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PRIVATIZATION AND PRIVATE SECTORCOMPETITIVENESS PROJECT
(PPSCP)
E-407
ENVIRONMENTAL PRE-AUDIT OF ENTREPRISESSELECTION OF ENTREPRISES
FOR AUDITS)
SUBMITTED TO:
THE TECHNICAL SECRETARIAT FOR PRIVATISATIONMINISTRY FOR
PRIVTISATION ANTANANARIVO - MADAGASCAR
THE WORLDBANK PRIVATE SECTOR DEVELOPMENT1818H STREET, N.W.
WASHINGTON, D.C. 20433, USA
SUBMITTED BY:
KOBINA ATOBRAH, Ph.D.10875 MAIN STREET, SUITE 205FAIRFAX,
VIRGINIA 22030, USA
MALICK A.K.JOHNBANJUL, GAMBIA
November 2000
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TABLE OF CONTENTS
1. INTRODUCTION 41.1 LISTINGS
2. PROJECT OBJECTIVES 5
3.ENVIRONMENTAL SETTINGS
3.1 INITIAL CONDITIONS:3.2 ENVIRONMENTAL CONCERNS:
4. RANKING 6
4.1 ENVIRONMENTAL PRE AUDITS EVALUATION CRITERIA:4.1.1 Rating
Components4.1.2 Weighting Components
5. RESULTS OF RANKING:85.1 CONSULTATIONS
6. SECTOR ANALYSIS 10
7. DESCRIPTION OF KEY PRE AUDIT FINDINGS: 13
1. SIRAMA (Sugar Enterprise)2. JIRAMA (Electricity & Water
enterprise)3. ADEMA (Airport enterprise)4. HASYMA (Cotton
enterprise)5. TELMA (Telecom Madagascar)
DECOMMISSIONING PLANS: 26
9.STATUTORY FRAMEWROK: 26
9.1 LEGAL FRAMEWORK ON LIABILITIES9.2 MONITORING PROTOCOLS9.3
ENVIRONMENTAL GUIDELINES AND REQUIREMENT:9.4 TRAINING AND CAPACITY
BUILDING:
10. COST ESTIMATES FOR AUDITS
11. RECOMMANDATIONS 31
12. LIST OF PUBLICATIONS USED FOR THE REPORT.
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13. PERSONS CONTACTED
1. INTRODUCTION
This report is an environmental pre-audit of four (4) Public
Enterprises (PEs) in Madagascarthat are being privatized under the
Privatization and Private Sector Competitiveness Project
(PPSCP) by the Government of Madagascar (GOM) and funded by the
IDA, World Bank,
Private Sector Development (Marie-Ange Saraka-Yao, Task Team
Leader).
Private Sector Development is crucial to poverty alleviation and
economic growth. A survey
of this sector in Madagascar identified deteriorating
infrastructure as one of the main
constraints to private sector development.
Public Enterprises (PEs) have be found to be inefficient if not
completely dormant and unable
to support employment and poverty alleviation programs
The Government of Madagascar embarked on a privatization program
and has set up
- the privatization committee- the technical secretarial for
privatization
It also proceeded to find in a first phase the privatization of
SOLIMA, the national Petroleum
Company.
In addition, it has proceeded with reforms of various sectors of
the economy including
privatization of a certain number of enterprises.
The assignment was carried out in two places as follows
Phase I: Field mission by Malick A.K. John,
Engineer/Environmental Assessment Specialistwith back-up from
Washington by Dr. Kobina Atobra as Team Leader. This phase
entailed:
a) A preliminary meeting with the PU of GOM headed by Norbert
RAZANAKOTO,Secretaire Technique. In attendance were
Erick RAJAONARY, Expert FinancierPaul TOMBOZAFY, Responsible for
Operations STPRAJAONSON Bienvenu, World Bank- Environmental
Adviseras well as the TTL.
b) Review of existing documentation and historical information
and visual inspection of sites.
Phase II entailed
- assessment of risks, prioritization of environmental concerns
and ranking of sites according
to the need for comprehensive, partial and no audit at
divestiture for the four (4) PEs listed
below.
- on request from the PU to carry out preliminary ranking of
twenty two (22) others based on
their activities
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1.1. Listings
The priority list of PEs for pre-audit was as follows:. The
sugar enterprises (SIRAMA). THE Water and Electricity enterprise
(JIRAMA). The cotton industry (HASYMA). Madagascar airport (ADEMA).
Telecommunications (TELMA)
Of the original list of PEs for preliminary ranking fourteen
were subsequently retained (seeCh.5)
2. PROJECT OBJECTIVES
The primary objective of the project is to carry out an
environment pre audit of the publicenterprises listed for
divestiture and develop an ranking to determine which will
needcomprehensive or full audit, partial audit or no audit at all
before divestiture.
Furthermnore, the objectives include measuring the enterprises
environmental conditionsagainst the risk of being held responsible
for contingent damages after privatization. Inaddition, assist the
Borrower to prepare guidelines that will ensure that the
privatizationcandidates will undertake the necessary audits
according to the ranking study and that theguidelines should be
able to help with the determination of the environmental
liabilities andaudit requirements for future privatization
candidates.
The objectives also include the review of the national
legislative framework to ascertain therole of PEs and the new
investors on clean-up responsibilities after privatization.
