQI on an annual basis. The benchmark for performance will be the ongoing compliance against the applicable environmental safeguard requirements as presented in the QQI annual report and confirmed through site inspections by the regional and district SCEEP Inspectors. D. Grievance Redress Mechanism and Public Relations 16. The QQI branch offices and the regional offices of QQI will be designated as the receivers of complaints from people affected by the ARHP. Complaints received by the headquarters office of QQI will first be referred back to the appropriate QQI branch office/regional office. All complaints will be addressed first by the QQI branch office/regional in coordination with local hokimiyat. The QQI branch office/regional office will also monitor whether any complaints or resolutions have been received by the local hokimiyat. The grievance will be addressed in accordance with the