Sonnedix South Africa

MIGA has been asked to provide a guarantee for a period of up to 15 years to cover equity investments by Okavango Biology Luxembourg SARL for the acquisition of Sonnedix Solar South Africa Holdings Pty Ltd (the Company). The Company owns 60% of Mulilo Sonnedix Prieska PV (RF) (Pty) Ltd (the Project Enterprise), who owns and operates an existing 75 MW solar power project (the Project).  

The Project is located on 125-hectare site, 60 km South West of the town Prieska, Northern Cape province, approximately 750 km northeast of Cape Town. The Project site is in Copperton, in the Siyathemba Local Municipality and Pixley Ka Seme District Municipality. The surrounding land use is primarily agricultural, however the Copperton mine is located approximately 5km from the Project. The Kronos Solar Plant Project is located approximately 2km to the east and shares the Kronos Substation with the Project. A wind power project is also located approximately 9 km to the northeast of the Project.  Access to the site is via a graded dirt road which connects directly to a regional road. The Project came forward under round three of the South African Renewable Energy Independent Power Producer Procurement Program (REIPPPP) in 2013. The Project started construction in April 2015 and reached COD in July 2016. The Solar PV Power Plant consists of solar arrays, photovoltaic modules, solar module mounting structures comprised of galvanized steel and aluminum, and foundations. The main buildings on site comprise of offices, an operational and maintenance control center, a warehouse, ablution facilities, substations, waste storage and laydown areas, an electric fence and camera and guard houses with CCTV. An access road, internal gravel roads and stormwater channels have also been developed within the project footprint and are maintained by the Project. An O&M contractor has been appointed, the same firm who also served as the EPC contractor for the Project.   

The Project is connected to the Eskom power grid through a dedicated 2.2 km 132 kV overhead transmission line and electrical infrastructure installed at the Kronos substation. Financing and construction of the transmission line, and electrical infrastructure was undertaken by the Project and ownership transferred at commissioning to Eskom which is currently responsible for operation and maintenance. The transmission line and transformers are considered Associated Facilities to the Project, as defined by the MIGA Performance Standards.  

AE4 is a fund run by the private equity firm Actis of the United Kingdom, a MIGA key client since 2013. In August 2019, it acquired BioTherm Energy (Pty) Ltd (BTE), an African renewable energy development platform which is fully owned by Okavango South Africa Luxembourg SARL, a holding company subsidiary of the Guarantee Holder. As an operational Actis platform, BTE team is managing the equity investment to the Company and will oversee the operations of the Project moving forward. 

This is a Category B project according to MIGA’s Policy on Environmental and Social Sustainability (2013). The Project is expected to have potentially limited adverse Environmental and Social (E&S) risks, which will be few, site-specific, largely reversible, and readily addressed through mitigation measures. These impacts can be avoided or mitigated by adhering to applicable Performance Standards (PSs), procedures, World Bank Group (WBG) Environmental Health and Safety (EHS) guidelines and design criteria. 

During operations, key E&S risks and impacts include occupational health and safety, emergency response and community health and safety. Other E&S risks are related to workers’ grievance mechanisms, and compliance with applicable national labor, health and safety legal requirements, regulations, and standards.  

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

• 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 

• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources 

• PS8: Cultural Heritage 

PS5 is not deemed applicable as the land on which the Project was developed was negotiated on a ‘willing buyer, willing seller’ basis in the context of a single private landowner in South Africa. 

PS7 is not deemed applicable as there is no evidence that indigenous people have been impacted by the Project. 

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

• General EHS Guidelines (2007)  

• EHS guidelines for Electricity Transmission and Distribution (2007)  

The following documents were reviewed by MIGA:  

• Environmental Impact Report (EIR) for Proposed Hoekplaas PV Project (Final Report) prepared by Aurecon, April 2012 

• Environmental and Social Due Diligence (Final Report) prepared by IBIS, October 2021 

• Life Cycle Environmental Management Programme prepared by Aurecon, April 2014 

• Biodiversity Update Report prepared by NCC Environmental Services, December 2015 

• Desktop Agricultural Assessment for Site PV 3, Hoekplaas prepared by Aurecon South Africa, February 2012 

• Hoekplass Photovoltaic Energy Facility, prepared by Avisense Consulting Avian impact assessment, January 2012 

• Heritage Impact Assessment for a Proposed Photovoltaic Energy plant on the Farm Hoekplass near Copperton, Northern Cape, prepared by Archaeology Contracts Office, University of Cape Town, January 2012 

• Paleontological Specialist Assessment: Desktop Study, prepared by Natura Viva, February 2012 

In addition to reviewing the above documents, MIGA conducted virtual due diligence from October – December 2021, including calls with key BTE representatives. Due to COVID-19 travel restrictions, MIGA was not able to undertake a due diligence site visit but took part in findings from site visits conducted by IBIS (July 2021). 

