INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE
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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I. Basic Information Date prepared/updated: 01/19/2010 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Report No.: AC Basic Project Data Country: Brazil Project ID: P Project Name: ELETROBRÁS Distribution Rehabilitation Project Task Team Leader: Jennifer J. Sara Estimated Appraisal Date: January 13, Estimated Board Date: May 27, Managing Unit: LCSEG Lending Instrument: Specific Investment Loan Sector: Power (100%) Theme: Infrastructure services for private sector development (100%) IBRD Amount (US$m.): IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower Environmental Category: B - Partial Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) [ ] No [] 2. Project Objectives The higher level objective of the proposed Project is to improve the quality of electricity service provided by the Eletrobrás-managed distribution companies to the population in the States of Acre, Alagoas, Amazonas, Piaui, Rondonia and the City of Boa Vista, as a means to improve the quality of life and foster economic growth. 3. Project Description Component 1: Service Quality Improvement and Loss Reduction. This component will improve the quality of service, reduce technical, non-technical and billing losses, and enhance commercial management through the following three inter-related sets of activities: (i) Distribution Network Reinforcement: to strengthen, rehabilitate and expand low and medium voltage distribution grids and related substations. (ii) Advanced Metering Infrastructure: for the procurement and installation of Automatic Meter Reading (AMR) equipment and telecommunication systems to better manage metering, reading and monitoring of consumption of large high, medium and low voltage consumers to reduce non-technical losses and improve bill collection.
2 (iii) Modernization of DisCos Management Information System (MIS): including the acquisition and installation of: (a) new management information systems for commercial activities, technical services, and corporate resources; (b) updating of the client database and mapping of the distribution network based upon a Geographic Information System (GIS); and (c) acquisition of computing equipment and other tools required to put in place an integrated client management system. Component 2: Institutional Strengthening. This component will strengthen the operational capacities of the DisCos as follows: (i) Build capacity in the DisCos to move towards a common performance-based management approach, including by exposing DisCo staff to international best practices. (ii) Strengthen the DisCos management of environmental and social processes and impacts. (iii) Provide support to community outreach through the implementation of social action programs and communication campaigns to educate consumers on the benefits and responsibilities of becoming registered customers and paying bills, as well as in other areas, such as energy efficiency, safety and environmental issues. (iv) Support Project implementation, monitoring, reporting and evaluation by the six DisCos and Eletrobrás. 4. Project Location and salient physical characteristics relevant to the safeguard analysis The six DisCos to be supported under the project are located in the states of Acre, Amazonas, Rondonia and Roraima (in the case of Boa Vista Energia) in the Amazon, and Alagoas and Piauí in the Northeast Region. As noted, the programs in Eletroacre, Ceal, Amazonas Energia, Rio Branco Energia and Ceron are strictly limited to improvements of medium and low voltage distribution networks in urban areas, while the investments in Cepisa involve improvements both in intra-urban networks and in peripheral and interurban connections, in areas largely characterized by cattle-ranching and agricultural activities, where the cerrado (savannah) vegetation already has been cleared. The Cepisa medium-voltage lines will be routed to take maximum advantage of the rights-of-way of existing roads. Where patches of vegetation remain, they can be avoided. 5. Environmental and Social Safeguards Specialists Ms Maria Teresa Serra (SASDS) Ms Maria Bernadete Ribas Lange (LCSEN)
