SR23 Safeguards Diagnostic Review for South Africa Eskom Investment Support Project March 11, 2010 ABBREVIATIONS AND ACRONYMS AEL Atmospheric Emission License IBRD International Bank for Reconstruction APPA Atmospheric Pollution Prevention Act and Development AQA Air Quality Act IFC International Finance Corporation BAR Basic Assessment Report IP&WM Integrated Pollution and Waste BC Biodiversity and Conservation, a branch Management Policy of DEA IR Involuntary Resettlement BID Background Information Document ISDS Integrated Safeguards Data Sheet BP Bank Procedures IWULA Integrated Water Use License CEO Chief Executive Officer JSE SRI Johannesburg Stock Exchange Socially CLN Customer load network Responsible Investment (Index) CO Carbon monoxide Km Kilometer CO2 Carbon dioxide KPI Key Performance Indicators CPA Criminal Procedures Act kV Kilovolt CSIR Council for Scientific and Industrial MCWAP` Mokolo and Crocodile Water Research Augmentation Project CTF Clean Technology Fund MEA Multilateral Environmental Agreements DEA Department of Environmental Affairs MEC Member of the provincial Executive (formerly Department of Environmental Council Affairs and Tourism, DEAT) mg Milligram DEIR Draft Environmental Impact Report MW Megawatt DSR Draft Scoping Report NEMA National Environmental Management DWA Department of Water Affairs (formerly Act Department of Water Affairs and NGO Nongovernmental organization Forestry, DWAF) NH Natural Habitats EA Environmental Assessment NHRA National Heritage Resources Act EAR Environmental Assessment Report Nm3 Normal cubic meters EC Executive Committee (Eskom Holdings NOx, Nitrogen oxides Ltd) OHS Occupational Health and Safety ECA Environmental Conservation Act OHSP Occupational Health and Safety EEMP Eskom Environmental Management Management Plans Programme OP Operational Policy EHSG Environment, Health and Safety PCB Polychlorinated biphenyls Guidelines (World Bank Group) PCR Physical Cultural Resources EIA Environmental Impact Assessment PM Particulate matter EIR Environmental Impact Report PMP Provincial Management Plans EISP Eskom Investment Support Project PPAH Pollution Prevention and Abatement EMC Environmental Monitoring Committee Handbook EMF Environmental Management ppb Parts per billion Framework ROD Record of Decision EMI Environmental Management SAAQIS South African Air Quality Information Inspectorate System EMP Environmental Management Plan SANS South African National Standards EMS Environmental Management System SDR Safeguards Diagnostic Review EQP Environmental Quality and Protection, a SEA Strategic Environmental Assessment Branch of DEA SIA Social Impact Assessment Eskom Eskom Holdings, Limited SO2 Sulfur dioxide ESTA Extension of Security of Tenure Act SR Scoping Report FGD Flue gas desulfurization UCS Use of Country Systems FPM Fine particulate matter VOC Volatile organic compound GEF Global Environmental Facility WBG World Bank Group GoSA Government of South Africa WBR Waterberg Biosphere Reserve GRI Global Reporting Initiative I&APs Interested and Affected Parties ii Table of Contents EXECUTIVE SUMMARY.................................................................................................................. v I. BACKGROUND...................................................................................................................... 1 II. PROJECT DESCRIPTION ..................................................................................................... 2 III. BASIS FOR SELECTING THE PROJECT FOR PILOTING UNDER OP 4.00 ............... 4 IV. METHODOLOGY AND PROCESS FOLLOWED IN DETERMINING EQUIVALENCE AND ACCEPTABILITY .......................................................................... 5 V. SUMMARY OF EQUIVALENCE ANALYSIS ................................................................... 7 A. Environmental Assessment (EA) ................................................................................ 8 B. Natural Habitats (NH) ............................................................................................... 10 C. Physical Cultural Resources (PCR) .......................................................................... 10 D. Involuntary Resettlement .......................................................................................... 10 E. General Conclusion of the Equivalency Analysis ................................................... 11 VI. ACCEPTABILITY ASSESSMENT ..................................................................................... 11 A. Institutional Capacity................................................................................................. 12 1. Eskom Holdings Limited (Eskom)............................................................... 12 2. The Department of Environmental Affairs (DEA) ..................................... 22 3. Department of Water Affairs ........................................................................ 25 4. South African Heritage Resource Agency................................................... 25 B. Processes and Procedures .......................................................................................... 26 1. Environmental Governance .......................................................................... 26 2. Environmental Impact Assessment .............................................................. 27 3. Cumulative Impact Assessment ................................................................... 31 4. Strategic Environmental Assessment (SEA) and Environmental Management Frameworks (EMF) ................................................................ 32 5. Permitting ...................................................................................................... 35 6. Compliance and Enforcement ...................................................................... 36 7. Site-Specific EIA Process ............................................................................. 39 a) Medupi: EIA Process ........................................................................ 41 b) Kusile: EIA Process .......................................................................... 42 c) Overview of the EIA Process ........................................................... 45 8. DEAT Approvals and Associated Conditions ............................................. 47 a) Conditions Applicable to both Medupi and Kusile ........................ 48 b) Site-Specific ROD Conditions ......................................................... 49 c) Medupi Phase 1 Transmission Lines RODs ................................... 55 d) Post-ROD Permitting........................................................................ 56 e) Compliance and Enforcement .......................................................... 56 9. Environmental Management Plans (EMPs) ................................................ 57 a) Medupi: Construction Phase ............................................................ 57 b) Medupi: Operational Phase .............................................................. 58 C. Projected Outcomes: Environmental impacts .......................................................... 59 1. Medupi ........................................................................................................... 61 2. Kusile ............................................................................................................. 65 D. Projected Outcomes: Social Impacts ........................................................................ 67 1. Medupi ........................................................................................................... 67 2. Kusile ............................................................................................................. 67 3. Sere Wind Power Project, CSP Plant Sites, and Majuba Rail Spur Sites .. 68 E. Associated Facilities .................................................................................................. 68 1. Associated Facilities: Medupi ...................................................................... 68 F. Other Safeguards-Related Findings .......................................................................... 71 VII. SUMMARY OF GAPS AND PROPOSED GAP-FILLING MEASURES ....................... 73 Annexes Annex 1. World Bank Operational Policy 4.00 Annex 2. South African Legal Framework Applicable to the Environmental and Social Impacts of the EISP Environmental Framework Annex 3. Equivalence Matrix Annex 4. Comparison of South African Environmental Requirements for Thermal Power Plants and the World Bank Group Environmental Guidelines For Thermal Power Plants Annex 5. Summary of Stakeholder Consultations, Pretoria, December 9-10, 2009 Comments from Participants and World Bank Response References Maps Map 1. Location of EISP Components (IBRD 37164R) Map 2. Detail of Majuba Rail Spur (IBRD 37482) Map 3. Coalfields in the Medupi Area - Botswana and South Africa (IBRD 37658) iv EXECUTIVE SUMMARY 1. Policy Framework. Under Operational Policy/Bank Procedure 4.00 (OP/BP 4.00), Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects, the Bank has had the authority since March 2005 to support pilot projects in which lending operations are prepared using the borrowing country`s systems for environmental and social safeguards, rather than the Bank`s corresponding operational policies and procedures. The advantages of using country systems (UCS) are to: scale up development impact, increase country ownership, build institutional capacity, facilitate donor harmonization in approaches to environmental and social safeguards, and increase cost effectiveness. These objectives with respect to environmental and social safeguards were broadly endorsed at the Paris High Level Forum on Aid Effectiveness in March 2005, and strongly reiterated in the Accra Agenda for Action in September 2008. 2. During the past three years, the World Bank has approved ten pilot projects under the first phase of this program, including recent approval of a pilot project in South Africa. On January 31, 2008, the Executive Directors of the World Bank approved a three-year extension of the pilot program accompanied by an incremental scaling up of the pilots from the project to the country-level, including support of activities at the sub-national level. Under the three-year extension, i.e., the second phase of the pilot program, nine pilots have been formally initiated and are being worked on, including a scaled up second project in South Africa for which this document has been prepared. 3. OP/BP 4.00 describes the approach, enumerates the criteria for using country systems, and specifies documentation and disclosure requirements and respective roles of the borrower and the Bank. The Bank considers a borrower`s environmental and social safeguard system to be equivalent to the Bank`s if the borrower`s system is designed to achieve the objectives and adhere to the applicable operational principles set out in Table A1 of OP 4.00. Since equivalence is determined on a policy-by-policy basis in accordance with Table A1, the Bank may conclude that the borrower`s system is equivalent to the Bank`s with respect to specific environmental or social safeguards in particular pilot projects, and not with respect to others. Before deciding on the use of borrower systems, the Bank also assesses the acceptability of the borrower`s institutional capacity, implementation practices, and past performance in similar projects. Gap- filling measures must be implemented prior to project approval or, if carried out by necessity during project implementation, are subject to a time-bound legal agreement between the Bank and the borrower. The process and product of analyzing equivalence, assessing eligibility, and identifying and agreeing on gap-filling measures is called a Safeguards Diagnostic Review (SDR). Under OP 4.00, a draft SDR is required to be disclosed prior to project appraisal. 4. This SDR is prepared for the Eskom Investment Support Project (EISP) in South Africa. The project has been requested by the Government of South Africa (GoSA) to support selected investments by Eskom Holdings Ltd. (Eskom) in the power sector. The SDR describes the scope, methodology, and findings of the equivalence analysis and acceptability assessment carried out in South Africa by staff from the World Bank. It also identifies and proposes gap-filling measures designed to ensure that applicable South African safeguard systems, and Eskom`s corporate practices for complying with the relevant South African regulations, meet the v equivalence and acceptability criteria of OP 4.00 throughout the project cycle and are adapted to extend their benefits beyond the scope of the project to the extent possible. The SDR was conducted in collaboration with the borrower, which is Eskom, and officials from the South African Ministry of Water and Environmental Affairs, including the Department of Environmental Affairs (DEA).1 A draft of this SDR was publicly disclosed by the Bank and by Eskom in November 2009, and was the subject of stakeholder consultation workshops held in South Africa in early December 2009. This revised document takes into consideration comments received from stakeholders, and is being disclosed by the Bank and by Eskom. 5. Project Objectives. The strategic objectives of the EISP are to: (a) support the GoSA in removal of the growing infrastructure bottlenecks on an accelerated basis; and (b) revive economic growth in the Southern Africa region through enhancement of South Africa`s power supplies in an efficient and sustainable manner to bridge current and projected electricity supply- demand imbalances that already have taken a toll on sustained regional as well as South Africa`s economic growth. The objective of the SDR is to assess the borrower`s safeguards systems, and for this purpose the SDR has looked at safeguards documents prepared for several Eskom investment projects, not all of which would receive Bank support. 6. Project Components. The proposed Project (phase I) will consist of the following components, which will be implemented by Eskom: Component A includes the Medupi coal-fired power station (4,800 MW, based on super-critical technology) and is expected to cost US$12.047 billion2, of which IBRD will provide financing of about US$3.05 billion. This loan will be provided against supply and install and civil construction contracts for (i) the power plant and (ii) associated transmission lines. Component B includes investments in renewable energy (100 MW Sere Wind Power Project and 100 MW Upington Concentrating Solar Power Project). This component is estimated to cost US$1.198 billion, of which IBRD will provide financing of about US$260 million. The Clean Technology Fund (CTF) will provide financing of about US$250 million (with the proposed IBRD loan). A US$100 million loan from CTF is proposed to be processed through AfDB for the component. Component C includes both sector investments and technical assistance to support lowering Eskom`s carbon intensity through energy efficiency and development of renewable energy. The Majuba Rail Project (shift in transportation mode from road to rail) and technical assistance for assessing the opportunities for coal-fired power 1 From 1994 through May 2009, DEA was known as the Department of Environmental Affairs and Tourism (DEAT) and reported to the Ministry of Environmental Affairs and Tourism, As part of a ministerial reorganization in May 2009, DEA and the Department of Water Affairs (previous part of the Ministry of Water Affairs and Forestry) were both placed under the authority of the newly designated Ministry of Water and Environmental Affairs and the Department of Tourism became a separate Ministry of Tourism. For purposes of this report, the current acronym, DEA, will be used when referring to the Department in the present or future tense; and DEAT will be used when referring to the Departmental actions taken in its previous capacity. 2 The estimate project total cost is based on interest during construction directly related to debt that has been raised by Eskom for the Medupi power plant. Any Eskom funding costs for its contributions to the plant from the balance sheet have not been included and have been considered as Eskom equity to the Project. vi plant efficiency improvements and for the development and implementation of domestic and cross border renewable energy projects are envisaged under this component. This component is estimated to cost US$537.57 million of which US$440 million will be financed by IBRD. The project comprises about US$1.766 billion of Low-carbon Renewable and Energy Efficiency investments, of which IBRD will finance US$700 million and CTF will finance US$350 million.3 7. For purposes of assessing the implementation practices, track record, and institutional capacity of Eskom and the South African regulatory institutions that will be involved in addressing environmental and social safeguard issues in the proposed Bank-supported EISP, the Medupi power plant and another major Eskom investment currently under construction, the 4,800 MW Kusile power plant in Mpumalanga Province, were selected by the Bank team to assess and verify the robustness of the Environmental Impact Assessment (EIA) process and its outputs under the requirements of OP 4.00. By selecting these two nationally important projects as the primary subjects of SDR analytical work for the EISP, the Bank achieves two important objectives: it allows the SDR to assess the integrity and robustness of DEA`s environmental review and approval process for two major projects that could be considered of national importance; and it provides insights into Eskom`s capacity, commitment, and capability to address environmental and social safeguards issues with respect to both the EIA process and project implementation, since construction is well underway for both the Medupi and Kusile power plant projects. Moreover, this focus on these two key projects is a particularly valuable approach because both the safeguards work and the initial stages of construction have been carried out in accordance with Eskom`s corporate practices prior to the decision by the GoSA to seek Bank support for Eskom`s investment program. 8. Although this SDR analytical work focuses on the Medupi and Kusile power plants as representative examples to assess the borrower`s safeguards systems, it is important to note that the Bank team also reviewed safeguards documents already disclosed on Eskom`s website for additional Eskom investments that are expected to be financed in part by the Bank`s EISP. For example, in preparing the SDR, the Bank team also reviewed the final EIRs prepared by Eskom for the proposed Sere Wind Power Project (WPP) in Western Cape Province, the Concentrating Solar Power (CSP) plant near Upington in Northern Cape Province, and the 67-km Ermelo- Majuba rail line for coal transport in Mpumalanga Province, and found that the safeguards documents for these proposed Eskom investments demonstrate comparable equivalence and acceptability with respect to Environmental Assessment and treatment of Natural Habitats, Physical Cultural Resources, and Involuntary Resettlement. The Bank team also will continue reviewing the safeguards documents, such as Environmental Impact Reports (EIRs), Environmental Management Plans (EMPs), or similar documents, prepared by Eskom for other EISP components as they become available during project preparation, implementation, and supervision. 3 Including the US$100 million potentially combined with an AfDB loan for the Sere Wind Power Project and the Upington CSP. vii 9. Basis for Selection of Pilot Country and Project. South Africa was selected as a pilot country because it has an established legal and regulatory system and a favorable reputation for effective implementation of its systems governing environmental assessment and protection of natural habitats, protected areas, and physical cultural resources. This has already been demonstrated by the SDR completed by the Bank for the recently approved Global Environment Facility (GEF) project in support of the Development, Empowerment, and Conservation of the iSimangaliso Wetland Park and Surrounding Region (iSimangaliso), which examined South Africa`s legal framework for the same four safeguards that are triggered by the EISP, but with reference to their application to an internationally protected wetlands area with substantial autonomy from the mainstream of the South African administrative framework. 10. The EISP was selected as a scaled up pilot project because the borrower, Eskom Holdings Ltd., has demonstrated a substantial corporate commitment to fulfilling and going beyond compliance with legal and regulatory requirements and embracing a sustainability policy on both a corporate and project level. As described in detail below, Eskom subscribes to the United Nations Global Compact,4 has obtained or is in the process of obtaining ISO 14000 certification for the Environmental Management System (EMS) for each of its operational units, and seeks to align its projects and its practices with the requirements of the Equator Principles (i.e., the International Finance Corporation`s Performance Standards) and with the Global Reporting Initiative (GRI). Accordingly, there is reason to expect that Eskom`s systems are likely to demonstrate strong equivalence with the World Bank safeguards as set forth in OP 4.00 Table A1, and that Eskom`s investment projects making up the EISP would be implemented in an acceptable manner with respect to Bank safeguard policies. 11. SDR Methodology. This SDR for the EISP builds and expands on the results of the SDR completed in March 2009 for the GEF-funded iSimangaliso project, which received Board approval in December 2009. Although the iSimangaliso project involved a protected natural habitat rather than an energy generation (and associated infrastructure) project, the SDR included an Equivalence Analysis of the South African legal framework for Environmental Assessment, Natural Habitats, Physical Cultural Resources, and Involuntary Resettlement. The March 2009 SDR concluded that the South African systems are fundamentally equivalent to the Objectives and Operational Policies of OP 4.00 Table A1 with respect to the three environmental safeguard policies, and partially equivalent with respect to Involuntary Resettlement in the context of its application to management of a designated protected area. 12. The Equivalence Analysis and Acceptability Assessment for the EISP were carried out by a multidisciplinary team from the World Bank in collaboration with relevant officials and technical staff members from Eskom, with cooperation from DEA and the Department of Water Affairs. The methodology included: desk review of legislation currently in force, supporting regulations, and mandatory guidelines applicable to the electric power generation sector and associated infrastructure; discussion with officials; and site visits to the Medupi and Kusile construction sites, the Sere WPP site, the CSP site, and the 67-km Ermelo-Majuba rail line servitude, by members of the Bank`s project team. The Bank team preparing the SDR consisted entirely of senior level staff and included: an environmental lawyer, three environmental specialists, a Senior Technical Advisor, and a social specialist. 4 www.unglobalcompact.org. viii 13. The Equivalence Analysis included a detailed inventory of South African laws and regulations relating to the four Bank environmental and social safeguard policies triggered by the project, as identified below in the Equivalence Section of this report. These laws and regulations are supported by Constitutional provisions, policies, and international agreements ratified by the GoSA, all of which are included as relevant to the legal framework for the Equivalence Analysis. An extensive literature review was also conducted tracing the development and evolution of South African environmental law in both historical and comparative contexts. The analysis draws careful distinctions between laws and regulations that are mandatory, as valid comparators to the Operational Principles of OP 4.00 Table A1, and other documents having aspirational or guidance value, which may inform the analysis and provide a basis for comparison with the Objectives of OP 4.00 but cannot be considered conclusive evidence of equivalence with the mandatory provisions of Bank safeguards. Based on this analysis each relevant provision of a borrower`s system is characterized as having full, partial, or no equivalence to the corresponding Objective or Operational Principle of OP 4.00 Table A1. 14. The Acceptability Assessment applied the four-component methodology that has evolved through the SDR process during the implementation of the UCS pilot program. These four components include: institutional capacity; processes and procedures; outputs; and outcomes. To assess relevant institutional capacity, the assessment drew on primary sources including external and internal reports prepared by Eskom and DEA. These reports provided valuable insights into Eskom`s institutional capacity to: (a) conduct environmental assessment; (b) avoid, minimize, mitigate and compensate for adverse environmental and social impacts resulting from the construction and operation of thermal power plants and associated infrastructure, while conserving natural habitat and physical cultural resources; and (c) conduct land acquisition and related resettlement activities in accord with South African legal requirements and international good practice as exemplified by Bank safeguard policies and associated guidance documents. The SDR also examines the capacity of the DEA to apply informed critical judgment to its review of EIRs submitted by Eskom as demonstrated by its processing of the EIRs for the two power plants proposed for support under the EISP, and by Eskom or other parties responsible for associated infrastructure. 15. To assess the effectiveness of implementing processes and procedures, the SDR reviewed official procedural and guidance documents describing the appropriate conduct of the environmental assessment and management process in South Africa. Attention was given to the various stages of the environmental assessment process in South Africa including: the Scoping Phase and EIR Phase, public consultation and disclosure, culminating in the Environmental Authorization (formerly known as Record of Decision [ROD]) on the part of the Minister of Environmental Affairs. Similar review was conducted with respect to the development and approval of EMPs for the construction and operational phases of the two thermal power plant projects. The EIRs and construction-stage EMPs were reviewed in light of the requirements for environmental assessment under South African law and international good practice. 16. With respect to outputs, the SDR critically reviewed: the findings of the EIRs and EMPs for the Medupi and Kusile projects; the EIRs for the Sere WPP, the Upington CSP plant, and the coal transport rail spur; and the RODs and other approvals issued by DEA to date. The Acceptability Assessment also reviewed the land acquisition and compensation process undertaken by Eskom in connection with project development, and the outcomes of that process ix with respect to compliance with South African law and the objectives and operational principles of Bank policy with respect to Involuntary Resettlement. 17. The methodology included stakeholder consultation workshops on the draft findings of this SDR report as noted above. A summary of the workshops is included as an annex to this report. Summary of Equivalence Analysis 18. The first step in the Equivalence Analysis is to identify the World Bank environmental and social safeguard policies triggered by the project. The four environmental and social safeguards triggered by the project include: Environmental Assessment (EA); Natural Habitats (NH); Physical Cultural Resources (PCR); and Involuntary Resettlement (IR). 19. This Equivalence Analysis finds that South Africa`s regulatory systems for all of the four safeguards applicable to the project demonstrate sufficient equivalence so as to justify proceeding to an Acceptability Assessment to determine if and on what basis the Bank can use South Africa`s and Eskom`s systems in lieu of Bank safeguards to address the environmental and social safeguard issues raised by the proposed project. 20. The following findings apply to the four safeguards, respectively: Environmental Assessment (EA). With respect to EA, the South African system is deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1. However one ambiguity in the language in the regulatory framework required additional clarification during the preparation of the SDR: - It is not clear from the regulations that the assessment of alternatives is required to assess their relative feasibility with respect to all of the feasibility criteria cited in OP 4.00 Table A1. It appears from the South African regulations that the proponent has the option to include those alternatives deemed feasible and reasonable and compare the advantages and disadvantages of such alternatives for the environment and the community. But it does not explicitly require the EIR to justify alternatives considered on the basis of comparative capital and recurrent costs, and institutional, training and monitoring requirements, which are among the criteria noted in OP 4.00 Table A1 as among the criteria to be uniformly considered. DEA (then- DEAT) published guidance on criteria to be included in alternatives assessment in 2004 (Integrated Environmental Management Information Series, Series 11: Criteria for Determining Alternatives in EAI), which recognizes that the range of criteria must be appropriate to the type of project subject to the EIA process. As noted later in this report, Eskom`s policy and practice is to address alternatives assessment at both the strategic and project-specific levels. Although South African regulations do not explicitly require consideration of capital and recurrent costs, and institutional training and monitoring x requirements, among the key factors for all projects, Eskom does so at both levels of analyses. Thus, any ambiguity is resolved with respect to Eskom`s approach to alternatives analyses. Natural Habitats (NH). With respect to NH, the South African system is deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1. However one ambiguity in the regulatory framework required additional clarification during the preparation of the SDR: - South African legislation appears to lack a conservation offset provision for non-critical natural habitat. South Africa recognizes that as the development footprint increases, there will be unavoidable net loss of non-critical habitat, but through the Environmental Authorization (formerly ROD) process, biodiversity offsets can be required on a case-by-case basis. As noted later in this report, Eskom, through its partnerships with South African conservation organizations, has supported conservation offsets for projects that convert natural habitat, even though South African legislation does not appear to require such practice. Physical Cultural Resources (PCR). With respect to PCR, the South African system is deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1. However a few ambiguities in the regulatory framework required additional clarification during the preparation of the SDR: - The extent of participation and obligations of communities in the process of cultural heritage assessment and conservation remains within the scope of the EIA process, as specified by the National Heritage Resources Act, but are not as explicit as stated in OP 4.00 Table A1. - It is not clear how the legislative framework deals with chance finds. A standard condition is included in all Environmental Authorizations (formerly RODs) stipulating how chance finds must be dealt with during the construction and operational phase, but the legal basis for this requirement is not explicit in the regulations. Although South African regulations do not require it, Eskom implements its policy of extensive local stakeholder consultation regarding cultural resources, along with its standard protocol requiring that chance finds be reported immediately to the South African Heritage Resources Agency (SAHRA) and that construction is halted at the discovery until qualified experts are consulted. Involuntary Resettlement (IR). With respect to IR, the South African system is found to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1 for all but the following Operational Principles: xi - Rights of access to natural resources and biodiversity of protected areas (however, as there are no protected areas affected by the project, this gap in equivalence is not relevant to the conclusion of this SDR); - Disclosure of draft resettlement plans in a timely manner to the public at large is not clearly spelled out in Eskom guidelines, although it is a requirement with respect to directly affected parties under various Acts related to the National Environmental Management Act (NEMA) and Lands. It should be mentioned, however, that Eskom has developed a practice to conduct assessment to confirm whether the objectives of resettlement have been achieved upon completion of the project, taking into account the baseline conditions and the results of resettlement monitoring. It also should be noted that the South African legislation regarding resettlement requires extensive consultation and disclosure with directly affected people, i.e., those who are to be resettled, and provides for benefits and livelihood restoration in a manner consistent with the Bank`s safeguard policy. Therefore, for the EISP, the key gaps appear to be the absence of a requirement for a stand-alone, formal Resettlement Action Plan that is disclosed to a broad audience of interested parties, and a formal mechanism for a completion audit. Summary of Acceptability Assessment 21. The purpose of the Acceptability Assessment is to confirm that the implementation practices, track record, and institutional capacity of Eskom, and the South African regulatory institutions that will be involved in addressing environmental and social safeguard issues in the proposed Bank-supported EISP, fulfill the requirements of OP 4.00 Table A1. The Acceptability Assessment examined four criteria: institutional capacity; processes and procedures; outputs; and outcomes of the borrower`s systems for EA, NH, PCR, and IR. Institutional Capacity 22. The institutions responsible for implementing the four environmental and social safeguards applicable to the project include, in the first instance the borrower, Eskom, as well as DEA (under the authority of the Ministry of Environmental Affairs and Tourism until May 2009, and now under the authority of the Ministry of Water and Environmental Affairs with respect to environmental impact assessment and air and water quality management); Department of Water Affairs (DWA, formerly the Department of Water Affairs and Forestry), which enforces regulations governing the supply and use of water; the Department of Land Affairs, under the Ministry of Agriculture and Land Affairs with respect to land acquisition; the South African Heritage Resource Agency (SAHRA), which provides the expertise in South Africa to develop and implement policies and practices regarding protection and management of cultural resources; and provincial and municipal authorities with respect to many of these same authorizations. 23. Eskom. Eskom is South Africa`s national, vertically integrated electricity utility, and is wholly owned by the GoSA through the Department of Public Enterprises. Eskom`s current structure is defined by the Eskom Conversion Act of 2001. The utility employs about 35,500 employees (reduced from about 66,000 over the past two decades). Eskom operates its business xii through a number of divisions and subsidiary companies. Eskom`s core business as a utility is carried out by the three divisions under the heading Eskom Core Business and is described below, followed by a brief description of the operations of the key subsidiaries. 24. At the corporate level, environmental and social governance within Eskom begins at the level of the Chief Executive Officer (CEO) and is overseen by the Executive Directors, who are full time employees of Eskom, and by the authority delegated to Board Committees, including the Executive Management Committee and the Sustainability and Safety Subcommittee. The latter is comprised of four independent non-Executive Directors, along with the CEO and two Board Members, and guides corporate strategy on sustainability, occupational health and safety, and environmental matters in line with Eskom`s safety, health and environment policy, the NEMA, and the Occupational Health and Safety Act of 1993. 25. Within the management structure of Eskom, each line division (Generation, Transmission, or Distribution) is individually responsible for carrying out the EIA process, producing EIRs as required by South African regulations, and implementing the environmental management and monitoring activities associated with its line of business. To undertake these tasks Eskom has more than 100 environmental and social specialists located in their headquarters office and various field operations. 26. Eskom has a comprehensive triple bottom line approach to the management of environmental, health, and safety issues as part of its corporate commitment to sustainability. As one of the charter members of the United Nations Global Compact, Eskom is committed to uphold the ten principles of the Compact, which include inter alia protection of the environment, labor standards, human rights, and anti-corruption. Eskom`s sustainability performance in 2006 met the requirement for inclusion in the Johannesburg Stock Exchange Socially Responsible Investment Index. Eskom has a systematic audit process in place to ensure that any non- compliance with South African legal requirements is identified, reported, and investigated, and that corrective and preventive measures are implemented. 27. The one weakness at the Eskom corporate level that was identified in this SDR is the need, publicly acknowledged by Eskom, to pay greater attention to occupational health and safety, as indicated by a recent record, which Eskom itself characterizes as unsatisfactory, of traffic-related fatalities and injuries and incidents of electrocution resulting from accidental or unauthorized contact with energized lines or electrical equipment. Accordingly Eskom proposed to enhance its ...focus [on] safety training and awareness, skills, competency, supervision and operational discipline..., and has put in place a procedure to investigate all fatalities promptly and share lessons learned from case studies. In addition, Eskom engaged the services of an international specialist to evaluate its electrical safety as well as behavioral safety programs. Changes were made to the Eskom training materials to incorporate some of the recommendations made. With respect to community safety, campaigns to improve public awareness were rolled out in various media and included school visits and the handout of safety materials. 28. DEA. Established in 1994, as the Department of Environmental Affairs and Tourism, DEA is an independent Department of the GoSA responsible for protecting, conserving, and improving the environment and natural resources. It now reports to the Minister of Water and xiii Environmental Affairs, who is a member of the Cabinet and is appointed by the President from among members of the National Assembly. 29. DEA management and staff have high levels of specialized training in all key areas of environmental assessment and management. In particular, the Air Quality Directorate at DEA has been fully engaged in developing and implementing ambient air and emissions standards that are aligned with international good practice as defined by the World Bank, the European Union, and the United States Environmental Protection Agency. Processes and Procedure for Environmental Assessment and Management for Coal-Fired Thermal Power Plants and Associated Infrastructure 30. South Africa began undertaking EIA in an ad hoc manner during the 1980s, and a voluntary EIA procedure was integrated into the Environmental Conservation Act of 1989 (ECA), since largely superseded by the National Environmental Management Act (NEMA). Requirements for EIA were introduced on a sectoral basis in the Minerals Act of 1991 (Sections 38 and 39(5)). These requirements were generalized by the EIA Regulations of September 5, 1997, which mandated a process including screening, scoping, public participation, environmental reports, review, and decision. (For purposes of clarity, it should be noted that the current South African regulations refer to an EIA process, which produces an EIR, and this terminology is used in this SDR). 31. Following an extensive process of expert review and public consultation and discussion, substantially revised EIA Regulations were issued in 2006. The new regulations resulted in a more coherent process with respect to application of EIA including: (a) EIA scoping, (b) decision-making procedures, (c) roles, (d) responsibilities and compliance, (e) public participation, and (f) appeal process. 32. In November 2008, DEA (then DEAT) commissioned and issued a draft review of the previous ten years of EIA practice in South Africa. The draft report was conducted by independent consultants. The main findings of the report are that: (a) the overall effectiveness of EIA process in South Africa in meeting requirements of ECA and then NEMA was deemed moderately effective but with room for improvement; (b) overall there was a significant improvement in effectiveness and efficiency of EIA in moving from the ECA regulations to the NEMA regulations; (c) public participation in EIA is effective; (d) the cumulative (combined) impacts aspect is generally not considered effective and there is significant room for improvement; (e) the EIA process in South Africa is implemented relatively efficiently in terms of the average time it takes to produce and evaluate EIAs; (f) monitoring and enforcement in environmental management is one area where the current EIA system is not effective or efficient; and (g) a more strategic approach to environmental impact management is required and there is a definite need to move away from an EIA only system to one based on integrated environmental management. 33. South Africa`s legal and regulatory framework for management of ambient air quality is based on World Health Organization standards, and is therefore closely aligned with those used by the World Bank Group (WBG) as specified in the WBG General Environmental, Health and Safety Guidelines (EHSG) issued in April 2007. With respect to levels of emissions from xiv thermal power plants, the proposed South African regulatory approach to emissions standards for new plants is generally comparable to the WBG EHSG for Thermal Power issued in December 2008 in that it distinguishes between new and existing plants and sets more stringent requirements for plants that discharge emissions to a degraded airshed. (see Annex 4). 34. Permitting is a key output of the EIA process in South Africa. With respect to the air quality impacts of electrical generating facilities, the principal authorization is the Atmospheric Emission License (AEL). The granting of an AEL must be preceded by the issuance of a ROD, now referred to as an Environmental Authorization, for an EIA application, which, for listed activities (including thermal power plants with more than 70 MW heat output) is required to be accompanied by an Air Quality Impact Assessment Study prepared by qualified specialists. Metropolitan and district municipalities are charged with implementing the atmospheric licensing system per Section 36 of the Air Quality Act of 2004 (AQA), subject to alternative arrangements in which a provincial organ of state may be designated as the issuing authority. The contents of an AEL must include the maximum allowed amount, volume, and emission rate or concentration of pollutants that may discharged into the atmosphere under normal working conditions and during start-up, maintenance, and shut-down conditions. 35. Compliance monitoring and enforcement requirements for ambient air quality and emissions from electricity generating facilities are set forth in the Atmospheric Pollution Prevention Act of 1965 (APPA) which is being phased out under the terms of the 2004 AQA. Standards issued under the AQA also set forth reference methods and siting criteria for sampling of priority air pollutants associated with electricity generation facilities including particulate matter (PM10), sulfur dioxide (SO2), nitrogen oxides (NOx), and carbon monoxide (CO) as well as ozone, lead, and benzene. 36. As part of the National Framework for Air Quality Management in South Africa (National Framework), and in implementation of mandatory provisions of the AQA, an extensive network of ambient air quality stations has been established, owned and operated by a variety of organizations. South African National Standards (SANS) for ambient air quality monitoring have been established. 37. However, the AQA itself makes no provision for the enforcement of its own provisions; rather, enforcement provisions are located in NEMA as framework legislation, where provision is made for the statutory designation of Environmental Management Inspectors (EMIs) to monitor compliance with and enforce AQA. NEMA grants EMIs (acting within their designation and mandate) extremely wide powers, including powers of inspection, investigation, administrative and enforcement actions. The first EMIs were designated by the Minister of Environmental Affairs and Tourism in June 2006 and there were 903 trained and designated EMIs reached as of March 31, 2008. Processes and Procedures for Management of Social Impacts from Thermal Power Plants and Associated Infrastructure 38. Eskom seeks to avoid land expropriation wherever possible and includes the potential need for expropriation, resettlement, compensation and rehabilitation among the criteria used for alternative site assessment. When resettlement is unavoidable, all displaced people are xv effectively consulted and compensated; support and other benefits are provided in the relocation process, including livelihood restoration (rehabilitation) as mandated by GoSA law. 39. Eskom provides security of tenure to resettled parties and helps register deeds of ownership. 40. Replacement accommodation is based on South African Bureau of Standards requirements for housing, which require minimum brick, mortar and tile structures with running potable water and proper sanitation. Where cost-effective, Eskom also seeks to provide electricity to replacement structures. Eskom`s expenditure in these transactions is strictly controlled by the Public Finance Management Act; however, it is Eskom`s policy to ensure that resettled parties are better off than prior to resettlement. Eskom seeks to maximize employment of displaced persons in whatever jobs may be available on project sites. However, these are typically unskilled construction jobs of limited duration. 41. Where in-kind resettlement opportunities are not available, Eskom provides cash compensation based on an independent valuation using open market selling trends of similar land based on registered sales over a period between three months and three years. In cases where the land owner disagrees with the compensation offered, the owner is entitled to hire a valuer of his or her own choosing, with the final offer typically reflecting the difference between the two valuations. 42. Although Eskom does not prepare formal publicly-disclosed resettlement plans, Eskom does undertake independent social assessment and develops internal plans for resettlement with timelines and commitments. The plan is treated as a living document that is updated as required on an ongoing basis. All negotiated outcomes are documented as formalized agreements and the entire resettlement process is documented and filed by Eskom. The implementation phase of the contractual resettlement plan is monitored and evaluated and is subject to amendment by mutual agreement of the parties. Public Consultation and Disclosure in the EIA and Land Acquisition and Resettlement Processes 43. In examining the EIA process for both the Medupi and Kusile projects, the Bank team determined that Interested and Affected Parties (I&APs) were informed about the projects and consulted at various stages of the EIA process. During the Scoping Phase public participation was comprehensive and included advertising in national, regional, and local newspapers, subsequent notifications in regional and local newspapers, and the dissemination of a non- technical Background Information Document (BID) in English, Afrikaans, and local languages, which was updated on various occasions to take account of the evolution of the project. Public fora were held at diverse venues in each area, organized and facilitated by an independent consultant. Following the issuance of the Draft EIR reports, both on the internet and in hard copy at local public libraries and municipal offices, a second round of local public consultations took place. 44. The main issues raised by stakeholders for the Medupi and Kusile projects concerned increases in air and noise pollution and the consequent potential impacts on public health. The xvi issues raised and the responses by Eskom and government authorities to public comments and questions is thoroughly documented in minutes from the public consultations and summarized thematically in two Issues Trails documents prepared by the independent consultant. Stakeholders are also encouraged and often comment not only on the substance of the EIR but also on the disclosure and consultation process itself. The public consultation process is continued during construction, and will continue throughout project implementation with the assignment of Environmental Control Officers and the constitution of Environmental Monitoring Committees that include local stakeholder representatives. Outputs: EIA Process and EIR Content for Medupi and Kusile 45. The EIA process for the Medupi and Kusile plants, as well as associated transmission lines and most of the investments under consideration for the EISP, has been thoroughly documented, and the project-specific EIRs of projects that Eskom proposes to undertake are disclosed (and remain available) on Eskom`s website.5 The EIA processes and content of the EIRs for the two thermal power plants now under construction conform fully to the regulatory requirements in effect at the time that the applications to commence the EIA process were approved, i.e., the EIA Regulations issued in 1997 under the authority of the ECA of 1989. However, the EIA process and EIR content for both projects was strongly influenced by and is essentially consistent with the EIA Regulations that became effective in July 2006, although they are not legally applicable to the Medupi and Kusile projects. This is because the EIA process for both projects began at a time when the draft new regulations were already out for public comment; therefore, Eskom chose, and instructed its consultants, to conform with the proposed new regulations as well. As noted in the Equivalence section of this report, the 2006 EIA Regulations are nearly fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1 with the exception of an ambiguity in the regulations regarding whether capital and recurrent costs, and training and monitoring requirements are among the criteria to be considered as part of the alternatives assessment. However, as would be expected, these criteria were fully addressed in the strategic planning and project-specific EIA process for the two plants as per Eskom`s corporate practice. 46. An independent assessment of the EIA process and resulting EIRs commissioned by Eskom concluded that both the EIA process and the content of the EIRs were consistent with the requirements of the Equator Principles, which are based on the International Finance Corporation (IFC) Performance Standards and which also make reference to the WBG Thermal Power Guidelines issued under the 1998 PPAH and as revised in December 2008. 47. The Bank`s own review of the EIRs indicated that both are consistent with international good practice and with the Objectives and Operational Principles of OP 4.00 Table A1 with respect to EA, notwithstanding the minor ambiguity in the South African legal framework as noted in the Equivalence Analysis. 48. To date final EMPs have been prepared and approved by DEA for the construction phase of the Medupi and Kusile projects, and a draft EMP has been prepared for the operational phase of Medupi. Based on a review of these documents it may be concluded that the EMPs satisfy 5 www.eskom.co.za/eia. xvii South African regulatory requirements and are consistent with Bank-recommended practice for EMP. 49. The EIRs for the two plants were approved by DEA in publicly disclosed RODs issued in September 2006 for Medupi and in June 2007 for Kusile. The RODs include a long list of statutory and regulatory requirements reflecting site-specific projected impacts as documented in the EIRs. These impacts relate primarily to air emissions and ambient air impacts; liquid effluent control; management of ash and other solid wastes; and hazard assessment. The RODs require that Eskom implement detailed monitoring and reporting protocols, and that Eskom appoint independent Environmental Control Officers (having dual reporting to Eskom and DEA) and establish Environmental Monitoring Committees including local stakeholder representatives. The RODs demonstrate that DEA has the capacity and commitment to independently assess and identify conditions that should be imposed on projects on a case-by-case basis. 50. It should be noted that the RODs issued by DEA provide approval based on the satisfactory conclusion of the EIA process and conditions attached to project implementation. As noted in the RODs for the Medupi and Kusile projects, Eskom must still obtain individual permits, including an AEL from the Chief Air Pollution Control Officer (DEA) as per the AQA, a Water Use License, and licenses for waste disposal, among others. Issuance of some of these licenses, especially for the operational phase, is still pending. RODs for some of the other EISP components and associated transmission lines are publicly disclosed and available on DEA`s website ( http://www.environment.gov.za/). Projected Outcomes: Environment 51. The major potential environmental impacts of both the Medupi and Kusile projects relate to the impact of emissions on local air quality and human health, in particular with respect to the major pollutant, SO2. As existing ambient air quality conditions and water resources differ among the two sites, so does the timing of the proposed mitigation measures as presented in the EIR and required by the ROD. 52. The designated airshed at Medupi, which corresponds to the Waterberg District Municipality, is not yet considered degraded with respect to ambient air quality. However, ambient conditions in the airshed are expected to deteriorate in the future. Accordingly, DEA intends to propose that the Minister declare the Waterberg airshed as a National Priority Area for Air Quality and this declaration is likely to be issued sometime within the next year. Such a declaration would provide DEA with additional authority to require designated sources of emission, including Eskom, to take specified measures to reduce emissions such that ambient conditions are maintained at acceptable levels. In addition, DEA has proposed emission limitations for new and existing thermal power plants that will come into effect along with certain provisions of the AQA on April 1, 2010. Under these provisions as currently proposed, Medupi would be required to meet the limitations for existing plants within five years of commencing operations, and the much more stringent limitations applicable to new plants within an additional three to five years. 53. These ambient and emission limitations will oblige Eskom, to take unspecified measures to substantially reduce its sulfur dioxide (SO2) emissions from the levels that would result from xviii direct unmitigated combustion of coal to levels below the applicable emission limits and to take other actions, as necessary as specified in its ROD, (and to be further specified in its AEL) in order to further reduce its contribution to ambient conditions. Flue Gas Desulfurization (FGD) technology is the only means of achieving significant reductions in SO2 emissions from a given coal feedstock; accordingly, Eskom`s Board of Directors has approved installation of FGD and Eskom has designed and is constructing the Medupi plant to be FGD-ready, with sufficient infrastructure in place to accommodate installation of wet-FGD technology when it becomes necessary, and technically and operationally feasible to do so. Eskom`s staged approach to FGD is consistent with its environmental authorization (the ROD). 54. Although wet-FGD is the most efficient technology for reduction of SO2 emissions, Eskom faces a potential significant constraint in that wet-FGD is highly water intensive and local sources of water are insufficient to operate the plant at full capacity, even without FGD. Accordingly, Eskom is seeking from DWA an allocation of water from supplemental water sources, sufficient not only to operate the plant at full capacity, but to operate FGD when necessary. This allocation is dependent on the availability of water from the Mokolo and Crocodile Water Augmentation Project (MCWAP) that is being developed by DWA to supply supplemental water to priority users, including Eskom, in the Waterberg District Municipality and elsewhere in Limpopo Province. This water supply is not expected to become available until 2014 at the earliest by which time all six units at Medupi are expected to be operational. 55. As noted above, initially, and for five years of operations, Eskom will be required to operate Medupi in compliance with the proposed emissions standards for existing plants. Based on the data from the EIR, it would appear that Medupi should be able to meet these standards in the absence of FGD. However, once the standard for new plants become applicable to Medupi, in about 2019, Eskom will need to have FGD installed at Medupi. Accordingly, Eskom is planning to undertake FGD installation from 2018-2021, as part of its scheduled operational maintenance program, during which each power block is taken off-line for routine maintenance beginning after six years of operation. Although progress on the project to supply the required amount of water is on schedule, the Bank has, nevertheless, requested evidence from the Department of Water Affairs, committing to timely water supply to Eskom. Furthermore, in the event that sufficient water is not available (or allocated to Eskom) from the MCWAP, the Bank will recommend that Eskom proactively investigate the feasibility of using a less water intensive dry- FGD technology prior to commencing full operations. 56. It should be noted that with either wet- or dry-FGD technology installed it is expected that Medupi would be able to operate in compliance not only with the proposed South African limitations for new plants, but with the equally stringent World Bank Group Environment, Health and Safety Guidelines for Thermal Power plants issued in December 2008. 57. In contrast to Medupi, Kusile is located in an airshed that is already considered degraded with respect to particulates, but is adequately supplied with sufficient water to operate a wet- FGD system from the commencement of operations. Therefore the ROD for Kusile requires that the FGD system be fully operational at commissioning. Accordingly, Kusile will comply from the outset with international good practice as recommended in the Bank`s 2008 EHSG for Thermal Power Plants, as well as with the forthcoming national regulations for new sources. Both plants are to be equipped with fabric (baghouse) filters to control emissions of particulates, xix and low-NOx burners to reduce emissions of NOx to levels consistent with proposed South African regulatory requirements and international good practice as recommended in the Bank`s 2008 EHSG for Thermal Power Plants. 58. With respect to wastewater control, both Medupi and Kusile are designed as Zero Effluent Discharge facilities during operations, with all process and wastewater to be recycled. Solid waste, in the form of coal ash, will be disposed of in engineered ash storage facilities that will be lined and equipped with leachate detection and collection capacity. Ash disposal will occur with the minimum amount of water necessary to prevent dust formation; once deposited, the ash is quickly covered with topsoil for purposes of revegetation. Projected Outcomes: Social Impacts 59. The social impacts from both Medupi and Kusile are of a moderate scale. As explained below, there was no need to conduct a full Resettlement Action Plan or Framework under OP 4.00 Table A1 (or OP 4.12) for the Medupi project, and resettlement was relatively small scale for the Kusile project. In neither case has expropriation been required nor are there any outstanding restitution claims on lands to be acquired for the projects. In both cases land has been acquired by Eskom through voluntary willing buyer-willing seller transactions at realistic market based prices wherein land was acquired from local farmers. Social assessment and public outreach were undertaken to fully identify individuals and households, including neighboring farms and farm laborers, whose livelihoods might be affected by the land acquisition and other project activities. 