Energia de Celaya S.A de C.V

Fisterra Energy (FE) is seeking a MIGA guarantee for its investment in the Celaya Gas Power Plant (“Celaya”, or “the Project”), against the risks of expropriation, transfer restriction, war and civil disturbance, and breach of contract, for a period of up to 15 years. The Summary of Proposed Guarantee for the Project is available here.  

The Project is developed by Energia de Celaya S.A de C.V. (the Project Company), a Mexican special purpose vehicle owned by FE and DeAcero S.A. de C.V. FE is specialized in energy infrastructure with a focus on Latin America, Europe and the Middle East. Other investments in Mexico include the development of the Ventika Wind Farm in the northeast, and the Tierra Mojada Gas Power Plant, currently under construction. The Tierra Mojada project is covered by a MIGA Guarantee, the ESRS disclosed by MIGA is available here.

The Project comprises the development, construction, and operation & maintenance of a combined cycle gas turbine power plant with an approximate total capacity of 1,333 megawatt (MW). The Project location is in Cortazar Municipality in the State of Guanajuato, approximately 200 kilometers (km) northwest of Mexico City. The Project will also include the construction of a 5 km 400 kilovolt (kV) transmission line, and a 4 km 230 kV transmission line, connecting the Project’s substation to the existing transmission network owned and operated by the Federal Electricity Commission (CFE). To connect the Project to the Ramal Salamanca natural gas pipeline, an 11 km pipeline is being developed by a third party, Gasoducto de Cortazar, S.R.L. de C.V. (GACO). The Project also has access to gas through a secondary pipeline which crosses the south portion of the Project site.

Financing and construction of the two transmission lines will be undertaken by the Project Company. The 230 kV line will be owned and operated by the Project Company, while the 400 kV line will be transferred at commissioning to the national utility (CFE), which will then be responsible for operation and maintenance. The 230 kV line is considered part of the Project, while the 400 kV is considered an Associated Facility to the Project, as defined by the MIGA Performance Standards. Since the transmission line will be constructed by the Project Company, construction activities are expected to comply with MIGAs Performance Standards.  In addition, the 11 km pipeline described above is also considered an Associated Facility to the Project. Construction of the pipeline is undertaken by GACO which is currently owned by FE and DeAcero, construction activities will therefore be expected to comply with MIGAs Performance Standards. Prior to commissioning of the pipeline, GACO will be sold. The Project will therefore have no control and only limited leverage over the environmental and social compliance of the operations of the 400 kV transmission line and the pipeline.

Tecnicas Reunidas, a global consulting and engineering firm based in Spain, has been pre-selected as the EPC Contractor for the Project. Tecnicas Reunidas will undertake construction, commissioning and testing of the plant once completed. A separate company will be engaged as an Operations & Maintenance (O&M) Contractor following commissioning.

The key components of the Project include three gas fired combined-cycle turbines with associated electric generators, three heat recovery steam generators, a single steam turbine, a closed component cooling system, emission control equipment, an electric switchyard and substation, a control system, a wastewater treatment plant, and auxiliary infrastructure such as control room building, offices and access roads, in addition to the associated facilities.
The Project will be located on three land plots with a total area of 18 hectares (ha). The site is in a rural area surrounded by private land lots mainly used for crop or livestock farming. The closest town to the site is Cortazar, located approximately 4 km southwest of the site, and in addition the community of La Huerta, of around 600 inhabitants, that lies within 2 km south of the site. Right-of-way agreements for the transmission line have also been negotiated with the relevant landowners.

The project is expected to employ around 1,500 workers during peak construction, and 30 in operations phase. The construction stage is planned to commence in 2020 and estimated to take approximately 3 years. 

The Project is classified as Category A project according to MIGA’s Policy on Environmental and Social Sustainability (2013). The key environmental and social (E&S) risks/impacts associated with the Project during both construction and operation relate to air emissions (dust during construction and decommissioning, nitrogen dioxide (NO2) and greenhouse gases (GHG) during operations), noise, occupational health and safety (OHS), community health and safety (e.g. explosions, traffic accidents), land acquisitions, solid and hazardous waste generation and management, access to water and wastewater management.

While all Performance Standards (PSs) 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 Resource.

