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World Bank Document The World Bank Agus-Pulangi Hydropower Complex Rehabilitation Project (P173728) Public Disclosure Authorized For Official Use Only Public Disclosure Authorized Concept Environmental and Social Review Summary Concept Stage (ESRS Concept Stage) Date Prepared/Updated: 07/08/2020 | Report No: ESRSC01478 Public Disclosure Public Disclosure Authorized Public Disclosure Authorized Jul 08, 2020 Page 1 of 14 The World Bank Agus-Pulangi Hydropower Complex Rehabilitation Project (P173728) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Philippines EAST ASIA AND PACIFIC P173728 Project Name Agus-Pulangi Hydropower Complex Rehabilitation Project Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Energy & Extractives Investment Project 7/1/2021 9/29/2021 Financing For Official Use Only Borrower(s) Implementing Agency(ies) The Republic of the National Power Corporation, Philippines Power Sector Assets and Liabilities Management Corporation Proposed Development Objective(s) To enhance the reliability of clean energy generation in Mindanao by rehabilitating the Agus-Pulangi Hydropower Complex. Public Disclosure Financing (in USD Million) Amount Total Project Cost 300.00 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] The Agus-Pulangi Hydropower Complex (APHC) is located on the island of Mindanao in the Philippines archipelago and it consists of seven run-of-river hydropower plants (HPP) with a total installed capacity of about 1,000 megawatts (MW). Six of the plants of the APHC are located on the Agus River. The seventh plant is the Pulangi IV Plant, the first of five plants envisaged on the Pulangi River. The HPPs technology is reaching the end of its operational life, getting highly inefficient, and the infrastructure presents deteriorating signs that pose significant safety risks. Out of the 1,000 MW of capacity installed, only 600-700 MW is available. Jul 08, 2020 Page 2 of 14 The World Bank Agus-Pulangi Hydropower Complex Rehabilitation Project (P173728) The APHC Rehabilitation Project will be structured in the following two components: Component 1. Rehabilitation of APHC power units and infrastructure The project component will finance the rehabilitation of some of the plants, based on their conditions, needs of Mindanao power system, and economic and financial viability. Since the six Agus HPPs are developed in a cascade, it is necessary to assess the priority, grouping and sequencing of rehabilitation. The rehabilitation will include generating and auxiliary equipment, control systems, civil structures and hydro-mechanical equipment and penstocks. Works will also be included to address key safety issues for the HPPs to meet international safety standards. The scope of rehabilitation of each equipment/structure for each plant will depend on their conditions, and can broadly be described as: For Official Use Only - Option 1 - Restoring rated capacity, extending their operational lives and ensuring safety mainly through repairs and replacing obsolete equipment; - Option 2 - In addition to Option 1, additional measures to increase capacity and energy production through efficiency improvements. - Option 3 would consider additional scope of rehabilitation if generation constraints, which could be caused by potential flooding of the midstream Balo-i Floodplains when upstream plants operate at full capacity, were removed through the envisaged development of dikes by the Department of Public Works and Highways (DPWH). The function of the dikes is to mitigate flooding caused by natural floods of a larger magnitude of river discharge compared to the Agus HPPs’ discharge. The envisaged DPWH flood mitigation project is not a component of the Project. Public Disclosure Component 2. Capacity building and implementation support This component will finance the cost of technical consultancy to support the implementing agencies, National Power Corporation (NPC) and the Power Sector Assets and Liabilities Management Corporation (PSALM), in project management and implementation. Key consultancy contracts financed under this component will include the owner’s engineer to support NPC in the implementation of Component 1. Activities for capacity building and Technical Assistance (TA) will also be covered under this component and may include issues such as sustainable electricity pricing reform, power system planning, optimization of cascade operation, reinforced safety in HPP and to explore public-private partnership (PPP) investment opportunities in the sector. These potential TA activities will be considered during project