3. ENVIRONMENTAL SETTING
3.1. Initial conditionsThe country, with a total surface area of
590,000 sq kw has a population of 14 millions with aper capita
income of $US.
Madagascar is an island on the Indian Ocean bounded byLatitudes
12°- 25 0 South of equatorLongitudes 420 - 500 East
The Mozambique channel separates from the African continent:The
country covers an areaThe physical environment is governed by
its
- geological formations- topography and morphology- climate
The geology of Madagascar is a result of early volcanic activity
with formation of graniticmountain ranges in the central part of
the island running from the North East to the South. Theranges are
bisected by valleys forming drainage systems to the lowlands
bordering the islandon the eastern and western sea-boards. The
marble and granite industry of Madagascar isderived from these
formations.
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The topography is also an emanation of this past activity and
characterized by the centralhighlands giving way to rolling hills,
sloping to the lowlands of the coastal regions.The topography led
to the creation of the valleys, gorges which form the drainage
system ofthe island as shown by the large number of streams and
rivers.The climate is tropical to sub-tropical with average annual
rainfall of 2000 mm in twoseasons. Temperatures range from a
maximum of about 320 C to minima of 16°C.The soils range from sandy
to sandy loams and mud in the lowlands.
3.2. Environmental concerns
The topography and morphology has led to widespread erosion in
the whole country.
The indiscriminate burning and felling of trees as well as
cropping on the riverbanks hasaccelerated this process of
erosion.
The rivers and lakes are silting up at an alarming rate and the
physical environment isbecoming desertic.
4. RANKING
In order to determine which of the PEs require a full and
comprehensive audit to beundertaken, ranking have been carried out
of the facilities based on risk characterization. Therisk
characterization is a process of estimating the probable incidence
of adverse impacts topotential receptors under various exposure
conditions, including an elaboration ofuncertainties associated
with such estimates. The ranking process applied in this
assessmentinvolves the qualitative estimation of the potential
risks and/or hazards due to activities at thePEs, since
quantitative data were not required at the moment for such
assessment.
An adequate characterization of risks and hazards at a
potentially contaminated site allows fora comprehensive (full)
enviromnent audit to be performed during which the site
remediationprocess can be better focused, and cleanup criteria can
be developed based on the 'acceptable'level of risks to potential
receptors. Furthermore, during the comprehensive audits the
greatestrisk can be identified and the site mitigation measure
selected to address those issues.
The ranking procedure was similar to the scoring the DRASTIC
Index (Aller and Others,1987; Atobrah, 1990; Atobrah and Others,
1989), and was based on risk characterization ofhazardous wastes
(Asante-Duah, 1993; Asante-Duah and Others, 1996). The ranking
approachprovided indication on whether the site was located in a
generally sensitive or vulnerable areaand has a significant
pollution potential to the environment.
4.1 The Environment Pre-Audits Evaluation Criteria:
The enterprises were assigned scores on the basis of the Audit
Index Factors (AIF) developedfor the facilities at the various
sites. The AIF is a degree of pollution potential for anenterprise
by which assessment for comprehensive audits can be determined. The
criteriaconsidered to have little impact on the environment were
ranked by assigning the lowest scoreof one (1), and the criteria
with significant impact on the environment were assigned the
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highest score of the ten (10). The scores for each enterprise
were then summed and the sitewith the highest score assigned the
most likely site to have full audit to be undertaken.
4.1.1 Rating components:
The rating components for evaluating and characterizing the
audit potential of a site were asfollows:* Type of Enterprise (i.e.
activities at facilities and sites)* Emissions and Air Quality*
Wastewater (i.e. impact on surface water and groundwater
receptors)* Waste Oil and Spill Control Measures* Solid Waste*
Noise* Occupational Health and Safety Issues* Environmental
Management and Regulatory Framework* Capacity Building, Training
and Awareness
The audit evaluation factors were assigned rating components
ranging from one (1) to ten(10); with the least significant rated
as 1 and the very significant rated as 10. The AuditFactors were
incorporated into a relative ranking scheme that used a combination
of weightsand ratings to produce a numerical value called Audit
Index.
4.2 Weighting Components:
The weighting was assessed on the overall affects on pollution
potential for the sites andfacilities by considering the weighting
components as follows:
* Depth to water;* Soil and aquifer media;* Topography;* Impact
on land_use and planning;* Impact on wetlands and water bodies;
and* Impact on workers
Each audit factor was assigned a relative weight ranging from
one (1) to five (5); the leastsignificant with a weight of 1 and
the very significant with a weight of 5. For example, afactor such
as 'Air emission' was assigned a weight of 5 if the impact to the
environment wasvery significant and a weight of 1 if the impact to
the environment was of least significance.
To obtain the number for each Audit Index Factor (AIF) which
determined the degree of thepollution potential, the weight was
multiplied by the rating. The total of the numbers forindividual
Audit Factor gave the Audit Index. Evaluation of the Audit Index
for the PEsprovided the relative significance of each facility or
site with respect to the pollution potential.
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Based on the cumulative Audit Index Factors derived for the
facilities and sites, the PEs havebeen ranked into categories of
those that required comprehensive (full) audits, those thatrequired
partial audits and those that did not need any audits to be
undertaken at this moment.
