RFG297HDRS INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.:AC6919 Date ISDS Prepared/Updated: June 5, 2013 I. BASIC INFORMATION A. Basic Project Data Country: Uganda Project ID: P133318 Additional Project ID (if any): Project Name: Partial Risk Guarantee for Renewable Energy Development Program Task Team Leader: Raihan Elahi Estimated Appraisal Date: September 2, Estimated Board Date: December 3, 2013 2013 Managing Unit: AFTG1 Lending Instrument: PRG Sector: Hydropower (100%) Theme: Rural services and infrastructure (100%) IBRD Amount (US$m.): IDA Amount (US$m.): 40.00 GEF Amount (US$m.): PCF Amount (US$m.): Other financing amounts by source: Environmental Category: B Simplified Processing Simple [ ] Repeater [ ] Is this a transferred project Yes [ ] No [X] B. Project Objectives [from section 2 of PCN]: The Program Development Objective is to increase electricity generation by providing credit risk enhancement to renewable energy based small independent power producers. C. Project Description [from section 3 of PCN]: The proposed Partial Risk Guarantee for the Renewable Energy Development Program (PRG Program) will support private sector investors to develop renewable energy based power plants (herein after referred to as “subprojects�) in Uganda under the approved Renewable Energy Feed in Tariff (REFiT) structure. The REFiT was revised in 2010 by enhancing the Feed in Tariff based on levelized cost of power of different renewable energy technologies; however it did not attract expected investment from the private sector. Preliminary assessment carried out by ERA suggests that current financial performance of the single buyer, the UETCL, does not provide the required level of comfort to the interested investors to commit their capital and raise commercial debt for subprojects where revenue will depend on UETCL’s ability to make regular payments for about 15 years. The proposed PRG Program will enhance the creditworthiness of UETCL by guaranteeing its obligation to the SIPPs under the PPA. To create an enabling environment for private sector investment in renewable energy, the GoU is working with IDA and other development partners to introduce three instruments to enhance the market. These are: (i) IDA PRG Program, (ii) GETFiT Premium Payment, and (iii) Private Renewable Energy Financing Facility. While these instruments will be offered independent of each other, and will be supported by different institutions, they will all work to enhance the renewable energy market development in Uganda. D. Project location and salient physical characteristics relevant to the analysis of environmental and social risks and impacts (if known): Project locations are at specific hydropower generation sites throughout Uganda as follows (subject to revisions during project preparation): Siti Small Hydropower Subproject (5 MW and 16.5 MW): The proposed Siti small hydropower development includes two subsequent weirs and power stations at the Kapchorwa District. Siti 1 Plant will have an installed capacity of 5 MW and an annual output of 25 GWh, while Siti 2 will have a capacity of 16.5 MW and an annual output of 70 GWh. The load factor for Siti 1 is 57% and the load factor for Siti 2 is 48%. Both power plants are run of the river design. The sponsor of this power plant, VS Hydro (Pvt.) Ltd. from Sri Lanka, carried out the feasibility study for this plant. Hydrology: The Siti river originates from Mount Elgon which the feasibility states receives the highest rainfall in Uganda. Hydrology has been studied using three different approaches. The most conservative of the three concludes that the stream dries out 10% of the time. Flow duration curves have been derived and a design flow of 2.6m3/s has been selected for Siti 1 and 4.2m3/s for Siti 2. The value of Siti 2 is on the high side and could likely be reduced by 10%. Subproject Cost Estimate: The sponsors have decided to rely on an EPC contract that will be handled by VS Hydro. The engineering and project management costs reflected in the feasibility study will have to be further reviewed. The subproject cost estimate excluded the cost of constructing transmission line and interconnection facilities. The length of transmission line and the cost needs to be properly assessed to complete the feasibility study. Kakaka Small Hydropower Subproject (5 MW): The proposed Kakaka small hydropower subproject is a run of river project with a 5 MW power station operating under a 195 m head with a 3.6m3/s flow. The annual output is 22.8 GWh. The load factor is 52%. The feasibility study was carried out by VS Hydro (pvt) Ltd. from Sri Lanka who is also proposing construction management and manufacturing of the turbines. Hydrology: Hydrology has been studied with two separate methods and they both concur on an average annual flow of 2.11 m3/s. Subproject Cost Estimate: The sponsors have decided to rely on an EPC contract that will be handled by VS Hydro and Greenewus Energy Africa Limited. The engineering and project management costs reflected in the feasibility study will have to be further reviewed. The sub- project cost estimate excluded the cost of transmission line and interconnection facilities. The length of Transmission line and the cost needs to be properly assessed to complete the feasibility