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Argentina

Vientos Los Hercules S.A.

$30 million
Power
ESRS
Active
wind mill

Project Facts

Project Facts

Project Facts

argentina
Project ID
14058
Guarantee Holder
Mitsui & Co., Ltd.
Investor Country
Japan
Environmental Category
B
Date SPG Disclosed
April 04, 2018
Projected Board Date
May 15, 2018
Project Type
Non-SIP
Fiscal Year
2018

This Environmental and Social Review Summary (ESRS) is prepared by MIGA staff and disclosed prior to the date on which MIGA’s Board of Directors considers the proposed issuance of a Contract of Guarantee. Its purpose is to enhance the transparency of MIGA’s activities. This document should not be construed as presuming the outcome of the decision by MIGA’s Board of Directors. Board dates are estimates only. 

Any documentation that is attached to this ESRS has been prepared by the project sponsor, and authorization has been given for public release. MIGA has reviewed the attached documentation as provided by the applicant, and considers it of adequate quality to be released to the public, but does not endorse the content.
 

Mitsui and Company (Mitsui) of Japan is seeking MIGA guarantees for its US $30 million equity investment into the Vientos Los Hercules (VLH) Project (referred to hereafter as “the Project”). The Project involves the design, construction, operation and maintenance of a 97.2 megawatt (MW) wind farm in Santa Cruz, located 35km west of the city of Pico. VLH is a special purpose vehicle responsible for the construction and operation of the Project, which is fully owned by Total Eren. Total Eren has strong experience in renewable energy with 515_MW in operation and a further 448 MW either under construction or in financing stages in 11 different countries. MIGA is currently working with Total Eren in other countries including the Egypt Feed in Tarif program.

The Project will install 27 SENVION 3.6 MW wind turbine generators (WTGs) linked to 33 kilovolt (kV) collector switchgear. The total area of land required for the Project is 350 ha. The voltage will then be stepped up to a transmission voltage of 132 kV at an on-site substation and will be evacuated through the Las Heras-Santa Cruz Norte 132 kV transmission line, which runs adjacent to the site. Approximately 14 km of access roads will be constructed within the 350 ha Project area, and water for the Project will be sourced from groundwater. The total Project cost is estimated at US$223 million. The Project was awarded as part of the Government of Argentina’s (GoA) RenovAr public tendering program.

The closest settlement to the Project site is the town of Koluel Kayke, approximately 11 km from the site. There are no residences or residential areas in the vicinity of the Project site. The Project area consists of a flat terrain with small bushes and cattle raising activity. It is located within a SINOPEC oil and gas concession. SINOPEC has indicated that they have no objection to the development of the Project within its concession. The Project area has been significantly degraded by oil and gas exploration (i.e. numerous well pads, roads, footprints of past seismic exploration are present). There are no protected areas, nature reserves or national parks in the area of influence of the Project, nor are there any Important Bird Areas (IBAs) nearby.

Total Eren has signed an agreement with SENVION for turbine supply and installation. The engineering, procurement and construction (EPC) contractor will be SENVION, and SENVION will be supported by a civil works sub-contractor (Prodiel). The Owner’s Engineer, Ereda, will also have staff on site throughout the construction phase. Construction of the Project started at the end of January 2018, and is expected to take 12 months. Operations are expected to begin in the first quarter of 2019, and will last for 20 years. The Project is expected to require around 170 people during peak construction and 6 during operations.

 

B.  Environmental and Social Categorization

According to MIGA’s Environmental and Social Sustainability Policy, the Project has been categorized B as the expected risks and impacts are site specific and can be managed through the appropriate application of internationally recognized practices and measures for this type of Project. Key environmental and social (E&S) issues are expected to include the establishment and implementation of suitable management system and procedures; appropriate Human Resources (HR) policies and procedures, including occupational health and safety (OHS) provisions for all workers, including contractor employees; waste and traffic management during construction; and finally, potential bird and bat mortality due to collision with turbines.

