E4212v2

Energy Small and Medium sized Enterprise

Sub-Saharan Africa Trust Fund

The World Bank


January 2013 / / /
/ Environmental and Social Management Framework

SENEGAL

This Environmental and Social Management Framework (ESMF) was developed by GVEP, with the support of Mr. Marco A. Zambrano, International Consultant.

January, 2013.

Table of Contents

Table of Contents

Acronyms

Executive Summary

1.Introduction

1.1Objective

1.2Scope……………………………………………………………………………………………………

2.The Program and Project Description

2.1ESME in Sub-Saharan Africa Trust Fund Program

2.1ESME Senegal Project

2.1.1Background

2.1.2Purpose

2.1.3Beneficiaries

2.1.4Subprojects information

2.1.5Institutional arrangements for grant implementation: Support to small scale private sector businesses

3.Geographic and socio-economic description of the project area

3.1Environmental and Social Characterization

3.1.1General information

3.1.2Environmental Aspects

3.1.3Socio-Economic Aspects

3.1.4Vulnerability and Natural Disasters

4.Policy, Legal and Institutional Framework

4.1 General Overview

4.2Policy Framework

4.2.1 Energy National Policy

4.2.2 Forest National Policy

4.2.3 Agricultural Policy

4.2.4 Tourism Policy

4.2.5 National Environmental Policy

4.3Legal Framework

4.3.1Energy

4.3.2Environment

4.3.3Others related sectors

4.3.4International Agreements

4.4Institutional Framework

4.4.1Ministry of Energy

4.4.2Regulation Commission of Energy Sector

4.4.3Senegalese Rural Electrification Senegalese Agency

4.4.4Ministry of the Environment, Protection of Nature, the Retention Basin and Artificial Lakes

4.4.5Municipalities

5.World Bank Safeguard Policies

6.Environmental and Social Impacts of the Senegal Energy SME

6.1 Environmental and Social impacts

6.2 Potential Negative Impacts and associated mitigation measures

7.Environmental Review Process

7.1 Environmental Screening Process

7.2 Environmental Screening Categories

7.3 Environmental and Social Management Plan

7.4 Steps in the Environmental Review Process – Procedures and Institutional arrangements.

7.5 Roles and Responsibilities in the Environmental Review Process

8.Summary of consultations

ANNEXES

Annex 1 Environmental and Social Screening Sheet

Annex 2 Outline of an environmental and Social Management Plan

Annex 3 Guidelines for a Pest Management Plan

Annex 4

Annex 4.1: Environmental Legal Framework in Senegal

Annex 4.2: List of projects and programs that requires an EIS or IEA under Senegalese law

Annex 4.3: Guidelines to prepare an Initial Environmental Analysis (Senegalese law)