3 6. Safeguard Policies Triggered No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: A. The EA process In compliance with the World Bank#s OP/BP 4.01, an Environmental and Social Impact Assessment (EA) was conducted during preparation of the Project. The EA process comprised: (i) a review of investment plans, (ii) preliminary assessments of areas where project interventions are planned in the cities of Boa Vista, Maceió, Manaus, Porto Velho, Rio Branco and Teresina, and preliminary assessments of proposed peripheral and interurban routes in the State of Piauí; (iii) review of regulatory and institutional frameworks for environmental assessment and related topics in Brazil; (iv) assessment of environmental and social procedures currently followed by Eletrobrás and the DisCos; and, (v) interviews and meetings with technical staff at Eletrobrás and the DisCos during project preparation. Face-to-face consultations were held in Manaus in December 2009 and in Teresina in January 2010, with participation of state environmental agencies and key organizations, to discuss the objectives, scope and timing of the Project, the environmental and social issues that may potentially arise during implementation, and proposed actions to address any adverse project impacts. B. The typology of potential project impacts The EA identified the following typology of project interventions with potential environmental and/or social impacts: (i) Investment in improvements of medium and low voltage lines (34.8 kv and below) in urban neighborhoods that are already serviced by the utilities but are currently operating at overcapacity and/or with high levels of technical losses # in all six states. (ii) Investments in regularization (i.e., reduction of non-technical losses) of low and medium voltage connections to industrial, commercial and service sector consumers and
4 to low-income residential neighborhoods that have been recently incorporated (or will be incorporated) into the formal urban structure # in all six states. (iii) Construction of high voltage distribution lines (69 kv) and substations in the periphery of large urban areas or interconnecting mid-sized urban areas, replacing, reinforcing or expanding systems that are currently operating at overcapacity # only in the State of Piauí. Typologies 1 and 2: Investments in medium and low voltage lines, undertaken in urban areas -- whether focused on consolidated areas, as in investments in Distribution Network Reinforcement, or on neighborhoods in transition, as in the case of the Advanced Metering Infrastructure activities # are expected to have insignificant environmental and social impact. (i) Environmental impacts in both typologies are expected to be of short duration, largely related to execution of works (e.g., replacement of poles, cables, transformers, meters) and disposal of waste material (e.g., construction debris and obsolete equipment). Where transformers have to be replaced, removal and disposal will follow the established practice and will be undertaken by specialized contractors. (Over the course of several years, all PCBs have been removed and disposed of as per requirements of the Brazilian legislation.) Other obsolete material (e.g., cables, meters) is usually sold off in auctions held by the DisCos periodically. Construction debris and safety procedures issues have been addressed in a Construction Manual, which will be attached to contracts. (ii) Investments in Distribution Network Reinforcement, focused on technical losses, will target consolidated urban neighborhoods (Typology 1) and entail minor interference with ongoing activities during implementation. Given that disturbance is minimal and of short duration, and that resident, commercial and service customers in those neighborhoods are the primary beneficiaries of improved services, it is expected that these investments are unlikely to raise social concerns. (iii) Investments in Advanced Metering Infrastructure, meant to reduce non-technical losses (Typology 2), will concentrate on high and medium-income customers, which are expected to account for 85% of the energy recovered (increase in energy sold and reduction in energy purchased). The remaining 15% involve regularizing energy services in low-income, informal, usually peripheral neighborhoods that are in the process of being incorporated into the formal urban structure by municipal governments. In such cases, regularization of energy services will entail replacement of improvised line connections (with rerouting in a few cases), and introduction of metering and billing. This could have two potential social impacts: (i) resettlement, and (ii) a financial burden for households. As per ANEEL guidelines, the DisCos will only invest when there is a formal request from the municipality. Although improvised, the settlements, for the most part already have roadways; thus resettlement is not expected. Regularization of electricity service will however entail an obligation for payment, which may constitute a financial burden for lower-income households. Nevertheless, such households will benefit from subsidized #social# tariffs.
