Mega First Solar IPP

MIGA has been requested to provide guarantees to Mega First Power Industries Sdn Bhd (MFPI, Guarantee Holder or GH) for its quasi-equity investment in Mega First Solar (Maldives Consortium Pvt Ltd (MFS, Project Enterprise or PE) for a period of up to seven years. The PE has been awarded with the design, build, finance, own, operate, and transfer contract by the Government of Maldives to install 11.43 MW solar photovoltaic (PV) systems and interconnection facilities in nine sites in Addu, Fuvahmulah, Thinadhoo, Hinnavaru, Eydhafushi, and Kukhudhuffushi islands of Maldives (the Project). 

The Project is the third (and the largest thus far) independent power producer (IPP) sub-project under the International Development Agency (IDA)’s Accelerating Sustainable Private Investments in Renewable Energy (ASPIRE) program. This program aims to reduce the Maldives’ reliance on fossil fuel and increase solar PV generation in the country through private sector investment. Unlike other ASPIRE sub-projects, the Project’s solar panels will be mounted on the ground and are designed to be multi-purpose (e.g. shade for parking spaces, markets, and walkways). As an ASPIRE program sub-project, the Project is required to comply with IDA’s environmental and social (E&S) requirements, which stipulate compliance with the IFC/MIGA E&S Performance Standards due to private sector investment. 

The Project sites are located in reclaimed areas and brownfield sites, such as airports, sports complexes, and former landfill areas. There are no built structures found within these government-owned sites which are relatively distant from residential areas. The sites do not overlap with any protected areas or key biodiversity areas.

The Project depends on a planned grid update and battery energy storage systems (BESSs) to be able to store, distribute, and sell the electricity produced. The grid upgrade and BESS are not part of the Project, but are considered as associated facilities. These are two independent government projects under the IDA-funded Accelerating Renewable Energy Integration and Sustainable Energy (ARISE) program. 

The Engineering, Procurement and Construction (EPC) of the Project was implemented through split contracts between two international companies. The Project’s construction started in May 2024 and is anticipated to be completed in a couple of months. The Project’s operation and maintenance (O&M) will be contracted to one of the EPC contractors.

The Project is categorized as Category B according to MIGA’s Policy on Environmental and Social Sustainability (2013) as the potential E&S impacts are limited, site-specific and readily addressed through mitigation measures. Key risks and impacts associated with the construction and operation of the Project include capacity to implement an E&S management system, contractor management, stakeholder engagement, labor and working conditions (including occupational health and safety), water use, waste management, community health and safety (including workers’ influx), and risks related to forced labor in the solar supply chain.

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

There are no impacts related to the following PSs thus they are not triggered for the Project: PS5 Land Acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; PS7 Indigenous Peoples or PS8 Cultural Heritage.

In addition, the World Bank Group General Environmental, Health, and Safety (EHS) Guidelines (2007) and the EHS Guidelines for Electric Power Transmission and Distribution (2007) are applicable to the Project.

The following documents were reviewed by MIGA, including the parent company’s (Mega First Corporation Bhd, MFCB) E&S policies and procedures: 

• E&S Impact Assessment, April 2023
• Approval of the EIA, July 2023
• Environmental Monitoring Report, September 2024
• MFCB Employee Handbook, August 2016
• MFCB Employee’s Code of Conduct and Discipline, August 2016
• MFCB Human Rights Policy, September 2023
• MFCB Responsible Sourcing Policy, September 2023
• Onshore Contract with the EPC Contractors, May 2023
• ASPIRE Weekly Progress Report, November 2024

In addition to reviewing the above documents, MIGA carried out an E&S due diligence visit in November 2024 to the Project which included meeting with key E&S staff and management, Project Implementing Unit (ASPIRE program), relevant ministries, and local authorities, as well as visiting four Project sites on two islands. 

MIGA’s due diligence review considered the E&S 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 objectives.

Key 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 Assessment and Management System:

The PE currently adopts corporate-level E&S policies and procedures (i.e., MFPI E&S policies and procedures). The PE will develop and implement a project-specific ESMS that is appropriate to the nature and scale of its operations. The ESMS will specify compliance with applicable E&S regulations and MIGA Performance Standards (PSs), WBG EHS Guidelines, and regulatory requirements. The ESMS will be consistent with the commitments in the ESIA and incorporate the following elements, at a minimum:  (i) policy; (ii) identification of risks and impacts; (iii) management programs; (iv) organizational capacity and competency; (v) emergency preparedness and response; (vi) stakeholder engagement (including grievance management); (vii) monitoring and review, and (viii) contractor management (ESAP item 1). 

Policy:

The PE adopts the corporate Sustainability Policy which stipulates the strategies to environmental, social and business sustainability across the group. Building on this Sustainability Policy, the PE will develop a project-level policy that complies with PS1 requirements, as part of the Project’s ESMP (refer to ESAP item 1). 

Identification of Risks and Impacts:

The Project’s Environmental and Social Impact Assessment (ESIA) was developed and completed in April 2023. The ESIA describes potential E&S impacts of the different phases of the Project at all nine sites, proposed mitigation measures and a monitoring plan. The ESIA was updated to incorporate information requested by the Environmental Protection Agency (EPA) and was approved in July 2023. 