60. For the construction and operation of Medupi two game farms were purchased by Eskom. At one of the game farms there was one full-time worker residing on the farm at the time of purchase, and it was agreed that the farm worker will continue to be in the owner`s employ and be relocated at the owner`s expense to one of his other properties. No laborers or any other occupiers resided on the other farm at the time of purchase, and therefore no relocations were required with respect to that property. 61. At Kusile, social assessment indicated the presence of 18 family units of farm laborers requiring resettlement. To implement the resettlement, Eskom engaged the services of a specialized contractor, and, through a process of extensive consultation with the directly affected people, provided the families with several resettlement options on neighboring farms, some owned by Eskom, or on other land leased from other farmers for the purpose of resettlement. The families that opted to resettle on the Eskom-owned farms were provided with permanent homes with individual fencing, running water and sanitation, vegetable gardens, and a playground for children. Eskom assisted the project-affected peoples in establishing a Communal Property Association that would acquire ownership of the properties in the names of the family units. For those families who elected through the consultation process to be resettled on other properties, Eskom arranged to have existing structures rehabilitated or constructed new structures where existing structures were not of sufficient quality. 62. For the transmission lines that will be built as associated facilities for the EISP, Eskom follows its corporate practice of initially identifying, through the EIA process, corridors that avoid or minimize the need for relocation of households or farm structures, and subsequent xx refinement of the location of the right-of-way and tower locations within the preferred corridor to further reduce the need for physical displacement of people or structures, and avoid or minimize adverse effects on livelihoods or economic activities. Land valuation is required as part of the route selection process to determine appropriate compensation for acquisition of right-of-way for construction and maintenance. Summary of Gaps and Proposed Gap-Filling Measures 63. OP 4.00 requires that prior to piloting a project under a borrower`s environmental or social safeguard system, the Bank and the borrower reach agreement on a time-bound Action Plan to address gaps in Equivalence and Acceptability that have been identified in the SDR. At the draft stage of the SDR the Bank discloses the gaps that have been identified for further discussion with the borrower and other stakeholders including local stakeholders in the proposed project. For the EISP, the borrower is Eskom. The gap analysis begins with the South African laws and regulations as the regulatory framework with which Eskom must comply, but the final analysis of required gap-filling measures focuses on the consistency of Eskom`s policies, procedures, and practices for its projects with respect to OP 4.00 Table A1. 64. Equivalence. With respect to the SDR process conducted to date, the Bank has identified a few minor ambiguities or gaps in South Africa`s legal framework with respect to the four Bank safeguard policies triggered by the EISP. However, it would appear from the analysis of Eskom`s policies and procedures that all of these gaps in the legal framework applicable to environmental safeguards are fully addressed and internalized in Eskom`s policies and practices, with the exception of preparation of a stand-alone Resettlement Action Plan and its disclosure to a broad public audience. 65. With respect to EA, Eskom`s policy is to address alternatives assessment at both the strategic and project-specific levels, irrespective of any residual ambiguities in South Africa`s legal framework for the types of factors to consider in alternative analysis as part of the EIA process. Therefore, although South Africa requires alternatives analysis to include capital and recurrent costs, or institutional training and monitoring requirements as a matter of good practice, rather than as a regulatory requirement, Eskom does so as a standard operating procedure at both strategic and operational levels of analysis. 66. With respect to NH, Eskom, through its partnerships with South African conservation organizations, has supported conservation offsets for projects that convert natural habitat, although South African legislation does not, as matter of policy require such offsets. In any case, neither the Medupi nor Kusile projects will impact significant areas of high quality natural habitat to an extent that such an offset would be necessary or appropriate. 67. With respect to PCR, Eskom`s existing policy of extensive local stakeholder consultation regarding cultural sites and artifacts along with its standard protocol requiring that chance finds be reported to the South African Heritage Resources Agency (SAHRA) obviates a need for gap-filling at the institutional level. A review of project construction to date demonstrates that Eskom`s approach to chance finds has been effectively implemented by Eskom`s construction contractors, even though South African regulations do not require a formal protocol to address chance finds. xxi 68. It is only with respect to IR that South Africa appears to lack a legal mechanism, and Eskom an administrative mechanism, to require the preparation of publicly-disclosed, stand- alone resettlement plans or frameworks, or to publicly disclose its evaluation of the success of resettlement and rehabilitation activities. Accordingly, the Bank proposes to encourage Eskom to introduce such an administrative mechanism as corporate practice. Eskom has already disclosed on its website its corporate resettlement policy,6 which summarizes its corporate policy and practice with respect to land acquisition, resettlement, and rehabilitation (livelihood restoration) and a Resettlement Policy Framework specific to Components 2 and 3 of EISP.7 Audits will also be required for any resettlement already carried out for EISP components. For any EISP components for which resettlement is needed but has not yet occurred, the Bank will require and Eskom has agreed to disclose its draft resettlement plans for those components. 69. Acceptability. A detailed review of Eskom`s policies and procedures with respect to the four triggered safeguard policies as implemented on a corporate level, and as demonstrated by the planning and implementation of the Medupi and Kusile projects to date, indicates a high level of consistency with international good practice as exemplified by international standards of corporate environmental and social management, such as the United Nations Global Compact, IFC Performance Standards, the Equator Principles, and relevant WBG EHSG. There are, however, two outstanding issues where there are potential gaps in Eskom`s performance with respect to the expected outcomes of the Medupi and Kusile projects. 70. With respect to SO2 emissions and ambient impacts on air quality and human health, the Bank, due to short tenure of its proposed loan agreement, relative to the regulatory timetable for Medupi`s compliance with the proposed South African regulations, will seek agreement with Eskom to commit to timely installation of FGD in all six units at Medupi as soon as it is technically and operationally feasible to do so, and to seek Eskom`s agreement to provide to the Bank in mid 2013 a report satisfactory to the Bank that provides a plan and schedule for timely installation of SO2 emissions abatement measures. This may include an independent feasibility analysis of alternative control technologies in the event that sufficient water is not available or allocated to enable Eskom to operate the wet-FGD units. Given that Eskom`s compliance with South African emissions requirements can be expected to result from the implementation of the South Africa`s existing and proposed regulatory system, without Bank intervention, and the supplemental agreements reached between the Bank and Eskom are for the sole benefit of the Bank as a medium-term lender, these agreements need not be considered as gap-filling measures as this term is used in this SDR. However, any subsequent changes in South Africa`s regulatory requirements or actions, which would bring this compliance into question, would trigger Bank remedies per OP 4.00.8 6 Procedure for the Involuntary Resettlement of Legal and Illegal Occupants on or from Eskom-Procured Land; (July 2009). http://www.eskom.co.za/content/20091009091904201.pdf 7 Status and Process of Land Acquisition and Resettlement for Eskom`s Concentrating Solar Plant (CSP), Wind Energy Facility, Majuba Rail and Transmission Projects (October 2009). http://www.eskom.co.za/content/RelocationResettl_Final.pdf 8 OP 4.00, para. 6, Changes in Borrower Systems and Bank Remedies. If, during project implementation, there are changes in applicable legislation, regulations, rules or procedures, the Bank assesses the effect of those changes and discusses them with the borrower. If, in the judgment of the Bank, the changes reflect a further improvement in the country systems, and if the borrower so requests, the Bank may agree to revise the legal framework applicable to the operation to reflect these improvements, and to amend the legal agreement as necessary. Management documents, xxii 71. With respect to IR, Eskom staff has acknowledged the benefits of conducting independent retrospective monitoring of the social and economic impacts of any involuntary resettlement associated with its projects. For EISP components where resettlement has already occurred, the Bank will require that Eskom conduct and publish an audit of the resettlement based on Terms of Reference to be agreed by the Bank. For any EISP components for which resettlement is needed but has not yet occurred, the Bank will require Eskom to disclose its draft resettlement plans for those components. To begin addressing this identified gap between Bank policy and Eskom`s practice, Eskom prepared and disclosed on its website a Resettlement Policy Framework, which explains its corporate approach to resettlement and land acquisition. explains, and justifies any changes to such framework, and submits them for Board approval (normally on an absence of objection basis). If the country system is changed in a manner inconsistent with the legal framework agreed with the Bank, the Bank`s contractual remedies apply. xxiii I. BACKGROUND 1. Under Operational Policy/Bank Procedure 4.00 (OP/BP 4.00), Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects, the Bank has had the authority since March 2005 to support pilot projects in which lending operations are prepared using the borrowing country`s systems for environmental and social safeguards, rather than the Bank`s corresponding operational policies and procedures (Annex 1). The advantages of using country systems (UCS) are to scale up development impact, increase country ownership, build institutional capacity, facilitate donor harmonization in approaches to environmental and social safeguards, and increase cost effectiveness. These objectives were broadly endorsed at the Paris High Level Forum on Aid Effectiveness in March 2005 with respect to environmental and social safeguards, as well as financial management and procurement, and strongly reiterated in the Accra Agenda for Action in September 2008.1 Since March 2005, the World Bank has approved ten pilot projects prepared under this initial phase of the pilot program, including a pilot project in South Africa.2 On January 31, 2008, the Executive Directors of the World Bank approved a three-year extension of the pilot program, but requested an incremental scaling up of the pilots from the project to the country-level, including support of activities at the sub-national level. Under the three-year extension, i.e., the second phase of the pilot program, nine pilots have been formally initiated and are being worked on, including a second scaled up project in South Africa for which this document has been prepared. 2. OP/BP 4.00 describes the approach, enumerates the criteria for using country systems, and specifies documentation and disclosure requirements and respective roles of the borrower and the Bank. This approach and the criteria for assessment were developed with inputs from external stakeholders such as representatives of governments, bilateral and multilateral development institutions, civil society organizations, and the private sector. According to OP 4.00, prior to appraisal for any project proposed to be piloted under one or more of a borrower`s safeguard systems, the Bank is required to conduct an Equivalence Analysis and an Acceptability Assessment, and to reach any agreements necessary with the borrower for Gap-Filling measures as may be necessary to ensure that the Objectives and Operational Principles of the Bank`s applicable environmental and social safeguard policies will be met. Under OP 4.00 the focus of safeguards supervision will be on the implementation of the borrowers` environmental and social safeguard systems and agreed gap-filling measures. 3. The Bank considers a borrower`s environmental and social safeguard system to be equivalent to the Bank`s if the borrower`s system is designed to achieve the objectives and adhere to the applicable operational principles set out in Table A1 of OP 4.00. Since equivalence 1 In the Paris Declaration, developing countries committed to strengthen their safeguards systems, and donors committed to use those systems to the maximum extent possible. The Accra Agenda noted that even when there are good-quality country systems, donors often do not use them. Therefore, donors agreed to use country systems as the first option in support of activities managed by the public sector and, should donors choose not to use country systems, they will transparently state the rationale for this and will review their positions at regular intervals. 2 The ten pilot projects approved by the Board and in implementation are located in Ghana, Egypt, Tunisia (two projects), Romania (two projects), Jamaica, Bhutan, India, and South Africa. Two of the projects, India and Ghana, involved the energy sector. 1 is determined on a policy-by-policy basis in accordance with Table A1, the Bank may conclude that the borrower`s system is equivalent to the Bank`s with respect to some of the environmental or social safeguards in particular pilot projects, and not with respect to the others. Before deciding on the use of borrower systems, the Bank also assesses the acceptability of the borrower`s institutional capacity, implementation practices, and past performance in similar projects. Gap-filling measures must be implemented prior to project approval or, if carried out by necessity during project implementation, are subject to a time-bound legal agreement between the Bank and the borrower. The process and product of analyzing equivalence, assessing eligibility and identifying and agreeing on gap-filling measures is called a Safeguards Diagnostic Review (SDR). 4. This SDR is prepared for the Eskom Investment Support Project (EISP) in South Africa. The project has been requested by the Government of South Africa (GoSA) to support selected investments by Eskom Holdings Ltd. (Eskom) in the power sector. This SDR describes the scope, methodology, and findings of the equivalence analysis and acceptability assessment carried out in South Africa by staff from the World Bank. It also identifies and proposes gap- filling measures designed to ensure that applicable South African safeguard systems, and Eskom`s corporate practices for complying with the relevant South African regulations, meet the equivalence and acceptability criteria of OP 4.00 throughout the project cycle and are adapted to extend their benefits beyond the scope of the project to the extent possible. The SDR was conducted in collaboration with the borrower, which will be Eskom, and officials from the South African Ministry of Water and Environment, including the Department of Environmental Affairs (DEA).3 A draft of this SDR was publicly disclosed by the Bank and by Eskom in November 2009, and was the subject of stakeholder consultation workshops held in South Africa in early December 2009. This document takes into consideration comments received from stakeholders, and is being re-disclosed in its final form. II. PROJECT DESCRIPTION 5. The proposed project will be a US$4.0 billion financing package to support the GoSA`s energy sector investment plan. This project will have a total cost of about US$19 billion, to be implemented largely by Eskom. At the request of the GoSA, the International Bank for Reconstruction and Development (IBRD) loan, which would be counter-guaranteed by the GoSA, is proposed to be provided directly to Eskom. The EISP for the purposes of this SDR refers to the full set of Eskom investments that would receive Bank support. The objective of the SDR is to assess the borrower`s safeguards systems, and for this purpose the SDR has looked at safeguards documents prepared for several Eskom investment projects, not all of which would receive Bank support. 3 From 1994 through May 2009, DEA was known as the Department of Environmental Affairs and Tourism (DEAT) and reported to the Ministry of Environmental Affairs and Tourism, As part of a ministerial reorganization in May 2009, DEA and the Department of Water Affairs (previous part of the Ministry of Water Affairs and Forestry) were both placed under the authority of the newly designated Ministry of Water and Environmental Affairs and the Department of Tourism became a separate Ministry of Tourism. For purposes of this report, the current acronym, DEA, will be used when referring to the Department in the present or future tense; and DEAT will be used when referring to the Departmental actions taken in its previous capacity. 2 6. The proposed Project (phase I) will consist of the following components, which will be implemented by Eskom: Component A includes the Medupi coal-fired power station (4,800 MW, based on super-critical technology) and is expected to cost US$12.047 billion 4, of which IBRD will provide financing of about US$3.05 billion. This loan will be provided against supply and install and civil construction contracts for (i) the power plant and (ii) associated transmission lines. Component B includes investments in renewable energy (100 MW Sere Wind Power Project and 100 MW Upington Concentrating Solar Power Project). This component is estimated to cost US$1.198 billion, of which IBRD will provide financing of about US$260 million. The Clean Technology Fund (CTF) will provide financing of about US$250 million (with the proposed IBRD loan). A US$100 million loan from CTF is proposed to be processed through AfDB for the component. Component C includes both sector investments and technical assistance to support lowering Eskom`s carbon intensity through energy efficiency and development of renewable energy. The Majuba Rail Project (shift in transportation mode from road to rail) and technical assistance for assessing the opportunities for coal-fired power plant efficiency improvements and for the development and implementation of domestic and cross border renewable energy projects are envisaged under this component. This component is estimated to cost US$537.57 million of which US$440 million will be financed by IBRD. The project comprises about US$1.766 billion of Low-carbon Renewable and Energy Efficiency investments, of which IBRD will finance US$700 million and CTF will finance US$350 million.5 7. For purposes of assessing the robustness of South Africa`s Environmental Impact Assessment (EIA) process and its outputs under the requirements of OP 4.00, the Bank undertook a detailed analysis of the EIA process and outputs (Environmental Assessment Reports and Environmental Management Plans submitted by Eskom, and Records of Decision issued by DEA for the largest Bank-supported component of the EISP, the Medupi power plant). In addition, to add a further level of objectivity to the analysis of the EIA process and outputs, the Bank reviewed a second major thermal power plant that is not proposed for Bank support, the 4,800 MW Kusile power plant in Mpumalanga Province. By selecting these two nationally important projects as the primary subjects of SDR analytical work for the EISP, the Bank achieves two important objectives: it allows the SDR to assess the integrity and robustness of DEA`s (formerly DEAT`s) environmental review and approval process for two major projects that could be considered of national importance; and it provides insights into Eskom`s capacity, commitment, and capability to address environmental and social safeguards issues with respect 4 The estimate project total cost is based on interest during construction directly related to debt that has been raised by Eskom for the Medupi power plant. Any Eskom funding costs for its contributions to the plant from the balance sheet have not been included and have been considered as Eskom equity to the Project. 5 Including the US$100 million potentially combined with an AfDB loan for the Sere Wind Power Project and the Upington Concentrating Solar Power plant. 3 to both the EIA process and project implementation, since construction is well underway for both the Medupi and Kusile projects. Moreover, the focus on these two key projects, one of which is expected to receive Bank support as part of the EISP, is a particularly valuable approach because both the safeguards work and the initial stages of construction have been carried out in accordance with Eskom`s corporate practices prior to the decision by the GoSA to seek Bank support for Eskom`s investment program. 8. During preparation of this SDR, the Bank team also reviewed the final EIRs prepared by Eskom for the proposed Sere Wind Power Project (WPP) in Western Cape Province, the Concentrating Solar Power (CSP) plant near Upington in Northern Cape Province, and the 67- km Ermelo-Majuba rail line for coal transport in Mpumalanga Province, as well as the transmission lines that will connect the Medupi Power Plant to the national grid. The purpose of this review of additional EIRs by the Bank team was to ensure that the findings of this SDR regarding equivalence and acceptability of the borrower`s safeguards system remain valid with respect to Environmental Assessment, Natural Habitats, Physical Cultural Resources, and Involuntary Resettlement for the candidate EISP components in addition to the Medupi and Kusile thermal power plants. Although this SDR analytical work focuses on the Medupi and Kusile power plants as representative examples to assess the borrower`s safeguards systems, it is important to note that the Bank team will continue reviewing the safeguards documents, such as Environmental Impact Reports (EIRs), Environmental Management Plans (EMPs), or similar documents, prepared by Eskom for other EISP components, including associated facilities, as they become available during project preparation, implementation, and supervision. 9. Project Objectives. The strategic objectives of the EISP are to: (a) support the GoSA in removal of the growing infrastructure bottlenecks on an accelerated basis; and (b) revive economic growth in the Southern Africa region through enhancement of South Africa`s power supplies in an efficient and sustainable manner to bridge current and projected electricity supply- demand imbalances that already have taken a toll on sustained regional as well as South Africa`s economic growth. The outcomes of the project would be measured by the following indicators: Installation of an additional 4,800 MW or more of grid-connected power generation capacity by supporting implementation of Eskom`s investment program. Prepared plans and designs for retrofitting of some of Eskom`s power stations in order to improve efficiency and reduce carbon emissions. Investments in energy efficiency and renewable energy, such as the Sere Wind Power Project and the Upington CSP plant, which had been put on hold because of lack of sufficient project financing. III. BASIS FOR SELECTING THE PROJECT FOR PILOTING UNDER OP 4.00 10. South Africa was selected as a pilot country because it has an established legal and regulatory system and a favorable reputation for effective implementation of its systems governing environmental assessment and the protection and management of natural habitats, 4 protected areas, and physical cultural resources.6 This has already been demonstrated by the SDR completed by the Bank for the recently approved Global Environment Facility (GEF) project in support of the Development, Empowerment and Conservation of the iSimangaliso Wetland Park and Surrounding Region, which examined South Africa`s legal framework for the same four safeguards that are triggered by the EISP, but with reference to their application to an internationally protected wetlands area with substantial autonomy7 from the mainstream of the South African administrative framework. Just as this current document built on the findings of the previous SDR, this SDR will inform all future projects proposed for Bank support in South Africa, in particular those projects for which Bank safeguard policies are to be addressed through the application of South African environmental and social safeguard systems. 11. The EISP was selected as a scaled up pilot project because the borrower, Eskom, has demonstrated a substantial corporate commitment to fulfilling and going beyond compliance with legal and regulatory requirements and embracing a sustainability policy on both a corporate and project level. As described in detail below, Eskom subscribes to the United Nations Global Compact, has obtained or is in the process of obtaining ISO 14000 certification of its environmental management system for each of its operational units, and seeks to align its projects and its corporate practices with the requirements of the Equator Principles and with the Global Reporting Initiative (GRI). Accordingly, there was reason to expect that Eskom`s systems would likely demonstrate a very high level of equivalence with the World Bank safeguards as set forth in OP 4.00 Table A1, and Eskom`s investment projects would be implemented in an acceptable manner with respect to Bank environmental and social safeguards. IV. METHODOLOGY AND PROCESS FOLLOWED IN DETERMINING EQUIVALENCE AND ACCEPTABILITY 12. The Equivalence Analysis and Acceptability Assessment were carried out by a multidisciplinary team from the World Bank in collaboration with relevant officials and technical staff members from Eskom, with cooperation from DEA and the Department of Water. The methodology included: desk review of legislation currently in force, supporting regulations, and mandatory guidelines applicable to the electric power generation sector and associated infrastructure; discussion with officials; and site visits to the Medupi and Kusile construction sites in Limpopo and Mpumalanga provinces, respectively, by members of the Bank`s project team. The Bank`s team preparing this SDR consisted of senior level staff, including: an environmental lawyer, three environmental specialists, a Senior Technical Advisor, and a social specialist. 13. The Equivalence Analysis included a detailed inventory of South African laws and regulations relating to the four Bank environmental and social safeguard policies triggered by the 6 A letter from World Bank Country Director to the Director General of DEAT, August 29, 2005, proposed South Africa as a likely candidate for the Bank`s program on Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects`, due to the fact that in South Africa environmental regulations and agencies are already well developed and functioning, and that the conservation and sustainable development sector is attractive for the South African pilot both because the proposed project....is just now at the concept stage and because DEAT has already established capacity to conduct safeguard work. DEAT responded in the affirmative in a letter dated November 8, 2005. 7 The iSimangaliso Wetland Park is administered by the iSimangaliso Wetland Park Authority. 5 project, as identified below in the Equivalence section of this report. These laws and regulations are supported by Constitutional provisions, policies, and international agreements ratified by the GoSA, all of which are included as relevant to the legal framework for the Equivalence Analysis. An extensive literature review was also conducted tracing the development and evolution of South African environmental law in both historical and comparative contexts. The analysis draws careful distinctions between laws and regulations that are mandatory, as valid comparators to the Operational Principles of OP 4.00 Table A1, and other documents having aspirational or guidance value, which may inform the analysis and provide a basis for comparison with the Objectives of OP 4.00 but cannot be considered conclusive evidence of equivalence with the mandatory provisions of Bank safeguards (guidance documents, although not legally binding, may help clarify ambiguities in environmental laws and regulations and contribute to assessing Acceptability). Based on this analysis each relevant provision of a borrower`s system is characterized as having full, partial, or no equivalence to the corresponding Objective or Operational Principle of OP 4.00 Table A1. 14. The Acceptability Assessment applied the four-component methodology that has evolved through the SDR process during the implementation of the UCS pilot program. These components include: institutional capacity; processes and procedures; outputs; and outcomes. To assess relevant institutional capacity the assessment drew on primary sources including external and internal reports prepared by Eskom and DEA. These reports provided valuable insights into Eskom`s institutional capacity to: (a) conduct environmental assessment; (b) avoid, minimize, mitigate and compensate for adverse environmental impacts resulting from the construction and operation of thermal power plants and associated infrastructure while conserving natural habitat and physical cultural resources; and (c) conduct land acquisition and related resettlement activities in accord with South African legal requirements and international good practice as exemplified by Bank safeguard policies and associated guidance documents. The SDR also examined the capacity of DEA to apply informed critical judgment to its review of EIRs submitted by Eskom for the two power plants proposed for support under the EISP and by Eskom or other parties responsible for associated infrastructure. 15. To assess the effectiveness of implementing processes and procedures, the SDR reviewed official procedural and guidance documents describing the appropriate conduct of the environmental assessment and management process in South Africa, with particular attention to the various stages of the environmental assessment process, including the Scoping Phase, EIR Phase, public consultation and disclosure, culminating in the Environmental Authorization (formerly known as Record of Decision [ROD]) on the part of the Minister of Environmental Affairs. Similar review was conducted with respect to the development and approval of EMPs for the construction and operational phases of the project. The EIRs were reviewed in light of the requirements for environmental assessment under South African law and international good practices. 16. With respect to outputs, the SDR critically reviewed: the EIRs and EMPs for the Medupi and Kusile projects; the EIRs for the Sere Wind Power Project, the Upington CSP plant, and the Majuba coal transport rail spur; and the RODs and other approvals issued by DEA to date. The Acceptability Assessment also reviewed the land acquisition and compensation process undertaken by Eskom in connection with project development and the outcomes of that process 6 with respect to compliance with South African law and the objectives and operational principles of Bank policy with respect to Involuntary Resettlement. 17. As noted in Section III, the findings with respect to specific aspects of the South African regulatory framework and responsible implementing agencies, such as DEAT, have already been subject to a SDR and public consultations as part of the iSimangaliso project. Those findings are updated as necessary and reflected in the current SDR, but the primary focus of the current SDR is Eskom`s corporate policies and practices, especially as demonstrated by its assessment and implementation of the Medupi and Kusile projects. A draft of this SDR was disclosed by the Bank as a consultation draft on November 3, 2009, and on Eskom`s website on November 11, 2009. The SDR was subject to stakeholder consultation workshops as noted in Section I above. Following the public consultation period, the SDR was updated, and an Annex to this report provides a summary of comments received from stakeholders and the Bank`s response, and where relevant, cites revision that have been made in the SDR. V. SUMMARY OF EQUIVALENCE ANALYSIS 18. The first step in the Equivalence Analysis is to identify the World Bank environmental and social safeguard policies triggered by the project. This exercise is undertaken by the World Bank project team at the Bank`s project concept stage8 and is revised if necessary as project preparation evolves toward Appraisal. The documentation of triggered safeguards along with the justification is recorded in the Integrated Safeguards Data Sheet (ISDS) for the project. According to the concept-stage ISDS, the four environmental and social safeguards triggered by the project include: Environmental Assessment (EA); Natural Habitats (NH); Physical Cultural Resources (PCR); and Involuntary Resettlement (IR). The project also triggers OP 7.50 (Projects on International Waterways), but this is a legal Safeguard Policy and not eligible for consideration under OP 4.00. 19. It should be noted that the issue of greenhouse gas emissions and the related impacts on climate change that may be associated with the EISP are outside the scope of this SDR. The application of OP 4.00 is limited to the Bank`s environmental and social safeguard policies that are triggered by a particular project or activity that the Bank proposes to support. Although the Bank`s safeguard policy on EA makes reference to the need to address global impacts as part of the EA process, the Bank is better positioned to address the climate change issue at a strategic level, through the application of the Bank`s Strategic Framework for Energy and in the context of the corresponding strategic framework of the borrower, Eskom, and the GoSA. A thorough discussion of greenhouse gas emissions and climate change issues associated with the EISP will be included in the Project Appraisal Document for the EISP, which also will be subject to public disclosure once it is prepared by the Bank team. 8 In this case, the two main investments by Eskom that are the key subjects of this SDR, i.e., the Medupi and Kusile power plants, have already been subject to the full EIA process in accordance with South African legislation, and are already under construction. The other investments that are part of EISP also have already been subject to the full EIA process, but their implementation has been put on hold primarily because of budgetary constraints and priorities. Land acquisition has been completed for the 67-km Majuba rail spur, and the acquired right-of-way has been fenced off. 7 20. Annex 2 of this Report includes a narrative summary of South Africa`s Constitutional provisions, laws, and regulations that apply to the projects to be financed by the EISP and that correspond to the four Bank environmental and social safeguard policies triggered by the EISP components. Annex 3 contains in matrix format a detailed comparison between the relevant provisions of the South African legal system and the corresponding Objectives and Operational Principles of OP 4.00 Table A1. 21. Following is a summary of the findings of the Equivalence Assessment. Although a few ambiguities or gaps in South Africa`s legislative framework required additional analyses or clarification as part of stakeholder consultation in order to make a determination of full equivalence with respect to the four safeguards, the Acceptability Assessment concludes that the few apparent ambiguities in equivalence with respect to South African legislation regarding EA, NH, and PCR have all been addressed by Eskom in its EA process and in its implementation of the project components to date. With respect to IR, there are some gaps in equivalence that will be addressed through project implementation. These gaps, and what will be done about them, are discussed in subsequent sections of this report (Section VI. Acceptability Assessment; and Section VII. Proposed Gap-filling Measures). A. ENVIRONMENTAL ASSESSMENT (EA) 22. With respect to EA, and the legal system designed to manage the environmental and social impacts of the various components of the EISP, the Equivalence Analysis needed to be carried out on a composite of current legislation and regulations and legislation and regulations that were in effect at the time the projects were designed (2004-2008) but may have since been superseded. This is because the South African regulations for Environmental Impact Assessment (EIA) were revised in 2006, shortly after the Terms of Reference for the EIA process for the Medupi and Kusile investments were approved. Therefore, the EIRs9 for both Medupi and Kusile were conducted and approved under the EIA Regulations issued in 1997 under the authority of the 1989 Environmental Conservation Act (ECA) rather than the current EIA Regulations issued in 2006 under the authority of the National Environmental Management Act (NEMA). However, as described later, the EIA process and EIR content for both projects was strongly influenced by and is essentially consistent with the EIA Regulations that became effective in July 2006, even though they were not legally applicable to the Medupi and Kusile projects. This is because the EIA process for both projects began at a time when the draft new regulations were already out for public comment; therefore, Eskom chose, and instructed its consultants, to ensure that the EIA process and the EIRs would conform with the proposed new regulations as well. Furthermore, pending full application of the implementing provisions of the NEMA AQA of 2004, the provisions of the Atmospheric Pollution Prevention Act (APPA) of 1965 continue to apply to the Medupi and Kusile facilities. Finally, pending the implementation of the new Waste Act of 2008, the Minimum Requirements for Landfills issued by the Department of Water Affairs and Forestry (second edition, 1998) will apply to the ash disposal facilities to be constructed adjacent to the two plants. All comparisons between the South African legal framework and the corresponding Objectives and Operational Principles of OP 4.00 Table A1 9 South African regulations refer to an EIA process, which produces an EIR. An effort is made in this SDR to retain this distinction in South African regulatory terminology between process and product. 8 are based on the South African laws and regulations that apply to the EISP components, as reflected in the RODs issued by DEA. 23. The South African system for EA is deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1. However, the equivalency analysis of the regulatory framework identified two ambiguities in the regulatory language that will be addressed with respect to the EISP in the subsequent Acceptability Assessment (Section VI): It is not clear from the regulatory language that the assessment of alternatives is required to assess their relative feasibility on the basis of all of the feasibility criteria cited in OP 4.00 Table A1, which are expected in the Bank`s work to be applied to all projects. It appears that the proponent has the option to include only those alternatives deemed feasible and reasonable and compare the advantages and disadvantages of such alternatives for the environment and the community. But it does not explicitly require the Environmental Impact Report to justify alternatives with respect to comparative capital and recurrent costs, and institutional, training and monitoring requirements, as well as other factors. DEAT published guidance on criteria to be included in alternatives assessment in 2004 (Integrated Environmental Management Information Series, Series 11: Criteria for Determining Alternatives in EAI), which recognizes that the range of criteria must be appropriate to the type of project subject to the EIA process. However, in practice, and as a business matter, Eskom addresses the capital and recurrent costs, as well as the institutional, training and monitoring requirements of alternative mitigation measures. Paragraph 5 of Table A1 of OP 4.00 states that the borrower system EA, [w]here applicable to the type of project being supported, is expected to normally [emphasis added] apply the Pollution Prevention and Abatement Handbook (PPAH) [and to j]ustify deviations when alternatives to measures set forth in the PPAH are selected. Although neither NEMA, the EIA Regulations, nor Eskom policy require any reference to the PPAH10 with respect to the impacts of thermal power projects, in particular ambient and atmospheric emissions, all of these South African systems reference the same source documentation as the General Environmental, Health and Safety Guidelines and the Thermal Power Environmental, Health and Safety Guidelines in the PPAH. These include the ambient air quality standards of the World Health Organization and international good practice with respect to emission controls as implemented by the European Union and the United States Environmental Protection Agency. In addition, Eskom has commissioned an independent review of the compliance of the Medupi and Kusile projects with the Equator Principles, which are derived from, and make reference to, the Performance Standards of the International Finance Corporation (IFC) and the Environmental, Health and Safety Guidelines (EHSGs) in the PPAH. 10 It may not be entirely reasonable to expect a borrower`s system to reference any particular external standard. The absence of any reference to the PPAH is more understandable with respect to Eskom in South Africa, which would instead reference South African environmental regulations as its benchmark for environmental performance in South Africa, rather than an external benchmark such as the World Bank`s PPAH. 9 B. NATURAL HABITATS (NH) 24. With respect to NH, the South African system is deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1. However, a few ambiguities in the language of the regulatory framework will be addressed with respect to the EISP in the subsequent Acceptability Assessment (Section VI): South African legislation appears to lack a conservation offset provision for non- critical habitat. South Africa recognizes that as the development footprint increases, there will be unavoidable loss of non-critical habitat, but through the Environmental Authorization (formerly ROD) process, biodiversity offsets can be required on a case-by-case basis. The otherwise strong prohibition on conversion of critical natural habitat could be weakened by the provision that an area may be excluded by Unilateral Notice issued by the Minister of Environment or a provincial government. But this ambiguity is irrelevant to the EISP because project components are not sited in nor do they require conversion of critical natural habitat, and it will not be examined further. There appears to be no specific language regarding requirements for public disclosure and consultation in legislation pertaining to NH, but it is clearly an integral part of the EIA process. C. PHYSICAL CULTURAL RESOURCES (PCR) 25. With respect to PCR, the South African system is deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1. However, a few ambiguities in the language of the regulatory framework will be addressed with respect to the EISP in the subsequent Acceptability Assessment (Section VI): There appears to be no specific language in legislation pertaining to PCR regarding the extent of participation and obligations of communities in the process of cultural heritage assessment and conservation, but it clearly is within the scope of the EIA process, as specified by the Natural Heritage Resources Act. Although the legislative framework does not make explicit reference to chance finds, a standard condition is included in all Environmental Authorizations (formerly RODs) stipulating how chance finds must be dealt with during construction and operations, but the legal basis for this standard condition is not evident. D. INVOLUNTARY RESETTLEMENT 26. With respect to IR, the South African system is found to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1 for all but the following Operational Principles: 10 Rights of access to natural resources and biodiversity of protected areas (however, as there are no protected areas affected by the EISP, this gap in equivalence is not relevant to the conclusion of this SDR); Disclosure of stand-alone draft resettlement plans, including documentation of the consultation process, in a timely manner, before appraisal formally begins, in an accessible place, and in a form and language that are understandable to key stakeholders; and Assessment of whether the objectives of the resettlement instrument have been achieved upon completion of the project, taking into account the baseline conditions and the results of resettlement monitoring. 27. It should be noted, however, that the South African legislation regarding resettlement requires extensive consultation and disclosure with directly affected people, i.e., those who are to be resettled, and provides for benefits and livelihood restoration in a manner consistent with the Bank`s safeguard policy. Therefore, for the EISP, the key gaps in equivalence appear to be the absence of a requirement for a formal, stand-alone Resettlement Action Plan that is disclosed to a broad audience of interested parties, and a formal mechanism for a completion audit. These gaps will be discussed further in Sections VI and VII of this SDR. E. GENERAL CONCLUSION OF THE EQUIVALENCY ANALYSIS 28. Although a few ambiguities or gaps in the regulatory framework have been noted in the Equivalency Analysis with respect to the four safeguards, it would appear, as a result of the Acceptability Assessment (below) that all the apparent ambiguities in equivalence with respect to EA, NH, and PCR have been addressed by the borrower (Eskom) in its EIA process and its implementation of the projects to date. With respect to IR, there are some gaps in equivalence that remain to be addressed through project implementation, in particular those relating to the absence of any requirement in South African law to prepare and disclose stand-alone resettlement plans and to assess whether the objectives of the resettlement instrument have been achieved upon completion of the project, taking into account the baseline conditions and the results of resettlement monitoring. VI. ACCEPTABILITY ASSESSMENT 29. The purpose of the Acceptability Assessment is to confirm that the implementation practices, track record, and institutional capacity of Eskom as the borrower, and relevant South African agencies that will be involved as regulators in addressing environmental and social safeguard issues in the proposed Bank-supported EISP, meet the requirements of OP 4.00. This report presents acceptability findings only for the four policy areas that have been found applicable thus far to the EISP: Environmental Assessment, Natural Habitats, Physical Cultural Resources, and Involuntary Resettlement. 30. The primary institutions responsible for implementing the four environmental and social safeguards applicable to the project, and under consideration for piloting under UCS, include Eskom and DEA (formerly DEAT). The Department of Water Affairs (DWA) and the South 11 African Heritage Resources Agency (SAHRA) have well defined but limited roles in the context of EISP. Eskom will be assessed for acceptability with respect to its corporate capacity and practices as well as its implementation of the Medupi and Kusile power plants and associated transmission lines, the Sere WPP, the Upington CSP plant, and the Ermelo-Majuba rail spur for coal transport. DEA will be assessed for acceptability with respect to its regulatory role, i.e., capacity and commitment to oversee the EIA process, review and approve EIRs, identify and require permit conditions in RODs, and identify and implement effective project monitoring and supervision requirements. The Department of Water Affairs` role in the EISP is in regulating the disposal of ash waste (and indirectly in assuring water supply to the Medupi project). SAHRA provides the expertise in South Africa to develop and implement policies and practices towards protection and management of cultural resources, but under the EIA Process established by NEMA, cultural heritage and resources are among the key subjects that must considered in the EIA process, which is under the jurisdiction of DEA. SAHRA becomes involved at the point cultural resources are found, at which it time it must be consulted and its advice followed. A. INSTITUTIONAL CAPACITY 1. Eskom Holdings Limited (Eskom) 31. Eskom is South Africa`s national, vertically integrated electricity utility, and is wholly owned by the Government of South Africa through the Department of Public Enterprises. Eskom`s current structure is defined by the Eskom Conversion Act of 2001. The utility employs about 35,500 employees (reduced from about 66,000 over the past two decades). Eskom operates its business through a number of divisions and subsidiary companies. Figure 1 shows the current structure of the Eskom Group, including the major subsidiaries. Eskom`s core business as a utility is carried out by the three divisions under the heading Eskom Core Business and is described below, followed by a brief description of the operations of the key subsidiaries. 32. At the corporate level, environmental and social governance within Eskom begins with the Chief Executive Officer (CEO) and is overseen by: the Executive Directors, who are full time employees of Eskom, and by the authority delegated to Board Committees, including the Executive Management Committee and the Sustainability and Safety Subcommittee. The latter is comprised of four independent non-Executive Directors along with the CEO and two Board Members, and guides corporate strategy on sustainability, occupational health and safety, and environmental matters in line with Eskom`s safety, health and environment policy, NEMA, and the Occupational Health and Safety Act of 1993.11 At the technical level, the Subcommittee is supported by the Environmental Liaison Committee, which includes all environmental managers and representatives from the generation, transmission, distribution audit, legal and research units. 11 Eskom, Annual Report, 2008, pp. 206-215. 12 Figure 1. Eskom Holdings Business Structure Eskom Holdings Ltd Eskom Core Subsidiaries Generation Customer Networks -System ops and Corporate -Generation - Finance Eskom Enterprises (Pty) Ltd planning -Rotek Industries (Pty) Ltd -Primary energy -Corporate services - Transmission - Roshcon (Pty) Ltd -Enterprises -Human resources -Distribution - Eskom Uganda Ltd - arivia.com (Pty) Ltd - Eskom Energie Manantali SA 33. The CEO, as chairman of the Sustainability Committee of Eskom`s Executive Committee (EC), is accountable for all of Eskom`s overall sustainability performance. The coordination and determination of Eskom`s strategic direction on sustainability, including environment, occupational health, and safety, is undertaken through the Sustainability Liaison Committee. Each line manager is responsible for monitoring environmental and social impacts in their respective divisions, 34. Within the management structure of Eskom, each line division (Generation, Transmission, or Distribution) is individually responsible for carrying out the EIA process and preparing EIRs, and for the environmental management and monitoring activities associated with its line of business. To undertake these tasks Eskom has approximately 120 environmental and social specialists located in its headquarters office and various field operations. 35. Eskom has integrated sustainable development issues into its strategic planning and decision making since 200412 and has adopted a comprehensive triple bottom line13 approach to the management of environment, health, and safety issues as part of its corporate commitment to sustainability. As one of the charter members of the United Nations Global Compact, Eskom 12 Eskom, Annual Report, 2008, p. 27. 13 Triple bottom line refers to the synergies between economic, environmental, and social sustainability in corporate management. 13 is committed to uphold the ten principles of the Compact, which include inter alia: protection of the environment, labor standards, human rights, and anti-corruption.14 36. Eskom states that We are ensuring that not only are we complying with South African environment, social and legal requirements, but also the Equator Principles, 15 IFC Performance Standards, while taking into account, the IFC Environmental, Health and Safety Guidelines.16 37. Each year Eskom candidly audits its own performance in terms of a sustainability index based on 20 indicators, including economic, environmental, technical, and social aspects. Eskom`s overall performance for the most recent rating period (2008) was 2.5 on a five point scale, where overall performance of 3.0 is considered sustainable. Of the four issue areas, Eskom most recently rated itself lowest for environment, with a score of 2.2 in 2008 compared to 2.6 in 2007.17 Beginning in 2006, Eskom engaged the London-based Ethical Investment Research Centre to benchmark its sustainability performance against the Johannesburg Stock Exchange Socially Responsible Investment (JSE SRI) Index which measures environmental, social, and governance issues, and has met the required standard to qualify for inclusion in the JSE SRI through financial year 2007.18 38. With respect to environmental management, Eskom`s Transmission Division has been certified to the ISO 14001 standard. Regular environmental audits are undertaken on all Divisions, with the results reported to the relevant EC and managing directors of all Divisions. The Operations Subcommittee of the EC monitors and assesses environment and occupational health and safety performance and reviews major incidents to ensure that necessary corrective measures are taken. 39. Eskom`s accounting practice also identifies and reports on dedicated environmental expenditures. In 2006 R339 million (approximately US$45 million) was spent on capital and R354 million (approximately US$47 million) on operational environmental activities, primarily aimed at improving air quality management at coal-fired power plants, rehabilitation of coal mines, environmental assessment in connection with capacity expansion, and disposal of polychlorinated biphenyls (PCBs). 14 The three Global Compact Principles relating to the Environment include: Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. 15 The Equator Principles are a set of environmental and social benchmarks for managing environmental and social issues in international project finance globally. The original Equator Principles were adopted by ten leading commercial banks in 2003, based on IFC safeguard policies and subsequently revised to align with IFC Performance Standards in 2006. Currently approximately 70 financial institutions subscribe to the Equator Principles including: international, regional, and national commercial and investment banks; insurance companies; export credit agencies; and bilateral development finance institutions. As an indication of its commitment to the Equator Principles, Eskom commissioned independent reviews of the compliance of the Medupi and Kusile plants with them. The results of these reviews are considered in the discussion of the EIA process and projected project outcomes in this SDR. 16 Eskom, Annual Report, 2008, p. 63. IFC's Performance Standards define clients` roles and responsibilities for managing their projects and the requirements for receiving and retaining IFC support. The Performance Standards are closely aligned with World Bank environmental and social safeguard policies and include additional standards (e.g., on labor rights) reflecting the private sector and corporate structure of IFC clientele. 17 Eskom, Annual Report, 2008, p. 28. 18 Eskom, Annual Report, 2008, p. 28. 14 40. With respect to its public reporting practices, Eskom aligns itself with the GRI 19 and applies the GRI principles of inclusivity, relevance and materiality; sustainability; completeness; and boundary setting.20 41. Eskom`s environmental policy is articulated in its Environmental Procedure. This includes several subsidiary sections: Environmental Management System; Environmental Management Programme; Waste Management; Land Management; Electro and Magnetic Fields; Due Diligence; and Reporting. Additional policies guide its approach to Air Quality Management; Climate Change; and Safety, Health and the Environment. 42. Environmental Management. The Eskom Environmental Management Programme (EEMP) is the most relevant document relating to the corporate approach to managing the environmental impacts of the EISP. The EEMP issued in September 2007 is a plan of action that sets out a required environmental end state and...how activities that could have a negative impact on the environment will be managed and monitored and how impacted areas will be rehabilitated.21 It requires that an EMP be developed in accord with the Environmental Management System (EMS) of each line division for all existing and future land that is owned or occupied by Eskom; and for projects for which an EIR or EIA Screening is undertaken. Each Eskom division and subsidiary is required to establish Key Performance Indicators (KPIs/EMS) for the development and implementation of EMPs. Business Unit managers are accountable for the coordinated development and implement of the EMPs in their respective areas in line with the KPIs/EMS. The EEMP articulates the ten steps in EMP process which is designed to integrate the development and implementation of an EMP into the project...[through] systems, processes; documentation, contracts, etc. 43. Detailed guidance is provided in the EEMP for the collection of baseline data; identifying and predicting environmental impacts and their significance (including the activity or root cause associated with any significant impact); the setting of objectives and targets to address root causes; actions to be taken to meet objectives and targets; integration of the above actions into project/operational systems, documentation, and contracts; the linking of EMP performance to existing business performance measures and reporting practices via KPIs; implementation of EMP actions; monitoring; and auditing. 44. The EEMP specifies the substantive environmental issues that are to be addressed in an EMP including: air quality; water quality; land management (including protected species, invasive plants, herbicide usage, access roads, and animal safety); community issues (including property ownership, waste disposal, emergency response, culture and lifestyles, procurement of agricultural products, cultural artifacts, and noise reduction); and the establishment of a community grievance procedure through which all complaints shall be reported, recorded, and investigated in compliance with each business unit`s procedure. The Programme further stipulates that environmental clauses shall be included in all contract documents for all 19 The GRI is a network-based organization that has pioneered the development of the world`s most widely used sustainability reporting framework (www.globalreporting.org). 20 Eskom, Annual Report, 2008, Executive Summary. 21 Eskom, Environmental Guideline: Environmental Management Programme, September 2007. Note that this document addresses Eskom`s approach to environmental management at the corporate level. Eskom also prepares project-specific Environmental Management Plans as required under South African law. 15 contractors and that only contractors with proven track records of sound environmental performance shall be engaged for Eskom projects. 