DRAFT
BANGLADESH BANK
Investment Promotion and Financing Facility (IPFF)
ENVIRONMENTAL AND SOCIAL MANAGEMENT FRAMEWORK
ESMF
FOR
IPFF
05 December 2009
Prepared by:
Infrastructure Investment Facilitation Center
Dhaka, Bangladesh
ESMF for IPFF
TABLE OF CONTENT
Acronyms
EXECUTIVE SUMMARY
PART – A GENERAL
1THE ESMF DOCUMENT
1.1Overview of ESMF
1.2Structure of the DOCUMENT
1.3Methodology
1.4Purpose of ESMF
1.5Users of ESMF
2IPFF PROJECT DESCRIPTION
2.1Background Of IPFF Project
2.2Objectives & aims of IPFF
2.3Components of IPFF
2.3.1Infrastructure Development Sub-Loans
2.3.2Technical Assistance
2.4Anticipated Project Types under IPFF
2.5The IPFF Project Cycle
3SUB-PROJECTS OF IPFF - APPROVAL AND MONITORING
3.1IPFF Projects Management
3.2Project Document Preparation
3.3Appraisal and Approval
3.3.1Environmental and Social Assessment Process
3.3.2Approval Process of Loan
3.4ProjectS ReportING under IPFF
3.5Annual Reviews for IPFF
4CAPACITY BUILDING, TRAINING ON ESMF
4.1Institutional Capacity Assessment
4.2Capacity Building
4.3Training needs and Plans
4.4Technical Assistance for Capacity Building Implementation
PART – B ENVIRONMENTAL MANAGEMENT FRAMEWORK
5GENERAL ENVIRONMENTAL MANAGEMENT
5.1OVERVIEW
5.2TARGET AREAS OF ENVIRONMENTAL MANAGEMENT
5.2.1Physiographic and Land Use Pattern
5.2.2Hydrology
5.2.3Ground Water
5.2.4Ecology
5.2.5Climate
5.2.6Environmentally and Ecologically Sensitive Areas
5.3Main Environmental Concerns
6LEGAL AND INSTITUTIONAL FRAMEWORK (ENVIRONMENTAL)
6.1OVERVIEW
6.2ENVIRONMENT RELATED POLICIES IN BANGLADESH
6.2.1National Environmental Policy, 1992
6.2.2National Environmental Management Action Plan, 1995
6.2.3National Conservation Strategy, 1992
6.2.4National Water Policy, 2000
6.2.5National Water Management Plan, 2001
6.3RELEVANT LAWS AND REGULATIONS IN BANGLADESH
6.4ENVIRONMENTAL GUIDELINES FOR PROJECTS IN BANGLADESH
6.4.1Green Category
6.4.2Orange A and B Category
6.4.3Red Category
6.5INSTITUTIONAL ORGANIZATIONS
6.5.1Department of Environment (DoE)
6.5.2Department of Forest
6.6DOE REQUIREMENTS ON ENVIRONMENTAL ASPECTS
6.7WORLD BANK SAFEGUARD POLICIES
6.8CATEGORIES OF PROJECTS ACCORDING TO THE WORLD BANK
6.8.1Category A:
6.8.2Category B
6.8.3Category C
6.9COMPARISON BETWEEN GOB AND WB GUIDELINES
7ENVIRONMENTAL IMPACT AND MITIGATION MEASURES
7.1OVERVIEW
7.2POTENTIAL IMPACTS
7.2.1Pre-Construction (Planning and Design) Phase
7.2.2Construction Phase
7.2.3Operation and Maintenance Phase
7.3MAJOR ENVIRONMENTAL IMPACTS
7.4ASSESSMENT OF IMPACTS
7.4.1Cumulative Impacts
7.5MITIGATION MEASURES
PART – C SOCIAL MANAGEMENT FRAMEWORK
8LEGAL AND INSTITUTIONAL FRAMEWORK (SOCIAL)
8.1OVERVIEW
8.2RELEVANT NATIONAL LEGISLATION
8.3ACQUISITION AND REQUISITION ORDINANCE, 1982
8.4WORLD BANK’S SAFEGUARD POLICIES
8.4.1OP 4.12 Requirements (Involuntary Resettlement)
8.4.2OP 4.10 Requirements (Indigenous Peoples)
8.5COMPARISON OF REQUIREMENTS OF GOB AND WB
8.6ADDRESSING WORLD BANK SAFEGUARD POLICIES
9SOCIAL MANAGEMENT PROCESS
9.1General
9.2STAGES IN PROJECT DEVELOPMENT
9.3FLOWCHART FOR SMF
9.4SOCIAL COMPLIANCE MATRIX
9.5SOCIAL SCREENING
9.6PUBLIC INFORMATION CAMPAIGN and CONSULTATION
9.6.1Involvement of the Host Populations
9.6.2Formal Consultation Process
9.6.3Informal Consultation Process
9.7Record of Consultation
9.8SOCIAL IMPACT ASSESSMENT (SIA)
9.8.1Identifying Social Impact Assessment Variables.
