E561 TAJIKISTAN PAMIR PRIVATE POWER PROJECT Environment and Social Impact Assessment Executive Summary 1. PROJECT BACKGROUND 1.1 Project Setting Tajikistan's Gorno Badakshan Autonomous Oblast (GBAO) is one of the poorest and most remote areas of the world. Situated in the heart of the Pamir Mountains, GBAO is a region sparse in population and natural resources. The majority of its 250,000 people is rural combining subsistence agriculture with animal husbandry. A socio-economic survey conducted as part of the environment and social assessment of the project estimated an average annual income for the typical project area family of six at US$216. Winter temperatures in the region average minus 5°C. As a result, the average family spends between 8 to 17 percent of its disposable income on energy (fuelwood, kerosene and electricity) notwithstanding the opportunity cost of labor used to gather fuelwood and other forms of biomass. With forest cover largely depleted, the majority of rural households rely on cattle dung, agricultural residues and root stock as heating and cooking fuel. Affordable electricity provides one of the only alternatives to continued natural resource depletion in the region. Current power capacity in the GBAO region is composed of thirteen recently-constructed micro- hydroelectric plants and several small hydro-electric plants, two of which account for 70 percent of installed capacity - Pamir with 14 MW and Khorog with 7 MW. No functioning diesel power generating capacity remains. The transmission system of GBAO is in poor condition having been largely destroyed in the civil war of the 1990s. Of the 435 km of 35 kV lines, only about 15 percent is still in service. There are about 990 km of 10 kV lines, and only a similar percentage is believed operational. All villages outside the capital Khorog receive no electricity from early November to late March or April. Load shedding only applies to Khorog. The Government has adopted a strategy for the energy sector to expand and diversify Tajikistan's energy system to supply reliable, efficient, and affordable energy to more people, support poverty reduction, improve the standards of living, and bring economic development to rural areas. To that end, the Government has initiated a package of policy and institutional reforms, and rehabilitation and adequate maintenance of the existing power systems. 1.2. Project Objectives The objective of the project is through private sector involvement, to improve the reliability and enhance quantity of supply of electricity in the Gorno Badakshan Autonomous Oblast (GBAO) in a financially, environmentally and socially sustainable way. 1.3. Project Description The proposed Project involves: (a) taking over and operation, by a private concessionaire Pamir Energy Company (the Beneficiary), of all existing power facilities in GBAO under a 25-year - r~FLE COPYD Concession Agreement; (b) completion of the Pamir I hydropower plant to its original design capacity of 28 MW from the current 14 MW along with a regulating structure at Lake Yashilkul; and (c) rehabilitation of other assets including other small hydroelectric stations, substations, transmission and distribution lines. 1.4 Project Proponent Pamir Energy Corporation (PamirEnergy), a special purpose company for the project, will be formed as a concessionaire, under the laws of the Republic of Tajikistan as a joint stock company or another form of limited liability organization. PamirEnergy will be 70% percent owned and controlled by Aga Khan Fund for Economic Development (AKFED) and the balance by IFC. AKFED is part of the Aga Khan Development Network, a group of private development agencies created by His Highness the Aga Khan. AKFED has been active in GBAO since 1991. Among its initiatives, AKFED mobilized donor funding, including World Bank's Tajikistan Social Investment Fund, to construct several mini-hydro stations in outlying villages. AKFED was also involved in the construction of the Pamir I hydro plant (Units 1 and 2) supported by USAID funding. In this context, AKFED identified the need for enhancing the long term power supply capacities in the region, and particularly during winter, and approached IFC in 1998 for project preparation and financing assistance. IFC had previously financed thermal power projects developed by AKFED in Africa. AKFED will be the main equity provider with US$ 7.5 million towards financing the total project cost of about US$ 25 million. IFC would provide US$3.2 million in equity and another US$4.3 million in debt for a total of US$7.5 million. IDA will lend US$ 10 million to the Government of Tajikistan (GOT), thus completing the financing. IDA's involvement has also been crucial to the mobilization of financing from the Swiss Government to enable the Tajik Government to meet its Social Protection obligations towards the Project, since a considerable share of the residential consumers would need to be protected from paying even the 2.1 US cents/kWh tariffs'. With the support from the Swiss Government, complemented by IDA, the resource- constrained Government will be able to implement a set of lifeline tariff measures for poorer residential customers, phasing out over a ten year period, while meeting the project financial requirements. At the end of this period, a basic lifeline tariff for the poorest households will be retained, with Government support. The Project will halt the current disintegration of electricity generation and distribution facilities in GBAO and will provide additional generation capacity to meet peak demand in winter months. The project will also provide the energy base for long term economic growth while at the same time reduce pressure on natural resources, reduce indoor pollution; and stimulate economic activity over the medium term via construction. 1.5 Summary of ESIA Findings The Project is a rehabilitation, upgrading and expansion of an existing power generation, transmission and distribution system. All power generation facilities are run-of-river hydropower plants and the rehabilitation of transmission and distribution lines will occur in existing sites so that no new land acquisition and/or right-of-way is required. As a result, and as the Environmental Assessment has shown, the project will have only a limited number of specific environmental and social impacts, and these can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. On behalf of the project proponents, IFC and the technical consultant Electrowatt-Ekono (EWE) have been collaborating 'The tariff required on a levelized basis for the 25-year concession period to achieve commercial viability. 2 since 1999 on the project design as well as the environmental and social impact mitigation measures to ensure that those impacts are minimized. The cornerstone of the project is the completion of the Pamir I run-of-river hydroelectric plant near Khorog, the administrative capital of GBAO, by: i) installing two additional turbines to bring the installed capacity of the plant to a total of 28 MW; and ii) completing a regulating structure at Lake Yashilkul - the source of the Gunt River that powers the Pamir I plant - to allow release of additional water during the winter to ensure sufficient water flows for energy production at the time of highest demand. The diversion of water to the expanded power plant will have no significant impact on the Gunt River inasmuch as a minimum ecological flow will be maintained in the river between the intake and tailrace structures. To the extent that all diverted water is returned to the Gunt from the power plant after use, the project will have no impact on the river's downstream use, although there will be some changes in the annual pattern of flows and there will be no detectable impact on international waterways. The most significant potential impacts identified will occur during the construction phase of the project. During the construction phase, the level of Lake Yashilkul will be reduced by a maximum of two meters and the operations of the Pamir powerhouse will be interrupted for the inspection and rehabilitation of the tunnel. The following impacts may result: * Temporary reduction of fish population in the lake as the area of spawning grounds and benthic vegetation is diminished. * Temporary depletion of flood plain vegetation that provides grazing and fodder for livestock on the margins of the lake. * Temporary interruption of an already unreliable power supply. Accordingly, the Proponent, with the assistance of IFC and EWE, have developed a detailed Environmental Monitoring and Management Plan (EMMP) that includes measures, containing also compensation arrangements, to mitigate any adverse impacts to the physical environment and social environment, most of which will result from the completion of the regulating structure at Lake Yashilkul. The EMMP describes the monitoring program and contingency plans to address anticipated temporary impacts and ensure unanticipated medium- long term impacts. 