Performance Standard 7 Indigenous Peoples and Performance Standard 8 Cultural Heritage are not applicable to this investment since there are no Indigenous People (as defined in MIGA’s Performance Standards) and no Cultural Heritage sites/risks in the Project area identified from the documents reviewed and the site visit.  However, a chance finds procedure will be developed for the construction phase of the project, consistent with PS8 requirements.

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)
• Sector specific guidelines for Thermal Power Plants (2017)
• Sector specific guidelines for Onshore Oil and Gas Development

The following documents were reviewed by MIGA:

• Manifestación de Impacto Ambiental (Environmental Impact Assessment): Ciclo Combinado Energia de Celaya. October 2018.
• Evaluación del Impacto Social (Social Impact Assessment) - Ciclo Combinado Energia de Celaya. March 2016.
• Politica de Sustenabilidad (Sustanability Policy) - Ciclo Combinado Energia de Celaya. September 2019.
• Environmental and Social Management System (draft), Ciclo Combinado Energia de Celaya. October 2019.
• Politicia de Recursos Humanos (draft), Ciclo Combinado Energia de Celaya. October 2019.
• Hydrological and hydraulical studies, Ciclo Combinado Energia de Celaya. April 2018.
• Manifestación de Impacto Ambiental (Environmental Impact Assessment) - Gasoducto de Cortazar. January 2019.
• Evaluacion del Impact Social (Social Impact Assessment) – Gasoducto de Cortazar. January 2019.
• Tecnicas Reunidas Quality, Health, Safety and Environmental Policy, April 2017.
• Tecnicas Reunidas Code of Conduct, April 2017.

In addition to reviewing the above documents, MIGA carried out an E&S due diligence visit in October 2019 to the Project site, which included meetings with the Project Company and consultants, local authorities 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 requirements of the applicable Performance Standards.

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

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

Policy:

The Project Company has prepared a sustainability policy setting out the guiding principles and standards for Environment, Health, and Safety (EHS) requirements, applicable to the construction and operations of the power plant and related infrastructure, including contractors and sub-contractors. The policy defines the basis of the ethical, environmental, social and corporate behavior of the Project in terms of sustainability of its processes and its relationships and impacts with stakeholders. As part of the ESAP, the Project Company will amend the sustainability policy to include commitments towards compliance with Mexican regulation and the PSs.

In addition, the EPC Contractor has an EHS policy in place, further described below.

Identification of Risks and Impacts:

Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA) studies have been carried out, and approvals have been granted by the relevant national authorities. The scope of the EIA and SIA included the power plant and the transmission lines. The EIA was prepared by IRCA Consultores, a local consultant, and approved by Federal Environmental Agency (SEMARNAT) in June 2019, and the SIA was prepared by Fundación para el Desarrollo Sustentable A.C. (FDS), a local non-profit organization, and approved by the Secretary of Energy (SENER) in November 2017. Various rounds of consultations with communities and other stakeholder were conducted as part of the impact assessment studies, including community meetings and focus groups. The impacts assessment reports were also publicly disclosed on the respective authorities’ website. In order to meet potential international lender’s requirements, the Project engaged ERM, an international environmental consulting firm, to undertake an environmental and social due diligence of the Project and the EIA/SIA in line with the requirements of the PSs. This due diligence identified a list of gaps in Project compliance to the PSs, and measures to address these gaps. MIGA has consulted with ERM regarding the outcome of its review, which is not yet finalized at the time of disclosure. ERM have also been contracted by the Project to update and amend a set of management plans and programs as specified in the ESAP, including inter alia policies for E&S and human resources, grievance redress mechanism, and stakeholder engagement.

Potential cumulative impacts were considered as a part of the EIA and SIA, potentially significant cumulative impacts were not identified. As per the ESAP, the Project will include monitoring indicators for cumulative impacts regarding for example noise and air quality, into its monitoring program considering existing and planned infrastructure projects and the Project’s Associated Facilities.

As mentioned above, the project company that is responsible for the 11 km gas pipeline (associated facility), GACO, has conducted EIA and SIA studies for the gas pipeline in line with national legislation and is in the process of acquiring necessary permits for the construction. EIA and SIA studies did not reveal any potential significant irreversible impacts but only those associated with construction activity such as risks associated with excavation works, occupational health and safety risks, dust and noise.