45. According to DEA, Eskom has developed a superior ability to conduct EA through independent consultants (as required by the EIA Regulations); to prepare and implement project- specific EMPs; to pro-actively engage the affected public and nongovernmental organizations (NGOs) in informed consultation through transparent public disclosure of projects; and to assess alternative sites and mitigation strategies. 46. Air Quality Management. Of particular relevance to the EISP is Eskom`s policy on air quality.22 Eskom`s approach to air quality management at its power plants is governed by the NEMA Air Quality Act (AQA) of 2004 and the implementation plans detailed in the National Framework for Air Quality Management of September 11, 2007,23 and incorporates emissions control for particulates, sulfur dioxide (SO2), oxides of nitrogen (NOx), heavy metals, fugitive emissions, volatile organic compounds (VOCs), and greenhouse gases. 47. Eskom`s policy on gaseous emissions is consistent with the requirements of the AQA and DEA policy. It requires that decisions on use of available and proven technologies to reduce sulfur emissions (installation of Flue Gas Desulfurization, or FGD) are made on the basis of a facility`s projected impact on ambient air quality, taking into consideration existing and projected air quality from the proposed facility combined with other emission sources. In addition, Eskom`s policy requires that all new capacity will include a requirement for low NO x technology. With respect to particulate emissions, Eskom continually investigates new particulate control technologies and maintenance regimes to ensure the most practicable and cost-effective methods of emission control.24 48. Over the years, Eskom has recorded significant progress in reducing particulate emissions through the use of technologies that enhance the efficiency of electrostatic precipitators, such as sulfur trioxide flue gas conditioning, skew flow technology, retrofitting of pulse jet fabric filters, and improved control systems. In addition to particulates, Eskom calculates and records on an aggregate basis the annual amounts of NO x, SO2, and carbon dioxide (CO2) emitted from its power stations based on coal characteristics and power station design parameters. All coal-fired power stations are in the process of installing continuous emissions monitoring systems on at least one unit per station. 49. With respect to SO2 emissions, Eskom reports that the primary control technology, FGD, has not been installed at any existing power stations to date in South Africa. This approach will change with respect to the Medupi and Kusile plants, under plant-specific circumstances to be described below. In addition to FGD, which involves substantial inputs in the form of water and lime (or limestone) as well as high capital and operating costs, Eskom is studying alternative ways to reduce SO2 emissions, including coal beneficiation/processing to reduce the sulfur 22 Eskom distinguishes air quality from climate change as follows: air quality refers to local air pollutant [e.g., oxides of sulfur and nitrogen, and particulate matter] that have local impacts, whereas climate change impacts result from greenhouse gas emissions which have impacts on a global scale. 23 It should be noted that the EIRs for Medupi and Kusile were undertaken prior to the issuance of the National Framework for Air Quality Management in 2007. 24 Eskom, Annual Report, 2007, Director's Report on the Environment and Climate Change. 16 content of the coal. With respect to NOx emissions, Eskom relies primarily on the use of low- NOx burners to meet emissions and ambient impact requirements and objectives.25 50. In addition to monitoring emissions, Eskom has operated an ambient air quality monitoring network since the 1980s to provide national and regional information on long-term trends in air quality. The network includes monitoring sites in the immediate vicinity of certain power stations and research sites. Additional monitoring stations have been installed near proposed new power stations, and others have been relocated to more appropriate locations. The network measures not only Eskom emissions, but all emissions from surrounding sources. Monitoring equipment is calibrated against National Meteorological Laboratory standards in a laboratory accredited by the South African National Accreditation System. All sites, except two, are equipped to monitor SO2, NOx, ozone (O3), fine particulate matter (FPM), wind speed, wind direction, and ambient temperature. The other two sites monitor SO 2, FPM, and meteorological parameters. According to Eskom, over a ten year period from 1998 through 2008, NEMA AQA standards and DEA guidelines for particulates and SO2 were exceeded on several occasions at a few specified sites, including the airshed affected by the Kusile project, where the DEA daily mean guideline value of 48 ppb for SO2 was exceeded on two occasions and the DEA hourly mean guideline value of 134 ppb was exceeded on 57 occasions as a result of emissions from the existing Kendal station.26 51. Water Supply. Eskom purchases its water from the Department of Water Affairs directly via abstraction from state-owned water works or through intermediaries (such as Exxaro at the existing Matimba Power station in Limpopo).27 52. Occupational Health and Safety (OHS). Despite significant efforts, Eskom`s OHS record remains unsatisfactory in terms of Eskom`s own corporate standards and target of zero fatalities per reporting year.28 During the past two years covered by Eskom`s 2008 Annual Report (2007-2008) Eskom experienced 25 fatalities among employees, 30 among contractors, and 83 among members of the public in accidents and other incidents, especially involving vehicles and accidental or unauthorized electrical contact. 25 Additional insight into Eskom`s approach to managing power plant emissions with direct relevance to its proposed mitigation measures for Medupi and Kusile, is evident from its November 2008 submission to the Working Group on Minimum Emissions Standards for Combustion Installations, established under the 2007 Framework for Air Quality Management for the purpose of developing Regulations Relating to Listed Activities and Minimum Emissions Standards under the 2004 AQA. Although not all of Eskom`s recommendations were subsequently accepted by DEAT, Eskom sought to ensure that the application of emissions standards to particular facilities would take into account ambient conditions such as existing air quality and population exposure; that permitted concentrations of pollutants be qualified in terms of monthly and hourly averaging periods so as to provide some reasonable tolerance for exceedances, particularly during start-up, shut-down or upset conditions. In addition, Eskom argued that DEAT`s proposed timetable for compliance with the new plant standards should be determined on a plant-by-plant basis and take into account availability of resources, remaining life of plant, and impact of emissions on health of people living in the plant vicinity. Eskom further recommended that the definition of existing plant should include those plants for which authorization was obtained prior to the publication of emission standards. The details on Eskom`s proposals to the Working Group can be found at: www.saaqis.org.za/filedownload.aspx?fileid=188. 26 www.eskom.co.za/annreport08/034 27 Eskom, Annual Report, 2008, p. 25. 28 Eskom, Annual Report, 2008, pp. 20. 17 53. Eskom, having established a target of zero fatalities per reporting year, believes that this performance is totally unacceptable, and proposes to continue its focus in terms of enhancing safety training and awareness, skills, competency, supervision and operational discipline. Eskom has in place a procedure to investigate all fatalities promptly and share lessons learned from case studies and internal briefings. In June 2007 Eskom launched its Switched on to Safety Excellence program designed to: Achieve a sustainable culture of excellence based on enhanced safety management by reinforcing teamwork, increasing operational discipline, and applying learned skills; Customize and adopt existing safety management systems and protocols focusing on best practice; and Equip leadership with the knowledge and tools to drive Eskom`s safety culture transformation. 54. To accelerate these changes, Eskom implemented a behavior-based safety observation tool and senior leadership training aimed at strategic and operational aspects of effectively managing safety. Increased leadership commitment was demonstrated through national and regional work stoppages to reinforce the importance of safety, in particular in high risk activities. Eskom has established divisional contractor fora, partnering with contractors to address safety, health and environmental concerns. In addition, Eskom engaged the services of an international specialist on a three year contract to evaluate electrical safety as well as a behavioral safety program. Changes were made to the Eskom electrical training material to incorporate some of the recommendations made. With respect to community safety, campaigns to improve public awareness were rolled out in various media and included school visits and the handout of safety materials. 55. Ash Management. Eskom seeks to recycle as much of the ash produced by its power stations as possible; in 2008 this amounted to seven percent used for the production of cement. The remaining ash is disposed of in ash lagoons or on dry ash dumps adjacent to power stations with management practices to control fugitive dust.29 For the Medupi and Kusile projects, ash will be disposed of essentially dry, i.e., with the minimum amount of water necessary to prevent dust formation during transport by conveyor belt and deposition. The sites are located on relatively flat terrain, and are designed as landfill facilities for solid wastes with leachate collection, treatment, and reclaim systems. As soon as possible, deposited ash is covered with topsoil for revegetation purposes. Therefore, ash disposal facilities that are part of the EISP are not liquid storage facilities, and the Bank`s Dam Safety Policy does not apply. 56. Biodiversity. Eskom manages and controls any significant threats to biodiversity resulting from its power stations and power lines through partnerships with civil society to ensure best practice and specialist input, including projects in areas of non-critical natural habitats. Examples of such partnerships include the Endangered Wildlife Trust, Birdlife South Africa, the Middlepunt Wetland Trust, and the Wildlife and Environment Society of South Africa. 29 Eskom, Annual Report, 2008, pp.76-80. 18 57. Land Acquisition and Resettlement. As noted in the Equivalence Analysis, above, South African legal requirements for resettlement and compensation are broadly consistent with the Objectives and Operational Principles of 4.00 Table A1, especially in the context of transparency in consultations with directly affected people, fairness of compensation, the widely- known availability of appeal mechanisms, and, particularly for the poor, a requirement for significant improvement in living quarters and opportunities for betterment in livelihood (economic rehabilitation). 58. South African law goes beyond market value compensation, to include all costs needed for the affected landowner to re-establish an economic livelihood, including losses incurred during the transition period. South African law also guarantees that all people living on an acquired property, such as tenants, employees, or even squatters, are entitled to resettlement and assistance to improve their economic well-being. 59. One key area in which South African legislation, and Eskom`s practice, differ from Bank practice is the absence of a requirement for preparation and public disclosure of a stand-alone Resettlement Action Plan (or Resettlement Plan Framework) prior to resettlement. It is important to note that the difference is not in the substance of the process, but that in South Africa there is no requirement to systematically document and make public to a broad audience how resettlement will occur, what the rights and benefits are, and what grievance and appeal procedures are available. Instead, this is done through consultations and negotiations with all directly affected parties prior to resettlement. 60. Eskom views the legal requirements that apply to land acquisition and resettlement as minimum requirements and strongly supports the principle of security of tenure.30 This involves negotiated solutions where people are given choices. Consultation takes place with all affected people and is geared toward a negotiated settlement. 61. Eskom is the direct implementing agent for the resettlement process and takes full responsibility for the land acquisition and resettlement process, but government is part of the process as an observer to ensure that the legal requirements are being met. For this purpose, the national Department of Land Affairs provides a field officer who then participates in all negotiations. In addition, provincial and local authorities participate directly in the resettlement process through representation on consultation fora. The government plays a more direct role in circumstances where land claims exist for restitution on a property that Eskom is seeking to acquire for a project; in this instance the government must first make a decision on the land claim before the land acquisition process can proceed. Eskom need for the land is considered as part of the government`s decision on whether the land is returned to the claimant or whether replacement land is made available. 62. At the earliest possible stage in the resettlement process, Eskom conducts a detailed Social Impact Assessment (SIA), typically through an independent third party with the required expertise. The SIA provides a socio-economic baseline that includes both the physical characteristics and the communities to be affected (i.e., number of homesteads, family units, and 30 The following discussion is drawn partially from the independent reviews of the Medupi and Kusile power plants conducted on behalf of Eskom by SE Solutions. 19 total population) as well as characterizing livelihoods and dependencies. The baseline also serves as a formal census or register of affected and potentially affected parties that can be used later if required as a threshold for determining eligibility for compensation. 63. Eskom seeks to avoid expropriation wherever possible and includes the potential need for and cost of expropriation, resettlement, compensation and rehabilitation among the criteria used for alternative site assessment. When resettlement is unavoidable all displaced people are effectively compensated and support and other benefits are provided in the relocation process. 64. Eskom provides security of tenure to resettled parties and helps register deeds of ownership. They provide owners with collateral for a loan to finance their own economic improvement. 65. Replacement accommodation is based on South African Bureau of Standards requirements for housing, which requires minimum brick, mortar and tile structures with running potable water and proper sanitation. Where cost-effective, Eskom also seeks to provide electricity to replacement structures. Eskom`s expenditure in these transactions is strictly controlled by the Public Finance Management Act; however, it is Eskom`s policy to ensure that resettled parties are better off than prior to resettlement. Eskom seeks to maximize employment of displaced persons in whatever jobs may be available on project sites. However, these are typically unskilled construction jobs of limited duration. 66. Where in-kind resettlement opportunities are not available, Eskom provides cash compensation based on an independent valuation using open market selling trends of similar land based on registered sales over a period between three months and three years. In cases where the land owner disagrees with the compensation offered, the owner is entitled to appoint a valuer of its own choosing, but at its own expense, with the final offer typically reflecting the difference between the two valuations. 67. Although Eskom does not prepare formal publicly-disclosed resettlement plans, Eskom does undertake independent SIAs and develops internal plans for resettlement with timelines and commitments. The plan is treated as a living document that is updated as required on an ongoing basis. All negotiated outcomes are documented as formalized agreements and the entire resettlement process is documented and filed by Eskom. The implementation phase of the contractual resettlement plan is monitored and evaluated by contractors hired by Eskom, and is subject to amendment by mutual agreement of the parties. 68. Eskom states that it has embarked on numerous strategically important EIAs with respect to land and servitude acquisitions for new power stations, substations and power lines... In [2008] alone 8,155 interested and affected parties were consulted and 584 servitudes were acquired. The majority of these projects were successfully completed, as they were well received by the communities... Eskom attributes this success to the engagement of a public committed to taking part, voicing its views and influenc[ing] the outcome of [the] servitude acquisition process. 69. In terms of registered land owners, Eskom provides direct compensation on a willing seller-willing buyer principle and pays market value for properties so acquired. In addition, 20 Eskom pays for direct financial losses that may be incurred as a result of the need to relocate, including the replacement of assets where this is appropriate.31 70. However, Eskom also acknowledges the following two weaknesses that have the effect of delaying the completion of the process:32 Some stakeholders only begin participating late in the land or right-of-way (servitude) acquisition process, which results in a need to review decisions already made; and Individuals purchase properties where the seller has failed to disclose that Eskom has an approved ROD to install a power line. 71. To address these weaknesses going forward, Eskom proposes the following measures:33 Involvement of all stakeholders during the planning stages of our projects. The public will have a view of our future development plans and will have an opportunity to give inputs and comments. We will also announce and publicize all our proposed projects early enough to the communities involved. Furthermore, we will actively engage with various national and provincial statutory bodies, NGOs, agricultural unions, and other organizations to raise awareness about planned projects and proposed implementation plans, solicit support for all current projects and future projects, and influence their strategic development plans. Lastly, we endeavor to improve our communication media and feeding of information to our customers. 72. A review of Eskom`s practices indicates that they fully meet the requirements of South African legislation. During discussions with Eskom on the subject of more formally documenting the resettlement process, Eskom recognized that there could be value in making public to a broader audience than directly affected people how resettlement would be carried out for future projects. As a first step gap-filling measure, Eskom prepared a Resettlement Plan Framework (Procedure for the Involuntary Resettlement of Legal and Illegal Occupants on or from Eskom Procured Land) and disclosed it on its website in October 2009. 73. Internal Monitoring and Compliance. Eskom has a systematic audit process in place to ensure that any non-compliance with South African legal requirements are identified, reported, and investigated, and that corrective and preventive measures are implemented. During the most recent two-year reporting period from 2007-08, 96 environmental legal contraventions were recorded, most of them relating to unauthorized releases of process and wastewater. 31 SE Solutions, The Kusile Coal-fired Power Station Project, Independent Review of Compliance with the Equator Principles, June 15, 2009, 4.6.1. (SE Solutions, Kusile) 32 Eskom, Annual Report, 2008, p. 65. 33 www.eskom.co.za/annreport08/023. 21 74. Independent Verification of Eskom's 2008 Business Sustainability and Performance Review. Eskom engaged KPMG Service (Pty) Limited in 2008 to provide independent assurance with regard to selected key sustainability indicators as presented in the business sustainability and performance review section of the 2007/08 Annual Report. 34 The KPMG review provided unqualified support for Eskom`s reportage regarding the following environmental and social issues: Net specific water consumption; and Relative particulate emissions, and emissions of SO2 and CO2. KPMG offered qualified opinions on the reliability of Eskom`s reporting with respect to: The total number of environmental legal contraventions; and The lost time injury rate. The qualified opinions result from identified weaknesses in Eskom`s reporting performance with respect to the precise number of environmental contraventions and the lost time injury rate, as it moves toward GRI standards.35 2. The Department of Environmental Affairs (DEA) 75. Established in 1994, DEAT (now DEA) is an independent Department of the GoSA responsible for protecting, conserving, and improving the environment and natural resources. It was also responsible for promoting and creating growth conditions for tourism to the country until its very recent reorganization. It now reports to the Minister of Water and Environmental Affairs, who is a member of the Cabinet and is appointed by the President from among members of the National Assembly.36 76. Organization. DEA was organized until recently into six integrated departmental programs each led by a separate organizational unit, or branch, and supported by various public entities and statutory bodies:37 Administration: human resources, finances, logistical support and communications; 34 Eskom, Annual Report, 2008, pp. 94-96. 35 With respect to the lost time injury rate (LTIR) and the total number of environmental legal contraventions, our review identified process and control weaknesses that prevent complete, consistent and accurate reporting of the performance data in accordance with the internally developed Eskom reporting guidance, as discussed in the report on pages 91 and 79 respectively. As a result, based on our work performed, we are unable to form a conclusion on the LTIR and total number of environmental legal contraventions data reported, Eskom Annual Report, 2008, p.96. 36 DEAT`s legal mandate and authority is supported by various legislative instruments including the Constitution of South Africa (1996), the National Environmental Management Act of 1998 as amended (NEMA), the Marine Living Resources Act of 1998; the World Heritage Convention Act of 1999; the National Environmental Management Biodiversity Act of 2003 , the National Environmental Management Protected Areas Act of 2003; the Air Quality Act of 2005; 28 multilateral and 33 bilateral agreements; and various other primary legislative instruments affecting environmental matters and related issues. DEAT, Annual Report, 2006-2007, p. 12. 37 DEAT, Annual Report, 2006-2007. 22 Environmental Quality and Protection: protecting and improving the quality and safety of the environment; Marine and Coastal Management: promoting conservation and sustainable use of coastal and marine resources; Tourism: ensuring the creation of conditions for sustainable tourism growth and development; Biodiversity and Conservation: promoting the conservation and sustainable use of natural resources, including protected areas, biodiversity research, plant and animal species protection and trans-boundary conservation; and Sector Services and International Relations: corporate and cooperative governance, organizational performance management and project implementation and international relations. 77. The Environmental Quality and Protection Branch (EQP) is mandated to protect and improve the quality and safety of the environment, including air, water and soils and has undergone fairly rapid expansion since its establishment in 2003.38 Within EQP the Chief Directorate of Environmental Impact Management is responsible for all aspects of EIA and is divided into separate Directorates for Environmental Impact Assessment, Environmental Impact Processing, and Environmental Impact Management. A separate Chief Directorate for Regulatory Services includes separate Directorates for Compliance Monitoring and Enforcement. 78. The strengths and weaknesses of DEA`s capacity to supervise and approve the EIA process with respect to the thermal power sector are best characterized in the November 2008 review of the effectiveness of EIA in South Africa during the previous ten years, as DEA is the sole agency with responsibility for quality of EIA at the national level. This is the level at which all thermal power plants are reviewed and authorized due to the fact that Eskom, the national power generation, transmission and distribution company, is a para-statal corporation. 79. Intergovernmental coordination and cooperation among national and provincial agencies is implemented through quarterly meetings of MINMEC Environment, a standing intergovernmental body consisting of the Minister for Environmental Affairs and Tourism and members of the provincial Executive Councils (MECs) responsible for environmental management functions. Technical assistance to MINMEC is provided by MINTEC: Environment, which consists of the Director General of DEA and the heads of the provincial departments responsible for environmental management functions. Intergovernmental coordination among national level agencies takes place through the Committee for Environmental Coordination comprising the Director Generals of the following agencies: DEA (chair), Water Affairs and Forestry, Minerals and Energy, Land Affairs, Constitutional Development, Housing, Agriculture, Health, Labor, Arts, Culture, Science and Technology, along with representatives from provincial and local governmental bodies. 38 Frances Craigie, Phil Snijman and Melissa Fourie, Environmental Compliance and Enforcement Institutions, in Alexander Paterson and Louis J. Kotzé, eds., Environmental Compliance and Enforcement in South Africa, Legal Perspectives, p. 82 (hereafter, Paterson and Kotzé). 23 80. In May 2009 it was announced by the newly elected government that DEAT would be separated from the tourism function and would be placed under the authority of the new Ministry of Water and Environmental Affairs along with the Department of Water Affairs, which was previously part of the Ministry of Water Affairs and Forestry. 81. Human Resources and Capacity. As of the end of 2009 DEA reported a total of 1,874 budgeted positions, of which 1,532 were filled (leaving an 18 percent vacancy rate). Within EQP there were 213 positions, with 56 vacancies and 22 contract employees. 39 DEA management and staff have high levels of specialized training in all key areas of environmental assessment and management including, in particular, air quality evaluation and monitoring. 82. DEA places a high value on training as evidenced by the fact that provincial training on the 2006 EIA Regulations was completed by the end of March 2007. 83. During 2005 and 2006 DEAT implemented an Electronic Document Management System, which seeks to automate business processes and reduce paper usage throughout the organization. By 2007 about one half of DEA staff had transitioned to the new systems.40 84. The 1999 National State of the Environment Report highlighted the need for environmental data and information necessary for DEA to monitor the state of the environment on a national, provincial, and local basis. Accordingly, DEA initiated a comprehensive State of the Environment Programme, which includes support to provincial and local authorities to undertake environmental assessments and report on the state the environment. Since 1999 nineteen sub-national State of the Environment reports have been produced. During 2002 DEA (then DEAT) also released a set of environmental indicators and developed a draft set of environmental performance indicators for local authorities. The State of the Environment Report has also provided capacity to provinces and local authorities for developing environmental reports and products on the internet.41 85. Until recently, regulatory measures for waste management in South Africa were not on a par with international legislation. In the mid 1990s DEAT initiated the development of an integrated approach to waste management and issued three guidance documents to deal with the management of hazardous waste, waste disposal by landfill, and water quality at waste management facilities.42 The National Environmental Management Waste Act of 2008 provides a more comprehensive regulatory framework for management of waste. One of the major changes of the Act is to transfer primary authority for waste management from sectoral ministries to DEA. 39 Telcon with DEA, February 5, 2010. 40 DEAT, Annual Report, 2006-2007, p. 17. 41 DEAT, 2007, South Africa Environment Outlook, A Report on the State of the Environment, Revised Edition, 1.4.1 (SAEO). 42 Minimum Requirements for the Handling, Classification and Disposal of Hazardous Waste; Minimum Requirements for Waste Disposal by Landfill; and Minimum Requirements for the Monitoring of Water Quality at Waste Management Facilities are existing documents. Other documents envisaged for the series include: Minimum Requirements for Waste Disposal Site Auditing; Training of Operators and Managers of Waste Management Facilities; and Minimum Requirements for the Handling, Classification and Disposal of Hazardous Waste. Department of Water Affairs and Forestry, Republic of South Africa, Waste Management Series, Second Edition, 1998. 24 3. Department of Water Affairs 86. Since 1956 the Department of Water Affairs (DWA), until recently the Department of Water Affairs and Forestry (DWAF), has been responsible for implementing all government policies and regulations regarding water supply, initially under the terms of the Water Act, 1956. This authority was reiterated under the ECA of 1989, the Water Services Act of 1997, and the National Water Act of 1998 (Act 36 of 1998). DWAF prepared a National Water Resource Strategy in 2004, which among other findings determined that the Crocodile (West) River Basin is of paramount importance in developing a more specific management strategy. The DWA is reviewing the institutional arrangements for the supply of water at the national level, and is expected to establish a National Water Resource Infrastructure Agency which will develop, operate, and maintain bulk water infrastructure of national importance at a first tier level. 87. The 2000 Integrated Pollution and Waste Management Policy (IP&WM) contains key principles that inform the government`s approach to waste management. Currently, coal ash pond management is regulated under the Water Act, which is administered by DWA. In addition, DWA was also responsible for issuing permits for waste disposal that could impact ground and surface water. Since the cabinet reorganization of May 2009 the Department of Water Affairs has been reassigned to the new Ministry of Water and Environmental Affairs. It remains to be determined how the responsibilities for water and waste management will be allocated between the Department of Water Affairs and the Department of Environmental Affairs (formerly DEAT) within the new ministry. 4. South African Heritage Resource Agency 88. The South African Heritage Resource Agency (SAHRA) provides the expertise in South Africa to develop and implement policies and practices towards protection and management of cultural resources. Under the EIA Process established by NEMA, cultural heritage and resources are among the key subjects that must be considered in the EIA process, which is under the jurisdiction of DEA. Specialists must be engaged in the EIA process who have the skill, competence, and qualifications satisfactory to SAHRA. If cultural resources are identified or found in the course of the EIA process, SAHRA or its provincial counterpart must be involved to survey the site that is being subject to environmental assessment and assess any discovery, and may either issue a prohibition to further develop the site or mandate mitigation and conservation measures to be taken by the project proponent. If findings are made during the EIA process, the requirements mandated by SAHRA are incorporated in the Record of Decision issued by DEAT. The ROD also normally requires notification of SAHRA in the event of chance finds during project construction. 25 B. PROCESSES AND PROCEDURES 1. Environmental Governance 89. The White Paper on Environmental Management Policy issued by DEAT in 1997 identified good environmental governance as a critical factor in successful environmental management in South Africa. The White Paper set forth the following principles:43 Responsible and accountable governance; Regulatory enforcement; Establishment of integrating mechanisms and structures to facilitate participation; Inter-ministerial and interdepartmental coordination; Separation of institutional responsibilities for regulation of environmental impacts and promotion of resource exploitation; Public access to information; and Institutional and community capacity building. 90. In addition to the provisions contained in the NEMA of 1998 44 and EIA Regulations issued in 2006, other legislation relevant to public consultation and disclosure with respect to the electricity generation and transmission sector include: the Promotion of Access to Information Act of 2000; the Promotion of Administrative Justice Act of 2000; and the Protection of Information Act of 1982. Collectively these acts promote access to information, including air quality information, while limiting access to information that may be deemed sensitive for purposes of national security and public safety. The Integrated Environmental Management Information Series not only provides access to information but also practical guidance to the public regarding environmental management and governance. The Environment Sector Strategic Plan published by DEA in 2009 also makes contributions to improved environmental governance in South Africa. 91. The Integrated Policy for Waste Management, implemented jointly by DEA and the Department of Water Affairs, clearly recognizes the role of public participation in the establishment of environmental standards, specifically in terms of: the universal, consultative application of the standards setting process, taking into account the needs of.... civil society [and] the provision of access to civil society to the standards setting process and of the standards 43 SAEO, 5.1.2 SESA. 44 Section 3(1(a) of NEMA provides that every person is entitled to have access to information held by State and organs of state which relate to the implementing of ...NEMA and any other law affecting the environment, and to the state of the environment and actual and future threats to the environment including any emissions to air, water or soil and the production, handling, transportation, treatment, storage and disposal of hazardous waste and substances. 26 themselves....45 With specific reference to air quality, Section 7(2) of the NEMA AQA of 2004 requires that the norms and standards established in the National Framework are aimed at ensuring opportunities for public participation in the protection and enhancement of air quality including public access to air quality information. 92. To implement these provisions with respect to air quality, DEA has initiated the South African Air Quality Information System (SAAQIS) to make real time information available to stakeholders in a user-friendly format and to provide a common system for managing air quality and provide uniformity in the management of data, information and reporting. 2. Environmental Impact Assessment 93. South Africa began undertaking EIAs in an ad hoc manner during the 1980s and a voluntary EIA procedure was integrated into the ECA of 1989 (since largely superseded by NEMA; some sections of the ECA remain in effect pending further amendments to NEMA). Requirements for EIA were introduced on a sectoral basis in the Minerals Act of 1991 (Sections 38, and 39(5). These requirements were generalized by the Environmental Impact Assessment Regulations of September 5, 1997 (1997 EIA Regulations), which mandated a process including screening, scoping, public participation, environmental reports, review and decision.46 Although the 1997 EIA Regulations were superseded by new EIA Regulations issued in 2006, the acceptability of the 1997 EIA Regulations are relevant to this review because the EIRs for Medupi and Kusile were initiated prior to the effective date of the 2006 EIA Regulations and were, therefore, conducted under the authority of the 1997 EIA Regulations. 94. Under the 1997 and 2006 EIA Regulations, environmental management is a concurrent function where DEA sets the legal framework but provinces are normally autonomous in implementing the function. EIRs are conducted at several administrative levels: national, provincial, and local depending on whether the national environment is affected or national governmental authorities are the applicant.47 95. However, one unintended effect of this process was a lengthy application process that conflicted with urgent national priorities of economic growth and job creation.48 Over the years, DEA reviewed the South African EIA system to see what regulations worked and what regulations needed improvement.49 An April 2006 report found the following inadequacies: (a) a wide interpretation of activities resulted in inconsistent applications; (b) unnecessary EIRs were conducted for applications of small scale/insignificant activities; (c) the application process itself was lengthy and inflexible and contained too many authority stops/decision points; (d) there were inadequate provisions for public consultation; (e) there were no strategic planning tools to 45 Ministry of Environmental Affairs and Tourism, 2007. National Framework for Air Quality Management in the Republic of South Africa. September 11, 2007, Section 5.4.3.4. (National Framework). 46 Jens Staerdahl, Zuriati Zakaria, Neil Dewar and Noppaporn Panich, Environmental Impact Assessment in Malaysia, South Africa, Thailand and Denmark: Background, layout, context, public participation and environmental scope. Journal of Transdisciplinary Environmental Studies, Vol. 3, no. 1, 2004 (Staerdahl et al. 2004). 47 Staerdahl et al. 2004. 48 DEAT, Annual Report, 2006-2007. 49 DEAT, 2006. Report on NEMA EIA Regulations. 27 provide support; and (f) enforcement measures were generally weak. The review led to the promulgation of the 2006 EIA Regulations, issued under the authority of NEMA. Six aspects of EIA Regulations were identified as areas that might be retained and that might need improvement. The six areas reviewed are as follows:50 Application of EIA: The 1997 EIA Regulations were applied to too wide a spectrum of activities resulting in a level of effort disproportionate to potential impacts and risks. As a result some low risk projects were utilizing excessive resources for regulatory review and approval while at the same time some higher-risk projects were not getting sufficient attention. The 2006 EIA Regulations seek to address this issue by redefining the spectrum of projects subject to EIA. EIA Scoping: The 1997 EIA Regulations created a cumbersome process for EIAs, which resulted in innovative interventions. The NEMA EIA Regulations differentiate between basic and thorough assessments, resulting in a more tailored scope for each EIA. Decision-Making Process: The 1997 EIA Regulations allowed only a comprehensive process. In contrast, the NEMA EIA Regulations allow for upfront decision making regarding fatal flaws, emergency circumstances, and clearly no impact situations, and additionally prescribe differential time frames. Roles, Responsibilities and Compliance: The 1997 EIA Regulations limited the allocation of roles and responsibilities to authorities and applicants and did not specify consequences for non-compliance. The NEMA EIA Regulations prescribe the roles and responsibilities for all parties involved, and provide consequences for non- compliance. Public Participation: The 1997 EIA Regulations included public participation as part of an EIA, but the regulation itself was poorly defined. The NEMA EIA Regulations provide a well-defined requirement for public participation, which includes minimum requirements. Appeal Process: The 1997 EIA Regulations contained no prescribed appeal decision- making process. The NEMA EIA Regulations sought to change this by providing a well-defined appeals process. The overall appeal process has been streamlined with regulations set forth by a consistent national process. 96. While some EIA applications are processed by DEA, the majority of applications are actually handled at the provincial level.51 However, DEA is still involved as it has the Constitutional responsibility to provide the provinces with support and help in effectively handling the stream of EIA applications.52 50 DEAT, 2006. Report on NEMA EIA Regulations. 51 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 52 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 28 97. As a result of a significant effort by DEA to develop capacity and provide technical support to provincial authorities, the number of pending EIA applications (nationally and in the provinces) was dramatically reduced from 5,300 in July 2006 to 1,717 by the end of March 2007. EIA backlogs were reduced by 40 percent by the end of FY 2006-07 and more than 80 percent of new applications were processed on time.53 Moreover, electronic tracking of applications is no longer restricted to state-owned enterprises.54 DEA has developed the National Environmental Authorization System as a web-based tool to track the process of EIA applications.55 98. In November 2008, DEAT issued a draft review of the previous ten years of EIA practice in South Africa. The draft report was commissioned by DEAT and conducted by independent consultants. The main findings of the report are that: (a) the overall effectiveness of EIAs in South Africa in meeting requirements of ECA and NEMA was deemed moderate, with substantial room for improvement; (b) overall there was a significant improvement in effectiveness and efficiency of EIA in moving from the ECA regulations to the NEMA regulations; (c) public participation in EIA is effective; (d) the cumulative (combined) impacts aspect is generally not considered effective and there is room for improvement; (e) the EIA process in South Africa is implemented relatively efficiently if one considers the average time it takes to produce and evaluate EIAs; (f) monitoring and enforcement in Environmental Management is one area where the current EIA system is not effective or efficient; (g) a more strategic approach to Environmental Impact Management is required and there is a definite need to move away from an EIA only system to one based on integrated environmental management. 99. NEMA itself has been several times, most recently in December 2008 by the National Environmental Laws Amendment Act (35 of 2007, NELAA) and by the National Environmental Management Amendment Act of 2008 (36 of 29, NEAMA), which came into effect on May 1, 2009. These amendments provided some useful clarifications to the EIA, enforcement and compliance provisions of NEMA and made provision for the conformance of these provisions to legislation issued pursuant to NEMA. Some of these provisions are relevant to the EISP and are described below. 100. Implementation of Multilateral Environmental Agreements (MEAs). Since 1994, South Africa has engaged fully and actively in international fora, a process of emergence that culminated to date in its hosting of the World Summit on Sustainable Development in 2002. Like other developing countries, South Africa`s implementation of ratified MEAs has been variable. Progress has been made in implementation of the Kyoto Protocol and the Convention on Biological Diversity; less so on the development of its National Action Programme on Land 53 DEAT, Annual Report 2006-2007, p. 4. Under Article 36 of the Regulations in terms of Chapter 5 of the NEMA (EIA Regulations).... A competent authority must within 45 days of acceptance of an environmental impact assessment report....or, if the report was referred for specialist review ...within 45 days of the receipt of the findings of the specialist reviewer, in writing ­ (a) grant authorization in respect of all or part of the activity applied for; or (b) refuse authorization in respect of all or part of the activity. 54 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 55 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life.. 29 Degradation required for implementation of its commitments under the Convention to Combat Desertification.56 101. Decentralization of the EIA Process. Distributing power at a provincial level is common in South Africa, stemming from the South African Constitution that gives wider powers to the provinces (e.g., provincial planning), as well as to the Department of Water Affairs, and the Department of Minerals and Energy. To achieve this end, several initiatives were launched to capacitate provinces while reducing the large number of pending EIA applications, as noted above. 102. In accordance with its Constitutional responsibility to provide support for the provinces, DEA conducts visits to each province spending a full day with each provincial team to establish capacity. The feedback from these trips is incorporated into a Capacity Audit and Needs Analysis, which allows custom-made interventions to tackle provincial needs.57 DEA has also established a new Capacity and Support Directorate that focuses on provincial assistance. Additional training and other initiatives have included:58 Fourteen training sessions, with one for each province, followed up by five further sessions for provincial officials in related fields who had not attended the initial training; Eleven open day information sessions, one for each province and two national sessions in Pretoria and Cape Town; Four Regulation Implementation workshops of two to three days each; Financial and technical help extended to seven provinces; and Several Environmental Management Frameworks (EMFs) have been developed in partnership with the provinces. The target is for the Minister or MECs to promulgate these EMFs in terms of Rule 72 of the NEMA EIA Regulations in 2008/2009. 103. Further improvements are expected as a result of the revised Strategic Plan issued by DEAT in 2008, which among other recommendations, proposed a desired service standard of 95 percent of applications processed on schedule by 2010.59 The revised Strategic Plan also recommended training in EIA administration for both provincial and national EIA Administrators.60 Training is offered in 9 provinces, without discrimination, to all EIA Administrators. To date, approximately 250 administrators attended basic training on the 2006 EIA Regulations.61 The desired standard and timeframe is 450 trained EIA administrators at the end of 2008/09. The revised Strategic Plan recommends finalizing development and accreditation of training courses, adding training material and tutorials to the DEA website, 56 SAEO, 2.1.4. 57 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 58 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 59 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 60 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 61 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 30 funding contact sessions in appropriate locations, and entering into partnerships with tertiary institutions to ensure sustainability of training courses.62 3. Cumulative Impact Assessment 104. Both OP 4.00 Table A1 and South African EIA Regulations make reference to assessment of cumulative impacts as appropriate in the project context. NEMA requires that cumulative impacts be considered both in the EIA process and by decision-makers. Because EIA in South Africa is primarily a permitting instrument and the EIA process results in a permit with conditions for which the applicant is responsible, it is very difficult to include detailed assessment of impacts not under the control of the applicant. At the same time, the permitting authority needs to be in a position to decide on the acceptability of impacts not only as a result of the applicant`s proposed project but all of the activities in the project area. 105. In order to address this dilemma, South Africa has adopted a two-pronged approach, where cumulative impacts or effects are dealt with at both a strategic and an activity level. On the strategic level, the SEA approach is used by government to develop Environmental Management Frameworks (EMFs) for a defined area as described below. An EMF for an area takes into consideration all existing and planned (or anticipated) activities, and then models impacts on air, water, land use, and the socio-cultural landscape. This forms the baseline against which decisions on specific development applications can be based. It also informs land use planning and management for the area, something that civil society stakeholders consider has been lacking until this time. At a project-specific level, the applicant assesses the contribution of the proposed activity with respect to the baseline; this forms part of the EIA process, even though it is focused on what is under the control of the applicant and for what the applicant can reasonably and lawfully be made responsible through permit conditions. 106. With respect to the EISP and its components, the issue of cumulative impacts is germane at the level of each individual project component. As noted in the maps attached to this SDR, the various project components are well removed from each other, and have been considered as stand-alone projects by Eskom and the regulatory authorities. There has been and remains no reasonable justification for examining their cumulative impacts as a package of investments being considered for Bank financing through the EISP. As individual projects, however, cumulative impacts have been examined as appropriate as part of the EIA process. In the case of the Medupi and Kusile projects, the most important cumulative impact relates to air emissions and ambient air quality. South African air quality regulations require assessment of cumulative impacts on the airshed of the new project. As noted later in this SDR, the cumulative impacts on the airshed resulting from the proposed project, existing sources, and likely future developments are taken into consideration in the Record of Decision.63 107. In the context of transmission lines, cumulative impacts are also taken into consideration by Eskom`s Transmission Division in carrying out feasibility and siting studies for new high- 62 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 63 This accounts for a key difference in the Records of Decision for the Medupi and Kusile projects; the Kusile project must be built with FGD capacity installed, and the Medupi project must be FGD-ready with the expectation that airshed quality will degrade at such time as additional industrial development and population growth occurs in the airshed. 31 voltage transmission lines. One of the key issues considered in both system planning and the EIA process is whether new transmission lines should be installed as part of a utility corridor, or kept distant from existing transmission line rights-of-way, depending on the assessed cumulative impacts of the two strategies. A utility corridor approach is rarely taken, however, in areas where the risk of large-scale brush fires may place high voltage transmission lines at risk because of regulatory restrictions established to maintain safety and security of the national power grid. 4. Strategic Environmental Assessment (SEA) and Environmental Management Frameworks (EMF) 108. South Africa has no legislation requiring SEA, which is still considered an emerging tool for assessing environmental impacts on a strategic level in both developed and developing countries.64 NEMA, by making provision for the development of assessment procedures that aim to ensure that the environmental consequences of policies, plans and programs (as well as projects) are considered, provides for the use of SEA on a case-by-case basis.65 As a result, no particular body has legal responsibility for undertaking or approving SEA,66 but the EMF has become a useful tool for DEA and other agencies to address a wide range of environmental issues in a particular geographic area at a strategic level, as discussed further below. 109. A more recent iteration of South Africa`s SEA Guideline was issued in 2004 as part of a series of overview information documents on concepts of, and approaches to, integrated environmental management that have been issued by DEAT.67 The document cites the 2000 Guideline document prepared by DEAT and the Council for Scientific and Industrial Research (CSIR) as the authoritative guidance on SEA in South Africa. It expands the scope of its recommendations on best practice using a broad set of international and national sources including the United States, Canada, the European Union, the United Nations, Economic Commission for Europe, and the World Bank.68 More recently, DEA has taken note of the pending incorporation of South Africa`s SEA Guideline within South Africa`s regulatory framework once the initiated provincial consultation process has been completed. 69 110. A lack of capacity on the part of South Africa`s public sector to deal with the implementation of new legislation (such as EIA Regulations) has been widely acknowledged. 70 In contrast, there is significant SEA capacity in the consultancy profession, where some international best practices in SEA have been demonstrated. The major consequence of this 64 There is currently no internationally accepted definition of SEA. It is commonly referred to as a processing for assessing the environmental consequences of policies, plans and programmes as distinguished from site-specific activities or projects. Nigel Rossouw, Michelle Audoin, Paul Lochner, Stuart Heather-Clark and Keith Wiseman, Development of strategic environmental assessment in South Africa, Impact Assessment and Project Appraisal, September 2000, Vol. 18, No. 3:217-223. 65 DEAT and CSIR, 2000. Guideline Document: Strategic Environmental Assessment in South Africa (DEAT/CSIR Guideline Document). 66 DEAT/CSIR Guideline Document, p. 10. 67 DEAT, Strategic Environmental Assessment, Integrated Environmental Management Information Series, No. 10, 2004 (DEAT, SEA 2004). 68 DEAT, SEA. 69 DEAT, Annual Report, 2006-2007, p. 18. 70 Francois Retief, 2007. Quality and effectiveness of strategic environmental assessment (SEA) as a tool for water management in the South African context. Water SA. Vol. 33, No. 2:153-164. (Retief, 2007a). 32 consultancy driven approach to SEA is a lack of integration of SEA into the decision-making process, and a lack of correspondence between the quality of SEA inputs and outputs.71 111. Based on Bank team discussions with DEA during preparation of this SDR, it is anticipated that pending NEMA regulations will bring SEA under the regulatory purview of DEA. These proposals are consistent with the international view that forming an unambiguous and explicit legislation is important for [SEA] success.72 112. A more recent iteration of SEA in South Africa has taken the form of an Environmental Management Framework (EMF), a regional approach to strategic EIA that was provided for in Section 8, Articles 69-70 of NEMA. Under the provisions of NEMA, the Minister of the Environment or the provincial representative of the Ministry may initiate an EMF process with the following objectives: Specify the attributes of the environment in the area, including the sensitivity, extent, interrelationship and significance of those attributes; Identify any parts in the area to which those attributes relate; State the conservation status of the area and in those parts; State the environmental management priorities of the area; Indicate the kind of activities that would have a significant impact on those attributes and those that would not; Indicate the kind of activities that would be undesirable in the area or in specific parts of the area; and Include any other matters that may be specified. 113. Among other things the Minister or MEC must: (a) subject the draft EMF to a public participation process by making the draft available for public inspection at a convenient place; and (b) invite potential interested and affected parties by way of advertisements in newspapers circulating in the area and in any other appropriate way to inspect the draft and submit representations, objections and comments in connection with the draft to that person or organ of state; and review the draft in the light of any representations, objections and comments received. 114. EMF Regulations were issued as part of the 2006 NEMA EIA Regulations. The EMF Regulations define EMF as a study of the biophysical and socio-cultural systems of a geographically defined area to reveal where specific land uses may best be practiced and to offer performance standards for maintaining appropriate use of such land.... 115. The Regulations call for the EMF process to be conducted in such a way as to ensure that participation by potential interested and affected parties in the development of the 71 Retief, 2007a. 72 Retief, 2007a. 33 environmental management framework is facilitated in such a manner that all potential interested and affected parties are provided with a reasonable opportunity, sufficient understanding and skill, best suited to the local interests and groups in each geographical area, to provide comment during the process of developing the [EMF]. 116. In addition to elaborating on the content of an EMF, the Regulations provide that if the Minister or provincial Ministerial authority adopts the environmental management framework [it] must be taken into account in the consideration of applications for environmental authorization in or affecting the geographical area to which the framework applies 117. To date, EMFs have been completed and/or initiated for three municipal districts in South Africa undergoing rapid economic growth and transformation, including Oliphants-Msundzi, Magaliesburg, and Emakhazeni. The Bank`s review of the EMF documentation indicates that DEA conducted robust baseline analysis, based on sophisticated Geographic Information Systems technology, and broad stakeholder engagement across government agencies, non- governmental organizations and the interested and affected public. Outputs of the EMF process included Environmental Management Plans for affected areas, which have provided a strategic context for zoning and for assessing the indirect and cumulative impacts of specific proposed projects and thereby informed and enhanced the EIA process in the three regions. 118. More recently, in November 2009, DEA issued an Invitation to Bid on the Development of the EMF for the Waterberg District Municipality in which the Medupi project is located. The objective of the EMF is to ensure that water resources, biodiversity, and ecosystem services are comprehensively and well managed in the expectation of prospective future increases in mining, industrial development, agricultural and tourism activities, and population growth in the Waterberg area. 119. The Terms of Reference for the Waterberg EMF73 are consistent with the requirements of NEMA and include sections on the Status Quo (or baseline) environment including important biodiversity conservation areas;74 threatened ecosystems and species; ambient air quality; status of primary resources, including water; cultivated areas and areas suitable for agriculture; a spatial representation of land uses (with an emphasis on uses that may threaten environmental resources); planned development nodes obtained from municipalities and other stakeholders such as Eskom, and the mining and petroleum industries in the area; current allocation for prospecting and mining rights and permits; spatially defined environmental NGO initiatives; completed and pending EIA authorizations; status of existing services; social and economic conditions and key environmental issues (opportunities and constraints). The Status Quo report will be the basis of a consultative public participation process through which the Desired State of the Environment 73 DEA, 2009. Revised Invitation to Bid, Development of the Environmental Management Framework for the Waterberg District Municipality, November 13, 2009. 