2. ENVIRONMENT IMPACT ASSESSMENT PROCESS The Project has evolved and expanded since AKFED originally approached IFC for financing in 1998. IFC commissioned EWE to assess the technical feasibility of the project in 1999, which included a critical assessment of the original Soviet-era Environmental Impact Assessment (prepared for the Pamir I hydropower project) and the capacity of the population to afford the increased power tariffs that would be necessary to make the project financially feasible. The initial assessment of EWE's environmental specialist, supported by IFC's environmental specialist following a site visit in May 2000, was that the original design of the project would result in adverse and unacceptable environmental and social impacts, including major permanent lowering of the Lake level. As a result, JIFC requested EWE to revise the design of the project to reduce or eliminate these impacts. The project design was revised following an EWE technical mission to GBAO later in the same year. During that mission, the EWE environmental specialist and AKFED representatives carried out extensive public consultation in the project area to assess public reaction to the project, its environmental impacts and the prospects of dramatic increases in electricity tariffs. 3 In the spring of 2001, both EWE and IFC environmental specialists returned to the project area to assist AKFED in developing an environmental mitigation and management plan for both the construction and operation phases of the project. The main results of this mission were: i) the creation of monitoring frameworks for the anticipated environmental impacts of the project; ii) formulation of a compensation framework for addressing any adverse impacts from the project on the livelihood or the population; and iii) preparation of a draft Health, Safety and Environment (HSE) Plan for the project. EWE's environmental specialist returned to the project area in August 2001 to initiate the environmental monitoring programs planned in the previous mission. During negotiations of the concession agreement with the GOT during 2000 and 2001, the scope of the project expanded to include not only the Pamir project but all power generation, transmission and distribution facilities in GBAO. As a result, the preliminary HSE Plan will be expanded to encompass all project facilities and operations as the concession is undertaken. 2.1 Tajikistan Administrative, Legal and Policy Framework There is no comprehensive overall environmental legislation in place in Tajikistan. The basic law for environmental protection is the Law on Nature Protection of 1993. It determines the organisational framework for the protection of the environment, and also covers the following sectoral aspects: * Conservation of soils. * Protection of air quality. * Protection of water quality, provision of the required quality and quantity to meet requirements of the population and the economy. * Protection of biodiversity. * Protection of environmental equilibrium and the development of its monitoring. In addition to that, the country has a series of laws from other domains which also deal with aspects of environmental protection, and a number of environmental resolutions. Legally, the resolutions do not have the same weight as laws, but they are easier to pass. The most important of these environmentally relevant texts are the following: * Law on Mining (1994): regulates rational use of mineral natural resources. * Law on Wildlife Utilisation (1994): protection and management of wildlife populations. * Law on Air Protection (1996): Control and protection of air quality especially in cities and at industrial sites. * Law on Foreign Investment (1992): Regulates the need of foreign investments for compliance with the protection of natural resources according to the legislation in vigour. * Law on Land Charges (1992): authorises charges for various forms of land use. * Resolution on the Unauthorised Collection of Substances (1990): Regulates use of medically active substances, including plants useful for medicinal purposes. * Resolution on the Ministry of Environment (1992): Identifies the rights and the responsibilities of the Ministry. * Resolution on State Control of Environmental Protection and Use of Resources (1994): Defines the responsibilities of the State, represented by the MoE, in inspecting activities for compliance with environmental legislation. * Resolution on State Ecological Review (1994): Establishes the rights and obligations of the MoE for reviewing all government-proposed development projects; this is the existing approach to an EIA procedure. Attempts have been made by the MoE to have this Resolution passed as a law in order to give it higher importance. 4 * Resolution on State Ecological Program (1997): Definition of fundamental goals and tasks for the ecological and economic development of the Republic. 2.2 Institutional Structure The responsibility for all environmental protection activities lies with the Ministry of Environment (MoE) in Dushanbe and its provincial offices. A construction permit can only be granted when the MoE has approved the project, i.e. when it is satisfied that no environmental harm will arise from the project and/or all mitigation measures required have been taken. An "ecological expertise" is made for such projects, either by specialists from the Ministry itself or by external experts. This follows the EIA practice which was in place during the Soviet Union period; under this regulation, an EIA had been made in 1986 for the Pamir 1 HEP. Under that procedure, the initial project was in conformity with national regulations, although it did not satisfy all the requirements of IFC/IDA. However, a stringent and coherent regulation on EIA (defining project types requiring an EIA, general procedures and responsibilities, especially responsibilities of the project proponent, general structure and contents of EIAs, necessity and procedure for public involvement etc.) is not in place. UNDP is preparing a program for EIA institutional strengthening and capacity building within the MoE. Other responsibilities of the MoE include: carrying out environmental monitoring programs, when and if such programs have been designed; water quality and water use surveys; and air quality monitoring. 