Initial Environmental Examination Project Number: 49177-002 May 2021 Timor-Leste: Power Distribution Modernization Project Prepared by Electricidade de Timor-Leste for the Asian Development Bank. CURRENCY EQUIVALENTS The currency unit of Timor-Leste is the United States dollar. NOTE In this report, "$" refers to US dollars. This initial environmental examination 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 on ADB’s website. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. ABBREVIATIONS ADB Asian Development Bank AMI advanced meter infrastructure AMR automatic meter reading ANLA Agencia National de Licenciamento Ambiental AVR automatic voltage regulator CAFI Council for Administration of the Infrastructure Fund cct-km circuit kilometer CEMP construction environmental management plan CIS customer information system COVID-19 coronavirus disease CRVA Climate Risk Vulnerability Assessment DAS distribution automation system DCC distribution control/dispatch center DMIS distribution management information system DNSAS National Directorate of Water Supply EDTL Electricidade de Timor-Leste EHS environment, health and safety EIA environmental impact assessment EIS Environmental Impact Statement ELL Environmental Licensing Law EMP environmental management plan FM facility management FRTU field remote terminal unit GDP gross domestic product GHG greenhouse gas GRM grievance redress mechanism HEPA high efficiency particulate air HIV human immune deficiency IBBA important bird and biodiversity area ICT information, communication, and technology IEE initial environmental examination IFC International Finance Corporation kV Kilovolt LBS load break switch LV low voltage MAFF Ministry for Agriculture, Forestry, and Fisheries MOF Ministry of Finance MOH Ministry of Health MPW Ministry of Public Works MOTC Ministry of Transportation and Communication MV medium voltage MW megawatt NDC nationally determined contributions NDLPCS National Directorate of Land, Property and Cadastral Survey PMU project management unit PPE personal protective equipment PSC project supervision consultant ROW right-of-way RTU remote terminal unit SEIS simplified environmental impact statement SEMR semi-annual monitoring report SOP standard operating procedure STDs sexually transmitted diseases TA technical assistance UNCBD United Nations Convention on Biodiversity UNCCD United Nations Convention to Combat Desertification UNFCC United Nations Framework Convention on Climate Change WHO World Health Organization TABLE OF CONTENTS EXECUTIVE SUMMARY i I. INTRODUCTION 1 II. POLICY, LEGAL, AND ADMINISTRATIVE FRAMEWORK 1 III. DESCRIPTION OF THE PROJECT 5 A. Project Components 5 B. Installation and Construction Activities 9 IV. DESCRIPTION OF THE ENVIRONMENT 13 A. Physical 13 B. Biology 19 C. Socioeconomic Conditions 21 D. Environmental Condition at the Sites of EDTL Regional Offices 27 V. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 35 A. Project Benefits 35 B. Impacts during Pre-Construction 35 C. Impacts during Construction 36 D. Impacts during Operation 46 VI. INFORMATION DISCLOSURE, CONSULTATION, AND PARTICIPATION 47 A. Focused Group Discussions 47 B. Meetings with Relevant Agencies 51 C. Follow-up Stakeholder Consultation 52 VII. GRIEVANCE REDRESS MECHANISM 53 VIII. ENVIRONMENTAL MANAGEMENT PLAN 53 A. Institutional Arrangements and Responsibilities 54 B. Capacity Development on Environment Safeguards 55 C. Public Consultation Plan 56 D. Mitigation 56 E. Monitoring and Reporting 57 IX. CONCLUSION AND RECOMMENDATION 58 APPENDIXES APPENDIX 1: Environmental Management Plan APPENDIX 2: Semi-Annual Environmental Monitoring Report Template APPENDIX 3: Documentation of Focused Group Discussion and Interviews with Villagers LIST OF TABLES Table 1: Environmental Regulatory Requirements for Energy Projects Table 2: Annual Climate Data for Dili Table 3: Recorded Hazards in Timor-Leste Table 4: Historical losses in Dili Municipality due to strong winds, flood, and landslides (1992-2013) Table 5: Population in Dili Municipality (2015) Table 6: Results of Focused Group Discussions with Stakeholders Table 8: Capacity Development Program on Environment Safeguard Table 9: Summary of Estimated Costs for Environmental Management and Monitoring LIST OF FIGURES Figure 1: Project Location Figure 2: Location of DCC Building and Existing EDTL Warehouse Figure 3: Geology of Timor-Leste and Dili Figure 4: Environmentally Sensitive Areas in Timor-Leste Figure 5: Power plants and transmission network in Timor-Leste Figure 6: Structure of the Grievance Redress