74 The Waterberg District Municipality includes the Waterberg Biosphere Reserve (WBR), one of four UNESCO recognized biosphere reserves in South Africa. Within the Waterberg there are archaeological finds dating to the Stone Age, and nearby are early evolutionary finds related to the origin of humans. The northernmost boundary of the WBR lies about 40 kilometers from the Medupi plant from which it is separated by an area of high terrain, and is therefore outside the area of influence of the Medupi plant. The Eskom Development Foundation is providing funding to the South African Institute for Breeding Rare and Endangered African Mammals for research in the Laphalala Wilderness, which is located in the core area of the WBR. 34 will be established. Based on the spatial component of the Desired State of the Environment, and biological constrains and opportunities, the Waterberg area will be divided into environmental control zones so as to facilitate future decision making on environmental requirements and acceptability of development applications.75 The EMF will, in turn, inform the development, as part of the EMF process, of a Strategic Environmental Management Plan which will include strategies for: maintaining productive agricultural activity on suitable lands; maintaining biodiversity and open spaces on land where biodiversity conservation has been identified as a feasible and desirable end use; and promoting development where appropriate without EIA authorization. Under the EIA Regulations, the draft EMF must be circulated to identified stakeholders for comments before adoption by decision making authorities at the national, provincial and municipal levels.76 5. Permitting 120. Permitting is a key output of the EA process in South Africa. With respect to the air quality impacts of electrical generating facilities, the principal authorization is the Atmospheric Emission License (AEL). The granting of an AEL must be preceded by the issuance of a ROD 77 for an EIA application, which for listed activities (including thermal power plants with more than 70 MW heat output) is required to be accompanied by an Air Quality Impact Assessment Study prepared by qualified specialist(s).78 Metropolitan and district municipalities are charged with implementing the atmospheric licensing system per Section 36 of the AQA, subject to alternative arrangements in which a provincial organ of state may be designated as the issuing authority 121. Factors to be taken into account in the issue of an AEL include, inter alia:79 Any applicable minimum standards set for ambient air and point source emissions as per the AQA; Pollution being (or likely to be) caused by the operation of the activity being applied for and the effect (or likely effect) of that pollution on the environment, defined to include health, economic and social conditions, cultural heritage and ambient air quality; and The best practicable environmental options available80 that could be taken to prevent, control, abate, or mitigate the pollution and to protection the environment (as defined above) from harm as a result of the pollution. 75 A three-fold categorization will be applied per standard EMF practice, delineating: (1) areas in which the undertaking of an activity should be allowed to take place without further investigation; areas in which the undertaking of an activity may be allowed subject to any environmental authorization per NEMA regulations; and (3) areas in which the undertaking of an activity should not be considered. 76 In January 2010 the tender was awarded to Enviro-Consult, a South African consulting firm with considerable experience in preparing previous EMFs. 77 The term Record of Decision is to be phased out under the NEMA EIA Regulations of 2006 and replaced with the term Environmental Authorization. National Framework, 5.5.2 and p. 67 footnote 3. 78 National Framework, 5.5.3. 79 H. von Blottnitz, C. Fedorsky and W. Bray, Air Quality, in H.A. Strydom and N.D. King (eds.), Fuggle and Rabie's Environmental Management in South Africa (2nd. ed., 2009, p. 597. (von Blottnitz et al.). 35 122. The contents of an AEL must include the maximum allowed amount, volume, and emission rate or concentration of pollutants that may discharged into the atmosphere under normal working conditions and during start-up, maintenance, and shut-down conditions, as well as point source emission and onsite ambient air quality measurements and reporting requirements (including measurement reporting requirements for greenhouse gas emissions).81 123. The public participation requirements of the EIA process are also intended to contribute meaningfully to the AEL process as specified in Section 38(3) of the AQA under which an applicant for an AEL must bring the application to the attention of relevant organs of state, interested persons, and the public. 124. With respect to the management of solid waste (coal ash), under the previous 1989 ECA, guidelines were issued for different classes of landfill. The landfill class is determined from the waste type, size of operation, and potential for significant leachate generation. Where significant leachate is generated, leachate management is mandatory. Where hazardous waste is involved, the most stringent Minimum Requirements are applicable. With enactment of the Waste Act of 2008, which became effective in early 2009, DEA will have primary authority to authorize and regulate the final design and operation of the coal ash retention landfill at the Medupi site. Regulations to implement the Waste Act remain under development. The requirements for public participation are integrated with the Public Scoping requirements of DEA`s Environmental Impact Assessment Regulations (EIA Regulations). The EIR, together with other necessary stages in the landfill development process, forms part of the Landfill Permit System, and has to be approved by DEA. 6. Compliance and Enforcement 125. The International Network for Environmental Compliance and Enforcement (INECE) considers the following as essential components of an effective compliance and enforcement program: creating requirements that are enforceable; knowing who is subject to the requirements, promoting compliance in the regulated community, monitoring compliance, responding to violations, clarifying roles and responsibilities, and evaluating the success of the compliance and enforcement program.82 126. Within the South African context, as in many other countries, there is a variable mix of rationalist, and normative approaches to environmental compliance and enforcement.83 The 80 Under NEMA, Section1, the Best Practical Environmental Option (BPEO) is defined as the option that provides the most benefit or causes the least damage to the environment as a whole, at a cost acceptable to society, in the long term as well as the short term. 81 National Framework 5.5.3.5; and von Blottnitz et. al, p. 599. 82 INECE, Principles of Environmental Enforcement (2005); http:www.inece.org/princips/ch.1.pdf as cited in Craigie, Snijman and Fourie, in Paterson and Kotzé, eds. Environmental Compliance and Enforcement in South Africa, Legal Perspectives, p. 44. 83 The rationalist approach is based on establishing certain predictable consequences for non-compliance, typically the risk of punishment in the form of administrative measures (ranging from compliance notes, directives, abatement notes to suspension or withdrawal of an environmental authorization); criminal sanctions (in the form of substantial fines or imprisonment) or civil measures (such as issuing a court order to halt or remediate harm). The normative approach tends to focus more on providing assistance to the regulated community to facilitate compliance, rather than relying exclusively on enforcement measures designed to penalize non-compliance, op. cit, pp 42-43. 36 enactment of NEMA in 1998 was accompanied by a significant shift in approach towards rationalist, enforcement measures, through various amendments to NEMA, as the initial Act had contained only administrative measures84 and did not provide for criminal sanctions.85 This, together with the incorporation within NEMA of the polluter pays principle, has had a strong deterrent effect on non-compliance in many instances.86 127. The Constitution has significantly molded the structure and form of South Africa`s environmental compliance and enforcement institutions.87 Under the Constitution, the national government exercises legislative competence and executive authority concurrent with provincial government. Accordingly, all general environmental authorizations, compliance and enforcement powers under NEPA are shared by DEA and provincial environment departments. However, national government does not have competence over environmental issues falling within the exclusive competence of provincial government, and, moreover, local (e.g., municipal) government is authorized to make and administer its own laws relating to air pollution, noise, water and sanitation services, solid waste disposal and other matters, subject to national and provincial oversight. Two legislative instruments of particular relevance to the EISP, the NEMA Air Quality Act and the NEMA Waste Act, are administered by national and provincial government in addition to local authorities.88 128. In addition to this vertical delegation of authority, authority to issue and enforce environmental regulations, although focused in DEA, under the authority of the Ministry of Water and Environmental Affairs, is shared with several other Departments. The Department of Water Affairs (until recently housed within the Ministry of Water Affairs and Forestry, and only since May 2009, included within the Ministry of Water and Environmental Affairs), is responsible, per the authority of the National Water Act, for the protection of fresh water resources, including the issuance of licenses to discharge treated effluent into surface waters. Mining is regulated primarily by the Department of Minerals and Energy under the authority of the Minerals and Petroleum Resources Development Act.89 This is significant because, in contrast to DEA, the Department of Water Affairs (DWA) has limited authority for enforcement.90 129. To offset this decentralization of authority, Section 41 of the Constitution also prescribes a set of principles for cooperative governance, which are operationalized in the Inter- governmental Relations Framework Act of 2005. Accordingly, as described above, NEMA prescribes an array of statutory mechanisms including interministerial coordinating committees at both the national and provincial levels, planning frameworks and procedures for conflict resolution. In addition, four Working Groups consisting of officials from DEA and provincial 84 These were further limited to provisions including Duty of Care (Section 28) and Emergency Incidents (Section 30) as cited in Craigie, Snijman and Fourie, Environmental Compliance and Enforcement Institutions, in Paterson and Kotzé, op. cit, p.89. 85 Ibid., p. 53. 86 Ibid., p. 54. 87 Craigie, Snijman and Fourie, op.cit., p. 66. 88 Ibid., p. 68. 89 Ibid., p. 67. 90 Paterson and Kotzé, p. 83. 37 environment departments have been created, of which one, Working Group IV, established in 2007, deals with permitting, compliance and enforcement issues.91 130. In 2001, DEAT initiated a process to develop appropriate authority structures to undertake pro-active environmental monitoring for purposes of assessing and enforcing compliance. This resulted in the 2003 issuance of legislative authority under NEMA to designate an Environmental Monitoring Inspectorate (EMI) tasked with enforcing NEMA and other designated Specific Environmental Management Laws (SEMAs), together with subordinate legislation and regulations, together with the establishment a new Enforcement Directorate within DEAT. When the new legislative authority became effective in May 2005, the EMI`s authority was initially limited to the enforcement of NEMA and laws issued under NEMA since 1998 such as the AQA.92 However, until the NEMA Amendments of 2008 were enacted, many statutes issued prior to NEMA, such as the APPA and the ECA (pending their gradual repeal), both of which are directly relevant to components of the EISP (particularly Medupi), were not subject to the EMI. Furthermore, NEMA grants individual Environmental Management Inspectors (acting within their mandate) extremely wide powers, including powers of inspection, investigation, administrative and enforcement actions. 93 In addition to these powers, EMIs (within their mandate) have the same powers as those assigned a police official under specified provisions of the Criminal Procedure Act (No. 51 of 1977). These provisions deal with search warrants, entering of premises, seizure, forfeiture, and disposal of property connected with offences as well as powers relating to arrest, issuing of written notices to appear in court, and the issuing of admission-of-guilt fines.94 131. The fact that the institution of a centralized national environmental compliance and enforcement regime in South Africa is a relatively recent development accounts in large part for the perception among some members of South African civil society that environmental enforcement is not effective. However, there have been several developments since 2005 that suggest that the EMI is evolving into an effective mechanism for compliance and enforcement, particularly on a national level. Beginning in 2005, a national EMI Training Framework was developed and implemented.95 Officials cannot be designated as EMIs unless they have successfully completed the accredited EMI Basic Training Course. In 2007, the EMI developed a standard operating procedure for dealing with non-compliant organs of state, expanding its oversight role from private to public sector entities. 91 Ibid. p. 68. 92 This is of particular importance as the AQA itself makes no provision for the enforcement of its own provisions. It does, however, set forth compliance monitoring and enforcement parameters as do the African National Standards (SANS) 29, with respect to siting criteria for sampling of priority pollutants associated with thermal power plants including particulate matter (PM10), SO2, NOx, and carbon monoxide (CO) as well as ozone, lead, and benzene. 93 The legislative vehicle was NEMA, First Amendment Act of 2003, which inserted a new Chapter 7 (part 2) in NEMA. P.J. Lukey, A. Brijlall, and M. Thooe, Gearing Up for Efficient and Effective Pollution and Waste Management Enforcement, 2004, unpublished paper, cited in Craigie, Snijman and Fourie, op.cit, pp. 89-92. 94 Enforcement of air quality legislation in South Africa ­ October 2008, An overview prepared for the United Nations Environment Programme Eastern Africa Workshop on Better Air Quality in Cities on 21-23 October 2008, Melissa Fourie, Evolve Consulting Pty Ltd. 95 The curriculum was developed with technical assistance from the UK Environment Agency and the US Environmental Protection Agency. 38 132. As of March 31, 2008 there were 903 designated EMIs; 42 had been trained but not registered;96 and an additional 104 were completing the requisite training for designation, including the first 27 local government officials. 97 However, more than two-thirds of the registered EMIs were assigned to SANPARKs, the South African management authority for the national park system or local parks boards, leaving a maximum of 232 EMIs to undertake functions related to terrestrial and marine pollution outside protected areas.98 133. With respect to the EISP, sector-specific compliance monitoring and enforcement requirements of direct relevance to the EISP are set forth in Sections 20(c), 41(1)(k and m), 51, 52, and 55(2) of the AQA. South African National Standards (SANS) 29 also sets forth reference methods and siting criteria for sampling of priority pollutants associated with thermal power plants including particulate matter (PM 10), SO2, NOx, and carbon monoxide (CO) as well as ozone, lead, and benzene. As part of the National Framework for Air Quality Management in South Africa (National Framework), and in implementation of mandatory provisions of the AQA, an extensive network of ambient air quality stations has been established, owned and operated by a variety of organizations. SANS for ambient air quality monitoring have been established. Since the AQA itself makes no provision for the enforcement of its own provisions, DEA enforcement of these provisions, in the event of non-compliance, would rely on the EMI. 134. In the course of consultations on the draft version of this SDR, stakeholders from civil society expressed concerns about DEA`s compliance and enforcement capacity. Compliance monitoring and enforcement are recognized by DEA as an area for overall improvement. However, data from DEA indicates that significance instances of non-compliance are concentrated in particular sectors and activity including artisan mining and quarrying, municipal public services, property development, and agricultural operations, and usually at a small scale. In contrast, the energy generation sectors, and Eskom in particular, have been largely compliant and, accordingly, not subject to DEA`s as yet limited enforcement capacity. 7. Site-Specific EIA Process 135. Before getting into details, there are several aspects of the EIA process followed for both the Medupi and Kusile plants that are worth noting with respect to the requirements of South African EIA Regulations and Objectives and Operational Principles per OP 4.00 Table A1. With respect to South African EIA Regulations it should be noted that the applications for authorization to begin the EIA process were initiated in 2006, prior to the effective date of the 2006 EIA Regulations, which was July 3, 2006. Accordingly, the EIAs for both projects were conducted under the authority of the 1989 ECA and the September 1997 EIA Regulations.99 However, the EIA process and EIR content for both projects was strongly influenced by and is 96 National Environmental Compliance and Enforcement Report, (NCER) 2008/09, 2.1. In 2007 DEA began issuing the National Compliance and Enforcement Report (NCER) which compiles data from all authorized national and provincial environmental compliance and enforcement officials. The most recent NCER was issued on November 25, 2009 and covers the period from April 1, 2008 through March 31, 2009. 97 DEAT, Environmental Management Inspectorate, Standard Operating Procedure 2007-3, cited in Craigie, Snijman and Fourie, p. 69. 98 NCER, op. cit. 99 DEAT, Record of Decision for the Construction of the Eskom Generation Proposed 4,800 MW Coal-Fired Power Station in the Lephalale Area, September 21, 2006; DEAT, Record of Decision for the Construction of the Eskom Generation Proposed 5400 MW Coal-Fired Power Station, Witbank, June 5, 2007 (ROD, Kusile). 39 essentially consistent with the EIA Regulations that became effective in July 2006, as noted in paragraph 22 above. This was particularly evident in the Kusile EIR, for which the EIA process began and ended later. 136. In preparing this SDR, the team also reviewed the EIRs for the Sere Wind Power project (Final EIR dated 2008), the CSP plant (Final EIR dated 2007), the proposed coal transport railway between Ermelo and the Majuba power station (Final EIR dated 2004), and the various transmission lines that will connect the Medupi plant to the national grid. The purpose was to determine whether the findings of the analysis of equivalence and acceptability would significantly change from what is presented below for the Medupi and Kusile projects. There were no significant differences, but it was noteworthy that even for the 2004 EIR the public participation (disclosure and consultation) process with interested and affected parties was conducted in a highly proactive and robust manner, fully consistent with the requirements of applicable legislation (Environmental Conservation Act of 1989 and NEMA 1998), as well as with the applicable provisions of OP 4.00, and that the results of the consultation were fully taken into account in the final EIR. Moreover, site visits to the Ermelo-Majuba rail spur right-of- way by the Bank team as part of the SDR confirmed that consultations with directly affected and adjacent landowners and occupants remained ongoing during the land acquisition process. 137. Additional noteworthy aspects of the EIA process with respect to OP 4.00 Table A1 are as follows: Consistent with the applicable regulations, the EIA processes began with a formal application to commence, a Background Information Document (BID) and Comment Registration Process, a Pre-feasibility Study Report, followed by a Scoping Phase and EIR Phase, leading to a ROD and an EMP.100 The EIA process, including full public disclosure and consultation on all aspect of the projects, was initiated and completed prior to the start of construction.101 However, of the two thermal power plants, only the Kusile project fully complied with the requirements of the 2006 EIA Regulations in that it included in the final EIR a complete summary of the public consultation and disclosure process.102 For Medupi the consultation and disclosure process is fully documented, but it is not summarized in the final EIR; rather, it has appendices containing copies of public announcements, minutes from various public meetings, and a consolidated matrix of issues raised and responses provided by Eskom and the independent EIA practitioner. Consistent with the requirements of the 1997 EIA Regulations, Eskom contracted out the EIA process to independent consultants.103 100 Eskom, Environmental Impact Report, Proposed New Coal-fired Power Station, Lephalale Area, www.eskom.co.za.live/content.php?Item_ID=2341. 101 SE Solutions, Kusile 3.7. 102 Eskom, 2007. Environmental Impact Assessment Process: Proposed Coal-Fired Power Station And Associated Infrastructure in the Witbank Area, Final Environmental Impact Report, February 2007, Chapter 3. (EIR, Kusile) 103 The Medupi EIA was conducted by Bohlweki Environmental as lead consultant; the Kusile EIA was conducted by Nisham Shand as lead consultant. 40 Based on the Scoping Reports (SR), both Eskom and DEAT recognized the need to conduct a full EIA under the applicable regulations rather than the more limited Basic Assessment. Whereas most EIAs are submitted to provincial governments for a decision, all Eskom projects must be submitted to DEA due to the fact that Eskom is a para-statal organization. Therefore, while provincial authorities were invited to comment on the Draft Scoping Reports (DSRs) and Draft EIRs, they did not have decision-making authority in the EIA process. Eskom has established community-based Environmental Management Committees at both Medupi and Kusile to provide oversight with respect to the environmental and social impacts of its activities. a) Medupi: EIA Process 138. Eskom`s Board decision to proceed with the Medupi power station was made on December 5, 2005. Eskom issued its DSR for public comment on October 3, 2005. Following the public comment period, Eskom submitted its SR to DEAT in November 18, 2005, per the requirements of the 1997 EIA Regulation R 1183 Section 5(2) issued under the authority of the 1989 ECA.104 On February 21, 2006, DEAT accepted the SR as satisfying the requirements of the EIA Regulation and requested that Eskom submit a Plan of Study for the EIA. 105 On March 23, 2006, Eskom issued its Draft EIR for public comment. Following the public comment period, Eskom submitted its Final EIR on May 22, 2006, and an Addendum in June 2006. Comments on the final EIR were submitted to DEAT by the Department of Water Affairs and Forestry on July 18, 2006. Eskom was issued an initial ROD by DEAT on September 21, 2006. Construction began on May 9, 2007.106 139. The public consultation and disclosure process is well documented for the Medupi project, but in a less organized manner than was done for the Kusile project, as noted above. 104 Although NEMA came into effect in 1999, it was not until 2006 that the EIA regulations under NEMA were promulgated and the repeal of the relevant sections and regulations of the ECA took effect. During 1999-2006, the ECA regime operated in parallel to the NEMA provisions in Chapter 5 for which general principles were applied in the absence of prescriptive regulations. In practice, the ECA was applied to identified activities, including the construction and operation of thermal power plants; whereas NEMA principles were applied to activities having potential environment impacts which were not identified activities in terms of the ECA. M. Kidd and F. Retief, Environmental Assessment, in Strydom and King, op.cit., p. 991. 105 In doing so, DEAT specified that the EIR must include: A more detailed description of the process used to determine the selection of the project site, alternatives studied and the assessment criteria as background to the project and explanation of the need and justification for the project; addition of a third potential site to the alternatives assessment; A visual presentation and footprint of the proposed plant; Detail on the water study then underway from the Department of Water Affairs and Forestry with all relevant information including a study of the existing groundwater pollution in the study area and possible future pollution and groundwater and recommendations for mitigation and improvement measures as applicable; Further exploration of the option of ashing back to the mine pit; and All specialist studies recommended in the Scoping Report incorporated into the EIR. 106 Eskom, Annual Report, 2008, p. 10. 41 Interested and Affected Parties (I&APs) were informed about the Medupi project and consulted at various stages of the EIA process. During the Scoping Phase, public participation was comprehensive and included advertising in national, regional, and local newspapers; subsequent notifications in regional and local newspapers; and the dissemination of a non-technical BID in English and Afrikaans on two occasions to take into account the evolution of the project. Two rounds of public fora organized and facilitated by the independent consultant were held at three venues in the area between October 3 and November 11, 2005, and were supplemented by open houses and one-on-one consultations.107 Following the issuance of the Draft EIR report in March 2006, both on the internet and in hard copy at public libraries and municipal offices, a second round of public consultations took place. 140. The issues raised, and Eskom and government responses to public comments and questions, are thoroughly documented in minutes from the public consultations and summarized thematically in two Issues Trail documents prepared by the independent consultant. The main issues raised by stakeholders concerned increases in air and noise pollution and the consequent potential impacts on public health. Stakeholders are also encouraged to comment, and do so, not only on the substance of the EIR but also on the disclosure and consultation process itself. 141. The public consultation process is continuing at Medupi during project implementation with Environmental Monitoring Committee (EMC) meetings (see below) being held to communicate project progress and general environmental management performance to stakeholders with EMC reports submitted directly to DEA. 108 The EMP for the construction phase (described in more detail below) includes mechanisms designed to ensure that Eskom continues to inform the public and surrounding communities throughout the construction phase as and when specific issues arise.109 Documentation of the consultation and disclosure process was submitted to DEAT as part of the SR and final EIR. However, as noted above, the documentation consists of disaggregated minutes of the numerous public meetings, copies of public announcements, and an Issues Trail report. b) Kusile: EIA Process 142. In April 2006 Eskom submitted for comment and approval its Plan of Study for the Scoping Process, followed by the Final SR in October 2006. The final draft of the EIR was submitted in February 2007 and was accompanied by Specialist Reports dated November 2006 and February 2007.110 The ROD for the Kusile EIA was issued in June 2007. Following an appeal raised by two local landowners and a poultry farm, additional analysis was done and a final ROD was issued on March 17, 2008. Construction began on April 1, 2008.111 107 SE Solutions, 2008. The Medupi Coal-fired Power Station Project, Independent Review of Compliance with the Equator Principles, November 25, 2008, 3.7. (SE Solutions, Medupi). 108 SE Solutions, Medupi, 3.7. 109 Eskom, 2007. Environmental Management Plan for the Medupi Coal-Fired Power Station in the Lephalale Area, Limpopo Province: The Construction Phase, April 2007, 2.6. (Medupi, EMP Construction Phase) 110 ROD, Kusile. 111 Eskom, Annual Report, 2008, p. 10. 42 143. The public disclosure and consultation process followed in the Kusile project was documented in the final EIR112 and is summarized in four phases corresponding to the periods of: Planning; Scoping; EIA; and the Appeal period following DEAT`s issuance of the initial ROD. The four phases are more clearly summarized in the final EIR than is the case for Medupi. Also, because Medupi is located in a relatively remote area with low population density while Kusile is located much closer to the highly populated industrial center of South Africa, there was far more public interest and comment on the Kusile project during the various stages of the EIA process than there was for the Medupi project. 144. The process of identification and engagement of I&APs began in April and May 2006 with the launch of the EIA process announced in national, regional, and local newspapers. In addition, a BID, together with a response form and envelope were provided to 67 identified stakeholders, comprising local landowners; local, provincial and national government departments; environmental organizations; and mining companies. All of the above information was made available in four languages: English, Afrikaans, Zulu, and Predi. The BID was also placed on the Eskom website. Stakeholders were invited to a Stakeholder Meeting held at the Protea Hotel in Witbank on May 8, 2006, where the project team presented the proposed project and gave stakeholders the opportunity to raise comments, questions, and issues of concern. Thirty-one stakeholders attended the meeting. 145. The Planning Phase was extended as a result of the consideration of two final alternatives related to the site selection process. For this purpose the BID was revised and redistributed to I&APs on July 14, 2006, including to additional landowners who might be affected by the site selection process. All stakeholders were informed of the outcome of the site selection process on August 7, 2006. 146. The DSR was released to the public at four public libraries and two municipal offices on August 21, 2006, and on the Eskom and independent consultant websites. Media notices in all four languages were placed in local newspapers on September 1, 2006, in order to notify the public of the availability of the DSR and about the Open Houses/Public Meetings that would be held to present the report. Registered I&APs were notified of the availability of the DSR and the Open Houses/Public Meetings by means of a letter dated August 21, 2006. The DSR was presented to the public at an Open House/Public Meeting held in Witbank on September 4, 2006, where attendees were provided with an opportunity to ask questions and comment on the report. Although the official comment period ended on September 15, 2006, submissions were accepted through September 26, 2006, for those who requested more time.113 Once the SR was finalized, it was submitted to DEAT and copies were lodged in public libraries, municipals offices, and on the Eskom and independent consultant websites. All registered I&APs were notified by letter on October 20, 2006, and minutes of the public meetings were posted to all attendees along with a themed summary of all issues raised and Eskom/independent consultant responses in matrix format (Issues Trail). The Issues Trail report was posted to all who submitted written comments. 112 EIR, Kusile, Chapter 3. 113 It was noted in the EIR that attaining landowner information and contact details was exceptionally difficult. With assistance from a conveyancer new landowners at one of the potential sites were identified, and letters of notification and BIDs were sent to them on September 15, a delay which necessitated an extension of the public comment period. 43 147. Key issues raised by the public during the scoping phase involved: Water impacts (supply sources and impacts on local surface and groundwater resources); Air quality impacts from emissions and ash dumps; Impacts with respect to greenhouse gases and climate change; Socio-economic impacts on property values, economic viability of surrounding farms and existing businesses; Job opportunities for skilled, semi-skilled and unskilled labor; Cumulative impacts of the power station and the coal mine; and Consideration of alternative means of electricity generation and rationale for regional site selection. 148. Registered I&APs were notified of the imminent release of the Draft EIR (DEIR) and were provided a copy of the Executive Summary of the DEIR and the details of the public meetings that would be held to present the report to the public via email November 8, 2006, and by letter dated November 13, 2006. The DEIR was disclosed at the four public libraries and two municipal offices on November 20, 2006, and on the Eskom and independent consultant websites. Media notices in four languages were placed in the newspapers to notify the public of the availability of the DEIR and of the public meetings. 149. The DEIR was presented to the public at an Open House/Public Meeting held at a conference center near Kendal on November 28, 2006, and at an Open House/Public Meeting at Phola and Witbank on November 29, 2006. Attendees were provided with an opportunity to ask questions and comment on the report. Minutes of the meetings were posted to the attendees on December 14, 2006 and an updated copy of the Issues Trail (compiled from responses received between the finalization of the SR and the release of the DEIR), was posted to all those who submitted written comments. On account of the holiday season, the written public comment period was extended to January 8, 2007, and additional time was provided to any I&APs who requested it through mid-February. Comments and responses from the extension period were included in the fourth draft of the Issues Trail issued in February 2007. 114 Various authorities were invited to comment on the DEIR,115 and meetings were held to elicit comment with particular stakeholders. 114 In addition, a focus group meeting was held on January 12, 2007, with two of the landowners adjacent to one of the proposed alternative sites to discuss their detailed concerns which were raised at the November public meetings and in their written submissions, the minutes of which were included in the final EIR. 115 Department of Public Enterprises; Department of Minerals and Energy; South African Heritage Resources Agency (Mpumalanga and Gauteng provincial offices); DWAF; DEAT: Directorate of Air Quality Management and Climate Change; Mpumalanga Department and Agriculture and Land Affairs: Mpumalanga Department of Roads and Transport; Gauteng Transport Department; South African National Roads Agency Ltd; Spoormet; and the Kungwini and Delmas local municipalities. 44 150. In addition to those issues raised during the Scoping Phase the following key issues were raised by the public during the EIR phase: Impact of heat emissions on ambient temperatures; Emission reduction issues; Impacts on farm laborers (in particular, loss of housing and jobs); Visual impacts; Safety and security during construction; Need for additional inputs on heritage impacts; Timing of land acquisition; Lack of engagement with adjacent landowners on an individual level; Lack of notification of visits by specialists and valuators; Noise; Access roads; Influx of job seekers; Construction impacts; Impacts on municipal services and infrastructure; and Confirmation of coal availability. c) Overview of the EIA Process 151. The major outputs of the EIA process include the EIRs submitted by Eskom for Medupi, Kusile, and associated transmission line facilities for Medupi (some of which will be financed by the EISP), the RODs issued by DEAT approving the EIRs with conditions, and the draft EMPs subsequently submitted by Eskom to DEAT covering separately the construction and operational phases of the projects.116 116 Consistent with international good practice, detailed EMPs for the operational stage are prepared for regulatory review during the construction phase. This is done in order to ensure that the operational stage EMPs reflect the project as built, and to take into account any new information or findings that may arise from environmental and social monitoring during the construction stage. Operational stage EMPs are being prepared in draft form for review and comment by DEAT. These will be made available to Bank staff for review during the SDR process; a draft EMP for the Medupi project has already been prepared and has been reviewed by the Bank team in preparing this SDR, as discussed later in this report. 45 152. Based on a detailed review of the EIRs by Bank EA specialists, the quality of the EIRs and draft EMPs was found to be fully consistent with applicable South African legal requirements as defined by the 1989 ECA as amended, and Regulation 1183 of September 1997. Although the more recent 2006 EIA Regulations did not apply to the EIRs, the EIRs for both Medupi and Kusile are generally consistent with the procedural requirements of the 2006 EIA Regulations and incorporated most of the elements of best practice as defined by the South African guidelines on integrated environmental management.117 153. An additional indication of the overall quality of the EIRs was provided by an independent review commissioned by Eskom which examined both of the EIRs in relation to the requirements of the Equator Principles.118 The Equator Principles are based on the IFC Performance Standards, which is a Board-approved safeguards system that is closely aligned with the environmental and social safeguard policies of the World Bank and therefore corresponds closely to the Objectives and Operational Principles found in OP 4.00 Table A1. The independent review found that Kusile will be materially compliant with the Equator Principles,119 and that the Medupi project poses only one issue of potential non-compliance, regarding SO2 emissions.120 This issue is discussed in detail later in the outcomes section of this Acceptability Assessment. 154. The EIRs and associated studies are detailed technical documents that are too extensive to be summarized in this report. The EIRs for both Medupi and Kusile as well as associated facilities operated by Eskom are available for review on Eskom`s website and should be consulted along with this report. Some characteristics of the EIRs are worth noting here: The EIRs were comprehensive in scope and considered all applicable laws and regulations and addressed the project`s sphere of influence (locally, regionally, and globally) through different phases of the project lifecycle from construction through operational to decommissioning and the scale of the assessment was appropriate to the scale of risks and impacts.121 Alternatives assessment was conducted at a strategic level122and at a site-specific EIA level,123 with the EIR for Medupi focusing on the latter. The no action alternative 117 http://deltaenviro.org.za/resources/envirofacts/management.html. 118 SE Solutions, Medupi; SE Solutions, Kusile. 119 SE Solutions, op.cit., p. 49. 120 SE Solutions, op.cit., p. 60. 121 SE Solutions, op. cit., 3.4.2. 122 Fundamentally different alternatives are usually assessed at a strategic level, and EIA practitioners recognise the limitations of project-specific EIAs to address fundamentally different alternatives. Electricity Generating alternatives have been addressed as part of the National Integrated Resource Plan (NIRP) from the National Electricity Regulator (NER) and the Integrated Strategic Electricity Plan (ISEP) undertaken by Eskom, which is in line with the NIRP. Environmental aspects are considered and integrated into the NIRP and ISEP using the strategic environmental assessment approach, focusing on environmental life-cycle assessments, water-related issues and climate change considerations. Eskom Generation, Environmental Impact Assessment Report for the proposed establishment of a new Coal-fired Power station in the Lephalale area, Limpopo Province, Final report, Ref no: 12/12/20/695, 22 May 2006, Chapter 2.2. 123 The Environmental Scoping Study, thus, only considered alternatives in terms of the proposed new coal-fired power station in the Lephalale area, and did not evaluate any other power generation options being considered by Eskom. 46 was considered and rejected on the basis of an acute and chronic crisis in electricity supply in South Africa with detrimental effects on economic growth and social welfare. Atmospheric dispersion modeling was conducted for both Medupi and Kusile using the CALPUFF modeling suite recommended for regulatory use by the United States Environmental Protection Agency for complex terrain environments and regional scale modeling domains. DEAT engaged the US Environmental Protection Agency in extensive consultations in developing and adapting the model for standardized use in South Africa. The EIRs for Medupi and Kusile were supplemented by specialist reports on numerous topics including: groundwater resources, terrestrial fauna and flora, 124 air quality, regional water supply, visual impacts, noise quality, human health, socio- economic impacts, heritage resources,125 traffic, tourism, agricultural potential and livelihoods and covering both the construction and operational phases of the projects. Neither EIR addressed OHS issues as OHS generally falls outside the scope of EIA in South Africa as elsewhere. However, detailed OHS strategies are being developed and implemented for the construction and operational phases in compliance with the Occupational Health and Safety Act of 1993.126 Cumulative impacts were considered to the extent feasible (as required by Section 2 of NEMA). With respect to Kusile, a rationale was given in the final EIR for undertaking a separate EIA process for the power plant and coal mine rather than an integrated assessment. The justification given was that the underlying legal frameworks and hence competent authorities differ as the coal mine EIA is being undertaken primarily to meet the requirements of the Department of Minerals and Energy, while DEA is the competent authority for the Kusile power station. In addition the lead time for the development of Kusile is longer than for the coal mine further complicating the integration of the respective EIA processes. However, the principle of cooperative governance requires that the two regulatory bodies consult each other during their respective decision-making processes. To facilitate this the independent consultant and the coal mine practitioner exchanged all documentation on the power plant and the coal mine.127 8. DEAT Approvals and Associated Conditions 155. The RODs issued by DEAT for Medupi on September 21, 2006, and for Kusile on June 5, 2007, were both issued under the authority of Sections 22(3) and 33(1) of the ECA and 124 For Kusile, a detailed biodiversity assessment was conducted including terrestrial and aquatic investigations to identify sensitive fauna, flora or habitats within the project footprint. SE Solutions, Kusile, 4.7. 125 For Kusile, a Phase 1 archeological survey was conducted per SAHRA requirements including a literature survey, review of existing data bases, a field survey and documentation of sites, objects and structures. SE Solutions, Kusile, 4.8. 126 SE Solutions. 127 EIR, Kusile, 4.5.1. 47 contained several key provisions in common and other provisions that apply individually to the sites and circumstances of the two plants. However, the amendment process that provides for subsequent changes to the ROD, as implemented in the case of Medupi, makes reference to the 2006 NEMA EIA Regulations (Regulation 43) rather than the 1997 EIA Regulations issued under the ECA. a) Conditions Applicable to both Medupi and Kusile 156. The following conditions are applicable to both Medupi and Kusile: In both cases DEAT concluded that based on the information considered the proposed activities may lead to substantial detrimental impact on the environment but that the implementation of the mitigation measures and conditions set out in [the ROD] are considered adequate to minimize detrimental impacts to acceptable levels...subject to the successful implementation of conditions and mitigation measures such that the principles of section 2 of NEMA can largely be upheld. Both RODs made general reference to the need for the projects to comply with all provisions of the National Water Act of 1998; APPA of 1965, and any registration certificate issued under the APPA; the NEMA AQA of 2004, or any related AEL issued under the AQA; the NEMA Biodiversity Act of 2004; the Occupational Health and Safety Act of 1993; and the Hazardous Substances Act of 1973 and associated regulations as well as SANS 0228 and 0229. Air Emissions and Ambient Impacts: DEAT stipulated that the authorization is granted solely in terms of Section 22 of the ECA and does not exempt Eskom from compliance with any other legislation. Compliance with any related Registration Certificate to be issued in terms of the APPA or any related AEL issued under the AQA. Groundwater Protection: Continuous monitoring of groundwater quality to be detailed in the EMP. Conservation of Physical Cultural Resources: Should any archeological artifacts be exposed during excavation (chance finds), construction in the vicinity of the find must be halted, and under no circumstances may any artifacts be destroyed or removed from the site. An archeologist must be called to the site for inspection, SAHRA must be contacted, and their recommendations must be included in the construction EMP and followed. Environmental Management and Monitoring: Appointment of an independent Environmental Control Officer reporting to both Eskom and DEAT, with responsibility for: 48 - Monitoring on a daily basis project compliance with the ROD, environmental legislation, and specific mitigation requirements stipulated in the EMPs; - Ensuring that periodic performance audits are undertaken; - Submission to DEAT (and copied to the Mpumalanga Department of Agriculture and Land Administration) of a written environmental compliance report on a bi- monthly basis. - Employment of the Environmental Control Officer until all rehabilitation measures, as required for implementation due to construction damage, are completed and the site is handed over to Eskom for operation. Establishment of an EMC for the purpose of monitoring project compliance during construction and with the following composition: - The Environmental Control Officer, who reports to and is accountable to the EMC, and chairs its meetings; - An ecologist with direct project experience in the EIA process, or otherwise suitably qualified; - An air quality specialist; and - A senior site manager from the main contractor. At the completion of construction, the role, responsibilities and constitution of the EMC is to be reconsidered and re-established with new terms of reference for the operational phase of development. Submission of a site specific construction EMP to relevant authorities prior to commencement of construction. The contents of the EMP are specified in the ROD. Once accepted by DEAT the construction EMP is to be seen as a dynamic document. Any changes to the EMP must be submitted to DEAT accompanied by a recommendation from the EMC. Other Conditions: The authorization is subject to the approval of relevant local authorities in terms of any legislation administered by those authorities. Eskom is responsible for all costs necessary to comply with the conditions of the ROD. The ROD provided 30 days for any appeals and provided that any complaint from the public during construction must be attended to as soon as possible and to the satisfaction of all parties concerned. b) Site-Specific ROD Conditions 157. The RODs issued for Medupi and Kusile contained a number of site-specific conditions. The differences between the conditions issued for the two facilities may be partially accounted for by different site conditions with respect to existing and projected ambient air quality and 49 ecological conditions affecting the siting of ash ponds. In particular the higher levels of exceedance of ambient air quality thresholds for SO2 in the more industrialized Witbank area, where Kusile is located, compared to the agricultural Lephalale area, where Medupi is located, may account for the requirement that Eskom install FGD units at the commencement of operations at Kusile, whereas at Medupi, Eskom is required to take action to ensure compliance with SO2 and other air quality parameters. The implications of these imposed conditions are discussed below with respect to the individual RODs for the two power plants and in the following section on Projected Outcomes. An analysis of the recommendations of the EIRs for the two projects, and the final requirements included in the ROD for each project, indicates that the process of preparing and issuing the ROD is robust, i.e., DEAT is willing and able to take its own views on project-related issues and state how they should be addressed by Eskom in construction and operation of the projects. 158. Some differences are not readily clear, such as the absence of requirements in the Medupi ROD for bag filters or electrostatic precipitators to reduce PM10; use of low NOx burners in boiler design to reduce NOx levels; indication of which technology will be installed to reduce emissions of mercury; reference to national noise regulations and Zero Effluent Discharge provisions; recycling of polluted water; and the need for a Major Hazard Installation Risk Assessment. However, it is apparent from the EIR and draft EMPs that Eskom submitted to DEAT that these issues are being addressed at Medupi in much the same manner as the ROD specifies for the Kusile project. 159. Medupi ROD Conditions. Air emissions and ambient impacts: The ROD noted that project emissions will potentially release significant amounts of SO2, NOx, CO, and trace amounts of mercury, and that resulting ambient SO 2 levels resulting from the new power station are predicted to contribute to health effects in the Marapong residential area.128 The ROD requires that Eskom install, commission and operate any required SO 2 abatement measures that may be necessary to ensure compliance with any applicable emission or air quality standards issued under the AQA but did not specify any particular SO2 abatement measure such as FGD. However, DEAT required that, should the monitoring required as a condition of the ROD (see below) indicate non-compliance with SO2 standards, Eskom would be required to install, commission and operate [unspecified] SO2 abatement measures at the nearby existing Eskom-operated Matimba Power Station as necessary to ensure compliance with any applicable emission or ambient air quality standard issued under the AQA. 128 The ROD noted that ambient SO2 standards are already being exceeded in the area, and specifically in the Marapong residential area due to existing point and nonpoint sources of emissions in the vicinity, including the existing Eskom-operated Matimba power station, the Grootegeluk coal mining operation, and, to a lesser extent, brickworks, household fuel consumption, veld fires, wind blown dust from agricultural activities, and vehicle exhaust. 50 Solid Waste Management: With respect to the disposal and storage of ash at Medupi, DEAT concluded that alternatives to the construction of a conventional ash dam, including backfilling into the Grootegeluk mine pit, has not progressed sufficiently for an informed decision to be made with respect to the optimum solution for ash disposal. Natural Habitat Protection: Any removal of native protected and endangered plant and animal species requires a permit from the provincial department of nature conservation. No exotic plant species may be used for rehabilitation purposes. Measures aimed at controlling invasive plant species and weeds must be implemented and form part of the EMP. No disturbance of land at any stream or river edge is allowed except in conformity with legislation and strict design parameters. Environmental Management and Monitoring: DEAT required that Eskom initiate a program for continuous monitoring of ambient concentrations of SO2, NOx, CO,129 PM10, PM2.5, ozone, and mercury in the Marapong residential areas and areas around the proposed power station as well as the existing Matimba station, and that the monitoring protocol be subject to a commissioning report by an independent party to confirm that the installations are in place, calibrated, and operating to international standards. Eskom is required to submit quarterly monitoring reports including both numerical and graphical representation of measured concentrations as compared to any applicable ambient air quality standards issued under the AQA. 160. Appeals. Several appeals were lodged against the ROD for Medupi under the terms of Section 35 of the ECA. The appeals referred generally to the Constitutional rights of the appellants and specifically with respect to the following issues: Water supply and quality; Air quality; Project sustainability; and 129 Eskom subsequently successfully requested an amendment to the ROD to remove the requirement for ambient CO monitoring based on the fact that CO concentrations in flue gas streams from Eskom`s power stations are known be extremely low and that the contribution of power stations to ambient CO concentrations is considered to be negligible. DEAT, Request for An Amendment of Record of Decision for the Medupi Power Station near Lephalale to Remove the Requirement for Carbon Monoxide Monitoring, January 26, 2009. 51 General effects on the environment. 161. In responding to the appeals,130 the Minister of Environmental Affairs and Tourism reviewed the findings and requirements specified in the ROD; Eskom`s responses to the appeals; the appellants` reply to Eskom`s comments; and comments received from the Department of Water Affairs and Forestry (Chief Directorate of Integrated Water Resource Protection) and DEAT`s Chief Directorate of Air Quality Management. The Minister dismissed all of the appeals and let the ROD stand on the grounds that: The EIA complies with the requirements of the EIA Regulations in force at the time when the ROD was issued, and the information submitted in support of the EIA application was sufficient to support the ROD. The environmental impacts of the proposed development were assessed in detail and appropriate mitigation was proposed where possible. The specific issues raised in the appeals were adequately addressed in the EIA process. Negative environmental impacts associated with the project can be sufficiently mitigated provided that the conditions contained in the ROD are implemented and adhered to. Serious alternatives were considered during the process leading to the appropriate decision. The need and justification for the project is evident in the tremendous growth in electricity demand. Later in the next section, discussion is provided on a set of appeals on the ROD initially issued for the Kusile project. The difference in approach taken by the Minister in that case is useful in assessing the robustness of the appeals process. 162. Kusile ROD Conditions. In the initial ROD issued on June 5, 2007, DEAT concluded that although the proposed project may lead to substantial detrimental impact on the environment....the implementation of the mitigation measures and conditions set out in this [ROD] are considered adequate to minimize detrimental impacts to acceptable levels...subject to the successful implementation of conditions and mitigation measures such that the principles of section 2 of NEMA can largely be upheld. Furthermore, DEAT stipulated that the authorization is granted solely in terms of Section 22 of the ECA and does not exempt Eskom from compliance with any other legislation. 163. The ROD imposed the following conditions on Eskom: Air emissions and ambient impacts: Installation and operation of wet-FGD with at least 90 percent removal efficiency as well as any required SO2 abatement measures that may be required to ensure 130 Statement by the Office of Minister of Environmental Affairs and Tourism, May 4, 2007. 52 compliance with any applicable emission or ambient air quality standards issued under the AQA;131 Installation and operation of bag filters or electrostatic precipitators to reduce PM 10 emissions; Use of low NOx burners in boiler design to reduce NOx levels; and Indication of which technology will be installed to reduce emissions of mercury. Noise abatement: Use of Gauteng and National Noise Control Regulations and SANS 10103:2004 guidelines for addressing potential noise impacts. Visual impact management: The ROD specified design measures to ensure minimum visual intrusion into the landscape. Water management and effluent control: Consideration during planning of all risk reduction recommendations made in the Hydrogeological Assessment, GCS (Pty) of November 14, 2007; Operation of the power station under Eskom`s Zero Liquid Effluent Discharge policy thereby preventing any water or effluent from being discharged into local river systems; Recycling of polluted water such that all pollutants are captured as waste for disposal with ash deposition; Testing of water generated on site and considered for irrigation to determine suitability in terms of salinity and sodium absorption ratio; and Leak detection and inspection on site and along pipelines. 131 The ROD notes that ambient SO2 standards are already being exceeded on occasion in the area, in large part due to the proximity of the existing Eskom-operated Kendal Power Station as well as other local sources of emissions. Therefore, potential exists for cumulative concentrations and increases in frequency and magnitude of SO 2 exceedances and spatial non-compliance, as a result of which compliance with ambient SO2 limits cannot be achieved through implementation of SO2 abatement technologies [i.e., FGD] for the proposed power station [Kusile] given that current non-compliance is due to existing sources. The implementation of [FGD at Kusile] can however avoid any significant increase in non-compliance from the current situation. In addition, Eskom was directed to initiate a program of support for initiatives aimed at improving air quality in the Witbank residential area to be included in the operational EMP. 53 Solid waste management: Above-ground ash dumping as the preferred ash disposal method. Major hazard assessment: Quantitative Risk Assessment prior to construction consistent with the Major Hazardous Installation Regulations of July 2001, with findings incorporated into the Construction Phase EMP. Natural habitat protection: Undertaking of a site-specific wetland assessment and survey of rare and endangered species during the appropriate season so as to enable the identification of less sensitive areas for the positioning of pipeline, road, rail, and coal conveyor corridors so as to avoid or minimize the impacts on wetlands; Preparation of a revised layout plan indicating how the proposed corridors take wetlands into account and where proposed dams to contain water will be constructed; and Any unavoidable construction within wetland areas must minimize disturbance that would directly affect groundwater hydrology in wetlands systems. Conservation of Physical Cultural Resources: Recommendations proposed in the Heritage Impact Assessment conducted by the Natural History Museum (October 2006) to be implemented for the nine historic sites on the proposed property that were deemed culturally important; and Consultation with SAHRA if any of the nine historic sites are to be impacted. Community engagement and socio-economic impact management: Establishment and maintenance of a community forum and communication channels between local communities, construction companies/contractors and Eskom; Assistance provided to local inhabitants in the form of skills development and job opportunities with results included in environmental compliance report to be undertaken by the Environmental Compliance Officer; Action Plan submitted to DEAT as part of operational EMP, related to surplus land not occupied by project-related infrastructure that could be leased to farmers for agricultural production; Eskom required to inform all interested and affected parties of the authorization and if requested, to provide copies of the ROD; and 54 A complaints register to be up to date and disclosed to DEA on request. Submission to DEA and other relevant provincial and local authorities of an EMP for the operational phase prior to completion of construction and inception of operations. As is the case with the construction EMP, once accepted by DEAT the operational EMP is to be seen as a dynamic document; however, any changes to the EMP must be submitted to DEA accompanied by a recommendation from the EMC. Unlike the construction phase of the EMP, the content of the operational phase EMP is not specified in the ROD. 164. Appeals. An appeal to the initial ROD issued in June 2007 for Kusile was made by two local landowners and a nearby poultry farm. In this instance, following a similar process as noted above for the Medupi ROD appeal, the Minister found that additional consultations and analyses were required because the issues raised in the appeal appeared to have merit. Following this additional work, DEAT issued a revised ROD on March 17, 2008. The difference in responses to appeals of the ROD in these two nationally important projects demonstrates the robustness of the approval and appeals process, i.e., concerns or objections raised by citizens are carefully considered and, if they are deemed to have merit, may produce modifications in regulatory decisions or permit conditions. c) Medupi Phase 1 Transmission Lines RODs 165. Some of the high voltage transmission lines for the Medupi power plant will be financed in part by the EISP; others may not and are considered associated facilities. The Medupi transmission line connections are described in detail in the section below on Projected Outcomes. The associated Phase 1 transmission lines for Medupi involve one 400kV line from the power plant to the Marang substation near Rustenberg, and two 200 kV lines to the Dinaledi substation near Brits. The EIRs for these and other transmission lines being developed by Eskom have already been completed, and have been and remain available on Eskom`s website. DEAT issued RODs for the three Phase 1 transmission lines on March 5 and March 27, 2008. The RODs were appealed in April 2008. The grounds for the appeals were: 1) Alleged deficiencies in the public participation process; 2) Inadequate consideration of proposed technological solutions; 3) Insufficiency of the information provided for the route selection; 4) Need for more comprehensive implementation of the utility corridor concept; 5) Unacceptable impacts on avian biodiversity in general and on certain bird species; 6) Disaggregation of the EIA process with other transmission lines; 7) Independence of Eskom`s EA Practitioner for the transmission line EIAs; 55 8) The need for increased power generation and hence pollution from the power plant due to the power losses attributable to the greater length of the proposed route relative to alternative routes; 9) Incremental rather than holistic decision-making on the establishment of transmission infrastructure related to Medupi; and 10) Undue consideration given to avoiding undermined areas. 