PROPOSED FLOW REGULATION OF THE ORKHON RIVER AND CONSTRUCTION OF RESERVOIR COMPLEX PROJECT TERMS OF REFERENCE FOR REGIONAL ENVIRONMENTAL ASSESSMENT AND ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT Buryatiya, Russian Federation, March 20-31, 2017 CONTENT

1. BACKGROUND INFORMATION • Project objective and rationale • Project location • Initial screening results • Technical parameters • Technical indicators of initial screening • Coordination between FS and REA/ESIA • Interfaces between FS ToR and ESIA ToR

2. DRAFT Terms of Reference • Environmental and social impact assessment structure • ESIA ToR: Key environmental issues • ESIA ToR: Key social aspects • Environmental management plan • Expected outputs • Requirements concerning consultants

PROJECT OBJECTIVE AND RATIONALE

Objective: Expected outcomes of the project: • To build a reservoir complex and regulate • Through multi-year flow regulation of Orkhon river, will flow of Orkhon river for the water supply achieve stable ecological flow regime without receding of consumption centers in the Gobi region water levels even in driest periods • Will achieve conservative use of limited ground water resources in project covered regions, leading to assured water sources in the region • Will create conditions for meeting increasing water consumption in the region driven by expanding mineral production. Rationale: Domestic water needs • Existing groundwater sources are being depleted • Growing demand in water in the region due to development Orkhon project is reflected in policy documents: • “National Security Concepts” adopted under July 15, 2010 Resolution of the Parliament No.48; • Resolution of GoM #304 on adoption of Action Plan for the implementation of “Water” National Program dated November 23, 2010 states: Item 3.2 of the Plan: In 2011-2015 development of FS shall be completed on priority basis for “Orkhon-Gobi” project, for improved water supply in high water demand regions. PROJECT LOCATION

DAM, RESERVOIR: From Orkhon river headwaters - 440 km From dam to confluence Orkhon to Selenge – 709 km From dam to - border – 733 km From dam to Baikal lake -1142 km

Source: The Baikal Basin Information center RESULTS OF INITIAL SCREENING Identified scenarios for improvement of water supply in Southern Gobi Region

SCENARIO “A” Demands are met with the region’s ground water resources

SCENARIO “B” Demands are met with surface water resources of bigger Khangai region rivers

SCENARIO “C” Demands are met with both surface and groundwater resources

SCENARIO “D” Demands are met with groundwater resources in basins of bigger rivers

SCENARIO “E” Demand is met with collected resources of rain, snow, runoff water

RESULTS OF INITIAL SCREENING Identified scenarios for improvement of water supply in Southern Gobi Region

From From Projected ground surface water Scenario Description water water Comment demand, resources, resources, м3/day % %

Groundwater Demands are met with the A 174 060 100 0 in only South region’s ground water resources Gobi region

Demands are met with surface B water resources of bigger Khangai 386 800 15 85 region rivers Demands are met with both C surface and groundwater 386 800 45 55 resources

Demands are met with 55 % provided groundwater resources in basins by diverter D 386 800 100 of bigger rivers Khangai region waters TECHNICAL PARAMETERS

 Hydrologic parameters Orkhon River: • Catchment area (Orkhon post): 37 673 km2 • River length : 1149 km • Multiyear average flow (Orkhon – Orkhon () post: 41,6 m3/sec • Average annual flowrate volumes: 1.3 km3 /year (Orkhon – Sukhbaatar 3.92 km3 /year )

 Dam and reservoir parameters: • Dam height: 66 m • Barrage length: 360 m • Reservoir total capacity/volume: 730 mln.m3 • Reservoir storage capacity: 580 mln.m3 • Estimated lowest capacity of reservoir: 150mln.m3 • Normal water levels: 1 173 m • Boosted water levels: 1 175 m • Reservoir area at forced discharge rates: 31km2 • Reservoir area at normal discharge rates: 28 km2

7 TECHNICAL INDICATORS OF INITIAL SCREENING

Estimated water usage rate is Q = 2.5 m3/сек. This is equal to 0.73 % of average flow of Selenge at Mongolian border. At border: Q=339 m3/сек;

