90002 International Bank for Reconstruction and Development International Development Association INSP/89109-IN MANAGEMENT REPORT AND RECOMMENDATION IN RESPONSE TO THE INSPECTION PANEL INVESTIGATION REPORT INDIA VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT (LOAN NO. 8078-IN) August 13, 2014 MANAGEMENT REPORT AND RECOMMENDATION IN RESPONSE TO THE INSPECTION PANEL INVESTIGATION REPORT OF THE INDIA VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT (LOAN NO. 8078-IN) Pursuant to paragraph 23 of the Resolution Establishing the Inspection Panel (IBRD Resolution 93-10 and IDA Resolution 93-6), attached for consideration by Executive Directors is Management’s Report and Recommendation in response to the findings set out in the Investigation Report No. 89109-IN dated July 1, 2014, of the Inspection Panel on the captioned Project (Vishnugad Pipalkoti Hydro Electric Project, Loan No. 8078-IN). MANAGEMENT REPORT AND RECOMMENDATION IN RESPONSE TO THE INSPECTION PANEL INVESTIGATION REPORT NO. 89109-IN INDIA VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT (LOAN NO. 8078-IN) CONTENTS Abbreviations and Acronyms ............................................................................................ iv  Executive Summary ........................................................................................................... vi  I. Introduction ............................................................................................................. 1  II. Project Background................................................................................................. 1  III. Summary of Panel Findings .................................................................................... 5  IV. Response to Findings by the Panel ......................................................................... 7  V. Management’s Actions in Response to the Findings ............................................ 15  VI. Conclusion ............................................................................................................ 15  Annexes: Annex 1. Findings, Comments and Actions iii India ABBREVIATIONS AND ACRONYMS BP Bank Procedures CAT Catchment Area Treatment CEA Central Electricity Authority CSR Corporate Social Responsibility Cumec Cubic Meter per Second EA Environmental Assessment EMP Environmental Management Plan GHG Greenhouse Gas GOI Government of India GWh Gigawatt Hour IBRD International Bank for Reconstruction and Development IDA International Development Association LADF Local Area Development Funds MAW Minimum Agricultural Wage MoU Memorandum of Understanding NH National Highway OP Operational Policy PAD Project Appraisal Document PGCIL Powergrid Corporation of India POWERGRID Central Transmission Utility PTCUL State Transmission Utility PWD Public Works Department RAP Resettlement Action Plan TBM Tunnel Boring Machine THDC Tehri Hydro Development Corporation Limited VPHEP Vishnugad Pipalkoti Hydro Electric Project CURRENCY EQUIVALENTS (Exchange Rate Effective July 18, 2014) Currency Unit = Indian Rupee (INR) 1,00 = US$0.016 US$1.00 = 60 iv Management Report and Recommendation v India EXECUTIVE SUMMARY Background 1. On August 3, 2012, the Inspection Panel registered a Request for Inspection concerning the India Vishnugad Pipalkoti Hydro Electric Project. The Request was submitted by residents of Chamoli district in the State of Uttarakhand. Management responded to the claims in the Request on October 24, 2012. In its Report to the Board, the Panel found the Request eligible and recommended that the Executive Directors authorize an investigation. On July 1, 2014, the Panel issued its report outlining the findings of the investigation. Management appreciates the Panel’s clear and thorough presentation of its findings. 2. The Vishnugad Pipalkoti Hydro Electric Project (VPHEP) was approved by the Board of Executive Directors on June 30, 2011 and is currently under implementation. The Bank-funded components of the project are: (i) construction of the dam and hydropower facility (US$638 million); and (ii) technical assistance for capacity building and institutional strengthening of Tehri Hydro Development Corporation Limited (THDC), the project implementing agency (US$10 million). 3. The objectives of the VPHEP are to: (i) increase the supply of electricity to India’s national grid through the addition of renewable, low-carbon energy; and (ii) strengthen the institutional capacity of THDC with respect to the preparation and implementation of economically, environmentally and socially sustainable hydropower projects. The VPHEP has been designed as a 444 MW run-of-river hydropower generation project on the Alaknanda River in Uttarakhand, India. It will generate 1,636 GWh in a 90 percent dependable year, and it will help reduce the need to expand thermal generation in the Northern Grid of India. 4. India’s energy deficit represents a significant constraint to growth and is increasing in severity. More than 350 million people still lack access to electricity and 60 percent of Indian firms rely on back-up diesel generation. In response, the Government has set aggressive targets for all sources of energy, but coal-fired generation still represents more than 56 percent of installed capacity. The harnessing of India’s significant hydropower potential represents one of the opportunities to promote clean energy at scale, and, in the Government’s estimation, is a critical way to address both baseload and peaking electricity demand. Panel Findings 5. Cumulative Impacts. The Panel found that Management complied with the provisions of OP/BP 4.01 by, inter alia, ensuring the preparation of a cumulative impact assessment for the Project and by incorporating the recommended increased minimum environmental flow (e-flow) into the project to mitigate cultural, religious and biodiversity impacts. With respect to transmission lines, the Panel noted that project documents did not address the proposed 30 km transmission line which will evacuate power from the Project to the Kuwari Pass pooling station, and also the wider proposed power transmission system in the area. vi Management Report and Recommendation 6. Water Loss. The Panel found that Management complied with OP/BP 4.01 by undertaking the baseline studies to document village water sources along the tunnel alignment routes and ensuring that THDC commits to provide alternative water sources in the event that an existing source is lost. However, the Panel found that the Bank did not identify detailed and adequate mitigation measures that could be operationalized if a water source is lost, in non-compliance with OP/BP 4.01. 7. Risk relating to Structures, Landslides and Earthquakes. The Panel noted the steps taken to use tunnel boring machine (TBM) technology to reduce potential harm from vibrations. The Panel found that this action complied with Bank Policy OP/BP 4.01 as a step to reduce or mitigate potential harm. The Panel found that, in compliance with OP/BP 4.37, Management took adequate measures to ensure the preparation of relevant studies by THDC during project design, appraisal and implementation stages to mitigate the risks raised in the Request. The Panel noted the importance of Management clarifying the issue of slurry disposal. 8. Risk to Aquatic Life and Ecology. The Panel found the project to be in compliance with OP/BP 4.01 with respect to the Requesters’ claim about the project’s impacts on fish and aquatic fauna. The Panel commended Management for advising Project authorities of the need to specifically study the issue of bedload, but found that the analysis was lacking. 9. Resettlement and Livelihood Restoration. The Panel understood that resettlement and rehabilitation efforts were underway and almost half of the eligible families had already received their R&R assistance. However, with respect to Hatsari (Hatsari is one of the three hamlets of Haat village, the other two being Dhobighat and Haat; eight families in Hatsari are affected by the project,), the Panel found that the project Resettlement Action Plan (RAP) did not adequately assess the Hatsari situation, in non- compliance with Bank Policy OP/BP 4.12 on Involuntary Resettlement, but did recognize Management’s concern for the Hatsari issue to date and the fact that negotiations are still continuing. 10. Gender Impacts. The Panel found that the THDC Resettlement and Rehabilitation (R&R) Policy covering access to livelihood sources complies with the requirements of OP/BP 4.01 and OP/BP 4.12. The Panel found that insufficient attention had been given to the issue of women’s security. 11. Local Benefit Sharing. The Panel found that important efforts were being made to restore the livelihoods of displaced people in accordance with the provisions of OP/BP 4.12. The Panel also noted the need for clarity on the use of the royalty payments and the revenue generated so that project-affected villages and others will benefit from these initiatives. The Panel further noted the importance of assessing the impact of the project on host communities at the end of RAP implementation. 12. Community Conflicts and the Grievance Redress Mechanism. The Panel found that the requirement of OP/BP 4.12 to establish an appropriate and accessible grievance mechanism had been met. vii India Management’s Response 13. Management appreciates the Panel’s recognition of the importance of the VPHEP for India, the complexity of the project and the local setting, the value of the Bank’s engagement in this type of project, and the steps Management has already taken to address the Requesters’ legitimate concerns. 14. Management welcomes the Panel’s findings of compliance regarding, inter alia:  OP 4.01 on cumulative impacts, baseline studies on water sources, mitigation measures for risks relating to structures, landslides and earthquakes, project impacts on fish and aquatic fauna, and gender impacts related to access to livelihood sources;  OP 4.37 on studies to mitigate risks related to dam safety; and  OP 4.12 on gender impacts related to livelihood sources; restoration of livelihoods of displaced people, and community conflicts and grievance redress. 15. With respect to the findings of non-compliance in regard to OP 4.01 and OP 4.12, Management wishes to note the following:  Potential water source losses: Management is of the view that the identification of detailed and adequate mitigation measures that could be operationalized in case such a loss were to occur was subsumed in THDC’s unequivocal commitment to provide a sustainable replacement water source. Based on the mitigation systems in place, Management is confident that THDC will be able to honor its commitment and provide an alternative water source to a village should the need arise. Management will continue to work with THDC to conduct regular monitoring of the use of existing water sources throughout the life of the Bank project and prepare and implement action plans to supply alternative water should any of the current sources dry up.  