The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Public Disclosure Date Prepared/Updated: 10/18/2023 | Report No: ESRSC03866 Feb 07, 2025 Page 1 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) I. BASIC INFORMATION A. Basic Operation Data Operation ID Product Operation Acronym Approval Fiscal Year P181214 Investment Project Financing (IPF) REMIT - Central Asia 2025 Operation Name Regional Electricity Market Interconnectivity and Trade - Central Asia Country/Region Code Beneficiary country/countries Region Practice Area (Lead) (borrower, recipient) Central Asia Kazakhstan, Kyrgyz Republic, EUROPE AND CENTRAL Energy & Extractives Tajikistan, Uzbekistan ASIA Borrower(s) Implementing Agency(ies) Estimated Appraisal Date Estimated Board Date Kyrgyz Republic, Ministry of Energy, Ministry of Energy, 04-Mar-2025 29-May-2025 Republic of Ministry of Energy, Ministry of Energy Kazakhstan, Republic and Water of Tajikistan, Republic of Public Disclosure Uzbekistan Estimated Concept Total Project Cost Review Date 28-Aug-2023 0.00 Proposed Development Objective The development objective of the project is to pilot electricity trade, and to strengthen regional transmission capacity. B. Is the operation 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 Activities The project will help facilitate enhanced electricity trade and enable clean energy transition in Central Asia. The project will support activities in these areas as described below. Component 1: Piloting regional market trading; Component 2: Reinforcing interconnections and system resilience; and Component 3: Strengthening enabling environment and institutional capacity. Feb 07, 2025 Page 2 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) D. Environmental and Social Overview D.1 Overview of Environmental and Social Project Settings The locations of the proposed interventions for establishing a robust regional electric grid will be in 4 Central Asian countries:Kyrgyz Republic, Kazakhstan, Tajikistan & Uzbekistan. The energy sector has been a key driver that fueled economic growth in Central Asia for years following independence from the Soviet Union and will continue to play a key role as the region seeks to transition towards cleaner, greener and inclusive economic growth.Energy infrastructure is ageing with high energy losses. Participating countries inherited a legacy of aging power grid equipment and generating capacities from the Soviet era that have long past their theoretical service life (the share of facilities aged 30 years or more ranges from 44% to 75%). Reported total electricity losses were high at about 15–20% of total net generation in Central Asian countries, further resulting in increasing number of frequent outages at both national and regional levels. Across the four countries, the terrain is dominated by high mountainous regions and steppe plains with scattered human settlements, except fertile river valleys which are densely populated. The proposed project aims to finance critical infrastructure investments needed to improve the technical and operational performance of the regional grid, while providing a proof-of-concept on how a simplified short-term regional market platform would look like for Central Asia. Most of the interventions at this stage are targeted for augmentation/modernization/digitization of existing transmission network including domestic network for which feasibility studies are underway, therefore, precise locations and configuration of facilities to be supported under the project are not currently known. Hence, E&S impact Public Disclosure assessment is not possible at this initial stage. Currently, it is envisaged that most improvements will be close to existing similar infrastructure, and green-field sites are likely to be few. D.2 Overview of Borrower’s Institutional Capacity for Managing Environmental and Social Risks and Impacts The project implementation arrangements will focus on strengthening existing national/regional institutions to better support ongoing or planned investment activities. The proposed project will be implemented by respective Ministries of Energy (main coordinating body & implement Components 1 and 3) with technical support from transmission companies. The implementation agencies for Comp. 2 include Ministry of Energy in each country with support from Kazakhstan Electricity Grid Operating Company (KEGOC), National Power Grid of Uzbekistan (NEGU), National Electricity Grid of Kyrgyzstan (NEGK), & Barqi Tojik Open Joint Stock Holding Company (BT) of Tajikistan. The implementation agency for Comp. 3 will involve all implementation agencies for comp 1. These organizations will be assessed for their suitability for project implementation. The assessments will build on information already available through ongoing engagements in CA countries. NEGK & BT have prior experience of working on a major transmission project (CASA-1000) assisted by the Bank & other developmental institutions, currently rated as moderately satisfactory in Tajikistan & Moderately Unsatisfactory in Kyrgyz Republic. Separate PMUs will be responsible for managing activities in each country, with responsibilities for local & any transboundary impacts of project activities, which occur in their respective territories. Any attendant staffing and capacity building needs will be assessed in project preparation. The lack of clear institutional arrangements has been hampering regional power trade in Central Asia. In addition, both national & regional entities including national TSOs, utilities and CDC Energia, have limited experience with short-term Feb 07, 2025 Page 3 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) electricity markets. The project will conduct comprehensive institutional assessment for optimal institutional framework facilitating the implementation of the pilot market & capacity building on E & S issues will be provided to national & regional entities. II. SCREENING OF POTENTIAL ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS A. Environmental and Social Risk Classification (ESRC) Substantial A.1 Environmental Risk Rating Substantial The environmental risk rating of the project, which is Phase 1 of the MPA, is assessed as Substantial based on the typology of activities proposed for support under the project and the current environmental baseline in the participating countries, as