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Oman

Special Economic Zone at Duqm

$2,000 million
Infrastructure
ESRS
Proposed
oman

Project Facts

Project Facts
Guarantee Holder
International Lender to be Determined
Investor Country
To be determined
Environmental Category
A
Date SPG Disclosed
February 21, 2019
Projected Board Date
April 22, 2019
Project Type
Non-SIP

This Environmental and Social Review Summary (ESRS) is prepared by MIGA staff and disclosed prior to the date on which MIGA’s Board of Directors considers the proposed issuance of a Contract of Guarantee. Its purpose is to enhance the transparency of MIGA’s activities. This document should not be construed as presuming the outcome of the decision by MIGA’s Board of Directors. Board dates are estimates only.

Any documentation that is attached to this ESRS has been prepared by the project sponsor, and authorization has been given for public release. MIGA has reviewed the attached documentation as provided by the applicant, and considers it of adequate quality to be released to the public, but does not endorse the content.

Country:                                        Oman

Sector:                                           Infrastructure

Project Enterprise:                     Special Economic Zone Authority at Duqm (SEZAD)

Environmental Category:       A

Date ESRS Disclosed:                February 21, 2019

Status:                                           Due Diligence

MIGA has been asked to consider an application by the Ministry of Finance of the Sultanate of Oman and Standard Chartered Bank (acting as Global Coordinator) to cover the commercial debt provided to Duqm Special Economic Zone in the Sultanate of Oman. MIGA coverage has been sought to cover the Non-Honoring of Sovereign Financial Obligations (“NHSFO”) Guarantees on a debt financing structure of up to US$2.0 billion (including principal, interest, MIGA premium and other financing costs) for a tenor of up to 15 years. Further details about MIGA cover is in the Summary of Proposed Guarantee (SPG) published on MIGA website on 02/21/2019.

The Special Economic Zone (SEZ) at Duqm was established under Royal Decree (RD) Number 119/2011 which superseded RD 85/2006 establishing the area as a public good.  The SEZ stretches 2,000 square kilometers (km2) with a 90 km long beach front, which makes it the biggest in the Middle East region. The SEZ is located in Al Wusta Governorate on the Omani coast, approximately 550 km south of Muscat, the capital of Oman. The SEZ includes functional zones: a deep-water port (Duqm Port), a dry dock, a regional airport, a heavy/medium and light industries complex (including a refinery and petrochemical complex), a residential and commercial area, a tourism area, a logistic services area and an industrial fisheries complex with a port. These zones are to be connected by a multimodal transport system that will also connect the SEZ with nearby regions. Around 45% of SEZ (about 900 km2) is being currently developed, with the remainder of the area to be developed in future phases. The Port entered into an early operations phase in 2012 and currently remains in this stage with a fully functional commercial quay capable of handling heavy lift project cargo, general cargo, dry bulk and containers. In addition, the Port offers a wide range of services such as the availability of marine pollution prevention (MARPOL at dry dock) facilities, fresh water supply, fuel bunkering and domestic waste collection & treatment facilities. Being closely located to the major oil & gas and mining projects in the country, Duqm is seeking to increase the activity level at the Port exponentially in the years to come.

The development, management and regulation of the SEZ is overseen by the Special Economic Zone Authority at Duqm (SEZAD), a statutory institution empowered under the Royal Decree (RD) No. 119/2011 with regulatory, administrative, fiscal and economic responsibilities within the Duqm The SEZ is managed by a Chairman who holds the ranks of a Minister. RD 79/2013 grants SEZAD the regulation rights of the SEZ, registration of the projects as per Commercial Registration Law, licensing of tourist projects, and issuance of environmental permits as well as taking the necessary environmental measures to implement the environment protection and anti-pollution law. The RD 79/2013 further stipulates that labor office will be established at SEZ by a Ministerial Decision (MD) issued by the Ministry of Manpower.

SEZAD has established its development/commercial arm the Oman Company for the Development of Special Economic Zone at Al-Duqm (Tatweer) in 2013. Tatweer is responsible for providing project management services for all SEZAD funded projects in the SEZ, particularly strategic infrastructure projects that support investments within SEZ. Tatweer assists with land preparation, monitors contractors’ progress during the construction stage, and ensures all necessary infrastructure services for new facilities, such as water, electricity, gas, telecommunications, roads and transportation. Once the construction is completed, Tatweer acts as facilities/asset manager within the special economic zone, and at that stage is responsible for facilities’ operations and Health, Safety and Environment (HSE) oversight.

Within the SEZ, the development of Duqm Port is being financed by the Government of the Sultanate of Oman (GoO) from the Sultanate budget, and in conjunction with US$265 million loan from the Asian Infrastructure Investment Bank (“AIIB”) specifically for the construction of infrastructure components related to the commercial terminal at the Port of Duqm (PoD). The Port of Duqm Company SAOC (PDC) is the Port Authority for the PoD and is responsible for the management and operation of the Port and its facilities, and navigation within and around the Port.  PDC is a 50/50 joint venture between the GoO and the Consortium Antwerp Port (CAP). PDC has a concession contract with the SEZAD for 28 years to co-invest, develop, manage and operate the Port.  PDC established an independent entity called Duqm Industrial Land Company to develop an industrial zone, which is outside the Port boundary but located within the SEZ. 

The Port’s development was initiated by the Ministry of Transport and Communications (MOTC) following a feasibility study in 2002 and based on technical and engineering parameters a suitable location in the Duqm area was completed in 2004. PoD maritime infrastructure and related work operations comprises the operations of the initial development of marine infrastructure (i.e., breakwaters, reclaimed land), navigable areas (i.e., Approach Channel, maneuvering area, berthing pockets). The maritime and related works was constructed between 2007 and 2012 by the MOTC. Landside and utilities are planned over 7 infrastructure packages: (1) internal roads, (2) commercial and Roll-on Roll-off (RoRo) berth, (3) security and customs area, (4) government berths, (5) administration building and gate, (6) land leveling, and (7) dry bulk and liquid berths. The security, commercial gate and custom area are currently under construction. The landside infrastructures are expected to be in place by 2019/2020.

The Port operations consists of an operational port largely focused on the resulting commercial quay – including a dry bulk terminal, container terminal and multi-purpose terminal – and to a lesser extent, the government berths. The subsequent PoD development will be developed in line with development plan Oman Vision 2040 and following stages consisting of the development and operations of a liquid berth and liquid storage areas on the lee breakwater, which is currently under development by Duqm Refinery. Simultaneously, the GoO established as a separate entity the Oman Dry Dock to support activities in the SEZ.

Another integral part of the SEZ is the Duqm Refinery which is being developed by the Duqm Refinery and Petrochemical Industries Company LLC (DRPIC) as a joint venture between Oman Oil Company (OOC) and Kuwait Petroleum International (KPI) to develop, build, own and operate an export refinery complex, with each shareholder holding 50% interest.  The Refinery is comprised of a 230,000 barrels per day (BPD) complex refinery and onsite utilities, infrastructure and storage; product export terminal at the PoD, crude storage facility at the Ras Markaz crude oil terminal and a 28 inch 80 km crude pipeline from Ras Markaz to the Refinery. The Refinery will generate a number of products for the export market that will conform to international standards, including liquefied petroleum gas (LPG), naphtha, diesel, kerosene jet fuel (Jet A-1), petroleum coke and sulphur. The new export refinery complex will be designed and operated by DRPIC on a prepared plot covering 9 km2 within the proposed Heavy Industry Zone in the wider Duqm SEZ.

