The World Bank PNG National Energy Access Project (P173194) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 10/12/2022 | Report No: ESRSC03031 Oct 12, 2022 Page 1 of 15 The World Bank PNG National Energy Access Project (P173194) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Papua New Guinea EAST ASIA AND PACIFIC P173194 Project Name PNG National Energy Access Project Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Energy & Extractives Investment Project 2/16/2023 9/30/2023 Financing Borrower(s) Implementing Agency(ies) Independent State of PNG Power Limited, Papua New Guinea National Energy Authority Proposed Development Objective To expand access to sustainable and resilient energy services in Papua New Guinea. Public Disclosure Financing (in USD Million) Amount Total Project Cost 350.00 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] This project supports the Government of Papua New Guinea (GoPNG) to achieve its energy access target through investments in on-grid electrification, sustainable renewable energy mini-grids, private sector-led off-grid market promotion, and institutional development. The National Energy Policy for 2018-2028 outlines an ambitious target of 70 percent electrification by 2030. In 2019 GoPNG adopted the National Electrification Roll-out Plan (NEROP) and prepared a detailed NEROP implementation strategy and investment plan, to prioritize a project-by-project roll-out plan covering the entire country based on a geo-spatial and least-cost planning tool. The proposed National Energy Access Project (NEAP) will directly support the implementation of several priority investments identified in NEROP. Oct 12, 2022 Page 2 of 15 The World Bank PNG National Energy Access Project (P173194) The proposed project would comprise four main components: - Component 1: On-grid electrification and network resilience - will aim to support PNG Power Limited (PPL) restore and improve the reliability and resilience of power supply in the existing grid; expand and densify its MV and LV distribution networks; and support households with connection financing. Subcomponents include: o 1.1: Grid rehabilitation and modernization: Continued implementation of the Urgent Rehabilitation Plan (URP) currently also supported through the current Energy Utility Performance and Reliability Improvement Project (EUPRIP – P167820) including transmission and substations rehabilitation and upgrade to restore the reliability of supply; substation upgrade through support for implementation of the substation upgrade plan; and modernization (i.e. technology upgrade) of the existing National Control Room and/or Ramu-2 Hydro Power Plant (HPP) control room. o 1.2: Grid access expansion: Densification of the existing distribution grid and expansion of grid to serve unelectrified residential clusters. o 1.3: Household connections. Subsidy scheme to improve affordability of initial connection fees and house wiring. - Component 2: Renewable energy mini-grids - will aim to support the National Energy Agency (NEA) to establish sustainable mini-grids in isolated population centers – either through engineering-procurement-construction (EPC) or a third-party investment (private/community organizations). The selected mini-grids will aim to maximize utilization of locally available renewable energy sources, such as solar, wind and small hydro combined with battery storage technologies. - Component 3: Rural energy market development - will include the establishment of a results-based financing (RBF) scheme implemented through a grant administer to be contracted by NEA, which will offer competitively awarded incentives to accelerate off-grid solar and clean cooking expansion in PNG, with a particular focus on Public Disclosure currently underserved rural areas. The project will also support technical standards adoption and enforcement to protect consumers from low quality products, raise awareness of available solar products, and provide Technical Assistance (TA) to companies. - Component 4: Institutional development and project management - which aims to empower the GoPNG and PPL, including the mini-grid project implementation and coordination unit that will be formed under the NEA, as well as their capabilities to plan, coordinate, and implement the NEROP to achieve the governments ambitious national energy access target and program. o Sub-Component 4.1: NEA Institutional Development and TA will help establish a Program Management Unit (PMU) within the NEA that will be fully equipped with qualified staff to manage the NEROP investment program. The project will support the preparation and adoption of key policy and regulatory instruments, such as service and technical design standards, tariff and subsidy design, and monitoring and evaluation arrangements. It will also provide overall program coordination and implementation support and provide a platform for co-financing and coordination with development partners. The project will also support technical standards adoption and enforcement to protect consumers from low quality products, raise awareness for quality off-grid solar products for distributors, retailers, and consumers, and provide TA to participating companies – e.g., rural marketing strategies, financial management for PAYGo business models, linkages with investors, and other business development support. o Sub-Component 4.2: PPL Institutional Development and TA: The project will finance project implementation expertise needed to plan, survey, design, construct, and operate the power system development. This will include a Project Management Unit (PMU) within PPL that will be fully equipped with qualified staff to manage Components 1 and 4-2 of the proposed Project. TA will include support to evaluate climate and disaster risks of grid assets, find appropriate preparation and post recovery mitigations, adopt