Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project

Executive Summary 1. Background

The Kabeli A Hydroelectric Project (KAHEP) located in between the geographical coordinates, latitudes 27 o17'32"N to 27 o13’41"N and longitudes 87 o45'50"E to 87 o40'55"E in Pachthar and Taplejung district, Mechi zone of Eastern Development Region of Nepal, is based on the water resources of the Kabeli Khola, a natural border between the Panchtahar and Taplejiung districts in the

Public Disclosure Authorized Middle Mountains of Eastern Nepal about 620 km east of Kathmandu. This project utilizes a 15 km long loop of Kabeli River formed with Tamor River (Figure 1).

Figure 1: Location of the Key Project Structures in relation to the Project Districts and VDCs

Namgkholyan VDC Taplejung District Thechambu VDC Taplejung District Public Disclosure Authorized

Amarpur VDC Panchthar District Public Disclosure Authorized

Panchami VDC Panchthar district

Public Disclosure Authorized

The KEL is the project proponent and has signed a Project Development Agreement (PDA) with the Department of Electricity Development (DoED) for the development of KAHEP. The Environment Protection Rule Schedule 1 classifies KAHEP as Initial Environmental Examination (IEE) category project. However, the project has been classified by the World Bank as a 'Category A' project and has to comply with the environmental and social safeguard policies of the Bank. This Environmental Assessment statement is prepared to meet the requirements of the government of Nepal and World Bank.

i Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project

The access to the project area is through an all season 228 km long Mechi Highway connecting Charali at the East West national highway and Taplejung (Figure 2.3). The headwork site is about 2.4 km. from the Mechi Highway, while the Powerhouse is about 12.0 km away.

2. The Project The project is PRoR type with a proposed installed capacity of 34.70 MW with a design discharge 37.73m 3/s. The diversion dam with provisions for ponding will be constructed at 2.5 km upstream of Kabeli Bazaar at Dhuseni village of Amarpur VDC on the left bank and Khudurke Ban of Thechambu VDC on the right bank. The intake on the left bank will feed the underground settling basin and is diverted to the Powerhouse located at Tamor River bank close to Pinase village through a 4.322 km long headrace tunnel. A surface powerhouse will be constructed on the left bank of the Tamor River. The salient features of the project are presented in Table 1.

Table 1: Salient Feature of the Project

SN Items Description 1. Project Name Kabeli-A Hydroelectric Project Amarpur and Panchami VDCs of Panchthar District and 1.1 Location Thechambu and Nangkholyang of Taplejung District East 87° 45' 50" E West 87° 40' 55" E 1.2 Project Boundaries North 27° 17' 32" N South 27° 13' 41" N 1.3 Type of Development Peaking Run-of-the-river (PROR) 2 Hydrology at intake 2.1 Catchment area 864 km 2 3 2.2 100 year flood (Q 100 ) 1920 m /s 3 2.3 Probable maximum flood (Q 1000 ) 2750 m /s 2.4 Mean monthly flow 51.75 m 3/s 2.5 40 percentile flow 37.73 m 3/s 3 Headworks 3.1 Type/Length of weir Barrage with 6 radial gates including undersluice 3.2 Full supply level 575.3 m 3.3 Crest elevation 561.6m 3.4 Intake type Tunnel intake on left bank 4 Diversion during construction 4.1 Diversion flood (5 year dry season flow) 154 m 3/s 4.2 Diversion tunnel 360m long; 4.8m diameter D-shaped tunnel 80m at upstream side 4.3 Coffer Dams 90m long at downstream side 5 Approach Tunnel 5.1 Number 2 (1 each starting from either intake) 5.2 Type Inverted D shaped; Concrete lined 6 Settling basin 6.1 Type Underground settling basin 6.2 Number 2 basins with 2 hoppers in each 6.3 Total length including transition 113 m 6.4 Width 15.8 m each 6.5 Height 17 m 6.6 Flushing system S4 system 7 Waterways 7.1 Pair Tunnels (headrace) 7.1.1 Length 32 m 7.1.2 Type Inverted D shaped; Concrete lined 7.2 Headrace Tunnel

ii Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project

SN Items Description 7.2.1 Length after pair tunnels 4322 m 7.2.2 Type Inverted D shaped; Concrete lined 7.2.3 Cross section Internal Finished Diameter 3.85 m 7.3 Surge Shaft 7.3.1 Type Underground and exposed to surface 7.3.2 Internal diameter 11 m 7.3.3 Height 60.5 m 7.4 Penstock 7.4.1 Material Mild steel 7.4.2 Length before bifurcation 218.6 m 7.4.3 Length after bifurcation 54.4 m 7.4.4 Internal Diameter 3.55 m 7.4.5 Shell Thickness 10-20 mm 8 Powerhouse 8.1 Powerhouse type Surface 8.2 Outer Dimension of PH 32m long and 16.9 m wide 9 Tailrace 9.1 Design tailwater level 458.5 masl 9.2 Length 93.1 m Longitudinal slope 1 in 1500 10 Turbine 10.1 Turbine type Vertical Axis Francis 10.2 Number of units 2 Numbers 11 Power and energy output 11.1 Gross head 116.8 m 11.2 Rated net head 107.22 m 11.3 Design discharge 37.73 m 3/s 11.4 Installed capacity 34.70 MW Annual estimated energy per excluding 6% 11.5 177.61 GWh outage 11.6 Firm energy excluding outage 132.86 GWh 11.7 Secondary energy excluding outage 44.75 GWh