The Refinery is being financed by Equator Principles Financial Institutions and will be delivered through three separate Engineering, Procurement and Construction (EPC) packages:

  • EPC 1: Refinery Process Units awarded to a Joint Venture of Técnicas Reunidas S.A. and Daewoo Engineering & Construction Co., Ltd;
  • EPC 2: Refinery Utilities and Off-Sites awarded to Petrofac International Limited and Samsung Engineering Co Limited; and
  • EPC 3: Ras Markaz Crude Storage, 80 km Crude Pipeline and Products Storage and Export Facilities at Duqm Port awarded to Saipem SpA and CB&I Europe B.V.

It is also anticipated that 2000 hectares (ha) of land will be allocated for the development of the medium, heavy and petrochemical industries within the Industrial Zone of the Duqm SEZ. SEZAD usufruct agreements requires land to be returned to the same initial conditions.

The MIGA Project consists of financing and/or refinancing of seven infrastructure projects (sub projects) within the SEZ, pertaining mainly to the construction of infrastructure and roads at the Port’s commercial pre-gate, design and dredging for a new liquid bulk berth, roads and corridors connecting the refinery to the liquid bulk berth, and dams and channels to protect the area against floods (see Table 1 for details).

Table 1. The sub projects (the Project) covered by the MIGA Guarantee, Status and Completion Dates.

#

Contract Description

Project Completion as of January 2019

Expected Completion Date

1

Infrastructure Package (IP) 3: Construction of roads, buildings and additional infrastructure at the commercial pre-gate, gates and inspection zone of Port of Duqm

74%

Q4 2019

2

IP7: Design and development of marine infrastructure for the new liquid bulk berths in the Port of Duqm (stage 1) including optional dredging

85%

Q2 2020, including optional works

3

Construction of Road No 1 and Road No 5 to link the Liquid Berth Terminal at Duqm Port to the Heavy Industrial Zone and drainage systems along the two roads

40%

Q4 2019

4

Construction of Jurf and Saay flood protection channels in Duqm

78%

Q4 2019

5

Construction of Jurf and Saay flood protection dams in Duqm

88%

Q4 2019

6

Engineering, procurement and construction of Duqm Refinery service corridor to liquid jetty

40%

Q3 2019

7

Construction of interface roadway projects in Duqm (Road Sections 4)

100%

Q2 2018

The Project (comprised of the seven sub projects) is categorized as Category A according to MIGA’s Policy on Environment and Social Sustainability (2013). Key potential environmental and social (E&S) risks and impacts related to the Project are biodiversity impacts; water quality and quantity; solid and hazardous waste and chemicals management; dust, noise impacts; air quality and emissions; blasting; emergency response, including oil spills mitigation and response; transportation of hazardous materials; labor influx; contractor and tenant management. In addition the potential E&S risks and impacts related to the associated facilities (the port, refinery, etc.) were considered in the context of cumulative impact assessment and overall development of the SEZ.

Under the structure of the MIGA Guarantee, MIGA may have limited leverage/influence, or even no leverage/influence, regarding the E&S performance of associated facilities (AF) of which the key two AF for this Project are operated by independent joint venture entities.

MIGA’s focus for E&S due diligence was on the seven sub projects (the Project), while considering E&S risks and impacts of the Port of Duqm (Phase 1 Operations) and the Duqm Refinery based on available information. The larger development was considered at a broad level with focus on common services such as waste management facilities, sewage treatment, and desalination plant.

While all Performance Standards are applicable to this investment, our current information indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

  • PS1:  Assessment and Management of Environmental and Social Risks and Impacts
  • PS2:  Labor and Working Conditions
  • PS3:  Resource Efficiency and Pollution Prevention
  • PS4:  Community Health, Safety and Security
  • PS5:  Land Acquisition and Involuntary Resettlement
  • PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resources
  • PS8:  Cultural Heritage

PS7 Indigenous Peoples is not applicable to the project as there are no Indigenous Peoples, as defined under PS7, in the project area. 

In addition, the following World Bank Group Environmental, Health, and Safety (WBG EHS) Guidelines are applicable to the MIGA Project:

  • General EHS Guidelines (2007)
  • Guidelines for Crude Oil and Petroleum Product Terminals (2007)
  • Guidelines for Onshore Oil and Gas Development (2007) [related to pipeline corridor between Liquid Bulk Berth and Refinery]
  • Guidelines for Toll Roads (2007)
  • Guidelines for Ports, Harbors and Terminals (2017)

In addition, applicable WBG EHS Guidelines will be considered by SEZAD, on a best efforts basis, as part of the SEZ long term Environmental Strategy and overall SEZ development.

The following documents were reviewed by MIGA:

  • Port of Duqm Oil Spill Contingency Plan. Oman Pesco LLC, March 2017
  • Medium Industrial Zone Environmental Impact Assessment. Volume I: Non-Technical Summary. HaskoningDHV UK Ltd. Mar 2017
  • Duqm Refinery Project Oman. Environmental and Social Impact Assessment – non-technical summary. WSP. Dec 2017
  • Duqm Refinery Project Oman. Consolidated Impact Assessment and Mitigation Report with appendices. WSP. Dec 2017
  • Duqm Refinery Project Oman. Cumulative Impact Assessment. WSP. Dec 2017
  • Duqm Refinery Grievance Management Procedure. Sep 2017
  • Duqm Refinery Stakeholder Engagement Plan. Aug 2017
  • Duqm Refinery ESDD Phase 2 report. Ramboll Environ. Dec. 2017
  • Duqm Refinery ESDD Phase 3 report. Ramboll. July 2018
  • Port of Duqm Safety Rules for Contractors
  • Port of Duqm Company SAOC. Port of Duqm Environmental Guidance Notes: 1) Omani Environmental Regulations International Legislations References; 2) Environmental Standards and Limits; 3) Environmental Review and Permitting; 4) Environmental Performance and reporting; 5) Construction Environmental Management Plan (CEMP); 6) Chemical substances; 7) Waste management; 8) Air emissions management plan. Feb 2017
  • Port of Duqm Company SAOC. Port of Duqm Early Operations Environmental Performance Report. HaskoningDHV UK Ltd. Sep 2016
  • Port of Duqm Company SAOC. Port of Duqm Environmental Guidance Note. Feb 2017
  • Stage 4 Report: Final Master Plan and Development Framework, Schematic Engineering Design and Governance Strategy – Chapter 7 Environment, Biodiversity and Cultural Heritage. Atkins. May 2018
  • Tatweer Company Profile
  • Tatweer HSE roles and responsibilities. Excerpts from the documents. May 2016
  • Tatweer Brief Introduction Presentation
  • SEZAD Infrastructure Projects- E&S initial findings memo. WSP Middle East- Dubai. Dec 2018
  • Findings of the Independent Environmental and Social Consultant (IESC) site visit conducted during Nov 23-28, 2018. WSP. Nov 2018

The 7 infrastructure sub projects are an integral part of the overall development of SEZ and are interconnected in terms of design and operations with other parts of SEZ larger development such as the Port of Duqm, the Duqm Refinery, industrial zone, residential and commercial area and logistics services area, and the associated facilities. MIGA’s primary focus was on the 7 sub projects and reviewed the independent environmental and social consultant (IESC) reports for the Refinery. 

In addition, an IESC was engaged by potential lenders to assist with the E&S due diligence to assess compliance of the seven sub projects against the PSs. MIGA, the IESC and the Global Coordinator participated in a due diligence visit in November 2018. The visit comprised of visiting the sites of the seven sub projects, touring the larger development area (including the Port, third party workers’ accommodations, common facilities, fish landing area), and meeting with SEZAD and contractor staff. MIGA also met with representatives for the PoD and the Refinery.

As part of seeking international financing for the Refinery, an IESC was engaged to provide an assessment of the compliance of the Refinery project against the IFC Performance Standards (2012), WBG EHS general and industry specific guidelines and included all relevant aspects of construction, operations and management described in the environmental impact assessments, environmental and social management plans and other associated project documentation. MIGA is considering the Refinery IESC’s findings in the context of the Refinery as an associated facility to the MIGA Project and has not carried out additional review.

