mtegratedsafeguardsdatasheet APPRAISAL STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Date ISDS Prepared: I. BASIC INFORMATION l. Basic Project Data mtegratedsafeguardsdatasheet APPRAISAL STAGE 15-0ct Report.: Country: Vietnam I Project ID: jpt10477 Project Name: VN-CPF-Vietnam Renewable Energy Development (PI 10477) Task Team Leader: Estimated Board Date 1 : Managing Unit: Ky HongTran NA EASVS Sector(s): Other Renewable Energy (50%), Hydropower (490/o), Public Administration -Energy and Mining (1%) Tbeme(s): Infrastructure services for private sector development (67%), Change (33%) Is tbis project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies)? Project Financing Data (in USD Million) Total Project Cost: Total Bank Financing: j202 Financing Gap: I Financing Source BORROWER/RECIPIENT International Development Association (IDA)' Swiss SECO Borrowing Country's Fin. lntenneidary/ies Total Carbon Finance from the World Bank Environmental Category: FI - Financial Intermediary Assessment Is tbis a Repeater project? Is this a Transferred project? Climate Amount There is no Board approval for the CF operation but the signing of the ERPA between the Bank and the Government, expected in late Oct/early vember 2013

2 2. Project Development Objective(s) The Bank and the Ministry of Industry and Trade {MOI1) have signed a Carbon Finance Intermediary Agreement (CFIA) that sets the framework for a pipeline of Carbon Finance Project (CFP) in Vietnam. The objective is to scale-up the implementation of CF in the renewable energy sector, focusing on renewable non-fossil energy sources such as wind, solar, geothermal, hydropower, and biomass. The Bank will assist in building capacity of MOlT, Participating Banks (PBs), and developers in terms of safeguards, as. well as Clean Development Mechanism (COM) project cycle- from project identification and evaluation, to registration by the COM Executive Board and monitoring. 3. Project Description The carbon finance operations for the REDP will be based on a Program of Activity (PoA) which will scale up the development of renewable energy projects and reduce the project - by - project carbon fmance transaction costs. The potential carbon fmance revenue for the renewable energy proj~cts seeking support from the REDP will help to overcome numerous barriers preventing widespread investment in the renewable energy sector in Vietnam, enhancing the financial attractiveness of the subprojects as well as improve their long-term sustainability through performance based payment in hard currency. The proposed PoA is proposed to be initially financed by IDA Credit - Vietnam Renewable Energy Development Project (P/03238). The carbon finance related component of the IDA Credit is the Renewable Energy Investment Component consisting of two subcomponents: (i) Credit to Support Renewable Energy Investments; and (ii) Technical Assistance for Investment Project Implementation. Within the REDP program, private developers will develop sub-projects not exceeding 30MW based on small hydro, wind, and biomass in accordance with REDP criteria including environmental and social safeguards. They will commit at least 20% in equity funding and will approach participating banks for lending of up to 80% of each sub-project's total project cost. This COM program of activities (the REDP PoA), however, only supports the development of small hydropower projects. A typical COM Project Activity (CPA) under this PoA will be small run-of-river hydropower plants with an installed capacity below or equal to 30 MW connecting to Vietnam national electricity grid. Although detailed technical characteristics may differ among CP As, the general design conditions outlined below apply to all CP As. REDP seeks to implement environmentally friendly practices such as the maintenance of minimum ecological flow. From the water intake, water is diverted through a channel (headrace) to a surge tank so as to always maintain a minimum ecological flow in the natural river bed. From the surge tank, water goes through penstock(s) to run turbines situated inside a power house and generate electricity by generators connected to the turbines. As per the geology, a small reservoir may be necessary to ensure minimum power generation during the dry season. In the power house one or more turbines and generator(s) are located. From there the plant connects to the next nearby sub-station through a new or existing power