new design standard, and train employees practically. The project will support TA (type 1) to conduct the detail environmental, social, and engineering preparation, design, Oct 12, 2022 Page 3 of 15 The World Bank PNG National Energy Access Project (P173194) aspects for potential small Hydro Power Plants (HPPs). PPL further needs to incorporate resilience matters into its design guideline, existing assets rehabilitation, necessary implementation. D. Environmental and Social Overview D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] PNG (population of 8.8 million) is one of the most culturally diverse countries with more than 1000 ethnic clans and 800 languages. It has 22 provinces and 87 districts across 4 regions-Highlands, Islands, Momase, and Southern. Over 85% of the population lives in remote and hard-to-reach rural areas presenting significant challenges for infrastructure and service provision. Prevalence of extreme poverty in PNG is high (around 38% in 2010) and the impact of COVID-19 on livelihoods has been severe, particularly for the poor and vulnerable. Forests cover 71% of total land area, comprises of rainforest, evergreen forest, swamp forest, and Mangroves. The non-forest area includes lowland, shrubland, grassland, settlements, and water bodies. Sepik, Fly, and Mamberamo River are the main rivers. 36 species classified as critically endangered in the country. About 15% of the population has access to on-grid electricity, concentrated around main urban areas. Where on-grid electricity is available, reliability is low, connection fees are high, and the price of electricity is high. PNG relies on thermal generation using imported oil products, around 37% of total generation by the utility in 2015-2017. Over the past 5 years the country has seen substantial growth in the adoption of off-grid solar products. The majority of these products are PV pico-lights of unknown quality. Plug and play solar home systems (PnP SHS) and component-based systems are rarely used in PNG but hold significant promise for future development. On-grid electrification activities (C1)-transmission and substations rehabilitation and upgrades, grid digitalization Public Disclosure upgrades, and expansion and densification of existing distribution networks-will be located around urban and peri- urban areas served by PPL distribution network. PPL service area includes 3 transmission grids (Port Moresby, Ramu, and Gazelle) and 26 isolated generation-distribution grids distributed across PNG. URP Phase2, substations, and grid digitalization upgrades are likely to take place within the boundaries of existing power generation and transmission infrastructure. While densification will involve minor extension of MV/LV networks around the existing distribution grid (approx. less than 5 km), the grid expansion will require extension of MV feeders to around 70km and installation of new distribution transformers beyond the existing infrastructure. The implementation of household connections subsidy will cover all areas with grid access. Sustainable mini-grid activities (C2) are expected to be developed in urban/peri-urban areas that lack on-grid access. It will maximize utilization of locally available renewable sources such as solar and micro/mini hydro (with capacity of a few hundred KW), combined with battery technology. The NEROP implementation plan identified potential 57 mini-grid site in 15 provinces distributed across PNG. NEA will do the prioritization of the sites and conduct preliminary analysis of the site conditions, including on E&S aspects. The prioritization and site selection will be finalized during implementation. Project activities to support growth off-grid solar and clean cooking market (C3) will set up an RBF facility to support energy access companies in expanding their services, prioritizing underserved rural areas. Targeted provinces/districts will be finalized during implementation. The activities under C1 and C2 may require land acquisition or the establishment of easements, and the development of greenfield sites. TA activities (C4) will seek to build institutional capacities in NEA (C4.1) and PPL (C4.2) through specialists recruitments and training. Under C4.1, the policy and regulatory instruments supported are likely on service and technical standards, tariff and subsidy, and monitoring and evaluation arrangements. TA for the design of new small HPP with expected maximum capacity of a few MW (Type 1) is proposed. The site selection will be finalized in implementation. D. 2. Borrower’s Institutional Capacity Oct 12, 2022 Page 4 of 15 The World Bank PNG National Energy Access Project (P173194) The project’s implementing agencies (IAs) are expected to be PPL (C1 and C4) and the NEA (C2, C3 and C4). Implementing partners are expected to include Provincial governments and District Development Authorities, through the Ministry for Provincial and Local-level Governments. For C3, NEA will sub-contract a grant administrator as well as an Independent Verification Agency (IVA). The grant administrator will support the implementation of the RBF and provide TA to participating companies. The IVA will verify connection claims by companies participating in the RBF prior to disbursement of funds. NEA has only recently been established and as such its National Electrification Management Unit (NEMU) is yet to be fully staffed and currently has very limited current capacity to implement the project or manage environmental and social risks. A Project Preparation Advance (PPA) is envisaged for the establishment of NEMU including the recruitment of experienced staff in the areas such as project management, electrification planning, distribution system engineering, procurement, financial management, and environmental and social safeguards. The NEMU E&S staff will lead preparation of the project’s environmental and