INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA834 Public Disclosure Copy Date ISDS Prepared/Updated: 14-May-2012 I. BASIC INFORMATION 1. Basic Project Data Country: Uruguay Project ID: P118064 Project Name: OSE Sustainable and Efficient (P118064) Task Team Leader: Carmen Rosa Yee-Batista Estimated Appraisal Date: 14-May-2012 Estimated Board Date: 05-Jul-2012 Managing Unit: LCSUW Lending Instrument: Specific Investment Loan Sector: General water, sanitation and flood protection sector (100%) Theme: Climate change (50%), Vulnerability assessment and monitoring (25%), Water resource management (25%) Financing (In USD Million) Financing Source Amount Borrower 42.00 International Bank for Reconstruction and Development 42.00 Total 84.00 Environmental Category: B - Partial Assessment Is this a Repeater project? No 2. Project Objectives The Project Development Objective (PDO) is to increase the sustainability of OSE by improving the reliability and resilience of its water supply and sanitation systems, enhancing its efficiency, and strengthening its management capacity 3. Project Description In an effort to ensure its future sustainability, OSE will improve the reliability of its water supply and sanitation systems, use water and energy more Public Disclosure Copy efficiently, strengthen company management, promote forward looking knowledge activities, and incorporate climate variability response measures into its operative strategy. Component 1: Investing in Reliable Water Supply Infrastructure (US$22.20 million). This component will finance the construction, expansion and rehabilitation of water system facilities in order to increase the reliability of the water supply system, which will be defined in terms of the shortages that result from failures of the systems’ physical components. In addition to increasing reliability, these infrastructure improvements will enhance the efficiency of water services and build resilience to future climatic challenges. This component is divided into the following three subcomponents. Subcomponent 1 – Aguas Corrientes Intake Structure & Electrical System Improvements. This subcomponent will finance the construction of a new water intake structure and improvements to the electrical system of the finished water pump station. The objective of the water intake structure is to increase the standby capacity of the system. The installed capacity will be 20,000 m3 per hour. This additional capacity will help OSE perform routine maintenance procedures and shield against unexpected failures and disasters. The subcomponent will also finance activities to improve the efficiency and reliability of 10 finished water pumps at the Aguas Corrientes WTP by replacing 10 motors. Subcomponent 2 – Construction of Two Water Treatment Plants. This subcomponent will finance the replacement of two water treatment plants in Durazno and Treinta y Tres that are located in areas that are prone to flooding and are underperforming. The Durazno WTP will serve a population of about 50,000 and Treinta y Tres will serve a population of about 35,000 people. Both WTPs will be built to meet the cities’ estimated water needs for 2035. For the Durazno WTP, the Project will finance the installation and construction of the (i) raw water intake pumps, (ii) water main from the intake to the plant, (iii) treatment system, and (iv) finished water force main. For the Treinta y Tres WTP, the Project will finance the construction of the water treatment system and the rehabilitation of the administrative building. OSE will produce a detailed design, prepare bidding documents, and supervise the Project. Component 2: Managing Water and Energy More Efficiently (US$37.50 million). This component focuses on optimizing water and energy efficiency to increase OSE’s sustainability. The Project will finance activities to support OSE’s flagship Non-Revenue Water and the Energy Management Programs. Water and energy are brought together under this component because of the synergies between the two sectors. Promoting efficiency in these areas will reduce costs, reduce GHG emissions and prolong the useful life of equipment. Subcomponent 1 – Non-Revenue Water Reduction Program. The aim of this subcomponent is to improve OSE’s flagship non-revenue water reduction program’s capacity to prevent, reduce and control real (physical) and apparent (commercial) water losses. The subcomponent will pursue these goals through supporting the establishment of Districts of Measurement and Control (DMCs) throughout the country, building institutional support for the NRW Program and enhancing the metering capabilities of OSE. The DMCs would coordinate institutional, physical and Page 1 of 7 socio-environmental actions and lead the effort to prevent and reduce non-revenue water. Under this Project, DMCs will be established in Montevideo, Paysandú, Mercedes, Rivera, Salto, and La Piedras-La Paz. The program will strengthen institutional support for non-revenue water loss through, among other activities, establishing standardized procedures for construction of water connections, implementing capacity building activities for staff across OSE, holding annual evaluation workshops and developing a secure budget for the program. This subcomponent will also assist in the replacement of micro and macro meters throughout the country and support a pilot program for telemetry. The Project would support the development