Other project facility requirements are the internal access roads; camps for engineers, contractors, and labours; quarry/burrow pits; construction powers, aggregate crushing, storage yards, Baching plants and mechanical yards; spoil disposal sites etc. All of these facilities will be located close to the headworkws and powerhouse sites. A total of of 47.718 ha of land will be required for the project. Of the total, 22.508 ha is permanent land required while 25.21 ha is temporarily required. A total of about 6 to 800 construction workforce is required on daily basis during construction period whereas the operation phase requirement is less than 50. The project is planned for construction within a period of four years. Estimated cost of the project is about 5 billion Nepali Rupees. The project districts are Pachthar and Taplejung whereas the projects VDCs to be impacted directly and indirectly are Amarpur, Panchami, Thechambu, and Namgkholyang.

3. Legislative and Regulatory Considerations A number of over arching and sectoral policies, legislations, and guidelines of the government of Nepal are attracted by the project. Similarly, the EA, forest, indigenous people, involuntary resettlement and cultural safeguard policies of the World Banks are attracted by the project. The policies, legislative mechanisms, guidelines and standards of the Government of Nepal to safeguard the environmental aspects (Environmental Assessment EA -0P 4.01, and Forestry - OP 4.36) of the proposed project are adequate and broadly conform to the World Bank’s natural

iii Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project environment safeguard policies. However, the provisions for the involuntary resettlement, cultural properties and indigenous people are not adequate to comply with the World Bank’s safeguard policies.

4. Baseline Environment 4.1 Physical Environment 4.1.1 The project area is located in the Mid-Mountain Physiographic Zone. Characteristic of the Mid-Mountain Physigraphic Zone is a ramification of the elevated mountaineous topgraphy (>1500m) with intervaining deeply entreched “V”shaped valleys (<700m). The steep mountain slopes, particularly the valley slopes and the upper middle hillslopes reflect the geomorphic dynamism of the area related to the mountain building tectonic activities. Most of the project structures and facilities are located at the valley section represented by active alluvial flood plains or on alluvial tars. 4.1.2 Geologically the area lies in the Lesser Himalayan Crystalline to Meta-sedimentary rock sequences representing Taplejung Window. The headworks area is comprised of dominantly granites. The settling basin, and headrace tunnel is made up of granite, gneisses, schists, phyllites and quartzites whereas the surge shaft and powerhouse areas consist of phyllite, schist, and quartzite. 4.1.3 Two distinct climatic zones sub-tropical and warm temperate to cool temperate climate at the immediate vicinity of the project. The monsoon has a greater influence on the precipitation of the area and also controls the summer season temperatures and wind pattern. The monsoon commences from June till September. Nearly 80 percent of the rainfall occurs during the monsoon season. 4.1.4 The Kabeli River is one of the tributaries of the Tamor River and has a total length of about 52.4 km at intake site. The catchment area of the Kabeli River is 864 km 2 at the barrage site. Tawa Khola, Phawa Khola and Inwa Khola are the major tributaries of the Kabeli River upstream intake. The river at intake has an average annual flow of 51.57m 3/s, minimum being in the month of March 8.11 m 3/s and maximum in the month of August 151.09 m 3/s. 4.1.5 About 40 to 50 landslides are seen within the catchments of Kabeli above Headworks. No recent active landslide features have been reported or noted close to the project development sites. The maximum recorded suspended sediment concentration is 13,616 ppm. The Monsoon is the period of high sediment load in the river, 4.1.6 Since the area is located in rural setting, the ambient air quality, water quality and noise levels are not been influenced by the industrial pollutions. The Kabeli river is not used for consumptive purpose downstream of the intake, however, the river water is used for recreational and cultural purpose such as bathing, and dead body cremation. 4.1.7 The majority of the land of the project affected VDCs is occupied by agricultural land followed by forest vegetation. Settlements are scattered and are located at distance from the project development sites. The land use by the project is dominantly alluvial flood plain with limited agricultural and forest land. 4.1.8 The earthquakes generated around the project area are mostly of a magnitude less than 4 and has low seismic risk. The project site falls in the seismicity area-3 close to its border with the seismicity area-2. There are few glaciers lake in the Kabeli catchment. Most of the glacial lakes of the catchment are small. None of these lakes are identified as potentially dangerous lakes in the study conducted by ICIMOD and UNEP in 2001.