9.8.2Combining Social Impact Assessment Variables, Project Stage, and Setting
9.8.3Steps in the Social Impact Assessment Process
9.9IDENTIFICATION OF IMPACT
9.10IMPACT MITIGATION
9.11LAND ACQUISITION FOR PROJECTS
9.11.1Steps in Land Acquisition
9.12RESETTLEMENT ACTION PLAN (RAP)
9.12.1Land Acquisition Plan
9.12.2Resettlement Types
9.12.3Resettlement Action Plan (RAP) Preparation
9.12.4Abbreviated Resettlement Plan
9.13Indigenous Peoples Development Plan (IPDP)
9.14Grievance Redress Mechanism
PART-DOPERATIONAL MANUAL
10OPERATIONAL MANUAL
10.1SEQUENCE OF TASKS OF THE ESMF IN DIFFERENT PHASES OF IPFF PROJECT
10.1.1Pre-Construction Phase Activities
10.1.2Criteria For Site Clearance Of Projects/Industries
10.1.3Procedure for Issuing Environmental Clearance Certificate
10.1.4Land Acquisition Phase
10.1.5Financing Phase
10.1.6Construction Phase
10.1.7Post-Construction Operation Phase
10.2INSTITUTIONAL FRAMEWORK FOR ESMF IMPLEMENTATION
10.2.1Environment and Social Cell (ESC) of IPFF
10.2.2The Project Management Unit (PMU) in Sub-project
10.2.3Project Environmental and Social Cell (PESC) under sub-project
10.2.4Resettlement Unit (RU) under PESC
10.3ESMF IMPLEMENTATION BUDGET
10.4MONITORING OF ESMF
10.4.1Construction Phase Monitoring
10.4.2Operational Phase Monitoring
10.4.3Monitoring Plan
10.5ESMF AUDITING FRAMEWORK
10.6PERIODIC REPORTING ON ESMF
Acronyms
APOAnnual Plan Operation
BBBangladesh Bank
BECABangladesh Environment Conservation Act
BMPBest Management Practices
BPBank Procedures
BRTABangladesh Road Transport Authority
COCarbon Monoxide
CULCompensation under Law
DCsDistrict Commissioners
DLACDistrict Land Acquisition Committee
DoEDepartment of Environment
EAEnvironmental Assessment
ECAEnvironment Conservation Act, 1995
ECCEnvironmental Clearance Certificate
ECREnvironment Conservation Rules, 1997
EIAEnvironmental Impact Assessment
EMPEnvironmental Management Plan
EMMPEnvironmental Mitigation and Management Plan
ERDEconomic Relations Division
ESAEnvironmental and Social Assessment
ESMFEnvironmental and Social Management Framework
ESMPEnvironmental and Social Management Plan
FCDFlood, Control and Drainage
FGDFocus Group Discussion
FIFinancial Intermediary
FILFinancial Intermediary Loan
GoBGovernment of Bangladesh
GRCGrievance Resolution Committee
ICTInformation and Communication Technology
IDAInternational Development Association
IEEInitial Environmental Examination
IIFCInfrastructure Investment Facilitation Centre
IPFFInvestment Promotion Financing Facility
IPDPIndigenous People Development plan
LAPLand Acquisition Proposal
MoEFMinistry of Environment & Forest
NEMAPNational Environmental Management Action plan
NGONon-Government Organization
NOxOxides of Nitrogen
ODOperational Directives
OPOperational Policies
PADProject Appraisal Document
PAPProject Affected Person
PFIParticipatory Financing Institution
PIPublic Involvement
PICOMPrivate Infrastructure Committee
PPPPublic-Private Partnership
PRAParticipatory Rural Appraisal
RAPResettlement Action Plan
RDPRegional Development Plan
SCCSite Clearance Certificate
SIASocial Impact Assessment
SMPSocial Management Plan
SOxOxides of Sulphur
TATechnical Assistance
WBWorld Bank
WARPOWater Resources Planning Organization
WQSWater Quality Standard
EXECUTIVE SUMMARY