166. The Minister of Environmental Affairs, in a carefully worded and informed opinion issued on December 8, 2008, concluded that, while the appeals raised some valid issues that need to be taken into account by Eskom in the implementation of these transmission line projects, they were not sufficient to warrant the setting aside of the ROD.132 In view of the different outcomes noted above on the appeals of the RODs issued for the Medupi and Kusile projects, this third type of outcome further demonstrates the robustness of the project approval and appeals process. d) Post-ROD Permitting 167. It should be noted that the RODs issued by DEAT provide approval based on the satisfactory conclusion of the EIA process and state conditions attached to project implementation. As noted in the RODs, Eskom must still obtain individual permits, including an AEL from the Chief Air Pollution Control Officer (DEA) as per the AQA, a Water Use License,133 and a license for waste disposal, among others. At the time this SDR was prepared most of these licenses that pertain to plant operations were still pending for the Medupi and Kusile projects. Others specific to the construction process had been issued. e) Compliance and Enforcement 168. Per the RODs, compliance with the DEA-approved EMP must form part of all tender documentation for all contractors working on the project and must be contractually endorsed.134 169. Also under the RODs, Eskom is required to notify DEA in writing within 24 hours if any condition in the ROD cannot be or is not adhered to, along with an explanation for any non- compliance. 170. DEA reserves the right to monitor and audit the project throughout its full life cycle to ensure compliance with the conditions stipulated in the ROD as well as mitigation measures described in the EIR and the construction and operational EMPs. For this purpose the ROD provides that DEA officials shall be given access to the sites at all reasonable times. Under the authority of Section 22(4) of the ECA, DEA may withdraw its approval after 20 days of written notice to Eskom for non-compliance of any condition imposed in the ROD. Failure to comply 132 Minister of Environmental Affairs and Tourism, Appeals decision against the Environmental Authorizations of the proposed construction of the....transmission lines and their associated infrastructure from the proposed Medupi power station.... December 8, 2008 (www.search.gov.za/info/previewDocument.jsp?dk=%2Fstatic%2Finfo%2). 133 Eskom has obtained a water use license for site dewatering and stream diversion at Medupi, SE Solutions, Medupi. 3.4.5. 134 ROD, Kusile. 56 with any conditions of the ROD is subject to the penalties of Section 29, 30 and 31 of the ECA as well as other legal mechanisms. 9. Environmental Management Plans (EMPs) 171. Eskom is required to prepare and submit to DEA separate EMPs for the construction and operational phases of both the Medupi and Kusile plants. a) Medupi: Construction Phase 172. Eskom has submitted and DEAT has approved an EMP for the construction phase of the Medupi project.135 The EMP is a comprehensive document with a level of detail and actions commensurate with the project`s potential impacts and risks at the construction stage. The EMP has the following objectives:136 Outline functions and responsibilities of responsible persons; State standards and guidelines that are required to be achieved in terms of environmental legislation; Outline mitigation measures and environmental specifications that are required to be implemented for the construction phase of the project in order to minimize the extent of environmental impacts, and to manage environmental impacts associated with the Power Station; and Prevent long-term or permanent environmental degradation. 173. The EMP establishes organizational structure and responsibility mechanisms for managing the environmental, health, and safety impacts of the construction process; the requirements for training of personnel in appropriate levels of awareness and competence; a program on monitoring and performance measurement and for inspection, documentation and reporting. 174. Among the documents used for tendering purposes and cited in the EMP is a Health Safety and Environmental Specification for the Medupi Power Station.137 Environmental Specifications are included for the full range of potential environmental impacts anticipated in the EIR including: site clearing; plant repair, maintenance and cleaning; air quality; dust control; noise; water management (consumption, domestic use); pollution control; storm and wastewater management; erosion control; solid waste management; transportation, storage and handling of hazardous substances; aesthetics; vegetation clearing and disposal of vegetative material 135 Eskom, Medupi, EMP Construction Phase. 136 Medupi, EMP Construction Phase 1.4. 137 Medupi EMP 1.1, p. 8. 57 (including relocation of designated plant species, management of alien vegetation; herbicide use);138 protection of fauna, heritage sites, and artifacts; and traffic management. b) Medupi: Operational Phase 175. A preliminary EMP for the operations phase has been prepared and submitted to DEAT for review and comment.139 The objectives of the EMP are to: Outline mitigation measures and environmental specifications that are required to be implemented for the operation/maintenance phase of the power station in order to minimize the extent of environmental impacts, and to manage environmental impacts associated with the project; Identify measures that could optimize beneficial impacts; Ensure that the operation and maintenance activities associated with the power station do not result in undue or reasonably avoidable adverse environmental impacts, and ensure that any potential environmental benefits are enhanced; Ensure that all environmental management conditions and requirements as stipulated in the Environmental Authorization are implemented throughout the project life- cycle; Ensure that all relevant legislation (including national, provincial, and local) is complied with during the operation and maintenance of the power station; Identify entities that will be responsible for the implementation of the measures, and outline functions and responsibilities; Propose mechanisms for monitoring compliance, and preventing long-term or permanent environmental degradation; and Facilitate appropriate and proactive response to unforeseen events or changes in project implementation that were not considered in the EIA process. 176. The draft Operational EMP addresses key environmental issues identified in the EIR in terms of the applicable regulatory framework and ROD conditions, by making provision for corresponding actions: 138 Herbicide use is required by the EMP to comply with the conditions of the Fertilizers, Farm Feed, Agricultural Remedies and Stock Remedies Act of 1947 under which herbicides may be applied by construction contractors only with the explicit authority of Eskom, under the supervision of a registered pest control operator (Medupi EMP Construction Phase, 4.12.5). There is no expectation that herbicides will be used by construction contractors, and it is not Eskom`s practice to use herbicides for vegetation management at its facilities. 139 Eskom, 2009. Medupi Power Station, Limpopo Province, Environmental Management Plan (EMP) for Operation and Maintenance, February 2009. Savannah Environmental (Pty) Ltd. 58 Impacts on ambient air quality and human heath as a result of emissions: monitor continuously ambient concentration of pollutants (SO2, NOx, PM10, PM2.5, ozone, and mercury) in the surrounding Marapong residential area; install, commission, and operate any required SO2 abatement measures that may be necessary to ensure compliance with emission or ambient air quality standards issued under the AQA; and investigation of additional measures to further reduce SO 2 emissions, such as FGD technology. Impacts on surface and groundwater resources: drill, construct, and maintain monitoring boreholes on site; monitor groundwater levels and hydrochemistry on a quarterly basis; undertake groundwater modeling and potential plume migration to assess risk reduction measures and potential impacts; and, in the event that water quality is found to fall outside of prescribed guideline levels, investigate the source of the problem and take remedial measures. Visual impacts: minimize visibility of the power station and the contrast with surrounding environment, through careful planning and placement of lighting, lighting shields and limited removal of natural vegetation; Noise impacts: ensure that all necessary acoustic designs are installed and maintained such that the overall generated noise level from the installation does not exceed 70dBA at the property boundary; Social impacts: maintain communication and consultation with community arrangements through operational phase of project through maintenance of up-to-date register of neighboring property owners; ensure that neighboring owners have accurate contact numbers at the plant; and make an emergency plan of action with neighboring community and relevant authorities in case of an emergency such as a veld fire, oil spill or water contamination. 177. The draft Operational EMP sets forth institutional arrangements with the objective of establishing clear reporting, communication, and responsibilities for environment and safety. The critical positions include: a Generation Environmental Manager with overall responsibility for plant environmental performance; a Power Station Manager with responsibility for assembling an EMS management team and ensuring that adequate human, financial, and technical resources are made available, conducting periodic reviews of EMS effectiveness and taking appropriate action as a result of findings and recommendations of management review and audits; and a Safety and Health Environmental Officer charged with implementation of the EMS. The EMP also provides for the establishment of an Environmental Committee with quarterly meetings and a Safety and Health Environmental Committee to meet every two months. C. PROJECTED OUTCOMES: ENVIRONMENTAL IMPACTS 178. The projected site-specific environmental, health, and safety impacts anticipated to result from the construction and operation of Medupi and Kusile can be summarized based on the 59 DEAT-approved EIRs for both plants,140 draft construction and operational stage EMPs,141 independent review of the EIRs,142 visits by Bank staff to both sites at a time when they were well under construction,143 and interviews with Eskom management and staff and South African regulatory officials.144 While on the project sites, Bank staff also had discussions with the Environmental Control Officers responsible for monitoring project compliance with the ROD, EMP, and other permit conditions, and reporting to both Eskom and DEA.145 179. In this section, quantitative outcomes (e.g., air emissions, ambient air quality, liquid effluents) are compared to applicable South African legal and regulatory requirements. To put South African requirements into perspective with international good practice, a comparison of these requirements with corresponding World Bank Group (WBG) environmental guidelines is provided in Annex 4. Under the emissions standards proposed by South Africa for large thermal power plants, both Medupi and Kusile are to be considered as existing plants during their first eight years of operation because they made application for authorization under NEMA, as amended (i.e., in this instance, in the form of an EIA application) on or before twelve months prior to the publication of the Emissions Standards issued under the AQA.146 Under the Draft Emissions standards, such plants have five years in which to comply with the emissions standards for existing plants and an additional three years to comply with the standards for new plants. 180. It is within this proposed regulatory context147 that projected emissions from the Medupi and Kusile plants may be compared to South Africa`s proposed emissions standards for large thermal power installations. As is evident from Table 1, emissions from Medupi are expected to comply with proposed South African emissions standards for existing plants 148 for PM10 and NOx. The projected range for SO2 emissions for Medupi, which will commence operations without FGD, indicates that exceedances could occur, especially if the sulfur content of the coal is at its maximum expected level. This regulatory risk can be managed by Eskom through the 140 Eskom Generation, Environmental Impact Assessment Report for the proposed establishment of a new Coal-fired Power station in the Lephalale area, Limpopo Province. Final report, Ref no: 12/12/20/695, 22 May 2006; Environmental Impact Assessment Process: Proposed Coal-Fired Power Station And Associated Infrastructure in the Witbank Area, Final Environmental Impact Report, February 2007. 141 Medupi EMP, op. cit. 142 SE Solutions, Medupi; SE Solutions, Kusile, op.cit. 143 Bank staff made site visits to Medupi on May 27, 2009, and to Kusile on May 28, 2009, and to these and other EISP key components during the period December 6-15, 2009. 144 Meetings were held with Eskom in Washington on April 28, 2009, and in South Africa during the period May 27--June 1, 2009. Meetings with DEAT were held on May 29, 2009, and with the Ministry of Water on June 1, 2009, as part of preparation of the SDR. 145 The Environmental Control Officer also chairs meetings of the EMC, which is made up of representatives of various stakeholders as per ROD requirements. 146 As per General Notice 1001, Draft National Environmental Management: Air Quality Act: List of Activities which result in atmospheric emissions which have or may have a significant detrimental effect on the environment, including health, social conditions, economic conditions, ecological conditions or cultural heritage. Government Gazette, Vol. 529, No. 32434, July 24, 2009: Existing Plant` shall mean any plant or process that was legally authorized to operate before the date on which the Notice was published or any plant where an application for authorization in terms of the National Environmental Management Act, 1998 (Act No. 107 of 1998) (as amended) was made or 12 months before the date on which the Notice was published. 147 The Draft Emissions Standards are expected to be adopted in very nearly their current form on April 1, 2010. 148 Source for Medupi and Kusile emissions: SE Solutions, Medupi, Tables 4 and 6; and Kusile, Table 3. 60 common practice of blending coal with various sulfur levels. Kusile will be equipped with wet- FGD with 90 percent SO2 removal efficiency at commencement of operations; therefore, it is expected to comply with proposed South African emissions standards for new plants as well as existing plants with respect to SO2, and will comply with proposed existing plant standards for PM10 and NOx. The particular circumstances and environmental impacts associated with emissions from each of these two plants is described further below, as well as other projected environmental impacts of emissions and effluents from Medupi and Kusile. Table 1. Projected Emissions from Medupi and Kusile Compared to Proposed South African Emissions Standards for New and Existing Combustion Facilities Pollutant South Africa South Africa Medupi* Kusile** Proposed Proposed Emission Standard Emission Standard for for New Plants Existing Plants Particulates (PM10) 50 mg/Nm3 100 mg/Nm3 <50 mg/Nm3 <30 mg/Nm3 Sulfur Dioxide 500 mg/Nm3 3,500mg/Nm3 3,000-4,500 <400 mg/Nm3 3 mg/Nm Nitrogen Oxides 750 mg/Nm3*** 1,100 mg/Nm3** 550-650 mg/Nm3 510 mg/Nm3 *without FGD installed at commencement of operations as approved in the ROD of September 2006; once FGD is installed, the expected emissions at Medupi would be similar to those expected at Kusile ** expected emissions with FGD installed at commencement of operations (Source SE Solutions, Table 3) *** as NO2. 1. Medupi 181. With respect to particulates (measured as PM 10), South Africa`s proposed emissions standards for existing plants will be met at Medupi through the use fabric filter technology with a guaranteed emission limit of 50 mg/Nm3 and will, accordingly, comply at the commencement of operations with the proposed South African emission standards for both existing and new plants. Likewise, through the use of low-NOx burners Medupi emissions will comply at the commencement of operations with proposed standards for both existing and new plants. 182. However, with respect to SO2 emissions, depending on the evolution of the sulfur content of the coal feedstock, Medupi may encounter some difficulty in meeting proposed SO2 emissions standards for existing plants within the five year timetable, and in the absence of a substantial reduction on SO2 emissions, could not comply with the proposed Emissions Standards for new plants within the required eight year timetable. 183. The main concern with respect to excessive SO2 emissions relates to the local health effects of sulfur dioxide. The baseline SO2 concentrations in the area are affected primarily by the existing Matimba Power Plant. Prevailing winds are from the northeast all year, and the highest SO2 levels occur in the sparsely populated area to the southwest, which is occupied mostly by large game farms. 184. The EIR measured baseline ambient air quality and health impacts in the airshed to be affected by Medupi prior to construction and modeled projected future cumulative emissions in the airshed with Medupi in full operation. Both the baseline and projected data were compared to 61 the interim South African National Ambient Air Quality Standards as proposed in the 2004 AQA. With respect to baseline emissions, where the existing Eskom-operated Matimba plant is the major source of SO2 emissions, sampling data from various periods between 1991 and 2005 showed that the 2004 interim standards were exceeded relatively infrequently even at monitoring stations directly downwind and within four kilometers of the existing Matimba plant. The daily average of 125 /Nm3 was exceeded only three times and at only one station located three kilometers immediately west of the Matimba plant. There was consistent compliance with the annual average standard in all sampling programs. An intensive 10-month Eskom sampling campaign in 2004-2005 at ten stations surrounding Matimba included one station eight kilometers from the plant, at which an hourly standard was exceeded only once149 and the daily average was not exceeded at all. The EIA concluded that little potential existed for health risks due to existing SO2 levels in the high-exposure areas downwind of the plant. The most populated locality that is affected is the town of Marapong (population 17,000) which is near Matimba but to the northeast, hence normally upwind. Although existing ambient concentrations are lower and standards are exceeded less frequently there because it is upwind, the health risk rises because a population of 17,000 will include a significant number of individuals with respiratory conditions. The report points out that the evaluation of current risk in Marapong is based on short-term exceedance of health thresholds occurring on average only four times per year. 185. Operation of the six units of the Medupi plant without FGD was predicted to raise the number of times the interim daily ambient standard would be exceeded in the maximum impact area downwind to 33 times per year, and to more than double the size of that impacted area downwind. The interim hourly standard could be exceeded up to 419 times in a year downwind (i.e., less than 5 percent of the time). However, the additional area affected is likely to remain as sparsely populated game farms, and health effects are therefore limited. At Marapong, the dispersion model predicts exceedance of the hourly standard 35 times and of the daily standard 4 times per year. These numbers continue to be relatively low because the wind blows only infrequently from the southwest. The maximum 1-hour and 24-hour concentrations at Marapong are predicted to be 1,481 and 153 /Nm3, respectively. The annual average is predicted to be 42.7 /Nm3 in the high impact area downwind and 6.8 /Nm3 at Marapong, both below the annual ambient standard. Referring to California and WHO health effects thresholds,150 the dispersion model predicted 35 occasions during a year of one or a few hours duration in which persons at risk in Marapong could be affected by ambient SO2 concentrations. The model predicted that the 24-hour health effects threshold would be exceeded in Marapong four times in a year, and the annual average standard would never be exceeded.151 Eskom established a continuous monitoring station in Marapong in January 2008, and quarterly monitoring reports show that through December 2009, the 1-hour limit for SO2 in the then-proposed (and since adopted) new DEA standards was exceeded five times. Two of the exceedances occurred when 149 GoSA`s interim standards did not include an hourly concentration limit for SO 2, so the EIR consultant used the EC/UK 1-hour limit of 350 µg/Nm3 in the analysis. 150 California has established a 1-hr maximum of 660 /Nm3 as the risk level for at-risk individuals; WHO uses 181 and 72 /Nm3 as the 24-hr and annual average exposure levels at which health effects could occur in the elderly and people with respiratory problems such as asthma. 151 . Government Gazette No. 32816, 24 December 2009. 62 the wind was from the northeast; the Matimba Power Plant could not have been the source of the SO2 on those occasions.152 186. On December 24, 2009, the Minister of Water and Environmental Affairs issued final National Ambient Air Quality standards, to take effect immediately. Unlike the interim standards, the final ones are expressed as a combination of limit values and frequencies of exceedance. For SO2 a 1-hour limit value of 350µg/Nm3 has been introduced; the other limit values are unchanged. Consequently, the conclusions and predictions in the EIR concerning exceedance of limits remain valid. The frequencies of exceedance represent the maximum number of times a limit value can be exceeded at a given sampling location in a calendar year without resulting in non-compliance with the standard: for SO2 it is 526 times for the 10-minute standard, 88 times for 1-hours, four times for 24-hours, and zero for the annual average. If these exceedance frequencies had been in effect at the time the EIR was written, its conclusions would have been that the baseline data showed virtually no instances of non-compliance with any of the standards, and the SO2 concentrations predicted by the dispersion model would not result in non- compliance in Marapong. Similarly, the five exceedances measured in Marapong in 2008-2009 are well within the tolerance of the 1-hour standard, and the SO2 concentrations predicted by the dispersion model would not result in non-compliance in Marapong. However, the predicted numbers of exceedances of the hourly and daily limits in the maximum impact area downwind of Medupi are larger than the permissible frequencies of exceedance in the final standards. 187. DEA is taking a holistic approach to the management of air quality in the airshed affected by Medupi as well as the larger surrounding Waterberg area. Although the Waterberg area is currently in general compliance with the ambient air quality standards of the AQA, DEA expects that ongoing and planned expansion of the mining industry, industrial development, and population in the Waterberg area could result in a significant near to medium term deterioration in air quality if future developments occur as expected. As a consequence of these anticipated future developments, DEA has decided to respond proactively and is accordingly preparing a proposal to declare Waterberg as a National Priority Area under the Air Quality Act,153 and is in the process of installing an air quality monitoring network and developing an EMF for the Waterberg region.154 188. Given the concerns noted above for possible future deterioration of ambient air quality in the Waterberg airshed with respect to SO2 due to cumulative impacts arising from future development of industry, the ROD issued to Eskom for Medupi requires that Eskom take steps to mitigate its emissions from both Medupi and potentially also Matimba should air quality fail to meet ambient standards in the future.155 Given the likelihood of this occurrence, Eskom`s Board 152 Eskom, 2008 and 2009. Marapong Air Quality Quarterly Reports. Eight quarterly reports were reviewed. No other ambient air quality limits were exceeded. 153 The Minister of Water and Environmental Affairs may declare an area as a priority area if there is a reasonable belief that ambient air quality standards are being exceeded or may be exceeded in the area, or a situation exists which is causing, or may cause, a significant negative impact on air quality and the area requires a specific air quality management action to rectify the situation. H. von Blotttnitz, et al, op.cit., p. 591. To date, three areas have been declared as National Priorities under the AQA. 154 The EMF is expected to be completed in mid 2011. 155 Eskom has already begun a research program in Marapong to identify and explore possible initiatives; one example would be supporting conversion of other air pollutant sources such as home heating systems to technology that would have lower SO2 emissions 63 of Directors has approved installation of FGD and accordingly, Eskom has developed and is constructing Medupi to be FGD-ready by providing sufficient physical space and infrastructure to allow installation of FGD for all six units as necessary.156 However, Eskom is reluctant to invest in wet-FGD equipment until sufficient water has been made available, given the high capital cost of FGD, estimated at US$800 million, an amount which would add about ten percent to the capital cost of Medupi and increase operating costs by an estimated five percent.157 189. Moreover, the wet-FGD technology (limestone-gypsum forced oxidization) selected by Eskom would require Medupi to have access to approximately twice the volume of water that is required for full operations without FGD. Medupi currently has access to sufficient water to meet approximately one half of its operational water requirements without FGD, with the other half to be provided through a temporary reallocation of reservoir water from the Mokolo Reservoir. In order to operate at full design capacity as scheduled in 2014, Medupi will need to access water from the Mokolo and Crocodile Water Augmentation Project (MCWAP) that is currently undergoing the EIA process for Phases 1 and 2 of this four-phase project. This source would also provide Medupi with sufficient water to operate wet-FGD, and thereby allow Medupi to comply with proposed South African Emissions Standards for new power plants and international good practice with respect to its emission of SO2, while at the same time, doing its part to help maintain acceptable air quality in the (prospective National Priority) Waterberg area. 190. Assuming the availability of sufficient water, Eskom proposes to install FGD in a sequential manner, as necessary and feasible as each operating unit is shut down for routine maintenance, normally six years following the commencement of operations. Given the current construction schedule and commissioning of the first of six units in 2012, the timetable for FGD installation is expected to begin in 2018 and require about two years to complete as each unit is sequentially brought offline for maintenance at which time Medupi would be fully equipped with FGD and come into full compliance with the proposed South African emissions regulations for new plants. The Bank is continuing to engage Eskom on a technically feasible and operationally responsible timetable for installation of FGD at Medupi. In this connection the Bank has proposed that, no later than 2013, Eskom provide the Bank with a plan for FGD installation and include consideration of alternative, less water intensive dry-FGD, in the event that sufficient water is not available or allocated to support wet-FGD technology 158 156 Accordingly, the stacks will be lined with FGD compatible materials. Medupi, EMP Construction Phase, 1.1. 157 The ten percent capital cost estimate is consistent with the guidance provided in the WBG EHS Thermal Power Guideline, which estimates a range of 11-14 percent plant capital cost increase (WBG EHS Thermal Power Guideline, Table 1). However, Bank staff will continue to review Eskom`s estimates of the capital cost of wet-FGD as the cost of this technology may have been substantially reduced since Eskom`s decision study of FGD alternatives was completed in 2004. These potential cost reductions are due to changes in material costs, rapid market development in Eastern Europe (related to EU accession requirements), China`s requirement for FGD at all new and existing power plants, and the subsequent rapid emergence of Chinese FGD suppliers. 158 The team discussed with Eskom technical staff the potential for reducing the timeline for installation of FGD by considering other FGD and SO2 reduction technologies, including semi-dry-FGD and activated carbon technology (ReACT), both of which would require considerably less water than wet-FGD. Based on the studies it commissioned from two independent consultants that were completed in 2004, Eskom excluded semi-dry-FGD due to the high cost and risk of lime supply. Although Eskom currently acknowledges the technical advantages of ReACT, it decided as part of project planning to rely on wet-FGD as the more commercially proven and available technology at the time 64 191. In other respects, Medupi is designed to meet international good practice by using zero wastewater discharge through recycling and reuse of process water accompanied by surface and groundwater quality monitoring, and solid waste management using lined ash dumps and leachate monitoring. The potential impact of the project on surface and groundwater were further evaluated by the Department of Water Affairs and Forestry in connection with Eskom`s application for an Integrated Water Use License (IWULA). The IWULA requires that the ash dump be lined. 2. Kusile 192. The ROD for Kusile requires that Eskom install, commission and operate: any SO2 abatement measures that may be necessary to ensure compliance with any applicable emission or ambient air quality standards issued under the AQA; bag filters or electrostatic precipitators for particulate emissions control; as well as a boiler design that includes low NO x burners. Like Medupi, Kusile will use fabric filter technology with a guaranteed emission limit of 50 mg/Nm 3. 193. Unlike the case with Medupi, the Witbank airshed in which Kusile is located is already classified as degraded according to South African and WHO standards, in part due to its proximity to the existing Eskom-operated Kendal Power Station. The airshed is classified as degraded based largely on existing measured levels of particulates, with exceedances of SO2 occurring with less frequency than would be characteristic of a degraded airshed. However, because the Witbank airshed has a strong potential to become degraded with respect to SO 2 and because water availability is not a limitation, the ROD requires that Eskom deploy FGD for SO 2 emissions control at the commencement of operations. 194. By virtue of the installation of wet-FGD units at construction, the Kusile project is expected to fully comply with the proposed South African air emission regulations for existing plants, and the use of FGD will further reduce PM 10 emissions to <30 mg/Nm3. It will also comply with the proposed SO2 emission standard for new plants, but only for plants emitting to a non-degraded airshed. As a result Kusile`s overall low percentage contribution of SO 2 to the airshed, the cost-benefit ratio of any further reduction in SO2 emissions at Kusile is unjustifiable. 195. With respect to NOx, the EIR concludes that the project will not result in exceedance of South African ambient standards for NOx. With respect to proposed emission levels, however, the boiler specification, as in the case of Medupi, sets the maximum NOx level above what would be allowed if Kusile were classified as a new plant instead of an existing plant. The Kusile plant, like the Medupi plant, is defined by the proposed new emissions regulations as an existing plant, the decision needed to be made. Eskom remains committed to this option should FGD installation become necessary and has made irreversible plant design decisions and material commitments based on the future use of wet-FGD. Eskom`s decision process to use wet-FGD is consistent with the WBG EHS Guideline for Thermal Power which states that the choice of technology depends on a benefit­cost analysis of the environmental performance of different fuels, the cost of controls, and the existence of a market for sulfur control by-products. The optimal type of FGD system depends on the capacity of the plant, fuel properties, site conditions and the cost and availability of reagent as well as by-product disposal and utilization. World Bank. EHS Guideline for Thermal Power Plants, pp. 3-4. 65 and the design specifications for the boiler easily meet proposed emission levels for existing plants.159 196. Like Medupi, the Kusile project is designed to meet international good practice by using zero wastewater discharge through recycling and reuse of process water accompanied by surface and groundwater quality monitoring, and solid waste management using lined ash dumps and leachate monitoring. Although Kusile is being designed to be a Zero Liquid Effluent Discharge site; it is important to note that for the entire site Zero Liquid Effluent Discharge would be realized only after all six generating units have been commissioned. In the meantime, construction wastewater requires necessary controls to ensure that natural contaminants such as silt, spilled petroleum products, and other contaminants are collected and treated, and not allowed to enter into the natural watercourses and wetlands that will remain on the site. The Kusile plant layout also includes space for future installation of carbon capture technology. 197. The decision to install FGD at Kusile will result in an additional use of 9.6 million m3 of water per year over and above the 4.4 million m3 required for the power station and associated infrastructure if FGD were not to be installed. Total demand will be met through a recently completed augmentation scheme that moves water from the Vaal River Catchment to the eastern Highveld. The current supply to the nearby Kendal power plant will be increased through a larger pipeline to supply Kusile as well. As a result, there will be no abstraction of surface or groundwater resources to supply the power station.160 198. The key solid wastes from Kusile will be ash and gypsum (the latter from the FGD units). Eskom is still in the process of finalizing the waste disposal strategy for Kusile on the basis of the following principles: Sale of gypsum if a local market can be found; Co-disposal of ash and gypsum in the absence of a market for gypsum; No contamination of groundwater; and Lining of ash disposal sites to be engineered in accordance with DWA requirements and permits. As in the case of Medupi, ash and gypsum disposal will be carried out with the minimum amount of water necessary to avoid generation of dust during transport on conveyor belts and deposition before capping with topsoil. The facility essentially will operate as a sanitary landfill for solid wastes, and not as a wet ash lagoon. 199. As required by the ROD for Kusile, the onsite Environmental Compliance Officer(s), seconded from independent NGOs, have concurrent reporting responsibilities to Eskom, the 159 The Kusile boiler specifications are designed to guarantee an emissions level of 650 mg/Nm3, while actual emissions are expected to be 510 mg/Nm3. The South African proposed emissions standard for NOx at new plants is proposed as 500 mg/Nm3, and for existing plants it is proposed to be 800 mg/Nm 3. 160 SE Solutions, Kusile 5.2. 66 Environmental Management Committee, and DEA with respect to compliance with all environmental permitting and EMP requirements. D. PROJECTED OUTCOMES: SOCIAL IMPACTS 1. Medupi 200. The social impacts tentatively identified during the scoping study and earmarked for further investigation included a significant increase in the demand for housing and pressure on municipal infrastructure in the surrounding area, which would be particularly acute during the construction period. This increase would have a substantial impact on the local municipality. The EIR concluded that these effects could be managed by the local municipality, but events arising after construction began proved that this was not the case. In particular, the municipality could not come up with the resources to manage the increased flows to the municipal wastewater system, and the municipal solid waste disposal facilities proved to be inadequate. Although these problems have not yet been fully resolved, Eskom has recognized its role in contributing to the unexpected problems, and is working with the municipality to address them in a responsible manner. 201. Land acquisition and resettlement impacts have been negligible at Medupi, where two large game farms were acquired by Eskom for the Medupi project. The game farm Naauwontkomen (the selected site for the proposed power station) was owned by Kumba Resources (Exxaro) and was purchased by Eskom. No relocations were required as there were no people living on the farm at the time of purchase. The neighboring game farm Eenzaamheid (the selected site for the ash dump) was owned by the farmer, and there was one full-time worker residing on the farm when purchased by Eskom. It was agreed that the farm worker will continue in the landowner`s employ and be relocated at the farmer`s expense to one of his other properties. The game farm Kromdraai, directly to the south of Eenzaamheid, was purchased by Eskom. No laborers or any other occupiers resided on the farm at the time of purchase and therefore no relocations were required with respect to the property. The Bank`s IR Policy would not be applicable to the Medupi project component. 202. The extent of resettlement necessary for transmission lines to connect the Medupi project to the grid is not yet known because the exact alignment of most of the lines, especially those to be built as part of Phase 2 connections, has not been finalized with the various property owners from whom the right-of-way will be acquired. In deciding on final alignment, Eskom tries to avoid resettlement altogether, and the number of houses that will need to be relocated, most likely elsewhere on the landowner`s property, is likely to be small. Eskom compensates landowners for the right-of-way on the basis of either market value or 100 percent of the financial loss. Eskom either pays for or replaces trees or structures such as windmills and water tanks that need to be relocated for safety reasons. 2. Kusile 203. No expropriation is required in the case of Kusile, nor are there any outstanding restitution claims on land to be acquired for the project. However, despite the investigation of alternative locations for the power station which sought to minimize social impacts, some 18 67 family units required resettlement, consisting of families of farm laborers on the farms that were sold to Eskom on a willing buyer-willing seller basis.161 South African legislation is very detailed in what is required with respect to both physical displacement and livelihood restoration (rehabilitation). To implement the resettlement, Eskom engaged the service of contractors specializing in agricultural socio-economic and development consultation services and implementation. Eskom provided the families with several resettlement options on neighboring farms, some owned by Eskom, and for those families who preferred alternatives, on other land leased from other farmers for the purpose of resettlement. The families who opted to resettle on the Eskom-owned farms were provided with permanent homes with individual fencing, running water and sanitation, vegetable gardens, and a playground for children. Eskom assisted the project-affected people in establishing a Communal Property Association that would acquire ownership of the properties in the names of the family units. For those families who elected to be resettled on other properties, Eskom arranged to have existing structures rehabilitated or constructed new structures where existing structures were not of sufficient quality. Eskom monitors implementation of the program through quarterly reports prepared by specialists on the progress of the resettlement and rehabilitation of these households. 3. Sere Wind Power Project, CSP Plant Sites, and Majuba Rail Spur Sites 204. Both the Sere Wind Power Project and the CSP Plant sites are located in sparsely occupied semi-arid or arid landscapes that are predominantly used for grazing sheep or cattle. Eskom has nearly completed the acquisition of 16 km 2 of land needed for the Sere Wind Power Project. The land is being purchased from three farm owners on a willing buyer-willing seller basis. No resettlement will result from the development of the wind farm or acquisition of the right-of-way for its 132 kV transmission line. Eskom is negotiating the purchase of land from a single landowner for the CSP plant site near Upington. The CSP plant will occupy 4 km 2 of the acquired farm, and the right-of-way for the 132 kV transmission line to connect to the grid is located on the same farm property. There will be no resettlement, and farming activities (cattle grazing) could continue on the remainder of the farm. 205. The route of the 67-km Ermelo-Majuba rail spur crosses the lands of 43 separate farm owners, consisting primarily of cattle grazing lands and croplands (mostly corn). Eskom has acquired the land for the entire right-of-way through a combination of servitude rights and outright purchases. Twenty-one households with 152 residents are being resettled, mostly for safety and noise reasons (although the rail line is electrically-powered) that cannot be otherwise mitigated. On-farm relocation has been agreed in the case of 16 of the households, other lands have been purchased for the other five families. E. ASSOCIATED FACILITIES 1. Associated Facilities: Medupi 206. The Medupi project is located in the Northern Grid of South Africa`s power network. The Medupi project will supply additional power to the Waterberg, Polokwane, and Rustenburg customer load networks (CLNs) in the Northern Grid, and to the Carletonville CLN in the North- 161 SE Solutions, Kusile 4.6. 68 West Grid. Associated facilities for the Medupi project include several high tension transmission lines and two new substations in the power grid that will be installed in two phases. Some of these lines will be financed in part by EISP; the rest are considered associated facilities. Phase 1 connections to the grid include: Two 192-km 400-kV transmission lines to the existing Spitskop substation (north of Rustenburg, serving the Waterberg CLN); and A 281-km 400-kV transmission line to the existing Marang substation (near Rustenburg, serving the Rustenburg CLN). 207. These Phase 1 transmission line EIRs have already been approved and disclosed by Eskom both locally and on Eskom`s website. Right-of-way acquisition is already about 70 percent complete, and construction will start in September 2009. Phase 2 includes eight new high voltage transmission lines and two new substations, as follows: Four 400-kV lines from Medupi to the proposed new Delta substation, located about 50 km west of Medupi, near Steenbokpan; A 400 kV line (with capacity to expand to 765 kV) from the new Delta substation to the proposed Epsilon substation, located about 450 km southwest of the new Delta substation (120 km west-southwest of Johannesburg), thereby linking to the North- West Grid in the Carletonville CLN; A 400 kV line from the Delta substation to the existing Witkop substation, located southwest of Polokwane [Pietersburg]; a 400 kV line from the Delta substation to a new substation near Mokopane (west- southwest of Polokwane) that is being built separately as part of a grid strengthening project; and A 400 kV line from the Delta substation to a new substation near Mogwase (north of Rustenburg) that is being built separately as part of a grid strengthening project. 208. The Phase 2 transmission lines have already had EIRs disclosed locally and on Eskom`s website, and are in the process of permitting review by DEA. All Phase 1 and most of the Phase 2 transmission lines listed above are either financed in part by EISP or considered associated facilities for the Medupi power station because they are necessary to evacuate Medupi`s power to the national grid, and these facilities would not be built without the Medupi project, i.e., there is mutual dependence. The new substations near Mokopane and Mogwase are not associated facilities of the Medupi project because they would be built anyway as part of a grid reliability strengthening project. The EIRs for the above facilities either have already been reviewed by the Bank team as part of project preparation, or will be reviewed as they become available during project implementation. 209. No new coal mines will be developed to supply fuel to Medupi. The plant site is adjacent to the Grootegeluk Colliery, an open-pit, back-cast mine operated since early 1981 by Exxaro 69 and located on the southern end of the vast Waterberg coal bed. Grootegeluk currently produces 18.6 million metric tons of coal per year (M mt/yr), of which 15.3 M mt/yr of thermal coal is supplied to the Matimba Power Plant. Grootegeluk will expand production in phases to meet the needs of Medupi ­ an additional 14.6 M mt/yr of thermal coal when in full operation ­ under a long-term contract. As a result, coal will be mined at an accelerated rate, but Grootegeluk`s reserves, calculated as 5,600 million tons within the authorized area of mining operations, will be sufficient for the lifetimes of Matimba and Medupi. In order to support the increased coal sales to Eskom to supply Medupi, Exxaro will add two new coal processing (beneficiation) units to the six already operating at the mine. Because neither any mining nor the construction of the new processing units and associated coal stockyard will occur outside the permitted boundaries of the mine operations, GoSA regulations do not require a full EIA and an environmental authorization from DEA. Instead, the company`s obligation under national environmental legislation is to obtain approval of an amendment to its Environmental Management Program for Grootegeluk from the Limpopo Department of Minerals and Energy (LDME). For this purpose, in 2006 the mine owner prepared an environmental document entitled Amendment to the Grootegeluk Mine Environmental Management Programme Report (EMPR): Matimba Brownfields Expansion Project. Scoping for this report was conducted with stakeholder participation in March 2006, and the draft report was publicly disclosed for stakeholder consultations in July 2006. LDME issued its approval for the amendment to the EMPR in 2007. The Bank has reviewed the report. A site visit to the mining operation by the Bank team indicates a well-run operation with due regard for responsible environmental management and worker safety in accordance with South African mining regulations. 210. As noted earlier, in preparing the National Water Resource Strategy in 2004, the DWA identified the Crocodile (West) River Basin as of paramount importance in developing a more specific water management strategy. This was because the GoSA anticipated that the mostly unexploited vast coal reserves of the Waterberg area would be further developed, inducing industrial development, additional power development, increased population, and expansion of the agricultural sector (including ecotourism and hunting on game farms) in the Steenbokpan- Lephalale corridor. The first step in developing a Catchment Management Strategy was the preparation in 2004 of an Internal Strategic Perspective for the Limpopo Water Management Area and an Internal Strategic Perspective for the Crocodile River (West) and Marico Water Management Area. Both of these strategies were based on a 25-year planning horizon, and the core proposal to meeting the need was the MCWAP, described below, and consisting of four phases of development. A second step in developing a Catchment Management Strategy was preparation by DWA of the Water Resource Reconciliation Strategy in 2008 for the Crocodile (West) River Basin. The first phase of the MCWAP proposes installation of additional pipeline capacity within the existing pipeline right-of-way transporting additional water from Mokolo Reservoir to the Lephalale area. The second phase of MCWAP has been designed to capture large volumes of artificially augmented flows in the Crocodile River, supply agriculture and facilitate significant industrial development to the Steenbokpan-Lephalale corridor. The artificial flows occur as a result of water initially diverted from the Vaal River basin, sent as water supply to the Johannesburg metropolitan area, and then discharged from overloaded wastewater treatment plants in Johannesburg`s northern sectors to the upper Crocodile River basin. 211. Water supply for the Medupi project will initially come from the existing Mokolo Reservoir, located about 40 km south on the Mokolo River. This initial water supply is a quantity 70 of water allocated to the Matimba power station, but not needed. The formal process has been followed for the change in Matimba`s water allocation and for reallocation of that quantity of unused water to be delivered to the Medupi project by way of a short extension of pipeline from the Matimba power station onto the Medupi project site. Medupi will also require additional makeup water from Phases 1 and 2 of the four-phase MCWAP that is being undertaken by the Department of Water Affairs. Phase 1 is provision of water from the existing Mokolo Reservoir within the footprint of an existing water supply and delivery system within a right-of-way established for that purpose. Although its impact is predominantly related to construction activities for additional pipeline capacity within the existing right-of-way, Phase 1 is subject nevertheless to the EIA process in South Africa, and a Scoping Report for this phase has already been prepared as noted below. Phase 1 of the MCWAP will not fully supply Medupi`s total water requirements, but by the time Phases 1 and 2 of the MCWAP are completed, the Medupi project will receive about 10 percent of the total additional water delivery by the MCWAP to the Steenbokpan-Lephalale corridor. As Phases 3 and 4 of the MCWAP are implemented, the consumption of the Medupi power plant becomes an increasingly smaller percentage of the water supplied by the MCWAP to the Waterberg area. The MCWAP has been identified as a priority project by DWA and will be developed to supply water to the Steenbokpan--Lephalale corridor even if the Medupi project were not built; therefore, the MCWAP is not an associated facility. Development of the MCWAP by the Department of Water Affairs is subject to the South African EIA process. Scoping reports have already been prepared on Phases 1 and 2, and were made available for public comment in November 2009 and on the Department of Water Affairs website (www.dwa.gov.za). The Phase 2 Draft Scoping Report for public review was revised as a result of public comment and resubmitted in January 2010 for public review and comment. Phase 2 is expected to be completed and operational by mid-2015, allowing sufficient water for the Medupi project to install and operate wet-FGD systems as each boiler unit is sequentially shut down for routine maintenance and overhaul. F. OTHER SAFEGUARDS-RELATED FINDINGS 212. Issues and impacts regarding natural habitats and physical cultural resources, among others, are required under Bank OP 4.01 to be addressed as part of the EIA process. This is standard practice in most EIA systems, and is international good practice. In terms of equivalency and acceptability, these safeguards issues have already been subject to analytical work as part of the review for this SDR of the South African EIA system, and Eskom`s commitment and capacity to conduct comprehensive EIA work. 213. Natural Habitat. The Medupi project is located in relatively flat terrain in the Bushveld, a landscape dominated by thick growth of woody shrubs and low trees. The project area is occupied by large game farms and scattered hunting lodges. The Medupi project is located on land occupied by two game farms that were purchased by Eskom for the project`s development, and does not produce a significant adverse loss of sensitive or critical natural habitat. Mammalian wildlife populations and vegetation were managed by the game farms. Construction and operation of the Medupi project, including the ash disposal facility, results in the loss of about 1500 hectares of degraded natural habitat. The ROD requires that the project engage in rescue and salvage operations for sensitive flora and fauna. Discussions with the Environmental Control Officer at the Medupi site included a review of progress to date, and shows compliance with ROD requirements. 71 214. Because the Medupi project is sited in an area of degraded natural habitat of marginal value, a review of the Kusile project by the Bank team during SDR preparation was useful to further assess Eskom`s approach to conservation and management of good quality natural habitat, as would be required under the Bank`s NH Policy. The Kusile project is being built in the Highveld, a landscape dominated by grasslands and agriculture (grain production and cattle raising) in gently rolling terrain. The project will result in the loss of approximately 2500 hectares of agricultural land that gently slopes and drains to the west. The two farms purchased by Eskom for the project`s development include two spring-fed drainage systems that begin on higher ground to the east of the plant site, and shallow groundwater with associated wetland systems in the swales through which the spring-fed streams flow to the west. In addition to narrow bands of wetlands, these swales include a few small impoundments behind low earthen dams that were built for agricultural purposes. The wetlands on the project lands range from localized areas of high integrity wetland habitat in these swales to much longer stretches of low integrity wetland habitat. The layout of project facilities was rearranged by Eskom during the EIA process to avoid loss of, and adverse impacts on, high integrity wetland habitat, and to minimize loss of low integrity wetland habitat. The spring, stream, and associated wetland on the north side of the power plant facilities (northern tributary) are expected to remain intact. The upper reach of the spring-fed stream and associated low integrity wetlands that are on the south side of the project site (southern tributary) will be filled and converted to the coal storage yard. Water from the southern tributary springs, located a short distance upslope (east) of the project site, will be collected and transported around the project facilities in a diversion channel, and a French drain is being installed to intercept groundwater coming from the low ridgeline to the south (the location of the 10-yr lined ash disposal facility) and discharge it down slope (west) of the project site. By minimizing natural habitat loss and avoiding loss of good quality natural habitat on the project site, the Kusile project would be consistent with the NH policy if it were to be a Bank-financed investment. 215. Apart from the wetland habitat in the drainage swales, there is little of conservation value on the project site with respect to flora and fauna because the land previously was in the production of primarily corn (maize), or used for high density livestock grazing. DEAT required as part of both the scoping process and the ROD that special measures be taken by Eskom to survey and inventory the wetland habitat value, and take measures to protect and manage it to the maximum extent practical. Discussions with the Environmental Control Officer at the Kusile site included a review of progress to date, and shows compliance with ROD requirements. The ROD also requires Eskom to examine the possibility of returning unused land not needed for the project to farming use, especially to those that were relocated. Since construction is still underway, there is an unacceptable risk for accidents if this measure were to be implemented during the construction period, therefore, progress on this is deferred until construction is completed. Return of some unused land to agricultural purposes, however, would not be an adverse impact on natural habitat value of the property, unless unauthorized disturbance in the protected wetlands were allowed. This will need to be factored into any decision regarding the circumstances in which agricultural production is allowed to resume on the property acquired by Eskom for the Kusile project. 216. Neither the Sere WPP nor the CSP plant is located in important or sensitive natural habitats; both sites are semi-arid to arid landscapes that have been disturbed to varying extent by livestock grazing. Field surveys carried out for both project EIRs have detected small, scattered 72 patches of habitat or plant species of conservation interest. Eskom has committed to modify transmission line alignments or location of structures such as wind turbines to avoid sensitive areas, or to engage in rescue and relocation programs for plants or animals that cannot be avoided. The EIR for the Majuba rail spur identified several sensitive natural features that would be harmed by construction of the track, including springs and wetlands, hillside seeps, and a short but relatively broad section of the Vaal River floodplain that contains wetlands and oxbow lakes. Eskom adopted all the recommendations in the EIR for adjustment of the right-of-way alignment to avoid springs and seeps and to cross the Vaal River at a less sensitive location. Stone-filled wetland underpasses will be installed as the railroad embankment is constructed in order to not impede natural water flow in wetlands that cannot be avoided. 217. Physical Cultural Resources. The PCR safeguard would be triggered by the Kusile plant if it were to be a Bank-financed investment. The Kusile site contains several abandoned homesteads and graveyards of recent (19th century) historical significance. Eskom has developed the institutional capacity and effective procedures to implement South African legal requirements, including standard procedures for chance finds. This capacity and procedures have been successfully implemented at the Kusile site where historic homesteads identified during the EIA process have been preserved and protected and human remains identified during both the EIA process and as chance finds during site clearance have been exhumed and moved in accordance with national standards. For the Medupi project, one gravesite was discovered during site clearing; this chance find was managed in a manner consistent with Eskom`s practice at the Kusile site and in accordance with South African regulations. 