Peru, Guarantee Facility Project

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Peru, Guarantee Facility Project Environmental and Social Management Framework (ESMF) Summary 1 Introduction 1.1 Country and sector background Peru faces strong challenges in all its infrastructure sectors, including (i) insufficient productive infrastructure; (ii) low and inequitable infrastructure coverage; and (iii) inadequate quality of service. To eliminate identified infrastructure shortages, huge investments are needed in all sectors: to date, the Government of Peru (GOP) has identified investment needs of over $18 billion in projects in the transport, energy, water and sanitation and telecommunication sectors. However, Peru faces strong challenges to fund these investments, as a result of insufficient public investment capacity and a worldwide decline in private infrastructure finance. In addition, to improve quality of service, a significant improvement in management is required. Therefore, the GOP plans, whenever possible, to implement and fund future infrastructure investments via Public-Private Partnerships (PPPs) combining the benefits of private sector management and funding with public sector contributions. ProInversih, the Peruvian private investment promotion agency, has identified a first phase of about 15 projects requiring over $1.5 billion of investments in the transport, energy, water and sanitation and telecommunication sectors over the next three years that could be developed under PPP arrangements. However, as most of these projects are of a regional, rural or local nature, they are not financially viable on their own and require some direct public contribution - contrarily to the first wave of infrastructure concessions of the 1990s. The Guarantee Facility project (the Project) aims at maximizing the attractiveness of Peru s future infrastructure projects to private investors so as to make them suitable for PPP development, maximize private sector funding and minimize the required public contributions. This will be achieved by providing IBRD Partial Risk Guarantees (PRGs) to protect private project debt against various risks, including political risks and backstopping government obligations under the projects. The PRGs will reduce the riskiness of Peru s projects for private investors -even when the projects are not financially viable on their own-, which will attract more private investments and increase competition among potential bidders. The lower degree of risk of Peru s projects will also enhance their credit ratings, which will reduce the cost of project debt. Lower cost of debt will reduce government contributions and ultimately translate into lower tariffs for consumers. Consequently, the guarantees will create welfare gains for the Peruvian population. In addition, the higher ratings of project debt will allow local capital market participants, such as Peru s pension funds, to invest in 1

2 better-rated project bond issues on the local capital market. Therefore, the PRGs will also help develop Peru s capital markets. The Project will therefore combine the economic benefits of increasing the probability of success of infrastructure PPPs and lowering future tariffs, with the financial benefits of developing local capital markets, thus contributing to Peru s economic development and poverty reduction. The World Bank s guarantees will tact as catalyst to attract vital private sector investments in infrastructure and help address Peru s critical infrastructure sector issues. 1.2 Project description The project contemplates the establishment of a Partial Risk Guarantee Facility in support of Peru s future infrastructure public-private partnership projects. The Project will establish a $100 million guarantee facility (the Guarantee Facility ) to provide IBRD Partial Risk Guarantees (PRGs) to Peru s future infrastructure projects. Through the Guarantee Facility, the IBRD (the Guarantor ) will agree to issue guarantees of loans from private investors for infrastructure PPPs that have been satisfactorily appraised, against defaults caused by the failure of the Peruvian government to comply with its obligations in form of investment and operating cost contributions in eligible concession projects as well as political and breach of contract risks. Given the large pipeline of infrastructure projects and their urgency, a facility will be established to facilitate the granting of PRGs to several of these projects without delay. 1.3 Safeguard issues While all the infrastructure projects participating to the Guarantee Facility are not known yet, it is anticipated, based on the current pipeline of projects, that four Bank safeguard policies are likely to be triggered: those on (i) environmental assessment, (ii) natural habitats, (iii) involuntary resettlements and (iv) indigenous people. The first project likely to participate to the Guarantee Facility involves the rehabilitation of nine regional airports across Peru. This project, if it participates to the Guarantee Facility, will trigger the Environmental Assessment and the Involuntary Resettlement safeguards. ProInversi6n has defined with the Bank an Environmental and Social Management Framework (ESMF) with detailed procedures to ensure compliance with the four Bank safeguards listed above, as well as with any other Bank safeguard that might be triggered by new infrastructure projects applying to the Guarantee Facility. To complement the ESMF, ProInversi6n has prepared a Resettlement Framework and an Indigenous Peoples Framework in line with the Bank s safeguards. The ESMF defines the process for the evaluation, mitigation, implementation, disclosure and monitoring of the environmental and social impacts of infrastructure projects participating in the Guarantee Facility. The ESMF, the Resettlement and Indigenous Peoples frameworks have been designed and agreed with ProInversi6n s staff and management, and have been presented to all other sector agencies in charge of monitoring the social impact of projects. Designated staff of the future Project Implementation Unit within ProInversi6n will be in charge of implementing the ESMF. 2