8 TECHNICAL INDICATORS OF INITIAL SCREENING

Source water supply: Groundwater resources of South Gobi + Surface water resources of Orkhon river:. • Surface water: 213000 m3/day • From existing aquifers:174000 m3/day • Water diversion – Underground piping • Length of main pipeline with spur lines 740 km

9 COORDINATION BETWEEN FS AND REA/ESIA STUDIES

International Advisory committee reviews studies

FS Finalized Orkhon Project ToR finalized and Review of PFS and further proposal screening specialists hired to Technical and Financial and Pre-feasibility per form assessment studies undertaken studies (PFS) STUDY FEASIBILITY

Public consultations International Advisory International Advisory Public consultation on around draft Terms of committee reviews committee reviews studies studies draft REA and EISA Reference for EISA (ToR)

Orkhon Project ToR finalized and Further Regional Review of REA and Environmental REA, ESIA preliminary specialists hired to Environmental further Environmental Management Plan and EMP Environmental and per form Studies undertaken and social impact Finalized assessment undertaken social studies (PESS) assessment (REA)

(ESIA) ASSESSMENT IMPACT

NVIRONMENTAL AND SOCIAL NVIRONMENTAL Е ENVIRONMENTAL AND SOCIAL IMPACTS ASSESSMENT STRUCTURE

Кey issues: 1. Hydrology / impacts on river flow (rates, volumes, distribution) 2. Dam safety, community health and safety, emergency preparedness and response 3. Environmental impacts 4. Social impacts The ESIA will identify all environmental and social elements, issues, plans and other aspects to be used at detailed feasibility study stage The geographic scope of the ESIA will extend from the proposed project site(s) downstream along the course of River and include the assessment of impacts, and planning for mitigation measures, for the Russian section of Selenge River as well as . ESIA TOR: KEY ENVIRONMENTAL ISSUES

• Impacts on riverine and aquatic ecosystems • Impacts on fish population, species composition, migration • Habitat formation, conversion, and loss • Impacts on flow regime, volumes, distribution, including tributaries due to water abstraction • Impacts on microclimate; influence of weather and climate on severity of anticipated impacts • Impacts on landscapes, natural habitats, natural heritage sites • Erosion, slope stability and induced seismicity in reservoir area and downstream river systems; project in context of regional seismic risks • Influence of climate change on project’s environmental performance ESIA TOR: KEY SOCIAL ASPECTS

Stakeholder analysis

Public consultations

Project scenario assessment

Cumulative impact

Local community resettlement program and rationale for its selection

Places of tangible cultural heritage

Social aspects Social Resettlement analysis and documentation

Local communities

Grievance mechanism

Implementation arrangements 13 ENVIRONMENTAL MANAGEMENT PLAN

Dam safety plan Water biodiversity Monitoring plan protection planning

Environmental Identification of management plan stakeholder roles Reclamation and participation/ planning operational involvement

Plan for Plan for protection of protection of soil and plant archeological and coverage cultural heritage 14 EXPECTED OUTPUTS

Public consultation REA report ESIA report program report REQUIREMENTS CONCERNING CONSULTANTS

KEY SPECIALISTS

Person-month, Person-month, INTERNATIONAL CONSULTANTS NATIONAL CONSULTANTS experience, in years experience, in years Environmental and social Environmental and social 6 /≥15 8 /≥ 5 assessment team leader assessment team deputy leader Senior environmental assessment 2 /≥10 3 /≥15 Hydrologist specialist Senior social assessment specialist 3 /≥10 Meteorologist 2/≥10 (land use, resettlement) Ichtiologist 2 /≥10 Hydro-geologist 2/ ≥ 10

Water ecologist/ limnologist 2 /≥10 Engineer –geologist 3/≥10 Ecologist 4/≥10 Biologist 2.5 /≥10 Anthropologist 4.5/≥10 Archeologist 2.5/≥10 Plant specialist 2.5/≥10 Social economist 4/≥10 Land specialist 1/≥ 5 GIS specialist 3 /≥8 Ichthyologist 3/≥10 Soil specialist 3/≥10 Sociologist 2/≥10 Hydro-technical engineer 2/≥10 TOTAL 16 51