The rankings sere categorized as follows:
- PEs with Audit Index Factor of cumulative scores above 140
were considered highrisk and would require comprehensive (full)
audits;
- PEs with Audit Index Factors of cumulative scores ranging from
100 - b 140 wereconsidered medium risk and would require partial
audits;
- PEs with Audit Index Factors of cumulative scores less than
100 were consideredlow risk and would require no audits.
5. RESULTS OF RANKING
5.1. Based on the visual inspections in the field and using the
audit criteria and index factors,the first four (4) PEs have been
ranked as follows:
A. PEs requiring full audits
Sugar enterprise (SIRAMA) (259)Water and Electricity enterprise
(JIRAMA)
B. PEs requiring partial audit
Airport of Madagascar (ADEMA) (134)Cotton Enterprise (HASYMA)
(130)Telecommunications (TELMA) (114)
5.2. For the fourteen (14) enterprises for which a preliminary
assessment of their ranking wasrequested the consultants, based on
the nature and scope of their activities propose thefollowing
rankings
A - Full audits
- Societe d'Etudes, de Constructions et de Reparation Navales
(SECREN)- Societe d'Exploitation de la Viande a Madagascar
(SEVIMA)- Societe d'Andapa Mamokatra (SOAMA)- Ferme d'Etat de la
Sakay (FESA)- Societe Rizicole de Marovoay (SORIMA)- Fikambanana
Fampandrosoana ny Lemak'i Betsiboka (FIFABE)
B - Partial audits
- Societe d'Interet National des Produits Agricoles (SINPA)-
Kafe Malagasy (KAFEMA)- Societe Malgache de Transports Maritimes
(SMTM)
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C - No audits
- Antok'Asa Ambanivohitra (AAA)
- Societe Industrielle et Commerciale de l'Emyrne (SICE)- Maxime
Darrieux (DARRIEUX)
- Groupe Comptoir de Commerce et de Representation pour l'Ocean
Indien (COROI)- Cabinet RINDRA
6. SECTOR ANALYSIS
6.1. Agriculture
In general, in most African countries there are major concerns
related to operation of plantsand the operations of the related
nucleas/outgrower farms.Major impacts are usually encountered on-
the atmosphere- terrestrial and- aquatic ecologies- health and
safetyAdequate recycling or clean-up operations and equipment are
not put in place for
- air emissions- liquid and solidwaste and their disposal
The condition of the plants in several cases have a lot to be
desired.
The farms also generate impacts due to unplanned settlements
resulting in- poor water and sanitation facilities not being
available- promiscuity of the communities- banditism
These issues are addressed under the findings on the PE's in
questionIn the case of Madagascar and as a general remark, the
sugar in industry exhibited high auditindex marks of (259) because
of pollution potentials. The cotton industry however showedlittle
or no pollution except for the use of pesticides and fertilizer on
the farms.
6.2. Transport and Telecommunications
As regards Madagascar airport the main concerns related to-
noise levels- emissions- solid and liquid waste- airport utilities
(waste/sanitation)- airport estatesAs regards telecommunications
the major concerns relate to the- location of present and future
equipment e.g. commutators, lines etc. in relation to
protected areas /sites- the decommissioning , replacement and
disposal of its obsolete systems
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Because most of these impacts can be mitigated the audit index
factors have been put at ( 134)for the airport and (114) for TELMA
i.e. only partial audits are required
7. DESCRIPTION OF KEY AUDIT FINDINGS
7.1. SIRAMA SUGAR INDUSTRY
The industry is composed of four (4) sugar and alcohol
production facilities surrounded by
nucleus and outgrower farms at- AMBILOBE- NAMAKIA- NOSY BE-
BRICKAVILLE
The management comprises a Director General and Secretary
General with four (4) Directors
(Administration, Technical, Finance, Supplies) supported by two
(2) Regional Directions andDelegations at the factory levels
KEY PRE-AUDIT FINDINGS
As a general remark, the most dramatic negative impacts were
found on the island of NOSYBE.The practices of the enterprise are
affecting the environment on the entire island.The consultants felt
it necessary to emphasize the case of Nosy Be because of- the
fragility of its eco-system- the impacts on its tourism trade
Waste disposal
It was found thati. Untreated liquid waste in all cases was
discharged directly to rivers/streams, lakes in
their raw state from the factoriesii. Most of the solid waste
(filter cake)
iii. Though most of the bagasse is burnt for full, a lot is
found froating around the coasttime.
Although time was had to visit only Ambilobe, SIRAMA executives
recognized the seriousnegative impacts of their disposal practices
on
i. the rivers and lakesii. land surrounding their facilities
iii. groundwateriv. the oceanThe wastes with high sugar
residues, COD, BOD, solid particles including bagasse which
areactually visible have raised protests from- the communities- the
tourist industry- environmentalists
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Emissions
The emissions of Carbon Dioxide (CO2 ) Nitrogen Oxide (NO,)
Sulfur Dioxide (SO,) VolatileOrgane Compounds (VOC5 ) fly ash and
particulate are also visible. This is particularlydisturbing to the
Hotel industry at Nosy Be.The burning of came before cutting is
also causing an outcry because of noxious firmspervading the
atmosphere.
Siltation
i. The rivers and streams are actually siting up from
a) the dumping practices of the enterpriseb) the agricultural
practices of the communities on the river banks
ii. Some rivers are actually diverting their courses and
threatening roads and bridges some ofwhich have simply
disappeared.