3 The unit currently consists of dedicated members from ProInversidn but it will draw on the help of outside consultants as necessary. The next section of this document summarizes the main aspects of the ESMF. 2 The Environmental and Social Management Framework 2.1 Objectives The Environmental and Social Management Framework (ESMF) provides (i) socioenvironmental management procedures; (ii) necessary tools to assure the inclusion of socio-environmental variables in the projects promoted by ProInversidn; and (iii) methods to ensure compliance with the World Bank s Safeguard Policies throughout the life of projects. 2.2 Legal and Institutional Background The ESMF was developed on the basis of a diagnosis of the prevailing legal and institutional framework in Peru Concession model used The concession contract model used is the Build, Operate and Transfer (BOT) model, which consists of private sector participation in the construction and operation of public infrastructure, and private sector operation during a period of time, to guarantee investment recuperation and debt payment. At the end of the concession, the ownership and operation of the works revert to the State Legal framework Box 1 below shows the applicable laws and regulations. 3

4 National Environmental Management Law Framework Law Law Law Law Director Resolution MTC- 16 Director Resolution MTC-16 Legislative Resolution w Law28296 Agency (OSITRAN), which supervises road concession contracts Defines the roles of the National Environment Council (CONAM) and the sectoral, regional and local entities in terms of their environmental responsibilities, to guarantee compliance and avoid overlap, omissions and duplication Expropriations regulation Facilitates the implementation of road works and establishes procedures for property appraisal Promotes government transparency and regulates access to information Establishes citizen participation and consultation in the socioenvironmental evaluation of transport projects Establishes rules for development and application of compensation and I involuntary resettlement plans in transport projects Ratifies Convention No. 169 of the International Labor Organization on I indigenous and tribal peoples, and incorporates it in the political system Declares the identification, protection, conservation and diffusion of the I cultural patrimony to be of national interest Institutional Aspects ProInversi6n does not have any environmental unit, as responsibilities for the evaluation and mitigation of the environmental and social impacts of projects falls on the environmental units of each sector ministry. However, ProInversi6n plays a support role vis-a-vis these institutions for projects being concessioned under its responsibility. It is under that role that it proposes to implement the proposed ESMF. ProInversi6n has an Office of Social and Community Affairs (DASC), of which the key function is to lead the institution s consultation and information processes during project development. The DASC maintains direct contact with regional and municipal governments and civil society representatives through local, institutional, social and sector authorities. Before starting to develop a project, ProInversi6n seeks the formal consent of local and regional authorities, as well as the favorable opinion of civil society and, according to the type of project, acceptance by local communities. To that end, it establishes direct 4

5 contacts with local authorities, publishes on the Web all relevant information for a project and distributes information through mass communications media. In many cases ProInversi6n enters into dialogue with the local population of the directly or indirectly affected area to learn about their perception of the project and reach agreements with community representatives interested in the projects. 2.3 Socio-Environmental Evaluation of Projects The ESMF is based on an evaluation of the socio-environmental risks of projects, on the basis of which the socio-environmental studies that will be required to comply with the Peruvian environmental legislation and the World Bank s safeguard policies will be defined. ProInversih s projects can have different levels of socio-environmental risk, according to the nature of the projects and of the environment around them Categorizing Projects by Socio-Environmental Risk A categorization of projects based on different risk levels has been established. The proposed process to determine risk levels consists in classifying projects in terms of (i) their nature and magnitude, and (ii) the sensitivity of the environment in which they are located. Classification by nature and magnitude of projects Two aspects should be taken into account to classify projects depending on their nature and magnitude: (i) the overall size of the projects and the resulting likely magnitude of their impact, and (ii) the nature of the proposed works. The following table was prepared with ProInversih, to classify the various projects they are likely to promote in three socio-environmental impact categories: (A) High impact projects; (B) Moderate impact projects; and (C) Low impact projects. 5

