World Bank Safeguard Diagnostic Review: South African

World Bank

Safeguard Diagnostic Review:

South African Environmental and

Social Systems

Pretoria

December 10, 2009

World Bank Environmental and

Social Safeguards

“Environmental and Social Safeguards” are Board-mandated Operational Policies that the World Bank applies to all of its investment operations in borrower countries.

The World Bank applies up to ten Safeguard Policies to its support of investment projects.

However, in certain circumstances the WB can use country/borrower systems in lieu of corresponding World Bank safeguard policies: “Use of Country Systems” (UCS).

Under UCS, the Bank assesses and approves the environmental and social impacts of the project in terms of the country or borrower’s own policies and legal requirements.

World Bank Safeguard Policies

Environmental Assessment

Natural Habitats

Forests

Pest Management

Physical Cultural Resources

Safety of Dams

Involuntary Resettlement

Indigenous Peoples

Projects on International Waterways

Projects in Disputed Areas

Rationale for Selection

of South Africa for UCSSouth Africa’s environmental laws and policies are widely recognized as world class and as constituting the state-of-the art in Africa.

Use of Country Systems provides a vehicle to build on the strengths of South Africa’s environmental safeguard systems while identifying measures to further enhance national and corporate environmental and social systems.

Precedent: UCS is being used in South Africa for the “Development, Empowerment and Conservation in the iSimangaliso Wetland Park and Surrounding Region Project,” recently approved by the Bank for funding by the Global Environment Facility.

iSimangaliso SDR

• Formerly known as St. Lucia Wetland Park, KwaZulu-Natal

• Grant financed by Global Environment Facility (UNDP, UNEP, World Bank)

• Project administered by iSimangaliso Wetland Park Authority

(“the Authority”) in coordination with Department of Environment

• Applicable WB safeguards: Environmental Assessment (EA), Natural Habitats (NH), Physical Cultural Resources (PCR) managed under country systems as applicable to the Authority

• Involuntary Resettlement managed under WB OP 4.12

• Project approved by WB Board December 1, 2009

World Bank Operational Policy 4.00

Authorizes the use of a borrower’s safeguard systems in place of the corresponding Bank safeguard when a “Safeguard Diagnostic Review” (SDR) indicates that:

1) The borrower’s legal and regulatory systems are “equivalent” to Bank’s corresponding safeguards;

2) The borrower has demonstrated an “acceptable” level of implementation with respect to its own safeguard systems; and

3) The Bank and borrower have reached a time-bound agreement (Action Plan) to “fill gaps” in equivalence and acceptability prior to or during project implementation.

World Bank Use of Country Systems

Portfolio (2006-2009)

Bhutan (2 projects)*

Botswana

Brazil (2 projects)

Croatia

Egypt*

Ghana*

India*

Jamaica*

*Approved by the Board

Lao PDR

Mauritius

Morocco

Philippines

Romania* (2 projects)

South Africa*

Tunisia (3 projects)*

Equivalence Analysis: Methodology

Builds on SDR for iSimangaliso project;

Identify relevant Bank safeguard policies;

Inventory and analysis of policies, laws, regulations and mandatory guidance relevant to power sector and associated impacts;

Interviews with government, Eskom and other stakeholders;

Preparation of Equivalence Matrix comparing South African requirements with corresponding objectives and operational principles of OP 4.00 Table A1.

Relevant World Bank Safeguard Polices and

Corresponding South African Legal Framework

World Bank South Africa

Environmental Assessment National Environmental Management Act of 1998,

as amendedNEMA EIA Regulations, 2006

Natural Habitats Environmental Conservation Act of 1989, as amended

NEMA Biodiversity ActNEMA Protected Areas Act

Physical Cultural Resources National Heritage Resources Act of 1999

Involuntary Resettlement Expropriation Act of 1975, as amended, and other land-related laws and regulations

South African Legal Framework:

Environmental and Social Impacts

The Constitution (Sections 24, 25 & 108) and International Conventions ratified by South Africa (e.g. Biodiversity, Ramsar Conventions)

Environmental Assessment:

National Environmental Management Act (NEMA) 1998 as amended to date; including the Environmental Impact Assessment Regulations, 2006

Promotion of Access to Information Act, 2000

NEMA, Air Quality Act, 2004

National Water Act, 1998

NEMA, Waste Act, 2008

Occupational Health and Safety Act, 1993

South African Legal Framework: Environmental

and Social Impacts (continued)

Natural Habitats

NEMA: Protected Areas Act, 2003

NEMA: Biodiversity Act, 2004


National Heritage Resources Act, 1999


Expropriation Act, 1975, as amended to date

Housing Act, 1997

Extension of Security of Tenure Act (ESTA), 1997

Land and Assistance Act, 1993

Land Reform (Labor Tenants) Act, 1998

Restitution of Land Rights Act, 1994

Equivalence Findings: Summary

The objectives of South Africa’s legal system are

equivalent to the Objectives of OP 4.00 Table A1 with respect to Environmental Assessment, Natural Habitats and Physical Cultural Resources.