While all Performance Standards are applicable to this Project, based on our current information indicates that the Project 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
     
  • PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resource
     

Total Eren did not have the right to expropriate land for the Project. The land area required for the Project is owned by one landowner, who does not currently reside on or use the land. As indicated previously, the land falls within a Sinopec concession, and the owner had previously allowed Sinopec to undertake exploration on the land. The Project has signed a 32-year usufruct agreement with the landowner. Thus, PS5 Land Acquisition and Involuntary Resettlement does not apply.

The Instituto Nacional de Asuntos Indígenas (INAI – National Institute of Indigenous Affairs) has indicated that there is no evidence of indigenous people residing in or having cultural ties to the Project area; therefore, PS7 do not apply. Regardless, as per the recommendation of the INAI and the guidance provided in the Marco de Plancificación Para Pueblos Indígenas (Indigenous Peoples Planning Framework) prepared for the World Bank’s guarantee program, the Project will also engage with the local Consejo de Participación Indígena (CPI – the Indigenous Participation Council).

The archaeological surveys conducted in the area have found archaeological evidence but usually small pre-historical artifacts such as angular rocks (lascas angulares) used as tools, which are found widely dispersed throughout the region. The paleontological surveys did not find any fossils and the geology of the area indicates there is low probability of finding paleontological remains, and therefore, PS 8 Cultural Heritage does not apply. Regardless, the Project ESIA includes an archaeological management plan and chance finds procedure, and the EPC contractor has prepared and is implementing a ‘Chance Finds Procedure’ during construction.

In addition to the Performance Standards, the World Bank Group (WBG) Environmental, Health and Safety (EHS) General Guidelines; Guidelines for Wind Power Projects; and Guidelines for Electricity Transmission and Distribution apply to this Project.

The Project is also part of the World Bank guarantee program for the renewable sector in Argentina (Garantía FODER – Fondo de Energias Renovables), and is therefore subject to the safeguard policies and documents established for that Project.

The following documents were reviewed by MIGA:
 

In addition to the Project-specific documents above, the safeguard documents prepared as part of the World Bank guarantee program were reviewed. As part of the Lender’s ESDD, Mott MacDonald undertook a site visit in March 2017. MIGA’s review also included a site visit in February 2018, which included a visit to the Project area, meetings with the client, consultant, EPC contractor and sub-contractor and representatives of Koluel Kayke and the Subsecretaria de Medio Ambiente.

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 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 Performance Standards objectives.

The Project will have standard construction based risks and impacts, the most important resulting from: (i) the transport of turbines, machinery, material and workers into the Project site, (ii) the installation of electrical components, (iii) activities involving workers working from heights, and (iv) ensuring all contractors consistently apply E&S mitigation and management measures to potential risks and impacts.

While operational risks and impacts are generally low, the Project, in addition to standard mitigation measures, will: (i) carry out a comprehensive post-construction monitoring of birds and bats and follow an adaptive management approach to mitigate impacts; (ii) take specific fire safety measures to prevent and mitigate against the potential risks and impacts from natural fires of grasslands; and (iii) prevent and manage against potential OHS risks that result from activities that require working from heights.

 

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

Environmental and Social Assessment:

An Environmental and Social Impact Assessment (ESIA) was prepared for the Project by an independent consultant, as per local requirements. The ESIA was submitted to the Subsecretaria de Medio Ambiente in May 2016, and was approved with conditions in August 2016. An addendum to address the conditions was submitted and approved in February 2017. In addition to the ESIA, an ESDD Report was undertaken by an independent consultant as part of the Lender’s appraisal of the Project. The ESDD Report benchmarked Project documents against the IFC Performance Standards, identified gaps and developed an ESAP to address the gaps. MIGA also reviewed progress against the Lender’s ESAP as part of the due diligence.

The ESIA baseline, impact assessment and recommended mitigation measures were largely in compliance with MIGA’s requirements; however, a few key deficiencies were identified during the Lender’s ESDD, including lack of: sufficient baseline on bird activity (particularly during different seasons); and a bird collision risk assessment. Actions to address these deficiencies were incorporated into the Lender’s ESAP, and have now been largely addressed.
 