6 Table 2: Categorization of projc Large road projects on principal or primary network Large scale energy and related projects (electrical lines that are part of the national interconnected network and generation plants of more than 100 MW) A Large scale oil, gas and pipelines projects Large scale irrigation and drainage projects Large scale oil or gas exploration Potable water and sanitation projects for large population centers with more than 1 million inhabitants Manufacture, transport, use of dangerous or toxic materials :s depending on their nature and B Road projects on secondary road system Medium scale energy and related projects (electrical lines that are part of the secondary network and generation plants between 10 and 99 MW) Medium scale oil, gas and pipelines projects Medium scale irrigation and drainage projects Medium scale oil and gas exploration Potable water and sanitation projects for population centers with between 100,000 and 1,000,000 inhabitants Note: This list serves as a reference and can be extended as the need arises. iagnitude n Road projects on tertiary road system Small scale energy and related projects (electrical lines that form part of a rural network and generation plants smaller than 10MW) Rural and tertiary level oil, gas and pipelines projects Small scale irrigation and drainage projects Small scale oil and gas exploration Potable water and sanitation projects for population centers with less than 100,000 inhabitants Regional airports In terms of type of works, the most common classification differentiate new construction, expansion, rehabilitation and maintenance. New Construction: New projects with new geographic boundaries. New construction requires the acquisition of land. Note that ProInversi6n s pipeline projects are all centered around existing facilities and premises, so that the pipeline should not include any new construction project (unless some existing facilities need substantial expansion). Expansion: Expansion of current projects, such as, for example, the expansion of generation capacity, increases in reservoirs, road expansion or realignment. This may require the acquisition of land. Rehabilitation: Works aimed at returning a deteriorated project to its original condition. Works are conducted on the existing structure, roadway or land. Rehabilitation occurs onsite. In road rehabilitation projects, the work includes improvement of drainage, containing walls and ramparts, among others. Maintenance: The project is in good condition and no additional investments are planned. This requires only routine and periodic work to maintain the project in good condition. All work occurs in the structure or on-site. 6

7 After classifying projects based on their nature and magnitude and on the type of work required, a first categorization of projects by type of projects is reached, for which four categories of projects have been defined: Type I, Type 11, Type I11 and Type IV. This first-cut categorization of projects allows to obtain a first approximation of the likely environmental and social impact of a project, with Type I projects likely to have the largest negative environmental and social impacts and Type IV projects the smallest impact. It is worth noting that when a concession includes various sub-projects, the exercise should be done with each sub-project and the overall risk category should be that of the project with the highest negative socio-environmental impact. Classification by the sensitivity of the environment Once the project has been classified by nature and type of work, the level of sensitivity of the natural and social environment in which the project is developed should be more precisely described. To that end, a checklist has been designed so that, based on secondary information (reports, maps, etc.), the degree of sensitivity of the environment can be evaluated. 7

8 Table 4: Degrees Sensitivity of the environment HIGH MODERATE,OW Sensitivity of the environment Description Protected areas (National Parks, others) Areas with high biodiversity (L. Holdrige, 1978) Areas with a high degree of threat (accessibility, CIAT) Areas with a high degree of endemism Areas with a grave danger of environmental degradation (deforestation, hunting, etc.) Mountainous areas with hilly relief (>35% slope) Areas with high risk of earthquake Areas subject to natural disasters (e.g. floods) Areas subject to erosion Permanently flooded areas (marshes, wetlands) Old growth forests Rare ecosystems and habitats with endangered species Water springs Regions recognized as indigenous territory or with vulnerable populations Sites of high anthropological or archeological interest Regions occupied by indigenous communities Areas occupied by populations that reside, work or obtain subsistence from it Areas at risk of social conflict because of environmental agreements not fulfilled Buffer zones for protected regions Areas with moderate to high biodiversity Areas with moderate to high degree of threat (accessibility, CIAT) Areas with moderate to high endemism Areas with moderate danger of environmental degradation (deforestation, hunting) Areas with moderate earthquake risk (15 to 35%) Areas with moderate potential for erosion Sporadically flooded areas Areas with presence of populations with established legal rights and good management capacity Areas with moderate archeological or anthropological interest Regions under risk of human occupation or recent invasions Areas leading to significant loss of labor Occupied areas outside of National Parks Areas with low to moderate level of biodiversity Areas with low to moderate degree of threat Areas with low to moderate endemism Areas with low danger of environmental degradation (deforestation, hunting) Areas with affected vegetation Regions without threat of flooding Regions with absence of historic or national interest Unprotected areas Regions with low levels of social conflict Partially built up land or structures Regions with alternative or harmonized uses After both the nature of the project and the sensitivity of the environment have been evaluated, the socio-environmental risk of the project can be determined. These risk 8

