Quick Facts

Where the impacts of the investment may be experienced.
  • Panama
Location: Telfer Island, Colon
Whenever identified, the area within countries where the impacts of the investment may be experienced. Exact locations of projects may not be identified fully or at all in project documents. Please review updated project documents and community-led assessments.
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
  • International Finance Corporation (IFC)
Status: Active
Bank Risk Rating: A
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Board Decision Date: 2016-07-20
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower or Client: GAS NATURAL ATLANTICO S. DE R.L.
The holder of the loan, grant, or other investment.
The service or industry focus of the investment. A project can have several sectors.
  • Energy
Potential Rights Impacts:
Only for projects receiving a detailed analysis, a broad category of human and environmental rights and frequently at-risk populations.
  • Healthy Environment
  • Housing & Property
  • Labor & Livelihood
  • Right to Health

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Primary Source

Original disclosure @ IFC website
Updated in EWS: 2017-12-19
Disclosure Date: 2016-03-25
AES Panama LNG

Project Description
AES Corporation ("AES Corp" or the "Sponsor") through its indirect ownership interest in each of Gas Natural Atlantico the ("company" or "GNA") and Costa Norte LNG Terminal ("Costa Norte"), is developing a project that comprises the development, construction, operation and maintenance of an integrated gas to power project consisting of: (a) a 380MW combined cycle gas turbine ("CCGT") power plant, and (b) an onshore liquefied natural gas ("LNG") import terminal with a 180,000 m3 storage tank (approximately 80 TBTUs. It is anticipated that the project will begin construction by April 2016. Project cost for both the Plant and the Terminal are estimated at $1.1 billion which the company expects to finance with both debt (approximately 55%) and Sponsor equity (45%). IFC is proposing to provide up to US$150 million in the form of an IFC A Loan. The combined cycle of 3 units of gas and steam is to be supported by a heat recovery system. The produced energy will be delivered to the Costa Norte substation as per established on the Power Purchase Agreement. The LNG Terminal will include a new berth for LNG ships and one above ground storage tank with 180,000 m3 of capacity. The terminal has been sized to accommodate LNG vessels up to 180,000m3 which more than covers the gas supply requirement of the plant. The three main functions of the terminal and associated system include: (a) download of the LNG on a pier parallel to the coast ("Jetty") and cryogenic pipes up to storage tank (through which gas will be transported at temperatures minus 160 degrees centigrade); (b) LNG storage in the storage tank; (c) regasification and onshore gas delivery to the power plant. The plant and the terminal will be built on a 20-hectare site, located in an industrial area near the Atlantic entrance of the Panama Canal in Telfer Island, in the province of Colon (approximately 60km northwest of Panama City), leased to the company by the Panama Ports Company (PCC.) The project site borders to the North with the storage and fuel supply tanks and the pier of the Telfer Tanks Company. To the South it borders unused land forming part of the Panama Ports concession. To the East it borders with the road that ends in the Pier 16 and to the West with the entry of the Atlantic sector of the Panama Canal and Manzanillo Bay. As the project is located in the so-called "compatibility area" of the Panama Canal Authority (ACP) it needs to be compatible with ACP operations and requires the approval of ACP. This process evaluates the project from an operational standpoint as well as potential environmental risks and impacts on ship traffic. The site offers good access to road transportation and the nearby Cristobal port and it is located in a zone designated for industrial activities with a limited population in the immediate vicinity. The socio-economic area of influence of the project includes the following populations: Cristobal, Barrio Norte, Barrio Sur, Ciudad Arco Iris, Puerto Escondido or Urbanizacion El Esfuerzo and Margarita located at between 0.37 km and 4.0 km from the project site. The approach bay to the dock is located within the breakwater in the Atlantic sector of the Canal and adjoins to the West with the path used for all the ships that cross the Canal. The bathymetric studies conducted as part of the project reflect current water depth from 0.80 to 2.39 m in the jetty area, and some depths reaching 11m on the turning basin area. Thus to ensure the draft required by the LNG vessels and the FSU to access the dock, as part of the project, GNA will dredge (a) a navigation channel that connects with the navigation route of the Atlantic access of the Panama Canal, (b) a maneuvering area within the Manzanillo Bay and (c) a strip of access to the pier. The estimated dredging need varies from 2.6 to 3.5 million cubic meters, depending on the final agreement with the Panama Canal Authority ("ACP") for the maneuvering operation. It is estimated that to reach the needed depth of 14m, approximately 3.5 million m3 of material will be removed within an approximately 62 ha area. The site selected for the disposal of the dredged material is located in Limon Bay to the East of the entrance of the Panama Canal, in an area of approximately 60.72 ha and a depth of 21 to 23 m. This site is located approximately 8.5 km from the project site and requires authorization from the Panama Marine Authority (AMP). The final disposal area for the dredged material is not within areas defined for fishery use, and according to the ACP Use Plan, it is designated as an area of anchorage for vessels awaiting passage through the Canal and has been used previously by the AMP for disposal of dredged material. OVERVIEW OF IFC'S SCOPE OF REVIEW IFC's appraisal reviewed AES's Environmental, Health and Safety (EHS), social and labor management capabilities and its ability to ensure compliance with Panamanian regulatory requirements and IFC's Performance Standards (PSs) during the construction and operation of the project. Specific items reviewed included: (a) AES Corporate EHS and Social system and procedures, and (b) the Environmental and Social Impact Assessments (ESIA) developed for the power plant and regasification terminal, respectively, as well as related studies on air dispersion, sediment plume, wastewater temperature, noise modeling and cumulative impact assessment among others; and the corresponding Environmental