Page 1 Lao People’s Democratic Republic Peace Independence Democracy Unity Prosperity ----------000000---------- Ministry of Energy and Mines Cabinet Office Technical Assistance for Capacity Building in the Hydropower and Mining Sectors Environmental and Social Safeguards Activities Document Vientiane, October 2009 E2263 Page 2 1 Technical Assistance for Capacity Building in the Hydropower and Mining Sectors Environmental and Social Safeguards Activities Document A. Project Description 1. The project will provide technical assistance to increase the institutional capacity of agencies within the Ministry of Energy and Mines (MEM) to forge sustainable development of the hydropower and mining sectors through enhanced planning, monitoring, and administration. The project will not financially support any direct physical investment in the sector, including preparation for any specific physical investments. Accordingly, the project will not directly cause any adverse environmental or social impacts. Instead, the project will enhance the awareness and technical knowledge of MEM agencies, especially the Department of Electricity (DOE), the Department of Mines (DOM), and the provincial departments of MEM (PDEM), to address environment and social safeguard issues. The project comprises the following four components. Environmental and social capacity building and awareness is an integral part of the design: · (1) Joint Hydropower and Mining Learning Program (HMLP). This component aims to building technical capacity and generating public awareness through the following subcomponents: (a) continuing learning program for sector professional, (b) education sector support, and (c) outreach and information sharing; · (2) Hydropower Sector Development. This component will build capacity through the following subcomponents: (a) hydropower planning, (b) hydropower concession management, and (c) hydropower management and implementation of National Policy on Environmental and Social Sustainability of Hydropower Sector (NPSH). · (3) Mining Sector Development. This component will build capacity through the following subcomponents: (a) improvement of sector governance and the enabling environment, (b) strengthening of government oversight capacity, and (c) program to promote mineral development; and · Project Administration and Management. 2. Following the brief project description above, this annex first provides information on sector issues related to environment and social safeguards. Secondly, the annex reviews previous related studies and gives an overview of existing regulatory and institutional frameworks related to safeguards in Lao PDR. Thirdly, the annex identifies the key legal and institutional issues in the mining and hydro sectors respectively, including the implementation experience, and current status in the country; and highlights the safeguard activities to be carried out under the project. Page 3 2 B. Existing Regulatory and Institutional Frameworks 3. Below summarizes the current regulations and institutional frameworks related to environment and social safeguard in Lao PDR: Regulations · Environmental laws, decrees, and regulations. In Lao PDR, environmental and social safeguards are governed by the Environmental Protection Law (EPL) of 1999; the Decree on the Implementation of the EPL (2001); the Environmental Impact Assessment (EIA) Regulation (2003); and the Compensation and Resettlement Decree (CRD) (2005). The EPL outlines the EIA process, the use of best available technology, and the establishment of an Environmental Protection Fund (EPF). The EPL Implementation Decree assigns responsibility for the EIA review to the sector agencies and the provinces, and requires them to establish EIA regulation and monitoring units in line with the general guidelines established by the national agency. For both the hydropower and mining sectors, the sector regulations and requirements for the EIA process have been established, but their application and enforcement have not been consistently implemented across all project developments. The main reasons for weak enforcement are found in overlapping layers of responsibility and insufficient resources at provincial level as well as in delegated sector agencies. In response to these weaknesses a new decree on Environmental and Social Impact Assessment (ESIA) was developed and has been submitted for government approval. The technical guidelines for implementation of the 2005 CRD and for public involvement are being finalized. The 1996 EPL is being reviewed and revised and the process is expected to be completed by the end of 2010.   · Environmental and Social Impact Assessment (ESIA) Decree. Due to the rapid development of the sectors and increased investor interest, the Government has taken action to ensure effective management and application of safeguards procedures. The 2003 EIA regulation has been upgraded to a decree status (ESIA) with the following positive features: (a) improved clarity on the ESIA procedures and process, including roles and responsibilities of key agencies and project owners; (b) a stronger role for WREA as the regulating agency at all stages of approval and monitoring; and (c) clear requirement for social impact assessments, public involvement, and disclosure. The ESIA decree (draft) is expected to be approved in late 2009 and effective in early 2010.   · Other safeguard related laws/regulations. Also of relevance are the Water and Water Resources Law (WWRL) of 1992 and its implementing decree; the Forestry Law of 1996, revised in 2007; the 1995 Mekong River Commission (MRC) Agreement; and other international conventions (biodiversity, climate change, RAMSAR 1 , etc.). Like the EPL, the WWRL will be reviewed and revised in 2010. While regulations on the discharge of toxic wastes and environmental standards for industrial operations do exist, they focus mainly on the sugar mill, textile and garment, and pulp and paper mill industries. No effluent/emission or ambient standards have been defined with regard to hydropower and mining operations. 1 Convention on Wetlands of International Importance Especially as Waterfowl Habitat Page 4 3 · Electricity Law and Minerals Law (1997, 2008): Hydropower development is governed by the Electricity Law of 1997, as updated in 2008. The mining sector is governed by the Mining Law of 1997, updated and renamed the Minerals Law in 2008. The laws define sector operations, stipulate restrictions, and define operators’ technical obligations, including those related to safeguards.   Institutions · Water Resources and Environmental Administration (WREA) is the agency responsible for effective management of water resources and the environment. It was established in mid 2007 as part of the Prime Minister’s Office. The agency comprises the Cabinet, four departments, one center, and one institute. The departments are Department of Water Resources (DWR), responsible for ensuring effective management of water resources and the promotion of integrated river basin management; the DHM, responsible for collection and analysis of meteorological and hydrological data and for emergency preparedness planning; the Department of Environment, responsible for the national policy, planning, and public outreach; and the Department of Environmental and Social Impact Assessment (DESIA), responsible for implementation of the ESIA process. The Water Resources and Environment Research Institute (WERI) is responsible for research and development, including the laboratory function. The technical and management capacity of these agencies is weak and the technical assistance and operational supports through the government and donor agencies (ADB, MRC, the Bank, and bilateral donors) remain inadequate. Additional Bank support through the Lao Environmental and Social (LEnS) project and the Mekong-Integrated Water Resources Management (M-IWRM) are being considered. · The Ministry of Energy and Mines (MEM) is the key ministry responsible for oversight of hydropower and mining development in Lao PDR. MEM consists of seven departments, of which three are administrative, two cover the mining sector, and two cover the energy sector. ¾ For the energy sector, DOE is responsible for policy, planning, regulations and standards, environmental and social safeguards, and rural electrification. The DEPD is responsible for the promotion and monitoring of concessions agreements between the Government and private investors. ¾ For the mining sector, DGEO is responsible for administering geo-science and survey activities not related to specific mine site investments; and for developing and maintaining geological and mineralogical databases as well as mapping and library resources. DOM is responsible for all activities related to mine concession management and investments; and is the lead agency in all preparatory stages of mine investment (licensing, exploration, feasibility studies, etc.). DOM is also responsible for inspection and monitoring of performance requirements, health and safety issues, and environmental management in existing operations. ¾ In addition to the central agencies, provincial departments of MEM (PDEMs) exist in each of the 17 provinces. Provincial and district authorities have previously played a central role in planning and decision making. While this position is diminishing with regard to the approval Page 5 4 and management of large-scale investments, their responsibility has become more formalized for investments of less than US$2 million. Local authorities also retain an important role in execution and monitoring of environmental and social programs. On the other hand, there is often a mismatch between the delegation of responsibility and the allocation of resources, which means that local offices are often not equipped to carry out the monitoring responsibilities they have been assigned. · Other key agencies. The Ministry of Agriculture and Forestry (MAF) is responsible for ensuring effective management and utilization of forests and natural habitats, and the protection of protected areas. The Environmental Protection Fund (EPF) was established in 2006 as a means to provide financial resources to promote institutional capacity building, investment, and conservation of biodiversity. EPF reports directly to the EPF board chaired by a deputy prime minister and an EPF office provides management and secretarial support to EPF operations. Its initial capitalization has been assured through ADB and Bank support, and it is expected to be made sustainable through allocations of Nam Theun 2 (NT2) revenues and contributions from other hydropower operations. However, detailed regulations and mechanisms to ensure its sustainability remain to be worked out.   