2.3 Applicable World Bank Group Safeguard Policies and Guidelines As a condition of financing the Pamir Energy project, IFC and IDA require that the project proponent comply with applicable World Bank Group (WBG) social and environmental safeguard policies and guidelines in the construction and operation of the project's facilities. This compliance includes the mitigation of any potentially adverse social and environmental impacts of the project. General guidance on compliance is provided in both World Bank's and IFC's Operational Policy 4.01 on Environmental Assessment . The environmental assessment has identified the applicability of the following WBG policies and guidelines: * Natural Habitats (OD 4.04) - The construction and operation of the Pamir power plant will require the seasonal draw-down of Lake Yashilkul, a natural reservoir that feeds the Gunt River, which is the water source for the Pamir power plant. This draw-down may have an adverse impact on the lake's fisheries and on the floodplain vegetation surrounding the lake. * Involuntary Resettlement (OD 4.30) - The floodplain vegetation of Lake Yashilkul provides grazing and hay for livestock maintained by farmers living in and around the Gunt River Valley. A depletion of water resources may have an adverse impact on floodplain vegetation, reducing the amount of grazing and hay available for livestock and forcing the reduction of herds. Such reduction could cause economic hardship to the farmers dependent on the floodplain resource. * Safety of Dams (OP/BP 4.37) - Lake Yashilkul was formed by a landslide that dammed two tributaries to the Gunt River many hundreds of years ago. During their technical assessment of the project, the consultants determined that the rubble and boulder dam is stable. Nevertheless, at the recommendation of the World Bank Safeguards Committee, expert opinion has confirmed the safety of the lake's natural dam. Monitoring of the dam will be included in the overall operation and maintenance of the project. 5 * Cultural Property (OPN 11.03) - With the exception of two Kirgiz graves, successive environment and social assessments have identified no cultural property of any significance in or near areas that may be temporarily affected by project construction activities. Nevertheless, at the recommendation of the World Bank Safeguard Committee, expert opinion is being sought to confirm these findings. That opinion will be available after the winter allows a further site visit and appropriate measures to protect cultural property will be incorporated into the HSE plan as required. * Projects on International Waterways (OP/BP/GP 7.50) -The review of the potential environmental impact of the completion of Pamir 1 by Electrowatt in 1999 has shown that the effect on Pianj River, of which the Gunt is a tributary and which forms the border with Afghanistan, is marginal and well within natural fluctuations (minor reduction in summer and small increase in winter flows). To the extent that all diverted water is returned to the Gunt from the power plant after use, the project will have no impact on the river's downstream use and no detectable impact on international waterways. Formal confirmation has been issued by IDA management that notification of riparians is not required. Such confirmation would be a condition of IDA Board presentation. * Policy on Child and Forced Labor (IFC) - Harmful child labor consists of the employment of children that is economically exploitative, or is likely to be hazardous to, or interfere with, the child's education, or to be harmful to the child's health, or physical, mental, spiritual, moral, or social development. Forced labor consists of all work or service, not voluntarily performed, that is exacted from an individual under threat of force or penalty. IFC will require PamirEnergy and all PamirEnergy contractors to incorporate the necessary provisions in their contractual documents to implement this policy. * Environmental, Health and Safety Guidelines for Electric Power Transmission and Distribution (IFC) - Construction activities associated with the project - particularly the completion of a regulating structure on Lake Yashilkul - will require adherence to standard environmental management practices governing construction projects including the management, clean up and restoration to original conditions of construction sites and access to those sites. Operation of the Pamir power plant and the other 11 smaller power generation facilities managed by PamirEnergy will also require adherence to standard health, safety and environmental management practices governing the operation of power generation and transmission facilities including workplace safety, handling and storage of hazardous materials and employee training. In addition, IFC's Guideline for the Elimination of PCBs, which recommends that that PCB equipment, particularly equipment located in commercial/residential buildings should be replaced with PCB-free equipment as routine maintenance and replacement allows may also be applicable to the project. A study undertaken by EWE, assessing the general situation of the power sector in Tajikistan in 2000, did not reveal any use of PCBs in Barki Tajik installations anywhere in the country. In conclusion, all applicable World Bank Group safeguard policies and guidelines have been considered and addressed during the environment and social assessment of the project. The initial project design was adjusted so as to be in compliance with WBG safeguard policies and guidelines and appropriate environmental and social impact mitigation measures have been included. 6 2.4 Approach to Project Assessment The involvement of EWE in the project began in 1999, when it carried out a comprehensive review of the project on behalf of IFC. In addition to technical and economic aspects, this review also covered environmental and socio-economic aspects. The environmental review of the project had to focus on three points, namely: * the overall environmental effects of the Pamir power plant project * the effects of the plant's operation on Gunt and Pianj rivers, and * the quality of the previous environmental assessment of the project. The socio-economic review aimed at assessing the impact of the expected increase in electricity tariffs due to privatization on family budgets, and at estimating the ability of the population to pay this price. The review was made based mainly on the following sources of information: * Relevant documents: EIA report; technical project documents, mainly hydrological report. * Maps of the area; the most detailed map were of 1:200,000. * Discussions with representatives of the power company and of the relevant Environmental Protection Agency. * Site visits to all the relevant points: Lake Yashilkul; Gunt River downstream of the natural dam, at the water intake and at the water outlet of the power plant; confluence with Pianj River; Pianj River downstream of Gunt confluence. * Discussions with key informants in Khorog and in Dushanbe. * Rapid socio-economic survey by means of interviews in the project area. This work, which was accounted for in an initial project report prepared for IFC, was then expanded during the following visits to the project area. These visits focused on the following main points: * Socio-economic survey: the data obtained form a small sample of households had to be extended for a better assessment of the socio-economic situation in the project area and the positive and negative impacts of the project. * Initiation of a process of public information and participation, mainly by means of a series of public hearings on the project. * Development of the Environmental Management and Monitoring Plan for the project. 