INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Public Disclosure Authorized

1. Basic Information Report No.: Date prepared/updated: 11/16/2006 1. Basic Project Data P098572 Country: Project ID: Project Name: Northern Negros Geothermal Power Project Task Team Leader: Selina Shum Date: N/A Estimated A raisal Date: November 2006 Estimated Board carbon finance Managing Unit: EASEG Lending Instrumenf: -_- Sector: Renewable energy Rural services and Theme. Infrastructure services for private sector development, infrastructure, environmental policies and institutions

Public Disclosure Authorized IBRD Amount (US$m.): 0.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 l PCF Amount (US$m.): 8.30 Other financing amounts by source (US$m.): ER/RECIPIENT 38 BORROW 107 JBIC Environmental Category: A - Partial Assessment Repeater [I - Simplified Processing N/A Simple [] Yes ] NNo i Is this project processed under OP 8.50 (Emergency Recovery)

2. Project Objectives power plant in the Pataan The project aims to develop a 40-MW capacity geothermal of Negros. The additional sector of the Mt. geothermal prospect in the island Public Disclosure Authorized in demand for electricity power generating capacity will help meet the projected growth steam for power generation will in the Negros-Panay Grid. The utilization of geothermal fuels and contribute towards the also help reduce the country's dependence on imported global objective of reducing greenhouse gas (GHG) emission.

3. Project Description within the Mt. Kanlaon 'I'he proposed 40MW geothermal project is the first development the multiple-use and buffer zones geothernal prospect, a 4,191-ha block which includes Geological exploration works of the 24,388-ha Mt. Kanlaon Natural Park (MKNP). drillings were conducted within the prospect began in the late 1970s and exploratory The present project is located within Catugasan, Hagdan and Pataan sectors in 1994-95. commercially viable of the three in the Pataan sector which was found to be the most been delineated outside the Mt. Kanlaon sectors. '\ development block of 220-ha has major components: Natural Park. The present project includes the following MW power plant: * Construction, installation and commissioning of a 40 wells; Public Disclosure Authorized * Drilling and maintenance of 15 production and 3 reinjection and Reinjection System (FCRS . * Construction/installation of the Fluid Collection stations and associated control consisting of a network of pipelines, separator facilities; and, facility and a 24-km, 138-kV. single * Construction and operation a switchyard circuit spur transmission line. in geothennal power development in T he project builds on PNOC-EDC's experiences (200MW) and Bacon-Manito (20(MW 1. Leyte (700MW), Palinpinon (1 92MW), Mt. Apo in 1997 and as of this update, most of the Development works in the project site started and all wells have already been drilled. projeci's civil works have already been completed of FCRS, the power plant and The current activities are geared towards the construction the transmission line. relevant to the safeguard 4. Project Location and salient physical characteristics analysis slope of the Mt. Kanlaon The proposed project will be located at the northwestern City, . 'rhis is , in Sitio Pataan, Mailum, Bago the project were formerly private outside of the MKNP. The lands occupied by generally mountainous with elevations agricultural lots. The topograplly of the area is from 70(-S0() masl. Kanlaon Natural Park The Mt. Kanlaon Geothermal Prospect and Mt. Contract (prospect) area includes portion The 4,191-ha Mt. Kanlaon Geothermal Service Results of geological explorationis in the of the 24,388-ha Mt. Kanlaon National Park. block namely, the Catugasan, llagdan and 1980s have identified three sectors within the determined that the commercially viable Pataan. Subsequent resource assessments have have also determnined that although the resource is in the Pataan sector. The assessments 40 MW geothermal power plant, part of the resource outside the Park is able to sustain a from) inside the Park. resource is situated (or can be accessed only system may allow PNOC-IEDC to Recent developments in Philippine protected area The National Integrated Protected Area develop the geothermal resource inside the Park. others, the re-classification and re- System (NIPAS) law of 1992 provides for, among Parks. It also provides for the delineation of all protected areas such as National where controlled economic activities establishment of "buffer" or "multiple-use" zones the fringes of the protected area to shield such as energy development may be allowed at NIPAS, a bill converting the Mt. ii from further human encroachment. Pursuant to Park (MKNP) underwent public National Park into Mt. Kanlaon Natural 13, 1997. The bill which desigilates a consultations from September 23, 1996 to January as a buffer zone specifically 169-ha area within the northwestern flank of MKNP enacted into law by Philippine reserved for geothermal energy development was II, 2001. The implementing rules and Congress as Republic Act No. 9154 in August have yet to be issued by DENR. PNOC- regulations for the utilization of the buffer zone in the future. However as far as the FDC has indicated it may develop this buffer zone all development activities outslde the present 40MW project is concerned, it is restricting boundaries of the MKNP. 5. Environmental and Social Safeguards Specialists Mr. .lonas Bautista (EASEN) Mr .osefo Tuyor (EASEN) Ms Victoria Florian S. Lazaro (EASSD) Yes No 1 6. Safeguard Policies Triggered X EEnvironmental Assessment (OP/BP 4.01) (OP/BP 4.04) X Natural Habitats X (OP/BP 4.36) Forests X (OP 4.09) Pest Management X Resources (OP/BP 4.11) Physical Cultural X Peoples (OP/BP 4.10) - Indigenous X Involuntary Resettlement (OP/BP 4.12) X of Dams (OP/BP 4.37) Safety X l on International Waterways (OP/BP 7.50) ___- Projects | X Projects in Disputed Areas (OP/BP 7.60)