well as variable level of capacity available in the countries to manage environmental risks and impacts, taking a precautionary approach. The key risks and impacts that would need to be assessed and managed include those pertaining to pollution and resource use, as well as community exposure to hazardous substances. In some cases, there could also be impacts on biodiversity resources if sites need to be selected in relatively pristine areas, given the low overall human population density. In areas close to communities, impacts related to health and risk of accidents from use of chemicals and/or fire also need consideration. During project preparation, further assessment of risks and impacts will be undertaken and classification will be confirmed at appraisal stage. Relevant instruments to support assessment and management of such environmental risks and Public Disclosure impacts will be prepared, including guidance to undertake site specific assessments and management plans to inform the final decisions regarding selection and implementation of selected activities. Substantial A.2 Social Risk Rating The social risk is assessed as Substantial. As the interventions proposed in Phase-1 involve change of earth wire with fibre cables, modernization and upgrade of 2 existing substations and 2 220 kV lines that may entail social risks associated with such activities. Component 3 will also include a project preparation facility for regional projects for subsequent phases which may elevate the risk level further. These issues shall have to be properly assessed during the feasibility and detailed E&S assessment and preparation of ESIA and RAP, if needed. Some of other social risks that need further assessment include lack or limited stakeholder and citizen engagement in the Project which may be required due to economic and physical displacement, worker retrenchment, and impact on livelihood related activities, if any; difficulties in establishment of an effective grievance mechanism for handling a potentially large volume of complaints; labor management challenges, including labor influx, working terms and conditions, OHS, and the establishment of safe and effective work camps; and community health and safety issues. The more detailed scope of anticipated risks and associated impacts will only be known once the ESIA studies have been completed and will be further updated based on detailed design at the project implementation stage. B. Relevance of Standards and Policies at Concept Stage B.1 Relevance of Environmental and Social Standards Feb 07, 2025 Page 4 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) ESS1 - Assessment and Management of Environmental and Social Risks and Impacts Relevant As proposed project will follow framework approach, ESS 1, 2, 3, 4,5, 6, 8, &10 are relevant & will be applied to identify mitigation measures required. Since project involves 4 countries, trans-boundary issues are also relevant & may require thorough assessment for their proper & long-lasting management. Therefore, to align project component with the requirements of the WB ESF and other international standards, including additional social & environmental studies & assessments that may be required, an Environmental and Social Management Framework (ESMF) shall be developed to guide these assessment & studies including Terms of Reference for detailed assessment and development of site-specific instruments to manage environmental and social risks. The ESMF to be prepared by appraisal, will draw on the experience of other projects of Bank in these countries, WBG EHS guidelines, and relevant GIIP. It will include various formats, checklists to confirm the need for site-specific ESIA/ESMPs. ESS10 - Stakeholder Engagement and Information Disclosure Relevant The Project recognizes need for effective &inclusive engagement with all relevant beneficiaries & stakeholders particularly in all the 4 countries. Meaningful consultations & disclosure of appropriate information assume huge significance to ensure that stakeholders are included in project preparation & implementation. It is important to engage all Project stakeholders and beneficiaries during the preparation and implementation of the Project, in particular if new construction of any transmission line is involved to inform them at an early stage and receive their feedback on the proposed route and project design as well as the environmental and social mitigation measures. The Borrower will prepare and disclose a Stakeholder Engagement Plan (SEP) before negotiation which include stakeholder identification including vulnerable group & analysis; effective communication tool for consultations and Public Disclosure disclosure; defining roles and responsibilities of different actors in implementing SEP & GRM. ESS2 - Labor and Working Conditions Relevant The project will engage consultants as direct workers who will carry out activities under the 4 components. Labor Management Procedures (LMP) to be prepared and the contract for these consultants will stipulate safe working conditions and procedures (including OHS and measures to address SEA/SH risks), workforce protection measures and a labor grievance mechanism. The actual number of workers cannot be determined at this stage and will be further estimated as part of the FS and design studies. The project will support the preparation of LMP as well as an Occupational Health and Safety Plan to meet the requirements of ESS 2 and the World Bank Group Environmental Health and Safety (EHS) Guidelines, which cover Occupational Health and Safety. The LMP will also include guidance on addressing labor influx, establishing safe and effective work camps and preparing measures to address GBV/SEA/SH risks. LMP will contain a workers grievance mechanism that will be established under the project. ESS3 - Resource Efficiency and Pollution Prevention and Management Relevant This standard is relevant as the construction and operation of facilities proposed for support under the project have the potential to pollute air, water, and soil. In particular, use of oils and lubricants, handling asbestos containing material (ACM),as well as SF6 bearing devices like circuit breakers and capacitators for the improved working of system, can release harmful chemicals that need to be properly managed. Pollution could also arise from facilities and machinery in