C. Key Legal and Institutional Issues in the Mining Sector (1) Review of previous studies 4. The recent surge in mining and hydro operations in Lao PDR has triggered a considerable number of studies and sector assessments. Five studies are of particular interest from a safeguards perspective because of their emphasis on environmental and social impacts and management, including analysis of institutional aspects and associated skill levels. The key findings are summarized below. Title Contents Findings with Regard to Safeguards 1. Review of the Lao Mining Sector (World Bank, 2003) • Assessment of geological resources; • Production and revenue estimates; • Legal and fiscal review; • Principles of sector sustainability. • Requirements and guidance need to be more clearly defined; • Safeguards enforcement needs strengthening; • Sustainability initiatives are largely company driven; • Existing Government staff needs more training, and more staff need to be recruited. 2. Review of Environmental and Safety Regulation in the Mining Sector (Flachberger, 2004) • Review of international benchmarks for environmental management; • Assessment of sector-specific environmental regulation; • Occupational health and safety procedures; • Principles of monitoring and enforcement; • Water and waste management. • Decision-making and monitoring need streamlining; • Staffing needs to be expanded; • Capacities and resources at provincial level need enhancement; • Ambient standards and maximum values for emissions and discharges need to be determined. Page 6 5 3. Sector Plan for Sustainable Development of the Mining Sector (MINDECO 2006) • Assessment of geological resources; • Production estimates and industrial policy; • Principles of sustainable industry development; • Action plan for sector strengthening activities. • Staffing needs to be expanded; • Laboratory skills need enhancement; • Laboratory equipment needs refurbishment. 4. Gender and Social Inclusion Study (Earth Systems Lao et al, 2009) • Emphasis on women, children and vulnerable groups; • Social impacts of mining (employment, environment, livelihood, social services, etc.); • Community consultation; • Benefit-sharing. • Early consultation and compensation procedures need to be improved; • Simple tool-kits for consultation need to be prepared; • Awareness of consultation procedures that are sensitive to vulnerable groups needs to be increased; • Artisanal and small-scale mining need to be promoted; • More research is needed on gender and social inclusion in the mining sector. Social Impacts and Social Sustainability in Mining and Hydropower Development in Lao PDR (Earth System Lao, 2009) • Explores the social impacts of mining / hydro development in Lao PDR • Introduces risk mitigation and benefit sharing approaches • Reviews international and Lao specific good practices and case studies • Participatory consultation and community engagement need to be improved • Models for benefit sharing should be further explored / developed • Capacity enhancement to implement safeguard policies are needed 5. Review of the previous studies in light of current institutional arrangement suggested that key legal and institutional issues related to environment and social safeguards in the mining sector in Lao PDR include: · Overlapping regulations and lack of institutional capacity. Many agencies are involved in project approval, inspection, and enforcement of regulations, therefore delegation of responsibility is unclear, and operators risk either being subjected to dual regulation and inspection requirements or not being regulated and monitored. With the updated ESIA, parts of the conflicting mandates are expected to be solved, and WREA will assume stronger leadership. However, practices and procedures have yet to be established. To this end, regulations on general and sector-specific requirements have to be drafted and agreed to. Standards for emissions and discharges must also be defined. Technical and management capacity of provincial and district authorities will also be necessary. · Skill level and resource allocation . Government agencies responsible for the mining sector suffer from an acute shortfall of professional staff, since the number of staff has remained constant despite the nearly 100-fold increase in sector activities. More importantly, the capacity level of existing staff needs upgrading, since most staff have been forced to develop their skills by taking Page 7 6 on increasingly complex tasks but with no formalized continued learning programs. Most office personnel obtained their formal education in the former Soviet Union or Eastern Europe in the 1980s or early 1990s, and in most cases environmental and social principles were not included in the courses. Under the Department of Mines, a dedicated Division for Mines Inspection is charged with all aspects of inspection and monitoring, including safeguard. This is a small unit (about 5 staff) with limited technical and management capacity, equipment, and other facilities. Given the decentralized structure of safeguards regulation and inspection, DOM officers are supposed to collaborate with staff from the environmental agencies as well as provincial representatives. However, the lack of resource allocations to conduct site surveys and surprise inspections has severely reduced the quality and quantity of inputs and collaboration. Moreover, all agencies conduct inspections and measuring with very basic testing and laboratory equipment, since no policy or budget exists for the maintenance of old equipment and purchase of new