I. Key Safeguard Policy Issues and Their Management A. Sunmmary of Key Safeguard Issues with the proposed project l Describe any safeguard issues and impacts associated and/or irreversible impacts; Identify and describe any potential large scale, significant include displacement of 43 farming The safeguard issues associated with the project lands into industrial use, the families, the conversion of 100 hectares of agricultural Mt. Kanlaon Natural Park, the hydrogen alleged encroachment of the project into the and the possible contamination of surface sulfide (H1-S) emission from the power plant have been well analyzed, clarified water and groundwater. All of these issues however consultations, including the fonnulation and resolved in the EIA report and the various and implementation of a resettlement plan. has implemented a resettlemenm On the issue of displacement of families, PNOC-EDC Under the program, the 25 families and compensation program for the affected families. are now living within a newl-, who have opted to avail of the resettlement package who have opted to receive cash developed resettlement site while the 18 families of land use conversion of the projecl compensation have since left the area. On the issue of Agriculture (DA), the site underwent thorough screening by the Department other government agencies involved Department of Agrarian Reform (DAR), DENR and however were mostly of marginal in land use conversion process. The converted lands and hence were clearly unsuitable for productivity being mountainous and erosion-prone of encroachment into the Natural Park. continuous agricultural production. On the issue within alienable and disposable PNOC-EDC has restricted all development activities impacts, the hydrogen sulfide emission lands outside the Park. In terms of environmental levels with maximum concentration from the power plant is expected to be at acceptable water quality is expected to be only in predicted at around 60ptg/Ncm while impacts on earth-moving activities in the protect the form of short term turbidity due to remaining as spent geothermal brine will he site. Contamination of river water is highly unlikely from the earth's surface reinjected back to the geothennal reservoir 2-3 km underneath interaction of geothermal wells and Finally, the contamination of groundwater due to the of an impenneable cap rock that the aquifer has been ruled out because of the presence wells are lined with cement and steel separates the two plus the fact that the geothermal casing up to a depth of 1,600 m. impacts due to anticipated future 2. Describe any potential indirect and/or long term activities in the project area: buffer zone within the nortliweste-rti PNOC'-EDC may develop in the future the 169-ha energy development. This will be flank ot MKNP, specifically reserved for geothermal covered by a separate EIA study. to help avoid or minimiize 3. Describe any project altematives (if relevant) considered adverse impacts. such as hydro, wind, solar, biomass, The development of indigenous energy resources Philippines. Geothermal is the mosL natural gas and geothermal are encouraged in the Negros-Panay Grid. It also stands out readily available indigenous energy resource in the land area requirements. The proposed as the better alternative in terms of investment and increase in power demand in the 40MW geothermal plant will help meet projected energy sources are not readily islands of Negros and Panay. As other indigenous the installation of additional generating available, the most feasible alternative would be would entail either of the capacity from diesel or coal-fired power plants. This or the acquisition of new diesel powk et repair/overhaul of old diesel-fired power plants one option but these plants are not plants and barges. Bagasse cogeneration plants are base load plants. safeguard policy issues. Provide 4. Descrihe measures taken by the borrower to address the measures described. an assessment of borrower capacity to plan and implement 4.01) a) Re: Environmental Assessment (OP/BP/GP EAs, one for the geothermal stcairi hteld The project sponsor has prepared two separate The EA for the geothermal steam development and another for the Transmission Line. in 1995, the study area covered field development was a full EIA study. Conducted of which are part of the MKNP' It approximately 5,000 hectares, some 2,000 hectares from the MKGSC, the coastal included the Bago River and tributaries draining also centers downwind of thrce near the outlet of the Bago River and population waters of the geothennal resource project sites. Since at that time, the exact location proposed of 80MW geothermal power was still unknown, the study considered the development The scope of the study was within either Catugasan, Pataan or Hagdan Sector. air quality, noise, terrestrial comprehensive, covering geology, hydrology, meteorology, oceanography and bathymetry. ecosystem, freshwater biology, marine ecosystem, of the area. The EIA report pedology and land use, and the socioeconomic conditions

