Djermaya CDEN Energy SARL
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.
MIGA has been asked to provide a guarantee for a period of up to twenty years to cover equity investments and shareholder loans provided by Djermaya Holdings Limited of the United Kingdom to Djermaya CDEN Energy S.a.r.l. in the Republic of Chad (the Project Company) for the development of the Djermaya Solar Project (hereafter referred to as “the Project”).
The Project is developed by a group of sponsors consisting of InfraCo Africa Limited, Aldwych Africa Developments Limited (developing on behalf of InfraCo Africa), and Smart Energies International. InfraCo Africa is a donor funded facility active in project development in lower income countries in Africa. Aldwych Africa is a subsidiary of the Anergi Group which holds a portfolio of operating power plants in Africa. Smart Energies is a developer and financer of solar projects in both Europe and Africa, as well as other frontier markets. The lenders include the Africa Development Bank and Proparco. The Project Company has been formed as a special-purpose company in Chad to develop and manage the Project.
The Project consists of the development, construction and operation of a 32 MW greenfield photovoltaic (PV) solar power plant in Chad, located 30 km north of the capital N’Djamena. The plant includes PV modules mounted on single-axis trackers, inverters, step-up transformers, and supporting infrastructure such as maintenance buildings, control room and offices, and internal access roads. In addition, the Project will include a ca 4 MWh battery storage back-up system, intended to improve the ability of the grid operator to manage frequency and voltage fluctuations during periods of short-term power variations in the solar plant’s output. The Project will be connected to the national power grid through a dedicated 18 km 33 kV overhead transmission line and two new step-up transformers installed at the Lamadji substation. Financing and construction of the battery system, transmission line, and transformers will be undertaken by the Project Company and ownership transferred at commissioning to the national utility (SNE) which will then be responsible for operation and maintenance. The transmission line and transformers are considered Associated Facilities to the Project, as defined by the MIGA Performance Standards.
The expected annual energy generation is 62 GWh per year. The EPC Contractor, a leading electricity manufacturer with experience from Africa, has been selected through an international competitive process. The same company will commence the role of O&M Operator following the commissioning of the plant. Construction is expected to start in 2020, and last 12 months.
The Project is located on a 100 ha plot approximately 300 m from the main highway connecting N’Djamena with Lake Chad, and approximately 7 km southwest of Chad’s main oil refinery. Currently, land in the Project area is partially used for seasonal crop farming and animal grazing. There are no buildings or other types of infrastructure within the Project footprint. There are five villages, as well as the medium sized town of Djermaya, located within 5 kilometers of the Project area.
The Project is categorized as Category B according to MIGA’s Policy on Environmental and Social Sustainability (2013). Key potential environmental and social (E&S) risks and impacts related to the Project are economic displacement and livelihood impacts; contextual security risks; labor and community health and safety risks; and the implementation of environmental and social management system and procedures.
While all Performance Standards are applicable to this investment, based on our current information, 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
The Project is located on heavily modified farmed and fallow land and there are no significant impacts related to biodiversity, thus PS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources does not apply.
Nomadic groups, which are considered Indigenous People according to PS7, seasonally visit the area around the project site; however, the Project is not expected to cause any adverse impact on these nomadic groups. Therefore, PS7 Indigenous Peoples does therefore not apply.
No sites of cultural / historical value were identified within the boundaries of the project areas, neither were any resources of heritage value identified. PS 8 Cultural Heritage does therefore not apply.
In addition, the following World Bank Group Environmental, Health, and Safety (WBG EHS) Guidelines are applicable to the Project:
- General EHS Guidelines (2007)
- Sector specific guidelines for Electricity Transmission and Distribution (2007)
The following documents were reviewed by MIGA:
- Environmental Impact Assessment Study: Djermaya Solar Plant. Artelia & CIR-SA, August 2019.
- Livelihood Restoration Plan, Artelia & CIR-SA, August 2019.
- Social Due Diligence Report, INSUCO, April 2019
- Environmental Impact Assessment Study: Djermaya Solar Transmission Line. Artelia & CIR-SA, August 2019.
- Travel Threat Assessment – Djermaya. Drum Cussac, March 2019.
- Owner’s Environmental, Social, Health and Safety/ Security (ESHS) Requirements for the Works – Construction EPC Contract. August 2019.
- Owner’s Environmental, Social, Health and Safety/ Security (ESHS) Requirements for the Works – Operation and Maintenance Contract. August 2019.
In addition to reviewing the above documents, MIGA carried out an E&S due diligence visit in July 2019 to the Project site, which included meetings with the Project Company and consultants, E&S staff, and affected communities, as well as a tour of the Project site.