Resettlement
While the enterprises real estates have been found to be
adequate, shanty towns have sprungup around the factories
without
- water or sanitation facilities- health facilities
The potential for- proliferation of diseases- sexual promiscuity
and hence HIV/AIDS- banditism
is all too evident
Decommissioning
The facilities require a major renewal program. Large amounts of
obsolete equipment arepresent in all the facilities.
The audit should delve into this in detail and proposed
decommissioning plan.
RECOMMENDATION
i. SIRAMA should be subjected to a full and comprehensive
audit.ii. Special attention should be given to the island of Nosy
Be
iii. The audit should identify- the quality and quantity of the
emissions from the factories- the quality (content) and quantity of
sugar residue, chemicals and solids fromeffluents from the
factories.
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- the amount of fertilizer and pesticide residue from the farms
entering the drainagesystems and discharged into the rivers/lakes
and the ocean
iv. Assess the impacts ona. fisheriesb. the physical
environmentc. the groundwater with particular emphasis on Nosy Bed.
the tourism trade
v. Evaluate the economic and financial implications of
converting the present practice ofburning the cane before cutting
to green cutting in relation to the environmental impactof the
burning practice.
vi. Propose a detailed- clean up exercise- waste treatment
system- effluent discharge standards in collaboration with ONE
vii. The audit should identify equipment due for decommissioning
and prepare a plan withcost estimates.
viii. The auditor in collaboration with ONE should formulate an
appropriatea. An Environmental Management Plan (EMP)b. A monitoring
programc. Capacity building and training program
These should be accompanied where relevant by the cost
estimates.
Although it is best to leave time frames to bidders based on the
terms of reference which areusually not limitative. It is the
considered opinion of the consultants that the SIRAMA auditshould
take no more than 12 weeks including reporting
COST ESTIMATE
Based on three (3) experts (one Environmentalist, one
Environmental Engineer, one FinancialAnalyst)
Fees + Living Expenses $1 ,000/day 252,000 $USLeasing of
equipment, local transportation or Lab analysesReporting etc 10%
25,200 $US
TOTAL 277,000 $US
7.2 JIRAMA (Electricity and Water enterprise)
This enterprise was a last minute inclusion to that of the four
(4) enterprises for auditing.The Consultant was therefore obliged
to visit the production sites, treatment where appropriate and
transmissionor transportation The Consultant was able to visit
only:
(i) the dam site at MANDRAKA
(ii) the reservoirs at AMPASAPITO and MANTASOA
(iii) the powerhouse at MANDRAKA
(iv) the estate at MANDRAKA
(v) the water treatment plant in TANA
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PRE-AUDIT FINDING
7.2.1 Electricity
This is generated either fromHydro-electric power stations
orThermal oil-fired stations
7.2.1.1 For hydropower at the dam sites the Consultant found
that
(a) The spillways were in concrete with boulder stones acting as
buffers to reduce flow speeds soas to prevent erosion
downstream.
(b) Cooling water for the turbines go through aspersion chambers
before being emptied into thechannels at stream temperatures.
There were therefore no environmental impacts of major concern
at MANDRAKA power house.The main concerns were at the reservoirs
sites at AMPASIPOTSY and MANTASOA with particular referenceto
health of the populations i.e:
- Bilharzia- Malaria- Cholera- Typhoid- Dysentery
Because the reservoirs are used for drinking water as well as
washing by the communities. There were noelements available to
assess these potential impacts of the reservoirs around and
downstream of them.All the other reservoirs present essentially the
same concerns. Unfortunately JIRAMA could not produce anydocument
as to the locations of these.
RESETTLEMENT
The Consultant could not assess the extent of resettlement
attributable to the Dams and reservoirs as the landtenure system is
complex. The downstream ricefields are essentially rainfed in the
area visited.
7.2.1.2 Thermal Power StationsAgain JIRAMA did not furnish any
documentation on their distribution in the country and none was
withinvisiting range.
It suffices therefore to note that the main concerns are:
(i) Atmospheric pollution from emissions of carbon dioxide
(C02), Nitrogen oxide (N02), Volatileorganie compounds (VOC5),
Hydrocarbons (HC) Sulfur (HSO2) soot and other particulates.
(ii) Noise
(iii) Oil and lubrifiant spills
(iv) Health and safety measures in the plants.
RECOMMENDATIONS (Electricity)
The audit recommended should:
(i) carry out, in collaboration with the Medical Services of
Madagascar and Institut Pasteur a Clinicalevaluation of the
prevalence of water borne a water related diseases in the
communities around thedams and reservoirs created by JIRAMA.
(ii) Assess the nature, scope and quality of water and
sanitation facilities provided for the most vulnerableof these
communities.
(iii) Carry out sampling and analyses of water in the lakes,
rivers, reservoirs used by JIRAMA for physico-chemical and
microbial parameters.
(iv) Formulate a management plan centered around- Settlements
around the reservoirs
- Water and sanitation facilities for communities around the
reservoirs- An awareness program or health practices
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(v) For the thermal power stations to evaluate the level of
atmospheric pollution from emissions and theircontribution to
- Acidification
- Eutrophication
- Depletion of the ozone layer or the green house effect
(vi) Assess the efficiency of the health and safety measures in
place in a representative sample of theElectricity Generating
facilities, transformers and transmission facilities.
7.2.2 Water
JIRAMA operates a total of 66 water extraction facilities
throughout Madagascar. Extraction is either fromboreloles, rivers
and lakes.
