To Ministry of Economy, Trade and Industry Feasibility Study Project of Overseas Development for High-Quality Energy Infrastructure in FY2018 (Republic of Kenya: Study on LPG Import Terminal Project in the Port of Mombasa) Final report March, 2019 Toyota Tsusho Corporation
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Final report - METI · 2019. 11. 6. · LPG Liquefied Petroleum Gas MoEP Ministry of Energy and Petroleum MoI Ministry of Industrialization MoPM Ministry of Petroleum & Mining MoT
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To Ministry of Economy, Trade and Industry
Feasibility Study Project of Overseas Development
for High-Quality Energy Infrastructure
in FY2018
(Republic of Kenya: Study on LPG Import Terminal
Project in the Port of Mombasa)
Final report
March, 2019
Toyota Tsusho Corporation
i
Project map (Candidate site)
Target
location
ii
List of acronyms
Acronym Proper name
AGOL Africa Gas and Oil Limited
API American Petroleum Institute
CAPEX Capital Expenditure
CO2 Carbon Dioxide
CP Contract Price
D1 Name of the Free Zone developed inside the SEZ
DK-1 Name of the berth developed inside the SEZ
EAC East African Community
EIA Environmental Impact Assessment
EMCA Environmental Management and Coordination Act
EPC Engineering, Procurement, and Construction
ERC Energy Regulation Commission
ESIA Environmental Social Impact Assessment
FEED Front End Engineering Design
FS Feasibility Study
GDP Gross Domestic Product
GJ Giga Joule
GNI Gross National Income
ha hectare
HP Homepage
IEA International Energy Agency
IFC International Finance Corporation
IRR Internal Rate of Return
JBIC Japan Bank for International Cooperation
JETRO Japan External Trade Organization
JICA Japan International Cooperation Agency
JV Joint Venture
KOT Kipevu Oil Terminal
KPA Kenya Ports Authority
KPC Kenya Pipeline Company Limited
KSh Kenyan Shilling
KWh Kilowatt hour
iii
LAPSSET Lamu Port and South Sudan Ethiopia Transport
LPG Liquefied Petroleum Gas
MoEP Ministry of Energy and Petroleum
MoI Ministry of Industrialization
MoPM Ministry of Petroleum & Mining
MoT Ministry of Transportation
MT Metric Ton
MW Mega Watt
NEC National Environmental Council
NEMA National Environmental Management Authority
NOCK National Oil Corporation of Kenya
ODA Official Development Assistance
OPEX Operating Expense
PIEA Petroleum Institute of East Africa
PPP Public–Private Partnership
SEZ Special Economic Zone
SEZA SEZ Authority
SGR Standard Gauge Railway
SoT Simanzi Oil Terminal
TICAD Tokyo International Conference on African Development
It also prohibits unauthorized entry, tree felling
and hunting in protected habitats.
Prevention of Pollution in Coastal Zone and other
segments of the
environment regulations, 2003
Regulations pertaining to the protection and
prevention of pollution in coastal areas
regulated under EMCA.
Environment (society)
Coast Development Authority Act, 449, 1992 and
amended in 2012
Law granting the Coast Development Authority
the authority to plan and coordinate
development projects in all coastal regions and
special economic zones.
Public Health Act (Cap. 242), 1986 and amended in
2019
Law pertaining to the maintenance of a healthy
environment in land development.
Occupational Health and Safety Act, 2009 and
amended in 2010
Law pertaining to occupational health and
safety.
National Museums and Heritage Act (Cap 216), 2006
and amended in 2012
Law requiring impact assessment on cultural
properties and heritage, etc.
County Government Act, 2012 Law that sets forth the authority and
administrative framework of county
governments.
Other
27
Laws, etc. Outline
Occupational Safety and Health Act, 2007 Law regulating health, safety and welfare of
legal workers and all persons at work sites and
the establishment of the National Council for
Occupational Safety and Health (NACOSH).
Environmental standards in Kenya are established in concrete form under regulations
for each sector in compliance with EMCA. Environmental standards relevant to the project
are shown in Table 10.