social instruments during project preparation. PPL has existing environmental and social staff, has implemented projects with the World Bank, and has experience with fiduciary and safeguard policies, however its implementation capacity is weak. PPL is the IA for the the World Bank financed Energy Utility Performance and Reliability Improvement Project (EUPRIP – P167820) however it is yet to establish the PMU. PPL is expected to recruit E&S specialists by January 2023. Neither NEA or PPL have experience with the Bank’s Environmental and Social Framework (ESF), and given current institutional uncertainty and capacity challenges, both IAs are expected to require significant support from the World Public Disclosure Bank E&S team during project preparation and implementation. Project preparation financing is currently being proposed to support project implementation and if provided, will include E&S specialists to develop the required E&S instruments. Under Component 4, the Project aims to support the institutional capacity development of NEA and PPL to plan, coordinate, and implement the Project as well as the overall institutional development, including in building environment and social capacities through the establishment of PMUs for both IAs (including E&S specialists) and capacity building. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Substantial Environmental Risk Rating Substantial The Project is expected to deliver environmental benefits through the uptake of electricity generation from renewable sources to serve underserved areas. However, there are also environmental risks associated with the Project. The environmental risks include risks and impacts associated with construction activities under C1 and C2, such as soil erosion, increased dust and noise, sedimentation, soil and water pollution from inappropriate construction materials use and waste management, spills associated with the replacement of oil-filled transformers (e.g. PCB or solvents used for degreasing), as well as community and occupational health and safety risks (e.g. risk working with live power lines and magnetic fields, as well as working at height). The risks related to the use of resources includes the sourcing of construction materials and aggregates. Potential habitat loss/natural habitat fragmentation related to land clearing on greenfield development for on-grid expansion and development of mini- grid. These risks can be avoided, minimized/mitigated by applying site screening criteria for location selection and the Oct 12, 2022 Page 5 of 15 The World Bank PNG National Energy Access Project (P173194) application of mitigation measures for the civil works, proportional to its scale. The risks during operations include risk of soil and water contamination from inappropriate waste management and spillage, fire risk from faulty wiring, electrocution risk if installations are not done by qualified personnel, as well as risks to wildlife (e.g., birds and bats) related to collision, electrocution, and glare from solar panels. The solar mini-grid operations (C2) and off-grid Solar Home System (C3) may also result in impacts related to hazardous waste generation from battery and used solar photovoltaic (PV), including during decommissioning, as well as minor nuisance impacts (i.e., glare). The potential development of micro/mini hydropower under C2 may result in disturbance to aquatic lives and increased turbidity. TA activities, under C4.1 will support policy and regulatory instrument (Type 2) and under C4.2 will support design and E&S instruments for small HPP (Type 1) (with expected maximum capacity of a few MW), may have potential downstream environmental impacts. The above environmental risks and impacts are expected to be limited in scale and the activities are not complex. The grid expansion under C1 will be around 70 km, while the densification will occur less than 5km from existing distribution grid. The capacity of mini grids under C2 (solar and micro/mini hydro) may varies with maximum around few hundred KW) and the micro/mini hydro will possibly use run-of-river technology. The risks are also mostly temporary, low in magnitude, predictable, can be easily mitigated, and has low of probability of serious adverse effects to human health and/or the environment. However, the environmental risks are assessed to be substantial due to: i) capacity risk, noting that the IAs have little to no experience working with the Bank’s ESF or E&S systems and procedure; and ii) potential environmental risks related to the proposed activities with the current limited information on Project locations. This risk rating will be revisited during project preparation when there will be better understanding on the details of project activities, as well as borrower’s capacity and commitments. The appropriate mitigation measures will be identified through the development of Environmental and Social Management Framework (ESMF). Public Disclosure Social Risk Rating Substantial The Project is expected to result in long-term positive social impacts associated with the provision of reliable electricity supply in target communities across PNG including in health, education, safety and economic development. However, there are a number of social risks associated with the project that will require further assessment and management. These include: i) land and livelihood impacts associated with the establishment of sites/easements for on-grid and micro-grid electricity generation, storage and transmission infrastructure; ii) inequitable access to expanded electricity services within communities (i.e. ability to afford access to expanded electricity services and products, and risk of indebtedness) particularly for vulnerable social groups (widows, single mothers, disabled, elderly); iii) social tensions, conflict and civil unrest between diverse cultural