and Social Management Plan (ESMP) Frameworks. IFC conducted a pre-appraisal site visit in November 2015, in February 2016. The visits included interviews with the company's project management team including EHS staff, representatives of the Ministry of Environment, Panama Marine Authority, Panama Canal Authority, and members of the Smithsonian Institution. The team also met with approximately 20 representatives of Colon, the closest community to the project. IDENTIFIED APPLICABLE PERFORMANCE STANDARDS** While all Performance Standards are applicable to this investment, IFC's environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. PS 1 - Assessment and Management of Environmental and Social Risks and Impacts PS 2 - Labor and working conditions PS 3 - Resource Efficiency and Pollution Prevention PS 4 - Community Health, Safety and Security PS 5 - Land Acquisition and Involuntary Resettlement PS 6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources If IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards The project's area of influence is located in areas absent of communities that would be considered as 'Indigenous' as defined by the World Bank Group, thus PS 7 - Indigenous Peoples is not considered applicable. Archaeological and historic sites were not found within the project site's boundaries, thus PS8 - Cultural Heritage will not apply. ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE Key environmental and social impacts associated with this type of operation include air emissions, liquid effluents, noise and hydrocarbon vapor exposure, handling of hazardous materials, transportation, land and marine biodiversity, and community related impacts and risks.The proposed project is Category A per IFC's Environmental and Social Sustainability Policy (2012): although it is expected to bring economic and social benefits it will be a source of significant, diverse and irreversible impacts during the construction and operational phases as discussed below. **Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability ENVIRONMENTAL AND SOCIAL MITIGATION MEASURES IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFC's requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. PS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS To comply with Panamanian regulatory requirements and as part of the project permitting process, AES commissioned URS Holdings, Inc., a multidisciplinary consultant firm, to prepare and ESIA for the LNG terminal, the power plant and its associated operations, as well as the dredging activities. The ESIA cover potential impacts and risks for the entire project life-cycle from site preparation, construction, operation and decommissioning as well as assessment of the potential cumulative impacts within the project area. The company received the environmental permit from the Ministry of Environment, the Panamanian environmental authorities, for the ESIA in February 24th, 2016. AES commissioned an update of the ESIAs, resulting in a comprehensive Environmental and Social Impact Assessment (ESIA) to conform to international standards and the IFC PSs, which was completed in March 2016 and is attached to this summary. The ESIA covers potential impacts and risks for the entire project life-cycle from site preparation, construction, operation and decommissioning as well as assessment of the potential cumulative impacts of all local industry on its area of influence. The ESIA includes frameworks for the Environmental and Social Management Plans (ESMPs), to be implemented at the various phases of the project, preventing and addressing key impacts as well as monitoring arrangements. Key environmental plans include management of hazardous wastes, air emissions, liquid effluent treatment, erosion control, occupational health and industrial safety, emergency response plans, flora and fauna rescue and relocation, dredging, and biodiversity management. The Social Management Plan being developed aims at mitigating adverse project impacts and supporting long-term socioeconomic development in the surrounding District of Colon. The plan includes a policy framework, community health measures, participatory monitoring plan, a local hiring plan, stakeholder engagement plan, security management plan, as well as implementation arrangements, including grievance redress for workers and communities and monitoring mechanisms. The ESIA presents the process followed by the company for the selection of the project site and the selection process aiming to pose minimum social and environmental impacts. Key aspects considered in the selection included avoidance of community relocation and minimum disturbance to natural areas, among others. As part of the E&S assessment of the project, the company commissioned baseline and assessment studies including: biodiversity (flora, fauna), hydrology (assessing flooding risks, precipitation regimes, etc.), ambient air and noise baselines, and soil contamination. As part of the assessment, the company also commissioned studies to assess the likelihood and risks of hurricanes, tornados, cyclones and earthquakes in the study area. The assessment demonstrated that the geographic location of the site (Limon Bay) has sheltered this region from the negative impacts of hurricanes in the past. Thus, anticipated climate change impacts from an increase in the number and strength of hurricanes in the project site are not anticipated. The results also revealed that the study area is not prone to tornados, cyclones, or earthquakes. As part of the ESIA, the company also conducted a cumulative impact assessment (CIA). It identified value components (VECs), covering physical, marine and social aspects. Identified possible future projects include works of electric generation (a thermoelectric plant and electricity generation barges), works related to port activity (dredging and construction of a pier), expansion of farm tanks, renovation works and urban improvement, and a power transmission line. The analysis of the contributions of each of these projects to the occurrence of cumulative impacts in the environment of the project, indicates that the construction of a thermoelectric plant close to the same, would affect the greatest number of VECs on air quality, water quality, and noise. The CIA also presents actions that should be taken in case these projects materialized, such as promote intercompany agreements to evaluate and implement best practices to prevent and control potential impacts, establish continuous monitoring system to assess the quality of the environmental conditions, establish interinstitutional coordination to discuss and establish best practices, among others: To