Project categorization is based on the highest level of category of the underlying projects included in this operation. The Project is Category A according to MIGA’s Policy on Environmental and Social Sustainability (2013) primarily due to the large geographical scope, the sector, and risks associated with the operation. Key potential E&S impacts and risks associated with Project operations are related to definition of the right of way with associated regulation of legal relations with affected owners tfor the rights of use and easement and associated economic displacement and compensation; impacts on biodiversity; labor and working conditions and occupational health and safety (OHS); community health and safety (including risks of gender-based violence); environmental management and monitoring of emissions, effluents, and waste. Other key risks include the capacity of Transgaz to assess and manage the E&S risks associated with its operations, including management of contractors, in line with the requirements of the Performance Standards (PSs).  

Romania’s Environmental Impact Assessment (EIA) process for the natural gas sector is governed by the national Environmental Impact Assessment legislation, that is aligned with European regulations. Projects are subject to an initial screening to determine whether a full EIA is required. Where applicable, project proponents prepare an EIA that includes baseline analysis, assessment of potential impacts, consultation with stakeholders, and proposed mitigation measures and management plans. Following technical review, the competent authority may issue an Environmental Agreement (constituting EIA approval), including conditions, or decline approval. In the case of projects with low environmental impact, the environmental authority issues a screening decision establishing that a full EIA might not be necessary.  In addition to national requirements, Transgaz complements the project EIAs with cumulative and social impacts assessments, and associated mitigation measures and management plans, to align with international standards in case they would seek financing from international lenders, as in the case of this operation. Aligning with national and European requirements, Transgaz has included in its ESMS procedures on how to identify and manage risks at project level through the Risk and Opportunity Management Plan. This plan is used as a template and guidance for assessing risks and impacts at the project level. The plan outlines the main guidelines for project risk management including guidelines for siting and planning, identifying, analyzing, monitoring and controlling impacts and risks within the project site and in its surroundings, as well as it includes guidelines for the definition and planning of mitigation measures. The criteria for the siting process include: minimization of overall impacts; avoidance of protected areas, cultural sites, and physical displacement; minimization of impacts associated to regularization of the right of way and livelihood impacts; minimization of exposure to flooding and extreme events; minimization of impacts to neighboring communities households (i.e. establishing a safe distance from inhabited centers households for the compressor stations, or criteria for use of the right of way). The ESMS includes also requirements for periodic E&S performance monitoring. 

For the Sub-Projects included in this operation, Transgaz prepared and disclosed full ESIAs, and obtained the Environmental Agreement, for the Ghercești – Jitaru, Prunișor – Orșova – Băile Herculane – Jupa, and Lugasu – Huedin pipelines. The EIA process is ongoing for the Recaș – Horia and the Săușa – Azomureș Târgu Mureș pipeline. Transgaz has completed the EIA process for some of the projects outside of the reviewed sample, with the issuance of a screening decision (Tântăreni – Turceni, Hurezani – Turburea, Mihai Bravu – Silistea,  Tetila – Horezu – Râmnicu Vâlcea, Segarcea – Băilești – Calafat, Romania – Serbia Interconnection, Ghergheasa – Focșani, Bordoșiu – Coroi), and it has not yet started preparing the ESIA for the remaining Sub-Projects since they are still in the planning phase. For the compressor stations, aligning with national requirements, and due to the limited size of the intervention, Transgaz is completing rapid assessments for the expansion works. Through the implementation of the project, the EPC contractor at each Sub-Project site, under the supervision of Transgaz, will be responsible for implementing the conditions of the environmental agreements issued by the Ministry of Environment together with the directions included in Transgaz ESMS. The assessments and management plans reviewed for the sample project align with national, EU, and MIGA’s requirements. Transgaz will prepare all studies and assessments for each Sub-Project (ESAP Item).  

Transgaz’s monitoring architecture functions as a three‑tier system, where corporate‑level oversight (IMS), project‑level controls, and contractor‑level implementation operate in an integrated way. At the highest level, Transgaz’ IMS provides the overarching framework for compliance, operational integrity, and continuous improvement. The IMS includes annual internal audits, external certification audits, regulatory inspections, structured risk‑management reviews, and annual management reviews. These processes evaluate compliance with legal and IMS requirements, assess performance indicators and incident trends, and drive updates to procedures, resourcing, and programs. This forms the corporate backbone that sets expectations for all projects and contractors.  