Table 10: List of environmental standards
Category Name of regulatory standard Description
Air quality Environmental Management and
Co-ordination (Air Quality) Regulations,
2014, Legal Notice No. 34
Parameters for ambient air quality
set forth in the standard: SOx, NOx,
NO2, SPM, PM10, PM2.5, Pb,
CO/CO2, H2S, non-methane
hydrocarbons, VOC, O3
Wastewater Environmental Management and
Co-ordination (Water Quality) Regulations,
2006, Legal Notice No. 120
Water quality standards are
established as follows.
— Domestic wastewater
— Wastewater release into the
environment
— Wastewater discharge into public
sewage system
Excessive
Vibration Pollution
Environmental Management and
Co-ordination (Noise and Excessive
Vibration Pollution) (Control) Regulations,
2006, Legal Notice No. 121
Daytime and nighttime permissible
noise levels are set by zone, such
as silence zone, residential zone,
commercial zone, etc.
Environmental impact assessment (EIA) in Kenya
The Second Schedule of the EMCA specifies projects that require submission of an EIA
report, based on the business sector and project characteristics. The project understudy is
believed to classify in "management of hydrocarbons," thus requiring the following EIA
procedure. It must be noted, however, that the issue of business scale is not stated explicitly
28
regarding whether or not IEA procedure is necessary in this sector. For this reason, advance
confirmation with NEMA on this matter is required.
<Management of hydrocarbons>
Mass storage of natural gas, petroleum and all other flammable and volatile fuels
(EIA procedure in Kenya)
The Environmental Impact Assessment Guidelines and Administrative Procedures by
NEMA aims at elucidating potential impact of a proposed development project, policy or
government program, etc., on the environment through EIA. At the same time, it is
designed to maximize positive impact while identifying measures to mitigate negative
impact. With this basic concept, EIA is recognized as a tool for promoting sustainable
development decision-making in Kenya.
In the EIA procedure, NEMA holds the authority of issuing, revising and canceling
environmental impact assessment licenses and is responsible for coordination between
the public and private sectors. The steps involved in the EIA procedure are illustrated in
Figure 6. A summary of the actual steps involved is also shown in Table 11.
Table 11: Principal steps in the EIA process
No. Step Outline
1 Screening (Decision-making on whether or not an EIA study is required)
The project proponent is to prepare and submit a project report. The project must include chiefly the following.
The objective and scope of the project
Project site and area affected
Project activities (construction, operation and closure
phases)
Design
Materials used, output, waste
Latent environmental impact & mitigation measures
Measures on accident prevention & health and safety
Project budget
Views of affected parties
Environmental management plan
2 Scoping (Establishment of the scope of the EIA
Scoping of the environment is a process for defining important conceptual matters related to the project activities and for determining the terms of reference of the EIA study. Matters to
29
No. Step Outline
study and of the terms of reference (ToR))
be studied in scoping include the following.
Communication plan (target parties & timing)
Information disclosure for gathering views and opinions
Listing matters of concern to people
Definition of the terms of reference for the study regarding
major issues
3 Preparations for the EIA study
The EIA study must address issues of concern found in the terms of reference established by the project proponent through consultations with relevant parties. Furthermore, the study is to be conducted by specialists registered with the regulatory authority. However, the responsibility for the study lies with the party implementing the project..
4 Execution of the EIA study
The EIA study aims at identifying the following matters.
Identifying impact from the project
Impact prediction
Impact assessment and analysis
Review into mitigation measures
Environmental monitoring and environmental management
planning
It must be added that effective consultations with local citizens is the key in EIA planning and execution. Engagement of relevant parties, including affected persons and regulatory authorities, is necessary from the planning stage to the closing stage of the project.
5 Review of the EIA report
The project proponent is to submit an EIA report, together with designated fee" to the regulatory authorities (in 10 hard copies and digital media). The report is examined from the standpoints of whether the project complies with its terms of reference, whether the study results are scientifically and technically appropriate, whether it is clear for the general public to understand, whether appropriate mitigation measures have been studied after designating the negative impact, whether there is sufficient record of deliberations with local citizens and other matters of concern.