support the ESIA, socio-economic baseline information in the project's area of influence was also gathered and recorded. This data was gathered through household interviews and questionnaires as well as during the community consultation events carried out in communities and towns in the areas of influence. The EPC contractor will be required to develop and implement detailed environmental pollution control and occupation health and safety measures based on project ESMPs. Policy: AES has a corporate environmental, health, safety, and social policy that is implemented in its projects across its operations. Thus, this project will specifically adopt the corporate policy which will be reflected in all programs/procedures and systems to be implemented. Management Programs: Key to the construction phase will be the environmental, health, safety (EHS) and social management and monitoring program to be established by the engineering, procurement, and construction (EPC) contractor selected by AES. The responsibility for compliance with the ESIA findings including EHS and social management commitments and management planning are being included in the EPC contract agreements. Alignment of the EPC contractor with project requirements will be closely managed and monitored by AES through contractor management plans and procedures to be developed by the company and to be submitted to IFC as indicated in ESAP action # 7 to ensure that the control and mitigation measures are being implemented in accordance with AES's EHS and Social commitments with the IFC PSs. POSCO Engineering & Construction Company, the EPC contractor selected for the construction of the plant and terminal has demonstrated international experience in the design and construction of similar projects. This contractor is required to operate an environmental management system in accordance with the international ISO 14001 and OSHAS 18001 standard requirements and to develop detailed project EHS Management Plans (ESMPs) which will be submitted to the sponsors and IFC as indicated in ESAP action # 8. The ESMPs will include procedures for environmental management, traffic management, dust management, occupational health and safety, dredging, labor conditions, community engagement, grievance mechanisms, biodiversity rescue/removal/restoration, etc. Further to this, the EPC contractor will give preference to directly and indirectly affected communities for employment. In addition, the EPC contractor will have an EHS organization consisting of a team of EHS and Social professionals on-site throughout the construction phase. AES will directly handle the relationship and engagement with the communities. For project operations the company will establish and implement an Environmental, Health, Safety, and Social Management System (ESMS) based on the Panamanian regulations and AES's own Corporate ESMS; IFC's PSs; the relevant WBG EHS Guidelines; and internationally recognized EHS and social standards (i.e. ISO 14000 and OHSAS 18000.) The ESMS will include; (a) procedures for identifying social and environmental risks and impacts; (b) development and implementation of environmental and social management plans (ESMP); (c) monitoring and internal audits; and (d) development and implementation of a stakeholder engagement program. The management program for operations will be developed before the start of AES facility operations and submitted to IFC, as per ESAP action # 16. Organizational Capacity and Competency: The company has three Environment and Social (E&S) teams: i) Environmental Compliance, ii) Health and Safety / Security, and iii) Community Relations. Each team has a Manager and a number of specialist support staff. Environmental Compliance and EHS Managers reports to the Construction Director. Community Relations Manager reports directly to the Project General Manager. In addition to the trained specialists in environmental and H&S aspects already in place, the company is hiring additional qualified personnel. These teams are responsible for managing the health, safety, environmental and social programs, environmental and social awareness and training, health and safety training, overseeing of the EHS and social performance of the contractors, ensuring regulatory compliance, implementation of compliance audits, stakeholder engagement, grievance management and documentation, and E&S monitoring and record keeping, among others. Emergency Preparedness and Response: For the construction phase, the EPC contractor will be required to develop and implement an Emergency Response Plan and have qualified personnel and equipment response to potential emergencies as part of its EMP. Potential emergency scenarios will also be identified by AES in conjunction with the EPC contractor and adequate emergency response arrangements will be developed for implementation. This will include provisions for a trained and equipped emergency response team to be ready to respond to emergency events. For the operation phase, AES will develop an Emergency Response Plan for onsite as well as offsite operations considering appropriate emergency preparedness and response measures to implement in the event of a fire, leak, spill, etc. This plan will identify likely emergency scenarios, appropriate response equipment, response equipment, emergency training and drill frequencies, identification of appropriate supporting parties, etc. Qualified personnel to respond to any emergency will be available at all times. The company will submit a copy of this plan prior to operations to IFC as indicated in ESAP action # 20. In addition, SINAPROC, the local entity regulating these actions has been already informed on the project and will provide recommendations for this plan and coordination with projects in the vicinity. Similarly, as part of the emergency response procedures, the emergency response plan to be developed for each of the project phases will include the communication to and training of the communities related to response to emergencies. As part of its emergency response planning, the company will also involve the local authorities in the development of community preparedness planning in the event of a major accident. Monitoring and Review: As part of the implementation of the project, the company will develop the monitoring plans frameworks included in the ESIAs, for the construction and operation phases respectively covering aspects such as air emissions, air quality, liquid effluents, noise, water quality, workplace conditions, biodiversity, social aspects, water and energy consumption, GHG emissions, etc., as indicated in the ESAP actions # 9 and 15 respectively. The EPC contractors will develop