ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK. for the. Partial Risk Guarantees Project for Independent Power Producers in Kenya DRAFT
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1 ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK for the Partial Risk Guarantees Project for Independent Power Producers in Kenya DRAFT May 2011
2 INTRODUCTION The World Bank, through IDA funding, is proposing a series of Partial Risk Guarantees (PRGs) provided in support of payment obligations of Kenya Power and Lighting Company (KPLC) under individual Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) that are being considered by the Government of Kenya. The proposed Bank project (Partial Risk Guarantees for IPPs in Kenya) would support, among other possible investments, the installation of up to three MW capacity Medium Speed Diesel (MSD) Power Plants. These power plants would be constructed by IPPs under a 20-year Build Own Operate (BOO) arrangement. Each IPP also will be responsible for the construction of a fuel storage facility at each plant site as well as interconnection facilities (switchyards) to allow for the transmission of power by KPLC to the national grid. This Environmental and Social Management Framework (ESMF) is prepared for the three MSD power plants. KPLC initially identified a parcel of land in an Export Processing Zone (EPZ) on the southwest side of the town of Athi River for three proposed MSD thermal power plants. Due to the potential cumulative environmental impacts of siting three such power plants within the same parcel of land, KPLC sought to acquire land in three separate locations. Key selection criteria included: sites with minimal environmental and social impacts; sites from which power could be easily evacuated; sites available for sale immediately; and sites adequate in size. KPLC used print media, estate agents, local authorities, and the public to identify suitable candidate sites. The three sites selected and purchased by KPLC are: the initial site within an unused part of the EPZ southwest of Athi River town, a site near Thika town, and a site along the Nairobi- Mombasa highway to the east of Athi River. Given their respective generating capacities, prevailing winds, and distances from each other, the airsheds of the three projects are not expected to overlap such that cumulative adverse impacts occur on ambient air quality. KPLC conducted preliminary environmental and social assessment work for each of the three sites and was able to determine that there were likely to be no significant environmental and social risks associated with the three sites in terms of natural habitat, land use, or other characteristics associated with the site itself. Rather, the likely impacts would be associated with the construction and operation of the proposed thermal power plant at each site, e.g., construction-related impacts; air emissions and impacts on ambient air quality; solid and liquid waste management; noise; the transport, handling, and storage of fuel; etc. The responsibility, however, for preparing an Environmental and Social Impact Assessment (ESIA) relies with each of the IPPs that successfully wins the bid for building and operating a power plant on the designated site. The ESIA for each project would likely have very similar issues and impacts to address, but the details of the impact analysis would depend on the specifics of the proposed design and management of each facility. ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK In preparing the proposed project, the Bank recognized that an Environmental and Social Management Framework (ESMF) would be required to meet the requirements of Bank Policy OP 4.01 (Environmental Assessment) for the three MSD thermal power plants. An ESMF is
3 prepared during project preparation as per OP 4.01 when the nature of the proposed investments is well understood, but details (either locations, designs, or both) of the specific investments in the project are not yet known, and therefore a detailed ESIA cannot be prepared. The purpose of the ESMF is: (i) to provide as much information as possible about environmental and social impacts (including possible land acquisition and resettlement) at the project s current state of preparation; (ii) to inform project planning and design process by comparing potential impacts of alternative locations, configurations, and construction techniques that are under consideration; and (iii) to describe procedures for subsequent assessment of impacts and development of appropriate impact management instruments when the details of the project become available. The scope and coverage of an ESMF generally includes the following key tasks: Task 1: Screening and Scoping of Issues Task 2: Environmental Policy and Regulatory Framework Task 3: Identification of Key Environmental and Social Issues Task 4: Description of Typical Mitigation Measures to Avoid or Minimize Impacts Task 5: Outlines of Environmental and Social Management Plans Task 6: Public Consultation and Disclosure Process The preparation of an ESMF is designed to provide stakeholders and decisionmakers with a broad understanding of what are likely to be the key issues and impacts, and how they can be addressed. It also serves as a guide to the preparation of subsequent site-specific Safeguards documents such as an Environmental and Social Impact Assessment, Environmental Management Plan, Emergency Response Plan, or similar documents that are appropriate to the nature of the project, once specific sites and project designs are selected and can be subject to detailed impact assessment. The limitation of an ESMF, however, is that it often tends to be a more generic analysis and assessment of impacts, since details of project design, or location (or both), are not yet known. In the case of the current project in Kenya to provide PRGs to IPPs