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Safeguards Diagnostic Review for South Africa Eskom Investment Support Project March 11, 2010

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Page 1: Safeguards Diagnostic Review for South Africa …siteresources.worldbank.org/INTSOUTHAFRICA/Resources/...Eskom in November 2009, and was the subject of stakeholder consultation workshops

Safeguards Diagnostic Review

for

South Africa

Eskom Investment Support Project

March 11, 2010

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ii

ABBREVIATIONS AND ACRONYMS

AEL Atmospheric Emission License

APPA Atmospheric Pollution Prevention Act

AQA Air Quality Act

BAR Basic Assessment Report

BC Biodiversity and Conservation, a branch

of DEA

BID Background Information Document

BP Bank Procedures

CEO Chief Executive Officer

CLN Customer load network

CO Carbon monoxide CO2 Carbon dioxide

CPA Criminal Procedures Act

CSIR Council for Scientific and Industrial

Research

CTF Clean Technology Fund

DEA Department of Environmental Affairs

(formerly Department of Environmental

Affairs and Tourism, DEAT)

DEIR Draft Environmental Impact Report

DSR Draft Scoping Report

DWA Department of Water Affairs (formerly

Department of Water Affairs and Forestry, DWAF)

EA Environmental Assessment

EAR Environmental Assessment Report

EC Executive Committee (Eskom Holdings

Ltd)

ECA Environmental Conservation Act

EEMP Eskom Environmental Management

Programme

EHSG Environment, Health and Safety

Guidelines (World Bank Group)

EIA Environmental Impact Assessment EIR Environmental Impact Report

EISP Eskom Investment Support Project

EMC Environmental Monitoring Committee

EMF Environmental Management

Framework

EMI Environmental Management

Inspectorate

EMP Environmental Management Plan

EMS Environmental Management System

EQP Environmental Quality and Protection, a

Branch of DEA

Eskom Eskom Holdings, Limited ESTA Extension of Security of Tenure Act

FGD Flue gas desulfurization

FPM Fine particulate matter

GEF Global Environmental Facility

GoSA Government of South Africa

GRI Global Reporting Initiative

I&APs Interested and Affected Parties

IBRD International Bank for Reconstruction

and Development

IFC International Finance Corporation

IP&WM Integrated Pollution and Waste

Management Policy

IR Involuntary Resettlement

ISDS Integrated Safeguards Data Sheet

IWULA Integrated Water Use License

JSE SRI Johannesburg Stock Exchange Socially

Responsible Investment (Index)

Km Kilometer KPI Key Performance Indicators

kV Kilovolt

MCWAP` Mokolo and Crocodile Water

Augmentation Project

MEA Multilateral Environmental Agreements

MEC Member of the provincial Executive

Council

mg Milligram

MW Megawatt

NEMA National Environmental Management

Act

NGO Nongovernmental organization NH Natural Habitats

NHRA National Heritage Resources Act

Nm3 Normal cubic meters

NOx, Nitrogen oxides

OHS Occupational Health and Safety

OHSP Occupational Health and Safety

Management Plans

OP Operational Policy

PCB Polychlorinated biphenyls

PCR Physical Cultural Resources

PM Particulate matter PMP Provincial Management Plans

PPAH Pollution Prevention and Abatement

Handbook

ppb Parts per billion

ROD Record of Decision

SAAQIS South African Air Quality Information

System

SANS South African National Standards

SDR Safeguards Diagnostic Review

SEA Strategic Environmental Assessment

SIA Social Impact Assessment

SO2 Sulfur dioxide SR Scoping Report

UCS Use of Country Systems

VOC Volatile organic compound

WBG World Bank Group

WBR Waterberg Biosphere Reserve

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Table of Contents

EXECUTIVE SUMMARY .................................................................................................................. v

I. BACKGROUND ...................................................................................................................... 1

II. PROJECT DESCRIPTION ..................................................................................................... 2

III. BASIS FOR SELECTING THE PROJECT FOR PILOTING UNDER OP 4.00 ............... 4

IV. METHODOLOGY AND PROCESS FOLLOWED IN DETERMINING

EQUIVALENCE AND ACCEPTABILITY .......................................................................... 5

V. SUMMARY OF EQUIVALENCE ANALYSIS ................................................................... 7

A. Environmental Assessment (EA) ................................................................................ 8

B. Natural Habitats (NH) ............................................................................................... 10

C. Physical Cultural Resources (PCR) .......................................................................... 10

D. Involuntary Resettlement .......................................................................................... 10

E. General Conclusion of the Equivalency Analysis ................................................... 11

VI. ACCEPTABILITY ASSESSMENT ..................................................................................... 11

A. Institutional Capacity................................................................................................. 12

1. Eskom Holdings Limited (Eskom)............................................................... 12

2. The Department of Environmental Affairs (DEA) ..................................... 22 3. Department of Water Affairs ........................................................................ 25

4. South African Heritage Resource Agency ................................................... 25 B. Processes and Procedures .......................................................................................... 26

1. Environmental Governance .......................................................................... 26

2. Environmental Impact Assessment .............................................................. 27 3. Cumulative Impact Assessment ................................................................... 31

4. Strategic Environmental Assessment (SEA) and Environmental

Management Frameworks (EMF) ................................................................ 32

5. Permitting ...................................................................................................... 35 6. Compliance and Enforcement ...................................................................... 36

7. Site-Specific EIA Process ............................................................................. 39 a) Medupi: EIA Process ........................................................................ 41

b) Kusile: EIA Process .......................................................................... 42 c) Overview of the EIA Process ........................................................... 45

8. DEAT Approvals and Associated Conditions ............................................. 47 a) Conditions Applicable to both Medupi and Kusile ........................ 48

b) Site-Specific ROD Conditions ......................................................... 49 c) Medupi Phase 1 Transmission Lines RODs ................................... 55 d) Post-ROD Permitting........................................................................ 56

e) Compliance and Enforcement .......................................................... 56 9. Environmental Management Plans (EMPs) ................................................ 57

a) Medupi: Construction Phase ............................................................ 57 b) Medupi: Operational Phase .............................................................. 58

C. Projected Outcomes: Environmental impacts .......................................................... 59

1. Medupi ........................................................................................................... 61

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2. Kusile ............................................................................................................. 65 D. Projected Outcomes: Social Impacts ........................................................................ 67

1. Medupi ........................................................................................................... 67

2. Kusile ............................................................................................................. 67 3. Sere Wind Power Project, CSP Plant Sites, and Majuba Rail Spur Sites .. 68

E. Associated Facilities .................................................................................................. 68

1. Associated Facilities: Medupi ...................................................................... 68 F. Other Safeguards-Related Findings .......................................................................... 71

VII. SUMMARY OF GAPS AND PROPOSED GAP-FILLING MEASURES ....................... 73

Annexes

Annex 1. World Bank Operational Policy 4.00

Annex 2. South African Legal Framework Applicable to the Environmental and Social

Impacts of the EISP Environmental Framework

Annex 3. Equivalence Matrix

Annex 4. Comparison of South African Environmental Requirements for Thermal Power

Plants and the World Bank Group Environmental Guidelines For Thermal Power

Plants

Annex 5. Summary of Stakeholder Consultations, Pretoria, December 9-10, 2009

Comments from Participants and World Bank Response

References

Maps

Map 1. Location of EISP Components (IBRD 37164R)

Map 2. Detail of Majuba Rail Spur (IBRD 37482)

Map 3. Coalfields in the Medupi Area - Botswana and South Africa (IBRD 37658)

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EXECUTIVE SUMMARY

1. Policy Framework. Under Operational Policy/Bank Procedure 4.00 (OP/BP 4.00),

Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects, the Bank has had the authority since March 2005 to support pilot

projects in which lending operations are prepared using the borrowing country‘s systems for

environmental and social safeguards, rather than the Bank‘s corresponding operational policies

and procedures. The advantages of using country systems (UCS) are to: scale up development

impact, increase country ownership, build institutional capacity, facilitate donor harmonization

in approaches to environmental and social safeguards, and increase cost effectiveness. These

objectives with respect to environmental and social safeguards were broadly endorsed at the

Paris High Level Forum on Aid Effectiveness in March 2005, and strongly reiterated in the

Accra Agenda for Action in September 2008.

2. During the past three years, the World Bank has approved ten pilot projects under the

first phase of this program, including recent approval of a pilot project in South Africa. On

January 31, 2008, the Executive Directors of the World Bank approved a three-year extension of

the pilot program accompanied by an incremental scaling up of the pilots from the project to the

country-level, including support of activities at the sub-national level. Under the three-year

extension, i.e., the second phase of the pilot program, nine pilots have been formally initiated and

are being worked on, including a scaled up second project in South Africa for which this

document has been prepared.

3. OP/BP 4.00 describes the approach, enumerates the criteria for using country systems,

and specifies documentation and disclosure requirements and respective roles of the borrower

and the Bank. The Bank considers a borrower‘s environmental and social safeguard system to be

equivalent to the Bank‘s if the borrower‘s system is designed to achieve the objectives and

adhere to the applicable operational principles set out in Table A1 of OP 4.00. Since equivalence

is determined on a policy-by-policy basis in accordance with Table A1, the Bank may conclude

that the borrower‘s system is equivalent to the Bank‘s with respect to specific environmental or

social safeguards in particular pilot projects, and not with respect to others. Before deciding on

the use of borrower systems, the Bank also assesses the acceptability of the borrower‘s

institutional capacity, implementation practices, and past performance in similar projects. Gap-

filling measures must be implemented prior to project approval or, if carried out by necessity

during project implementation, are subject to a time-bound legal agreement between the Bank

and the borrower. The process and product of analyzing equivalence, assessing eligibility, and

identifying and agreeing on gap-filling measures is called a Safeguards Diagnostic Review

(SDR). Under OP 4.00, a draft SDR is required to be disclosed prior to project appraisal.

4. This SDR is prepared for the Eskom Investment Support Project (EISP) in South Africa.

The project has been requested by the Government of South Africa (GoSA) to support selected

investments by Eskom Holdings Ltd. (Eskom) in the power sector. The SDR describes the scope,

methodology, and findings of the equivalence analysis and acceptability assessment carried out

in South Africa by staff from the World Bank. It also identifies and proposes gap-filling

measures designed to ensure that applicable South African safeguard systems, and Eskom‘s

corporate practices for complying with the relevant South African regulations, meet the

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equivalence and acceptability criteria of OP 4.00 throughout the project cycle and are adapted to

extend their benefits beyond the scope of the project to the extent possible. The SDR was

conducted in collaboration with the borrower, which is Eskom, and officials from the South

African Ministry of Water and Environmental Affairs, including the Department of

Environmental Affairs (DEA).1 A draft of this SDR was publicly disclosed by the Bank and by

Eskom in November 2009, and was the subject of stakeholder consultation workshops held in

South Africa in early December 2009. This revised document takes into consideration comments

received from stakeholders, and is being disclosed by the Bank and by Eskom.

5. Project Objectives. The strategic objectives of the EISP are to: (a) support the GoSA in

removal of the growing infrastructure bottlenecks on an accelerated basis; and (b) revive

economic growth in the Southern Africa region through enhancement of South Africa‘s power

supplies in an efficient and sustainable manner to bridge current and projected electricity supply-

demand imbalances that already have taken a toll on sustained regional as well as South Africa‘s

economic growth. The objective of the SDR is to assess the borrower‘s safeguards systems, and

for this purpose the SDR has looked at safeguards documents prepared for several Eskom

investment projects, not all of which would receive Bank support.

6. Project Components. The proposed Project (phase I) will consist of the following

components, which will be implemented by Eskom:

Component A includes the Medupi coal-fired power station (4,800 MW, based on

super-critical technology) and is expected to cost US$12.047 billion2, of which

IBRD will provide financing of about US$3.05 billion. This loan will be provided

against supply and install and civil construction contracts for (i) the power plant and

(ii) associated transmission lines.

Component B includes investments in renewable energy (100 MW Sere Wind Power

Project and 100 MW Upington Concentrating Solar Power Project). This component

is estimated to cost US$1.198 billion, of which IBRD will provide financing of

about US$260 million. The Clean Technology Fund (CTF) will provide financing of

about US$250 million (with the proposed IBRD loan). A US$100 million loan from

CTF is proposed to be processed through AfDB for the component.

Component C includes both sector investments and technical assistance to support

lowering Eskom‘s carbon intensity through energy efficiency and development of

renewable energy. The Majuba Rail Project (shift in transportation mode from road

to rail) and technical assistance for assessing the opportunities for coal-fired power

1 From 1994 through May 2009, DEA was known as the Department of Environmental Affairs and Tourism

(DEAT) and reported to the Ministry of Environmental Affairs and Tourism, As part of a ministerial reorganization

in May 2009, DEA and the Department of Water Affairs (previous part of the Ministry of Water Affairs and

Forestry) were both placed under the authority of the newly designated Ministry of Water and Environmental

Affairs and the Department of Tourism became a separate Ministry of Tourism. For purposes of this report, the current acronym, DEA, will be used when referring to the Department in the present or future tense; and DEAT will

be used when referring to the Departmental actions taken in its previous capacity. 2 The estimate project total cost is based on interest during construction directly related to debt that has been raised

by Eskom for the Medupi power plant. Any Eskom funding costs for its contributions to the plant from the balance

sheet have not been included and have been considered as Eskom equity to the Project.

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plant efficiency improvements and for the development and implementation of

domestic and cross border renewable energy projects are envisaged under this

component. This component is estimated to cost US$537.57 million of which

US$440 million will be financed by IBRD.

The project comprises about US$1.766 billion of Low-carbon Renewable and

Energy Efficiency investments, of which IBRD will finance US$700 million and

CTF will finance US$350 million.3

7. For purposes of assessing the implementation practices, track record, and institutional

capacity of Eskom and the South African regulatory institutions that will be involved in

addressing environmental and social safeguard issues in the proposed Bank-supported EISP, the

Medupi power plant and another major Eskom investment currently under construction, the

4,800 MW Kusile power plant in Mpumalanga Province, were selected by the Bank team to

assess and verify the robustness of the Environmental Impact Assessment (EIA) process and its

outputs under the requirements of OP 4.00. By selecting these two nationally important projects

as the primary subjects of SDR analytical work for the EISP, the Bank achieves two important

objectives: it allows the SDR to assess the integrity and robustness of DEA‘s environmental

review and approval process for two major projects that could be considered of national

importance; and it provides insights into Eskom‘s capacity, commitment, and capability to

address environmental and social safeguards issues with respect to both the EIA process and

project implementation, since construction is well underway for both the Medupi and Kusile

power plant projects. Moreover, this focus on these two key projects is a particularly valuable

approach because both the safeguards work and the initial stages of construction have been

carried out in accordance with Eskom‘s corporate practices prior to the decision by the GoSA to

seek Bank support for Eskom‘s investment program.

8. Although this SDR analytical work focuses on the Medupi and Kusile power plants as

representative examples to assess the borrower‘s safeguards systems, it is important to note that

the Bank team also reviewed safeguards documents already disclosed on Eskom‘s website for

additional Eskom investments that are expected to be financed in part by the Bank‘s EISP. For

example, in preparing the SDR, the Bank team also reviewed the final EIRs prepared by Eskom

for the proposed Sere Wind Power Project (WPP) in Western Cape Province, the Concentrating

Solar Power (CSP) plant near Upington in Northern Cape Province, and the 67-km Ermelo-

Majuba rail line for coal transport in Mpumalanga Province, and found that the safeguards

documents for these proposed Eskom investments demonstrate comparable equivalence and

acceptability with respect to Environmental Assessment and treatment of Natural Habitats,

Physical Cultural Resources, and Involuntary Resettlement. The Bank team also will continue

reviewing the safeguards documents, such as Environmental Impact Reports (EIRs),

Environmental Management Plans (EMPs), or similar documents, prepared by Eskom for other

EISP components as they become available during project preparation, implementation, and

supervision.

3 Including the US$100 million potentially combined with an AfDB loan for the Sere Wind Power Project and the

Upington CSP.

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9. Basis for Selection of Pilot Country and Project. South Africa was selected as a pilot

country because it has an established legal and regulatory system and a favorable reputation for

effective implementation of its systems governing environmental assessment and protection of

natural habitats, protected areas, and physical cultural resources. This has already been

demonstrated by the SDR completed by the Bank for the recently approved Global Environment

Facility (GEF) project in support of the Development, Empowerment, and Conservation of the

iSimangaliso Wetland Park and Surrounding Region (iSimangaliso), which examined South

Africa‘s legal framework for the same four safeguards that are triggered by the EISP, but with

reference to their application to an internationally protected wetlands area with substantial

autonomy from the mainstream of the South African administrative framework.

10. The EISP was selected as a scaled up pilot project because the borrower, Eskom

Holdings Ltd., has demonstrated a substantial corporate commitment to fulfilling and going

―beyond compliance‖ with legal and regulatory requirements and embracing a sustainability

policy on both a corporate and project level. As described in detail below, Eskom subscribes to

the United Nations Global Compact,4 has obtained or is in the process of obtaining ISO 14000

certification for the Environmental Management System (EMS) for each of its operational units,

and seeks to align its projects and its practices with the requirements of the Equator Principles

(i.e., the International Finance Corporation‘s Performance Standards) and with the Global

Reporting Initiative (GRI). Accordingly, there is reason to expect that Eskom‘s systems are

likely to demonstrate strong equivalence with the World Bank safeguards as set forth in OP 4.00

Table A1, and that Eskom‘s investment projects making up the EISP would be implemented in

an acceptable manner with respect to Bank safeguard policies.

11. SDR Methodology. This SDR for the EISP builds and expands on the results of the SDR

completed in March 2009 for the GEF-funded iSimangaliso project, which received Board

approval in December 2009. Although the iSimangaliso project involved a protected natural

habitat rather than an energy generation (and associated infrastructure) project, the SDR included

an Equivalence Analysis of the South African legal framework for Environmental Assessment,

Natural Habitats, Physical Cultural Resources, and Involuntary Resettlement. The March 2009

SDR concluded that the South African systems are fundamentally equivalent to the Objectives

and Operational Policies of OP 4.00 Table A1 with respect to the three environmental safeguard

policies, and partially equivalent with respect to Involuntary Resettlement in the context of its

application to management of a designated protected area.

12. The Equivalence Analysis and Acceptability Assessment for the EISP were carried out by

a multidisciplinary team from the World Bank in collaboration with relevant officials and

technical staff members from Eskom, with cooperation from DEA and the Department of Water

Affairs. The methodology included: desk review of legislation currently in force, supporting

regulations, and mandatory guidelines applicable to the electric power generation sector and

associated infrastructure; discussion with officials; and site visits to the Medupi and Kusile

construction sites, the Sere WPP site, the CSP site, and the 67-km Ermelo-Majuba rail line

servitude, by members of the Bank‘s project team. The Bank team preparing the SDR consisted

entirely of senior level staff and included: an environmental lawyer, three environmental

specialists, a Senior Technical Advisor, and a social specialist.

4 www.unglobalcompact.org.

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13. The Equivalence Analysis included a detailed inventory of South African laws and

regulations relating to the four Bank environmental and social safeguard policies triggered by the

project, as identified below in the Equivalence Section of this report. These laws and regulations

are supported by Constitutional provisions, policies, and international agreements ratified by the

GoSA, all of which are included as relevant to the legal framework for the Equivalence Analysis.

An extensive literature review was also conducted tracing the development and evolution of

South African environmental law in both historical and comparative contexts. The analysis

draws careful distinctions between laws and regulations that are mandatory, as valid comparators

to the Operational Principles of OP 4.00 Table A1, and other documents having aspirational or

guidance value, which may inform the analysis and provide a basis for comparison with the

Objectives of OP 4.00 but cannot be considered conclusive evidence of equivalence with the

mandatory provisions of Bank safeguards. Based on this analysis each relevant provision of a

borrower‘s system is characterized as having full, partial, or no equivalence to the corresponding

Objective or Operational Principle of OP 4.00 Table A1.

14. The Acceptability Assessment applied the four-component methodology that has evolved

through the SDR process during the implementation of the UCS pilot program. These four

components include: institutional capacity; processes and procedures; outputs; and outcomes. To

assess relevant institutional capacity, the assessment drew on primary sources including external

and internal reports prepared by Eskom and DEA. These reports provided valuable insights into

Eskom‘s institutional capacity to: (a) conduct environmental assessment; (b) avoid, minimize,

mitigate and compensate for adverse environmental and social impacts resulting from the

construction and operation of thermal power plants and associated infrastructure, while

conserving natural habitat and physical cultural resources; and (c) conduct land acquisition and

related resettlement activities in accord with South African legal requirements and international

good practice as exemplified by Bank safeguard policies and associated guidance documents.

The SDR also examines the capacity of the DEA to apply informed critical judgment to its

review of EIRs submitted by Eskom as demonstrated by its processing of the EIRs for the two

power plants proposed for support under the EISP, and by Eskom or other parties responsible for

associated infrastructure.

15. To assess the effectiveness of implementing processes and procedures, the SDR reviewed

official procedural and guidance documents describing the appropriate conduct of the

environmental assessment and management process in South Africa. Attention was given to the

various stages of the environmental assessment process in South Africa including: the Scoping

Phase and EIR Phase, public consultation and disclosure, culminating in the Environmental

Authorization (formerly known as Record of Decision [ROD]) on the part of the Minister of

Environmental Affairs. Similar review was conducted with respect to the development and

approval of EMPs for the construction and operational phases of the two thermal power plant

projects. The EIRs and construction-stage EMPs were reviewed in light of the requirements for

environmental assessment under South African law and international good practice.

16. With respect to outputs, the SDR critically reviewed: the findings of the EIRs and EMPs

for the Medupi and Kusile projects; the EIRs for the Sere WPP, the Upington CSP plant, and the

coal transport rail spur; and the RODs and other approvals issued by DEA to date. The

Acceptability Assessment also reviewed the land acquisition and compensation process

undertaken by Eskom in connection with project development, and the outcomes of that process

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with respect to compliance with South African law and the objectives and operational principles

of Bank policy with respect to Involuntary Resettlement.

17. The methodology included stakeholder consultation workshops on the draft findings of

this SDR report as noted above. A summary of the workshops is included as an annex to this

report.

Summary of Equivalence Analysis

18. The first step in the Equivalence Analysis is to identify the World Bank environmental

and social safeguard policies triggered by the project. The four environmental and social

safeguards triggered by the project include: Environmental Assessment (EA); Natural Habitats

(NH); Physical Cultural Resources (PCR); and Involuntary Resettlement (IR).

19. This Equivalence Analysis finds that South Africa‘s regulatory systems for all of the four

safeguards applicable to the project demonstrate sufficient equivalence so as to justify

proceeding to an Acceptability Assessment to determine if and on what basis the Bank can use

South Africa‘s and Eskom‘s systems in lieu of Bank safeguards to address the environmental and

social safeguard issues raised by the proposed project.

20. The following findings apply to the four safeguards, respectively:

Environmental Assessment (EA). With respect to EA, the South African system is

deemed to be fully equivalent to the Objectives and Operational Principles of OP 4.00

Table A1. However one ambiguity in the language in the regulatory framework

required additional clarification during the preparation of the SDR:

- It is not clear from the regulations that the assessment of alternatives is

required to assess their relative feasibility with respect to all of the feasibility

criteria cited in OP 4.00 Table A1. It appears from the South African

regulations that the proponent has the option to include those alternatives

deemed ―feasible and reasonable‖ and compare the advantages and

disadvantages of such alternatives for the environment and the community.

But it does not explicitly require the EIR to justify alternatives considered on

the basis of comparative capital and recurrent costs, and institutional, training

and monitoring requirements, which are among the criteria noted in OP 4.00

Table A1 as among the criteria to be uniformly considered. DEA (then-

DEAT) published guidance on criteria to be included in alternatives

assessment in 2004 (Integrated Environmental Management Information

Series, Series 11: Criteria for Determining Alternatives in EAI), which

recognizes that the range of criteria must be appropriate to the type of project

subject to the EIA process.

As noted later in this report, Eskom‘s policy and practice is to address

alternatives assessment at both the strategic and project-specific levels.

Although South African regulations do not explicitly require consideration of

capital and recurrent costs, and institutional training and monitoring

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requirements, among the key factors for all projects, Eskom does so at both

levels of analyses. Thus, any ambiguity is resolved with respect to Eskom‘s

approach to alternatives analyses.

Natural Habitats (NH). With respect to NH, the South African system is deemed to

be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table A1.

However one ambiguity in the regulatory framework required additional clarification

during the preparation of the SDR:

- South African legislation appears to lack a conservation offset provision for

non-critical natural habitat. South Africa recognizes that as the development

footprint increases, there will be unavoidable net loss of non-critical habitat,

but through the Environmental Authorization (formerly ROD) process,

biodiversity offsets can be required on a case-by-case basis.

As noted later in this report, Eskom, through its partnerships with South

African conservation organizations, has supported conservation offsets for

projects that convert natural habitat, even though South African legislation

does not appear to require such practice.

Physical Cultural Resources (PCR). With respect to PCR, the South African system

is deemed to be fully equivalent to the Objectives and Operational Principles of OP

4.00 Table A1. However a few ambiguities in the regulatory framework required

additional clarification during the preparation of the SDR:

- The extent of participation and obligations of communities in the process of

cultural heritage assessment and conservation remains within the scope of the

EIA process, as specified by the National Heritage Resources Act, but are not

as explicit as stated in OP 4.00 Table A1.

- It is not clear how the legislative framework deals with ―chance finds.‖ A

standard condition is included in all Environmental Authorizations (formerly

RODs) stipulating how ―chance finds‖ must be dealt with during the

construction and operational phase, but the legal basis for this requirement is

not explicit in the regulations.

Although South African regulations do not require it, Eskom implements its

policy of extensive local stakeholder consultation regarding cultural resources,

along with its standard protocol requiring that ―chance finds‖ be reported

immediately to the South African Heritage Resources Agency (SAHRA) and

that construction is halted at the discovery until qualified experts are

consulted.

Involuntary Resettlement (IR). With respect to IR, the South African system is found

to be fully equivalent to the Objectives and Operational Principles of OP 4.00 Table

A1 for all but the following Operational Principles:

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- Rights of access to natural resources and biodiversity of protected areas

(however, as there are no protected areas affected by the project, this gap in

equivalence is not relevant to the conclusion of this SDR);

- Disclosure of draft resettlement plans in a timely manner to the public at large

is not clearly spelled out in Eskom guidelines, although it is a requirement

with respect to directly affected parties under various Acts related to the

National Environmental Management Act (NEMA) and Lands.

It should be mentioned, however, that Eskom has developed a practice to conduct

assessment to confirm whether the objectives of resettlement have been achieved

upon completion of the project, taking into account the baseline conditions and the

results of resettlement monitoring. It also should be noted that the South African

legislation regarding resettlement requires extensive consultation and disclosure with

directly affected people, i.e., those who are to be resettled, and provides for benefits

and livelihood restoration in a manner consistent with the Bank‘s safeguard policy.

Therefore, for the EISP, the key gaps appear to be the absence of a requirement for a

stand-alone, formal Resettlement Action Plan that is disclosed to a broad audience of

interested parties, and a formal mechanism for a completion audit.

Summary of Acceptability Assessment

21. The purpose of the Acceptability Assessment is to confirm that the implementation

practices, track record, and institutional capacity of Eskom, and the South African regulatory

institutions that will be involved in addressing environmental and social safeguard issues in the

proposed Bank-supported EISP, fulfill the requirements of OP 4.00 Table A1. The Acceptability

Assessment examined four criteria: institutional capacity; processes and procedures; outputs; and

outcomes of the borrower‘s systems for EA, NH, PCR, and IR.

Institutional Capacity

22. The institutions responsible for implementing the four environmental and social

safeguards applicable to the project include, in the first instance the borrower, Eskom, as well as

DEA (under the authority of the Ministry of Environmental Affairs and Tourism until May 2009,

and now under the authority of the Ministry of Water and Environmental Affairs with respect to

environmental impact assessment and air and water quality management); Department of Water

Affairs (DWA, formerly the Department of Water Affairs and Forestry), which enforces

regulations governing the supply and use of water; the Department of Land Affairs, under the

Ministry of Agriculture and Land Affairs with respect to land acquisition; the South African

Heritage Resource Agency (SAHRA), which provides the expertise in South Africa to develop

and implement policies and practices regarding protection and management of cultural resources;

and provincial and municipal authorities with respect to many of these same authorizations.

23. Eskom. Eskom is South Africa‘s national, vertically integrated electricity utility, and is

wholly owned by the GoSA through the Department of Public Enterprises. Eskom‘s current

structure is defined by the Eskom Conversion Act of 2001. The utility employs about 35,500

employees (reduced from about 66,000 over the past two decades). Eskom operates its business

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through a number of divisions and subsidiary companies. Eskom‘s core business as a utility is

carried out by the three divisions under the heading Eskom Core Business and is described

below, followed by a brief description of the operations of the key subsidiaries.

24. At the corporate level, environmental and social governance within Eskom begins at the

level of the Chief Executive Officer (CEO) and is overseen by the Executive Directors, who are

full time employees of Eskom, and by the authority delegated to Board Committees, including

the Executive Management Committee and the Sustainability and Safety Subcommittee. The

latter is comprised of four independent non-Executive Directors, along with the CEO and two

Board Members, and guides corporate strategy on sustainability, occupational health and safety,

and environmental matters in line with Eskom‘s safety, health and environment policy, the

NEMA, and the Occupational Health and Safety Act of 1993.

25. Within the management structure of Eskom, each line division (Generation,

Transmission, or Distribution) is individually responsible for carrying out the EIA process,

producing EIRs as required by South African regulations, and implementing the environmental

management and monitoring activities associated with its line of business. To undertake these

tasks Eskom has more than 100 environmental and social specialists located in their headquarters

office and various field operations.

26. Eskom has a comprehensive ―triple bottom line‖ approach to the management of

environmental, health, and safety issues as part of its corporate commitment to sustainability. As

one of the charter members of the United Nations Global Compact, Eskom is committed to

uphold the ten principles of the Compact, which include inter alia protection of the environment,

labor standards, human rights, and anti-corruption. Eskom‘s sustainability performance in 2006

met the requirement for inclusion in the Johannesburg Stock Exchange Socially Responsible

Investment Index. Eskom has a systematic audit process in place to ensure that any non-

compliance with South African legal requirements is identified, reported, and investigated, and

that corrective and preventive measures are implemented.

27. The one weakness at the Eskom corporate level that was identified in this SDR is the

need, publicly acknowledged by Eskom, to pay greater attention to occupational health and

safety, as indicated by a recent record, which Eskom itself characterizes as ―unsatisfactory,‖ of

traffic-related fatalities and injuries and incidents of electrocution resulting from accidental or

unauthorized contact with energized lines or electrical equipment. Accordingly Eskom proposed

to enhance its ―…focus [on] safety training and awareness, skills, competency, supervision and

operational discipline…,‖ and has put in place a procedure to investigate all fatalities promptly

and share lessons learned from case studies. In addition, Eskom engaged the services of an

international specialist to evaluate its electrical safety as well as behavioral safety programs.

Changes were made to the Eskom training materials to incorporate some of the recommendations

made. With respect to community safety, campaigns to improve public awareness were rolled

out in various media and included school visits and the handout of safety materials.

28. DEA. Established in 1994, as the Department of Environmental Affairs and Tourism,

DEA is an independent Department of the GoSA responsible for protecting, conserving, and

improving the environment and natural resources. It now reports to the Minister of Water and

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Environmental Affairs, who is a member of the Cabinet and is appointed by the President from

among members of the National Assembly.

29. DEA management and staff have high levels of specialized training in all key areas of

environmental assessment and management. In particular, the Air Quality Directorate at DEA

has been fully engaged in developing and implementing ambient air and emissions standards that

are aligned with international good practice as defined by the World Bank, the European Union,

and the United States Environmental Protection Agency.

Processes and Procedure for Environmental Assessment and Management for Coal-Fired

Thermal Power Plants and Associated Infrastructure

30. South Africa began undertaking EIA in an ad hoc manner during the 1980s, and a

voluntary EIA procedure was integrated into the Environmental Conservation Act of 1989

(ECA), since largely superseded by the National Environmental Management Act (NEMA).

Requirements for EIA were introduced on a sectoral basis in the Minerals Act of 1991 (Sections

38 and 39(5)). These requirements were generalized by the EIA Regulations of September 5,

1997, which mandated a process including screening, scoping, public participation,

environmental reports, review, and decision. (For purposes of clarity, it should be noted that the

current South African regulations refer to an EIA process, which produces an EIR, and this

terminology is used in this SDR).

31. Following an extensive process of expert review and public consultation and discussion,

substantially revised EIA Regulations were issued in 2006. The new regulations resulted in a

more coherent process with respect to application of EIA including: (a) EIA scoping, (b)

decision-making procedures, (c) roles, (d) responsibilities and compliance, (e) public

participation, and (f) appeal process.

32. In November 2008, DEA (then DEAT) commissioned and issued a draft review of the

previous ten years of EIA practice in South Africa. The draft report was conducted by

independent consultants. The main findings of the report are that: (a) the overall effectiveness of

EIA process in South Africa in meeting requirements of ECA and then NEMA was deemed

moderately effective but with room for improvement; (b) overall there was a significant

improvement in effectiveness and efficiency of EIA in moving from the ECA regulations to the

NEMA regulations; (c) public participation in EIA is effective; (d) the cumulative (combined)

impacts aspect is generally not considered effective and there is significant room for

improvement; (e) the EIA process in South Africa is implemented relatively efficiently in terms

of the average time it takes to produce and evaluate EIAs; (f) monitoring and enforcement in

environmental management is one area where the current EIA system is not effective or efficient;

and (g) a more strategic approach to environmental impact management is required and there is a

definite need to move away from an ―EIA only‖ system to one based on integrated

environmental management.

33. South Africa‘s legal and regulatory framework for management of ambient air quality is

based on World Health Organization standards, and is therefore closely aligned with those used

by the World Bank Group (WBG) as specified in the WBG General Environmental, Health and

Safety Guidelines (EHSG) issued in April 2007. With respect to levels of emissions from

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thermal power plants, the proposed South African regulatory approach to emissions standards for

new plants is generally comparable to the WBG EHSG for Thermal Power issued in December

2008 in that it distinguishes between new and existing plants and sets more stringent

requirements for plants that discharge emissions to a degraded airshed. (see Annex 4).

34. Permitting is a key output of the EIA process in South Africa. With respect to the air

quality impacts of electrical generating facilities, the principal authorization is the Atmospheric

Emission License (AEL). The granting of an AEL must be preceded by the issuance of a ROD,

now referred to as an Environmental Authorization, for an EIA application, which, for listed

activities (including thermal power plants with more than 70 MW heat output) is required to be

accompanied by an Air Quality Impact Assessment Study prepared by qualified specialists.

Metropolitan and district municipalities are charged with implementing the atmospheric

licensing system per Section 36 of the Air Quality Act of 2004 (AQA), subject to alternative

arrangements in which a provincial organ of state may be designated as the issuing authority.

The contents of an AEL must include the maximum allowed amount, volume, and emission rate

or concentration of pollutants that may discharged into the atmosphere under normal working

conditions and during start-up, maintenance, and shut-down conditions.

35. Compliance monitoring and enforcement requirements for ambient air quality and

emissions from electricity generating facilities are set forth in the Atmospheric Pollution

Prevention Act of 1965 (APPA) which is being phased out under the terms of the 2004 AQA.

Standards issued under the AQA also set forth reference methods and siting criteria for sampling

of priority air pollutants associated with electricity generation facilities including particulate

matter (PM10), sulfur dioxide (SO2), nitrogen oxides (NOx), and carbon monoxide (CO) as well

as ozone, lead, and benzene.

36. As part of the National Framework for Air Quality Management in South Africa

(National Framework), and in implementation of mandatory provisions of the AQA, an extensive

network of ambient air quality stations has been established, owned and operated by a variety of

organizations. South African National Standards (SANS) for ambient air quality monitoring have

been established.

37. However, the AQA itself makes no provision for the enforcement of its own provisions;

rather, enforcement provisions are located in NEMA as framework legislation, where provision

is made for the statutory designation of Environmental Management Inspectors (EMIs) to

monitor compliance with and enforce AQA. NEMA grants EMIs (acting within their designation

and mandate) extremely wide powers, including powers of inspection, investigation,

administrative and enforcement actions. The first EMIs were designated by the Minister of

Environmental Affairs and Tourism in June 2006 and there were 903 trained and designated

EMIs reached as of March 31, 2008.

Processes and Procedures for Management of Social Impacts from Thermal Power Plants and

Associated Infrastructure

38. Eskom seeks to avoid land expropriation wherever possible and includes the potential

need for expropriation, resettlement, compensation and rehabilitation among the criteria used for

alternative site assessment. When resettlement is unavoidable, all displaced people are

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effectively consulted and compensated; support and other benefits are provided in the relocation

process, including livelihood restoration (―rehabilitation‖) as mandated by GoSA law.

39. Eskom provides security of tenure to resettled parties and helps register deeds of

ownership.

40. Replacement accommodation is based on South African Bureau of Standards

requirements for housing, which require minimum brick, mortar and tile structures with running

potable water and proper sanitation. Where cost-effective, Eskom also seeks to provide

electricity to replacement structures. Eskom‘s expenditure in these transactions is strictly

controlled by the Public Finance Management Act; however, it is Eskom‘s policy to ensure that

resettled parties are better off than prior to resettlement. Eskom seeks to maximize employment

of displaced persons in whatever jobs may be available on project sites. However, these are

typically unskilled construction jobs of limited duration.

41. Where in-kind resettlement opportunities are not available, Eskom provides cash

compensation based on an independent valuation using open market selling trends of similar land

based on registered sales over a period between three months and three years. In cases where the

land owner disagrees with the compensation offered, the owner is entitled to hire a valuer of his

or her own choosing, with the final offer typically reflecting the difference between the two

valuations.

42. Although Eskom does not prepare formal publicly-disclosed resettlement plans, Eskom

does undertake independent social assessment and develops internal plans for resettlement with

timelines and commitments. The plan is treated as a living document that is updated as required

on an ongoing basis. All negotiated outcomes are documented as formalized agreements and the

entire resettlement process is documented and filed by Eskom. The implementation phase of the

contractual resettlement plan is monitored and evaluated and is subject to amendment by mutual

agreement of the parties.

Public Consultation and Disclosure in the EIA and Land Acquisition and Resettlement

Processes

43. In examining the EIA process for both the Medupi and Kusile projects, the Bank team

determined that Interested and Affected Parties (I&APs) were informed about the projects and

consulted at various stages of the EIA process. During the Scoping Phase public participation

was comprehensive and included advertising in national, regional, and local newspapers,

subsequent notifications in regional and local newspapers, and the dissemination of a non-

technical Background Information Document (BID) in English, Afrikaans, and local languages,

which was updated on various occasions to take account of the evolution of the project. Public

fora were held at diverse venues in each area, organized and facilitated by an independent

consultant. Following the issuance of the Draft EIR reports, both on the internet and in hard copy

at local public libraries and municipal offices, a second round of local public consultations took

place.

44. The main issues raised by stakeholders for the Medupi and Kusile projects concerned

increases in air and noise pollution and the consequent potential impacts on public health. The

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issues raised and the responses by Eskom and government authorities to public comments and

questions is thoroughly documented in minutes from the public consultations and summarized

thematically in two ―Issues Trails‖ documents prepared by the independent consultant.

Stakeholders are also encouraged and often comment not only on the substance of the EIR but

also on the disclosure and consultation process itself. The public consultation process is

continued during construction, and will continue throughout project implementation with the

assignment of Environmental Control Officers and the constitution of Environmental Monitoring

Committees that include local stakeholder representatives.

Outputs: EIA Process and EIR Content for Medupi and Kusile

45. The EIA process for the Medupi and Kusile plants, as well as associated transmission

lines and most of the investments under consideration for the EISP, has been thoroughly

documented, and the project-specific EIRs of projects that Eskom proposes to undertake are

disclosed (and remain available) on Eskom‘s website.5 The EIA processes and content of the

EIRs for the two thermal power plants now under construction conform fully to the regulatory

requirements in effect at the time that the applications to commence the EIA process were

approved, i.e., the EIA Regulations issued in 1997 under the authority of the ECA of 1989.

However, the EIA process and EIR content for both projects was strongly influenced by and is

essentially consistent with the EIA Regulations that became effective in July 2006, although they

are not legally applicable to the Medupi and Kusile projects. This is because the EIA process for

both projects began at a time when the draft new regulations were already out for public

comment; therefore, Eskom chose, and instructed its consultants, to conform with the proposed

new regulations as well. As noted in the Equivalence section of this report, the 2006 EIA

Regulations are nearly fully equivalent to the Objectives and Operational Principles of OP 4.00

Table A1 with the exception of an ambiguity in the regulations regarding whether capital and

recurrent costs, and training and monitoring requirements are among the criteria to be considered

as part of the alternatives assessment. However, as would be expected, these criteria were fully

addressed in the strategic planning and project-specific EIA process for the two plants as per

Eskom‘s corporate practice.

46. An independent assessment of the EIA process and resulting EIRs commissioned by

Eskom concluded that both the EIA process and the content of the EIRs were consistent with the

requirements of the Equator Principles, which are based on the International Finance Corporation

(IFC) Performance Standards and which also make reference to the WBG Thermal Power

Guidelines issued under the 1998 PPAH and as revised in December 2008.

47. The Bank‘s own review of the EIRs indicated that both are consistent with international

good practice and with the Objectives and Operational Principles of OP 4.00 Table A1 with

respect to EA, notwithstanding the minor ambiguity in the South African legal framework as

noted in the Equivalence Analysis.

48. To date final EMPs have been prepared and approved by DEA for the construction phase

of the Medupi and Kusile projects, and a draft EMP has been prepared for the operational phase

of Medupi. Based on a review of these documents it may be concluded that the EMPs satisfy

5 www.eskom.co.za/eia.

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South African regulatory requirements and are consistent with Bank-recommended practice for

EMP.

49. The EIRs for the two plants were approved by DEA in publicly disclosed RODs issued in

September 2006 for Medupi and in June 2007 for Kusile. The RODs include a long list of

statutory and regulatory requirements reflecting site-specific projected impacts as documented in

the EIRs. These impacts relate primarily to air emissions and ambient air impacts; liquid effluent

control; management of ash and other solid wastes; and hazard assessment. The RODs require

that Eskom implement detailed monitoring and reporting protocols, and that Eskom appoint

independent Environmental Control Officers (having dual reporting to Eskom and DEA) and

establish Environmental Monitoring Committees including local stakeholder representatives. The

RODs demonstrate that DEA has the capacity and commitment to independently assess and

identify conditions that should be imposed on projects on a case-by-case basis.

50. It should be noted that the RODs issued by DEA provide approval based on the

satisfactory conclusion of the EIA process and conditions attached to project implementation. As

noted in the RODs for the Medupi and Kusile projects, Eskom must still obtain individual

permits, including an AEL from the Chief Air Pollution Control Officer (DEA) as per the AQA,

a Water Use License, and licenses for waste disposal, among others. Issuance of some of these

licenses, especially for the operational phase, is still pending. RODs for some of the other EISP

components and associated transmission lines are publicly disclosed and available on DEA‘s

website ( http://www.environment.gov.za/).

Projected Outcomes: Environment

51. The major potential environmental impacts of both the Medupi and Kusile projects relate

to the impact of emissions on local air quality and human health, in particular with respect to the

major pollutant, SO2. As existing ambient air quality conditions and water resources differ

among the two sites, so does the timing of the proposed mitigation measures as presented in the

EIR and required by the ROD.

52. The designated airshed at Medupi, which corresponds to the Waterberg District

Municipality, is not yet considered degraded with respect to ambient air quality. However,

ambient conditions in the airshed are expected to deteriorate in the future. Accordingly, DEA

intends to propose that the Minister declare the Waterberg airshed as a National Priority Area for

Air Quality and this declaration is likely to be issued sometime within the next year. Such a

declaration would provide DEA with additional authority to require designated sources of

emission, including Eskom, to take specified measures to reduce emissions such that ambient

conditions are maintained at acceptable levels. In addition, DEA has proposed emission

limitations for new and existing thermal power plants that will come into effect along with

certain provisions of the AQA on April 1, 2010. Under these provisions as currently proposed,

Medupi would be required to meet the limitations for existing plants within five years of

commencing operations, and the much more stringent limitations applicable to new plants within

an additional three to five years.

53. These ambient and emission limitations will oblige Eskom, to take unspecified measures

to substantially reduce its sulfur dioxide (SO2) emissions from the levels that would result from

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direct unmitigated combustion of coal to levels below the applicable emission limits and to take

other actions, as necessary as specified in its ROD, (and to be further specified in its AEL) in

order to further reduce its contribution to ambient conditions. Flue Gas Desulfurization (FGD)

technology is the only means of achieving significant reductions in SO2 emissions from a given

coal feedstock; accordingly, Eskom‘s Board of Directors has approved installation of FGD and

Eskom has designed and is constructing the Medupi plant to be ―FGD-ready,‖ with sufficient

infrastructure in place to accommodate installation of wet-FGD technology when it becomes

necessary, and technically and operationally feasible to do so. Eskom‘s staged approach to FGD

is consistent with its environmental authorization (the ROD).

54. Although wet-FGD is the most efficient technology for reduction of SO2 emissions,

Eskom faces a potential significant constraint in that wet-FGD is highly water intensive and local

sources of water are insufficient to operate the plant at full capacity, even without FGD.

Accordingly, Eskom is seeking from DWA an allocation of water from supplemental water

sources, sufficient not only to operate the plant at full capacity, but to operate FGD when

necessary. This allocation is dependent on the availability of water from the Mokolo and

Crocodile Water Augmentation Project (MCWAP) that is being developed by DWA to supply

supplemental water to priority users, including Eskom, in the Waterberg District Municipality

and elsewhere in Limpopo Province. This water supply is not expected to become available until

2014 at the earliest by which time all six units at Medupi are expected to be operational.

55. As noted above, initially, and for five years of operations, Eskom will be required to

operate Medupi in compliance with the proposed emissions standards for existing plants. Based

on the data from the EIR, it would appear that Medupi should be able to meet these standards in

the absence of FGD. However, once the standard for new plants become applicable to Medupi, in

about 2019, Eskom will need to have FGD installed at Medupi. Accordingly, Eskom is planning

to undertake FGD installation from 2018-2021, as part of its scheduled operational maintenance

program, during which each power block is taken off-line for routine maintenance beginning

after six years of operation. Although progress on the project to supply the required amount of

water is on schedule, the Bank has, nevertheless, requested evidence from the Department of

Water Affairs, committing to timely water supply to Eskom. Furthermore, in the event that

sufficient water is not available (or allocated to Eskom) from the MCWAP, the Bank will

recommend that Eskom proactively investigate the feasibility of using a less water intensive dry-

FGD technology prior to commencing full operations.

56. It should be noted that with either wet- or dry-FGD technology installed it is expected

that Medupi would be able to operate in compliance not only with the proposed South African

limitations for new plants, but with the equally stringent World Bank Group Environment,

Health and Safety Guidelines for Thermal Power plants issued in December 2008.

57. In contrast to Medupi, Kusile is located in an airshed that is already considered degraded

with respect to particulates, but is adequately supplied with sufficient water to operate a wet-

FGD system from the commencement of operations. Therefore the ROD for Kusile requires that

the FGD system be fully operational at commissioning. Accordingly, Kusile will comply from

the outset with international good practice as recommended in the Bank‘s 2008 EHSG for

Thermal Power Plants, as well as with the forthcoming national regulations for new sources.

Both plants are to be equipped with fabric (baghouse) filters to control emissions of particulates,

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and low-NOx burners to reduce emissions of NOx to levels consistent with proposed South

African regulatory requirements and international good practice as recommended in the Bank‘s

2008 EHSG for Thermal Power Plants.

58. With respect to wastewater control, both Medupi and Kusile are designed as Zero

Effluent Discharge facilities during operations, with all process and wastewater to be recycled.

Solid waste, in the form of coal ash, will be disposed of in engineered ash storage facilities that

will be lined and equipped with leachate detection and collection capacity. Ash disposal will

occur with the minimum amount of water necessary to prevent dust formation; once deposited,

the ash is quickly covered with topsoil for purposes of revegetation.