In all cases, the water is treated and subjected to
physico-chemical and micro-biological analyses by both
theenterprise and Institut Pasteur. Standards responding to WIO
nomer are maintained.
The Consultant found that(i) Certain chemical standards could
not be met as for example from boreholes and in particular iron
and
calcium contents.(ii) Daily sampling is carried out but the
analyses lag behind due to transfers to the laboratory in
TANA.(iii) Only two(2) portable test kits are available for the
seven regional centers outside TANA
RECOMMENDATION (Water)
(i) All the regional centers should be supplied with portable
physico-chemical and microbial test kits
(ii) A training program for middle-level personnel on water
quality analysis should be carried out using alocal Consultant
TOTAL COST FOR BOTH £US35,000
ENVIRONMENTAL MANAGEMENT
Whist the water sector of JIRAMA is following a fairly rigorous
water quality monitoring program, the healthrelated impacts of the
dams and reservoirs have not been evaluated.
As regards capacity, JIRAMA has the capacity, in liaison with
Institut Pasteur to monitor all potential impactsarising from its
operations.
OVERALL RECOMMENDATION
The Audit Index factor assigned to JIRAMA is 214 and therefore a
full audit is required.
The terms of reference for this audit will de derived from the
recommendations specified for each of the sub-sectors.
COST OF AUDIT
The team for the audit should comprise:
- One (I) environmentalist for two (2) months $US 60,000
- One (1) clinical physician for two(2)months SUS 60,000- One
(1) microbiologist for six(6) weeks $US 45,000
- Transportation $US 5,000
- TOTAL FULL AUDIT SUS 170,000
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7.3 THE AIRPORT OF MADAGASCAR (ADEMA)
Background information
It need be borne in mind that ADEMA operates only 12 out of 51
airports in Madagascar, of which themain airport is at
Antananarivo.
The airport of TANA, like any international airport is composed
of:
- The runways
- Aircraft parking bays
- Aircraft maintenance bays (restricted
- Passengers and freight terminals
- Airport service areas such as taxi and cars parks
- Pre-audit findings
(i) Noise:
(a) it was found that the noise levels tolerated for the Air
Madagascar Boeing 737 fleetwere not acceptable in European
airports.
(b) noise level tests are in effect carried out on the basis of
destinations to conform to thestandards imposed.
(c) for Madagascar, the noise level did not seem to matter or
was acceptable probably foreconomic reasons.
(d) Ground crews were provided with ear sound mufflers.(ii)
Emission:
(a) emission levels were determnined for different types of
aircraft and in relation to theirdestinations again to conform to
standards set.
(b) for in coming flights no standards have been set so far.
(iii) Solid waste disposal:
All solid waste is collected by the airport cleansing services
from waste bins for disposal at a privatelyowned waste dump
(iv) Liquid waste:
Sewage, used water and storm water are all collected in a
treatment plant before being pumped to thesurrounding rice fields.
The sludge is used as fertiliser in the same fields.
The team could not access the aircraft maintenance workshop to
assess issues related to oil andlubrifiant spills.
For the 12 secondary airports the major problem was resettlement
of the riparian population orencroachment into the airports
designated precincts.
The Consultants were informed that the airports are now being
enclosed to halt the trend.
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The noise and emission levels are less intense. Solid waste is
incinerated in bins.
A- Recommendations
(i) Noise and emission levels
The partial audit recommended should review the levels with the
airports authority and ONE anddetermine the economic and financial
impacts of imposing specific standards of noise and
emissionlevels.
(ii) the partial audit should review the efficiency of the solid
and liquid waste disposal techniquesalready in place.
(iii) a cursory visit to the aircraft maintenance workshop to
access waste oil/fuel / lubrifiantmanagement practices will be
required.
(iv) a visit to one or two representative secondary airports
will be required
(v) An assessment of stornwater drainage from the runways should
be carried out for therepresentative airports visited
(vi) An evaluation of the sewage and used water disposal systems
must be carried out.
D- Decommissioning
The partial audit should identify the necessity for
decommissioning of any plant andequipment belonging to ADEMA
E- Cost of partial audit
(i) (ONE) National environmentalist or environmental engineer
for two (2) weeks (includingtransportation and reporting at $
200/day , $ 2800).
F- Environmental Management - Capacity Building
For the environmental issues to be addressed the partial audit
should assess whether:
In house management and capacity building is necessary as
opposed to- Sub-contracting the monitoring of the noise / emission
levels, waste disposal especially where
ONE specifies standards.
7.3 COTTON INDUSTRY (HASYMA)
A- Background information
HASYMA operates five (5) ginneries at the moment with three (3)
in the north of the country (Port-Berger, Mahajanga and Ambilobe)
and two in the south (Ambahikily and Tulear). Two others(Morondava
and Belobaka) were closed for lack of cotton.
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The Technical Directorate in Tana manages the operations of
HASYMA with the assistance of thefactory managers.
The production stands at 35,000 tons per annum.
B- Ginneries
The flow chart shown below typifies the processes from entry of
the cotton to the outputs.