5 Typology 3: Investments in high voltage (69 kv) distribution systems (lines and substations) will occur only in the case of Cepisa, in the State of Piauí. Five networks will be reinforced: Teresina, Parnaíba, Campo Maior, Ribeiro Gonçalves, and Valença. (i) The first two are located in the outskirts of two major cities and will follow existing rights-of-way (already occupied by other lines, one of which will be fully replaced and upgraded), existing low-density urban roads or national highways. Land acquisition for construction of associated substations (equivalent to about a 100-meter square block or less each) has already taken place or does not present a problem, given the abundance of unoccupied plots in these peripheral areas. No resettlement or adverse impact on livelihoods is foreseen. (ii) In the case of the three interconnections between mid-sized urban areas, lines will follow state highways and other rural roads. These are low-density, largely agricultural and cattle ranching regions, characterized by #cerrado# (savanna) landscape, much of which already removed to form pastures. No significant impact on natural habitats is foreseen. Rights-of way can often be shared with those already existing; land for substations has already been acquired or is available in the periphery of settlements. There is no impact on indigenous peoples; while lands will be needed for the passage of rights-of-way and for substations, no resettlement or other significant impact on people or their livelihoods is foreseen. In sum, based on the type of infrastructure to be put in place, the pre-feasibility documents available, the site visits conducted during the EIA process undertaken during project preparation, it is foreseen that the project will not have large scale, significant and/or irreversible environmental and social impacts. The project has been rated as Category B. C. Approach to addressing Project environmental and social impacts No construction work is foreseen during the first year of project implementation. Investment plans are currently available at the pre-feasibility level -- in the case of urban system improvements, priority neighborhoods have been identified; in the case of peripheral and inter-urban connections, indicative routing of distribution lines and substation sites is available. Detailed projects will be prepared during the first year of project implementation; construction of the first segments is foreseen to start during the second year. Given this implementation timeframe, site-specific environmental and social impact assessments could not be conducted before project appraisal. The approach to identifying and managing environmental and social risks under the project will be twofold: (i) Safeguards frameworks have been prepared and are of two types: (a) mandatory, i.e., guidelines that will be applied in all sub-projects that may potentially have an environmental or social impact (EA, Construction Guidelines, and Waste Management Guidelines), and (b) precautionary, i.e., guidelines that will be applied if the specific impacts are identified during project preparation or should these arise during
6 implementation (Resettlement, Indigenous Peoples, Natural Habitats, Cultural Property, and Pest Management). (ii) Site-specific assessments will be conducted and impact mitigation/compensation plans drawn up, as needed, during Year 1 for investments to be made during Year 2; a similar procedure will be adopted for subsequent years. For effective and informed decision making on the need to conduct detailed assessments on investments to be undertaken in Year 1 and beyond, screening, supervision and monitoring mechanisms have been included in the frameworks. As noted above, a simplified but comprehensive EA, focused on impact mitigation, is expected to be carried out for all sub-projects with potential environmental and/or social impacts. The EA will identify the need to apply any one of the precautionary frameworks. It is not expected that the precautionary frameworks will be called upon given the typology of project impacts identified through the appraisal stage. If needed, however, the guidance is available in the EA. For instance, the Discos do not use pesticides to control vegetation growth in rights-of-way, but resort to manual cropping instead. A Pest Management Framework has been prepared although it is not foreseen that it will be triggered and that a pest management plan will be necessary. The safeguards frameworks lay out: (i) guidelines and procedures for environmental assessment, involuntary resettlement, and management of impacts on indigenous peoples, natural habitats, cultural heritage; (ii) guidelines and procedures for general construction work and management of hazardous and other waste; (iii) criteria for screening and classification of sub-projects from an environmental and social impact perspective, flagging the appropriate guidelines and procedures to be followed during sub-project design and implementation; (iv) a timeframe for sub-project screening and preparation of appropriate assessments and mitigation plans as needed, taking into account typical contracting, preparation, consultation, and licensing times that may be required; and (v) coordination, supervision, monitoring and evaluation mechanisms to ensure the effective and timely implementation of environmental and social activities during the annual project cycle. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: We do not anticipate indirect and/or long term environmental or social impacts, other than those derived from access to improved electricity services. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. High voltage distribution lines, interconnecting urban settlements in Rondônia were initially included in the project. Although environmental and social impacts were estimated to be minor and manageable, roughly of the same nature as those proposed for