MIGA’s due diligence review considered the environmental and social management planning process and documentation for the Project, and identified gaps, if any, between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period, are summarized in the paragraphs that follow and in the Environmental and Social Action Plan (ESAP) attached to this ESRS. Through the implementation of these measures, the Project is expected to be designed and operated in accordance with the Performance Standards.

Key environmental and social (E&S) issues associated with the Project business activities are summarized in the paragraphs that follow. 

PS1:  Assessment and Management of Environmental and Social Risks and Impacts

Environmental and Social Policy:

Tatweer has developed a health and safety (H&S) policy endorsed by management. This policy recognizes the importance of a healthy workforce in achieving business success and commit Tatweer to providing and maintaining a safe and healthy workplace for all staff. It also states that Tatweer will provide information, instruction and supervision for employees, investors and visitors in areas of safety and health. SEZAD and Tatweer are planning to enhance the H&S policy document as part of the Environmental and Social Management System (ESMS) to also include environmental matters and extend the coverage of this policy to contractors, third parties and future tenants (as per ESAP).

Environmental and Social Assessment and Management System:

In March 2017, SEZAD issued its own Environmental Impact Assessment (EIA) Guidelines. In 2018, SEZAD Environmental Regulatory Department has developed technical notes on: Air Quality Protection, Biodiversity Protection, Marine Environment Protection, Noise Abatement Protection, Soil Quality Protection, and Water Quality Protection. All the technical notes apply to all industries in the SEZ. SEZAD is committed to the development of an Environmental and Social Management System (ESMS) that is still in progress and will be strengthened as presented in the following sections (as per ESAP). SEZAD ESMS will be applicable to all stages of the projects’ life-cycle. Ministry of Environment and Climate Affairs (MECA) is the main authority for regulating E&S outside of SEZ (e.g., offshore disposal of sediment or any far-reaching interactions in the marine environment within Masirah Island or mobile species such as birds, whales and turtles).

International and national consultants prepared the E&S studies for the sub projects, as listed in Section D of this ESRS. EIAs for sub projects 1-6 were developed to meet Omani requirements and all sub projects received relevant environmental permits.

Key EIA documents produced for sub project 1 outline the environmental mitigation measures to be implemented during construction works and include receptor specific management plans, for example, Traffic Management Plan (TMP) and Environmental Management Plan (EMP). There have been variations within the construction contract pertaining to the design of the internal roads, drainage and utility trenches and various finishing to buildings. The Preliminary EIA provides broad, high-level information on the construction and operation methods and activities for the development of the Project, but it also needs to reflect changes in design. SEZAD has agreed to obtain a written representation from the contractor demonstrating how construction activities (including the variations) are being managed and monitored in accordance with Omani legislation.

The suite of documentation provided for sub project 2 is comprehensive and robust, evidencing commitment to monitor and manage the E&S performance of the sub project throughout its lifetime. After the submission of the EIA report, several additional studies and assessments were produced by an international consultant including marine sediment sampling and analysis, plume dispersion modelling of the offshore borrow pit and disposal site and oil spill modelling.

Based on the documentation for sub project 3, the EIA report provides details about the construction methods and activities, types and quantities of machinery and plant, as well as resources required during the construction of the Project in compliance with Omani legislation.

For sub projects 4 & 5, the EIA reports refer to the relevant international legislation and guidelines. They provide a general description of the construction and operation works required, the detail is mainly focused on the design of the dams, channel and drainage systems. Due to the nature of the sub projects, operational works will be minimal and related to routine maintenance works. Quality control plans were developed by the contractor that is constructing the Saay and Jurf Dams and the contractor that is constructing the Jurf and Saay Channels. These quality control plans generally comply with international dam engineering and construction practice.

For sub project 6, consideration in the EIA documentation is given to the key environmental receptors, including soils and groundwater, ecology, air quality, noise and climate change. A combination of project-specific survey data and existing survey data and information has been used to inform the environmental baseline. The EIA only focuses on sub project activities. A number of the sub project components such as Duqm Refinery and other industry pipelines, instrumentation, leak detection and fire-fighting systems, operation of petroleum pipelines have been included in the Refinery EIA.

SEZAD has represented that sub project 7 in operation did not require an EIA under national requirements.  The construction contractor for this sub project 7 prepared an environmental impact matrix and HSE plan.  SEZAD has also committed to provide E&S documentation pertaining to the operations phase to identify potential impacts, mitigation, and monitoring, as well as offer potential recommendations. 

Based on the Phase 3 Refinery IESC ESDD report and the Refinery ESAP developed for the lenders (Lenders’ ESAP), the Refinery is materially compliant with the requirements of the Performance Standards and WBG EHS Guidelines. 

DRPIC has developed a Cumulative Impact Assessment (CIA) study, consolidated Environmental and Social Impact Assessment (ESIA), Associated Facility Management Plan and Cumulative Impact Management Plan for the refinery project to identify and assess the third-party impacts. These studies recognize SEZAD’s Export Pipeline Corridor (sub project 6), Duqm Export Terminal jetty (sub project 2) and Haul Road for Solid Product from Refinery to Duqm Export Terminal as associated facilities (AF) for the project. Furthermore, DRPIC has made communication with the operators of all AFs with regards to DRPIC’s commitments to satisfy Lenders’ E&S requirements. This included confirmation with relevant third party operators that their facilities represented an AF to the Refinery and that DRPIC’s duties included influencing its operators into managing its environmental and social risks as much as practicable.

SEZAD is planning to develop a long term environmental strategy for the SEZ. To address potential E&S impacts associated with the overall development of the SEZ, SEZAD has agreed to develop a framework for the scope of cumulative impact assessment (CIA), methodology, types of monitoring, requirements for new tenants, and the resources required to carry it out (as per ESAP). SEZAD will also collate information and data from existing studies (e.g. the Port CIA, Refinery CIA, Master Plans) to identify trends of impact and modify its approach to managing E&S aspects for the SEZ, in an adaptive manner, over time (as per ESAP).

Management Program: 

The production of a Construction Environmental Management Plan (CEMP) and HSE plans for some sub projects and the undertaking of monitoring prior to the production of a full EIA (e.g. Project 1) suggests a positive and proactive approach to the assessment and management of E&S risks and impacts during construction works. Where CEMPs were not available SEZAD agreed to collect the evidence that sub projects complied with Omani legislation (as per ESAP).

As per ESAP in regard to the operations phase, for those projects that fall under the responsibility of SEZAD (sub project 3, 4, 5), SEZAD will develop operations and maintenance (O&M) manuals which will also cover the management and monitoring of the E&S aspects. For those projects which are operated and maintained by concessionaires (i.e., sub projects 1, 2 and 6), SEZAD will monitor the implementation of the O&M manuals. SEZAD will also require all operators/owners to ‘outline’ and develop detailed decommissioning plans (i.e. construction sites, workers camps, quarries, landfills, transport maintenance workshops etc.).

Organizational Capacity and Training:  SEZAD’s Environmental Regulatory Department (ERD) employs 11 staff in four sections: 1) environmental assessment & permitting, 2) environmental monitoring & pollution prevention, 3) environmental inspection and, 4) management of hazardous material & waste. SEZAD indicated that as part of its resource planning to accommodate the expected growth of SEZ, more specialists will be employed under the ERD and SEZAD will develop and identify staffing plan and training needs based on the international good practice, resources, and budget (as per ESAP). These efforts will include designating a focal point to coordinate the joint E&S actions with the Refinery and other tenants (as per ESAP). Along with existing HSE expertise, Tatweer will also assign internal resources to oversee E&S matters.