groups/communities resulting from real or perceived inequities concerning selection of target sites/communities; iv) community health and safety risks associated with construction and labor influx (i.e. antisocial behavior, transmissible disease and sexual exploitation and abuse and sexual harassment), as well as safety risks associated with the supply and use of electricity in communities; and v) labor and working condition risks, particularly within the PV panel supply chain concerning polysilicon suppliers. Project TA activities, particularly TA for small HPP design (Type 1) (with expected maximum capacity of a few MW), have the potential for downstream social impacts and these impacts will require assessment during the design phase. Social risks are expected to be medium in scale and magnitude, predictable and readily mitigated and have a low to moderate probability of serious adverse effected to human health and safety. However social risks have been assessed as substantial at concept stage due to limited IA experience and capacity to managing social risks – particularly within the newly established NEA; and current uncertainty regarding the location of project activities and implementation arrangements. These risks and potential impacts and resourcing/capacity needs will be further assessed during project preparation, through the preparation of an ESMF, Resettlement Framework, Labor Management Procedures and Stakeholder Engagement Plan. Sub-project specific instruments will be developed Oct 12, 2022 Page 6 of 15 The World Bank PNG National Energy Access Project (P173194) alongside detailed subproject design once specific investments and their locations have been confirmed during implementation. B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered B.1. General Assessment ESS1 Assessment and Management of Environmental and Social Risks and Impacts Overview of the relevance of the Standard for the Project: The Project's support for the expansion of electricity services is expected to have long-term positive impacts for target communities in the areas of health, education, safety and economic development, as well as in the reduction of GHG emissions resulting from the electricity generation from renewable sources. The project will aim to identify and optimize these benefits including: i) creation of opportunities to employ local businesses and workers in subproject construction, operations and maintenance activities; ii) training and skills development for local workers; provision of electricity to social infrastructure within communities such as health clinics and schools as well as streetlights to enhance community safety, particularly for women and children. Key social risks and potential impacts associated with the Project include: i) land and livelihood impacts associated with the establishment of sites/easements for on-grid and micro-grid electricity generation, storage and transmission infrastructure; ii) inequitable access to expanded electricity services within communities (i.e. ability to afford access to expanded electricity services and products, and risk of indebtedness) particularly for vulnerable social groups Public Disclosure (widows, single mothers, disabled, elderly); iii) social tensions, conflict and civil unrest between diverse cultural groups/communities resulting from real or perceived inequities concerning selection of target sites/communities; iv) community health and safety risks associated with construction and labor influx (i.e. antisocial behavior, transmissible disease and sexual exploitation and abuse and sexual harassment), as well as safety risks associated with the supply and use of electricity in communities; and v) labor and working condition risks, particularly within the PV panel supply chain concerning polysilicon suppliers. Key environmental risks and potential impacts associated with the project include: i) risks and impacts associated with construction activities such as soil erosion, increased dust and noise, sedimentation, pollution from inappropriate construction materials use or waste management, as well as community and occupational health and safety risks; ii) resources used during construction, such construction materials and aggregates; iii) potential habitat loss/natural habitat fragmentation particularly related to the development of mini-grid and off-grid network which targeting rural areas that may be located in Greenfields area; iv) potential risks during operations including soil and water contamination from inappropriate waste management, fire risk from faulty wiring and battery storage system, electrocution risk if installations are not done by qualified personnel, risks to wildlife (e.g., birds and bats) related to collision and electrocution, as well as minor nuisance impacts (i.e., glare); v) Operations and decommissioning of mini grids and solar home system may also result in impacts related to hazardous waste generation from battery and used solar PV; and vi) potential impacts from small hydropower operations such as sedimentation, disturbance to aquatic lives, and dam safety risks. Oct 12, 2022 Page 7 of 15 The World Bank PNG National Energy Access Project (P173194) Project TA activities supporting policies and regulatory standards (Type 2) and particularly TA for small HPP design (Type 1) (with expected maximum capacity of a few MW), have the potential for downstream environmental and social impacts and these impacts will require assessment in accordance with relevant ESSs. As subproject prioritization (C1 and C2) and design of RBF facility (C3) is not expected to occur until project implementation, an Environmental and Social Management Framework (ESMF) will be prepared during project preparation. The ESMF will provide a preliminary assessment of the potential E&S impacts associated with anticipated subprojects/activities and