218. Sixteen Late Stone Age middens (essentially dumping grounds for kitchen wastes consisting mostly of mollusk shells or animal bones) were found during the EIA process in a localized area near the shore on the Sere WPP site. Although small adjustments in location of turbine footings can avoid some of these, it will not be possible to avoid them all. The middens are not considered to be particularly rich in artifacts, but have research value. Under supervision of the provincial authorities (Heritage Western Cape), the unavoidable sites will be investigated and documented by experts before permits are issued that allows their destruction. The chance finds procedures that Eskom routinely uses at construction sites will be important at this project site because there could be Stone Age material in deeper strata on the site. VII. SUMMARY OF GAPS AND PROPOSED GAP-FILLING MEASURES 219. OP 4.00 requires that, prior to piloting a project under a borrower`s environmental or social safeguard system, the Bank and the borrower reach agreement on a time-bound Action Plan to address gaps in Equivalence and Acceptability that have been identified in the SDR. At the draft stage of the SDR the Bank discloses the gaps that have been identified for further discussion with the borrower and other stakeholders including local stakeholders in the proposed project. 220. Equivalence. With respect to the SDR process conducted to date, the Bank has identified a few minor gaps or ambiguities in the language of the legal framework of South Africa with respect to the four Bank safeguard policies triggered by the EISP. However, it would appear from the analysis of Eskom`s policies and procedures that all of these gaps or ambiguities 73 applicable to environmental safeguards are fully addressed and internalized in Eskom`s policies and practices, and no gap-filling measurements are required. 221. With respect to EA it is clear that Eskom`s policy is to address alternatives assessment at both the strategic and project-specific levels. In doing so, Eskom`s approach to alternatives analysis takes into account at either or both levels the full range of key factors as identified in OP 4.00 Table A1, irrespective of any ambiguities in South Africa`s legal framework for EIA as to whether alternatives analysis always should include the same suite of specific factors such as capital and recurrent costs, or institutional training and monitoring requirements. 222. With respect to NH, Eskom, through its partnerships with South African conservation organizations, has supported conservation offsets for projects that convert non-critical natural habitat, although South African legislation does not appear to require such offsets. In any case, none of the EISP components will impact non-critical natural habitat to an extent that such an offset would be necessary or appropriate. 223. With respect to PCR, Eskom`s existing policy of extensive local stakeholder consultation regarding cultural sites and artifacts, along with its standard protocol requiring that chance finds be reported to the SAHRA and construction at that specific location be halted until appropriate specialists are consulted, obviates a need for gap-filling at the institutional level. 224. It is only with respect to IR that South Africa appears to lack a legal mechanism and Eskom an administrative mechanism to require the preparation of stand-alone publicly-disclosed resettlement plans or frameworks, or to document its evaluation of the impacts of resettlement and rehabilitation activities. Accordingly, the Bank proposes to require that Eskom develop such an administrative mechanism as a pre-condition to submitting the EISP to Board approval, and in the interests of improving Eskom`s publicly stated policy of improved transparency. Eskom has already begun the gap-filling process, as described below. 225. Acceptability. A detailed review of Eskom`s policies and procedures with respect to the four triggered safeguard policies as implemented on a corporate level and in particular with respect to the planning and implementation of the Medupi and Kusile projects to date indicates a high level of consistency with international good practice as exemplified by international standards of corporate environmental and social management, such as the United Nations Global Compact, IFC Performance Standards, the Equator Principles, and relevant WBG EHSG. There are, however, two issues where there are potential gaps in Eskom`s performance that relate to the outcomes of the Medupi and Kusile projects. 226. With respect to SO2 emissions and ambient impacts on air quality and human health, the Bank will require Eskom, as a pre-condition of Board approval, to commit to timely installation of FGD in all six units at Medupi as soon as it is technically feasible and operationally responsible to do so. This is expected to begin as early as 2018, and be completed in approximately two years as each unit is sequentially taken offline for routine maintenance. As a related condition, the Bank will require that Eskom provide to the Bank in mid 2013 a report satisfactory to the Bank that provides a plan and schedule for timely installation of SO 2 emission abatement measures. This may include an independent feasibility analysis of alternative control technologies as discussed above. 74 227. With respect to Involuntary Resettlement, Eskom has acknowledged the benefits of conducting independent retrospective monitoring of the social and economic impacts of any involuntary resettlement associated with its projects. For project components where resettlement has already occurred, the Bank will require that Eskom agree to conduct and publish an audit of the resettlement based on a Terms of Reference to be agreed by the Bank. For any EISP component for which resettlement is needed but has not yet occurred, the Bank will require Eskom to disclose its draft resettlement plan for those components. To begin the process of addressing this gap, Eskom has prepared and disclosed on its website its corporate resettlement policy and procedure.162 Eskom has also disclosed on its website a Resettlement Policy Framework for Components 2 and 3 of EISP, which explains its corporate practice for addressing involuntary resettlement, land acquisition, and livelihood restoration (rehabilitation).163 Audits will also be required for any resettlement already carried out for EISP components (i.e., some of the transmission lines for the Medupi project, and acquisition of the right-of-way for the Majuba rail spur). For any EISP components for which resettlement is needed but has not yet occurred (primarily the Phase 2 transmission lines for the Medupi project), the Bank will require and Eskom has agreed to disclose a draft Resettlement Action Plan for those components. 162 Eskom, 2009. Procedure for the Involuntary Resettlement of Legal and Illegal Occupants on or from Eskom- Procured Land (July 2009), http://www.eskom.co.za/content/20091009091904201.pdf. 163 Eskom, 2009. Status and Process of Land Acquisition and Resettlement for Eskom`s Concentrating Solar Plan (CSP), Wind Energy Facility, Majuba Rail and Transmission Projects (October 2009), http://www.eskom.co.za/content/RelocationResettl_Final.pdf. 75 ANNEX 1 WORLD BANK OPERATIONAL POLICY OP 4.00 March 2005 Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects 1. The Bank`s1 environmental and social (safeguard) policies 2 are designed to avoid, mitigate, or minimize adverse environmental and social impacts of projects supported by the Bank. The Bank encourages its borrowing member countries to adopt and implement systems3 that meet these objectives while ensuring that development resources are used transparently and efficiently to achieve desired outcomes. To encourage the development and effective application of such systems and thereby focus on building borrower capacity beyond individual project settings, the Bank is piloting the use of borrower systems in Bank- supported projects. The key objective of the pilot program is to improve overall understanding of implementation issues related to greater use of country systems. 2. Equivalence and Acceptability. The Bank considers a borrower`s environmental and social safeguard system to be equivalent to the Bank`s if the borrower`s system is designed to achieve the objectives and adhere to the applicable operational principles set out in Table A1. Since equivalence is determined on a policy-by-policy basis, the Bank may conclude that the borrower`s system is equivalent to the Bank`s in specific environmental or social safeguard areas in particular pilot projects, and not in other such Areas. Before deciding on the use of borrower systems, the Bank also assesses the acceptability of the borrower`s implementation practices, track record, and capacity.4 3. Addressing Gaps. If the borrower has to fill gaps in its system to meet the objectives and applicable principles in Table A1 and is committed to doing so, the Bank may, when determining equivalence take account of measures to improve the borrower`s system. Similarly if the borrower has to fill gaps in implementation practices and capacity to achieve acceptability and is committed to doing so, the Bank may, when determining acceptability, take account of measures to strengthen borrower implementation practices and capacity. Such measures are to be carried out before the borrower undertakes implementation of the relevant project activities, and may include Bank-supported efforts to strengthen relevant capacity, incentives and methods for implementation. 4. Borrower Role and Obligations. The borrower is responsible for achieving and maintaining equivalence as well as acceptable implementation practices, track record, and capacity, in accordance with the Bank`s assessment. For each project, the borrower identifies those provisions of the country system that are necessary to ensure that the requirements of Table A1 are met. These provisions may vary from project to project, depending on such factors as the structure of the country`s system and the type of operation. In all cases, the specific provisions of the country system and any additional actions that the borrower needs to undertake to achieve and maintain equivalence and acceptable implementation become part of the borrower`s contractual obligations to the Bank, subject to the Bank`s normal contractual remedies (e.g., suspension of disbursements). 76 5. Bank Responsibility. The Bank is responsible for determining the equivalence and acceptability of borrower systems, and for appraising and supervising pilot projects that use these systems. The Bank carries out its responsibility, including supervision 5 of borrower implementation practices, track record, and capacity, in a manner proportional to potential impacts and risks. The Bank may explore with the borrower (and, as appropriate, third- parties) the feasibility of arrangements to strengthen ownership and country capacity to implement specific operational principles in Table A1. Without limitation to its responsibility under this paragraph, the Bank may also explore with the borrower (and, as appropriate, third-parties) the feasibility of establishing alternative monitoring arrangements for overseeing the implementation of the project. 6. Changes in Borrower Systems and Bank Remedies. If, during project implementation, there are changes in applicable legislation, regulations, rules or procedures, the Bank assesses the effect of those changes and discusses them with the borrower. If, in the judgment of the Bank, the changes reflect a further improvement in the country systems, and if the borrower so requests, the Bank may agree to revise the legal framework applicable to the operation to reflect these improvements, and to amend the legal agreement as necessary. Management documents, explains, and justifies any changes to such framework, and submits them for Board approval (normally on an absence of objection basis). If the country system is changed in a manner inconsistent with the legal framework agreed with the Bank, the Bank`s contractual remedies apply. 7. Disclosure. To promote transparency and facilitate accountability, the Bank makes public through the PID early in the project cycle its intent to use country systems in a proposed pilot operation. It updates this information as project development proceeds. At a later stage, but prior to beginning appraisal, the Bank makes publicly available its analysis of equivalence of borrower systems and Bank requirements and its assessment of the acceptability of borrower implementation practices, track record, and capacity (including a description of the applicable borrower systems and of actions that would achieve and sustain equivalence and acceptability). In addition, the Bank ensures that relevant project-related environmental and social safeguard documents (see Table A1), including the procedures prepared for projects involving subprojects, are disclosed in a timely manner before project appraisal formally begins, in an accessible place and understandable form and language to key stakeholders. 1 Bank includes IDA; loan includes credit and grant; and borrower includes grant recipient. 2 The Bank`s environmental and social safeguards policies and procedures are: OP/BP 4.01, Environmental Assessment; OP/BP 4.04, Natural Habitats; OP 4.09, Pest Management; OP/BP 4.10, Indigenous Peoples; OP 4.11 (forthcoming), Management of Cultural Property in Bank-Financed Projects; OP/BP 4.12, Involuntary Resettlement; OP 4.36, Forests; and OP/BP 4.37, Safety of Dams. 3 When used in this policy statement country systems means a country`s legal and institutional framework, consisting of its national, sub-national, or sectoral implementing institutions and applicable laws, regulations, rules, and procedures. 4 As the applicable statement for the pilots, this OP and BP will apply only to those areas where the Bank has determined equivalence. The Bank`s environmental and social safeguard policies will apply to the areas which the Bank has determined not to be equivalent to its applicable policy framework and will continue to apply to all projects that are not part of the pilot program. Pilot projects will be subject to all other applicable policies and procedures. 5 OP/BP 13.05, Project Supervision, applies to pilot projects. 77 ANNEX 2 SOUTH AFRICAN LEGAL FRAMEWORK APPLICABLE TO THE ENVIRONMENTAL AND SOCIAL IMPACTS OF THE EISP ENVIRONMENTAL FRAMEWORK 1. Under the 1996 Constitution of South Africa, the right to an environment that is not harmful to one`s health and well being is considered fundamental. The Constitution refers to this right and that of future generations to a healthy environment (Clause 32 of the Bill of Rights). The Constitution contains mandatory, clear and applicable provisions on environmental protection and sustainable development.1 The environment is defined as the natural environment and its physical, chemical, aesthetic and cultural properties that influence human health and well- being. The following sections of the Constitution are particularly relevant to the environmental safeguard policies addressed in this report: Environmental Chapter 2 ­ Bill of Rights, Section 24 (Environment); Chapter 14 ­ General Provisions, Section 231 (International Agreements), Section 232 (Customary International Law), and Section 233 (Application of International Law). 2. In addition, South Africa has ratified several multilateral agreements relating to atmospheric emissions, in particular, UN Framework Convention on Climate Change, the Kyoto Protocol, the Vienna Convention and Montreal Protocol for the Protection of the Ozone Layer and the Stockholm Convention on Persistent Organic Pollutants.2 3. Until 1998 the controlling legislative instrument for environmental management in South Africa was the Environmental Conservation Act (Act 73 of 1989, ECA). With the enactment of the National Environmental Management Act of 1998 (NEMA) the ECA and various laws enacted under it have been partially superseded by a new paradigm and by various laws and regulations. Consequently, the legal regime applicable to the Medupi and Kusile projects, which were designed during the period from 2004 through 2008, reflects a hybrid approach with application of both ECA and NEMA authorized provisions. The Records of Decision (RODs) issued by DEAT on September 21, 2006, and June 5, 2007 for the Medupi and Kusile plants, respectively, and the Environmental Management Plans (EMPs) submitted to DEAT by Eskom, and currently pending approval, make explicit reference to the laws and regulations listed in the text that follows. Environmental Conservation Act (ECA) 4. The ECA provided the umbrella legislative authority for all environmental legislation regulations up to the enactment of NEMA in 1998, under which many of the provisions of the 1 Section 24, South African Constitution,1996. 2 South Africa ratified the UN Framework Convention on Climate Change in 1997. As a non-Annex 1 party, South Africa`s obligations include the preparation of a National Communication incorporating an inventory of GHGs. South Africa ratified the Kyoto Protocol in 2002 but as a developing country has no binding commitment to cap or reduce GHS emissions. However, South Africa has developed climate change mitigation and adaptation strategies and is a potential beneficiary of the Clean Development Mechanism. South Africa ratified the Vienna Convention for the Protection of the Ozone Layer in 1990 and the Montreal Protocol and London Amendment in 1990 and 1992 respectively. Ratification of the Copenhagen Amendment is in process. South Africa ratified the Stockholm convention on Persistent Organic Pollutants in 2002. 78 ECA have been progressively repealed. However, the sections cited above and summarized below continue to apply to the Medupi and Kusile projects: Section 19 prohibits discarding, dumping or leaving of any litter on land or water surface except in a contained space dedicated for that purpose. Section 20(1) provides that where an operation accumulates, treats, stores or disposes of waste on site for a continuous period, it must apply for a permit to be classified as a suitable waste disposal facility, and will require an appropriate permit from the Department of Water Affairs and Forestry. (In May 2009 it was announced that the Department of Water Affairs would henceforth be part of the Ministry of Water and Environmental Affairs).3 Section 21 identifies those categories of activities (Schedule 1) that may have a substantial detrimental effect on the environment, whether in general or in respect of certain areas. The application of this provision to the Medupi and Kusile projects is evident in the inclusion of energy generation as one of the categories identified. Section 22 prohibits any activity identified in Section 21 from being undertaken without written authorization issued by the Minister of Environmental Affairs and Tourism or by a competent local authority, as defined by the ECA. Sections 28, 31 and 33 reference the general regulatory powers of various levels of government authority with respect to the provisions of the ECA. Sections 29 and 30 deal with offenses, penalties and forfeiture provisions of the ECA. Section 35 provides for an appeal process (implemented by Regulation 1183, below). Section 38 provides that the President may unilaterally modify the ECA to incorporate the provisions of any convention, treaty or agreement relating to the protection of the environment. 5. Regulation R1182 (September 5, 1997) further specifies the activities included in Section 21 of the ECA as the following (which are applicable to the components of the EISP): Facilities for commercial supply of electricity generation with an output of at least 10 megawatts; Infrastructure, including roads and rails for the transportation of any substance; Schemes for the abstraction or utilization of ground or surface water for bulk supply purposes; and Change in land use from agricultural to any other use. 3 Under Section 81 of the Waste Act of 2008 (see below). 79 6. Regulation R1183 (September 5, 1997) sets forth the procedures under which an applicant could be required to undertake scoping and conduct an Environmental Impact Assessment (EIA) for an activity subject to Schedule 1 of Section 21 of the ECA. Key provisions applicable to the Medupi and Kusile projects include the following: Applications to undertake scheduled activities must be referred to the relevant provincial authority and/or the Minister of Environmental Affairs and Tourism for authorization (Para. 4). Applicants seeking authorization are required to appoint an independent consultant, having no financial or other interest in the undertaking, with expertise in the area of environmental concern, a good working knowledge of all relevant policies, legislation, guidelines, norms and standards; the ability to perform in a timely, thorough and readable manner, all the relevant tasks required in the regulation including management of the public participation process. (Para. 3(1)). The applicant is responsible for conducting a public participation process that ensures that all interested parties (defined as any person or group of persons concerned with or affected by an activity...including government departments that may have jurisdiction over any aspect of the activity) are given the opportunity to participate in all relevant procedures contemplated in the regulation provided that such interested party responds within the time agreed to between the relevant authority and the applicant. (Paras. 3(1)(f) and 3(5). The applicant is required to submit a Plan of Study for Scoping and/or a Scoping Report including a brief description of: (a) the project; (b) how the environment may be affected; (c) the environmental issues identified; and (d) all alternatives identified. The Scoping Report is also required to provide an Appendix containing a description of the public participation process followed, including a list of interested parties and their comments (Paras. 5 and 6). Based on the Scoping Report, the relevant authority may consider the application without further investigation or require that the Scoping Report be supplemented by an EIA (Para. 6). If an EIA is required the applicant is first required to submit a Plan of Study for the EIA, the contents of which are prescribed in the regulation (Para. 7 (1)). After the Plan of Study has been accepted the applicant must submit an Environmental Impact Report (EIR) to the relevant authority: The EIR must include: (a) a description of each alternative, including (i) the extent and significance of each identified environmental impact, and (ii) the possibility for mitigation of each identified impact; (b) a comparative assessment of all the alternatives; and (c) appendices containing descriptions of: (i) the environment concerned, (ii) the activity to be undertaken, (iii) the public participation process followed, including a list of interested parties and their comments, (iv) any media coverage given to the proposed activity, and (v) any other information included in the accepted plan of study (Para.8). 80 The relevant authority must issue a record of the decision (ROD) which must include, inter alia: (a) a brief description of the proposed activity, the extent or quantities of the surface area involved; (b) the specific place where the activity is to be undertaken; (d) the identity of any consultant involved; (e) the date of and persons present at site visits, if any; (f) the decision of the relevant authority; (g) the conditions of the authorization, if any, including measures to mitigate, control or manage environmental impact or to rehabilitate the environment; (h) the key factors that led to the decision; and (j) the name of the person to whom an appeal may be directed. The ROD must also indicate the method by which the applicant must make the ROD available to any interested party. Any report submitted in support of the regulation is considered a public document as of the date of the ROD. Appeals of any decision must be made to the Minister or provincial authority within 30 days of the ROD. NEMA 7. NEMA was enacted in 1998 as the new framework environmental law for South Africa and is designed to progressively substitute for the ECA. NEMA is designed to support institutional capacity in all spheres of government for effective implementation of participation. It promotes equitable access to natural resources and fair and equitable sharing of the benefits arising out of the utilization of marine resources. The RODs for Medupi and Kusile cite in particular the principles set out in Section 2 of the NEMA, many of which are particularly relevant to this analysis to the extent that they correspond to the Objectives and Operational Principles of OP 4.00, Table A1 as demonstrated in the Equivalence Analysis. 8. A number of important laws and regulations have subsequently been enacted under NEMA that are applicable in whole or in part to the Medupi and Kusile projects. These include the NEMA Environmental Impact Assessment Regulations of 2005; the NEMA Air Quality Act of 2004 (AQA);4 the NEMA Biodiversity Act of 2005, as amended and the NEMA Waste Management Act of 2008. 9. NEMA itself has been amended several times, most recently in December 2008 by the National Environmental Laws Amendment Act (35 of 2007, NELAA) and by the National Environmental Management Amendment Act of 2008 (36 of 29, NEAMA), which came into effect on May 1, 2009. The former extended the mandate of the EMI to include the 1989 ECA, the APPA and the AQA (see below). It clarified the status of EMIs as peace officers under the Criminal Procedures Act (51 of 1977) and prescribed a maximum penalty of five year imprisonment and/or a R10 million fine for noncompliance with a compliance notice issued by an EMI. The NEAMA revised NEMA in terms of identification of those activities requiring environmental authorization; geographical areas within which specified activities require or are excluded from environmental authorization; and activities that may commence without environmental authorization but complying with norms or standards. It also reinforced several 4 Preceded by the Atmospheric Pollution Prevention Act (Act 45 of 1965, APPA). 81 provisions of NEMA with reference to the 2006 EIA regulations relating to investigation of alternatives (including the no-go alternative); mitigation measures; assumptions, gaps, and uncertainties in EIA data; reporting on monitoring and management actions; and adherence to requirements contained in SEMAs, including the Air Quality Act, the Biodiversity Act and the Water Act (see below).5 NEMA Environmental Impact Assessment Regulations of 2006 (2006 EIA Regulations) 10. South Africa issued new EIA Regulations under the authority of NEMA, which became effective on July 3, 2006 and repealed the regulations issued under the ECA. Pursuant to NEAMA, draft provisions to amend the EIA Regulations were issued on February 13, 2009 and have yet to be adopted.6 The new Regulations addressed many of the gaps and ambiguities of the regulations issued under the ECA. Although the 2006 EIA Regulations do not have legal application to the EIA processes for the Medupi and Kusile projects because the applications to initiate the EIA processes were submitted and approved prior to July 3, 2006, 7 previous drafts of the EIA Regulations had been in wide public circulation, and they clearly influenced the content and format of the Environmental Impact Reports (EIRs) that were ultimately submitted and approved. Moreover, according to Eskom, the EMP provisions of Section 34 of the 2006 EIA Regulations are applicable8 to the Medupi and Kusile projects. These provisions may be summarized as noted below. 11. A Draft Environmental Management Plan (EMP)9 must include: (a) Details of: (i) the person who prepared the EMP; and (ii) the expertise of that person to prepare an EMP; (b) Information on any proposed management or mitigation measures that will be taken to address the environmental impacts that have been identified in a report prepared under these Regulations, including environmental impacts or objectives in respect of: (i) planning and design; (ii) pre-construction and construction activities; (iii) operation or undertaking of the activity; (iv) rehabilitation of the environment; and (v) closure, where relevant. (c) A detailed description of the aspects of the activity that are covered by the draft EMP; 5 Paterson and Kotzé, op.cit., p. 381; and DEA&DP, 2009, Implementation of the National Environmental Management Amendment Act, 62 of 2008, Presentation to Western Cape branch of the South African Chapter of the International Association for Impact Assessment, Western Cape Province, Kirstenbosch, June 18, 2009. (DEA&DP). 6 Government Gazette, No 31885, February 13, 2009. 7 Therefore, the 2006 EIA Regulations are not cited in the RODs as applicable to the Medupi or Kusile projects. 8 This EMP...has been compiled in accordance with Section 34 of the EIA Regulations. Eskom, 2009, Medupi Power Station, Limpopo Province, Environmental Management Plan for Operation and Maintenance, February 2009, Savannah Environmental (Pty) Ltd: p. 3. 9 The term Environmental Management Plan was replaced by the term Environmental Management Programme by the NEAA, DEA&DP, op.cit. 82 (d) Identification of the persons who will be responsible for the implementation of the measures contemplated in paragraph (b); (e) Where appropriate, time periods within which the measures contemplated in the draft EMP must be implemented; and (f) Proposed mechanisms for monitoring compliance with the EMP and reporting thereon. Atmospheric Pollution Prevention Act (Act 45 of 1965, APPA) 12. Under the APPA a specifications standard applies to the production of noxious or offensive gases from 69 scheduled processes, listed in Schedule 2 of the Act, including thermal power generation, and requires that pollution control equipment must conform to certain design criteria. These provisions of the APPA are scheduled to be replaced by Section 60 of the NEMA AQA on promulgation of its Section 22. In the Act: Section 9 prohibits the operation of a scheduled process without a registration certificate issued by the DEA`s Chief Air Pollution Control Officer. The certificate is issued subject to compliance with specified minimum standard conditions. Sections 15 and 16 prohibit the installation or siting of any fuel burning appliance in the absence of effective equipment to limit emissions of grit and dust to the satisfaction of local authorities. Sections 27 and 28 authorizes the Minister of Environmental Affairs to declare any area to be a dust control area and to require a facility causing a nuisance to locally affected persons to adopt the best practicable means for the abatement of such nuisance, per the satisfaction of the Chief Air Pollution Control Officer. Section 34 authorizes the Minister to prescribe essential national standards for the control of noise and to specify maximum levels of noise. Such regulations are specified in the National Noise Control Regulations (GN R154, January 10, 1992, GRN 55 of January 14, 1994); the South African National Standard (SANS) 10103: 2004; and associated regulations as well as South African Standards Board 0228 and 0229 codes. Section 35 authorizes the Minister to prescribe measures for the control of offensive odors. NEMA AQA 13. In 2004 South Africa enacted the NEMA AQA. There are several key provisions of the AQA that have been enacted and are applicable to the Medupi and Kusile projects, but which are not yet not in effect:10 10 Per Eskom, Medupi, EMP Construction Phase, List of Applicable National Legislation not yet Taken Effect at Date of This Document, April 16, 2007. 83 Section 21: List of Activities which result in atmospheric emissions and which have or may have a significant detrimental effect on the environment, including health, social, economic or ecological conditions, or cultural heritage. Sections 22 and 36: Requires atmospheric emission license (AEL) or provisional AEL to be obtained from Metropolitan or District Municipality for any listed activity. 14. Ambient Air Quality Standards: Provisional ambient air quality limits for South Africa were published in Schedule 2 of the 2004 AQA. Subsequently, in March 2009, draft ambient air quality standards intended to replace the provisional limits were published for public comment 11 and were revised and adopted and adopted in final form on December 24, 2009.12 Seven priority pollutants have been designated13 of which four (PM, SO2, NO2 and CO) are directly associated with electricity generating facilities. Parameters have been set for limit values, alert thresholds and target values. Margins of tolerance, time frames for achieving compliance with limit values of permissible frequencies of allowable exceedance have been determined. These values are based on assessments that establish the ambient concentrations of prioritized pollutants and evaluate the technical feasibility, economic viability and social and political acceptability of implementing measures to reduce and maintain air quality within limit values. A comparison of the provisions of the South African air quality standards with the corresponding parameters of the World Health Organization`s Ambient Air Quality Guidelines is presented in Annex 4 of this report. 15. Proposed Emissions Standards for Thermal Power Plants: Draft emissions standards for combustion installations were issued for preliminary public comment under Section 21 of the AQA in February 200914 and were reissued for final public comment on July 24, 2009.15 The proposed emissions standards take into account the capacity of the facility, the fuel source, and the status of the facility (new or existing). As provided for under the National Framework, time frames for compliance of various industry sectors with new emissions standards are proposed to be informed by industry cycles, and that for individual controlled emitters....compliance time frames [are proposed] to be established taking into account risks to human health, relative contribution to ambient air quality levels and ability to monitor compliance. As such, the National Framework anticipates that provinces and municipalities will adopt compliance time frames, in line with international trends, specifically, three years from date of issuance are provided for a new facility to come into compliance with the limitations applicable to new facilities whereas existing facilities are given an initial five years to come into compliance with the limitation applicable to existing facilities and an additional three years to come into compliance with the much more stringent requirements applicable to new facilities. In addition, 11 South African National Standards National Committee (SABS TC 146), Air Quality SANS 1929:2009, Edition 2. 12 Per Schedule 2 of the AQA, 2004 as issued by the Department of Environmental Affairs, December 24, 2009. 13 Sulfur dioxide (SO2); Nitrogen dioxide (NO2); Carbon Monoxide (CO); Particulate Matter (PM10). 14 DEAT, AQA Implementation: Listed Activities and Minimum Emissions Standards, Draft Schedule for Section 21 of Air Quality Act, Rev. 1.0, February 27, 2008. 15 General Notice 1001, National Environmental Management: Air Quality Act (39/2004): List of Activities which result in atmospheric emission which have or may have a significant detrimental effect on the environment, including health, social conditions, economic conditions, ecological conditions or cultural heritage, Government Gazette, Vol. 529, No. 32434, July 24, 2009. 84 provisions are proposed to be made for specific industries to apply for possible extensions to the compliance time frame, provided that ambient air quality standards in the area are in compliance and that the industry`s air emissions are not causing any adverse effects on the surrounding environment.16 NEMA ­ Biodiversity Act 2005 16. The following sections of the Biodiversity Act apply to the Environmental Assessment safeguard policy: Chapter 1 ­ Interpretation, Objectives and Application of Act, Section 5 (Application of International Agreements), Chapter 3 ­ Biodiversity Planning and Monitoring, Section 45 (Contents of Biodiversity Management Plans), and Chapter 4 ­ Threatened or Protected Ecosystems and Species, Section 51 (General Purpose of the Chapter). The following provisions are cited as being potentially relevant to the Medupi and Kusile projects:17 Sections 40, 43 and 54 provide the Minister or MEC for environmental affairs in a province or the Minister of Environmental Affairs, respectively, with authority to declare a particular geographic region as a bioregion or an ecosystem warranting special conservation attention under Section 54, as characterized by its landforms, vegetation cover, human culture and history, and to issue a Biodiversity Management Plan for such a region; Section 43 and Section 57 provide that the Minister may issue a Biodiversity Management Plan for an indigenous species or other (critically endangered, endangered, vulnerable or otherwise protected) species per Section 56 or for a species that warrants special conservation; the Minister may prohibit any activity which may negatively impact on the survival of such a species without a permit as required by Section 7 of the Act. Section 53 authorizes the Minister to identify any process or activity in a listed ecosystem as a threatening process requiring specific authorization from DEA. National Water Act (Act 36 of 1998, NWA) 17. The NWA regulates the protection, use, development, conservation, management and control of water resources in South Africa, incorporating the objectives of pollution prevention, ecological and resource conservation, sustainable utilization, the precautionary principle, participatory decision-making, transparency and just administrative action. Under the Act, water resource reserves for human use and maintaining sound ecosystems take precedence over agricultural and industrial demands. With respect to the Eskom projects considered for inclusion in the EISP, the following sections are particularly germane: 16 National Framework, Section 5.4.3.5, page 58. 17 Eskom, Medupi, EMP Construction Phase, List of Applicable National Legislation not yet Taken Effect at Date of This Document, April 16, 2007. List of Applicable National Legislation not yet Taken Effect at Date of This Document. 85 Section 19 requires that a project proponent must ensure that reasonable measures are taken throughout the life cycle of a project to prevent and remedy the effects of pollution to water resources. Sections 21, 27, 28 and 29 set out the water uses and procedures by which a water use permit must be issued by the Department of Water Affairs and Forestry. 18 National Environmental Management Waste Act of 2008 (NEMA Waste Act) 18. The NEMA Waste Act, which became effective on March 6, 2009, is designed to provide a comprehensive regulatory framework for management of waste; allow the Minister of the Environment to declare any waste stream as a priority waste, and set rules specifically for that waste; make provision for integrated waste management plans prepared by local authorities and industries (such as Eskom) and approved by the Minister through a public participatory process (under the polluter pays principle); create a hierarchy of preferred waste disposal methods and incentives to encourage waste minimization; and develop a formal licensing procedure for the generation and disposal of waste. One of the major changes in the Act is to transfer primary authority for the management of waste from sectoral ministries (such as the Ministry of Minerals and Energy in the case of coal wastes from both mining and power generation) to DEA. 19. It would appear that some provisions of the Waste Act, in particular, the requirement to prepare Industry Waste Plans, could apply to Eskom as a corporate entity as well as directly to the components of the EISP, specifically the design and operation of coal ash ponds or dry ash disposal landfills, and the discharge of other solid wastes from power plant operations. The operation of power plants is including within the Act`s definition of industry and coal ash would appear to fit the definition of wastes (any substance...which the generator has no further use of for purpose of production). The discharge of coal ash into engineered ash dumps would appear to meet the Act`s definitions of disposal, which includes the dumping, placing or release of any waste into or onto any land, as well as storage, which is defined as the accumulation of waste in a manner that does not constitute the treatment or disposal of that waste. Depending on how coal ash is subsequently categorized in the waste listing schedules to be issued by DEA, Eskom could be required to obtain a license under the provisions of the Act for the construction and operation of the ash ponds at Medupi and Kusile and to prepare Waste Management Plans as provided in the Act and/or a separate EMP as required under Section 11 of NEMA.19 Eskom could also be required to obtain a separate authorization from the Department of Water (per Section 50(3)), which since May 2009 has become part of the Ministry of Water and Environmental Affairs, and to appoint a Waste Management Officer per Section 58. 18 As of May 2009, the Department of Water Affairs has been transferred to the new Ministry of Water and Environmental Affairs. 19 Waste Act, Section 46 (2)(d). The Act further provides that where the holder a permit under Section 20 of the ECA (repealed by the Waste Act) must apply for waste management license under the Waste Act when required to do so by the licensing authority and that any license pending under section 20 of the ECA will henceforth be treated as if it were an application for waste management license under the Waste Act. 86 Minimum requirements for Landfills issued by the Department of Water Affairs and Forestry (second edition, 1998) 20. Pending the issuance of detailed implementing regulations for the Waste Act, the ROD refers to guidelines that were issued by the Department of Water Affairs and Forestry in 1998 as part of a series of guidance documents, the Waste Management Series, on various aspects of waste management.20 As a guidance document, it does not appear to be legally enforceable, although permits issued that make reference to the document would appear to be enforceable under provisions of the ECA and the NWA. Among other things, the document addresses landfill classification, and the siting, investigation, design, operation and monitoring of landfill sites. In the landfill classification system, a landfill is classified in terms of waste class, size of operation, and potential for significant leachate generation, all of which influence the risk it poses to the environment. Graded requirements are then set for all aspects of land filling, including public participation. As there is no specific mention of coal ash dumps in the document, the specific application of the document to the Medupi and Kusile ash ponds is not clear. Other Environmental Laws National Forest Act (Act 84 of 1998) and Government Notice 1339 of August 6, 1976 (promulgated under the Forest Act of 1984) 21. This requires a permit for the removal, relocation or pruning of any protected plants. Conservation of Agricultural Resources Act (Act 43 of 1983) 22. The Act regulates the conservation and management of agricultural natural resources. Key provisions and regulations issued under the authority of the Act apply to: The prevention of soil erosion and the development of soil conservation schemes; Protection of wetlands and associated vegetation; The burning of veld (Regulation 6); and Control of invasive plant species (per Regulation 15 of GNR1048). Fertilizers, Farm Feed, Agricultural Remedies and Stock Remedies Act (Act 36 of 1947) 23. This Act requires that only a registered pest control operator may apply application of herbicides. 20 Thus far, the series comprises: Document 1: Minimum Requirements for the Handling, Classification and Disposal of Hazardous Waste. Document 2: Minimum Requirements for Waste Disposal by Landfill. Document 3: Minimum Requirements for Monitoring at Waste Management Facilities 87 National Veld and Forest Fire Act (Act 101 of 1998) 24. This Act obligates an operator to burn firebreaks to ensure that that any veld fire occurring on the property does not spread to adjoining land. It specifies the dimensions of the firebreak and requires that suitably trained and equipped personnel be made available for extinguishing such fires. Natural Heritage Resources Act of 1999 (Act 25 of 1999) 25. Archeological remains, artificial features and structures older than 60 years are protected by the Act. The Act requires a permit for any disturbance, removal or destruction of any national and provincial heritage, archeological or paleontological site, burial ground, grave or public monument or memorials. Hazardous Substances Act (Act 15 of 1973) 26. This Act regulated the control of toxic, corrosive, explosive and inflammable substances through the issuance of permits by the Department of Health for any such substances used, stored or handled on site. National Road Traffic Act (Act 93 of 1996) 27. The Act requires that: Operators implement procedures to ensure that any dangerous goods transported do not exceed specified quantities per SABS Code 0232; A permit is obtained from the Minister of Transport to transport excessive loads based on a survey of the prospective route by a qualified structure/transport engineer. Occupational Health and Safety Act (Act 85 of 1993) 28. According to the RODs for Medupi and Kusile, all provisions of the Act must be adhered to with respect to safety and security, hazard and emergency response and fire control, including by contractors and consultants. In addition, (a) Subject to the Major Hazardous Installation (MHI) Regulations of July 10, 2001 (GRN 692) issued under the authority of the Act, an employer must: Undertake a risk assessment of existing major hazard installations or substances, to be updated every three years and submitted to the local emergency services; and in consultation with such services, establish an on- site emergency plan; (b) Subject to the GNR 1179 of August 25, 1995 an employer must: 88 Take all steps to ensure that hazardous chemical substances are identified stored, handled and distributed in accordance with the South African Standards Bureau 0228 Code; Ensure that any employee who may be exposed to any hazardous chemical substance has been adequately and comprehensively informed and trained; Ensure that material safety data sheets are provided by suppliers for any substance that would classify the facility as a major hazard installation; Ensure that any driver transporting hazardous material is in possession of a valid driver`s license, as well as medical and hazardous chemical training certificates, complies with the Road Transport Quality System, has full knowledge of emergency response procedures and is equipped with and trained in the use of protective clothing; and Ensure that an emergency plan is established and implemented through testing in practice at least once annually. SOCIAL FRAMEWORK 29. The Constitution upholds the right to property ownership. The legal system recognizes three forms of property rights systems: freehold, communal, and state-owned. The government`s land reform policy seeks to restore control and ownership of resources to the claim group (depending on the nature of the claim).21 30. South African laws relating to resettlement and land acquisition are summarized in Table 1. The South African legal framework for land acquisition and involuntary resettlement recognizes that issues of land and land ownership were and still are an important legacy of the apartheid period. This recognition is explicitly and implicitly embedded in the legislative framework that addresses the issues of land acquisition.22 31. With regard to OP 4.12, section 3(a) on the involuntary taking of land, the body of land laws introduced after 1994 has a similar focus to the Bank`s involuntary resettlement policy. The South African land laws refer to protecting the security of tenure (whether formal or informal) of vulnerable and poor sections of the population and attempts to put in place procedural protections that ensure that where people do lose access to land, they are consulted and compensated. These laws all recognize different forms of established occupation of, and vested interests in land that previously had no formal recognition because of racial prohibitions on black contractual rights to land. In general, interventions that comply with OP 4.12 section 3(a) will also comply with the provisions of these laws. 32. Eskom has conducted its land acquisition program in compliance with all applicable laws and regulations related to land expropriation for public purposes and other applicable laws and regulations aiming at strengthening land tenure security and rights. In doing so, it follows the 21 SAEO, Box 3.2 Para. 5. 22 SE Solutions, Kusile, 4.6.1. 89 pattern implemented by the government, which has conducted land acquisition on the willing- buyer, willing-seller model, as described, along with a compensation scheme, in the Expropriation Act, No.63 of 1975. Under the 1975 Act (Section 12), the compensation calculation formula is based on the market value of land, actual losses, and solatium (solace money). Act 63 pre-dates the Constitution (1996) which requires the government to pay just and equitable compensation under its Section 35(3). In practice, just and equitable compensation was meant to reflect the market value of the expropriated properties and a fair balance between the public interest and the interests of those affected. 33. Other laws and regulations adopted after the 1994 Constitution came into force have an important impact on land acquisition in South Africa and shed light on the land taking and compensation process followed for all public interest development projects. In fact, South Africa is dealing with a critical legacy of land acquisition and distribution and has developed a program to deal with claims lodged in terms of the Restitution of Land Rights Act 22 of 1994, under which a person or community dispossessed of property after the start of the colonial era (Natives Land Act of 19 June 1913), as a result of racially discriminatory laws or practice, is entitled to lodge a claim for restitution of that property or comparable redress. It thus tackles the injustices of apartheid most directly. By the cut-off date in March 1999, 67,531 claims by groups and individuals had been lodged, of which about 80 percent are urban. A Land Tenure Reform Program aims at providing people with secure tenure where they live, to prevent arbitrary evictions and fulfill the constitutional requirement that all South Africans have access to legally secure tenure in land. Also, the Land Reform (Labor Tenants) Act, 1996 (Act No.3 of 1996) provides for the protection of the rights of labor tenants and gives them the right to claim land. The Interim Protection of Informal Land Rights Act, 1996 (Act No.31 of 1996) was passed as an interim measure to protect people in the former homelands against abuses of their land rights by corrupt chiefs, administrative measures or property developers who fail to consult the occupiers of affected land, while a new more comprehensive law was being prepared. Finally, the Extension of Security of Tenure Act (ESTA) of 1997 aims to protect people who live on land with the consent of the owner or person in charge against unfair eviction and to create long term tenure security through on-or-off-site settlement assisted by a government grant and the landowner. 90 TABLE 1 Summary of relevant South Africa laws affecting land acquisition and resettlement Legal Issues Laws or Field Short Description Covered To provide for co-operative environmental governance by establishing National Environmental Environ- principles for decision-making on matters affecting the environment, Management Act, 1998 mental institutions that will promote co-operative governance and procedures for (Act 107 of 1998) (as protection coordinating environmental functions exercised by organs of state including amended) EIA Regulations, 2006 (GN No. 385, 386 and 387 of 21 April 2006). Where ESKOM wishes to incorporate (purchase) privately owned land, the act makes provision for this, where the owner has agreed. In the event of no Expropriation Act 63 of Land agreement, the act makes provision for expropriation by the Minister of 1975 Public Works. The Expropriation Act contains provisions consistent with the features of OP 4.12. No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property. Land, Labor The Constitution 108 of Chapter 2, the Bill of Rights, proclaims a range of socio-economic rights in and 1996 sections 24 to 29, specifically in regard to environment (section 24); housing Livelihoods (section 26), health care, food, water and social security (section 27), children (section 28), and education (section 29). This Act provides for the restitution of rights to land in respect of which Restitution of Land Labor persons or communities were dispossessed under, or for the purposes of Rights Act 22 of 1994 furthering the object of, racially based discriminatory legislation. The Act provides for measures with state assistance to facilitate long-term security of land tenure; regulates the conditions of residence on certain land; Extension of Security of Land and and the conditions by, and circumstances in, which the right of persons Tenure Act 62 of 1997 Labor residing on land may be terminated and under what conditions and in what circumstances they may be evicted. The Act provides the legal framework for labor law, especially when it comes to termination of service, transfer of staff from one legal person to Labor Relations Act of another and what is considered to be fair labor practices. Section 189 and Labor 1995 189A of this Act apply when an employer contemplates dismissing one or more employees for reasons based on the employer`s operational requirements. This Act provides for the protection of the security of tenure of labor tenants Labor Tenants Act 30 of Land and and those persons occupying or using land as a result of their association 1996 Labor with labor tenants. It also provides for the acquisition of land and rights to land by labor tenants. Interim Protection of The objective is to provide for protection of people who have occupied land Informal Land Rights Land on an established, undisputed basis, since 1992, but nevertheless do not have Act 31 of 1996 legal or formal rights because of the legacy of racial laws. Prevention of Illegal Eviction From and Land and This Act provides for the prohibition on unlawful evictions and lays down Unlawful Occupation of Labor procedures for eviction of unlawful occupiers. Land Act 19 of 1998 91 ANNEX 3 EQUIVALENCE MATRIX PER OP 4.00 TABLE A11 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Africa's implementing the Principles) Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities ENVIRONMENTAL ASSESSMENT Objective: To help ensure The Constitution and various acts, including the National Section 24 of the South African 1996 contains None None the environmental and Environmental Management Act (NEMA) provides for the mandatory, clear, applicable provisions on social soundness and Government to (i) protect ecological processes, natural environmental protection and sustainable sustainability of systems and preservation of biotic diversity in the natural development. investment projects. To environment, (ii) promote sustainable use of species and Under the Constitution, NEMA has: (i) a support integration of ecosystems and effective application and reuse of natural comprehensive Chapter 1 on National environmental and social resources, (iii) protect the environment against disturbance, Environmental Management principles which aspects of projects into the deterioration, defacement, poisoning, pollution or mandates all stakeholders to ensure the decision- making process. destruction as a result of man-made structures, installations, environmental, social and economic soundness of processes, products or human activities, (iv) establish and development activities (See Sections 2.3 and 2.4 on maintain acceptable human living environments in definition of sustainability and sustainable accordance with the environmental values and development), and (ii) a Chapter 5 on integrated environmental needs of communities, and (v) apply Environmental Management. appropriate environmental management tools in order to ensure the integrated environmental management of activities. EIA is one of the tools that the NEMA promotes. Operational Principles: Screening is mandatory for all development projects. NEMA as amended to date (Sections 23 and 24; None None and 2006 Regulations in terms of Chapter 5 of the 1. Use a screening process DEAT has issued lists of activities to guide and frame the NEMA (2006 EIA Regulations hereinafter). for each proposed project, screening process. as early as possible, to 2006 Notices (lists) related to Activities identified The first list relates to activities that may not commence determine the appropriate in terms of Section 24(2)(a) and (d) of the Act without environmental authorization from the competent extent and type of (NEMA), which may not commence without an authority and in respect of which the investigation, environmental assessment environmental authorization from the Competent assessment and communication of potential impact of (EA) so that appropriate Authority and in respect of which the investigation, activities must be subject to full scoping and EIA studies are undertaken assessment and communication of potential impact processes. proportional to potential of activities must follow the procedure as described risks and to direct, and, as The second list relates to activities that will be subject to in Sections 22 to 26 of the 2006 EIA Regulations, relevant, indirect, Basic Assessment described in detail in the 2006 EIA and Sections 27 to 36 of the 2006 EIA Regulations. cumulative, and associated Regulations. Sectoral and Provincial environmental plans are impacts. Use sectoral or Once a project falls under the list of prescribed projects, referred to in Chapter 3 of NEMA, Sections 11 regional environmental project proponents are responsible to submit an application through 16. assessment when to the relevant authority. Concerning EMFs, the NEMA, as amended to date, 1 Prepared during the preparation of the Eskom Investment Support Project. 2 See Attachment to this Annex. 92 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities appropriate. Projects on the first prescribed list will require a plan of mandates the Minister and/or the province`s study for scoping acceptable to the relevant authority. authorities to compile information and maps that specify the attributes of the environment in a A scoping study prepared by the project proponent is to be particular geographical area, including the submitted for review by the relevant authority. Once the sensitivity, interrelationship and significance of scoping study report is approved, the proponent begins the such attributes which must be taken into account by preparation of an Environmental Impact Report (EIR) as every competent authority (Section 24.3) and no mandated by NEMA and applicable regulations. authorization shall be granted to any activity that is Requirements of Regional and Sectoral Environmental not consistent with such attributes. Management Plans (EMPs) and Provincial Management 2006 EIA Regulations, Chapter 8, Part 1, Sections Plans (PMPs) are described in NEMA and are meant to 69 through 72 on EMFs. coordinate, harmonize the environmental policies, plans programs and decisions of the various national departments that exercise functions that may affect the environment or are entrusted with powers and duties aimed at the achievement, promotion, and protection of a sustainable environment, and of provincial and local spheres of government in order to ...secure protection of the environment across the country ... prevent unreasonable actions by provinces in respect of the environment.... These EMPs and PMPs, accompanied by Environmental Implementation Plans (EIPs) are prepared by relevant department and all provinces and regularly updated every four years. 