equipment. Because of these budgetary constraints, most of the monitoring relies on the operators’ corporate social responsibility. The skill level and experience of Government officers will naturally expand as a result of increased exposure to and demands from mining operations. On the other hand, without adequate incentive/compensation structures and budget allocations for equipment, the regulating agencies will be unable to fulfil inspection requirements. · Disclosure and consultation practices. Disclosure and consultation practices are critical gaps in the planning and exploitation of natural resources in Lao PDR. Standard procedures are being developed, with good practice examples from various high-profile developments (NT2, Theun Hinboun, Lane Xang Mining Limited), and legislation is being updated. However, adoption of best practices may not be implemented at local levels because of limited dissemination, training, and toolkits for following guidelines. Conflicts have also emerged between mine developers and villagers since land and livelihood compensation procedures are based on land titling practices that have not always been rolled out in the local areas. Similarly, benefit-sharing and revenue management have proven complicated to implement, since capacities and management tools at the local level have not been provided to manage and execute the entire chain of participatory consultation, implementation and monitoring of local development plans. Additional capacity building, outreach activities and implementation of operational practices will be required.   · Limited capacity on water resource planning and management: As a result of weak technical capacity and budget constraints, knowledge and understanding on the linkage of water resources, fisheries, watershed protection, land use, and livelihood of local community remain limited, and effective management of a river basin has been a challenge for Lao regulators and decision- makers. Awareness has been generated on the need to address cumulative impacts and on an integrated river basin management, but the activities remain at an infant stage. Exploitation of water and other natural resource will increase environment and social pressure due to competing uses of water resources and negative impacts on the local livelihood. There is a need to forge additional collaboration among authorities responsible for land and water management and bio- diversity conservation, and with industrial and project developers, local residents, and user communities. Page 8 7 (2) Project activities and their impacts on safeguard capacity building –Component 1 and 3 6. The project’s mining sector component is designed to strengthen government capacity in areas where gaps and deficiencies were identified by previous studies and in light of the current legal and institutional arrangements. The project will provide support selectively to the needs that require urgent attention, while acknowledging that capacity building on safeguard practices will continue over a longer timeframe than the present project execution of five years. The project will also be geographically selective, with emphasis on three to four provinces with the largest existing operations or potential for mineral development in the short term. 7. The capacity building will complement existing activities to strengthen implementation of the Minerals Law, revision of the sector regulations in line with the 2005 CRD, the ESIA decree, and the (to be) revised EPL. In addition to the operational support programs, the project will also support skills development more broadly through environmental and social planning, management, and resource optimization. The skills development will be provided both as continuing learning programs for sector professionals and as core courses in the formal curriculum at the National University of Lao (NUOL) and technical colleges. 8. The table below highlights the project activities and its contribution to the capacity building of the mining sector while more details are provided in Annex 4 of the Project Appraisal Document. Objective/ Subcomponent Project Activities Project input Positive impact on safeguard capacity building Component 1: Joint Hydropower and Mining Learning Program ($2,345,000) Skills development (a) Training courses in environmental and social management (b) Natural resource optimization and planning (a) Technical advisory and training to MHLP (b) Technical advisory on cadastre management Knowledge on environment and social safeguard will be part of the training courses Subcomponents of Component C: Mining Sector Development ($2,216,000) (1) Drafting of key regulations and guidelines for: Impact assessment; Monitoring; Approval; Inspection (1) Hire legal advisor and consultants for in-house advisory service to Mines Inspection Division to draft implementing guidelines (2) Develop/implement sector policy (2) Hire consultants (a)Regulatory strengthening (3) Concession Agreement (CA) model and inspection ( 3) Hire consultants Safeguard requirements will be considered during the drafting of the revised regulations, guidelines, sector policy, and CA (b) Strengthening of inspection capacities (1) Implementation of Monitoring and Evaluation (M&E) framework (2) Acquisition of critical testing equipment (3) Training/workshops (1) Hire consultant --Advisory service to support implem entation of M&E templates (2) On -the-job training Safeguard inspection