Emergency Preparedness and Response: 

Site visits have revealed that emergency provisions are in place at the sub projects under the MIGA coverage in line with the requirements of the Omani legislation (e.g. Ministerial Decision 286/2008 Regulation of Occupational Safety and Health for Establishments Governed by the Labor Law).  SEZAD will ensure that the six sub projects have formal up-to-date construction phase Emergency Response Plans (ERPs) or that contractors provide a written description of how emergencies are handled, dealt with and resolved.

The Sultanate of Oman has strengthened its state system of emergency response after the Cyclone Gonu in 2007. There are two laws that regulate emergency management: Civil Defense Law (the RD 76/1991) and the State of Emergency Law, which was outlined by the RD 75/2008. In line with these requirements, SEZAD has developed an emergency response plan (ERP) for the SEZ (Dept. of Health and Safety, Sep. 2017) and will update it further in accordance with PSs to cover the seven sub projects (including information on the sub projects’ approach to emergency response) and the latest developments in the SEZ (as per ESAP).

PDC’s emergency response plan includes an oil spill plan, roles and responsibilities, and a list of equipment to have onsite (booms, transfer pumps, high pressure washers, collapsible tanks, etc.); the plan will be updated to reflect changes in activities and development.DRPIC has an ERP in place in accordance with Lender’s E&S requirements and PSs.

Monitoring and Review: 

Following SEZAD’s mandate as a regulator, specialists in SEZAD Environmental Regulatory Department conduct regular environmental performance site monitoring visits. Environmental reports issued by SEZAD directly to the construction contractors describe non-compliances and suggested corrective actions referencing Oman legislation. For sub projects under MIGA coverage EIA studies outlines monitoring requirements. SEZAD will review its health, safety, and environmental (HSE) and social inspection program at contractors’ sites, including construction sites, workers’ accommodations and technical workshops. SEZAD will monitor implementation of agreed methodology for sub project 3 with contractor and will carry out E&S monitoring for sub project 1 in compliance with Oman legislation (as per ESAP).  As per the Memorandum of Understanding governed by the RD79/2013, SEZAD submits to MECA environmental monitoring information pertaining to environmental international conventions every six months reporting on such matters as greenhouse gases, chemicals, etc.

During the remainder of construction and operations, SEZAD will submit periodic monitoring reports to MIGA on the Project’s E&S compliance with PSs.

Stakeholder Engagement: 

There is a grievance redress page on SEZAD website. The Grievance Redress Mechanism (GRM) is a responsibility of Partnership and Development Department under SEZAD Corporate Social Responsibility. Interested parties can contact SEZAD by means of the phone calls, email, official letters or submit the grievance form through the website portal. This grievance redress mechanism (GRM) cannot be used in relation to the housing and land acquisition issues because such issues are managed directly by the Ministry of Housing (see more details under PS5). SEZAD will update its existing GRM for affected communities in accordance with PS1 (as per ESAP).

For the refinery project, Refinery IESC considers the robust stakeholder engagement plan and activities to capture all affected or interested stakeholders. The Stakeholder Engagement Plan includes details of the Stakeholder GRM which is in line with international standards and made available to all project affected peoples or other community members.

PDC developed a Stakeholder Engagement Plan (SEP) in 2016 as part of its ESIA for Phase 1 Port Operations.  Stakeholders were identified, and a summary of engagement was included.  The Port established a grievance mechanism in line with good practice and includes a process to address anonymous grievances.

SEZAD will formalize its SEP in accordance with the requirements of PSs (as per ESAP). The SEP will cover the ongoing construction and future operation phases of the Project.

External communications and grievance mechanism: SEZAD will disclose non-technical summaries for the sub projects on SEZAD’s website. SEZAD will implement and maintain a procedure for external communications in accordance with PS1 (as per ESAP). SEZAD is working on its project-level grievance mechanism and recognizes the efforts will support SEZAD to adopt improved practices to manage the E&S aspects of its longer term investment program. SEZAD will update its existing grievance mechanism (GM) for affected communities in accordance with PS1 (as per ESAP). The GM will capture any grievances related to security. 

Identification of Other Risks and Impacts: 

Risks related to changes in climate can potentially impact operations in the SEZ potentially leading to higher maintenance and operational costs. A climate risk and vulnerability high level assessment was carried out as part of the sub projects’ due diligence, as per SEZAD EIA Guidelines (2017) and the national legislation. Based on available documentation and climate change projections, vulnerabilities related to a changing climate in the Project area include changes in frequency and intensity of heatwaves, dust storms, cyclones drought, sea-level rise and increased extreme precipitation events. Specifically for the Project, identified climate risks could have significant impacts on the performance of the infrastructure, utilities, and activities including, for example: increased damage to the structural integrity of buildings and road surfaces as a result of increased surface flooding, extreme winds, and higher temperatures; decreased water quality and soil stability due to higher salinity rates caused by sea level rise and droughts; and increased health and safety risks and decreased productivity from worker exposure to extreme temperatures.

Resilience measures against sea-level rise have been identified into the design, construction and operation of roads, buildings, and equipment components of the Project. Another resilience feature for the SEZ and Port development is the construction of flood protection systems, which include the two flood protection dams and drainage channels as part of the MIGA Project.  The upstream dams have been designed to attenuate 1,000-year flood events to 100-year flood events with drainage channels designed to withstand 100-year flood events, significantly mitigating the downstream impacts of extreme flooding in the SEZ.

SEZAD has committed to carry out a climate risk vulnerability assessment for the seven sub projects and consider opportunities to enhance resilience across the SEZ (as per ESAP).

PS2:  Labor and Working Conditions

The expected peak workforce during the construction and operation for the overall SEZ is approximately 16,000 workers projected for the coming 3 years.  Enterprises in SEZ have a target of 10% Omanization in their permanent workforce as a minimum during operations.  In 2019, there are 1,200 opportunities for Omani employment in the SEZ . As of January 2019, the SEZ employs approximately 9,500 workers with about 1,560 Omanis and about 350 from Duqm area.  The sub projects covered by MIGA Guarantee have employed around 3400 employees. 

Working Conditions and Management of Worker Relationship

As explained earlier SEZAD is a statutory institution under the RD 119/2011 and SEZAD has developed its internal Human Resources (HR) manual (March 2012). The HR manual mandates the creation of the HR Committee which oversees decisions on employee recruitment and promotion, training, performance reviews, etc. Other matters that are not captured in the HR manual can be addressed in separate policies. The HR manual outlines the requirements for minimum wages, overtime, termination of the contract, sick leave, maternity leaves and holidays both for Omani and non-Omani employees and based on the document these two categories are provided with equal opportunities and rights. The HR manual covers only SEZAD direct employees. SEZAD has a Codes of Ethics and Business Conduct which emphasizes SEZAD commitment to ethics and compliance with the law, sets out the standards for ethical and lawful behavior. SEZAD’s Code of Ethics and Business Conduct applies to contractors and third party operations. SEZAD (including Tatweer) will review existing human resources (HR) policies and recruitment procedures and update respective policies (not HR manuals approved under laws of incorporation) which sets out the approaches to managing direct employees and apply the policy to workers engaged by third parties in accordance with PS2 (as per ESAP).

SEZAD has an Employee Grievance Policy and procedure for “Employee Grievance and Redressal” that outlines grievances can be submitted for workplace harassment, health and safety, supervisor behavior and address any adverse changes in employment conditions. As part of SEZAD update of the HR policies, SEZAD will review the grievance mechanism in line with PS2 requirements and has agreed to use commercially reasonable efforts to ensure that contractors have grievance mechanisms aligned with PS2. Where this is not possible, SEZAD will extend its grievance mechanism to workers engaged by third parties in accordance with PS2 (as per ESAP). 