2.5 Stakeholder Consultation and Public Disclosure Between July 1999 and October 2000, the Consultant undertook a comprehensive technical, economic, social and environmental assessment of the Project leading to a detailed project design and impact mitigation strategy. This project preparation had already involved a high number of meetings and discussions at various levels throughout the project area, with special emphasis on the small village located near lake Yashilkul. Following this assessment, a series of 17 public hearings was conducted by representatives of the Sponsor and the Consultant in October 2000. These hearings engaged a wide range of the GBAO population including townspeople, rural villagers, school teachers and hospital workers. Minutes of these hearings indicated widespread public agreement that improvements in the electricity supply are needed to improve general living conditions and to support economic growth in GBAO, and that improvements are needed in the management of the utility. During these public hearings, the details of the project were explained (improvement and expansion of the Pamir plant, completion of regulating structure in Lake Yashilkul, improvement, especially rehabilitation of the transmission and distribution network). The problems to be dealt 7 with were also explained (construction time of two years, shutting down the plant during the first summer of construction). No doubt was left about the fact that the price for electricity would increase very substantially, and that a strict policy of cutting off consumers who do not pay their bill would have to be introduced, particularly for industrial consumers. In accordance with IFC Environmental and Social Review Procedures, a written summary of the project detailing its potential environmental and social impacts and the planned mitigation measures will be translated into Russian, Tajik and Shugni - the predominant language of the Gunt River Valley - and posted in publicly accessible places throughout the project area in advance of project approval by the IFC Board of Directors. In preparation for presentation to the IDA Board, this EA is also being made publicly available in the project area and in Washington, in English and Russian. AKFED will facilitate a number of public hearings to consult with stakeholders on the final details of the project prior to IFC and IDA Board consideration of the project. 3. PROJECT DETAILS AND ENVIRONMENTAL ANALYSIS 3.1 Project Components The cornerstone of the project is the completion of the 28 MW Pamir 1 run-of-river hydroelectric plant near Khorog. This component of the project consists of: * upgrading and completing the Pamir I power plant by installing the two additional turbines and bringing the installed capacity of the plant to a total of 28 MW; * completing the originally planned regulating structure at Lake Yashilkul, which will allow to release water to the river during winter to ensure a sufficient discharge for energy production. In addition, the project comprises the following additional components, which are not directly related to the completion of the Pamir I plant: * Rehabilitation and upgrading of the 9 MW Khorog Hydropower Plant, the 1.2 MW Vanj Hydropower Plant and the 2.0 MW Namangut Hydropower Plant. * Erection of a new 35 kV line between the Pamir I power station and the substation in Khorog on an existing transmission line alignment. * Rehabilitation of the 35 kV line between Khorog and Andarbak. * General rehabilitation of critical sections of other 35 kV and 10 kV lines within the Khorog area. * Rehabilitation of the distribution network within the Khorog area as required. 3.2 Project Location and Geophysical Features Gorno-Badakhshan is a very mountainous area, consisting of two main parts: (i) the Pamir mountains and high plateau, and (ii) the valleys at the western fringe of this high plateau, draining into Pianj valley. The highest elevation of the Pamir is Peak Somoni (formerly Peak Kommunism) with 7495 m; the high plateau has an elevation of generally between 3700 and 4200 m asl. The Pianj River forms the border between Tajikistan and Afghanistan. After its confluence with Vaksh River, about 550 km downstream of Khorog, the Pianj becomes the Amu Darya, which is one of the two main tributaries of the Aral Sea. 8 The project region is the valley of Gunt, one of the rivers originating on the high plateau and draining into Pianj River. Khorog lies at the confluence of Gunt with Pianj, at an elevation of about 2075 m asl. Lake Yashilkul, from where Gunt River originates, is situated at the edge of the high plateau, at an elevation of 3720 m asl. There are three floodplains in the Lake Yashilkul area totaling 477 hectares (ha) and two of them, totaling 207 ha, could be affected by the project. The climate of the project region is of the extremely continental mountain climate type. Temperatures are characterised by very marked seasonal and daily fluctuations. In Khorog, average temperature is 23.70 C in August and -6.3° C in January; in Bulunkul, a small village near Lake Yashilkul, average monthly temperature varies between 11.20 C in July and -25.5° C in January. The whole region is rather dry (annual precipitation in Khorog 235 mm, in Bulunkul only 86 mm), with the major part of the precipitation falling as snow in the period between November and April. This climate also determines the discharge pattern of the rivers. Winter discharge is very low, summer discharge is high, augmented by water from melting snow. With the exception of river alluvial plains in the generally narrow valleys, the vegetation is very sparse. The flanks of the mountains are covered with a low, very patchy steppe vegetation. Trees and bushes grow up to an altitude of about 3000 m asl, but only along the rivers or on irrigated land. Forests are almost non-existent in the project area. 3.2.1 Environment and resource use In spite of its sparseness, vegetation is a very important natural resource and an important part of the livelihood basis of the local population. In the valleys, agriculture (mainly subsistence agriculture) is an important economic activity, at higher elevations this is restricted to animal husbandry. During the summer, cattle (mainly yaks, but also cows) and sheep use the high valleys (mostly above 4000 m asl) and mountain slopes as pasture. In winter, the herds come down into the valleys, where they depend on the pasture provided by the alluvial plains of the rivers, and on hay gained form these sites during summer. Overgrazing is a problem. Additionally, the vegetation has come under increasing pressure, especially during the last 10 years, where due to the lack of altematives biomass (wood from the trees and bushes growing along the rivers, but also step'pe plants) had increasingly to be used as fuel. Since the steppe plants used in this way are not cut, but uprooted, this practice is extremely harmful for the vegetation as well as for the soils. At higher elevations, where not trees and bushes grow, animal dung is the most important fuel. 3.2.2 Socio-economic context Tajikistan is the poorest of the former Soviet Republics, and GBAO is probably the poorest region of Tajikistan. This is due to the high altitudes, the mountainous and very unproductive land, the harsh climatic conditions, and also to the remoteness of the area, which makes imports as well as exports to and from GBAO difficult and expensive. Employment opportunities are very few, and salaries are very low. An estimated 77 percent of the population lives below the poverty line. During the Soviet period, much of the energy requirement was covered by coal, and mainly diesel, which had to be imported. Diesel was also used for operating generators for the production of electricity. Even remote villages where equipped accordingly and had a sufficient supply of electricity throughout the year. Most schools and hospitals were equipped with central heating systems, mostly burning coal. 9 After independence in 1991, import of coal and diesel (as import of other products) stopped immediately and completely. The only form of energy still available is hydropower, which is not sufficient to meet energy demand. One direct consequence of this situation is that most schools and hospitals are closed during January and February, the two coldest months. Households had to shift largely to biomass (including dung) as the main energy source for cooking and heating. To a lesser extent, candles and kerosene are used, mainly for lighting. The project will increase the use of local hydro-power resources to offset this loss of imported fuels and will increase electricity supply and improve distribution in GBAO. It will provide additional capacity to meet peak demands in the winter months and will reduce some of the pressure on local tree cover, that is being harvested for fuelwood. 