Resettlement and livelihood restoration – Hatsari. In Management’s view, THDC has demonstrated professionalism and commitment to improving the well-being of project-affected people by offering them a range of options including permanent and temporary relocation during the construction phase. THDC is continuing discussions with the Hatsari families in an effort to eliminate their exposure to the limited construction impacts. THDC remains willing to provide temporary relocation to the affected families throughout the construction phase, giving the families the option to reassess their choice not to relocate, once they experience the actual construction. As a result of these measures, Management is of the view that the project’s approach to resettlement and impact mitigation with respect to Hatsari is in compliance with OP/BP 4.12. viii Management Report and Recommendation Other Issues of Concern 16. Transmission Lines. Management will build on the recent discussions between THDC and the Bank to ensure that the transmission line impacts are adequately mitigated. The proposed evacuation line is needed for the VPHEP project to be operational and there should be sufficient time during project implementation to address any transmission issues. 17. Slurry Disposal. Management will ensure that THDC and the civil works contractor analyze the composition of the slurry and take appropriate measures, as needed, to remove any harmful particles or substances before disposal. The contractor will use, as needed, phased disposal and other preventive methods at the slurry disposal site, so that no slurry from the TBM operation flows into the river. 18. Bedload Movement. THDC has conducted silt management studies and has designed an effective silt management system. In addition, a real time flood forecasting system to plan flood routing is planned to be installed in the catchment area of VPHEP. Finally, a Catchment Area Treatment plan will be implemented (through the State Forests Department) over the next five years in the catchment area of the river up to the project area, with the objective of preventing sediment generation. In addition, Management is currently recruiting an independent expert to conduct a Remote Sensing review of the upper catchment of the Alaknanda River in Uttarakhand State for evidence of Glacial Lake Outburst Floods. 19. Women’s Security. The following actions have been agreed by the civil works contractor and will be monitored during project implementation: (i) contractor will hire women staff as security officers and guards; and (ii) Contractor and THDC will conduct regular awareness campaigns in the labor camps about women’s safety and to reinforce project boundaries, with penalties for violation of the same and availability of criminal prosecution. In addition, THDC will deploy women social mobilizers in each of the affected villages throughout the construction period. Further, the well-functioning GRM will be made gender-sensitive by inducting women members from the affected villages so that complaints about abuse of women can be properly and speedily logged and addressed. At least a third of the members will be women. GRM members will receive training on gender related issues from the social staff of THDC. At the appropriate time, a specific campaign will be conducted to let women know that there are dedicated conduits to file complaints about workers’ behaviors and other possible threats. 20. Royalty Payments. The developer provides 12 percent free power as royalty to the host state, and the revenue generated from this power will be used as a source of revenue for host state development. An additional 1 percent of revenue collected, matched by a state government grant, will go directly to the project area and will be used to meet local infrastructure and development needs. THDC has already carried out a number of activities to maintain infrastructure and public services in the resettlement villages. Going forward, the following activities will be implemented: (i) THDC will carry out evaluation of host villages (if any) to establish baseline; (ii) the end-term evaluation of RAP implementation will also cover the impact evaluation for the host villages; and (iii) the ix India GRC will be made more accessible by holding GRC meetings in each of the affected villages, whenever possible. x I. INTRODUCTION 1. On August 3, 2012, the Inspection Panel registered a Request for Inspection, IPN Request RQ 12/04 (hereafter referred to as “the Request”), concerning the India Vishnugad Pipalkoti Hydro Electric Project (“the Project”) financed by the International Bank for Reconstruction and Development (IBRD). The Request for Inspection was submitted by residents of Chamoli district in the State of Uttarakhand, who have requested that their identity remain confidential, and by Dr. Bharat Jhunjhunwala of Tehri district, also in the State of Uttarakhand (hereafter referred to as the “Requesters”). 2. The Executive Directors and the President of IDA were notified by the Panel of receipt of the Request. The Management responded to the claims in the Request on October 24, 2012. In its Report to the Board, the Panel found the Request eligible and recommended that the Executive Directors authorize an investigation. The investigation was authorized by the Executive Directors on December 18, 2012, effective March 15, 2013. 3. On July 1, 2014, the Panel issued its report outlining the findings of the investigation. Management appreciates the Panel’s clear and thorough presentation of its findings. This report, responding to the findings of the Panel, is organized in six sections. Section II presents project background. Section III summarizes the findings of the Panel. Section IV presents Management’s response to the Panel’s findings. Section V describes Management’s actions in response to the findings, and Section VI concludes the report. The Panel’s findings, along with Management’s responses, are described in detail in Annex 1. II. PROJECT BACKGROUND 4. Project Objectives. The Government of India (GOI) requested World Bank financing for the Vishnugad Pipalkoti Hydro Electric Project (VPHEP) in July 2006. The objectives of the project are to: (i) increase the supply of electricity to India’s national grid through the addition of renewable, low-carbon energy; and (ii) strengthen the institutional capacity of Tehri Hydro Development Corporation Limited (THDC), the project implementing agency, with respect to the preparation and implementation of economically, environmentally and socially sustainable hydropower projects. 5. VPHEP has been designed as a 444 MW run-of-river hydropower generation project on the Alaknanda River in Uttarakhand, India. It will generate 1,636 GWh in a 90 percent dependable year, and it will help reduce the need to expand thermal generation in the Northern Grid of India (please see paras. 6 and 7). The major features of the project infrastructure as designed are: (i) a 65 m diversion dam to create a small daily pondage in a V-shaped gorge; (ii) a 13.4 km headrace tunnel; (iii) an underground power house; and (iv) a 3 km tailrace tunnel that will return the diverted water to the Alaknanda River. The project infrastructure will be located on the sparsely populated right bank of the river (which is on the side opposite to National Highway 58) in Chamoli District of Uttarakhand. VPHEP is expected to reduce greenhouse gas (GHG) emissions by 1 India approximately 1.6 million tons carbon dioxide equivalent per year over the plant operation period. 6. Development context. India’s energy deficit of 9 percent and peak deficit of 6 percent represent a significant constraint on growth and are increasing in severity. Although the current installed capacity of 205 GW represents a 46 percent increase since 2007, power supply is still not able to keep pace with the rise in electricity demand. More than 350 million people (a third of all Indians) still lack access to electricity and 60 percent of Indian firms rely on back-up diesel generation (compared to 20 percent in China). In response, the GOI has set aggressive targets for all sources of energy, but coal- fired generation still represents more than 56 percent of installed capacity. According to the Central Electricity Authority (CEA), in the next five years, 60-64 GW of new coal- fired capacity is expected to be added to the electricity mix, bringing the overall coal- fired generation capacity to 176 GW by 2017. Hence, coal will continue to dominate the energy mix into the foreseeable future, which poses significant risks to the global environment. India has faced growing problems with its supply of coal from domestic sources and is increasingly relying on imported coal to supply installed capacity; consequently, its economy is more vulnerable to international coal price fluctuations. 7. The harnessing of India’s significant hydropower potential represents one of the opportunities to promote clean energy at scale, and, in the Government’s estimation, is a critical way to address both baseload and peaking electricity demand. India has not been able to make optimal use of its hydropower potential; in fact, growth of hydropower capacity has decelerated. From 44 percent in 1970, the share of hydropower in India’s overall electricity generation capacity decreased to less than 19 percent by August 2012. This is suboptimal to meet peak load requirements as well as system and frequency stability needs. Hydropower’s share of energy generated (as opposed to installed capacity) is even smaller, at 15.5 percent (2012). This reflects lower availability of the existing installed hydropower capacity relative to the thermal plants that predominate in India’s electricity mix. If India can successfully harness its hydropower potential with due regard to social and environmental impacts, the planned hydropower expansion could alter the baseline trajectory for GHG emissions from the power sector, which currently contributes half of India’s emissions. 8. Project Components. The Bank-funded components of the project are: (i) construction of the dam and hydropower facility (US$638 million); and (ii) technical assistance for capacity building and institutional strengthening of THDC, the project implementing agency (US$10 million). THDC is a public sector company, majority- owned by the GOI, which was set up in 1988 to develop baseload hydropower potential in Northern India, and which is now expanding its operations by developing primarily run-of-river projects, such as VPHEP. 