At the Sub-Project level, corporate requirements are translated into project‑specific monitoring and review mechanisms. Implementation of the IMS requires daily field supervision by Transgaz’s OHS, environmental, and community specialists; weekly formal inspections with standardized checklists; and periodic internal audits of the ESMPs and permit compliance. Independent consultants and national regulators conduct external audits. Findings are captured in Action Tracking Registers and monitored through monthly Key Performance Indicator (KPIs) and Project Scorecards. The EPC contractor is then required to conduct daily field monitoring, twice‑weekly inspections, monthly audits, and specialized technical monitoring defined in the Contractor Implementation Plans. The contractors maintain their own action tracking systems and implement KPIs jointly established with Transgaz. Contractors report monthly on performance and must follow Transgaz’s incident management system, including 12‑hour reporting for significant events. Change management procedures apply to any contractor-proposed modifications with environmental or social implications. Semiannual joint management reviews help align contractor performance with project and corporate expectations. Annual monitoring reports will be developed by Transgaz and submitted to MIGA. 

At the corporate level, stakeholder engagement is part of the company’s broader governance and sustainability framework. Engagement focuses on maintaining continuous communication with internal and external stakeholders, including employees, management, shareholders, regulators, financial institutions, clients, suppliers, local communities, Non-Governmental Organizations (NGOs), and the public, primarily through transparent reporting, periodic consultations, and information disclosure via the company website and regulatory platforms. Stakeholder identification and prioritization rely on materiality assessments, surveys, and internal/external consultations, with stakeholder expectations on regulatory compliance, safe and reliable gas transmission, environmental protection, and community well-being integrated into the management system. Corporate-level engagement includes Corporate Social Responsibilities (CSR) initiatives, formal reporting channels, and mechanisms for raising concerns (online forms, email, written submissions), as well as internal systems for employee involvement, union dialogue, and whistleblower reporting. 

At the Sub-Project level, engagement begins with systematic stakeholder identification and analysis that distinguishes among affected groups (landowners, land users, local communities, vulnerable groups) and interested parties (government authorities, NGOs, financial institutions, the public). Each Sub-Project is required by Transgaz IMS to develop a Stakeholder Engagement Plan (SEP). The SEP functions as a living document guiding culturally appropriate, timely engagement throughout the project lifecycle, consistent with national, EU, and MIGA’s requirements. Disclosure is done early and via multiple channels, with online ESIA publication, printed materials, and hard copies placed in municipal offices. Consultations include public meetings, targeted discussions with affected people, socio-economic surveys, and continuous dialogue with environmental regulators and local authorities, ensuring participatory, two-way engagement. A grievance mechanism provides multiple accessible entry points (municipal offices, email, phone, website, Community Liaison Officers), with clear procedures for recording and resolving complaints within 30 days and escalation without prejudice to legal rights. Ongoing monitoring includes SEP implementation reports, tracking grievances and consultation activities, and website updates.  Transgaz will develop a SEP and grievance redress mechanism for each Sub-Project (ESAP item). 

Transgaz human resources (HR) are managed at central level with overarching HR policies, evaluation of benefits and remuneration, and compliance with both regulatory and Transgaz internal policies. Transgaz has a corporate-level Gender Equality and Human Rights Policy, Code of Conduct and Code of Ethics for staff. The Policies and the Codes are applicable also to contractors, and contracts include provisions regarding labor management. The Code of Conduct includes general rights and responsibilities, institutional values, regulatory requirements, equal opportunities commitment, grievance reporting and management. Transgaz HR policies stipulate the terms of employment (wages and benefits, hours of work, overtime arrangements and overtime compensation, annual and sick leave, maternity and paternity leave, vacation and holiday, health insurance and end of service benefits). 

Each Sub-Project will be built by EPC contractors, and it is estimated that it will require crews of approximately 20 to 50 workers, depending on the type of project. Skilled workers will be part of the EPC contractor staff, while unskilled labor will be procured from nearby towns and villages. Minimal workers’ accommodation will be necessary for the skilled workers, as these are expected to be 10-15 workers per crew maximum, with the EPC contractors planning to use local hotels and accommodations. During operations, each compressor station will be manned by 10-15 workers per shift that will work on 8-hour shift and will live locally.  

Romania’s labor laws allow for worker’s organizations and protect labor leaders against discriminatory actions by employers. Currently there are four trade union organizations recognized at national level that employees can choose to join freely for representation. As included in its policies, Transgaz is committed to not discriminate based on race, religion, origin, ethnicity, gender identity, sexual orientation, and political parties. Transgaz HR policies include provision against sexual harassment and provisions on restrictions to child labor and prevention of forced labor, as also included in the Labor Code of Romania. The company does not hire people under 18 years old, and age is verified through the person’s ID and recorded in the worker’s file. Provisions for equality and equal opportunities are key pillar of Transgaz policies and are applicable to both Transgaz staff and contractors, as these are also included in the contract documents with both staff and contractors.  