called Mt. Canlaon National Park It was turie of the preparation of the EA, the park was still ' t the under the National Integrated Protected as Mt. Kanlaon Natural Park (MKNP) by legislation proclaimed a 169-ha portion of Park's buffer or multiple- System (NIPAS) law. The MKNP law has designated Areas project is outside this zone. use zone for geothermal development. The present 40MW the Environmnental Conditions witholot contains Baseline Characterization, Projection of Environmental Management Plan and the Project, Impact Assessment, Risk Assessment, review of the EIA report followed the Watershed Management Plan. The preparation and drives and dialogues with surrounding Philippine EIS process and included information City. The EIA study was also thc first communities in Murcia, City and Bago where the local communities arvz participatory EIA to be conducted in the Philippines of results. Two (2) public hearilngs involved in data collection, analysis and validation Marmbucal, Murcia in April l 8. 1995 were held under the auspices of the DENR: one in 1995. The Environmental Compliance and another in Mailum, Bago City in April 19, after a review by the DENR-appointed Certificate (ECC) was issued in December 1995 EIA Review Committee. of Initial Environmental Examination The EA ior the Transmission Line was in the form The lEE preparation involved (lEE) checklist as prescribed by Philippine Laws. endorsed the TI. alignment to the consultations with the affected communities who Management Plan. The ECC DENR. The IEE checklist also included an Environmental for the TL was issued by DENR in the same year. in conducting environmental impact PNOC-EDC has more than 20 years of experience social and environmental manage-ment assessments and in formulating and implementing Its Environmental Managemenit programs for its geothermal power development projects. Department (CPD) are stafted by more Department (EMD) and Community Partnerships PNOC-EDC has also than 20 office-based and around 150 field-based personnel. the 640 MW Leyte Geothermal implemented various projects under the Bank, including Project under the Bank's C>arbon Project and recently the 20 MW Nasulo Geothermal Finance Program.