MIGA’s due diligence review considered the E&S management procedures and documentation being developed, and which will be implemented for the Project, and identified gaps, if any, between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period, are summarized in the paragraphs that follow and in the Environmental and Social Action Plan (ESAP) attached to this ESRS. Through the implementation of these measures, the Project is expected to be designed and operated in accordance with MIGA’s PSs. 

Key E&S issues associated with the Project’s 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 O&M contractor has developed and is implementing some elements of a site level Environmental & Social Management System (ESMS) including a policy, baseline and task level risk assessments, roles and responsibilities, Health & Safety (H&S) Program, operational Environmental Management Plan (EMP), Emergency Action Plan, Method Statements, Maintenance Plan, as well as monthly, quarterly, and annual monitoring and reporting. The Project’s E&S and Occupational Health and Safety (OHS) requirements are defined in the O&M contract including provisions for the O&M contractor to comply with all applicable laws and requirements relating to occupational health, safety, labor, and the environment.  

A project level Environmental and Social Management System (ESMS) will be developed for the operational and decommissioning phases (ESAP item). The O&M contractor’s ESMS will be updated to reflect the overall project level ESMS (ESAP item). 

The O&M contractor has developed and is implementing elements of a site level ESMS including a SHE Policy, baseline and task level risk assessments, roles and responsibilities, H&S Program, operational Environmental Management Plan (EMP), Emergency Action Plan, Method Statements, Maintenance Plan, as well as monthly, quarterly, and annual monitoring and reporting. The O&M contractor’s ESMS will be updated to reflect the overall project level ESMS (ESAP item). 

Policy  

Environmental, Social and Governance Policies and Standards have been developed at the Corporate level and are applicable at the Project level. These Policies and Standards recognize international industry standards such as those set out by the World Bank Group and the International Finance Corporation, which align to MIGA’s PS. The O&M contractor has a signed Safety, Health and Environment (SHE) Policy which commits to compliance with relevant health, safety, and environmental legislation, implementing a safety, health, and environmental management system, informing their employees, allocating appropriate resources, and monitoring implementation in accordance with MIGA’s PS. 

Identification of Risks and Impacts 

An Environmental Impact Assessment (EIA) was undertaken for the Project by an independent consultant and received approval from the South African Department of Environmental Affairs in March 2013 and including an Environmental Management Plan (EMP). As part of the EMP, the O&M contractor has conducted risk assessments following a standard methodology and undertakes task specific hazard identification and risk assessments.   

In addition, a climate risk screening was performed for the Project using MIGA’s Climate Risk Screening Tool and supplementary World Bank climate datasets and materials. Based on this information, three climate hazards were identified as potential risks for the Project’ location: wildfire, extreme heat, and urban flood. Of these, wildfires, as a result of an increase in temperature and greater variance in rainfall, is classified as High. Climate change is projected to increase the frequency and severity of fire weather, as well as the duration of fire season in this region. Hence, Emergency Management Plan should incorporate wildfire emergency response planning and firefighting capabilities, taking into account the high level of wildfire hazard due to climate change (ESAP item). 

Management programs 

The EMP for the Plant was approved in 2014. Under South African law, the implementation of the EMP is both a legal and contractual obligation for the Project and this obligation is passed down to the O&M contractor. The EMP is implemented by the O&M Contractor and includes a set of programs covering for example health & safety, life cycle assessments, and emergency preparedness.  

The management programmes across the various plans and procedures cover all operational activities and potential impacts, and follow a standard format in which the scope, purpose, operational controls, and record keeping is defined. The EMP was approved as part of the permitting process for the EIA.  

The Department of Water Affairs confirmed that no Water Use License for the Project is required. The O&M contractor has received licenses for the removal of protected fauna and flora species, and these are renewed regularly. External audits are undertaken to ensure compliance with legal obligations, but it was reported by the IESC that there is no active process to internally manage legal requirements in the EMP. The Project will therefore develop a legal register which defines all ongoing legal obligations (ESAP item). 

The O&M contractor has a COVID – 19 Workplace Compliance Procedure in place including a policy statement, risk assessment, and education and awareness measures. Emergencies are also covered in case a COVID – 19 outbreak occurs at the Project.  