Management Programs and Monitoring: 

A draft version of an Environmental and Social Management System (ESMS) for construction and operations phases has been prepared based on the findings of the EIA and SIA. The system is based on the requirements of the PSs and consists of a number of plans and programs to manage impacts and risks, including air emissions and water effluents, waste management, soil conservation, stakeholder engagement, social investment program, health and safety plan, etc., as well as a monitoring program. To comply with PS1 requirements, the Project will finalize and update the ESMS in terms of consistency, coordination, responsibilities for implementation and monitoring, as per the ESAP. As described above, ERM has been hired to assist the Project Company in the finalization of the ESMS and related management plans. In addition, the project has engaged with other stakeholders in Celaya, e.g. the Polytechnic University of Guanajuato, for consultation on the ESMS.

Tecnicas Reunidas is certified according to International Organization for Standardization ISO 9001:2015, Quality Management Systems, ISO 14001:2015 Environmental Management Systems and the British Standards Occupational Health and Safety Assessment Series (OHSAS) 18001:2007 Occupational Health and Safety Management Systems, and has a Quality, Health, Safety and Environmental Policy applicable to all undertaken projects.

Organizational Capacity and Training:

FE has Sustainability Officer in place managing the Project preparation phase, and will appoint a team of on-site supervisors for construction who will be responsible for keeping track of the Project’s overall performance in terms of quality, environmental and social aspects, and health and safety. FE’s team will be accompanied on site by a team of environmental and social supervisors provided by the Project’s local consultants including IRCA Consultores (environmental management) and FDS (social management).

The consultants will support FE’s team with the day-to-day monitoring of the EPC contractor’s activities, and will be responsible for overseeing the implementation of the Project’s environmental and social plans and programs. Tecnicas Reunidas, the EPC contractor, will retain a team of EHS specialists at site (ESAP item), working on the implementation of the ESMS and related sub-plans during construction. As main EPC contractor, Tecnicas Reunidas will also be in charge of monitoring and coordinating relevant requirements with sub-contractors. E&S management, and the requirements of the PSs, will be part of Project induction training mandatory for all employees. During operations, and as per the ESAP, the O&M Contractor will retain an EHS team to manage the implementation of the ESMS in operations phase.

Emergency Preparedness and Response:

The impact assessment studies and ESMS includes descriptions of potential emergency scenarios related to construction, the Project’s use of natural gas and its potential impacts on the Project’s surroundings. As per the ESAP, FE has committed to developing and implementing an Emergency Preparedness and Response Plan (ERP) that addresses all the potential emergency scenarios related to the Project’s construction and operation stages, and specifies the measures to be followed by FE, the EPC contractor, and other subcontractor’s personnel in the event of an emergency. The ERP will include natural disaster and project-induced emergency scenarios, a description of the roles and responsibilities of first emergency responders, a list of emergency contacts, and a description of the level of training that will be required from emergency responders to attend emergency scenarios.

Monitoring and Review:   

FE will be responsible for ensuring that the Project’s E&S performance aligns with the EIA/SIA and requirements from national regulations and MIGA PSs. As mentioned earlier, the Project’s consultants will assign a team of supervisors during the Project’s construction stage to monitor the EHS performance of the Project, including the EPC contractor and subcontractors. The consultants will prepare and submit monthly reports to FE during construction, detailing field observations and providing evidences of the implementation of the Project’s E&S plans and programs. The reports will also be submitted to MIGA, and the Project will continuously be preparing reports to the local environmental authorities.

The ESMS includes monitoring programs, defining indicators, reporting, responsibilities etc. for environmental (air, water, noise, waste, soil conservation) and social (health, safety, communication, grievances, implementation of social investment programs). The social aspects of the monitoring program are based on the ISO 26000:2010 Guidance on Social Responsibility. The Project has committed to updating, as per the ESAP, the monitoring plans in order to strengthen the integration of monitoring activities, including monitoring and reporting for the construction of the pipeline and transmission lines, as well as a procedure for monitoring of subcontractors and their compliance to the requirements set out in the ESMS.   

Stakeholder Engagement:

Stakeholder identification, engagement and consultation has been carried out as part of Project preparation and impact assessment studies. A Stakeholder Engagement Plan (SEP) will be developed as part of the ESMS (ESAP item) to include the consultation and disclosure activities that will occur throughout Project construction and implementation. The SEP outlines the Project’s objectives in terms of stakeholder engagement and describes the activities to be conducted with the stakeholders during each stage of the Project’s development.