Annex 5 – World Bank Group’s Environmental, Health, and Safety Guidelines

Acronyms

ABE Agriculture-Based Enterprises

ANSD Agence Nationale de la Statistique et de la Demographie

ASER Agence Sénégalaise d’Electrification Rurale

ARAPAbbreviated Resettlement Action Plan

CBD Convention on Biological Diversity

CBOCommunity-Based Organization

CDMClean Development Mechanism

CGRN Comité de gestion des ressources naturelles

CITESConvention on International Trade in Endangered Species

CONSERE Conseil Supérieur des Ressources Naturelles et de l’Environnement

CRSE Commission de Regulation du Secteur de l’Energie

DE Direction de L’Energie

EAC East African Community

EDCGEnvironment Donor Coordination Group

EIAEnvironmental Impact Assessment

EIS Energy Information System

EMCAEnvironmental Management Coordination Act

EMPEnvironmental Management Plan

ESMFEnvironmental and Social Management Framework

GDPGross Domestic Product

GEFGlobal Environment Facility

GoSGovernment of Senegal

GoRGovernment of Russia

GVEPGlobal Village Energy Partnership International

IWRM Integrated Water Resources Management

MDGs Millennium Development Goals

MEA Multilateral Environmental Agreement

NEAP National Environmental Action Plan

NGONon-Governmental Organization

NRA Natural Resource Accounting

PAs Protected Areas

PANA Plan National d’Adaptation

PCC Public Complaints Committee

PCPPublic Consultation Plan

PCRPhysical and Cultural Resources

RAPResettlement Action Plan

SENELEC Société Nationale d’Electricité

ToRTerms of Reference

UNDPUnited National Development Program

USAID US Agency for International Development

WHOWorld Health Organization

WSSD World Summit on Sustainable Development

Executive Summary

The main purpose of the Energy Small and Medium sized Enterprise (ESME) Trust Fund, administrated by the World Bank, is to support private sector entrepreneurship and investment in the provision of energy services in remote, un-served and under-served regions within a number of Sub Saharan African countries. The organization responsible for the Program implementation in Kenya and Senegal is Global Village Energy Partnership (GVEP) International.

In order to ensure adequate environmental and social management during the ESME Trust Fund implementation, and to comply with the national environmental laws and the World Bank’s Safeguards Policy, the presentEnvironmental and Social Management Framework (ESMF)hasbeen developed during the Trust Fund preparation. Due to the characteristics of the resources application in each country(Kenya and Senegal), it was agreed with GVEP to develop a separate instruments (ESMF-K and ESMF-S) in order to take into account the needs and requirements in terms of environmental and social management for each case.

In relation with the ESME-S the Trust Fund will introduce financial support to provideinvestment grants to small scale private sector businesses (Projet Energétique Multi-Sectoriel – PREMs) seeking to expand their production through investments in energy supply and operating equipment. The amount of this ESME-S Trust Fund is US$2.3 million. The funding will be used to provide grants to existing private businesses to support14-16productive initiatives(food processing, tourism and others sectors).Indirectly the investments will benefit the communities within the operational areas who participate voluntarily in the subproject activities.

The implementation of the ESME-Swill bring high positive environmental and social impact.The environmental impact fromthe use of others source of energy,especiallycombustion used in fossil fuel power generation, and other greenhouse gases and air pollutants.In addition to these environmental benefits, improving the productivity of businesscreates direct and indirect employment and additional income in the surrounding area of the development.

The negative environmental impact during the subprojects implementation and operation is not expected to be significant, but it is important that the grant recipients implement good environmental and social practices.

The parent project, ESME Trust Fund, was classified in accordance with the Bank’s Environmental Assessment Policy (OP/BP 4.01) as Category Bwhich applies to the Senegal ESME as well as to itssub-projects.Category A (high environmental and social risk) subprojects are therefore excluded from financing under the ESME project. In some cases (Category B), depending on the sub-project type,the Grant Recipient may have to prepare an Initial Environmental Analysis (IEA) to comply with national law in addition to the Environmental and Social Management Plan (ESMP) required by the implementation of this ESMF. The guidelines to prepare the safeguards instruments required by national law and also by the World Bank Safeguard Policiesare included in this ESMF. While Category Csubprojects do not require further environmental work past the initial screening, it is still important that they implement good environmental and social practices and comply with the requirements of national law. The project will not finance any new land acquisition or activities that restrict and/or lead to loss of assets, income, or means of livelihood.

Any activity financed under the ESME-S will be subject to the procedures outlines in this ESMF.

Withregard to the institutional capacity and safeguards experience, GVEP is implementing ESME funded programs in Tanzania and Rwanda as a part of existing World Bank funded programs governed by safeguards frameworks. GVEP has includedUS$ 30,000 in its budgetto support the implementation of this ESMF, including the recruitment, as needed and on a part-time basis, of a consultant with experience in environmental and social assessment.

1.Introduction

The $30 million Trust Fund to support Energy Small and Medium sized Enterprise (ESME) in Sub-Saharan Africa (SSA) has the objective of fostering local private sector entrepreneurship and investment in the provision of energy services in remote, un-served and under-served regions within a number of Sub Saharan African countries. The aim is to support the establishment and the development of stable and viable privately run enterprises and business models that will increase access to reliable, sustainable, and affordable modern energy services in peri-urban areas, small towns, and rural areas within the selected countries.