Management Programs: 

As stated in the environmental approval, the PE is required to implement the E&S mitigation measures and monitoring plan specified in the ESIA. Due to logistical challenges and parallel construction works, the PE relies on the EPC contractors to implement these commitments. The EPC Contractors were observed to be implementing some mitigation measures during construction activities, however, there is a need to improve overall E&S performance. 

As part of the ESMP, the PE will develop and implement a Contractor Management Plan, which will specify how it will monitor and manage the E&S performance of its contractors (ESAP item 2). This Plan will describe remedial actions if the contractors are found to be underperforming or non-compliant. The contractors will adopt the Project’s ESMS or will develop their own Project-specific ESMS that is aligned with the Project’s ESMS. This requirement and applicable PS requirements will be incorporated in the contractual agreement with contractors. (ESAP item 2).

Organizational Capacity and Competency:

The Project Manager, based abroad, is responsible for the overall performance of the Project. The EPC contractors engage two onsite HSE Managers to oversee the HSE matters during construction. They report directly to the Project Manager and to PIU. The PE will hire a competent local E&S Officer who will be responsible for implementing the ESMS and ensuring the Project’s compliance with the PSs and E&S requirements (ESAP item 3). The E&S Officer will coordinate closely with the third-party monitoring entity, ASPIRE and ARISE Project Management Units (PMUs), and local councils to monitor and assess contractors’ E&S performance in different sites/ islands.

Emergency Preparedness and Response:

The PE will develop an Emergency Preparedness and Response Plan (EPRP) that describes potential emergencies, responsibilities, incident reporting, training, and measures to prepare for and respond to emergency situations (ESAP item 4). The EPRP will identify coordination with local communities and authorities, describe internal and external communication protocols, evacuation areas and routes, as well as Emergency Response Team members and their responsibilities. The EPRP will be reviewed and updated regularly to determine if additional mitigation measures are required

Monitoring and Review:

The ESIA includes a monitoring plan, which summarizes proposed monitoring actions (e.g. monthly during construction; annually for the first two years of operation). The ESIA also specifies daily and weekly monitoring for activities such as waste management, vehicle maintenance, site management, and hazardous material handling and storage during construction and operation. The Project will update and revise the E&S Monitoring Plan to comply with PS1 requirements (ESAP item 5). At a minimum, the monitoring plan will include scheduled monitoring activities, location, frequency, performance indicators, responsible staff, adaptive management, and corrective actions during the Project’s construction and operation. 

The PE has contracted a consulting firm to conduct and submit environmental monitoring reports quarterly during construction and annually for the first two years of operation. The PE will develop monitoring report guidelines and templates that cover all applicable PS requirements (ESAP 5). The monitoring reports will cover all relevant E&S aspects of the project with evidence of compliance (e.g. photos, measurement results, records). These requirements will be specified in the E&S Monitoring Plan and shared with the third-party monitoring firm. The E&S monitoring reports will be submitted to MIGA.

Stakeholder Engagement:

Public consultation activities were conducted as part of the ESIA process. The PE will develop a Stakeholder Engagement Plan (SEP) that will describe stakeholder identification and analysis, engagement methodologies, information disclosure and communication strategies, and grievance redress mechanism (GRM) (ESAP item 6). The SEP will build on the Community Engagement Plan in the ESIA and the SEP from the ASPIRE program. It will specify responsible staff and their responsibilities, as well as concrete activities that will be implemented to enable open communication with the local communities and relevant stakeholders. 

External Communication and Grievance Mechanism:

The SEP will cover external communication strategies and the public grievance mechanism. The PE will disclose Project information, ESIA report, SEP (including GRM), and other relevant E&S documents on the Project website (ESAP item 7)

The PE will update the GRM described in the ESIA, which adopts the ARISE GRM, to include project-specific implementation details (ESAP item 7). The GRM will include disclosure strategies, access methodologies, as well as complaint handling and management process. The GRM will also include provisions regarding sexual exploitation and abuse and/or sexual harassment. The E&S Officer will be responsible for accepting, addressing, and monitoring grievances, as well as managing the grievance register. The details of the Project’s GRM will be included in the SEP. 

PS2:  Labor and Working Conditions

The construction EPC contractors engage approximately 66 foreign workers at the sites. The workers are housed in rented apartments. During operation, the O&M contractor will engage approximately five foreign experts to operate and manage the Project.

Working Conditions and Management of Worker Relationship: 

The PE is required to adhere to the corporate level human resource (HR) policies and procedures, which include a Human Rights Policy. The Policy recognizes freedom of association and collective bargaining, fair working conditions, equal opportunity, as well as prohibition of child labor and forced labor. The PE also adopts the corporate Employee Handbook and Code of Conduct and Discipline, which describes employees’ responsibilities and prohibited actions to uphold integrity and ethics at work. 

The PE will update HR policies, procedures, and Code of Conduct to be project-specific; to stipulate compliance with the PS2 requirements and Maldivian labor laws; and to incorporate gender-based violence and harassment (GBVH), workers’ grievance mechanism, applicability to all Project workers, and communication strategies (ESAP item 8).