2. Assess potential impacts Under NEMA, in case of any activity that requires an NEMA, Section 24 (i). None None of the proposed project on authorization or permission by law and which may affect Regulation for projects subject to Basic Assessment physical, biological, socio- significantly the environment, the project proponent must (Section 23 (h)) mandates the EAR to provide a economic and physical assess and, evaluate the potential impacts on environment, description and assessment of the significance of cultural resources, socio-economic conditions and the cultural heritage, prior to any environmental impacts, including cumulative including trans-boundary implementation. impacts that may occur as a result of the and global concerns, and Basic Assessment must be prepared by an EA Practitioner undertaking of the activity or identified potential impacts on and must describe the manner in which the geographical, alternatives... human health and safety. physical, biological, social, economic and cultural aspects of Sections 22 through 26 of the 2006 EIA the environment may be affected by the proposed activity Regulations describe the Basic Assessment Report and how the proponent intends to address all potential (BAR). impacts. Sections 27 through 38 of 2006 EIA Regulations For projects subject to scoping and environmental impact govern the preparation, content and adoption of assessment, a more thorough description of the proposed scoping and EIA reports. project, its siting and its potential impacts, are required in the Scoping Report (SR) that must be approved by the Cumulative impacts must be identified: 2006 EIA relevant authority before a comprehensive and thorough EIR Regulations: 93 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities is prepared. Sections 23. 2 (h) for a BAR; Section 29 (1) (f) for a SR; and Section 32 (2) (k) (i) for an EIR. Trans-boundary and global concerns are explicitly referred to in NEMA but not in the 2006 EIA Regulations. Section 2 (b) (n) and Sections 23 (6) and 50 of NEMA refer to global and international responsibilities related to the environment and activities that will affect the interest of more than one province or traverse international boundaries 3. Assess the adequacy of South Africas Constitution provides for the implementation Constitution, Chapter 14 Sections 231-232-233. None None the applicable legal and of international conventions and international customary NEMA, 1998 as amended to date refers to institutional framework, law in the country. NEMA has a full Chapter on compliance compliance with international law in various including applicable with all international commitments of the Republic of South sections including: Section 24.3 (c) and (d) and international Africa and the 2006 EIA Regulations mention the obligation 24.4, 24.5, 25, 26 and 27 environmental agreements, of any applicant to take into account the provisions of all and confirm that they international commitments made by South Africa under NEMA Biodiversity Act 2005, Sections 5, 45 and provide that the environmental agreements. 51 refer to application of relevant International cooperating government Agreements binding on the Republic. The applicant must identify and describe all legislation and does not finance project The 2006 EIA Regulations: Section 23 (2) (e), and guidelines that have been considered in the preparation of activities that would 27 (f) refer to identification of all applicable the BAR. contravene such legislation, including applicable international international obligations. conventions ratified by South Africa in the BAR or SR. 4. Provide for assessment NEMA provides for the investigation of the potential NEMA, 1998 as amended to date, Section 24.7 (b), None None of feasible investment, impact of the activity and its alternatives on the (c) and (d) and 2006 EIA Regulations. technical, and siting environment... The Regulations provide a long list of Section 8.5, when considering applications for an alternatives, including the items that must be addressed in the report including: a activity, authorities expect the proponent to include no action alternative, description of the proposed method of identifying the reference to any feasible and reasonable potential impacts, environmental issues and alternatives. It is also a rule that alternatives to the activity....and any feasible and feasibility of mitigating the authority may accept the SR and decide that the reasonable modifications and changes to the these impacts, their capital information contained in the scoping report should be activity that may minimize harm to the and recurrent costs, their supplemented by an environmental impact assessment environment. suitability under local which focuses on the identified alternatives and conditions, and the environmental issues identified in the scoping report. Section 23.2 (g), on consideration of identification institutional, training and of alternatives to the proposed activity....including As for the EIR, it is mandated to provide a description of monitoring requirements advantages and disadvantages that the proposed the feasible alternatives identified during scoping that may associated with them. activity or alternatives will have on the be further investigated. environment and on the community that may be There is reference to the cumulative impacts and no affected by the activity in the BAR. action alternative in NEMA and the 2006 EIA Regulations Section 29.1 (b) on description of the proposed which refer to the obligation of the EIA expert to prepare a activity and of any feasible and reasonable scoping report with consideration given to all alternatives alternatives that have been identified and 29. 1 (i) identified. Finally it is mandated that the EIR provide a (iii) description of the proposed method of 94 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities description of each alternative.. a comparative assessment assessing the environmental issues and alternatives, of all alternatives......including the option of not including the option of not proceeding with the proceeding with the activity. activity in the SR. Section 32.2 (f) and (h) require assessment of advantages and disadvantages that the proposed activity or alternatives will have on the environment and on the community ­ a comparative assessment of all alternatives identified during the EIA process. 5. Where applicable to the South Africa is not equipped with an instrument comparable NEMA, Section 2.4 and Section 11.2. None None type of project being to the PPAH. However, the definition of principles of NEMA considers as a basic principle the principle Medupi has been supported, normally apply sustainability under NEMA contains many of the principles of best practicable environmental option, which designed and the Pollution Prevention used in the PPAH to define clear and precise quality and is defined as providing the most benefit or causes engineered to be and Abatement Handbook emission standards used in various economic sectors of the least damage to the environment as a whole, at a FGD-ready so that (PPAH). Justify deviations activities. cost acceptable to the society, in the long run as FGD can be installed when alternatives to In addition, NEMA provides for the preparation of EMPs by well as the short run. when and if necessary measures set forth in the all the departments in charge of any portion of the in order to comply PPAH are selected. environment. These EMPs must define: the environmental with applicable norms and standards, including norms and standards ambient air quality contemplated in Section 146.2 (b) (i) of the Constitution. and emissions regulations. For Kusile: the ROD requires that the FGD system be fully operational at commissioning. Accordingly, Kusile will comply from the outset with proposed South African emissions standards and with good international practices for as recommended in the Bank`s 2008 EHSG for Thermal Power Plants. 6. Prevent and, where not NEMA states clearly that disturbances of ecosystems and NEMA, Section 2.4 (a) (i) through (viii), Section Cost estimate is None, Eskom`s possible to prevent, at least loss of biological diversity are avoided or where they cannot 2.4 (b) (i) and (p) on mitigation measures and costs; not required as practice is to consider minimize, or compensate be altogether avoided, are minimized and remedied. Also, and Section 24.7 (f) on formulation of arrangements part of an EIA costs in identifying 95 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities for adverse project impacts NEMA mentions that if disturbance of site and landscapes for the monitoring and management of impacts, and report and the mitigation measures in and enhance positive that constitute the nation`s cultural heritage cannot be the assessment of effectiveness of such EMP. the EIR, and impacts through avoided, it must be mitigated, minimized and remedied. arrangements after their implementation. especially in preparing environmental the EMP for DEA Applicable regulations mandate the project proponent to 2006 EIA Regulations management and planning review and approval. submit an EIR, which must include: (i) the extent and that includes the proposed - Section 8 (b) significance of each identified environmental impact, and mitigation measures, - Section 23. 2 (h), (i), (j) and (k) for BAR (ii) the possibility for mitigation of each identified impact. monitoring, institutional Prior to granting any authorization, the competent authority - Section 27 (f) and (g) and 29. 1 (i) for SR, and capacity development and must assess the ability of the applicant to implement training measures, an - Section 32. 2 (j) and (k) and 34 (b) for the EIR mitigation measures and to comply with any conditions implementation schedule, subject to which the application may be granted. and related EMP. and cost estimates. The Record of Decision (ROD) related to any EIR includes Section 35 of the EIA Regulation 385, April 2006 a description of the measures to mitigate, control or manage requires that a draft EMP is developed with the environmental impacts or to rehabilitate the environment. EIR. Once a ROD is issued, and presuming it permits the development to go ahead, the EMP is updated to incorporate any new conditions from the ROD. 7. Involve stakeholders, NEMA has many provisions related to the consultation of General principle of public consultation in NEMA None None including project-affected stakeholders and public participation in decision-making Section 2.4 (f) and (k), Section 23.2 (d) and Section groups and local processes. Consultation of stakeholders (Interested and 24.7 (d). nongovernmental Affected Parties, or I&AP, in the NEMA) is mandatory for 2006 EIA Regulations: Chapter 6 Public organizations, as early as Basic Assessment, Scoping and EIA processes, including Participation Processes including Sections 56 possible, in the preparation during implementation of mitigation measures and EMPs. through 59 and more specifically: process and ensure that The independent expert in charge of preparing the EIR must their views and concerns 1. For BAR: Section 22 (a) on conducting a public have the ability to manage the public participation process are made known to participation process; Section 22 (c) on opening and and is responsible for the public participation process to decision makers and taken maintaining a registry of all I&APs in respect of an ensure that all I&APs, including government departments into account. Continue application; Section 22 (d) on documenting the that may have jurisdiction over any aspect of the activity, consultations throughout public participation process conducted including are given the opportunity to participate in all the relevant project implementation as objections received from I&APs; and Section 23 (2) procedures contemplated in these Regulations. necessary to address EA- (f) on description of the public participation and related issues that affect I&APs may obtain information, including copies of EIRs consultation process undertaken during the them. and EMPs and copies of the decisions of the relevant preparation of a BAR. authorities whether at national and/or local level. The 2. For scoping process and preparation of an SR, Scoping Report must provide an appendix containing a similar requirements are described in Section 28 description of the public participation process followed, (a); Section 28 (c); Section 28 (d); and Section 29 including a list of I&APs and their comments. (1) (h). Finally, it is important to note that the EIR and all related 3. For EIR: Section 32. 2 (e) and the 2000 Access documents and appendices become public documents under to the Information Act describe these requirements. the Promotion of Access to Information Act 2000. 96 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities 8. Use independent The EIA Regulations clearly impose on the project NEMA as amended to date: Not a None expertise in the preparation proponent to contract an independent expert to prepare the significant Section 1 (d) and Section 24.7 (d) refer to of EA where appropriate. SR and EIR, and later for supervision of the implementation difference. independent review and conflict resolution; and Use independent advisory of mitigation measures and EMPs as appropriate. They are Section 17 and 18 mention that Environmental panels during preparation defined and referred to as Environmental Assessment Assessment Practitioners must be independent. and implementation of Practitioners under NEMA. projects that are highly Section 24 (I) states that relevant authority may NEMA provides for independent review of all phases of the risky or contentious or that appoint an external specialist reviewer and may investigation and assessment of impacts. involve serious and multi- recover cost from the applicant, in instances where: dimensional environmental DEA implements a systematic review process under very (a) the technical knowledge required to review any and/or social concerns. strict review guidelines established to ensure consistency in aspect of an assessment is not readily available review and to clarify the role of reviewers throughout the within the competent authority; or process. (b) a high level of objectivity is required which is not apparent in the document submitted, in order to ascertain whether the information is adequate for decision making or whether it requires amendment. 9. Provide measures to link NEMA provides for linkages between environmental NEMA: Section 2(2), (3) and (4) provides for the None None the environmental management in general and people`s economic, social, general link between environmental management assessment process and cultural, and health needs. and the overall economic and social development; findings with studies of and Section 24 provides for direct linkages between The EIR is linked to the underlying factors (economic, economic, financial, the environmental impact assessment and socio- technical and social) which characterize the proposed institutional, social and economic and cultural conditions. project. technical analyses of a The 2006 EIA Regulations provide for additional proposed project. and specialized studies that may be needed and are defined in the SR (Section 29.1 (d) and (i)). 10. Provide for application NEMA and 2006 EIA Regulations are mandatory NEMA, Chapter 5 on Integrated Environmental None None of the principles in this requirements for all subprojects. Management. Table to subprojects under The 2006 EIA Regulations recognize also the possibility for 2006 EIA Regulations, Section 15. investment and financial an applicant to apply for various similar projects in the same intermediary activities. or different geographical areas and provides for combination of applications subject to consideration that environmental impacts of each activity must be assessed in terms of the location where the activity is to be undertaken. 11. Disclose draft EA in a Disclosure is dealt with across all the segments of NEMA as amended to date: Section 3.4 (f) and (k) None None timely manner, before environmental management and conservation processes in on participation of all I&APs which assumes appraisal formally begins, South Africa. It is part of the general principles that form appropriate information is disclosed to them to in an accessible place and the ground of environmental law in South Africa. ensure transparency and fairness in environmental in a form and language decision-making processes. Notice is given to stakeholders about any project subject to understandable to key environmental impact assessment. Draft report is disclosed The 2006 EIA Regulations state that I&APs must 97 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities stakeholders. and stakeholders are informed through newspapers (local be given opportunity to discuss draft BAR (Section and/or national) and radio. 22. f), SR (Section 28.g), draft EIR (Section 32.1) and EIR (Section 32.2.e). Special Reports prepared Information to be disclosed for the purpose of the to complement the EIA are also subject to public consultation process is described in the 2006 EIA disclosure and discussion by I&APs (Section 33.2. Regulations. (h) and (i)). In addition, all stakeholders registered during the Also Chapter 6 of the 2006 EIA Regulations on consultation process have access to final documentation and Public participation process governs disclosure- Record of Decision. related issues. South Africa adopted a comprehensive Act on Promotion of Section 31 of NEMA on access to environmental Access to Information in 2000. information and protection of whistleblowers and Promotion of Access to Information Act, 2000. PHYSICAL CULTURAL RESOURCES Objective: To assist in South Africa`s environmental law recognizes the Constitution of the Republic of South Africa, 1996 None None preserving physical significance of human processes in the phenomenon of an Section 24 (Environment) and Section 31 (Cultural, cultural resources (PCR) integrated environment. A vital component of the human Religious and Linguistic Communities). and avoiding their process includes cultural heritage, which broadly consists of South Africa ratified the 1972 Convention destruction or damage. the intellectual, artistic, social and historical record of the Concerning the Protection of the World Cultural PCR includes human species that constitutes the common cultural and Natural Heritage on June 10, 1997. archaeological, patrimony of the human race. paleontological, historical, NEMA defines Environment as inter alia the The National Heritage Resources Act 25 of 1999 (hereafter and sacred sites, including physical, chemical, aesthetic and cultural properties the NHRA) aims to create an integrated framework for the graveyards, burial sites, and conditions that influence human health and protection of cultural heritage with regard to the and unique natural values. well-being (Section 1) and provides for an management and development thereof, as well as assessment of impact of development activities on participation in and access to heritage resources. And, in cultural heritage (Section 24.1 c). practice the South African Heritage Resource Agency (SAHRA) and South African specialists and practitioners Finally the Kwazulu-Natal Heritage Act, Act 10 of are using best international practices including but not 1997 applies specifically to the proposed project limited to the Australian Burra Charter as a guide to and provides rules and procedures for dealing with developing strategies for understanding the problem of cultural heritage and archeological properties. heritage assessment, managing resource assessment and developing policies with regard to the assessment. Operational Principles: General objective of integrated environmental management NEMA Section 23 (2)(b). None None entails the identification, prediction and evaluation of the 1. Analyze feasible project Kwazulu-Natal Act 10 of 1997 provides incentives actual and potential impact of development on inter alia alternatives to prevent or for the protection of cultural heritage, including cultural heritage. minimize or compensate prohibition of any demolition of heritage for adverse impacts and NEMA accordingly acknowledges the importance of landmarks. enhance positive impacts Heritage Impact Assessment in the EIA process. on PCR, through site Provincial legislation confirms these rules and mandates 98 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities selection and design. proponents to take measures to avoid impacts on cultural heritage 2. If possible, avoid South Africa`s legal framework for cultural heritage Section 2(viii) of the NHRA defines development None None financing projects that conservation and protection prohibit any investment that as: significantly damage PCR. may damage a physical cultural resource. any physical intervention, excavation, or action As appropriate, conduct other than those caused by natural forces, which Current practice under the NHRA implemented by the field based surveys using may in the opinion of a heritage authority in any South African heritage resource practitioners includes: (i) an qualified specialists to way result in a change to the nature, appearance or assessment to identify the heritage resource found; (ii) evaluate PCR. physical nature of a place, or influence its stability information pertaining to the significance of the resources; and future well-being. and (iii) a statement of significance. Finally, obligations arising from the significance must then be identified, Same process is provided for under the Kwazulu- information that may affect the future of the resource must Natal Heritage Act (Section 8, 17.e, 19.2, 20.2...) be gathered, a policy must be developed and a statement of and Section 27.1 provides a list of activities that policy must be formulated. In the last instance the process must be notified by applicants to the Cultural requires strategies to be developed which must be Heritage Council which will approve the selection implemented through a management plan. The process will of a specialist to assess the proposed activity and its be concluded with monitoring and review of the potential impacts on its areas and prepare a plan for assessment.3 dealing with cultural heritage resources. SAHRA must be involved to assess any discovery and survey the site under environmental assessment or considered for a project and may issue a prohibition to further develop the site or mandate mitigation and conservation measures to be taken by developers. 3. Consult local people in NHRA provides for community involvement, including All applicable rules on consultation for EIA process None None documenting the presence owners of lands, who are consulted, with their comments and in addition: and significance of PCR, taken into account in the final report regarding the impact of NHRA, Section 35.a, 38.3.a. assessing the nature and any proposed development on a cultural heritage property. extent of potential impacts However, clearer indications are needed as to the extent of Kwazulu-Natal Act, Section 17.3.d and 27. on these resources, and participation and obligations of communities, NGOs and designing and community-based organizations in the process of cultural implementing mitigation heritage assessment and conservation. plans. 4. Provide for the use of All project proponents must notify the responsible heritage NHRA, Section 38.1. None None chance find procedures resource authority and furnish it with details regarding the The 2006 EIA Regulations, Sections 22 and 23.2. that include a pre- location, nature and extent of the proposed development. If (h), (i), (j), and (k) for BAR; Section 29.1 (d), (g) approved management and the heritage resource authority has reason to believe that and (j) for SR, and Section 32.2 (d), (i), (j) and (p) conservation approach for heritage resources will be affected by such development, it 3 This was the process followed during the implementation of the EIA process for the Cradle of Humankind Project and agreed upon by DEAT and the Agency in charge of physical cultural heritage. 99 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities materials that may be will require of the proponent to submit a heritage impact for EIR. discovered during project assessment report. Approval of the mitigation measures and implementation. management plan if required is made by the relevant cultural heritage administration. The 2006 EIA Regulations provide for comprehensive survey of the proposed activity and its impacts on area of influence including on cultural heritage, which if applicable will require the applicant to discuss additional terms of reference for the cultural heritage aspects of the assessment and prepare a specific report. 5. Define and undertake South Africa is equipped with adequate capacity to deal NHRA, Section 38.2 (a). None None measures for strengthening with cultural heritage resources at the central level. An 2006 EIA Regulations. institutional capacity to independent consultant who would be contracted to prepare implement mitigation the SR and the EIR is expected to be trained to deal with all plans and to deal with applicable regulations including those on cultural heritage impacts on PCR identified resources. Such consultants must have the skill, competence prior to and/or discovered and qualification satisfactory to SAHRA. during project implementation. 6. Disclose draft mitigation Disclosure is mandated as part of the EIA process. NEMA. None None plans, in a timely manner, The 2006 EIA Regulations. before appraisal formally begins, in an accessible place and in a form and language that are understandable to key stakeholders. 100 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities NATURAL HABITATS Objective: South Africa has two main laws that fully confirm to the Constitution : Section 24. None None objective; these are the Protected Areas Act 57 of 2004 and To promote NEMA Section 2 and Section 16 through 18 on the Biodiversity Act 10 of 2004. Together they form a environmentally Protection of Natural Environment. comprehensive legislation on establishment, protection and sustainable development conservation and management of natural habitats, their NEMA-Biodiversity Act 2004, which provides for by supporting the biological diversity wealth and environmental functions. management and conservation of South Africa`s protection, conservation, Key principles embedded in this legislation include: (i) biodiversity....the protection of species and maintenance and development must not degrade the natural, built, social, ecosystems that warrant national protection, the rehabilitation of natural economic, and governance resources on which it is based, sustainable use of indigenous biological habitats and their (ii) current actions should not cause irreversible damage to resources.... functions. natural and other resources, as this potentially prevents the NEMA-Protected Areas Act, 2003 as amended to realization of future sustainable options, (iii) where there is date, which provides for the protection and uncertainty about the impact of activities on the conservation of ecologically viable areas environment, caution should be exercised in favor of the representative of South Africa`s biological diversity environment, (iv) land use and environmental planning need and its natural landscapes and seascapes; ....for the to be integrated. management of those areas in accordance with South Africa has a National Biodiversity Strategy and norms and standards; [and] for ...public Action Plan. consultation in matters concerning protected areas. Operational Principles: NEMA is aiming, among other objectives, at prohibiting or NEMA: Section 2.4.vii, Section 23 (1) and Section None None limiting those activities that will be identified as having a 27. 1. Use a precautionary detrimental effect on the environment; legislation on approach to natural Chapter 4 Part I of NEMA, Protected Areas Act protected areas and biodiversity is an important asset. resources management to 2003 Regulations prohibits activities that may have ensure opportunities for Under NEMA, the Minister of Environment may by Notice a negative impact of conservation and protection of environmentally in the Gazette declare any area...as a limited development biological diversity of the protected areas, (Section sustainable development. area on which no development can be undertaken unless on 50-56). Determine if project the basis of a conditional authorization. Any development Chapter 4, Part II of NEMA, Protected Areas Act, benefits substantially project that may affect a protected area is subject to a full Regulations lists Restricted Activities (Section 57). outweigh potential EIA to be reviewed and monitored by DEA at national level. environmental costs. Chapter 4 Part III of NEMA, Protected Areas, Finally, it should be mentioned that as a matter of principle, Regulations lists Prohibitions or Restrictions of NEMA is grounded on a risk-averse and cautious approach Land Use in Protected Areas (Sections 58-60). which takes into account the limits of current knowledge about the consequences of decisions. and therefore requires The 2006 EIA Regulations provide for assessment authorities to use the precautionary principle in all their of all activities that may impact a protected area decisions. and for assessment of such impacts. 101 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities 2. Avoid significant NEMA states as an important principle of sustainable NEMA, Section 2 and Section 24.2 (e). None None conversion or degradation development of South Africa that sensitive, vulnerable, Legally protected special nature reserve cannot be of critical natural habitats, highly dynamic or stressed ecosystems, such as coastal converted except by resolution of the National including those habitats shores, estuaries, wetlands and similar systems require Assembly, Protected Areas Act of 2003 as that are (a) legally specific attention in management and planning procedures amended, Section 19. However, the Act provides protected, (b) officially especially where they are subject to significant human that an area or part of an area declared as protected proposed for protection, resource usage and development pressure. environment may be excluded or withdrawn from (c) identified by Based on this principle, the Minister in charge of the protected area system by a Notice issued by the authoritative sources for environment and provincial government shall prepare Minister of Environment or Provincial Government their high conservation compilation of information and maps that specify the as the case may be. value, or (d) recognized as attributes of the environment in particular geographical protected by traditional areas, including the sensitivity, extent, interrelationships and communities. significance of such attributes which must be taken into account by every organ of state charged by law with authorizing, permitting or otherwise allowing the implementation of a new activity, or with considering, assessing and evaluating an existing activity. Currently, 6 percent of the land surface of South Africa is formally conserved through the system of national and provincial protected areas. The target is to expand this to 8 4 percent by 2010. To this end, DEAT has prepared with relevant authorities and stakeholders a National Spatial Biodiversity Assessment that takes into account important poverty alleviation and community development programs that have been initiated and which present opportunities to improve natural resources management and link biodiversity to social development. 3. Where project adversely The EIA process provides for a comprehensive assessment NEMA as amended to date and the 2006 EIA None None affects non-critical natural and evaluation of any proposed activity that may impact a Regulations. habitats, proceed only if protected area. In such case, it is the national authority NEMA, Protected Areas Act as amended. viable alternatives are not which will be responsible for reviewing the SR and EIR. available, and if Mitigation measures and/or a comprehensive environmental appropriate conservation management plan will be required, implemented and and mitigation measures, monitored. including those required to There is no provision to oblige the Government and/or maintain ecological proponent to establish and maintain an ecologically services they provide, are similar area. in place. Include 4 South Africa`s National Biodiversity Strategy and Action Plan, 2005 (Draft disclosed by DEAT for public consultation and comments, (www.deat.gov.za//PolLeg/Legislation/2004Jun7_2/Biodiversity%20Act-7%20June%202004.pdf). 102 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities mitigation measures that minimize habitat loss and establish and maintain an ecologically similar protected area. 4. Whenever feasible, give NEMA provides for the development of national and NEMA 1997 as amended to date, Section 23.2 (b). None None preference to siting provincial environmental management frameworks and The 2006 EIA Regulations on alternatives to the projects on lands already plans, including implementation plans and maps that proposed activity and more generally. converted. provide for, among other issues, compliance with the national environmental management principles. The basic Chapter 1 on Principles of Environmental principle which these plan must comply with is to avoid Management (Section 2 (r)) and Chapter on disturbances to ecosystems and loss of biological diversity Procedures for Cooperative Governance which and where they cannot be avoided they are minimized and deals with implementation plans and management or remedied. plans. 5. Consult key Consultation of stakeholders is a key requirement during the NEMA and 2006 EIA Regulations. None None stakeholders, including environmental assessment process which is mandatory for NEMA, Protected Areas, 2003 as amended to date, local nongovernmental all activities that may impact a protected area. The NEMA, Part 5 Sections 31 through 34 organizations and local Biodiversity Act also provide for public consultation communities, and involve including affected and local communities for all issues NEMA, Biodiversity Act, 2004, Section 63 on such people in design, pertaining to biodiversity conservation. consultation related to specific issues dealing with implementation, threats to and biodiversity conservation issues, and NEMA, Protected Areas Act has a Part on Consultation monitoring and evaluation Sections 99-100 which govern the consultation process, including Public Participation and consultation of projects, including process. of affected organs of state, communities and beneficiaries. mitigation planning. Any draft act, regulation, or activity that relates to protected areas must be disclosed and opened to public consultation. Disclosure is ensured through publication in newspapers, including local newspapers, to ensure participation of local communities. Also Parks Boards are mandated to involve local communities in protected areas management, including preparation of management plans, and in developing as appropriate co-management of protected areas frameworks. 6. Provide for the use of NEMA provides the general principle that EIAs and EMPs, NEMA and 2006 EIA Regulations. None None appropriate expertise for including specialist reports are prepared and developed by NEMA Protected Areas, Sections 38 through 44. the design and specialists approved by the authorities. implementation of Review and monitoring is done under the supervision of mitigation and monitoring monitoring specialists that the applicant contracts as part of plans. the EMP, and the authorities have the ability to contract independent experts to monitor implementation and look at 103 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities more specific issues. 7. Disclose draft mitigation Disclosure is provided for under NEMA. It is provided for NEMA and the 2006 EIA Regulations. None None plan in a timely manner, the publication of notices and relevant documents Section 2(f) and (k) which deal with public before appraisal formally concerning EIR and EMPs in local journals to make them participation and disclosure. begins, in an accessible accessible to local communities. There is no reference to place and in a form and language in laws and regulations, but all documents related Section 23.2 (d) and 24.7 (d) on public language understandable to to environmental issues are disseminated in Afrikaans and information and participation, independent review key stakeholders. English. and conflict resolution in all phases of the investigation and assessment of impacts. INVOLUNTARY RESETTLEMENT Objective: To avoid or a) Because of the history of South Africa, resettlement is an Constitution, Section 25.1 no one may be deprived None None minimize involuntary issue that is central to national consensus building and of property except in terms of law of general resettlement and, where sustainability. The Constitution and numerous laws and application and no law may permit arbitrary this is not feasible, to assist regulations govern land ownership, land tenure rights, land deprivation of property. displaced persons in use and protect rights of owners, users and tenants. A Land 25.2 Property may be expropriated only in terms of improving or at least Claim Court has been established for that purpose. law of general application: (a) for a public purpose restoring their livelihoods b) Expropriation can occur only after the need for public or in the public interest; and (b) subject to and standards of living in purpose, public use or public interest is demonstrated compensation, the amount of which and the time real terms relative to pre- in a legal process and compensation is made. Therefore, the and manner of payment of which have either been displacement levels or to need to minimize involuntary resettlement is explicit. agreed to by those affected or decided and approved levels prevailing prior to by a court. the beginning of project c) Compensation is paid taking into account a wide range of implementation, whichever criteria including but not limited to market value and 25.3 The amount of compensation and the timing is higher. prejudice (damages actually suffered and lost benefits, and manner of payment must be just and equitable, such as loss of income. relocation costs, etc). Assumed to reflecting an equitable balance between the public enable affected people to maintain the value of their assets interest and the interest of those affected having and restore their livelihoods and standards of living. regard to all the relevant circumstances, including: (a) the current use of the property, (b) the history of d) The expropriation of land for conservation purpose is the acquisition and use of the property, the market treated under NEMA as to be made for public purpose or in value of the property.... the public interest and therefore subject to the Expropriation Act 63 of 1975, however, the amount of Extension of Security of Tenure Act (ESTA) Act 28 compensation and manner of payment are made under the of 1997: the Act governs the procedures which Constitutional rules and due process of law, including must be used to resettle poor people occupying mandatory hearing of any land owner before any land rural land. It applies to those people who have an taking. explicit or implicit permission to live on rural land belonging to a third party. The Act: (i) limits the e) Finally, it should be mentioned that the Expropriation Act circumstances under which involuntary resettlement 63 of 1975 is being reviewed in order to assure that the can take place, (ii) requires that suitable alternative Nation`s commitment to land reform and to bring about accommodation is provided to those evicted, equitable access to all South Africa`s natural resources can suitable accommodation cannot be less be fulfilled in an effective, fair and democratic manner,... favorable than the current accommodation of the 104 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities to ensure that expropriation does not take place arbitrarily occupier; (iii) provides additional protection for and takes place only for public purposes and in the public long term occupiers, (iv) states that rights of interest and that persons impacted by expropriation are occupiers survive change of ownership in land, and treated on an equal and procedural fair basis and entitled (v) provide government support for occupiers to to just and equitable compensation. acquire rights to land in either on farm or off- farm settlements. Rights of vulnerable category: people over 60, for example, will have lifetime security if they occupied the land for ten Interim Protection of Informal Land Rights Act 31 years and more. of 1996 provides for temporary protection of certain informal land rights pending the Land Reform (Labor Tenants) Act 30 of 1996 applies to introduction of comprehensive tenure legislation. It people who have occupied farm lands over generations who applies to those who occupy land as if they were are paid for their labor; they are provided with strong the owner. This category of land occupiers cannot protection through access to land. They are protected from be deprived of their informal rights except with eviction and have the right to acquire the portion of land their consent or through expropriation under Act 63 they occupy and use. of 1975. Prevention of Illegal Eviction from Unlawful Occupation of Land Act 19 of 1998. This Act sets out procedures for evictions of unlawful occupiers and states that eviction is ordered only when it is just and equitable. If the occupier has been in occupation for more than six month, provision of alternative accommodation is a factor to decide whether the eviction is just and equitable. Operational Principles: An expropriation decision is issued by a relevant authority Expropriation Act (Act 63 of 1975), Extension of None None (national, for example, minister of public works and land Security of Tenure Act (ESTA) 1997 including 1. Assess all viable affairs, provincial, or local, depending on the level of the ESTA, 1997: Regulations N.1632 of 1998. alternative project designs authority that is investing), based on the assumption that to avoid, where feasible, or public interest and public use are made after all minimize involuntary alternatives have been taken into account and that no other resettlement. viable alternative could be implemented. 2. Through census and a) The constitutional and legal framework mandates a Constitution, Section 25 Difference The identified gap is socio-economic surveys of survey of those affected by expropriation and the amount of concerning not relevant for the NEMA provide for the general principle of prior the affected population, their losses after the public purpose is declared. rights to access proposed Project. assessment of impacts including socio-economic identify, assess, and to protected b) Specialist Report may be mandated in case socio- impacts (Section 24) for all development activity in address the potential area`s natural economic impacts are important under a proposed activity. order to promote integrated environmental economic and social resources and management. impacts of the project that c) In case resettlement is envisioned by the Scoping and biodiversity, are caused by involuntary EIA Regulations, a ROD may be issued by DEA or the The 2006 EIA Regulations provide for which are not taking of land (e.g. relevant local authority, but project cannot commence comprehensive survey of the proposed activity and clear. relocation or loss of unless a land acquisition plan which includes consultation of its impacts on area of influence, including socio- shelter, loss of assets or affected people and compensation is prepared and agreed 105 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities access to assets, loss of upon by the relevant authority. Ministry in charge of public economic impacts. income sources or means works, land affairs or environment and tourism may be ESTA. of livelihood, whether or involved in the process depending on the purpose of the not the affected person expropriation. NEMA, Protected Areas Act, Section 41-43 must move to another d) If land is expropriated for conservation purpose or more location) or involuntary generally for environmental protection purpose, the Minister restriction of access to of Environment shall undertake the expropriation process legally designated parks and apply all laws and regulations thereon including Section and protected areas. 25 of the Constitution. e) A more comprehensive protection is granted to land users including those without any title under the ESTA. If the activity triggers resettlement of these, compensation shall be provided through a process managed by the Ministry of Land Affairs. f) There is no clear language in South Africa`s legislation about restriction of access to protected areas` natural resources by local communities. However, there are provisions that protect use of biological resources by local communities under NEMA, Protected Areas Act 2003 and NEMA, Biodiversity Act of 2005. Local communities having rights, direct or indirect interest shall be registered with the park authority to continue to enjoy their rights to and interests in the natural resources of the park. In addition, the National Biodiversity Strategy and Action Plan being prepared with stakeholders involvement states that it is critical that the value and importance of biodiversity to people`s livelihood is recognized and biodiversity management (including conservation, access, use and rehabilitation) must be integrated with poverty alleviation strategies and local economy development. Tenure reform and rights to access and use of biological resources need to be clarified to ensure equitable sharing of benefits.5 3. Identify and address Legal expropriation and compensation requirements apply Constitution, Section 25. None None impacts also if they result to all aspects of an investment. Expropriation Law. from other activities that Potential impacts of any proposed project including are (a) directly and NEMA (Section 24). cumulative impacts and its alternatives are addressed under significantly related to the the EIA for the proposed project (NEMA, Section 24. 7). proposed project, (b) 5 South Africa`s National Biodiversity Strategy and Action Plan. DEAT 2005, p.22. See reference under footnote 4. 106 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities necessary to achieve its objectives, and (c) carried out or planned to be carried out contemporaneously with the project. 4. Consult project-affected Consultation is mandatory for all expropriation processes Constitution Section 25. None None persons, host communities and includes discussion of the purpose of the expropriation, NEMA, Section 24.7 (d), (f) and (h). and local nongovernmental compensation and other rehabilitation and mitigation organizations, as measures to be decided under the resettlement action plan ESTA Chapter VI, Section 35. appropriate. Provide them and conflict resolution procedures provided for under the Section 3 of the Promotion of Administrative opportunities to participate Constitution and numerous land-related laws and Justice Act, 2000 requires that administrative in the planning, regulations including NEMA. actions of the Minister, in terms of expropriation implementation, and and land taking, must be procedurally fair and Grievance mechanism is well developed in South Africa monitoring of the parties must receive adequate notice and be able to because of the sensitivity of all land-related issues. A Land resettlement program, make representations in regard to that Claims Court has been established and administrative especially in the process of administrative action. recourse procedures are defined under each applicable land- developing and related law. NEMA, Protected Areas Act, Section 44 is implementing the procedures for determining Under NEMA, for the purpose of an EIR, all impacts important for access to natural resources of eligibility for including social impacts must be monitored and designated protected areas. compensation benefits and arrangements for the monitoring must be embedded in the development assistance (as EMP for the project. The consultation of local communities documented in a and affected persons by a proposal to establish a protected resettlement plan), and for area is mandated by the NEMA Protected Areas Act. establishing appropriate and accessible grievance mechanisms. Pay particular attention to the needs of vulnerable groups among those displaced, especially those below the poverty line, the landless, the elderly, women and children, Indigenous Peoples, ethnic minorities, or other displaced persons who may not be protected through national land compensation legislation. 5. Inform displaced It is an established Constitutional right to be heard about The 1975 Expropriation Act requires proper None None persons of their rights, notification of expropriation to be served, provides 107 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities consult them on options, any expropriation. for the passing of ownership on the date of and provide them with expropriation, and further provides inter alia for the technically and requirements for possession of the property and for economically feasible Information prior to any taking of land, loss of assets or offers and determination of compensation. resettlement alternatives access to natural resources is common practice and and needed assistance, governed by numerous laws and regulations. It is a practice including (a) prompt that EIA processes are announced in local media in at least Under the Constitution (see above) and under the compensation at full two newspapers and other means. This practice is governed Land Restitution Act as amended in 2003, Section replacement cost for loss by the EIA Regulations under NEMA 42(E)(3), the compensation and time and manner of of assets attributable to the payment for expropriations shall be determined by project; (b) if there is agreement and/or by the Land Claims Court. relocation, assistance Property can be expropriated subject to compensation, the during relocation, and amount of which and the time and manner of payment of residual housing, or which have either been agreed to by those affected or Constitution, Section 25 and more specifically, housing sites, or decided and approved by a court. The amount of Section 25(5) which requires the State to take agricultural sites of compensation and the timing and manner of payment must reasonable legislative and other measures within its equivalent potential, as be just and equitable, reflecting an equitable balance available resources to foster conditions which required; (c) transitional between the public interest and the interest of those affected enable citizens to gain access to land on an support and development having regard to all the relevant circumstances, including: equitable basis. In other words the State is required assistance, such as land (a) the current use of the property, (b) the history of the to pass laws and conduct its administration to preparation, credit acquisition and use of the property, the market value of the achieve these objectives facilities, training or job property, .... opportunities as required, in addition to Section 3 of the Promotion of Administrative compensation measures; Under additional legislation on land-related issues, resettled Justice Act, 2000 requires that administrative (d) cash compensation for persons are entitled to additional rehabilitation assistance. actions of the Minister, in terms of expropriation land when the impact of People to be resettled under the ESTA must get a suitable and land taking, must be procedurally fair and land acquisition on alternative accommodation which is defined as a safe and parties must receive adequate notice and be able to livelihoods is minor; and overall not less favorable than the occupier`s previous make representations in regard to that (e) provision of civic situation, having regard to the residential accommodation administrative action. infrastructure and and land for agricultural use available to them prior to community services as eviction and suitable having regard to (a) the reasonable required. needs and requirements of all of the occupiers in the 1975 Expropriation Act 63, and ESTA, Sections household in question for residential accommodation, land 1(1) xvii, Section 13 and 26.2 and 3 and agricultural use, and services; (b) their joint earning abilities; and (c) the need to reside in proximity to opportunities for employment or other economic activities if NEMA, Section 36.3 they intend to be economically active 6. Give preference to land- There is no clear statement on land-based resettlement Constitution, Section 25. None None based resettlement preference in the Constitution and Acts. However, it is well Land Assistance Act. strategies for displaced established that the GoSA, because of its history and the 108 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities persons whose livelihoods importance of land issues, favors land-based resettlement ESTA. are land-based. for those who might be impacted by the taking of land for development purposes. However, under the Land Assistance Act 126 of 1993, assistance to those peoples who want to access to land through grant will be provided by the Government. 7. For those without Legislation provides for compensation of those enjoying ESTA Chapter III Rights and duties of occupiers None None formal legal rights to lands land uses without and with formal rights. A process is and owners. or claims to such land that defined to ensure that the no-eviction rule will protect those could be recognized under who enjoy a peaceful and legitimate use of land. Program the laws of the country, concerning those people will (i) reach to secure their tenure, provide resettlement or (ii) provide them with compensation alternative without assistance in lieu of disrupting their livelihoods. compensation for land to help improve or at least restore their livelihoods. 8. Disclose draft Disclosure and consultation rules and procedures are the NEMA. ESKOM does Eskom will ensure (i) resettlement plans, same as those used for the purpose of environmental not disclose that any land taking Regulations on EIA. including documentation assessment. resettlement and or resettlement of the consultation process, and/or land issue and instrument In the case of land taking, information should be provided to in a timely manner, before acquisition will be disclosed prior the land owner, user or tenant before any decision is made. appraisal formally begins, plans. to the implementation in an accessible place and EIRs for the two proposed power generation plants have of the project and (ii) in a form and language been disclosed by ESKOM and include Social Impact compensation and that are understandable to Assessment which discusses resettlement issues. rehabilitation schemes key stakeholders. will be discussed with affected persons. 9. Apply the principles The laws and procedures apply equally to all expropriation None None described in the required for an investment. The Acts and Regulations do not involuntary resettlement distinguish between projects and sub-projects. section of this Table, as applicable and relevant, to subprojects requiring land acquisition. 10. Design, document, and Protected areas are an important part of the territory of NEMA- 1998, Section 2 all principles being None. Not None disclose before appraisal South Africa. Laws and regulations related to protected defined as applicable to protected areas. applicable as of projects involving areas are numerous and consistent with good internationally no legally NEMA-Protected Areas Act 2003: involuntary restriction of recognized practices on conservation and sustainable protected areas access to legally development of the natural resources and biological - Chapter 3: Section 23 and Section 28 or designated designated parks and diversity wealth of the country. - Section 31 (Consultation) and Section 33 (Public park is 109 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities protected areas, a Under NEMA-Protected Areas Act 2003, the competent Participation) envisioned or participatory process for: authority shall declare a portion of the territory a protected planned in the - Chapter 4: Sections 38 through 42 on management (a) preparing and area if such area: (i) has significant natural features or two proposed plan implementing project biodiversity, scientific, cultural, historical or archeological project areas. components; (b) value, or if it is in need of long-term protection for the - Chapter 5: Section 51 on Regulation on restriction establishing eligibility maintenance of its biological diversity or for the provision of Development and Other Activities in Protected criteria; (c) agreeing on of environmental goods and services; (ii) provides Environment. mitigation measures that sustainable flow of natural products and services to meet the NEMA-Protected Areas Amendment Act 2004: help improve or restore needs of local communities, (iii) enables the continuation of livelihoods in a manner traditional consumptive uses as are sustainable... - Section 19 related to Commercial and that maintains the community activities in national park, nature Under NEMA-Biodiversity Act, 2004, it is clearly reserve and world heritage site. sustainability of the park recognized that conservation and sustainable use are not or protected area; (d) NEMA-Biodiversity Act 2004 always incompatible and are recognized to benefit local and resolving conflicts; and (e) indigenous communities that may continue to enjoy the - Section 82. monitoring resources of a protected areas or where such use: (i) would implementation. not lead to long-term decline of such a resource, (ii) would not disrupt the ecological integrity of the ecosystem, and (iii) would ensure the continued use of the resources to meet the needs and aspirations of present and future generations. Before any formal establishment of a protected area, a Notice is served to land owners and occupiers and an intention notice is disclosed to the public at large in the Government official gazette and local newspapers. A consultation process is undertaken including authorities at central, provincial and local levels, lawful occupier with right in land in any part of the area affected. The authorities must: (i) allow any affected community or person whose rights might be affected to make representations and/or objections and (ii) give due consideration to such representations and/or objections. Management plans for protected areas must define conditions for community and affected peoples participation in the natural resources and biological diversity wealth of the area, provide for the zoning of the area and related authorized activities and development of economic opportunities within and in the buffer zone of the protected area. Finally, South Africa`s system allows protected areas` authorities to enter into agreements with communities and affected persons to define their participation in the conservation and sustainable development of biological 110 Bank Policy (OP 4.00) Government of South Africa's Equivalent Requirements Differences Improvements needed Requirements between OP to address the 4.00 and South differences before (Objective and Operational Objectives and Operational Principles as stated in the relevant References to the relevant sections of the laws, rules, Africa's implementing the Principles) laws, rules, regulations, procedures, and policies 2 regulations, procedures, and policies requirements project activities diversity within protected areas. Restrictions to access are defined by regulations and limited to those activities that are inappropriate for the [protected] area; or that may impede [the] purpose of the area. 11. Implement all relevant As general principle under South Africa`s legal system, ESTA ­Section 10 (2). None None resettlement plans before persons affected by projects are compensated before being NEMA Section 34. project completion and moved or their rights to access to natural resources provide resettlement restricted. entitlements before Under the ESTA, an eviction order can be issued only after displacement or restriction suitable alternative accommodation is available to the of access. For projects occupier concerned. involving restriction of access, impose the restrictions in accordance with the timetable in the plan of actions. 12. Assess whether the There is no provision related directly to monitoring the NEMA Regulations, Section 34 ESKOM None objectives of the fulfillment of a resettlement program`s objectives. conducts social resettlement instrument assessment However, under the NEMA, for the purpose of an EIA, all have been achieved, upon including impacts including social impacts must be monitored and completion of the project, monitoring arrangements for the monitoring must be embedded in the taking account of the achievement of EMP for the project. Report on the implementation of baseline conditions and the resettlement mitigation measures must be prepared and provided to the results of resettlement plans. competent agency and disclosed to affected peoples, monitoring. including those who participated in the consultation process during the preparation of the EIA report and resettlement plan when applicable. 