To implement this project, the Government of Russia (GoR) requestedthat the World Bank manage this trust fund and closely collaborate with the Global Village Energy Partnership (GVEP) International. This agreement was formalized with the signing of an Administration Agreement between the World Bank and the GoR on March 19, 2009 for the ESME support in SSA project. In 2012, the project’s closing date was extended to 31st August 2014 and the Administrative Agreement is being amended to give GVEP responsibility as the grant’s implementing agency in Senegal and Kenya.

To ensure adequate environmental and social management during the project implementation in Kenya and Senegal and to comply with the national environmental laws and the World Bank’s Safeguards Policy, this Environmental and Social Management Framework (ESMF) was developed as part of project preparation and GVEP will be responsible for its implementation

1.1Objective

The overall purpose of the ESMF-S is to:

  • Present the project’s scope, boundaries, and main activities; the applicable World Bank Safeguards policies and their requirements; a diagnosis of the policy, legal, institutional framework in Senegal as well the social and environmental characterization of the country.
  • Guide GVEP and Grant Recipientswithmethodologies, tools and procedures to develop and implement Environmental and Social Management Plans (ESMPs) during the project implementation.The ESMF-S should be implementedby GVEP and Grant Recipients.

1.2Scope

The activities that will be financed under the ESME trust fund are not fully know, though there is an indicative list per sector (see Chapter 6).The ESMF presents a comprehensive process that aims to assess the negative environmental and social impacts caused by the project’s activities and to mitigate them. The ESMF also includes monitoring and evaluation measures.

To be effective, the implementation of the ESMF must be integrated in the grant approval process. GVEP will use the ESMF to ensure that proposed activities do not have significant or long-lasting negative environmental and social impacts. In applying the ESMF’s methodology, GVEP will ensure that grantees avoid, minimize, or mitigate the negative impacts to an acceptable level. An exclusion list included in this ESMF regroups all the activities that ineligible for funding: activities typically excluded by the Bank (arms, illegal activities, bars, etc.) as well as activities with impacts on natural habitats, forests, endangered species, international waterways, and activities involving disputed areas,involuntary resettlement, and dams.

The ESMF is based on a two-step approach:

1Conduct a preliminary environmental assessment using the screening checklist in order to determine the environmental category of the activity to finance.

2Implement the appropriate procedure based on the assigned EA category. There are three categories:

  1. Significantly adverse impact (World Bank’s Category A): activity is excluded
  2. Potentially adverse impact (World Bank’s Category B): Prepare Environmental and Social Management Plan (ESMP)
  3. Minimal or no adverse impact (World Bank’s Category C): No Impact assessment or further environmental work needed.

In relation to the contents of the document, the ESMF-S is divided into8Chapters: The First Chapter presents the Introduction including the Objective and Scope of the instrument; the Second Chapter presents the description of the ESME Trust Fund Program; the ESME proposed for Senegal; and the potential subprojects that the Project will support; the Third Chapter presents geographic and socio-economic description of the project area; the Fourth Chapter presents the policy, legal and institutional framework; the FifthChapter presents and analysis of the World Bank Safeguards Policies as applicable to the project; the SixthChapter presents the potential environmental and social impacts and the measures to prevent, mitigate and/or compensate the potential negative impacts; the SeventhChapterpresents the Environmental Review Process; and the Eighth Chapter provides a summary of consultations.

2.The Program and Project Description

2.1ESME in Sub-Saharan Africa Trust Fund Program

The development objective of the Energy Small and Medium size Enterprise (ESME) Trust Fund (US$ 30 million) is to strengthen the capacity of SMEs that provide energy services to poor communities in selected countries in Sub-Saharan Africa (SSA). In the case of Senegal, the focus is on promoting private sector investment in energy generation for productive use.

The Program has three components.

First Component: Additional Financing to Scale-Up Energy expansion provides grants to the Governments to support programs benefiting energy SMEs. The funds are channeled as additional parallel grant funding to IDA/IBRD projects. Under these arrangements, grant agreements have been signed with Tanzania, Mali, Botswana,and Rwanda and additional agreements are expected to be signed withUganda.

Second Component: GVEP Technical Assistance to SMEs and REAs.The component finances GVEP to provide technical assistance to energy SMEs and REAs managing energy SME grants under the Component 1. The Amendment of the Administrative Agreement has expanded this component to also authorize GVEP to provide grants directly to Energy SMEs. Subsequently, two grant programs have been agreed, in Kenya and in Senegal.