construction camps and vehicles used during the transport of material and labor to and from work- sites. The project activities also have the potential to improve resource efficiency by preferentially using more benign Feb 07, 2025 Page 5 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) / less energy intensive material and technologies. The ESMF will provide guidance regarding this in line with ESS3 stipulations and relevant WBG EHS guidelines for Electric Power Transmission and Distribution. ESS4 - Community Health and Safety Relevant This standard is relevant to the Project. Potential risks and impacts associated with community health and safety during the implementation of the project activities could be significant. Interactions between project workers and the communities will be limited to stakeholder consultations, census/surveys and delivery of technical studies. This will be restricted to survey parties creating risks to isolated/scattered communities during site-work for preparation of the various studies. For the construction the different components of project , the main risks to communities health and safety include the aspects of electric safety, traffic safety and labor influx during construction. ESIA will undertake an assessment of work-related health risks; works & road safety; excessive noise and dust levels, site safety awareness and access restrictions; labor influx (if any), and SEA/SH. ESS5 - Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant This standard is relevant. Project includes indirect but likely impacts caused by the use of outputs of the Project, that may involve temporary and/ or permanent economic and/or physical displacement and/or land-use restrictions. The main ESS 5 risks are (i) land acquisition & involuntary resettlement required due to use of outputs of the project (ii) economic and physical displacement, & need for restoration of economic activities, if any; (iii) impacts on livelihoods due to damage to crop and trees and restriction imposed on land use in RoW of TL; (iv) social exclusion risk, the interests of vulnerable and disadvantage groups will need to be considered in the Project design to ensure that they Public Disclosure have equal access to project benefits and are not disproportionately negatively impacted by the Project. To address such important issues a Resettlement Policy Framework (RPF) if required, acceptable to all 4 countries shall also be developed before loan effectiveness. ESS6 - Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources The standard is considered relevant to the project as the final footprint of some investments in transmission and distribution infrastructure has the potential of impacting areas with vegetation and other habitat like water courses that could be harboring important biodiversity assets with impacts like reduced availability of habitat and collision with project facilities, especially for new (re-) alignments of transmission lines and HVDC connector stations. The ESMF will provide guidance to assess and manage issues related to biodiversity, in context of typical activities supported under the project. As details for such facilities get finalized, wherever needed, relevant instruments will be prepared, with specific plans to meet requirements of ESS6 and these would inform the final design as well implementation plans. ESS7 - Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities ESS7 is not relevant. There is no social group in these countries that is considered as Indigenous Peoples. ESS8 - Cultural Heritage Relevant Feb 07, 2025 Page 6 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) This standard is relevant to the project. While the current locations and alignments are not known, experience of working in many of the participating countries indicates that these could encounter and potentially impact important cultural heritage assets. As the project involves excavations, chance-finds, which have been recorded in projects already under implementation in these countries, may also be encountered. While at this stage, risks on intangible cultural heritage have not been identified, during project preparation, relevant guidance in line with ESS 8 requirements will be prepared and adopted by the participating countries to guide assessment and implementation of activities supported under the project. ESS9 - Financial Intermediaries Not Currently Relevant No FIs are envisaged to be involved in this project. B.2 Legal Operational Policies that Apply OP 7.50 Operations on International Waterways No OP 7.60 Operations in Disputed Areas No B.3 Other Salient Features Use of Borrower Framework No Public Disclosure Use of Common Approach No C. Overview of Required Environmental and Social Risk Management Activities C.1 What Borrower environmental and social analyses, instruments, plans and/or frameworks are planned or required by Appraisal? Development/Preparation of project Environmental and Social Management Framework (ESMF) its concurrence by Bank, adoption by implementing agency/ies and subsequent disclosure; Terms of Reference for Environmental and Social Impact Assessment and development of Environmental and Social Management Plan for project component; Development/preparation of Resettlement Policy Framework and its disclosure before appraisal; Development of the Stakeholder Engagement Plan for this Project, its disclosure, and consultation with stakeholders; Development of Labor Management Procedures for this Project, its disclosure, and consultation with stakeholders Preparation of site-specific ESIAs, prior to launch of civil works and disclosure after Bank approval; Feb 07, 2025 Page 7 of 8 The World Bank Regional Electricity Market Interconnectivity And Trade - Central Asia (P181214) Preparation of Environmental and Social Commitment Plan for this Project, its disclosure, and consultation with stakeholders. III. CONTACT POINT World Bank Task Team Leader: Manuel Berlengiero Title: Lead Energy Specialist Email: mberlengiero@worldbank.org TTL Contact: Maksudjon Safarov Job Title: Senior Energy Specialist Email: msafarov@worldbank.org Public Disclosure IV. 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 V. APPROVAL Task Team Leader(s): Manuel Berlengiero, Maksudjon Safarov ADM Environmental Specialist: Gaurav Dilipkumar Joshi ADM Social Specialist: Harjot Kaur Feb 07, 2025 Page 8 of 8