6 Review of the EIA report
The project proponent is to submit an EIA report, together with designated fee" to the regulatory authorities (in 10 hard copies and digital media). The report is examined from the standpoints of whether the project complies with its terms of reference, whether the study results are scientifically and technically appropriate, whether it is clear for the general public to understand, whether appropriate mitigation measures have been studied after designating the negative impact, whether there is sufficient record of deliberations with local citizens and other matters of concern.
30
Figure 6; Procedure for the EIA process (Environment Impact Assessment Guidelines and
Administrative Procedures, NEMA, 2002)
(Impact on the environment and society (including safety) as a result of project execution)
The environmental impacts on the natural environment and to society predicted in the
project have been organized in a preliminary scoping matrix shown in Table 12.
1 Air pollution B- B- Construction stage: Dust created by
construction work is likely to impact air quality. After operation startup: Exhaust from
LPG tankers is likely to impact air quality. Additionally, incidents such as outflow or leakage from the pipeline may affect air quality.
2 Water pollution B- C Construction stage: Dredging and
earthwork may impact sea water quality. Additionally, wastewater used in pressure tests for the ocean floor pipeline may affect water quality. Operation stage: Domestic wastewater
may be released by terminal facilities. Additionally, incidents such as outflow or leakage from the pipeline may affect water quality.
3 Waste B- B- Construction stage: Solid wastes and
construction wastes will be produced. Operation stage: Wastes will be
generated with LPG tanker and terminal operation.
4 Soil pollution D B- Construction stage:·No particular matter
of concern Operation stage: There is possibility of
leakage at LPG transport in and out of facilities, as well as from the pipeline.
5 Noise and Excessive Vibration Pollution
B- C Construction stage: Construction work
may increase the noise level. Operation stage: Operation may increase
the noise level.
6 Soil subsidence D D Construction and operation stages: No particular concerns.
7 Foul odor D D Construction and operation stages: No particular concerns.
8 Bottom sediment B- C Construction stage: Dredging, earthwork
and installation of ocean floor pipeline may impact the bottom sediment quality. Operation stage: Maintenance dredging
may impact the bottom sediment quality.
Environment (Natural)
9 Protected areas D D Construction & operation stages:
Protected areas are not found in the area surrounding the project site.
10 Ecosystem B- C Construction stage: Construction work
may temporarily impact the marine ecosystem. Also, mangrove clearing is anticipated. Operation stage: Although the marine
ecosystem could be affected by wastewater, the extent of such effects will be confirmed going forward.
11 Hydrometeor B- C Construction stage: Dredging and
earthwork may impact hydrology in the surrounding area. Operation stage: Although the marine
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Number
Impact category
Assessment Predicted impact
Construction stage
Operation stage
ecosystem could be affected by wastewater, the extent of such effects will be confirmed going forward.
12 Topography/geology B- D Construction stage: The terrain will be
altered. Operation stage: No particular concerns.
Environment (society)
13 Land acquisition and relocation of residents
C D Construction stage: Residents may have
to be relocated with land acquisition. Operation stage:·No particular matter of
concern
14 The poor B+ B+ Construction & operation stages: Job
opportunities for local citizens are expected to grow.
15 Minorities & indigenous ethnicities
C C Construction & operation stages: The
presence of minorities and/or indigenous ethnicities requires inspection in the future.
16 Local economy, such as employment and means of livelihood
B+/C B+/C Construction stage: Job opportunities
will increase for local residents. At the same time, the project may impact fisheries, etc. Operation stage: The project will reduce
the use of firewood, resulting in shorter cooking time and reduction of health hazards caused by fumes. At the same time, however, it may impact fisheries, etc.
17 Use of land and regional resources
C C Construction stage: There is possibility
of impact on fisheries, etc. Operation stage: There is possibility of
impact on fisheries, etc.
18 Water use D D Construction & operation stages:
Impact on water use is not anticipated in the area surrounding the project site.
19 Existing social infrastructure & services
C B+ Construction stage: There is possibility
of traffic congestion by construction work vehicles. Operation stage: The project will reduce
the use of firewood, resulting in reduction of effort required for cooking with firewood.
20 Social capital & social organization, such as local decision-making entities, etc.
D D Construction and adjoining stage:
No particular effects are anticipated.