of this subcomponent through the financing of consulting services, goods and works, and training. Public Disclosure Copy Subcomponent 2 – Energy Management Program. The aim of the energy management subcomponent is to strengthen OSE’s energy management program through strengthening OSE’s energy management plan, replacing inefficient equipment and improving OSE’s capacity to measure and conserve energy use. The EMP aims to integrate non-revenue water reduction and short-term energy conservation measures into a comprehensive energy strategy that clearly outlines objectives and delegates responsibilities. Energy reduction measures would improve OSE’s operational efficiency, reduce expenditures, and contribute to Uruguay’s climate change mitigation efforts. The Project will replace 250 pumps and associated equipment that is underperforming. The Project will also finance training activities and the acquisition of monitoring equipment and software to promote energy efficient management. This subcomponent will finance consulting services, goods and works, and training to develop and carry-out these activities. Component 3: Preparing for the Future: Management, Planning and Risk (US$11.10 million). This component will finance management, planning and risk assessment activities to improve OSE’s social reach, environmental management and economic efficiency. The advances OSE makes through this component will be captured in the Business Management Efficiency Index that OSE and the Bank Project team jointly formulated. The BMEI will serve as a stepping stone for using more advanced benchmarking and utility scorecardsat OSE. This component is divided into the following three subcomponents. Subcomponent 1 – Corporate Management. The subcomponent will finance the development of a number of cutting edge corporate management programs that OSE has identified as key to enhancing management’s efficiency, efficacy and transparency. Among other activities, the subcomponent will finance the development of an asset management program, a logistics management model, and a knowledge and innovation management model. These activities, which are all part of OSE’s Strategic Plan, will consolidate and build on the corporate management improvements made during the APL2 Project. Subcomponent 2 –Risk Management& Planning. This subcomponent will support OSE’s efforts to develop a long term, strategic plan that thoroughly analyzes and mitigates potential risks and to strengthen OSE’s capacity to manage risk in day-to-day operations. The Project will help OSE consolidate its strategic vision through financing consulting services to coordinate upper management’s vision with the sectors’ lines of action. To help integrate risk analysis into strategic planning, the Project will finance a climate vulnerability risk assessment. To systemize risk management at OSE, the Project will finance the development of contingency plans for droughts and floods and water safety plans to mitigate risks relating to water quality. These activities will help OSE establish protocol for identifying risks, resolving those risks that come to fruition, and planning for a sustainable future. Subcomponent 3 – Environmental Sustainability. This subcomponent would enhance OSE’s ability to operate in an environmentally sustainable manner by strengthening the environmental and sanitation units at OSE and supporting OSE’s participation in water source protection activities. The Project will strengthen the Environmental Management Unit at OSE through building the unit’s capacity to ensure that OSE is following environmental safeguards during construction and operations. A key environmental mitigation measure that this Project would support is the development of a sludge master plan. The Project will also build the capacity of the Sanitation Unit through, among other activities, developing a comprehensive strategic wastewater plan and strengthening operational capacity. In addition, the Project will support OSE’s participation in Public Disclosure Copy regional watershed management programs. OSE, in collaboration with the University of the Republic and MVOTMA, will implement a water quality and quantity monitoring program and a hydraulic management plan for Laguna del Sauce as part of the watershed’s integrated management plan. Component 4: Knowledge Sharing and Project Management Activities (US$2.00 million). This component would finance knowledge sharing activities, such as documenting best practices, participating in conferences, and conducting seminar/conferences on water, energy and climate related topics. Particular emphasis will be placed on South-South knowledge exchange. This component will also provide funding for project management, supervision and engineering support, and financial and technical audits. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) Component 1 includes improvements to the Aguas Corrientes WTP, which is located 56 km from Montevideo in Aguas Corrientes in the Department of Canelones. The Aguas Corrientes WTP is located in the Santa Lucía River Basin. The Government of Uruguay is evaluating a proposal to establish Santa Lucía’s floodplain area and buffer zone as a protected management area, under the category “sustainable use of natural resources.