9. In comparison to other projects of its type and size in terms of power generation, VPHEP is a relatively moderate risk project from an environmental and social perspective, with a very small footprint. The dam will be placed in a deep gorge with limited access or forest cover. In total, the project involves a relatively low level of resettlement – 265 families, as noted on page 102 of the Project Appraisal Document 2 Management Report and Recommendation (PAD); of these, 92 percent are families who requested relocation from Haat village to the other side of the river, as detailed in the PAD. No houses or other structures, agricultural land or common infrastructure will be submerged, and therefore no displacement will take place due to submergence. In total, 21 ha will be submerged, 109.93 ha of forest land (including government and van panchayat lands) and 31.64 ha of private land will be required by the project for road access, project and office space, switchyard, as well as for the quarry area, variously affecting 773 families (as noted in Annex 10 of the PAD). 10. Status of project. The VPHEP was approved by the Board of Executive Directors on June 30, 2011 and is currently under implementation. The current closing date is December 31, 2017. About US$15.5 million have been disbursed to date. The contract for the construction of the civil works, which includes the dam, the headrace tunnel, the underground powerhouse and the tailrace tunnel, was awarded to HCC Ltd. in January 2014 after the project received all its mandatory clearances. The procurement process for the electro-mechanical equipment is well-advanced and the bid opening took place on July 11, 2014. Some preliminary work such as construction of access roads and bridges has been completed. The contractor has started the excavation of the diversion tunnel, as well as the adit for the de-silting chamber; and construction of the tail race tunnel road and the approach road from the Haat Bridge to the main access tunnel/ventilation tunnel/ TBM platform, which will help prepare the ground for major construction work. Payments for land acquisition have largely been completed. In addition, disbursements to households eligible for assistance arising from the loss of community amenities are nearly completed, while disbursements for compensation for fuel and fodder will be ongoing for five years. 11. In order to ensure that the livelihoods of local people were not adversely affected by the project, THDC drew up an Income Restoration Plan. Under this plan, the Company has assisted the affected villages to form 21 cooperative societies, which undertake small community infrastructure works such as road repairs, bund and gabion wall construction, with costs up to INR 200,000 (about US$3,300). THDC has also, to date, provided employment to 70 project-affected persons either directly in the Company or indirectly through contractors or as sub-contractors. Opportunities for employment will increase when the major construction works start. THDC also is constructing a small shopping centre in Jaisal near its staff colony. Nine of the 14 shops will be allocated to project-affected families from Jaisal village. THDC is also helping project-affected persons get vocational training in various trades such as motor mechanics, marketing, hospitality, including a one-year diploma in hotel management from Dehradun. The Company is collaborating with the Industrial Training Institute (ITI) in nearby Gopeshwar to ensure that 20 percent of places are guaranteed for youths from families affected by VPHEP. The ITIs at Rudraprayag and Srinagar have also been requested to provide short-term courses in areas of use to the hydropower industry so that trainees can find employment in various hydropower projects upon completion of their training. 12. Other income restoration schemes include distribution of high-yield seeds and fruit saplings and activities such as dairy development (in Guniyala village), vermicomposting and napier grass cultivation. “Self-help” groups of women from Haat 3 India village are being assisted to start small knitting units. A more detailed Training Needs Assessment for individual project-affected persons will soon be conducted to better design individual livelihood restoration plans. 13. Corporate Social Responsibility (CSR) activities have been carefully planned with the involvement of the community and are being regularly implemented. So far, community works worth INR 4 million (about US$66,700) have been implemented in various project-affected villages and more, worth around INR 5 million (about US$83,300), are under implementation. Works include building pathways, ropeways and drinking water schemes for these remote mountain villages. In the current Fiscal Year 2013-14, THDC has thus far spent INR 7,62,371 (US$12,700) and cumulatively an amount of INR 21.32 million (about US$355,300) since activities commenced in the area under its CSR policy in 2009. The Company is also financing merit-based scholarships for students from project-affected villages. So far, 367 students (of which 201 are girls) have received these scholarships. THDC is now planning to also introduce a pension scheme for widows. 4 Management Report and Recommendation III. SUMMARY OF PANEL FINDINGS Cumulative The Panel finds that Management complied with the provisions of Impacts OP/BP 4.01 by ensuring the preparation of a cumulative impact assessment for the Project and by incorporating the recommended increased minimum environmental flow (e-flow) into the project to mitigate cultural, religious and biodiversity impacts. Water Loss The Panel finds that Management complied with OP/BP 4.01 by undertaking the baseline studies to document village water sources along the tunnel alignment routes and ensuring that THDC commits to provide alternative water sources in the event that an existing source is lost. However, the Panel finds that the Bank did not identify detailed and adequate mitigation measures that could be operationalized if a water source is lost, in non-compliance with OP/BP 4.01. Risk relating to The Panel notes the steps taken to use TBM technology to reduce Structures, potential harms from vibrations. The Panel finds that this complies Landslides and with Bank Policy OP/BP 4.01 as a step to reduce or mitigate Earthquakes potential harm. The Panel finds that, in compliance with OP/BP 4.37, Management took adequate measures to ensure the preparation of relevant studies by THDC during project design, appraisal and implementation stages to mitigate the risks raised in the Request. Risk to Aquatic The Panel finds the project to be in compliance with OP/BP 4.01 Life and Ecology with respect to the Requesters’ claim about the project’s impacts on fish and aquatic fauna. Resettlement and The Panel understands that resettlement and rehabilitation efforts Livelihood are underway and almost half of the eligible families have already Restoration received their R&R assistance. However, with respect to Hatsari (where eight families are affected), the Panel found that the project Resettlement Action Plan (RAP) does not adequately assess the Hatsari reality, in non-compliance with Bank Policy OP/BP 4.12 on Involuntary Resettlement. The Panel recognizes, however, Management’s concern for the Hatsari issue to date and the fact that negotiations are still continuing with a wide range of options on offer to Hatsari residents. Gender Impacts The Panel finds that the THDC Resettlement and Rehabilitation (R&R) Policy covering access to livelihood sources, i.e., fuel and fodder, complies with the requirements of OP/BP 4.01 and OP/BP 4.12. The Panel acknowledges the gender analysis included as part of the SIA, as required by OP/BP 4.01, which identifies differential impacts on women when a project changes access to resources in 5 India fragile ecosystems, which may have unanticipated impacts on women who use those resources. Local Benefit The Panel finds that important efforts are being made to restore the Sharing livelihoods of displaced people in accordance with the provisions of OP/BP 4.12. The Panel notes, as project implementation progresses, that Management is responsive to OP 4.12, paragraph 13 (b), which requires that infrastructure and public services are provided as necessary to new resettlement sites and host communities to improve, restore, or maintain accessibility and levels of service for the displaced persons and host communities. On the issue relating to community conflicts and the Grievance Redress Mechanism, the Panel finds that the requirement of OP/BP 4.12 to establish an appropriate and accessible grievance mechanism has been met. In accordance with the requirement of OP/BP 4.12, the Panel notes the importance of the project GRC being accessible to host communities so that their concerns can be heard and resolved when appropriate. 6 Management Report and Recommendation IV. RESPONSE TO FINDINGS BY THE PANEL 14. Management appreciates the Panel’s findings on compliance and noncompliance. Management takes the opportunity to respond to these findings below, and in greater detail in Annex 1. Moreover, Management appreciates the Panel’s recognition of the importance of the VPHEP for India, the complexity of the project, the value of the Bank’s engagement in this type of project, and the steps Management has already taken to address the Requesters’ legitimate concerns. A. Regional and Cumulative Impacts - Assessment of cumulative environmental and cultural impacts 15. Panel Finding: The Panel finds that Management complied with the provisions of OP/BP 4.01 with regard to cumulative impact assessment for the project and minimum environmental flows. The Panel notes that the extent to which the cumulative impact assessments influenced other aspects of project design is not clear, but recognizes that Management will put forward additional measures as needed. The Panel emphasizes the importance of a coordinated river basin management approach. With respect to transmission lines, the Panel notes that project documents do not address the proposed 30 km transmission line which will evacuate power from the Project to the Kuwari Pass pooling station, and also the wider proposed power transmission system in the area. 16. Response. Management welcomes the Panel’s assessment of the Bank’s compliance with the provisions of OP/BP 4.01 and also recognizes that a river basin management approach can be critical, both for the long-term sustainability of VPHEP and other projects along the Alaknanda River, as well as for the enhancement of these projects’ positive outcomes on the lives of populations in the Himalayan region. Since the 2006 River Basin Optimization Study commissioned by the Bank, Management has endeavored to advance adoption of a coordinated hydropower development approach at various levels of government in India and reiterated this recommendation in the 2012 Uttarakhand Economic Report. Management will pursue this policy dialogue during the implementation of VPHEP and other operations in Uttarakhand as opportunities arise. Management is pleased to report that in Himachal Pradesh, another Himalayan state, progress is being made on that front with Bank collaboration, and hopes that similar results will also unfold in Uttarakhand. 