Mechanism Figure 7: Environmental management requirements EXECUTIVE SUMMARY 1. The Power Distribution Modernization Project is a proposed loan from the Asian Development Bank (ADB) to the government of Timor-Leste. ADB approved a small-scale transaction technical assistance to conduct due diligence that includes environmental and social assessment of the project in accordance with ADB’s requirements for project approval. A. Project Scope 2. The project will have the following outcomes: (i) efficiency and reliability of power supply improved in Timor-Leste and (ii) financial performance of Electricidade de Timor-Leste (EDTL) improved. The project aims to increase access to reliable electricity in congruence with the government’s Strategic Development Plan 2011-2030. The project outputs are: i. Service delivery to end users strengthened; ii. Distribution network and regional offices constructed and/or rehabilitated; and iii. Institutional and community capacity strengthened on electrical safety and operations. 3. Activities that will involve construction are the rehabilitation of electricity network and regional offices and the construction of the distribution control/dispatch center. The rest involve the procurement/installation of equipment and application software. 4. The rehabilitation of distribution network will involve the replacement of damaged network components such as poles, pole accessories, conductors, connectors, switchgear, HT fuses, and protective devices, overloaded distribution transformers, LV switch gears, damaged service drops including meter boxes. It will also include conductor re-tensioning, straightening of leaning poles, and replacement of damaged transformer components. Where necessary, conductors of overhead MV network and LV network will be replaced with appropriate size to reduce the distribution line technical losses. The rehabilitation of distribution network will be for the sections of Dili network and in some areas outside and near Dili that are considerably old and in bad condition that leads to frequent breakdowns or failures. 5. The project estimates about 175 circuit-km of 20 kV lines for rehabilitation and about 35 distribution transformers to be added to de-load existing distribution transformers particularly in the urban areas and to reduce the LV line length in rural transformer schemes. About 34,500 service drops will be replaced with new service wires. In anticipation of the large number of distribution materials (poles, conductors, transformers, AVRs, autoreclosers, etc.) that need to be stored as well as the number of damaged equipment and parts to be replaced from the network, the project will also involve the rehabilitation of the main EDTL warehouse in Dili that is located next to the EDTL headquarters compound in Dili. 6. In addition, the project will also rehabilitate the twelve (12) regional offices of EDTL to improve operational efficiency and to provide better customer services. The regional offices are located in Dili, Manatuto, Baucau, Lospalos, Viqueque, Liquisa, Bobonaro, Covalima, Same, Alinaro, Alieu, and Ermera. The offices will be built in properties that are owned by the Government and currently used as EDTL office. The regional offices are in district centers. 7. The distribution control/dispatch center (DCC) building will be constructed in the area currently occupied by the Distribution Department within the EDTL headquarters compound in Dili. A new two-storey building is proposed to replace the existing one-storey building. The ii proposed DCC building, with a floor area of about 800 square meters, will house the DAS and the office of the Distribution Department. The building will be designed with conference room, training room, IT and accessory equipment room (for main server / back-up server, UPS, diesel generator room, restrooms, etc.). B. Assessment Methodology 8. The following methodologies and activities were undertaken in the conduct of the environmental assessment: i. Site visit to the existing distribution lines in the communities in Dili Municipality, Alieu and Ermera districts, the switching bay in Alieu district, proposed site of the dispatch center at the EDTL compound and at the EDTL central warehouse in Dili to assess the areas of influence and identify any environmental and social issues. ii. Stakeholder meetings with Agencia National de Licenciamento Ambiental (ANLA), Dili Authority, State Secretary of Culture and Arts, and Electricidade de Timor-Leste (EDTL) to ascertain the environmental issues that need to be considered