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 time 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
The Project Company has prepared a policy statement setting out the guiding principles and standards for Environment, Social, Health and Safety (ESHS) requirements, applicable to the solar plant site and related infrastructure, including the battery system and transmission line. The policy statement affirms the Company’s commitment to develop the Project in a socially responsible manner and in line with sound environmental management practices. The policy also adopts the requirements of the PSs and WBG EHS guidelines.
Identification of Risks and Impacts:
An Environmental and Social Impact Assessment Study (ESIA) has been conducted for the Project, in accordance with local regulation and the requirements of the PSs. The study was conducted by Artelia, an international consulting firm, in cooperation with CIRA-SA, an environmental consultancy based in Chad. The ESIA has been reviewed by the local environmental authorities, the Project has addressed the comments provided by the authorities and the report was re-submitted for approval in September 2019.
The ESIA includes an alternatives assessment, which concluded that the initial project design would result in impacts related to access to a nearby water body, for both community members and wildlife. The site was therefore shifted east and away from the water body, to avoid impacts related to shore access.
A separate ESIA has been prepared for the transmission line, also by Artelia, and in accordance with the requirements of the PSs. A Social Due Diligence of the Project and the ESIAs (for the solar park and transmission line) against the requirements of the PSs was commissioned by the lenders in April 2019 and conducted by Insuco, an international consulting firm. The main gaps identified included assessment of impacts resulting from associated infrastructure, identification of vulnerable households, the robustness of the stakeholder consultation program, including communication and establishment of a cut-off date for compensation, and eligibility criteria for economic displacement compensation. The ESIA and related documentation were subsequently updated to address the findings of the third-party review.
An assessment of risks related to security was commissioned and completed by Drum Cussac, a global security and safety provider. The assessment concluded that security risks are fluid, but manageable, and regular re-assessment is required. As per the ESAP, the Project Company will establish a Security Management Plan commensurate with the risks, for both construction and operations phases.
Potential cumulative impacts were considered in the ESIAs, which concluded that no material cumulative impacts are expected.
The ESIA includes an overarching Environmental and Social Management Plan (ESMP), which provides a framework for preventing and mitigating environmental and social impacts, in both construction and operation phases. Likewise, the impact assessment for the transmission line also includes an ESMP. For each impact and corresponding mitigating action, the ESMPs define a technical description, schedule of implementation, responsibilities, monitoring indicators, and budget.
A Contractor’s ESHS management plan (CESMP) for construction will be developed and implemented by the EPC Contractor before the start of construction (as per the ESAP). The implementation of the CESMP and adherence with the E&S requirements of the Project Company, including the PSs, will be condition of the EPC Contract. The CESMP will include sub-management plans for issues such as construction camp management; erosion and sediment control; occupational health and safety; community health and safety; emissions (air and water) and pollution prevention; waste; hazardous materials; traffic, and biodiversity. The Project Company will complement the EPC CESMP by developing specific plans regarding stakeholder engagement and grievance mechanism, and inspection and auditing of the Contractor.
An ESMP for the operations phase will be developed prior to commencement of operations, as per the ESAP.
Organizational Capacity and Competency:
The Managing Director of the Project Company has overall responsibility of the implementation of ESHS plans and related coordination with authorities, contractors and other stakeholders. The Project Company will also employ an on-site ESHS Manager, reporting to the Managing Director.
The EPC Contractor will appoint an EHS Manager responsible for overseeing the implementation of the CESMP, monitoring and inspections, training, and reporting to the Project Company and relevant authorities. The EHS Manager shall be suitably qualified and have prior experience from overseeing ESHS management in construction projects. The EHS Manager will be supported by EHS Supervisors as required to fulfill the requirements of the CESMP. In addition, each sub-contractor will be required to appoint an EHS Officer.
As per the ESAP, the Project Company will notify MIGA of the appointment and qualifications of the ESHS Manager prior to the start of construction.
Emergency Preparedness and Response:
An Emergency Response Plan will be a part of the CESMP, including inter alia procedures for responding to fire and explosion, spills, loss of containments of dangerous substances, traffic incidents, safety incidents, and malicious acts. The procedures and responsibilities for emergency response actions and communication will be clearly defined and available on-site.
The plan will include provisions for organization of emergency areas; roles and responsibilities, communication systems, resources, and training and updating.