Management Program and Monitoring:

The ESIA includes a framework for environmental management, and Total Eren has prepared an environmental and social management system (ESMS). The objectives of the ESMS are to ensure that the Project’s environmental and social risks are appropriately identified, evaluated and managed throughout the construction, operation and decommissioning phases. The ESMS includes the Project’s Environmental Policy; identification of applicable environmental and social obligations; identification of environmental and social aspects and impacts relevant to the Project; an overview of the environmental procedures to ensure compliance with the Project’s environmental and social obligations; auditing requirements and reporting requirements. The ESMS also includes an organization structure for environmental and social management and statements of responsibility and authority. An environmental and social management plan (ESMP) for operations will be developed based on the framework provided in the ESMS (ESAP Action 3).

SENVION is ISO 9001, ISO 14001, and OHSAS 18001 certified. Construction environmental management plans have been prepared, which include an organizational chart for environment, health and safety management during construction. Prodiel has also prepared, and is implementing a series of project-specific environmental management procedures, including procedures for management of flora and fauna, archaeological or paleontological chance finds, hazardous materials, general waste, wastewater and excavation materials.

Monitoring activities for construction and operation are described in the ESIA. The monitoring plans are managed via an overarching environmental monitoring program, and EPC contractor payments are subject to the fulfilment of the monitoring plans.
 

Organizational Capacity and Training:

As above, the Project ESMS includes an organization chart, roles and responsibilities for environmental, health, safety and social management. Total Eren has adequate capacity at the corporate level and national level. A consulting firm with extensive wind power experience, CSI, has been engaged to provide environment and social support during construction. CSI has a full-time environmental and social consultant based at site for the construction phase.

SENVION and Prodiel have qualified environment, health and safety managers on site. SENVION and Prodiel provide a joint induction training, including environment, social, health and safety aspects, to all workers before they are allowed to start working. Refresher training is provided weekly (i.e. each week a different topic is discussed), and Prodiel has daily toolbox talks, which focus on health and safety. The framework for training is provided in the Construction Environmental Management Plan, and a Training Plan has been prepared. Commitment to training during operations is included in the ESMS.
 

Reporting:

Reporting activities for the construction phase, including weekly onsite reports and monthly formal reports, are described in the ESIA. The Construction Environmental Management Plan indicates that SENVION will prepare monthly construction progress reports (which include a section on environment, health and safety), and CSI will prepare monthly reports on behalf of Total Eren. During construction, monthly reports will be shared with MIGA. The Project will also provide MIGA with an Annual Environmental and Social Monitoring Report (AMR).

 

PS2:  Labor and Working Conditions

As indicated above, at peak construction, there will be approximately 170 workers on site. During operations, 6 employees will be required. A majority of workers will be Argentinian, and employment from local communities (Koluel Kayke, Las Heras and Pico Truncado) will be prioritized.

Human Resource Policy and Procedures: Total Eren, SENVION and Prodiel are in the process of developing internal human resource (HR) policies and procedures, which will be consistent with national laws and the requirement of PS 2 (ESAP Action 4). SENVION currently uses a web-based platform to manage all human resource information (including sub-contractor employees), including names and key information of all employees, names and information of prospective employees, payment and training records.

Working Conditions and Terms of Employment: The Project will avoid discrimination and ensure equality of opportunity during the processes of employing its own and contracted workers. As much as possible, hiring of local labor will be prioritized to maximize benefits to the local communities.

Employee Grievance Mechanism: As part of the HR policies and procedures, SENVION and Prodiel will establish a workers’ grievance mechanism that covers all workers, and is accessible and transparent, providing timely feedback to claimants without risk of retribution and allowing anonymous complaints to be raised. Total Eren HR procedures will include a workers’ grievance mechanism for the operations phase.

Occupational Health and Safety (OHS): During the construction phase, Total Eren will ensure that contractors and sub-contractors adopt OHS practices and procedures at the project level. The EPC contractor has a corporate Health, Safety and Environment Policy, and as indicated above, is OHSAS 18001 certified. The construction health and safety plan includes: a chart of key personnel describing their accountability, roles and responsibilities; identification of risks and prevention measures; reporting templates; training requirements; and contingency and emergency preparedness and response measures, particularly during high risk activities such as working from heights during the installation of turbines and electrical components.