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FIGI - FLOW - CHART FOR GINNERY
cotton grain input
X; | Cotton grain (100%)
1. telescope aspiration
2. Rock Catcher Po rocks + heavy solid waste
Dust + Volatiles
3. Separaty -* air ventilation Dustaspiration chamber Dust +
Waste
4. Cleaner lo Waste
5. Distribution conveyor
6. Feeder} Waste}7. Ginner} Waste I Waist conveyor 1 Dust
Ventilator
Fibre
8. Super jet (Air)
4 Graine9. Line flue Grain conveyor
10. Condenser press
11. Lint slide Hydraulic press Grain bagging
12. Pounder presse
Fibre bales
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C- Pre-audit findings
The Consultants found that
(i) the cotton ginnery produced
(a) Solid non toxic waste in the form of rocks or stones
collected during harvesting ofthe cotton and were used in
landscaping.
(b) Dust containing thin cotton fibres which were volatile or
solid. These were allcontainerised and condensed and subsequently
sold or incinerated.
The consultants concluded that for the ginneries, there were no
discernible negative impacts on theenvironment.
(ii) the main source of concern was the use of fertilisers and
pesticides whose residues foundthemselves in run-off water from the
cotton fields into the natural drainage systems in thevicinity of
the ginneries the consultants recognised the predicament of HASYMA
on the needto
(a) conserve the fertility of the soils to maintain their
production or to expand it(b) protect the cotton crop form virulent
parasites endemic to cotton production
D- Recommendations
The consultants therefore found that only a partial Audit of a
short duration was required forHASYMA. The partial Audit
should:
(i) confirm the waste (dust, volatiles) disposal techniques
presently in use i.e. condensation, saleand incineration of the
materials
(ii) undertake sampling of the run-off water from the cotton
fields for chemical content especiallypesticides(a) in the soils on
the farms and the catchment area as well as in the groundwater
and(b) to test for pesticide pollution of surface waters where
run-off discharges are to rivers,
streams or lakes.
(iii) Environmental management plan
Due to the scope of the potential impacts of the farms
especially their possible expansion. It isincumbent not only on
HASYMA but also on ONE to:
(a) monitor the land use patterns for cotton cultivation
(b) monitor fertiliser and pesticide use for the effects of
residues in run-off wateron land and the acquifers. The need for
HASYMA to build up capacity forthis is not evident. The committees
set up by ONE should be provided withthe tools to carry out these
exercises. The partial audit should thereforeformulate the
mechanism for implementing this approach.
E- Cost estimates
Based on one Consultant (National) an Environmentalist for 30
days at $US250 (includingtransportation chemical analysis, etc) $US
7500
N.B: This must be carried out before the end of or during this
coming rainy reason.
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7.4 TELMA (TELECOM MALAGASY)
A- Background information
TELMA took over the network from the government of Madagascar in
1995 with a managementcontract
The contract called for increasing numerisation of the network
from the analogue system then existingand this over a three-year
period to 1998.
The numeric system is centred around a unique national transit
point in Antananarivo equipped withan ALCATEL OCB system. This
system, apart from its functions as a local commutator also
assumesthe role of a national and international transit link.
Table I shows the status of the network as of august 2000 with
analogue systems largely in the north-east and southern parts of
the country.
TELMA has ceased to execute any more development or up grading
of the network on the
premise that any such development / expansion should be
undertaken by the acquirers ofTELMA.
B- Pre-audit findings
(i) There were no environmental impacts discernible by the
Consultants
The analogue equipment were essentially all cannibalised some
stations with their relatedelectromagnetic equipment are however
still in place as for example at Di6go where the analoguesystem is
at the top of the hill in remote surroundings with the numeric
station at button of the hill.
The only concern therefore is that these stations are in their
rural setting simply.
EYESORES
Environmental Management Plan
It is not relevant for this enterprise, as the ONE Charter now
requires any expansion program to bescrutinised by them prior to
approval.
(ii) Capacity Building and training
Again, the Consultants found it unnecessary to build any
in-house capacity for environmentalmanagement.
It is more cost-effective to call on Consultants to undertake
the requisite environmental analyses /assessment for future
expansion programs.
RECOMMENDATIONS
(i) A small scale short duration partial audit purely
(a) To identify the locations of obsolete equipment not in
use
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(b) To determine the where about of cannibalised analogue
equipment and to specify thenature of the remnants and propose
disposal techniques for these.
(c) In the case of (a) above, determine the need for
decommissioning bearing in mind thefinancial costs.
(ii) Prepare a decommissioning plan where necessary
D- Cost of audit
Based on one (1) local Consultant for 30 days $US 250/day
include of travel, $US 7500.
8. DECOMMISSIONING PLANS:
During the assessment it was observed that all the enterprises
that needed comprehensiveaudits to be undertaken also needed
decommissioning plans to dismantle, remove, andtransport to safe
disposal sites obsolete plants and equipment. The decommissioning
must beconducted separately from the environmental audits, and must
adhere to the World Bankregulations that demand a decommissioning
plan (DP) with a full environmental assessmentand properly carried
out cost estimates.
9. STATUTORY FRAMEWORK:
The Charter for the management and control of the environment
was enacted in 1990.
Enabling legislation in the form of decrees were promulgated for
the application of the provisions ofthe charter.
The Office National de l'Environment (ONE) was charged with the
responsibility of enforcement.
Broadly the charter and the enabling legislation confers on the
ONE the powers and obligationto recommend to their titular Minister
not to grant approval for execution of any project that
isirreversibly detrimental to the environment.In effect, every
project in Madagascar must now be submitted to the ONE for
approval.