Organizational Capacity and Competency 

At the corporate level, E&S staff are in place to develop, revise and distribute E&S standards and policies. Project leads are responsible for ensuring these standards are applied on their projects. Office managers are responsible for ensuring these standards are applied in offices and contractors are responsible for ensuring that they meet the requirements of these standards. BTE will implement a similar model once the acquisition has been concluded. The Project Enterprise has appointed an Asset Manager to oversee and ensure that corporate E&S Policies and Standards are implemented accordingly. The Community Liaison Officer has been in place for several years and will be retained by BTE in the operational phase. The O&M contractor reports to the Project Enterprise on EHS on-site and the intent is for such O&M contractor to report to BTE after the acquisition has been concluded.  

The O&M has a permanent, site based SHE Officer who was also part of the EPC team and is therefore familiar with the Project site and E&S requirements. The site SHE officer is supported by the O&M corporate SHE Coordinator. 

There is a Community Liaison/Socio Economic Development Manager in place who is responsible for the development, revision, and implementation of the Stakeholder Engagement Plan and communicating the grievance mechanism to stakeholders (ESAP).  

Emergency Preparedness and Response 

The O&M contractor has developed an Emergency Action Plan (EAP) which includes key emergency contact details; emergency and evacuation procedures covering medical, fire, oil spill and Eskom related emergencies (power outages etc.); and reporting requirements (incident reporting etc.). As there is a contextual community health and safety risk related to potential protest action (see PS4), guidance on how to respond to a protest/riot that may affect the access to the Project will be included in the EAP (ESAP item).  

In addition, it was reported by Project personnel that emergency drills are undertaken once a month and drill minutes are kept. Fire extinguishers were observed by the IESC onsite (office building and inverter stations). However, there is no back up water tank and bowser. Given the semi-arid nature of the Project location where wildfires pose a risk and the remote location of the project (nearest fire brigade is in Upington 300 kms away), additional firefighting capabilities are required including the provision of a water tank and associated firefighting training (ESAP item). 

Monitoring and review 

The O&M contractor undertakes monthly, quarterly, and annual internal monitoring and reporting on H&S and the environment, incident reporting, fauna and flora register and part of the EMP. The Project also undertakes a quarterly SHE Audit, and an external annual Environmental Audit assessing of compliance with the EIA and EMP; and monthly OHS Audits assessing compliance with the local regulatory requirements.  

The O&M contractor reported that they have not undertaken a process to internalize the requirements of the EIA and EMP but instead rely on external audits to ensure compliance. The IESC noted that the external annual SHE Audit, and quarterly H&S audits were inadequate as they do not properly define the audit reference framework, the methodology followed, and corrective actions for any non-compliances (ESAP item). 

The Project has a SHE statistics register which covers H&S, environment, business disruption, legal and regulatory, and impacts on reputation/social/community. The Register describes the action taken, the root cause, and corrective measure after the incident. The Project will also be required to provide annual monitoring reports to MIGA.  

Stakeholder Engagement 

There are no adjacent or nearby communities, and the nearest community (Prieska) is approximately 60km away, and the scope for stakeholder engagement is therefore limited. The Project does not have a Stakeholder Engagement Plan (SEP) to identify and map stakeholders (ESAP item). An SEP will be developed, commensurate to the Project risks related to stakeholder engagement and grievances.  

External Communications and Grievance Mechanism 

The Community Liaison Officer (CLO) Manager reported to the IESC that the Project uses the Corporate level Grievance Mechanism (GM). A project level GM will be developed (ESAP item). 

PS2:  Labor and Working Conditions 

There are approximately 20-30 workers on site which varies due to contractor activities. Permanent workers on site are typically split between permanent staff provided by the O&M contractor (site technicians, operations staff etc.), general maintenance workers (subcontracted labor contractor), and security workers (subcontracted security contractor). In addition, contractor staff that may be present on site for a specific task (temporary).  

At a corporate level, HR is included in ESG Policies and Standards, the Global Company Handbook and the Managing Performance Policy which covers both permanent and contracted staff. After the acquisition has been completed, HR policies will be provided by BTE’s Employee Handbook and its Code of Conduct. These requirements follow applicable Human Resources regulation and PS2 and are then implemented at the Project level through the O&M contract regarding contractors and subcontractors.  

Working Conditions and Management of Worker Relationship 

The Project and O&M contractor have a robust set of internal and external audits covering environment and OHS requirements. All workers are provided with documented information regarding their rights and responsibilities, including freedom of association and collective bargaining. The O&M Contract includes specific requirements regarding the performance of services and using its best endeavors to ensure that subcontractors and their respective owners perform services in a manner which avoids labor disputes.  