Significant adverse impacts on affected communities are not expected as part of this Project as described under PS4, and since land acquisition is limited to compensation for Right-of-Way and affected land owners may still farm or use the land with some restrictions (see PS5). Requirements related to Informed Consultation and Participation of PS1 does therefore not apply.

External Communication and Grievance Mechanisms:

As part of the draft ESMS, the Project has a grievance mechanism a procedure for external stakeholders, called Sistema de Atención a las Partes Interesadas (SAPI), which can be translated as the System for Attention of Interested Parties. It describes steps to be followed to receive, address and register grievances, and how grievances will be used to provide feedback to the Project’s ESMS.  The means for submitting the grievances include phone numbers, email, complaint boxes and in person. All grievances are recorded into a SAPI logbook that contains, among other things, the date of the grievance, the type, applicable PS and the status of resolution.

The EPC 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. The information is disclosed in hard copy through the local administration offices in each area. In addition, the Project and its consultants have been conducting regular consultation meetings with various focus groups during Project preparation and will continue consultations as part of the SEP (ESAP item).

PS2:  Labor and Working Conditions

As mentioned earlier, the Project will employ approximately 1,500 people during peak construction, of which around 30 will be FE staff and the remainder employed by contractors. Local labor will be prioritized for non-specialized tasks. During operations, around 30 staff will be employed.

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 Cortazar, and a training program to support the plan. Recruitment at the entrance of, or close to the project site, will not be permitted in order to minimize issues related to influx of workers.

No worker’s camps are currently planned at site, accommodation will be provided by the contractors in Cortazar, Celaya and other nearby towns. The Project’s draft ESMS includes a manual for workers accommodation, based on the IFC/EBRD Guidance Note on Worker’s Accommodation. Transportation by bus to site will be made available to staff, and the Project site will include a canteen.

Working Conditions and Management of Worker Relationship:

The Project has prepared a draft project-specific Human Resources (HR) policy, including provisions for 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.

Tecnicas Reunidas, the pre-selected EPC contractor, has in place a Labor Policy, and a Code of Conduct, which state Tecnicas Reunidas’ commitment to ensure compliance with local labor standards for all of its projects, as well as  commitments to respecting Human Rights; providing a safe workplace; fostering non-discrimination; respecting individual intimacy, and prohibiting bribes, among others. Project staff are free to join and/or form workers organizations or unions.

As described under PS1, the current grievance management procedure is designed for external stakeholders and not developed to receive grievances from Project staff. The Project has committed to develop, communicate and establish a formal worker grievance mechanism in line with PS2 provisions. The grievance process will be made accessible to the construction workforce (both company and contract workers), enable workers to raise anonymous complaints and will have provisions for protection of confidentiality and non-retribution. The company will maintain worker grievance records and shall monitor resolution of grievances. In addition, Tecnicas Reunidas implements a corporate grievance mechanism open to all employees.

Protecting the Work Force:

In line with the Project Company’s policy statement, child and forced labor is prohibited in relation to the Project. Tecnicas Reunidas, as 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.

In addition, the Tecnicas Reunidas Code of Conduct prohibits all forms of child and forced labor.

Occupational Health and Safety:

During construction, the workers will be exposed to hazards and risks including works at heights, slips and falls, falling objects and particles, moving machinery, dust, confined spaces and excavations, hazardous and flammable materials and hazardous waste. In addition, there are risks related to transportation of materials and workers to and from the site. During operations, the workers may be exposed to gas leaks and explosions, confined spaces and electrocution. Particularly in relation to operation and maintenance of the power transmission lines, maintenance staff can be exposed to live power lines, working at height, electric and magnetic fields and chemical hazards (e.g. pesticides at the agricultural fields along the RoW). 

As part of the ESMS, a draft Project Health and Safety Plan (HSAP) has been established,  including adherence to worker’s safety, Mexican Health and Safety regulations, specification of training and supervision, job hazard analysis, work permits for high risk activities, use of PPEs, documentation, and emergency response. The HSAP requirements will be applicable to all project employees, including contractor staff. Monitoring of the occupational health and safety and the HSAP implementation will be part of FDS’s scope of work. As part of the ESAP, the HSAP will be finalized and updated in line with the requirements of PS2.

On-site emergency capacity will include a medical station, an ambulance and fire-fighting equipment.