preparation. D. Environmental and Social Overview D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] The APHC is located on the island of Mindanao, six plants on the Agus River composing the “Agus Cascade” and one on the Pulangi River (Pulangi IV HPP). Jul 08, 2020 Page 3 of 14 The World Bank Agus-Pulangi Hydropower Complex Rehabilitation Project (P173728) Pulangi IV, commissioned in 1985 with 255 MW of installed capacity, is located near Maramag in Bukidnon Province. It has a reservoir with an original storage volume of 73 million cubic meters (MCM), but reduced to about 26 MCM due to sedimentation. At maximum plant discharge of 276 cubic meters per second (m3/s), the original reservoir capacity is only worth approximately three days of operation, and the current available storage capacity is worth one day only. The reservoir is called the Pulangi Lake or the Maramag Basin and has a surface area of about 1,100 hectares, but reduced due to sedimentation. The reservoir and dam is also the main water source for the province of Bukidnon, both for drinking water and for irrigation through the National Irrigation Administration (NIA). The Agus River flows for 36.5 km from Lake Lanao to Iligan Bay. It cuts through the provinces of Lanao del Sur and Lanao del Norte. Settlements along the banks of the river include the City of Marawi, the Municipality of Linamon and the City of Iligan. It separates into two channels as it drains to Iligan Bay; one going over the Maria Cristina Falls while the other supplies the Tinago Falls. The river descends for about 700 meters between Lake Lanao and Iligan Bay. The river is relatively shallow and only 1.2 meter deep in some areas. The watershed spans about 200,000 hectares. It has For Official Use Only a discharge of about 60 m3/s and flows from a narrow depression off the northwestern rim of Lake Lanao and over a basalt rock formation. The project area straddles three provinces: Lanao Del Norte and Bukidnon part of Mindanao administrative region and Lanao Del Sur part of the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) and Lanao Del Norte. The economies are mainly based on agriculture (and fisheries in Lanao del Norte). Bukidnon Province is a major producer of rice and corn. The majority of people in Lanao del Norte and Lanao del Sur belong to the Maranao tribe, one of the 13 ethno- linguistic tribes that comprise the Moro groups of BARMM practicing Islam. The majority of the population in Bukidnon are Christians with the Cebuano being the main ethnic group. About 25% of the population belong to different indigenous groups collectively referred to as Lumads, including the Bukidnon, Higaonon, Manobo, and Public Disclosure Talaandig groups. The project location has a complex social context that defines many of the social risks of the project, including: (i) complex land issues with disputes over land and access to natural resources, including historic disputes over the utilization of Lake Lanao and Agus River, (ii) conflict and violence with many armed elements operating in the area, including criminal and kidnap for ransom groups and revolutionary groups such as the New People's Army (NPA), the Moro National Liberation Front (MNLF), the Moro Islamic Liberation Front (MILF) and the Maute group (ISIS- affiliated), (iii) and presence of indigenous peoples in the Pulangi area with a history of resistance, supported by civil society organization (CSO) groups, against dam construction and other projects affecting the ecosystem of the Pulangi River. The plants were commissioned from 1969 (Agus VI) to 1994 (Agus II). With the end of the Marcos Regime’s Martial Law in 1984 and the country’s return to democracy in 1986, the Maranaos have started to raise social and environmental issues of the Agus power plants. Agus 1, the closest to the lake, was issued the Environmental Compliance Certificate (ECC) in 1992 with 23 conditions. The CSO who sits on the Agus Hydropower Complex Multi- Partite Monitoring Board—Save Lake Lanao Movement or SALLAM—has disagreed with the NPC over the implementation of these conditions, particularly on reforestation and irrigation. Potential legacy issues will be assessed as part of the ESIA. D. 2. Borrower’s Institutional Capacity The main implementing agency is the NPC. NPC has an Environmental Management Department (EMD) with a total of 29 staff (24 technical and 5 admin) and consisting of an Environmental Impact Assessment (EIA) and a Monitoring Jul 08, 2020 Page 4 of 14 The World Bank Agus-Pulangi Hydropower Complex Rehabilitation Project (P173728) section. The EIA section is responsible
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