17. Management agrees that the transmission line issues, both for the proposed 30 km evacuation line and the proposed wider transmission network, are not yet fully identified, as the actual scale of the proposed hydropower development is not fully clear yet. However, since the proposed evacuation line is part of the VPHEP project and is needed for it to be operational, Management is confident that it will be completed in a timely manner. Management is also pleased to report that significant progress has already been made since the preparation of the EIA and it is now envisaged that (i) the State Transmission Utility (PTCUL) will erect the transmission line corridor to evacuate power generated by VPHEP from Pipalkoti (Kuwari Pass) to Srinagar, and from Srinagar to the Uttarakhand state border near Kashipur; and (ii) the Central Transmission Utility, Power Grid Corporation of India (POWERGRID or PGCIL), will connect the transmission line 7 India corridor to the national grid. As CEA, PTCUL, and POWERGRID have functioning mechanisms for planning and coordination, the design and construction of the transmission line for VPHEP output evacuation as well as of the regional network will follow the well-tested Environmental and Social Policy and Procedures (ESPP) of POWERGRID. 18. Going forward, Management will build on the recent discussions (held in May 2014) between THDC and the Bank to ensure that the transmission line impacts are adequately mitigated. The proposed evacuation line is needed for the VPHEP project to be operational and there should be sufficient time during project implementation to address any transmission issues since the transmission line is not on the project critical path, unlike the case for most hydropower projects. B. Local Impacts – The risk to village water sources from blasting and tunneling 19. Panel Finding: The Panel finds that Management complied with OP/BP 4.01 by undertaking baseline studies for village water sources and planning. However, the Panel finds that the Bank did not identify adequate mitigation measures if a water source is lost, in non-compliance with OP/BP 4.01. 20. Response. Management welcomes the Panel’s assessment that the project’s baseline studies for village water sources and planning are in compliance with OP/BP 4.01. With respect to the Panel’s concern regarding potential water source losses, Management is of the view that the identification of detailed and adequate mitigation measures that could be operationalized in case such a loss were to occur was subsumed in THDC’s unequivocal commitment to provide a sustainable replacement water source. This commitment is also reflected in the RAP, CSR initiatives and in individual Memoranda of Understanding (MoUs) that THDC signed with the villages of the project area. 21. OP/BP 4.01 sets out the need to identify and anticipate impacts and to prepare mitigation plans for them. The environmental assessment (EA) did not identify any impacts on the 66 existing water sources in the project-affected villages (generally small settlements with limited number of families); however the baseline of these sources was sufficiently documented in the EA to prepare a specific mitigation plan if these sources were to be affected in the future. Arrangements are in place to detect changes in the flow from the 66 existing sources. 22. Based on the mitigation systems in place, Management is confident that THDC will be able to honor its commitment and provide an alternative water source to a village should the need arise. THDC has a solid track record in addressing water supply issues in the two relocation villages (Daswana and El Dana) for the inhabitants of Haat, where it took appropriate steps in a timely fashion to provide piped water supply to these two villages by identifying alternative sources. 23. Within the same framework, Management will continue to work with THDC to conduct regular monitoring of the existing water sources throughout the life of the Bank 8 Management Report and Recommendation project and prepare and implement action plans to supply alternative water, supply based on consultation with the project-affected communities, should any of the current sources dry up. C. Local Impacts – Risk relating to structures, landslides and earthquakes 24. Panel Finding: The Panel finds that the various measures to address these risks comply with OP/BP 4.01. The Panel also finds that, in compliance with OP/BP 4.37, Management took adequate measures to ensure the preparation of relevant studies by THDC during project design, appraisal and implementation stages to mitigate the risks raised in the Request related to earthquakes, landslides and extreme weather events. The Panel notes the importance of Management clarifying the issue of slurry disposal. 25. Response: Management welcomes the Panel’s assessment of the Bank’s compliance with the provisions of OP/BP 4.01 and 4.37. Management agrees that the disposal of tunnel excavation by-products should be done in a way that prevents any contamination of the river and in an adaptive management mode. The VPHEP anticipates that the excavated spoil from the TBM operation will be transported from the tunnel face via conveyor belt to an intermediate location (temporary construction site for drying and desanding) from which it will be transferred to the spoil transport system, which may be by rail or diesel trucks. The spoil in this case will predominantly consist of rock pieces, and will not be mixed with slurry or chemicals. 26. The experience to date of many project developers indicates that the Himalaya rock is not likely to contain heavy metals such as chromium, lead or cadmium, nor has there been any report of release of heavy metals when the rock surface is exposed to air and water. However, the environmental monitoring plan contained in the environmental management plan (EMP) includes monitoring to detect release of heavy metals. 27. Under the adaptive management approach adopted by VPHEP, the selected civil works contractor has agreed to establish a systematic protocol, under the supervision of THDC and independent Third Party Monitoring Consultants, to regularly test slurry samples in the project laboratory facilities during the TBM operation to identify any heavy metal or hazardous substances and to treat the slurry as needed before disposal. 28. It is expected that the slurry will be dewatered and sun-dried at the intermediate site before being transported to designated spoil disposal sites. Management agrees that dewatering of slurry at the site should be done in way that the sediment level of the discharged water remains within permissible parameters. The purpose of the retaining structure at the tunnel mouth is to ensure that sediments are not discharged with the slurry water, and that the discharge remains similar to the natural water that flows from the slopes, particularly during the rainy season. 29. THDC should monitor, with the assistance of independent Third-Party Monitoring Consultants, the quality of the filtered slurry-discharge water along with the river water. 30. It is also planned that the spoil disposal sites will be regenerated using bio- engineering techniques. 9 India 31. Going forward, Management will ensure that THDC and the civil works contractor, with collective oversight from the environmental Panel of Experts and the Bank, analyze the composition of the slurry and take appropriate measures, as needed, to remove any harmful particles or substances before disposal, as provided for in the contractual documents. As discussed during the March 2014 implementation support visit and the May 2014 technical visit, the contractor will use, as needed, phased disposal and other methods to prevent overflow at the slurry disposal site so that no slurry from the TBM operation flows into the river. D. Local Impacts – Risk to aquatic life and ecology from altered flow and sediment release 32. Panel Finding: The Panel finds the project to be in compliance with OP/BP 4.01 with respect to impacts on fish and aquatic fauna. The Panel commends Management for advising Project authorities of the need to specifically study the issue of bedload, but found that the analysis is lacking. The Panel’s expert believes it may be necessary to study this further. 33. Response: Management welcomes the Panel’s assessment of the Bank’s compliance with the provisions of OP/BP 4.01. 34. Regarding bedload movement, THDC has conducted silt management studies through mathematical as well as physical modeling, using silt data for the last 16 years, and has designed an effective silt management system that can handle sediment of size 0.2 mm and above with an 90 percent efficiency. 35. In addition, a real time flood forecasting system to plan flood routing is planned to be installed in the catchment area of VPHEP, which will provide advance information for operation/preparations required at the dam site. Finally, a Catchment Area Treatment (CAT) plan will be implemented (through the State Forests Department) over the next five years in the catchment area of the river up to the project area, with the objective of preventing sediment generation. The CAT plan also identifies sites vulnerable to landslide and erosion that will be treated simultaneously during implementation, thus reducing one source of silt deposition in the river. 36. In the event of major bedload movement, several measures are in place to limit its impact at the VPHEP level. 37. First, at least three projects, one on the Alaknanda River and two HEPs under construction on the Dhauli Ganga River (a major tributary of river Alaknanda) are situated upstream of VPHEP. When completed, they will offer a physical damping effect by considerably reducing the bedload of the river before reaching VPHEP in case of flash flood or any other event. 38. At Full Reservoir Level (FRL), the reservoir starts around 2.9 km upstream of the diversion structure. The average bed slope of the river upstream of the diversion structure is very mild, i.e., 1.5 percent. In case of flood, any large boulders will accumulate at the 10 Management Report and Recommendation tip of the reservoir, and THDC does not anticipate that they would reach the dam, nearly 3 km downstream. 39. Smaller boulders and debris reaching the diversion structure will be flushed out by means of the following: (i) One (1) 12 m diameter spillway tunnel at river level (RL) 1228 m, on the left bank, just upstream of the diversion structure; (ii) Four (4) sluices, each 7.2 m (w) x 15 m (h) in size sluices, located at 1233 m, just 8 m above the river bed in the dam; and (iii) One (1) ogee type spillway at 1260 m to pass any floating debris. 