SENVION has appointed appropriately qualified staff to manage occupational health and safety matters in compliance with national regulations and international standards.

Workers’ Organizations: As per usual practice in Argentina, the EPC contractor and sub-contractor consult with Union Obrera de la Construccion de la Republica Argentina (UOCRA – Construction Workers Union of Argentina) for recruitment of construction workers. All construction workers are free to join UOCRA, but are not required to be UOCRA members. UOCRA holds regular meetings, and undertakes collective bargaining on behalf of all construction workers (not just members).

Worker Accommodation: During construction, worker accommodation will be built in the nearby towns of Pico Truncado and Las Heras. Worker accommodation for the existing workforce in Pico Truncado is in accordance with the requirements of PS 2. A Worker Accommodation Plan will be prepared to ensure that, as the workforce grows, all workers are provided with accommodation in accordance with the requirements of PS 2 (ESAP Action 5). Transportation will be provided from Pico Truncado and Las Heras to the Project site.

 

PS3:  Resource Efficiency and Pollution Prevention

Greenhouse gases: The Project will not contribute to greenhouse gases (GHG) emissions, except during the construction period due to the consumption of fuel by vehicles and heavy machinery. During operations, it is estimated that the Project will avoid the emission of 204,000 tons of carbon dioxide equivalent (tCO2e) per year.

Water Resource Use: During construction, estimated water needs are approximately 110 m3per day, most of which will be used for dust control and concrete production. Water will be sourced from an underground aquifer. A water extraction permit has been received from the relevant government authority. The Subsecretaria de Medio Ambiente confirmed that the aquifer is renewable (i.e. there is regular recharge) and is not currently utilized by local communities or other industrial users. Temporary water use for construction is unlikely to have an impact on groundwater availability or terrestrial habitats. During construction, the Project will install a meter to measure how much water is being abstracted. Also, as groundwater in the Project area may have naturally occurring high levels of arsenic, the Project will analyze water quality prior to use (ESAP Action 6). Water requirements during operations are negligible.  
 

Pollution prevention

The Project's ESMP and Prodiel’s environmental procedures include measures to minimize the production of solid and liquid waste. Rented portable toilets are used for on-site toilet facilities, and these are emptied every three days by the company who owns them. Preventive and control measures will be taken to prevent and properly manage contamination of soil, rainwater and / or groundwater by spillage of lubricating oils or other polluting substances used in the assembly and / or maintenance of electromechanical installations. Hazardous materials will be stored in containers transiently until their final disposal. A licensed contractor will be engaged to dispose of hazardous waste.

Noise: Modelling undertaken during the ESIA indicated that noise and shadow flicker effects during the operations phase are not likely to be an issue, as there are no residents or land users near the Project. 

Solid waste management: During the installation tasks of the wind turbine units, as well as during the construction of the substation, solid waste produced will be separated, stored and disposed of in the municipal waste dump of Koleul Kayke. In the event of any type of waste considered to be hazardous, in accordance with current legislation, the Project will be responsible for its temporary collection and storage until delivery to an authorized carrier for transfer to an authorized hazardous waste disposal company. Spoil estimates indicate that all the spoil generated from the excavation will be used for back-filling and construction of access roads. There will be no need for separate spoil disposal.

 

PS4:  Community Health, Safety and Security

As the Project is in a rural area, and there are no communities in the immediate vicinity, the potential impacts on community health and safety are expected to be limited. The most significant risk is associated with the use of heavy vehicles to transport the turbines and other large equipment to the Project site during the construction phase. The Project will require use of National Route 3 and Provincial Route 43 to bring the turbines to site. During construction, traffic movements are expected to include 243 abnormal loads and other smaller equipment to be transported in 40-ft containers. There will also be an increase in light vehicles transporting workers to and from site. A transportation management plan will be prepared by the Project to ensure community safety during the movement of Project equipment (ESAP Action 9). The traffic management plan will also include specific emergency preparedness and response measures to be implemented with the assistance of local authorities.