will be part of the effort; MEM staff will have hand-on experience on monitoring and evaluation (M&E) Page 9 8 Disclosure and consultation practices (1) Public awareness programs (2) Training of national and provincial staff (3) Principles of community- driven planning and benefit- sharing (1) Advisory service on external relations strategy and work plan (2) Training advisors (3) Tool-kits for community consultation These efforts will facilitate information disclosure on safeguard and encourage active participation of local communities in addressing the i ssues. (1) Geological/mineral input to existing GIS (2) Produce GEO map (c) Strengthening technical capacity (3) Lab training Hiring consultants, training, procure equipments, etc. This effort will indirectly benefit the safeguard issue in the longer term D. Legal and Institutional Issues in the Hydropower Sector (1) The NPSH implementation 9. Preparation of the NT2 project suggested that key legal and institutional issues related to environment and social safeguards in the hydropower sector in Lao PDR are similar to those identified in the mining sector discussed above i.e. overlapped regulations and lack of institutional capacity; skill level and resource allocation; disclosure and consultation practices; and limited capacity on water resource planning and management. To address these issues and ensuring sustainable development of hydropower, the Government established a national policy, namely the National Policy on Environmental and Social Sustainability in Hydropower Sector (NPSH), in 2005. DOE takes the lead in the implementation of the NPSH with technical and operational support from LEnS project through EPF. Status and experience from NPSH implementation has been incorporated into the design of this project. 10. Effective implementation of the NPSH is critical for ensuring sustainable development of hydropower in Lao PDR. Development of large hydropower projects has been rapid after 2005. A number of private investors have expressed interest in developing hydropower projects, and more than 60 large-scale projects are listed in MEM database. Despite the global financial crisis and difficulties with some investors, it is anticipated that by 2015 there will be at least 10 large hydropower projects operating in Lao PDR. As of early 2009, there are four large hydropower projects in operation, five under construction, and seven under negotiation. Below highlights the key aspects and the implementation experience and progress of the NPSH: · The NPSH applies to projects built after 1990 that are larger than 50 megawatt (MW) or inundate more than 10,000 hectares. It stipulates specific measures to be undertaken by project owners and the government agencies in the following areas: (a) Environmental assessment, (b) Project- affected population; (c) Watershed management and conservation; (d) Consultation; (e) Information disclosure; (f) Compliance monitoring; (g) Revenue sharing; (h) Existing Hydropower Projects; (i) Institutionalization; and (j) Reporting. · Given the lack of legal and institutional instruments, implementation of NPSH has been difficult and time consuming. Limited number of qualified staff and lack of technical and management capacity of DOE and limited coordination among key agencies have exacerbated the issue. Page 10 9 Recent scale-up of activities (through the LEnS project and others) have allowed gradual improvements. In 2007, DOE conducted a capacity assessment and developed a strategy to implement the NPSH. The preliminary assessment of NPSH compliance suggests that while most projects have carried out EIA and/or SIA as required by regulation, including at least partial consultations, the majority of projects have not met the specific requirements for information disclosure, watershed protection, compliance monitoring, and revenue sharing. After discussion, four implementation strategies have been adopted: Ensuring NHSP compliance through project- by-project assessment and effective compliance monitoring; Forging effective cooperation among key agencies through training and capacity building, public outreach, and promotion of stakeholder involvement; Strengthening effectiveness of the regulatory and institutional framework; and Establishing a sustainable funding. DOE is slated to receive additional resources from LEnS to initiate the implementation of the strategy during 2009-2010. Progress is highlighted below: o In early 2009, DOE in close cooperation with WREA conducted a national workshop to confirm the Government’s commitment to implement the NPSH, and a large number of private investors participated. DOE has also recruited national consultants to ensure that management of the subproject will be implemented in line with the required guidelines. Given the current institutional reform and the ESIA Decree, the NPSH will be updated by DOE in close consultation with WREA and other agencies in late 2009. Institutionalization of the Alignment of the NPSH with the current legal and institutional arrangements will be critical for forging effective implementation of the NPSH. o Of the three projects under operation, Houay Ho is the first IPP starting operation in 1998 while two projects (Theun Hinboun and Nam Leuk) are taking actions to mitigate actual negative impacts (mostly on livelihoods restoration) under supervision of ADB. DOE also, in cooperation with WREA and the World Bank’s technical team, conducted