4. ASSESSMENT OF ENVIRONMENTAL IMPACTS 4.1 Identification of Relevant Impacts The original EIA for the project was prepared in 1986. All the relevant aspects (landscape, climate, hydrology, soils, vegetation, fauna, water quality, hydrobiology) were addressed in this report. The main conclusion of the report was that with the exception of effects on Lake Yashilkul, environmental impacts are either non-existent or of very minor importance, and that no specific mitigation measures are required. This view was confirmed during the project evaluation in 1999. As far as Lake Yashilkul is concerned, the EIA focused exclusively on the impact on fisheries and on specific impact mitigation measures. These included measures for increasing fish productivity in the lake, with a view to commercializing this resource. However, while the fish stock should certainly be maintained, such measures, at least at the present time, are not justified. The potential impact of the project on the floodplains at Lake Yashilkul was not addressed at all in the original EIA. Nonetheless, this impact is now considered the most important negative effect of the project and requires mitigation measures. 4.2 Project Construction Phase The following paragraphs describe potential environmental and social impacts and mitigation measures focusing on Lake Yashilkul. However, where the most important potentially affected receptors, namely, the fisheries and floodplain vegetation, are concerned, biophysical data is not sufficient to accurately forecast the impacts. Therefore, monitoring of these impacts has been initiated and will continue into the operations phase of the project as described in Section 6. 4.2.1 Hydrology In order to minimise the construction risk and to reduce costs for draining the construction pit required for completing the regulation structure at the outlet of Lake Yashilkul, it is planned to draw the lake down by about two meters during the two summers required for the construction. This drawdown will increase river flow during the period of its implementation. Once the construction period over, a similar amount of water will have to be retained in the lake, thus reducing the flow in the rivers during the first post-construction spring and summer. This reduction, however, will be less than the one which will in the future be required for 10 compensating for the operation of Pamir 1, which will entail a yearly lake drawdown in winter of up to 6 m. This issue is dealt with in the section on impacts during operation (see below). Other than this, the project will not change the river regime. The intake structure for Pamir 1, a weir across Gunt, is already in place and operating, and neither the structure nor its operation pattern will be changed by the present project. 4.2.2 Dam safety Lake Yashilkul has been formed by a natural dam as a result of a massive landslide, which occurred in prehistory. Unlike Lake Sarez, located in the next valley to the north of Yashilkul, which was formed by an extremely large landslide fewer than a hundred years ago, the natural dam of Yashilkul is stable and can be considered safe. A separate Dam Safety Study has been carried out to confirm this assessment. 4.2.3 Floodplain vegetation Lowering of the lake level during summer may have an effect on the groundwater level in the two floodplains adjacent to the lake, which will also be lowered. This in turn could negatively affect the vegetation in the floodplains, which depends entirely on ground water. A reduction in floodplain productivity would negatively affect the people who depend on these floodplains for feeding their livestock. The areas of possible impacts, the number of people that could be affected and measures to mitigate any economic hardship are discussed below: * There are three floodplains in the Lake Yashilkul area totaling 477 hectares (ha) comprising: Somon with an area of 157 hectares (ha), Marijinoy which covers 50 hectares, and Bulunkul floodplain which covers 270 ha. Of these, only the Somon and Marjinoy floodplains could be affected, i.e., totaling 207 ha (43%) of the available floodplains. * In terms of population, about 190 people from the Bulunkul Goskhoz (state farm), and about 300 people from Pamir Goskhoz could be affected.2 * In terms of hay production/availability, about 79 tons in Somon floodplain and another 25 tons in Marjinoy floodplain could be lost due to the project's construction. * In the event that indeed the floodplains are affected as mentioned above, the PamirEnergy would compensate the people affected, with cash and/or hay actually supplied. (See section 6.2.4 for more details on compensation). * In addition, the Pamir Goskhoz farmers would receive improved electricity supply from the Project, since they are connected to the main grid of GBAO. In other words, they get compensated for loss of grazing and also benefit from the project. However, the farmers of Bulunkul Goskhoz are not connected to the main grid and therefore would only get compensated for loss of grazing, but would not benefit from the Project as currently envisaged. 2 190 people whose livelihood depends on the Bulunkul Goskhoz include 50 employees in this farm and their 140 dependents. 300 people whose livelihood depends on Pamir Goskhoz include 95 employees and their 205 dependents 11 * To address this concern, the finalized Concession Agreement includes the provision to route any savings in the project costs as presently defined, to enhancing power supplies in remote areas to people of GBAO that now do not enjoy electricity supply. Efforts will be made to ensure, that in the event of any cost savings, the people in the Lake Yashilkul area not connected to the main GBAO grid at present, would be the first ones to benefit from any savings in project costs, perhaps by building the integrated small hydro plant into the regulating structure. In addition, efforts are underway to raise additional financing for such remote area electrification. * Furthermore, the sponsors will be encouraged to initiate programs in the Lake Yashilkul area to initiate a pilot assistance cum enterprise development program that seeks to: improve livestock holdings of individual herders (via improved grazing and fodder inputs, improved breeding techniques, etc.); and find improved markets for their stock. While there is a risk of the above-mentioned negative impacts, it is not possible to calculate its magnitude given the available data. For this reason, the project's main mitigation measures consist of setting up a monitoring program that will detect an influence of the project on floodplain productivity, and to budget compensation payments to the users if this should be required. Once construction is complete, the summer lake level will be restored to its natural level, and any potential negative effects on the vegetation should not persist. Here again, the monitoring program will help to verify this assessment (see below). 4.2.4 Lake fisheries Drawing down the lake can affect the fish population in two ways: (i) by reducing the amount of benthic organisms which form the main food basis for the fish, and (ii) interfering with reproduction by means of destroying spawning grounds. The latter could mainly happen if the lake level was to be lowered during June, which is the spawning period of the fish species which is the highest in numbers in the lake. For this reason, the fish population in the lake has to be monitored, although it is presently not exploited by the local population. This monitoring will have to be carried on beyond the construction phase of the project in order to detect potential impacts on fisheries of the operating regime (see below). 