b) Re: NVatural Habitats (OP/BP 4.04) of natural habitat, the Bank Policy on Although the project does not entail conversion indirect effects of hydrogen sulfide and Natural Habitat was triggered due to the potential MKNP as well as potential increase in noise emissions on the flora and fauna inside the the project site. This is critical because human encroachment due to better roads toward activities such as slash and bUrn MKNP forest line has been receding due to illegal and poaching. In some areas. forests fanning, subsistence logging, fuelwood gathering are found only 1-2 km inside the park's boundaries. from other documents howevei indicate Results from the EA and information gathered unlikely. In terms of H2S and noise, that these impacts are either insignificant or highly of the Park will not cmit much the three production well pads which hug the boundary source of emission which is the power 112S or noise during plant operations. The main boundary and mathematical simulations plant is located about 500 meters from the Park's emissions from the power plant will and actual measurements indicate that H2S and noise the immediate vicinity. In terilis ot be witlhin standards for residential areas even within may actually be expected. In other f'acilitating further human encroachment, the reverse discouraged illegal activities in sites, the presence of geothermal project has actually duty. Already the human activities in nearbv public forests due to 24-hr security guard of 43 families. The alternative the area have been reduced with the resettlement communities under its Watershed livelihood which PNOC-EDC provides to the nearby on the MKNP while reforestation Management Program is expected to reduce pressure projects will help restore denuded areas of the Park. Natural Parks has been recognizedl The protection that geothermal projects provide to the Area System (NIPAS) law of 1992 by Philippine law. The National Integrated Protected zones where controlled provides lor the establishment of "buffer" or "multiple-use" allowed at the fringes of the economic activities such as energy development may be Crafted under this protected area to shield it from further human encroachment. has designated a 169-ha area framework, the MKNP Law which was passed in 2001 specifically reserved for within the northwestern flank of MKNP as a buffer zone it may develop this bufter geothermiial energy development. PNOC-EDC has indicated the Company is restricting all zone in the future. However for the present 40MW project, development activities outside MKNP.

c) Re: Involuntary Resettlement (OP/BP4.12) resided within 500 meters from PNOC-EDC has resettled some 43 farming families who was patterned after the levyte any geothermal project facility. The resettlement program the company implemented iulder Geothermal Project Resettlement Program which plan was prepared in 1995 and Bank's supervision in 1992-94. A draft resettlement as 1996. The preliminary plan consultations with the affected families started as early 2000, a resurvey of the affected was submitted and approved by JBIC in 1996. In and the resettlement plan population and another round of consultations were conducted was selected by the resettlers rhe was finalized. In 2001, a suitable resettlement site on Involuntary Resettlement. It Resettlement Plan generally conforms to the Bank Policy survey of the affected population, contains definition of policies, criteria for eligibility, and negotiation and provision for conflict resolution, provision for consultation execution of the resettlement plan livelihood assistance. Although the preparation and features were noted based on the was not under Bank supervision, the following salient staff and resettlers review of documents, site visits and interview with PNOC-EDC development progran I The resettlement program was designed as a community provided with Aside from the houses and amenities, the resettlers were also trained and organizeed replacement farms adjacent to their village. They were development to manage the communal areas and to facilitate livelihood assistance. of resettlers. They werc 2 There was meaningful consultation and participation and nature of informed of their rights and consulted regarding the types of the compensation options. They also participated in the identification resettlement site. of assets. Those who opted for 3. (ash compensation was at full replacement cost OT rendered inaccessible resettlement have received compensation for crops lost received full due to the project while those who opted for cash compensation properties. replacement costs of their houses, lands, crops and other transportation of belongings. 4 -Assistance was provided during transfer including meal and disruption allowance. the Relocation site werc The resettlers were transferred only after the houses in completed. d) Re: Indigenous Peoples (OD 4.20) minority. The present The project will not affect any indigenous people or cultural areas who belong to the llonggo residents in the area are new settlers from the lowland mainstream groups in the Visavas and Cebuano ethno-linguistic stocks, two of the largest and Mindanao area. e) Re: Forest (OP/BP 4 36) activities will be confined %kithiri The project will not affect the forest as all development were agricultural area. the existing 220-ha geothermal development block which layer for continued Moreover, the geothernal plant will serve as a protective company's watershed management encroachment of human activities into the forest. The forest cover of the MNKP andi programii is expected to preserve and even enhance the ncarbv denuded areas. for consultation and 5. Identify the key stakeholders and describe the mechanisms potentially affected people disclosure on safeguard policies, with an emphasis on Government of the Philippines, the The key stakeholders of the project are the National into Napatagan Farmers Association resettled community which has been organized Mailum, City of B3ago and (NAMAFA), the host Local Government Units (i.e., Barangay residents who will benefit from Province of Negros Occidental) and the local benefits. emplovimient, royalty receipts and other government-mandated exploration phase, PNOC-ELD( - was Documents provided indicate that as early as the stakeholders. Starting April already in close consultation and collaboration with project's of host barangays, local governments, 21, 1994, PNOC-EDC collaborated with residents for the implementation of a government agencies, and non-government organizations the geothermal exploration block. watershed management and forest patrol plan in conduct of the EA in 1994-95 as Coordination and consultation continued during the was among the first projects in tlle required tnder the Philippine EIS process. The project local residents are involved in thle Philippines to employ a participatory EA wherein impacts. As part of the EA review collection of data and the validation of environmental conducted from January 15 to Apr]l 6, process. PNOC-EDC conducted 36 dialogues were process culminated in two public 1995 in the host and surrounding viliages. The EIS on April 19, 1995 hearings held in Minoyan on April 18, 1995 and in Mailum affected by specific concerns After the EIS process, consultations continued with groups of the project site and the or project components. These include rights-of-way acquisition block and the rights-of resettlement of 43 households located within the development Among the items subjected to way acquisition for the 25km transmission line route. site and the duration ol tle consultation were the compensation package, the resettlement rights-of-way from usufruct period of houses and lot. PNOC-EDC also negotiated consulted with the respective individual land owners for the transmission line and has transmission line. It has secured local governiment units for the optimum alignment of the the Municipality of Murcia endorsements for the transmission line from 11 Barangays, and the City Councils of Bago and Bacolod Cities. PNOC-EDC is in continual consultation with the local communities in the implementation of the its social and environmental programs through the barangay and the municipal governments, the Multisectoral Monitoring Team (MSMT), and the Mt. Kanlaon Natural Park Board in which PNOC is a member, the resettled families association, NAMAFA and the other livelihood associations that PNOC-EDC has organized among the communities surrounding the project site. Additional due diligence works on PNOC-EDC's continued engagement with the local communities will determine whether additional consultation on the project is necessary.