The specific provisions of South Africa’s legal system

are broadly consistent with the Operational Principles of OP 4.00 Table A1.

Minor ambiguities are addressed by Eskom, or remain to be addressed through analysis, consultation and operational guidelines without recourse to legislative or regulatory changes.

Equivalence: Issues for Which

We Seek Clarification

Environmental Assessment:

Level of evaluation applied to:

• Parameters included in assessment of alternatives;

• Consideration of cumulative impacts;

• Trans-boundary impacts; and

Natural Habitats:

Lack of requirements for conservation offsets for conversion/degradation of non-critical habitat; and

Requirements for public disclosure and consultation provisions for actions affecting natural habitats.

Equivalence: Issues for Which

We Seek Clarification

Physical Cultural Resources:Provisions for community participation and proponent obligations in identifying, assessing and protection of PCR is not clearly defined; and

How does the legal framework deal with “chance finds” ?

Involuntary Resettlement:Obligation to disclose the resettlement instrument and consult with affected persons;

Obligation to compensate affected persons before Project implementation;

Other differences observed in the national legal framework do not apply to the proposed EISP (Restriction of access to natural resources in legally protected national parks and protected areas).

Eskom Investment Support Project

US$ 3.75 billion loan under preparation by the World Bank

Objectives:

1. Enable Eskom to enhance energy supply security in an efficient and sustainable manner;

2. To support both economic growth objectives and South Africa’s long-term carbon mitigation strategy.

EISP Components

Component I: Medupi coal-fired power station (4,800 MW with super-critical technology);

Component II: Investments in renewable energy:

- 100 MW SERE wind farm located in Western

Cape (west coast); and

- +/-100 MW Upington Concentrated Solar

Power (CSP)

EISP Components

Component III: Low-carbon energy efficiency components:

- Technical assistance program for

improving supply-side efficiencies;

and

- Majuba road to rail coal transportation

Acceptability Assessment: Methodology

Institutional Capacity: Interviews with Eskom, decision-making authorities and other stakeholders;

Procedures: Review of Environmental Assessment and Land Valuation and Compensation processes and procedures;

Outputs: Qualitative review of Environmental Impact Reports, Scoping Studies for land acquisition and social impacts, Records of Decision, Environmental Management Plans; and

Outcomes: Site visits to representative Eskom projects to determine compliance with South African environmental and social legal and regulatory requirements.

Acceptability Findings: Institutional

Capacity of Government Agencies

Ministry of Water and Environmental Affairs (MWEA) is a Cabinet level agency with lead responsibility for environmental protection and water management.

Within the MWEA, the Department of Environmental Affairs has world class expertise in environmental assessment, air and water quality control and biodiversity conservation.

Department of Water Affairs is recognized worldwide for its outstanding expertise in the management of water resources.

South African Heritage Resources Agency is the UNESCO-recognized authority on cultural heritage in South Africa.

Acceptability Findings:

Institutional Capacity of Eskom

Environmental and social governance is the responsibility of Eskom Board and Chief Executive, and Board-level Executive Management Sub-Committee on Sustainability and Safety;

Each line division responsible for EIAs with overall Holdings coordination;

More than 100 environmental and social specialists;

Internationally recognized consultants conduct EIAs, specialist studies and land valuations; and

Independent audits of environmental management systems.

Processes and Procedures:

Environmental Assessment

EIA process introduced in 1980’s, formalized in EIA regulations 1997 under ECA;

Strongly participative and highly transparent;

Updated in 2006 to align with NEMA; and

Further amendments awaiting promulgation based on “Review of Effectiveness and Efficiency of EIA System in South Africa” (2008).

Conclusion: A comprehensive system based on the principle of continuous improvement in both process and outcomes.

Comparison of South Africa’s Proposed

Regulatory Standards and World Bank

Guidelines

South Africa’s Interim Ambient Air Quality Standards (Schedule 2 of Air Quality Act, 2004) are consistent with World Bank ambient air quality guidelines per World Bank Group General Environment, Health and Safety Guidelines (EHSG, April 2007) and WHO.