outline the principles, rules, guidelines, procedures, and tools to assess and manage environmental and social risks and potential impacts alongside Project design. It will also include guidance to identify associated facilities (based on criteria set out in the ESF) and the guidelines to determine requirements for necessary assessment or measures to comply with ESF. The ESMF will include an exclusion list to screen types of activities and locations that are not suitable to be supported under the Project. It will also provide guidelines and tools for screening E&S risks and determination of requirements for assessment and preparation of further E&S instruments for i) on grid electrification activities (C1); and ii) sustainable mini-grid activities (C2). Existing procedures and tools for C1, outlined in the EURPIP ESMF will be reviewed/strengthened. As the grant administrator (C3) will not be identified during preparation, ESMF will outline requirements and guidance for the assessment and management of E&S risks associated with the proposed Results- based Financing facility. The ESMF will also include Environmental and Social Code of Practice (ESCOP) outlining E&S measures for the activity under C3. In the selection of companies for RBF, E&S aspects will be included as part of the selection criteria. The companies selected will be required to comply with ESCOP and this will be verified as part of Public Disclosure the completion verification. For TA type 1 (C4), the ESMF will provide indicative TOR for the E&S assessment, and for type 2 activities (C4), the ESMF will include guidelines for providing inputs on relevant ESSs requirements to the activity-specific TOR, as well as the review of the TA output for compliance with the ESS requirements. A number of tools will be developed and annexed to the ESMF including COVID-19 Protocol and SEA/SH Action Plan, screening tools, ESCOP and/or generic Environmental and Social Management Plan (ESMP) outline for different types of investments planned under the project. The ESMF will outline institutional arrangements, roles and responsibilities and reporting procedures for environmental and social management and monitoring; determine the training, capacity building and technical assistance needed to successfully implement the provisions of the ESMF and associated instruments; and establish a budget for the implementation of the ESMF and associated instruments. The ESMF will be prepared to a standard acceptable to the Bank and disclosed prior to appraisal. Further study requirements and actions emanating from the ESMF will be captured in the Environmental and Social Commitment Plan (ESCP). In the event that contractors are hired, the contractors would be required to develop Contractor Environment and Social Management Plan (C-ESMP) in accordance with the ESMF and relevant sub-project instruments. The Resettlement Framework will be prepared in accordance with the requirements of ESS5 to guide the management of potential land acquisition and resettlement impacts associated with sub-projects. The RF will established the principles, objectives, procedures and rules to be used to manage land acquisition and associated impacts. This will include processes and tools for negotiated settlement, voluntary land donation, and involuntary resettlement. Oct 12, 2022 Page 8 of 15 The World Bank PNG National Energy Access Project (P173194) A Stakeholder Engagement Plan (including Grievance Redress Mechanism) and an Indigenous Peoples Policy Framework will be prepared in accordance with the requirements of ESS10 and ESS7. Labor Management Procedures (including Workers Grievance Redress Mechanism) for the Project workforce will also be prepared. The Borrower will prepare and disclose an Environmental and Social Commitment Plan (ESCP) prior to appraisal. The ESCP will outline the Borrower’s commitments to develop the required E&S instruments and tools; implement appropriate mitigation measures; and report on performance related to application of ESSs relevant to the project. Areas where “Use of Borrower Framework” is being considered: No area where "Use of Borrower Framework" is being considered. ESS10 Stakeholder Engagement and Information Disclosure Project stakeholders will be identified during project preparation and are expected to include: i) affected parties and target beneficiaries (i.e., households/communities who lack access to modern/reliable energy services, and SMEs expanding energy products and services); ii) vulnerable groups including widows, single mothers, disabled, elderly and people living outside their traditional communities iii) other interested parties including other sectoral agencies, NGOs and the public at large. The Borrower will prepare a Stakeholder Engagement Plan for the project. The SEP will identify/confirm and analyze Public Disclosure key project stakeholders; describe the process and modalities for sharing information on the project activities and seeking and incorporating stakeholder feedback into project design and during implementation; outline specific strategies for consultation and information dissemination; and outline approaches for reporting and disclosure of project documents. The SEP will include an annex, outlining a specific framework for community consultation and engagement for Component 2 Mini-grids. The SEP (and GRM) will ensure consistency with ESS7, promoting the inclusion of Indigenous Peoples, and outlining a strategy for engagement with diverse ethnic groups and culturally appropriate approaches for consultation and information dissemination. It will also outline a strategy for engaging vulnerable and disadvantaged groups. The SEP will also include principles and approaches to mitigate the risk of COVID-19 during the conduct of consultation and engagement activities in accordance with government regulations. The SEP will also outline