the monitoring plan for the construction phase and in turn, AES will develop the corresponding monitoring procedures to oversee their EHS performance. AES will implement the expected EHS & social measures and continue to assess E&S performance during the operational phase. For all phases of the project, the company will commission an independent third party environmental and social audit of its operations to confirm compliance with Panamanian legislation and IFC PSs. AES is committed to periodically report the results of its environmental and social performance to the Panamanian environmental authorities, IFC, other international lenders, and nearby communities based on its own and third party performance assessment. PS 2: LABOR AND WORKING CONDITIONS Human Resources Policies and Procedures: AES corporate human resources policies and procedures are rooted in the values that guide their actions with staff, partners and suppliers, customers and the many communities and environments in which they operate around the world. These values are: i) Put Safety First; ii) Act with Integrity; iii) Honor Commitments; iv) Strive for Excellence; and v) Have Fun through Work. These values provide a common framework for business decisions, actions, and behaviors at all AES operations. For this, as AES does it for other projects, the company hired and train qualified Human Resources (HR) personnel to manage its HR policy and its procedural elements for the project, support the construction management team (CMT) with the implementation of the HR and E&S policies, standards and procedures, and coordinate all HR activities between the EPC contractor and the CMT. The project promotes transparent application of their labor policy through a series of measures including external labor assessments and audits, the creation of worker's grievance mechanism, and a campaign to broadly communicate the company's policies on anti-discrimination and local hiring practices and grievance mechanisms. They also have zero tolerance for discrimination or harassment. The EPC contractor will develop an HR policy which ought to be aligned with the company's HR policy. Copies of this HR policy will be submitted to IFC as per ESAP action # 10. Working Conditions and Management of Worker Relationship: During the construction phase, the EPC contractor is committed through the contractual agreements to ensure that labor conditions comply with the requirements of Panamanian legislation and IFC Performance Standard 2. The company will develop a plan to monitor the performance of the EPC contractor to ensure that labor conditions are in compliance with the contractual requirements. Monitoring will include regular audits, review of the EPC contractor internal monitoring reports and documentation as well as review of grievances logged by the contractors and subcontractors employees. The company expects the peak workforce during construction to reach about 1500 to 2000 direct positions and until 3000 indirect jobs for both combined, the CCGT and the LNG terminal. Operations will require up to 60 direct workers and approximately 200 indirect workers. A Local Hiring Plan will be developed and implemented jointly with the EPC contractor. This plan will ensure prioritization for employment of members of the nearby communities and will include an assessment of availability of workers in order to determine potential influx impacts. As part of the contract, the EPC contractor is being required to guarantee that at least 60% of the professional workforce will be contracted in Panama. For purposes of workers' accommodations, the EPC contractor will need to consider suitable accommodations in nearby communities for those workers who do not already live in these communities. As part of the EPC ESMS as indicated in ESAP action #8, and as required by the company, the EPC contractor will develop a Workers' Accommodation Management Plan outlining the expected quality of workers' accommodation and the way they will be monitored to ensure high levels of safety and health among workers and local communities. Working Conditions and Terms of Employment: The terms of employment are defined in the internal employment rules and regulations (reglamento interno de trabajo and collective labor agreement) and are provided to each employee when contracted where benefits, hours of work and overtime compensation, among others are defined, and in the individual work contracts where their wages are defined. AES employees receive life insurance (100% paid by the company), health insurance (70% paid by the company if an employee have dependents or 100% paid by company if an employees do not have dependents). The conditions for the EPC contractor employees will be defined in the EPC Contractor's HR policy to be delivered to IFC according to action #10 of the ESAP. Workers' Organization: AES corporate policies guarantee all workers, including those hired by the EPC contractor, the right to form labor organizations or associate with any existing ones. Panama is a member of the International Labor Organization (ILO). As such, it is committed to adopt and maintain in law and practice the rights as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work and it's Follow-Up. These include pledges to provide access to judicial tribunals for labor law enforcement; ensure that the enforcement process is fair, equitable, and transparent; and promote public awareness of their labor laws. Panama's current laws and practices related to internationally recognized labor rights are considered largely consistent with relevant international standards. For example, the Constitution of Panama and the Labor Code provide workers and employers with the right to form unions for economic and social activities, bar discrimination on the basis of a worker's union-related activities, and establish the right to strike. The Labor Code provides for the right to collective bargaining. AES has signed with the company union, and dully registered at the Ministry of Labor, a collective agreement, applicable to its employees and that could include all subcontractor companies employees hired to work on the construction of this project if both parts agree. Local labor regulations establish that when a company signs a collective agreement with a union, like in this case, all its affiliates, as well as non-affiliated employees of all subcontractors, are ruled by the on-going collective agreement, during the four years of its duration. Non-discrimination and Equal Opportunity: The AES Corporate HR policy also includes provisions relating to non-discrimination and equal opportunity, wages and benefits and occupational health and safety. AES