The Consultants found that the procedures used by the ONE are
exactly as those stipulated in theworld bank operational policy
document OP.401 of September 1998.
Every project submitted is subjected to:
(a) Screening to determine the extent and type of EA required or
not. The project is classified orcategorised based on type,
location, sensitivity and scale and the nature and magnitude
ofpotential environmental impacts identified.
(b) An environmental impact analysis or assessment is then
carried out either by the project promoteror ONE.
(c) Where necessary, public consultations of interested or
affected groups and other stakeholders are
carried out.
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(d) Where the project is approved or licensed,
management/monitoring protocols are entered into toensure
compliance by the project sponsor of guidelines and standards
specified by ONE.
The Consultants also found that the ONE has extended
environmental management practices to theprovinces by setting up
committees composed of community representatives, NGOS and
appropriateagents of decentralised services. The Consultants were
impressed by the statutory framework in place.They noted however
that
(i) the ONE lacks the capacity to fulfil all its
obligations.
(ii) it does not possess the logistics and equipment for a
sustained monitoring and enforcementprogram.
(iii) a vigorous awareness program is still at its infancy.
(iv) it needs to decentralise its inspectorate services as soon
as possible and to formulateguidelines and standards for all
sectors of the economy.
RECOMMENDATIONS
Capacity Building and Training
(i) Human Resources Training and awareness programsIt was agreed
that ONE will furnish the Consultant the planned capacity building
program and trainingneeds envisaged. This was however not done.
This should be done during one of the audit exercises.
However, from past experiences of the Consultant, the Bank and
the PU may be required to assist inthe Capacity Building exercise
over at least the first three years. Given the need to ensure
propersequencing of the environmental audits and the closure of the
privatization transaction, it is proposedthat an international
environmental expert be placed at the PU to supervise environmental
auditscarried out by consulting firms. The international
environmental expert will provide quality controland ensure the
delivery of these audits in due time prior to the closure of the
privatization transaction.He will be responsible for coaching and
training in the field one local expert at the PU. A liaison
agentwill be trained at the ONE to monitor compliance to
environmental guidelines. Tentative proposals aretherefore as
follows
(a) International Expert for 2 years @$US 120,000/yr $US
240,000
(b) Liaison agent at the ONE: $US 48,000
(c) Training $US 100,000
(d) Awareness Programs (all levels), $US 84,000
(ii) Logistics and monitoring equipment $US 150,000.(iii)
Formulation of guidelines and standards $US 50,000
(iv) Grand total $US 672,000
9.1 Legal Framework on Liabilities
The privatization Unit must work closely with the National
Environment Office (ONE) toascertain who assumes the
responsibilities for the environment liabilities at the PEs.
Forinstance, do the liabilities fall on the new owners or on the
formner owners? It appears the lawsof Madagascar are silent on
these issues, and hence ONE is required to determine theappropriate
law(s) covering environmental liabilities with respect to:
privatization policy, duediligence, and indemnification, so that
there would be a clear understanding of who is liablefor
contamination, both past, current and in the future, i.e. during
and after divestiture.
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9.2 Monitoring Protocols
There were lack of standards for monitoring environmental
parameter, for instance, formeasuring water quality and air quality
for Madagascar. Therefore, the individual PEs havebeen conducting
self monitoring using standards that were not consistent. The
National
Environment Secretariat (ONE) must be responsible for
determining and preparing guidelinesand environmental performance
indicators that are measurable for monitoring sites andfacilities
of the PEs. The performance indicators can serve as the instrument
for responding toany potential environmental hazard that may occur
as a result of activities by the enterprises.
Furthermore. ONE must set up a monitoring and accountability
protocol that would requireeither monthly, quarterly or yearly
reporting from the PEs with respect to addressingsignificant
mitigation measures and meeting the environmental management
challenges of theenterprises.
9.3 Environmental Guidelines and Requirement:
The privatization Unit was not in a position to prepare
guidelines for determiningenvironmental requirements for the future
privatization candidates. The exercise should becarried out by the
National Environment Office, working closely with the privatization
Unitand local consultants. At best, the terms of reference (TORs)
could be prepared by theprivatization Unit for the procurement of
services requiring environmental demands within
theprivatization.
9.4 Training and capacity Building:
A «
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financing of key remedial and mitigation measures will be
determined separately in each auditas appropriate.
During the conduct of the full audits, the cost evaluations
would include estimates of capitaland operating expenses associated
with remedial actions along with an implementationschedule. If at
all possible the cost data on operation and maintenance (O&M)
and otherrecurrent costs should be made available during the full
audits. It may be difficult to separateoperating and recurrent
costs from capital costs during the audits. However, it is
important toobtain the information to make meaningful cost
comparisons between simplified systems andother alternatives.
11. RECOMMENDATION
1.Based on the environmental pre-audit conducted in Madagascar,
it is recommended thatcomprehensive (full) audits be undertaken for
the eight enterprises. The prioritized list beingindicated in a
reducing order as follows:
* SIRAMA* JIRAMA
Partial audit must be carried out for ADEMA; HASYMA and
TELMA.
2. Decommissioning Plans: During the pre-audit it was observed
some of the enterpriseswould require some form of decommissioning
of old equipment and materials. Someof the equipment
comprises:cranes, old plants, clarifiers, control panels, and
batteries.It is recommended that undertaking actual decommissioning
plans for each site mustbe evaluated and the costs be determined
during the comprehensive audits.