� The new water intake will be situated on the river bank, 50 meters from the existing intake system and 350 meters from the treatment facilities. The intake and pipeline construction will only disturb a small portion of the riparian area (300 m2), and the pump station and force main will be constructed in disturbed areas adjacent to the plant. The electrical upgrades will take place in existing facilities within the plant site. Under Component 1, two water treatment plants in the cities of Durazno and Treinta y Tres that have been affected by floods and have surpassed their useful lives will be replaced. In the case of Durazno, the plant will be reconstructed at a higher elevation on a new site located within 500 meters of the existing intake structure. The intake structure at Rio Yi will not be replaced, but it will be improved by replacing aged pumps. The new plant site was recently acquired by OSE. The Durazno WTP and associated water mains will be built in a disturbed suburban area of the city where natural habitats are not found. The Treinta y Tres WTP will be located at a higher elevation on the existing plant site owned by OSE, and the intake structure at the Olimar River and its associated equipment will not be replaced. Under the non-revenue water reduction program in Component 2, Districts of Measurement and Control (DMCs) will be established in Montevideo, Las Piedras-La Paz, Mercedes, Paysandú, Rivera and Salto, and meters will be replaced throughout the country. The other components are nationwide, non-structural activities involving consulting services and the purchase of equipment and software. 5. Environmental and Social Safeguards Specialists Ricardo Schusterman (LCSSO) Elba Lydia Gaggero (LCSEN) Page 2 of 7 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/BP 4.01 Yes Explanation included in Section II. Natural Habitats OP/BP 4.04 Yes Explanation included in Section II. Forests OP/BP 4.36 No The project will not support management of forest. Public Disclosure Copy Pest Management OP 4.09 No This safeguard does not apply as the project does not require the purchase, application or storage of pesticides and will not lead to an increased use of pesticides. Physical Cultural Resources OP/BP 4.11 Yes Explanation included in Section II. Indigenous Peoples OP/BP 4.10 No This safeguard does not apply as indigenous peoples, as defined by the four required characteristics in OP4.10, are not present. Involuntary Resettlement OP/BP 4.12 Yes Explanation included in Section II. Safety of Dams OP/BP 4.37 No This safeguard does not apply as the trigger characteristics are not present in the Project. Projects on International Waterways OP/BP Yes Explanation included in Section II. 7.50 Projects in Disputed Areas OP/BP 7.60 No This safeguard does not apply. II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: Environmental Assessment (OP/BP 4.01). The physical interventions foreseen in the Project are included in Components 1 and 2 and refer to (i) the construction of a new water intake structure at the Aguas Corrientes WTP; (ii) electrical system improvements by replacing water pump motors and upgrading electrical switchgears and transformers in the same plant; (iii) the replacement of two medium-size water treatment plants in the cities of Durazno and Treinta y Tres; and (iv) the replacement of water distribution pipes, meters, and valves under the non- revenue water program. Based on the nature of the works, this Project is classified as Category B and requires a partial environmental assessment (EA) in accordance with the World Bank’s Environmental and Social Safeguards Policies. The Project’s environmental impacts will primarily be positive. They include reducing water losses and energy consumption and introducing green elements, such as asset management, water source protection, climate risk assessment, and environmental and wastewater management into OSE’s strategic planning and operational management. In particular, the Project will support training and assistance to help develop and standardize tools and procedures on environmental management practices related to the provision of WSS services. The Project will generate significant benefits in the provision of water to the 1.87 million residents of Montevideo, Durazno and Treinta y Tres by increasing reliability and efficiency of service, while maintaining the sustainability and quality of the water sources. Public Disclosure Copy The proposed works do not involve new water sources. The new intake construction at the Aguas Corrientes WTP does not aim to increase the production of the plant but to add a 20,000 m3/h backup intake capacity to gain maintenance and operational flexibility. Specific works include trench excavations, construction of an 80 meter concrete channel, and installation of pipes (approx. 