is an equal opportunity employer that extends equal employment opportunity to all applicants and its selection decisions are merit based. As the hiring age in Panama is 18 years old and in compliance with the Panamanian law and PS2, the project as well as contracted personnel will be older than 18 years. The working periods during the construction phase will be specified in the EPC Contractor's HR policy to be submitted to IFC according to action #10 of the ESAP. The operation phase will have three 8 hours shifts. AES will comply with the Panamanian requirements as well as PS 2 as it will not have any forced labor and will prohibit workplace discrimination on the basis of race, nationality, disability, social class, sex, religion or political ideas. In addition, it will follow up the Panamanian constitution call for complying with national minimum wage and paying overtime for all work in excess of eight hours per day or 48 hours per week. Grievance Mechanism: AES has a worker's functional grievance mechanism that defines communication channels and includes the option of submitting grievances by mail, phone and in person. Workers who have concerns about illegal or unethical business conduct or questionable accounting, internal controls, or auditing issues, can contact their manager, an Ethics and Compliance Department representative, AES legal counsel, or another appropriate AES person. In addition, the AES Helpline is available 24 hours a day, seven days a week to request information or to report concerns (http://www.aeshelpline.com). AES Helpline posters providing local telephone numbers are also displayed at all AES operations. Contacts to the AES Helpline may be made anonymously, and all efforts are made to protect the confidentiality of anyone contacting the AES Helpline. This grievance mechanism is communicated to all employees and is an integral part of the human resources policy. For purposes of the project, the company will maintain a database with information regarding grievances, results of which will be reported quarterly. Occupational Health and Safety (OHS): The company has an established health and safety (OHS) at work policy. For the project, it will develop the corresponding plans and procedures for both construction and operation phases. The EPC contractor will be responsible for developing EHS plan for the construction phase describing the procedures that will be followed to ensure safe working practices at the construction site as part of the EPC ESMS and as indicated in ESAP action #8. Procedures will include H&S induction training for all site personnel thus ensuring its personnel have the necessary skills to identify hazards and carry out their work responsibilities safely. Other procedures will include the recording and recordkeeping of all incidents and near misses and follow-up to prevent re-occurrences and the establishment of its own workplace conditions monitoring program with which it will routinely report to the company it E&S performance. In addition, the company will commission independent monitoring and supervision of contractors operations to ascertain compliance with the agreed policies and procedures. Potential emergency scenarios will also be identified by the company in conjunction with the EPC contractor and adequate emergency response arrangements will be developed for implementation. This will include provisions for a trained and equipped emergency response team to be ready to respond to emergency events. The company will include measures (noise barrier/insulation, periodic maintenance plans) to limit noise disturbance outside the site boundary. The company will establish a noise monitoring program at the facility boundaries to ascertain the project's compliance with Panamanian standards and IFC guidelines. Noise monitoring will also be routinely carried out during the facility construction program and measures will be taken to minimize noise disturbance where necessary. For the operation phase, the company will develop the OHS programs as indicated in ESAP action # 16. Even though, the company has begun identifying general H&S impacts in the workplace for the operation phase, it is being required to conduct job safety analysis for this phase to confirm that the measures proposed will ensure compliance with workplace conditions as per IFC requirements also as indicated in the ESAP action # 18. Health checks will be made on workers during construction and operational phase prior to starting work to establish fitness for work and regular worker health checks will continue through the construction and operational phase to monitor workers health. A health service facility will be provided during construction and operation phases. PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION Click here PS 4: COMMUNITY HEALTH, SAFETY AND SECURITY Community Health and Safety: The health and safety of the communities near its operations is also of paramount importance to the company. The proposed project will be designed and constructed by an internationally recognized contractor with experience implementing LNG and gas fired power plant projects. The project will be designed, constructed and operated using Good International Industry Practice (GIIP) and is expected to meet applicable national and international guidelines, standards and safety codes. The LNG terminal design and equipment will be in line with proven technologies (e.g., a vessel certified by a recognized third party for the service as an LNG, transfer arms appropriate for continuous service, powered emergency release couplings, comprehensive emergency shutdown system, etc. Major risks from the facility were assessed as part of the Quality Risk Assessment (QRA) conducted. Traffic volumes to transport workers, equipment and materials to the construction site will be considerable. For this reason, in addition to the mitigation measures identified in the ESIA, the company will prepare a Traffic Safety Management Plan as indicated in ESAP action # 16. This plan will establish the traffic volumes required and its impact in relation to the existing situation, the possible transportation routes and the traffic management measures to be employed that will reduce impacts; these include infrastructure upgrades, optimum route selection and vehicle management as well as the staggering of working hours and optimum site access provisions. Project-related vehicles will be modern and they will be continuously monitored to ensure their quality to minimize noise and vehicle emissions. Infrastructure and Equipment Design and Safety: The LNG and power plant facilities will have controlled access with the property boundaries being fenced with