3. Legal Framework and Contingent Liabilities: The Ministry of
Environment,through the National Environment Office must be
strengthened to ascertain whoassumes the responsibilities for
environmental liabilities at the enterprises. The ONE,working
closely with the privatization Unit and other appropriate and
relevantgovernment agencies, must determine whether the liabilities
fall on the new owners oron former owners at the time of
divestiture.
4. Guidelines and Environment Performance Indicators: The
National EnvironmentSecretariat ONE must be responsible for
determining and preparing guidelines andenvironmental performance
indicators which are measurable for monitoring sites andfacilities
of the enterprises being privatized, or have already been
privatized. Theguidelines, prepared in collaboration with the
Privatization Unit, should enable the PUto determine the
environmental requirements of future privatization candidates.
The cost for developing the guidelines and monitoring protocols
has been estimated at fiftythousand dollars (US$50,000.00). It is
recommended that the allocated amount must be givento ONE who may
retain local environmental consultants to provide the technical
assistance.
Furthermore, it is recommended that the ONE must set up a
monitoring and accountabilityprotocol that would require either
monthly, quarterly or annual reports with respect toaddressing
significant mitigation measures and meeting the environmental
managementdemands due to the activities and operations of the
enterprises. The monitoring protocolwould require working in
partnership with the leading agencies, such as the National
WaterBoards, non-governmental organizations, and government
institutions.
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5. Training: It is recommended that the National Environment
Office (ONE), workingclosely with the Privatization Unit, should
participate effectively in providing training for thesenior
management of all the enterprises by providing programs
inenvironment. The training could consist of workshops or seminars,
with the initial trainingprovided by a qualified local
environmental management firm supported by
internationalconsultants. The training should be part of the
environmental audits for the privatizationprocesses. The cost for
providing the training has been estimated at eighty four
thousandsdollars (US$84,000.00).
5. Environmental Management Systems/Plans: Some enterprise must
have on itspremise a senior Official responsible for environmental
management activities, andliaise with the ONE on environmental laws
and regulations pertaining to the activitiesof the enterprise and
participate in training and be part of the capacity building
forenviromnental management. The senior official must coordinate
and support thedevelopment of contingency plans that link
city/urban contingency plans with that ofthe enterprise.
Furthermore, it is recommended that some of the enterprises
develop and incorporateenvironmental management systems plans
(EMS/P) into its management structure. TheEMS/P must include
elements such as:
* Execution of environmental monitoring programs for the
enterprises;* Knowledge and compliance with applicable
environmental laws and regulations;* Conduct occasional drills to
alert the staff and workers on how to react and operate
in cases of emergencies;* Conduct training and awareness
programs as part of good management practices
while promoting capacity building within the enterprises;*
Develop the capacity to execute coherent sampling and monitoring
programs as
part of remedition plans; and* Carry out medical monitoring,
while including HIV/AIDS awareness programs.
6. Consultations
Consultations were carried out using:(i) Radio/Television
announcements(ii) Public discussions as far as environmental
impacts are concerned.The outcome of these discussions were
positive clearly stating the need:
(a) To clean up area where pollution is evident, in particular
solid waste such asbagasse.
(b) To ensure that liquid waste is treated to acceptable
standards/normes.(c) With particular reference to NOSY-BE, to
determine impacts on groaned
waters.
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LIST OF ACRONYMS USED
ONE Office National pour l'Environment
PU Privatization Unit
HASYMA Cotton Madagascar
TELMA Telecom Madagascar
ADEMA Airports of Madagascar
SIRAMA Sugar of Madagascar
PE Public Enterprises
SCT Technical Secretariate for Privatization
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JIRAMA Water and Electricity of Madagascar
LIST OF PEOPLE ENCOUNTERED
1. TECHNICAL SECRETARIAT FOR PRIVATISATION
- Mr. Norbert RAZANAKOTO, Technical Secretary
- Mr. Erick RAJAONARY, Financial Expert
- Mr. Paul TOMBOZAFY, responsible for Operations
2. WORLD BANK
- Ms Marie-Ange SARAKA-YAO, Task Team Leader
- Mr. RAJAOSON Bienvenue, Environmental advise
3. NATIONAL OFFICE FOR THE ENVIRONMENT
- Mr. Henri RAKOTOBE, Director - Department for Environment
Policy
- Mr. Paul ANDRIANAVOMAHEFA, Chief cellule MECIE
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4. HASYMA (COTTON INDUSTRY)
- Mr. Henri RAKOTOFIRINGA, Director of Production
- Mr. Dimbiarinaivo RALIJAONA, Financial Director
5. TELMA (TELECOM MALAGASY)
- Mr. Jean Andriamaro RAKOTOMALALA, Deputy Chief Executive
6. ADEMA (AEROPORTS DE MADAGASCAR)
- Mr. Herison ANDRIAMIHAFY, Director General
7. SIRAMA (SUGAR INDUSTRY)
- Mr. Fran,ois Xavier SOAVELO, Adviser to the Director
General
- Mr. Maurice NDIAMANANA, Director Technical Department
- Mr. Andre RAZAFIMAMONJY, Former Director - Nosy Be
- Mr. Simon RANDRIANANTOANDRO, Agronomy Co-ordinator