21 Imbalance in damages and benefits
D D Construction and adjoining stage:
No particular effects are anticipated.
22 Conflict of interests within the region
D D Construction and adjoining stage:
No particular effects are anticipated.
23 Cultural assets C D Construction stage: There is possibility
of cultural heritage property existing in the area surrounding the project site. Operation stage: No particular concerns.
24 Scenery C C Construction stage: There is possibility
of construction work affecting the surrounding landscape. Operation stage: There is possibility of
33
Number
Impact category
Assessment Predicted impact
Construction stage
Operation stage
impact on the surrounding landscape.
25 Gender C C Construction and operation stages:
Latent effects need to be confirmed going forward.
26 Rights of children C C Construction and operation stages:
Latent effects need to be confirmed going forward.
27 HIV/AIDS and other infectious diseases
B- C During construction: There is a risk of
infection with HIV, etc., due to influx and movement of construction workers. After operation startup: Safety and
public health risk in the region in the operation stage must be examined in the future.
28 Work environment (including occupational safety)
B- B- Construction and operation stages:
There is a danger of accidents and other latent risks. Latent risks and dangers need to be confirmed going forward.
29 Accidents B- B- Construction and operation stages:
There is a danger of accidents and other latent risks. Latent risks and dangers need to be confirmed going forward.
30 Trans-boundary impact and climate change
D B+ Construction stage: No impact of
concern is anticipated. Operation stage: The project will reduce
the use of firewood, resulting in reduction of CO2 emission.
Legend: A+/-: Significant positive/negative impact anticipated B+/-: Positive/negative impact is anticipated to a certain degree C: Impact is unknown D: No impact anticipated
(Terms of reference (ToR) for environmental and social impact assessment (ESIA))
This project will require an environmental and social impact assessment (ESIA) study.
In the ESIA study, assessment of environmental impact will be followed by the preparation
of mitigation measures for predicted impacts and a monitoring program. ESIA is
conducted in compliance with Kenya's IEA legal framework. It must also be executed
according to the requirements of the lender, such as international banks. Based on the
above, the terms of reference (ToR) proposal for the project's ESIA study are shown in
Table 13.
Table 13: TOR proposal for the ESIA study
Environmental & social impacts
Study categories Study methods
1 Air pollution Collection and update of climate & meteorological data (temperature, humidity, wind velocity, wind direction & precipitation)
Current air quality conditions
Gather and review secondary data
On-site survey Baseline data for air quality (as
needed)
34
Environmental & social impacts
Study categories Study methods
Organize related standards Evaluate impact and propose
mitigation measures and a monitoring program
2 Water pollution Study into the current state of water quality in areas where potential impacts are likely, such as the LPG terminal and ocean floor pipeline route
Organize related standards Evaluate impact and propose
mitigation measures and a monitoring program
Gather and review secondary data
On-site survey Baseline data for water quality
(as needed)
3 Waste Inspection of discharged waste volume & type
Study into waste storage, transport & handling method
Propose recommended mitigation measures
Gather and review secondary data
Interviews with related bodies
4 Soil pollution Current soil quality conditions Propose recommended mitigation
measures
Gather and review secondary data
On-site survey
5 Noise and excessive vibration pollution
Current noise conditions Organize related standards Evaluate impact and propose
mitigation measures and a monitoring program
Gather and review secondary data
On-site survey Baseline data for noise (as
needed)
6 Bottom sediment Current bottom sediment conditions on the pipeline route
Evaluate impact and propose mitigation measures and a monitoring program
Gather and review secondary data
Interviews with related bodies
7 Ecosystem Current state of underwater and land ecosystems, including mangrove
Identification of the status of the examined ecosystems (protected areas, protected species, etc.)