that will build MSD thermal power plants at the three sites purchased for this purpose by KPLC, progress is being made in preparing ESIAs for all three projects by the respective IPPs. The first draft ESIA has been received by the Bank for one of the projects, located east of Athi River. The Bank has determined that the Draft ESIA dated April 2011, prepared by Nutek Solutions for Gulf Power Ltd. (the IPP for the proposed MSD power plant at Athi River), is of sufficient quality to be disclosed as a draft ESIA in accordance with Bank practice, and this has now been done by the Bank both locally in the Bank s Public Information Center in Kenya, and in the Bank s InfoShop. Moreover, the timely preparation of this Draft ESIA also provides the level of detail and analysis that is typically expected in an ESMF for investments of this type in this region of Kenya. Therefore, with the permission of the responsible IPP, Gulf Power Ltd., and their consultants, Nutek Solutions, the Bank is taking the innovative approach of disclosing their
4 document not only as an ESIA for their specific investment, but also as the ESMF for the Bank s Partial Risk Guarantees for IPPs in Kenya Project because their document reflects the scope and coverage of an ESMF as indicated above, but on the basis of a real case study, rather than the more generic approach normally taken in preparation of an ESMF. This innovative approach is being taken because the attached draft ESIA provides a broad understanding of what are likely to be the key issues and impacts, and how they can be addressed, in the construction and operation of an MSD thermal power plant of approximately MW capacity in this region of Kenya. KEY ENVIRONMENTAL ISSUES INMSD THERMAL POWER PLANT OPERATIONS Key environmental issues typically of concern in the operations of a MSD thermal power plant, which typically use reciprocating engines and burn various forms of diesel fuel, primarily include the following: Air emissions Noise Water consumption Solid wastes Hazardous materials and oil In thermal power plants of the proposed size range (80-90 MW) using heavy fuel oil, the primary air emission parameters of concern is SO 2, and to a lesser extent, NO x. Installation of pollution control equipment, such as scrubbers, is generally not economical on such power plants at that scale; rather, other measures, such as choice of fuel quality and use of engines that increase energy conversion efficiency, are recognized as Good International Industry Practice (GIIP) to most effectively reduce emissions of multiple air pollutants. Limiting sulfur content of the fuel to 2 percent sulfur or less in such a power plant is generally recognized as an effective measure to comply with World Bank Group Environmental Health and Safety Guidelines for air emissions from thermal power plants. Designing stack heights according to GIIP also can be used to avoid excessive ground level concentrations and minimize impacts. Principal sources of noise in thermal power plants include the turbine generators and auxiliaries; boilers and auxiliaries; reciprocating engines; fans and ductwork; pumps; compressors; condensers; piping and valves; motors; transformers; and cooling towers. Use of noise control techniques is normal practice, and GIIP techniques may include as appropriate: using acoustic machine enclosures; selecting structures according to their noise isolation effect to envelop the building; using mufflers or silencers in intake and exhaust channels; using sound-absorptive materials in walls and ceilings; using vibration isolators and flexible connections; and applying a carefully detailed design to prevent possible noise leakage through openings or to minimize pressure variations in piping. All of these measures can be considered in ensuring that the engines will be located within a power house that will be acoustically designed. Modification of the plant layout, or use of noise barriers such as berms and vegetation to limit ambient noise at plant property lines, especially where sensitive noise receptors may be present, is also a common noise attenuation measure. Noise levels from the facility must meet the requirements of Kenyan legislation on noise and ISO 15664:2001. Noise impacts shall not exceed the World Bank guideline levels or result in a maximum increase in background levels of 3 db(a) at the nearest
5 receptor off-site. The Proponent will ensure compliance with the requirements of Kenyan legislation on noise, specifically L.N. 25: The Factories and Other Places of Work (Noise Prevention and Control) Regulations, 2005 and L.N. 61: Environmental Management and Coordination (Noise and Vibration Pollution Control) Regulations, There will be minimal water requirements during the operational phase for drinking and sanitation. An on-site water tank will hold water for cooling and sufficient for fire-fighting purposes. A standalone fire protection system will be provided for the power plant with all of the requisite fire-fighting equipment in accordance with relevant local and international codes. Sewage and waste will be dealt with in accordance with local by-laws and other relevant Kenyan legislation. It is normal practice to store oily sludges from the fuel cleaning process and return them to either the fuel supplier or directly to a refinery for reprocessing into other usable products. The bulk liquid storage tanks will be bunded and provided with a closed system drain where the water will be treated prior to release. ACKNOWLEDGEMENTS The Bank wishes to acknowledge the generous agreement of Gulf Power Ltd. and Nutek Solutions to allow the Bank and Borrower to use their document not only as the ESIA for their project, but also as an innovative approach to development of an Environmental and Social Management Framework for the Bank s project.
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