B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Date of receipt by the Bank 12/02/2005 Date of in-country" disclosure 12/02/2005 IDate of submission to InfoShop 03/24/2006 For category A projects, date of distributing the Executive Summary of the EA to the Executive Directors Resettlement Action Plan Date of receipt by the Bank 12/02/2005 Date of "in-country" disclosure 04/18/1995 Date of submission to InfoShop 03/24/2006 * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why:

C. Compliance Monitoring Indicators at the Corporate Level (to befilled in when the LIDS isfinalized by the project decision meeting)

OP/BP/GP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? Ye If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the No credit/loan? OP/BP 4.10 - Indigenous Peoples Hias a separate Indigenous Peoples Plan/Planning Framework (as No appropriate) been prepared in consultation with affected Indigenous Peoples" If yes, then did the Regional unit responsible for safeguards or Sector Manager- review the plan? If the whole project is designed to benefit IP, has the design been reviewed and approved by the Regional Social Development Unit or Sector Manager?. OP/BP 4.36 - Forests and constraints No Has the sector-wide analysis of policy and institutional issues been carried out? these No Does the project design include satisfactory measures to overcome constraints') it include No Does the project finance commercial harvesting, and if so, does rovisons for certification system? The World Bank Policy on Disclosure of Information Bank's Y'es Have relevant safeguard policies documents been sent to the World Infoshop'. place in a Yes Have relevant documents been disclosed in-country in a public project-affected fonn and language that are understandable and accessible to L° anid local NGOs? Policies All Safeguard Yes [lave satisfactory calendar, budget and clear institutional responsibilities to safegiuard been prepared for the implementation of measures related policies' in the project Yes Have costs related to safeguard policy measures been included cost" the e's Does the Monitoring and Evaluation system of the project include policies'? monitoring of safeguard impacts and measures related to safeguard the Y'es Have satisfactory implementation arrangements been agreed with legal horroweer and the same been adequately reflected in the project documents?

D. Approvals Date7 submitted by: NeM Signed and .. . 16!Oo Leader: Ms Selina Shum. a 'T'ask Team I71-1 lI Specialist: Mr Jonas Bauti sta/7 ' Environmental I I '6!O06 Specialist: Mr Josefo Tuyor Environmental !6 11 Social l)evelopment Specialist: Ms Victoria Florian Lazaro

-I Approved by: OI•A/) .ek4D Regional Safeguards Coordinator; 'Mr Glenn S. Morgan t521 Comments - Sector Manager: Ms Junhui Wu I-- Comments: