Annual Environment & Social Monitoring Report (July 2013 to June 2014) Environmental and Social Performance Report October 2014 Pakistan: Karachi Electric Supply Company Post Privatization Rehabilitation, Upgrade and Expansion Prepared by K-Electric Limited (formerly Karachi Electric Supply Company) Karachi, Pakistan The Environmental and Social Performance Report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff, and may be preliminary in nature. Your attention is directed to the “Terms of Use” section of this website. ANNEXURE ‘E’ K-Electric (IFC LOAN DOCUMENT) ANNUAL MONITORING REPORT (AMR) REPORTING PERIOD: 1st JULY 2013 – 30th JUNE 2014 8th Yearly Report K-Electric Certification IFC Project Identification: KESC (Pakistan) IFC Number # 25396 AMR reporting period: 1st July 2013 – 30th June 2014 KE PHYSICAL ADDRESS: K-Electric Limited KE House, 39 – B, Sunset Boulevard Defence Housing Authority (DHA) Phase - II, Karachi Sindh Pakistan. Telephone: +9221-32637133 Fax: +9221-35647155 Web: www.ke.com.pk We certify that to the best of our knowledge and belief the data contained in this AMR completely and accurately represents the environmental and social aspects of KE’s activities during this reporting period i.e. 1st July 2013 to 30th June 2014. Acronyms and Abbreviations AMR Annual Monitoring Report BDL Below Detectable Limits EHSS Environmental, Health, Social and Sustainability EHT Extra High Tension EIA Environmental Impact Assessment GoS Government of Sindh GT Gas Turbine HSEQ Health, Safety, Environment & Quality IBC Integrated Business Centre IEE Initial Environmental Examination Report IFC International Finance Corporation KE K-Electric Limited KESC Karachi Electric Supply Company NEQS National Environmental Quality Standards NFEH National Forum for Environment and Health NGO Non-Governmental Organisation NMS Non Management Staff PEPA’97 Pakistan Environmental Protection Act 1997 PS Performance Standards SEPA Sindh Environmental Protection Agency SEPA’14 Sindh Environmental Protection Act 2014 T&D Transmission and Distribution Contents 1. Introduction 1 2. Scope and Timing 1 3. K-Electric: Energy that moves Life 2 4. KE’s Environmental, Health, Social and Sustainability (EHSS) Initiatives 4 4.1. Compliance Evaluation 4 4.2. Environmental Management and Assessment 6 4.3. Health and Safety 10 4.4. Corporate Social Responsibility 16 4.5. Energy Conservation Initiatives 18 4.6. New and Renewable Energy Projects 18 4.7. Stakeholders Engagement 21 5. Compliance with IFC Performance Standards 23 5.1. Social and Environmental Assessment and Management System (PS1) 23 5.2. Labour and Working Conditions (PS2) 26 5.3. Pollution Prevention and Abatement (PS3) 31 5.4. Community Health, Safety and Security (PS4) 37 5.5. Land Acquisition and Involuntary Resettlement (PS5) 38 5.6. Biodiversity Conservation and Natural Resource Management (PS 6) 38 5.7. Indigenous People (PS 7) 38 5.8. Cultural Heritage (PS 8) 38 6. Challenges and the Way Forward 39 Annexes Annex – A: List of KE Awards during FY 2013 - 14 Annex – B: IFC’s Social and Environmental Management Plan (April – June 2014) Annex – C: KE’s HSEQ Policy Annex – D: Executive Summaries of IEE of 03 projects Annex – E: Executive Summary of EIA - 132 kV Baldia Valika Transmission Line Annex – F: Public Hearing Notice of 132 kV Baldia Valika Transmission Line project Annex – G: Non-Objection Certificates of KE’s projects by SEPA Annex – H: Generation Plants Monitoring Results for Second Quarter 2014 Annex – I: ISO 14001:2004 certificates of Two Generation Plants Annex – J: PCBs summary sheet Annex – K: Waste Management Procedure Annex – L: Asbestos Management Procedure Annex – M: SF6 Management Procedure Annex – N: Trainings on Environmental Management Annex – O: Safety Inspection Report Annex – P: Energy Conservation Activities Annex – Q: Breakdown of Customers Complaints Annex – R: Descriptions of accidents 1. Introduction The Annual Monitoring Report (AMR) for FY 2013 – 2014 has been prepared by the K- Electric Limited (KE – the company) as part of its reporting commitments to the International Finance Corporation (IFC). This is Eighth Year post-financing report and describes the degree to which the requirements specified in the Action Plan and Annexure ‘E’, specified in section 5.03(d) of the Loan Agreement document, have been met and to describe non-compliance and what is being done to address such non-compliance. This report is not only KE’s disclosure of its environmental, health, social and sustainability (EHSS) initiatives to the stakeholders but, also, is a performance benchmarking document. Thus, the AMR will enable the company to reflect back and improve on its various ESS initiatives undertaken to incorporate the element of sustainability in its business functions and operations. 