4.2.5 Impact of construction activities The completion of the regulating structure at lake Yashilkul can have adverse environmental impacts. Although these are limited in duration and area of impact, efforts need to be made to minimise them, as follows: * Water contamination: Construction work in a river invariably leads to an increase in turbidity and in the sediment load of the river. This, however, is not of a major concern since baseline quantities of suspended solids are usually high, especially at times of high flows. Furthermore, the existing weir at Pamir 1 also serves as a sediment trap. However, there is a risk of water contamination with fuels and lubricants used at the construction site. Measures for reducing this risk are taken normally at a construction site and include proper storage of these substances, at a safe distance form the water, and a general prohibition to refuel, maintain and wash cars, lorries and construction machines in or near the water. These 12 measures will have to be a condition for the contractors, and it will have to be controlled and enforced as a part of the environmental monitoring during the construction activities. With these measures in place, the risk of water contamination is very low. * Site access: Presently, access to the construction site is a track or road leading from the main road Khorog - Murgab to Bulunkul and then onwards to the future construction site at the outlet of Lake Yashilkul. Vehicle drivers typically drive outside the track as soon as it deteriorates. This practice damages the vegetation in this semi-desert environment, where regeneration is very slow. In order to prevent such damage, the road/track will have to be maintained, and where required improved, in order to make it suitable for any kind of traffic to and from the construction site. Off-track driving will have to be prohibited. Between the village of Bulunkul and the future construction site, the road crosses three small lateral streams. Here, appropriate structures - small bridges or culverts - will have to be put in place for allowing an easy crossing of theses streams. Preparing and maintaining access will be the responsibility of the contractor, and will also have to be controlled during the entire construction phase. * Construction sites: Temporary land use (e.g. for storage of material, for excavating construction material, or for dumping of unused excavation material) will have to be restricted to the absolute minimum required. A rehabilitation of such sites at the end of the construction periodis required. This concerns mainly the cleanup of installation and storage sites and the removal of all material no longer used. * Worker health and safety: At all construction sites, worker health and safety rules will have to be observed by the contractors. * Local economic benefits: The construction activities for Pamir I will generate a considerable amount of income through the labour required for its implementation. Most, if not all, construction work will be carried out by local contractors. However, efforts will have to be made to ensure employment of inhabitants of villages near the construction site. This employment will contribute to an improvement of the local economic situation. 4.2.6 Impact of power disruption The completion of the regulating structure will not affect the functioning of existing power plants, since it will interfere only marginally with river discharge, increasing it at least during a part of the summers required for construction. No change in the natural regime will take place in winter. However, rehabilitating and upgrading of the power plant itself will require to shut it down during one summer, thus reducing the available amount of electricity during this period. Since energy demand is especially high in winter, and this has to be seen in the light of a permanent considerable improvement of the supply situation, this temporary inconvenience is considered acceptable. 4.2.7 Rehabilitation works The rehabilitation of the existing hydro plants at Khorog, Vanj and Namagut and of the power distribution system comprises limited scale works on existing sites or transmission line alignments. The details of the rehabilitation works will be defined in the audits of existing facilities which will be carried out by PamirEnergy under the project. All of these works will be carried out in conformity with WBG environmental and social guidelines. 13 4.3 Project Operations Phase 4.3.1 Hydrology Since the natural river regime does not guarantee a sufficient amount of water in Gunt River for an optimal operation of Pamir 1 HPP in winter, the regulating structure on Lake Yashilkul will release an additional 10 m3/s during this period. This release will result in a drawdown of the lake during the winter months. To compensate, and to have the required amount of water in the lake for the following winter, the same total amount of water will have to be retained in the lake during the summer months. The effects of this planned regime on the lake level are illustrated in Figure 4-1. While the project, as conceived originally, planned to draw down the lake by about 2 m and to operate it from there. Rather, the revised project design maintains the lake level during summer close to its historic levels and within its natural range of fluctuation, mainly for preventing permanent damage to the vegetation of the floodplains. The operation of the regulating structure on Gunt River will allow the purpose of the project - an increase in winter flow - to be achieved. These augmented winter flows have to be compensated by retaining a similar total amount of water in the lake during the summer months, thus reducing the river discharge in this period. Analyses carried out for design show that the resulting reduction in summer flow is rather small in relative terms (less than 10%), and even in Gunt River it is within the natural fluctuations. Most importantly, the project does not change the seasonal flow pattem, of high discharges in summer and low ones in winter. Lake Yashikul Water Level Fluctuation 3,722.0 - ------------- -------------- -- --1945-1984 3 3,714.0 - -- -----------------=-Orig. project --- Rev. project 3,708.0. 3,706.0 l l l J F M A M J J A S 0 N D Figure 4-1: Lake level fluctuations with and without the regulating structure in place. The project as planned now prevents the permanent drawdown of the lake by about 2 m. 14 At Khorog, Gunt flows into Pianj River, which forms the border between Tajikistan and Afghanistan. The changes caused by the project in Gunt discharge values will also affect Pianj. However, Pianj is far bigger than Gunt (average annual discharge in Gunt at Khorog: 104 m3/s; Pianj at Shizd: 435 m3/s). Its annual discharge pattern is also very seasonal, with summer flows of over 1000 m3/s. Here, the change brought about by Pamir 1 is a reduction on flow of around 1%. This is far less than any natural, even short time fluctuation, and can be determined only mathematically. Therefore, it can be said that the impact of Pamir 1 on Pianj is negligible. Pianj River Discharge at Shidz 1400 1200 --- - 800 - ---------- - - ....... -@ -------+------------------ 67 w ithout C -u--~~~~~~~~~~~~~~~~~~~~~~70 w thout - x- 70 w ith E4 .0 0 - -- --- - -- --- .......... . ... ... ... . -- - -- - -- - 200 - -----*----------~--v-............