Monitoring and Review:
As part of the CESMP, the EPC Contractor will develop and implement a monitoring and reporting system on environmental, social and Occupational Health and Safety (OHS) impacts related to construction. Monitoring frequencies, methodology and indicators will be reflective of the risks and impacts identified in the ESIA. The EPC Contractor will report to the Project Company, which will report to authorities as required, disclose monitoring results and provide feedback to affected communities on at least an annual basis in relation to any impacts affecting them and associated mitigation measures. Annual monitoring reports will also be developed and submitted to MIGA.
In addition, the ESMP also defines an auditing program including both internal and external audits of compliance with regulatory requirements and the CESMP. The ESMP also includes specific auditing procedures for waste management, emissions and OHS.
External Communication and Grievance Mechanisms:
The Contractor will build on the existing external grievance mechanism to ensure that all complaints or other communications received from communities or other stakeholders are responded to and managed appropriately. This includes recording any stakeholder comments or complaints and ensuring that they are passed on to the Project Company for response and resolution as soon as practicable. If the grievance is related to the Contractor’s activity, the Contractor will work with the Project Company to address the complaint.
PS2: Labor and Working Conditions
Construction works for the plant will generate about 250 jobs for up to one year, and operations will involve about 20 full-time workers. Construction staff will be housed in N’Djamena, with transportation provided by the EPC Contractor. Worker accommodation provided by the contractor will be in line with the IFC/EBRD Guidance Note on Worker’s Accommodation, as specified in the EPC contract.
The EPC Contractor will implement a local recruitment plan, in order to maximize employment opportunities for local villagers. The plan will include public presentations of employment and business opportunities, creation of a recruitment office in Djermaya, and a training program to support the plan. Recruitment at the entrance of, or close to the project site, will not be permitted.
Working Conditions and Management of Worker Relationship:
The EPC contract will require the Contractor to observe applicable labor laws and comply with the requirement of PS 2 regarding its employees, and it will also require the Contractor to ensure that this requirement is passed on to sub-contractors. Relevant HR policies and procedures for the construction and operations phases will cover all workers, including direct workers and contracted workers. At a minimum, the HR Policies will include the following provisions: working relationship; working conditions; terms of employment; workers’ organizations; non-discrimination and equal opportunity; grievance mechanism; prohibition of child and forced labor; and occupational health and safety. The conditions of employment and worker’s rights will be communicated to all new employees during the induction process.
The HR policy and employment contracts will allow for employees to join or form worker’s organizations. A staff representative will also be appointed, responsible for bringing employee’s concerns or requests to the management.
Protecting the Work Force:
In line with the Project Company’s policy statement, child and forced labor is prohibited in relation to the Project. The EPC Contractor will be contractually bound not to use any forms of forced labor, and to observe applicable laws and PS2 requirements related to child labor.
Occupational Health and Safety:
The ESIA includes a detailed description of OHS risks and impacts during construction, operations, and decommissioning, with a series of preventive measures. The main risks and impacts will include heat exposure, traffic safety, exposure to welding light and fumes and potential for fires and/or explosions resulting from ignition of flammable materials or gases. As referenced earlier under PS 1, the EPC Contractor will develop and implement the CESMP, including an OHS Management Plan. This will include organization, identification of risks and prevention measures, scheduling of meetings and trainings, permit-to-work procedure, and medical check-ups.
Workers Engaged by Third Parties:
As stated above, the Project Company will include EHS provisions in the EPC and O&M contracts and contracts with other sub-contractors providing services to that Project Company’s operations. These provisions will include as a minimum: compliance with labor legislation, terms of OHS management, and access to a workers’ grievance mechanism including review and response to anonymous complaints. The Project Company will monitor third-party compliance with approved EHS requirements.
PS3: Resource Efficiency and Pollution Prevention
During construction, water will be trucked in to meet the Contractor’s requirements. Water will be primarily required for building foundations of the solar plant and transmission line towers, as well as for sanitary purposes and dust control. During operations water will be used for sanitary purposes and to clean the panels during operations. The frequency of cleaning depends on weather and climatic conditions, it is estimated that the solar panels will have to be cleaned 2 times a month, using approximately 150 m3 per cleaning campaign.
The Project Company will undertake a water resource study during the construction period (ESAP item), to assess whether water can be extracted from the ground aquifers to meet the water requirements for operations, whilst ensuring that extraction will not affect the local community’s resources. If sufficient water is not available, water will continue to be trucked in, amounting to approximately nine trucks per month throughout operations.
According to the ESIA, the Project will lead to greenhouse gas emissions reductions equivalent to approximately 35,000 tonnes of carbon dioxide per year.