This ESMF has been prepared to serve as a guideline for the stakeholders of the IPFF project: the intending project sponsors; the financial intermediaries; the executing agency and relevant line ministries, etc. For the intending project sponsor, the ESMF gives the sequence of activities that should be followed in conforming to the environmental and social aspects of a project seeking IPFF funding.
1
ESMF for IPFF
PART – A GENERAL
1THE ESMF DOCUMENT
1.1Overview of ESMF
Environmental and Social Management Framework (ESMF) is a safeguard instrument which establishes a mechanism to determine and assess future potential environmental and social impacts of different projects and other activities associated with the projects regardless of funding agency. The framework sets out mitigation, monitoring and institutional measures to be taken during design, implementation and operation of the project activities to eliminate adverse environmental and social impacts, offset them, or reduce them to acceptable levels. This instrument has been prepared as a separate and stand-alone document to be used for IPFF project. This framework is a diagnostic tool to support decision-making but is not a substitute for decision making either at the strategic or detailed implementation levels.
It is important to recognize that the World Bank Operational Policies require that the Environmental and Social Assessments (ESA) of private sector projects, financed by Financial Intermediary Loan (FIL) institutions undergo the same rigorous treatment, as in case of regular public sector investment projects. However, it is practically unachievable. In public sector projects, the Bank is involved from the inception of the project and goes along in all the stages from project identification, feasibility study, tendering, evaluation, award of contract, financing and construction (from Stages 0 to 6, in the continuum of project development stages, as given in Bangladesh Private Sector Investment Guidelines, BPSIG 2004). But in Private Public Partnership (PPP) projects, the Bank or a Participatory Financial Institute (PFI) comes in the project scene only at the time of financing (Stage 5). The The Bank or the PFI enters in the project life when much of the Environmental and Social Assessment (ESA) activities have been completed. As such it cannot control these activities and can only make a due diligence in the past activities, to ensure compliance.
For projects in which the World Bank finances are involved since the inception, all the WB requirements for environmental and social issues are to be followed. But in case where the sponsor purchases the land for the project through voluntary negotiations or the land has been acquired by the government earlier, all the Bank guidelines for land acquisition and resettlement issues cannot be followed. In such cases the IPFF will take appropriate measure that may be possible at that stage. This matter has been discussed in detail, in the Operational Manual of this document.
1.2Structure of the DOCUMENT
The ESMF is a large and an important document. It has been divided into four parts with total ten chapters for the convenience of the users of this document. Here, the ‘Environmental Management Framework’ and the ‘Social Management Framework’ are dealt separately, so that users can easily go through the both frameworks without any perplexity.
The four parts are named as,
- Part A: General includes chapters 1, 2, 3 and 4.
- Part B: Environmental Management Framework includes chapters 5, 6 and 7.