3 line. A discharge channel returns the water to the natural river bed. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Except for few subprojects selected upfront, all renewable energy subprojects will be identified during implementation. Majority of the subprojects would be small hydro power plants which are typically located in hilly or mountainous areas in the rthern and Central regions. Biomass subprojects would be located in the Southern delta areas while wind subprojects are likely situated in Central coastal areas. 5. Environmental and Social Safeguards Specialists on the Team Son Van Nguyen ( EASVS) Nghi Quy Nguyen ( EASVS) Since the CFP is directly related to the REDP, the safeguards policies triggered for REDP are also triggered for the CFP. 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/BP 4.0 l Yes The project is expected to provide additional energy to the grid to improve the quality and availability of power, especially in rural remote areas. It is also expected to lead to improvements of local productive capacity, business environment as well as social, educational and cultural life. It is also expected to generate local employment opportunities and improve access of rural communities. Nevertheless, previous experience in Vietnam in developing renewable energy projects, especially small hydropower plants shows t.hat these projects cause some change in land use and impact the lives of people living in the project areas. The project can have other local environment consequences as well, including impacts on natural habitats and forests, and to landscapes. These sub-projects are also likely to be located in hilly areas where, in

4 Natural Habitats OP/BP 4.04 Forests OP/BP 4.36 Pest Management OP 4.09 Physical Cultural Resources OP/BP 4.11 Vietnam, ethnic minorities live. The RE subprojects will be scre.ened using the Environment Safeguards Framework (ESF) developed under the REDP for environment and social impacts. The ESF was developed in compliance with Bank safeguard policies and GoV's environment policies. It provides guidance in the screening of subprojects for eligibility to receive funds from the REDP, and identifies additional information that may be needed to ensure compliance with WB Safeguards. Each subproject is required to prepare its Environment Impact Asses.sment (EIA) or Document for Environment Protection Certification (EPC) in accordance with Vietnamese laws and regulations. Indigenous Peoples OP/BP 4.10 Yes Sub-projects are also likely to be located in hilly and mountain areas where ethnic minorities live. The project will adopt the Ethnic Minorities Planning Framework (EMPF) developed under REDP to ensure that the development of subprojects fully respects the dignity, human rights, economies, and culture of affected ethnic minority peoples. The subproject developer must be able to demonstrate that. they have obtained broad community support for the subproject through a process of free, prior, and informed consultations with the affected ethnic minority communities. In this regard,

5 the EMPF sets out guidelines to (a) ensure that the ethnic minority peoples receive social and economic benefits that are culturally appropriate; (b) avoid potentially adverse effects on the ethnic minority communities; and (c) when such adverse impacts cannot be avoided, minimize, mitigate, or compensate for such effects. Involuntary Resettlement OP/BP 4.12 Yes RE sub-projects may displace people and/or require land acquisition. A Resettlement Policy Framework (RPF) developed under REDP will be used to address the various types of land acquisition and resettlement that may occur during a sub-project preparation and implementation. It lays down the principles and objectives, eligibility criteria of displaced persons, modes of compensation and rehabilitation, participation features and grievances procedures that will guide the compensation and potential resettlement of these persons. It further describes the planning and documentation requirements for such activities under the project The developers would need to follow these policy guidelines and procedures, and prepare necessary documents during the planning and design of the project proposals. Safety of Dams OP/BP Yes For both new and rehabilitated small hydropower projects, the Dam Safety (OP/BP 4.37) will be applied. For any dam that is considered large by the World Bank and GoV will be treated as large dam and subject to the additional safety requirements, a

6 Projects on International Waterways OP/BP7.SO. Projects in Disputed Areas OP/BP 7.60 Dam Safety Safeguards Framework has been prepared and developed under ~EDP to include the relevant requirements in accordance with OP II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the project. Identify and describe any potential large scale, significant and/or irreversible impacts: The net impact of the CFP is positive because they seek to overcome multiple barriers that prevent investment in the renewable energy sector in Vietnam and contributes to the greenhouse gas emission abatement. However, the CFP is directly linked to the subprojects under REDP, its potential impacts are also related to those of the REDP (P ). 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: The CFP itself would have positive long term impacts in sustainable renewable development of the sector in emission reduction and economic development in rural and disadvantage areas. However, the CFP is also directly related to the REDP with its potential indirect and/or long term impacts described in the REDP ISDS (Report.: AC3584) 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. The alternatives to the grid connected renewable energy power plants are thermal power generation. The CFP is superior environmentally because it encourages production of low emission electricity, and therefore reduce overall local and global pollutants resulting from thermal power generation. The environment benefit of the project has even greater value to Vietnam given the increasing reliance of the country to the coal fired generation to meet its electricity demand. Renewable energy generation is also superior in social terms compared to large thermal power plants because it catalyzes economic development in rural and disadvantaged areas through creation of associated infrastructure and employment opportunity. At the CFP subproject level, each developer is required to consider alternative options to minimize adverse social and environment impacts during design and execution, including -selection of sites for its subproject facility and infrastructure. The requirements are included in the safeguard frameworks that each participating developer has to follow in order to get access to the project financing. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of boa:rower capacity to plan and implement tbe measures described.