guards posted at the access points at all times of the day and night. Components of the LNG and power plant facilities are located approximately 1.25 km from the nearest residential sensitive receptors in the community of Arco Iris. There is a good vegetation buffer between the community and the project. Other industrial and port facilities are located within 0.25 km of the project site. Both LNG and gas fired power plants have good safety records on an industry wide basis. Community Exposure to Disease: The mobilization of a large amount of workers (likely 2000 at the peak) to be hired during the construction phase may increase the risk of transmission of communicable diseases including sexually transmitted diseases. To monitor potential health impact on the local communities, the company will establish a health baseline for the surrounding communities prior to the inception of the construction phase to establish current health conditions of the nearby communities as indicated in ESAP action # 13. The company will also require the contractor to develop a Communicable Disease Management Plan. As part of this effort the company will jointly with the EPC contractors implement a communicable diseases awareness campaign in coordination with relevant stakeholders such as the women's union, youth union, health workers and representatives from affected communities. In addition, to prevent the risk if spreading diseases triggered by vectors, any open area to be built as part of the wastewater treatment plant will be designed and built (i.e., aeration) to prevent it becoming a vectors breeding ground. Influx: Significant induced influx of job seekers is not expected based on the local availability of skilled and unskilled workers. The company will broadly communicate its plan to prioritize local hiring and will conduct an employment survey to determine the capacity of the local workforce. Operational Safety: The company's design philosophy is to provide sufficient process safeguards to protect personnel, equipment and the surrounding communities. These include, but are not limited to, the following: smokeless elevated flare; installation of emergency isolation valves, as per design codes; de-pressurization facilities; hazardous emission detectors; protective instrumentation and controls with sufficient redundancy; emergency shutdown instrumentation; emergency alarms; installation of fire protection systems, as per design codes; complete wastewater treatment system to protect the local water system. According to the Republic of Panama seismic hazard map the site is located in a low seismic risk area, with one acceleration less than 3.4 m/s2 on a scale that goes up to 6.2 m/s2. Hydrological and geomorphological characteristics on the terrestrial area of the project confers certain susceptibility to flooding, due to the pending existing flat, close to the coastal zone and the low altitude of the sector. An analysis of flooding potential at the project site was conducted and as a result, areas of the project site will be elevated by approximately 3.5 meters. According to the result of an analysis of susceptibility to landslides at the level of districts (environmental Atlas, 2010), it is observed that in the District of Colon, where the project is located the susceptibility to landslides is high. However, low slopes existing in the project area, as well as intervention and compacting existing in the environment, considerably reduce the probability of occurrence of landslides in the area. AES commissioned a HAZID analysis, conducted in February 2016 where critical scenarios were selected by the assessment team and AES. The recommendations of this assessment will be integrated into the design and operation of the project. In addition, it also commissioned a (QRA) to determine potential risks associated to the operation of the LNG terminal. The assessment, which was conducted in March 2016, selected scenarios (i.e., releases where the flammable cloud is not immediately ignited, it extends to engulf a large portion -or all- of the terminal, and then ignites; a pool of LNG burns as it evaporates; flash fires; etc.) to evaluate potential risks and identify additional prevention and mitigation efforts. Project areas assessed included the LNG carrier moored at the terminal, the breakwater and jetty, LNG transfer equipment (e.g., arms, valves, piping), regasification unit, natural gas pipeline to the power plant and, several sections at the power plant. In addition, to the normal operation, the assessment also took into account the interim case of about one year when the LNG storage facility will be permanently moored to the dock sending the LNG to the onshore storage tank. The assessments concluded that the LNG release events examined will be contained within the site boundaries as stipulated in NFPA-59A, thus, no buffer zone between the project boundaries and the surrounding areas will be required. In addition, AES commitment to implement the recommendations provided in the HAZID report, and use of best practices on handling LNG; as well as: design and operation based on established LNG codes and standards will ensure a sound and safe operation of the project. As part of the detailed design engineering, the company will conduct an additional QRA to ascertain that once built there will not be significant negative risks. As needed, the project will incorporate the necessary changes resulting from this assessment. The results of this quantitative risk assessment will be submitted to IFC as indicated in ESAP action #22. Emergency Preparedness and Response: As indicated above, for the construction phase the EPC contractors will be required to develop and implement an Emergency Response Plan and have qualified personnel and equipment response to potential emergencies and for the operation phase, the company will develop an Emergency Response Plan for its onsite as well as offsite operations. Qualified personnel to respond to any emergency will be available at all times. The company will also become active participant of the already established Emergency Response Organization established by the project area and will keep the local authorities, port authorities as well as communities abreast about the plans, response to emergencies, and the emergency drills to be conducted periodically. Community Health Assessment and Participatory Monitoring: The company will also establish a community-based Participatory Monitoring program in the directly affected communities. The results of the monitoring will be externally communicated. Security Personnel: For the construction phase, the EPC contractor will hire unarmed private security contractors for