study. Lubila Small Hydropower Subproject (4.5 MW): The proposed Lubilia small hydropower development includes a power station with an installed capacity of 4.5 MW and an annual output of 21.3 GWh. The load factor is 42%. The feasibility study has been conducted by AH Consulting, a Ugandan based regional consulting firm providing consulting services to the private sector, public sector, non-governmental organizations and development agencies. Hydrology: The Lubilia river originates in the high forests of the Rwenzori mountains. There are no data of historical flows on this river, but there is a good correlation with the neighboring Kanyampara River and a considerable database of stream flows exist for neighboring streams. The catchment area is reported to be 42.5 km2with an average annual flow of 1.44m3/s. Further assessment on a number of parameters including catchment yield needs to be carried out before finalizing the subproject design. Kikagati Small Hydropower Subproject (16 MW): The proposed Kikagati small hydropower subproject is a 16 MW power plant. It’s a trans-boundary project where the benefits will be shared between Uganda and Tanzania. The sponsors have advanced the project preparation by concluding the technical, financial and environmental assessments. The sponsor have identified the EPC contractor to construct the plant and at present are negotiating the EPC contract price. The sponsor of this power plant is Tronder Power Ltd. which owns other power plants in Uganda. Nyamwamba Small Hydropower Project (9.2 MW): The proposed Nyamwamba project is situated just outside the Rwenzori Mountains National Park in Kasese district. While the project is on the Nyamwamba River, it lacked hydrological information, and hence the feasibility of the hydropower project was carried out using hydrological information of two parallel rivers next to Nyamwamba. Based on this feasibility report, the sponsors applied for the hydropower generation permit from ERA for a 16 MW power plant. After receiving the permit, the sponsors installed metering gauges on the Nyamwamba River and as per the hydrological information obtained from these metering stations, they revised their feasibility report to a 9.2 MW capacity power plant. The sponsor’s application to revise its generation permit from 16 MW to 9.2 MW is still awaiting ERA’s approval. The sponsors for all the projects have outdated ESIAs and RAPs; they have been requested to update the environment and social documents as per the Performance Standards. E. Borrower’s Institutional Capacity for Effective ESMS: Beneficiaries of the proposed PRG will be private companies (with or without foreign involvement). These are likely to have varied capacity for effective implementation of environmental and social management system (ESMS). Their institutional capacity will be assessed as a part of IDA due diligence and summarized in the Environmental and Social Review Summary (ESRS). The beneficiary companies will operate under the established Ugandan institutional, legal and regulatory framework for environmental and social management. This framework is broadly considered to be consistent with generally accepted global practice, although some procedural aspects and application vary and are affected by limited institutional capacity and political commitment. However, the framework has been applied extensively for large and small hydropower development. F. Environmental and Social Safeguards Specialists on the Team: Martin Fodor, AFTN3 Yasmine Tayyab, AFTCS II. PERFORMANCE STANDARDS THAT MIGHT APPLY Performance Standards (please explain why) Yes No TBD PS 1: Assessment and Management of Environmental X and Social Risks and Impacts PS 2: Labor and Working Conditions X PS 3: Resource Efficiency and Pollution Prevention X PS 4: Community Health, Safety, and Security X PS 5: Land Acquisition and Involuntary Resettlement X PS 6: Biodiversity Conservation and Sustainable X Management of Living Natural Resources PS 7: Indigenous Peoples X PS 8: Cultural Heritage X III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the ESRS would be disclosed and the PAD-stage ISDS would be prepared: An ESRS would be prepared, covering each of the sites, for the Phase 1 sub-projects in August 2013. Phase 1 sub-projects will be selected based on financial, technical, environmental and social considerations after information on candidate sub-projects is provided by the counterparts. B. For Category C or Category FI projects that do not require an ESRS, the target date for preparing the PAD-stage ISDS: Not applicable as project is neither Category C nor FI, and does require ESRS. C. Timeframe for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS: Preparation of safeguard related studies will be determined upon review of the existing environmental and social due diligence work prepared for the sub-projects in the course of preparing the ESRS. Riparian Notification per OP 7.50 – carried out by the Bank IV. APPROVALS Signed and submitted by: Task Team Leader: Raihan Elahi Date: 06/06/13 Approved by: Regional Safeguards Coordinator: Alexandra C. Bezeredi Date: 06/07/13 Comments: Sector Manager: Lucio Monari Date: 06/10/13 Comments: 1 Reminder: The Bank's Access to Information Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.