the Project’s Grievance Redress Mechanism (GRM) which will enable stakeholders to raise project related concerns and grievances. The GRM will outline a procedure for managing and addressing project related grievances including lodgment channels, governance structure, roles and responsibilities, investigation and feedback processes taking into account different stakeholders needs, social risks, and implementing arrangements for each project component. The GRM will be equipped to handle SEA/SH complaints. The SEP (and GRM) will be prepared, disclosed and consulted upon before Project Appraisal. The ESCP will outline a requirement for the GRM to be operational before project effectiveness. Oct 12, 2022 Page 9 of 15 The World Bank PNG National Energy Access Project (P173194) B.2. Specific Risks and Impacts A brief description of the potential environmental and social risks and impacts relevant to the Project. ESS2 Labor and Working Conditions The project workforce is expected to include i) direct workers including government staff and consultants engaged directly by the IAs; ii) contracted workers employed or engaged through third parties such as, design and supervision consultants or works contractors; and iii) primary supply workers including workers in the polysilicon/PV panel supply chain. Key risks for direct and contracted workers include working conditions, and occupational health and safety issues associated with construction activities and activities during operations of subprojects, working in remote areas and in communities with the potential for civil unrest and conflict to occur. There is also a risk of SEA/SH associated with the project workforce. As many of the micro grids and off-grid products supported through the project are likely to involve solar power generation with the use of photovoltaic panels, risks of forced labor in the polysilicon/PV panel supply chain will be addressed in accordance with the World Bank’s Mandatory Note to Borrowers on IPF Solar Procurement. The Borrower will prepare Labor Management Procedures (LMP) which set out the way in which project workers will be managed in accordance with the requirements under PNG law and ESS2. The Project workforce will be confirmed Public Disclosure during this process, and the procedures will address the way in which ESS2 requirements apply to each category of worker. The LMP will outline provision on Occupational Health and Safety (OHS), a grievance redress mechanism for all direct and contracted workers, and requirements for managing SEA/SH risk in accordance with the SEA/SH Action Plan which will be prepared and annexed to the ESMF. The LMP will also outline requirements for the project workforce to undertake project activities in accordance with the Project’s COVID-19 Safety Protocol (prepared and annexed to the ESMF), to protect themselves (and other project stakeholders) against infection with COVID-19. In the event the contractors are hired for civil work activities, the contractors will be required to develop C-ESMP in compliance with the Project’s LMP. ESS3 Resource Efficiency and Pollution Prevention and Management The Project will promote renewable energy related investments which will increase the uptake of electricity from renewable sources. However, the Project will also potentially resulted in environmental degradation and pollution from the use of resources, improper management of waste generated (including during transportation, handling, storage, and end-of-life use) as well as accidentals spill associated with the replacement of transformers (e.g., PCB or solvents used for degreasing). The use of resources during construction includes the sourcing of construction materials and aggregates. The improper handling of waste generated may cause soil or land pollution. Construction activities may generate pollution from dust, noise, improper management of waste, including hazardous waste such as used oil and batteries Oct 12, 2022 Page 10 of 15 The World Bank PNG National Energy Access Project (P173194) associated with the use of construction machineries. The development of mini-grids requires the use of battery storage which may result in soil and water pollution if the handling and disposal is not done properly. Used solar panels from replacement or decommissioning of the solar plants, as well as the solar home system may also lead to environmental pollution. Potential issue on the use of pesticides for solar plants management will be further assess during preparation. Safe disposal of PCB based oil transformers and other contaminated equipment is also a potential source of pollution. There are limited facilities and services available in PNG to manage hazardous waste. Several private waste companies, provide limited service of recycling of hazardous waste such as waste oil, contaminated metals, etc. PNG has no local recycling facilities or electronic waste recovery facilities. General mitigation measures related to the environmental degradation and pollution risks from construction and implementation of Project activities will be included in the ESMF. The ESMF will emphasize collaboration with solar panel suppliers for potential of recycling and/or disposal of used panels, and the use of non-PCB transformers for the upgrading activities. Commitments to implement approaches in the ESMFs as well as preparation of investment- specific ESMP will be included in the ESCP. In the event contractors are engaged for construction of any project activities, the contractors will be required to develop C-ESMP. TA activities supported under the Project (both on the development of policy and regulations, as well as small HPP design and E&S instruments), may entail downstream pollution impacts, such soil and water contamination and resource efficiency issues. The ESMF will include guideline for providing inputs on relevant ESSs