7 Piauí, the degree of risk and uncertainty with regard to the Rondônia high-voltage distribution investments were thought to be higher than those in Piauí, especially with respect to potential impacts on indigenous peoples and natural habitats. The Rondônia interconnections were thus dropped from the project. More broadly, the key initiatives that have been included in the project in order help avoid or minimize adverse impacts are: (i) the set of safeguard frameworks, (ii) a subproject screening process, (iii) the Construction Manual and Waste Management guidelines, (iv) the capacity building program and (v) the communications programs. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Eletrobrás has carried out a comprehensive EA that identified key sub-project typologies, and prepared an environmental management plan, centered on a set of safeguard frameworks and a sub-project screening process, in line with Bank policy and the Brazilian legislation, as summarized in Section II.A above. It also has developed an institutional strengthening program as described below. At present, the capacity of the six DisCos to manage environmental and social issues varies significantly but overall is significantly inferior to that of other distribution companies in Brazil against which they might be benchmarked. Of the six DisCos, Amazonas Energia is best positioned, with an environmental unit of around 30 staff largely resulting from prior company mergers. In the five other DisCos there is at best a #focal point# for environmental/social issues, with limited capacity and stability, within each company; they generally rely on outside technical expertise to support the licensing process and address issues as they arise. The Project Coordinator, the Environmental and Social Safeguard focal in the UGP and the EDE Coordinators, will be responsible for: (i) coordinating the social and environmental activities of the Project within Eletrobrás and within each DisCo; (ii) screening proposed sub-projects, guiding social and environmental assessment and mitigation plan preparation as required, analyzing and approving specific Socio- Environmental Management Plans (SEMP) for the interventions to be executed; (iii) inspecting, following-up and providing guidance during implementation of mitigation measures, required by the environmental licensing authorities and recommended by the SEMP; (iv) supervising the implementation of the Policy Framework for Civil Works; and, (vi) supervising, monitoring and evaluating implementation of the institutional strengthening program focused on environmental and social management issues (see below). Although attention to date has mostly focused on their immediate environmental or municipal licensing requirements, the DisCos and Eletrobrás see the Project as an opportunity to reduce existing environmental/social management capacity gaps in the near-term and better align themselves to best practices established within other companies in the Brazilian power sector in the medium-term. In addition to the sitespecific environmental and social activities associated to the annual investment plans that
8 will be prepared starting in the first year of project implementation under Component 1, the project will support a program of institutional strengthening through Component 2, comprising the following lines of activity: i. Establishing common policies and procedures across the six DisCos regarding (a) appropriate mainstreaming of environmental and social concerns in operation and expansion of their distribution systems, and (b) facilitating the timely licensing of future investment projects; this would be undertaken in step-wise manner as follows: mapping of current procedures and adoption of the set of safeguard frameworks, proposed through the Project#s EIA process; design of detailed guidelines and procedures, structured per different stages of the project cycle, for different typologies of projects # and their discussion within the DisCos and with the DD, during 2010; piloting of the guidelines and procedures during the first year of project implementation (2011); and evaluation, adjustment and formal adoption (2012). ii. Strengthening of current management capacity by clarifying roles and responsibilities, mobilizing additional staff and/or consultants to address day-to-day demands within the DisCos, supplemented by the EDRP UGP that will be providing general oversight of project implementation; alternative strategies may also include twinning with one of the larger power sector companies, drawing on resources made available through Eletrobrás# Environment Department, and support through the Environment Sub-Committee (SCA) of the Eletrobrás Group, focused on issues of common interest to member companies and that, among its eight working groups, has one specifically dedicated to DisCo issues. iii. Training on environmental and social impact management issues and best