1000 m) and pumps. Electrical system investments aim to improve energy efficiency by replacing and upgrading equipment. There will not be an increase of water withdrawal or modification of existing processes. Therefore, the planned investments would not alter the conditions of the Santa Lucía River. The Durazno WTP (with a 700 m3/h design capacity) and Treinta y Tres WTP (500 m3/h design capacity) will be built at higher elevations in areas that are not prone to floods. The Durazno WTP will be built on a new plot of land, and the Treinta y Tres WTP will be built on another area within the boundaries of the existing plant site. In both cases the technological upgrades involve sludge treatment and disposal, which at present are discharged to the Yí River and the Olimar River. The design capacities of the three water plants are based on the estimated maximum daily flow required to meet the projected 2035 water demand. Existing water withdrawal authorizations are maintained since the water source locations do not change, and they already take into account future flows. Water resources regulation gives priority to drinking water use and includes provisions to restrict potential adverse impacts associated with water withdrawal. No significant, irreversible adverse impacts are anticipated for the Project; however, there are some potential minor adverse impacts in the construction and operation phases of the Project. Potential impacts from the construction of the infrastructure works include construction staging, dust emissions, noise, debris and other solid waste generation, traffic, public and workers safety and other standard impacts of construction. During the operation phase the main environmental risks are related to water withdrawal, solid waste and wastewater generation, and handling of chlorine gas. The main impacts from equipment and pipe replacement are associated with earthworks and solid waste generation. All of the Project’s adverse impacts are expected to be manageable; known technological and management solutions have been included in the Environmental and Social Management Plan (ESMP) of the Project. Almost all of the works to be financed under the Project will be conducted on disturbed land where sensitive natural habitats and cultural resources have not been found. However, the Natural Habitats (OP 4.04) and the Physical Cultural Resources (OP 4.11) are triggered for the reasons explained below. The other components involve institutional development, training, and capacity building activities, such as the development of a strategic plan focusing on risk management, water source monitoring and evaluation, a comprehensive wastewater management plan, and a sludge master plan. The studies will evaluate the benefits, potential adverse environmental impacts, and mitigation measures when evaluating and recommending actions. Page 3 of 7 Natural Habitats (OP 4.04). The Government of Uruguay is evaluating the possibility of establishing the Santa Lucía floodplain and buffer zone, an area of approximately 160 km2, as a protected area under the “sustainable use of natural resources� category to ensure the protection of a wetland system located in the lower basin close to the river confluence. The Project area is located within the proposed protected area; however, no sensitive ecosystems have been identified. The Project area is located in the middle basin, about 50 km from the wetland system. The environmental assessment indicates that natural habitats will only be affected in an area of approximately 300 m2 located in the Santa Lucía River bank, within the boundaries of the plant site, where the new intake pipe and channel of Aguas Corrientes WTP will be installed. The pump station and force main will be constructed in disturbed areas of the plant site. A hydrological study was conducted to select the intake Public Disclosure Copy location to ensure that appropriate environmental flows are maintained. Some vegetation loss would result and would include the removal of trees and shrubs for the installation of the new intake structure. During final stages of construction activities, the stream bank, soils and vegetation disturbed by the Project would be re-graded and restored. Disturbed riparian areas would be seeded with native riparian vegetation. During operation, the intake structure will deliver raw water to the Aguas Corrientes WTP for treatment as required, since its purpose is to add redundancy to the existing system to improve maintenance capabilities and increase operational flexibility. The Project will not increase the plant water withdrawal. The proposed protection category does not imply incompatibilities with the WTP operation, which has been operating in the site for almost 150 years (the first intake has been in operation since 1871). Furthermore, it would leverage OSE´s own objective of protecting its water sources. Non-structural activities, including strategic planning, sludge management plan, water safety plans, and water source protection will include natural habitats considerations as the two main water sources, the Santa Lucía River Basin and Laguna del Sauce River Basin are considered protected areas. Physical Cultural Resources (OP 4.11). The Bank’s experience in Uruguay with previous projects has led the team to conclude that excavation and building processes should not uncover any physical cultural resources (PCR). During Project preparation, it was found that the Santa Lucía lower basin had been identified as an important archaeological site. This area is located about 50 km from the Project and from previous works in the area, it is not expected that PCRs will be found in the Aguas Corrientes WTP site. Nevertheless, since construction and excavation activities will take place, OSE will implement procedures for screening known and unknown cultural property in the project area and incorporate “chance find� procedures in the event that culturally significant resources are discovered during implementation. Procedures for the identification and protection of physical cultural resources have been included in the ESMP. International Waters (OP/BP 7.50). The Project triggered