Projected Outcomes: Social Impacts

59. The social impacts from both Medupi and Kusile are of a moderate scale. As explained

below, there was no need to conduct a full Resettlement Action Plan or Framework under OP

4.00 Table A1 (or OP 4.12) for the Medupi project, and resettlement was relatively small scale

for the Kusile project. In neither case has expropriation been required nor are there any

outstanding restitution claims on lands to be acquired for the projects. In both cases land has

been acquired by Eskom through voluntary willing buyer-willing seller transactions at realistic

market based prices wherein land was acquired from local farmers. Social assessment and public

outreach were undertaken to fully identify individuals and households, including neighboring

farms and farm laborers, whose livelihoods might be affected by the land acquisition and other

project activities.

60. For the construction and operation of Medupi two game farms were purchased by Eskom.

At one of the game farms there was one full-time worker residing on the farm at the time of

purchase, and it was agreed that the farm worker will continue to be in the owner‘s employ and

be relocated at the owner‘s expense to one of his other properties. No laborers or any other

occupiers resided on the other farm at the time of purchase, and therefore no relocations were

required with respect to that property.

61. At Kusile, social assessment indicated the presence of 18 family units of farm laborers

requiring resettlement. To implement the resettlement, Eskom engaged the services of a

specialized contractor, and, through a process of extensive consultation with the directly affected

people, provided the families with several resettlement options on neighboring farms, some

owned by Eskom, or on other land leased from other farmers for the purpose of resettlement. The

families that opted to resettle on the Eskom-owned farms were provided with permanent homes

with individual fencing, running water and sanitation, vegetable gardens, and a playground for

children. Eskom assisted the project-affected peoples in establishing a Communal Property

Association that would acquire ownership of the properties in the names of the family units. For

those families who elected through the consultation process to be resettled on other properties,

Eskom arranged to have existing structures rehabilitated or constructed new structures where

existing structures were not of sufficient quality.

62. For the transmission lines that will be built as associated facilities for the EISP, Eskom

follows its corporate practice of initially identifying, through the EIA process, corridors that

avoid or minimize the need for relocation of households or farm structures, and subsequent

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refinement of the location of the right-of-way and tower locations within the preferred corridor to

further reduce the need for physical displacement of people or structures, and avoid or minimize

adverse effects on livelihoods or economic activities. Land valuation is required as part of the

route selection process to determine appropriate compensation for acquisition of right-of-way for

construction and maintenance.

Summary of Gaps and Proposed Gap-Filling Measures

63. OP 4.00 requires that prior to piloting a project under a borrower‘s environmental or

social safeguard system, the Bank and the borrower reach agreement on a time-bound Action

Plan to address gaps in Equivalence and Acceptability that have been identified in the SDR. At

the draft stage of the SDR the Bank discloses the gaps that have been identified for further

discussion with the borrower and other stakeholders including local stakeholders in the proposed

project. For the EISP, the borrower is Eskom. The gap analysis begins with the South African

laws and regulations as the regulatory framework with which Eskom must comply, but the final

analysis of required gap-filling measures focuses on the consistency of Eskom‘s policies,

procedures, and practices for its projects with respect to OP 4.00 Table A1.

64. Equivalence. With respect to the SDR process conducted to date, the Bank has identified

a few minor ambiguities or gaps in South Africa‘s legal framework with respect to the four Bank

safeguard policies triggered by the EISP. However, it would appear from the analysis of Eskom‘s

policies and procedures that all of these gaps in the legal framework applicable to environmental

safeguards are fully addressed and internalized in Eskom‘s policies and practices, with the

exception of preparation of a stand-alone Resettlement Action Plan and its disclosure to a broad

public audience.

65. With respect to EA, Eskom‘s policy is to address alternatives assessment at both the

strategic and project-specific levels, irrespective of any residual ambiguities in South Africa‘s

legal framework for the types of factors to consider in alternative analysis as part of the EIA

process. Therefore, although South Africa requires alternatives analysis to include capital and

recurrent costs, or institutional training and monitoring requirements as a matter of good

practice, rather than as a regulatory requirement, Eskom does so as a standard operating

procedure at both strategic and operational levels of analysis.

66. With respect to NH, Eskom, through its partnerships with South African conservation

organizations, has supported conservation offsets for projects that convert natural habitat,

although South African legislation does not, as matter of policy require such offsets. In any case,

neither the Medupi nor Kusile projects will impact significant areas of high quality natural

habitat to an extent that such an offset would be necessary or appropriate.

67. With respect to PCR, Eskom‘s existing policy of extensive local stakeholder consultation

regarding cultural sites and artifacts along with its standard protocol requiring that ―chance

finds‖ be reported to the South African Heritage Resources Agency (SAHRA) obviates a need

for gap-filling at the institutional level. A review of project construction to date demonstrates

that Eskom‘s approach to ―chance finds‖ has been effectively implemented by Eskom‘s

construction contractors, even though South African regulations do not require a formal protocol

to address chance finds.

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68. It is only with respect to IR that South Africa appears to lack a legal mechanism, and

Eskom an administrative mechanism, to require the preparation of publicly-disclosed, stand-

alone resettlement plans or frameworks, or to publicly disclose its evaluation of the success of

resettlement and rehabilitation activities. Accordingly, the Bank proposes to encourage Eskom to

introduce such an administrative mechanism as corporate practice. Eskom has already disclosed

on its website its corporate resettlement policy,6 which summarizes its corporate policy and

practice with respect to land acquisition, resettlement, and rehabilitation (livelihood restoration)

and a Resettlement Policy Framework specific to Components 2 and 3 of EISP.7 Audits will also

be required for any resettlement already carried out for EISP components. For any EISP

components for which resettlement is needed but has not yet occurred, the Bank will require and

Eskom has agreed to disclose its draft resettlement plans for those components.

69. Acceptability. A detailed review of Eskom‘s policies and procedures with respect to the

four triggered safeguard policies as implemented on a corporate level, and as demonstrated by

the planning and implementation of the Medupi and Kusile projects to date, indicates a high level

of consistency with international good practice as exemplified by international standards of

corporate environmental and social management, such as the United Nations Global Compact,

IFC Performance Standards, the Equator Principles, and relevant WBG EHSG. There are,

however, two outstanding issues where there are potential gaps in Eskom‘s performance with

respect to the expected outcomes of the Medupi and Kusile projects.

70. With respect to SO2 emissions and ambient impacts on air quality and human health, the

Bank, due to short tenure of its proposed loan agreement, relative to the regulatory timetable for

Medupi‘s compliance with the proposed South African regulations, will seek agreement with

Eskom to commit to timely installation of FGD in all six units at Medupi as soon as it is

technically and operationally feasible to do so, and to seek Eskom‘s agreement to provide to the

Bank in mid 2013 a report satisfactory to the Bank that provides a plan and schedule for timely

installation of SO2 emissions abatement measures. This may include an independent feasibility

analysis of alternative control technologies in the event that sufficient water is not available or

allocated to enable Eskom to operate the wet-FGD units. Given that Eskom‘s compliance with

South African emissions requirements can be expected to result from the implementation of the

South Africa‘s existing and proposed regulatory system, without Bank intervention, and the

supplemental agreements reached between the Bank and Eskom are for the sole benefit of the

Bank as a medium-term lender, these agreements need not be considered as ―gap-filling

measures‖ as this term is used in this SDR. However, any subsequent changes in South Africa‘s

regulatory requirements or actions, which would bring this compliance into question, would

trigger Bank remedies per OP 4.00.8

6 ―Procedure for the Involuntary Resettlement of Legal and Illegal Occupants on or from Eskom-Procured Land;‖

(July 2009). http://www.eskom.co.za/content/20091009091904201.pdf 7 ―Status and Process of Land Acquisition and Resettlement for Eskom‘s Concentrating Solar Plant (CSP), Wind

Energy Facility, Majuba Rail and Transmission Projects‖ (October 2009).

http://www.eskom.co.za/content/RelocationResettl_Final.pdf 8 OP 4.00, para. 6, ―Changes in Borrower Systems and Bank Remedies. If, during project implementation, there are

changes in applicable legislation, regulations, rules or procedures, the Bank assesses the effect of those changes and

discusses them with the borrower. If, in the judgment of the Bank, the changes reflect a further improvement in the

country systems, and if the borrower so requests, the Bank may agree to revise the legal framework applicable to the

operation to reflect these improvements, and to amend the legal agreement as necessary. Management documents,

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71. With respect to IR, Eskom staff has acknowledged the benefits of conducting

independent retrospective monitoring of the social and economic impacts of any involuntary

resettlement associated with its projects. For EISP components where resettlement has already

occurred, the Bank will require that Eskom conduct and publish an audit of the resettlement

based on Terms of Reference to be agreed by the Bank. For any EISP components for which

resettlement is needed but has not yet occurred, the Bank will require Eskom to disclose its draft

resettlement plans for those components. To begin addressing this identified gap between Bank

policy and Eskom‘s practice, Eskom prepared and disclosed on its website a Resettlement Policy

Framework, which explains its corporate approach to resettlement and land acquisition.

explains, and justifies any changes to such framework, and submits them for Board approval (normally on an

absence of objection basis). If the country system is changed in a manner inconsistent with the legal framework

agreed with the Bank, the Bank‘s contractual remedies apply.‖

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I. BACKGROUND

1. Under Operational Policy/Bank Procedure 4.00 (OP/BP 4.00), Piloting the Use of

Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported

Projects, the Bank has had the authority since March 2005 to support pilot projects in which

lending operations are prepared using the borrowing country‘s systems for environmental and

social safeguards, rather than the Bank‘s corresponding operational policies and procedures

(Annex 1). The advantages of using country systems (UCS) are to scale up development impact,

increase country ownership, build institutional capacity, facilitate donor harmonization in

approaches to environmental and social safeguards, and increase cost effectiveness. These

objectives were broadly endorsed at the Paris High Level Forum on Aid Effectiveness in March

2005 with respect to environmental and social safeguards, as well as financial management and

procurement, and strongly reiterated in the Accra Agenda for Action in September 2008.1 Since

March 2005, the World Bank has approved ten pilot projects prepared under this initial phase of

the pilot program, including a pilot project in South Africa.2 On January 31, 2008, the Executive

Directors of the World Bank approved a three-year extension of the pilot program, but requested

an incremental scaling up of the pilots from the project to the country-level, including support of

activities at the sub-national level. Under the three-year extension, i.e., the second phase of the

pilot program, nine pilots have been formally initiated and are being worked on, including a

second scaled up project in South Africa for which this document has been prepared.

2. OP/BP 4.00 describes the approach, enumerates the criteria for using country systems,

and specifies documentation and disclosure requirements and respective roles of the borrower

and the Bank. This approach and the criteria for assessment were developed with inputs from

external stakeholders such as representatives of governments, bilateral and multilateral

development institutions, civil society organizations, and the private sector. According to OP

4.00, prior to appraisal for any project proposed to be piloted under one or more of a borrower‘s

safeguard systems, the Bank is required to conduct an Equivalence Analysis and an Acceptability

Assessment, and to reach any agreements necessary with the borrower for Gap-Filling measures

as may be necessary to ensure that the Objectives and Operational Principles of the Bank‘s

applicable environmental and social safeguard policies will be met. Under OP 4.00 the focus of

safeguards supervision will be on the implementation of the borrowers‘ environmental and social

safeguard systems and agreed gap-filling measures.

3. The Bank considers a borrower‘s environmental and social safeguard system to be

equivalent to the Bank‘s if the borrower‘s system is designed to achieve the objectives and

adhere to the applicable operational principles set out in Table A1 of OP 4.00. Since equivalence

1 In the Paris Declaration, developing countries committed to strengthen their safeguards systems, and donors

committed to use those systems to the maximum extent possible. The Accra Agenda noted that even when there are

good-quality country systems, donors often do not use them. Therefore, donors agreed to use country systems as the first option in support of activities managed by the public sector and, should donors choose not to use country

systems, they will transparently state the rationale for this and will review their positions at regular intervals. 2 The ten pilot projects approved by the Board and in implementation are located in Ghana, Egypt, Tunisia (two

projects), Romania (two projects), Jamaica, Bhutan, India, and South Africa. Two of the projects, India and Ghana,

involved the energy sector.

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is determined on a policy-by-policy basis in accordance with Table A1, the Bank may conclude

that the borrower‘s system is equivalent to the Bank‘s with respect to some of the environmental

or social safeguards in particular pilot projects, and not with respect to the others. Before

deciding on the use of borrower systems, the Bank also assesses the acceptability of the

borrower‘s institutional capacity, implementation practices, and past performance in similar

projects. Gap-filling measures must be implemented prior to project approval or, if carried out by

necessity during project implementation, are subject to a time-bound legal agreement between

the Bank and the borrower. The process and product of analyzing equivalence, assessing

eligibility and identifying and agreeing on gap-filling measures is called a Safeguards Diagnostic

Review (SDR).

4. This SDR is prepared for the Eskom Investment Support Project (EISP) in South Africa.

The project has been requested by the Government of South Africa (GoSA) to support selected

investments by Eskom Holdings Ltd. (Eskom) in the power sector. This SDR describes the

scope, methodology, and findings of the equivalence analysis and acceptability assessment

carried out in South Africa by staff from the World Bank. It also identifies and proposes gap-

filling measures designed to ensure that applicable South African safeguard systems, and

Eskom‘s corporate practices for complying with the relevant South African regulations, meet the

equivalence and acceptability criteria of OP 4.00 throughout the project cycle and are adapted to

extend their benefits beyond the scope of the project to the extent possible. The SDR was

conducted in collaboration with the borrower, which will be Eskom, and officials from the South

African Ministry of Water and Environment, including the Department of Environmental Affairs

(DEA).3 A draft of this SDR was publicly disclosed by the Bank and by Eskom in November

2009, and was the subject of stakeholder consultation workshops held in South Africa in early

December 2009. This document takes into consideration comments received from stakeholders,

and is being re-disclosed in its final form.

II. PROJECT DESCRIPTION

5. The proposed project will be a US$4.0 billion financing package to support the GoSA‘s

energy sector investment plan. This project will have a total cost of about US$19 billion, to be

implemented largely by Eskom. At the request of the GoSA, the International Bank for

Reconstruction and Development (IBRD) loan, which would be counter-guaranteed by the

GoSA, is proposed to be provided directly to Eskom. The EISP for the purposes of this SDR

refers to the full set of Eskom investments that would receive Bank support. The objective of the

SDR is to assess the borrower‘s safeguards systems, and for this purpose the SDR has looked at

safeguards documents prepared for several Eskom investment projects, not all of which would

receive Bank support.

3 From 1994 through May 2009, DEA was known as the Department of Environmental Affairs and Tourism

(DEAT) and reported to the Ministry of Environmental Affairs and Tourism, As part of a ministerial reorganization in May 2009, DEA and the Department of Water Affairs (previous part of the Ministry of Water Affairs and

Forestry) were both placed under the authority of the newly designated Ministry of Water and Environmental

Affairs and the Department of Tourism became a separate Ministry of Tourism. For purposes of this report, the

current acronym, DEA, will be used when referring to the Department in the present or future tense; and DEAT will

be used when referring to the Departmental actions taken in its previous capacity.

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6. The proposed Project (phase I) will consist of the following components, which will be

implemented by Eskom:

Component A includes the Medupi coal-fired power station (4,800 MW, based on

super-critical technology) and is expected to cost US$12.047 billion4, of which IBRD

will provide financing of about US$3.05 billion. This loan will be provided against

supply and install and civil construction contracts for (i) the power plant and (ii)

associated transmission lines.

Component B includes investments in renewable energy (100 MW Sere Wind Power

Project and 100 MW Upington Concentrating Solar Power Project). This component

is estimated to cost US$1.198 billion, of which IBRD will provide financing of about

US$260 million. The Clean Technology Fund (CTF) will provide financing of about

US$250 million (with the proposed IBRD loan). A US$100 million loan from CTF is

proposed to be processed through AfDB for the component.

Component C includes both sector investments and technical assistance to support

lowering Eskom‘s carbon intensity through energy efficiency and development of

renewable energy. The Majuba Rail Project (shift in transportation mode from road to

rail) and technical assistance for assessing the opportunities for coal-fired power plant

efficiency improvements and for the development and implementation of domestic

and cross border renewable energy projects are envisaged under this component. This

component is estimated to cost US$537.57 million of which US$440 million will be

financed by IBRD.

The project comprises about US$1.766 billion of Low-carbon Renewable and Energy

Efficiency investments, of which IBRD will finance US$700 million and CTF will

finance US$350 million.5

7. For purposes of assessing the robustness of South Africa‘s Environmental Impact

Assessment (EIA) process and its outputs under the requirements of OP 4.00, the Bank

undertook a detailed analysis of the EIA process and outputs (Environmental Assessment

Reports and Environmental Management Plans submitted by Eskom, and Records of Decision

issued by DEA for the largest Bank-supported component of the EISP, the Medupi power plant).

In addition, to add a further level of objectivity to the analysis of the EIA process and outputs,

the Bank reviewed a second major thermal power plant that is not proposed for Bank support, the

4,800 MW Kusile power plant in Mpumalanga Province. By selecting these two nationally

important projects as the primary subjects of SDR analytical work for the EISP, the Bank

achieves two important objectives: it allows the SDR to assess the integrity and robustness of

DEA‘s (formerly DEAT‘s) environmental review and approval process for two major projects

that could be considered of national importance; and it provides insights into Eskom‘s capacity,

commitment, and capability to address environmental and social safeguards issues with respect

4 The estimate project total cost is based on interest during construction directly related to debt that has been raised

by Eskom for the Medupi power plant. Any Eskom funding costs for its contributions to the plant from the balance

sheet have not been included and have been considered as Eskom equity to the Project. 5 Including the US$100 million potentially combined with an AfDB loan for the Sere Wind Power Project and the

Upington Concentrating Solar Power plant.

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to both the EIA process and project implementation, since construction is well underway for both

the Medupi and Kusile projects. Moreover, the focus on these two key projects, one of which is

expected to receive Bank support as part of the EISP, is a particularly valuable approach because

both the safeguards work and the initial stages of construction have been carried out in

accordance with Eskom‘s corporate practices prior to the decision by the GoSA to seek Bank

support for Eskom‘s investment program.

8. During preparation of this SDR, the Bank team also reviewed the final EIRs prepared by

Eskom for the proposed Sere Wind Power Project (WPP) in Western Cape Province, the

Concentrating Solar Power (CSP) plant near Upington in Northern Cape Province, and the 67-

km Ermelo-Majuba rail line for coal transport in Mpumalanga Province, as well as the

transmission lines that will connect the Medupi Power Plant to the national grid. The purpose of

this review of additional EIRs by the Bank team was to ensure that the findings of this SDR

regarding equivalence and acceptability of the borrower‘s safeguards system remain valid with

respect to Environmental Assessment, Natural Habitats, Physical Cultural Resources, and

Involuntary Resettlement for the candidate EISP components in addition to the Medupi and

Kusile thermal power plants. Although this SDR analytical work focuses on the Medupi and

Kusile power plants as representative examples to assess the borrower‘s safeguards systems, it is

important to note that the Bank team will continue reviewing the safeguards documents, such as

Environmental Impact Reports (EIRs), Environmental Management Plans (EMPs), or similar

documents, prepared by Eskom for other EISP components, including associated facilities, as

they become available during project preparation, implementation, and supervision.

9. Project Objectives. The strategic objectives of the EISP are to: (a) support the GoSA in

removal of the growing infrastructure bottlenecks on an accelerated basis; and (b) revive

economic growth in the Southern Africa region through enhancement of South Africa‘s power

supplies in an efficient and sustainable manner to bridge current and projected electricity supply-

demand imbalances that already have taken a toll on sustained regional as well as South Africa‘s

economic growth. The outcomes of the project would be measured by the following indicators:

Installation of an additional 4,800 MW or more of grid-connected power generation

capacity by supporting implementation of Eskom‘s investment program.

Prepared plans and designs for retrofitting of some of Eskom‘s power stations in

order to improve efficiency and reduce carbon emissions.

Investments in energy efficiency and renewable energy, such as the Sere Wind

Power Project and the Upington CSP plant, which had been put on hold because of

lack of sufficient project financing.

III. BASIS FOR SELECTING THE PROJECT FOR

PILOTING UNDER OP 4.00

10. South Africa was selected as a pilot country because it has an established legal and

regulatory system and a favorable reputation for effective implementation of its systems

governing environmental assessment and the protection and management of natural habitats,

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protected areas, and physical cultural resources.6 This has already been demonstrated by the SDR

completed by the Bank for the recently approved Global Environment Facility (GEF) project in

support of the Development, Empowerment and Conservation of the iSimangaliso Wetland Park

and Surrounding Region, which examined South Africa‘s legal framework for the same four

safeguards that are triggered by the EISP, but with reference to their application to an

internationally protected wetlands area with substantial autonomy7 from the mainstream of the

South African administrative framework. Just as this current document built on the findings of

the previous SDR, this SDR will inform all future projects proposed for Bank support in South

Africa, in particular those projects for which Bank safeguard policies are to be addressed through

the application of South African environmental and social safeguard systems.

11. The EISP was selected as a scaled up pilot project because the borrower, Eskom, has

demonstrated a substantial corporate commitment to fulfilling and going ―beyond compliance‖

with legal and regulatory requirements and embracing a sustainability policy on both a corporate

and project level. As described in detail below, Eskom subscribes to the United Nations Global

Compact, has obtained or is in the process of obtaining ISO 14000 certification of its

environmental management system for each of its operational units, and seeks to align its

projects and its corporate practices with the requirements of the Equator Principles and with the

Global Reporting Initiative (GRI). Accordingly, there was reason to expect that Eskom‘s systems

would likely demonstrate a very high level of equivalence with the World Bank safeguards as set

forth in OP 4.00 Table A1, and Eskom‘s investment projects would be implemented in an

acceptable manner with respect to Bank environmental and social safeguards.

IV. METHODOLOGY AND PROCESS FOLLOWED IN

DETERMINING EQUIVALENCE AND ACCEPTABILITY

12. The Equivalence Analysis and Acceptability Assessment were carried out by a

multidisciplinary team from the World Bank in collaboration with relevant officials and technical

staff members from Eskom, with cooperation from DEA and the Department of Water. The

methodology included: desk review of legislation currently in force, supporting regulations, and

mandatory guidelines applicable to the electric power generation sector and associated

infrastructure; discussion with officials; and site visits to the Medupi and Kusile construction

sites in Limpopo and Mpumalanga provinces, respectively, by members of the Bank‘s project

team. The Bank‘s team preparing this SDR consisted of senior level staff, including: an

environmental lawyer, three environmental specialists, a Senior Technical Advisor, and a social

specialist.

13. The Equivalence Analysis included a detailed inventory of South African laws and

regulations relating to the four Bank environmental and social safeguard policies triggered by the

6 A letter from World Bank Country Director to the Director General of DEAT, August 29, 2005, proposed South

Africa ―as a likely candidate for the Bank‘s program on ‗Piloting the Use of Borrower Systems to Address

Environmental and Social Safeguard Issues in Bank-Supported Projects‘,‖ due to the fact that in South Africa ―environmental regulations and agencies are already well developed and functioning,‖ and that the conservation and

sustainable development sector is ―attractive for the South African pilot both because the proposed project….is just

now at the concept stage and because DEAT has already established capacity to conduct safeguard work.‖ DEAT

responded in the affirmative in a letter dated November 8, 2005. 7 The iSimangaliso Wetland Park is administered by the iSimangaliso Wetland Park Authority.

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project, as identified below in the Equivalence section of this report. These laws and regulations

are supported by Constitutional provisions, policies, and international agreements ratified by the

GoSA, all of which are included as relevant to the legal framework for the Equivalence Analysis.

An extensive literature review was also conducted tracing the development and evolution of

South African environmental law in both historical and comparative contexts. The analysis

draws careful distinctions between laws and regulations that are mandatory, as valid comparators

to the Operational Principles of OP 4.00 Table A1, and other documents having aspirational or

guidance value, which may inform the analysis and provide a basis for comparison with the

Objectives of OP 4.00 but cannot be considered conclusive evidence of equivalence with the

mandatory provisions of Bank safeguards (guidance documents, although not legally binding,

may help clarify ambiguities in environmental laws and regulations and contribute to assessing

Acceptability). Based on this analysis each relevant provision of a borrower‘s system is

characterized as having full, partial, or no equivalence to the corresponding Objective or

Operational Principle of OP 4.00 Table A1.

14. The Acceptability Assessment applied the four-component methodology that has evolved

through the SDR process during the implementation of the UCS pilot program. These

components include: institutional capacity; processes and procedures; outputs; and outcomes. To

assess relevant institutional capacity the assessment drew on primary sources including external

and internal reports prepared by Eskom and DEA. These reports provided valuable insights into

Eskom‘s institutional capacity to: (a) conduct environmental assessment; (b) avoid, minimize,

mitigate and compensate for adverse environmental impacts resulting from the construction and

operation of thermal power plants and associated infrastructure while conserving natural habitat

and physical cultural resources; and (c) conduct land acquisition and related resettlement

activities in accord with South African legal requirements and international good practice as

exemplified by Bank safeguard policies and associated guidance documents. The SDR also

examined the capacity of DEA to apply informed critical judgment to its review of EIRs

submitted by Eskom for the two power plants proposed for support under the EISP and by

Eskom or other parties responsible for associated infrastructure.

15. To assess the effectiveness of implementing processes and procedures, the SDR reviewed

official procedural and guidance documents describing the appropriate conduct of the

environmental assessment and management process in South Africa, with particular attention to

the various stages of the environmental assessment process, including the Scoping Phase, EIR

Phase, public consultation and disclosure, culminating in the Environmental Authorization

(formerly known as Record of Decision [ROD]) on the part of the Minister of Environmental

Affairs. Similar review was conducted with respect to the development and approval of EMPs

for the construction and operational phases of the project. The EIRs were reviewed in light of the

requirements for environmental assessment under South African law and international good

practices.

16. With respect to outputs, the SDR critically reviewed: the EIRs and EMPs for the Medupi

and Kusile projects; the EIRs for the Sere Wind Power Project, the Upington CSP plant, and the

Majuba coal transport rail spur; and the RODs and other approvals issued by DEA to date. The

Acceptability Assessment also reviewed the land acquisition and compensation process

undertaken by Eskom in connection with project development and the outcomes of that process

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with respect to compliance with South African law and the objectives and operational principles

of Bank policy with respect to Involuntary Resettlement.

17. As noted in Section III, the findings with respect to specific aspects of the South African

regulatory framework and responsible implementing agencies, such as DEAT, have already been

subject to a SDR and public consultations as part of the iSimangaliso project. Those findings are

updated as necessary and reflected in the current SDR, but the primary focus of the current SDR

is Eskom‘s corporate policies and practices, especially as demonstrated by its assessment and

implementation of the Medupi and Kusile projects. A draft of this SDR was disclosed by the

Bank as a consultation draft on November 3, 2009, and on Eskom‘s website on November 11,

2009. The SDR was subject to stakeholder consultation workshops as noted in Section I above.

Following the public consultation period, the SDR was updated, and an Annex to this report

provides a summary of comments received from stakeholders and the Bank‘s response, and

where relevant, cites revision that have been made in the SDR.

V. SUMMARY OF EQUIVALENCE ANALYSIS

18. The first step in the Equivalence Analysis is to identify the World Bank environmental

and social safeguard policies triggered by the project. This exercise is undertaken by the World

Bank project team at the Bank‘s project concept stage8 and is revised if necessary as project

preparation evolves toward Appraisal. The documentation of triggered safeguards along with the

justification is recorded in the Integrated Safeguards Data Sheet (ISDS) for the project.

According to the concept-stage ISDS, the four environmental and social safeguards triggered by

the project include: Environmental Assessment (EA); Natural Habitats (NH); Physical Cultural

Resources (PCR); and Involuntary Resettlement (IR). The project also triggers OP 7.50 (Projects

on International Waterways), but this is a legal Safeguard Policy and not eligible for

consideration under OP 4.00.

19. It should be noted that the issue of greenhouse gas emissions and the related impacts on

climate change that may be associated with the EISP are outside the scope of this SDR. The

application of OP 4.00 is limited to the Bank‘s environmental and social safeguard policies that

are triggered by a particular project or activity that the Bank proposes to support. Although the

Bank‘s safeguard policy on EA makes reference to the need to address global impacts as part of

the EA process, the Bank is better positioned to address the climate change issue at a strategic

level, through the application of the Bank‘s Strategic Framework for Energy and in the context

of the corresponding strategic framework of the borrower, Eskom, and the GoSA. A thorough

discussion of greenhouse gas emissions and climate change issues associated with the EISP will

be included in the Project Appraisal Document for the EISP, which also will be subject to public

disclosure once it is prepared by the Bank team.

8 In this case, the two main investments by Eskom that are the key subjects of this SDR, i.e., the Medupi and Kusile power plants, have already been subject to the full EIA process in accordance with South African legislation, and are

already under construction. The other investments that are part of EISP also have already been subject to the full

EIA process, but their implementation has been put on hold primarily because of budgetary constraints and

priorities. Land acquisition has been completed for the 67-km Majuba rail spur, and the acquired right-of-way has

been fenced off.

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20. Annex 2 of this Report includes a narrative summary of South Africa‘s Constitutional

provisions, laws, and regulations that apply to the projects to be financed by the EISP and that

correspond to the four Bank environmental and social safeguard policies triggered by the EISP

components. Annex 3 contains in matrix format a detailed comparison between the relevant

provisions of the South African legal system and the corresponding Objectives and Operational

Principles of OP 4.00 Table A1.

21. Following is a summary of the findings of the Equivalence Assessment. Although a few

ambiguities or gaps in South Africa‘s legislative framework required additional analyses or

clarification as part of stakeholder consultation in order to make a determination of full

equivalence with respect to the four safeguards, the Acceptability Assessment concludes that the

few apparent ambiguities in equivalence with respect to South African legislation regarding EA,

NH, and PCR have all been addressed by Eskom in its EA process and in its implementation of

the project components to date. With respect to IR, there are some gaps in equivalence that will

be addressed through project implementation. These gaps, and what will be done about them, are

discussed in subsequent sections of this report (Section VI. Acceptability Assessment; and

Section VII. Proposed Gap-filling Measures).

A. ENVIRONMENTAL ASSESSMENT (EA)

22. With respect to EA, and the legal system designed to manage the environmental and

social impacts of the various components of the EISP, the Equivalence Analysis needed to be

carried out on a composite of current legislation and regulations and legislation and regulations

that were in effect at the time the projects were designed (2004-2008) but may have since been

superseded. This is because the South African regulations for Environmental Impact Assessment

(EIA) were revised in 2006, shortly after the Terms of Reference for the EIA process for the

Medupi and Kusile investments were approved. Therefore, the EIRs9 for both Medupi and Kusile

were conducted and approved under the EIA Regulations issued in 1997 under the authority of

the 1989 Environmental Conservation Act (ECA) rather than the current EIA Regulations issued

in 2006 under the authority of the National Environmental Management Act (NEMA). However,

as described later, the EIA process and EIR content for both projects was strongly influenced by

and is essentially consistent with the EIA Regulations that became effective in July 2006, even

though they were not legally applicable to the Medupi and Kusile projects. This is because the

EIA process for both projects began at a time when the draft new regulations were already out

for public comment; therefore, Eskom chose, and instructed its consultants, to ensure that the

EIA process and the EIRs would conform with the proposed new regulations as well.

Furthermore, pending full application of the implementing provisions of the NEMA AQA of

2004, the provisions of the Atmospheric Pollution Prevention Act (APPA) of 1965 continue to

apply to the Medupi and Kusile facilities. Finally, pending the implementation of the new Waste

Act of 2008, the Minimum Requirements for Landfills issued by the Department of Water

Affairs and Forestry (second edition, 1998) will apply to the ash disposal facilities to be

constructed adjacent to the two plants. All comparisons between the South African legal

framework and the corresponding Objectives and Operational Principles of OP 4.00 Table A1

9 South African regulations refer to an EIA process, which produces an EIR. An effort is made in this SDR to retain

this distinction in South African regulatory terminology between process and product.

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are based on the South African laws and regulations that apply to the EISP components, as

reflected in the RODs issued by DEA.

23. The South African system for EA is deemed to be fully equivalent to the Objectives and

Operational Principles of OP 4.00 Table A1. However, the equivalency analysis of the regulatory

framework identified two ambiguities in the regulatory language that will be addressed with

respect to the EISP in the subsequent Acceptability Assessment (Section VI):

It is not clear from the regulatory language that the assessment of alternatives is

required to assess their relative feasibility on the basis of all of the feasibility criteria

cited in OP 4.00 Table A1, which are expected in the Bank‘s work to be applied to

all projects. It appears that the proponent has the option to include only those

alternatives deemed ―feasible and reasonable‖ and compare the advantages and

disadvantages of such alternatives for the environment and the community. But it

does not explicitly require the Environmental Impact Report to justify alternatives

with respect to comparative capital and recurrent costs, and institutional, training and

monitoring requirements, as well as other factors. DEAT published guidance on

criteria to be included in alternatives assessment in 2004 (Integrated Environmental

Management Information Series, Series 11: Criteria for Determining Alternatives in

EAI), which recognizes that the range of criteria must be appropriate to the type of

project subject to the EIA process. However, in practice, and as a business matter,

Eskom addresses the capital and recurrent costs, as well as the institutional, training

and monitoring requirements of alternative mitigation measures.

Paragraph 5 of Table A1 of OP 4.00 states that the borrower system EA, ―[w]here

applicable to the type of project being supported, is expected to normally [emphasis

added] apply the Pollution Prevention and Abatement Handbook (PPAH) [and to

j]ustify deviations when alternatives to measures set forth in the PPAH are selected.‖

Although neither NEMA, the EIA Regulations, nor Eskom policy require any

reference to the PPAH10

with respect to the impacts of thermal power projects, in

particular ambient and atmospheric emissions, all of these South African systems

reference the same source documentation as the General Environmental, Health and

Safety Guidelines and the Thermal Power Environmental, Health and Safety

Guidelines in the PPAH. These include the ambient air quality standards of the

World Health Organization and international good practice with respect to emission

controls as implemented by the European Union and the United States

Environmental Protection Agency. In addition, Eskom has commissioned an

independent review of the compliance of the Medupi and Kusile projects with the

Equator Principles, which are derived from, and make reference to, the Performance

Standards of the International Finance Corporation (IFC) and the Environmental,

Health and Safety Guidelines (EHSGs) in the PPAH.

10 It may not be entirely reasonable to expect a borrower‘s system to reference any particular external standard. The

absence of any reference to the PPAH is more understandable with respect to Eskom in South Africa, which would

instead reference South African environmental regulations as its benchmark for environmental performance in South

Africa, rather than an external benchmark such as the World Bank‘s PPAH.

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B. NATURAL HABITATS (NH)

24. With respect to NH, the South African system is deemed to be fully equivalent to the

Objectives and Operational Principles of OP 4.00 Table A1. However, a few ambiguities in the

language of the regulatory framework will be addressed with respect to the EISP in the

subsequent Acceptability Assessment (Section VI):

South African legislation appears to lack a conservation offset provision for non-

critical habitat. South Africa recognizes that as the development footprint increases,

there will be unavoidable loss of non-critical habitat, but through the Environmental

Authorization (formerly ROD) process, biodiversity offsets can be required on a

case-by-case basis.

The otherwise strong prohibition on conversion of critical natural habitat could be

weakened by the provision that an area may be excluded by Unilateral Notice issued

by the Minister of Environment or a provincial government. But this ambiguity is

irrelevant to the EISP because project components are not sited in nor do they

require conversion of critical natural habitat, and it will not be examined further.

There appears to be no specific language regarding requirements for public

disclosure and consultation in legislation pertaining to NH, but it is clearly an

integral part of the EIA process.

C. PHYSICAL CULTURAL RESOURCES (PCR)

25. With respect to PCR, the South African system is deemed to be fully equivalent to the

Objectives and Operational Principles of OP 4.00 Table A1. However, a few ambiguities in the

language of the regulatory framework will be addressed with respect to the EISP in the

subsequent Acceptability Assessment (Section VI):

There appears to be no specific language in legislation pertaining to PCR regarding

the extent of participation and obligations of communities in the process of cultural

heritage assessment and conservation, but it clearly is within the scope of the EIA

process, as specified by the Natural Heritage Resources Act.

Although the legislative framework does not make explicit reference to ―chance

finds,‖ a standard condition is included in all Environmental Authorizations (formerly

RODs) stipulating how chance finds must be dealt with during construction and

operations, but the legal basis for this standard condition is not evident.

D. INVOLUNTARY RESETTLEMENT

26. With respect to IR, the South African system is found to be fully equivalent to the

Objectives and Operational Principles of OP 4.00 Table A1 for all but the following Operational

Principles:

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Rights of access to natural resources and biodiversity of protected areas (however, as

there are no protected areas affected by the EISP, this gap in equivalence is not

relevant to the conclusion of this SDR);

Disclosure of stand-alone draft resettlement plans, including documentation of the

consultation process, in a timely manner, before appraisal formally begins, in an

accessible place, and in a form and language that are understandable to key

stakeholders; and

Assessment of whether the objectives of the resettlement instrument have been

achieved upon completion of the project, taking into account the baseline conditions

and the results of resettlement monitoring.

27. It should be noted, however, that the South African legislation regarding resettlement

requires extensive consultation and disclosure with directly affected people, i.e., those who are to

be resettled, and provides for benefits and livelihood restoration in a manner consistent with the

Bank‘s safeguard policy. Therefore, for the EISP, the key gaps in equivalence appear to be the

absence of a requirement for a formal, stand-alone Resettlement Action Plan that is disclosed to

a broad audience of interested parties, and a formal mechanism for a completion audit. These

gaps will be discussed further in Sections VI and VII of this SDR.

E. GENERAL CONCLUSION OF THE EQUIVALENCY ANALYSIS

28. Although a few ambiguities or gaps in the regulatory framework have been noted in the

Equivalency Analysis with respect to the four safeguards, it would appear, as a result of the

Acceptability Assessment (below) that all the apparent ambiguities in equivalence with respect to

EA, NH, and PCR have been addressed by the borrower (Eskom) in its EIA process and its

implementation of the projects to date. With respect to IR, there are some gaps in equivalence

that remain to be addressed through project implementation, in particular those relating to the

absence of any requirement in South African law to prepare and disclose stand-alone

resettlement plans and to assess whether the objectives of the resettlement instrument have been

achieved upon completion of the project, taking into account the baseline conditions and the

results of resettlement monitoring.

VI. ACCEPTABILITY ASSESSMENT

29. The purpose of the Acceptability Assessment is to confirm that the implementation

practices, track record, and institutional capacity of Eskom as the borrower, and relevant South

African agencies that will be involved as regulators in addressing environmental and social

safeguard issues in the proposed Bank-supported EISP, meet the requirements of OP 4.00. This

report presents acceptability findings only for the four policy areas that have been found

applicable thus far to the EISP: Environmental Assessment, Natural Habitats, Physical Cultural

Resources, and Involuntary Resettlement.

30. The primary institutions responsible for implementing the four environmental and social

safeguards applicable to the project, and under consideration for piloting under UCS, include

Eskom and DEA (formerly DEAT). The Department of Water Affairs (DWA) and the South

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African Heritage Resources Agency (SAHRA) have well defined but limited roles in the context

of EISP. Eskom will be assessed for acceptability with respect to its corporate capacity and

practices as well as its implementation of the Medupi and Kusile power plants and associated

transmission lines, the Sere WPP, the Upington CSP plant, and the Ermelo-Majuba rail spur for

coal transport. DEA will be assessed for acceptability with respect to its regulatory role, i.e.,

capacity and commitment to oversee the EIA process, review and approve EIRs, identify and

require permit conditions in RODs, and identify and implement effective project monitoring and

supervision requirements. The Department of Water Affairs‘ role in the EISP is in regulating the

disposal of ash waste (and indirectly in assuring water supply to the Medupi project). SAHRA

provides the expertise in South Africa to develop and implement policies and practices towards

protection and management of cultural resources, but under the EIA Process established by

NEMA, cultural heritage and resources are among the key subjects that must considered in the

EIA process, which is under the jurisdiction of DEA. SAHRA becomes involved at the point

cultural resources are found, at which it time it must be consulted and its advice followed.

A. INSTITUTIONAL CAPACITY

1. Eskom Holdings Limited (Eskom)

31. Eskom is South Africa‘s national, vertically integrated electricity utility, and is wholly

owned by the Government of South Africa through the Department of Public Enterprises.

Eskom‘s current structure is defined by the Eskom Conversion Act of 2001. The utility employs

about 35,500 employees (reduced from about 66,000 over the past two decades). Eskom operates

its business through a number of divisions and subsidiary companies. Figure 1 shows the current

structure of the Eskom Group, including the major subsidiaries. Eskom‘s core business as a

utility is carried out by the three divisions under the heading Eskom Core Business and is

described below, followed by a brief description of the operations of the key subsidiaries.

32. At the corporate level, environmental and social governance within Eskom begins with

the Chief Executive Officer (CEO) and is overseen by: the Executive Directors, who are full time

employees of Eskom, and by the authority delegated to Board Committees, including the

Executive Management Committee and the Sustainability and Safety Subcommittee. The latter is

comprised of four independent non-Executive Directors along with the CEO and two Board

Members, and guides corporate strategy on sustainability, occupational health and safety, and

environmental matters in line with Eskom‘s safety, health and environment policy, NEMA, and

the Occupational Health and Safety Act of 1993.11

At the technical level, the Subcommittee is

supported by the Environmental Liaison Committee, which includes all environmental managers

and representatives from the generation, transmission, distribution audit, legal and research units.

11 Eskom, Annual Report, 2008, pp. 206-215.

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Figure 1. Eskom Holdings Business Structure

33. The CEO, as chairman of the Sustainability Committee of Eskom‘s Executive Committee

(EC), is accountable for all of Eskom‘s overall sustainability performance. The coordination and

determination of Eskom‘s strategic direction on sustainability, including environment,

occupational health, and safety, is undertaken through the Sustainability Liaison Committee.

Each line manager is responsible for monitoring environmental and social impacts in their

respective divisions,

34. Within the management structure of Eskom, each line division (Generation,

Transmission, or Distribution) is individually responsible for carrying out the EIA process and

preparing EIRs, and for the environmental management and monitoring activities associated with

its line of business. To undertake these tasks Eskom has approximately 120 environmental and

social specialists located in its headquarters office and various field operations.

35. Eskom has integrated sustainable development issues into its strategic planning and

decision making since 200412

and has adopted a comprehensive ―triple bottom line‖13

approach

to the management of environment, health, and safety issues as part of its corporate commitment

to sustainability. As one of the charter members of the United Nations Global Compact, Eskom

12 Eskom, Annual Report, 2008, p. 27. 13 ―Triple bottom line‖ refers to the synergies between economic, environmental, and social sustainability in

corporate management.

Eskom Holdings Ltd

Eskom Core Subsidiaries

Generation-Generation

-Primary energy

-Enterprises

Customer Networks-System ops and

planning

- Transmission

-Distribution

Corporate- Finance

-Corporate services

-Human resources

Eskom Enterprises (Pty) Ltd-Rotek Industries (Pty) Ltd

- Roshcon (Pty) Ltd

- Eskom Uganda Ltd

- arivia.com (Pty) Ltd

- Eskom Energie Manantali SA

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is committed to uphold the ten principles of the Compact, which include inter alia: protection of

the environment, labor standards, human rights, and anti-corruption.14

36. Eskom states that ‖We are ensuring that not only are we complying with South African

environment, social and legal requirements, but also the Equator Principles,15

IFC Performance

Standards,‖ while ―taking into account,‖ the IFC Environmental, Health and Safety Guidelines.16

37. Each year Eskom candidly audits its own performance in terms of a sustainability index

based on 20 indicators, including economic, environmental, technical, and social aspects.

Eskom‘s overall performance for the most recent rating period (2008) was 2.5 on a five point

scale, where overall performance of 3.0 is considered sustainable. Of the four issue areas, Eskom

most recently rated itself lowest for environment, with a score of 2.2 in 2008 compared to 2.6 in

2007.17

Beginning in 2006, Eskom engaged the London-based Ethical Investment Research

Centre to benchmark its sustainability performance against the Johannesburg Stock Exchange

Socially Responsible Investment (JSE SRI) Index which measures environmental, social, and

governance issues, and has met the required standard to qualify for inclusion in the JSE SRI

through financial year 2007.18

38. With respect to environmental management, Eskom‘s Transmission Division has been

certified to the ISO 14001 standard. Regular environmental audits are undertaken on all

Divisions, with the results reported to the relevant EC and managing directors of all Divisions.

The Operations Subcommittee of the EC monitors and assesses environment and occupational

health and safety performance and reviews major incidents to ensure that necessary corrective

measures are taken.

39. Eskom‘s accounting practice also identifies and reports on dedicated environmental

expenditures. In 2006 R339 million (approximately US$45 million) was spent on capital and

R354 million (approximately US$47 million) on operational environmental activities, primarily

aimed at improving air quality management at coal-fired power plants, rehabilitation of coal

mines, environmental assessment in connection with capacity expansion, and disposal of

polychlorinated biphenyls (PCBs).

14 The three Global Compact Principles relating to the Environment include: Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater

environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly

technologies. 15 The Equator Principles are a set of environmental and social benchmarks for managing environmental and social

issues in international project finance globally. The original Equator Principles were adopted by ten leading

commercial banks in 2003, based on IFC safeguard policies and subsequently revised to align with IFC Performance

Standards in 2006. Currently approximately 70 financial institutions subscribe to the Equator Principles including:

international, regional, and national commercial and investment banks; insurance companies; export credit agencies;

and bilateral development finance institutions. As an indication of its commitment to the Equator Principles, Eskom

commissioned independent reviews of the compliance of the Medupi and Kusile plants with them. The results of

these reviews are considered in the discussion of the EIA process and projected project outcomes in this SDR. 16 Eskom, Annual Report, 2008, p. 63. IFC's Performance Standards define clients‘ roles and responsibilities for managing their projects and the requirements for receiving and retaining IFC support. The Performance Standards

are closely aligned with World Bank environmental and social safeguard policies and include additional standards

(e.g., on labor rights) reflecting the private sector and corporate structure of IFC clientele. 17 Eskom, Annual Report, 2008, p. 28. 18 Eskom, Annual Report, 2008, p. 28.

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40. With respect to its public reporting practices, Eskom aligns itself with the GRI19

and

applies the GRI principles of inclusivity, relevance and materiality; sustainability; completeness;

and boundary setting.20

41. Eskom‘s environmental policy is articulated in its Environmental Procedure. This

includes several subsidiary sections: Environmental Management System; Environmental

Management Programme; Waste Management; Land Management; Electro and Magnetic Fields;

Due Diligence; and Reporting. Additional policies guide its approach to Air Quality

Management; Climate Change; and Safety, Health and the Environment.

42. Environmental Management. The Eskom Environmental Management Programme

(EEMP) is the most relevant document relating to the corporate approach to managing the

environmental impacts of the EISP. The EEMP issued in September 2007 is ―a plan of action

that sets out a required environmental end state and…how activities that could have a negative

impact on the environment will be managed and monitored and how impacted areas will be

rehabilitated.‖21

It requires that an EMP be developed in accord with the Environmental

Management System (EMS) of each line division for all existing and future land that is owned or

occupied by Eskom; and for projects for which an EIR or EIA Screening is undertaken. Each

Eskom division and subsidiary is required to establish Key Performance Indicators (KPIs/EMS)

for the development and implementation of EMPs. Business Unit managers are accountable for

the coordinated development and implement of the EMPs in their respective areas in line with

the KPIs/EMS. The EEMP articulates the ten steps in EMP process which is designed to

―integrate the development and implementation of an EMP into the project…[through] systems,

processes; documentation, contracts, etc.‖

43. Detailed guidance is provided in the EEMP for the collection of baseline data; identifying

and predicting environmental impacts and their significance (including the ―activity or root

cause‖ associated with any significant impact); the setting of objectives and targets to address

root causes; actions to be taken to meet objectives and targets; integration of the above actions

into project/operational systems, documentation, and contracts; the linking of EMP performance

to existing business performance measures and reporting practices via KPIs; implementation of

EMP actions; monitoring; and auditing.

44. The EEMP specifies the substantive environmental issues that are to be addressed in an

EMP including: air quality; water quality; land management (including protected species,

invasive plants, herbicide usage, access roads, and animal safety); community issues (including

property ownership, waste disposal, emergency response, culture and lifestyles, procurement of

agricultural products, cultural artifacts, and noise reduction); and the establishment of a

community grievance procedure through which all complaints shall be reported, recorded, and

investigated in compliance with each business unit‘s procedure. The Programme further

stipulates that environmental clauses shall be included in all contract documents for all

19 The GRI is ―a network-based organization that has pioneered the development of the world‘s most widely used sustainability reporting framework‖ (www.globalreporting.org). 20 Eskom, Annual Report, 2008, Executive Summary. 21 Eskom, Environmental Guideline: Environmental Management Programme, September 2007. Note that this

document addresses Eskom‘s approach to environmental management at the corporate level. Eskom also prepares

project-specific Environmental Management Plans as required under South African law.