9 levels are divided into High (level l), Moderate (level 2), and Low (level 3), as shown in the matrix below. Table 5: Matrix to define the Environmental Risk Category of Projects I I Sensitivity of the Environment Level 1 Projects: Projects with high socio-environmental risks due to the high sensitivity of the environment and that the planned works are of such magnitude that they can alter the natural environment, its biodiversity, the social fabric, economic organization and cultural richness. The impacts could be irreversible. Level 2 Projects: Projects with moderate socio-environmental risks due to moderate levels of socio-environmental sensitivity and the fact that the planned works are not of a large magnitude. The impacts of this type of project are easily identifiable. Level 3 Projects: Projects that have a low socio-environmental risk. The natural environment, biodiversity, social fabric, economic organization and cultural richness are not at risk Required social and environmental studies As mentioned earlier, once the socio-environmental risk category of a project has been determined, the ESMF determines the environmental and social studies that will be required during the appraisal of the project to ensure its environmental sustainability and compliance with the World Bank safeguards. Environmental Studies Requirements Level 1 projects, of high socio-environmental risk, require a detailed Environmental Impact Assessment (EIA), which discusses alternatives and justifies the selected alternative as having the lowest socio-environmental impact. An Environment Management Plan (EMP) will have to be produce for the selected alternative. Level 2 projects, of medium socio-environmental risk, require an Environmental Assessment (EA), which identifies the potential impacts and proposes, in the Environmental Management Plan, measures to prevent, mitigate and/or compensate these impacts. Level 3 projects, of limited socio-environmental risk, require an Environmental Report (ER) which identifies social and environmental technical specifications needed to ensure the environmental sustainability of the project. 9

10 Social Studies Requirements Level 1 Projects: High risk projects should include, in addition to the EIA: i) a Resettlement Framework, an Indigenous Peoples Development Plan, and/or a Plan for Preservation of Historical and Cultural Property depending on the risks identified; ii) an identification of the needs to strengthen regulatory and institutional capacity; iii) a strategy for public consultation and community participation; iv) a clear, comprehensible and accessible publication strategy to disclose the social and environmental aspects of project. Level 2 Projects: Medium risk projects should examine the possible negative and positive effects of the project and recommend methods to prevent, minimize and compensate for the negative impacts and improve the positive effects. The EA may include: i) a specific Resettlement Plan, an action plan for Indigenous Peoples, and/or an evaluation of other social risks depending on the risks identified; ii) the programming of a public consultation with the objective to understand the expectations of interested parties and disclose the results of the EA. Level 3 Projects: The low risk level implies that the impacts can be managed by adequate specifications in the technical designs prepared by the environment sector agency. In all cases, these studies should be included in the technical feasibility or design studies, so that the project specifications take them into account and minimize socioenvironmental risks. To facilitate the execution of these studies and ensure compliance with the Bank s standards, a Resettlement Framework and an Indigenous People Framework have been developed by ProInversi6n with the help of the Bank to complement this ESMF. They have been disclosed at the Infoshop with the ESMF. Poverty assessment study requirements The ESMF requires also that for all projects, a poverty impact study needs to be carried out to (i) ensure their eligibility (only project that are socially desirable are eligible to the Guarantee Facility), (ii) evaluate negative and positive impacts on poverty, and (iii) measure the results during implementation. The ESMF specifies that, during the preappraisal phase, a Preliminary Poverty Impact Evaluation will be conducted with qualitative estimate of the project s expected impacts on poverty. During the appraisal phase, a Poverty Impact Evaluation will estimate the expected impacts on poverty. The impacts will be measured in terms of prices, employment, access to services and assets by the affected population group. The evaluation will also propose some indicators on the basis of which the impact of the project on poverty will be monitored during implementation. Complementary socio-environmental studies The ESMF highlights that several complementary studies may be required depending on the nature of risks. The box below summarizes the required instruments when a Safeguard Policy is activated. Among them, an Environmental Audit might be needed to establish environmental liabilities. Also, in the case of projects such as roads, gas lines, electrical networks, etc. 10