SEZAD’s Health and Safety Regulations and Standards Manual contains the requirements for labor camps under the set of regulations pertaining to contractor management. These requirements set the standards for workers accommodation including fire safety, sanitary and toilet facilities, regular cleaning and inspection, interaction with neighboring communities and businesses, and other. The staff of Tatweer regularly conduct site visits using an accommodation inspection checklist to ensure compliance with the Omani legislation.

The 7 sub projects illustrated different levels of camp organization and living conditions. Most of the camps visited during the due diligence mission had acceptable accommodation including sanitary and toilet facilities, on-site first aid and medical facilities, canteen and cooking facilities, access to clean water, and provided minimum living space. Sub project 7 was able to provide written evidence (camp audit checklists) that regular camp inspections were conducted. Employees of sub projects 2 and 6 reside in Renaissance village, state of the art accommodation constructed and managed by a third-party contractor to provide for accommodation needs of the whole SEZ. Some sub projects, did not provide evidence of risk assessment and mitigation pertinent to workers accommodation. SEZAD will review its Health, Safety and Environment (HSE) and social inspection program at contractors’ sites including construction sites, workers’ accommodation and technical workshops (as per ESAP). SEZAD has committed to strengthen its inspection program to ensure that reports are issued and follow-up visits are made (as per ESAP).

Protecting the Workforce: Through IESC interviews with camp managers, it was established that they followed best practice where management severed relationship with national and international recruiters who tried to charge workers and take “security deposits” from them. Licensed recruiters and employers are not allowed by law to charge the worker any sums in consideration of his/her employment (Labor Law 2012 Art. 20). All camps follow best practice of providing workers with their ID card and copies of passports (ID card enables travelling from Oman and entry to other Gulf countries) and keep workers’ passports (for safekeeping) in the camp offices where workers have access to these documents, in line with Omani legislation.  MD2/2006 issued by the Ministry of Manpower bans companies from keeping employee passports against the interest of fair labor. Omani Labor Law (RD 35/2003) Article 75 prohibits child or bonded labor and such incidents were not observed in the visited workers’ camps.

There is a new MD 270/2018 to protect expat workers resigning from their jobs in Oman.  Workers have the right to submit complaints to the Ministry of Manpower and if more than five complaints of the same company in a month are received or ten during the year, the Ministry of Manpower will investigate.  If companies are found to not complying with the provisions of the Labor Law or Regulation, it will be suspended from receiving any services from the Ministry for a year.

Occupational Health and Safety: Omani Labor Law requires employers to acquaint the worker with the hazards of occupation and provide measures necessary for protection of workers against health hazards and dangers of machinery. SEZAD has a detailed Health & Safety Regulations and Standards manual issued in 2018. The manual outlines HSE management system, safety rules, contractor management, emergency preparedness and response, construction works, permit to work forms, job hazard analysis, incident reporting, inspection forms, toolbox talks, etc. SEZAD also has a detailed Human Resource and Social Risk (HRSR) manual. As mentioned earlier, SEZAD will enhance its existing health, safety and environment (HSE) policy and procedures relating to safe and healthy working environment (including food safety), workers’ accommodation, road safety, incident/accident reporting, root cause analysis, etc. As part of these policies, SEZAD will provide clear definitions and expectations of minimum standards reflected in future bidding documents. These policies and procedures shall be consistent with the requirements of both PS2 and Omani legislation (as per ESAP).

Workers Engaged by Third Parties and Supply Chain: SEZAD has a solid process of selecting contractors and this process is published on SEZAD’s website. Contractors’ policies are compliant with the main HR and recruitment Omani legislation. SEZAD (including Tatweer) will extend requirements of HSE policies to workers engaged by third parties in accordance with PS2. All future SEZAD Contracts will include stipulations that Contractors’ Management Plans must be aligned with SEZAD’s own corporate policies and management plans, and such policies should be implemented by all third parties (contractors) associated with SEZAD (as per the ESAP). SEZAD will prepare and implement a supply chain policy in accordance with PS2 (as per ESAP).

PS3:  Resource Efficiency and Pollution Prevention

Resource Efficiency: 

SEZAD EIA guidelines generally captures efficient use of resources to be considered in the project documents. The EIA documentation describes resource efficiency measures that could be implemented during construction and operation of the Project. No evidence or confirmation that such measures were implemented. SEZAD has agreed to prepare corporate guidance and set minimum standards (e.g. Good International Industry Practice, GIIP) for resource efficiency measures into projects within the SEZ (e.g. in procurement documents, contracts and a technical guidance note). These will relate to reduction of energy, water consumption and other resources and material inputs (technically, and financially feasible and cost effective). SEZAD will also ensure that its long-term environmental strategy for the SEZ embraces resource efficiency measures to be integrated into operational and maintenance plans, and the management plans of future tenants’ projects (as per ESAP).   

Alternative methods and activities were considered in the EIAs to reduce greenhouse gas (GHG) emissions. At this stage of the Project, it is difficult to estimate the carbon footprint. EIA reports reflect commitment to the monitoring of GHG emissions during construction and operation stages and there is an evidence of GHG calculation in Air Quality Monitoring reports and environmental performance reports (sub projects 1 & 2). As per ESAP, SEZAD has agreed to take steps to ensure Projects 3 and 6 retrospectively capture or make best estimate of fuel consumption data in construction phase for compliance with SEZAD requirements, review the calculations of the GHG data from Projects 4 and 5 and will also estimate the GHG emissions (for operations) from Projects 6 and 7 to complete a combined GHG emissions’ footprint for the Project. In line with national requirements (referencing Intergovernmental Panel on Climate Change IPCC), SEZAD has agreed to develop a GHG methodology and eventually prepare an overall GHG emissions’ footprint for the SEZ. In the long-term SEZ Environmental strategy SEZAD will include guidance on the type of information required from new tenants to inform a GHG emissions’ footprint (as per ESAP).

For the Refinery project GHG emissions have been estimated and indicate that emissions from the Project will be over 100,000 tonnes of CO2 equivalent per year, thus triggering GHG reporting requirements under the PSs. Refinery IESC states that the operational GHG emission estimate for the refinery is reasonable and sufficient considering the current state of the project development with some Lenders’ ESAP items around the collection and procedures.

As regards to the water efficiency, none of the sub projects under MIGA coverage are considered to require large quantities of water during construction and operation. Consideration has been given to the re-use of water in the EIA and Environmental Management Plan (EMP) documents. For the refinery, Refinery IESC has recommended a detailed water balance to be developed to address all project phases as part of the Lenders’ ESAP. 

Pollution Prevention:

Construction pollution impacts were identified during the EIA process and reflected in the contractor Construction Environmental Management Plans (CEMP) and HSE Plans for the 7 sub projects.  These plans provide details on pollution prevention measures to avoid and minimize the impacts of pollution during construction works. These measures include dust suppression, secondary containment to prevent spills, timely removal of construction waste, allocation of space for the storage of construction material. SEZAD will prepare corporate guidance on pollution prevention in accordance with PS3 and on best effort basis for projects within the SEZ reflect this guidance, for example, in bidding documents, contracts and a technical guidance note. On a best efforts basis, SEZAD will also ensure that their long-term environmental strategy for the SEZ includes potential health impacts on nearest communities and embraces pollution prevention measures to be integrated into operational and maintenance plans, and the management plans of future tenants’ projects (as per ESAP).

The Refinery will emit discharges to air and water during construction, pre-commissioning and commissioning and operation. The predicted type, rate, quantity and concentration of these discharges were identified in the ESIAs. Based on the Phase 1 & 2 ESDD recommendations by Refinery IESC, a revised consolidated ESIA report (CIAMR) and CIA Report were developed and provided for Refinery IESC review. 