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contractors and that only contractors with ―proven track records of sound environmental

performance‖ shall be engaged for Eskom projects.

45. According to DEA, Eskom has developed a superior ability to conduct EA through

independent consultants (as required by the EIA Regulations); to prepare and implement project-

specific EMPs; to pro-actively engage the affected public and nongovernmental organizations

(NGOs) in informed consultation through transparent public disclosure of projects; and to assess

alternative sites and mitigation strategies.

46. Air Quality Management. Of particular relevance to the EISP is Eskom‘s policy on air

quality.22

Eskom‘s approach to air quality management at its power plants is governed by the

NEMA Air Quality Act (AQA) of 2004 and the implementation plans detailed in the National

Framework for Air Quality Management of September 11, 2007,23

and incorporates emissions

control for particulates, sulfur dioxide (SO2), oxides of nitrogen (NOx), heavy metals, fugitive

emissions, volatile organic compounds (VOCs), and greenhouse gases.

47. Eskom‘s policy on gaseous emissions is consistent with the requirements of the AQA and

DEA policy. It requires that decisions on use of available and proven technologies to reduce

sulfur emissions (installation of Flue Gas Desulfurization, or FGD) are made on the basis of a

facility‘s projected impact on ambient air quality, taking into consideration existing and

projected air quality from the proposed facility combined with other emission sources. In

addition, Eskom‘s policy requires that all new capacity will include a requirement for low NOx

technology. With respect to particulate emissions, Eskom ―continually investigates new

particulate control technologies and maintenance regimes to ensure the most practicable and

cost-effective methods of emission control.‖24

48. Over the years, Eskom has recorded significant progress in reducing particulate emissions

through the use of technologies that enhance the efficiency of electrostatic precipitators, such as

sulfur trioxide flue gas conditioning, skew flow technology, retrofitting of pulse jet fabric filters,

and improved control systems. In addition to particulates, Eskom calculates and records on an

aggregate basis the annual amounts of NOx, SO2, and carbon dioxide (CO2) emitted from its

power stations based on coal characteristics and power station design parameters. All coal-fired

power stations are in the process of installing continuous emissions monitoring systems on at

least one unit per station.

49. With respect to SO2 emissions, Eskom reports that the primary control technology, FGD,

has not been installed at any existing power stations to date in South Africa. This approach will

change with respect to the Medupi and Kusile plants, under plant-specific circumstances to be

described below. In addition to FGD, which involves substantial inputs in the form of water and

lime (or limestone) as well as high capital and operating costs, Eskom is studying alternative

ways to reduce SO2 emissions, including coal beneficiation/processing to reduce the sulfur

22 Eskom distinguishes air quality from climate change as follows: ― air quality refers to local air pollutant [e.g., oxides of sulfur and nitrogen, and particulate matter] that have local impacts,‖ whereas ―climate change impacts

result from greenhouse gas emissions which have impacts on a global scale.‖ 23 It should be noted that the EIRs for Medupi and Kusile were undertaken prior to the issuance of the National

Framework for Air Quality Management in 2007. 24 Eskom, Annual Report, 2007, Director’s Report on the Environment and Climate Change.

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content of the coal. With respect to NOx emissions, Eskom relies primarily on the use of low-

NOx burners to meet emissions and ambient impact requirements and objectives.25

50. In addition to monitoring emissions, Eskom has operated an ambient air quality

monitoring network since the 1980s to provide national and regional information on long-term

trends in air quality. The network includes monitoring sites in the immediate vicinity of certain

power stations and research sites. Additional monitoring stations have been installed near

proposed new power stations, and others have been relocated to more appropriate locations. The

network measures not only Eskom emissions, but all emissions from surrounding sources.

Monitoring equipment is calibrated against National Meteorological Laboratory standards in a

laboratory accredited by the South African National Accreditation System. All sites, except two,

are equipped to monitor SO2, NOx, ozone (O3), fine particulate matter (FPM), wind speed, wind

direction, and ambient temperature. The other two sites monitor SO2, FPM, and meteorological

parameters. According to Eskom, over a ten year period from 1998 through 2008, NEMA AQA

standards and DEA guidelines for particulates and SO2 were exceeded on several occasions at a

few specified sites, including the airshed affected by the Kusile project, where the DEA daily

mean guideline value of 48 ppb for SO2 was exceeded on two occasions and the DEA hourly

mean guideline value of 134 ppb was exceeded on 57 occasions as a result of emissions from the

existing Kendal station.26

51. Water Supply. Eskom purchases its water from the Department of Water Affairs directly

via abstraction from state-owned water works or through intermediaries (such as Exxaro at the

existing Matimba Power station in Limpopo).27

52. Occupational Health and Safety (OHS). Despite significant efforts, Eskom‘s OHS

record remains ―unsatisfactory‖ in terms of Eskom‘s own corporate standards and target of zero

fatalities per reporting year.28

During the past two years covered by Eskom‘s 2008 Annual

Report (2007-2008) Eskom experienced 25 fatalities among employees, 30 among contractors,

and 83 among members of the public in accidents and other incidents, especially involving

vehicles and accidental or unauthorized electrical contact.

25 Additional insight into Eskom‘s approach to managing power plant emissions with direct relevance to its proposed mitigation measures for Medupi and Kusile, is evident from its November 2008 submission to the

Working Group on Minimum Emissions Standards for Combustion Installations, established under the 2007

Framework for Air Quality Management for the purpose of developing Regulations Relating to Listed Activities and

Minimum Emissions Standards under the 2004 AQA. Although not all of Eskom‘s recommendations were

subsequently accepted by DEAT, Eskom sought to ensure that the application of emissions standards to particular

facilities would take into account ambient conditions such as existing air quality and population exposure; that

permitted concentrations of pollutants be qualified in terms of monthly and hourly averaging periods so as to

provide some reasonable tolerance for exceedances, particularly during start-up, shut-down or upset conditions. In

addition, Eskom argued that DEAT‘s proposed timetable for compliance with the new plant standards should be

determined on a plant-by-plant basis and take into account availability of resources, remaining life of plant, and

impact of emissions on health of people living in the plant vicinity. Eskom further recommended that the definition

of ―existing plant‖ should include those plants for which authorization was obtained prior to the publication of emission standards. The details on Eskom‘s proposals to the Working Group can be found at:

www.saaqis.org.za/filedownload.aspx?fileid=188. 26 www.eskom.co.za/annreport08/034 27 Eskom, Annual Report, 2008, p. 25. 28 Eskom, Annual Report, 2008, pp. 20.

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53. Eskom, having established a target of zero fatalities per reporting year, believes that ―this

performance is totally unacceptable,‖ and proposes to continue its ―focus in terms of enhancing

safety training and awareness, skills, competency, supervision and operational discipline.‖

Eskom has in place a procedure to investigate all fatalities promptly and share lessons learned

from case studies and internal briefings. In June 2007 Eskom launched its ―Switched on to Safety

Excellence‖ program designed to:

Achieve a sustainable culture of excellence based on enhanced safety management by

reinforcing teamwork, increasing operational discipline, and applying learned skills;

Customize and adopt existing safety management systems and protocols focusing on

best practice; and

Equip leadership with the knowledge and tools to drive Eskom‘s safety culture

transformation.

54. To accelerate these changes, Eskom implemented a behavior-based safety observation

tool and senior leadership training aimed at strategic and operational aspects of effectively

managing safety. Increased leadership commitment was demonstrated through national and

regional work stoppages to reinforce the importance of safety, in particular in high risk activities.

Eskom has established divisional contractor fora, partnering with contractors to address safety,

health and environmental concerns. In addition, Eskom engaged the services of an international

specialist on a three year contract to evaluate electrical safety as well as a behavioral safety

program. Changes were made to the Eskom electrical training material to incorporate some of

the recommendations made. With respect to community safety, campaigns to improve public

awareness were rolled out in various media and included school visits and the handout of safety

materials.

55. Ash Management. Eskom seeks to recycle as much of the ash produced by its power

stations as possible; in 2008 this amounted to seven percent used for the production of cement.

The remaining ash is disposed of in ash lagoons or on dry ash dumps adjacent to power stations

with management practices to control fugitive dust.29

For the Medupi and Kusile projects, ash

will be disposed of essentially dry, i.e., with the minimum amount of water necessary to prevent

dust formation during transport by conveyor belt and deposition. The sites are located on

relatively flat terrain, and are designed as landfill facilities for solid wastes with leachate

collection, treatment, and reclaim systems. As soon as possible, deposited ash is covered with

topsoil for revegetation purposes. Therefore, ash disposal facilities that are part of the EISP are

not liquid storage facilities, and the Bank‘s Dam Safety Policy does not apply.

56. Biodiversity. Eskom manages and controls any significant threats to biodiversity

resulting from its power stations and power lines through partnerships with civil society to

ensure best practice and specialist input, including projects in areas of non-critical natural

habitats. Examples of such partnerships include the Endangered Wildlife Trust, Birdlife South

Africa, the Middlepunt Wetland Trust, and the Wildlife and Environment Society of South

Africa.

29 Eskom, Annual Report, 2008, pp.76-80.

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57. Land Acquisition and Resettlement. As noted in the Equivalence Analysis, above,

South African legal requirements for resettlement and compensation are broadly consistent with

the Objectives and Operational Principles of 4.00 Table A1, especially in the context of

transparency in consultations with directly affected people, fairness of compensation, the widely-

known availability of appeal mechanisms, and, particularly for the poor, a requirement for

significant improvement in living quarters and opportunities for betterment in livelihood

(economic rehabilitation).

58. South African law goes beyond market value compensation, to include all costs needed

for the affected landowner to re-establish an economic livelihood, including losses incurred

during the transition period. South African law also guarantees that all people living on an

acquired property, such as tenants, employees, or even squatters, are entitled to resettlement and

assistance to improve their economic well-being.

59. One key area in which South African legislation, and Eskom‘s practice, differ from Bank

practice is the absence of a requirement for preparation and public disclosure of a stand-alone

Resettlement Action Plan (or Resettlement Plan Framework) prior to resettlement. It is important

to note that the difference is not in the substance of the process, but that in South Africa there is

no requirement to systematically document and make public to a broad audience how

resettlement will occur, what the rights and benefits are, and what grievance and appeal

procedures are available. Instead, this is done through consultations and negotiations with all

directly affected parties prior to resettlement.

60. Eskom views the legal requirements that apply to land acquisition and resettlement as

minimum requirements and strongly supports the principle of security of tenure.30

This involves

negotiated solutions where people are given choices. Consultation takes place with all affected

people and is geared toward a negotiated settlement.

61. Eskom is the direct implementing agent for the resettlement process and takes full

responsibility for the land acquisition and resettlement process, but government is part of the

process as an observer to ensure that the legal requirements are being met. For this purpose, the

national Department of Land Affairs provides a field officer who then participates in all

negotiations. In addition, provincial and local authorities participate directly in the resettlement

process through representation on consultation fora. The government plays a more direct role in

circumstances where land claims exist for restitution on a property that Eskom is seeking to

acquire for a project; in this instance the government must first make a decision on the land

claim before the land acquisition process can proceed. Eskom need for the land is considered as

part of the government‘s decision on whether the land is returned to the claimant or whether

replacement land is made available.

62. At the earliest possible stage in the resettlement process, Eskom conducts a detailed

Social Impact Assessment (SIA), typically through an independent third party with the required

expertise. The SIA provides a socio-economic baseline that includes both the physical

characteristics and the communities to be affected (i.e., number of homesteads, family units, and

30The following discussion is drawn partially from the independent reviews of the Medupi and Kusile power plants

conducted on behalf of Eskom by SE Solutions.

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total population) as well as characterizing livelihoods and dependencies. The baseline also serves

as a formal census or register of affected and potentially affected parties that can be used later if

required as a threshold for determining eligibility for compensation.

63. Eskom seeks to avoid expropriation wherever possible and includes the potential need for

and cost of expropriation, resettlement, compensation and rehabilitation among the criteria used

for alternative site assessment. When resettlement is unavoidable all displaced people are

effectively compensated and support and other benefits are provided in the relocation process.

64. Eskom provides security of tenure to resettled parties and helps register deeds of

ownership. They provide owners with collateral for a loan to finance their own economic

improvement.

65. Replacement accommodation is based on South African Bureau of Standards

requirements for housing, which requires minimum brick, mortar and tile structures with running

potable water and proper sanitation. Where cost-effective, Eskom also seeks to provide

electricity to replacement structures. Eskom‘s expenditure in these transactions is strictly

controlled by the Public Finance Management Act; however, it is Eskom‘s policy to ensure that

resettled parties are better off than prior to resettlement. Eskom seeks to maximize employment

of displaced persons in whatever jobs may be available on project sites. However, these are

typically unskilled construction jobs of limited duration.

66. Where in-kind resettlement opportunities are not available, Eskom provides cash

compensation based on an independent valuation using open market selling trends of similar land

based on registered sales over a period between three months and three years. In cases where the

land owner disagrees with the compensation offered, the owner is entitled to appoint a valuer of

its own choosing, but at its own expense, with the final offer typically reflecting the difference

between the two valuations.

67. Although Eskom does not prepare formal publicly-disclosed resettlement plans, Eskom

does undertake independent SIAs and develops internal plans for resettlement with timelines and

commitments. The plan is treated as a living document that is updated as required on an ongoing

basis. All negotiated outcomes are documented as formalized agreements and the entire

resettlement process is documented and filed by Eskom. The implementation phase of the

contractual resettlement plan is monitored and evaluated by contractors hired by Eskom, and is

subject to amendment by mutual agreement of the parties.

68. Eskom states that it has ―embarked on numerous strategically important EIAs with

respect to land and servitude acquisitions for new power stations, substations and power lines…

In [2008] alone 8,155 interested and affected parties were consulted and 584 servitudes were

acquired. The majority of these projects were successfully completed, as they were well received

by the communities…‖ Eskom attributes this success to the engagement of a public ―committed

to taking part, voicing its views and influenc[ing] the outcome of [the] servitude acquisition

process.‖

69. In terms of registered land owners, Eskom provides direct compensation on a willing

seller-willing buyer principle and pays market value for properties so acquired. In addition,

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Eskom pays for direct financial losses that may be incurred as a result of the need to relocate,

including the replacement of assets where this is appropriate.31

70. However, Eskom also acknowledges the following two weaknesses that have the effect of

delaying the completion of the process:32

Some stakeholders only begin participating late in the land or right-of-way (servitude)

acquisition process, which results in a need to review decisions already made; and

Individuals purchase properties where the seller has failed to disclose that Eskom has

an approved ROD to install a power line.

71. To address these weaknesses going forward, Eskom proposes the following measures:33

―Involvement of all stakeholders during the planning stages of our projects. The

public will have a view of our future development plans and will have an opportunity

to give inputs and comments.

―We will also announce and publicize all our proposed projects early enough to the

communities involved.

―Furthermore, we will actively engage with various national and provincial statutory

bodies, NGOs, agricultural unions, and other organizations to raise awareness about

planned projects and proposed implementation plans, solicit support for all current

projects and future projects, and influence their strategic development plans.

―Lastly, we endeavor to improve our communication media and feeding of

information to our customers.‖

72. A review of Eskom‘s practices indicates that they fully meet the requirements of South

African legislation. During discussions with Eskom on the subject of more formally

documenting the resettlement process, Eskom recognized that there could be value in making

public to a broader audience than directly affected people how resettlement would be carried out

for future projects. As a first step gap-filling measure, Eskom prepared a Resettlement Plan

Framework (―Procedure for the Involuntary Resettlement of Legal and Illegal Occupants on or

from Eskom Procured Land‖) and disclosed it on its website in October 2009.

73. Internal Monitoring and Compliance. Eskom has a systematic audit process in place to

ensure that any non-compliance with South African legal requirements are identified, reported,

and investigated, and that corrective and preventive measures are implemented. During the most

recent two-year reporting period from 2007-08, 96 environmental legal contraventions were

recorded, most of them relating to unauthorized releases of process and wastewater.

31 SE Solutions, The Kusile Coal-fired Power Station Project, Independent Review of Compliance with the Equator

Principles, June 15, 2009, 4.6.1. (SE Solutions, Kusile) 32 Eskom, Annual Report, 2008, p. 65. 33 www.eskom.co.za/annreport08/023.

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74. Independent Verification of Eskom’s 2008 Business Sustainability and Performance Review. Eskom engaged KPMG Service (Pty) Limited in 2008 to provide independent assurance

with regard to selected key sustainability indicators as presented in the ―business sustainability

and performance review‖ section of the 2007/08 Annual Report.34

The KPMG review provided

unqualified support for Eskom‘s reportage regarding the following environmental and social

issues:

Net specific water consumption; and

Relative particulate emissions, and emissions of SO2 and CO2.

KPMG offered qualified opinions on the reliability of Eskom‘s reporting with respect to:

The total number of environmental legal contraventions; and

The lost time injury rate.

The qualified opinions result from identified weaknesses in Eskom‘s reporting performance with

respect to the precise number of ―environmental contraventions‖ and the lost time injury rate, as

it moves toward GRI standards.35

2. The Department of Environmental Affairs (DEA)

75. Established in 1994, DEAT (now DEA) is an independent Department of the GoSA

responsible for protecting, conserving, and improving the environment and natural resources. It

was also responsible for promoting and creating growth conditions for tourism to the country

until its very recent reorganization. It now reports to the Minister of Water and Environmental

Affairs, who is a member of the Cabinet and is appointed by the President from among members

of the National Assembly.36

76. Organization. DEA was organized until recently into six integrated departmental

programs each led by a separate organizational unit, or branch, and supported by various public

entities and statutory bodies:37

Administration: human resources, finances, logistical support and communications;

34 Eskom, Annual Report, 2008, pp. 94-96. 35 ―With respect to the lost time injury rate (LTIR) and the total number of environmental legal contraventions, our

review identified process and control weaknesses that prevent complete, consistent and accurate reporting of the

performance data in accordance with the internally developed Eskom reporting guidance, as discussed in the report

on pages 91 and 79 respectively. As a result, based on our work performed, we are unable to form a conclusion on

the LTIR and total number of environmental legal contraventions data reported,‖ Eskom Annual Report, 2008, p.96. 36 DEAT‘s legal mandate and authority is supported by various legislative instruments including the Constitution of

South Africa (1996), the National Environmental Management Act of 1998 as amended (NEMA), the Marine Living Resources Act of 1998; the World Heritage Convention Act of 1999; the National Environmental Management

Biodiversity Act of 2003 , the National Environmental Management Protected Areas Act of 2003; the Air Quality

Act of 2005; 28 multilateral and 33 bilateral agreements; and various other primary legislative instruments affecting

environmental matters and related issues. DEAT, Annual Report, 2006-2007, p. 12. 37 DEAT, Annual Report, 2006-2007.

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Environmental Quality and Protection: protecting and improving the quality and

safety of the environment;

Marine and Coastal Management: promoting conservation and sustainable use of

coastal and marine resources;

Tourism: ensuring the creation of conditions for sustainable tourism growth and

development;

Biodiversity and Conservation: promoting the conservation and sustainable use of

natural resources, including protected areas, biodiversity research, plant and animal

species protection and trans-boundary conservation; and

Sector Services and International Relations: corporate and cooperative governance,

organizational performance management and project implementation and

international relations.

77. The Environmental Quality and Protection Branch (EQP) is mandated to protect and

improve the quality and safety of the environment, including air, water and soils and has

undergone fairly rapid expansion since its establishment in 2003.38

Within EQP the Chief

Directorate of Environmental Impact Management is responsible for all aspects of EIA and is

divided into separate Directorates for Environmental Impact Assessment, Environmental Impact

Processing, and Environmental Impact Management. A separate Chief Directorate for

Regulatory Services includes separate Directorates for Compliance Monitoring and Enforcement.

78. The strengths and weaknesses of DEA‘s capacity to supervise and approve the EIA

process with respect to the thermal power sector are best characterized in the November 2008

review of the effectiveness of EIA in South Africa during the previous ten years, as DEA is the

sole agency with responsibility for quality of EIA at the national level. This is the level at which

all thermal power plants are reviewed and authorized due to the fact that Eskom, the national

power generation, transmission and distribution company, is a para-statal corporation.

79. Intergovernmental coordination and cooperation among national and provincial agencies

is implemented through quarterly meetings of MINMEC Environment, a standing

intergovernmental body consisting of the Minister for Environmental Affairs and Tourism and

members of the provincial Executive Councils (MECs) responsible for environmental

management functions. Technical assistance to MINMEC is provided by MINTEC:

Environment, which consists of the Director General of DEA and the heads of the provincial

departments responsible for environmental management functions. Intergovernmental

coordination among national level agencies takes place through the Committee for

Environmental Coordination comprising the Director Generals of the following agencies: DEA

(chair), Water Affairs and Forestry, Minerals and Energy, Land Affairs, Constitutional

Development, Housing, Agriculture, Health, Labor, Arts, Culture, Science and Technology,

along with representatives from provincial and local governmental bodies.

38 Frances Craigie, Phil Snijman and Melissa Fourie, ―Environmental Compliance and Enforcement Institutions,‖ in

Alexander Paterson and Louis J. Kotzé, eds., Environmental Compliance and Enforcement in South Africa, Legal

Perspectives, p. 82 (hereafter, Paterson and Kotzé).

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80. In May 2009 it was announced by the newly elected government that DEAT would be

separated from the tourism function and would be placed under the authority of the new Ministry

of Water and Environmental Affairs along with the Department of Water Affairs, which was

previously part of the Ministry of Water Affairs and Forestry.

81. Human Resources and Capacity. As of the end of 2009 DEA reported a total of 1,874

budgeted positions, of which 1,532 were filled (leaving an 18 percent vacancy rate). Within EQP

there were 213 positions, with 56 vacancies and 22 contract employees.39

DEA management and

staff have high levels of specialized training in all key areas of environmental assessment and

management including, in particular, air quality evaluation and monitoring.

82. DEA places a high value on training as evidenced by the fact that provincial training on

the 2006 EIA Regulations was completed by the end of March 2007.

83. During 2005 and 2006 DEAT implemented an Electronic Document Management

System, which seeks to automate business processes and reduce paper usage throughout the

organization. By 2007 about one half of DEA staff had transitioned to the new systems.40

84. The 1999 National State of the Environment Report highlighted the need for

environmental data and information necessary for DEA to monitor the state of the environment

on a national, provincial, and local basis. Accordingly, DEA initiated a comprehensive State of

the Environment Programme, which includes support to provincial and local authorities to

undertake environmental assessments and report on the state the environment. Since 1999

nineteen sub-national State of the Environment reports have been produced. During 2002 DEA

(then DEAT) also released a set of environmental indicators and developed a draft set of

environmental performance indicators for local authorities. The State of the Environment Report

has also provided capacity to provinces and local authorities for developing environmental

reports and products on the internet.41

85. Until recently, regulatory measures for waste management in South Africa were not on a

par with international legislation. In the mid 1990s DEAT initiated the development of an

integrated approach to waste management and issued three guidance documents to deal with the

management of hazardous waste, waste disposal by landfill, and water quality at waste

management facilities.42

The National Environmental Management Waste Act of 2008 provides

a more comprehensive regulatory framework for management of waste. One of the major

changes of the Act is to transfer primary authority for waste management from sectoral

ministries to DEA.

39 Telcon with DEA, February 5, 2010. 40 DEAT, Annual Report, 2006-2007, p. 17. 41 DEAT, 2007, South Africa Environment Outlook, A Report on the State of the Environment, Revised Edition, 1.4.1

(SAEO). 42 Minimum Requirements for the Handling, Classification and Disposal of Hazardous Waste; Minimum

Requirements for Waste Disposal by Landfill; and Minimum Requirements for the Monitoring of Water Quality at Waste Management Facilities are existing documents. Other documents envisaged for the series include: Minimum

Requirements for Waste Disposal Site Auditing; Training of Operators and Managers of Waste Management

Facilities; and Minimum Requirements for the Handling, Classification and Disposal of Hazardous Waste.

Department of Water Affairs and Forestry, Republic of South Africa, Waste Management Series, Second Edition,

1998.

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3. Department of Water Affairs

86. Since 1956 the Department of Water Affairs (DWA), until recently the Department of

Water Affairs and Forestry (DWAF), has been responsible for implementing all government

policies and regulations regarding water supply, initially under the terms of the Water Act, 1956.

This authority was reiterated under the ECA of 1989, the Water Services Act of 1997, and the

National Water Act of 1998 (Act 36 of 1998). DWAF prepared a National Water Resource

Strategy in 2004, which among other findings determined that the Crocodile (West) River Basin

is of paramount importance in developing a more specific management strategy. The DWA is

reviewing the institutional arrangements for the supply of water at the national level, and is

expected to establish a National Water Resource Infrastructure Agency which will develop,

operate, and maintain bulk water infrastructure of national importance at a first tier level.

87. The 2000 Integrated Pollution and Waste Management Policy (IP&WM) contains key

principles that inform the government‘s approach to waste management. Currently, coal ash

pond management is regulated under the Water Act, which is administered by DWA. In addition,

DWA was also responsible for issuing permits for waste disposal that could impact ground and

surface water. Since the cabinet reorganization of May 2009 the Department of Water Affairs

has been reassigned to the new Ministry of Water and Environmental Affairs. It remains to be

determined how the responsibilities for water and waste management will be allocated between

the Department of Water Affairs and the Department of Environmental Affairs (formerly DEAT)

within the new ministry.

4. South African Heritage Resource Agency

88. The South African Heritage Resource Agency (SAHRA) provides the expertise in South

Africa to develop and implement policies and practices towards protection and management of

cultural resources. Under the EIA Process established by NEMA, cultural heritage and resources

are among the key subjects that must be considered in the EIA process, which is under the

jurisdiction of DEA. Specialists must be engaged in the EIA process who have the skill,

competence, and qualifications satisfactory to SAHRA. If cultural resources are identified or

found in the course of the EIA process, SAHRA or its provincial counterpart must be involved to

survey the site that is being subject to environmental assessment and assess any discovery, and

may either issue a prohibition to further develop the site or mandate mitigation and conservation

measures to be taken by the project proponent. If findings are made during the EIA process, the

requirements mandated by SAHRA are incorporated in the Record of Decision issued by DEAT.

The ROD also normally requires notification of SAHRA in the event of ―chance finds‖ during

project construction.

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B. PROCESSES AND PROCEDURES

1. Environmental Governance

89. The White Paper on Environmental Management Policy issued by DEAT in 1997

identified good environmental governance as a critical factor in successful environmental

management in South Africa. The White Paper set forth the following principles:43

Responsible and accountable governance;

Regulatory enforcement;

Establishment of integrating mechanisms and structures to facilitate participation;

Inter-ministerial and interdepartmental coordination;

Separation of institutional responsibilities for regulation of environmental impacts

and promotion of resource exploitation;

Public access to information; and

Institutional and community capacity building.

90. In addition to the provisions contained in the NEMA of 199844

and EIA Regulations

issued in 2006, other legislation relevant to public consultation and disclosure with respect to the

electricity generation and transmission sector include: the Promotion of Access to Information

Act of 2000; the Promotion of Administrative Justice Act of 2000; and the Protection of

Information Act of 1982. Collectively these acts promote access to information, including air

quality information, while limiting access to information that may be deemed sensitive for

purposes of national security and public safety. The Integrated Environmental Management

Information Series not only provides access to information but also practical guidance to the

public regarding environmental management and governance. The Environment Sector Strategic

Plan published by DEA in 2009 also makes contributions to improved environmental governance

in South Africa.

91. The Integrated Policy for Waste Management, implemented jointly by DEA and the

Department of Water Affairs, clearly recognizes the role of public participation in the

establishment of environmental standards, specifically in terms of: ―the universal, consultative

application of the standards setting process, taking into account the needs of…. civil society

[and] the provision of access to civil society to the standards setting process and of the standards

43 SAEO, 5.1.2 SESA. 44 Section 3(1(a) of NEMA provides that ―every person is entitled to have access to information held by State and

organs of state which relate to the implementing of …NEMA and any other law affecting the environment, and to

the state of the environment and actual and future threats to the environment including any emissions to air, water or

soil and the production, handling, transportation, treatment, storage and disposal of hazardous waste and

substances.‖

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themselves…‖.45

With specific reference to air quality, Section 7(2) of the NEMA AQA of 2004

requires that the norms and standards established in the National Framework are aimed at

ensuring opportunities for public participation in the protection and enhancement of air quality

including public access to air quality information.

92. To implement these provisions with respect to air quality, DEA has initiated the South

African Air Quality Information System (SAAQIS) to make ―real time‖ information available to

stakeholders in a user-friendly format and to provide a common system for managing air quality

and provide uniformity in the management of data, information and reporting.

2. Environmental Impact Assessment

93. South Africa began undertaking EIAs in an ad hoc manner during the 1980s and a

voluntary EIA procedure was integrated into the ECA of 1989 (since largely superseded by

NEMA; some sections of the ECA remain in effect pending further amendments to NEMA).

Requirements for EIA were introduced on a sectoral basis in the Minerals Act of 1991 (Sections

38, and 39(5). These requirements were generalized by the Environmental Impact Assessment

Regulations of September 5, 1997 (1997 EIA Regulations), which mandated a process including

screening, scoping, public participation, environmental reports, review and decision.46

Although

the 1997 EIA Regulations were superseded by new EIA Regulations issued in 2006, the

acceptability of the 1997 EIA Regulations are relevant to this review because the EIRs for

Medupi and Kusile were initiated prior to the effective date of the 2006 EIA Regulations and

were, therefore, conducted under the authority of the 1997 EIA Regulations.

94. Under the 1997 and 2006 EIA Regulations, environmental management is a concurrent

function where DEA sets the legal framework but provinces are normally autonomous in

implementing the function. EIRs are conducted at several administrative levels: national,

provincial, and local depending on whether the national environment is affected or national

governmental authorities are the applicant.47

95. However, one unintended effect of this process was a lengthy application process that

conflicted with urgent national priorities of economic growth and job creation.48

Over the years,

DEA reviewed the South African EIA system to see what regulations worked and what

regulations needed improvement.49

An April 2006 report found the following inadequacies: (a) a

wide interpretation of activities resulted in inconsistent applications; (b) unnecessary EIRs were

conducted for applications of small scale/insignificant activities; (c) the application process itself

was lengthy and inflexible and contained too many ―authority stops‖/―decision points‖; (d) there

were inadequate provisions for public consultation; (e) there were no strategic planning tools to

45 Ministry of Environmental Affairs and Tourism, 2007. National Framework for Air Quality Management in the

Republic of South Africa. September 11, 2007, Section 5.4.3.4. (National Framework). 46 Jens Staerdahl, Zuriati Zakaria, Neil Dewar and Noppaporn Panich, ―Environmental Impact Assessment in

Malaysia, South Africa, Thailand and Denmark: Background, layout, context, public participation and environmental scope.‖ Journal of Transdisciplinary Environmental Studies, Vol. 3, no. 1, 2004 (Staerdahl et al.

2004). 47 Staerdahl et al. 2004. 48 DEAT, Annual Report, 2006-2007. 49 DEAT, 2006. Report on NEMA EIA Regulations.

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provide support; and (f) enforcement measures were generally weak. The review led to the

promulgation of the 2006 EIA Regulations, issued under the authority of NEMA. Six aspects of

EIA Regulations were identified as areas that might be retained and that might need

improvement. The six areas reviewed are as follows:50

Application of EIA: The 1997 EIA Regulations were applied to too wide a spectrum

of activities resulting in a level of effort disproportionate to potential impacts and

risks. As a result some low risk projects were utilizing excessive resources for

regulatory review and approval while at the same time some higher-risk projects were

not getting sufficient attention. The 2006 EIA Regulations seek to address this issue

by redefining the spectrum of projects subject to EIA.

EIA Scoping: The 1997 EIA Regulations created a cumbersome process for EIAs,

which resulted in innovative interventions. The NEMA EIA Regulations differentiate

between basic and thorough assessments, resulting in a more tailored scope for each

EIA.

Decision-Making Process: The 1997 EIA Regulations allowed only a comprehensive

process. In contrast, the NEMA EIA Regulations allow for upfront decision making

regarding fatal flaws, emergency circumstances, and ―clearly no impact‖ situations,

and additionally prescribe differential time frames.

Roles, Responsibilities and Compliance: The 1997 EIA Regulations limited the

allocation of roles and responsibilities to authorities and applicants and did not

specify consequences for non-compliance. The NEMA EIA Regulations prescribe the

roles and responsibilities for all parties involved, and provide consequences for non-

compliance.

Public Participation: The 1997 EIA Regulations included public participation as part

of an EIA, but the regulation itself was poorly defined. The NEMA EIA Regulations

provide a well-defined requirement for public participation, which includes minimum

requirements.

Appeal Process: The 1997 EIA Regulations contained no prescribed appeal decision-

making process. The NEMA EIA Regulations sought to change this by providing a

well-defined appeals process. The overall appeal process has been streamlined with

regulations set forth by a consistent national process.

96. While some EIA applications are processed by DEA, the majority of applications are

actually handled at the provincial level.51

However, DEA is still involved as it has the

Constitutional responsibility to provide the provinces with support and help in effectively

handling the stream of EIA applications.52

50 DEAT, 2006. Report on NEMA EIA Regulations. 51 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 52 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life.

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97. As a result of a significant effort by DEA to develop capacity and provide technical

support to provincial authorities, the number of pending EIA applications (nationally and in the

provinces) was dramatically reduced from 5,300 in July 2006 to 1,717 by the end of March 2007.

EIA backlogs were reduced by 40 percent by the end of FY 2006-07 and more than 80 percent of

new applications were processed on time.53

Moreover, electronic tracking of applications is no

longer restricted to state-owned enterprises.54

DEA has developed the National Environmental

Authorization System as a web-based tool to track the process of EIA applications.55

98. In November 2008, DEAT issued a draft review of the previous ten years of EIA practice

in South Africa. The draft report was commissioned by DEAT and conducted by independent

consultants. The main findings of the report are that: (a) the overall effectiveness of EIAs in

South Africa in meeting requirements of ECA and NEMA was deemed moderate, with

substantial room for improvement; (b) overall there was a significant improvement in

effectiveness and efficiency of EIA in moving from the ECA regulations to the NEMA

regulations; (c) public participation in EIA is effective; (d) the cumulative (combined) impacts

aspect is generally not considered effective and there is room for improvement; (e) the EIA

process in South Africa is implemented relatively efficiently if one considers the average time it

takes to produce and evaluate EIAs; (f) monitoring and enforcement in Environmental

Management is one area where the current EIA system is not effective or efficient; (g) a more

strategic approach to Environmental Impact Management is required and there is a definite need

to move away from an ―EIA only‖ system to one based on integrated environmental

management.

99. NEMA itself has been several times, most recently in December 2008 by the National

Environmental Laws Amendment Act (35 of 2007, NELAA) and by the National Environmental

Management Amendment Act of 2008 (36 of 29, NEAMA), which came into effect on May 1,

2009. These amendments provided some useful clarifications to the EIA, enforcement and

compliance provisions of NEMA and made provision for the conformance of these provisions to

legislation issued pursuant to NEMA. Some of these provisions are relevant to the EISP and are

described below.

100. Implementation of Multilateral Environmental Agreements (MEAs). Since 1994,

South Africa has engaged fully and actively in international fora, a process of emergence that

culminated to date in its hosting of the World Summit on Sustainable Development in 2002. Like

other developing countries, South Africa‘s implementation of ratified MEAs has been variable.

Progress has been made in implementation of the Kyoto Protocol and the Convention on

Biological Diversity; less so on the development of its National Action Programme on Land

53 DEAT, Annual Report 2006-2007, p. 4. Under Article 36 of the Regulations in terms of Chapter 5 of the NEMA

(―EIA Regulations‖)…. ―A competent authority must within 45 days of acceptance of an environmental impact assessment report….or, if the report was referred for specialist review …within 45 days of the receipt of the findings

of the specialist reviewer, in writing – (a) grant authorization in respect of all or part of the activity applied for; or

(b) refuse authorization in respect of all or part of the activity.‖ 54 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 55 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life..

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Degradation required for implementation of its commitments under the Convention to Combat

Desertification.56

101. Decentralization of the EIA Process. Distributing power at a provincial level is

common in South Africa, stemming from the South African Constitution that gives wider powers

to the provinces (e.g., provincial planning), as well as to the Department of Water Affairs, and

the Department of Minerals and Energy. To achieve this end, several initiatives were launched to

capacitate provinces while reducing the large number of pending EIA applications, as noted

above.

102. In accordance with its Constitutional responsibility to provide support for the provinces,

DEA conducts visits to each province spending a full day with each provincial team to establish

capacity. The feedback from these trips is incorporated into a Capacity Audit and Needs

Analysis, which allows custom-made interventions to tackle provincial needs.57

DEA has also

established a new Capacity and Support Directorate that focuses on provincial assistance.

Additional training and other initiatives have included:58

Fourteen training sessions, with one for each province, followed up by five further

sessions for provincial officials in related fields who had not attended the initial

training;

Eleven ―open day‖ information sessions, one for each province and two national

sessions in Pretoria and Cape Town;

Four Regulation Implementation workshops of two to three days each;

Financial and technical help extended to seven provinces; and

Several Environmental Management Frameworks (EMFs) have been developed in

partnership with the provinces. The target is for the Minister or MECs to promulgate

these EMFs in terms of Rule 72 of the NEMA EIA Regulations in 2008/2009.

103. Further improvements are expected as a result of the revised Strategic Plan issued by

DEAT in 2008, which among other recommendations, proposed a desired service standard of 95

percent of applications processed on schedule by 2010.59

The revised Strategic Plan also

recommended training in EIA administration for both provincial and national EIA

Administrators.60

Training is offered in 9 provinces, without discrimination, to all EIA

Administrators. To date, approximately 250 administrators attended basic training on the 2006

EIA Regulations.61

The desired standard and timeframe is 450 trained EIA administrators at the

end of 2008/09. The revised Strategic Plan recommends finalizing development and

accreditation of training courses, adding training material and tutorials to the DEA website,

56 SAEO, 2.1.4. 57 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 58 DEAT, Annual Report, 2006-2007: Enhancing Quality of Life. 59 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 60 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 61 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08.

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funding contact sessions in appropriate locations, and entering into partnerships with tertiary

institutions to ensure sustainability of training courses.62

3. Cumulative Impact Assessment

104. Both OP 4.00 Table A1 and South African EIA Regulations make reference to

assessment of cumulative impacts as appropriate in the project context. NEMA requires that

cumulative impacts be considered both in the EIA process and by decision-makers. Because EIA

in South Africa is primarily a permitting instrument and the EIA process results in a permit with

conditions for which the applicant is responsible, it is very difficult to include detailed

assessment of impacts not under the control of the applicant. At the same time, the permitting

authority needs to be in a position to decide on the acceptability of impacts not only as a result of

the applicant‘s proposed project but all of the activities in the project area.

105. In order to address this dilemma, South Africa has adopted a two-pronged approach,

where cumulative impacts or effects are dealt with at both a strategic and an activity level. On

the strategic level, the SEA approach is used by government to develop Environmental

Management Frameworks (EMFs) for a defined area as described below. An EMF for an area

takes into consideration all existing and planned (or anticipated) activities, and then models

impacts on air, water, land use, and the socio-cultural landscape. This forms the baseline against

which decisions on specific development applications can be based. It also informs land use

planning and management for the area, something that civil society stakeholders consider has

been lacking until this time. At a project-specific level, the applicant assesses the contribution of

the proposed activity with respect to the baseline; this forms part of the EIA process, even

though it is focused on what is under the control of the applicant and for what the applicant can

reasonably and lawfully be made responsible through permit conditions.

106. With respect to the EISP and its components, the issue of cumulative impacts is germane

at the level of each individual project component. As noted in the maps attached to this SDR, the

various project components are well removed from each other, and have been considered as

stand-alone projects by Eskom and the regulatory authorities. There has been and remains no

reasonable justification for examining their cumulative impacts as a package of investments

being considered for Bank financing through the EISP. As individual projects, however,

cumulative impacts have been examined as appropriate as part of the EIA process. In the case of

the Medupi and Kusile projects, the most important cumulative impact relates to air emissions

and ambient air quality. South African air quality regulations require assessment of cumulative

impacts on the airshed of the new project. As noted later in this SDR, the cumulative impacts on

the airshed resulting from the proposed project, existing sources, and likely future developments

are taken into consideration in the Record of Decision.63

107. In the context of transmission lines, cumulative impacts are also taken into consideration

by Eskom‘s Transmission Division in carrying out feasibility and siting studies for new high-

62 DEAT, 2007. Strategic Plan for 01 April 2005 to 31 March 2010, Revised 2007/08. 63 This accounts for a key difference in the Records of Decision for the Medupi and Kusile projects; the Kusile

project must be built with FGD capacity installed, and the Medupi project must be FGD-ready with the expectation

that airshed quality will degrade at such time as additional industrial development and population growth occurs in

the airshed.

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voltage transmission lines. One of the key issues considered in both system planning and the EIA

process is whether new transmission lines should be installed as part of a utility corridor, or kept

distant from existing transmission line rights-of-way, depending on the assessed cumulative

impacts of the two strategies. A utility corridor approach is rarely taken, however, in areas where

the risk of large-scale brush fires may place high voltage transmission lines at risk because of

regulatory restrictions established to maintain safety and security of the national power grid.

4. Strategic Environmental Assessment (SEA) and Environmental Management

Frameworks (EMF)

108. South Africa has no legislation requiring SEA, which is still considered an emerging tool

for assessing environmental impacts on a strategic level in both developed and developing

countries.64

NEMA, by making provision for the development of assessment procedures that aim

to ensure that the environmental consequences of policies, plans and programs (as well as

projects) are considered, provides for the use of SEA on a case-by-case basis.65

As a result, no

particular body has legal responsibility for undertaking or approving SEA,66

but the EMF has

become a useful tool for DEA and other agencies to address a wide range of environmental

issues in a particular geographic area at a strategic level, as discussed further below.

109. A more recent iteration of South Africa‘s SEA Guideline was issued in 2004 as part of a

series of overview information documents on concepts of, and approaches to, integrated

environmental management that have been issued by DEAT.67

The document cites the 2000

Guideline document prepared by DEAT and the Council for Scientific and Industrial Research

(CSIR) as the authoritative guidance on SEA in South Africa. It expands the scope of its

recommendations on best practice using a broad set of international and national sources

including the United States, Canada, the European Union, the United Nations, Economic

Commission for Europe, and the World Bank.68

More recently, DEA has taken note of the

pending incorporation of South Africa‘s SEA Guideline within South Africa‘s regulatory

framework ―once the initiated provincial consultation process has been completed.‖69

110. A lack of capacity on the part of South Africa‘s public sector to deal with the

implementation of new legislation (such as EIA Regulations) has been ―widely acknowledged.‖70

In contrast, there is significant SEA capacity in the consultancy profession, where some

international best practices in SEA have been demonstrated. The major consequence of this

64 ―There is currently no internationally accepted definition of SEA. It is commonly referred to as a processing for

assessing the environmental consequences of policies, plans and programmes‖ as distinguished from site-specific

activities or projects. Nigel Rossouw, Michelle Audoin, Paul Lochner, Stuart Heather-Clark and Keith Wiseman,

―Development of strategic environmental assessment in South Africa,‖ Impact Assessment and Project Appraisal,

September 2000, Vol. 18, No. 3:217-223. 65 DEAT and CSIR, 2000. Guideline Document: Strategic Environmental Assessment in South Africa (DEAT/CSIR

Guideline Document). 66 DEAT/CSIR Guideline Document, p. 10. 67 DEAT, ―Strategic Environmental Assessment,‖ Integrated Environmental Management Information Series, No. 10, 2004 (DEAT, SEA 2004). 68 DEAT, SEA. 69 DEAT, Annual Report, 2006-2007, p. 18. 70 Francois Retief, 2007. ―Quality and effectiveness of strategic environmental assessment (SEA) as a tool for water

management in the South African context.‖ Water SA. Vol. 33, No. 2:153-164. (Retief, 2007a).

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―consultancy driven‖ approach to SEA is a lack of integration of SEA into the decision-making

process, and a lack of correspondence between the quality of SEA inputs and outputs.71

111. Based on Bank team discussions with DEA during preparation of this SDR, it is

anticipated that pending NEMA regulations will bring SEA under the regulatory purview of

DEA. These proposals are consistent with the international view that ―forming an unambiguous

and explicit legislation is important for [SEA] success.‖72

112. A more recent iteration of SEA in South Africa has taken the form of an Environmental

Management Framework (EMF), a regional approach to strategic EIA that was provided for in

Section 8, Articles 69-70 of NEMA. Under the provisions of NEMA, the Minister of the

Environment or the provincial representative of the Ministry may initiate an EMF process with

the following objectives:

Specify the attributes of the environment in the area, including the sensitivity, extent,

interrelationship and significance of those attributes;

Identify any parts in the area to which those attributes relate;

State the conservation status of the area and in those parts;

State the environmental management priorities of the area;

Indicate the kind of activities that would have a significant impact on those attributes

and those that would not;

Indicate the kind of activities that would be undesirable in the area or in specific parts

of the area; and

Include any other matters that may be specified.

113. Among other things the Minister or MEC must: (a) subject the draft EMF to a public

participation process by making the draft available for public inspection at a convenient place;

and (b) invite potential interested and affected parties by way of advertisements in newspapers

circulating in the area and in any other appropriate way to inspect the draft and submit

representations, objections and comments in connection with the draft to that person or organ of

state; and review the draft in the light of any representations, objections and comments received.

114. EMF Regulations were issued as part of the 2006 NEMA EIA Regulations. The EMF

Regulations define EMF as ―a study of the biophysical and socio-cultural systems of a

geographically defined area to reveal where specific land uses may best be practiced and to offer

performance standards for maintaining appropriate use of such land….‖

115. The Regulations call for the EMF process to be conducted in such a way as to ―ensure

that participation by potential interested and affected parties in the development of the

71 Retief, 2007a. 72 Retief, 2007a.

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environmental management framework is facilitated in such a manner that all potential interested

and affected parties are provided with a reasonable opportunity, sufficient understanding and

skill, best suited to the local interests and groups in each geographical area, to provide comment

during the process of developing the [EMF].‖

116. In addition to elaborating on the content of an EMF, the Regulations provide that if the

Minister or provincial Ministerial authority adopts ―the environmental management framework

[it] must be taken into account in the consideration of applications for environmental

authorization in or affecting the geographical area to which the framework applies‖

117. To date, EMFs have been completed and/or initiated for three municipal districts in South

Africa undergoing rapid economic growth and transformation, including Oliphants-Msundzi,

Magaliesburg, and Emakhazeni. The Bank‘s review of the EMF documentation indicates that

DEA conducted robust baseline analysis, based on sophisticated Geographic Information

Systems technology, and broad stakeholder engagement across government agencies, non-

governmental organizations and the interested and affected public. Outputs of the EMF process

included Environmental Management Plans for affected areas, which have provided a strategic

context for zoning and for assessing the indirect and cumulative impacts of specific proposed

projects and thereby informed and enhanced the EIA process in the three regions.

118. More recently, in November 2009, DEA issued an Invitation to Bid on the Development

of the EMF for the Waterberg District Municipality in which the Medupi project is located. The

objective of the EMF is to ensure that water resources, biodiversity, and ecosystem services are

comprehensively and well managed in the expectation of prospective future increases in mining,

industrial development, agricultural and tourism activities, and population growth in the

Waterberg area.

119. The Terms of Reference for the Waterberg EMF73

are consistent with the requirements of

NEMA and include sections on the Status Quo (or baseline) environment including important

biodiversity conservation areas;74

threatened ecosystems and species; ambient air quality; status

of primary resources, including water; cultivated areas and areas suitable for agriculture; a spatial

representation of land uses (with an emphasis on uses that may threaten environmental

resources); planned development nodes obtained from municipalities and other stakeholders such

as Eskom, and the mining and petroleum industries in the area; current allocation for prospecting

and mining rights and permits; spatially defined environmental NGO initiatives; completed and

pending EIA authorizations; status of existing services; social and economic conditions and key

environmental issues (opportunities and constraints). The Status Quo report will be the basis of a

consultative public participation process through which the Desired State of the Environment

73 DEA, 2009. Revised Invitation to Bid, Development of the Environmental Management Framework for the

Waterberg District Municipality, November 13, 2009. 74 The Waterberg District Municipality includes the Waterberg Biosphere Reserve (WBR), one of four UNESCO

recognized biosphere reserves in South Africa. Within the Waterberg there are archaeological finds dating to the Stone Age, and nearby are early evolutionary finds related to the origin of humans. The northernmost boundary of

the WBR lies about 40 kilometers from the Medupi plant from which it is separated by an area of high terrain, and is

therefore outside the area of influence of the Medupi plant. The Eskom Development Foundation is providing

funding to the South African Institute for Breeding Rare and Endangered African Mammals for research in the

Laphalala Wilderness, which is located in the core area of the WBR.