Workers Engaged by Third Parties:

The Project will include EHS provisions in the EPC and O&M contracts and contracts with other sub-contractors providing services to the 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 will monitor third-party compliance with approved EHS requirements.

PS3:  Resource Efficiency and Pollution Prevention

The potential environmental impacts from construction activities for the Project include: fugitive dust and noise emissions; vibrations; water consumption and wastewater generation; hazardous materials and waste handling, and surface water runoff. The EPC contractor and subcontractors are expected to control these to acceptable levels through application of standard construction environmental controls. The relevant recommendations and mitigation measures suggested in the ESMS will be incorporated into the construction contract documents. The EPC contractor will be contractually required to ensure use of efficient construction equipment and machines during the construction phase and meeting the emission standards applicable in Mexico, as well as the WBG EHS Guidelines. During the O&M phase, the company will set energy and material efficiency goals in alignment with ISO 14001 standards.

Resource Efficiency:

The project will be fueled by natural gas, and will utilize high efficiency combined cycle technology. With respect to emissions of greenhouse gases (GHG), the project is expected to emit approximately 3,700,000 tonnes of CO2e per year. The Project aims to reduce consumption of primary resources and emissions of pollutants, and the ESMS includes application of adequate control measures for this purpose. The Project will monitor GHG emission continuously and including emissions in its reporting to MIGA.

The Project’s cooling system is a closed-circuit system and water will be reused in the cooling cycle. This will help reduce the total water consumption compared to a once-through system. A Water Management and Conservation Program has been developed as part of the ESMS, describing mechanisms that will be used during the operation stage to collect, purify and reuse water.

The Project’s water supply will consist of groundwater abstraction wells located within the Project’s site. Water for the Project’s construction stage will be supplied directly by the groundwater abstraction wells, while supply water for operations will be directed to a filtration system, including a reverse osmosis process, to reduce its content of minerals and solids so that supply water reaches the quality of required for the Project’s operation.

A geohydrological assessment of groundwater resources have been conducted, and a water abstraction permit for 700,000 cubic meters m3/year have been approved by the National Water Commission (CONAGUA) (April 2018). The geohydrological assessment concluded that the Project water usage will not adversely impact availability of water resources for communities and other users. There are no other industrial groundwater users in the area and pumping of groundwater for irrigation purposes is limited to adjacent farmers.

Pollution Prevention:

The majority of wastes will be produced during the construction phase. These wastes include, for example, spoil, packaging, and scrap metals. Waste generated during operations will include paper, packaging materials and food wastes. According to the Project’s Waste Management Program, good housekeeping practices for reducing, segregating, recycling, and depositing wastes will be implemented during all Project phases. A temporary warehouse will be built to handle the solid waste that will be generated during the construction phase. Contractors will have the obligation to use waste disposal vendors and service providers authorized by SEMARNAT, in accordance with the established procedures in the applicable regulations.

As part of the ESMS, the Project has established a draft version of a Waste Management Program. As per the ESAP, the Waste Management plan will be finalized and amended to comply with PS3, specifically in terms of defining responsibilities for waste handling and detailing methodologies for waste reduction and recycling. 

During construction, air emissions will consist of combustion gases from vehicles used for construction activities, and dust/particles generated from vehicle movement. Control measures to minimize emissions will be applied, including water spraying on access roads and areas with bare soil, enforcement of speed limits, covering trucks transporting soil and other materials prone to dust dispersion, and preventive maintenance and monitoring of the construction vehicle fleet.

The operation of the plant with natural gas as fuel in combined cycle will generate flue gas emissions containing primarily carbon dioxide (CO2), carbon monoxide (CO), and nitrogen oxides (NOx) Emissions of sulphur dioxide (SO2) and particulate matter are expected to be negligible, as natural gas typically has a low sulphur level. The gas turbine will have dry low NOx combustors, reducing both emissions of NOx and water use for cooling purposes and in line with the recommendations of the EHS Guidelines for Thermal Power Plants. The Complex also has back-up diesel generators on site, which may be used infrequently during start-up and maintenance.

Impacts due to the operation of the plant were assessed by emissions modelling of the EIA using AERMOD, an air quality dispersion model recommended by the US Environmental Protection Agency. as part. On the basis of the modelling results, maximum ground level the study area will be within the applicable standards (national and WBG EHS Guidelines) for air quality with usage of natural gas, and impact on air quality has been predicted to be moderate.