During construction, a minor amount of air, noise and water emissions are anticipated, which will be mitigated through standard pollution prevention and control measures. During the operational phase, environmental pollution will be limited to wastewater and waste generation. The EPC Contractor will be required to implement pollution prevention measures in the CESMP to mitigate the risk of any pollution, with specific provisions for erosion and sediment control, effluent management, chemical management, and waste management.
The measures indicated in the ESMP of the ESIA include the use of proper equipment, vehicle and roads maintenance, timely dust suppression measures, speed restriction, etc.
According to the ESIA, during construction waste will primarily consist of wood residues and packaging material, metal, and domestic waste. During operations, waste will be mostly generated at the offices, along with mineral oil from transformers, and sanitary effluents. A waste management procedure has been developed as part of the ESMP, including characterization of waste by type, quantities, and potential use; opportunities for source reduction, as well as reuse and recycling; procedures and operational controls for onsite storage; and final disposal.
Only sanitary wastewater will be generated. As there is no sewage collection network at the site, a septic system will be used, designed and installed in accordance with local regulations to prevent any hazard to public health or contamination of land, surface or groundwater.
For end-of-life management of batteries in the backup storage system, there will be buy-back-agreements with the battery supplier or similar arrangements. Mineral insulating oils will be used to cool transformers in operations phase. These oils will be handled by trained personnel to ensure that manufacturers’ recommendations are strictly followed. Provision of secondary containment, drip trays or other overflow and spill containment measures will be implemented in designated areas. Vegetation control will be carried out manually without any pesticide use. The waste management system described above will include used hazardous materials and will address issues linked to waste minimization, generation, transport, disposal, and monitoring.
PS4: Community Health, Safety and Security
Community Health and Safety
The Project is located in a rural and sparsely populated area. The site is surrounded by rural communities grouped in villages and hamlets, the closest of which is located approximately 1 km from the site, on the other side of the main road. The area around the site is also used for seasonal camps by two nomadic communities.
Construction traffic is the primary potential adverse community health & safety impact associated with construction. A Traffic Management Plan will be implemented, including training & certification, vehicle safety procedures, signage, and awareness campaigns in affected communities.
Community impacts related to in-migration are expected to be moderate and short-term due to the relatively short duration of the construction works. In-migration will be minimized and managed through a local recruitment plan, prohibiting the use of short-term workers and recruitment at the site, and the communication of qualified job opportunities on a national level.
As discussed under Performance Standard 3, the quantities of hazardous materials are limited, and the materials are managed in a suitable manner to avoid community exposure to these materials.
The community exposure to disease around the plant is limited as the site is located in a sparsely populated area. The Project will be implementing worker’s health programs to screen the health of workers, and a Communicable Diseases Awareness Campaign will be implemented in the communities surrounding the Project, in collaboration with a local NGO. A Code of Conduct for employees will be established, covering rules of interaction with local communities, addressing respect for local beliefs and customs and with special attention for risks related to sexual harassment, gender-based violence, and prostitution.
As indicated under Performance Standard 1, the Project will develop and implement an Emergency Preparedness and Response Plan which covers the procedures for informing stakeholders and responding to emergencies.
Site security will be managed by a professional private security firm who provides trained, unarmed security personnel. The Project Company will ensure that the security contractor operates in a manner which meets the requirements of local regulation and Performance Standard 4. The site will be fenced to prevent public access to the solar plant. The Project is guided by the principles good international practice in relation to hiring, rules of conduct, training, equipping, and monitoring of security workers, and by applicable law.
PS5: Land Acquisition and Involuntary Resettlement
The Project area, which is approximately 100 hectares (ha), was selected and refined to minimize displacement. No physical displacement is required, but the Project will result in economic displacement associated with land acquisition for the solar park and the associated transmission line. The Project area was identified as suitable for development of a solar project and attributed to the Project through a Presidential Decree in 2014 and registered with the cadastral plan and land registry in 2016. Land acquisition and compensation of land owners; however, is the responsibility of the Project Company.
The Project area is privately owned by approximately 190 individual farmers from the communities of Am Soukar and Am Koundjo. Given the barren and desert-like conditions, land use is limited to occasional crop farming in the rainy season. Eleven (11) farmers (8 from Am Soukar and 3 from Am Koudjo) cultivate 15 ha primarily to grow sorghum. Currently, only 4 ha is being actively cultivated, while 11 ha are fallow. All 8 affected farmers also cultivate land in different areas not affected by the Project. The remaining 85 ha is owned by approximately 180 individuals but is communally managed and used by residents of both Am Soukar and Am Koundjo for grazing sheep and goats. In rainy seasons with good conditions, other plots in the area may also be used for growing crops.