Occupational Health and Safety (OHS): 

The PE will develop a Project-specific OHS Management Plan, which will identify potential OHS hazards (e.g. working at heights, electrical works, hot works), preventive and protective measures, training plan, inspection and monitoring, and incident management and reporting (ESAP item 9). The OHS Plan will stipulate the responsibilities of the E&S Officer, contractors in ensuring that the workers implement good international industry practice at work during the Project construction and operation. 

Workers Engaged by Third Parties:

As part of the Contractor Management Plan, the PE will specify policies, procedures, and mechanisms to manage and monitor the E&S performance of contractors and their sub-contractors (ESAP item 2). The Plan will describe remedial actions if the contractors and sub-contractors are found to be underperforming or non-compliant. It will also describe measures to ensure that contractors’ workers can access the workers’ grievance mechanism of the Project. 

Supply Chain:

The Project adopts the corporate Human Rights Policy and Responsible Sourcing Policy, which describe the PE’s strong commitment against “unlawful and unethical human rights abuses that go against globally recognized labor standards”, such as forced labor and child labor. In particular, the Sourcing Policy includes provisions for human rights due diligence, action planning, monitoring, and reporting. 

As the Project is expected to finish construction soon, the acquisition of solar panels is limited to maintenance requirements. The PE will develop a supply chain management plan, which will cover supply chain risk assessment and screening procedure in line with PS 2 requirements to identify and assess risks related to forced labor in the supply chain for future procurement of solar panels (ESAP item 10). The E&S criteria will be included in the selection and evaluation of suppliers and stipulate relevant PS requirements in agreements with primary suppliers. The plan will also include an internationally recognized traceability protocol and verification system to ensure products are not linked to forced labor.

PS3:  Resource Efficiency and Pollution Prevention

Resource Efficiency 

The Project is estimated to generate 18,000 MWh per year with potential greenhouse gas reductions of approximately 11,800 tCO2 per year. Solar batteries are used to store energy needed in case of emergencies, such as an emergency shutdown. 

The Project sources its water through temporary connections from FENAKA (a state-owned utility company) with approvals from the local councils. The Project uses water for construction and domestic use. During operations, water is needed for each wet cleaning, which is carried out two to four times a year. The PE will monitor water use and will include this in the E&S monitoring reports. 

Pollution Prevention:

The PE will develop the pollution prevention plan to avoid and mitigate the Project’s adverse environmental impacts during the project life (ESAP item 11). This Plan will include the mitigation hierarchy and specify measures to mitigate, manage, and monitor air emissions, noise, wastes (including cleared top soil), wastewater, domestic sewage, soil and groundwater contamination. The Plan will also stipulate the avoidance of using pesticides, herbicides, and other chemicals, particularly for cleaning the panels and managing vegetation within the Project sites. 

The Maldives have no capacity to treat and manage hazardous wastes (e.g. broken solar panels, electrical wastes, waste oil/lubricants). The PE will develop a hazardous waste management plan (ESAP item 12) which will describe measures to collect, store, and dispose of hazardous waste that will be generated by the Project. The Plan will also identify the proper reuse and/or disposal of waste solar panels during operations and after decommissioning based on consultation and agreement with the government and relevant stakeholders. The PE will set-up temporary hazardous waste storage facility/ies, compliant with the WBG EHS Guidelines, that will store broken panels and hazardous waste until it is viable to transport and dispose these (ESAP item 12). 

Prior to the start of operations, the PE will submit to MIGA a construction close out report (ESAP item 13). The report will provide information regarding the E&S measures implemented during the final stage of construction and describe the E&S conditions of the Project sites and areas temporarily used by the Project. The report will include measurements of relevant E&S parameters after construction to assess the effectiveness of measures implemented at all sites, as well as evidence that demonstrate compliance with E&S requirements (e.g. training register, accident/incident reports with corrective measures, waste register, record of replanted trees and success rate, photos/evidence of all site inspections, grievance register).  

PS4:  Community Health, Safety and Security

The Project is being built on nine sites across six islands. Most of the sites are located in public spaces such as newly reclaimed areas, airport and harbor premises, and other urban areas. Some sites are not directly adjacent to residential areas but are within active urban areas. 

The Project’s ESIA identifies potential E&S impacts to local communities during construction and operation and describes mitigation measures to avoid and minimize these impacts. The construction close out report will include a summary of measures implemented to ensure that potential hazards to the public during construction works have been removed and that all project sites and surrounding areas have been restored and/or rehabilitated. (refer to ESAP item 13). During operations, the potential impact on local communities will be minimal. The PE will update the GRM and improve accessibility to the public (ESAP item 7).

The Project does not and will not engage security personnel during construction and operation because the sites are mostly located on public land.  Considering multiple sites, the O&M contractor will monitor the sites remotely and conduct regular visits. 

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

• ESIA, April 2023

For additional information about the Project, please contact:

Name: Mohamed Shadhah Shahid

Contact: +60145192474

Email: shadhah.shahid@mega-first.com  

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