South Africa’s proposed maximum emissions limits for new and existing coal-fired thermal power plants (Draft Schedule for Section 21 of AQA, February 2008) are comparable to WBG EHSGs for Thermal Power Plants (December 2008) and 1998 Pollution Prevention and Abatement Handbook Industry Guidelines for New Thermal Power Plants, respectively.

Processes and Procedures:

Environmental Management, Compliance

and Enforcement

Permitting follows EIA approval: e.g. Atmospheric Emissions License for power plant;

Regulations are not self-enforcing, subject to appointment of Environmental Control Officers and reporting to authorities; and

Non-compliance subject to Criminal Procedures Act.

Review of EA and Land Acquisition

Processes

Focused on EISP components:Medupi Thermal Power Plant: 4800 MW, coal-fired, Lephalale, Limpopo ProvinceOther EISP components (wind, concentrated solar)

Environmental Impact Reports and Management Plans consistent with applicable 1997 EIA Regulations and reflected principles of then-pending 2006 EIA Regulations as well as best practice per South African guidelines on Integrated Environmental Management;Independent review (SE Solutions) found EIRs consistent with the requirements of Equator Principles subscribed by major international financial institutions, based on Performance Standards of the International Finance Corporation (World Bank, 2006).

Records of Decision

(now Environmental Authorizations)

Robust, independent review of EIR findings and recommendations;

Permit conditions tied to legal framework and reflected detailed knowledge of site-specific conditions;

Adequate provision for appeal by stakeholders; and

Responsive consideration of substantive issues raised

in appeal process.

Compliance with South African Legal and

Regulatory Requirements

Medupi will comply with proposed emissions standards for “existing plants” under AQA as stipulated in National Framework for Air Quality (which reasonably defines “existing plants” as having EIA applications filed more than 12 months prior to effective date of proposed emissions standards).

Management of land acquisition impacts consistent with legal framework:

Avoidance of land expropriation whenever feasible;Displacement only after consultation, compensation and livelihood restoration;Replacement housing based on South African Bureau of Standards requirements; andCash compensation based on independent valuation.

Eskom Corporate Management Systems

Eskom has demonstrated corporate commitment through:

Fulfilling and going “beyond compliance” with legal and regulatory requirements by embracing a sustainability policy at corporate and project levels;Signing on to the UN Global Compact; Obtaining ISO 14000 certification for the Environmental Management System (EMS) for parts of its operational units; Aligning its projects and its practices with the requirements of the Equator Principles and annual sustainability reporting with the Global Reporting Initiative (GRI); andImplementing measures to hold itself accountable to stakeholders.

Gap-Filling Measures: Equivalence

Apparent gaps in South African legal framework are addressed through Eskom policy and practice with respect to:

- Alternatives, and assessment in EA (strategic and project

levels);

- Conservation offsets for non-critical habitat

conversion; and

- Reporting of all “chance finds” of cultural resources to SAHRA.

For Involuntary Resettlement, Eskom has developed and issued a publicly disclosed Resettlement Framework document for EISP and future projects.

Gap-Filling Measures: Acceptability

Timely installation of FGD at Medupi based on water availability;

More robust consideration of associated facilities and trans-boundary/regional impacts (joint challenge for Eskom and World Bank);

Development of site-specific Occupational Health and Safety Management Plans for all EISP components; and

Preparation and disclosure of independent audit of resettlement impacts based on agreed Terms of Reference.

Comments and Questions

on the SDR

Please submit comments by January 10,

2010 to:

• [email protected]



mailto:[email protected]



Additional Information

worldbank.org: “Use of Country Systems”

World Bank Operational Policy 4.00, “Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-supported Projects”

Copy of full Draft SDR, September 30, 2009:

http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/11/09/000334955_20091109014817/Rendered/PDF/SR230Box3420341ept0Stage0SDR0110309.pdf






World Bank and Climate Change

Supporting recognition of climate change, both mitigation and adaptation as a development planning priority;

Prepared “Development and Climate Change Strategic Framework”;

Rolling out “Climate Change Strategy for Africa” (Copenhagen, December 2009)

World Bank and Climate Change

Issued World Development Report 2010 on “Development and Climate Change”;

Hosting International Association for Impact Assessment Conference on Climate Change and Environmental Assessment, November 2010;

Supporting a range of climate change and mitigation and adaptation studies and projects.

Relevant WB Safeguard Policies

Environmental Assessment: Help ensure the environmental and social soundness and sustainability of investment projects and support integration of environmental and social aspects of projects into the decision making process.

Natural Habitats: Promote environmentally sustainable development by supporting the protection, conservation, maintenance, and rehabilitation of natural habitats and their functions.