field visits to a number of projects under construction and ongoing operations (Houay Ho, Xeset 2, Xekaman 1, Nam Leuk). These efforts found that (a) the active involvement of senior DOE and/or WREA staff will be critical for ensuring effective cooperation of project owners, especially private sector owners; (b) protection of watershed and benefit- sharing issues should be better addressed at provincial level through consultation and discussion of concerned agencies and local communities; and (c) assistance from qualified consultants in the monitoring and oversight process will be necessary. As a follow-up to field visits, DOE prepared a draft TOR for a rapid assessment of social issues of Houay Ho and a consultant is being recruited. Results from this assessment will guide the future actions regarding Houay Ho project. A follow-up action, including training workshop in Champasak, was conducted to discuss the issue related to watershed protection for Xeset 2 and reservoir clearance for Xekaman 3. Actions are undertaken on the ground to address the issues identified during field visits. Recruitment of a qualified consultant to assist in the NPSH compliance assessment and monitoring of safeguard performance is being processed. · Given the experience above and discussion with key agencies and the project owners, it is clear that preparation of individual action plan to bring all hydropower into full compliance of the Page 11 10 NPSH will take time and efforts. Preparation of costed action plans to bring existing hydropower projects into compliance with the NPSH will be challenging since this would in some instances require changes to existing concession agreements (CA). DOE in close cooperation with WREA are making an effort to address this issue and ensure that the CA of new projects includes safeguard measures. Watershed protection and revenue/benefit sharing are also considered difficult due to the lack of clear regulation and/or institutional mechanism. Discussions with some project owners suggest that they have developed programs to assist local government and nearby communities on various social aspects of the projects. However, these programs have not made a systematic contribution to watershed protection. NT2, scheduled to be in operation in 2010, is the only project for which the owner has provided a budget for watershed protection (US$1 million for 25 years). NT2 is also the only project that requires tracking of how revenues are utilized, and in which environmental conservation is a priority activity. These arrangements provide an opportunity for the key agencies to secure the necessary budget for compliance monitoring and reporting, including capacity building to carry out these activities. Integrated river basin management can be another effective way to connect watershed protection with community development and benefit sharing. Voluntary contributions by project owners to the EPF could be an option. Mandatory contributions to the EPF, on the other hand, may require the establishment of regulations; this aspect will be explored during the review of the Water and Water Resources Law (1996), to be carried out as part of the Mekong-IWRM project. · To move forward, DOE prepared a draft Sector Action Plan describing actions to be carried out by key agencies to forge effective implementation of NPSH. Given that the NPSH will have to be revised in line with the present institutional framework and the new ESIA decree, the Sector Action Plan will be considered as a living document to be refined through discussion and consultation with key agencies and stakeholders during 2009-2010. Key element of the plan is summarized below. Key Elements of the Hydropower Sector Action Plan (draft July 2009) NPSH Requirements Ongoing Actions DOE/DEPD Actions During the Project EA, SA, consultation, information disclosure • ESIA decree will provide a clear legal basis for EA, SA, consultation, and disclosure, including roles and responsibility of key agencies during the EA/SA process and monitoring of development projects. Capacity of DSIA and other agencies under WREA is being strengthened through LEnS and other projects (M-IWRM, etc.). • Under LEnS, DOE will conduct a rapid assessment of social aspects of Houay Ho project, and has initiated discussion of key stakeholders on watershed protection of Xeset 2. • Social and environmental issues of Theun • DOE will implement the recommendations from the rapid assessment of Houay Ho. • DOE will periodically monitor the technical and safeguard performance of Theun Hinboun, Nam Leuk, NT2, Xeset 2, Nam Ngum 3 and 5 as well as new projects and report on their compliance with NPSH. • Building technical and management capacity of key PDEMs will enhance MEM’s capacity to be effective in Page 12 11 Hinboun are being addressed with ADB assistance and through the preparation of the Theun Hinboun Extension project, while the social issues of Nam Leuk are being addressed with ADB funding. • NT2, Xeset2, Nam Ngum 5 will be under operation in 2010. performing the oversight function. • HMLP will also promote information disclosure of the sector. Compliance monitoring • The ESIA regulation (draft) also provides specific requirements on compliance monitoring. The project owner will be required to submit monthly monitoring report, while WREA will conduct compliance monitoring; DOE/DEPD will monitor compliance with the sector regulations and ensure compliance