11 which go through protected areas (national parks, protected forests, etc.) or environmentally sensitive areas (wetlands, old growth forests, etc), a Protected (or Sensitive) Areas Management Plan should be developed or updated before any other environmental study i s conducted. Table 6: Nature of socio-environmental studies ri World Bank Policies OP 4.01 Environmental Assessment Infrastructure projects with direct or indirect impacts OP 4.04 Natural Habitats If a project crosses a fragile area in terms of biodiversity, whether or not it is a legally declared area. OP 4.12 Involuntary Resettlement When project implementation may result in displacement or involuntary resettlement of a population. OD 4.20 Indigenous Peoples When a project benefits or affects indigenous people or vulnerable groups 3PN Management of Cultural Property in Bank-Financed Projects When the project area includes sites that are of ircheological or religious imdortance 'ublic Information :n all cases when a population will be negatively iffected by or will benefit from the project. uired to satisfy World Bank safeguards Instruments Level 1 projects require an EIA; Level 2 projects require an EA; Level 3 projects require an ER. When works have a regional impact, a Strategic Environmental Evaluation should include a longterm view of potential indirect and cumulative effects. Construction design should be adapted to established conditions in the Area Management Plan. If the area is not legally declared, the project should evaluate whether is should be. An Involuntary Resettlement Plan and a Simplified Resettlement Plan are required, depending on the size of the displaced population. When the project includes a number of concessions or subprojects, in which the location is not known precisely, it will be necessary to develop a resettlement framework for each of the sectors. As a condition of approval to the concessionaire, projects should include specific resettlement plans within the Framework. An Indigenous Peoples Development Plan should propose sustainable development programs that are culturally sensitive and approved by the authorities or their representatives. A Cultural Properties Protection Plan should comply with the requirements of the Cultural Properties Protection Law The Management Plans should include a :ommunications strategy for affected populations I1

12 Socio-environmental dialogue requirements The ESMF requires that, during appraisal, projects include dialogue with local players, including the community. This dialogue should include information on the project and its potential impacts. The number and purpose of these dialogues vary depending on the level of socio-environmental risk of projects. Level 1 projects require two meetings with local representatives and the community. The first meeting should discuss the proposed project and receive input on potential impacts. The second meeting should present the results of the environmental studies. If appropriate, the dialogue procedures should guarantee participation of indigenous populations. It should further assure adequate participation of Indigenous people in the preparation of the Indigenous Peoples Development Plan based on local indigenous cultural characteristics. Level 2 projects require one meeting with local players and the community to discuss: i) the project objectives; ii) results of the environmental evaluation; iii) the simplified resettlement plan, if required. Level 3 projects require an informational meeting with the community on the project objectives. Information disclosure requirements All projects should include a public information strategy to inform citizens in general and direct beneficiaries of objectives and impacts. The ESMF specifies that information will be published on ProInversi6n s website and will use adequate local media to reach the affected population. ProInversi6n s web page will include: i) basic project information; ii) a chronology of activities for bidding processes (tenders); iii) the project s level of socio-environmental risk; iv) the terms of reference for the required environmental studies; v) the list of businesses participating in the bidding process; vi) a summary of community meetings; vii) the final environmental impact assessment or report; viii) where relevant, the resettlement plan or the simplified resettlement plan; ix) where relevant, the indigenous peoples development plan and the cultural properties protection plan; x) any other important study of the project; xi) the announcement of the selected company; xii) the signed contractual social and environmental commitments made by the concessionaire; and during implementation xiii) an annual progress report. The following will also be placed in local media: i) the place, date and invitees to the meetings; ii) draft environmental impact studies; and iii) draft resettlement plan (so that local stakeholders have enough information in advance to engage in an informed dialogue). The bid due date, list of participating bidders and the announcement of the selected bid should also be published in the local media. In addition, a summary of the results of the community dialogue and the contract with the selected bidder should be published. This should include social and environmental commitments. 12