7 To be eligible for a CPA, a subproject must be fmanced under REDP and follow all the safeguards requirements of the parent project, REDP allows subprojects to be refinanced provided that they meet basic eligibility and quality criteria that will help ensure the subprojects meet good international practice in technical, environmental and social terms and meet minimwn levels of financial and economic performance. An Environmental Safeguards Framework (ESF), Resettlement Policy Framework (RPF) and Ethnic Minority Planning Framework (EMPF) were prepared for the REDP project to ensure that the subproject to be financed under REDP meets the government regulation and World Bank safeguard policy requirements. The ESF provides guidance on screening of subprojects for eligibility to receive funds from the REDP, and identifies additional information that may be needed to ensure compliance with WB Safeguards. The framework also describes the roles and responsibilities of MOlT, Ministry of Finance (MoF), the participating banks (PBs), and the developers involved in meeting these requirements. The RP specifies all mitigation measures related to the involuntary resettlement, and includes details compensation payments. The purpose of the policy framework is to clarify resettlement principles, organizational arrangements, and design criteria to be applied to subprojects to be prepared during project implementation. According to the RPF, the compensation for alllosses as the result of involuntary resettlement for the subproject will be at replacement level. The EMPF describes the implementation process for screening for the presence of indigenous peoples in areas covered by a specific REDP sub-project, social assessment, free, prior and informed consultations leading to broad community support, and the preparation of an Ethnic Minority Development,Plan (EMDP). MOlT has prepared the dam safety safeguards framework (DSF) includes the relevant requirements in accordance with the World Bank's Safeguard Policy. The Independent Dam Safety Panel of Experts (DSP) will review and advise the REDP Project Management Board (PMB) on matters relative to the safety of new large dams or high hazard dams, or the rehabilitation of existing large or high hazard dams. PMB will screen and select subprojects for the Panel's review. PMB views the Panel as an objective reviewer, whose independence and integrity will be safeguarded. The DSP has been appointed. Dam Safety Assessment Reports (DSRs) have been prepared for the five CP As which are classified as large and already approved for refinancing (Sung Vui, Song Rieng, Nam Tha 4, Pa Chien and Hoa Phu) and found satisfactory by the Bank. During the implementation of the REDP, close safeguards supervision has been maintained by the Bank and the client. Some non-compliance has been identified; corrective action plans have been developed and implemented to address environinental and social safeguard issues. To date, the overall environmental and social performance of the REDP can be assessed as moderately satisfactory. The developers are relatively active in developing close relationship with local authority and community. Compensation for affected land/assets and supports for displaced people have been implemented. In addition, the developers contributed significant effort in improving local basic infrastructures (rural road, primary school, hostel for pupils, etc) and in enhancing the use of local labor in construction/operation work. Generally, the dams under the program are safe and construction quality varies from site to site but in acceptable standards. The PMB and DSP continue its close supervision, identify technical risks and provide technical ad vices to developers and its contractors. Currently 5 CP As have been identified and additional 14 CP As are expected to be included.