the security of the project personnel and property. As indicated in the ESAP action # 12, the EPC contractor will develop a Security Management Plan and it will submit it to IFC. Prior to developing the plan which will include background checks, training of private security forces, rules of engagement as well as monitoring and reporting plans, the contractor will first conduct a security risk assessment. The training to be conducted to the security personnel to be hired is aimed to ensure a conduct aligned with PS 4 requirements. For the operation phase, the company will, in turn, develop, establish and implement a security management plan, satisfactory to IFC, as indicated in ESAP action #23. PS 5: LAND ACQUISITION AND INVOLUNTARY RESETTLEMENT The land required for the terminal and power plant is located within the Panama Canal Zone administered by the Panama Canal Authority (PCA). In 1996, the PCA signed a concession agreement transferring use rights over 20 hectares of land, including the project area, to the Panama Ports Company (PPC). PPC's concession allows it to transfer all or part of its obligations and rights to Panamanian companies or foreign companies registered to carry out commercial businesses in the Republic of Panama. AES signed a 25 year rental agreement with PPC to develop the project in this concession area. The property is currently unused and has no structures or improvements on it. PS 6: BIODIVERSITY CONSERVATION AND SUSTAINABLE MANAGEMENT OF LIVING NATURAL RESOURCES A flora and fauna baseline was conducted as part of the ESIA, in the project area for the terrestrial and marine areas. In addition, as part of the ESIA for the T-line, it also conducted a general assessment of the flora and fauna on the general route definition of the T line. Terrestrial Impacts: The natural vegetation characteristic of the terrestrial zone, which corresponds to three layers rainforest, has being totally degraded due to the high degree of anthropogenic impacts (namely the canal and terminal activities). Of the total area of direct influence, approximately 24 ha; only 9 % still has some presence of degraded vegetation in which the most representative species are grasses and another approximately 7 % of the project site with scattered trees. Additionally, to the Northwest side of the project area, in the border between the coast and the sea there is a continuous wetlands strip approximately 30 meters wide and about 546 m long that occupies an area of approximately 2.7 ha, or 16.5% of the total terrestrial vegetation and 1,5 % of the area required for the project (177.614 has). All this vegetation will be removed to build the project. The species identified include white mangrove (Laguncularia racemosa) and button mangrove (Conocarpus erectus) as well as some individuals of Rhizophora mangle (red mangrove) in direct contact with the sea. Flora and fauna impacts related to the route of the transmission line will be fully determined once the detailed route is defined. Of the total of species identified in the various types of vegetation (59), 6 species are in categories of certain conservation concern. Four (4) of these are classified as Vulnerable by the Panamanian authorities: Calophyllum longifolium, Conocarpus erectus, Prioria copaifera and Brassavola nodosa. Meanwhile two (2) species are listed in the IUCN Red Book catalog Laguncularia racemosa listed as endangered and Rhizophora mangle as of low concern. Of 19 terrestrial fauna species identified in the area of influence of the project, both in the field and previous studies, only one species is classified as Vulnerable in the Panamanian legislation, the Barbinaranja parakeet (Brotogeris jugularis); two species are listed in Appendix II of CITES: Milvago yellow (Caracara cabeciamarilla) and perico barbinaranja (Brotogeris jugularis). Meanwhile fifteen species are listed in CITES as of low concern. Prior to the site preparation phase, the company will conduct a capture and relocation fauna program under the guidance of qualified experts hired by the company to lead this effort. The ESIA included the fauna capture and relocation plan which establishes the methods and procedures to be follow by qualified experts hired by the company for this purpose. The Local authority approved this plan and the local company to execute it at the end of February, 2016. In addition, to compensate for the loss of vegetation on the site, the company will develop a biodiversity management plan, as indicated in the ESAP action #6, for the (a) terrestrial (vegetation compensation) and (b) mangrove (Offsets Strategy) loss. The biodiversity monitoring plan will identify the locations for compensations, long-term biodiversity offset implementation and management, the biodiversity qualified resources to coordinate all the biodiversity aspects, the monitoring plan to determine how will 'gains' at the offset site be measured and monitored over time, among other aspects. For purposes of the mitigations for the Red Mangrove, the company will work together with the Smithsonian Institution, based in Panama. Three nearby potential sites for quarrying sand, aggregates and boulders have been identified. The EPC contractor will source those materials from environmentally approved quarries. Marine Impacts: Within the proposed dredging area, there are photosynthetic species such as algae, seagrass, and marine pastures, with high density of Thalassia testudinum, with areas of algae on dead brain coral in the shallower areas, none of which are identified as fragile species. The protected Cove Island (Isla Galeta), is located approximately 3.5 km from the dredged material disposal area. Cove Island has an area of 605 ha area and it is covered by mixed forests, mangroves and a coralline platform off the coast. It also has a dedicated area for the scientific study of the high ecological value mangroves due to their excellent state of preservation by the Smithsonian Institute. The sediments dispersion modeling conducted as part of the ESIA which included prevailing currents, distances and conditions of dilution, among others; indicated that any potential negative impact as a result of the disposal of the dredged material is highly unlikely. In the area of marine influence, although there were no registered vulnerable, endemic or endangered species; some migratory species are included in the IUCN protection categories, such as the turtle channel or lute (Dermochelys coriacea) listed as vulnerable, and the bottlenose dolphin (Tursiops truncatus), which is listed as one of low protection. As per the CITES classification, the spotted dolphin of the Caribbean (Stenella front) is included in CITES Appendix II.