13 2.3.3 Compliance with Environmental Agencies Requirements Each project should count with all required authorizations or permissions from the corresponding environment sector agency. Once concluded, the environmental and social studies conducted as requested in the ESMF should be submitted to the respective environment sector agencies so that each agency has enough information to give the respective license or environmental permit. The license or permit becomes official upon publication of a Supreme Resolution. Once the concession is adjudicated, ProInversi6n s Board of Directors will send the project s socio-environmental report to the corresponding ministry. The report should include the agreements made by ProInversi6n during the process of acquiring environmental authorizations, agreements with communities and other interested parties, and other inter-institutional agreements. The concession contract should include clauses ensuring compliance with sector agency requirements Responsibilities for the Environmental and Social Management of projects Creation of a Socio-environmental unit A Socio-Environmental Management Unit (SEMU) will be created within ProInversi6n. The unit will be led by a manager with a broad understanding of socio-environmental issues, supported by an assistant to ensure adequate management. The unit manager s functions will include: e e a e e e a e e a Participate in the project evaluation work teams Propose a socio-environmental category for the projects using the Environmental Project Categorization method described in the ESMF and submit to the World Bank for approval Prepare the Preliminary Environmental Evaluation Reports after the evaluation process has begun Follow up on studies during the pre-appraisal stage Coordinate with environmental authorities and ensure compliance with environmental legislation Prepare an Environmental Appraisal Report Ensure the inclusion of environmental clauses in the concession contracts Update the ESMF as needed Develop training activities on social and environmental themes to internalize the topic within the institution Develop promotional activities and publications for the ESMF for project coordinators 13

14 2.4.2 Project Cycle Procedures and Positions Identification stage During the identification stage, the SEMU will be responsible for filling in a pre-defined Eligibility Form that will enable the Bank to assess whether a project soliciting participation to the Guarantee Facility is eligible or not. The Eligibility Form includes a proposal for the Environmental Category of the projects, based on the categorization method described earlier. Projects that will solicit a World Bank guarantee should receive a no objection to the proposed category. Pre-appraisal stage SEMU s manager will coordinate with the World Bank Project Coordinator in Washington DC the activities to be developed during the pre-appraisal phase. These activates should include a site visit, after which SEMU will be responsible to fill in a predetermined Preliminary Environmental Evaluation Report. For projects soliciting a World Bank guarantee, this report should be forwarded to the World Bank for review and no objection. This form should include an Action Plan, agreed with the Bank, defining all the environmental and social studies that will need to be carried out during appraisal and specific dates for their contracting, and implementation. SEMU should then prepare the Terms of Reference for all studies that will be required during the appraisal stage. Terms of Reference for Level 1 projects require the Bank s no objection. SEMU will be responsible to monitor that the studies are executed properly. As much as possible, SEMU will coordinate with the sector environmental authorities in order to ensure that they are involved in the preparation of the studies and ensure compliance with the appropriate legislation. Appraisal stage After the required studies have been finalized, SEMU will review the results and indicate its agreement with the results. During this review process, SEW will maintain a close coordination with the sector environmental authority, in order to agree on the results. SEMU will then prepare a pre-determined Environmental Appraisal Report which summarizes the results of the environmental and social studies and confirms the social and environmental viability of the project. A no-objection from the World Bank is required for World Bank-supported Level 1 and Level 2 projects. Finally, SEMU should make sure to include the Environmental Appraisal Report in the concession promotion plan, to ensure the recommendations made in the report are included in the bidding documents and concession contract. Monitoring stage ProInversidn is developing a number of follow-up and monitoring activities for projects already concessioned in order to ensure that the studies and plans developed and agreed upon during the investment preparation phase are executed and implemented. In addition to these initiatives, the ESMF imposes that ProInversi6n prepares annual Project Monitoring Reports (PMRs) to be send to the Bank with a detailed evaluation of the 14

15 projects progresses. The detailed content of the PMRs will be defined in the project s operational manual. 15