Safeguards Diagnostic Review

for

Piloting the Use of Ghanaian Systems to
Address Environmental Safeguard Issues in the
Proposed World Bank-Assisted
Ghana Energy Development and Access Project
(GEDAP)

Equivalence and Acceptability Report

December 2006

iii

TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS iv

EXECUTIVE SUMMARY v

BACKGROUND 1

GEDAP PROJECT DESCRIPTION 2

RATIONALE FOR CHOOSING GEDAP FOR PILOTING 3

METHODOLOGY AND PROCESS FOLLOWED IN DETERMINING EQUIVALENCE AND ACCEPTABILITY 3

EQUIVALENCE ANALYSIS 3

World Bank Safeguards Policies Applicable to the Proposed Pilot 3

Ghanaian Laws, Regulations and Procedures Applicable to the Proposed Pilot 4

Current and Proposed Measures to Improve the EA System 14

Gaps/Differences 14

Proposed Gap Filling Measures 16

ACCEPTABILITY ASSESSMENT 17

Purpose and Scope 17

Implementation Practices and Track Records 17

Institutional Capacity 17

Strengths and Weaknesses 21

Current and Proposed Measures to Improve Acceptability 23

Gap Filling Measures Agreed to Achieve Acceptability 24

Gap Filling Measures Agreed to Sustain Acceptability 24

MONITORING AND REPORTING 25

ROLES AND RESPONSIBILITIES OF MOE AND THE BANK 25

ANNEXES 27

Annex 1. Assessment of Equivalence – Summary Matrix 27

Annex 2. List of Key Officials Met 63

Annex 3. List of Project Sites Visited 65

Annex 4. List of Main Documents Consulted 66

Annex 5. August 2006 Workshop Proceedings 67

CURRENCY EQUIVALENTS

(Exchange Rate Effective December 12, 2006)

Currency Unit / = / Ghanaian Cedi
USD 1.00 / = / GHC 9,238.40
GHC 1.00 / = / USD 0.00010824
Vice President:
Country Manager/Director:
Sector Director:
Sector Manager:
Team Leader: / Gobind T. Nankani
Mats Karlsson
Michel Wormser
Subramaniam V. Iyer
Paivi Koljonen

ABBREVIATIONS AND ACRONYMS

ADB / African Development Bank
AMA / Accra Metropolitan Authority
BP / Bank Procedures
BSP / Bulk Supply Point
CEPS / Corporate Environmental Policy Statement (of VRA)
DSUP / Distribution System Upgrading Project
EA / Environmental Assessment
EAA / Environmental Assessment and Audit Department
EAPM / Environmental Assessment Procedures Manual
ECG / Electricity Company of Ghana
EA/TRC / Environmental Assessment Technical Review Committee
EIS / Environmental Impact Statement
EMP / Environmental Management Plan
EPA / Ghana Environmental Protection Agency
ESD / Department of Environment and Sustainable Development
GEDAP / Ghana Energy Development and Access Project
GEF / Global Environment Facility
GMMB / Ghana Museum and Monuments Board
IDA / International Development Association
kV / Kilovolt
LI / Legislative Instrument
LPG / Liquefied Petroleum Gas
MOE / Ministry of Energy
NCC / National Commission on Culture
NGO / Nongovernmental organization
OP / Operational Policy
OPN / Operational Policy Note
PCR / Physical Cultural Resources
PER / Preliminary Environmental Reports
PFESM / Policy Framework for Environmental Management of Bulk Transmission Line Projects in Ghana
PPAH / Pollution Prevention and Abatement Handbook
RAP / Resettlement Action Plan
ROW / Right of Way
SEA / Strategic Environmental Assessment
TOR / Terms of Reference
VRA / Volta River Authority


Piloting the Use of Ghanaian Systems to Address Environmental Issues
in the Proposed World Bank-Assisted
Ghana Energy Development and Access Project

Safeguards Diagnostic Review

EXECUTIVE SUMMARY

1.  Ghana is one of the countries being considered for piloting the use of country environmental systems, specifically in the proposed Ghana Energy Development and Access Project (GEDAP). GEDAP will be governed by the new operational policy[1] (OP 4.00) on “Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects.” In accordance with OP 4.00, staff from the World Bank, in collaboration with staff from the Ghana Ministry of Energy (MOE), Ghana Environmental Protection Agency (EPA), Volta River Authority (VRA), and Electricity Company of Ghana (ECG), carried out an equivalence analysis and acceptability assessment of applicable Ghanaian environmental systems, in the latter half of 2005 and early 2006. The work was done in partnership with the African Development Bank (ADB) in order to facilitate use of country systems in Ghana by both banks and to progress toward harmonizing their respective safeguards requirements.