------------*~ Jan. Feb. Mar. Apr. Mby June Jul. Aug. Sept. Oct. Nov. Dec. Figure 4-3: Effects of the project on Pianj river, at about 100 river km downstream of its confluence with Gunt. For this river, no long term flow data are available. However, the two years on record (1967 and 1970) show that variation form year to year can be rather marked, and that the changes caused by Pamir I (increase in winter, reduction in summer) are marginal. The "with project" curves in the figures above are calculations based on the assumptions that there will be: (i) a continuous release in water from the lake of 10 m3/s from November to April; (ii) no change in May and October; (iii) a retention of 10 m3/s in June and September; and (iv) a retention of 20 m3/s in July and August. The optimal regime will have to be found in the first years of operation. It is therefore recommended to start retention earlier and/or with higher values, e.g., starting in May and retaining more in June, in order to reach the high water level in the lake at an earlier date. The monitoring program (see below) will provide important input for this decision. 4.3.2 Floodplain vegetation Productivity of floodplain vegetation depends entirely on the availability of water, i.e., on the ground water level in these alluvial floodplains. This in turn is influenced very directly by the 15 lake level. A lowering of the lake level would lead to a lowering of the ground water table in the floodplains and in this way to a reduction of the productivity. Therefore, the two mitigation measures for preventing this effect are: (i) the modification of the project in a way that allows to keep the summer water level within the range of its natural fluctuations; and (ii) to find an operating regime which allows to bring the lake level up as quickly as possible. If this is achieved, the project should not cause any long term adverse impact on the vegetation and on the productivity of the two floodplains. Here again, the results of the monitoring will be important. 4.3.3 Lake fisheries The fisheries of lake Yashilkul are not exploited presently, but they constitute a potentially valuable resource for future use. Drawing down the lake, and changing the pattern of its level fluctuations can interfere with fish populations, namely with its food base and the reproduction pattern. For maintaining the fish population in the lake, mainly liseosman (Schizopygopsis stolizkae), the most numerous species, it will be important to find the optimum operating regime for the outlet structure. The best regime would probably be to opt for a quick rise in lake level as early as, possible, in order to prevent too strong a change during the spawning period of this species. This strategy would proceed in parallel with the recommendations made for maintaining the floodplain vegetation. The results of the monitoring program will be essential for defining the best operation pattern. 4.3.4 Worker health and safety PamirEnergy will establish a Health, Safety and Environment (HSE) unit at project headquarters in Khorog to implement the project's Environmental Monitoring and Management Plan (see below) The HSE Unit Engineer will monitor the compliance of all PamirEnergy generation and transmission facilities to the relevant WBG environmental, health and safety guidelines on a regular basis. PamirEnergy will appoint and train an HSE manager to each facility who will be responsible for enforcing workplace safety and good housekeeping in compliance with the guidelines on site. PamirEnergy will provide the Unit Engineer and other relevant personnel with participant training in prevailing international standards for occupational health and safety as required. The Engineer, in turn, will provide preliminary and refresher training to all facility HSE managers annually. The Unit Engineer will inspect all generation facilities on a quarterly basis and meet with the HSE manager at each facility to discuss his findings. Violations of guidelines will be noted and persistent violations will be reported to the PamirEnergy General Manager, who may take disciplinary action against the management of the facility. The Unit Engineer will also regularly inspect all transmission facilities, including transmission lines, sub-stations and transformers to ensure that they are safe and maintained in accordance with WBG guidelines. As part of its public education efforts, the HSE Unit will raise public awareness about electricity safety and encourage consumers to report problems to the Unit. 5. ANALYSIS OF ALTERNATIVES As a part of the project evaluation in 1999, a short assessment of energy alternatives was made. This study confirmed that the proposed expansion of the Pamir hydroelectric plant is the most economic and the most environmentally acceptable. The following options have been addressed: 16 * Fossil fuels: Coal and diesel oil were used before, for heating and for operating generators. All fossil fuels have to be imported; Tajikistan does not have any oil, and the coal found so far, although said to be of good quality, is located in regions with difficult access. Transport costs for importation from Osh, in the Kyrgyz Republic, are prohibitive, with about 100 US$/t. Kerosene is used mainly for lighting, but is not an alternative for other uses. * Biomass: Wood is scarce, and the existing resources are heavily exploited. Availability of other plant biomass (steppe plants) is also limited, and is also overexploited. Cotton stalks are an important fuel in other parts of Tajikistan, but this, like other agricultural waste, is not available here. The general scarcity of biomass also excludes biogas as an option. * Animal dung: This is a very important fuel, but it is fully utilised, without potential for expansion. Furthermore, burning animal dung deprives the farmers form their most important fertiliser. * Hydropower: There is a considerable additional potential for further hydropower development, especially for small and micro hydro plants for supply to isolated villages. The problem here is that these small installations tend to freeze in winter, when energy demand is highest. * Other renewables: Wind speed is limited, especially in winter; this excludes wind as an alternative. Solar power might be an option; irradiation is high, even during winter, mainly thanks to the dry climate. However, available solar systems for electricity generation are still too expensive to be a viable alternative to hydropower under the given circumstances. Geothermy could be an option in a few places. In the project area, as in other parts of GBAO, there are a few hot springs, some of which are being used (thermal baths, heating of greenhouses). However, this can be used only very locally. In addition, the regional agency of the national utility, Barki Tajik, has allowed the generation and the grid system to fall into an advanced state of decay. It did not, therefore offer a good basis as a power purchaser on which to base a project financing for the increased generation. IFC and AKFED therefore proposed a 25 year concession, under which responsibility for running the electricity service of the region will be taken over by the project company which in addition to its commitments to certain new investments, will also commit to meet certain performance standards. 6. IMPACT MITIGATION MONITORING AND MANAGEMENT 6.1 Health Safety and Environment Unit PamirEnregy will establish a Health, Safety and Environment (HSE) Unit at project headquarters in Khorog to implement the project's Environmental Monitoring and Management Plan (EMMIP). The HSE Unit will be a permanent office within PamirEnergy. The Unit will be established as soon as PamirEnergy is established and its personnel will gain additional experience by working together with the Project Consultant (Electrowatt-Ekono) in monitoring PamirEnergy's construction and operation activities. The HSE Unit will have three principal functions: * To undertake an environmental audit of all project facilities and recommend to PamirEnergy remediation of those facilities to achieve compliance with WBG social and environmental safeguard policies and guidelines as necessary. 