4.2 Biological Environment 4.2.1 The project area lies outside the biodiversity conservation sites (National Parks, Wildlife Reserves, Conservation Areas, Strict Nature Reserves, Hunting Reserves and Buffer Zones) officially declared by the Government of Nepal. 4.2.2 The Kabeli Hydroelectric Project components lie in Upper tropical to sub-tropical Phytogeographic zone of eastern Nepal. The dominant tree species occurring in the upper tropical zone is Shorea robusta and other major associated species are Adina cordifolia, Lagerstroemia parviflora, Terminalia alata, T. chebula , T. bellirica . In the subtropical region as dominant tree species. The major associated tree species are Schima wallichii, Pyrus pashia, Juglans regia, Lyonia ovalifolia etc. Altogether 168 plant species are recorded in the project affected areas. Among these species, 61 are trees, 22 shrubs, 62 herbs, 15 climbers, 2 lichens, 4 mushrooms and 2 epiphytic plant species. 4.2.3 The headworks and head pond area located at right bank of the Kabeli river lies in the private forest of Thechambu VDC, Taplejung district where as the headworks and head pond

iv Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project

area located at the left bank of Kabeli river lies in the Kabeli Garjite and Thulo Dhuseni Community Forests of Amarpur VDC. 4.2.4 Shorea robusta, Bombax ceiba , Dioscorea deltoida, Different lichens species, and Different species of Orchids are Endangered/Threatened or Protected species under the Government of Nepal (Forest Act 1993), IUCN Red Book, and CITES Annexes. 4.2.5 The study area comprises of traditional farming systems characterized by integrated crop-livestock production, sub-systems for the subsistence of the households. Farmers cultivate mostly in terraced upland and grow a number of cereals like maize, millets, wheat, Simal tarul ( Manihot esculenta ), various pulses, mustard, vegetables etc and some perennial crops like fruits, fodder, and timber species mostly for home consumption under rain-fed conditions. 4.2.6 Due to the extension of agricultural field since the time of local migration, the forest is open and in degraded conditions. Tree stands are distributed only in the inclined areas where human settlements and agricultural practices are impossible. Ground vegetation, in the moist valley basin area, is dense while a south facing slope and landslide area is scarce. The forest areas are not a suitable habitat for medium and large animals and diverse biodiversity. 4.2.7 The local project area consists of a few mammal species as the forest area is scattered due to high human pressure and agriculture extension. A total of 22 mammalian species have been reported from the project affected VDCs. Similarly, 38 avian, and 13 herpetofauna have been reported. Among the reported mammalian species 9 are of conservation significance as per the govenment of Nepal, IUCN redbook and CITES Appendices , while none of the avian and haerpetofauna are under the conservation list. 4.2.8 A total of 31 species of fish were reported in the Kabeli river. Out of total, 19 are reported species while12 species were collected/recorded during the field survey. Among 31 fish species, four species were long range migratory species ( Tor putitora , Tor tor, Bagarius yarrellii and Anguilla bengalensis ), four species ( Neolissiochilus hexagonolepis , schizothoraichthys spp . and Labeo dero ) were medium distance migratory species and the rest were resident species. 4.2.9 The major class of phytoplanktons recorded in 3-sampling stations in the field visit is Bacillariophyceae, Cyanophyceae, Chlorophyceae and Xanthophycea. Similarly a total of five species of zooplankton of 2 different orders were observed in the Kabeli River.

5. Alternative Analysis No project alternative is rejected as it does not help enhance the current ongoing load shedding in the country, nor it help development aspiration of the local area people of the project development site. Other alternative to electricity power were rejected, as hydropower is a renewable resource abundant in the country while other require a number of technical and recurrent financial burdens for the power development. The project location alternatives within the given geographical coordinates were evaluated and the proposed location and design alternative is considered best from environmental and economical perspective.

6. Environmental Impact and Mitigation The site clearance in the forest area involving a loss of 1.57 ha of forest land with a total of 200 trees and 153 pole size vegetation of 2228293 Nepali rupees monetary value in the current market is of concern environmentally, as it involves loss of wildlife habitat as well as loss of goods and services from the forest area. Since the forest is of degraded nature, the envisaged impact is considered comparatively low. Similarly, the use of firewood, NTFP harvesting, parching of wildlife etc by the construction workforce is also of environmental concern. To minimise the impact measures such as compensatory afforestation as per the forest guideline (2006), lease compensation to the forest land area, clearing of the forest vegetation as to the requirement of project structures and facilities only, technical and financial assistance to the affected Community Forests and Leasehold Forest User Groups, preference to the local for project employment, provision of kerosene to the workforce for cooking, Prohibition on the sale and purchase of the local NTFP and fishes in the camps, Prohibition in roaming in the local forest area by the outside workforce etc.: will be implemented. Loss of about 0.33 ha of community forest and 0.97 ha of leasehold forest used by the local community forest user groups and lease holders is a direct impact to the people. To minimise the

v Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project impacts forest enhancement programs and production loss of the lost forest area equalling to five years will be provided to the affected forest users. The barrier created by the dam structure to the aquatic life is a severe impact of the project in the operation phase. Similarly the diversion of water is the other issue aquatic ecology concern as it dewaters the stretch of the river downstream till the confluence with Tamor. Further it prohibits the migrating fish species upstream, restricting the spawning grounds and diversity. To minimise the above impacts measures such as provisions of fish ladder in the dam structure, release of 10% minimum monthly flow as environmental flow will be implemented. The impacts of water ponding in the reservoir, reservoir bank failure, river water quality changes, eutrophication potentials, micro climate changes etc are relatively less significant. However, measures such as removal of mat, protection of the banks, restriction on fishing in the dewatered sections etc will be implemented. The secondary environmental issues such as impacts of land take, impacts on land use, impacts on geology and soil, land instability and erosion due to quarry and burrow operations, impacts on natural springs and built structures along tunnel have a moderate to low impacts on the project area. To minimise the impacts a range measures such as compensation to the land at market price, controlled quarrying operations, protection of cut slopes above 3 meter height through civil and bio- engineering, provisioning of water supply to the users of affected natural springs, compensation to the affected structures etc will be implemented. The other environmental issues such as change in the ambient air quality, water quality, and noise levels in the construction phase, land pollution and erosion related to muck disposals have low to moderate and even high impacts on the local area. To minimise the impacts to acceptable levels measures such as sprinkling of water, restriction on the use of noisy activities in critical hours, establishment of waste management systems at camps, and construction sites, discharge of waste waters after proper treatment etc will be implemented.

7. Environmental Management Plan Environmental monitoring plans include the Environmental Monitoring during Pre construction, Construction and Operation phases for baseline, compliance and impact monitoring of the project activities. A set of measurable indicators have been selected for the monitoring and the plan includes methods of monitoring, monitoring frequency, monitoring location, and personnel responsible for monitoring along with the costs required for monitoring. To ensure that the environmental issues of the project development and operation in the project impact areas are properly addressed during the project life cycle, the KAHEP project management, as the primary responsible institution, will implement the key elements stipulated in this environment management plan. The environmental management plan has two components ; the environmental management activities and implementing organ. The environmental management actions for the project is broadly included in the following headings ; Permits and Approval Plan ; Environmental Training Plan, Resettlement and Rehabilitation Plan ; Construction Camps and Traffic Management Plan ; Pollution Abatement Plan ; Terrestrail Ecology Management Plan, Acqautic Ecology Management Plan, Erosion Abatement and Muck/spoil Management Plan, Public Health and Occupational Safety Management Plan, Emergency Management Plan, and Rehabilitation Plan. The elements stipulated in the above plan go hand in hand throughout the project life cycle. As per the Nepalese Environmental Protection Rules, environmental management of the project is the responsibility of the proponent. To ensure that the designed Monitoring Plans and Environmental Management Plans are duly implemented, monitored, assessed, evaluated and disseminated to the stakeholders for feedback and improvement, the KAHEP, PMO should establish a separate Environmental and Social Unit (ESU) of its own. The proposed ESU has four major roles to play. First it will implement and administer land and property acquisition, resettlement and rehabilitation of affected parties. Second it will implement and administer the VCDP and other enhancement program in the project-affected areas. Third it will disseminate information to the project's stakeholders and co-ordinate with the different line agencies. Fourth it will monitor the environmental and social measures and its performance as per Environmental Management Plan and Environmental Monitoring Plan. The ESU will comprise of two sub-units, namely Environmental and Social Implementation Sub- unit (ESISU) and Environmental and Social Monitoring Sub-unit (ESMSU). The former sub-unit will have the responsibility to implement environmental provisions not included in the contract documents of the contractor and liaison with the other governmental and non-governmental organizations. As these works require official responsibilities, the members of this sub-unit will be the regular members

vi Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project of the proponent organization with past experience in the implementation of environmental provisions and also in the operation of Public Information Center (PIC) and grievance handling. The ESMSU, on the other hand will be managed by the consultants with experience in environmental monitoring of the Hydropower projects in the past. As the project envisages a third party monitoring during construction, the experienced consultants will be contracted to fulfill this requirement. They will work in close co-ordination with project ESU coordinator and ESISU and will report directly to Project ESU coordinator. The project ESU shall be established at least six months before the project's civil construction award. The ESU shall function directly under the Project Manager but the ESMSU will have a responsibility to co-ordinate with the project's Supervising Consultant, Whereas ESISU will coordinate with ESU coordinator and stakeholders of the project such as Local VDCs, DDCs, NGOs, CBOs, affected parties, DOED, and MOE. The stakeholders involved in the project represent different institutions. There is a need to have an interagency coordination. Environmental and Social unit of the KAHEP project management office is the key agency which will be involved in the interagency coordination as it has been assigned key role in the information dissemination and operation of the Project Information Center at the project site. The ESU chief will be responsible for the organization of meetings with the local stakeholders, particularly district and VDC based stakeholders of the project affected area. At least once in two months an interagency coordination meeting will be called by the ESU chief to give first hand information of the project activities, progresses, and issues that need participatory approach for resolution of conflicts etc. The inputs from the stakeholders will be taken into consideration for further actions. Information on the progress of action on issues raised by the stakeholders will also be shared with the local stakeholder in these meetings. The ESMSU under ESU section will carryout monitoring works of the construction contractors and prepare monitoring reports bimonthly during construction phase. The ESMSU consultants will compile the Environmental monitoring report of the construction phase within 3 months of the construction completion and submit to proponent. Proponent shall pass the report to stakeholders to get feedback and provide database of environmental management works of the Proposal for future use. 7.10 Environmental audit of KAHEP will begin after two years of the commencement of the project. The KAHEP will make necessary arrangements for this Audit through GON or its nominated auditor.