2.  The development objectives of GEDAP are to: (a) improve the transmission and distribution networks to enhance reliability and efficiency of power to existing customers; (b) provide increased access to affordable, reliable and adequate electricity; and (c) improve the efficiency and security of fuels such as liquefied petroleum gas (LPG), wood, and charcoal. The Project will contribute to the global objective of mitigating climate change through the reduction of greenhouse gas emissions, in line with the United Nations Framework Convention on Climate Change and its Kyoto Protocol, to which Ghana is a Party. A grant from the Global Environment Facility (GEF) has been applied for and, if it is approved, the funds will be blended with GEDAP’s IDA financing to support technical assistance in promoting use of renewable energy sources and enhancing efficiency. Moreover, the efficiency enhancing measures in the transmission and distribution sector are likely to generate additional greenhouse gas emission reductions, which may be eligible for carbon finance. GEDAP will consist of four components:

·  Transmission. This component will be implemented by VRA. The main thrust of the component is to reduce transmission losses and to enhance the reliability of supply.

·  Distribution. This component will be implemented by ECG, and will build on the ongoing work under the Distribution System Upgrading Project (DSUP), which is part of the Thermal Power Project (P000926).[2] Key investments focus on the improvement of energy service quality and resulting financial flows by rehabilitating the existing networks, improving the quality of service delivery, implementing loss reduction measures and enhancing commercial capabilities.

·  Rural Access. This component is proposed to be implemented initially by a Project Management Unit under the MOE, which may later be developed into a Rural Electrification Agency with a separately administered Rural Electrification Fund. The component will complement the Government’s efforts to achieve its electrification goals through grid extensions and renewable sources (mini-hydro, solar and wind). It will also promote efficiency and security of fuels such as LPG, wood, and charcoal.

·  Capacity Building. Capacity building efforts will complement the efforts of the Government to establish and operate robust, sustainable energy sector institutions and carry out informed policy making.

3.  Five World Bank safeguards policy areas are applicable to the proposed GEDAP: (a) Environmental Assessment; (b) Natural Habitats; (c) Physical Cultural Resources; (d) Involuntary Resettlement; and (e) Safety of Dams. The equivalence analysis, which was based on a review of legislation, regulations, guidelines and procedures, concluded that Ghanaian systems for environmental assessment (EA) and physical cultural resources (PCR) are in most respects equivalent to the World Bank’s and ADB’s policies and procedures. EPA, MOE, and VRA have activities already underway to further strengthen environmental assessment in the energy sector which, although undertaken for the borrower’s own purposes, will enhance equivalence. Ghana’s policies for natural habitats, involuntary resettlement, and safety of dams differ significantly from those of the two banks.

4.  The acceptability assessment addresses only the two policy areas in which World Bank/ADB and Ghanaian systems are equivalent. It is based on field visits to VRA and ECG projects, review of the safeguards documents and permits associated with projects visited, evaluation of EPA’s institutional capacity and the three implementing agencies, discussions with agency officials and nongovernmental organizations (NGOs), and meetings with communities in the vicinity of transmission lines. The assessment confirms that, with a modest number of gap-filling measures, Ghanaian EA and PCR systems can be used in preparing and implementing GEDAP. For these areas, OP/BP 4.00, Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects, will apply. For the three areas judged not equivalent, the following World Bank operational policies will apply to GEDAP: (a) OP/BP 4.04, Natural Habitats, (b) OP/BP 4.12, Involuntary Resettlement, and (c) OP 4.37 Safety of Dams.

5.  The following actions will be carried out prior to the date of effectiveness of GEDAP (approximately September 1, 2007) to fill minor gaps in equivalence and achieve acceptability.

·  EPA will complete and issue the “Sector-Specific Guidelines for EA” for the energy sector.

·  VRA management will approve the “Policy Framework for Environmental and Social Management of Bulk Transmission Line Projects in Ghana.”

·  MOE will prepare and issue an “Environmental Policy Framework for Captive Generation” setting forth MOE policy and procedure for applying Ghana’s EA system in MOE’s rural electrification and rural access programs.

·  ECG and the Northern Electricity Department (NED) will prepare and issue an “Environmental Policy Framework for Distribution” setting forth ECG policy and procedure for applying Ghana’s EA system in ECG and NED electricity distribution projects.

·  ECG and MOE will prepare staffing plans that provide for adequate environmental and social impact management capacity to be in place before any disbursements begin on investments in the components for which they are the implementing agencies.