An Air Emission Monitoring Program has been developed as part of the draft ESMS, specifying measures to be implemented in order to evaluate air quality impacts, monitoring air emissions, and establish mitigation measure/corrective actions to reduce and minimize the Project’s air emissions. To ensure compliance with the air emission criteria for flue gas stacks, a Continuous Emission Monitoring System for the measurement of NOX, CO, and CO2 emission levels in the exhaust stack will be installed, and ambient air quality monitoring stations will be in place. The Monitoring Program will also include measure to detect and minimize SF6 leaks from gas insulated equipment.  

Noise will be generated during the Project’s construction stage by vehicles, machinery used for installing the Project’s components, and building of internal and external roads. Construction activities are expected to be limited to daylight hours, although nighttime activities may take place in exceptional cases. Noise emissions during the Project’s operation stage will be generated mostly by the turbines operation, and mitigated minimized through the use of turbine enclosures and airflow silencers.

The Project has developed a Noise Monitoring Program (NMP) that establishes the guidelines for conducting noise monitoring during the Project’s operation stage, and the mitigation measures to implement in order to ensure that noise levels are kept under the applicable Official Mexican Standard. The NMP will be updated to make reference to the applicable limits of the WGB EHS Guidelines (ESAP item), and define monitoring requirements for the construction stage. 

Water discharge during the construction stage will mainly consist of sanitary wastewater, which will be stored in septic tanks and collected and disposed of by an authorized contractor company. Wastewater during the Project’s operation stage will be made up of process water that was not reused or recycled into the process. The Project will have a wastewater treatment plant with mechanical and biological treatment for its wastewater discharges, and it is expected that discharges will amount to approximately 1,000 m3 of treated wastewater daily. In line with the discharge permit, the treated wastewater will be discharged to the Laja River, to the south of the Project site. The wastewater treatment plant will include a sludge de-hydration system to minimize the water content in the sludge. Once treated, the sludge will be picked up by an authorized contractor.

Hazardous Materials Management:  

Hazardous material waste during construction will include contaminated containers, used paint, engine oils, hydraulic fluids and waste fuel, spent solvents from equipment cleaning activities and spent batteries or spent acid/alkali from the maintenance of machinery on site. The Project will require the EPC contractor to have proper system for hazardous materials storage and management at site to avoid any accidental spillages, documentation and record keeping of hazardous materials and wastes, which will be periodically reviewed by the company’s EHS manager.

The primary hazardous waste during operations primarily include contaminated containers, oils, grease and solvents, including oily rags, and spent batteries. The hazardous wastes generated from the project will be collected and stored in designated roofed-areas and/or barrels with concrete flooring and secondary containment and disposed of/sold through contractors.

As mentioned earlier the draft ESMS include a Waste Management Plan (WMP) with provisions for hazardous waste storage, transport and disposal. As part of the ESAP, the WMP will be updated and finalized in line with the requirements of PS3.

PS4:  Community Health, Safety and Security

As mentioned earlier, the Project is located within the Cortazar Municipality in the State of Guanajuato. Parts of the 230 kV transmission line also runs through the Villagrán Municipality. The Project site is in a rural area, surrounded by private plots used for crops and livestock farming. The closest town to the site is Cortazar (~88,000 inhabitants), located approximately 4 km southwest of the site, and in addition the community of La Huerta with around 600 inhabitants lies within 2 km south of the site.

Community Health and Safety:

Potentially negative community health impacts during construction stem from dust and noise due to the movement of heavy equipment, materials and project personnel, as well as influx of workers. During operations, negative impacts are expected to be related to noise, air emissions, traffic and potential emergency scenarios.  

Mitigation measures for noise and air emissions are described under PS3. A Community Health and Safety plan will be implemented including provisions for traffic safety management, emergency response procedures, and security. Traffic safety measures will include speed limitations, traffic control signs, and driver training, and the plan will be applicable also to drivers of buses for staff transportation to and from the site. In terms of emergency response, the plan will include identification of potential emergency scenarios, how to address them, steps for setting up lines of communication for external liaison and reporting, and coordination between the Project’s internal, and external emergency services.