of the NPSH. • WREA is establishing a high-level Compliance Committee to oversee the compliance monitoring of hydropower and mining projects – expected to be in place soon after the ESIA decree is approved. Both WREA and MEM and key provinces are to report key findings to the Committee. • DOE/DEPD will monitor compliance with sector regulations, including safeguards, and take actions as needed. • DOE will report on the implementation status of NPSH to the committee at least on an annual basis. Watershed conservation and revenue sharing • Under LEnS, DOE will work closely with WREA, MAF, and MOF to prepare a plan and mechanism (including regulations as needed) to achieve these objectives. It is anticipated that the reviews of the Water and Water Resources Law, the Environmental Protection law (EPL), and the Forestry Law will also consider these aspects. • DOE will implement activities as agreed among the key agencies. Institution and regulations • ESIA Decree will provide clear guidance. A series of workshops is anticipated during July-September 2009 to clarify roles and responsibilities of agencies in line with the decree. • DOE/DEPD will ensure that the private investors are aware of the NPSH and that appropriate environmental safeguard requirements are included in the concession agreements for all new projects. • DOE will update MEM regulations in line with the new Energy Law, ESIA Decree, Compensation and Resettlement Decree, etc. • DOE/DEPD will ensure that private investors are informed of the NPSH Reporting • DOE is preparing a draft of the first NPSH implementation status report, which will be submitted to the Compliance Committee • DOE will prepare the status report and conduct an annual workshop on NPSH implementation, and Page 13 12 when it is formally established. Disclosure of the report will be made after approval by the Committee. disclose compliance information to the public at least once a year. (2) Project activities and their impacts on safeguard capacity building--Components 1 and 2. 11. The safeguard activities under the Project will be mainstreamed into MEM’s regulations and operation process. Capacity building through training courses will be carried out through Component 1, HMLP, while the on-the-job training will be undertaken under other subcomponents and with assistance from consultants (national and international). Implementation of the NPSH will include c larification of responsibilities of key agencies to ensure effective coordination among them. DEPD will monitor hydropower projects’ compliance with the NPSH. It is expected that by the end of the project: (a) an effective coordination and cooperation mechanism for NPSH implementation will be in place; (b) MEM and the PDEMs will have adequate capacity to guide the development of hydropower projects and regulate their operation; and (c) a provincial information centers will be operational. Table below highlights the project activities and their impacts on the safeguard capacity building. Objective/ Subcomponent Project Activities Project input Positive impact on safeguard capacity building Component 1: Joint Hydropower and Mining Learning Program ($2,345,000) Skills development a) Training courses in environmental and social management b) Natural resource optimization and planning a) Technical advisory and training b) Technical advisory on cadastre management Knowledge on environment and social safeguard will be part of the courses Subcomponents of Component C2: Hydropower Sector Development ($2,285,000) (a) Hydropower Development Planning (DHM, DOE) a) Updating the Least-Cost Development Plan (LCDP) b) Developing a National Hydrological Data Collection System (NHDC) to support an integrated river basin management system. c) Developing planning capacity in Nam Ou river basin, including installation of equipment a) Hire an international expert for updating and training on the LCDP) b) Hire an international expert for developing and training on the NHDC c) Install equipment, including hire an international consultant to assist in the design of the equipment and locations Improved planning capacity in Nam Ou river basin will improve cooperation among key agencies and stakeholders and facilitate effective participation of affected population in the decision making process (b) Hydropower concession management a) Advisory support in reviewing the IPP legal and financial aspects a) Hire consultants (legal, finance) Safeguard requirements will be considered during the drafting of the CA Page 14 13 (DEPD, LHSE) (c) Hydropower management and implementation of NPSH (DOE, PDEMs) a) Improving MEM internal regulations and technical standards, including NPSH, in line with the new Decree. b) Contribute to the implementation of the Sector Action Plan to bring large hydropower projects in compliance with the NPSH c) Initiating safeguard capacity building of 3-4 provincial MEM to carry out the oversight function (monitoring and evaluation) a) Hire national and regional consultants; b) Fund will be provided to facilitate on-the-job training and filed visits to strengthen safeguard oversight functions and forging benefit sharing at local level. c) Priority 3-4 PDEMs will be selected based on the urgency (# of dams) of the basins. Eventual compliance with the NPSH will be critical for ensuring sustainable development of the sector. Priority provinces include Vientiane, Borikhamxay, and Attapeu, but yet to be determined.