The Project include provisions for preferential procurement and employment in accordance with South African law and PS2. Retrenchment is not anticipated; in the event of any future collective dismissals a retrenchment process will be followed in line with applicable South Africa regulation and PS2.  

There are no formal internal GM for O&M contracted workers to report to at the Project level A GM is in place at the corporate level, but O&M contractors are not aware of it nor do they engage with it. The Project will develop an internal GM and communicate to O&M contracted staff on how to submit a grievance in line with PS2 (ESAP item). 

Protecting the Workforce 

The approach to human and labor rights in the Project is governed by the ‘Human Rights, Forced and Child Labor standard’. Every year, the Project Enterprise publishes the Modern Slavery Statement, which outlines the steps taken to prevent and eradicate forced labor and human trafficking in their global operations and supply chains.  At the Project level, IDs are required to be produced prior to hiring and that all workers have signed contracts.  

Occupational Health and Safety (OHS) 

As noted above, the O&M contractor has undertaken baseline risk assessments and undertake continuous risk assessments (see PS 1). These risk assessments follow a standard methodology and are undertaken regularly. The O&M contractor has a H&S program which is reviewed and updated annually. The HSE Program includes H&S Policy, Personal Protective Equipment Procedure, COVID – 19 Workplace Compliance Procedure, Method Statements, Emergency Procedure, Incident reporting, Audits, and Inspections (See PS 1).  

The O&M contractor has an OHS Training Matrix in place and completed training is reported in the Monthly O&M Reports. The Training Matrix includes detailed training requirements for key workers, contractors, and subcontractors. The only instances in which training is not up to date is where training could not take place due to COVID – 19 restrictions. In addition, weekly toolbox talks occur on a regular basis. 

Workers Engaged by Third Parties: 

Human resources policies and requirements are extended to the O&M Contractor and other applicable contractors as required by PS2, as described above.  

Supply chain  

The PE has a Human Rights, Forced and Child Labor standard and a Modern Slavery Statement published annually, which outlines the steps taken to prevent and eradicate forced labor and human trafficking in their supply chains. The PE has developed requirements and engaged in dialogue with suppliers and sub-contractors in relation to managing E&S risks within their supply chain. They are also in the process of developing a Responsible Procurement Policy that will extend to the future procurement of solar panels and associated parts in line with the MIGA PSs (ESAP item). In addition, procurement of local suppliers is also a requirement of the Socio-Economic Development (SED) Plan.   

PS3:  Resource Efficiency and Pollution Prevention 

Resource Efficiency 

A Resource Efficiency Plan was developed in 2015 that aims to identify and implement cost effective measures for minimizing utility consumption and costs at the plant. The Plan is meant to be updated every two years during O&M. However, it appears that the Plan has not been updated since September 2015 (ESAP item).  

Drinking water for the site is supplied by an external contractor and water for sanitation and panel cleaning is obtained from the municipal line. Monthly water consumption is captured in the Monthly O&M Report. While some measures are taken to use resources efficiently, usage is not compared against targets or defined industry benchmarks and Key Performance Indicators (KPIs) are not monitored and reported (ESAP item). 

Greenhouse Gas (GHG) emissions associated with the operations phase of the Project are expected to be minimal. 

Pollution Prevention  

Dust fall-out monitoring is conducted as per the National Dust Control Regulations. An independent service provider was contracted, and monitoring points established. Dust suppression is ongoing with water tankers wetting the roads, as and when required. According to the bimonthly reports, rates were reported to fall well below the respective adopted limits.  

The Project reported that no spills have occurred during the O&M phase but that small (~2 l), predominantly oil spills were recorded during the construction phase that were remediated in accordance with the Spillage Procedure (dated 2015) that requires such spills to be cleaned using the spill kits provided. Spill kits are available on site (for the operational phase).  

A Waste Management Plan (September 2016) was compiled and is implemented as part of the EMP. Waste is collected by a permitted waste contractor and disposed of at licensed municipal facilities. Appropriate waste collection bins are provided, and waste disposal figures are captured in the Monthly O&M Report. A letter from the municipality permitting the disposal of general and domestic sewage waste is maintained on file. There are currently only a handful of broken panels on site that are being stored in a container until an appropriately licensed disposal contractor is identified.  

The Project reported that no hazardous materials are stored on site, not even small quantities of oils or lubricants for maintenance activities. If any cleaning agents are required to clean panels on site, they are brought by contractors on a as needs basis. The Project reported that no pesticides, herbicides, or snake repellents are used on site. 