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will be established. Based on the spatial component of the Desired State of the Environment, and

biological constrains and opportunities, the Waterberg area will be divided into environmental

control zones so as to facilitate future decision making on environmental requirements and

acceptability of development applications.75

The EMF will, in turn, inform the development, as

part of the EMF process, of a Strategic Environmental Management Plan which will include

strategies for: maintaining productive agricultural activity on suitable lands; maintaining

biodiversity and open spaces on land where biodiversity conservation has been identified as a

feasible and desirable end use; and promoting development where appropriate without EIA

authorization. Under the EIA Regulations, the draft EMF must be circulated to identified

stakeholders for comments before adoption by decision making authorities at the national,

provincial and municipal levels.76

5. Permitting

120. Permitting is a key output of the EA process in South Africa. With respect to the air

quality impacts of electrical generating facilities, the principal authorization is the Atmospheric

Emission License (AEL). The granting of an AEL must be preceded by the issuance of a ROD77

for an EIA application, which for listed activities (including thermal power plants with more than

70 MW heat output) is required to be accompanied by an Air Quality Impact Assessment Study

prepared by qualified specialist(s).78

Metropolitan and district municipalities are charged with

implementing the atmospheric licensing system per Section 36 of the AQA, subject to alternative

arrangements in which a provincial organ of state may be designated as the issuing authority

121. Factors to be taken into account in the issue of an AEL include, inter alia:79

Any applicable minimum standards set for ambient air and point source emissions as

per the AQA;

Pollution being (or likely to be) caused by the operation of the activity being applied

for and the effect (or likely effect) of that pollution on the environment, defined to

include health, economic and social conditions, cultural heritage and ambient air

quality; and

The best practicable environmental options available80

that could be taken to

prevent, control, abate, or mitigate the pollution and to protection the environment

(as defined above) from harm as a result of the pollution.

75 A three-fold categorization will be applied per standard EMF practice, delineating: (1) areas in which the

undertaking of an activity should be allowed to take place without further investigation; areas in which the

undertaking of an activity may be allowed subject to any environmental authorization per NEMA regulations; and

(3) areas in which the undertaking of an activity should not be considered. 76 In January 2010 the tender was awarded to Enviro-Consult, a South African consulting firm with considerable

experience in preparing previous EMFs. 77The term ―Record of Decision‖ is to be phased out under the NEMA EIA Regulations of 2006 and replaced with

the term ―Environmental Authorization.‖ National Framework, 5.5.2 and p. 67 footnote 3. 78 National Framework, 5.5.3. 79 H. von Blottnitz, C. Fedorsky and W. Bray, ―Air Quality,‖ in H.A. Strydom and N.D. King (eds.), Fuggle and

Rabie’s Environmental Management in South Africa (2nd. ed., 2009, p. 597. (von Blottnitz et al.).

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122. The contents of an AEL must include the maximum allowed amount, volume, and

emission rate or concentration of pollutants that may discharged into the atmosphere under

normal working conditions and during start-up, maintenance, and shut-down conditions, as well

as point source emission and onsite ambient air quality measurements and reporting requirements

(including measurement reporting requirements for greenhouse gas emissions).81

123. The public participation requirements of the EIA process are also intended to contribute

meaningfully to the AEL process as specified in Section 38(3) of the AQA under which an

applicant for an AEL must bring the application to the attention of relevant organs of state,

interested persons, and the public.

124. With respect to the management of solid waste (coal ash), under the previous 1989 ECA,

guidelines were issued for different classes of landfill. The landfill class is determined from the

waste type, size of operation, and potential for significant leachate generation. Where significant

leachate is generated, leachate management is mandatory. Where hazardous waste is involved,

the most stringent Minimum Requirements are applicable. With enactment of the Waste Act of

2008, which became effective in early 2009, DEA will have primary authority to authorize and

regulate the final design and operation of the coal ash retention landfill at the Medupi site.

Regulations to implement the Waste Act remain under development. The requirements for public

participation are integrated with the Public Scoping requirements of DEA‘s Environmental

Impact Assessment Regulations (EIA Regulations). The EIR, together with other necessary

stages in the landfill development process, forms part of the Landfill Permit System, and has to

be approved by DEA.

6. Compliance and Enforcement

125. The International Network for Environmental Compliance and Enforcement (INECE)

considers the following as essential components of an effective compliance and enforcement

program: creating requirements that are enforceable; knowing who is subject to the requirements,

promoting compliance in the regulated community, monitoring compliance, responding to

violations, clarifying roles and responsibilities, and evaluating the success of the compliance and

enforcement program.82

126. Within the South African context, as in many other countries, there is a variable mix of

―rationalist,‖ and ―normative‖ approaches to environmental compliance and enforcement.83

The

80 Under NEMA, Section1, the ―Best Practical Environmental Option (BPEO)‖ is defined as ―the option that

provides the most benefit or causes the least damage to the environment as a whole, at a cost acceptable to society,

in the long term as well as the short term.‖ 81 National Framework 5.5.3.5; and von Blottnitz et. al, p. 599. 82 INECE, Principles of Environmental Enforcement (2005); http:www.inece.org/princips/ch.1.pdf as cited in

Craigie, Snijman and Fourie, in Paterson and Kotzé, eds. Environmental Compliance and Enforcement in South

Africa, Legal Perspectives, p. 44. 83 The ―rationalist‖ approach is based on establishing certain predictable consequences for non-compliance, typically the risk of punishment in the form of administrative measures (ranging from compliance notes, directives, abatement

notes to suspension or withdrawal of an environmental authorization); criminal sanctions (in the form of substantial

fines or imprisonment) or civil measures (such as issuing a court order to halt or remediate harm). The ―normative‖

approach tends to focus more on providing assistance to the regulated community to facilitate compliance, rather

than relying exclusively on enforcement measures designed to penalize non-compliance, op. cit, pp 42-43.

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enactment of NEMA in 1998 was accompanied by a significant shift in approach towards

rationalist, enforcement measures, through various amendments to NEMA, as the initial Act had

contained only administrative measures84

and did not provide for criminal sanctions.85

This,

together with the incorporation within NEMA of the ―polluter pays‖ principle, has had a strong

deterrent effect on non-compliance in many instances.86

127. The Constitution ―has significantly molded the structure and form of South Africa‘s

environmental compliance and enforcement institutions.‖87

Under the Constitution, the national

government exercises legislative competence and executive authority concurrent with provincial

government. Accordingly, all general environmental authorizations, compliance and enforcement

powers under NEPA are shared by DEA and provincial environment departments. However,

national government does not have competence over environmental issues falling within the

exclusive competence of provincial government, and, moreover, local (e.g., municipal)

government is authorized to make and administer its own laws relating to air pollution, noise,

water and sanitation services, solid waste disposal and other matters, subject to national and

provincial oversight. Two legislative instruments of particular relevance to the EISP, the NEMA

Air Quality Act and the NEMA Waste Act, are administered by national and provincial

government in addition to local authorities.88

128. In addition to this ―vertical‖ delegation of authority, authority to issue and enforce

environmental regulations, although focused in DEA, under the authority of the Ministry of

Water and Environmental Affairs, is shared with several other Departments. The Department of

Water Affairs (until recently housed within the Ministry of Water Affairs and Forestry, and only

since May 2009, included within the Ministry of Water and Environmental Affairs), is

responsible, per the authority of the National Water Act, for the protection of fresh water

resources, including the issuance of licenses to discharge treated effluent into surface waters.

Mining is regulated primarily by the Department of Minerals and Energy under the authority of

the Minerals and Petroleum Resources Development Act.89

This is significant because, in

contrast to DEA, the Department of Water Affairs (DWA) has limited authority for

enforcement.90

129. To offset this decentralization of authority, Section 41 of the Constitution also prescribes

a set of principles for ―cooperative governance,‖ which are operationalized in the Inter-

governmental Relations Framework Act of 2005. Accordingly, as described above, NEMA

prescribes an array of statutory mechanisms including interministerial coordinating committees

at both the national and provincial levels, planning frameworks and procedures for conflict

resolution. In addition, four Working Groups consisting of officials from DEA and provincial

84 These were further limited to provisions including Duty of Care (Section 28) and Emergency Incidents (Section

30) as cited in Craigie, Snijman and Fourie, ―Environmental Compliance and Enforcement Institutions,‖ in Paterson

and Kotzé, op. cit, p.89. 85 Ibid., p. 53. 86 Ibid., p. 54. 87 Craigie, Snijman and Fourie, op.cit., p. 66. 88 Ibid., p. 68. 89 Ibid., p. 67. 90 Paterson and Kotzé, p. 83.

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environment departments have been created, of which one, Working Group IV, established in

2007, deals with permitting, compliance and enforcement issues.91

130. In 2001, DEAT initiated a process to develop appropriate authority structures to

undertake pro-active environmental monitoring for purposes of assessing and enforcing

compliance. This resulted in the 2003 issuance of legislative authority under NEMA to designate

an Environmental Monitoring Inspectorate (EMI) tasked with enforcing NEMA and other

designated Specific Environmental Management Laws (SEMAs), together with subordinate

legislation and regulations, together with the establishment a new Enforcement Directorate

within DEAT. When the new legislative authority became effective in May 2005, the EMI‘s

authority was initially limited to the enforcement of NEMA and laws issued under NEMA since

1998 such as the AQA.92

However, until the NEMA Amendments of 2008 were enacted, many

statutes issued prior to NEMA, such as the APPA and the ECA (pending their gradual repeal),

both of which are directly relevant to components of the EISP (particularly Medupi), were not

subject to the EMI. Furthermore, NEMA grants individual Environmental Management

Inspectors (acting within their mandate) extremely wide powers, including powers of inspection,

investigation, administrative and enforcement actions. 93

In addition to these powers, EMIs

(within their mandate) have the same powers as those assigned a police official under specified

provisions of the Criminal Procedure Act (No. 51 of 1977). These provisions deal with search

warrants, entering of premises, seizure, forfeiture, and disposal of property connected with

offences as well as powers relating to arrest, issuing of written notices to appear in court, and the

issuing of admission-of-guilt fines.94

131. The fact that the institution of a centralized national environmental compliance and

enforcement regime in South Africa is a relatively recent development accounts in large part for

the perception among some members of South African civil society that environmental

enforcement is not effective. However, there have been several developments since 2005 that

suggest that the EMI is evolving into an effective mechanism for compliance and enforcement,

particularly on a national level. Beginning in 2005, a national EMI Training Framework was

developed and implemented.95

Officials cannot be designated as EMIs unless they have

successfully completed the accredited EMI Basic Training Course. In 2007, the EMI developed a

standard operating procedure for dealing with non-compliant organs of state, expanding its

oversight role from private to public sector entities.

91 Ibid. p. 68. 92 This is of particular importance as the AQA itself makes no provision for the enforcement of its own provisions. It

does, however, set forth compliance monitoring and enforcement parameters as do the African National Standards

(SANS) 29, with respect to siting criteria for sampling of priority pollutants associated with thermal power plants

including particulate matter (PM10), SO2, NOx, and carbon monoxide (CO) as well as ozone, lead, and benzene. 93 The legislative vehicle was NEMA, First Amendment Act of 2003, which inserted a new Chapter 7 (part 2) in

NEMA. P.J. Lukey, A. Brijlall, and M. Thooe, ―Gearing Up for Efficient and Effective Pollution and Waste

Management Enforcement,‖ 2004, unpublished paper, cited in Craigie, Snijman and Fourie, op.cit, pp. 89-92. 94 ―Enforcement of air quality legislation in South Africa – October 2008,‖ An overview prepared for the United

Nations Environment Programme Eastern Africa Workshop on Better Air Quality in Cities on 21-23 October 2008,

Melissa Fourie, Evolve Consulting Pty Ltd. 95 The curriculum was developed with technical assistance from the UK Environment Agency and the US

Environmental Protection Agency.

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132. As of March 31, 2008 there were 903 designated EMIs; 42 had been trained but not

registered;96

and an additional 104 were completing the requisite training for designation,

including the first 27 local government officials. 97

However, more than two-thirds of the

registered EMIs were assigned to SANPARKs, the South African management authority for the

national park system or local parks boards, leaving a maximum of 232 EMIs to undertake

functions related to terrestrial and marine pollution outside protected areas.98

133. With respect to the EISP, sector-specific compliance monitoring and enforcement

requirements of direct relevance to the EISP are set forth in Sections 20(c), 41(1)(k and m), 51,

52, and 55(2) of the AQA. South African National Standards (SANS) 29 also sets forth reference

methods and siting criteria for sampling of priority pollutants associated with thermal power

plants including particulate matter (PM10), SO2, NOx, and carbon monoxide (CO) as well as

ozone, lead, and benzene. As part of the National Framework for Air Quality Management in

South Africa (National Framework), and in implementation of mandatory provisions of the

AQA, an extensive network of ambient air quality stations has been established, owned and

operated by a variety of organizations. SANS for ambient air quality monitoring have been

established. Since the AQA itself makes no provision for the enforcement of its own provisions,

DEA enforcement of these provisions, in the event of non-compliance, would rely on the EMI.

134. In the course of consultations on the draft version of this SDR, stakeholders from civil

society expressed concerns about DEA‘s compliance and enforcement capacity. Compliance

monitoring and enforcement are recognized by DEA as an area for overall improvement.

However, data from DEA indicates that significance instances of non-compliance are

concentrated in particular sectors and activity including artisan mining and quarrying, municipal

public services, property development, and agricultural operations, and usually at a small scale.

In contrast, the energy generation sectors, and Eskom in particular, have been largely compliant

and, accordingly, not subject to DEA‘s as yet limited enforcement capacity.

7. Site-Specific EIA Process

135. Before getting into details, there are several aspects of the EIA process followed for both

the Medupi and Kusile plants that are worth noting with respect to the requirements of South

African EIA Regulations and Objectives and Operational Principles per OP 4.00 Table A1. With

respect to South African EIA Regulations it should be noted that the applications for

authorization to begin the EIA process were initiated in 2006, prior to the effective date of the

2006 EIA Regulations, which was July 3, 2006. Accordingly, the EIAs for both projects were

conducted under the authority of the 1989 ECA and the September 1997 EIA Regulations.99

However, the EIA process and EIR content for both projects was strongly influenced by and is

96 National Environmental Compliance and Enforcement Report, (NCER) 2008/09, 2.1. In 2007 DEA began issuing

the National Compliance and Enforcement Report (NCER) which compiles data from all authorized national and

provincial environmental compliance and enforcement officials. The most recent NCER was issued on November

25, 2009 and covers the period from April 1, 2008 through March 31, 2009. 97 DEAT, Environmental Management Inspectorate, Standard Operating Procedure 2007-3, cited in Craigie, Snijman and Fourie, p. 69. 98 NCER, op. cit. 99 DEAT, Record of Decision for the Construction of the Eskom Generation Proposed 4,800 MW Coal-Fired Power

Station in the Lephalale Area, September 21, 2006; DEAT, Record of Decision for the Construction of the Eskom

Generation Proposed 5400 MW Coal-Fired Power Station, Witbank, June 5, 2007 (ROD, Kusile).

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essentially consistent with the EIA Regulations that became effective in July 2006, as noted in

paragraph 22 above. This was particularly evident in the Kusile EIR, for which the EIA process

began and ended later.

136. In preparing this SDR, the team also reviewed the EIRs for the Sere Wind Power project

(Final EIR dated 2008), the CSP plant (Final EIR dated 2007), the proposed coal transport

railway between Ermelo and the Majuba power station (Final EIR dated 2004), and the various

transmission lines that will connect the Medupi plant to the national grid. The purpose was to

determine whether the findings of the analysis of equivalence and acceptability would

significantly change from what is presented below for the Medupi and Kusile projects. There

were no significant differences, but it was noteworthy that even for the 2004 EIR the public

participation (disclosure and consultation) process with interested and affected parties was

conducted in a highly proactive and robust manner, fully consistent with the requirements of

applicable legislation (Environmental Conservation Act of 1989 and NEMA 1998), as well as

with the applicable provisions of OP 4.00, and that the results of the consultation were fully

taken into account in the final EIR. Moreover, site visits to the Ermelo-Majuba rail spur right-of-

way by the Bank team as part of the SDR confirmed that consultations with directly affected and

adjacent landowners and occupants remained ongoing during the land acquisition process.

137. Additional noteworthy aspects of the EIA process with respect to OP 4.00 Table A1 are

as follows:

Consistent with the applicable regulations, the EIA processes began with a formal

application to commence, a Background Information Document (BID) and Comment

Registration Process, a Pre-feasibility Study Report, followed by a Scoping Phase and

EIR Phase, leading to a ROD and an EMP.100

The EIA process, including full public disclosure and consultation on all aspect of the

projects, was initiated and completed prior to the start of construction.101

However, of

the two thermal power plants, only the Kusile project fully complied with the

requirements of the 2006 EIA Regulations in that it included in the final EIR a

complete summary of the public consultation and disclosure process.102

For Medupi

the consultation and disclosure process is fully documented, but it is not summarized

in the final EIR; rather, it has appendices containing copies of public announcements,

minutes from various public meetings, and a consolidated matrix of issues raised and

responses provided by Eskom and the independent EIA practitioner.

Consistent with the requirements of the 1997 EIA Regulations, Eskom contracted out

the EIA process to independent consultants.103

100 Eskom, Environmental Impact Report, Proposed New Coal-fired Power Station, Lephalale Area,

www.eskom.co.za.live/content.php?Item_ID=2341. 101 SE Solutions, Kusile 3.7. 102 Eskom, 2007. Environmental Impact Assessment Process: Proposed Coal-Fired Power Station And Associated

Infrastructure in the Witbank Area, Final Environmental Impact Report, February 2007, Chapter 3. (EIR, Kusile) 103 The Medupi EIA was conducted by Bohlweki Environmental as lead consultant; the Kusile EIA was conducted

by Nisham Shand as lead consultant.

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Based on the Scoping Reports (SR), both Eskom and DEAT recognized the need to

conduct a full EIA under the applicable regulations rather than the more limited

―Basic Assessment.‖

Whereas most EIAs are submitted to provincial governments for a decision, all

Eskom projects must be submitted to DEA due to the fact that Eskom is a para-statal

organization. Therefore, while provincial authorities were invited to comment on the

Draft Scoping Reports (DSRs) and Draft EIRs, they did not have decision-making

authority in the EIA process.

Eskom has established community-based Environmental Management Committees at

both Medupi and Kusile to provide oversight with respect to the environmental and

social impacts of its activities.

a) Medupi: EIA Process

138. Eskom‘s Board decision to proceed with the Medupi power station was made on

December 5, 2005. Eskom issued its DSR for public comment on October 3, 2005. Following the

public comment period, Eskom submitted its SR to DEAT in November 18, 2005, per the

requirements of the 1997 EIA Regulation R 1183 Section 5(2) issued under the authority of the

1989 ECA.104

On February 21, 2006, DEAT accepted the SR as satisfying the requirements of

the EIA Regulation and requested that Eskom submit a Plan of Study for the EIA.105

On March

23, 2006, Eskom issued its Draft EIR for public comment. Following the public comment period,

Eskom submitted its Final EIR on May 22, 2006, and an Addendum in June 2006. Comments on

the final EIR were submitted to DEAT by the Department of Water Affairs and Forestry on July

18, 2006. Eskom was issued an initial ROD by DEAT on September 21, 2006. Construction

began on May 9, 2007.106

139. The public consultation and disclosure process is well documented for the Medupi

project, but in a less organized manner than was done for the Kusile project, as noted above.

104 Although NEMA came into effect in 1999, it was not until 2006 that the EIA regulations under NEMA were

promulgated and the repeal of the relevant sections and regulations of the ECA took effect. During 1999-2006, the

ECA regime operated in parallel to the NEMA provisions in Chapter 5 for which general principles were applied in the absence of prescriptive regulations. In practice, the ECA was applied to ―identified activities,‖ including the

construction and operation of thermal power plants; whereas NEMA principles were applied to activities having

potential environment impacts which were not identified activities in terms of the ECA. M. Kidd and F. Retief,

―Environmental Assessment,‖ in Strydom and King, op.cit., p. 991. 105 In doing so, DEAT specified that the EIR must include:

A more detailed description of the process used to determine the selection of the project site, alternatives

studied and the assessment criteria as background to the project and explanation of the need and

justification for the project; addition of a third potential site to the alternatives assessment;

A visual presentation and footprint of the proposed plant;

Detail on the water study then underway from the Department of Water Affairs and Forestry with all

relevant information including a study of the existing groundwater pollution in the study area and possible future pollution and groundwater and recommendations for mitigation and improvement measures as

applicable;

Further exploration of the option of ashing back to the mine pit; and

All specialist studies recommended in the Scoping Report incorporated into the EIR. 106 Eskom, Annual Report, 2008, p. 10.

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Interested and Affected Parties (I&APs) were informed about the Medupi project and consulted

at various stages of the EIA process. During the Scoping Phase, public participation was

comprehensive and included advertising in national, regional, and local newspapers; subsequent

notifications in regional and local newspapers; and the dissemination of a non-technical BID in

English and Afrikaans on two occasions to take into account the evolution of the project. Two

rounds of public fora organized and facilitated by the independent consultant were held at three

venues in the area between October 3 and November 11, 2005, and were supplemented by open

houses and one-on-one consultations.107

Following the issuance of the Draft EIR report in March

2006, both on the internet and in hard copy at public libraries and municipal offices, a second

round of public consultations took place.

140. The issues raised, and Eskom and government responses to public comments and

questions, are thoroughly documented in minutes from the public consultations and summarized

thematically in two ―Issues Trail‖ documents prepared by the independent consultant. The main

issues raised by stakeholders concerned increases in air and noise pollution and the consequent

potential impacts on public health. Stakeholders are also encouraged to comment, and do so, not

only on the substance of the EIR but also on the disclosure and consultation process itself.

141. The public consultation process is continuing at Medupi during project implementation

with Environmental Monitoring Committee (EMC) meetings (see below) being held to

communicate project progress and general environmental management performance to

stakeholders with EMC reports submitted directly to DEA.108

The EMP for the construction

phase (described in more detail below) includes mechanisms designed to ensure that Eskom

continues to inform the public and surrounding communities throughout the construction phase

as and when specific issues arise.109

Documentation of the consultation and disclosure process

was submitted to DEAT as part of the SR and final EIR. However, as noted above, the

documentation consists of disaggregated minutes of the numerous public meetings, copies of

public announcements, and an Issues Trail report.

b) Kusile: EIA Process

142. In April 2006 Eskom submitted for comment and approval its Plan of Study for the

Scoping Process, followed by the Final SR in October 2006. The final draft of the EIR was

submitted in February 2007 and was accompanied by Specialist Reports dated November 2006

and February 2007.110

The ROD for the Kusile EIA was issued in June 2007. Following an

appeal raised by two local landowners and a poultry farm, additional analysis was done and a

final ROD was issued on March 17, 2008. Construction began on April 1, 2008.111

107 SE Solutions, 2008. The Medupi Coal-fired Power Station Project, Independent Review of Compliance with the

Equator Principles, November 25, 2008, 3.7. (SE Solutions, Medupi). 108 SE Solutions, Medupi, 3.7. 109 Eskom, 2007. Environmental Management Plan for the Medupi Coal-Fired Power Station in the Lephalale Area,

Limpopo Province: The Construction Phase, April 2007, 2.6. (Medupi, EMP Construction Phase) 110 ROD, Kusile. 111 Eskom, Annual Report, 2008, p. 10.

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143. The public disclosure and consultation process followed in the Kusile project was

documented in the final EIR112

and is summarized in four phases corresponding to the periods of:

Planning; Scoping; EIA; and the Appeal period following DEAT‘s issuance of the initial ROD.

The four phases are more clearly summarized in the final EIR than is the case for Medupi. Also,

because Medupi is located in a relatively remote area with low population density while Kusile is

located much closer to the highly populated industrial center of South Africa, there was far more

public interest and comment on the Kusile project during the various stages of the EIA process

than there was for the Medupi project.

144. The process of identification and engagement of I&APs began in April and May 2006

with the launch of the EIA process announced in national, regional, and local newspapers. In

addition, a BID, together with a response form and envelope were provided to 67 identified

stakeholders, comprising local landowners; local, provincial and national government

departments; environmental organizations; and mining companies. All of the above information

was made available in four languages: English, Afrikaans, Zulu, and Predi. The BID was also

placed on the Eskom website. Stakeholders were invited to a Stakeholder Meeting held at the

Protea Hotel in Witbank on May 8, 2006, where the project team presented the proposed project

and gave stakeholders the opportunity to raise comments, questions, and issues of concern.

Thirty-one stakeholders attended the meeting.

145. The Planning Phase was extended as a result of the consideration of two final alternatives

related to the site selection process. For this purpose the BID was revised and redistributed to

I&APs on July 14, 2006, including to additional landowners who might be affected by the site

selection process. All stakeholders were informed of the outcome of the site selection process on

August 7, 2006.

146. The DSR was released to the public at four public libraries and two municipal offices on

August 21, 2006, and on the Eskom and independent consultant websites. Media notices in all

four languages were placed in local newspapers on September 1, 2006, in order to notify the

public of the availability of the DSR and about the Open Houses/Public Meetings that would be

held to present the report. Registered I&APs were notified of the availability of the DSR and the

Open Houses/Public Meetings by means of a letter dated August 21, 2006. The DSR was

presented to the public at an Open House/Public Meeting held in Witbank on September 4, 2006,

where attendees were provided with an opportunity to ask questions and comment on the report.

Although the official comment period ended on September 15, 2006, submissions were accepted

through September 26, 2006, for those who requested more time.113

Once the SR was finalized, it

was submitted to DEAT and copies were lodged in public libraries, municipals offices, and on

the Eskom and independent consultant websites. All registered I&APs were notified by letter on

October 20, 2006, and minutes of the public meetings were posted to all attendees along with a

themed summary of all issues raised and Eskom/independent consultant responses in matrix

format (―Issues Trail‖). The Issues Trail report was posted to all who submitted written

comments.

112 EIR, Kusile, Chapter 3. 113 It was noted in the EIR that attaining landowner information and contact details was ―exceptionally difficult.‖

With assistance from a ―conveyancer‖ new landowners at one of the potential sites were identified, and letters of

notification and BIDs were sent to them on September 15, a delay which necessitated an extension of the public

comment period.

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147. Key issues raised by the public during the scoping phase involved:

Water impacts (supply sources and impacts on local surface and groundwater

resources);

Air quality impacts from emissions and ash dumps;

Impacts with respect to greenhouse gases and climate change;

Socio-economic impacts on property values, economic viability of surrounding farms

and existing businesses;

Job opportunities for skilled, semi-skilled and unskilled labor;

Cumulative impacts of the power station and the coal mine; and

Consideration of alternative means of electricity generation and rationale for regional

site selection.

148. Registered I&APs were notified of the imminent release of the Draft EIR (DEIR) and

were provided a copy of the Executive Summary of the DEIR and the details of the public

meetings that would be held to present the report to the public via email November 8, 2006, and

by letter dated November 13, 2006. The DEIR was disclosed at the four public libraries and two

municipal offices on November 20, 2006, and on the Eskom and independent consultant

websites. Media notices in four languages were placed in the newspapers to notify the public of

the availability of the DEIR and of the public meetings.

149. The DEIR was presented to the public at an Open House/Public Meeting held at a

conference center near Kendal on November 28, 2006, and at an Open House/Public Meeting at

Phola and Witbank on November 29, 2006. Attendees were provided with an opportunity to ask

questions and comment on the report. Minutes of the meetings were posted to the attendees on

December 14, 2006 and an updated copy of the Issues Trail (compiled from responses received

between the finalization of the SR and the release of the DEIR), was posted to all those who

submitted written comments. On account of the holiday season, the written public comment

period was extended to January 8, 2007, and additional time was provided to any I&APs who

requested it through mid-February. Comments and responses from the extension period were

included in the fourth draft of the Issues Trail issued in February 2007.114

Various authorities

were invited to comment on the DEIR,115

and meetings were held to elicit comment with

particular stakeholders.

114 In addition, a focus group meeting was held on January 12, 2007, with two of the landowners adjacent to one of

the proposed alternative sites to discuss their detailed concerns which were raised at the November public meetings

and in their written submissions, the minutes of which were included in the final EIR. 115 Department of Public Enterprises; Department of Minerals and Energy; South African Heritage Resources

Agency (Mpumalanga and Gauteng provincial offices); DWAF; DEAT: Directorate of Air Quality Management and

Climate Change; Mpumalanga Department and Agriculture and Land Affairs: Mpumalanga Department of Roads

and Transport; Gauteng Transport Department; South African National Roads Agency Ltd; Spoormet; and the

Kungwini and Delmas local municipalities.

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150. In addition to those issues raised during the Scoping Phase the following key issues were

raised by the public during the EIR phase:

Impact of heat emissions on ambient temperatures;

Emission reduction issues;

Impacts on farm laborers (in particular, loss of housing and jobs);

Visual impacts;

Safety and security during construction;

Need for additional inputs on heritage impacts;

Timing of land acquisition;

Lack of engagement with adjacent landowners on an individual level;

Lack of notification of visits by specialists and valuators;

Noise;

Access roads;

Influx of job seekers;

Construction impacts;

Impacts on municipal services and infrastructure; and

Confirmation of coal availability.

c) Overview of the EIA Process

151. The major outputs of the EIA process include the EIRs submitted by Eskom for Medupi,

Kusile, and associated transmission line facilities for Medupi (some of which will be financed by

the EISP), the RODs issued by DEAT approving the EIRs with conditions, and the draft EMPs

subsequently submitted by Eskom to DEAT covering separately the construction and operational

phases of the projects.116

116 Consistent with international good practice, detailed EMPs for the operational stage are prepared for regulatory

review during the construction phase. This is done in order to ensure that the operational stage EMPs reflect the project as built, and to take into account any new information or findings that may arise from environmental and

social monitoring during the construction stage. Operational stage EMPs are being prepared in draft form for review

and comment by DEAT. These will be made available to Bank staff for review during the SDR process; a draft EMP

for the Medupi project has already been prepared and has been reviewed by the Bank team in preparing this SDR, as

discussed later in this report.

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152. Based on a detailed review of the EIRs by Bank EA specialists, the quality of the EIRs

and draft EMPs was found to be fully consistent with applicable South African legal

requirements as defined by the 1989 ECA as amended, and Regulation 1183 of September 1997.

Although the more recent 2006 EIA Regulations did not apply to the EIRs, the EIRs for both

Medupi and Kusile are generally consistent with the procedural requirements of the 2006 EIA

Regulations and incorporated most of the elements of best practice as defined by the South

African guidelines on integrated environmental management.117

153. An additional indication of the overall quality of the EIRs was provided by an

independent review commissioned by Eskom which examined both of the EIRs in relation to the

requirements of the Equator Principles.118

The Equator Principles are based on the IFC

Performance Standards, which is a Board-approved safeguards system that is closely aligned

with the environmental and social safeguard policies of the World Bank and therefore

corresponds closely to the Objectives and Operational Principles found in OP 4.00 Table A1.

The independent review found that ―Kusile will be materially compliant with the Equator

Principles,‖119

and that the Medupi project poses only one issue of ―potential non-compliance,‖

regarding SO2 emissions.120

This issue is discussed in detail later in the outcomes section of this

Acceptability Assessment.

154. The EIRs and associated studies are detailed technical documents that are too extensive

to be summarized in this report. The EIRs for both Medupi and Kusile as well as associated

facilities operated by Eskom are available for review on Eskom‘s website and should be

consulted along with this report. Some characteristics of the EIRs are worth noting here:

The EIRs were comprehensive in scope and considered all applicable laws and

regulations and addressed the project‘s sphere of influence (locally, regionally, and

globally) through different phases of the project lifecycle from construction through

operational to decommissioning and the scale of the assessment was appropriate to

the scale of risks and impacts.121

Alternatives assessment was conducted at a strategic level122

and at a site-specific EIA

level,123

with the EIR for Medupi focusing on the latter. The ―no action‖ alternative

117 http://deltaenviro.org.za/resources/envirofacts/management.html. 118 SE Solutions, Medupi; SE Solutions, Kusile. 119 SE Solutions, op.cit., p. 49. 120 SE Solutions, op.cit., p. 60. 121 SE Solutions, op. cit., 3.4.2. 122 ―Fundamentally different alternatives are usually assessed at a strategic level, and EIA practitioners recognise the

limitations of project-specific EIAs to address fundamentally different alternatives. Electricity Generating

alternatives have been addressed as part of the National Integrated Resource Plan (NIRP) from the National

Electricity Regulator (NER) and the Integrated Strategic Electricity Plan (ISEP) undertaken by Eskom, which is in

line with the NIRP. Environmental aspects are considered and integrated into the NIRP and ISEP using the strategic

environmental assessment approach, focusing on environmental life-cycle assessments, water-related issues and

climate change considerations.‖ Eskom Generation, Environmental Impact Assessment Report for the proposed establishment of a new Coal-fired Power station in the Lephalale area, Limpopo Province, Final report, Ref no:

12/12/20/695, 22 May 2006, Chapter 2.2. 123 The Environmental Scoping Study, thus, only considered alternatives in terms of the proposed new coal-fired

power station in the Lephalale area, and did not evaluate any other power generation options being considered by

Eskom.

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was considered and rejected on the basis of an acute and chronic crisis in electricity

supply in South Africa with detrimental effects on economic growth and social

welfare.

Atmospheric dispersion modeling was conducted for both Medupi and Kusile using

the CALPUFF modeling suite recommended for regulatory use by the United States

Environmental Protection Agency for complex terrain environments and regional

scale modeling domains. DEAT engaged the US Environmental Protection Agency in

extensive consultations in developing and adapting the model for standardized use in

South Africa.

The EIRs for Medupi and Kusile were supplemented by specialist reports on

numerous topics including: groundwater resources, terrestrial fauna and flora,124

air

quality, regional water supply, visual impacts, noise quality, human health, socio-

economic impacts, heritage resources,125

traffic, tourism, agricultural potential and

livelihoods and covering both the construction and operational phases of the projects.

Neither EIR addressed OHS issues as OHS generally falls outside the scope of EIA in

South Africa as elsewhere. However, detailed OHS strategies are being developed

and implemented for the construction and operational phases in compliance with the

Occupational Health and Safety Act of 1993.126

Cumulative impacts were considered ―to the extent feasible‖ (as required by Section 2

of NEMA). With respect to Kusile, a rationale was given in the final EIR for

undertaking a separate EIA process for the power plant and coal mine rather than an

integrated assessment. The justification given was that the underlying legal

frameworks and hence competent authorities differ as the coal mine EIA is being

undertaken primarily to meet the requirements of the Department of Minerals and

Energy, while DEA is the competent authority for the Kusile power station. In

addition the lead time for the development of Kusile is longer than for the coal mine

further complicating the integration of the respective EIA processes. However, the

principle of cooperative governance requires that the two regulatory bodies consult

each other during their respective decision-making processes. To facilitate this the

independent consultant and the coal mine practitioner exchanged all documentation

on the power plant and the coal mine.127

8. DEAT Approvals and Associated Conditions

155. The RODs issued by DEAT for Medupi on September 21, 2006, and for Kusile on June

5, 2007, were both issued under the authority of Sections 22(3) and 33(1) of the ECA and

124 For Kusile, a detailed biodiversity assessment was conducted including terrestrial and aquatic investigations to

identify sensitive fauna, flora or habitats within the project footprint. SE Solutions, Kusile, 4.7. 125 For Kusile, a Phase 1 archeological survey was conducted per SAHRA requirements including a literature

survey, review of existing data bases, a field survey and documentation of sites, objects and structures. SE Solutions,

Kusile, 4.8. 126 SE Solutions. 127 EIR, Kusile, 4.5.1.

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contained several key provisions in common and other provisions that apply individually to the

sites and circumstances of the two plants. However, the amendment process that provides for

subsequent changes to the ROD, as implemented in the case of Medupi, makes reference to the

2006 NEMA EIA Regulations (Regulation 43) rather than the 1997 EIA Regulations issued

under the ECA.

a) Conditions Applicable to both Medupi and Kusile

156. The following conditions are applicable to both Medupi and Kusile:

In both cases DEAT concluded that based on the information considered ―the

proposed activities may lead to substantial detrimental impact on the environment‖

but that ―the implementation of the mitigation measures and conditions set out in [the

ROD] are considered adequate to minimize detrimental impacts to acceptable

levels…subject to the successful implementation of conditions and mitigation

measures‖ such that ―the principles of section 2 of NEMA can largely be upheld.‖

Both RODs made general reference to the need for the projects to comply with all

provisions of the National Water Act of 1998; APPA of 1965, and any registration

certificate issued under the APPA; the NEMA AQA of 2004, or any related AEL

issued under the AQA; the NEMA Biodiversity Act of 2004; the Occupational Health

and Safety Act of 1993; and the Hazardous Substances Act of 1973 and associated

regulations as well as SANS 0228 and 0229.

Air Emissions and Ambient Impacts:

DEAT stipulated that the authorization is granted solely in terms of Section 22 of the

ECA and does not exempt Eskom from compliance with any other legislation.

Compliance with any related Registration Certificate to be issued in terms of the

APPA or any related AEL issued under the AQA.

Groundwater Protection:

Continuous monitoring of groundwater quality to be detailed in the EMP.

Conservation of Physical Cultural Resources:

Should any archeological artifacts be exposed during excavation (―chance finds‖),

construction in the vicinity of the find must be halted, and under no circumstances

may any artifacts be destroyed or removed from the site. An archeologist must be

called to the site for inspection, SAHRA must be contacted, and their

recommendations must be included in the construction EMP and followed.

Environmental Management and Monitoring:

Appointment of an independent Environmental Control Officer reporting to both

Eskom and DEAT, with responsibility for:

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- Monitoring on a daily basis project compliance with the ROD, environmental

legislation, and specific mitigation requirements stipulated in the EMPs;

- Ensuring that periodic performance audits are undertaken;

- Submission to DEAT (and copied to the Mpumalanga Department of Agriculture

and Land Administration) of a written environmental compliance report on a bi-

monthly basis.

- Employment of the Environmental Control Officer until all rehabilitation

measures, as required for implementation due to construction damage, are

completed and the site is handed over to Eskom for operation.

Establishment of an EMC for the purpose of monitoring project compliance during

construction and with the following composition:

- The Environmental Control Officer, who reports to and is accountable to the

EMC, and chairs its meetings;

- An ecologist with direct project experience in the EIA process, or otherwise

suitably qualified;

- An air quality specialist; and

- A senior site manager from the main contractor.

At the completion of construction, the role, responsibilities and constitution of the

EMC is to be reconsidered and re-established with new terms of reference for the

operational phase of development.

Submission of a site specific construction EMP to relevant authorities prior to

commencement of construction. The contents of the EMP are specified in the ROD.

Once accepted by DEAT the construction EMP is to be seen as a ―dynamic

document.‖ Any changes to the EMP must be submitted to DEAT accompanied by a

recommendation from the EMC.

Other Conditions:

The authorization is subject to the approval of relevant local authorities in terms of

any legislation administered by those authorities.

Eskom is responsible for all costs necessary to comply with the conditions of the

ROD.

The ROD provided 30 days for any appeals and provided that any complaint from the

public during construction ―must be attended to as soon as possible and to the

satisfaction of all parties concerned.‖

b) Site-Specific ROD Conditions

157. The RODs issued for Medupi and Kusile contained a number of site-specific conditions.

The differences between the conditions issued for the two facilities may be partially accounted

for by different site conditions with respect to existing and projected ambient air quality and

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ecological conditions affecting the siting of ash ponds. In particular the higher levels of

exceedance of ambient air quality thresholds for SO2 in the more industrialized Witbank area,

where Kusile is located, compared to the agricultural Lephalale area, where Medupi is located,

may account for the requirement that Eskom install FGD units at the commencement of

operations at Kusile, whereas at Medupi, Eskom is required to take action to ensure compliance

with SO2 and other air quality parameters. The implications of these imposed conditions are

discussed below with respect to the individual RODs for the two power plants and in the

following section on Projected Outcomes. An analysis of the recommendations of the EIRs for

the two projects, and the final requirements included in the ROD for each project, indicates that

the process of preparing and issuing the ROD is robust, i.e., DEAT is willing and able to take its

own views on project-related issues and state how they should be addressed by Eskom in

construction and operation of the projects.

158. Some differences are not readily clear, such as the absence of requirements in the Medupi

ROD for bag filters or electrostatic precipitators to reduce PM10; use of low NOx burners in

boiler design to reduce NOx levels; indication of which technology will be installed to reduce

emissions of mercury; reference to national noise regulations and Zero Effluent Discharge

provisions; recycling of polluted water; and the need for a Major Hazard Installation Risk

Assessment. However, it is apparent from the EIR and draft EMPs that Eskom submitted to

DEAT that these issues are being addressed at Medupi in much the same manner as the ROD

specifies for the Kusile project.

159. Medupi ROD Conditions.

Air emissions and ambient impacts:

The ROD noted that project emissions will potentially release significant amounts of

SO2, NOx, CO, and trace amounts of mercury, and that resulting ambient SO2 levels

resulting from the new power station are predicted to contribute to health effects in

the Marapong residential area.128

The ROD requires that Eskom ―install, commission and operate any required SO2

abatement measures that may be necessary to ensure compliance with any applicable

emission or air quality standards‖ issued under the AQA but did not specify any

particular SO2 abatement measure such as FGD.

However, DEAT required that, should the monitoring required as a condition of the

ROD (see below) indicate non-compliance with SO2 standards, Eskom would be

required to install, commission and operate [unspecified] SO2 abatement measures at

the nearby existing Eskom-operated Matimba Power Station as necessary to ensure

compliance with any applicable emission or ambient air quality standard issued under

the AQA.

128 The ROD noted that ambient SO2 standards are already being exceeded in the area, and specifically in the

Marapong residential area due to existing point and nonpoint sources of emissions in the vicinity, including the

existing Eskom-operated Matimba power station, the Grootegeluk coal mining operation, and, to a lesser extent,

brickworks, household fuel consumption, veld fires, wind blown dust from agricultural activities, and vehicle

exhaust.

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Solid Waste Management:

With respect to the disposal and storage of ash at Medupi, DEAT concluded that

alternatives to the construction of a conventional ash dam, including backfilling into

the Grootegeluk mine pit, has not progressed sufficiently for an informed decision to

be made with respect to the optimum solution for ash disposal.

Natural Habitat Protection:

Any removal of native protected and endangered plant and animal species requires a

permit from the provincial department of nature conservation.

No exotic plant species may be used for rehabilitation purposes.

Measures aimed at controlling invasive plant species and weeds must be implemented

and form part of the EMP.

No disturbance of land at any stream or river edge is allowed except in conformity

with legislation and strict design parameters.

Environmental Management and Monitoring:

DEAT required that Eskom initiate a program for continuous monitoring of ambient

concentrations of SO2, NOx, CO,129

PM10, PM2.5, ozone, and mercury in the

Marapong residential areas and areas around the proposed power station as well as

the existing Matimba station, and that the monitoring protocol be subject to a

commissioning report by an independent party to confirm that the installations are in

place, calibrated, and operating to international standards. Eskom is required to

submit quarterly monitoring reports including both numerical and graphical

representation of measured concentrations as compared to any applicable ambient air

quality standards issued under the AQA.

160. Appeals. Several appeals were lodged against the ROD for Medupi under the terms of

Section 35 of the ECA. The appeals referred generally to the Constitutional rights of the

appellants and specifically with respect to the following issues:

Water supply and quality;

Air quality;

Project sustainability; and

129 Eskom subsequently successfully requested an amendment to the ROD to remove the requirement for ambient

CO monitoring based on the fact that CO concentrations in flue gas streams from Eskom‘s power stations are known

be extremely low and that the contribution of power stations to ambient CO concentrations is considered to be

negligible. DEAT, Request for An Amendment of Record of Decision for the Medupi Power Station near Lephalale

to Remove the Requirement for Carbon Monoxide Monitoring, January 26, 2009.

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General effects on the environment.

161. In responding to the appeals,130

the Minister of Environmental Affairs and Tourism

reviewed the findings and requirements specified in the ROD; Eskom‘s responses to the appeals;

the appellants‘ reply to Eskom‘s comments; and comments received from the Department of

Water Affairs and Forestry (Chief Directorate of Integrated Water Resource Protection) and

DEAT‘s Chief Directorate of Air Quality Management. The Minister dismissed all of the appeals

and let the ROD stand on the grounds that:

The EIA complies with the requirements of the EIA Regulations in force at the time

when the ROD was issued, and the information submitted in support of the EIA

application was sufficient to support the ROD. The environmental impacts of the

proposed development were assessed in detail and appropriate mitigation was

proposed where possible.

The specific issues raised in the appeals were adequately addressed in the EIA

process. Negative environmental impacts associated with the project can be

sufficiently mitigated provided that the conditions contained in the ROD are

implemented and adhered to. Serious alternatives were considered during the process

leading to the appropriate decision.

The need and justification for the project is evident in the ―tremendous growth in

electricity demand.‖

Later in the next section, discussion is provided on a set of appeals on the ROD initially issued

for the Kusile project. The difference in approach taken by the Minister in that case is useful in

assessing the robustness of the appeals process.

162. Kusile ROD Conditions. In the initial ROD issued on June 5, 2007, DEAT concluded

that although the proposed project ―may lead to substantial detrimental impact on the

environment….the implementation of the mitigation measures and conditions set out in this

[ROD] are considered adequate to minimize detrimental impacts to acceptable levels…subject to

the successful implementation of conditions and mitigation measures‖ such that ―the principles

of section 2 of NEMA can largely be upheld.‖ Furthermore, DEAT stipulated that the

authorization is granted solely in terms of Section 22 of the ECA and does not exempt Eskom

from compliance with any other legislation.

163. The ROD imposed the following conditions on Eskom:

Air emissions and ambient impacts:

Installation and operation of wet-FGD with at least 90 percent removal efficiency as

well as any required SO2 abatement measures that may be required to ensure

130 Statement by the Office of Minister of Environmental Affairs and Tourism, May 4, 2007.

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compliance with any applicable emission or ambient air quality standards issued

under the AQA;131

Installation and operation of bag filters or electrostatic precipitators to reduce PM10

emissions;

Use of low NOx burners in boiler design to reduce NOx levels; and

Indication of which technology will be installed to reduce emissions of mercury.

Noise abatement:

Use of Gauteng and National Noise Control Regulations and SANS 10103:2004

guidelines for addressing potential noise impacts.

Visual impact management:

The ROD specified design measures to ensure minimum visual intrusion into the

landscape.

Water management and effluent control:

Consideration during planning of all risk reduction recommendations made in the

Hydrogeological Assessment, GCS (Pty) of November 14, 2007;

Operation of the power station under Eskom‘s Zero Liquid Effluent Discharge policy

thereby preventing any water or effluent from being discharged into local river

systems;

Recycling of polluted water such that all pollutants are captured as waste for disposal

with ash deposition;

Testing of water generated on site and considered for irrigation to determine

suitability in terms of salinity and sodium absorption ratio; and

Leak detection and inspection on site and along pipelines.

131 The ROD notes that ambient SO2 standards are already being exceeded on occasion in the area, in large part due

to the proximity of the existing Eskom-operated Kendal Power Station as well as other local sources of emissions.

Therefore, potential exists for cumulative concentrations and increases in frequency and magnitude of SO2

exceedances and spatial non-compliance, as a result of which ―compliance with ambient SO2 limits cannot be achieved through implementation of SO2 abatement technologies [i.e., FGD] for the proposed power station [Kusile]

given that current non-compliance is due to existing sources. The implementation of [FGD at Kusile] can however

avoid any significant increase in non-compliance from the current situation.‖ In addition, Eskom was directed to

―initiate a program of support for initiatives aimed at improving air quality in the Witbank residential area‖ to be

included in the operational EMP.

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Solid waste management:

Above-ground ash dumping as the preferred ash disposal method.

Major hazard assessment:

Quantitative Risk Assessment prior to construction consistent with the Major

Hazardous Installation Regulations of July 2001, with findings incorporated into the

Construction Phase EMP.