8. Environmental Mitigation, monitoring, auditing and Management Costs A total of additional NRs. 2,36,94,177 will be required for the mitigation activities for the project. The breakdown of the mitigation cost for construction and operation phase is NRs. 98,44,177 and 1,38,50,000 respectively. A total of NRs. 10897500 will be required for environmental monitoring for the pre-construction, construction and operation phases. The breakdown of the cost for pre-construction, construction and operation period is NRs. 11,00,000, 44,00,000 , and 53,97,500 respectively. A total of NRs. 3,02,23,575 is allocated for the Project Environmental Management team as a part of management institutional cost. Estimated cost for the post construction environmental audit is NRs. 7,50,000 Cost allocated in the project civil cost for environmental measures is NRs. 15,20,58,935 The sum of the Environmental costs for the project is estimated as NRs. 21,76,24,187 , which is about 4.37 percent of the project cost.

vii Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project

Acronyms and Abbreviations

AAPA Aquatic Animals Protection Act AP Affected person B.S Bikram Sambat BOD Biological Oxygen Demand BOOT Build, own, operate and transfer BPC Butwal Power Company Ltd CITES Convention on International Trade in Endangered Wild Fauna and Flora cm Centimetre CPUE Catch per unit effort DBH Diameter at Breast Height DDCs District Development Committees DO Dissolved Oxygen DOED Department of Electricity Development DPs Displaced Persons E East EA Environmental Assessment EIA Environmental Impact Assessment EMP Environmental Management Plan EPA Environment Protection Act EPR Environment Protection Rule GLOF Glacier Lake Outburst Floods GoN Government of Nepal GWh Gigga Watt hours ha Hector HEP Hydroelectric Project HH Household IEE Intitial Environmental Examination IUCN World Conservation Union KAHEP Kabeli A Hydroelectric Project KEL Kabeli Energy Ltd Km Kilometer km 2 Square Kilometre kV Kilo Volt LRMP Land Resource Mapping Project m m m3 Cubic meter masl Meter above sea level mm Millimetre MoEn Ministry of Energy MoEnv Ministry of Environment MW Mega Watt N North NEA Nepal Electricity Authority NESS Nepal Environmental and Scientific Services NPWCA National Parks and Wildlife Conservation Act ºC Degree Celsius Ops Operational Policies PAF Project Affected Families PDA Project Development Agreement RAP Resettlement Action Plan

a Environmental Impact Assessment Study of Kabeli ‘A’ Hydroelectric Project

RPF Resettlement Policy Framework s Second SWCA Soil and Watershed Conservation Act TDS Total Dissolved Solids ToR Terms of Reference TSS Total Suspended Sediments UN United Nation VDCs Village Development Committees WMI Monsoon Wetness Index

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HCPL SA of KAHEP

EXECUTIVE SUMMARY 1 DESCRIPTION OF THE PROJECT Kabeli Energy Limited (KEL) is the proponent of Kabeli-A Hydroelectric Project (KAHEP). KAHEP was opened for global bidding to develop under Build, Own, Operate and Transfer (BOOT) model. A joint venture led by Butwal Power Company Limited won the bid and formed KEL to develop the project. KEL, in the status of a Project Company, signed a Project Development Agreement (PDA) with Department of Electricity (DoED) for the development of KAHEP. KAHEP is a 37.6 MW peaking run-of-the-river hydropower project on the Kabeli River in Eastern Nepal. KAHEP is located about 800 km east of Kathmandu. Kabeli River forms a natural border between the Panchthar and Taplejung districts. The project area of KAHEP covers four Village Development Committees (VDCs), namely, Amarpur and Panchami of Panchthar district and Thechambu and Nangkholyang of Taplejung district. KAHEP has been classified by the World Bank as a 'Category A' project. Hydro Consult Private Limited (HCPL) has carried out the Social Assessment (SA) in accordance with the Nepal Government’s statutory framework and World Bank’s Policies and Guidelines. On the basis of SA study a Social Action Plan (SAP) report is prepared. The major project features of the KAHEP are diversion barrage, side intake, settling basin, headrace tunnel, surge shaft, surface penstock and surface powerhouse. The diversion barrage of 14.3 height with provision for ponding will be constructed at 2.5 km upstream of Kabeli Bazaar in Dhuseni village of Amarpur VDC on the left bank and Khudurke of Thechambu VDC on the right bank. The water will be conveyed by 60.2 m long pair tunnels followed by a 4326.8 m long headrace tunnel to a surface powerhouse located adjacent to the Piple Khola on the left bank of the Tamor River. About 600 to 800 of skilled, semi skilled and unskilled human resources are expected to be required during the proposed project implementation. The overall estimated construction time is about 4 years. It is expected that the implementation of this project will help to reduce the power shortage to some extent by providing electricity to the Integrated Nepal Power System (INPS). 2 OBJECTIVES OF THE STUDY The overall objective of SA study is to assess and analyze the likely social issues arising from the implementation of the project and to recommend mitigation and enhancement measures for adverse and beneficial impacts. The SA report will act as a main document to prepare SAP during the detailed project planning exercise. An interdisciplinary core team of experts carried out the SA study. 3 APPROACH AND METHODOLOGY OF THE STUDY An issue-focused multi stage study approach has been adapted for the study. Series of the consultation with the technical team and representative of the World Bank before and the after the field visit were made to exchange information and highlight potential issues relevant for the SA. Both primary and secondary source of data have been used as required. The primary data were collected through household survey, Focused Group Discussion (FGD), in depth interview and consultation meetings with the various stakeholders. Comprehensive household Interview schedule for the potentially affected households and specific checklists for FGD were used to elicit the information. Similarly, review of published and unpublished reports like CBS reports, District Development Committee (DDC) and VDC profiles, all the relevant information about the project VDCs and project district collected by various organization along with the Environmental Impact Assessment (EIA) study carried out by Nepal Consult (P) Limited in 1998 were the important Source of secondary data for this SA study. 4 EXISTING SOCIO-CULTURAL ENVIRONMENT 4.1 The Eastern Development Region Eastern Development Region (EDR) is one of Nepal's five development regions. The total population of this region is 5,344,476 (2,670,622 male and 2,673,854 female) having population density 188 person/km2 with annual population growth rate of 1.84% per year. The average family size for this region is 5.28. The Adivasi Janajati groups (indigenous people) constitute about 48.5% of the xv

HCPL SA of KAHEP population followed by Hindu high caste groups (25.3%), Dalits (10.7%) and others various cast groups (15.5%). About 84.3% households have access to safe drinking water and 46.1% have the access to toilet. Firewood and Kerosene are the major household energy sources for cooking and lighting respectively. The literacy rate of EDR is 55.7 % (CBS, 2001). 4.2 Project districts The project districts, Panchthar and Taplijung, provide habitat to about a population of 3,36,654 having population density 163 person/km2 and 36.39 person/km2 respectively. The average population growth rate for Panchthar and Taplejung is 1.0 % 1.45 % respectively. Limbu constitute the highest percentage of population in both the districts. Kirat and Hindu are the two major religions of the project districts. The literacy rate for Taplejung and Panchthar districts is 55.40% and 52.43% respectively. Both the districts have limited transportation and electricity facilities. The overall economic structure of the project districts is characterized by a mixture of farm and nonfarm activities. Farm activities are subsistence in nature that are characterized by fragmented land-holding and low farming inputs. Only about 7.58% of the land in Taplejung district and about 48% in Panchthar district can be used for agricultural cultivation. Paddy, maize, wheat, millet, and barley are the major crops of these districts. Remittance, small trade and businesses, cottage industries, agro and forest based enterprises and service represent the major non-farm activities of the project districts. Remittance plays a major role in the overall economy of these districts. 4.3 Project VDCs Amarpur and Panchami VDCs of Panchthar district and Thechambu and Nangkholyang VDCs of Taplejung district are the project affected VDCs. Major Project structures like headwork, surge shaft, waterways and powerhouse are located in Amarpur VDC. Population of these project VDCs is 21,098 (48.1% male and 51.88% female) having sex ratio of 1:1.07. Average household size is 5.54. The project VDCs has mixed communities including various caste and ethnicities. These communities reflect a wide range of cultural, linguistic and religious background. Adivasi Janajati (Limbu, Rai, Tamang, Newar and Majhi) constitute about 53.38% followed by 39.47% Hindu High Caste (Brahmin/Chettri) and 6.13% Dalits (Damai, Kami and Sarki). Limbu is the dominant group in all four VDCs. Nepali, Limbu and Bantawa are the major mother languages spoken by the local population. Similarly, Hindu (53.06%), Kirat (37.05%) and Buddhism (9.52%) are the major religions practiced by the local residents. The literacy rate is 49% (55.3% male and 44.7% female). Like the project districts, the overall economic structure of these project VDCs is characterized by a mixture of farm and nonfarm activities. 4.4 Surveyed households In total 46 households from the impact zone of three project VDCs (Amarpur 30 HHs, Panchami 2 HHs and Thechambu 14 HHs) were taken for detailed socio-economic survey. The total population of the surveyed household is 363 (51.24% male and 48.76% female) with an average household size of 7.89 that is higher than the national and project VDCs average. Majority of the households (62%) represent joint family structure followed by nuclear (29%) and extended (9%). About 50% of the households follow Kirat religion followed by 34.78% Hindu and 15.22% Buddha religion. The literacy rate of the surveyed household is 84.39%, that is better compared to the average literacy rate of the project VDCs and districts. About 64.46% of the populations are economically active and most of them are involved in subsistence agriculture. About 43.48% reported agriculture as their only one livelihood source whereas rest of the households are involved in secondary occupations like foreign employment, services and daily wages in addition to agriculture. The average land holding of the surveyed household is 1.59 ha that is higher than the districts (Panchthar 0.81ha and Taplejung 0.89 ha) and national averages (0.80 ha). In terms of caste and ethnicity, land holding is the highest among Limbu (1.74 ha/HHs) and the lowest among Tamang (1.24 ha/HHs). Of the total cultivated land, about 54.70% is Khet (irrigated land) and 45.29% Bari (non irrigated land). Paddy, maize, wheat, and pulses are the major crops produced in the area. Households rear cattle, goats, buffalo, pigs, duck and poultry as an important subsistence activity and source of income. The average annual income of these households is NRs. 179,457.14. It is highest (NRs 301,100.00) for Brahmin and lowest (NRs.

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86,000.00) for Majhi. This average household income is better in comparison to the national figure. Even though most of the households are engaged in agriculture, remittance has the highest contribution (44.92%) in the income of these households. The average annual expenditure is NRs. 121,921.00 that is highest for Brahmin (NRs. 225,648.00) and lowest for Majhi (NRs. 77,476.00). Among the various expenditure sources, people spent highest amount on food (30.52%) followed by clothing, health and education. The situation of sanitation in the project areas except Pinasi village is satisfactory. About 65.21% households have access to safe drinking water and about 87% of households have toilet facilities. Typhoid, asthma, anemia, blood-pressure, sugar, lung related diseases and worms are the common disease among the surveyed households. Health facilities in the project area consist of only few health post and sub-health posts. Majority of the population prefer Dhami/Jhankri (local healers) for treatment. Firewood is the only fuel used for cooking by all the households. Most of the households (87%) have the access to telephone/mobile service provided through various service provider companies. The Mechi Highway is the only one road network that connects the area with respective district headquarters. 4.5 Adivasi Janajati There is a mixed community including various caste and ethnicities. Limbu, Tamang and Majhi are the Adivasi Janajati groups that are directly affected by the project activities. These communities reflect a wide range of cultural, linguistic and religious background. These, Adivasi Janajati groups have special relationship with the land and territory. They have their attachment to the natural resources and show a sense of ancestral territory. 4.6 Gender, disadvantaged and vulnerable groups In the context of KAHEP vulnerability, refers to households and communities that may have considerable difficulties in participating in the livelihood restoration process and benefit sharing due to serious lack of required skills, resources, experience and organization. In the project area Indigenous Peoples, Dalits and women are regarded as the disadvantaged and vulnerable groups. 5 ASSESSMENT OF PROJECT ADVERSE IMPACTS The execution of KAHEP will have an impact on four VDCs-Amarpur and Panchami of Panchthar district and Thechambu and Nangkholyang of Taplejung district. • Land Acquisition: The project will require 47.718 ha of land (22.508 ha permanent and 25.21 ha temporary). In terms of land use, 61.10% is the riverine area including riverbeds, river flood plains and elevated banks. Agricultural land (cultivated and marginal) required is 35.60 % followed by 3.30% of the forestland including Community, communal and Leasehold Forests. Of the land use types acquired permanently, only 7.678 ha is agricultural land and 1.57 ha is forest land. The agricultural land required temporarily are the sites of construction camps and storage facilities totaling to 9.31 ha. As per the local production practice, about 14.784 Metric Ton (MT) of agricultural production will be annually lost due to permanent land acquisition. The project will remove 141 trees and poles from the private lands. • Possible loss of access to NTFP: A total of 0.33 ha forest area of Kabeli Garjite and Thulo Dhuseni Community Forests (CF) at the headworks site will be acquired permanently by the project for construction of project structures. In addition, the project will acquire 0.97 ha of Pinasi Leasehold Forest at the powerhouse site. The CFs at the headworks are used by the local forest users to collect Non Timber Forest Products (NTFPs) for religious and medicinal purposes. Acquisition of forest area in these CFs will result into reduced access to NTFP. • Impact on Fishing: Diversion of the Kabeli River will have effects on riverine fish resources of the Kabeli from November through June for nearly 4.6 kilometers downstream of dam. There are no professional fishermen in this zone. However, occasional fishing by the downstream communities to collect fish for household consumption as protein supplement will experience some impact from the reduced flow.