requirements to the activity-specific TOR, as well as the review of the TA output for compliance with the ESS requirements. Public Disclosure The Bank will provide assistance to borrower in estimating the GHG emissions of the Project. The information will be captured in appraisal stage ESRS and ESMF. ESS4 Community Health and Safety The ESMF will assess and outline requirements for managing community health and safety risks associated with the Project. Community health and safety risks associated with the expansion and densification of on-grid electrification (C1); and the development of sustainable mini grids (C2) include community exposure to: i) physical hazards on sites where the community has access; ii) water-borne/vector-borne diseases which may result from poor site management (e.g., stagnant water); iv) communicable diseases such as COVID-19 and HIV/AIDS and anti-social behavior and SEA/SH risks associated with project workforce; and vi) nuisance level noise, dust and vibration impacts. Sub-project ESMPs will assess and outline measures for managing these risks. Relevant requirements will be outlined in works contracts; and works contractors will be required to develop and implement C-ESMPs. TA for small hydropower design and E&S planning will also assess these risks in accordance with ESS4. The supply of electricity also presents safety risks for members of the community, particularly vulnerable groups (i.e., children) who have low awareness of electricity safety. Sub-project ESMPs will assess and outline measures for managing this risk. Oct 12, 2022 Page 11 of 15 The World Bank PNG National Energy Access Project (P173194) Potential for social tensions, conflict and civil unrest. Real or perceived inequities regarding access to project services, and particularly the selection of target sites/communities for on-grid electrification and development of sustainable mini grid have the potential to lead to social tensions, conflict and civil unrest within and between diverse cultural groups/communities. This risk may be exacerbated by existing tribal tensions and conflict. The ESMF and SEP will outline procedures and strategies for assessing and managing this risk during sub-project preparation. Sub-project ESMPs will include rapid assessment of social and conflict risk and measure for managing this. PNG has high rates of gender inequity and gender-based violence. There is a risk of project workforce related SEA/SH. Gender and GBV risks associated with project activities will be assessed and included in the ESMF. All project activities present a risk of transmission in the community. High risk activities involve outside workers visiting remote communities to conduct community engagement and support the delivery of project activities. The project will develop an COVID-19 Safety Protocol to manage the project related risk of COVID 19 transmission in target communities. The resilience of new infrastructure related to climate and exposure to extreme weathers will be addressed through project design. This will be included in the ESMF. The small hydropower could potentially have some form of water retention (e.g., weirs). The applicability of safety of dams under ESS4 will be further assessed. Where dams do not fall into dam safety requirements under ESS4, dam safety measures designed by qualified engineers in accordance with GIIP will be used, as per ESF. Public Disclosure ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement The project will require the acquisition of land and easements for i) expansion and diversification of on-grid MW and LV distribution networks (C1); and ii) establishment of sustainable mini-grids (including power generation/storage facilities and distribution infrastructure) in isolated population centers (C2). TA (type 1) for upstream design and E&S assessment/planning for small hydropower projects (C4) may also involve assessment/planning of land and resettlement impacts. Land required is expected to be a mixture of customary and alienated land (state land or private-freehold land). The locations and details of works will be identified during project implementation, as will the associated land related risks and issues. As such, a Resettlement Framework (RF) will be prepared which will establish the principles, objectives, procedures and rules to be used to manage land acquisition and associated impacts. This will include processes for negotiated settlement, voluntary land donation, and involuntary resettlement. Given the intrinsic linkages between land and indigenous communities in PNG, the risks will be managed in a coordinated manner with those outlined for ESS7 which will include, among other things, meaningful consultation and where necessary a process to obtain free, prior and informed consent. For C2 mini-girds, a fundamental part of sub-project identification process will be ensuring that there is a high level of community demand and “ownership” of the Project. The majority of projects are expected to secure land through negotiated settlement or voluntary land donation. ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources Oct 12, 2022 Page 12 of 15 The World Bank PNG National Energy Access Project (P173194) The clearing of vegetation on greenfield area for construction of power generation components and facilities may cause risks associated with habitat loss, disturbance of terrestrial biodiversity, degradation and fragmentation of natural habitat, as well as introduction of invasive alien species. The construction and operation of micro/mini hydropower have potential risks to disturb aquatic life in the river. However, this risk is perceived to be limited considering the scale and type of the hydropower that are envisaged under the Project. The construction activities may lead to negative environmental impacts through noise pollution, sedimentation, inappropriate disposal of waste leading to soil and water contamination, which all have the potential to impact existing biodiversity values on the site and surrounding area. Transmission lines may also affect the wildlife (e.g., bats and birds) related to collision and electrocution. To avoid or minimize the disturbance to sensitive natural habitat from clearing of vegetation, a site selection screening criteria will be included as part of the ESMF. The criteria will guide the site selection of the investments that will not be known before the start of Project implementation. The ESMF will also provide general mitigation measures to avoid or minimize impacts to biodiversity from construction and operations of Project activities. The requirements under these ESMF will also included in C-ESMP if contractors are engaged for construction. TA activities supported under the Project ,particularly on small HPP design and E&S instruments, may entail impacts on biodiversity and habitat. The ESMF will include guideline for providing inputs on relevant ESSs requirements to the activity-specific TOR, as well as the review of the TA output for compliance with the ESS requirements. Public Disclosure ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities PNG is one of the most culturally diverse countries in the world with over 800 languages and over 1,000 distinct ethnic groups. The project is expected to be implemented in diverse communities across several provinces and districts. ESS7 is relevant and the standard applies for this project since ethnic groups (Indigenous Peoples - IPs) possessing the four characteristics listed in para 8 of ESS7 are present in the project area. An Indigenous Peoples Policy Framework will be prepared and will include requirements for subprojects, and other activities where necessary, to identify the ethnic groups that are present in the sub-project areas; assess the potential direct and indirect economic, social and cultural impacts on these communities; and outline measures for protecting and enhancing the interests of IPs during project implementation in accordance with ESS7. The IPPF will also outline requirements for consultation and engagement consistent with the SEP including stakeholder analysis and engagement planning, disclosure of information and meaningful consultation in a culturally appropriate and gender and intergenerational inclusive manner - to identify and address any economic or social constraints that may limit opportunities for IPs to benefit from, or participate in, the project. The IPPF will also outline a process to obtain free, prior and informed consent in the event that involuntary land acquisition is required. TA activities supported under the Project, particularly on small HPP design and E&S instruments (type 1), are likely to impact indigenous peoples. The IPPF will include guidance for providing inputs on ESS7 requirements to the activity- specific TOR, as well as the review of the TA output for compliance with the ESS requirements. Oct 12, 2022 Page 13 of 15 The World Bank PNG National Energy Access Project (P173194) ESS8 Cultural Heritage This standard is not considered relevant at this stage. Impacts on tangible cultural heritage will be avoided during project screening. A chance finds procedure will be included in the ESMF and implemented if during works tangible cultural heritage is discovered. No intangible cultural heritage is expected to be impacted by the project. ESS9 Financial Intermediaries This standard is not considered relevant at this stage. The project will not involve financial intermediaries. C. Legal Operational Policies that Apply OP 7.50 Projects on International Waterways No OP 7.60 Projects in Disputed Areas No III. WORLD BANK ENVIRONMENTAL AND SOCIAL DUE DILIGENCE A. Is a common approach being considered? No Financing Partners Public Disclosure N/A B. Proposed Measures, Actions and Timing (Borrower’s commitments) Actions to be completed prior to Bank Board Approval: Environmental and Social Management Framework (ESMF) Resettlement Framework (RF) Labor Management Procedures (LMP) Stakeholder Engagement Plan (SEP) Environmental and Social Commitment Plan (ESCP) Possible issues to be addressed in the Borrower Environmental and Social Commitment Plan (ESCP): - E&S staffing requirements - Regular reporting - Notification of incidents and accidents - Prepare, disclose, consult, adopt, and implement any environmental and social management plans, other instruments or measures as defined in the ESMF - Incorporate environmental and social management plans or other instruments, ESS2 requirements, and any other required ESHS measures, into the ESHS specifications of the procurement documents and contracts with contractors. Thereafter ensure that the contractors comply with the ESHS specifications of their respective contracts Oct 12, 2022 Page 14 of 15 The World Bank PNG National Energy Access Project (P173194) - Inputs on relevant ESSs requirements to the activity-specific TOR and review of the output for compliance with the ESS requirements for TA activities - E&S capacity building C. Timing Tentative target date for preparing the Appraisal Stage ESRS 28-Feb-2023 IV. CONTACT POINTS World Bank Contact: Mitsunori Motohashi Title: Senior Energy Specialist Telephone No: 5740+6467 / 61-2-92356467 Email: mmotohashi@worldbank.org Borrower/Client/Recipient Borrower: Independent State of Papua New Guinea Implementing Agency(ies) Implementing Agency: PNG Power Limited Public Disclosure Implementing Agency: National Energy Authority V. FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects VI. APPROVAL Task Team Leader(s): Mitsunori Motohashi Practice Manager (ENR/Social) Ann Jeannette Glauber Recommended on 11-Oct-2022 at 22:19:30 GMT-04:00 Safeguards Advisor ESSA Nina Chee (SAESSA) Cleared on 12-Oct-2022 at 13:38:29 GMT-04:00 Oct 12, 2022 Page 15 of 15