6.  The following actions will be undertaken to sustain acceptability during and after implementation of GEDAP.

Action to be Taken / By Whom / By When
Carry out a review of the quality of EA instruments prepared under GEDAP: Environmental Impact Statements, Preliminary Environmental Reports (PERs), scoping reports/Terms of Reference (TOR), Environmental Management Plans (EMPs), etc. and communicate results to MOE, VRA, and ECG. Provide recommendations for improvement. / Environmental Assessment and Audit (EAA) Department of EPA / March 2008 and annually thereafter, continue with these tasks periodically
Transition from consultant-provided EA capacity to in-house permanent capacity in MOE “Electricity Group” and ECG, through staffing, training, refinement of environmental frameworks prepared in connection with GEDAP. / MOE, ECG, EPA, World Bank / During 2007 and 2008
Issue the updated EA Procedures Manual. / EAA Department of EPA / June 2008
Review adequacy of resources (staff, equipment, and budget) allocated to EA in the energy sector in EPA Headquarters and Regional Offices, and optimize as appropriate. / EPA / December 2007

7.  As part of its reporting to the World Bank, MOE will monitor the status of gap-filling measures for equivalence and acceptability identified in this report, at six-month intervals. MOE will annually forward copies of the EEA/EPA review described immediately above to the World Bank and ADB.

8.  MOE conducted a stakeholders’ consultation workshop on a draft of this report in Accra, Ghana, on August 15, 2006. Copies of the draft were made available to the public in advance of the workshop. Workshop findings and recommendations have been included in this final version that will also be disclosed both in-country and at the World Bank Infoshop in Washington, DC. The workshop report prepared by MOE is included in this report as Annex 5.

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Piloting the Use of Ghanaian Systems to Address Environmental Issues in the Proposed World Bank-Assisted Ghana Energy Development and Access Project

Safeguards Diagnostic Review

BACKGROUND

1.  Over the next two years the World Bank will be supporting a limited number of pilot projects in which lending operations will be prepared using the borrowing country’s systems[3] for environmental assessment (EA) and other environmental and social safeguards, rather than the Bank’s operational policies and procedures on safeguards. The rationale for using country systems is to scale up development impact, increase country ownership, build institutional capacity, facilitate harmonization and increase cost effectiveness. These pilot operations are governed by a new operational policy[4] (OP 4.00), “Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects” issued in March 2005. The policy describes the approach, enumerates the criteria for assessing country systems, and specifies documentation and disclosure requirements and respective roles of the client country and the Bank.

2.  The Bank considers a borrower’s environmental and social safeguard system to be equivalent to the Bank’s if the borrower’s system is designed to achieve the objectives and adhere to the applicable operational principles set out in Table A1 of OP 4.00. Since equivalence is determined on a policy-by-policy basis in accordance with Table A1, the Bank may conclude that the borrower’s system is equivalent to the Bank’s in specific environmental or social safeguard areas in particular pilot projects, and not in other areas.[5] Before deciding on the use of borrower systems, the Bank also assesses the acceptability of the borrower’s implementation practices, track record, and institutional capacity. This approach and the criteria for assessment were developed with inputs from external stakeholders such as representatives of governments, bilateral and multilateral development institutions, civil society organizations, and the private sector and are consistent with commitments made by the development community in the Paris Declaration on Aid Effectiveness in March 2005.

3.  Ghana is one of the countries being considered for piloting the use of country systems, specifically in the proposed Bank-assisted Ghana Energy Development and Access Project (GEDAP). The World Bank is considering the use of Ghanaian systems to address environmental safeguard issues in this Project in the following two areas: (a) Environmental Assessment; and (b) Physical Cultural Resources.[6] This report describes the scope, methodology, and findings of the equivalence analysis and acceptability assessment carried out in Ghana by staff from the African Development Bank (ADB) and the World Bank. The two banks are collaborating on country systems pilots in two African countries. The analysis was conducted in collaboration with officials from the Ghana Ministry of Energy (MOE), Ghana Environmental Protection Agency (EPA), Volta River Authority (VRA) and Electricity Company of Ghana (ECG). The proposed pilot is expected to bring the added benefit of moving towards harmonization of environmental safeguards requirements among the Government, the World Bank, ADB and other development partners that might support the GEDAP.

GEDAP PROJECT DESCRIPTION

4.  GEDAP will consist of four components. The project will be implemented within a timeframe of five years at a total cost of USD 368 million, of which USD 65 million will be financed by an IDA credit and USD 7 million by a Global Environment Facility (GEF) grant. Board approval is expected to be in June 2007. Possible sources of cofinancing include ADB and bilateral donors active in the energy sector in Ghana.

·  Component 1: Transmission. This component will be implemented by the VRA. The main thrust of this component is to reduce transmission losses and to enhance the reliability of supply. Transmission requirements include construction of the second Kumasi Bulk Supply Point (BSP), the third Accra BSP, a 120 km 69kV Network Extension between Kpando and Kedjebi, and a Substation Upgrade Project.