111 Attachment to the Equivalence Matrix References to Applicable Acts, Regulations, International Agreements I- Relevant Legislation to Overall Environmental Governance in South Africa a. The Constitution of South Africa b. The National Environmental Management Act, 1998 c. The Provision of Access to Information Act, 2000 d. The Promotion of Administrative Justice Act (PAJA) e. The Occupational Health and Safety Act, 1993 f. The Atmospheric Pollution Prevention Act (1965 APPA) 1 g. The NEMA Air Quality Act (2004 AQA) h. The National Water Act (NWA 1998) i. The NEMA Waste Act (2008) II- Environmental Assessment a. National Environmental Management Act (NEMA)107 of 1998 as amended to date2; and b. Regulations in terms of Chapter 5 of NEMA, 1998 to regulate procedures and criteria as contemplated in Chapter 5 of the Act for the submission, processing, consideration and decision of applications for environmental authorization of activities and for matters pertaining thereto, and including: 1. List of activities and competent authorities identified in terms of Sections 24 and 24D of the NEMA, 1998: list 1 related to activities identified in terms of Section 24 (2) (a) and (d) of the Act, which may not commence without environmental authorization from the competent authority and in respect of which the investigation, assessment and communication of potential impacts of activities must follow the procedure as described in Regulations 22 to 26 of the EIA Regulations 2006, and 2. List of activities and competent authorities identified in terms of Sections 24 and 24D of the NEMA, 1998: list 2 related to activities identified in terms of Section 24 (2) (a) and (d) of the Act, 1 Partially amended by the 2004 AQA. 2 The Equivalence analysis was based on the 2006 EIA Regulations for the purpose of EA as these regulations describe the current state of the country system. The two EIAs for the two proposed power plants to be financed out of the proposed ESKOM Investment Project were processed under the 1997 Regulations which set forth procedures under which an applicant is required to undertake scoping and conduct an EIA for an activity subject to Section 21 (Schedule 1) of the ECA. However, the two EIAs and the related RODs refer also to NEMA (Section 2). The principles and processes used for the preparation and review of the two EIAs are consistent with the NEMA Environmental Impact Regulations 2006 including but not limited to requirement under Section 34 on EMPs. The NEMA and its implementing regulations have replaced progressively the Environmental Conservation Act (ECA) 73 of 1989, including: (i) Government Notice. R. 1182 concerning the identification under Section 21 of the ECA of activities that may have a substantial detrimental effect on the environment, published in Government Gazette No.18261, Pretoria, 5 September 1997, and Amended by GN R 1355 of 1997-10-17, GN R 448 of 1998-03-27and GN R 670 of 2002-05-10, and (ii) Government Notice. R. 1183 concerning regulations regarding activities identified under Section 21 (1) of the ECA, published in Government Gazette No. 8261, Pretoria, 5 September 1997 and amended by GN R 1645 of 1998-12-11 and GN R 672 of 2002-05-10. 112 which may not commence without environmental authorization from the competent authority and in respect of which the investigation, assessment and communication of potential impacts of activities must follow the procedure as described in Regulations 27 to 36 of the EIA Regulations III- Physical Cultural Resources a. Constitution of the Republic of South Africa, 1996 Section 24 (Environment) and Section 31 (Cultural, Religious and Linguistic Communities); b. The National Environmental Management Act; c. National Heritage Resources Act (NHRA) 25 of 1999; IV- Involuntary Resettlement a. Constitution of the Republic of South Africa, 1996, Section 25 (property) b. Environmental Conservation Act (ECA), as amended to date c. National Heritage Resources Act (NHRA) d. Housing Act, 107 of 1997, e. Extension of Security of Tenure Act (ESTA), 62 of 1997 f. Land and Assistance Act, 126 of 1993 g. Land Reform (Labor Tenants) Act 30 of 1998, h. Restitution of Land Rights Act 22 of 1994, V- Natural Habitats a. National Environmental Management Act: Protected Areas Act, Act 57 of 2003 as amended to date, b. National Environmental Management: Biodiversity Act, Act 10 of 2004 VI- International Environmental Treaties, Conventions and Agreements to Which South Africa is a Party3 a. Convention on Biological Diversity b. Convention on World natural and Cultural Heritage c. United Nations Framework Convention on Climate Change d. Convention to Combat Drought and Desertification, Especially in Africa e. Convention on International Trade in Endangered Species (CITES) f. Convention on Wetlands of International Importance, Especially as Waterfowl Habitats 3 South Africa`s Constitution has a Sub-Chapter 14 on International Law which has a Section 231 on International Agreements. In addition, the National Environmental Management Act (NEMA), Act 107 of 1998 as amended to date, (notably Section 25) makes provisions for the treatment of International Obligations and Agreements related to Environmental Law. The list provided refer to those conventions and agreements that are useful for the purpose of the proposed GEF Project and the preparation of the Report on the Use of Country System (UCS) 113 ANNEX 4 COMPARISON OF SOUTH AFRICAN ENVIRONMENTAL REQUIREMENTS FOR THERMAL POWER PLANTS AND THE WORLD BANK GROUP ENVIRONMENTAL GUIDELINES FOR THERMAL POWER PLANTS 1. In addition to the EIA requirements and associated authorizations that are discussed in the main text of this report, the major South African regulatory requirements that address ambient air quality and emissions from thermal power plants derive from the authority of the National Environmental Management ACT of 1998 as amended (NEMA); of which the most significant amendment is the 2004 NEMA Air Quality Act (AQA), which is progressively replacing the Atmospheric Pollution Prevention Act of 1965 (APPA). 1 Some of the regulations promulgated under AQA came into force in 2005; others are still in progress. 2. This annex focuses on those aspects of the South African legal system that correspond to the guidelines for control of air emissions as found in the World Bank Group`s Pollution Prevention and Abatement Handbook (PPAH), which was issued in 1998. The 1998 PPAH contained an environmental, health, and safety guideline for new thermal power plants (Thermal Power: Guidelines for New Plants), as well as one for existing plants (Thermal Power: Rehabilitation of Existing Plants); these included recommended emissions levels as well as a brief discussion of ambient air quality. In April 2007, the PPAH was updated with a new set of guidelines; one of which was a General Environmental Health and Safety Guideline, which included a discussion of and recommendations for ambient air quality. In December 2008, the PPAH was further updated with a new Environmental Health and Safety Guideline (EHSG) for Thermal Power Plants. The December 2008 EHSG for Thermal Power Plants states: The EHS Guidelines contain the performance levels and measures that are generally considered to be achievable in new facilities by existing technology at reasonable costs. Application of the EHS Guidelines to existing facilities may involve the establishment of site-specific targets, based on environmental assessments and/or environmental audits as appropriate, with an appropriate timetable for achieving them. 3. The EIRs for both Medupi and Kusile were prepared and approved, and construction began, at a time when revised South African regulations were still under discussion and prior to the issuance by the Bank of the December 2008 EHSG with new recommended emissions levels for new thermal power plants. The EIRs were properly prepared and approved in accordance with the South African regulations in effect at the time, but in order to fully assess equivalence and acceptance with respect to OP 4.00 Table A1, the SDR will review in this annex how the evolution of the air quality regulations in South Africa during this critical period 2 compared to the concurrent change in guidelines by the WBG. 1 Fourie, Melissa. Enforcement of air quality legislation in South Africa ­ October 2008, An overview prepared for the United Nations Environment Programme Eastern Africa Workshop on Better Air Quality in Cities on 21-23 October 2008, Evolve Consulting Pty Ltd. 2 October 2005 to March 2008, the time from when the Environmental Scoping Report was issued for the Medupi project to the issuance of the final ROD for the Kusile project. 114 Ambient Air Quality 4. Among other things, the AQA (Chapter 4) issued by South Africa in 2004 outlines air quality management measures of particular relevance to the electrical generation and transmission sector, including: (i) the declaration of Priority Areas, where ambient air quality standards are being or may be exceeded; (ii) list of activities that result in atmospheric emissions which have or may have a significant detrimental effect on the environment; (iii) declaration of Controlled Emitters and Controlled Fuels; (iv) control measures such as implementation of a Pollution Prevention Plan or Atmospheric Impact Report; and (v) requirements for addressing dust, noise and offensive odors. 5. Schedule 2 of the AQA issued in 2005 set forth interim ambient air quality standards that were designed to be closely aligned with World Health Organization (WHO) guidelines and European Union Directives. This reference to WHO and other examples of international good practice is consistent with the approach taken by the Bank to ambient air quality in the 1998 PPAH, and again in the 2007 update (the General EHSG). 6. Section 7 of the AQA required the Minister to establish a National Framework (NF) to achieve the objectives of the AQA by September 11, 2007. Section 7(1) of the AQA requires the NF to include mechanisms and systems and procedures to: Attain compliance with ambient air quality standards; Give effect to the Republic`s obligations in terms of international agreements; and Establish national norms and standards: - to control emissions from point sources; - monitor air quality; - manage air quality planning; and - manage air quality information. 7. Ambient air quality standards were defined as targets for air quality management that establish the permissible amount or concentration of a particular substance in or property of discharges to air based on what a particular receiving environment can tolerate without significant deterioration. The NF aims to be in line with the principles of the WHO, i.e., the primary aim of ambient air quality standards is to provide a uniform basis for the protection of public health and ecosystems from the adverse effects of air pollution, and to eliminate (or reduce to a minimum) exposure to those pollutants that are known or likely to be hazardous. From 2004 through 2007 several air quality networks were established, priority areas were identified, and intergovernmental coordination and cooperation structures were established. On September 11, 2007, the Minister of Environmental Affairs and Tourism issued Notice 1138 of 2007 establishing the NF as required by Section 7(1) of the AQA. 8. Under the authority of NEMA, the NF and the AQA, new South African National Standards (SANS) have been approved by National Committee SANS TC 146, Air Quality.3 3 SANS 1929:2009, Edition 2. 115 Consistent with the NF, air quality objectives have been set based initially on values designed to protect human health. In this connection, seven priority pollutants have been designated,4 of which four (PM10, SO2, NO2 and CO) are directly associated with thermal power plants. Parameters have been set for limit values, alert thresholds, and target values. Margins of tolerance, time frames for achieving compliance with limit values, and limits on permissible frequencies of allowable exceedance have been established. These values are based on assessments, which establish the ambient concentrations of prioritized pollutants and evaluate the technical feasibility, economic viability, and social and political acceptability of implementing measures to reduce and maintain air quality within limit values. Because both the interim South African ambient air quality standards and the and 1998 and 2007 WBG EHSG make reference to the WHO standards, the following table uses WHO values as the common reference point. Comparison of South African Ambient Air Quality Standardsa and World Health Organization Guidelinesb c d WHO Pollutant South Africa 3e Particulates (PM10) 40 ug/Nm 70 ug/Nm3 Particulates (PM2.5) N/A 35 ug/Nm3 5 3 Sulfur Dioxide 50 ug/Nm 125 ug/Nm3 3 Nitrogen oxides 40 ug/Nm 40 ug/Nm3 6 3 Ozone 120 ug/Nm 120 ug/Nm3 a) Per Schedule 2 of the AQA, 2004 as issued by the Department of Environmental Affairs, December 24, 2009. b) As cited in WBG General Environmental, Health and Safety Guideline, Table 1.1.1, 2007. c) Unless otherwise stated, numbers refer to Annual Limit value for the protection of human health (WHO). d) Immediate compliance, except where otherwise noted. The WHO also proposes interim (year 2017) and aspirational targets. e) Compliance date of January 1, 2015 9. As can be seen from the above table, South African standards for ambient air quality for parameters relevant to thermal power plants are consistent with and, in some cases, even more stringent than the standards issued by the World Health Organization. Emissions Standards for Thermal Power Plants 10. Under the authority of the AQA, South Africa issued proposed emissions standards for thermal power plants, most recently on July 24, 2009.7 At the time of this report (February 2010) the final emissions standards were expected to be adopted in very similar form on April 1, 2010, when the relevant sections of the Air Quality Act are schedule to come into full effect. 11. The comparability of the proposed South African and the World Bank standards is limited by the reference to a single 30 day compliance time frame, for monitoring purposes, in 4 Sulfur dioxide (SO2); Nitrogen dioxide (NO2); Carbon Monoxide (CO); Particulate Matter (PM10); Ozone (O3); Lead (Pb); and Benzene (C6H6). 5 24 hour limit. 6 8 hour daily maximum. 7 General Notice 1001, National Environmental Management: Air Quality Act (39/2004): List of Activities which result in atmospheric emission which have or may have a significant detrimental effect on the environment, including health, social conditions, economic conditions, ecological conditions or cultural heritage, Government Gazette, Vol. 529, No. 32434, July 24, 2009. 116 the most recent iteration of the South African standards, whereas World Bank Group EHS Guidelines are expressed as hourly, daily or annual limitations. However, the South African standards take the same general approach to managing emissions as the WBG EHS Guidelines in that both make a distinction between existing and new plants (with a requirement to establish a process by which existing plants are to be considered within a specified period of time for upgrade in performance to comply with the standards for new plants); by providing for the application of good international industry practice (best practicable environmental option, in South African parlance8); by their application of more stringent requirements to plants discharging emissions to an already degraded airshed; and by the use of emission offsets to achieve airshed-wide reductions. 8 NEMA, Section 4(2(b) as further described in the The 2007 National Framework for Air Quality Standards, 5.4.3.2, Ministry of Environmental Affairs and Tourism, September 11, 2007. 117 ANNEX 5. SUMMARY OF STAKEHOLDER CONSULTATIONS, PRETORIA, DECEMBER 9-10, 2009 COMMENTS FROM PARTICIPANTS AND WORLD BANK RESPONSE No. Issue Response Disposition in SDR USE OF COUNTRY SYSTEMS (UCS) AND SDR PROCESS FOR SOUTH AFRICA 1. Will the Safeguards Diagnostic Review [SDR] For South Africa in general, the equivalence analysis This issue has been clarified in have to be done again in projects in the future? conducted for the EISP, with respect to the World Bank the final SDR. safeguard policies on Environmental Assessment, Natural Habitats, Physical Cultural Resources and Involuntary Resettlement, will be the basis of any future application of use of country systems in South Africa, (including thermal power, wind, solar and transmission line projects). For other sectors or for hydroelectric power projects, equivalence analysis and acceptability assessment will be needed only for the policies, regulations and implementing institutions in the sector. The national aspects of the equivalence analysis in this SDR will not need to be repeated unless there have been subsequent legislative or regulatory changes. 2. The UCS approach not only achieves the The Bank appreciates these observations. The advantages of the UCS objectives set forth for it by the World Bank, it approach are described in the also minimizes duplication of effort and final SDR. prevents stakeholder confusion. 3. IFC Performance Standards clearly state that UCS requires that if a borrower`s requirements are less All proposed gap-filling where there is a difference between a country stringent than a corresponding and applicable Bank measures are identified in the and an IFC standard, the more stringent one safeguard requirement, the Bank and the borrower will SDR and agreed gap-filling applies. How is that consistent with UCS? agree on an Action Plan to address the gap between the measures are described in the two requirements. The SDR has found that such gaps final SDR. as may exist between South African and Eskom 118 No. Issue Response Disposition in SDR standards are quite minor and have either already been addressed by Eskom or may be readily addressed during project implementation. Although generally consistent with the safeguard policies of the World Bank, IFC Performance Standards (PS) apply to IFC support of projects as well as projects supported by Equator Banks and other entities that follow IFC PS. IFC PS are not generally used in the Bank`s UCS Pilot Program as they are designed for private sector projects and the Bank provides support primarily to public sector entities. 4. How many of the other UCS projects in the Two energy sector projects have been previously These projects are cited in the portfolio are in the energy sector? supported under UCS: the Fifth Power Systems final SDR. Development Project (POWERGRID) in India and the Energy Development and Access Project in Ghana. 5. What is the oversight role of the World Bank if If UCS is adopted the Bank would supervise Eskom`s This is clarified in the final UCS is approved? implementation of the project as it would for any other SDR. large investment supported by the Bank. The only difference would be that the Bank would use the South African requirements that it has determined to be equivalent and acceptable as the basis for evaluating compliance EQUIVALENCE ANALYSIS: LEGISLATIVE FRAMEWORK 6. The Legislative Framework for Environmental This legislation is referenced in the SDR, which also All relevant legislation is Assessment should be expanded to also include takes into account the laws and regulations that are referenced in the final SDR. the National Environmental Management: Air relevant to the EISP. Quality Act (2004), the National Environmental Management: Waste Act (2008) and any notices or regulations in terms of these 119 No. Issue Response Disposition in SDR Acts as these Acts directly impact on and inform EA processes in South Africa. There are also others, such as the Integrated Coastal Management Act, etc., but as they are not relevant to the EISP, they are not mentioned here. 7. The National Heritage Resources Act of 1999 This Act is cited in the SDR with respect to Physical This issue is clarified in the also places a direct obligation on EA processes. Cultural Resources (PCR). Like South Africa the Bank final SDR. addresses PCR primarily within the context of the EIA process. 8. It should be noted that with the coming into This added information on the Waste Act, its The final SDR references the effect of the Waste Act on 1 July 2009. EIAs effectiveness and application to the EISP, will be Waste Act with respect to for listed waste management activities now referenced in the SDR. DEA licensing of solid waste take place in terms of this Act and inform facilities. Waste Management Licenses. This is relevant to all waste activities such as ash dumps, waste oils, etc., forming part of Eskom`s facilities. 9. Various Acts have implications and in a way Although these laws may be relevant to the EISP, they do These Acts and their govern EIA in South Africa ­ important ones not necessarily correspond to the Objectives and Operational implications are described in relevant to the EISP and missing from the list are: Principles of World Bank OP 4.00, Table A1, which is the the SDR. basis of the Bank`s Equivalence Analysis for the South o Promotion of Administrative Justice Act of 2000 African Environmental Assessment system. For example, it o National Heritage Act of 1999 is unclear how the Development Facilitation Act of 1996, the Mineral and Petroleum Resources Development Act of o The Development Facilitation Act of 1996 2002 or the Promotion of Administrative Justice Act of 2000 o The Mineral and Petroleum Resources correspond to the above cited Objectives and Operational Development Act of 2002. Principles. It is acknowledged in the SDR that the National Heritage Act of 1999 does correspond to the Objectives and Operational Principles of World Bank OP 4.00, Table A1 with respect to Physical Cultural Resources. This Act is referenced in the Equivalence Analysis. 120 No. Issue Response Disposition in SDR EQUIVALENCE ANALYSIS: CUMULATIVE IMPACTS 10. Cumulative impacts must make a distinction In addition to preparing to proactively declare the A summary of the EMF ToRs between what is required of the applicant and Waterberg municipal district as a Priority Air Pollution and process is included in the what is required of the government as part of a Hotspot, The Department of Environmental Affairs final SDR. broader planning strategy. The Waterberg (DEA) has issued a tender for a comprehensive municipal district including the Medupi area is Environmental Management Framework (EMF) for the The Bank is engaged with the first location where the Government of Waterberg area. both the Government of South Africa has proactively declared a Botswana and the Government Framework area, rather than reacting after of South Africa in preparing a airshed degradation has already occurred. regional study of trans- boundary air quality issues. 11. How does cumulative impact analysis, as DEA is in the process of preparing an EMF for the A summary of the EMF ToRs defined by DEA to mean the addition of a Waterberg area that will address impacts on water and process is included in the proposed project to the baseline status quo, resources while taking into account baseline final SDR. allow impacts on water, for example, to be conditions, such as water use by Matimba. taken into account when we know it is already affected by Matimba? 12. There must be a [Strategic Environmental See discussion above on EMF for Waterberg area. The EMF is addressed in the Assessment] SEA for the Waterberg area. final SDR. The Bank is proposing to be a partner with the Government and Eskom in supporting the preparation of the EMF. 13. Did the SDR consider any of the guidelines on Since the EISP is a South African and not a regional Cumulative impacts will be transboundary and cumulative impacts from project, the SDR relies on South African environmental addressed in the EMF, which SADEC? regulatory policy and guidance to address the issues of is described in the final SDR. trans-boundary and cumulative impacts. These policies and guidance are consistent with those of the World 121 No. Issue Response Disposition in SDR Bank as set forth in OP 4.00. Cumulative impacts within the project-affected area in South Africa are addressed in the SDR and will be given additional attention in the EMF. 14. The [National Environmental Management] Act The Bank appreciates this clarification. The final SDR has been (NEMA) requires that cumulative impacts be revised to incorporate this considered both in the EIA process and by clarification. decision-makers. As EIA in South Africa is a permitting instrument and the EIA process results in a permit with conditions which the applicant is responsible for, it is very difficult to include impacts not under the control of the undertaker of the activity. At the same time the authority need to be in a position to decide on the acceptability of impacts not only as a result of the activity of the applicant but of all the activities in the specific area. The relationship between a thermal power station and a coal mine may illustrate this best ­ the thermal power station is dependent on the coal from the mine but has no control over the impacts of the mine. Both the mine and the power station place demands on water, air and land and have impacts on the environment. In order to address this dilemma, South Africa has adopted a two-pronged approach where cumulative impacts or effects are dealt with at both strategic and activity level. On the strategic level the SEA approach is utilized by government to develop environmental management frameworks (EMF) for geographical areas. An EMF basically determines the status quo of the environment (social, biophysical and cultural) of a given geographical 122 No. Issue Response Disposition in SDR area, then through an extensive consultation process determines the desired state of the environment (this could also be termed levels of acceptable or desired change) and lastly through introduction of environmental management control zones for the geographical area in question. An EMF developed for an area takes into consideration all existing and planned activities and then models impacts on air, water, land and also on the social and cultural landscape. This then forms the baseline against which decisions on development applications can be made. It also informs land use management and planning for the area. On the activity level it is required that the applicant assess the contribution of his activity to the baseline (and where the baseline is not known, to determine the baseline) where the baseline includes existing and known future activities. This forms part of the EIA process and is restricted to what is under the control of the applicant and what the applicant can reasonably and lawfully be made responsible for through conditions of an environmental authorization. EQUIVALENCE ANALYSIS: ALTERNATIVES ASSESSMENT 15. Both the 1998 NEMA (as amendment by inter The Bank appreciates the clarification. This issue is further clarified alia Act 62 of 2008) and the EIA Regulations in the final SDR. require the assessment of alternatives in a comparative way. The range of alternatives to be investigated depends on the nature and scope of the activity to be undertaken and the policy framework in place for such activity. 123 No. Issue Response Disposition in SDR The Act and regulations refer to alternatives such as location (both site and lay-out), technology and the no-go alternatives. The Integrated Environmental Management information series published by DEA also contains a booklet specifically on alternatives. 16. In terms of the role of costs in alternatives The Bank appreciates the clarification. This issue is further clarified assessments it should be noted that although in the final SDR. not prescribed through the regulations, where relevant, as is the case for most of Eskom`s infrastructure development projects, the cost implications are demonstrated in the comparative assessment of alternatives and, together with the requirement to demonstrate need and desirability, often plays an important role in decisions on the acceptability of environmental impacts. EQUIVALENCE ANALYSIS: TRANSBOUNDARY IMPACTS 17. An acknowledged area of weakness in the The Bank is working with the governments of South This information is South African and SADC environmental Africa, Botswana and other SADC countries to incorporated into the final assessment system is that there is currently no promote regional approaches to environmental impact SDR. mechanism to facilitate consultation with assessment, in particular with respect to energy projects neighboring countries or for the assessment of having trans-boundary impacts. impacts on our neighbors by activities taking place in South Africa or vice versa. The revival of the SADC environmental protocol will hopefully address this. In the short term however, The Government of South Africa has already agreed to work with Botswana on the 124 No. Issue Response Disposition in SDR regional SEA planned for parts of the Limpopo province and the southern parts of Botswana. It is envisaged that this process will be informed by the EMF mentioned above. EQUIVALENCE ANALYSIS: NATURAL HABITAT OFFSETS 18. In terms of requirements for offsets: South Africa is The Bank appreciates this clarification. This issue is addressed in the a developing country and it must therefore be final SDR. accepted that as the development footprint increases, there will be an unavoidable loss of biodiversity. The biodiversity conservation and protection policies are accordingly more focused on reaching and maintaining targets set for the different biomes and biodiversity types. A biodiversity offset policy is under development. However, in practice and through the EIA process biodiversity offsets are an established mitigation measure enforced through environmental authorizations EQUIVALENCE ANALYSIS: PHYSICAL CULTURAL REOURCES 19. In terms of community participation: The Bank appreciates this clarification. This issue is clarified in the final SDR. In addition to any requirements stemming from the relevant Acts regulating PCR, it must be remembered that the definition for environment in South Africa`s legislation reaches beyond the biophysical environment and includes PCR. The extensive consultation process prescribed through the EIA regulations and NEMA accordingly is relevant to PCR as well. In addition, the National 125 No. Issue Response Disposition in SDR Heritage Resources Act specifically requires that heritage issues must be addressed in the EIA process. 20. In terms of chance finds: The Bank appreciates this clarification. This issue is clarified in the final SDR. In addition to any requirements stemming from the relevant Acts regulating PCR, it must be remembered that the definition for environment in South Africa`s legislation reaches beyond the biophysical environment and includes PCR. In addition, the National Heritage Resources Act specifically requires that heritage issues must be addressed in the EIA process. Accordingly, a standard condition has been included in all environmental authorizations stipulating how chance finds must be dealt with during the construction and operational phases of an activity. ACCEPTABILITY ASESSMENT: DEPARTMENT OF ENVIRONMENT CAPACITY BUIDING AND TRAINING 21. The statistics on DEA[T]`s capacity building The Bank appreciates this update. The issue is clarified in the and training activities are limited to a single final SDR. recent financial year. Various training sessions and other capacity building interventions have taken place since, including a comprehensive Capacity audit and need exercise which resulted in a Capacity Intervention Implementation Plan that is currently being implemented. ACCEPTABILITY ASSESSMENT: EIA PRACTICE IN SOUTH AFRICA 22. It is not correct that EIA has been centralized The Bank appreciates this clarification. This clarification is included 126 No. Issue Response Disposition in SDR through NEMA and is now under DEA in the final SDR. supervision. Environmental Management is a concurrent function where the national department sets the legal framework but provinces are fully autonomous in implementing the function. The National department has no supervisory powers over provinces. Also, this position did not change from the previous (1997) EIA regime. 23. It is not correct that the backlog in DEA The Bank appreciates this clarification. The final SDR has been processing of EIA applications was reduced as revised to reflect this a result of the implementation of the 2006 clarification. Regulations. The elimination of the backlog was due to capacity building and support initiatives of the department whereby financial and technical assistance was given to provinces to assist them with finalizing pending applications. 24. The section of the SDR should be updated to The Bank appreciates this reference. The final SDR incorporates reflect the inputs provided by DEA on the use reference to the EMF approach of Strategic Environmental Assessment and its application to the EISP. through the EMF approach. ACCEPTABILITY ASESSMENT: EIA PROCESS FOR ESKOM INVESTMENT SUPPORT PROJECT 25. The SDR concludes that the EIA process is The EISP does not include any coal mining activities; As coal mining is not part of robust, but there is no mention of coal mining neither the Bank nor Eskom has any control over the the EISP, it is not relevant to anywhere. There is acid mine drainage, environmental impacts of coal mining. In order to the SDR. competition for water, other impacts on water support the increased coal sales to Eskom, Exxaro will quality. add two new coal processing (beneficiation) units to the six already operating at the mine. Because neither 127 No. Issue Response Disposition in SDR Impacts of coal mining have to be addressed; it any mining nor the construction of the new processing will be vast, and the region will lose its water units and associated coal stockyard will occur outside resources. the permitted boundaries of the mine operations, GoSA regulations do not require a full EIA and an environmental authorization from DEA. Instead, the company`s obligation under national environmental legislation is to obtain approval of an amendment to its Environmental Management Program for Grootegeluk from the Limpopo Department of Minerals and Energy (LDME). For this purpose, in 2006 the mine owner prepared an environmental document entitled Amendment to the Grootegeluk Mine Environmental Management Programme Report (EMPR): Matimba Brownfields Expansion Project. Scoping for this report was conducted with stakeholder participation in March 2006, and the draft report was publicly disclosed for stakeholder consultations in July 2006. LDME issued its approval for the amendment to the EMPR in 2007. The Bank has reviewed the report. The broader, regional and strategic impacts of coal mining will be addressed in the EMF (see above). 26. Was there a statistically sound process that led Eskom`s investment program is based on a strategic This issue is outside the scope to the selection of Medupi as an investment? of the SDR, which focuses on review of the power sector at the national level. It is at this point that the Government of South Africa Bank and corresponding South African safeguard policies. examines alternatives, including consideration of cost- benefit analyses, etc. Economic analyses by the Bank However, it will be discussed are included in project preparation and appraisal, butin detail in the Project not as part of the SDR. Appraisal Document (PAD) to be submitted to the Executive Of the projects under development by Eskom, the Directors of the World Bank Medupi plant provides the most immediate prospect for and subsequently disclosed to 128 No. Issue Response Disposition in SDR helping to address South Africa`s critical electricity the public. supply needs. 27. How can the World Bank be financing coal- The Bank has adopted a Strategic Framework for This issue is outside the scope fired plants in view of climate change? Development and Climate Change which includes the of the SDR but will be criteria under which the Bank will support coal fueled thoroughly documented in the power plants. PAD. [http://beta.worldbank.org/overview/strategic- framework-development-and-climate-change] . Because the SDR focuses on environmental and social safeguard policies, climate change impacts are addressed in other Bank documentation related to the EISP, such as the Project Information Document, which is available on the Bank`s website, and other published information about the EISP. 28. How can the World Bank be financing 5,000 See other responses above and below on this point. This issue is outside the scope MW of new generating capacity in South Furthermore the EISP, with its renewable energy and of the SDR but will be Africa, with only 4 percent of it in renewable? energy efficiency components, is consistent with the thoroughly documented in the This is not low carbon growth. South Africa energy and climate change strategies of South Africa PAD. is one of the most favorable places in Africa which promote a transition to renewable energy for wind and solar power. sources while acknowledging that in the short to medium term, South Africa has no alternative to reliance on energy efficient use of coal as the primary fuel for baseload electrical power generation. 29. Solar power projects with heat storage can be The Bank is not aware of any operational solar thermal This issue is outside the scope used for base load, and there are proven projects that can provide baseload capacity at anywhere of the SDR but will be technologies (e.g., 345-MW plant near Los near the 4,800 MW to be generated by Medupi. thoroughly documented in the Angeles, CA). They require less land and have PAD. fewer impacts than thermal plants of comparable capacity according to 1960s study 129 No. Issue Response Disposition in SDR done for DEA. 30. South Africa is in Copenhagen committing to South Africa has stated its position with regard to This issue is outside the scope reduce carbon emissions and is getting funding reductions in carbon emissions in the context of the of the SDR but will be from the Bank for a large coal-fired plant. This Copenhagen Agreement. thoroughly documented in the does not make sense. PAD. 31. What about CO2 emissions; shouldn`t the The Bank is working with many countries including This issue is outside the scope amount and mitigation of it be considered? South Africa and Botswana to diversify energy sources of the SDR but will be and reduce carbon footprint. The inclusion of wind and thoroughly documented in the solar in EISP is an example. PAD. The Bank OP for EA was developed before climate change became a central issue, but the EA for Medupi does include estimates of carbon emissions. The choice of supercritical boiler technology is motivated in part by the desire to increase plant efficiency and reduce C02 emissions in relation to electricity output. In addition, South Africa is designing new coal fired power plants to be adaptable to carbon capture and storage opportunities as soon as this mitigation technology becomes commercially feasible. ACCEPTABILITY ASSESSMENT: WATER SUPPLY AND QUALITY IMPACTS OF EISP 32. How does South Africa achieve its macro- Water supply is as much a macro-level as a micro-level The issue of water supply is objectives for energy without neglecting issue both for energy supply and basic human needs in addressed in the final SDR and micro-concerns? Water should have been a water-scare environment. As part of the National will be thoroughly addressed addressed much earlier in the EIA process for Water Resource Strategy in 2004, the DWA identified in the EMF. The MCWAP is power. the Crocodile (West) River Basin as of paramount subject to the EIA process in importance in developing a more specific water South Africa, and its progress management strategy. The first step in developing a is also addressed in the final Catchment Management Strategy was the preparation SDR. 130 No. Issue Response Disposition in SDR in 2004 of an Internal Strategic Perspective for the Limpopo Water Management Area and an Internal Strategic Perspective for the Crocodile River (West) and Marico Water Management Area. Both of these strategies were based on a 25-year planning horizon, and the core proposal to meeting the need was the Mokolo and Crocodile Water Augmentation Project (MCWAP), consisting of four phases of development. A second step in developing a Catchment Management Strategy was preparation by DWA of the Water Resource Reconciliation Strategy in 2008 for the Crocodile (West) River Basin. Medupi will require additional makeup water from Phases 1 and 2 of the four-phase MCWAP that is being undertaken by the Department of Water Affairs. 33. Why is water not considered in the SDR, since Water is considered in the SDR with respect to the The issue of water supply is it has such close connection with coal mining? supply necessary to enable the Medupi plant to operate addressed in the final SDR and at capacity and to support the operation of wet-Flue will be thoroughly addressed Gas Desulfurization (FGD) Technology. It is also in the EMF. considered with respect to Eskom`s policy of zero effluent discharge and the protection of ground and surface water from potential ash pond contamination. It is not considered with respect to coal mining because coal mining is not part of the EISP. 34. Provision of water for FGD needs to be The SDR considers adequate provision of water for The issue of water supply is considered. Country needs to take the lead in FGD as a significant issue. The Bank agrees that water addressed in the final SDR and SEA for water use and mining including social supply and demand needs to be addressed in a broader, will be thoroughly addressed impacts. multi-user context. in the EMF. 35. One international bank pulled out of the The Bank is not aware of any other international bank`s The availability of water 131 No. Issue Response Disposition in SDR Medupi project because of the lack of FGD. decision regarding the Medupi plant. In any case, the sufficient to operate the wet- The World Bank`s position that it is acceptable Bank has proposed, per the SDR and in other public FGD units is addressed in the for FGD to come later when water is available statements, that Bank support for Medupi will be made final SDR. does not make sense; there is no water! conditional on the installation of FGD as soon as sufficient water is available and it is technically and operationally feasible to install the FGD units. The supply of incremental water sufficient to operate the FGD units is closely related to the provision of water adequate for medium-to-long term operation at Medupi at its design capacity. It is, therefore, highly unlikely that Medupi could operate for long at full capacity (with uncontrolled SO2 emissions) without also having sufficient water to operate the wet-FGD units. Were that unlikely circumstance to occur, Eskom would be required by its environmental authorization (i.e., the Record of Decision on its EIA Report, to consider alternative means of SO2 emissions reduction, including use of dry FGD technology that is less water intensive. 36. According to farmers in the area, surplus water The proximate source of incremental water to be This issue is clarified in the that would presumably become available from harvested from the Crocodile River catchment is final SDR. the Crocodile River may not be available in provided from surplus effluent return flows from the sufficient quantities during periods from May northern regions of Gauteng province, for which the to October. For example, three years ago, the ultimate source is the Vaal River Catchment. The availability of water was limited such that local surplus effluent is in fact a growing resource due to the farmers were limited to half their normal quota rapid urban growth of the metropolitan areas of for irrigation. Gauteng, particularly Johannesburg and Pretoria. 37. Utilizing available water for power or Water supply and allocation issues will be addressed in The ToR for the EMF is industrial purposes negatively affects the EMF for the Waterberg Municipal District. described in the final SDR agriculture. 132 No. Issue Response Disposition in SDR 38. Farmers in Botswana that rely on the Limpopo Since the EISP is a South African and not a regional Please see response to River have not been considered in the plans to project, the SDR relies on South African environmental comment 17, above. divert water from the Limpopo to support the regulatory policy and guidance to address the issues of Medupi project. transboundary and cumulative impacts. These policies and guidance are consistent with those of the World Bank as set forth in OP 4.00. ACCEPTABILITY ASSESSMENT: COMPLIANCE, ENFORCEMENT AND GRIEVANCE MECHANISMS 39. South Africa`s system is world class and The Environmental Monitoring Inspectorate (EMI) is The evolution and role of the Eskom`s practices are good, but there is no playing an increasingly important and effective role in EMI is described in the final enforcement, there is lack of staff and skills, monitoring and enforcing compliance with South SDR. and an environmental court is needed. African environmental laws, regulations and authorization conditions. 40. Implementation of environmental legislation DEA is of the view that while there are sectors with large This issue is thoroughly leaves a lot to be desired in South Africa. numbers of transgressions (either by not applying for addressed in the final SDR. Enforcement is a long way behind. The SDR authorization or by non-compliance with conditions set in an should deal much more with this issue. In authorization) there are others that are largely compliant. Typically small scale mining, property development and general, there is intense focus on EA, weak agriculture falls in this category of non-sectors, but the attention to implementation; good planning is energy sector falls in the latter category. not leading to good outcomes. DEA acknowledges that there is room for improvement but is also of the view that good strides have been made in this regard and the picture is not nearly as bleak as some would like to paint it. DEA considers that the steep penalties for transgressions provided for in law, the strong line taken by the Courts regarding environmental transgressions and the high visibility and success of the Environmental Management Inspectorate (EMI also known as the green scorpions) are aiding increased compliance with the legislation and conditions of authorization. 133 No. Issue Response Disposition in SDR 41. The UCS process is supported, but it relies too Eskom compliance with the terms of its authorizations The SDR discusses the much on voluntary action by Eskom. National is not voluntary; it is subject to sanctions and penalties requirements that have been policies should be reformed where necessary, for non-compliance. Eskom is required to demonstrate put in place regarding as in the case of expropriation. compliance and the DEA is authorized to verify that independent monitoring of compliance. It is recognized that South Africa does not performance by appointed have a strong record of enforcement for non- Environmental Control compliance, but DEA and the Bank find that Eskom`s Officers during construction as record of compliance to date indicates that its risk of well as operation. The broader non-compliance is low. issue of enforcement is also addressed in the final SDR. 42. Landowners affected by Medupi worked Decisions regarding transmission line routing take into This issue is addressed the within the EIA process, and thought they had account all recommendations made during the EIA final SDR. reached a reasonable compromise on T-line process. However, such decisions are also subject to and substation locations. However, they were technical requirements reflecting safety and energy concerned to note in the Record of Decision on security that may not be included within the scope of the T-Line EIAs that some of the the EIA. As a result, alternatives identified as in the recommendations in the EIA were ignored. EIA may not always be technically feasible. They suspect some sort of influence and have appealed the decision in the [Record of It is the Bank`s understanding that the landowners` Decision] (ROD). concerns and recommendations for a dedicated corridor for the high voltage transmission lines could not be implemented because of legal codes regarding installation of transmission line systems. 43. There is a community in Waterberg area that The Bank acknowledges that such circumstances may This issue is outside the scope receives water only one day per week, but a occur but has determined that the EIA process for of the SDR. developer just received a permit to use 4 M l/d Medupi was not compromised by consultant bias or to irrigate two golf courses just 10 km away. undue influence. Clearly EIA system is robust, but decisions based on EIA are not being made well. Consultants may be writing what serves their 134 No. Issue Response Disposition in SDR clients` interests. 44. Does the Bank rely entirely on country The Bank works with borrowers and other clients as The issues of compliance and procedures, or does it expect separate reporting partners in compliance. Eskom and the South African enforcement are thoroughly from Eskom? government have complementary roles to play in the addressed in the final SDR. project. However, Eskom is the borrower and therefore, the Bank will rely on Eskom in the first instance to provide the requisite reporting on compliance with South African requirements. However, the Bank may consult the Government with respect to compliance issues. 45. There is not much in the SDR about grievance The SDR is based on World Bank safeguard The Equator Principles are mechanisms. What we do in South Africa does requirements and not the Equator Principles. outside the scope of the SDR. not fully meet Equator Principles. ACCEPTABILITY ASSESSMENT: OTHER ISSUES 46. NEMA is sound on paper, but ROD focuses on We agree that DEA interpreted its mandate in the ROD Eskom`s corporate technical issues. Social impacts covered in the to focus on issues under its direct authority rather than commitment to go beyond EIA were not addressed in the ROD. Lephalale the broader set of issues addressed in the ROD. Other compliance as part of its municipality`s physical and human agencies, such as the Ministry of Land Affairs, have corporate social responsibility infrastructure is being overwhelmed by influx the mandate to regulate social impacts and provincial is discussed in the SDR. of contractors and their labor forces. No onus and municipal authorities have the mandate to regulate Although the ROD does not on Eskom in ROD to manage these impacts. indirect impacts from Eskom activities. However, require Eskom to address these Eskom does recognize that it has a social responsibility unexpected impacts, Eskom`s to assist local communities to address such indirect response is considered as part impacts and is doing so through its community of the SDR`s acceptability outreach and development activities. analysis. Eskom has noted that additional impacts not anticipated by the EIR for Medupi have emerged, and is working with the Lephalale municipality to address 135 No. Issue Response Disposition in SDR those impacts. 47. Eskom is following a strategy based on ISO, This may be the case. However, Eskom has no leverage This issue is outside the scope but this does not cover Eskom`s suppliers, over the environmental management practices of its of the SDR. especially mining companies. No onus on suppliers. There are no provisions in South African law Eskom in ROD to manage impacts of that would require Eskom to manage the impacts of its suppliers. suppliers. The Bank`s environmental and social safeguard policies also do not contain in their present form this type of requirement. 48. The SDR should be updated to reflect the The Bank appreciates this updated information. The final SDR references the permitting requirements stemming from the new permitting requirements National Environmental Management Waste with reference to solid waste. Act of 2008 which repealed the specified provisions of the Environmental Conservation Act. Some of the [solid] waste management facilities of Medupi have already been subjected to this licensing process. 49. Special studies, as for cultural resources, are a Consultation with all stakeholders is part of the EIA The distinct roles of covered in ToRs to which stakeholders don`t process from scoping to finalization of the EIR. The stakeholder input and have much input. Specialists on PCR are assessment of the significance of PCR is an integral specialized studies are needed. part of the EIA, as reflected in the EIA documentation described in the SDR. for EISP components. Special studies of PCR undertaken as necessary as part of the EIA process are supplementary to stakeholder input. 50. Waterberg Biosphere has been identified by The Waterberg Biosphere Reserve is located 40 This point is clarified in the UNESCO. It is the second largest wildlife area kilometers from the Medupi plant and is separated by a final SDR. in South Africa. Power development is a great mountain range. Therefore it is not within the airshed risk for it, and there is already a water crisis affected by the project or in any other way within the there. Mining is the main source of the project`s area of influence ­direct or indirect. impacts. Limpopo is among the waterways 136 No. Issue Response Disposition in SDR worst affected. 51. Lephalale municipality has insufficient The ROD is limited to issues that are within the This issue is noted in the final financial and human resources with which to regulatory authority of DEA. It is the responsibility of SDR. respond to the incremental impacts of the the provincial and municipal authorities to address the Medupi project on the provision of impacts subject to regulation at the local level. Eskom accommodation, drinking water supply, has agreed to provide financial and technical support to electricity distribution, sewerage treatment and the Lephalale municipality in addressing these road maintenance. These impacts are not incremental impacts, including assisting the addressed in the ROD. municipality to upgrade its sewerage facilities. PROCESS FOR STAKEHOLDER CONSULTATION ON SDR 52. This is an appropriate forum, especially to have The team agreed that follow-up meetings would be The Bank has continued to an opportunity to talk with one of the financing useful. receive comments on the SDR institutions. However, January 10 is too short through January 31, 2010 and notice for written comments. Follow-up has taken all comments meetings would be good because of the limited received by that date into time for this one. consideration in this matrix. 137 REFERENCES Craigie, Frances, Phil Snijman and Melissa Fourie. 2009. Environmental Compliance and Enforcement Institutions. In Paterson, Alexander and Louis J. Kotzé. Eds. Environmental Compliance and Enforcement in South Africa: Legal Perspectives, Cape Town: JUTA Law. CSIR. 1997. A Protocol for Strategic Environmental Assessment. Draft Discussion Document. CSIR. 1996. Strategic Environmental Assessment (SEA) A Primer. CSIR, Stellenbosch. CSIR/DEAT. 1998. 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Biodiversity Support Programme UNDP/UNEP/GEF. von Blottnitz, H., C. Fedorsky and W. Bray. 2009. Air Quality. In H.A. Strydom and N.D. King. Eds. Fuggle and Rabie's Environmental Management in South Africa. Second Edition. p. 597. World Bank. 2007. Environmental Health and Safety Guidelines for Thermal Power Plants. International Finance Corporation. http://www.ifc.org/ifcext/sustainability.nsf/AttachmentsByTitle/gui_EHSGuidelines2007_Th ermalPower/$FILE/FINAL_Thermal+Power.pdf http://deltaenviro.org.za/resources/envirofacts/management.html www.eskom.co.za/eia www.saaqis.org.za/filedownload.aspx?fileid=188 142 SOUTH AFRICA 20°E 22°E 24°E 26°E 28°E 30°E 32°E 34°E Z IMB A B WE ESKOM INVESTMENT To 22°S Mazunga To SUPPORT PROJECT (EISP) Nuanetsi 22°S PROJECT: To SITES Serowe M O Z A M B IQ U E TRANSMISSION LINE CORRIDORS B O T S WA N A po Lephalale LIMPOPO po Local Municipality Li m COAL TRANSPORTION RAILWAY Medupi Power Plant NATIONAL ENERGY EFFICIENCY 24°S Waterberg Polokwane ts IMPROVEMENTS (NATIONWIDE) To Biosphere Olifan (Pietersburg) ENVIRONMENTAL MANAGEMENT Mochudi 24°S WATERBERG FRAMEWORK BY NATIONAL GOVERNMENT GAUTENG DISTRICT COUNCIL T r a n s v a a l CITIES AND TOWNS PROVINCE CAPITALS To Kanye NATIONAL CAPITAL Nelspruit Rustenburg PRETORIA RIVERS MPUMALANGA To Mmabatho Middleburg Maputo MAIN ROADS 26°S Johannesburg RAILROADS Springs Bethel To 26°S NORTH WEST Ermelo Mbabane PROVINCE BOUNDARIES Reitfontein Vereeniging SWAZILAND SW INTERNATIONAL BOUNDARIES Standerton Witdraal Hotazel al To Candidate rts Va For detail, see IBRD 37482. Siteki Ha 14°E 16°E 18°E Concentrated Kroonstad Newcastle To Karasburg Solar Power Site Sishen Vryheid NAMIBIA Bethlehem Coal Transportation Railway To Upington Ulundi 28°S 28°S Karasburg Harrismith Kimberley F R E E S TAT E Ladysmith Keimoes K WA Z U L U - Richards Bay IN DIA N Bloemfontein Orange Kenhardt N ATA L Port Nollth To LESOTHO Ulundi O CEA N g g Prieska Maseru (Pietermaritzburg) r r O Mafadi Springbok ra e (3451 m) on o ng Durban e NORTHERN CAPE ed b b s Cal 30°S G ro a t 30°S n n Britsown De Aar e V l o er Aiwal North k Kokstad Port Shepstone a Bitterfontein r Calvinia Middleburg D Victoria West Umtata Wind Farm Queenstown Vanrhynsdorp Beaufort EASTERN CAPE West Graaff- 32°S 32°S Reinet ATLA N TIC Bisho o Saldanha ro SOUTH WESTERN CAPE Kar O CEA N Grea t AFRICA Worcester Oudtshoor Uitenhage Cape Town Paarl Swellendam George Port Elizabeth Mosselbaai 0 100 200 Kilometers 34°S 34°S This map was produced by the Map Design Unit of The World Bank. Cape of The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, Good Hope 0 100 200 Miles any judgment on the legal status of any territory, or any endorsement or Cape Agulhas acceptance of such boundaries. 14°E 16°E 18°E 20°E 22°E 24°E 26°E 28°E 30°E 32°E 34°E 36°E JANUARY 2010 IBRD 37164R R. IBRDs 37482 28°00' 28°30' 29°00' 29°30' Eland to Stoffberg SOUTH AFRICA Pretoria Silverton Machadodorp ESKOM INVESTMENT Wilge R. Belfast Bronkhorstspruit Pie Middelburg to Machadodorp SUPPORT PROJECT (EISP) naa rs R i R. . MAJUBA RAIL LINE at Witbank PROJECT 3 kV DC RAILWAY, Uitkyk ERMELO TO MAJUBA Klein-Kom 3 kV DC RAILWAYS Komati R. 25 kV AC RAILWAYS Witbank Lake 26°00' New Largo DIESEL RAILWAYS Bapsfontein Bronk GAUTENG Klein-O R. DERELICT RAILWAYS (CLOSED/REMOVED) horst fie Arbor 26°00' R. lifants Kof Randburg Ogies PRIVATE SIDINGS R. Seekoei R. Rosebank Koornfontein THERMAL POWER PLANTS Wilge Delmas R. Kendal CarolinaCOAL MINES WHICH WILL SUPPLY MAJUBA Groengoeverden Johannesburg Komati 30°00' to Carolina 30°30' Benoni Hendrina Olifan ts Leeuwpan R. Steenkool R. Elders i R. uM pul Springs uzi Alberton Kriel Komat R. Matta rd R. Dunnottar Leandra MPUMALANGA Chrissiesmeer Breyten Tricha Kliprivier Eilandsmeer Nigel Lake Banagher Riet R. Bethal Davel 26°30' Heidelbe H id lb Heidelberg Trichardt W.B. Douglas Res. . R . Secunda Me Mey t Meyerton kR rand tu R. sbo bos Usu 26°30' . er Ble k Ermelo Sui l R. . Sasol Vaal R S OU T Hand R Ermelo Yard AFRICA r bos Waterva ker Sui Balfour Jericho Res. . sR an Vaal R . Greylingstad esm Bo 28°00' 28°30' to Bethlehem Morgenzon ZIM. Tutuka Over Vaal Tunnel BOTSWANA Deneysville LIMPOPO MOZ. Klein -Vaa isi R. l R. Vaal R. emp R. al NAMIBIA Ngw A A r va Area of main map te NG Wa GAUTENG PRETORIA to Piet ALA Oranjeville Retief NORTH WEST SWA. MINOR PROVINCIAL AND LOCAL ROADS UM Standerton Groot MP 27°00' PRIMARY AND MAJOR PROVINCIAL ROADS Lake SOUTH AFRICA Riet R. Vaal R. Villiers Vaal R. NATIONAL ROADS FREE STATE 27°00' KWAZULU- Amersfoort NATAL PROVINCE BOUNDARIES Vaal Lake LESOTHO NORTHERN CAPE CITIES AND TOWNS Kli pR . Majuba NATIONAL CAPITAL Heyshope Res. . lp R EASTERN CAPE . ATLANTIC ai R Sku ega OCEAN R. F R E E S TAT E Ass Klip IN DIA N This map was produced by the Map Design Unit of The World Bank. WESTERN CAPE The boundaries, colors, denominations and any other information shown on O 0 10 20 30 40 50 Heilbron FrankfortC EA N Palmford this map do not imply, on the part of The World Bank Group, any judgment Sand R. on the legal status of any territory, or any endorsement or acceptance of KILOMETERS to Vrede 29°30' to Volksrust 30°00' such boundaries. 30°30' JANUARY 2010 IBRD 37658 25º 26º 27º 28º 29º 30º 31º ZIMBABWE BOTSWANA AND Serowe CENTRAL Limpopo SOUTH AFRICA Morupule A po Limpo COAL FIELDS Morupule B Soutpansberg Lotsane AND POWER PLANTS Soutpansberg 23º 23º B O T S W A N A COAL-FIRED POWER PLANTS COAL FIELDS* Mmamabula ADMINISTRATIVE CAPITALS Mmamabula Waterberg NORTHERN NATIONAL CAPITALS Matimba PROVINCE MAIN ROADS KWENENG Medupi RAILROADS 24º KGATLENG Polokwane ADMINISTRATIVE BOUNDARIES (Pietersburg) Mmamantswe INTERNATIONAL BOUNDARIES 24º License Area Molepolole Mochudi S O U T H A F R I C A *Sources: Botswana's coal fields: "Geological Map of the Republic of Botswana, 1984, Geological Survey Department"; "Arkose, carbonaceous mudstone, coal, shale and tillite" category. South Africa's coal fields: "Mineral Map of the Republic of South Africa, 1976, The Government Printer, Pretoria"; "Coal fields" category. GABORONE SOUTHEAST BOTSWANA Kanye D.R. OF CONGO Springbok Flats TANZANIA 25º SOUTH AFRICA 25º Lobatse ANGOLA SOUTHERN MAL. ZAMBIA TSHWANE Nelspruit ZIMBABWE po Molo (PRETORIA) BOTSWANA NAMIBIA MOZ. Mabatho MPUMALANGA Gaborone (Mafikeng) NORTH WEST 26º Pretoria GAUTENG Kusile Area of Main Map SWAZILAND 0 25 50 75 100 150 200 26º Johannesburg KILOMETERS SOUTH LESOTHO (Approximate Scale) Witbank AFRICA This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. SWAZILAND 26º 27º 28º 29º 30º 31º MARCH 2010