PS4:  Community Health, Safety and Security 

Community Health and Safety 

As noted above, the Project is located 60 km southwest of Prieska, which is the closest town, with no communities adjacent or near the Project. The Socio-Economic Development (SED) plan is focused on communities within the area of Prieska and was developed as part of the EIA to guide how the benefits anticipated from developing the Project can be accrued to the local community. Considering the location, potential community health and safety risks associated with the Project are limited, and include traffic incident/accidents, fire incidents, and broader community discontent (protests, etc.).  

The Project owns two vehicles which staff use for transport to and from site. Driver licenses and vehicle service information is kept on file and reviewed regularly, and no vehicle accidents/incidents have been reported.  

Security Arrangements 

The Project has appointed a security contractor who is certified by the Private Security Industry Regulatory Authority. The security contractor is responsible for access control, perimeter patrols, and closed-circuit television observations. There are four security personnel for each shift (day and night) and 10 security personnel in rotation. The security contractor is required to produce monthly security reports including incident reports. In accordance with corporate Social Policy and Procedures and MIGA PS4, the Project’s Asset Manager has assessed any security related risks both to staff and community members. A due diligence exercise has been carried out to ensure that the security staff are not implicated in prior abuses or other similar allegations. It is also required that security personnel are trained and competent for the role they are undertaking and are licensed per South African legislation.  

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources 

Protection and Conservation of Biodiversity 

According to the EIA (April 2012), the project is located within the Nama Karoo Biome which consists of agricultural rangelands and is conserved for its grazing potential. The National Spatial Biodiversity Assessment classifies this vegetation type as Least Threatened, and it is not listed in the National List of Threatened Terrestrial Ecosystems. However, a Site Rehabilitation Method Statement developed in 2016 includes monitoring methods and reporting requirements for rehabilitation and alien invasive species removal. Under PS6, as agricultural rangelands conserved for grazing, the area is considered modified habitat. Recent monthly O&M Reports indicate that monitoring of rehabilitation is ongoing. 

During the EIA, an avifauna survey was conducted which indicated the displacement or disturbance to sensitive species and mortality caused by collision with the associated power line network during construction and operational phases. The Project has undertaken avifauna monitoring by an independent expert prior to and following construction. In 2017, Martial Eagles and Ludwig’s Bustard were identified during monitoring. Both are considered endangered according to the IUCN’s Red List, however, no biodiversity value was found to be a Critical Habitat trigger. Avifauna monitoring is included in the Project EMP and will continue to occur in the operational phase (ESAP Item). Mitigating measures have also been undertaken whereby new power lines servicing the plant were fitted with bird flight diverters.  

Various faunal species, or evidence of these animals, were observed in the area surrounding the Project during surveys for the ESIA, including Brown Hyaena and Small Spotted Cat. The Small Spotted Cat is listed as Vulnerable on the IUCN Red List, whilst the Brown Hyaena is listed as Near Threatened. The EIA recommends that small ground level openings, 20-30 cm in height, should be allowed for in the electrical fence to facilitate the movement of small mammals and reptiles through the site. The Annual Environmental Compliance Audit Reports provided state that the site fencing incorporates 20–30 cm ground level openings as required. Furthermore, several small mammals and reptiles were relocated from the site, including snakes, scorpions, tortoises, steenbok, etc. during construction. These species are relocated in accordance with related permits. All releases are captured in the O&M Monthly Reports.  

Surface Water Pans are important habitats, particularly for birds (especially migratory birds), mammal species and invertebrates. A surface water pan was identified in the original project footprint and the layout was then moved westwards to avoid impacting the pan.   

PS8: Cultural Heritage  

As part of the EIA, a Heritage Impact Assessment (HIA) and a Paleontology Impact Assessment (PIA) were undertaken. The HIA reported that the impacts to heritage resources were not considered to be highly significant and archaeological sites can very easily be mitigated. The mitigation measures consisted of excavation and sampling of sites as well as test excavations around the pans to check for subsurface archaeology. The PIA reported that the impact significance of the Project was low.  

Given the project is in the O&M phase the risk to heritage resources is low. The Operational Environmental Management Plan dated August 2016 refers to compliance with the requirements of the National Heritage Resources Act, 1999, however no specific chance finds procedure has been developed during the operations phase (ESAP item). 

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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 

• Aurecon Environmental Impact Report (EIR) for Proposed Hoekplaas PV Project (Final Report), April 2012 

The above listed documentation is available electronically as a PDF attachment to this ESRS at www.miga.org.  

 

Local Access of Project Documentation: 

Contact Person: Libby Hirshon 

Company Name: BTE Renewables  

Address: Building 1, Leslie Ave East, Design Quarter District, Fourways 

Email: LHirshon@bterenewables.com 

Phone: +27(0)827885903