Natural habitat protection:

Undertaking of a site-specific wetland assessment and survey of rare and endangered

species during the appropriate season so as to enable the identification of less

sensitive areas for the positioning of pipeline, road, rail, and coal conveyor corridors

so as to avoid or minimize the impacts on wetlands;

Preparation of a revised layout plan indicating how the proposed corridors take

wetlands into account and where proposed dams to contain water will be constructed;

and

Any unavoidable construction within wetland areas must minimize disturbance that

would directly affect groundwater hydrology in wetlands systems.

Conservation of Physical Cultural Resources:

Recommendations proposed in the Heritage Impact Assessment conducted by the

Natural History Museum (October 2006) to be implemented for the nine historic sites

on the proposed property that were deemed culturally important; and

Consultation with SAHRA if any of the nine historic sites are to be impacted.

Community engagement and socio-economic impact management:

Establishment and maintenance of a community forum and communication channels

between local communities, construction companies/contractors and Eskom;

Assistance provided to local inhabitants in the form of skills development and job

opportunities with results included in environmental compliance report to be

undertaken by the Environmental Compliance Officer;

Action Plan submitted to DEAT as part of operational EMP, related to surplus land

not occupied by project-related infrastructure that could be leased to farmers for

agricultural production;

Eskom required to inform all interested and affected parties of the authorization and if

requested, to provide copies of the ROD; and

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A complaints register to be up to date and disclosed to DEA on request.

Submission to DEA and other relevant provincial and local authorities of an EMP for

the operational phase prior to completion of construction and inception of operations.

As is the case with the construction EMP, once accepted by DEAT the operational

EMP is to be seen as a ―dynamic document;‖ however, any changes to the EMP must

be submitted to DEA accompanied by a recommendation from the EMC. Unlike the

construction phase of the EMP, the content of the operational phase EMP is not

specified in the ROD.

164. Appeals. An appeal to the initial ROD issued in June 2007 for Kusile was made by two

local landowners and a nearby poultry farm. In this instance, following a similar process as noted

above for the Medupi ROD appeal, the Minister found that additional consultations and analyses

were required because the issues raised in the appeal appeared to have merit. Following this

additional work, DEAT issued a revised ROD on March 17, 2008. The difference in responses to

appeals of the ROD in these two nationally important projects demonstrates the robustness of the

approval and appeals process, i.e., concerns or objections raised by citizens are carefully

considered and, if they are deemed to have merit, may produce modifications in regulatory

decisions or permit conditions.

c) Medupi Phase 1 Transmission Lines RODs

165. Some of the high voltage transmission lines for the Medupi power plant will be financed

in part by the EISP; others may not and are considered associated facilities. The Medupi

transmission line connections are described in detail in the section below on Projected Outcomes.

The associated Phase 1 transmission lines for Medupi involve one 400kV line from the power

plant to the Marang substation near Rustenberg, and two 200 kV lines to the Dinaledi substation

near Brits. The EIRs for these and other transmission lines being developed by Eskom have

already been completed, and have been and remain available on Eskom‘s website. DEAT issued

RODs for the three Phase 1 transmission lines on March 5 and March 27, 2008. The RODs were

appealed in April 2008. The grounds for the appeals were:

1) Alleged deficiencies in the public participation process;

2) Inadequate consideration of proposed technological solutions;

3) Insufficiency of the information provided for the route selection;

4) Need for more comprehensive implementation of the ―utility corridor concept;‖

5) Unacceptable impacts on avian biodiversity in general and on certain bird species;

6) Disaggregation of the EIA process with other transmission lines;

7) Independence of Eskom‘s EA Practitioner for the transmission line EIAs;

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8) The need for increased power generation and hence pollution from the power

plant due to the power losses attributable to the greater length of the proposed

route relative to alternative routes;

9) Incremental rather than holistic decision-making on the establishment of

transmission infrastructure related to Medupi; and

10) Undue consideration given to avoiding undermined areas.

166. The Minister of Environmental Affairs, in a carefully worded and informed opinion

issued on December 8, 2008, concluded that, while the appeals raised some valid issues that need

to be taken into account by Eskom in the implementation of these transmission line projects, they

were not sufficient to warrant the setting aside of the ROD.132

In view of the different outcomes

noted above on the appeals of the RODs issued for the Medupi and Kusile projects, this third

type of outcome further demonstrates the robustness of the project approval and appeals process.

d) Post-ROD Permitting

167. It should be noted that the RODs issued by DEAT provide approval based on the

satisfactory conclusion of the EIA process and state conditions attached to project

implementation. As noted in the RODs, Eskom must still obtain individual permits, including an

AEL from the Chief Air Pollution Control Officer (DEA) as per the AQA, a Water Use

License,133

and a license for waste disposal, among others. At the time this SDR was prepared

most of these licenses that pertain to plant operations were still pending for the Medupi and

Kusile projects. Others specific to the construction process had been issued.

e) Compliance and Enforcement

168. Per the RODs, compliance with the DEA-approved EMP must form part of all tender

documentation for all contractors working on the project and must be contractually endorsed.134

169. Also under the RODs, Eskom is required to notify DEA in writing within 24 hours if any

condition in the ROD cannot be or is not adhered to, along with an explanation for any non-

compliance.

170. DEA reserves the right to monitor and audit the project throughout its full life cycle to

ensure compliance with the conditions stipulated in the ROD as well as mitigation measures

described in the EIR and the construction and operational EMPs. For this purpose the ROD

provides that DEA officials shall be given access to the sites at all reasonable times. Under the

authority of Section 22(4) of the ECA, DEA may withdraw its approval after 20 days of written

notice to Eskom for non-compliance of any condition imposed in the ROD. Failure to comply

132 Minister of Environmental Affairs and Tourism, ―Appeals decision against the Environmental Authorizations of the proposed construction of the….transmission lines and their associated infrastructure from the proposed Medupi

power station….‖ December 8, 2008 (www.search.gov.za/info/previewDocument.jsp?dk=%2Fstatic%2Finfo%2). 133 Eskom has obtained a water use license for site dewatering and stream diversion at Medupi, SE Solutions,

Medupi. 3.4.5. 134 ROD, Kusile.

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with any conditions of the ROD is subject to the penalties of Section 29, 30 and 31 of the ECA

as well as other legal mechanisms.

9. Environmental Management Plans (EMPs)

171. Eskom is required to prepare and submit to DEA separate EMPs for the construction and

operational phases of both the Medupi and Kusile plants.

a) Medupi: Construction Phase

172. Eskom has submitted and DEAT has approved an EMP for the construction phase of the

Medupi project.135

The EMP is a comprehensive document with a level of detail and actions

commensurate with the project‘s potential impacts and risks at the construction stage. The EMP

has the following objectives:136

Outline functions and responsibilities of responsible persons;

State standards and guidelines that are required to be achieved in terms of

environmental legislation;

Outline mitigation measures and environmental specifications that are required to be

implemented for the construction phase of the project in order to minimize the extent

of environmental impacts, and to manage environmental impacts associated with the

Power Station; and

Prevent long-term or permanent environmental degradation.

173. The EMP establishes organizational structure and responsibility mechanisms for

managing the environmental, health, and safety impacts of the construction process; the

requirements for training of personnel in appropriate levels of awareness and competence; a

program on monitoring and performance measurement and for inspection, documentation and

reporting.

174. Among the documents used for tendering purposes and cited in the EMP is a Health

Safety and Environmental Specification for the Medupi Power Station.137

Environmental

Specifications are included for the full range of potential environmental impacts anticipated in

the EIR including: site clearing; plant repair, maintenance and cleaning; air quality; dust control;

noise; water management (consumption, domestic use); pollution control; storm and wastewater

management; erosion control; solid waste management; transportation, storage and handling of

hazardous substances; aesthetics; vegetation clearing and disposal of vegetative material

135 Eskom, Medupi, EMP Construction Phase. 136 Medupi, EMP Construction Phase 1.4. 137 Medupi EMP 1.1, p. 8.

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(including relocation of designated plant species, management of alien vegetation; herbicide

use);138

protection of fauna, heritage sites, and artifacts; and traffic management.

b) Medupi: Operational Phase

175. A preliminary EMP for the operations phase has been prepared and submitted to DEAT

for review and comment.139

The objectives of the EMP are to:

Outline mitigation measures and environmental specifications that are required to be

implemented for the operation/maintenance phase of the power station in order to

minimize the extent of environmental impacts, and to manage environmental impacts

associated with the project;

Identify measures that could optimize beneficial impacts;

Ensure that the operation and maintenance activities associated with the power station

do not result in undue or reasonably avoidable adverse environmental impacts, and

ensure that any potential environmental benefits are enhanced;

Ensure that all environmental management conditions and requirements as stipulated

in the Environmental Authorization are implemented throughout the project life-

cycle;

Ensure that all relevant legislation (including national, provincial, and local) is

complied with during the operation and maintenance of the power station;

Identify entities that will be responsible for the implementation of the measures, and

outline functions and responsibilities;

Propose mechanisms for monitoring compliance, and preventing long-term or

permanent environmental degradation; and

Facilitate appropriate and proactive response to unforeseen events or changes in

project implementation that were not considered in the EIA process.

176. The draft Operational EMP addresses key environmental issues identified in the EIR in

terms of the applicable regulatory framework and ROD conditions, by making provision for

corresponding actions:

138 Herbicide use is required by the EMP to comply with the conditions of the Fertilizers, Farm Feed, Agricultural

Remedies and Stock Remedies Act of 1947 under which herbicides may be applied by construction contractors only with the explicit authority of Eskom, under the supervision of a registered pest control operator (Medupi EMP

Construction Phase, 4.12.5). There is no expectation that herbicides will be used by construction contractors, and it

is not Eskom‘s practice to use herbicides for vegetation management at its facilities. 139 Eskom, 2009. Medupi Power Station, Limpopo Province, Environmental Management Plan (EMP) for Operation

and Maintenance, February 2009. Savannah Environmental (Pty) Ltd.

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Impacts on ambient air quality and human heath as a result of emissions: monitor

continuously ambient concentration of pollutants (SO2, NOx, PM10, PM2.5, ozone, and

mercury) in the surrounding Marapong residential area; install, commission, and

operate any required SO2 abatement measures that may be necessary to ensure

compliance with emission or ambient air quality standards issued under the AQA; and

investigation of additional measures to further reduce SO2 emissions, such as FGD

technology.

Impacts on surface and groundwater resources: drill, construct, and maintain

monitoring boreholes on site; monitor groundwater levels and hydrochemistry on a

quarterly basis; undertake groundwater modeling and potential plume migration to

assess risk reduction measures and potential impacts; and, in the event that water

quality is found to fall outside of prescribed guideline levels, investigate the source of

the problem and take remedial measures.

Visual impacts: minimize visibility of the power station and the contrast with

surrounding environment, through careful planning and placement of lighting,

lighting shields and limited removal of natural vegetation;

Noise impacts: ensure that all necessary acoustic designs are installed and maintained

such that the overall generated noise level from the installation does not exceed

70dBA at the property boundary;

Social impacts: maintain communication and consultation with community

arrangements through operational phase of project through maintenance of up-to-date

register of neighboring property owners; ensure that neighboring owners have

accurate contact numbers at the plant; and make an emergency plan of action with

neighboring community and relevant authorities in case of an emergency such as a

veld fire, oil spill or water contamination.

177. The draft Operational EMP sets forth institutional arrangements with the objective of

establishing clear reporting, communication, and responsibilities for environment and safety. The

critical positions include: a Generation Environmental Manager with overall responsibility for

plant environmental performance; a Power Station Manager with responsibility for assembling

an EMS management team and ensuring that adequate human, financial, and technical resources

are made available, conducting periodic reviews of EMS effectiveness and taking appropriate

action as a result of findings and recommendations of management review and audits; and a

Safety and Health Environmental Officer charged with implementation of the EMS. The EMP

also provides for the establishment of an Environmental Committee with quarterly meetings and

a Safety and Health Environmental Committee to meet every two months.

C. PROJECTED OUTCOMES: ENVIRONMENTAL IMPACTS

178. The projected site-specific environmental, health, and safety impacts anticipated to result

from the construction and operation of Medupi and Kusile can be summarized based on the

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DEAT-approved EIRs for both plants,140

draft construction and operational stage EMPs,141

independent review of the EIRs,142

visits by Bank staff to both sites at a time when they were

well under construction,143

and interviews with Eskom management and staff and South African

regulatory officials.144

While on the project sites, Bank staff also had discussions with the

Environmental Control Officers responsible for monitoring project compliance with the ROD,

EMP, and other permit conditions, and reporting to both Eskom and DEA.145

179. In this section, quantitative outcomes (e.g., air emissions, ambient air quality, liquid

effluents) are compared to applicable South African legal and regulatory requirements. To put

South African requirements into perspective with international good practice, a comparison of

these requirements with corresponding World Bank Group (WBG) environmental guidelines is

provided in Annex 4. Under the emissions standards proposed by South Africa for large thermal

power plants, both Medupi and Kusile are to be considered as ―existing plants‖ during their first

eight years of operation because they made application for authorization under NEMA, as

amended (i.e., in this instance, in the form of an EIA application) on or before twelve months

prior to the publication of the Emissions Standards issued under the AQA.146

Under the Draft

Emissions standards, such plants have five years in which to comply with the emissions

standards for existing plants and an additional three years to comply with the standards for new

plants.

180. It is within this proposed regulatory context147

that projected emissions from the Medupi

and Kusile plants may be compared to South Africa‘s proposed emissions standards for large

thermal power installations. As is evident from Table 1, emissions from Medupi are expected to

comply with proposed South African emissions standards for existing plants148

for PM10 and

NOx. The projected range for SO2 emissions for Medupi, which will commence operations

without FGD, indicates that exceedances could occur, especially if the sulfur content of the coal

is at its maximum expected level. This regulatory risk can be managed by Eskom through the

140 Eskom Generation, Environmental Impact Assessment Report for the proposed establishment of a new Coal-fired

Power station in the Lephalale area, Limpopo Province. Final report, Ref no: 12/12/20/695, 22 May 2006;

Environmental Impact Assessment Process: Proposed Coal-Fired Power Station And Associated Infrastructure in

the Witbank Area, Final Environmental Impact Report, February 2007. 141 Medupi EMP, op. cit. 142 SE Solutions, Medupi; SE Solutions, Kusile, op.cit. 143 Bank staff made site visits to Medupi on May 27, 2009, and to Kusile on May 28, 2009, and to these and other

EISP key components during the period December 6-15, 2009. 144 Meetings were held with Eskom in Washington on April 28, 2009, and in South Africa during the period May

27—June 1, 2009. Meetings with DEAT were held on May 29, 2009, and with the Ministry of Water on June 1,

2009, as part of preparation of the SDR. 145 The Environmental Control Officer also chairs meetings of the EMC, which is made up of representatives of

various stakeholders as per ROD requirements. 146 As per General Notice 1001, Draft National Environmental Management: Air Quality Act: List of Activities

which result in atmospheric emissions which have or may have a significant detrimental effect on the environment,

including health, social conditions, economic conditions, ecological conditions or cultural heritage. Government

Gazette, Vol. 529, No. 32434, July 24, 2009: ―‗Existing Plant‘ shall mean any plant or process that was legally authorized to operate before the date on which the Notice was published or any plant where an application for

authorization in terms of the National Environmental Management Act, 1998 (Act No. 107 of 1998) (as amended)

was made or 12 months before the date on which the Notice was published.‖ 147 The Draft Emissions Standards are expected to be adopted in very nearly their current form on April 1, 2010. 148 Source for Medupi and Kusile emissions: SE Solutions, Medupi, Tables 4 and 6; and Kusile, Table 3.

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common practice of blending coal with various sulfur levels. Kusile will be equipped with wet-

FGD with 90 percent SO2 removal efficiency at commencement of operations; therefore, it is

expected to comply with proposed South African emissions standards for new plants as well as

existing plants with respect to SO2, and will comply with proposed existing plant standards for

PM10 and NOx. The particular circumstances and environmental impacts associated with

emissions from each of these two plants is described further below, as well as other projected

environmental impacts of emissions and effluents from Medupi and Kusile.

Table 1. Projected Emissions from Medupi and Kusile Compared to Proposed South

African Emissions Standards for New and Existing Combustion Facilities

Pollutant South Africa Proposed

Emission Standard

for

New Plants

South Africa Proposed

Emission Standard

for

Existing Plants

Medupi* Kusile**

Particulates (PM10) 50 mg/Nm3 100 mg/Nm3 <50 mg/Nm3 <30 mg/Nm3

Sulfur Dioxide 500 mg/Nm3 3,500mg/Nm3 3,000-4,500

mg/Nm3

<400 mg/Nm3

Nitrogen Oxides 750 mg/Nm3*** 1,100 mg/Nm3** 550-650 mg/Nm3 510 mg/Nm3

*without FGD installed at commencement of operations as approved in the ROD of September 2006; once FGD

is installed, the expected emissions at Medupi would be similar to those expected at Kusile

** expected emissions with FGD installed at commencement of operations (Source SE Solutions, Table 3)

*** as NO2.

1. Medupi

181. With respect to particulates (measured as PM10), South Africa‘s proposed emissions

standards for existing plants will be met at Medupi through the use fabric filter technology with a

guaranteed emission limit of 50 mg/Nm3

and will, accordingly, comply at the commencement of

operations with the proposed South African emission standards for both existing and new plants.

Likewise, through the use of low-NOx burners Medupi emissions will comply at the

commencement of operations with proposed standards for both existing and new plants.

182. However, with respect to SO2 emissions, depending on the evolution of the sulfur content

of the coal feedstock, Medupi may encounter some difficulty in meeting proposed SO2 emissions

standards for existing plants within the five year timetable, and in the absence of a substantial

reduction on SO2 emissions, could not comply with the proposed Emissions Standards for new

plants within the required eight year timetable.

183. The main concern with respect to excessive SO2 emissions relates to the local health

effects of sulfur dioxide. The baseline SO2 concentrations in the area are affected primarily by

the existing Matimba Power Plant. Prevailing winds are from the northeast all year, and the

highest SO2 levels occur in the sparsely populated area to the southwest, which is occupied

mostly by large game farms.

184. The EIR measured baseline ambient air quality and health impacts in the airshed to be

affected by Medupi prior to construction and modeled projected future cumulative emissions in

the airshed with Medupi in full operation. Both the baseline and projected data were compared to

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the interim South African National Ambient Air Quality Standards as proposed in the 2004

AQA. With respect to baseline emissions, where the existing Eskom-operated Matimba plant is

the major source of SO2 emissions, sampling data from various periods between 1991 and 2005

showed that the 2004 interim standards were exceeded relatively infrequently even at monitoring

stations directly downwind and within four kilometers of the existing Matimba plant. The daily

average of 125 μ/Nm3 was exceeded only three times and at only one station located three

kilometers immediately west of the Matimba plant. There was consistent compliance with the

annual average standard in all sampling programs. An intensive 10-month Eskom sampling

campaign in 2004-2005 at ten stations surrounding Matimba included one station eight

kilometers from the plant, at which an hourly standard was exceeded only once149

and the daily

average was not exceeded at all. The EIA concluded that little potential existed for health risks

due to existing SO2 levels in the high-exposure areas downwind of the plant. The most populated

locality that is affected is the town of Marapong (population 17,000) which is near Matimba but

to the northeast, hence normally upwind. Although existing ambient concentrations are lower

and standards are exceeded less frequently there because it is upwind, the health risk rises

because a population of 17,000 will include a significant number of individuals with respiratory

conditions. The report points out that the evaluation of current risk in Marapong is based on

short-term exceedance of health thresholds occurring on average only four times per year.

185. Operation of the six units of the Medupi plant without FGD was predicted to raise the

number of times the interim daily ambient standard would be exceeded in the maximum impact

area downwind to 33 times per year, and to more than double the size of that impacted area

downwind. The interim hourly standard could be exceeded up to 419 times in a year downwind

(i.e., less than 5 percent of the time). However, the additional area affected is likely to remain as

sparsely populated game farms, and health effects are therefore limited. At Marapong, the

dispersion model predicts exceedance of the hourly standard 35 times and of the daily standard 4

times per year. These numbers continue to be relatively low because the wind blows only

infrequently from the southwest. The maximum 1-hour and 24-hour concentrations at Marapong

are predicted to be 1,481 and 153 μ/Nm3, respectively. The annual average is predicted to be

42.7 μ/Nm3 in the high impact area downwind and 6.8 μ/Nm

3 at Marapong, both below the

annual ambient standard. Referring to California and WHO health effects thresholds,150

the

dispersion model predicted 35 occasions during a year of one or a few hours duration in which

persons at risk in Marapong could be affected by ambient SO2 concentrations. The model

predicted that the 24-hour health effects threshold would be exceeded in Marapong four times in

a year, and the annual average standard would never be exceeded.151

Eskom established a

continuous monitoring station in Marapong in January 2008, and quarterly monitoring reports

show that through December 2009, the 1-hour limit for SO2 in the then-proposed (and since

adopted) new DEA standards was exceeded five times. Two of the exceedances occurred when

149 GoSA‘s interim standards did not include an hourly concentration limit for SO2, so the EIR consultant used the EC/UK 1-hour limit of 350 µg/Nm3 in the analysis. 150 California has established a 1-hr maximum of 660 μ/Nm3 as the risk level for at-risk individuals; WHO uses 181

and 72 μ/Nm3 as the 24-hr and annual average exposure levels at which health effects could occur in the elderly and

people with respiratory problems such as asthma. 151. Government Gazette No. 32816, 24 December 2009.

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the wind was from the northeast; the Matimba Power Plant could not have been the source of the

SO2 on those occasions.152

186. On December 24, 2009, the Minister of Water and Environmental Affairs issued final

National Ambient Air Quality standards, to take effect immediately. Unlike the interim

standards, the final ones are expressed as a combination of limit values and frequencies of

exceedance. For SO2 a 1-hour limit value of 350µg/Nm3 has been introduced; the other limit

values are unchanged. Consequently, the conclusions and predictions in the EIR concerning

exceedance of limits remain valid. The frequencies of exceedance represent the maximum

number of times a limit value can be exceeded at a given sampling location in a calendar year

without resulting in non-compliance with the standard: for SO2 it is 526 times for the 10-minute

standard, 88 times for 1-hours, four times for 24-hours, and zero for the annual average. If these

exceedance frequencies had been in effect at the time the EIR was written, its conclusions would

have been that the baseline data showed virtually no instances of non-compliance with any of the

standards, and the SO2 concentrations predicted by the dispersion model would not result in non-

compliance in Marapong. Similarly, the five exceedances measured in Marapong in 2008-2009

are well within the tolerance of the 1-hour standard, and the SO2 concentrations predicted by the

dispersion model would not result in non-compliance in Marapong. However, the predicted

numbers of exceedances of the hourly and daily limits in the maximum impact area downwind of

Medupi are larger than the permissible frequencies of exceedance in the final standards.

187. DEA is taking a holistic approach to the management of air quality in the airshed affected

by Medupi as well as the larger surrounding Waterberg area. Although the Waterberg area is

currently in general compliance with the ambient air quality standards of the AQA, DEA expects

that ongoing and planned expansion of the mining industry, industrial development, and

population in the Waterberg area could result in a significant near to medium term deterioration

in air quality if future developments occur as expected. As a consequence of these anticipated

future developments, DEA has decided to respond proactively and is accordingly preparing a

proposal to declare Waterberg as a National Priority Area under the Air Quality Act,153

and is in

the process of installing an air quality monitoring network and developing an EMF for the

Waterberg region.154

188. Given the concerns noted above for possible future deterioration of ambient air quality in

the Waterberg airshed with respect to SO2 due to cumulative impacts arising from future

development of industry, the ROD issued to Eskom for Medupi requires that Eskom take steps to

mitigate its emissions from both Medupi and potentially also Matimba should air quality fail to

meet ambient standards in the future.155

Given the likelihood of this occurrence, Eskom‘s Board

152 Eskom, 2008 and 2009. ―Marapong Air Quality Quarterly Reports.‖ Eight quarterly reports were reviewed. No

other ambient air quality limits were exceeded. 153 ―The Minister of Water and Environmental Affairs may declare an area as a priority area if there is a reasonable

belief that ambient air quality standards are being exceeded or may be exceeded in the area, or a situation exists

which is causing, or may cause, a significant negative impact on air quality and the area requires a specific air

quality management action to rectify the situation.‖ H. von Blotttnitz, et al, op.cit., p. 591. To date, three areas have been declared as National Priorities under the AQA. 154 The EMF is expected to be completed in mid 2011. 155 Eskom has already begun a research program in Marapong to identify and explore possible initiatives; one

example would be supporting conversion of other air pollutant sources such as home heating systems to technology

that would have lower SO2 emissions

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of Directors has approved installation of FGD and accordingly, Eskom has developed and is

constructing Medupi to be ―FGD-ready‖ by providing sufficient physical space and

infrastructure to allow installation of FGD for all six units as necessary.156

However, Eskom is

reluctant to invest in wet-FGD equipment until sufficient water has been made available, given

the high capital cost of FGD, estimated at US$800 million, an amount which would add about

ten percent to the capital cost of Medupi and increase operating costs by an estimated five

percent.157

189. Moreover, the wet-FGD technology (limestone-gypsum forced oxidization) selected by

Eskom would require Medupi to have access to approximately twice the volume of water that is

required for full operations without FGD. Medupi currently has access to sufficient water to meet

approximately one half of its operational water requirements without FGD, with the other half to

be provided through a temporary reallocation of reservoir water from the Mokolo Reservoir. In

order to operate at full design capacity as scheduled in 2014, Medupi will need to access water

from the Mokolo and Crocodile Water Augmentation Project (MCWAP) that is currently

undergoing the EIA process for Phases 1 and 2 of this four-phase project. This source would also

provide Medupi with sufficient water to operate wet-FGD, and thereby allow Medupi to comply

with proposed South African Emissions Standards for new power plants and international good

practice with respect to its emission of SO2, while at the same time, doing its part to help

maintain acceptable air quality in the (prospective National Priority) Waterberg area.

190. Assuming the availability of sufficient water, Eskom proposes to install FGD in a

sequential manner, as necessary and feasible as each operating unit is shut down for routine

maintenance, normally six years following the commencement of operations. Given the current

construction schedule and commissioning of the first of six units in 2012, the timetable for FGD

installation is expected to begin in 2018 and require about two years to complete as each unit is

sequentially brought offline for maintenance at which time Medupi would be fully equipped with

FGD and come into full compliance with the proposed South African emissions regulations for

new plants. The Bank is continuing to engage Eskom on a technically feasible and operationally

responsible timetable for installation of FGD at Medupi. In this connection the Bank has

proposed that, no later than 2013, Eskom provide the Bank with a plan for FGD installation and

include consideration of alternative, less water intensive dry-FGD, in the event that sufficient

water is not available or allocated to support wet-FGD technology 158

156 Accordingly, the stacks will be lined with FGD compatible materials. Medupi, EMP Construction Phase, 1.1. 157 The ten percent capital cost estimate is consistent with the guidance provided in the WBG EHS Thermal Power

Guideline, which estimates a range of 11-14 percent plant capital cost increase (WBG EHS Thermal Power

Guideline, Table 1). However, Bank staff will continue to review Eskom‘s estimates of the capital cost of wet-FGD

as the cost of this technology may have been substantially reduced since Eskom‘s decision study of FGD

alternatives was completed in 2004. These potential cost reductions are due to changes in material costs, rapid

market development in Eastern Europe (related to EU accession requirements), China‘s requirement for FGD at all

new and existing power plants, and the subsequent rapid emergence of Chinese FGD suppliers. 158 The team discussed with Eskom technical staff the potential for reducing the timeline for installation of FGD by considering other FGD and SO2 reduction technologies, including semi-dry-FGD and activated carbon technology

(ReACT), both of which would require considerably less water than wet-FGD. Based on the studies it commissioned

from two independent consultants that were completed in 2004, Eskom excluded semi-dry-FGD due to the high cost

and risk of lime supply. Although Eskom currently acknowledges the technical advantages of ReACT, it decided as

part of project planning to rely on wet-FGD as the more commercially proven and available technology at the time

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191. In other respects, Medupi is designed to meet international good practice by using zero

wastewater discharge through recycling and reuse of process water accompanied by surface and

groundwater quality monitoring, and solid waste management using lined ash dumps and

leachate monitoring. The potential impact of the project on surface and groundwater were further

evaluated by the Department of Water Affairs and Forestry in connection with Eskom‘s

application for an Integrated Water Use License (IWULA). The IWULA requires that the ash

dump be lined.

2. Kusile

192. The ROD for Kusile requires that Eskom install, commission and operate: any SO2

abatement measures that may be necessary to ensure compliance with any applicable emission or

ambient air quality standards issued under the AQA; bag filters or electrostatic precipitators for

particulate emissions control; as well as a boiler design that includes low NOx burners. Like

Medupi, Kusile will use fabric filter technology with a guaranteed emission limit of 50 mg/Nm3.

193. Unlike the case with Medupi, the Witbank airshed in which Kusile is located is already

classified as degraded according to South African and WHO standards, in part due to its

proximity to the existing Eskom-operated Kendal Power Station. The airshed is classified as

degraded based largely on existing measured levels of particulates, with exceedances of SO2

occurring with less frequency than would be characteristic of a degraded airshed. However,

because the Witbank airshed has a strong potential to become degraded with respect to SO2 and

because water availability is not a limitation, the ROD requires that Eskom deploy FGD for SO2

emissions control at the commencement of operations.

194. By virtue of the installation of wet-FGD units at construction, the Kusile project is

expected to fully comply with the proposed South African air emission regulations for existing

plants, and the use of FGD will further reduce PM10 emissions to <30 mg/Nm3. It will also

comply with the proposed SO2 emission standard for new plants, but only for plants emitting to a

non-degraded airshed. As a result Kusile‘s overall low percentage contribution of SO2 to the

airshed, the cost-benefit ratio of any further reduction in SO2 emissions at Kusile is unjustifiable.

195. With respect to NOx, the EIR concludes that the project will not result in exceedance of

South African ambient standards for NOx. With respect to proposed emission levels, however,

the boiler specification, as in the case of Medupi, sets the maximum NOx level above what would

be allowed if Kusile were classified as a new plant instead of an existing plant. The Kusile plant,

like the Medupi plant, is defined by the proposed new emissions regulations as an existing plant,

the decision needed to be made. Eskom remains committed to this option should FGD installation become necessary

and has made irreversible plant design decisions and material commitments based on the future use of wet-FGD.

Eskom‘s decision process to use wet-FGD is consistent with the WBG EHS Guideline for Thermal Power which states that ―the choice of technology depends on a benefit–cost analysis of the environmental performance of

different fuels, the cost of controls, and the existence of a market for sulfur control by-products. The optimal type of

FGD system depends on the capacity of the plant, fuel properties, site conditions and the cost and availability of

reagent as well as by-product disposal and utilization.‖ World Bank. EHS Guideline for Thermal Power Plants, pp.

3-4.

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and the design specifications for the boiler easily meet proposed emission levels for existing

plants.159

196. Like Medupi, the Kusile project is designed to meet international good practice by using

zero wastewater discharge through recycling and reuse of process water accompanied by surface

and groundwater quality monitoring, and solid waste management using lined ash dumps and

leachate monitoring. Although Kusile is being designed to be a Zero Liquid Effluent Discharge

site; it is important to note that for the entire site Zero Liquid Effluent Discharge would be

realized only after all six generating units have been commissioned. In the meantime,

construction wastewater requires necessary controls to ensure that natural contaminants such as

silt, spilled petroleum products, and other contaminants are collected and treated, and not

allowed to enter into the natural watercourses and wetlands that will remain on the site. The

Kusile plant layout also includes space for future installation of carbon capture technology.

197. The decision to install FGD at Kusile will result in an additional use of 9.6 million m3 of

water per year over and above the 4.4 million m3

required for the power station and associated

infrastructure if FGD were not to be installed. Total demand will be met through a recently

completed augmentation scheme that moves water from the Vaal River Catchment to the eastern

Highveld. The current supply to the nearby Kendal power plant will be increased through a

larger pipeline to supply Kusile as well. As a result, there will be no abstraction of surface or

groundwater resources to supply the power station.160

198. The key solid wastes from Kusile will be ash and gypsum (the latter from the FGD units).

Eskom is still in the process of finalizing the waste disposal strategy for Kusile on the basis of

the following principles:

Sale of gypsum if a local market can be found;

Co-disposal of ash and gypsum in the absence of a market for gypsum;

No contamination of groundwater; and

Lining of ash disposal sites to be engineered in accordance with DWA requirements

and permits.

As in the case of Medupi, ash and gypsum disposal will be carried out with the minimum amount

of water necessary to avoid generation of dust during transport on conveyor belts and deposition

before capping with topsoil. The facility essentially will operate as a sanitary landfill for solid

wastes, and not as a wet ash lagoon.

199. As required by the ROD for Kusile, the onsite Environmental Compliance Officer(s),

seconded from independent NGOs, have concurrent reporting responsibilities to Eskom, the

159 The Kusile boiler specifications are designed to guarantee an emissions level of 650 mg/Nm3, while actual

emissions are expected to be 510 mg/Nm3. The South African proposed emissions standard for NOx at new plants is

proposed as 500 mg/Nm3, and for existing plants it is proposed to be 800 mg/Nm3. 160 SE Solutions, Kusile 5.2.

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Environmental Management Committee, and DEA with respect to compliance with all

environmental permitting and EMP requirements.

D. PROJECTED OUTCOMES: SOCIAL IMPACTS

1. Medupi

200. The social impacts tentatively identified during the scoping study and earmarked for

further investigation included a significant increase in the demand for housing and pressure on

municipal infrastructure in the surrounding area, which would be particularly acute during the

construction period. This increase would have a substantial impact on the local municipality. The

EIR concluded that these effects could be managed by the local municipality, but events arising

after construction began proved that this was not the case. In particular, the municipality could

not come up with the resources to manage the increased flows to the municipal wastewater

system, and the municipal solid waste disposal facilities proved to be inadequate. Although these

problems have not yet been fully resolved, Eskom has recognized its role in contributing to the

unexpected problems, and is working with the municipality to address them in a responsible

manner.

201. Land acquisition and resettlement impacts have been negligible at Medupi, where two

large game farms were acquired by Eskom for the Medupi project. The game farm

Naauwontkomen (the selected site for the proposed power station) was owned by Kumba

Resources (Exxaro) and was purchased by Eskom. No relocations were required as there were no

people living on the farm at the time of purchase. The neighboring game farm Eenzaamheid (the

selected site for the ash dump) was owned by the farmer, and there was one full-time worker

residing on the farm when purchased by Eskom. It was agreed that the farm worker will continue

in the landowner‘s employ and be relocated at the farmer‘s expense to one of his other

properties. The game farm Kromdraai, directly to the south of Eenzaamheid, was purchased by

Eskom. No laborers or any other occupiers resided on the farm at the time of purchase and

therefore no relocations were required with respect to the property. The Bank‘s IR Policy would

not be applicable to the Medupi project component.

202. The extent of resettlement necessary for transmission lines to connect the Medupi project

to the grid is not yet known because the exact alignment of most of the lines, especially those to

be built as part of Phase 2 connections, has not been finalized with the various property owners

from whom the right-of-way will be acquired. In deciding on final alignment, Eskom tries to

avoid resettlement altogether, and the number of houses that will need to be relocated, most

likely elsewhere on the landowner‘s property, is likely to be small. Eskom compensates

landowners for the right-of-way on the basis of either market value or 100 percent of the

financial loss. Eskom either pays for or replaces trees or structures such as windmills and water

tanks that need to be relocated for safety reasons.

2. Kusile

203. No expropriation is required in the case of Kusile, nor are there any outstanding

restitution claims on land to be acquired for the project. However, despite the investigation of

alternative locations for the power station which sought to minimize social impacts, some 18

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family units required resettlement, consisting of families of farm laborers on the farms that were

sold to Eskom on a willing buyer-willing seller basis.161

South African legislation is very

detailed in what is required with respect to both physical displacement and livelihood restoration

(―rehabilitation‖). To implement the resettlement, Eskom engaged the service of contractors

specializing in ―agricultural socio-economic and development consultation services and

implementation.‖ Eskom provided the families with several resettlement options on neighboring

farms, some owned by Eskom, and for those families who preferred alternatives, on other land

leased from other farmers for the purpose of resettlement. The families who opted to resettle on

the Eskom-owned farms were provided with permanent homes with individual fencing, running

water and sanitation, vegetable gardens, and a playground for children. Eskom assisted the

project-affected people in establishing a Communal Property Association that would acquire

ownership of the properties in the names of the family units. For those families who elected to be

resettled on other properties, Eskom arranged to have existing structures rehabilitated or

constructed new structures where existing structures were not of sufficient quality. Eskom

monitors implementation of the program through quarterly reports prepared by specialists on the

progress of the resettlement and rehabilitation of these households.

3. Sere Wind Power Project, CSP Plant Sites, and Majuba Rail Spur Sites

204. Both the Sere Wind Power Project and the CSP Plant sites are located in sparsely

occupied semi-arid or arid landscapes that are predominantly used for grazing sheep or cattle.

Eskom has nearly completed the acquisition of 16 km2 of land needed for the Sere Wind Power

Project. The land is being purchased from three farm owners on a willing buyer-willing seller

basis. No resettlement will result from the development of the wind farm or acquisition of the

right-of-way for its 132 kV transmission line. Eskom is negotiating the purchase of land from a

single landowner for the CSP plant site near Upington. The CSP plant will occupy 4 km2 of the

acquired farm, and the right-of-way for the 132 kV transmission line to connect to the grid is

located on the same farm property. There will be no resettlement, and farming activities (cattle

grazing) could continue on the remainder of the farm.

205. The route of the 67-km Ermelo-Majuba rail spur crosses the lands of 43 separate farm

owners, consisting primarily of cattle grazing lands and croplands (mostly corn). Eskom has

acquired the land for the entire right-of-way through a combination of servitude rights and

outright purchases. Twenty-one households with 152 residents are being resettled, mostly for

safety and noise reasons (although the rail line is electrically-powered) that cannot be otherwise

mitigated. On-farm relocation has been agreed in the case of 16 of the households, other lands

have been purchased for the other five families.

E. ASSOCIATED FACILITIES

1. Associated Facilities: Medupi

206. The Medupi project is located in the Northern Grid of South Africa‘s power network. The

Medupi project will supply additional power to the Waterberg, Polokwane, and Rustenburg

customer load networks (CLNs) in the Northern Grid, and to the Carletonville CLN in the North-

161 SE Solutions, Kusile 4.6.

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West Grid. Associated facilities for the Medupi project include several high tension transmission

lines and two new substations in the power grid that will be installed in two phases. Some of

these lines will be financed in part by EISP; the rest are considered associated facilities. Phase 1

connections to the grid include:

Two 192-km 400-kV transmission lines to the existing Spitskop substation (north of

Rustenburg, serving the Waterberg CLN); and

A 281-km 400-kV transmission line to the existing Marang substation (near

Rustenburg, serving the Rustenburg CLN).

207. These Phase 1 transmission line EIRs have already been approved and disclosed by

Eskom both locally and on Eskom‘s website. Right-of-way acquisition is already about 70

percent complete, and construction will start in September 2009. Phase 2 includes eight new high

voltage transmission lines and two new substations, as follows:

Four 400-kV lines from Medupi to the proposed new ―Delta‖ substation, located

about 50 km west of Medupi, near Steenbokpan;

A 400 kV line (with capacity to expand to 765 kV) from the new Delta substation to

the proposed Epsilon substation, located about 450 km southwest of the new Delta

substation (120 km west-southwest of Johannesburg), thereby linking to the North-

West Grid in the Carletonville CLN;

A 400 kV line from the Delta substation to the existing Witkop substation, located

southwest of Polokwane [Pietersburg];

a 400 kV line from the Delta substation to a new substation near Mokopane (west-

southwest of Polokwane) that is being built separately as part of a grid strengthening

project; and

A 400 kV line from the Delta substation to a new substation near Mogwase (north of

Rustenburg) that is being built separately as part of a grid strengthening project.

208. The Phase 2 transmission lines have already had EIRs disclosed locally and on Eskom‘s

website, and are in the process of permitting review by DEA. All Phase 1 and most of the Phase

2 transmission lines listed above are either financed in part by EISP or considered associated

facilities for the Medupi power station because they are necessary to evacuate Medupi‘s power to

the national grid, and these facilities would not be built without the Medupi project, i.e., there is

mutual dependence. The new substations near Mokopane and Mogwase are not associated

facilities of the Medupi project because they would be built anyway as part of a grid reliability

strengthening project. The EIRs for the above facilities either have already been reviewed by the

Bank team as part of project preparation, or will be reviewed as they become available during

project implementation.

209. No new coal mines will be developed to supply fuel to Medupi. The plant site is adjacent

to the Grootegeluk Colliery, an open-pit, back-cast mine operated since early 1981 by Exxaro

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and located on the southern end of the vast Waterberg coal bed. Grootegeluk currently produces

18.6 million metric tons of coal per year (M mt/yr), of which 15.3 M mt/yr of thermal coal is

supplied to the Matimba Power Plant. Grootegeluk will expand production in phases to meet the

needs of Medupi – an additional 14.6 M mt/yr of thermal coal when in full operation – under a

long-term contract. As a result, coal will be mined at an accelerated rate, but Grootegeluk‘s

reserves, calculated as 5,600 million tons within the authorized area of mining operations, will be

sufficient for the lifetimes of Matimba and Medupi. In order to support the increased coal sales

to Eskom to supply Medupi, Exxaro will add two new coal processing (beneficiation) units to the

six already operating at the mine. Because neither any mining nor the construction of the new

processing units and associated coal stockyard will occur outside the permitted boundaries of the

mine operations, GoSA regulations do not require a full EIA and an environmental authorization

from DEA. Instead, the company‘s obligation under national environmental legislation is to

obtain approval of an amendment to its Environmental Management Program for Grootegeluk

from the Limpopo Department of Minerals and Energy (LDME). For this purpose, in 2006 the

mine owner prepared an environmental document entitled ―Amendment to the Grootegeluk Mine

Environmental Management Programme Report (EMPR): Matimba Brownfields Expansion

Project.‖ Scoping for this report was conducted with stakeholder participation in March 2006,

and the draft report was publicly disclosed for stakeholder consultations in July 2006. LDME

issued its approval for the amendment to the EMPR in 2007. The Bank has reviewed the report.

A site visit to the mining operation by the Bank team indicates a well-run operation with due

regard for responsible environmental management and worker safety in accordance with South

African mining regulations.

210. As noted earlier, in preparing the National Water Resource Strategy in 2004, the DWA

identified the Crocodile (West) River Basin as of paramount importance in developing a more

specific water management strategy. This was because the GoSA anticipated that the mostly

unexploited vast coal reserves of the Waterberg area would be further developed, inducing

industrial development, additional power development, increased population, and expansion of

the agricultural sector (including ecotourism and hunting on game farms) in the Steenbokpan-

Lephalale corridor. The first step in developing a Catchment Management Strategy was the

preparation in 2004 of an Internal Strategic Perspective for the Limpopo Water Management

Area and an Internal Strategic Perspective for the Crocodile River (West) and Marico Water

Management Area. Both of these strategies were based on a 25-year planning horizon, and the

core proposal to meeting the need was the MCWAP, described below, and consisting of four

phases of development. A second step in developing a Catchment Management Strategy was

preparation by DWA of the Water Resource Reconciliation Strategy in 2008 for the Crocodile

(West) River Basin. The first phase of the MCWAP proposes installation of additional pipeline

capacity within the existing pipeline right-of-way transporting additional water from Mokolo

Reservoir to the Lephalale area. The second phase of MCWAP has been designed to capture

large volumes of artificially augmented flows in the Crocodile River, supply agriculture and

facilitate significant industrial development to the Steenbokpan-Lephalale corridor. The artificial

flows occur as a result of water initially diverted from the Vaal River basin, sent as water supply

to the Johannesburg metropolitan area, and then discharged from overloaded wastewater

treatment plants in Johannesburg‘s northern sectors to the upper Crocodile River basin.

211. Water supply for the Medupi project will initially come from the existing Mokolo

Reservoir, located about 40 km south on the Mokolo River. This initial water supply is a quantity

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of water allocated to the Matimba power station, but not needed. The formal process has been

followed for the change in Matimba‘s water allocation and for reallocation of that quantity of

unused water to be delivered to the Medupi project by way of a short extension of pipeline from

the Matimba power station onto the Medupi project site. Medupi will also require additional

makeup water from Phases 1 and 2 of the four-phase MCWAP that is being undertaken by the

Department of Water Affairs. Phase 1 is provision of water from the existing Mokolo Reservoir

within the footprint of an existing water supply and delivery system within a right-of-way

established for that purpose. Although its impact is predominantly related to construction

activities for additional pipeline capacity within the existing right-of-way, Phase 1 is subject

nevertheless to the EIA process in South Africa, and a Scoping Report for this phase has already

been prepared as noted below. Phase 1 of the MCWAP will not fully supply Medupi‘s total

water requirements, but by the time Phases 1 and 2 of the MCWAP are completed, the Medupi

project will receive about 10 percent of the total additional water delivery by the MCWAP to the

Steenbokpan-Lephalale corridor. As Phases 3 and 4 of the MCWAP are implemented, the

consumption of the Medupi power plant becomes an increasingly smaller percentage of the water

supplied by the MCWAP to the Waterberg area. The MCWAP has been identified as a priority

project by DWA and will be developed to supply water to the Steenbokpan—Lephalale corridor

even if the Medupi project were not built; therefore, the MCWAP is not an associated facility.

Development of the MCWAP by the Department of Water Affairs is subject to the South African

EIA process. Scoping reports have already been prepared on Phases 1 and 2, and were made

available for public comment in November 2009 and on the Department of Water Affairs

website (www.dwa.gov.za). The Phase 2 Draft Scoping Report for public review was revised as

a result of public comment and resubmitted in January 2010 for public review and comment.

Phase 2 is expected to be completed and operational by mid-2015, allowing sufficient water for

the Medupi project to install and operate wet-FGD systems as each boiler unit is sequentially

shut down for routine maintenance and overhaul.

F. OTHER SAFEGUARDS-RELATED FINDINGS

212. Issues and impacts regarding natural habitats and physical cultural resources, among

others, are required under Bank OP 4.01 to be addressed as part of the EIA process. This is

standard practice in most EIA systems, and is international good practice. In terms of

equivalency and acceptability, these safeguards issues have already been subject to analytical

work as part of the review for this SDR of the South African EIA system, and Eskom‘s

commitment and capacity to conduct comprehensive EIA work.

213. Natural Habitat. The Medupi project is located in relatively flat terrain in the Bushveld,

a landscape dominated by thick growth of woody shrubs and low trees. The project area is

occupied by large game farms and scattered hunting lodges. The Medupi project is located on

land occupied by two game farms that were purchased by Eskom for the project‘s development,

and does not produce a significant adverse loss of sensitive or critical natural habitat.

Mammalian wildlife populations and vegetation were managed by the game farms. Construction

and operation of the Medupi project, including the ash disposal facility, results in the loss of

about 1500 hectares of degraded natural habitat. The ROD requires that the project engage in

rescue and salvage operations for sensitive flora and fauna. Discussions with the Environmental

Control Officer at the Medupi site included a review of progress to date, and shows compliance

with ROD requirements.

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214. Because the Medupi project is sited in an area of degraded natural habitat of marginal

value, a review of the Kusile project by the Bank team during SDR preparation was useful to

further assess Eskom‘s approach to conservation and management of good quality natural

habitat, as would be required under the Bank‘s NH Policy. The Kusile project is being built in

the Highveld, a landscape dominated by grasslands and agriculture (grain production and cattle

raising) in gently rolling terrain. The project will result in the loss of approximately 2500

hectares of agricultural land that gently slopes and drains to the west. The two farms purchased

by Eskom for the project‘s development include two spring-fed drainage systems that begin on

higher ground to the east of the plant site, and shallow groundwater with associated wetland

systems in the swales through which the spring-fed streams flow to the west. In addition to

narrow bands of wetlands, these swales include a few small impoundments behind low earthen

dams that were built for agricultural purposes. The wetlands on the project lands range from

localized areas of high integrity wetland habitat in these swales to much longer stretches of low

integrity wetland habitat. The layout of project facilities was rearranged by Eskom during the

EIA process to avoid loss of, and adverse impacts on, high integrity wetland habitat, and to

minimize loss of low integrity wetland habitat. The spring, stream, and associated wetland on the

north side of the power plant facilities (northern tributary) are expected to remain intact. The

upper reach of the spring-fed stream and associated low integrity wetlands that are on the south

side of the project site (southern tributary) will be filled and converted to the coal storage yard.