40. The invert level of the sluices at 1233 m is 9.5 m below the invert level of the Power Intakes (at 1242.5 m). This arrangement will eliminate the possibility of any debris/silt deposition in front of the Power Intakes. 41. Apart from the above measures, during plant operation THDC plans to carry out reservoir flushing about four times each year so that at any given time the reservoir has sufficient storage capacity. 42. Management is currently recruiting an independent expert to conduct a Remote Sensing review of the upper catchment of the Alaknanda River in Uttarakhand State for evidence of Glacial Lake Outburst Floods (GLOFs). GLOFs are thought to be associated with the devastating floods of June 2013. Once completed, the study will further inform the assessment of VPHEP preparedness for such extreme events, as well as the preparation of the dam and plant operations manual. E. Local Impacts – Resettlement and livelihoods restoration (Haat and Hatsari) 43. Panel Finding: The Panel understands that resettlement and rehabilitation efforts are underway and almost half of the eligible families have already received their R&R assistance. With respect to Hatsari, however, which had 13 families residing, the Panel finds that the Project RAP did not adequately assess the Hatsari situation, in non- compliance with OP/BP 4.12 on Involuntary Resettlement. The Panel notes that 2 families from Hatsari have accepted the Haat package and 2 nonresident families have agreed to sell their land to THDC. Negotiations are still continuing with the remaining 6 Hatsari families that reside in the village. 44. Response: Management appreciates the Panel’s views on the RAP. Management wishes to stress that resettlement in hydropower projects is a dynamic process and as a result, the RAP is an evolving document that reflects the continuous design optimization process of the project facilities and the outcomes of the consultative process with the project-affected people. Hence, while the Hatsari situation was initially analyzed during the social impact assessment as part of the Haat revenue village (Hatsari is one of the three hamlets of Haat village, the other two being Dhobighat and Haat), THDC subsequently offered to the Hatsari families a customized R&R package that went beyond 11 India the package they initially rejected. THDC put forward several enhanced relocation and compensation options, but these too were rejected by all eight Hatsari families. As a consequence, THDC changed the location of a switchyard and the alignment of the tail race tunnel and approach road to the surge shaft so that the Hatsari land would not be required for the project. Despite the fact that THDC does not require the Hatsari land for project construction, it offered to relocate the families(on a temporary or permanent basis), keeping in mind the potential temporary impacts on the community during construction. In addition to the adaptive management approach, THDC and the civil works contractor will implement other mitigation measures in accordance with the provision of the EMP to mitigate the remaining potential indirect construction-related dust, noise and traffic safety impacts. 45. In Management’s view, THDC has demonstrated professionalism and commitment to improving the well-being of the project-affected people by offering them a range of options including permanent and temporary relocation during the construction phase. As the Panel noted, two households have accepted the original R&R package and have moved out to the Mayapur village, while two non-residents have indicated their willingness to sell their land at the price agreed upon in the original RAP. If the remaining families still elect to stay in Hatsari, THDC will respect their choice. 46. THDC is continuing discussions with the Hatsari families in an effort to eliminate their exposure to these limited construction impacts. THDC has offered to maintain its willingness to provide temporary relocation to the affected families all through the construction phase, giving the families the option to reassess their choice not to relocate as the actual impact of the construction becomes clear. 47. From the above, Management is of the view that the project ‘is in compliance with OP/BP 4.12 with respect to Hatsari. F. Local Impacts - Gender-related livelihood and security issues 48. Panel Finding: The Panel finds that the THDC R&R Policy covering access to livelihood sources complies with the requirements of OP/BP 4.01 and OP/BP 4.12. Going forward, the Panel notes the need for monitoring/supervision and public consultation/information to ensure that Bank policy requirements with respect to livelihood restoration are being met, and that women are not disproportionately impacted. The Panel finds that insufficient attention has been given to the issue of women’s security. A key issue will be regular monitoring of the labor camps with regard to women’s security, and of gender-differentiated impacts of the project. 49. Response: Management acknowledges the Panel’s assessment of the Bank’s compliance with the requirements of OP/BP 4.01 and OP/BP 4.12. 50. With respect to loss of van panchayat land, THDC will provide access roads to the residual van panchayat and/or grazing land. In addition, each affected household will be paid 100 days of minimum agricultural wage (MAW) per year for a period of 5 years. The amount will be paid as a grant toward the replacement of lost fuel and fodder. These 12 Management Report and Recommendation provisions are over and above the livelihood restoration plan currently being implemented under the project. In order to reduce drudgery and stress among women in collecting fodder from nearby forests, activities were introduced to promote plantation of fodder such as napier grass. 51. With regard to women’s security, the civil works contractor is contractually obligated to undertake measures aimed at securing the safety of women living in villages around the labor camps. The labor force that will work on the construction site will be housed in two fenced camps (one near the dam site and the other close to the power house) to minimize its impact on local resources and communities. The contract contains very specific clauses to ensure that these camps have facilities for water supply, liquefied petroleum gas for cooking, toilets, and solid and liquid waste management. The labor force will not be allowed to access community forests so as to ensure the safety of local women collecting fuel and fodder there. 52. The following actions have already been agreed by the civil works contractor and will be monitored (gender-differentiated monitoring) during project implementation:  Contractor will hire women staff as security officers and guards.  Contractor and THDC will conduct regular awareness campaigns in the labor camps about women’s safety and to reinforce project boundaries, with penalties for violation of the same (to be borne by contractors and workers alike) and availability of criminal prosecution. Besides, THDC will deploy women social mobilizers in each of the affected villages throughout the construction period. 53. Further, the well-functioning GRM will be made gender-sensitive by inducting women members from the affected villages so that complaints about abuse of women can be properly and speedily logged and addressed. At least a third of the members will be women. GRM members will receive training on gender related issues from the social staff of THDC. At the appropriate time, a specific campaign will be conducted to let women know that there are dedicated conduits to file complaints about workers’ behaviors and other possible threats. G. Local Benefit Sharing and Grievance Handling 54. Panel Finding: The Panel finds that the requirement of OP/BP 4.12 on Involuntary Resettlement that an appropriate and accessible grievance mechanism be established has been met. The Panel notes the importance of the project GRC being made accessible to host communities so that their concerns can be heard and resolved whenever appropriate. It also notes the need for clarity on the use of the 12% royalty payment to the State and of the 1% revenue generated under the National Hydropower Policy so that project-affected villages and others that are impacted will benefit from these initiatives. The Panel further notes the importance of assessing the impact of the project on host communities at the end of RAP implementation. 13 India 55. Response: Management welcomes the Panel’s assessment of the Bank’s compliance with the provisions of OP/BP 4.12. 56. The developer provides 12 percent free power as royalty to the host state, and the revenue generated from this power will be used as a source of revenue for host state development. 57. An additional 1 percent of revenue collected as per the National Hydro Policy will go directly to the project area, following the guidelines for management of local area development funds (LADF) issued by the Ministry of Power in October 2013. These revenues will be utilized to meet the infrastructure and development needs of the local population. The State of Uttarakhand has yet to formulate a mechanism to utilize this fund; as per the guidelines issued by the Ministry of Power, the money will be directly deposited by the developer in the LADF and a 1 percent matching grant will be provided by the state government. The State of Uttarakhand will determine the details of the mechanism that will govern the use of these funds. 58. Currently THDC is carrying out development activities with funding from two sources, namely: (i) CSR funds (from 1 percent of THDC’s profit) in the district; and (ii) INR 96.44 million as part of the RAP budget for community and area development in the affected villages. 59. The following activities have been carried out by THDC to maintain infrastructure and public services in the resettlement villages:  A drinking water facility with two 5000-liter tanks has been installed for El Dana resettlement site. In Daswana, two tanks of 6000 liters each have been installed to supply drinking water.  THDC has installed a separate three-phase transformer for power supply to the resettlement villages but it is currently being operated as a single-phase transformer. THDC is in the process of adding two more phases to cater for the increased electricity demand.  THDC has planned to link Daswana village to National Highway (NH) 58 through Garhi village, for which the tendering is currently in process. This is an existing Public Works Department (PWD) road that passes through some private plots which will need to be acquired. THDC has also built internal footpaths to connect the two major settlement sites to an existing all-weather road.  THDC has relocated the government-run primary school of Haat to the new site (the money for constructing the new building has already been deposited with the state government in the form of compensation) in a rented accommodation. THDC plans to construct a school building in the allocated site, which can be used for common purposes by the community once the education department constructs its own building. 14 Management Report and Recommendation 60. Going forward, the following activities will be implemented:  THDC will carry out evaluation of host villages (if any – other than Ghedora) by December 31, 2014 to establish baseline.  The end-term evaluation of RAP implementation will also cover the impact evaluation for the host villages.  The GRC will be made more accessible by holding GRC meetings in each of the affected villages, whenever possible. V. MANAGEMENT’S ACTIONS IN RESPONSE TO THE FINDINGS 61. Management has carefully reviewed the Panel’s constructive findings and observations, and will seek to ensure that relevant considerations are reflected in the implementation of the project. In particular, Management proposes to clarify in greater detail how alternative water sources would be supplied if required as part of the mitigation measures, and to ensure a conclusion of the ongoing negotiations with the six households of the Hatsari hamlet that is compliant with Bank policy. VI. CONCLUSION 62. Management believes that the Bank has made every effort to apply its policies and procedures and to pursue its mission statement in the context of the Project. Management believes that the proposed actions identified in its response address the Panel’s findings. 15 16 MANAGEMENT REPORT AND RECOMMENDATION IN RESPONSE TO THE INSPECTION PANEL INVESTIGATION REPORT ON INDIA VISHNUGAD PIPALKOTI HYDRO ELECTRIC PROJECT ANNEX 1 FINDINGS, COMMENTS AND ACTIONS No. Issue/Finding OP/ Comment/Action BP 1. Regional and cumulative impacts -assessment 4.01 Management welcomes the Panel’s assessment of cumulative environmental and cultural of the Bank’s compliance with the provisions of impacts OP/BP 4.01 and also recognizes that a river basin management approach can be critical, The Panel considers that the VPHEP is closely both for the long-term sustainability of VPHEP linked, together with other hydro projects already and other projects along the Alaknanda River, constructed or planned, to cumulative impacts in as well as for the enhancement of these the Alaknanda River. The Panel finds that projects’ positive outcomes on the livelihoods of Management complied with the provisions of populations in the Himalayan region. Since the OP/BP 4.01 by ensuring the preparation of a 2006 River Basin Optimization Study cumulative impact assessment for the Project commissioned by the Bank, Management has and by incorporating the recommended been working to advance adoption of a increased minimum environmental flow into coordinated hydropower development approach the Project to mitigate cultural, religious, and at various levels of government in India; the biodiversity impacts. The Panel notes that Bank reiterated this recommendation in the despite increasing the minimum environmental 2012 Uttarakhand Economic Report. flow for the Project, the extent to which the Management will pursue this policy dialogue cumulative impact assessments influenced other during the implementation of VPHEP and other aspects of Project design is not clear. The Panel operations in Uttarakhand as opportunities arise. recognizes Management’s statement indicating Management is pleased to report that in that additional environmental protection measures Himachal Pradesh, another Himalayan state, based on the recommendations of the cumulative progress is being made on that front with Bank impact assessments will be conveyed to THDC collaboration and hopes that similar results will moving forward. The Panel notes the importance also unfold in Uttarakhand. of Management’s close monitoring of the implementation of these recommendations, within Management agrees that the transmission line the context of the Project’s adaptive management issues, both for the proposed 30 km evacuation approach, to ensure continued sustainability and line and the proposed wider transmission viability of the Project. In addition, taking into network, are not yet fully identified, as the actual account the on-going broader debate in India scale of the proposed hydropower development regarding cumulative impacts of hydropower is not fully clear yet. However, since the development in the Alaknanda and Bhagirathi river proposed evacuation line is part of the VPHEP basins, the Panel notes the importance for the project and is needed for it to be operational, Project of adopting and implementing relevant Management is confident that it will be recommendations which may result from this completed in a timely manner. Management is process. The Panel recognizes the complexities of also pleased to report that significant progress coordinated river basin management when has already been made since the preparation of multiple HEPs are present, and emphasizes the the EIA and it is now envisaged that (i) PTCUL importance of a mechanism to coordinate river will erect the transmission line corridor to basin management in the Alaknanda. With respect evacuate power generated by VPHEP from to transmission lines, the Panel understands that Pipalkoti (Kuwari Pass) to Srinagar, and from the Asian Development Bank is financing an Srinagar to the Uttarakhand state border near integrated power transmission system under its Kashipur; and (ii) the Central Transmission multi-tranche Uttarakhand Power Sector Utility, Power Grid Corporation of India Investment Program. The Panel notes that Project (POWERGRID or PGCIL), will connect the documents do not address the proposed 30 km transmission line corridor to the national grid. As transmission line which will evacuate power from CEA, PTCUL, and POWERGRID have the Project to the Kuwari Pass pooling station, and functioning mechanisms for planning and 16 Management Report and Recommendation also the wider proposed power transmission coordination, the design and construction of the system in the area. The Panel emphasizes the transmission line for of VPHEP output need for a clarification of both these issues. evacuation as well as of the regional network will follow the well-tested Environmental and Social Policy and Procedures (ESPP) of POWERGRID. Going forward, Management will build on the recent discussions (held in May 2014) between THDC and the Bank to ensure that the transmission line impacts are adequately mitigated. The proposed evacuation line is needed for the VPHEP project to be operational and there should be sufficient time during project implementation to address any transmission issues since the transmission line is not on the project critical path, unlike the case for most hydropower projects. 2. Local Impacts – The risk to village water 4.01 Management welcomes the Panel’s assessment sources from blasting and tunneling. that the project’s baseline studies for village water sources and planning are in compliance The Panel finds that Management complied with OP/BP 4.01. With respect to the Panel’s with OP/BP 4.01 by undertaking baseline concern regarding potential water source losses, studies to document village water sources Management is of the view that the identification along the tunnel alignment routes and of detailed and adequate mitigation measures ensuring that THDC commits to provide that could be operationalized in case such a loss alternative water sources in the event that an were to occur was subsumed in THDC’s existing source is lost. However, the Panel unequivocal commitment to provide a finds that the Bank did not identify detailed sustainable replacement water source. This and adequate mitigation measures that could commitment is also reflected in the RAP, CSR be operationalized if a water source is lost, in initiatives and in individual MoUs THDC signed non-compliance with OP/BP 4.01. The Panel with the villages of the project area. notes the importance of clarifying how alternative water sources will be provided in practical terms to OP/BP 4.01 sets out the need to identify and villages for their domestic and irrigation needs, in anticipate impacts and to prepare mitigation case the risks materialize during Project plans for them. The EA did not identify any implementation. impacts on the 66 existing water sources in the project-affected villages (generally small settlements with limited number of families); however the baseline of these sources was sufficiently documented in the EA to prepare a specific mitigation action plan if these sources were to be affected in future. Arrangements are in place to detect changes in the flow from the 66 existing sources. Based on the mitigation systems in place, Management is confident that THDC will be able to honor its commitment and provide an alternative water source to a village should the need arise. THDC has a solid track record in addressing water supply issues in the two relocation villages (Daswana and El Dana) for the inhabitants of Haat, where it took appropriate steps in a timely fashion to provide piped water supply to these two villages by identifying an alternative source. 17 18 Within the same framework, Management will continue to work with THDC to conduct regular monitoring of the use of existing water sources throughout the life of the Bank project and prepare and implement action plans to supply alternative water, supply based on consultation with the project-affected communities, should any of the current sources dry up. 3. 3: Local Impacts – Risk relating to structures, 4.01 Management welcomes the Panel’s assessment landslides and earthquakes. 