Projects on International Waterways (OP 7.5) since the activities described above involve the use of rivers that are tributaries to international waterways as set out in paragraph 1, b of OP 7.50. The relationship between the Project plants and rivers are included below. (i) The Aguas Corrientes WTP extracts water from the Santa Lucia River, which then flows into the Rio de la Plata (an international waterways between Uruguay and Argentina). (ii) Durazno WTP extracts water from the Yi River. The Yi River flows into the Negro River. The Negro River flows into the Uruguay River, which is an international waterways between Uruguay and Argentina. (iii) Treinta y Tres WTP extracts water from the Olimar River. The Olimar River flows into the Cebollati River. The Cebollati River flows into the Merin Lagoon, which is an international water body between Uruguay and Brazil. As these works represent expansions of existing systems that will not adversely change the quality or quantity of the water flows or be Public Disclosure Copy adversely affected by the other riparians’ possible water use, the proposed Project falls within the exception set forth in paragraph 7(a) of OP 7.50. The works to be financed will not increase water withdrawal or alter the ongoing scheme. As mentioned above, in the case of Aguas Corrientes, the intake structure will not increase the amount of extracted water since the structure will be added to increase standby capacity. In the case of the Durazno and Treinta y Tres WTPs, both plants are being replaced and the existing intake structures and withdrawal permits will be maintaine d. According to national regulations, the works under the Project do not require environmental authorization since they are drinking water projects and withdrawal permits are maintained because estimated withdrawals will not increase. In addition, the Rio Uruguay, the River Plate and the Merin Lagoon treaties do not require notification for the works and conditions under this Project. Social Aspects and Resettlement Policy. This Project is not likely to have any adverse social impacts. Rather, the Project would bestow positive social impacts on Uruguay by increasing the reliability and efficiency of the provision of water, as well as improving the capacity for effective management. The key social issue is ensuring regular consultations with key stakeholders and periodic communication of Project activities and results. To that end, the Project would develop and implement a communication strategy within the company and include training and consultation procedures for Components 1, 2 and 3. The Project EMP includes a communication plan to be implemented during the construction activities that would draw on existing procedures that OSE has in place, such as the customer service call center and complaint hotlines. Involuntary Resettlement (OP 4.12). The Bank has reviewed the main civil works that OSE included in the Project, and the assessment indicates that there would not be involuntary resettlement, land acquisition or easements. However, the Bank team and OSE triggered OP 4.12 in the event that easements and land acquisition are identified during implementation. Thus, OSE in collaboration with the Bank prepared a Resettlement Policy Framework (RPF) to guide the resettlement process in the case that land acquisition becomes necessary. OSEs and Uruguay’s country rules are consistent with OP 4.12’s mitigation and compensation measures for unavoidable physical or economic displacement, making it highly probable that land acquisition will entail no conflicts with Bank policies For the construction of the Durazno WTP, OSE expropriated a piece of land. The expropriation process was initiated in August 2009, before the Project Identification Mission, and concluded in December 2011.The expropriated land had no buildings, dwellers, economic activity, nor improvements of any type. The process did not reach judicial status because OSE and the landowners reached an agreement. OSE accepted the landowners’ request to increase the estimated land value. OSE paid almost three times the amount estimated by Dirección Nacional de Catastro. OSE followed national rules, which are consistent with OP 4.12’s mitigation and compensation measures for unavoidable physical or economic displacement. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: Page 4 of 7 No potential indirect and/or long term adverse impacts due to anticipated future activities in the project area have been identified. Potential long term impacts of this investment Project are highly positive: improved efficiency, reliability and resilience of the water systems will ensure sustainable sources of drinking water in Uruguay. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. A hydrological study of Aguas Corrientes was conducted to select the intake location to ensure that appropriate environmental flows are maintained. OSE, through engineering studies and planning, sought to eliminate the need to acquire land except in the case of Durazno. Public Disclosure Copy 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. Addressing safeguard policy issues. OSE has undertaken an Environmental Assessment in accordance with the environmental policies of the Bank for Category B projects and the national environmental regulations. The EA is organized in three main sections: (i) Description of the Project, environmental characteristics of the study area, and the legal and institutional framework to ensure that the Project is compliance with national laws. The section also includes a description of the Bank safeguard policies, with emphasis on those that are triggered. (ii) An assessment of all potential impacts associated with the planned investments and identification of any mitigation measures during construction and operation. Particular emphasis on analysis of potential impacts on any known cultural resources, natural habitats, and involuntary resettlement. (iii) A comprehensive Environmental and Social Management Plan (ESMP) for the Project that covers three thematic programs: (i) Project specific ESMP that includes mitigation measures for specific investments as needed, implementation responsibilities during the construction and operation phases, monitoring arrangements, and an implementation schedule with an adequate budget; (ii) environmental management consolidation, which includes capacity building and strengthening of the overall environmental management procedures and instruments in OSE; and (iii) a sludge management that includes short and long-term solutions for the treatment, disposal and reuse of sludge generated from water and wastewater treatment plants. Programs 2 and 3 of the EMP are included under Component 3 , of the Project. Under this subcomponent, the Project would support the consolidation of environmental management at OSE through the following activities: (a) strengthening the environmental team through restructuring and assigning specific roles and responsibilities to each team member, increasing the number of technical experts in the team, and holding capacity building workshops; (b) ensuring that legal and regulatory requirements are applied and followed throughout OSE’s operations; (c) implementing and streamlining procedures, guidelines and manuals for the design, construction and operation phases; and (d) creating a monitoring and information management system to ensure that environmental guidelines are being carried out throughout OSE. In addition, the Project will support the development of a sludge master plan for the entire company that emphasizes short term and long-term measures that will contribute to the efficiency and environmental sustainability of the company. The Project would finance the following activities: (a) the compilation of basic information on sludge generated by water and wastewater treatment plants in Uruguay; (b) pilot studies to test different reuse methods and technologies; and (c) the development of a strategic sludge master plan. Environmental Construction Manual. The EA involved the revision and improvement of the OSE’s Construction Environmental Manual (Manual Ambiental de Obras). The manual, which was developed for the APL1 as a guide for appropriate environmental practices, aims to ensure that Public Disclosure Copy the Project’s works do not result in environmental degradation. The implementation of the manual is responsibility of the construction companies, and the UGA is responsible for overseeing the works to make sure the guidelines are being properly applied. The manual includes: (i) the Project's social and environmental management system; (ii) environmental actions and rules related to the execution and management of civil works; (iii) environmental actions and rules related to the construction activities; and (iv) a plan for the control and recovery of disposal or excavation areas. The Manual also provides environmental specifications for contractors to prepare project specific construction environmental management plans. The plans must: (i) designate a professional to lead the environmental management of the works; (ii) comply with regulations and the guidelines of the Environmental Construction Manual; and (iii) be presented and approved before work can begin. Resettlement Policy Framework. OSE in collaboration with the Bank has prepared a Resettlement Policy Framework (RPF) to guide the resettlement process in the case that resettlement becomes necessary. OSEs and Uruguay’s country rules are consistent with OP 4.12’s mitigation and compensation measures for unavoidable physical or economic displacement, making it highly probable that land acquisition will not entail conflict with Bank policies. The RPF is constructed to address situations of (i) additional land acquisition and easements for water works construction should it be needed and (ii) physical and/or economic displacement resulting from the removal of squatters or encroachers from the impact zones of the plants or any of the other physical infrastructures to be built under Project. The RPF is attached to the ESMP. Communication Plan. The Project specific ESMP includes an external communication plan to be implemented by OSE’s social and communication units during the implementation of the water works. This plan also includes grievance handling mechanisms to be implemented, by both OSE and contractors, during the execution of works. OSE will also develop an internal communication strategy under the Component 4 of the Project to coordinate and document the various studies, workshops, and other knowledge sharing activities. In addition, under Component 3, the Project will support the development of corporate communications within OSE to facilitate internal communication and to improve the company’s institutional image with customers. The Project would finance