Parts of the 85 ha is also used seasonally by a nomadic group, which make annual migrations to the area in the dry season between October and March. Camps are mobile, and the nomads normally remain in a camp less than a week. The Project area itself is not used to set up tents but is occasionally visited for grazing of animals. A separate nomadic group is known to visit areas adjacent the Project, but not the Project footprint. The Project area is part of a larger area of land used for grazing, and the loss of access to this 100 ha is unlikely to affect the ability of local farmers and nomadic groups to find grazing land. The surveys conducted as part of the ESIA studies have identified available areas of land with similar conditions and use, adjacent the site itself and the affected communities.
There are no houses or buildings within the footprint, but the following physical assets will be affected: a water well and small retention pond previously used for a brickyard (currently not used), part of a fence (approximately 50 m length), and 10 brick turrets used to delineate a land plot.
The Project Company is in the process of purchasing the land from the affected owners. As part of the census and consultation, land owners were presented with various options for compensation including both in-kind and cash. To date, all owners expressed their wish to receive cash compensation, and a price has been negotiated and agreed between the Project Company, the landowners, village chiefs, and relevant authorities. The agreed price exceeds full replacement cost of the land. Households who do not own land but use it for grazing purposes will be eligible for support in terms of identification of replacement areas for grazing, or through the implementation of the Livelihood Restoration Plan (LRP) described below.
The transmission line has been routed to avoid physical resettlement and is primarily within the existing servitude for the highway. To avoid displacement, around 2 km of the transmission line will be routed as underground cable running adjacent to the shoulder of the road. The transmission line will require temporary relocation of 15 market stalls (vendors, workshops, etc.) during construction of the underground cable, and the relocation of a hut used by security guards.
A Livelihood Restoration Plan (LRP) (August 2019) has been established for the Project based on the requirements of PS5, covering land acquisition for both the solar plant and the transmission line. The LRP includes survey and census of land owners and farmers who make use of the land for grazing animals, consultation and community engagement, identification of vulnerable households, livelihood restoration programs, and a grievance redress mechanism. The livelihood restoration programs focus on income diversification and increase of agricultural production and have been developed in consultation with the communities. Individuals from the two affected communities and two nomadic groups may opt for participation in programs related to improvement of agricultural production (access to meteorological information, fodder production and conservation techniques, rotational grazing, and animal care and health, etc.), and diversification of income generation including training and support related to pottery, cowhide tanning, braiding, services, or other identified opportunities.
The grievance mechanism includes multiple communication channels both directly to the Project Company and via the village chiefs. As of today, all grievances received have been related to affected land owners registering their ownership of their plots. All received grievances have been resolved by adding the complainants to the list of affected land owners.
As outlined in ESAP item #2, the LRP will be updated once the survey of land owners and registration of plots is finalized. The Project Company will conduct monitoring related to the implementation of the LRP, and once all provisions are finalized, conduct an LRP completion audit (ESAP item #3). The completion audit will include, at a minimum, a review of the LRP mitigation measures implemented by the company, a comparison of implementation outcomes against agreed objectives, and a conclusion as to whether the monitoring process can be ended.
 In 2017 the project site boundaries were shifted eastwards to avoid a wetlands area, and whilst the new 100 ha project site was submitted to the Cadastry it was not formally signed off. This matter is currently being addressed and formal approval of a slightly smaller 84 ha project site with a modified boundary to the north and east is expected by the end of November 2019.
According to Chad’s environmental regulation (decree 630/PR/PM/MERH/2010), the solar plant is considered a high-risk project which requires an ESIA. As described under PS1, this ESIA was completed and submitted to the authorities for review; comments have been provided, addressed and the report re-submitted. In addition, the transmission line has been considered lower risk and the “NIES” report has been submitted to the authorities. The Project Company is currently awaiting feedback from the Ministry of Environment with regards to approval of the reports.
The ESIA includes identification of stakeholders and a description of consultation to date, involving stakeholders from authorities, private sector and civil society. A Stakeholder Engagement Plan will be established based on the findings of the ESIA and implemented in both construction and operations phases.
The Livelihood Restoration Plan, described under PS5, also includes stakeholder engagement activities related to livelihood restoration measures.
The documentation listed below is available electronically as PDF attachments to this ESRS at www.miga.org.
- Environmental Impact Assessment Study: Djermaya Solar Plant
- Environmental Impact Assessment Study: Djermaya Solar Transmission Line
- Livelihood Restoration Plan for the Djermaya Solar Plant and Transmission Line.
Broad Community Support is not applicable for this project.