Transgaz workers and its contractors have access to internal grievance mechanisms. The mechanism covers also concerns related to project-related gender based violence risks in the workforce and to the community. At each Sub-Project site workers can raise grievances either directly with the site manager or anonymously online or through suggestion boxes located at each site. Grievances are collected by the respective manager every 2 weeks and submitted to Transgaz HR for analysis and implementation of corrective actions. The existence of the grievance mechanism and suggestion boxes is communicated during induction training.  

Transgaz has a corporate level Sustainability and Resource Efficiency Strategy. In addition, it has included in its IMS practices to increase resource efficiency, especially in relation to energy and water consumption. Compressor stations are built with fully enclosed water recirculation systems to guarantee minimum losses of water (up to 99% efficiency). The exhaust of the turbines is also recirculated through a dedicated system to increase efficiency (up to 99.5% efficiency). For the construction, testing, and maintenance of the pipelines, water is secured from dedicated authorized wells and stored in containers for multiple uses.  

The primary source of Transgaz GHG emissions stem from the turbines at the compressor stations. Other sources of GHG emissions are the diesel-powered generators and the heavy machinery used for construction/maintenance. Current estimated GHG emissions of the Project is exceeding 25 thousand tons of CO2e per year as per MIGA estimate. Transgaz will quantify current and future GHG emission for all its operations (ESAP item).  

During construction, the primary pollution impacts associated with the projects include air emissions, dust, soil quality, erosion and sediment transport, construction waste/spoil, potential leaks or spills of hydrocarbons, noise, and impacts on waterways crossing. For each Sub-Project, Transgaz, as required by the ESMS, will develop site specific construction Environmental Management and Monitoring Plans (ESAP Item). 

Impacts related to pipeline operation are limited to maintenance activities, while the operation of compressor stations will have impacts associated with air emissions, noise, effluents, and waste. Due to the size and location of the compressor stations, air quality and noise impact to nearby community is expected to be minimal to none, as observed also from the modeling shared and while visiting similar existing infrastructure. In addition, as indicated in the site selection parameters, the compressor stations will be built at a safe distance from inhabited households. During normal operations each compressor station performs continuous monitoring of air emissions and effluent discharge. The risk of natural gas emissions is mitigated through project design, continuous monitoring, and emergency shutdowns protocols. Gas recirculation systems are present onsite to minimize the need for flaring (still available as redundancy). Based on the design, emission levels will be in line with the parameters included in PS3 and the applicable WBG EHS Guidelines. Transgaz will develop for each Sub-Project specific Environmental Management and Monitoring Plans developed to mitigate pollution derived from operation activities (ESAP Item). 

Hazardous materials used for construction and operation activities are petroleum derived products such as diesel and lubricants. The risk of significant spills is minimized by Transgaz use of licensed handlers, and use of storage tanks with secondary containment. Once exhausted, lubricants, used oil and oil filters are temporarily stored on site in enclosed, covered areas with secondary containment. Waste and hazardous waste are collected and transported for processing and/or disposal by a licensed company. Transgaz keeps records of the manifests ensuring the chain of custody from its facilities to the point of disposal, reprocessing or recycling. In addition, Transgaz reports periodically on its hazardous waste management practices to the environmental authority. For each Sub-Project, Transgaz will develop a Hazardous Material Management Plan and a Waste and Hazardous Waste Management Plan covering both construction and operation phases (ESAP item). 

The community health, safety and security risks associated with the projects include air emission, noise, and increased health and safety and traffic issues especially during construction of the linear infrastructure. Site specific Construction Management Plans and SEPs developed for each Sub-Project will be used to inform surrounding communities on the risks and impacts associated with the construction activities. Transgaz requires contractors to ensure that all Sub-Project sites are properly fenced and supervised to minimize the access of external people to the construction sites, especially for the projects near towns and villages (ESAP Item).  

Transgaz also has comprehensive Emergency Preparedness and Response Plans that are applied to existing projects in both construction and operation. Following the requirement of its ESMS, Transgaz will develop and consult with the surrounding communities’ site-specific Emergency Preparedness and Response Plans for both construction and operation phases   

Land access and any other land requirement for the project will be undertaken following national regulations and Transgaz IMS. Through their application, Transgaz will be able to define its right of use and easement in exchange for compensation. Easements and right of way will be needed for both above ground and underground infrastructure. The width of the right of way for the pipelines included in the operation ranges depending on the pipe diameter, in accordance with the provisions of the technical standards for the design and construction of natural gas transmission pipelines, and the total amount of land required for the Project is estimated to be over 350 ha based on initial designs and available information.  