4.37 of the Bank’s compliance with the provisions of OP/BP 4.01 and 4.37. Management agrees that Given that conventional blasting has occurred, and the disposal of tunnel excavation by-products is still planned near residential areas, it is essential should be done in a way that prevents any to ensure that proper steps are taken to avoid, contamination of the river and in an adaptive minimize and/or compensate for any harm that management mode. The VPHEP anticipates may arise. Regarding the possible generation of that the excavated spoil from the TBM operation “slurry” as opposed to “muck” by the use of the will be transported from the tunnel face via TBM, the Panel could not find any mention of this conveyor belt to an intermediate location issue in the PAD, EA, or EMP and has not been (temporary construction site for drying and able to find sufficient information to satisfy itself desanding) from which it will be transferred to that the Project will be able to appropriately the spoil transport system, which may be by rail dispose of such slurry, since the existing muck or diesel trucks The spoil in this case will disposal plan and corresponding documents do predominantly consist of rock pieces, and will not cover slurry disposal. The Panel notes the not be mixed with slurry or chemicals. importance of Management clarifying the issue of slurry disposal. The Panel notes the steps The experience to date of many project taken to use TBM technology to reduce harms developers indicates that the Himalaya rock is from vibrations. The Panel also notes the provision not likely to contain heavy metals such as in the Project of an insurance scheme to cover chromium, lead or cadmium, nor has there been potential losses for structures falling within a 500m any report of release of heavy metals when the corridor along the tunnels. The Panel finds that rock surface is exposed to air and water. these measures comply with Bank Policy However, the environmental monitoring plan OP/BP 4.01 as a step to reduce or mitigate contained in the environmental management potential harm. The Panel finds that, in plan (EMP) includes monitoring to detect compliance with OP/BP 4.37, Management took release of heavy metals. adequate measures to ensure the preparation Under the adaptive management approach of relevant studies by THDC during Project adopted by VPHEP, the selected civil works design, appraisal and implementation stages contractor has agreed to establish a systematic to mitigate the risks raised in the Request protocol, under the supervision of THDC and related to earthquakes, landslides and extreme independent Third Party Monitoring Consultants, weather events. The Panel notes the importance to regularly test slurry samples in the project of taking into account and addressing the potential laboratory facilities during the TBM operation to risks raised in the Request in the studies to be identify any heavy metal or hazardous prepared during Project implementation. substances and to treat the slurry as needed before disposal. It is expected that the slurry will be dewatered and sun-dried at the intermediate site before being transported to designated spoil disposal sites. Management agrees that dewatering of slurry at the site should be done in way that the sediment level of the discharged water remains within permissible parameters. The purpose of the retaining structure at the tunnel mouth is to ensure that sediments are not discharged with the slurry water, and that the discharge remains 18 Management Report and Recommendation similar to the natural water that flows from the slopes, particularly during the rainy season. THDC should monitor, with the assistance of independent Third-Party Monitoring Consultants, the quality of the filtered slurry-discharge water along with the river water. It is also planned that the spoil disposal sites will be regenerated using bio-engineering techniques. Going forward, Management will ensure that THDC and the civil works contractor, with collective oversight from the environmental Panel of Experts and the Bank, analyze the composition of the slurry and take appropriate measures, as needed, to remove any harmful particles or substances before disposal, as provided for in the contractual documents. As discussed during the March 2014 implementation support visit and the May 2014 technical visit, the contractor will use, as needed, phased disposal and other methods to prevent overflow at the slurry disposal site so that no slurry from the TBM operation flows into the river. 4. Local Impacts – Risk to aquatic life and 4.01 Management welcomes the Panel’s assessment ecology from altered flow and sediment of the Bank’s compliance with the provisions of release. The Panel notes and commends OP/BP 4.01. Management for advising Project authorities of the Regarding bedload movement, THDC has need to specifically study the issue of bedload conducted silt management studies through soon after the Bank’s engagement in the Project, mathematical as well as physical modelling, but found that the analysis is lacking. The Panel’s using silt data for the last 16 years, and has expert believes it may be necessary to study this designed an effective silt management system to ensure such bedload movement could be safely that can handle sediment of size 0.2 mm and passed downstream without damage to the Project above with a 90% efficiency. and the surrounding areas. The Panel finds that in light of the proposed increased e-flow figure of In addition, a real time flood forecasting system 15.65 cumecs, the Project is not expected to have to plan flood routing is planned to be installed in an adverse impact on aquatic life and fish the catchment area of VPHEP, which will populations in the 18 km stretch of the river where provide advance information for operation/ the water is diverted into tunnels by the Project. preparations required at the dam site. Finally, a The Panel finds the Project to be in compliance CAT plan will be implemented (through the State with OP/BP 4.01 with respect to the Forests Department) over the next 5 years in the Requesters’ claim about the Project’s impacts catchment of the river up to the project area, on fish and aquatic fauna. with the objective of preventing sediment generation. The CAT plan also identifies sites vulnerable to landslide and erosion that will be treated simultaneously during implementation, thus reducing one source of silt deposition in the river. In the event of major bedload movement, several measures are in place to limit its impact at the VPHEP level. First of all, more than two projects, one on the 19 20 Alaknanda River and two HEPs under construction on the Dhauli Ganga River (a major tributary of the Alaknanda) are situated upstream of VPHEP. When completed, they will offer a physical damping effect, by considerably reducing the bedload of the river before reaching VPHEP in case of flash flood or any other event. At Full Reservoir Level (FRL), the reservoir starts around 2.9 km upstream of the diversion structure. The average bed slope of the river upstream of the diversion structure is very mild, i.e., 1.5%. In case of flood, any large boulders will accumulate at the tip of the reservoir, and THDC does not anticipate that they would reach the dam, nearly 3 km downstream. Smaller boulders and debris reaching the diversion structure will be flushed out by means of the following: (i) One (1) 12 m diameter spillway tunnel at riverbed level (RL) 1228.00 on the left bank, just upstream of the diversion structure; (ii) Four (4) sluices, each 7.2 m (w) x 15 m (h) in size, located at 233 m, 8 m above the riverbed in the dam. (iii) One (1) ogee type spillway at 1260 m to pass any floating debris. The invert level of the sluices at 1233 m is 9.5 m below the invert level of the Power Intakes (at 1242.5 m). This arrangement will eliminate the possibility of any debris/silt deposition in front of the Power Intakes. Apart from the above measures, during plant operation THDC plans to carry out reservoir flushing about four times each year, so that at any given time the reservoir has sufficient storage capacity. Management is currently recruiting an independent expert to conduct a Remote Sensing review of the upper catchment of the Alaknanda River in Uttarakhand State, for evidence of Glacial Lake Outburst Floods (GLOFs). GLOFS are thought to be associated with the devastating floods of June 2013. Once completed, the study will further inform the assessment of VPHEP preparedness for such extreme events as well as the preparation of the dam and plant operations manual. 5. Local Impacts – Resettlement and livelihoods 4.12 The implementation of livelihood restoration for restoration (Haat & Hatsari). The Panel notes displaced families of Haat includes measures as the substantial steps taken under the Project to provided for in the RAP as well as under CSR identify and address the resettlement needs of policy. Key activities include: (i) provision of 20 Management Report and Recommendation displaced families from Haat village under the Petty Contracts to Cooperative societies; (ii) THDC R&R Policy. At the same time, the provision of direct and indirect employment; (iii) resettlement approach for Haat village implies, for allotment of shops in THDC colony; (iv) training most households, reduced land holdings and a for self-employment such as dairy development, need to develop new sources of income and food. animal husbandry, vegetable production, knitting This suggests a risk that vulnerable households and poultry; and (v) support to project-affected may not succeed in restoring their pre-Project people for vocational training including skill livelihoods. The Panel understands that enhancement in trades required in hydro power livelihood restoration efforts are being carried plants so that trainees can be absorbed in out by THDC and supported by Management. THDC or any other hydro power company. The Panel notes the importance of the need to In addition to these programs, the project will closely monitor and examine, as part of RAP dovetail with various government schemes and implementation and supervision, the impact of ensure their accessibility and benefits to the these efforts which are aimed at improving the project-affected people found eligible, socio-economic status of the affected particularly vulnerable groups. In addition, the population. The Panel understands that identified vulnerable groups affected, due to resettlement and rehabilitation efforts are either loss of private land or acquisition of van underway and almost half of the eligible families panchayat land, will also be provided with have already received their R&R assistance. With income restoration training in the trade of their respect to Hatsari, however, which had 13 families choice. residing, the Panel finds that the Project RAP did not adequately assess the Hatsari situation Management appreciates the Panel’s views on in non-compliance with OP/BP 4.12 on the RAP. Management wishes to stress that the Involuntary Resettlement. The Panel notes that RAP is an evolving document that reflects the 2 families from Hatsari have accepted the Haat continuous design optimization process of the package and 2 nonresident families have agreed project facilities and the outcomes of the to sell their land to THDC. Negotiations are still consultative process with the project-affected continuing with the remaining 6 Hatsari families people. Hence, while the Hatsari situation was that reside in the village. initially analyzed during the social impact assessment as part of the Haat village (Hatsari is one of the three hamlets of Haat village, the other two being Dhobighat and Haat), THDC offered to the Hatsari families a customized R&R package that went beyond the package they initially rejected. THDC respects the right of the families to remain in place. It put forward several enhanced relocation and compensation options, but all 12 Hatsari families preferred not to accept these options. As a consequence, THDC changed the location of a switchyard and the alignment of the tail race tunnel and  approach road to the surge shaft so that Hatsari land would not be required for the project. Because the construction period is likely to have temporary impacts on