Third Component finances World Bank costs for the management and administration.

With regard to the first component, GVEP International will act as the implementing agency for the project and administer and awardESME grants in Kenya and Senegal. In Kenya, the grants will be competitively awarded to the distributors of off-grid lighting products (OGL); and in Senegal, grants will be provided to SMEs to acquire electricity in order to expand their business and boost their production (e.g. solar PV lighting for eco-lodges, refrigeration equipment for dairy farms, and others).

2.1ESME Senegal Project

The ESME Grant Project in Senegal will providefinancial support throughinvestment grants to small scale private sector businesses seeking to expand their production through investments in energy supply and operating equipment. The amount of this project is US$2.3 million. This financing is a grant from ESME Trust Fund provided by the GoR.

2.1.1Background

The project will assist small and medium-sized private businesses to meet the costs of securing an enhanced power supply and the additional equipment required to make productive use of that power. The ability of small businesses to access energy services from either concession holders or transitional entities is severely limited. The only viable option for many businesses is to own and operate power equipment themselves.

2.1.2Purpose

The objective of the Trust Fund in Senegalis to provide financing and technical assistance to Small and Medium Enterprises (SMEs) to acquire electricity in order to expand and upgrade their activities. Specifically, the project will support private businesses to help meet the investment costs ofexpanding their operations, in accordance with eligibility criteria.The funding from the ESME Trust Fund will be used to provide grants to private businesses to bring 14-16expansion plans into the implementation stage.

2.1.3Beneficiaries

The direct beneficiaries will be the Small Medium-sized Enterprises (SMEs) that promote economic activities related to sectors such as food processing and tourism. Indirectly, the investments will benefit, within the target areas,local communities through increased services, employment opportunities, and improved product offering. According to local reports, frequent power outages have contributed to the closure of many small and medium enterprises.

The key stakeholders include the small scale private sector businesses (Project Energetique Multi-Sectoriel – PREMs); Senegalese Rural Electrification Agency (ASER); Local Authorities (Municipalities); environmental authorities at the local level; the environmental authority at the national level;and the local communities.

2.1.4Subprojects information

  1. Eligibility

The subprojects are demand driven. In 2010 an initial selection of potential subprojects was made from a database of 29PREMS. Seven businesses were selected for potential support and detailed investment plans have been developed. There is currently a second group of interested PREMs that are in the pipeline for consideration. The description of the ESME-S project, including expected SME and product eligibility criteria are included in the Senegal Project Paper.

  1. Description

The grants will be provided to SMEs to acquire electricity in order to expand and upgrade their activities. The investments could be in:

-Solar PV installationfor eco-lodges;

-Refrigeration equipment for dairy farms;

-Water pumps for irrigation;

-Connection to the grid;

-Generators

-Other relevant energy upgrades.

The investments will be in the following sectors: agriculture, dairy processing, village tourism, and peri-urban poultry farming.

  1. Amount

-Maximum grant amount of US$ 150,000. In order to allow 12-14 firms to access the available funding and foster competition between grantees, the maximum amount of a grant to one firm shall be US$150,000. In exceptional circumstances the committee may consider an award up to US$250,000, but only where the total investment in the project exceeds US $1.0 million and the scale of the impacts on the local community are large.

-SME contribution. In general, the total grant amount given to one firm shall not exceed 50% of the total amount of theinvestment (including revenues to be reinvested by the company in the following three years.) For smaller projects (US$120,000 and less) where the SME has limited financial means and the social benefits are large the grant element may increase to 85% of total costs. The level of grant should be appropriate to the specifics of each business case.

2.1.5Institutional arrangements for grant implementation: Support to small scale private sector businesses

GVEPwill have the responsibility for implementing the ESME grant in Senegal. GVEP is an international non-profit organizationwhich helps implement energy-related projects providing reliable electricity for rural and peri-urban communities in Africa and Latin America thereby improving the quality of people’s lives, stimulating growth and reducing poverty.GVEP works to increase access to modern energy and reduce poverty in developing countries.