The Project will prepare and implement a Code of Conduct for its workers (ESAP Action 8) that will be mandatory for all contractors and their subcontractors. All workers will be required to comply with the Code of Conduct, by which specific behaviors and activities that could put in danger the lives of the individuals themselves, other workers, flora/fauna and members of the local community will be prohibited.

The national civil aviation authority has provided approval for the Project, and has indicated that there is no interference with nearby airports. As per the requirements of the authority, the Project will install indicator lights on the turbines.

During construction, access to the Project site is restricted by security (see below) stationed at the main access points. Active construction areas and areas that present potential risk (e.g. excavated areas) are appropriately sign posted and fenced. During operations, access to the wind farm will be restricted by gates on the access roads. The substation will also be fully fenced to prevent unauthorized access, and there will be a fence around the base of each turbine.

Security Arrangements: As the Project site is remote and there are no communities nearby, security personnel related risks are expected to be very low. Security services are provided by a local sub-contractor. A Security management plan will be prepared (ESAP Action 7), and security personnel will be appropriately trained in the Code of Conduct to ensure that interactions with workers and any neighboring landowners are cordial and professional.
 

PS6:  Biodiversity Conservation and Sustainable Management of Living Natural Resource

The Project area is not located in any area of conservation significance (e.g. national park or nature reserve). Vegetation in the Project area is composed primarily of small sized arbustive-type trees and bushes, with predominance of steppe grass species. Flora and fauna diversity is low, but due to the harsh climate, multiple endemic species are present. These species, however, are regionally endemic, not endemic to the Project site.

Potential bird and bats mortality due to collisions with wind turbine blades was assessed to be one of the more relevant potential operations phase risks for this project. The ESIA and supporting studies indicate that the diversity and abundance of birds in the Project area is low. The ESIA initially identified the potential presence of a locally endangered species (IUCN listed as ‘least concern’), Cauquen Colorado (Chloephaga rubidiceps). Follow-up surveys, however have indicated that the presence of this species in the Project area is highly unlikely. There is also no evidence of bats in the Project area, and there is no suitable habitat for bats in the immediate vicinity of the Project; therefore, the risk of the presence of bats is low. One additional bird survey is pending (summer season survey, ESAP Action 10), and, if potential impacts are identified, the results of the survey will be used to develop mitigation measures. The monitoring program in the construction environmental management plan includes monitoring of bird and bat impacts.  During operations, the ESMP will include measures for monitoring of bird and bat activity and impact in the Project area (the extent of which will be determined based on the results of the observation studies held during the development phase).

In the Province of Santa Cruz, all projects that have the potential to impact the environment in any of its phases must obtain an environmental impact declaration from the Subsecretaria de Medio Ambiente, which is to be renewed every two years during the life of the Project. Projects are ranked into three categories with those with low impact considered category 1, those with medium impact category 2, and those with high environmental impact to be category 3.

A full ESIA was undertaken for the Project in 2016, and submitted to the Subsecretaria de Medio Ambiente in May 2016, and was approved with conditions in August 2016. Conditions have been addressed in subsequent addendums – the third of which was approved in February 2018. Through the ESIA, the Project was deemed to be category 2, medium impact.

Though there are no people living in the immediate vicinity of the Project, as part of the ESIA process, a public consultation meeting was undertaken in the nearest community of Koluel Kaike in July 2016. Information on Project risks, impacts and opportunities were provided and community members and authorities reportedly expressed strong support for the Project. Community concerns primarily related to the impact of influx of workers on the community’s security and living standards, as well as expectations regarding potential job opportunities and development benefits.

A draft Stakeholder Engagement Plan (SEP) has been prepared, and is currently being reviewed by the Environment Unit within the Secretariat for Renewable Energy. The SEP, which will include a community grievance mechanism, will be updated and implemented (ESAP Actions 1 and 2). Total Eren has engaged a social adviser to manage implementation of the SEP.

 

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