Early Warning System Project Analysis
APPLICABLE SOCIAL & ENVIRONMENTAL STANDARDS Based on IFC documents, the following Performance Standards (PS) are triggered: PS 1: Assessment and Management of Environmental and Social Risks and Impacts this safeguard is triggered due to the nature of the project and mitigating the adverse project impacts in the surrounding District of Colon. The ESIA covers potential impacts and risks for the entire project life cycle, assessment of potential cumulative impacts and frameworks such as the Environmental and Social Management Plans. PS 2: Labor and Working Conditions this is triggered because the company expects the peak workforce during construction to reach about 1,500 to 2,000 direct position and until 3,000 for indirect jobs for both the plant and terminal. Operations will require up to 60 direct workers and approximately 200 indirect workers. According to the ESIA, project activities could potentially affect worker's health and security. Risks include infection diseases, accidents and other factors that could affect the mental and physical health. PS 3: Resource Efficiency and Pollution Prevention this PS is triggered because of the impacts on water, air emissions, noise, soil and waste generated (solid waste, wastewater discharge and hazardous materials). The LNG terminal and the generation block will be installed in the same site, allowing synergies particularly with regard to the exchange of heat/cold for cooling of ambient air and operating the regasification system that will have an impact on these resources. PS 4: Community Health, Safety and Security this safeguard is triggered because, components of the LNG and power plant facilities are approximately 1.25 km from the nearest residential (area) in the community of Arco Iris. Furthermore the mobilization of a large amount of workers during the construction phase may increase the risk of communicable diseases including sexually transmitted diseases. PS 5: Land Acquisition and Involuntary Resettlement relative to the land acquisition, this PS is triggered due to the acquisition of the land. AES signed a 25 year rental agreement with the Panama Ports Company to develop the project in the concession area. PS 6: Biodiversity Conservation and Sustainable Management of Living Natural Resources this safeguard is triggered because of its terrestrial and marine impacts. A flora and fauna baseline was conducted as part of the ESIA, in the project area for the terrestrial and marine areas. OUR RISK ASSESSMENT Right to Property and Adequate Housing: This right is identified based on the limited information about the project location and the proximity of five km radius of the six communities identified to the project area. However, there are no further project information particularly on resettlement, the socio economic baseline data for the communities to be directly affected and the identification of the corresponding mitigation measures. Right to Livelihood: Impacts on the fauna and flora of the location may risk the food security of communities in the area, to the extent that they are source of sustenance for communities. As marine and terrestrial life are affected by, for instance, water disturbances, illegal hunting and accidents, communities would have a source of their sustenance threatened. Right to Healthy Environment: This right may be impacted resulting from potential environmental impacts to air, water and biodiversity inherent to the type of energy infrastructure, as recognized by project documents and according to the brief report on the project stakeholder engagement. Project documents state that the natural vegetation in the terrestrial zone has being totally degraded due to the high degree of anthropogenic impacts (namely the canal and terminal activities). To the northwest side of the project are also wetlands, where species of conservation concern live, including mangroves. Dredging activities may also have impacts on the marine environment. Additionally, dredging may present other impacts due to relative proximity to the Panama Canal. Project developer has already been required to present extensive data to supplement original studies resulting from these concerns by the IFC. The Institute of Americas had also raised the issue of open access to natural gas whether Panama has the adequate framework for employing natural gas, the necessary associated transport and infrastructure requirements. In addition to this, the appropriate mitigation measures to address the potential adverse impacts to the communities affected. Some of the impacts to the coastal environment result from the operations of this type of onshore LNG plant which requires the intake of high volumes of sea water and water discharges to regasify the gas. Intake of water through underwater pipes at 25,073.48 cubic meters per hour put marine life at risk of being pulled in and destroyed. The water discharges (pipes measure 2 meters in diameter) at hot temperatures (38 degrees centigrade, ten degrees higher than normal) have a high risk of affecting the marine ecosystem and surrounding vegetation. Again, the developer has been asked to clarify compliance with water discharge parameters in national regulations, and the methods for avoiding intake of marine life through pipes. Right to Health: Risks to human life include the potential for explosion and fire due to the use of a highly flammable fuel used in this energy infrastructure project. This risk of explosion and fire result from potential leaks or ruptures at several stages of operations, mainly the LNG tankers, the gas pipelines, and onshore storage tank which may impact workers on site and in communities surrounding the project site. Project developer has also been required to supplement information regarding proper contingency plans in the event of LNG leaks on land and water due to changes in temperature and pressure. Labor Rights: There is no and/or limited information how will the Bank comply with its Performance Standards on Labor and Working Conditions given the volume of local work force projected particularly at the construction phase. An Environmental, Health and Safety (EHS) Management Plan should also be disclosed in order to reflect both the Bank's and Borrower's commitment on maintaining the standards on occupational health and safety, labor conditions and community engagement among others. It should also be noted that there was a case in the past involving labor issues of AES. In 2013 the Compliance Advisor Ombudsman (CAO) had received an individual complaint raising labor issues, specifically demotion during employment and related benefits that the complainant believed to be due. It involves AES Sonel, a privatized national electric utility in Cameroon, which AES Corporation as in this case purchased 56% of the shares of the company. Although the CAO found the case eligible it did not warrant a full investigation. In the present project, workers will face hazardous conditions that are inherent to a project of this nature. Risks include accidents and diseases to the nature of the materials to be handled and the large number of workers engaged in the project at the same time.
Investment Description
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ACCOUNTABILITY MECHANISM OF IFC The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/
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