the community, THDC is offering options for temporary or permanent relocation to the villagers. Whether the villagers accept these options or not, , THDC and the civil works contractor will implement measures in accordance with the environmental management plan (EMP) to mitigate potential indirect construction-related dust, noise and traffic safety impacts. Management believes that THDC has demonstrated professionalism and commitment 21 22 to improving the well-being of the project- affected people by offering them a range of options including permanent and temporary relocation during the construction phase. As the Panel noted, two households have accepted the R&R package and have moved out to the Mayapur village, while two non-residents have indicated their willingness to sell their land. If the remaining families still elect to stay in Hatsari, THDC will respect their choice. THDC is continuing discussions with the Hatsari families in an effort to eliminate their exposure to these limited construction impacts. THDC remains willing to provide temporary relocation to the affected families all through the construction phase, giving the families the option of reassessing their choice not to relocate as the actual impact of the construction becomes clear. From the above, Management is of the view that the project’s approach to resettlement and impact mitigation with respect to Hatsari is in compliance with OP/BP 4.12. Management is monitoring the Hatsari issue on a regular basis and has also participated in several meetings chaired by the district administration to resolve the issue. . Going forward, THDC will continue the dialogue with the Hatsari community and the district administration of the state to arrive at a mutually agreed settlement. THDC will be assisted in its dialogue with the Hatsari community by the NGO hired for the implementation of the RAP and the Public Relations Officer of the civil works contractor. 6. Local Impacts - Gender-related livelihood and Management welcomes the Panel’s assessment security issues. The Panel finds that the THDC of the Bank’s compliance with the requirements R&R Policy covering access to livelihood of OP/BP 4.01 and OP/BP 4.12. sources, i.e. fuel and fodder, complies with the With respect to loss of van panchayat land, requirements of OP/BP 4.01 and OP/BP 4.12. THDC will provide access roads to the residual Going forward, the Panel notes the need for van panchayat and/or grazing land. In addition, monitoring/supervision and public each affected household will be paid 100 days consultation/information to ensure that Bank policy of MAW per year for a period of 5 years. The requirements with respect to livelihood restoration amount will be paid as a grant toward the are being met, and that women are not replacement of lost fuel and fodder. These disproportionately impacted by any possible provisions are over and above the livelihood changes to their van panchayat during Project restoration plan currently being implemented implementation, in light of the heavy burden that under the project. women will face if access to forest and forage resources is made more difficult. However, the In order to reduce drudgery and stress among Panel finds that insufficient attention has been women in collecting fodder from nearby forests, given to the issue of women’s security as activities were introduced to promote plantation fences around the labor camps alone cannot of fodder such as napier grass. be seen as an adequate mitigation measure. A 22 Management Report and Recommendation key issue in the future will be systematic and With regard to women’s security, the civil works regular monitoring of the conditions of the labor contractor is contractually obligated to undertake camps, and to ensure that any breaches of measures aimed at securing the safety of agreements and standards with respect to women living in villages around the labor camps. women’s security are picked up early and not The labor force that will work on the construction allowed to fester into serious conflict between the site will be housed in two fenced camps (one labor and villagers. The Panel notes the near the dam site and the other close to the importance of continued attention to monitoring power house) to minimize its impact on local gender-differentiated impacts of the Project and resources and communities. The contract the need to remedy potential negative impacts contains very specific clauses to ensure that through regular supervision missions that should these camps have facilities for water supply, include gender expertise. liquefied petroleum gas for cooking, toilets, and solid and liquid waste management. The labor force will not be allowed to access community forests so as to ensure the safety of local women collecting fuel and fodder there. The following actions have already been agreed by the civil works contractor and will be monitored (gender-differentiated monitoring) during project implementation:  Contractor will hire women staff as security officers and guards.  Contractor and THDC will conduct regular awareness campaigns in the labor camps about women’s safety and to reinforce project boundaries, with penalties for violation of the same (to be borne by contractors and workers alike) and availability of criminal prosecution. Besides, THDC will deploy women social mobilizers in each of the affected villages throughout the construction period. Further, the well-functioning GRM will be made gender-sensitive by inducting women members from the affected villages so that complaints about abuse of women can be properly and speedily logged and addressed. At least a third of the members will be women. GRM members will receive training on gender related issues from the social staff of THDC. At the appropriate time, a specific campaign will be conducted to let women know that there are dedicated conduits to file complaints about workers’ behaviors and other possible threats. 7. Local Benefit Sharing and inadequate handling 4.12 Management welcomes the Panel’s assessment of grievances. The Panel finds that important of the Bank’s compliance with the provisions of efforts are being made by Management to OP/BP 4.12. restore livelihoods of displaced people in The developer provides 12 percent free power accordance with the provisions of OP/BP 4.12 as royalty to the host state, and the revenue on Involuntary Resettlement. The Panel notes generated from this power will be used as a the importance of close monitoring to ensure that source of revenue for host state development. these initiatives have a sustained positive impact in the local area. The Panel notes the need for An additional 1 percent of revenue collected as clarity on the use of the 12% royalty payment to per the National Hydro Policy will go directly to 23 24 the State and of the 1% revenue generated under the project area, following the guidelines for the National Hydropower Policy so that Project management of LADF issued by the Ministry of affected villages and others that are impacted will Power in October 2013. These revenues will be benefit from these initiatives that are aimed at utilized to meet the infrastructure and financing developmental needs. With respect to development needs of the local population. As the issue of access to services and common per the guidelines of Ministry of Power, the resources in host communities, and the possibility money will be directly deposited by the of conflicts arising due to resource sharing, the developer in the LADF and a 1 percent matching Panel notes, to the extent that some villages, grant will be provided by the state government. such as Gadora, are indirectly “hosting” The State of Uttarakhand will determine the resettled families by sharing their public details of the mechanism that will govern the services and natural resources with them, that use of these funds. as Project implementation makes progress, Currently THDC is carrying out development Management is responsive to the letter and activities with funding from two sources, namely: spirit of OP 4.12, para 13 (b) which requires (i) CSR funds (from 1 percent of ’THDC’s profit) that infrastructure and public services are in the district; and (ii) INR 96.44 million as part provided as necessary to new resettlement of the RAP budget for community and area sites and host communities to improve, development in the affected villages. restore, or 101 maintain accessibility and levels of service for the displaced persons and The following activities have been carried out by host communities. The Panel further notes the THDC to maintain infrastructure and public importance of assessing the impact of the Project services in the resettlement villages: on host communities at the end of RAP implementation. The Panel also notes that there is  A drinking water facility with two 5000-liter a functioning grievance redress mechanism under tanks has been installed for the El Dana the Project to which issues are being taken for resettlement site. In Daswana, two tanks of resolution. Based on the foregoing, the Panel 6000 liters each have been installed to finds that the requirement of OP/BP 4.12 on supply drinking water. Involuntary Resettlement that an appropriate  THDC has installed a separate three-phase and accessible grievance mechanism be transformer for power supply to the established has been met. The Panel notes the resettlement villages but it is currently being importance of the Project GRC being made operated as a single-phase transformer. accessible to host communities so that their THDC is in the process of adding two more concerns can be heard and resolved whenever phases to cater for the increased electricity appropriate. demand.  THDC has planned to link Daswana village to NH 58 through Garhi village, for which the tendering is currently in process. This is an existing PWD road that passes through some private plots which will need to be acquired. THDC has also built internal footpaths to connect the two major settlement sites to an existing all-weather road.  THDC has relocated the government-run primary school of Haat to the new site (the money for constructing the new building has already been deposited with the state government in the form of compensation) in a rented accommodation. THDC plans to construct a school building in the allocated site, which can be used for common purposes by the community once the education department constructs its own building. 24 Management Report and Recommendation Going forward, the following activities will be implemented:  THDC will carry out evaluation of host villages (if any, other than Ghedora) by December 31, 2014 to establish baseline.  The end-term evaluation of RAP implementation will also cover the impact evaluation for the host villages.  The GRC will be made more accessible by holding GRC meetings in each of the affected villages, whenever possible. 25