Water from the southern tributary springs, located a short distance upslope (east) of the project

site, will be collected and transported around the project facilities in a diversion channel, and a

French drain is being installed to intercept groundwater coming from the low ridgeline to the

south (the location of the 10-yr lined ash disposal facility) and discharge it down slope (west) of

the project site. By minimizing natural habitat loss and avoiding loss of good quality natural

habitat on the project site, the Kusile project would be consistent with the NH policy if it were to

be a Bank-financed investment.

215. Apart from the wetland habitat in the drainage swales, there is little of conservation value

on the project site with respect to flora and fauna because the land previously was in the

production of primarily corn (maize), or used for high density livestock grazing. DEAT required

as part of both the scoping process and the ROD that special measures be taken by Eskom to

survey and inventory the wetland habitat value, and take measures to protect and manage it to the

maximum extent practical. Discussions with the Environmental Control Officer at the Kusile site

included a review of progress to date, and shows compliance with ROD requirements. The ROD

also requires Eskom to examine the possibility of returning unused land not needed for the

project to farming use, especially to those that were relocated. Since construction is still

underway, there is an unacceptable risk for accidents if this measure were to be implemented

during the construction period, therefore, progress on this is deferred until construction is

completed. Return of some unused land to agricultural purposes, however, would not be an

adverse impact on natural habitat value of the property, unless unauthorized disturbance in the

protected wetlands were allowed. This will need to be factored into any decision regarding the

circumstances in which agricultural production is allowed to resume on the property acquired by

Eskom for the Kusile project.

216. Neither the Sere WPP nor the CSP plant is located in important or sensitive natural

habitats; both sites are semi-arid to arid landscapes that have been disturbed to varying extent by

livestock grazing. Field surveys carried out for both project EIRs have detected small, scattered

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patches of habitat or plant species of conservation interest. Eskom has committed to modify

transmission line alignments or location of structures such as wind turbines to avoid sensitive

areas, or to engage in rescue and relocation programs for plants or animals that cannot be

avoided. The EIR for the Majuba rail spur identified several sensitive natural features that would

be harmed by construction of the track, including springs and wetlands, hillside seeps, and a

short but relatively broad section of the Vaal River floodplain that contains wetlands and oxbow

lakes. Eskom adopted all the recommendations in the EIR for adjustment of the right-of-way

alignment to avoid springs and seeps and to cross the Vaal River at a less sensitive location.

Stone-filled wetland ―underpasses‖ will be installed as the railroad embankment is constructed in

order to not impede natural water flow in wetlands that cannot be avoided.

217. Physical Cultural Resources. The PCR safeguard would be triggered by the Kusile

plant if it were to be a Bank-financed investment. The Kusile site contains several abandoned

homesteads and graveyards of recent (19th century) historical significance. Eskom has developed

the institutional capacity and effective procedures to implement South African legal

requirements, including standard procedures for ―chance finds.‖ This capacity and procedures

have been successfully implemented at the Kusile site where historic homesteads identified

during the EIA process have been preserved and protected and human remains identified during

both the EIA process and as ―chance finds‖ during site clearance have been exhumed and moved

in accordance with national standards. For the Medupi project, one gravesite was discovered

during site clearing; this chance find was managed in a manner consistent with Eskom‘s practice

at the Kusile site and in accordance with South African regulations.

218. Sixteen Late Stone Age middens (essentially dumping grounds for ―kitchen wastes‖

consisting mostly of mollusk shells or animal bones) were found during the EIA process in a

localized area near the shore on the Sere WPP site. Although small adjustments in location of

turbine footings can avoid some of these, it will not be possible to avoid them all. The middens

are not considered to be particularly rich in artifacts, but have research value. Under supervision

of the provincial authorities (Heritage Western Cape), the unavoidable sites will be investigated

and documented by experts before permits are issued that allows their destruction. The chance

finds procedures that Eskom routinely uses at construction sites will be important at this project

site because there could be Stone Age material in deeper strata on the site.

VII. SUMMARY OF GAPS AND PROPOSED GAP-FILLING

MEASURES

219. OP 4.00 requires that, prior to piloting a project under a borrower‘s environmental or

social safeguard system, the Bank and the borrower reach agreement on a time-bound Action

Plan to address gaps in Equivalence and Acceptability that have been identified in the SDR. At

the draft stage of the SDR the Bank discloses the gaps that have been identified for further

discussion with the borrower and other stakeholders including local stakeholders in the proposed

project.

220. Equivalence. With respect to the SDR process conducted to date, the Bank has identified

a few minor gaps or ambiguities in the language of the legal framework of South Africa with

respect to the four Bank safeguard policies triggered by the EISP. However, it would appear

from the analysis of Eskom‘s policies and procedures that all of these gaps or ambiguities

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applicable to environmental safeguards are fully addressed and internalized in Eskom‘s policies

and practices, and no gap-filling measurements are required.

221. With respect to EA it is clear that Eskom‘s policy is to address alternatives assessment at

both the strategic and project-specific levels. In doing so, Eskom‘s approach to alternatives

analysis takes into account at either or both levels the full range of key factors as identified in OP

4.00 Table A1, irrespective of any ambiguities in South Africa‘s legal framework for EIA as to

whether alternatives analysis always should include the same suite of specific factors such as

capital and recurrent costs, or institutional training and monitoring requirements.

222. With respect to NH, Eskom, through its partnerships with South African conservation

organizations, has supported conservation offsets for projects that convert non-critical natural

habitat, although South African legislation does not appear to require such offsets. In any case,

none of the EISP components will impact non-critical natural habitat to an extent that such an

offset would be necessary or appropriate.

223. With respect to PCR, Eskom‘s existing policy of extensive local stakeholder consultation

regarding cultural sites and artifacts, along with its standard protocol requiring that ―chance

finds‖ be reported to the SAHRA and construction at that specific location be halted until

appropriate specialists are consulted, obviates a need for gap-filling at the institutional level.

224. It is only with respect to IR that South Africa appears to lack a legal mechanism and

Eskom an administrative mechanism to require the preparation of stand-alone publicly-disclosed

resettlement plans or frameworks, or to document its evaluation of the impacts of resettlement

and rehabilitation activities. Accordingly, the Bank proposes to require that Eskom develop such

an administrative mechanism as a pre-condition to submitting the EISP to Board approval, and in

the interests of improving Eskom‘s publicly stated policy of improved transparency. Eskom has

already begun the gap-filling process, as described below.

225. Acceptability. A detailed review of Eskom‘s policies and procedures with respect to the

four triggered safeguard policies as implemented on a corporate level and in particular with

respect to the planning and implementation of the Medupi and Kusile projects to date indicates a

high level of consistency with international good practice as exemplified by international

standards of corporate environmental and social management, such as the United Nations Global

Compact, IFC Performance Standards, the Equator Principles, and relevant WBG EHSG. There

are, however, two issues where there are potential gaps in Eskom‘s performance that relate to the

outcomes of the Medupi and Kusile projects.

226. With respect to SO2 emissions and ambient impacts on air quality and human health, the

Bank will require Eskom, as a pre-condition of Board approval, to commit to timely installation

of FGD in all six units at Medupi as soon as it is technically feasible and operationally

responsible to do so. This is expected to begin as early as 2018, and be completed in

approximately two years as each unit is sequentially taken offline for routine maintenance. As a

related condition, the Bank will require that Eskom provide to the Bank in mid 2013 a report

satisfactory to the Bank that provides a plan and schedule for timely installation of SO2 emission

abatement measures. This may include an independent feasibility analysis of alternative control

technologies as discussed above.

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227. With respect to Involuntary Resettlement, Eskom has acknowledged the benefits of

conducting independent retrospective monitoring of the social and economic impacts of any

involuntary resettlement associated with its projects. For project components where resettlement

has already occurred, the Bank will require that Eskom agree to conduct and publish an audit of

the resettlement based on a Terms of Reference to be agreed by the Bank. For any EISP

component for which resettlement is needed but has not yet occurred, the Bank will require

Eskom to disclose its draft resettlement plan for those components. To begin the process of

addressing this gap, Eskom has prepared and disclosed on its website its corporate resettlement

policy and procedure.162

Eskom has also disclosed on its website a Resettlement Policy

Framework for Components 2 and 3 of EISP, which explains its corporate practice for

addressing involuntary resettlement, land acquisition, and livelihood restoration

(rehabilitation).163

Audits will also be required for any resettlement already carried out for EISP

components (i.e., some of the transmission lines for the Medupi project, and acquisition of the

right-of-way for the Majuba rail spur). For any EISP components for which resettlement is

needed but has not yet occurred (primarily the Phase 2 transmission lines for the Medupi

project), the Bank will require and Eskom has agreed to disclose a draft Resettlement Action

Plan for those components.

162 Eskom, 2009. ―Procedure for the Involuntary Resettlement of Legal and Illegal Occupants on or from Eskom-

Procured Land‖ (July 2009), http://www.eskom.co.za/content/20091009091904201.pdf. 163 Eskom, 2009. ―Status and Process of Land Acquisition and Resettlement for Eskom‘s Concentrating Solar Plan

(CSP), Wind Energy Facility, Majuba Rail and Transmission Projects‖ (October 2009),

http://www.eskom.co.za/content/RelocationResettl_Final.pdf.

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ANNEX 1

WORLD BANK OPERATIONAL POLICY OP 4.00

March 2005

Piloting the Use of Borrower Systems to Address

Environmental and Social Safeguard Issues in Bank-Supported Projects

1. The Bank‘s1

environmental and social (―safeguard‖) policies2 are designed to avoid,

mitigate, or minimize adverse environmental and social impacts of projects supported by the

Bank. The Bank encourages its borrowing member countries to adopt and implement

systems3

that meet these objectives while ensuring that development resources are used

transparently and efficiently to achieve desired outcomes. To encourage the development and

effective application of such systems and thereby focus on building borrower capacity

beyond individual project settings, the Bank is piloting the use of borrower systems in Bank-

supported projects. The key objective of the pilot program is to improve overall

understanding of implementation issues related to greater use of country systems.

2. Equivalence and Acceptability. The Bank considers a borrower‘s environmental and

social safeguard system to be equivalent to the Bank‘s if the borrower‘s system is designed to

achieve the objectives and adhere to the applicable operational principles set out in Table A1.

Since equivalence is determined on a policy-by-policy basis, the Bank may conclude that the

borrower‘s system is equivalent to the Bank‘s in specific environmental or social safeguard

areas in particular pilot projects, and not in other such Areas. Before deciding on the use of

borrower systems, the Bank also assesses the acceptability of the borrower‘s implementation

practices, track record, and capacity.4

3. Addressing Gaps. If the borrower has to fill gaps in its system to meet the objectives and

applicable principles in Table A1 and is committed to doing so, the Bank may, when

determining equivalence take account of measures to improve the borrower‘s system.

Similarly if the borrower has to fill gaps in implementation practices and capacity to achieve

acceptability and is committed to doing so, the Bank may, when determining acceptability,

take account of measures to strengthen borrower implementation practices and capacity.

Such measures are to be carried out before the borrower undertakes implementation of the

relevant project activities, and may include Bank-supported efforts to strengthen relevant

capacity, incentives and methods for implementation.

4. Borrower Role and Obligations. The borrower is responsible for achieving and

maintaining equivalence as well as acceptable implementation practices, track record, and

capacity, in accordance with the Bank‘s assessment. For each project, the borrower identifies

those provisions of the country system that are necessary to ensure that the requirements of

Table A1 are met. These provisions may vary from project to project, depending on such

factors as the structure of the country‘s system and the type of operation. In all cases, the

specific provisions of the country system and any additional actions that the borrower needs

to undertake to achieve and maintain equivalence and acceptable implementation become

part of the borrower‘s contractual obligations to the Bank, subject to the Bank‘s normal

contractual remedies (e.g., suspension of disbursements).

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5. Bank Responsibility. The Bank is responsible for determining the equivalence and

acceptability of borrower systems, and for appraising and supervising pilot projects that use

these systems. The Bank carries out its responsibility, including supervision5

of borrower

implementation practices, track record, and capacity, in a manner proportional to potential

impacts and risks. The Bank may explore with the borrower (and, as appropriate, third-

parties) the feasibility of arrangements to strengthen ownership and country capacity to

implement specific operational principles in Table A1. Without limitation to its responsibility

under this paragraph, the Bank may also explore with the borrower (and, as appropriate,

third-parties) the feasibility of establishing alternative monitoring arrangements for

overseeing the implementation of the project.

6. Changes in Borrower Systems and Bank Remedies. If, during project implementation,

there are changes in applicable legislation, regulations, rules or procedures, the Bank assesses

the effect of those changes and discusses them with the borrower. If, in the judgment of the

Bank, the changes reflect a further improvement in the country systems, and if the borrower

so requests, the Bank may agree to revise the legal framework applicable to the operation to

reflect these improvements, and to amend the legal agreement as necessary. Management

documents, explains, and justifies any changes to such framework, and submits them for

Board approval (normally on an absence of objection basis). If the country system is changed

in a manner inconsistent with the legal framework agreed with the Bank, the Bank‘s

contractual remedies apply.

7. Disclosure. To promote transparency and facilitate accountability, the Bank makes public

through the PID early in the project cycle its intent to use country systems in a proposed pilot

operation. It updates this information as project development proceeds. At a later stage, but

prior to beginning appraisal, the Bank makes publicly available its analysis of equivalence of

borrower systems and Bank requirements and its assessment of the acceptability of borrower

implementation practices, track record, and capacity (including a description of the

applicable borrower systems and of actions that would achieve and sustain equivalence and

acceptability). In addition, the Bank ensures that relevant project-related environmental and

social safeguard documents (see Table A1), including the procedures prepared for projects

involving subprojects, are disclosed in a timely manner before project appraisal formally

begins, in an accessible place and understandable form and language to key stakeholders.

1 ―Bank‖ includes IDA; ―loan‖ includes credit and grant; and ―borrower‖ includes grant recipient.

2 The Bank‘s environmental and social safeguards policies and procedures are: OP/BP 4.01, Environmental

Assessment; OP/BP 4.04, Natural Habitats; OP 4.09, Pest Management; OP/BP 4.10, Indigenous Peoples; OP

4.11 (forthcoming), Management of Cultural Property in Bank-Financed Projects; OP/BP 4.12, Involuntary

Resettlement; OP 4.36, Forests; and OP/BP 4.37, Safety of Dams.

3 When used in this policy statement ―country systems‖ means a country‘s legal and institutional framework,

consisting of its national, sub-national, or sectoral implementing institutions and applicable laws, regulations,

rules, and procedures.

4 As the applicable statement for the pilots, this OP and BP will apply only to those areas where the Bank has

determined equivalence. The Bank‘s environmental and social safeguard policies will apply to the areas which the Bank has determined not to be equivalent to its applicable policy framework and will continue to apply to

all projects that are not part of the pilot program. Pilot projects will be subject to all other applicable policies

and procedures.

5 OP/BP 13.05, Project Supervision, applies to pilot projects.

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ANNEX 2

SOUTH AFRICAN LEGAL FRAMEWORK APPLICABLE TO THE

ENVIRONMENTAL AND SOCIAL IMPACTS OF THE EISP

ENVIRONMENTAL FRAMEWORK

1. Under the 1996 Constitution of South Africa, the right to an environment that is not

harmful to one‘s health and well being is considered fundamental. The Constitution refers to this

right and that of future generations to a healthy environment (Clause 32 of the Bill of Rights).

The Constitution contains mandatory, clear and applicable provisions on environmental

protection and sustainable development.1 The environment is defined as the natural environment

and its physical, chemical, aesthetic and cultural properties that influence human health and well-

being. The following sections of the Constitution are particularly relevant to the environmental

safeguard policies addressed in this report: Environmental Chapter 2 – Bill of Rights, Section 24

(Environment); Chapter 14 – General Provisions, Section 231 (International Agreements),

Section 232 (Customary International Law), and Section 233 (Application of International Law).

2. In addition, South Africa has ratified several multilateral agreements relating to

atmospheric emissions, in particular, UN Framework Convention on Climate Change, the Kyoto

Protocol, the Vienna Convention and Montreal Protocol for the Protection of the Ozone Layer

and the Stockholm Convention on Persistent Organic Pollutants.2

3. Until 1998 the controlling legislative instrument for environmental management in South

Africa was the Environmental Conservation Act (Act 73 of 1989, ECA). With the enactment of

the National Environmental Management Act of 1998 (NEMA) the ECA and various laws

enacted under it have been partially superseded by a new paradigm and by various laws and

regulations. Consequently, the legal regime applicable to the Medupi and Kusile projects, which

were designed during the period from 2004 through 2008, reflects a hybrid approach with

application of both ECA and NEMA authorized provisions. The Records of Decision (RODs)

issued by DEAT on September 21, 2006, and June 5, 2007 for the Medupi and Kusile plants,

respectively, and the Environmental Management Plans (EMPs) submitted to DEAT by Eskom,

and currently pending approval, make explicit reference to the laws and regulations listed in the

text that follows.

Environmental Conservation Act (ECA)

4. The ECA provided the umbrella legislative authority for all environmental legislation

regulations up to the enactment of NEMA in 1998, under which many of the provisions of the

1 Section 24, South African Constitution,1996. 2 South Africa ratified the UN Framework Convention on Climate Change in 1997. As a non-Annex 1 party, South

Africa‘s obligations include the preparation of a National Communication incorporating an inventory of GHGs.

South Africa ratified the Kyoto Protocol in 2002 but as a developing country has no binding commitment to cap or reduce GHS emissions. However, South Africa has developed climate change mitigation and adaptation strategies

and is a potential beneficiary of the Clean Development Mechanism. South Africa ratified the Vienna Convention

for the Protection of the Ozone Layer in 1990 and the Montreal Protocol and London Amendment in 1990 and 1992

respectively. Ratification of the Copenhagen Amendment is in process. South Africa ratified the Stockholm

convention on Persistent Organic Pollutants in 2002.

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ECA have been progressively repealed. However, the sections cited above and summarized

below continue to apply to the Medupi and Kusile projects:

Section 19 prohibits discarding, dumping or leaving of any litter on land or water

surface except in a contained space dedicated for that purpose.

Section 20(1) provides that where an operation accumulates, treats, stores or disposes

of waste on site for a continuous period, it must apply for a permit to be classified as

a suitable waste disposal facility, and will require an appropriate permit from the

Department of Water Affairs and Forestry. (In May 2009 it was announced that the

Department of Water Affairs would henceforth be part of the Ministry of Water and

Environmental Affairs).3

Section 21 identifies those categories of activities (―Schedule 1‖) that ―may have a

substantial detrimental effect on the environment, whether in general or in respect of

certain areas.‖ The application of this provision to the Medupi and Kusile projects is

evident in the inclusion of ―energy generation‖ as one of the categories identified.

Section 22 prohibits any activity identified in Section 21 from being undertaken

without written authorization issued by the Minister of Environmental Affairs and

Tourism or by a competent local authority, as defined by the ECA.

Sections 28, 31 and 33 reference the general regulatory powers of various levels of

government authority with respect to the provisions of the ECA.

Sections 29 and 30 deal with offenses, penalties and forfeiture provisions of the ECA.

Section 35 provides for an appeal process (implemented by Regulation 1183, below).

Section 38 provides that the President may unilaterally modify the ECA to

incorporate the provisions of any convention, treaty or agreement relating to the

protection of the environment.

5. Regulation R1182 (September 5, 1997) further specifies the activities included in Section

21 of the ECA as the following (which are applicable to the components of the EISP):

Facilities for commercial supply of electricity generation with an output of at least 10

megawatts;

Infrastructure, including roads and rails for the transportation of any substance;

Schemes for the abstraction or utilization of ground or surface water for bulk supply

purposes; and

Change in land use from agricultural to any other use.

3 Under Section 81 of the Waste Act of 2008 (see below).

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6. Regulation R1183 (September 5, 1997) sets forth the procedures under which an

applicant could be required to undertake scoping and conduct an Environmental Impact

Assessment (EIA) for an activity subject to Schedule 1 of Section 21 of the ECA. Key provisions

applicable to the Medupi and Kusile projects include the following:

Applications to undertake scheduled activities must be referred to the relevant

provincial authority and/or the Minister of Environmental Affairs and Tourism for

authorization (Para. 4).

Applicants seeking authorization are required to appoint an ―independent‖ consultant,

having no financial or other interest in the undertaking, with expertise in the area of

environmental concern, a good working knowledge of all relevant policies,

legislation, guidelines, norms and standards; the ability to perform in a timely,

thorough and readable manner, all the relevant tasks required in the regulation

including management of the public participation process. (Para. 3(1)).

The applicant is responsible for conducting a public participation process that ensures

that ―all interested parties‖ (defined as any person or group of persons concerned with

or affected by an activity…including government departments that may have

jurisdiction over any aspect of the activity) are given the opportunity to participate in

all relevant procedures contemplated in the regulation provided that such interested

party responds within the time agreed to between the relevant authority and the

applicant. (Paras. 3(1)(f) and 3(5).

The applicant is required to submit a Plan of Study for Scoping and/or a Scoping

Report including a brief description of: (a) the project; (b) how the environment may

be affected; (c) the environmental issues identified; and (d) all alternatives identified.

The Scoping Report is also required to provide an Appendix containing a description

of the public participation process followed, including a list of interested parties and

their comments (Paras. 5 and 6).

Based on the Scoping Report, the relevant authority may consider the application

without further investigation or require that the Scoping Report be supplemented by

an EIA (Para. 6).

If an EIA is required the applicant is first required to submit a Plan of Study for the

EIA, the contents of which are prescribed in the regulation (Para. 7 (1)).

After the Plan of Study has been accepted the applicant must submit an

Environmental Impact Report (EIR) to the relevant authority: The EIR must include:

(a) a description of each alternative, including (i) the extent and significance of each

identified environmental impact, and (ii) the possibility for mitigation of each

identified impact; (b) a comparative assessment of all the alternatives; and (c)

appendices containing descriptions of: (i) the environment concerned, (ii) the activity

to be undertaken, (iii) the public participation process followed, including a list of

interested parties and their comments, (iv) any media coverage given to the proposed

activity, and (v) any other information included in the accepted plan of study (Para.8).

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The relevant authority must issue a record of the decision (ROD) which must include,

inter alia: (a) a brief description of the proposed activity, the extent or quantities of

the surface area involved; (b) the specific place where the activity is to be undertaken;

(d) the identity of any consultant involved; (e) the date of and persons present at site

visits, if any; (f) the decision of the relevant authority; (g) the conditions of the

authorization, if any, including measures to mitigate, control or manage

environmental impact or to rehabilitate the environment; (h) the key factors that led to

the decision; and (j) the name of the person to whom an appeal may be directed. The

ROD must also indicate the method by which the applicant must make the ROD

available to any interested party.

Any report submitted in support of the regulation is considered a public document as

of the date of the ROD.

Appeals of any decision must be made to the Minister or provincial authority within

30 days of the ROD.

NEMA

7. NEMA was enacted in 1998 as the new framework environmental law for South Africa

and is designed to progressively substitute for the ECA. NEMA is designed to support

institutional capacity in all spheres of government for effective implementation of participation.

It promotes equitable access to natural resources and fair and equitable sharing of the benefits

arising out of the utilization of marine resources. The RODs for Medupi and Kusile cite in

particular the principles set out in Section 2 of the NEMA, many of which are particularly

relevant to this analysis to the extent that they correspond to the Objectives and Operational

Principles of OP 4.00, Table A1 as demonstrated in the Equivalence Analysis.

8. A number of important laws and regulations have subsequently been enacted under

NEMA that are applicable in whole or in part to the Medupi and Kusile projects. These include

the NEMA Environmental Impact Assessment Regulations of 2005; the NEMA Air Quality Act

of 2004 (AQA);4 the NEMA Biodiversity Act of 2005, as amended and the NEMA Waste

Management Act of 2008.

9. NEMA itself has been amended several times, most recently in December 2008 by the

National Environmental Laws Amendment Act (35 of 2007, NELAA) and by the National

Environmental Management Amendment Act of 2008 (36 of 29, NEAMA), which came into

effect on May 1, 2009. The former extended the mandate of the EMI to include the 1989 ECA,

the APPA and the AQA (see below). It clarified the status of EMIs as peace officers under the

Criminal Procedures Act (51 of 1977) and prescribed a maximum penalty of five year

imprisonment and/or a R10 million fine for noncompliance with a compliance notice issued by

an EMI. The NEAMA revised NEMA in terms of identification of those activities requiring

environmental authorization; geographical areas within which specified activities require or are

excluded from environmental authorization; and activities that may commence without

environmental authorization but complying with norms or standards. It also reinforced several

4 Preceded by the Atmospheric Pollution Prevention Act (Act 45 of 1965, APPA).

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provisions of NEMA with reference to the 2006 EIA regulations relating to investigation of

alternatives (including the ―no-go alternative); mitigation measures; assumptions, gaps, and

uncertainties in EIA data; reporting on monitoring and management actions; and adherence to

requirements contained in SEMAs, including the Air Quality Act, the Biodiversity Act and the

Water Act (see below).5

NEMA Environmental Impact Assessment Regulations of 2006 (2006 EIA Regulations)

10. South Africa issued new EIA Regulations under the authority of NEMA, which became

effective on July 3, 2006 and repealed the regulations issued under the ECA. Pursuant to

NEAMA, draft provisions to amend the EIA Regulations were issued on February 13, 2009 and

have yet to be adopted.6 The new Regulations addressed many of the gaps and ambiguities of the

regulations issued under the ECA. Although the 2006 EIA Regulations do not have legal

application to the EIA processes for the Medupi and Kusile projects because the applications to

initiate the EIA processes were submitted and approved prior to July 3, 2006,7 previous drafts of

the EIA Regulations had been in wide public circulation, and they clearly influenced the content

and format of the Environmental Impact Reports (EIRs) that were ultimately submitted and

approved. Moreover, according to Eskom, the EMP provisions of Section 34 of the 2006 EIA

Regulations are applicable8 to the Medupi and Kusile projects. These provisions may be

summarized as noted below.

11. A Draft Environmental Management Plan (EMP)9 must include:

(a) Details of: (i) the person who prepared the EMP; and (ii) the expertise of that

person to prepare an EMP;

(b) Information on any proposed management or mitigation measures that will be

taken to address the environmental impacts that have been identified in a

report prepared under these Regulations, including environmental impacts or

objectives in respect of: (i) planning and design; (ii) pre-construction and

construction activities; (iii) operation or undertaking of the activity; (iv)

rehabilitation of the environment; and (v) closure, where relevant.

(c) A detailed description of the aspects of the activity that are covered by the

draft EMP;

5 Paterson and Kotzé, op.cit., p. 381; and DEA&DP, 2009, ―Implementation of the National Environmental

Management Amendment Act, 62 of 2008,‖ Presentation to Western Cape branch of the South African Chapter of

the International Association for Impact Assessment, Western Cape Province, Kirstenbosch, June 18, 2009.

(DEA&DP). 6 Government Gazette, No 31885, February 13, 2009. 7 Therefore, the 2006 EIA Regulations are not cited in the RODs as applicable to the Medupi or Kusile projects. 8 ―This EMP…has been compiled in accordance with Section 34 of the EIA Regulations.‖ Eskom, 2009, Medupi

Power Station, Limpopo Province, Environmental Management Plan for Operation and Maintenance, February

2009, Savannah Environmental (Pty) Ltd: p. 3. 9 The term Environmental Management Plan was replaced by the term ―Environmental Management Programme‖

by the NEAA, DEA&DP, op.cit.

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(d) Identification of the persons who will be responsible for the implementation

of the measures contemplated in paragraph (b);

(e) Where appropriate, time periods within which the measures contemplated in

the draft EMP must be implemented; and

(f) Proposed mechanisms for monitoring compliance with the EMP and reporting

thereon.

Atmospheric Pollution Prevention Act (Act 45 of 1965, APPA)

12. Under the APPA a specifications standard applies to the production of noxious or

offensive gases from 69 scheduled processes, listed in Schedule 2 of the Act, including thermal

power generation, and requires that pollution control equipment must conform to certain design

criteria. These provisions of the APPA are scheduled to be replaced by Section 60 of the NEMA

AQA on promulgation of its Section 22. In the Act:

Section 9 prohibits the operation of a scheduled process without a registration

certificate issued by the DEA‘s Chief Air Pollution Control Officer. The certificate

is issued subject to compliance with specified minimum standard conditions.

Sections 15 and 16 prohibit the installation or siting of any fuel burning appliance in

the absence of effective equipment to limit emissions of grit and dust to the

satisfaction of local authorities.

Sections 27 and 28 authorizes the Minister of Environmental Affairs to declare any

area to be a dust control area and to require a facility causing a nuisance to locally

affected persons to adopt ―the best practicable means‖ for the abatement of such

nuisance, per the satisfaction of the Chief Air Pollution Control Officer. Section 34

authorizes the Minister to prescribe essential national standards for the control of

noise and to specify maximum levels of noise. Such regulations are specified in the

National Noise Control Regulations (GN R154, January 10, 1992, GRN 55 of

January 14, 1994); the South African National Standard (SANS) 10103: 2004; and

associated regulations as well as South African Standards Board 0228 and 0229

codes.

Section 35 authorizes the Minister to prescribe measures for the control of offensive

odors.

NEMA AQA

13. In 2004 South Africa enacted the NEMA AQA. There are several key provisions of the

AQA that have been enacted and are applicable to the Medupi and Kusile projects, but which are

not yet not in effect:10

10 Per Eskom, Medupi, EMP Construction Phase, List of Applicable National Legislation not yet Taken Effect at

Date of This Document, April 16, 2007.

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Section 21: List of Activities which result in atmospheric emissions and which have

or may have a significant detrimental effect on the environment, including health,

social, economic or ecological conditions, or cultural heritage.

Sections 22 and 36: Requires atmospheric emission license (AEL) or provisional

AEL to be obtained from Metropolitan or District Municipality for any listed

activity.

14. Ambient Air Quality Standards: Provisional ambient air quality limits for South Africa

were published in Schedule 2 of the 2004 AQA. Subsequently, in March 2009, draft ambient air

quality standards intended to replace the provisional limits were published for public comment11

and were revised and adopted and adopted in final form on December 24, 2009.12

Seven priority

pollutants have been designated13

of which four (PM, SO2, NO2 and CO) are directly associated

with electricity generating facilities. Parameters have been set for limit values, alert thresholds

and target values. Margins of tolerance, time frames for achieving compliance with limit values

of permissible frequencies of allowable exceedance have been determined. These values are

based on assessments that establish the ambient concentrations of prioritized pollutants and

evaluate the technical feasibility, economic viability and social and political acceptability of

implementing measures to reduce and maintain air quality within limit values. A comparison of

the provisions of the South African air quality standards with the corresponding parameters of

the World Health Organization‘s Ambient Air Quality Guidelines is presented in Annex 4 of this

report.

15. Proposed Emissions Standards for Thermal Power Plants: Draft emissions standards for

combustion installations were issued for preliminary public comment under Section 21 of the

AQA in February 200914

and were reissued for final public comment on July 24, 2009.15

The

proposed emissions standards take into account the capacity of the facility, the fuel source, and

the status of the facility (new or existing). As provided for under the National Framework, time

frames for compliance of various industry sectors with new emissions standards are proposed to

be ―informed by industry cycles,‖ and that for individual ―controlled emitters….compliance time

frames [are proposed] to be established taking into account risks to human health, relative

contribution to ambient air quality levels and ability to monitor compliance.‖ As such, the

National Framework anticipates that provinces and municipalities will adopt compliance time

frames, in line with international trends, specifically, three years from date of issuance are

provided for a new facility to come into compliance with the limitations applicable to new

facilities whereas existing facilities are given an initial five years to come into compliance with

the limitation applicable to existing facilities and an additional three years to come into

compliance with the much more stringent requirements applicable to new facilities. In addition,

11 South African National Standards National Committee (SABS TC 146), Air Quality SANS 1929:2009, Edition 2. 12 Per Schedule 2 of the AQA, 2004 as issued by the Department of Environmental Affairs, December 24, 2009. 13 Sulfur dioxide (SO2); Nitrogen dioxide (NO2); Carbon Monoxide (CO); Particulate Matter (PM10). 14 DEAT, ―AQA Implementation: Listed Activities and Minimum Emissions Standards, Draft Schedule for Section 21 of Air Quality Act, Rev. 1.0, February 27, 2008.‖ 15 General Notice 1001, National Environmental Management: Air Quality Act (39/2004): List of Activities which

result in atmospheric emission which have or may have a significant detrimental effect on the environment,

including health, social conditions, economic conditions, ecological conditions or cultural heritage, Government

Gazette, Vol. 529, No. 32434, July 24, 2009.

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provisions are proposed to be made for specific industries to apply for possible extensions to the

compliance time frame, provided that ambient air quality standards in the area are in compliance

and that the industry‘s air emissions are not causing any adverse effects on the surrounding

environment.16

NEMA – Biodiversity Act 2005

16. The following sections of the Biodiversity Act apply to the Environmental Assessment

safeguard policy: Chapter 1 – Interpretation, Objectives and Application of Act, Section 5

(Application of International Agreements), Chapter 3 – Biodiversity Planning and Monitoring,

Section 45 (Contents of Biodiversity Management Plans), and Chapter 4 – Threatened or

Protected Ecosystems and Species, Section 51 (General Purpose of the Chapter). The following

provisions are cited as being potentially relevant to the Medupi and Kusile projects:17

Sections 40, 43 and 54 provide the Minister or MEC for environmental affairs in a

province or the Minister of Environmental Affairs, respectively, with authority to

declare a particular geographic region as a ―bioregion‖ or an ecosystem warranting

special conservation attention under Section 54, as characterized by its landforms,

vegetation cover, human culture and history, and to issue a Biodiversity

Management Plan for such a region;

Section 43 and Section 57 provide that the Minister may issue a Biodiversity

Management Plan for an indigenous species or other (critically endangered,

endangered, vulnerable or otherwise protected) species per Section 56 or for a

species that warrants special conservation; the Minister may prohibit any activity

which may negatively impact on the survival of such a species without a permit as

required by Section 7 of the Act.

Section 53 authorizes the Minister to identify any process or activity in a listed

ecosystem as a ―threatening process‖ requiring specific authorization from DEA.

National Water Act (Act 36 of 1998, NWA)

17. The NWA regulates the protection, use, development, conservation, management and

control of water resources in South Africa, incorporating the objectives of pollution prevention,

ecological and resource conservation, sustainable utilization, the precautionary principle,

participatory decision-making, transparency and just administrative action. Under the Act, water

resource reserves for human use and maintaining sound ecosystems take precedence over

agricultural and industrial demands. With respect to the Eskom projects considered for inclusion

in the EISP, the following sections are particularly germane:

16 National Framework, Section 5.4.3.5, page 58. 17 Eskom, Medupi, EMP Construction Phase, List of Applicable National Legislation not yet Taken Effect at Date of

This Document, April 16, 2007. List of Applicable National Legislation not yet Taken Effect at Date of This

Document.

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Section 19 requires that a project proponent must ensure that reasonable measures

are taken throughout the life cycle of a project to prevent and remedy the effects of

pollution to water resources.

Sections 21, 27, 28 and 29 set out the water uses and procedures by which a water

use permit must be issued by the Department of Water Affairs and Forestry.18

National Environmental Management Waste Act of 2008 (NEMA Waste Act)

18. The NEMA Waste Act, which became effective on March 6, 2009, is designed to provide

a comprehensive regulatory framework for management of waste; allow the Minister of the

Environment to declare any waste stream as a priority waste, and set rules specifically for that

waste; make provision for integrated waste management plans prepared by local authorities and

industries (such as Eskom) and approved by the Minister through a public participatory process

(under the ―polluter pays principle‖); create a hierarchy of preferred waste disposal methods and

incentives to encourage waste minimization; and develop a formal licensing procedure for the

generation and disposal of waste. One of the major changes in the Act is to transfer primary

authority for the management of waste from sectoral ministries (such as the Ministry of Minerals

and Energy in the case of coal wastes from both mining and power generation) to DEA.

19. It would appear that some provisions of the Waste Act, in particular, the requirement to

prepare Industry Waste Plans, could apply to Eskom as a corporate entity as well as directly to

the components of the EISP, specifically the design and operation of coal ash ponds or ―dry‖ ash

disposal landfills, and the discharge of other solid wastes from power plant operations. The

―operation of power plants‖ is including within the Act‘s definition of ―industry‖ and coal ash

would appear to fit the definition of ―wastes‖ (―any substance…which the generator has no

further use of for purpose of production‖). The discharge of coal ash into engineered ash dumps

would appear to meet the Act‘s definitions of ―disposal,‖ which includes the ―dumping, placing

or release of any waste into or onto any land,‖ as well as ―storage,‖ which is defined as ―the

accumulation of waste in a manner that does not constitute the treatment or disposal of that

waste.‖ Depending on how coal ash is subsequently categorized in the waste listing schedules to

be issued by DEA, Eskom could be required to obtain a license under the provisions of the Act

for the construction and operation of the ash ponds at Medupi and Kusile and to prepare Waste

Management Plans as provided in the Act and/or a separate EMP as required under Section 11 of

NEMA.19

Eskom could also be required to obtain a separate authorization from the Department

of Water (per Section 50(3)), which since May 2009 has become part of the Ministry of Water

and Environmental Affairs, and to appoint a Waste Management Officer per Section 58.

18 As of May 2009, the Department of Water Affairs has been transferred to the new Ministry of Water and Environmental Affairs. 19 Waste Act, Section 46 (2)(d). The Act further provides that where the holder a permit under Section 20 of the

ECA (repealed by the Waste Act) must apply for waste management license under the Waste Act when required to

do so by the licensing authority and that any license pending under section 20 of the ECA will henceforth be treated

as if it were an application for waste management license under the Waste Act.

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Minimum requirements for Landfills issued by the Department of Water Affairs and Forestry

(second edition, 1998)

20. Pending the issuance of detailed implementing regulations for the Waste Act, the ROD

refers to guidelines that were issued by the Department of Water Affairs and Forestry in 1998 as

part of a series of guidance documents, the Waste Management Series, on various aspects of

waste management.20

As a guidance document, it does not appear to be legally enforceable,

although permits issued that make reference to the document would appear to be enforceable

under provisions of the ECA and the NWA. Among other things, the document addresses landfill

classification, and the siting, investigation, design, operation and monitoring of landfill sites. In

the landfill classification system, a landfill is classified in terms of waste class, size of operation,

and potential for significant leachate generation, all of which influence the risk it poses to the

environment. Graded requirements are then set for all aspects of land filling, including public

participation. As there is no specific mention of coal ash dumps in the document, the specific

application of the document to the Medupi and Kusile ash ponds is not clear.

Other Environmental Laws

National Forest Act (Act 84 of 1998) and Government Notice 1339 of August 6, 1976

(promulgated under the Forest Act of 1984)

21. This requires a permit for the removal, relocation or pruning of any protected plants.

Conservation of Agricultural Resources Act (Act 43 of 1983)

22. The Act regulates the conservation and management of agricultural natural resources.

Key provisions and regulations issued under the authority of the Act apply to:

The prevention of soil erosion and the development of soil conservation schemes;

Protection of wetlands and associated vegetation;

The burning of veld (Regulation 6); and

Control of invasive plant species (per Regulation 15 of GNR1048).

Fertilizers, Farm Feed, Agricultural Remedies and Stock Remedies Act (Act 36 of 1947)

23. This Act requires that only a registered pest control operator may apply application of

herbicides.

20 Thus far, the series comprises:

Document 1: Minimum Requirements for the Handling, Classification and Disposal of Hazardous Waste.

Document 2: Minimum Requirements for Waste Disposal by Landfill.

Document 3: Minimum Requirements for Monitoring at Waste Management Facilities

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National Veld and Forest Fire Act (Act 101 of 1998)

24. This Act obligates an operator to burn firebreaks to ensure that that any veld fire

occurring on the property does not spread to adjoining land. It specifies the dimensions of the

firebreak and requires that suitably trained and equipped personnel be made available for

extinguishing such fires.

Natural Heritage Resources Act of 1999 (Act 25 of 1999)

25. Archeological remains, artificial features and structures older than 60 years are protected

by the Act. The Act requires a permit for any disturbance, removal or destruction of any national

and provincial heritage, archeological or paleontological site, burial ground, grave or public

monument or memorials.

Hazardous Substances Act (Act 15 of 1973)

26. This Act regulated the control of toxic, corrosive, explosive and inflammable substances

through the issuance of permits by the Department of Health for any such substances used, stored

or handled on site.

National Road Traffic Act (Act 93 of 1996)

27. The Act requires that:

Operators implement procedures to ensure that any dangerous goods transported do

not exceed specified quantities per SABS Code 0232;

A permit is obtained from the Minister of Transport to transport excessive loads

based on a survey of the prospective route by a qualified structure/transport

engineer.

Occupational Health and Safety Act (Act 85 of 1993)

28. According to the RODs for Medupi and Kusile, all provisions of the Act must be adhered

to with respect to safety and security, hazard and emergency response and fire control, including

by contractors and consultants. In addition,

(a) Subject to the Major Hazardous Installation (MHI) Regulations of July 10, 2001

(GRN 692) issued under the authority of the Act, an employer must:

Undertake a risk assessment of existing major hazard installations or

substances, to be updated every three years and submitted to the local

emergency services; and in consultation with such services, establish an on-

site emergency plan;

(b) Subject to the GNR 1179 of August 25, 1995 an employer must:

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Take all steps to ensure that hazardous chemical substances are identified

stored, handled and distributed in accordance with the South African

Standards Bureau 0228 Code;

Ensure that any employee who may be exposed to any hazardous chemical

substance has been adequately and comprehensively informed and trained;

Ensure that material safety data sheets are provided by suppliers for any

substance that would classify the facility as a major hazard installation;

Ensure that any driver transporting hazardous material is in possession of a

valid driver‘s license, as well as medical and hazardous chemical training

certificates, complies with the Road Transport Quality System, has full

knowledge of emergency response procedures and is equipped with and

trained in the use of protective clothing; and

Ensure that an emergency plan is established and implemented through testing

in practice at least once annually.

SOCIAL FRAMEWORK

29. The Constitution upholds the right to property ownership. The legal system recognizes

three forms of property rights systems: freehold, communal, and state-owned. The government‘s

land reform policy seeks to restore control and ownership of resources to the claim group

(depending on the nature of the claim).21

30. South African laws relating to resettlement and land acquisition are summarized in Table

1. The South African legal framework for land acquisition and involuntary resettlement

recognizes that issues of land and land ownership were and still are an important legacy of the

apartheid period. This recognition is explicitly and implicitly embedded in the legislative

framework that addresses the issues of land acquisition.22

31. With regard to OP 4.12, section 3(a) on the ―involuntary taking of land,‖ the body of land

laws introduced after 1994 has a similar focus to the Bank‘s involuntary resettlement policy. The

South African land laws refer to protecting the security of tenure (whether formal or informal) of

vulnerable and poor sections of the population and attempts to put in place procedural

protections that ensure that where people do lose access to land, they are consulted and

compensated. These laws all recognize different forms of established occupation of, and vested

interests in land that previously had no formal recognition because of racial prohibitions on black

contractual rights to land. In general, interventions that comply with OP 4.12 section 3(a) will

also comply with the provisions of these laws.

32. Eskom has conducted its land acquisition program in compliance with all applicable laws

and regulations related to land expropriation for public purposes and other applicable laws and

regulations aiming at strengthening land tenure security and rights. In doing so, it follows the

21 SAEO, Box 3.2 Para. 5. 22 SE Solutions, Kusile, 4.6.1.

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pattern implemented by the government, which has conducted land acquisition on the ―willing-

buyer, willing-seller‖ model, as described, along with a compensation scheme, in the

Expropriation Act, No.63 of 1975. Under the 1975 Act (Section 12), the compensation

calculation formula is based on the market value of land, actual losses, and solatium (solace

money). Act 63 pre-dates the Constitution (1996) which requires the government to pay ―just and

equitable compensation‖ under its Section 35(3). In practice, ―just and equitable compensation‖

was meant to reflect the market value of the expropriated properties and a fair balance between

the public interest and the interests of those affected.

33. Other laws and regulations adopted after the 1994 Constitution came into force have an

important impact on land acquisition in South Africa and shed light on the land taking and

compensation process followed for all public interest development projects. In fact, South Africa

is dealing with a critical legacy of land acquisition and distribution and has developed a program

to deal with claims lodged in terms of the Restitution of Land Rights Act 22 of 1994, under

which a person or community dispossessed of property after the start of the colonial era (Natives

Land Act of 19 June 1913), as a result of racially discriminatory laws or practice, is entitled to

lodge a claim for restitution of that property or comparable redress. It thus tackles the injustices

of apartheid most directly. By the cut-off date in March 1999, 67,531 claims by groups and

individuals had been lodged, of which about 80 percent are urban. A Land Tenure Reform

Program aims at providing people with secure tenure where they live, to prevent arbitrary

evictions and fulfill the constitutional requirement that all South Africans have access to legally

secure tenure in land. Also, the Land Reform (Labor Tenants) Act, 1996 (Act No.3 of 1996)

provides for the protection of the rights of labor tenants and gives them the right to claim land.

The Interim Protection of Informal Land Rights Act, 1996 (Act No.31 of 1996) was passed as an

interim measure to protect people in the former ―homelands‖ against abuses of their land rights

by corrupt chiefs, administrative measures or property developers who fail to consult the

occupiers of affected land, while a new more comprehensive law was being prepared. Finally,

the Extension of Security of Tenure Act (ESTA) of 1997 aims to protect people who live on land

with the consent of the owner or person in charge against unfair eviction and to create long term

tenure security through on-or-off-site settlement assisted by a government grant and the

landowner.

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TABLE 1

Summary of relevant South Africa laws affecting land acquisition and resettlement

Laws

Legal Issues

or Field

Covered

Short Description

National Environmental Management Act, 1998

(Act 107 of 1998) (as

amended)

Environ-mental

protection

To provide for co-operative environmental governance by establishing principles for decision-making on matters affecting the environment,

institutions that will promote co-operative governance and procedures for

coordinating environmental functions exercised by organs of state including

EIA Regulations, 2006 (GN No. 385, 386 and 387 of 21 April 2006).

Expropriation Act 63 of 1975

Land

Where ESKOM wishes to incorporate (purchase) privately owned land, the act makes provision for this, where the owner has agreed. In the event of no

agreement, the act makes provision for expropriation by the Minister of

Public Works. The Expropriation Act contains provisions consistent with the

features of OP 4.12.

The Constitution 108 of 1996

Land, Labor and

Livelihoods

―No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.‖

Chapter 2, the Bill of Rights, proclaims a range of socio-economic rights in

sections 24 to 29, specifically in regard to environment (section 24); housing

(section 26), health care, food, water and social security (section 27), children

(section 28), and education (section 29).

Restitution of Land Rights Act 22 of 1994

Labor

This Act provides for the restitution of rights to land in respect of which persons or communities were dispossessed under, or for the purposes of

furthering the object of, racially based discriminatory legislation.

Extension of Security of Tenure Act 62 of 1997

Land and Labor

The Act provides for measures with state assistance to facilitate long-term security of land tenure; regulates the conditions of residence on certain land;

and the conditions by, and circumstances in, which the right of persons

residing on land may be terminated and under what conditions and in what

circumstances they may be evicted.

Labor Relations Act of 1995

Labor

The Act provides the legal framework for labor law, especially when it comes to termination of service, transfer of staff from one legal person to

another and what is considered to be fair labor practices. Section 189 and

189A of this Act apply when an employer contemplates dismissing one or

more employees for reasons based on the employer‘s operational

requirements.

Labor Tenants Act 30 of 1996

Land and Labor

This Act provides for the protection of the security of tenure of labor tenants and those persons occupying or using land as a result of their association

with labor tenants. It also provides for the acquisition of land and rights to

land by labor tenants.

Interim Protection of Informal Land Rights

Act 31 of 1996 Land

The objective is to provide for protection of people who have occupied land on an established, undisputed basis, since 1992, but nevertheless do not have

legal or formal rights because of the legacy of racial laws.

Prevention of Illegal

Eviction From and Unlawful Occupation of

Land Act 19 of 1998

Land and Labor

This Act provides for the prohibition on unlawful evictions and lays down procedures for eviction of unlawful occupiers.

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ANNEX 3

EQUIVALENCE MATRIX PER OP 4.00 TABLE A11

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

ENVIRONMENTAL ASSESSMENT

Objective: To help ensure the environmental and social soundness and sustainability of investment projects. To

support integration of environmental and social aspects of projects into the decision- making process.