Evaluate major impact of business and propose mitigation measures
Gather and review secondary data
On-site survey Interviews with related bodies
8 Hydrometeor Inspection of general conditions related to water flow, such as water flow volume and peak flow volume in surrounding areas
Evaluate major impact of business and propose mitigation measures
Gather and review secondary data
On-site survey Interviews with related bodies
9 Topography/geology Current conditions on terrain and soil quality
Evaluate impact and propose mitigation measures and a monitoring program
Gather and review secondary data
On-site survey
10 Non-voluntary resident relocation
Land acquisition and inspection of the need of resident relocation
Study into options to minimize non-voluntary resident relocation
Execution of social economic study & preparations for resident relocation plan
Gather and review secondary data
On-site survey Interviews & consultations with
relevant organizations & communities
11 Lifestyle/livelihood Baseline data on social, demographic & economic
Gather and review secondary data
35
Environmental & social impacts
Study categories Study methods
characteristics of the communities surrounding the project site, including persons in fisheries
Identification of receptors vulnerable to impacts in the area surrounding the project site
Evaluate impact and propose mitigation measures and a monitoring program
On-site survey Interviews & consultations with
surrounding communities
12 Cultural assets Study of the current status of cultural heritage properties in and surrounding the project site
Evaluate impact and propose mitigation measures and a monitoring program
Gather and review secondary data
On-site survey Interviews with related bodies
13 Scenery Study of the current status of landscape in and surrounding the project site
Evaluate impact and propose mitigation measures and a monitoring program
Gather and review secondary data
On-site survey
14 Work environment Identification of hazards and risks in labor
Systematization of relevant standards, including gas handling
Propose recommended mitigation measures
Gather and review secondary data
Study into applicability of Japanese standards on gas handling on the project
15 Safety and public health risk in the region
Identification of hazards and risks to communities
Propose recommended mitigation measures
Gather and review secondary data
On-site survey
(Matters to be addressed by nations interested in the realization of the project)
Project development is scheduled to take place in Mombasa SEZ, for which a
development master plan has been developed. Because the plan includes construction of
roads in the surrounding areas and other infrastructures of the SEZ, the modes of LPG
shipment and the shipment routes may be affected, depending on the development status.
Furthermore, dredging inside the bay close to the planned project site is likely to be
implemented with port development underway on the shore opposite the project site. For
this reason, the project must be executed in coordination with surrounding development
projects as needed. As a result, the interested nations must execute coordination with the
organizations involved in these projects. In the area of safety in gas handling, study into
applicable safety standards, etc., by the nation's regulatory authority is necessary, in view
of the possible application of standards equivalent to relevant Japanese standards as the
need arises.
(Study into environmental improvement effect, environmental and social impacts, etc.)
36
The project's environmental improvement effect and significant effect on the
environment and society are the reduction in use of kerosene that produces large quantity
of fume and soot and replacement of firewood and coal with LPG.
Additionally, firewood and coal consumes time and effort for preparation and cleanup.
On top of that, poor thermal efficiency makes cooking time-consuming. In urban areas
where increasing number of women participate in the job market, wider use of LPG has
led to the reduction of workload for women who run households. In rural areas, it is
believed to contribute to reducing the workload of women and children responsible for
picking firewood.
(9) Environmental impact assessment (estimated reduction in CO2 emission based
on energy source)
LPG consumption in Kenya was 192,502 tons in 2017. In this study, consumption is
projected at 662,000 tons 10 years later in 2027 and to reach 1,091,000 tons in 2031. In
these consumption statistics, the project is expected to cover 25% of the market share,
with annual LPG sales volume at 272,750 tons.
The reduction in CO2 emission based on energy source is estimated as follows.
<Assumptions>
All of the LPG supply in Kenya will be used for cooking.
Of the total volume, 33.3% will replace kerosene. (Source: Figure 52 Cooking heat
sources, Report on the Survey of Potential Needs in the BOP Business: Energy
Sector in Kenya, JETRO, 2010)
<Equation>
CO2 emission reduced per year by the project (CO2t)
= Total kerosene volume replaced by LPG x Emission coefficient for kerosene
— Total LPG volume that replaced kerosene × LPG emission coefficient
Total kerosene volume replaced by LPG (MT):
33.3% of 272,750 tons of LPG sold under the project will replace kerosene. If the unit
calorific value of LPG is 50.80 GJ/t and that of kerosene is 36.70 GJ/kl (source: List of
Calorific Value & CO2 Emission Coefficients of Fuels, Japan LP Gas Association)
LPG calorific value =272,750 MT x 33.3% x 50.80 GJ/t = 4,613,948 GJ