- Part C: Social Management Framework includes chapters 8 and 9
- Part D: Operational Manual includes chapter 10
The contents of these ten chapters are stated below.
i)Chapter One gives an overview of ESMF including its purpose, users and environmental and social assessment process.
ii)Chapter Two gives a brief idea on the IPFF project including its objective, nature, components and the project cycle.
iii)Chapter Three gives a brief idea on IPFF sub-projects management and its monitoring and auditing framework.
iv)Chapter Four discusses the capacity building and training needs and plans of the ESMF. This chapter also discusses the technical assistance required for capacity building implementation and ESMF implementation budget.
v)Chapter Five describes the relevant available environmental resources of Bangladesh, which are important for environmental management.
vi)Chapter Six provides the legal and institutional basis for establishing the environmental standards/guidelines for IPFF projects. It also includes the World Bank guidelines and the comparison between GoB and WB guidelines.
vii)Chapter Seven outlines the possible environmental impacts and their mitigation measures during pre-construction, construction and operation phases of the sub-projects.
viii)Chapter Eight provides the legal and institutional basis for establishing the social standards/guidelines for IPFF sub-projects. It also includes the World Bank guidelines and the comparison between GoB and WB guideline
ix)Chapter Nine gives a brief idea on social management process, relating their risk to their management, and impact identification and mitigation measures, including land acquisition and resettlement issues for IPFF sub-projects. .
x)Chapter Ten gives an operational manual including sub project implementation arrangements; and management plans.
1.3Methodology
The following steps were followed in the methodology for preparation of this ESMF document. The whole report preparation consists of following seven steps.
- Review the ToR of ESMF
- Literature review
- Selection of experts and stakeholders
- Consultation with experts and stakeholders
- Compilation and analysis of information
- Preparation of Draft Final Report
- Preparation of the Final Report incorporating the comments of concerned agencies on Draft Final Report
These steps are detailed in the Flowchart shown on the following page.
Fig 1. 1 : Methodology of Preparing ESMF
1.4Purpose of ESMF
The Environment and Social Management Framework (ESMF) details the agreed policies, guidelines, and procedures to be integrated into the implementation of IPFF projects. The main purposes of the ESMF are,
- To understand the process of undertaking ESAs for IPFF sub-projects, which are usually PPP projects
- To establish clear procedures and methodologies for the environmental and social assessment, review, approval and implementation of investments to be financed under the project;
- To specify appropriate roles and responsibilities, and outline the necessary reporting procedures, for managing and monitoring environmental and social concerns related to project investments;
- To determine the training, capacity building and technical assistance needed to successfully implement the provisions of the ESMF;
- To provide practical information, resources for implementing the ESMF.
As a detailed guide on principles and procedures for incorporating environmental and social issues into project preparation, the ESMF would be a useful reference to potential project sponsors and other financing agencies likely to participate in future stage of an IPFF projects.
1.5Users of ESMF
As a core policy and procedural document for the IPFF projects, the ESMF is designed for use by the following actors:
- IPFF Project Staff: As a document enshrining operating principles and guidelines to ensure that projects are adequately assessed to ensure compliance with environmental and social standards.
- Project Sponsor: As a document that spells out requirements with respect to environmental and social issues that need to be met, for obtaining finances for IPFF project.
- Project Associates (Bangladesh Bank, other shareholders, consultants, lenders, etc.): As a document that explains the compliance requirements for environmental and social requirements for projects that receive financing for IPFF projects.
- Other relevant government agencies, including DOE, for reference.
2IPFF PROJECT DESCRIPTION
2.1Background Of IPFF Project
The Government of Bangladesh (GoB) with support from World Bank has taken the Investment Promotion and Financing Facility (IPFF) Project to open a new window for infrastructure financing through private sector participation. The IPFF has made available partial debt financing through private sector financial intermediaries for eligible, government-endorsed infrastructure projects to be developed by private sector. Projects developed solely by the private sector but identified by the Government to be in the public interest are also being eligible for financing. The project also seeks to assist the Government of Bangladesh in facilitating new infrastructure projects with potential for private sector participation and in developing the capacity of the financial institutions for the ongoing provisions of infrastructure finance.