The Constitution and various acts, including the National Environmental Management Act (NEMA) provides for the Government to (i) protect ecological processes, natural systems and preservation of biotic diversity in the natural environment, (ii) promote sustainable use of species and

ecosystems and effective application and reuse of natural resources, (iii) protect the environment against disturbance, deterioration, defacement, poisoning, pollution or destruction as a result of man-made structures, installations, processes, products or human activities, (iv) establish and maintain acceptable human living environments in accordance with the environmental values and environmental needs of communities, and (v) apply

appropriate environmental management tools in order to ensure the integrated environmental management of activities‖. EIA is one of the tools that the NEMA promotes.

Section 24 of the South African 1996 contains mandatory, clear, applicable provisions on environmental protection and sustainable development.

Under the Constitution, NEMA has: (i) a

comprehensive Chapter 1 on ―National Environmental Management principles‖ which mandates all stakeholders to ensure the environmental, social and economic soundness of development activities (See Sections 2.3 and 2.4 on definition of sustainability and sustainable development), and (ii) a Chapter 5 on ―integrated Environmental Management.‖

None None

Operational Principles:

1. Use a screening process for each proposed project, as early as possible, to determine the appropriate

extent and type of environmental assessment (EA) so that appropriate studies are undertaken proportional to potential risks and to direct, and, as relevant, indirect, cumulative, and associated

impacts. Use sectoral or regional environmental assessment when

Screening is mandatory for all development projects.

DEAT has issued lists of activities to guide and frame the screening process.

The first list relates to activities that ―may not commence without environmental authorization from the competent

authority and in respect of which the investigation, assessment and communication of potential impact of activities must be subject to full scoping and EIA processes.‖

The second list relates to activities that will be subject to ―Basic Assessment‖ described in detail in the 2006 EIA Regulations.

Once a project falls under the list of prescribed projects,

project proponents are responsible to submit an application to the relevant authority.

NEMA as amended to date (Sections 23 and 24; and 2006 Regulations in terms of Chapter 5 of the NEMA (2006 EIA Regulations hereinafter).

2006 Notices (lists) related to Activities identified in terms of Section 24(2)(a) and (d) of the Act

(NEMA), which may not commence without an environmental authorization from the Competent Authority and in respect of which the investigation, assessment and communication of potential impact of activities must follow the procedure as described in Sections 22 to 26 of the 2006 EIA Regulations, and Sections 27 to 36 of the 2006 EIA Regulations.

Sectoral and Provincial environmental plans are

referred to in Chapter 3 of NEMA, Sections 11 through 16.

Concerning EMFs, the NEMA, as amended to date,

None None

1 Prepared during the preparation of the Eskom Investment Support Project. 2 See Attachment to this Annex.

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93

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

appropriate. Projects on the first prescribed list will require a plan of study for scoping acceptable to the relevant authority.

A scoping study prepared by the project proponent is to be submitted for review by the relevant authority. Once the

scoping study report is approved, the proponent begins the preparation of an Environmental Impact Report (EIR) as mandated by NEMA and applicable regulations.

Requirements of Regional and Sectoral Environmental Management Plans (EMPs) and Provincial Management Plans (PMPs) are described in NEMA and are meant to ―coordinate, harmonize the environmental policies, plans programs and decisions of the various national departments

that exercise functions that may affect the environment or are entrusted with powers and duties aimed at the achievement, promotion, and protection of a sustainable environment, and of provincial and local spheres of government in order to ―…secure protection of the environment across the country … prevent unreasonable actions by provinces in respect of the environment…‖. These EMPs and PMPs, accompanied by Environmental

Implementation Plans (EIPs) are prepared by relevant department and all provinces and regularly updated every four years.

mandates the Minister and/or the province‘s authorities to ―compile information and maps that specify the attributes of the environment in a particular geographical area, including the

sensitivity, interrelationship and significance of such attributes which must be taken into account by every competent authority‖ (Section 24.3) and no authorization shall be granted to any activity that is not consistent with such attributes.

2006 EIA Regulations, Chapter 8, Part 1, Sections 69 through 72 on EMFs.

2. Assess potential impacts of the proposed project on physical, biological, socio-economic and physical cultural resources,

including trans-boundary and global concerns, and potential impacts on human health and safety.

Under NEMA, in case of any activity that requires an authorization or permission by law and which may affect significantly the environment, the project proponent must assess and, evaluate the potential impacts on environment, socio-economic conditions and the cultural heritage, prior to

implementation.

―Basic Assessment‖ must be prepared by an EA Practitioner and must describe the ―manner in which the geographical, physical, biological, social, economic and cultural aspects of the environment may be affected by the proposed activity‖ and how the proponent intends to address all potential impacts.

For projects subject to scoping and environmental impact

assessment, a more thorough description of the proposed project, its siting and its potential impacts, are required in the Scoping Report (SR) that must be approved by the relevant authority before a comprehensive and thorough EIR

NEMA, Section 24 (i).

Regulation for projects subject to Basic Assessment (Section 23 (h)) mandates the EAR to provide a description and assessment of ―the significance of any environmental impacts, including cumulative

impacts that may occur as a result of the undertaking of the activity or identified alternatives…‖

Sections 22 through 26 of the 2006 EIA Regulations describe the Basic Assessment Report (BAR).

Sections 27 through 38 of 2006 EIA Regulations govern the preparation, content and adoption of

scoping and EIA reports.

Cumulative impacts must be identified: 2006 EIA Regulations:

None None

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94

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

is prepared.

Trans-boundary and global concerns are explicitly referred to in NEMA but not in the 2006 EIA Regulations.

Sections 23. 2 (h) for a BAR; Section 29 (1) (f) for a SR; and Section 32 (2) (k) (i) for an EIR.

Section 2 (b) (n) and Sections 23 (6) and 50 of NEMA refer to global and international

responsibilities related to the environment and activities that ―will affect the interest of more than one province or traverse international boundaries‖

3. Assess the adequacy of the applicable legal and institutional framework, including applicable international

environmental agreements, and confirm that they provide that the cooperating government does not finance project activities that would contravene such international obligations.

South Africa‗s Constitution provides for the implementation of international conventions and international customary law in the country. NEMA has a full Chapter on compliance with all international commitments of the Republic of South Africa and the 2006 EIA Regulations mention the obligation

of any applicant to take into account the provisions of all international commitments made by South Africa under environmental agreements.

The applicant must identify and describe all legislation and guidelines that have been considered in the preparation of the BAR.

Constitution, Chapter 14 Sections 231-232-233.

NEMA, 1998 as amended to date refers to compliance with international law in various sections including: Section 24.3 (c) and (d) and 24.4, 24.5, 25, 26 and 27

NEMA Biodiversity Act 2005, Sections 5, 45 and 51 refer to application of relevant International Agreements binding on the Republic.

The 2006 EIA Regulations: Section 23 (2) (e), and 27 (f) refer to identification of all applicable legislation, including applicable international conventions ratified by South Africa in the BAR or SR.

None None

4. Provide for assessment of feasible investment, technical, and siting alternatives, including the ―no action‖ alternative, potential impacts, feasibility of mitigating

these impacts, their capital and recurrent costs, their suitability under local conditions, and the institutional, training and monitoring requirements associated with them.

NEMA provides for ―the investigation of the potential impact of the activity and its alternatives on the environment…‖ The Regulations provide a long list of items that must be addressed in the report including: ―a description of the proposed method of identifying the environmental issues and alternatives.‖ It is also a rule that the authority may accept the SR and decide that ―the

information contained in the scoping report should be supplemented by an environmental impact assessment which focuses on the identified alternatives and environmental issues identified in the scoping report.‖

As for the EIR, it is mandated to provide ―a description of the feasible alternatives identified during scoping that may be further investigated.‖

There is reference to the ―cumulative impacts‖ and ―no action alternative‖ in NEMA and the 2006 EIA Regulations

which refer to the obligation of the EIA expert to prepare a scoping report with consideration given to ―all alternatives identified.‖ Finally it is mandated that the EIR provide ―a

NEMA, 1998 as amended to date, Section 24.7 (b), (c) and (d) and 2006 EIA Regulations.

Section 8.5, when considering applications for an activity, authorities expect the proponent to include reference to ―any feasible and reasonable alternatives to the activity….and any feasible and reasonable modifications and changes to the

activity that may minimize harm to the environment.‖

Section 23.2 (g), on consideration of ―identification of alternatives to the proposed activity….including advantages and disadvantages that the proposed activity or alternatives will have on the environment and on the community that may be affected by the activity‖ in the BAR.

Section 29.1 (b) on description of the ―proposed

activity and of any feasible and reasonable alternatives that have been identified‖ and 29. 1 (i) (iii) description of ―the proposed method of

None None

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95

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

description of each alternative.‖. ―a comparative assessment of all alternatives…‖…‖including the option of not proceeding with the activity.‖

assessing the environmental issues and alternatives, including the option of not proceeding with the activity‖ in the SR.

Section 32.2 (f) and (h) require assessment of

advantages and disadvantages that the proposed activity or alternatives will have on the environment and on the community – a comparative assessment of all alternatives identified during the EIA process.

5. Where applicable to the type of project being supported, normally apply

the Pollution Prevention and Abatement Handbook (PPAH). Justify deviations when alternatives to measures set forth in the PPAH are selected.

South Africa is not equipped with an instrument comparable to the PPAH. However, the definition of principles of sustainability under NEMA contains many of the principles

used in the PPAH to define clear and precise quality and emission standards used in various economic sectors of activities.

In addition, NEMA provides for the preparation of EMPs by all the departments in charge of any portion of the environment. These EMPs must define: ―the environmental norms and standards, including norms and standards contemplated in Section 146.2 (b) (i) of the Constitution.‖

NEMA, Section 2.4 and Section 11.2.

NEMA considers as a basic principle the principle of ―best practicable environmental option,‖ which

is defined as providing the ―most benefit or causes the least damage to the environment as a whole, at a cost acceptable to the society, in the long run as well as the short run.‖

None None

Medupi has been designed and

engineered to be ―FGD-ready‖ so that FGD can be installed when and if necessary in order to comply with applicable ambient air quality and emissions

regulations.

For Kusile: the ROD requires that the FGD system be fully operational at

commissioning. Accordingly, Kusile will comply from the outset with proposed South African emissions standards and with good international practices

for as recommended in the Bank‘s 2008 EHSG for Thermal Power Plants.

6. Prevent and, where not possible to prevent, at least minimize, or compensate

NEMA states clearly that ―disturbances of ecosystems and loss of biological diversity are avoided or where they cannot be altogether avoided, are minimized and remedied.‖ Also,

NEMA, Section 2.4 (a) (i) through (viii), Section 2.4 (b) (i) and (p) on mitigation measures and costs; and Section 24.7 (f) on formulation of arrangements

Cost estimate is not required as part of an EIA

None, Eskom‘s practice is to consider costs in identifying

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96

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

for adverse project impacts and enhance positive impacts through environmental

management and planning that includes the proposed mitigation measures, monitoring, institutional capacity development and training measures, an implementation schedule, and cost estimates.

NEMA mentions that if disturbance of site and landscapes that constitute the nation‘s cultural heritage cannot be avoided, it must be mitigated, minimized and remedied.

Applicable regulations mandate the project proponent to

submit an EIR, which must include: (i) the extent and significance of each identified environmental impact, and (ii) the possibility for mitigation of each identified impact. Prior to granting any authorization, the competent authority must assess the ―ability of the applicant to implement mitigation measures and to comply with any conditions subject to which the application may be granted.‖

The Record of Decision (ROD) related to any EIR includes

a description of the measures to mitigate, control or manage environmental impacts or to rehabilitate the environment.

for the monitoring and management of impacts, and the assessment of effectiveness of such arrangements after their implementation.‖

2006 EIA Regulations

- Section 8 (b)

- Section 23. 2 (h), (i), (j) and (k) for BAR

- Section 27 (f) and (g) and 29. 1 (i) for SR, and

- Section 32. 2 (j) and (k) and 34 (b) for the EIR and related EMP.

Section 35 of the EIA Regulation 385, April 2006 requires that a draft EMP is developed with the EIR. Once a ROD is issued, and presuming it

permits the development to go ahead, the EMP is updated to incorporate any new conditions from the ROD.

report and the EMP.

mitigation measures in the EIR, and especially in preparing the EMP for DEA

review and approval.

7. Involve stakeholders, including project-affected groups and local nongovernmental organizations, as early as

possible, in the preparation process and ensure that their views and concerns are made known to decision makers and taken into account. Continue consultations throughout project implementation as

necessary to address EA-related issues that affect them.

NEMA has many provisions related to the consultation of stakeholders and public participation in decision-making processes. Consultation of stakeholders (―Interested and Affected Parties,‖ or I&AP, in the NEMA) is mandatory for Basic Assessment, Scoping and EIA processes, including

during implementation of mitigation measures and EMPs.

The independent expert in charge of preparing the EIR must have ―the ability to manage the public participation process‖ and is ―responsible for the public participation process to ensure that all I&APs, including government departments that may have jurisdiction over any aspect of the activity, are given the opportunity to participate in all the relevant procedures contemplated in these Regulations.

I&APs may obtain information, including copies of EIRs and EMPs and copies of the decisions of the relevant authorities whether at national and/or local level. The Scoping Report must provide an appendix ―containing a description of the public participation process followed, including a list of I&APs and their comments.‖

Finally, it is important to note that the EIR and all related documents and appendices become public documents under

the Promotion of Access to Information Act 2000.

General principle of public consultation in NEMA Section 2.4 (f) and (k), Section 23.2 (d) and Section 24.7 (d).

2006 EIA Regulations: Chapter 6 ―Public Participation Processes‖ including Sections 56

through 59 and more specifically:

1. For BAR: Section 22 (a) on conducting a public participation process; Section 22 (c) on opening and maintaining a registry of all I&APs in respect of an application; Section 22 (d) on documenting the public participation process conducted including objections received from I&APs; and Section 23 (2) (f) on description of the public participation and

consultation process undertaken during the preparation of a BAR.

2. For scoping process and preparation of an SR, similar requirements are described in Section 28 (a); Section 28 (c); Section 28 (d); and Section 29 (1) (h).

3. For EIR: Section 32. 2 (e) and the 2000 Access to the Information Act describe these requirements.

None None

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97

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

8. Use independent expertise in the preparation of EA where appropriate. Use independent advisory

panels during preparation and implementation of projects that are highly risky or contentious or that involve serious and multi-dimensional environmental and/or social concerns.

The EIA Regulations clearly impose on the project proponent to contract an independent expert to prepare the SR and EIR, and later for supervision of the implementation of mitigation measures and EMPs as appropriate. They are

defined and referred to as ―Environmental Assessment Practitioners‖ under NEMA.

NEMA provides for independent review of all phases of the investigation and assessment of impacts.

DEA implements a systematic review process under very strict review guidelines established to ensure consistency in review and to clarify the role of reviewers throughout the process.

NEMA as amended to date:

Section 1 (d) and Section 24.7 (d) refer to ―independent review and conflict resolution‖; and Section 17 and 18 mention that ―Environmental

Assessment Practitioners‖ must be independent.

Section 24 (I) states that relevant authority may ―appoint an external specialist reviewer and may recover cost from the applicant, in instances where: (a) the technical knowledge required to review any aspect of an assessment is not readily available within the competent authority; or

(b) a high level of objectivity is required which is

not apparent in the document submitted, in order to ascertain whether the information is adequate for decision making or whether it requires amendment.‖

Not a significant difference.

None

9. Provide measures to link the environmental assessment process and findings with studies of

economic, financial, institutional, social and technical analyses of a proposed project.

NEMA provides for linkages between environmental management in general and people‘s economic, social, cultural, and health needs.

The EIR is linked to the underlying factors (economic,

technical and social) which characterize the proposed project.

NEMA: Section 2(2), (3) and (4) provides for the general link between environmental management and the overall economic and social development; and Section 24 provides for direct linkages between

the environmental impact assessment and socio-economic and cultural conditions.

The 2006 EIA Regulations provide for additional and specialized studies that may be needed and are defined in the SR (Section 29.1 (d) and (i)).

None None

10. Provide for application of the principles in this

Table to subprojects under investment and financial intermediary activities.

NEMA and 2006 EIA Regulations are mandatory requirements for all subprojects.

The 2006 EIA Regulations recognize also the possibility for an applicant to apply for various similar projects in the same or different geographical areas and provides for ―combination of applications‖ subject to consideration that environmental impacts of each activity must be assessed in terms of the location where the activity is to be undertaken.

NEMA, Chapter 5 on ―Integrated Environmental Management.‖

2006 EIA Regulations, Section 15.

None None

11. Disclose draft EA in a timely manner, before

appraisal formally begins, in an accessible place and in a form and language understandable to key

Disclosure is dealt with across all the segments of environmental management and conservation processes in

South Africa. It is part of the general principles that form the ground of environmental law in South Africa.

Notice is given to stakeholders about any project subject to environmental impact assessment. Draft report is disclosed

NEMA as amended to date: Section 3.4 (f) and (k) on participation of all I&APs which assumes

appropriate information is disclosed to them to ensure transparency and fairness in environmental decision-making processes.

The 2006 EIA Regulations state that I&APs must

None None

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98

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

stakeholders. and stakeholders are informed through newspapers (local and/or national) and radio.

Information to be disclosed for the purpose of the consultation process is described in the 2006 EIA

Regulations.

In addition, all stakeholders registered during the consultation process have access to final documentation and Record of Decision.

South Africa adopted a comprehensive Act on Promotion of Access to Information in 2000.

be given opportunity to discuss draft BAR (Section 22. f), SR (Section 28.g), draft EIR (Section 32.1) and EIR (Section 32.2.e). Special Reports prepared to complement the EIA are also subject to public

disclosure and discussion by I&APs (Section 33.2. (h) and (i)).

Also Chapter 6 of the 2006 EIA Regulations on ―Public participation process‖ governs disclosure-related issues.

Section 31 of NEMA on ―access to environmental information and protection of whistleblowers‖ and Promotion of Access to Information Act, 2000.

PHYSICAL CULTURAL RESOURCES

Objective: To assist in preserving physical cultural resources (PCR) and avoiding their destruction or damage. PCR includes

archaeological, paleontological, historical, and sacred sites, including graveyards, burial sites, and unique natural values.

South Africa‘s environmental law recognizes the significance of human processes in the phenomenon of an integrated environment. A vital component of the human process includes cultural heritage, which broadly consists of the intellectual, artistic, social and historical record of the human species that constitutes the common cultural

patrimony of the human race.

The National Heritage Resources Act 25 of 1999 (hereafter the NHRA) aims to create an integrated framework for the protection of cultural heritage with regard to the management and development thereof, as well as participation in and access to heritage resources. And, in practice the South African Heritage Resource Agency (SAHRA) and South African specialists and practitioners are using best international practices including but not

limited to the Australian Burra Charter as a guide to developing strategies for understanding the problem of heritage assessment, managing resource assessment and developing policies with regard to the assessment.

Constitution of the Republic of South Africa, 1996 Section 24 (Environment) and Section 31 (Cultural, Religious and Linguistic Communities).

South Africa ratified the 1972 Convention Concerning the Protection of the World Cultural and Natural Heritage on June 10, 1997.

NEMA defines ―Environment‖ as inter alia ―the physical, chemical, aesthetic and cultural properties and conditions that influence human health and well-being‖ (Section 1) and provides for an assessment of impact of development activities on ―cultural heritage‖ (Section 24.1 c).

Finally the Kwazulu-Natal Heritage Act, Act 10 of 1997 applies specifically to the proposed project and provides rules and procedures for dealing with

cultural heritage and archeological properties.

None None

Operational Principles:

1. Analyze feasible project alternatives to prevent or

minimize or compensate for adverse impacts and enhance positive impacts on PCR, through site

General objective of integrated environmental management entails the identification, prediction and evaluation of the actual and potential impact of development on inter alia

cultural heritage.

NEMA accordingly acknowledges the importance of Heritage Impact Assessment in the EIA process.

Provincial legislation confirms these rules and mandates

NEMA Section 23 (2)(b).

Kwazulu-Natal Act 10 of 1997 provides incentives for the protection of cultural heritage, including

prohibition of any demolition of ―heritage landmarks.‖

None None

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99

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

selection and design. proponents to take measures to avoid impacts on cultural heritage

2. If possible, avoid

financing projects that significantly damage PCR. As appropriate, conduct field based surveys using qualified specialists to evaluate PCR.

South Africa‘s legal framework for cultural heritage

conservation and protection prohibit any investment that may damage a physical cultural resource.

Current practice under the NHRA implemented by the South African heritage resource practitioners includes: (i) an assessment to identify the heritage resource found; (ii) information pertaining to the significance of the resources; and (iii) a statement of significance. Finally, obligations arising from the significance must then be identified, information that may affect the future of the resource must

be gathered, a policy must be developed and a statement of policy must be formulated. In the last instance the process requires strategies to be developed which must be implemented through a management plan. The process will be concluded with monitoring and review of the assessment.3

SAHRA must be involved to assess any discovery and survey the site under environmental assessment or

considered for a project and may issue a prohibition to further develop the site or mandate mitigation and conservation measures to be taken by developers.

Section 2(viii) of the NHRA defines development

as: ―any physical intervention, excavation, or action other than those caused by natural forces, which may in the opinion of a heritage authority in any way result in a change to the nature, appearance or physical nature of a place, or influence its stability and future well-being.‖

Same process is provided for under the Kwazulu-Natal Heritage Act (Section 8, 17.e, 19.2, 20.2…)

and Section 27.1 provides a list of activities that must be notified by applicants to the Cultural Heritage Council which will approve the selection of a specialist to assess the proposed activity and its potential impacts on its areas and prepare a plan for dealing with cultural heritage resources.

None None

3. Consult local people in documenting the presence and significance of PCR, assessing the nature and

extent of potential impacts on these resources, and designing and implementing mitigation plans.

NHRA provides for community involvement, including owners of lands, who are consulted, with their comments taken into account in the final report regarding the impact of any proposed development on a cultural heritage property.

However, clearer indications are needed as to the extent of participation and obligations of communities, NGOs and community-based organizations in the process of cultural heritage assessment and conservation.

All applicable rules on consultation for EIA process and in addition:

NHRA, Section 35.a, 38.3.a.

Kwazulu-Natal Act, Section 17.3.d and 27.

None None

4. Provide for the use of ―chance find‖ procedures that include a pre-

approved management and conservation approach for

All project proponents must notify the responsible heritage resource authority and furnish it with details regarding the location, nature and extent of the proposed development. If

the heritage resource authority has reason to believe that heritage resources will be affected by such development, it

NHRA, Section 38.1.

The 2006 EIA Regulations, Sections 22 and 23.2. (h), (i), (j), and (k) for BAR; Section 29.1 (d), (g)

and (j) for SR, and Section 32.2 (d), (i), (j) and (p)

None None

3 This was the process followed during the implementation of the EIA process for the ―Cradle of Humankind‖ Project and agreed upon by DEAT and the Agency in charge

of physical cultural heritage.

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100

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

materials that may be discovered during project implementation.

will require of the proponent to submit a heritage impact assessment report. Approval of the mitigation measures and management plan if required is made by the relevant cultural heritage administration.

The 2006 EIA Regulations provide for comprehensive survey of the proposed activity and its impacts on area of influence including on cultural heritage, which if applicable will require the applicant to discuss additional terms of reference for the cultural heritage aspects of the assessment and prepare a specific report.

for EIR.

5. Define and undertake measures for strengthening

institutional capacity to implement mitigation plans and to deal with impacts on PCR identified prior to and/or discovered during project implementation.

South Africa is equipped with adequate capacity to deal with cultural heritage resources at the central level. An

independent consultant who would be contracted to prepare the SR and the EIR is expected to be trained to deal with all applicable regulations including those on cultural heritage resources. Such consultants must have the skill, competence and qualification satisfactory to SAHRA.

NHRA, Section 38.2 (a).

2006 EIA Regulations.

None None

6. Disclose draft mitigation plans, in a timely manner, before appraisal formally begins, in an accessible place and in a form and language that are understandable to key stakeholders.

Disclosure is mandated as part of the EIA process. NEMA.

The 2006 EIA Regulations.

None None

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101

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

NATURAL HABITATS

Objective:

To promote

environmentally sustainable development by supporting the protection, conservation, maintenance and rehabilitation of natural habitats and their functions.

South Africa has two main laws that fully confirm to the objective; these are the Protected Areas Act 57 of 2004 and

the Biodiversity Act 10 of 2004. Together they form a comprehensive legislation on establishment, protection and conservation and management of natural habitats, their biological diversity wealth and environmental functions. Key principles embedded in this legislation include: (i) development must not degrade the natural, built, social, economic, and governance resources on which it is based, (ii) current actions should not cause irreversible damage to natural and other resources, as this potentially prevents the

realization of future sustainable options, (iii) where there is uncertainty about the impact of activities on the environment, caution should be exercised in favor of the environment, (iv) land use and environmental planning need to be integrated.

South Africa has a National Biodiversity Strategy and Action Plan.

Constitution : Section 24.

NEMA Section 2 and Section 16 through 18 on

―Protection of Natural Environment.‖

NEMA-Biodiversity Act 2004, which provides for ―management and conservation of South Africa‘s biodiversity….the protection of species and ecosystems that warrant national protection, the sustainable use of indigenous biological resources….‖

NEMA-Protected Areas Act, 2003 as amended to date, which provides for ―the protection and

conservation of ecologically viable areas representative of South Africa‘s biological diversity and its natural landscapes and seascapes; ….for the management of those areas in accordance with norms and standards; [and] for …public consultation in matters concerning protected areas.‖

None None

Operational Principles:

1. Use a precautionary approach to natural resources management to ensure opportunities for environmentally sustainable development. Determine if project

benefits substantially outweigh potential environmental costs.

NEMA is aiming, among other objectives, at prohibiting or limiting those activities that will be identified as having a detrimental effect on the environment; legislation on protected areas and biodiversity is an important asset.

Under NEMA, the Minister of Environment may by Notice in the Gazette declare ―any area…as a limited development area‖ on which no development can be undertaken unless on the basis of a conditional authorization. Any development

project that may affect a protected area is subject to a full EIA to be reviewed and monitored by DEA at national level.

Finally, it should be mentioned that as a matter of principle, NEMA is grounded on a ―risk-averse and cautious approach which takes into account the limits of current knowledge about the consequences of decisions.‖ and therefore requires authorities to use the precautionary principle in all their decisions.

NEMA: Section 2.4.vii, Section 23 (1) and Section 27.

Chapter 4 Part I of NEMA, Protected Areas Act 2003 Regulations prohibits activities that may have a negative impact of conservation and protection of biological diversity of the protected areas, (Section 50-56).

Chapter 4, Part II of NEMA, Protected Areas Act,

Regulations lists Restricted Activities (Section 57).

Chapter 4 Part III of NEMA, Protected Areas, Regulations lists Prohibitions or Restrictions of Land Use in Protected Areas (Sections 58-60).

The 2006 EIA Regulations provide for assessment of all activities that may impact a protected area and for assessment of such impacts.

None None

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102

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

2. Avoid significant conversion or degradation of critical natural habitats, including those habitats

that are (a) legally protected, (b) officially proposed for protection, (c) identified by authoritative sources for their high conservation value, or (d) recognized as protected by traditional

communities.

NEMA states as an important principle of sustainable development of South Africa that ―sensitive, vulnerable, highly dynamic or stressed ecosystems, such as coastal shores, estuaries, wetlands and similar systems require

specific attention in management and planning procedures especially where they are subject to significant human resource usage and development pressure.‖

Based on this principle, the Minister in charge of environment and provincial government shall ―prepare compilation of information and maps that specify the attributes of the environment in particular geographical areas, including the sensitivity, extent, interrelationships and

significance of such attributes which must be taken into account by every organ of state charged by law with authorizing, permitting or otherwise allowing the implementation of a new activity, or with considering, assessing and evaluating an existing activity.‖

Currently, 6 percent of the land surface of South Africa is formally conserved through the system of national and provincial protected areas. The target is to expand this to 8

percent by 2010.4 To this end, DEAT has prepared with

relevant authorities and stakeholders a National Spatial

Biodiversity Assessment that takes into account important poverty alleviation and community development programs that have been initiated and which present opportunities to improve natural resources management and link biodiversity to social development.

NEMA, Section 2 and Section 24.2 (e).

Legally protected special nature reserve cannot be converted except ―by resolution of the National Assembly,‖ Protected Areas Act of 2003 as

amended, Section 19. However, the Act provides that an area or part of an area declared as ―protected environment‖ may be excluded or withdrawn from the protected area system by a Notice issued by the Minister of Environment or Provincial Government as the case may be.

None None

3. Where project adversely affects non-critical natural habitats, proceed only if

viable alternatives are not available, and if appropriate conservation and mitigation measures, including those required to maintain ecological services they provide, are in place. Include

The EIA process provides for a comprehensive assessment and evaluation of any proposed activity that may impact a protected area. In such case, it is the national authority

which will be responsible for reviewing the SR and EIR. Mitigation measures and/or a comprehensive environmental management plan will be required, implemented and monitored.

There is no provision to oblige the Government and/or proponent to ‖ establish and maintain an ecologically similar area.‖

NEMA as amended to date and the 2006 EIA Regulations.

NEMA, Protected Areas Act as amended.

None None

4 South Africa‘s National Biodiversity Strategy and Action Plan, 2005 (Draft disclosed by DEAT for public consultation and comments,

(www.deat.gov.za//PolLeg/Legislation/2004Jun7_2/Biodiversity%20Act-7%20June%202004.pdf).

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103

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

mitigation measures that minimize habitat loss and establish and maintain an ecologically similar

protected area.

4. Whenever feasible, give preference to siting projects on lands already converted.

NEMA provides for the development of national and provincial environmental management frameworks and plans, including implementation plans and maps that provide for, among other issues, compliance with the national environmental management principles. The basic principle which these plan must comply with is to avoid disturbances to ecosystems and loss of biological diversity

and where they cannot be avoided they are minimized and or remedied.

NEMA 1997 as amended to date, Section 23.2 (b).

The 2006 EIA Regulations on alternatives to the proposed activity and more generally.

Chapter 1 on Principles of Environmental Management (Section 2 (r)) and Chapter on Procedures for Cooperative Governance which deals with implementation plans and management

plans.

None None

5. Consult key stakeholders, including local nongovernmental organizations and local communities, and involve

such people in design, implementation, monitoring and evaluation of projects, including mitigation planning.

Consultation of stakeholders is a key requirement during the environmental assessment process which is mandatory for all activities that may impact a protected area. The NEMA, Biodiversity Act also provide for public consultation including affected and local communities for all issues

pertaining to biodiversity conservation.

NEMA, Protected Areas Act has a Part on ―Consultation process‖, including ―Public Participation‖ and consultation of affected organs of state, communities and beneficiaries. Any draft act, regulation, or activity that relates to protected areas must be disclosed and opened to public consultation. Disclosure is ensured through publication in newspapers, including local newspapers, to ensure participation of local

communities.

Also Parks Boards are mandated to involve local communities in protected areas management, including preparation of management plans, and in developing as appropriate co-management of protected areas frameworks.

NEMA and 2006 EIA Regulations.

NEMA, Protected Areas, 2003 as amended to date, Part 5 Sections 31 through 34

NEMA, Biodiversity Act, 2004, Section 63 on consultation related to specific issues dealing with

threats to and biodiversity conservation issues, and Sections 99-100 which govern the consultation process.

None None

6. Provide for the use of appropriate expertise for the design and

implementation of mitigation and monitoring plans.

NEMA provides the general principle that EIAs and EMPs, including specialist reports are prepared and developed by specialists approved by the authorities.

Review and monitoring is done under the supervision of monitoring specialists that the applicant contracts as part of the EMP, and the authorities have the ability to contract independent experts to monitor implementation and look at

NEMA and 2006 EIA Regulations.

NEMA Protected Areas, Sections 38 through 44.

None None

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104

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

more specific issues.

7. Disclose draft mitigation plan in a timely manner, before appraisal formally begins, in an accessible

place and in a form and language understandable to key stakeholders.

Disclosure is provided for under NEMA. It is provided for the publication of notices and relevant documents concerning EIR and EMPs in local journals to make them accessible to local communities. There is no reference to

language in laws and regulations, but all documents related to environmental issues are disseminated in Afrikaans and English.

NEMA and the 2006 EIA Regulations.

Section 2(f) and (k) which deal with public participation and disclosure.

Section 23.2 (d) and 24.7 (d) on ―public

information and participation, independent review and conflict resolution in all phases of the investigation and assessment of impacts.‖

None None

INVOLUNTARY RESETTLEMENT

Objective: To avoid or minimize involuntary resettlement and, where this is not feasible, to assist displaced persons in

improving or at least restoring their livelihoods and standards of living in real terms relative to pre-displacement levels or to levels prevailing prior to the beginning of project implementation, whichever

is higher.

a) Because of the history of South Africa, resettlement is an issue that is central to national consensus building and sustainability. The Constitution and numerous laws and regulations govern land ownership, land tenure rights, land use and protect rights of owners, users and tenants. A Land

Claim Court has been established for that purpose.

b) Expropriation can occur only after the need for ―public purpose,‖ ―public use‖ or ―public interest‖ is demonstrated in a legal process and compensation is made. Therefore, the need to minimize involuntary resettlement is explicit.

c) Compensation is paid taking into account a wide range of criteria including but not limited to market value and ―prejudice‖ (damages actually suffered and lost benefits,

such as loss of income. relocation costs, etc). Assumed to enable affected people to maintain the value of their assets and restore their livelihoods and standards of living.

d) The expropriation of land for conservation purpose is treated under NEMA as to be made for ―public purpose or in the public interest‖ and therefore subject to the Expropriation Act 63 of 1975, however, the amount of compensation and manner of payment are made under the

Constitutional rules and due process of law, including mandatory hearing of any land owner before any land taking.

e) Finally, it should be mentioned that the Expropriation Act 63 of 1975 is being reviewed in order to ―assure that the Nation‘s commitment to land reform and to bring about equitable access to all South Africa‘s natural resources can be fulfilled in an effective, fair and democratic manner,…‖

Constitution, Section 25.1 ‖no one may be deprived of property except in terms of law of general application and no law may permit arbitrary deprivation of property.‖

25.2 Property may be expropriated only in terms of

law of general application: (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided and approved by a court.‖

25.3 The amount of compensation and the timing and manner of payment must be just and equitable,

reflecting an equitable balance between the public interest and the interest of those affected having regard to all the relevant circumstances, including: (a) the current use of the property, (b) the history of the acquisition and use of the property, the market value of the property….‖

Extension of Security of Tenure Act (ESTA) Act 28 of 1997: the Act governs the procedures which

must be used to resettle poor people occupying rural land. It applies to those people who have an explicit or implicit permission to live on rural land belonging to a third party. The Act: (i) limits the circumstances under which involuntary resettlement can take place, (ii) requires that ―suitable alternative accommodation‖ is provided to those evicted, ―suitable accommodation‖ cannot be ―less

favorable than the current accommodation‖ of the

None None

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105

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

to ensure that ―expropriation does not take place arbitrarily and takes place only for public purposes and in the public interest‖ and that persons impacted by expropriation are ―treated on an equal and procedural fair basis‖ and ―entitled

to just and equitable compensation.‖

Rights of vulnerable category: people over 60, for example, will have lifetime security if they occupied the land for ten years and more.

Land Reform (Labor Tenants) Act 30 of 1996 applies to people who have occupied farm lands over generations who are paid for their labor; they are provided with strong protection through access to land. They are protected from

eviction and have the right to acquire the portion of land they occupy and use.

occupier; (iii) provides additional protection for long term occupiers, (iv) states that rights of occupiers survive change of ownership in land, and (v) provide government support for occupiers to

acquire rights to land in either ―on farm‖ or ―off-farm‖ settlements.

Interim Protection of Informal Land Rights Act 31 of 1996 provides for temporary protection of certain informal land rights pending the introduction of comprehensive tenure legislation. It applies to those who occupy land ―as if they were the owner.‖ This category of land occupiers cannot

be deprived of their informal rights except with their consent or through expropriation under Act 63 of 1975.

Prevention of Illegal Eviction from Unlawful Occupation of Land Act 19 of 1998. This Act sets out procedures for evictions of unlawful occupiers and states that ―eviction‖ is ordered only when it is ―just and equitable‖. If the occupier has been in

occupation for more than six month, provision of alternative accommodation is a factor to decide whether the eviction is just and equitable.

Operational Principles:

1. Assess all viable alternative project designs to avoid, where feasible, or minimize involuntary

resettlement.

An expropriation decision is issued by a relevant authority (national, for example, minister of public works and land affairs, provincial, or local, depending on the level of the authority that is investing), based on the assumption that ―public interest‖ and ―public use‖ are made after all

alternatives have been taken into account and that no other viable alternative could be implemented.

Expropriation Act (Act 63 of 1975), Extension of Security of Tenure Act (ESTA) 1997 including ESTA, 1997: Regulations N.1632 of 1998.

None None

2. Through census and socio-economic surveys of the affected population, identify, assess, and address the potential economic and social

impacts of the project that are caused by involuntary taking of land (e.g. relocation or loss of shelter, loss of assets or

a) The constitutional and legal framework mandates a survey of those affected by expropriation and the amount of their losses after the public purpose is declared.

b) Specialist Report may be mandated in case socio-economic impacts are important under a proposed activity.

c) In case resettlement is envisioned by the Scoping and

EIA Regulations, a ROD may be issued by DEA or the relevant local authority, but project cannot commence unless a land acquisition plan which includes consultation of affected people and compensation is prepared and agreed

Constitution, Section 25

NEMA provide for the general principle of prior assessment of impacts including socio-economic impacts (Section 24) for all development activity in order to promote integrated environmental management.

The 2006 EIA Regulations provide for comprehensive survey of the proposed activity and its impacts on area of influence, including socio-

Difference concerning rights to access to protected area‘s natural resources and

biodiversity, which are not clear.

The identified gap is not relevant for the proposed Project.

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106

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

access to assets, loss of income sources or means of livelihood, whether or not the affected person

must move to another location) or involuntary restriction of access to legally designated parks and protected areas.

upon by the relevant authority. Ministry in charge of public works, land affairs or environment and tourism may be involved in the process depending on the purpose of the expropriation.

d) If land is expropriated for conservation purpose or more generally for environmental protection purpose, the Minister of Environment shall undertake the expropriation process and apply all laws and regulations thereon including Section 25 of the Constitution.

e) A more comprehensive protection is granted to land users including those without any title under the ESTA. If the activity triggers resettlement of these, compensation shall be

provided through a process managed by the Ministry of Land Affairs.

f) There is no clear language in South Africa‘s legislation about restriction of access to protected areas‘ natural resources by local communities. However, there are provisions that protect use of biological resources by local communities under NEMA, Protected Areas Act 2003 and NEMA, Biodiversity Act of 2005. Local communities

having ―rights, direct or indirect interest‖ shall be registered with the park authority to continue to enjoy their rights to and interests in the natural resources of the park. In addition, the National Biodiversity Strategy and Action Plan being prepared with stakeholders involvement states that ―it is critical that the value and importance of biodiversity to people‘s livelihood is recognized and biodiversity management (including conservation, access, use and rehabilitation) must be integrated with poverty alleviation

strategies and local economy development. Tenure reform and rights to access and use of biological resources need to be clarified to ensure equitable sharing of benefits.‖5

economic impacts.

ESTA.

NEMA, Protected Areas Act, Section 41-43

3. Identify and address impacts also if they result from other activities that are (a) directly and

significantly related to the proposed project, (b)

Legal expropriation and compensation requirements apply to all aspects of an investment.

Potential impacts of any proposed project including cumulative impacts and its alternatives are addressed under

the EIA for the proposed project (NEMA, Section 24. 7).

Constitution, Section 25.

Expropriation Law.

NEMA (Section 24).

None None

5 South Africa‘s National Biodiversity Strategy and Action Plan. DEAT 2005, p.22. See reference under footnote 4.

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107

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

necessary to achieve its objectives, and (c) carried out or planned to be carried out

contemporaneously with the project.

4. Consult project-affected persons, host communities and local nongovernmental organizations, as appropriate. Provide them opportunities to participate

in the planning, implementation, and monitoring of the resettlement program, especially in the process of developing and implementing the procedures for determining

eligibility for compensation benefits and development assistance (as documented in a resettlement plan), and for establishing appropriate and accessible grievance mechanisms. Pay

particular attention to the needs of vulnerable groups among those displaced, especially those below the poverty line, the landless, the elderly, women and children, Indigenous Peoples, ethnic minorities,

or other displaced persons who may not be protected through national land compensation legislation.

Consultation is mandatory for all expropriation processes and includes discussion of the purpose of the expropriation, compensation and other rehabilitation and mitigation measures to be decided under the resettlement action plan and conflict resolution procedures provided for under the Constitution and numerous land-related laws and

regulations including NEMA.

Grievance mechanism is well developed in South Africa because of the sensitivity of all land-related issues. A Land Claims Court has been established and administrative recourse procedures are defined under each applicable land-related law.

Under NEMA, for the purpose of an EIR, all impacts including social impacts must be monitored and

arrangements for the monitoring must be embedded in the EMP for the project. The consultation of local communities and affected persons by a proposal to establish a protected area is mandated by the NEMA Protected Areas Act.

Constitution Section 25.

NEMA, Section 24.7 (d), (f) and (h).

ESTA Chapter VI, Section 35.

Section 3 of the Promotion of Administrative Justice Act, 2000 requires that administrative actions of the Minister, in terms of expropriation

and land taking, must be procedurally fair and parties must receive adequate notice and be able to make representations in regard to that administrative action.

NEMA, Protected Areas Act, Section 44 is important for access to natural resources of designated protected areas.

None None

5. Inform displaced persons of their rights,

It is an established Constitutional right to be heard about The 1975 Expropriation Act requires proper notification of expropriation to be served, provides

None None

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108

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

consult them on options, and provide them with technically and economically feasible

resettlement alternatives and needed assistance, including (a) prompt compensation at full replacement cost for loss of assets attributable to the project; (b) if there is relocation, assistance

during relocation, and residual housing, or housing sites, or agricultural sites of equivalent potential, as required; (c) transitional support and development assistance, such as land

preparation, credit facilities, training or job opportunities as required, in addition to compensation measures; (d) cash compensation for land when the impact of land acquisition on livelihoods is minor; and

(e) provision of civic infrastructure and community services as required.

any expropriation.

Information prior to any taking of land, loss of assets or access to natural resources is common practice and

governed by numerous laws and regulations. It is a practice that EIA processes are announced in local media in at least two newspapers and other means. This practice is governed by the EIA Regulations under NEMA

Property can be expropriated subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or

decided and approved by a court. The amount of compensation and the timing and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interest of those affected having regard to all the relevant circumstances, including: (a) the current use of the property, (b) the history of the acquisition and use of the property, the market value of the property, ….

Under additional legislation on land-related issues, resettled persons are entitled to additional rehabilitation assistance. People to be resettled under the ESTA must get ―a suitable alternative accommodation‖ which is defined as a ―safe and overall not less favorable than the occupier‘s previous situation, having regard to the residential accommodation and land for agricultural use available to them prior to eviction and suitable having regard to (a) the reasonable

needs and requirements of all of the occupiers in the household in question for residential accommodation, land and agricultural use, and services; (b) their joint earning abilities; and (c) the need to reside in proximity to opportunities for employment or other economic activities if they intend to be economically active‖

for the passing of ownership on the date of expropriation, and further provides inter alia for the requirements for possession of the property and for offers and determination of compensation.

Under the Constitution (see above) and under the Land Restitution Act as amended in 2003, Section 42(E)(3), the compensation and time and manner of payment for expropriations shall be determined by agreement and/or by the Land Claims Court.

Constitution, Section 25 and more specifically,

Section 25(5) which requires the State to take reasonable legislative and other measures within its available resources to foster conditions which enable citizens to gain access to land on an equitable basis. In other words the State is required to pass laws and conduct its administration to achieve these objectives

Section 3 of the Promotion of Administrative Justice Act, 2000 requires that administrative actions of the Minister, in terms of expropriation and land taking, must be procedurally fair and parties must receive adequate notice and be able to make representations in regard to that administrative action.

1975 Expropriation Act 63, and ESTA, Sections

1(1) xvii, Section 13 and 26.2 and 3

NEMA, Section 36.3

6. Give preference to land-based resettlement strategies for displaced

There is no clear statement on land-based resettlement preference in the Constitution and Acts. However, it is well established that the GoSA, because of its history and the

Constitution, Section 25.

Land Assistance Act.

None None

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109

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

persons whose livelihoods are land-based.

importance of land issues, favors land-based resettlement for those who might be impacted by the taking of land for development purposes.

However, under the Land Assistance Act 126 of 1993,

assistance to those peoples who want to access to land through grant will be provided by the Government.

ESTA.

7. For those without formal legal rights to lands or claims to such land that could be recognized under the laws of the country, provide resettlement

assistance in lieu of compensation for land to help improve or at least restore their livelihoods.

Legislation provides for compensation of those enjoying land uses without and with formal rights. A process is defined to ensure that the no-eviction rule will protect those who enjoy a peaceful and legitimate use of land. Program concerning those people will (i) reach to secure their tenure, or (ii) provide them with compensation alternative without

disrupting their livelihoods.

ESTA Chapter III ―Rights and duties of occupiers and owners.‖

None None

8. Disclose draft resettlement plans, including documentation

of the consultation process, in a timely manner, before appraisal formally begins, in an accessible place and in a form and language that are understandable to key stakeholders.

Disclosure and consultation rules and procedures are the same as those used for the purpose of environmental assessment.

In the case of land taking, information should be provided to the land owner, user or tenant before any decision is made.

EIRs for the two proposed power generation plants have been disclosed by ESKOM and include Social Impact Assessment which discusses resettlement issues.

NEMA.

Regulations on EIA.

ESKOM does not disclose resettlement

and/or land acquisition plans.

Eskom will ensure (i) that any land taking and or resettlement

issue and instrument will be disclosed prior to the implementation of the project and (ii) compensation and rehabilitation schemes will be discussed with affected persons.

9. Apply the principles described in the involuntary resettlement section of this Table, as applicable and relevant, to subprojects requiring land acquisition.

The laws and procedures apply equally to all expropriation required for an investment. The Acts and Regulations do not distinguish between projects and sub-projects.

None None

10. Design, document, and disclose before appraisal of projects involving involuntary restriction of access to legally designated parks and

Protected areas are an important part of the territory of South Africa. Laws and regulations related to protected areas are numerous and consistent with good internationally recognized practices on conservation and sustainable development of the natural resources and biological diversity wealth of the country.

NEMA- 1998, Section 2 all principles being defined as applicable to protected areas.

NEMA-Protected Areas Act 2003:

- Chapter 3: Section 23 and Section 28

- Section 31 (Consultation) and Section 33 (Public

None. Not applicable as no legally protected areas or designated park is

None

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110

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

protected areas, a participatory process for: (a) preparing and implementing project

components; (b) establishing eligibility criteria; (c) agreeing on mitigation measures that help improve or restore livelihoods in a manner that maintains the sustainability of the park

or protected area; (d) resolving conflicts; and (e) monitoring implementation.

Under NEMA-Protected Areas Act 2003, the competent authority shall declare a portion of the territory a protected area if such area: (i) has significant natural features or biodiversity, scientific, cultural, historical or archeological

value, or if it is in need of long-term protection for the maintenance of its biological diversity or for the provision of environmental goods and services; (ii) provides sustainable flow of natural products and services to meet the needs of local communities, (iii) enables the continuation of traditional consumptive uses as are sustainable…‖

Under NEMA-Biodiversity Act, 2004, it is clearly recognized that conservation and sustainable use are not

always incompatible and are recognized to benefit local and indigenous communities that may continue to enjoy the resources of a protected areas or where such use: (i) would not lead to long-term decline of such a resource, (ii) would not disrupt the ecological integrity of the ecosystem, and (iii) would ensure the continued use of the resources to meet the needs and aspirations of present and future generations.

Before any formal establishment of a protected area, a

Notice is served to land owners and occupiers and an ―intention notice‖ is disclosed to the public at large in the Government official gazette and local newspapers. A consultation process is undertaken including authorities at central, provincial and local levels, ―lawful occupier with right in land in any part of the area affected.‖

The authorities must: (i) allow any affected community or person whose rights might be affected to make representations and/or objections and (ii) give due

consideration to such representations and/or objections.

Management plans for protected areas must define conditions for community and affected peoples participation in the natural resources and biological diversity wealth of the area, provide for the zoning of the area and related authorized activities and development of economic opportunities within and in the buffer zone of the protected area.