Relevant WB Safeguard Policies

(continued)

Physical Cultural Resources: Assist in preserving physical cultural resources and avoiding their destruction or damage. PCR includes resources of archaeological, paleontological, historical, architectural, religious (including graveyards and burial sites), aesthetic, or other cultural significance

Involuntary Resettlement: Avoid or minimize involuntary resettlement and, where this is not feasible, to assist displaced persons in improving or at least restoring their livelihoods and standards of living in real terms relative to pre-displacement levels or to levels prevailing prior to the beginning of project implementation, whichever is higher

Projects on International Waterways (not included under OP 4.00)

Corresponding South African Legal and

Regulatory Framework

National Environmental Management Act (NEMA) 1998 as amended to date

Environmental Conservation Act (ECA) 1989 as amended to date

Provides for co-operative environmental governance by establishing principles for decision-making on matters affecting the environment, [….] and …[for] certain aspects of the administration and enforcement of other environmental management laws.

Governs the protection of ecological processes, natural systems and …..as well as the preservation of biotic diversity in the natural environment;…..the promotion of sustainable utilization of species and ecosystems and the effective application and reuse of natural resources ; the protection of the environment against disturbance,.

South African Legal Framework:

Social Impacts

Constitution (1996): Section 108

Expropriation Act, 1975, as amended to date

Housing Act, 107 of 1997

Extension of Security of Tenure Act (ESTA), 1997

Land and Assistance Act, 1993

Land Reform (Labor Tenants) Act 30 of 1998

Restitution of Land Rights Act 22 of 1994

Equivalence Findings: Summary

The objectives of South Africa’s legal system are fully

equivalent to the Objectives of OP 4.00 Table A1 with respect to Environmental Assessment, Natural Habitats and Physical Cultural Resources.

The specific provisions of South Africa’s legal system

are nearly fully consistent with the Operational Principles of OP 4.00 Table A1.

Minor ambiguities remain to be addressed through analysis, consultation and operational guidelines without recourse to legislative change

Equivalence Findings:

Environmental AssessmentSouth Africa’s EA legal system is fully equivalent to the Bank’s

requirements under OP 4.00 with respect to:

Objectives

Screening

Impact Assessment

Reference to applicable legal framework and international agreements

Assessment of feasible alternatives including “no action” alternative (?)

Environmental Management Planning

Stakeholder consultation

Use of independent expertise

Linkage of EA to environmental and social impacts

Application to project components

Public Disclosure of draft Environmental Assessment

Equivalence Findings: Natural Habitat

South Africa’s EA legal system is fully equivalent to the Bank’s requirements under OP 4.00 with respect to:

Objectives of OP 4.00Precautionary approachAvoid significant conversion or degradation of “critical habitats”Impact non-critical habitats only if viable alternatives are not available and with appropriate conservation and mitigation measures, including offsetsGive preference to sitting projects on lands already convertedConsult key stakeholders including NGOs and local communities in design, implementation, monitoring and evaluation of projectsProvide for use of appropriate expertise for design and implementation of mitigation and monitoring plans Disclose draft mitigation plan prior to appraisal in an accessible place, form and language accessible to stakeholders.




Objectives of OP 4.00Analyze feasible alternatives to prevent, minimize or compensate for adverse impacts on PCR and enhance positive impacts through site selection and designAvoid, if possible, projects that significantly damage PCR based on field-surveys using qualified specialistsConsult local people in documenting presence and significance of PCR….and designing and implementing mitigation plans


Physical Cultural Resources (continued)

South Africa’s EA legal system is fully equivalent to the Bank’s requirements under OP 4.00 with respect to:Provision of chance find procedures including a pre-approved management and conservation approach for materials that may be discovered during project implementationDefine and strengthen measures to strengthen institutional capacity to implement mitigationDisclose draft mitigation plans, in a timely manner…in an accessible place, form and language understandable to key stakeholders




Assessment of all viable alternative project designs to avoid, where feasible, or minimize involuntary resettlement.

Implement census and socio-economic surveys of the affected population;

Identify and address impacts also if they result from other activities that are (a) directly and significantly related to the proposed project, (b) necessary to achieve its objectives, and (c) carried out or planned to be carried out contemporaneously with the project;

Consult project-affected persons, host communities and local nongovernmental organizations, as appropriate.


Involuntary Resettlement (continued)


Consult project-affected persons, host communities and local nongovernmental organizations, as appropriate.

Inform displaced persons of their rights, consult them on options, and provide them with technically and economically feasible resettlement alternatives and needed assistance;

For those without formal legal rights to lands or claims to such land that could be recognized under the laws of the country, provide resettlement assistance in lieu of compensation for land to help improve or at least restore their livelihoods;

World Bank Safeguard Diagnostic Review: South African

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