The IPFF project has exhausted its first phase allocation amount of $50.00 million ($47.5 million investment and $2.50 million TA for capacity building) in its third year of operation, and considerable excess demand still exists. The initial funds have been used exclusively in the power sector as a matter of priority. However, other sectors also require a boost in infrastructure financing, as well as in familiarization with the PPP framework.
The objectives of the additional financing for IPFF project are:
- To supplement the resources of the Bangladesh financial markets to provide term finance for infrastructure and other investment projects beyond the capacity of local financial institutions; and
- To scale up the financing of public-private partnership (PPP) ventures in infrastructure already started in the project.
The proposed operation will support Bangladesh Bank (BB), the implementing agency, to scale up the financing of PPP ventures in infrastructure. The proposed operation is expected to increase additional financing of infrastructure by over $400 million, leveraging about 100% private resources. It is expected to increase infrastructure supply in the power sector - renewable energy and energy savings - as well as bridges, ports, container terminals, water treatment plants, waste disposal projects, and others. The increased provision of infrastructure will create (or help maintain) jobs during the economic slowdown, and remove bottlenecks in economic growth caused by existing infrastructure shortages. The proposed amount of US$257 million equivalent is divided into $7 million for capacity building (technical assistance) and US$250 million for the lending pipeline.
2.2Objectives & aims of IPFF
The objectives of the IPFF Project are to accelerate private sector-led growth by providing term finance for infrastructure development and promoting domestic infrastructure finance capacity.
The project aims to:
a)Supplement the resources of the Bangladesh financial markets to provide term finance, in Taka and foreign currency, for infrastructure and other investment projects beyond the capacity of local financial institutions;
b)Promote the role of private sector entrepreneurs in the development of capital projects, especially infrastructure.
2.3Components of IPFF
The IPFF Project consists of two components:
- Infrastructure Development Sub-loans
- Technical Assistance
2.3.1Infrastructure Development Sub-Loans
This component aims to develop a funding mechanism that adds transparent levels of control and market-based incentives to the existing methodology for allocating public funds to priority infrastructure projects identified by the government and developed on the basis of PPP.
The funding mechanism is not created for any newly licensed financial institutions but it operates following the regulation of BB for the existing regulated local financial institutions. Funds are allocated to local financial institutions for on-lending to private sector infrastructure projects selected by the government. Financing comes from the government but is administered by BB. The private sector infrastructure promoters operate under incentive-based contractual arrangements designed to align their interests with those of the GOB. Sub-loans to PFIs for investment projects eligible for financing from the facility are approved by the BB as agent of GOB subject to World Bank “No Objection”. Projects are supported on market terms and require at least a 30 percent equity component from the private infrastructure promoter and a further minimum of 14 percent of third-party funding, which may come from the PFIs. The PFIs are required to co-invest as well as assume all commercial credit risk to reinforce alignment of their interests and those of the government. Syndication amongst PFIs and with non participating institutions is permitted but the PFIs are responsible for credit administration and recovery.
BB has carried the selection of PFIs on a transparent basis. Eligibility is restricted to local financial institutions licensed by BB. World Bank provided its “No Objection” for the selected PFIs. The interest rate for funds available under the facility is market-determined, using a process that references the risk free rate (typically Government bonds) for financings of a comparable maturity and interest period. Sub-loans made to promoters of infrastructure projects are made at market offered rates to be determined by the PFIs.
2.3.2Technical Assistance
- Strengthening the management and operation of the Facility.
- Strengthening the capacity of PFIs in the areas of business planning, resource mobilization and management information system.
- Provision of technical advisory services to Bangladesh Bank to carry out the Project
- Provision of technical advisory services by IIFC to facilitate the development of a framework for building capacity to manage private-public partnership in infrastructure, and for fostering policy, regulatory, and institutional reforms.
- Provision of technical assistance by IIFC:
(i)To assess infrastructure investment projects;
(ii)To carry out training and dissemination activities to promote infrastructure finance; and