Transgaz has several procedures that are supporting the definition of the right of way. These are the: i) Procedure for ensuring  of Right of Way and compensations that includes all the legal provisions from Law no 185/2016, Law no 123/2012 and GD no 1240/2012; and ii) Procedure for development of a grievance mechanism and development of project specific SEP. These procedures are embedded in the IMS and applied to all operations and projects. Following its policies, Transgaz avoids physical displacement and minimizes economic displacement through prioritizing selection of routes that use existing rights of way and government owned land.  

As per the policies, Transgaz land evaluations includes evaluation of the property value for determining the amount of the indemnity due for the exercise of the rights of use and easement, as well as the assessment of loss of livelihood through the granting of compensation.”. Based on these internal policies, Transgaz also provides compensation for the loss of livelihood to people using the land with no rights or title.As an alternative, the land can be expropriated by the Government at the request of Transgaz, by applying the provisions of Law no. 255/2010, updated. The expropriation process involves an involuntary sale, where the ownership of a property is transferred from a private individual to the company. For this, it is necessary that the land be designated as a ‘public utility’. The expropriation process is governed by the Expropriation Law  which establishes that no one can be deprived of his property except for reasons of public utility, qualified by law, and without prior and fair compensation. If applied appropriately, the process for determining compensation will result in compensation in line with the objectives of PS 5. The expropriation process also includes consultation with the owner on the pricing, and a mechanism for dispute resolutions. As indicated above, according to its internal policies, Transgaz only applies the expropriation process as last resort after multiple failed direct negotiations attempts.  

In the right of way and easement definition process there is no transfer of ownership but the establishment of a right of way to the land, which includes restrictions on land use. These restrictions include no construction or agricultural activities (i.e. no activities that require digging).  

For this Project, the above ground installations have minimal footprints and are located every 5-10 km on the pipeline’s right of way. Expansion of the compressor stations does not involve the expansion of the land areas already occupied by these facilities. Most pipelines will be established on government land and within existing rights of way, and therefore, only limited acquisition of easements will be required. Transgaz will develop right of way and easement management plans  for each Sub-Project that are disclosed and consulted with affected stakeholders prior to construction (ESAP Item).  

Following the structure of these plans, the EPC contractors, under the supervision of Transgaz, will also be required to develop Sub-Project-specific land acquisition and livelihood plans to address temporary land and livelihood impacts that could arise during construction activities (ESAP Item). Once the right of way and easement definition process is  completed at each site, Transgaz will develop a Completion Report summarizing the process and identifying if any grievances or issues arose during the process and the measures taken to resolve them (ESAP Item). 

Transgaz complies with applicable Romanian and European environmental legislation, under which biodiversity is a mandatory component of the EIA. Accordingly, the IMS includes requirements for ecological baseline surveys and biodiversity assessment to be carried out for each Sub-Project, including inventories of flora, fauna, and natural habitats. The assessment identifies potential impacts such as habitat loss or alteration, fragmentation, species disturbance, and effects on ecosystem structure and function, proposing mitigation and management measures. These may include design modifications (e.g., wildlife crossings), habitat restoration, and temporal restrictions on construction activities to avoid sensitive periods such as breeding or migration seasons. The approach reflects the mitigation hierarchy consistent with PS6. Where the proposed route overlaps with, or may indirectly affect, Natura 2000 sites or other nationally protected areas, an Appropriate Assessment is required under Romanian regulations aligned with the EU Habitats Directive (92/43/EEC). This assessment examines potential effects on the conservation objectives of designated habitats and species, determining whether the project would compromise the integrity of the site. The EIA documentation, including all biodiversity-related studies, is reviewed by the Environmental Authority, and, following a satisfactory review, an Environmental Agreement is issued inclusive of environmental and biodiversity obligations for the project.  

Overall, the habitats at the project sites are mostly modified habitats, dedicated to cattle grazing and agricultural activities, with minor sections going through natural habitats. Transgaz, following its IMS, has been engaging with relevant authorities at national and EU level, NGOs, and has implemented specific mitigation measures to avoid and minimize any residual impact. In addition, following the requirements of the IMS, Romanian and EU regulations, and per MIGA’s requirements, and in case applicable, for the sub-projects that might have temporary negative impacts on sensitive biodiversity features, Transgaz will conduct project specific Biodiversity Assessment and develop project specific Biodiversity Management and Action Plans before the start of construction (ESAP Item). The assessment includes complete screening of all components for biodiversity within the right of way, including (i) mapping of natural vs modified habitat; and (ii) presence of priority flora and fauna species. The screening should focus on desktop review and expert consultation, with additional targeted surveys to fill information gaps as needed. The Biodiversity Management and Action Plans would need to overlap with existing biodiversity management plans in the project area of influence and consulted with relevant stakeholders (i.e. BirdLife Romania if applicable) on nature of risks and mitigation actions.