In order to amplify the Project’s positive impacts and in line with applicable national requirements,  a social investment plan for the communities in the Project area has been developed and will be implemented during Project construction. The purpose of the plan is to support measures that promotes socio-economic development in line with the communities’ needs, opportunities and customs. The investment plan will be implemented in cooperation with the Municipality of Cortazar, which will be responsible for managing donations made through the plan for the benefit of communities located within the Project’s area of influence.  Based on initial consultations, a list of proposed support measures and programs have been identified. The social investment plan and supported programs will be further detailed in consultation with the communities and local authorities.    

Community health and safety risks related to the pipeline will be managed through separate plans for emergency response, stakeholder engagement and physical security, implemented by GACO, the company developing the pipeline.

Security Personnel:

As part of the ESMS, a draft Security Management Plan has been established, providing clear commitment by the Project in terms of recruitment, vetting and appropriate training of security contractors, as well as a Code of Conduct with respect to use of force. The plan also includes incident reporting and follow-up procedures, and responding to any security-related complaints received through the external grievance mechanism. As part of the ESAP, the Project will finalize the Site Security Plan in line with the requirements of PS4.

The Project site will be fenced and equipped with video-surveillance and access-control systems.

PS5:  Land Acquisition and Involuntary Resettlement

The Project site will be located on three plots that the Project acquired through willing seller – willing buyer negotiations in September 2014 and March 2015. The negotiations and agreements were conducted in line with the PS5 definition of willing buyer – willing seller conditions, including an existing market for land sales, the informed consent of the seller, and fair compensation based on market values.

The Right-of-Way of the transmission lines will affect 11 private land owners, and one communal farming area (‘ejido’). There will be no other physical or economic resettlement necessary for the Project. Lease agreements for a period of 45 years have been negotiated with the land owners. A third-party consultant was hired by the Project Company to negotiate rates for land and assets (such as crops), and agreed rates exceed market value established by the Institute for Administration and Valuation of Goods. Compensation will include a one-off payment for the Right-of-Way exceeding full replacement cost, monetary compensation for any losses of crops during construction, and compensation any time the land is used or affected for maintenance activities during operations. The land owners will be allowed to farm as usual in the Right-of-Way, but with restrictions regarding buildings and height of any planted trees.

The social investment plan described under PS4 will include support programs for land owners affected by the transmission lines. As part of the ESAP, the Project will conduct a closing audit of the land acquisition process and compensation, to confirm that the requirements of PS5 have been met.

The Right-of-Way of the 11 km pipeline, which is considered an Associated Facility to the Project, will affect 65 private or ejidal (people that cultivate land that has been assigned to them within the communal areas) land owners, and 7 communal farming areas associations (ejidos). Current land use consists of various forms of agriculture. Land acquisition for the pipeline has been managed by a separate company but follow the same principles as for the transmission line described above. A separate social investment plan will also be implemented for the pipeline, based on the requirements of local legislation and the PSs.

As part of the ESAP, the Project Company will conduct a Land Acquisition Closing audit within one year following the completion of all activities related to land acquisitions and compensation for the RoW to confirm the successful outcome of the process and that the objectives of PS5 have been met. The scope closing audit will include land owners affected by the power plant, the transmission lines, and the pipeline.  

PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resource

The project site consists of modified habitat, previously used for crop farming. The site as well as the route of the transmission lines have been selected in order to minimize impacts, as presented in the analysis of alternatives in the EIA. Biodiversity surveys and baseline information is included in the EIA, and no Endangered or Critically Endangered (as per the IUCN Red List) were identified in the Project site or the transmission line’s and pipeline’s areas of impacts. Significant biodiversity impacts are therefore not expected.

Approximately 2.5 km of the 400 kV transmission line will pass through a regionally protected area (Cerros El Culiacán y La Gavia), which includes areas of low deciduous forests and oak forests Routing the transmission line through the protected area could not be avoided because the connection point to the national grid also lies within this area. The route was selected in consultation with the management authority of the protected area and does not affect forested or other areas of biological importance.

Significant biodiversity impacts are therefore not expected, and in the design of the Project and Associated Facilities the Project has avoided and minimized impact in line with the mitigation hierarchy of PS6. The Project will implement a Biodiversity Management Plan including programs to mitigate impacts and support the conservation aims of the protected area. As part of the ESAP, the Project will update the Biodiversity Management Plan to meet the requirements of PS6.

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