practices, targeting both managers and technical staff, through courses, seminars or TV LUME (an internal VC and TV system that Eletrobrás has recently set up), tapping into the experience of other DisCos in Brazil, and sharing experience across project DisCos, on topics such as environmental regulations, implementation of Environmental Management Systems, environmental risk management, and environmental audits; these programs may be implemented through partnerships with other DisCos, environmental licensing agencies, and universities. iv. Priority studies on current or future challenges, including topics such as establishment of a small set of social and environmental indicators to be tracked and reported on a regular basis, the invasion of rights-of-way, decommissioning of small diesel units in isolated systems, and others that are unrelated to the investment plan of the current project but may need to be addressed by the companies in other contexts; or yet, looking forward, environmental and social assessment of alternative expansion plans, and the potential for tapping into CDM and GEF funding. In addition to the above, a Social Communication Program and an Internal Communication Program will be prepared and implemented under Component 2. The purpose of these programs is to support implementation of the Project, through the involvement of the consumers directly or indirectly benefited by the interventions in the
9 Project. These programs will help build public awareness and consensus on the importance of the reduction of technical and no-technical losses, creating an environment favorable to the gradual change of inadequate behaviors, both by small and large consumers. It will harmonize program identity and main public messages, and prepare public opinion for changes in their relationship with the DisCos. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders are (i) regulatory agencies at the national and state levels -- in the power sector (ANEEL/national) and for the environment (state licensing agencies); (ii) municipal executive and legislative authorities; (iii) local communities; and (iv) NGOs and academic centers. Three consultations were held: with ANEEL in Brasilia, and with local stakeholders in Manaus and in Teresina. The EA has been disclosed in-country, in Eletrobras#website, and at the Bank#s Infoshop. During project implementation, as subprojects are prepared and potential impacts are identified, consultations will be held locally as needed. These will be conducted by each of the Discos in their respective states. Note: The IP Framework has not been consulted with indigenous peoples. Consultations will be undertaken, as needed, when subprojects become available. As noted, the IP Framework is included as a precautionary measure. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Date of receipt by the Bank 01/12/2010 Date of "in-country" disclosure 01/12/2010 Date of submission to InfoShop 01/13/2010 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank 01/12/2010 Date of "in-country" disclosure 01/12/2010 Date of submission to InfoShop 01/13/2010 Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank 01/12/2010 Date of "in-country" disclosure 01/12/2010 Date of submission to InfoShop 01/13/2010 Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank 01/12/2010 Date of "in-country" disclosure 01/12/2010 Date of submission to InfoShop 01/13/2010
10 * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP Environment Assessment Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan? OP/BP Natural Habitats Would the project result in any significant conversion or degradation of critical natural habitats? If the project would result in significant conversion or degradation of other (non-critical) natural habitats, does the project include mitigation measures acceptable to the Bank? OP Pest Management Does the EA adequately address the pest management issues? Is a separate PMP required? If yes, has the PMP been reviewed and approved by a safeguards specialist or SM? Are PMP requirements included in project design? If yes, does the project team include a Pest Management Specialist? OP/BP Physical Cultural Resources Does the EA include adequate measures related to cultural property? Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on cultural property? OP/BP Indigenous Peoples Has a separate Indigenous Peoples Plan/Planning Framework (as appropriate) been prepared in consultation with affected Indigenous Peoples? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit or Sector Manager? OP/BP Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? The World Bank Policy on Disclosure of Information No N/A No N/A N/A
11 Have relevant safeguard policies documents been sent to the World Bank s Infoshop? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? D. Approvals Signed and submitted by: Name Date Task Team Leader: Ms Jennifer J. Sara 01/12/2010 Environmental Specialist: Ms Maria Bernadete Ribas Lange 01/12/2010 Social Development Specialist Ms Maria Jose Vilas Boas Per Weiss 01/12/2010 Additional Environmental and/or Social Development Specialist(s): Ms Maria Teresa Serra 01/12/2010 Approved by: Sector Manager: Mr Philippe Charles Benoit 01/12/2010 Comments: Approved by Roberto Aiello, Acting SM. (Leopoldo Montanez is co-ttl) Note: This version incorporates changes requested during the DM
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