8 The processing and approval of the ERP A will be adhered to the following requirements:./ The approved ESF, RPF and EMPF will be applied to every CPA that is accounted for under the ERPA signed between MOlT and the Carbon Finance Project (CFP). An Environmental Management Plan (EMP), and where applicable, a Resettlement Plan and an Ethnjc Minority Development Plan acceptable to the Bank will be required for every CPA../ The same supervision agreements approved for subprojects under the REDP will be applied to CPAs, namely, prior review of the use of the ESF, RPF, EMPF for all the CPAs to ensure that these frameworks are being used adequately, and the EMP, RP and -EMDP meet the Bank safeguards requirements../ The ERPA to be signed between MOlT and the CFP shall include a description of the agreed safeguards and supervision provisions./ The duration of the ERPA between MOlT and the CPF will be limited to the life of the REDP Loan. S. Identify the key stakeholders and describe the mechanisms for consultation and disdosure on safeguard policies, with an emphasis on potentiauy.affected people. Key stakeholders are developers, participating banks, affected communities and NGOs, relevant district, provincial and central governments. Consultation on the project design and requirements with the key stakeholders has been carried out during preparation. Consultation workshop for dam safety framework of the REDP was held in October Consultation workshop for social and environment policy frameworks was held in vember, The frameworks were circulated for comments among concerned ministries before approved by MOlT. All safeguard frameworks will be disclosed at the provincial people's committees of the affected provinces. In addition, RPF will be disclosed at the affected district people's committees. The frameworks will be posted at MOlT website. At CFP subproject level, public consultation with potentially affected people on social and environment impacts of each subproject is mandatory for all participating developers as an important requirement of the safeguard frameworks. The consultation results are required to be documented in the RP, EMDP and EMPs. The developers will also be responsible for disclosing the EMPs, RPs and EMDPs at a public location near the subproject sites and in the offices of 'the Provincial DONRE and/or over the Internet. If the subproject is located in more than one province, the documents shall be disclosed at public locations nearest the subproject site in each province and at the local offices of DONRE.. B. Disclosure Requirements Environmental Assessment/ Audit/Management Plan/Other Date of receipt by the Bank Date of submission to InfoShop "In country" Disclosure Vietnam 25-v-2008 (ofredp) 0 1-Jun-2009 (of REDP) 20-v-2008 (of REDP)

9 Comments: Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank Date of submission to lnfoshop "In country" Disclosure Vietnam Comments: Indigenous Peoples Development Plan/Framework Date of receipt by the Bank Date of submission to Info~ hop "In country" Disclosure Vietnam Comments: 25-v-2008 (ofredp) 01-Jun-2009 (ofredp) 20-v-2008 (ofredp) 25-v-2008 (ofredp) Ol-Jun-2009 (ofredp) 20-v-2008 (ofredp) If the project triggers tbe Pest Management and/or Physical Cultural Resou~es policies, tbe respective issues are to be addressed and disclosed as part of tbe Environmental Assessment/ Audit/or EMP. If in-country disclosure of any of tbe above documents is not expected, please explain wby: C. Compliance Monitoring Indicators at the Corporate Level OPIBP/4.01 -Environment Assessment (ofredp) Does the project require a stand-alone EA (including EMP) report? Yes [X] [ 1 NA [ 1 If yes, then did the Regional Environment Unit or Sector Manager Yes [XJ [ 1 NA [ I (S\Vt) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in Yes (XI [ ) NA [ ] the credit/loan? OPIBP Indigenous Peoples (ofredp) Has a separate Indigenous Peoples Plan/Planning Framework (as ' Yes [X 1 [ I NA [ ] appropriate) been prepared in consultation with affected Indigenous Peoples? OPIBP Involuntary Resettlement (of REDP) Has a resettjement plan/abbreviated plan/policy framework/process Yes [X) [ ) NA [ 1 framework (as appropriate) been prepared? If yes. then did the Regional unit responsible for safeguards or Yes [X] [ ) NA [ ) Sector Manager review the plan? The World Bank Policy on Disclosure of Information (ofredp) Have relevant safeguard policies documents been sent to the World Yes [X J l ) NA [ J Bank's Infoshop?

10 Have relevant documents been disclosed in-country in a pubjic Yes [X 1 [ place in a fonn and language that are understandable and accessible 1 NA l 1 to project-affected groups and local NGOs? All Safeguard Policies (of the REDP) Have satisfactory calendar, budget and clear institutional Yes (X 1 [ 1 NA [ ] responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to ~feguard policy measures been included in Yes (X 1 [ ) NA [ 1 the project cost? Does the Monitoring and Evaluation system of the project include Yes [X 1 [ 1 NA [ 1 the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with Yes [X 1 [ 1 NA [ 1 the borrower and the same been adequately reflected in the project legal documents? 10. APPROVALS Task Team Leader: Approved By: Sector Manager: Date: 4