2. Scope and Timing The AMR encompasses all the activities associated with KE, including operations, generation, transmission and distribution, capacity enhancement projects and social and environmental initiatives from 1st July 2013 to 30th June 2014. The report has been independently verified to ensure that the reporting is factual and accurate and that a fair description of KE’s overall performance in meeting the loan agreement requirements has been provided. The AMR 2013-14 is built upon IFC’s Performance Standards (PS). IFC’s PS have been designed and developed to assist its clients in rolling out their respective business functions and operations in a sustainable way. Together, the eight (08) PS provide guidance and direction on EHSS aspects, that the client is to meet throughout the lifecycle of a project financed by IFC. Therefore, at KE, these PS are used as a benchmark to manage company’s environmental and social risks, which may arise as a result of its operations. In this report, first, a brief snapshot of KE, as a utility company, is presented. Second, the overview of KE’s EHSS regime and activities carried out during the FY 2013 -14 is presented. This is followed by KE’s EHSS initiatives benchmarking against each of the IFC’s PS. Page | 1 3. K-Electric: Energy that moves Life K-Electric Limited (KE), formerly known as Karachi Electric Supply Company (KESC), is the only remaining vertically integrated power utility in Pakistan with exclusive licensing rights for Karachi, a customer base of 2.4 million. The city of Karachi is central to Pakistan’s economy. Around 90 percent of the head offices of the banks, financial institutions and multinationals operate from Karachi. In addition, 40 percent of large scale manufacturing employment is Karachi based. Against this background and as the sole electricity provider to the city, KE is of strategic importance not only to Karachi but also to the country, Pakistan. KE was incorporated in 1913 (pre-independence) as a public utility company. However in 2005, KE was privatized. Outlook of KE’s entire power value chain is; Presence Across the Entire Power Value Chain Generation Transmission Distribution All power units and grid station are monitored by a centralized Load Dispatch Centre using state of the art SCADA system Own Generation Grid Stations End User Power Purchase Generation Capacity MW Capacity: Capacity: KE Internal 2,422 62 grid station KE Coverage area: 6,500 sq km IPPs and others 365 128 power transformers 11kV distribution capacity of 4,973 MVA NTDC (National 650 Network of 220, 132, and 66 kV circuits through 15,588 PMTs and sub stations Grid) 1,249 KM of overhead and underground 11kV: 7,900 KM cables (67% underground) Total 3,437 cables 0.4kV: 12,044 KM (90% overhead) Figure 1: K-Electric Presence across the Entire Power Value Chain KE has shown a noticeable improvement in its business operations and services since the takeover by the current management back in April/May 2009. Since then, KE’s generation capacity has increased by 1,000 Megawatts (MW). Through improved system, KE has witnessed 22 percent efficiency gain in FY 2013 – 14 since 2009. Page | 2 Average Fleet Efficiency (%) 22% 36.70% 37.00% 34.40% 33.10% 33.50% 30.40% FY-09 FY-10 FY-11 FY-12 FY-13 FY-14 Graph 1: Average Fleet Efficiency Moreover, KE increased the reliability of its transmission network, with 189km of old Extra High Tension (EHT) line rehabilitated and an additional 62km of EHT lines added. Similarly, the company turned around its ‘Transmission and Distribution (T&D)’ system and managed to reduce its T&D losses by ten percent since FY 2009. Currently T&D losses stand at 25.30 percent as compared to 35.9 percent in FY 2009. T&D Losses (%) – Rolling Average 35.90% 34.90% 32.20% 29.70% 27.80% 25.30% FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 Graph 2: Transmission & Distribution Losses (%) IFC Award: The success of KE’s transformation was appreciated by the Financial Times and IFC. KE, in June 2014, was honored with the prestigious FT/IFC Transformational Business Award for exceptional achievement in Project Finance – Energy. During the period KE won Picture 1: KE won Financial Times and IFC Award Page | 3 various other awards in the field of occupational health and safety, fire safety and environment (for details refer to attached Annex – A). New Identity: The FY 2013-14, amongst other things was important as K-Electric completed its 100 years of continued existence. Therefore, while entering the new century, a renewed pledge to realign the company’s identity with the company’s vision, a new corporate identity was established. On January 20, 2014, KESC evolved into KE. Figure 2: KE’s New Brand Identity The three feathers in KE’s new identity have been inspired by Pakistan’s national bird ‘Partridge’. The yellow feather represents ‘energy’, blue ‘community’ and the green is for the ‘environment’. The new corporate identity underpins the company’s resolve to carry out its operations in a sustainable way to meet the energy demands of current and future generations.