Sub project 2 dredging is disposed primarily onshore as per the permit issued by SEZAD and has been used for leveling the PDC areas used for landside infrastructure development.  The permit for offshore dredging disposal is issued by MECA in an approved and already existing disposal site.  As part of the CEMP, the contractor developed a dredging management plan which captures monitoring and management measures.  Implementation of this plan is being monitored by SEZAD.  Dredging complies with the rates modelled and permitted by MECA.

Currently most waste in the SEZ are taken to the un-engineered landfill in the SEZ. An Integrated Waste Treatment and Storage Facility (IWTSF) has been constructed and will be operationalized once commercial terms are agreed between SEZAD and operator. IWTSF includes a storage and transfer site for hazardous waste. Types of waste and waste disposal and recycling measures are described in some sub project specific EIA and EMP documents. SEZAD will complete a waste audit of the 7 sub projects and the port to identify types and volumes of hazardous wastes produced, transportation of, and disposal destination (as per ESAP). Waste audit will include review of waste logs, waste carriers, etc. Based on the findings of the audit, SEZAD will prepare a waste management plan (WMP). This plan shall include definitions of all waste types, confirm the roles and responsibilities for waste, state the need for registrations and certificates (e.g. waste carriers) and describe the destinations for each waste type. The WMP shall cover the remainder of the construction phase for the 6 sub projects and be relevant for operations and for future tenants moving into SEZ plots (as per ESAP).

SEZAD will pursue active engagement with the Oman Environmental Services Holding Company S.A.O.C. (be’ah) to agree on the timing of the opening of the new IWTSF. When the hIWTSF is operational, SEZAD will record quantities of waste transfer into that facility – and subsequent transfer out of the IWTSF to another be’ah facility. SEZAD will develop a closure plan for the existing non-engineered landfill in accordance with the PS and GIIP (as per ESAP).

PS4:  Community Health, Safety and Security

The sub projects (and the SEZ) are located in a sparsely populated area with semi nomadic people, and have the following receptors for potential community impacts:

  • Nafun (located within 9 km from the Port location)
  • Al Tayari (approximately 7 km from the location of the Renaissance Facilities - third party accommodations)
  • Duqm Hospital (located within 5.5 km from the Port location)
  • New residential development called “150 Villas” (approximately 9 km from Duqm airport)
  • Duqm Town, approximately 7 km from the Port location.

Community Health and Safety:

The social baseline in the EIAs for the 7 sub projects was comprised of a desktop collation of previous reports. Household surveys or consultations with communities was carried out for one sub project. To help strengthen its knowledge and monitoring of project-related community health and safety impacts, SEZAD has agreed to incorporate in the operations and maintenance (O&M) manual aspects of evaluation of risks and impacts to the health and safety of affected communities. SEZAD will use commercially reasonable efforts to incorporate guidelines for community health and safety aspects in third parties’ bidding documents and contracts (as per ESAP).

Prior to blasting as part of site preparation, the contractor submits its blasting plan to seek approval from the Royal Oman Police. A safety zone is established, and advance notification is issued to nearby communities.

Construction for the seven sub projects are close to completion and therefore community health and safety impacts during the operation phase are expected to be mainly associated with the additional traffic (heavy vehicles).  Potential impacts relate to public safety, emissions, noise and nuisance.  SEZAD has committed to prepare a traffic management plan (TMP), as part of the ERP, that considers not only how the seven sub projects construction and operations phases will influence local traffic (including safety), but inform capacity levels of the roads, highways and intersections for future planning.  The TMP will also outline standards for safety (e.g., barriers, road markings and signage).

As per of the construction permits, SEZAD requires that all projects satisfy the requirements of Public Authority for Civil Defense and Ambulance which certifies that safety aspects considered in the design.

As mentioned under PS1, climate change projections for the Project area indicate that increased climate vulnerabilities could exacerbate weather-related impacts such as increase in maximum probable flood levels and extreme temperature fluctuations resulting in the proliferation of vector diseases creating unsafe work conditions. SEZAD is committed to carry out the climate risk vulnerability assessment mentioned earlier (as per ESAP).

Dam Safety and Emergency ResponseThe Project is located in a low seismic zone in a bay where several wadis (i.e., valleys) drain the inland higher plateaus to the sea.  Previous studies recommend the construction of at least two dams (Saay and Jurf) and three channels over the project area (i.e., SEZ) to provide safe conveyance of storm water. As part of a flood protection system, SEZAD is constructing two flood protection dams (which are part of the seven sub projects comprising the MIGA Project). The dams were designed to attenuate the 1,000-year flood event to the 100-year flood event. Therefore, the discharge through the dam’s spillway will be equivalent to the 100-year flood. 

These two earth-filled dams are located upstream of the Jurf and Saay wadis, in the surrounding mountainous areas of Duqm and are being constructed to hold back flood waters resulting from infrequent heavy rainfall events. Both flood protection dams are considered large-scale dams. The flood protection system also consists of drainage channels within the Jurf and Saay wadi’s.  The channels are being constructed by a combination of excavating the natural ground surface and constructing 3 to 4-metre high earthen levees.

After the passage of the storm, the stored water will be released downstream of the dams in a controlled manner through bottom outlets of the dams and discharged to the sea.  When there are no storms, the flood protection dams will be dry.

Review by the IESC confirmed that guidelines applied to the flood protection dam design aligned with international good practice. Quality control plans for the Saay and Jurf dams and channels (sub projects 4&5) generally comply with international dam engineering and construction practice.

Although communities do not live immediately downstream of the flood protection dam, significant infrastructure and workforces are or will be present. Dam break analyses were performed for both dams and are described in the Detail Design Reports prepared for both dams. Both sunny day (failure through piping) and Probable Maximum Flood (failure through overtopping) analyses were performed for both the Jurf and Saay dams. The results of the dam break analysis were used to develop dam break flood maps for the downstream area for the ‘probable maximum flood’. The dam break analysis for the sunny day failure does not present a hazard to the community downstream. SEZAD will prepare an emergency action plan (EAP) for the facilities including the inundation maps developed from the results of dam breach analyses (as per ESAP).

As part of commitments in the ESAP related to PS3, SEZAD has committed to develop a checklist of general items for compliance monitoring covering hazardous materials management. As part of the waste management plan, SEZAD will include procedures to identify appropriate transportation routes related to hazardous materials and wastes within the SEZ. SEZAD will develop a closure plan for the existing non-engineered landfill in accordance with the PSs and GIIP (as per ESAP). SEZAD is also responsible for the expansion and upgrade of public utilities in the zone either directly or indirectly (power and drinking water) and with regards to municipal services (IWTF).

As part of developing and implementing E&S and HSE management plans (e.g., environmental monitoring, emergency response plans), SEZAD will collate a map of sensitive natural and human receptors (as per ESAP).

The activities in the SEZ as of January 2019 have employed approximately 9500 workers with 83% being expatriates.  Although most of the sub projects’ workforce live at workers’ accommodations, there is potential for worker interactions with communities and local populations. Sub projects have public relations officers (usually from the area) to liaise with local communities who may raise concerns, and which complement SEZAD’s stakeholder engagement activities.  SEZAD and public relations officers meet on a regular basis to discuss concerns raised, including potential impacts related to influx. Given that development in the SEZ is at early stages and workforces are anticipated to increase significantly, SEZAD as part of the ERP will consider capacity of local emergency services providers and health care facilities (as per ESAP).

As mentioned earlier, SEZAD’s Codes of Ethics and Business Conduct policy document apply to all employees, consultants, contractors, suppliers, investors and any person representing SEZAD in its commercial operations. It briefly describes substance abuse policy and requests employees to respect the culture of local communities. The common avenue for reporting stipulated in the document is informing the immediate supervisor. As mentioned above SEZAD will use commercially reasonable efforts to incorporate guidelines for community health and safety aspects in third party bidding documents and contracts.  Such aspects will include provisions for any future workers’ influx and management of such impacts. 

SEZAD has committed to ensuring the ESMS includes requirements for third parties to avoid and minimize the potential for community exposure to water borne, waster based related vector based disease resulting from operations and any potential communicable diseases that may be associated with the influx of temporary or permanent project labor (as per ESAP).  For sub projects 1, 3 & 7, SEZAD will also outline standards for community health and safety (e.g., barriers, road markings/demarcations and signage).

Security Personnel:

Most of the SEZ is accessible except key strategic locations fenced with controlled access points (e.g., customs and inspection area (sub project 1), Port).  Although not yet constructed, the Refinery will be fenced with controlled access.  Other security measures include Closed Circuit TV (CCTV) cameras and routine patrols. Within the SEZ itself, a Royal Oman Police (ROP) post will be located within the customs and inspection area at the Port.  Inside the SEZ boundary is an existing full service regional ROP station. 

Given the strategic importance of the Project and nature of activities, public security forces (e.g., Royal Oman Police, Omani Coast Guard, etc.) provide security to the SEZ (as well as for specific projects within the SEZ). Contracted private security is also used by investors and contractors.  As reflected in the ESAP, SEZAD is committed to carry out a security risk assessment which recognizes the responsibilities of SEZAD in accordance with PS4.  Findings of this assessment will be addressed in a security management plan for the SEZ which aligns with the requirements of PS4 (as per ESAP). SEZAD’s grievance mechanism will be revised to address security-related concerns.

PS5: Land Acquisition and Involuntary Resettlement

The area being developed for the SEZ historically supported a limited population in scattered small settlements. Receptors include people seasonally inhabiting the few local temporary residences and fisherman on the beach and passing along the sea.

Under the RD85/2006 the Duqm area was designated as an area of public good.  The GoO identified all owners and their potentially affected assets through an asset survey and satellite imagery in 2007 for all the area except Al Shuwayr and Nafun villages.  All owners of physical assets were compensated in cash by the Ministry of Regional Municipalities and Water Resources. The Ministry of Housing compensated the landowners inside the area of Nafun and Al Tayari for land.  The GoO allocated 16 million Omani Rials (approximately $US41.6 million) to build 150 villas for affected people and in 2012, SEZAD was entrusted to oversee completion of this construction.  RD44/2014 lifted the public good nature on some plots where private ownership was proven in the area in addition to a 15 km2 area allocated for residential development and compensation to allow affected people to continue to own their lands. In 2014, SEZAD in coordination with the Ministry of Housing appointed a consulting company to carry out an additional survey of Nafun village and Al Shuwayr to update baseline conditions.  Results of the survey were provided to the Ministry of Housing and respective departments to issue executive decisions for each of the households in Nafun (there were no changes in Al Shuwayr baseline).  MD61/2017 constituted to form a joint committee including SEZAD, and the Ministries of Internal Affairs, Municipalities, Housing, and Social Development to determine the names of affected peoples deserving the 150 Villas.  This taskforce decided to expand the baseline survey to the whole of SEZ including Saay, Nafun, Al Tayari. In December 2018, the taskforce announced the names of affected individuals allowing one month for appeal.  The Ministry of Housing is now reviewing appeals.

The GoO commissioned a new development of modern houses (150 Villas) inside the SEZ.  Each affected household will receive a new replacement house/villa approximately 400 m2 containing six bedrooms with ensuite bathroom. It is anticipated that the resettled population will benefit from the SEZ in terms of roads, utilities, jobs, etc. to be provided in the zone. Likewise, fishermen will benefit from the use of the new fisheries port and the fisheries industrial complex to be financed by GoO, thereby increasing income levels and standards of living.

SEZAD does not have direct responsibilities under PS5 as resettlement or compensation to local communities was managed by the GoO (specifically Ministry of Housing) when the planning and construction process started for the Port and SEZ as per RD 44/2014. The Project area for the seven sub projects consists of either an entirely undeveloped desert terrain or plots designated for industrial development without any residential properties or community facilities in the immediate vicinity. However, the historical land acquisition process that was initiated by the GoO prior to the formation of SEZAD is not finished and could potentially have adverse impacts on communities and people who use the land. Under government-led resettlement, SEZAD has agreed to undertake the following actions (as per ESAP):

  • Engage with respective government agencies to identify roles and responsibilities in line with RD 44/2015 and outline stakeholder engagement to address the status of the affected parties;
  • Develop and implement a program in consultation with GoO to define reasonable practical steps to support resolution of both historical and ongoing impacts to affected parties; and
  • Make available and raise awareness of its grievance mechanism to affected parties.

For any potential future land acquisition, SEZAD has agreed to develop a land acquisition framework in accordance with national requirements and PS5 in advance of commencing such activities (as per ESAP).

In regards to the resettlement for the Refinery, a specific site was allocated to DRPIC as the designated project location. The Refinery extended its grievance mechanism to include resettlement-related issues for example, monitoring for construction is already included in the construction phase grievance mechanism and the Social and Health Monitoring Plan and Health, Safety Security and Environmental and Social Assurance Plan/Schedule. Refinery IESC has recommended DRPIC to detail a monitoring program (as part of the ESMP) of its grievance mechanism for issues relating to the resettlement process, impacts on livelihoods and cultural use of land within the Refinery Area during the operations stage.

PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resources

Much of the land in the SEZ is dominated by degraded or transformed sand/gravel sand plains, with a variety of habitats from sabkha (salt flats) with intertidal mud and sand, mountain, rocky outcrops, plateau and slopes, to wadis and channels.  The SEZ footprint overlap two Important Bird Areas (IBA):  Jiddat al Harisis and Ad Duqm.  According to the EIA for the Phase 1 Port Operations, essentially all the birds at Ad Duqm are migratory and none (except a few Crested Larks) use the area as a breeding site. The importance of Ad Duqm, as well as Bar Al Hikman to the north and Khwar Ghawi (both outside the SEZ boundaries and area of influence) to the south lies in their value as stop-over sites during spring and autumn migration (East-African – Central Asian Migratory Flyover) as well as being used for wintering grounds. 

These IBAs are likely to contain critical habitat for certain bird and other species, as defined under PS6.  Sub projects 4 and 5 overlap with a small area of the Al Wusta Wildlife Reserve.  This reserve was formerly called the Arabian Oryx Sanctuary, which was established by RD 4/1994 and was formerly listed as a UNESCO World Heritage Site for geological, as well as ecological and heritage importance. The site was removed from the UNESCO World Heritage List in 2007 following a 90% reduction to the boundary. Permitting for sub project 5 was issued by MECA as the location falls outside the SEZ boundaries.  In consultation with the Office of Environment Conservation in the Diwan of Royal Court, a no objection certificate was issued to proceed with construction.

As part of the studies for the Phase 1 Port Operations EIA, sixteen species of marine mammals were recorded in the Gulf of Masrah including the endangered humpback whale, other baleen whales and toothed whales and dolphins. Marine turtles, especially the endangered green and the critically endangered loggerhead turtles are also commonly found in the area and both feed and nest in the near shore waters. Data gained from tagged marine turtles indicates that the Gulf of Masirah is known to be on the migratory path of all nesting marine turtle species in Oman.  Studies for the Port Phase 1 Operations EIA identified 39 plant species of which 5 are on the Oman Plant Red List; many tracks were observed in the study area with IUCN near threatened species of striped hyena tracks, IUCN vulnerable species Egyptian spiny-tailed lizard.

Mitigation measures to minimize impacts on wildlife include, for example, developing buffer zones, minimizing light and noise disturbance, supporting conservation programs, reporting sightings of large fauna, implementing waste management plan, controlling invasive species, and planting native species.

DRPIC undertook substantial biodiversity assessment that was reported in the Biodiversity Assessment Report and Biodiversity Sections of the Consolidated Impact Assessment and Mitigation Report.  The Refinery IESC considers both reports to be of high quality as they represent a harmonized habitat mapping combining data from the project and AF into one habitat map and provide clear baseline descriptions and impact assessments for habitats, birds, mammals, reptiles and floral species. SEZAD is committed to build on this work to develop as relevant to the SEZ.

Among high severity risks, DRPIC’s biodiversity assessment identifies mainly impacts of its AFs such as potential oil spill risk at Raz Markaz, vessel collisions with cetaceans and marine turtle species, and adverse impact from export terminal marine works on Duqm IBA. The assessment suggests a formation of an ‘advisory panel’ to guide mitigation and monitoring through linking industry together (with) government, conservation and research interests. To mitigate impacts on the Duqm IBA, the report suggests the enhancement of the remaining area of the IBA creation of constructed wetland using dredging spoil and offsite mitigation.

The DRPIC has developed a biodiversity offsetting framework which the Refinery IESC considers comprehensive and satisfying PS6. They suggest, however, that an Offset Strategy report should be developed as a precursor to the Biodiversity Action Plan (BAPs) that clearly identifies those offsets that do and do not relate directly to Refinery impacts and demonstrates the role and responsibility of DRPIC, identifies viable offset options and sets out the proposed measures to offset impacts on the two IBAs. The Refinery IESC recognizes, however, that the implementation will not be fully in DRPICs control. Once the Biodiversity Offset Strategy (BOS) Report has been developed, the required offsets should be further developed and implemented through the development of BAPs.

As per ESAP, SEZAD, in coordination with other entities in the SEZ, will quantify and assess impacts on natural habitats associated with each sub project to include a critical habitat assessment (CHA), covering the following key groups: cetaceans; turtles; endemic plants; rare/threatened reptile species; Duqm IBA/migratory wetland birds; Jiddat al Harisis IBA; and the Al Wusta Wildlife Reserve. The requirement for a CHA can build upon the comprehensive biodiversity work that others have prepared.  SEZAD will carry out ongoing coordination with the Refinery and Port in the preparation of its Biodiversity Offsetting Framework/Strategy and Biodiversity Action Plan to reflect its own approach to biodiversity to offset the impacts of the seven sub projects. SEZAD will identify suitable compensatory habitat creation/offsets to meet the requirements of No Net Loss (natural habitats)/Net Gain (critical habitats). 

SEZAD has agreed to:

  • With reference to both natural and critical habitats, undertake a cumulative impact assessment (CIA) considering all seven sub projects, their associated facilities (AFs) and other planned developments in the SEZ at Duqm or ensure this is included as part of the CIA work recommended in PS1 above.
  • Require the contractor for sub projects 4 & 5 to provide a statement regarding how measures to minimize working areas in proximity to Oryx reserve, and dust suppression in areas within and adjacent to vegetation have been taken.
  • Require sub projects 6 and 7 contractors to confirm their approach to the management and monitoring of ecological mitigation measures in a written statement.

SEZAD will also undertake an ecosystem services assessment for all sub projects or undertake a ”cross project” assessment examining all projects combined (as per ESAP). In support of its long term environmental strategy, SEZAD will set up a procedure or clause outlining its approach to biodiversity for future projects that considers evaluation of the supply chain for all contractors and operators while adhering to Omani commitment under international agreement and conventions (as per ESAP).

PS8:  Cultural Heritage

RD 6/1980 for the Law for the Protection of National Heritage refers to RD 12/1976 and 14/1976 regarding the establishment of the Ministry of Heritage and Culture.  Several articles are specified within RD 6/1980 regarding protection of elements of cultural heritage prohibiting individuals or owners of cultural heritage demolishing or negatively impacting such resources and land adjacent to such sites. It also outlines during construction works and excavations, procedures for chance finds that require notification to SEZAD who will then report to the Ministry of Heritage and Culture. 

The Final Master Plan and Development Framework for the SEZ (Atkins, May 2018) indicates a large number of archaeological sites within the areas to be developed as part of the SEZ area.   SEZAD has agreed to develop a Chance Finds Procedure for application to the SEZ and will disclose on its website (as per ESAP) to complement the existing practices. Through SEZAD’s website, contractors report chance finds using the Chance Finds Entry Form. Contractors are required to use the form when any artefacts are suspected to be found. The proposed approach to the removal, relocation, maintenance and protection of all archaeological sites within Duqm need to be discussed and agreed with SEZAD.

The areas in and around the seven sub project sites and locations of the workers’ accommodation camps visited during due diligence have been subject to considerable development.  Contractors followed their CEMPs and the Cultural Heritage Preservation procedure as per Omani legislation.

The Omani laws and regulations are regulated through a system of RDs and MDs. The principle ones are:

  • RD 101/1996: Basic Law of Oman provides for the protection of the environment and prevention of pollution
  • RD 114/2011: Law for the Protection of the Environment and Prevention of Pollution covering environmental protection;
  • RD35/2003 on Labor Law
  • MD 286/2008 addressing Occupational Health and Safety in Oman
  • And all related MDs and RDs for environmental and social matters.

The RD 79/2013 refers to issuing the regulation of the SEZAD. According to this RD, SEZAD has been assigned the same functions as the MECA within their boundary and is the Competent Authority for implementation of these regulations in Duqm.

All sub projects were granted environmental permits for construction by SEZAD (one by MECA). SEZAD conducts the environmental audits prior to expiration and makes decision on the extension of the permits.

Through SEZAD Corporate Social Responsibility (CSR) section of the Partnership and Development Department (PDD), SEZAD has carried out a variety of stakeholder engagement activities. SEZAD stakeholders include project developers, consultants, construction companies, communities, community leaders, community representative groups, Mayor’s office as well as other government entities. CSR has 5 focus areas: (1) service to the community, (2) contribute to the growth of education (to raise the literacy levels), 3. Community & Culture development, (4) protecting the environment; and (5) Health and wellness of both SEZAD internal (SEZAD employees) as well as our external stakeholders (the communities). Through donations, sponsorships and creating community events, SEZAD supports organizations and individuals making positive impactful change. SEZAD website provides links for communities to access project information as well as downloadable useful information for communication in addition to the typical forms of communication (written and in person) through the Grievance Mechanism (GM) form. SEZAD is assessing the impact of the whole masterplan in an integrative and holistic manner and will be organizing community engagement meetings once the final draft of the masterplan is approved. This would then allow for better consultation as and when a stakeholder engagement be required with the communities from a contractor reaffirming the Masterplan approach to industries.

SEZAD is in the early stages of creating a Tawasul Fund with contributions from partners to provide financial support and fund projects for the benefit of local communities in the SEZ and in Al Wusta governorate to promote sustainable economic and social development.
 

MIGA supports its clients (as defined in MIGA Policy on Environmental and Social Sustainability) in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.

In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for MIGA. The CAO is mandated to address complaints from people affected by MIGA-guaranteed business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of MIGA.

Independent of MIGA management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of MIGA’s environmental and social performance through its compliance arm.

Complaints may relate to any aspect of MIGA-guaranteed business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of a MIGA-guaranteed business activity. Complaints can be submitted to the CAO in writing to the address below:

Compliance Advisor/Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Room F11K-232
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
E-mail:
cao-compliance@ifc.org

The following documentation is available electronically as PDF attachments to this ESRS at www.miga.org

The above reports are also available for viewing at the following locations:

  • Mr. Ahmed Harib Al Balushi, Environmental Regulatory Department Manager +968 252 22370 (landline), email:  ahmed.albalushi2@duqm.gov.om
  • SEZAD office, Duqm