17 * To administer research activities undertaken by contractors on behalf of the project (e.g., Lake Yashilkul fisheries and floodplain monitoring) and coordinate the results of those activities with the impact mitigation activities to which the project is committed (e.g., compensation payments to herders for possible diminished floodplain pasture - see below); and contribute to defining the operating regime for the lake, and * To monitor the compliance of PamirEnergy and all contractors employed by PamirEnergy with WBG social and environmental safeguard policies and guidelines. 6.2 Environmental Monitoring and Management Plan The EMMP for the Pamir Energy Project will have six interrelated components: 1) Health, Safety and Environmental Monitoring; 2) Yashilkul Lake Level Monitoring; 3) Floodplain Monitoring; 4) Compensation Distribution and Monitoring; 5) Yashilkul Fisheries Monitoring; and 6) Community Outreach. A description of each of these components follows. 6.2.1 Health, Safety and Environmental Monitoring The principal task of the HSE Unit will be the regular monitoring of the project's compliance with IFC's social and environmental safeguard policies and guidelines. PamirEnergy will be responsible for incorporating these policies and guidelines into all contracts related to the engineering and construction of project facilities as well as in its standard operating procedures for those facilities. 6.2.2 Lake Level Monitoring Lake level monitoring is currently being carried out by the government Meteorological Observatory in Khorog. According to the information obtained on the occasion of the expert's visit to Khorog in early April 2001, this monitoring has been resumed recently, after a number of years of interruption of the program. However, at that time no recent data were available. The plant itself will require a reliable lake level monitoring, and for this purpose the necessary device will be installed at the outlet control structure. It is suggested that such a monitoring program is started as soon as possible by PamirEnergy. 6.2.3 Floodplain Monitoring The potential impact of the project on the two floodplains at lake Yashilkul (Somon and Marjinoy) could negatively affect the livelihood of the local population. If so, PamirEnergy will have to provide compensation to the farmers dependent on the floodplain resources. In order to determine if, and the extent to which, such compensation is required, a floodplain monitoring program has been initiated, which includes floodplain productivity and groundwater monitoring, to be carried out until the impacts have stabilized. If a reduction in productivity has been detected, it is important that compensation payments be made before the onset of winter, since hay will have to be bought in time. The floodplain monitoring will continue until the impacts have stabilized. 6.2.4 Compensation The HSE Unit will coordinate the research and monitoring activities of the Flood Plain Monitoring component and assess the need to purchase hay stocks to compensate herders for diminished production of the Yashilkul floodplains. This assessment will take place after the hay harvesting season in August during the project construction period and for at least two years after construction is complete. The HSE Unit will provide cash compensation directly to the 18 cooperative farms that utilize the floodplains for grazing and hay production. The compensation payments will be calculated on the basis of the number of head of livestock maintained by the members of each cooperative farm (including animals that they own independent of the farms) and any short-fall in hay production estimated by the Floodplains Monitoring component. The HSE Unit will audit each cooperative farm receiving compensation to ensure that the requisite hay stocks are purchased, and the Unit will monitor the distribution of hay stocks throughout the winter to ensure that needs of the cooperative members are met. At present, it is not possible to estimate the impact of the project on the productivity of the floodplains until the drawdown of the lake is undertaken. For this reason, a compensation contingency fund of $50,000 to cover a five year period has been proposed as part of the HSE Unit budget. This amount is based on a "worst-case" scenario calculated according to current livestock holdings and an average current price of hay per ton as reported by the managers of cooperative farms surveyed in March/April 2001. While the impact of the project is expected to stabilize within five years from the commencement of construction, the company will ensure that any enduring or unforeseen adverse impacts on the livelihoods of the project area population will be addressed through direct compensation targeted developmental initiatives. 6.2.5 Fisheries Monitoring A survey of Lake Yashilkul fisheries is currently underway by a team from the University of Khorog. As with the proposed floodplain monitoring, it is important that the fisheries monitoring starts ahead of the construction works to establish reliable baseline data against which project impacts can be assessed. Since the population living in the project area does not fish in Lake Yashilkul, there will be no compensation associated with any decline in the lake's fisheries. However, the data produced can be used later on in order to decide whether there is actually a potential for developing the fisheries as an economic resource. 6.2.6 Community Outreach The principal activity of the HSE Unit Community Outreach component is to promote safe and responsible energy use (including electricity, kerosene, wood fuel and other biomass) and payment of electricity tariffs through public education efforts including mass media and public meetings. In addition to public education, the HSE Unit may take on a more developmental role in promoting electricity use and creating linkages with ongoing community and enterprise development initiatives in GBAO through the Community Outreach component. As part of its regular interaction with consumers and its liaison with developmental organizations, the HSE Unit staff will explore opportunities for promoting improvements over the current patterns of energy use in GBAO to help make electricity more affordable to consumers. Through collaboration with AKFED, for example, PamirEnergy could support the development of enterprises that manufacture more efficient cooking and home heating devices or the marketing of compact fluorescent light bulbs. The HSE Unit would, in turn, promote the use of these technologies among electricity consumers. Such promotion efforts could be linked with ongoing rural development programmes that provide credit for domestic improvements such as sanitation and water supply. 19 6.3 Monitoring, Reporting and Evaluation In collaboration with the consultant and other collaborating organizations (including IFC), the HSE Unit will develop monitoring and reporting formats for each component. The Unit will identify a set of simple performance indicators for each component and will monitor and report against those indicators on a regular basis to PamirEnergy management, AKFED and IFC. IFC will share its evaluation of EMMP implementation with IDA. IFC will require an annual consolidated monitoring report for all components for the duration of its financing of the project. The format of these reports will be determined prior to financial closing. In addition, IFC will require an evaluation of EMMP implementation within one year of the completion of the construction phase of the project. PamirEnergy will be required to implement relevant recommendations related to EMMP implementation. 20