consulting services to assist in the development of the group through drafting: (i) communication policies; (ii) procedures and guidelines to implement relevant policies; (iii) an organizational structure for corporate communications; and (iv) action plans for internal and external communication strategies. Assessment of Borrower Capacity. OSE has a long history of working with the World Bank. As with the APL1 and the APL2 Projects, the proposed Project will be implemented by OSE through the Gerencia de Programas con Financiamiento Externo (PFE), OSE’s unit in charge of managing projects financed by Multilateral Development Banks. The social and environmental units within OSE will work in close coordination with the PFE and other technical departments to manage the social and environmental safeguards. These two units were created during the implementation of APL1 Project, and they have been further strengthened through support and close monitoring of OSE during the implementation of APL2. During Project implementation, the UGA will be responsible for: (i) supervising the implementation of the EMP; (ii) coordinating with other Page 5 of 7 departments about their environmental responsibilities in the Plan; (iii) supervising contractors’ implementation of environmental guidelines; and (iv) ensuring compliance with national environmental regulations. Although a moderate risk was identified in relation to the capacity of UGA to manage the increasing number of works OSE is undertaking, the Bank team has been working hand in hand with OSE during preparation to mitigate this risk. Risk mitigation measures include: (i) strengthening the UGA through restructuring and assigning specific roles to each team member, (ii) hiring more technical experts to join the team and (iii) establishing clear safeguards implementation and supervision arrangements. The Project will also finance training and capacity building workshops and provide environmental and social expert assistance to mitigate this risk. The mitigation measures are clearly stated in the ESMP. Public Disclosure Copy 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Key stakeholders include local authorities (Aguas Corrientes, Durazno y Treinta y Tres), Project-affected groups, government representatives (MVOTMA, DINAMA, DINAGUA), universities, and local NGOs. The EA terms of reference were disclosed on the OSE website from September 1-15, 2011. The draft EA was disclosed on the OSE Website on March 27, 2012 and through the Bank’s Infoshop on April 2, 2012. OSE conducted a public consultation on April 16, 2012 to give stakeholders the opportunity to comment on the EA. The meeting was announced in national newspapers and to stakeholders, including local and national authorities, NGOs, and universities. A representative from the local government of Aguas Corrientes expressed his support for the Project, while the President of the Regulator Agency (URSEA) highlighted the importance of energy reductions efforts since OSE is the major consumer in Uruguay. Further consultation meetings will be announced by the PFE at each site that civil works will take place. The final EA incorporated the results of the consultations and the participants’ views. The final EA was disclosed in the OSE Website and in the Infoshop on May 11, 2012. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other Date of receipt by the Bank 25-Apr-2012 Date of "in-country" disclosure 11-May-2012 Date of submission to InfoShop 11-May-2012 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process Date of receipt by the Bank 25-Apr-2012 Date of "in-country" disclosure 11-May-2012 Date of submission to InfoShop 11-May-2012 If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: Public Disclosure Copy C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP 4.01 - Environment Assessment Are the cost and the accountabilities for the EMP incorporated in the credit/loan? Yes [ ] No [ ] NA [ ] OP/BP 4.04 - Natural Habitats If the project would result in significant conversion or degradation of other (non-critical) natural Yes [ ] No [ ] NA [ ] habitats, does the project include mitigation measures acceptable to the Bank? OP/BP 4.11 - Physical Cultural Resources Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on Yes [ ] No [ ] NA [ ] cultural property? OP/BP 4.12 - Involuntary Resettlement If yes, then did the Regional unit responsible for safeguards or Sector Manager review the Yes [ ] No [ ] NA [ ] plan? OP 7.50 - Projects on International Waterways Has the RVP approved such an exception? Yes [ ] No [ ] NA [ ] The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Yes [ ] No [ ] NA [ ] Have relevant documents been disclosed in-country in a public place in a form and language Yes [ ] No [ ] NA [ ] that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for Yes [ ] No [ ] NA [ ] the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Yes [ ] No [ ] NA [ ] Does the Monitoring and Evaluation system of the project include the monitoring of safeguard Yes [ ] No [ ] NA [ ] impacts and measures related to safeguard policies? Page 6 of 7 Have satisfactory implementation arrangements been agreed with the borrower and the same Yes [ ] No [ ] NA [ ] been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Carmen Rosa Yee-Batista Public Disclosure Copy Approved By: Sector Manager: Name Niels B. Holm-Nielsen (SM) Date: 15-May-2012 Public Disclosure Copy Page 7 of 7