Finally, South Africa‘s system allows protected areas‘ authorities to enter into agreements with communities and affected persons to define their participation in the conservation and sustainable development of biological

Participation)

- Chapter 4: Sections 38 through 42 on management plan

- Chapter 5: Section 51 on Regulation on restriction

of Development and Other Activities in Protected Environment.

NEMA-Protected Areas Amendment Act 2004:

- Section 19 related to ―Commercial and community activities in national park, nature reserve and world heritage site.‖

NEMA-Biodiversity Act 2004

- Section 82.

envisioned or planned in the two proposed project areas.

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111

Bank Policy (OP 4.00)

Requirements

(Objective and Operational

Principles)

Government of South Africa’s Equivalent Requirements Differences

between OP

4.00 and South

Africa’s

requirements

Improvements needed

to address the

differences before

implementing the

project activities Objectives and Operational Principles as stated in the relevant

laws, rules, regulations, procedures, and policies2

References to the relevant sections of the laws, rules,

regulations, procedures, and policies

diversity within protected areas. Restrictions to access are defined by regulations and limited to those activities that ―are inappropriate for the [protected] area; ―or that may ―impede [the] purpose of the area.‖

11. Implement all relevant resettlement plans before project completion and provide resettlement entitlements before displacement or restriction of access. For projects involving restriction of

access, impose the restrictions in accordance with the timetable in the plan of actions.

As general principle under South Africa‘s legal system, persons affected by projects are compensated before being moved or their rights to access to natural resources restricted.

Under the ESTA, an eviction order can be issued only after ―suitable alternative accommodation is available to the occupier concerned.‖

ESTA –Section 10 (2).

NEMA Section 34.

None None

12. Assess whether the objectives of the resettlement instrument

have been achieved, upon completion of the project, taking account of the baseline conditions and the results of resettlement monitoring.

There is no provision related directly to monitoring the fulfillment of a resettlement program‘s objectives.

However, under the NEMA, for the purpose of an EIA, all

impacts including social impacts must be monitored and arrangements for the monitoring must be embedded in the EMP for the project. Report on the implementation of mitigation measures must be prepared and provided to the competent agency and disclosed to affected peoples, including those who participated in the consultation process during the preparation of the EIA report and resettlement plan when applicable.

NEMA Regulations, Section 34 ESKOM conducts social assessment

including monitoring achievement of resettlement plans.

None

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Attachment to the Equivalence Matrix

References to Applicable Acts, Regulations, International Agreements

I- Relevant Legislation to Overall Environmental Governance in South Africa

a. The Constitution of South Africa

b. The National Environmental Management Act, 1998

c. The Provision of Access to Information Act, 2000

d. The Promotion of Administrative Justice Act (PAJA)

e. The Occupational Health and Safety Act, 1993

f. The Atmospheric Pollution Prevention Act (1965 APPA)1

g. The NEMA Air Quality Act (2004 AQA)

h. The National Water Act (NWA 1998)

i. The NEMA Waste Act (2008)

II- Environmental Assessment

a. National Environmental Management Act (NEMA)107 of 1998 as amended to

date2; and

b. Regulations in terms of Chapter 5 of NEMA, 1998 to regulate procedures and

criteria as contemplated in Chapter 5 of the Act for the submission, processing,

consideration and decision of applications for environmental authorization of

activities and for matters pertaining thereto, and including:

1. List of activities and competent authorities identified in terms of

Sections 24 and 24D of the NEMA, 1998: list 1 related to

activities identified in terms of Section 24 (2) (a) and (d) of the Act,

which may not commence without environmental authorization

from the competent authority and in respect of which the

investigation, assessment and communication of potential impacts

of activities must follow the procedure as described in Regulations

22 to 26 of the EIA Regulations 2006, and

2. List of activities and competent authorities identified in terms of

Sections 24 and 24D of the NEMA, 1998: list 2 related to

activities identified in terms of Section 24 (2) (a) and (d) of the Act,

1 Partially amended by the 2004 AQA. 2 The Equivalence analysis was based on the 2006 EIA Regulations for the purpose of EA as these regulations

describe the current state of the country system. The two EIAs for the two proposed power plants to be financed out

of the proposed ESKOM Investment Project were processed under the 1997 Regulations which set forth procedures

under which an applicant is required to undertake scoping and conduct an EIA for an activity subject to Section 21

(Schedule 1) of the ECA. However, the two EIAs and the related RODs refer also to NEMA (Section 2). The

principles and processes used for the preparation and review of the two EIAs are consistent with the NEMA

Environmental Impact Regulations 2006 including but not limited to requirement under Section 34 on EMPs. The

NEMA and its implementing regulations have replaced progressively the Environmental Conservation Act (ECA)

73 of 1989, including: (i) Government Notice. R. 1182 concerning the identification under Section 21 of the ECA of activities that may have a substantial detrimental effect on the environment, published in Government Gazette

No.18261, Pretoria, 5 September 1997, and Amended by GN R 1355 of 1997-10-17, GN R 448 of 1998-03-27and

GN R 670 of 2002-05-10, and (ii) Government Notice. R. 1183 concerning regulations regarding activities identified

under Section 21 (1) of the ECA, published in Government Gazette No. 8261, Pretoria, 5 September 1997 and

amended by GN R 1645 of 1998-12-11 and GN R 672 of 2002-05-10.

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which may not commence without environmental authorization

from the competent authority and in respect of which the

investigation, assessment and communication of potential impacts

of activities must follow the procedure as described in Regulations

27 to 36 of the EIA Regulations

III- Physical Cultural Resources

a. Constitution of the Republic of South Africa, 1996 Section 24 (Environment) and

Section 31 (Cultural, Religious and Linguistic Communities);

b. The National Environmental Management Act;

c. National Heritage Resources Act (NHRA) 25 of 1999;

IV- Involuntary Resettlement

a. Constitution of the Republic of South Africa, 1996, Section 25 (property)

b. Environmental Conservation Act (ECA), as amended to date

c. National Heritage Resources Act (NHRA)

d. Housing Act, 107 of 1997,

e. Extension of Security of Tenure Act (ESTA), 62 of 1997

f. Land and Assistance Act, 126 of 1993

g. Land Reform (Labor Tenants) Act 30 of 1998,

h. Restitution of Land Rights Act 22 of 1994,

V- Natural Habitats

a. National Environmental Management Act: Protected Areas Act, Act 57 of 2003 as

amended to date,

b. National Environmental Management: Biodiversity Act, Act 10 of 2004

VI- International Environmental Treaties, Conventions and Agreements to Which South

Africa is a Party3

a. Convention on Biological Diversity

b. Convention on World natural and Cultural Heritage

c. United Nations Framework Convention on Climate Change

d. Convention to Combat Drought and Desertification, Especially in Africa

e. Convention on International Trade in Endangered Species (CITES)

f. Convention on Wetlands of International Importance, Especially as Waterfowl

Habitats

3 South Africa‘s Constitution has a Sub-Chapter 14 on ―International Law‖ which has a Section 231 on ―International Agreements‖. In addition, the National Environmental Management Act (NEMA), Act 107 of 1998 as

amended to date, (notably Section 25) makes provisions for the treatment of ―International Obligations and

Agreements‖ related to Environmental Law. The list provided refer to those conventions and agreements that are

useful for the purpose of the proposed GEF Project and the preparation of the Report on the Use of Country System

(UCS)

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ANNEX 4

COMPARISON OF SOUTH AFRICAN ENVIRONMENTAL REQUIREMENTS FOR

THERMAL POWER PLANTS AND THE WORLD BANK GROUP ENVIRONMENTAL

GUIDELINES FOR THERMAL POWER PLANTS

1. In addition to the EIA requirements and associated authorizations that are discussed in

the main text of this report, the major South African regulatory requirements that address

ambient air quality and emissions from thermal power plants derive from the authority of the

National Environmental Management ACT of 1998 as amended (NEMA); of which the most

significant amendment is the 2004 NEMA Air Quality Act (AQA), which is progressively

replacing the Atmospheric Pollution Prevention Act of 1965 (APPA).1 Some of the regulations

promulgated under AQA came into force in 2005; others are still in progress.

2. This annex focuses on those aspects of the South African legal system that correspond to

the guidelines for control of air emissions as found in the World Bank Group‘s Pollution

Prevention and Abatement Handbook (PPAH), which was issued in 1998. The 1998 PPAH

contained an environmental, health, and safety guideline for new thermal power plants (Thermal

Power: Guidelines for New Plants), as well as one for existing plants (Thermal Power:

Rehabilitation of Existing Plants); these included recommended emissions levels as well as a

brief discussion of ambient air quality. In April 2007, the PPAH was updated with a new set of

guidelines; one of which was a General Environmental Health and Safety Guideline, which

included a discussion of and recommendations for ambient air quality. In December 2008, the

PPAH was further updated with a new Environmental Health and Safety Guideline (EHSG) for

Thermal Power Plants. The December 2008 EHSG for Thermal Power Plants states:

―The EHS Guidelines contain the performance levels and measures that are generally

considered to be achievable in new facilities by existing technology at reasonable costs.

Application of the EHS Guidelines to existing facilities may involve the establishment of

site-specific targets, based on environmental assessments and/or environmental audits as

appropriate, with an appropriate timetable for achieving them.‖

3. The EIRs for both Medupi and Kusile were prepared and approved, and construction

began, at a time when revised South African regulations were still under discussion and prior to

the issuance by the Bank of the December 2008 EHSG with new recommended emissions levels

for new thermal power plants. The EIRs were properly prepared and approved in accordance

with the South African regulations in effect at the time, but in order to fully assess equivalence

and acceptance with respect to OP 4.00 Table A1, the SDR will review in this annex how the

evolution of the air quality regulations in South Africa during this critical period2 compared to

the concurrent change in guidelines by the WBG.

1 Fourie, Melissa. ―Enforcement of air quality legislation in South Africa – October 2008,‖ An overview prepared

for the United Nations Environment Programme Eastern Africa Workshop on Better Air Quality in Cities on 21-23

October 2008, Evolve Consulting Pty Ltd. 2 October 2005 to March 2008, the time from when the Environmental Scoping Report was issued for the Medupi

project to the issuance of the final ROD for the Kusile project.

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Ambient Air Quality

4. Among other things, the AQA (Chapter 4) issued by South Africa in 2004 outlines air

quality management measures of particular relevance to the electrical generation and

transmission sector, including: (i) the declaration of Priority Areas, where ambient air quality

standards are being or may be exceeded; (ii) list of activities that result in atmospheric emissions

which have or may have a significant detrimental effect on the environment; (iii) declaration of

―Controlled Emitters‖ and ―Controlled Fuels;‖ (iv) control measures such as implementation of a

Pollution Prevention Plan or Atmospheric Impact Report; and (v) requirements for addressing

dust, noise and offensive odors.

5. Schedule 2 of the AQA issued in 2005 set forth interim ambient air quality standards that

were designed to be closely aligned with World Health Organization (WHO) guidelines and

European Union Directives. This reference to WHO and other examples of international good

practice is consistent with the approach taken by the Bank to ambient air quality in the 1998

PPAH, and again in the 2007 update (the General EHSG).

6. Section 7 of the AQA required the Minister to establish a National Framework (NF) to

achieve the objectives of the AQA by September 11, 2007. Section 7(1) of the AQA requires the

NF to include mechanisms and systems and procedures to:

Attain compliance with ambient air quality standards;

Give effect to the Republic‘s obligations in terms of international agreements; and

Establish national norms and standards:

- to control emissions from point sources;

- monitor air quality;

- manage air quality planning; and

- manage air quality information.

7. Ambient air quality standards were defined as ―targets for air quality management‖ that

―establish the permissible amount or concentration of a particular substance in or property of

discharges to air based on what a particular receiving environment can tolerate without

significant deterioration.‖ The NF aims to be in line with the principles of the WHO, i.e., the

primary aim of ambient air quality standards is to provide a uniform basis for the protection of

public health and ecosystems from the adverse effects of air pollution, and to eliminate (or

reduce to a minimum) exposure to those pollutants that are known or likely to be hazardous.

From 2004 through 2007 several air quality networks were established, priority areas were

identified, and intergovernmental coordination and cooperation structures were established. On

September 11, 2007, the Minister of Environmental Affairs and Tourism issued Notice 1138 of

2007 establishing the NF as required by Section 7(1) of the AQA.

8. Under the authority of NEMA, the NF and the AQA, new South African National

Standards (SANS) have been approved by National Committee SANS TC 146, Air Quality.3

3 SANS 1929:2009, Edition 2.

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Consistent with the NF, air quality objectives have been set based initially on values designed to

protect human health. In this connection, seven priority pollutants have been designated,4 of

which four (PM10, SO2, NO2 and CO) are directly associated with thermal power plants.

Parameters have been set for limit values, alert thresholds, and target values. Margins of

tolerance, time frames for achieving compliance with limit values, and limits on permissible

frequencies of allowable exceedance have been established. These values are based on

assessments, which establish the ambient concentrations of prioritized pollutants and evaluate the

technical feasibility, economic viability, and social and political acceptability of implementing

measures to reduce and maintain air quality within limit values. Because both the interim South

African ambient air quality standards and the and 1998 and 2007 WBG EHSG make reference to

the WHO standards, the following table uses WHO values as the common reference point.

Comparison of South African Ambient Air Quality Standardsa and

World Health Organization Guidelinesb

Pollutantc South Africa

d WHO

Particulates (PM10) 40 ug/Nm3e 70 ug/Nm3

Particulates (PM2.5) N/A 35 ug/Nm3

Sulfur Dioxide5 50 ug/Nm3 125 ug/Nm3

Nitrogen oxides 40 ug/Nm3 40 ug/Nm3

Ozone6 120 ug/Nm3 120 ug/Nm3

a) Per Schedule 2 of the AQA, 2004 as issued by the Department of Environmental Affairs, December 24,

2009.

b) As cited in WBG General Environmental, Health and Safety Guideline, Table 1.1.1, 2007.

c) Unless otherwise stated, numbers refer to Annual Limit value for the protection of human health (WHO).

d) Immediate compliance, except where otherwise noted. The WHO also proposes interim (year 2017) and

aspirational targets.

e) Compliance date of January 1, 2015

9. As can be seen from the above table, South African standards for ambient air quality for

parameters relevant to thermal power plants are consistent with and, in some cases, even more

stringent than the standards issued by the World Health Organization.

Emissions Standards for Thermal Power Plants

10. Under the authority of the AQA, South Africa issued proposed emissions standards for

thermal power plants, most recently on July 24, 2009.7 At the time of this report (February 2010)

the final emissions standards were expected to be adopted in very similar form on April 1, 2010,

when the relevant sections of the Air Quality Act are schedule to come into full effect.

11. The comparability of the proposed South African and the World Bank standards is

limited by the reference to a single 30 day compliance time frame, for monitoring purposes, in

4 Sulfur dioxide (SO2); Nitrogen dioxide (NO2); Carbon Monoxide (CO); Particulate Matter (PM10); Ozone (O3);

Lead (Pb); and Benzene (C6H6). 5 24 hour limit. 6 8 hour daily maximum. 7 General Notice 1001, National Environmental Management: Air Quality Act (39/2004): List of Activities which

result in atmospheric emission which have or may have a significant detrimental effect on the environment,

including health, social conditions, economic conditions, ecological conditions or cultural heritage, Government

Gazette, Vol. 529, No. 32434, July 24, 2009.

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the most recent iteration of the South African standards, whereas World Bank Group EHS

Guidelines are expressed as hourly, daily or annual limitations. However, the South African

standards take the same general approach to managing emissions as the WBG EHS Guidelines in

that both make a distinction between existing and new plants (with a requirement to establish a

process by which existing plants are to be considered within a specified period of time for

upgrade in performance to comply with the standards for new plants); by providing for the

application of good international industry practice (―best practicable environmental option,‖ in

South African parlance8); by their application of more stringent requirements to plants

discharging emissions to an already degraded airshed; and by the use of emission offsets to

achieve airshed-wide reductions.

8 NEMA, Section 4(2(b) as further described in the ―The 2007 National Framework for Air Quality Standards,‖

5.4.3.2, Ministry of Environmental Affairs and Tourism, September 11, 2007.

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ANNEX 5.

SUMMARY OF STAKEHOLDER CONSULTATIONS, PRETORIA, DECEMBER 9-10, 2009

COMMENTS FROM PARTICIPANTS AND WORLD BANK RESPONSE

No. Issue Response Disposition in SDR

USE OF COUNTRY SYSTEMS (UCS) AND SDR PROCESS FOR SOUTH AFRICA

1. Will the Safeguards Diagnostic Review [SDR]

have to be done again in projects in the future?

For South Africa in general, the equivalence analysis

conducted for the EISP, with respect to the World Bank

safeguard policies on Environmental Assessment,

Natural Habitats, Physical Cultural Resources and

Involuntary Resettlement, will be the basis of any

future application of use of country systems in South

Africa, (including thermal power, wind, solar and

transmission line projects). For other sectors or for

hydroelectric power projects, equivalence analysis and

acceptability assessment will be needed only for the

policies, regulations and implementing institutions in

the sector. The national aspects of the equivalence

analysis in this SDR will not need to be repeated unless

there have been subsequent legislative or regulatory

changes.

This issue has been clarified in

the final SDR.

2. The UCS approach not only achieves the

objectives set forth for it by the World Bank, it

also minimizes duplication of effort and

prevents stakeholder confusion.

The Bank appreciates these observations. The advantages of the UCS

approach are described in the

final SDR.

3. IFC Performance Standards clearly state that

where there is a difference between a country

and an IFC standard, the more stringent one

applies. How is that consistent with UCS?

UCS requires that if a borrower‘s requirements are less

stringent than a corresponding and applicable Bank

safeguard requirement, the Bank and the borrower will

agree on an Action Plan to address the gap between the

two requirements. The SDR has found that such gaps

as may exist between South African and Eskom

All proposed gap-filling

measures are identified in the

SDR and agreed gap-filling

measures are described in the

final SDR.

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No. Issue Response Disposition in SDR

standards are quite minor and have either already been

addressed by Eskom or may be readily addressed

during project implementation. Although generally

consistent with the safeguard policies of the World

Bank, IFC Performance Standards (PS) apply to IFC

support of projects as well as projects supported by

Equator Banks and other entities that follow IFC PS.

IFC PS are not generally used in the Bank‘s UCS Pilot

Program as they are designed for private sector projects

and the Bank provides support primarily to public

sector entities.

4. How many of the other UCS projects in the

portfolio are in the energy sector?

Two energy sector projects have been previously

supported under UCS: the Fifth Power Systems

Development Project (POWERGRID) in India and the

Energy Development and Access Project in Ghana.

These projects are cited in the

final SDR.

5. What is the oversight role of the World Bank if

UCS is approved?

If UCS is adopted the Bank would supervise Eskom‘s

implementation of the project as it would for any other

large investment supported by the Bank. The only

difference would be that the Bank would use the South

African requirements that it has determined to be

equivalent and acceptable as the basis for evaluating

compliance

This is clarified in the final

SDR.

EQUIVALENCE ANALYSIS: LEGISLATIVE FRAMEWORK

6. The Legislative Framework for Environmental

Assessment should be expanded to also include

the National Environmental Management: Air

Quality Act (2004), the National

Environmental Management: Waste Act (2008)

and any notices or regulations in terms of these

This legislation is referenced in the SDR, which also

takes into account the laws and regulations that are

relevant to the EISP.

All relevant legislation is

referenced in the final SDR.

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No. Issue Response Disposition in SDR

Acts as these Acts directly impact on and

inform EA processes in South Africa. There

are also others, such as the Integrated Coastal

Management Act, etc., but as they are not

relevant to the EISP, they are not mentioned

here.

7. The National Heritage Resources Act of 1999

also places a direct obligation on EA processes.

This Act is cited in the SDR with respect to Physical

Cultural Resources (PCR). Like South Africa the Bank

addresses PCR primarily within the context of the EIA

process.

This issue is clarified in the

final SDR.

8. It should be noted that with the coming into

effect of the Waste Act on 1 July 2009. EIAs

for listed waste management activities now

take place in terms of this Act and inform

Waste Management Licenses. This is relevant

to all waste activities such as ash dumps, waste

oils, etc., forming part of Eskom‘s facilities.

This added information on the Waste Act, its

effectiveness and application to the EISP, will be

referenced in the SDR.

The final SDR references the

Waste Act with respect to

DEA licensing of solid waste

facilities.

9. Various Acts have implications and in a way

govern EIA in South Africa – important ones

relevant to the EISP and missing from the list are:

o Promotion of Administrative Justice Act of 2000

o National Heritage Act of 1999

o The Development Facilitation Act of 1996

o The Mineral and Petroleum Resources Development Act of 2002.

Although these laws may be relevant to the EISP, they do

not necessarily correspond to the Objectives and Operational

Principles of World Bank OP 4.00, Table A1, which is the

basis of the Bank‘s Equivalence Analysis for the South African Environmental Assessment system. For example, it

is unclear how the Development Facilitation Act of 1996,

the Mineral and Petroleum Resources Development Act of 2002 or the Promotion of Administrative Justice Act of 2000

correspond to the above cited Objectives and Operational

Principles. It is acknowledged in the SDR that the National

Heritage Act of 1999 does correspond to the Objectives and Operational Principles of World Bank OP 4.00, Table A1

with respect to Physical Cultural Resources. This Act is

referenced in the Equivalence Analysis.

These Acts and their

implications are described in

the SDR.

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No. Issue Response Disposition in SDR

EQUIVALENCE ANALYSIS: CUMULATIVE IMPACTS

10. Cumulative impacts must make a distinction

between what is required of the applicant and

what is required of the government as part of a

broader planning strategy. The Waterberg

municipal district including the Medupi area is

the first location where the Government of

South Africa has proactively declared a

Framework area, rather than reacting after

airshed degradation has already occurred.

In addition to preparing to proactively declare the

Waterberg municipal district as a Priority Air Pollution

Hotspot, The Department of Environmental Affairs

(DEA) has issued a tender for a comprehensive

Environmental Management Framework (EMF) for the

Waterberg area.

A summary of the EMF ToRs

and process is included in the

final SDR.

The Bank is engaged with

both the Government of

Botswana and the Government

of South Africa in preparing a

regional study of trans-

boundary air quality issues.

11. How does cumulative impact analysis, as

defined by DEA to mean the addition of a

proposed project to the baseline status quo,

allow impacts on water, for example, to be

taken into account when we know it is already

affected by Matimba?

DEA is in the process of preparing an EMF for the

Waterberg area that will address impacts on water

resources while taking into account baseline

conditions, such as water use by Matimba.

A summary of the EMF ToRs

and process is included in the

final SDR.

12. There must be a [Strategic Environmental

Assessment] SEA for the Waterberg area.

See discussion above on EMF for Waterberg area. The EMF is addressed in the

final SDR.

The Bank is proposing to be a

partner with the Government

and Eskom in supporting the

preparation of the EMF.

13. Did the SDR consider any of the guidelines on

transboundary and cumulative impacts from

SADEC?

Since the EISP is a South African and not a regional

project, the SDR relies on South African environmental

regulatory policy and guidance to address the issues of

trans-boundary and cumulative impacts. These policies

and guidance are consistent with those of the World

Cumulative impacts will be

addressed in the EMF, which

is described in the final SDR.

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No. Issue Response Disposition in SDR

Bank as set forth in OP 4.00. Cumulative impacts

within the project-affected area in South Africa are

addressed in the SDR and will be given additional

attention in the EMF.

14. The [National Environmental Management] Act

(NEMA) requires that cumulative impacts be considered both in the EIA process and by

decision-makers. As EIA in South Africa is a

permitting instrument and the EIA process results in a permit with conditions which the applicant is

responsible for, it is very difficult to include

impacts not under the control of the undertaker of the activity. At the same time the authority need to

be in a position to decide on the acceptability of

impacts not only as a result of the activity of the

applicant but of all the activities in the specific area. The relationship between a thermal power

station and a coal mine may illustrate this best – the

thermal power station is dependent on the coal from the mine but has no control over the impacts

of the mine. Both the mine and the power station

place demands on water, air and land and have

impacts on the environment.

In order to address this dilemma, South Africa has adopted a two-pronged approach where cumulative

impacts or effects are dealt with at both strategic

and activity level. On the strategic level the SEA approach is utilized by government to develop

environmental management frameworks (EMF) for

geographical areas. An EMF basically determines the status quo of the environment (social,

biophysical and cultural) of a given geographical

The Bank appreciates this clarification. The final SDR has been

revised to incorporate this

clarification.

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No. Issue Response Disposition in SDR

area, then through an extensive consultation process determines the ―desired state of the

environment‖ (this could also be termed ―levels of

acceptable or desired change‖) and lastly through

introduction of environmental management control zones for the geographical area in question. An

EMF developed for an area takes into consideration

all existing and planned activities and then models impacts on air, water, land and also on the social

and cultural landscape. This then forms the baseline

against which decisions on development applications can be made. It also informs land use

management and planning for the area.

On the activity level it is required that the applicant

assess the contribution of his activity to the

baseline (and where the baseline is not known, to determine the baseline) where the baseline includes

existing and known future activities. This forms

part of the EIA process and is restricted to what is under the control of the applicant and what the

applicant can reasonably and lawfully be made

responsible for through conditions of an

environmental authorization.

EQUIVALENCE ANALYSIS: ALTERNATIVES ASSESSMENT

15. Both the 1998 NEMA (as amendment by inter

alia Act 62 of 2008) and the EIA Regulations

require the assessment of alternatives in a

comparative way. The range of alternatives to

be investigated depends on the nature and

scope of the activity to be undertaken and the

policy framework in place for such activity.

The Bank appreciates the clarification. This issue is further clarified

in the final SDR.

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No. Issue Response Disposition in SDR

The Act and regulations refer to alternatives

such as ―location‖ (both site and lay-out),

technology and the ―no-go‖ alternatives. The

Integrated Environmental Management

information series published by DEA also

contains a booklet specifically on alternatives.

16. In terms of the role of costs in alternatives

assessments it should be noted that although

not prescribed through the regulations, where

relevant, as is the case for most of Eskom‘s

infrastructure development projects, the cost

implications are demonstrated in the

comparative assessment of alternatives and,

together with the requirement to demonstrate

need and desirability, often plays an important

role in decisions on the acceptability of

environmental impacts.

The Bank appreciates the clarification. This issue is further clarified

in the final SDR.

EQUIVALENCE ANALYSIS: TRANSBOUNDARY IMPACTS

17. An acknowledged area of weakness in the

South African and SADC environmental

assessment system is that there is currently no

mechanism to facilitate consultation with

neighboring countries or for the assessment of

impacts on our neighbors by activities taking

place in South Africa or vice versa. The revival

of the SADC environmental protocol will

hopefully address this. In the short term

however, The Government of South Africa has

already agreed to work with Botswana on the

The Bank is working with the governments of South

Africa, Botswana and other SADC countries to

promote regional approaches to environmental impact

assessment, in particular with respect to energy projects

having trans-boundary impacts.

This information is

incorporated into the final

SDR.

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No. Issue Response Disposition in SDR

regional SEA planned for parts of the Limpopo

province and the southern parts of Botswana. It

is envisaged that this process will be informed

by the EMF mentioned above.

EQUIVALENCE ANALYSIS: NATURAL HABITAT OFFSETS

18. In terms of requirements for offsets: South Africa is

a developing country and it must therefore be

accepted that as the development footprint

increases, there will be an unavoidable loss of biodiversity. The biodiversity conservation and

protection policies are accordingly more focused on

reaching and maintaining targets set for the different biomes and biodiversity types. A

biodiversity offset policy is under development.

However, in practice and through the EIA

process biodiversity offsets are an established

mitigation measure enforced through

environmental authorizations

The Bank appreciates this clarification. This issue is addressed in the

final SDR.

EQUIVALENCE ANALYSIS: PHYSICAL CULTURAL REOURCES

19. In terms of community participation:

In addition to any requirements stemming from the

relevant Acts regulating PCR, it must be remembered that the definition for ―environment‖

in South Africa‘s legislation reaches beyond the

biophysical environment and includes PCR. The extensive consultation process prescribed through

the EIA regulations and NEMA accordingly is

relevant to PCR as well. In addition, the National

The Bank appreciates this clarification. This issue is clarified in the

final SDR.

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No. Issue Response Disposition in SDR

Heritage Resources Act specifically requires that heritage issues must be addressed in the EIA

process.

20. In terms of chance finds:

In addition to any requirements stemming from the

relevant Acts regulating PCR, it must be

remembered that the definition for ―environment‖ in South Africa‘s legislation reaches beyond the

biophysical environment and includes PCR. In

addition, the National Heritage Resources Act specifically requires that heritage issues must be

addressed in the EIA process. Accordingly, a

standard condition has been included in all

environmental authorizations stipulating how chance finds must be dealt with during the

construction and operational phases of an activity.

The Bank appreciates this clarification. This issue is clarified in the

final SDR.

ACCEPTABILITY ASESSMENT: DEPARTMENT OF ENVIRONMENT CAPACITY BUIDING AND TRAINING

21. The statistics on DEA[T]‘s capacity building

and training activities are limited to a single

recent financial year. Various training sessions

and other capacity building interventions have

taken place since, including a comprehensive

Capacity audit and need exercise which

resulted in a Capacity Intervention

Implementation Plan that is currently being

implemented.

The Bank appreciates this update. The issue is clarified in the

final SDR.

ACCEPTABILITY ASSESSMENT: EIA PRACTICE IN SOUTH AFRICA

22. It is not correct that EIA has been centralized The Bank appreciates this clarification. This clarification is included

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No. Issue Response Disposition in SDR

through NEMA and is now under DEA

supervision. Environmental Management is a

concurrent function where the national

department sets the legal framework but

provinces are fully autonomous in

implementing the function. The National

department has no supervisory powers over

provinces. Also, this position did not change

from the previous (1997) EIA regime.

in the final SDR.

23. It is not correct that the backlog in DEA

processing of EIA applications was reduced as

a result of the implementation of the 2006

Regulations. The elimination of the backlog

was due to capacity building and support

initiatives of the department whereby financial

and technical assistance was given to provinces

to assist them with finalizing pending

applications.

The Bank appreciates this clarification. The final SDR has been

revised to reflect this

clarification.

24. The section of the SDR should be updated to

reflect the inputs provided by DEA on the use

of Strategic Environmental Assessment

through the EMF approach.

The Bank appreciates this reference. The final SDR incorporates

reference to the EMF approach

and its application to the EISP.

ACCEPTABILITY ASESSMENT: EIA PROCESS FOR ESKOM INVESTMENT SUPPORT PROJECT

25. The SDR concludes that the EIA process is

robust, but there is no mention of coal mining

anywhere. There is acid mine drainage,

competition for water, other impacts on water

quality.

The EISP does not include any coal mining activities;

neither the Bank nor Eskom has any control over the

environmental impacts of coal mining. In order to

support the increased coal sales to Eskom, Exxaro will

add two new coal processing (beneficiation) units to

the six already operating at the mine. Because neither

As coal mining is not part of

the EISP, it is not relevant to

the SDR.

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No. Issue Response Disposition in SDR

Impacts of coal mining have to be addressed; it

will be vast, and the region will lose its water

resources.

any mining nor the construction of the new processing

units and associated coal stockyard will occur outside

the permitted boundaries of the mine operations, GoSA

regulations do not require a full EIA and an

environmental authorization from DEA. Instead, the

company‘s obligation under national environmental

legislation is to obtain approval of an amendment to its

Environmental Management Program for Grootegeluk

from the Limpopo Department of Minerals and Energy

(LDME). For this purpose, in 2006 the mine owner

prepared an environmental document entitled

―Amendment to the Grootegeluk Mine Environmental

Management Programme Report (EMPR): Matimba

Brownfields Expansion Project.‖ Scoping for this

report was conducted with stakeholder participation in

March 2006, and the draft report was publicly

disclosed for stakeholder consultations in July 2006.

LDME issued its approval for the amendment to the

EMPR in 2007. The Bank has reviewed the report. The

broader, regional and strategic impacts of coal mining

will be addressed in the EMF (see above).

26. Was there a statistically sound process that led

to the selection of Medupi as an investment?

Eskom‘s investment program is based on a strategic

review of the power sector at the national level. It is at

this point that the Government of South Africa

examines alternatives, including consideration of cost-

benefit analyses, etc. Economic analyses by the Bank

are included in project preparation and appraisal, but

not as part of the SDR.

Of the projects under development by Eskom, the

Medupi plant provides the most immediate prospect for

This issue is outside the scope

of the SDR, which focuses on

Bank and corresponding South

African safeguard policies.

However, it will be discussed

in detail in the Project

Appraisal Document (PAD) to

be submitted to the Executive

Directors of the World Bank

and subsequently disclosed to

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No. Issue Response Disposition in SDR

helping to address South Africa‘s critical electricity

supply needs.

the public.

27. How can the World Bank be financing coal-

fired plants in view of climate change?

The Bank has adopted a Strategic Framework for

Development and Climate Change which includes the

criteria under which the Bank will support coal fueled

power plants.

[http://beta.worldbank.org/overview/strategic-

framework-development-and-climate-change] .

Because the SDR focuses on environmental and social

safeguard policies, climate change impacts are

addressed in other Bank documentation related to the

EISP, such as the Project Information Document,

which is available on the Bank‘s website, and other

published information about the EISP.

This issue is outside the scope

of the SDR but will be

thoroughly documented in the

PAD.

28. How can the World Bank be financing 5,000

MW of new generating capacity in South

Africa, with only 4 percent of it in renewable?

This is not ―low carbon growth.‖ South Africa

is one of the most favorable places in Africa

for wind and solar power.

See other responses above and below on this point.

Furthermore the EISP, with its renewable energy and

energy efficiency components, is consistent with the

energy and climate change strategies of South Africa

which promote a transition to renewable energy

sources while acknowledging that in the short to

medium term, South Africa has no alternative to

reliance on energy efficient use of coal as the primary

fuel for baseload electrical power generation.

This issue is outside the scope

of the SDR but will be

thoroughly documented in the

PAD.

29. Solar power projects with heat storage can be

used for base load, and there are proven

technologies (e.g., 345-MW plant near Los

Angeles, CA). They require less land and have

fewer impacts than thermal plants of

comparable capacity according to 1960s study

The Bank is not aware of any operational solar thermal

projects that can provide baseload capacity at anywhere

near the 4,800 MW to be generated by Medupi.

This issue is outside the scope

of the SDR but will be

thoroughly documented in the

PAD.

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No. Issue Response Disposition in SDR

done for DEA.

30. South Africa is in Copenhagen committing to

reduce carbon emissions and is getting funding

from the Bank for a large coal-fired plant. This

does not make sense.

South Africa has stated its position with regard to

reductions in carbon emissions in the context of the

Copenhagen Agreement.

This issue is outside the scope

of the SDR but will be

thoroughly documented in the

PAD.

31. What about CO2 emissions; shouldn‘t the

amount and mitigation of it be considered?

The Bank is working with many countries including

South Africa and Botswana to diversify energy sources

and reduce carbon footprint. The inclusion of wind and

solar in EISP is an example.

The Bank OP for EA was developed before climate

change became a central issue, but the EA for Medupi

does include estimates of carbon emissions. The choice

of supercritical boiler technology is motivated in part

by the desire to increase plant efficiency and reduce

C02 emissions in relation to electricity output. In

addition, South Africa is designing new coal fired

power plants to be adaptable to carbon capture and

storage opportunities as soon as this mitigation

technology becomes commercially feasible.

This issue is outside the scope

of the SDR but will be

thoroughly documented in the

PAD.

ACCEPTABILITY ASSESSMENT: WATER SUPPLY AND QUALITY IMPACTS OF EISP

32. How does South Africa achieve its macro-

objectives for energy without neglecting

micro-concerns? Water should have been

addressed much earlier in the EIA process for

power.

Water supply is as much a macro-level as a micro-level

issue both for energy supply and basic human needs in

a water-scare environment. As part of the National

Water Resource Strategy in 2004, the DWA identified

the Crocodile (West) River Basin as of paramount

importance in developing a more specific water

management strategy. The first step in developing a

Catchment Management Strategy was the preparation

The issue of water supply is

addressed in the final SDR and

will be thoroughly addressed

in the EMF. The MCWAP is

subject to the EIA process in

South Africa, and its progress

is also addressed in the final

SDR.

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No. Issue Response Disposition in SDR

in 2004 of an Internal Strategic Perspective for the

Limpopo Water Management Area and an Internal

Strategic Perspective for the Crocodile River (West)

and Marico Water Management Area. Both of these

strategies were based on a 25-year planning horizon,

and the core proposal to meeting the need was the

Mokolo and Crocodile Water Augmentation Project

(MCWAP), consisting of four phases of development.

A second step in developing a Catchment Management

Strategy was preparation by DWA of the Water

Resource Reconciliation Strategy in 2008 for the

Crocodile (West) River Basin. Medupi will require

additional makeup water from Phases 1 and 2 of the

four-phase MCWAP that is being undertaken by the

Department of Water Affairs.

33. Why is water not considered in the SDR, since

it has such close connection with coal mining?

Water is considered in the SDR with respect to the

supply necessary to enable the Medupi plant to operate

at capacity and to support the operation of wet-Flue

Gas Desulfurization (FGD) Technology. It is also

considered with respect to Eskom‘s policy of zero

effluent discharge and the protection of ground and

surface water from potential ash pond contamination. It

is not considered with respect to coal mining because

coal mining is not part of the EISP.

The issue of water supply is

addressed in the final SDR and

will be thoroughly addressed

in the EMF.

34. Provision of water for FGD needs to be

considered. Country needs to take the lead in

SEA for water use and mining including social

impacts.

The SDR considers adequate provision of water for

FGD as a significant issue. The Bank agrees that water

supply and demand needs to be addressed in a broader,

multi-user context.

The issue of water supply is

addressed in the final SDR and

will be thoroughly addressed

in the EMF.

35. One international bank pulled out of the The Bank is not aware of any other international bank‘s The availability of water

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No. Issue Response Disposition in SDR

Medupi project because of the lack of FGD.

The World Bank‘s position that it is acceptable

for FGD to come later when water is available

does not make sense; there is no water!

decision regarding the Medupi plant. In any case, the

Bank has proposed, per the SDR and in other public

statements, that Bank support for Medupi will be made

conditional on the installation of FGD as soon as

sufficient water is available and it is technically and

operationally feasible to install the FGD units. The

supply of incremental water sufficient to operate the

FGD units is closely related to the provision of water

adequate for medium-to-long term operation at Medupi

at its design capacity. It is, therefore, highly unlikely

that Medupi could operate for long at full capacity

(with uncontrolled SO2 emissions) without also having

sufficient water to operate the wet-FGD units. Were

that unlikely circumstance to occur, Eskom would be

required by its environmental authorization (i.e., the

―Record of Decision‖ on its EIA Report, to consider

alternative means of SO2 emissions reduction,

including use of ―dry‖ FGD technology that is less

water intensive.

sufficient to operate the wet-

FGD units is addressed in the

final SDR.

36. According to farmers in the area, surplus water

that would presumably become available from

the Crocodile River may not be available in

sufficient quantities during periods from May

to October. For example, three years ago, the

availability of water was limited such that local

farmers were limited to half their normal quota

for irrigation.

The proximate source of incremental water to be

harvested from the Crocodile River catchment is

provided from surplus effluent return flows from the

northern regions of Gauteng province, for which the

ultimate source is the Vaal River Catchment. The

surplus effluent is in fact a growing resource due to the

rapid urban growth of the metropolitan areas of

Gauteng, particularly Johannesburg and Pretoria.

This issue is clarified in the

final SDR.

37. Utilizing available water for power or

industrial purposes negatively affects

agriculture.

Water supply and allocation issues will be addressed in

the EMF for the Waterberg Municipal District.

The ToR for the EMF is

described in the final SDR

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No. Issue Response Disposition in SDR

38. Farmers in Botswana that rely on the Limpopo

River have not been considered in the plans to

divert water from the Limpopo to support the

Medupi project.

Since the EISP is a South African and not a regional

project, the SDR relies on South African environmental

regulatory policy and guidance to address the issues of

transboundary and cumulative impacts. These policies

and guidance are consistent with those of the World

Bank as set forth in OP 4.00.

Please see response to

comment 17, above.

ACCEPTABILITY ASSESSMENT: COMPLIANCE, ENFORCEMENT AND GRIEVANCE MECHANISMS

39. South Africa‘s system is world class and

Eskom‘s practices are good, but there is no

enforcement, there is lack of staff and skills,

and an environmental court is needed.

The Environmental Monitoring Inspectorate (EMI) is

playing an increasingly important and effective role in

monitoring and enforcing compliance with South

African environmental laws, regulations and

authorization conditions.

The evolution and role of the

EMI is described in the final

SDR.

40. Implementation of environmental legislation

leaves a lot to be desired in South Africa.

Enforcement is a long way behind. The SDR

should deal much more with this issue. In

general, there is intense focus on EA, weak

attention to implementation; good planning is

not leading to good outcomes.

DEA is of the view that while there are sectors with large

numbers of transgressions (either by not applying for authorization or by non-compliance with conditions set in an

authorization) there are others that are largely compliant.

Typically small scale mining, property development and

agriculture falls in this category of non-sectors, but the

energy sector falls in the latter category.

DEA acknowledges that there is room for improvement but

is also of the view that good strides have been made in this

regard and the picture is not nearly as bleak as some would like to paint it. DEA considers that the steep penalties for

transgressions provided for in law, the strong line taken by

the Courts regarding environmental transgressions and the

high visibility and success of the Environmental Management Inspectorate (EMI also known as the ―green

scorpions‖) are aiding increased compliance with the

legislation and conditions of authorization.

This issue is thoroughly

addressed in the final SDR.

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No. Issue Response Disposition in SDR

41. The UCS process is supported, but it relies too

much on voluntary action by Eskom. National

policies should be reformed where necessary,

as in the case of expropriation.

Eskom compliance with the terms of its authorizations

is not voluntary; it is subject to sanctions and penalties

for non-compliance. Eskom is required to demonstrate

compliance and the DEA is authorized to verify that

compliance. It is recognized that South Africa does not

have a strong record of enforcement for non-

compliance, but DEA and the Bank find that Eskom‘s

record of compliance to date indicates that its risk of

non-compliance is low.

The SDR discusses the

requirements that have been

put in place regarding

independent monitoring of

performance by appointed

Environmental Control

Officers during construction as

well as operation. The broader

issue of enforcement is also

addressed in the final SDR.

42. Landowners affected by Medupi worked

within the EIA process, and thought they had

reached a reasonable compromise on T-line

and substation locations. However, they were

concerned to note in the Record of Decision on

the T-Line EIAs that some of the

recommendations in the EIA were ignored.

They suspect some sort of influence and have

appealed the decision in the [Record of

Decision] (ROD).

Decisions regarding transmission line routing take into

account all recommendations made during the EIA

process. However, such decisions are also subject to

technical requirements reflecting safety and energy

security that may not be included within the scope of

the EIA. As a result, alternatives identified as in the

EIA may not always be technically feasible.

It is the Bank‘s understanding that the landowners‘

concerns and recommendations for a dedicated corridor

for the high voltage transmission lines could not be

implemented because of legal codes regarding

installation of transmission line systems.

This issue is addressed the

final SDR.

43. There is a community in Waterberg area that

receives water only one day per week, but a

developer just received a permit to use 4 M l/d

to irrigate two golf courses just 10 km away.

Clearly EIA system is robust, but decisions

based on EIA are not being made well.

Consultants may be writing what serves their

The Bank acknowledges that such circumstances may

occur but has determined that the EIA process for

Medupi was not compromised by consultant bias or

undue influence.

This issue is outside the scope

of the SDR.

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No. Issue Response Disposition in SDR

clients‘ interests.

44. Does the Bank rely entirely on country

procedures, or does it expect separate reporting

from Eskom?

The Bank works with borrowers and other clients as

―partners in compliance.‖ Eskom and the South African

government have complementary roles to play in the

project. However, Eskom is the borrower and therefore,

the Bank will rely on Eskom in the first instance to

provide the requisite reporting on compliance with

South African requirements. However, the Bank may

consult the Government with respect to compliance

issues.

The issues of compliance and

enforcement are thoroughly

addressed in the final SDR.

45. There is not much in the SDR about grievance

mechanisms. What we do in South Africa does

not fully meet Equator Principles.

The SDR is based on World Bank safeguard

requirements and not the Equator Principles.

The Equator Principles are

outside the scope of the SDR.

ACCEPTABILITY ASSESSMENT: OTHER ISSUES

46. NEMA is sound on paper, but ROD focuses on

technical issues. Social impacts covered in the

EIA were not addressed in the ROD. Lephalale

municipality‘s physical and human

infrastructure is being overwhelmed by influx

of contractors and their labor forces. No onus

on Eskom in ROD to manage these impacts.

We agree that DEA interpreted its mandate in the ROD

to focus on issues under its direct authority rather than

the broader set of issues addressed in the ROD. Other

agencies, such as the Ministry of Land Affairs, have

the mandate to regulate social impacts and provincial

and municipal authorities have the mandate to regulate

indirect impacts from Eskom activities. However,

Eskom does recognize that it has a social responsibility

to assist local communities to address such indirect

impacts and is doing so through its community

outreach and development activities.

Eskom has noted that additional impacts not

anticipated by the EIR for Medupi have emerged, and

is working with the Lephalale municipality to address

Eskom‘s corporate

commitment to go beyond

compliance as part of its

corporate social responsibility

is discussed in the SDR.

Although the ROD does not

require Eskom to address these

unexpected impacts, Eskom‘s

response is considered as part

of the SDR‘s acceptability

analysis.

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No. Issue Response Disposition in SDR

those impacts.

47. Eskom is following a strategy based on ISO,

but this does not cover Eskom‘s suppliers,

especially mining companies. No onus on

Eskom in ROD to manage impacts of

suppliers.

This may be the case. However, Eskom has no leverage

over the environmental management practices of its

suppliers. There are no provisions in South African law

that would require Eskom to manage the impacts of its

suppliers. The Bank‘s environmental and social

safeguard policies also do not contain in their present

form this type of requirement.

This issue is outside the scope

of the SDR.

48. The SDR should be updated to reflect the

permitting requirements stemming from the

National Environmental Management Waste

Act of 2008 which repealed the specified

provisions of the Environmental Conservation

Act. Some of the [solid] waste management

facilities of Medupi have already been

subjected to this licensing process.

The Bank appreciates this updated information. The final SDR references the

new permitting requirements

with reference to solid waste.

49. a Special studies, as for cultural resources, are

covered in ToRs to which stakeholders don‘t

have much input. Specialists on PCR are

needed.

Consultation with all stakeholders is part of the EIA

process from scoping to finalization of the EIR. The

assessment of the significance of PCR is an integral

part of the EIA, as reflected in the EIA documentation

for EISP components. Special studies of PCR

undertaken as necessary as part of the EIA process are

supplementary to stakeholder input.

The distinct roles of

stakeholder input and

specialized studies are

described in the SDR.

50. Waterberg Biosphere has been identified by

UNESCO. It is the second largest wildlife area

in South Africa. Power development is a great

risk for it, and there is already a water crisis

there. Mining is the main source of the

impacts. Limpopo is among the waterways

The Waterberg Biosphere Reserve is located 40

kilometers from the Medupi plant and is separated by a

mountain range. Therefore it is not within the airshed

affected by the project or in any other way within the

project‘s area of influence –direct or indirect.

This point is clarified in the

final SDR.

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No. Issue Response Disposition in SDR

worst affected.

51. Lephalale municipality has insufficient

financial and human resources with which to

respond to the incremental impacts of the

Medupi project on the provision of

accommodation, drinking water supply,

electricity distribution, sewerage treatment and

road maintenance. These impacts are not

addressed in the ROD.

The ROD is limited to issues that are within the

regulatory authority of DEA. It is the responsibility of

the provincial and municipal authorities to address the

impacts subject to regulation at the local level. Eskom

has agreed to provide financial and technical support to

the Lephalale municipality in addressing these

incremental impacts, including assisting the

municipality to upgrade its sewerage facilities.

This issue is noted in the final

SDR.

PROCESS FOR STAKEHOLDER CONSULTATION ON SDR

52. This is an appropriate forum, especially to have

an opportunity to talk with one of the financing

institutions. However, January 10 is too short

notice for written comments. Follow-up

meetings would be good because of the limited

time for this one.

The team agreed that follow-up meetings would be

useful.

The Bank has continued to

receive comments on the SDR

through January 31, 2010 and

has taken all comments

received by that date into

consideration in this matrix.

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