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• Socio-Cultural Impacts: One rest house and two ritual sites of Majhi at the powerhouse site are in close proximity of construction that will experience induced pressure. Similarly, the Panchyan Shivalaya Temple at Kabeli Bazar and three cremation sites in the dewater zone (4.6 km) will be affected by the reduced flow. Moreover, the reduced flow will have impacts on religious practices and fish species that are used for customary and ritual practices by Adivasi Janajati and local population. • Construction related/contractor operation related impacts: During construction, the project area will witness an increase in population due to an influx of workers and service providers. The increased population will further stress the local water supply, health, and sanitation facilities, especially around the construction camps. In addition, lack of proper sanitary measures and increases in water pollution and waste can lead to outbreak of epidemics and diseases such as jaundice, typhoid and sexually transmitted diseases. The construction activities such as blasting, using heavy equipment and working in dangerous areas may cause accidents and injuries. The influx of large number of people with different social and cultural backgrounds and the sudden inflow of cash at the same time may result into social abuse such as alcohol consumption, prostitution (illegal) etc. These impacts may lead to resentment and friction among local residents and the incoming workers that will affect the peace and harmony of the project area. • Impact on Adivasi Janajati and disadvantage groups: The Adivasi/Janjati and disadvantaged groups of the project area, though belong to a different ethnicity and/or group, share common approach to their economic and livelihood activities. The project area is a mixed community where Adivasi/Janjati and other groups live together. The Indigenous Peoples, women, children and vulnerable groups of the project area will also experience the above- mentioned impacts, and there are no specific impacts especially for this group. However, the magnitude of these impacts for these groups might be higher because of their low marketing skills and lack of professional competencies. 6 ASSESSMENT OF PROJECT BENEFITS AND DEVELOPMENT OPPORTUNITIES KAHEP facility will result in many community benefits at the national, regional and community levels. In addition to the resettlement and compensation package that each directly affected household and person will receive, KAHEP is committed to provide community benefits in a sustainable manner by implementing the SAP. The SAP measures are expected to benefit the wider communities in the project area, beyond those individuals and households who have been or will be directly affected. KAHEP is committed to strengthen health, drinking water and education facilities so that the wider project-affected-population can enjoy improved health care, drinking water and educational services. KAHEP will provide training and financial services to develop and strengthen the existing cooperatives, savings, and credit association in the project area. It is expected that a minimum of 50 % of the unskilled workforce will originate from the affected villages for the construction phase of the project. KAHEP, in partnership with potential local NGOs, will develop skills refresher courses to meet the needs of interested project affected persons. The project will cause an economic spin-off in the project impact area. The project will provide 37.6 MW of power to the much needed electricity grid of Nepal. This will have large positive impact on the macro-economic growth of the country and will reduce loadsheding. Moreover, hydropower is a source of clean renewable energy. As per the Electricity Act, 50% of the royalty that Government of Nepal (GoN) will receive during the 30 year license period will be given to the districts where the project is located. To facilitate possible electrification, KAHEP will undertake a need assessment within the affected villages, and identify individual households who have desire and have ability to pay for the electricity.

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7 PUBLIC CONSULTATION, PARTICIPATION AND DISCLOSURE A Public Consultation, Participation and Disclosure (PCPD) framework is developed for the KAHEP to develop and maintain avenues of communication between the project and stakeholders in order to ensure that their views and concerns are incorporated into project design and implementation with the objectives of reducing or offsetting negative impacts and enhancing benefits from the project. PCDP constitutes of following activities: • Project stakeholders identification; • Mechanism for stakeholders' participation; • Consultation methodologies; • Consultations and stakeholder engagement; • Information discloser and dissemination; and • Local government endorsement. 8 DEVELOPMENT OF PROJECT RESETTLEMENT AND REHABILITATION POLICY The resettlement principles of KAHEP adopted the Land Acquisition Act, 2034 (1977), the requirements of the World Bank policy on Involuntary Resettlement, Indigenous People and other relevant acts, policies and guidelines related to hydropower development. The Resettlement Policy has been prepared based on the general findings of the census survey of APs, FGDs with local stakeholders, field visits, and meetings with various affected persons residing in the different locations in the project area. The principals adopted to execute the resettlement policy of KAHEP includes: (i) minimization of the human displacement and resettlement, (ii) identification of all project impacts, (iii) resettlement planning, budgeting and implementation, (iv) meaningful public consultation, (v) assisting to restore, and improve the livelihoods of the affected persons, (vi) special consideration for indigenous peoples and vulnerable groups, (vii) procedures for grievance and monitoring, (viii) accounting the resettlement planning with regional socio-economic development context and (ix) complying resettlement policy with all legal and policy provisions. Consequently, the compensation policies of KAHEP have been formulated as a part of the overall policy on resettlement/relocation. This covers the identification of types of loss and corresponding modes of payment of compensation to the project affected parties. 9 PROPOSAL FOR MITIGATION AND DEVELOPMENT MEASURES Landowners of the permanently acquired lands of project components and project facility sites will be compensated in cash at the replacement cost. The counseling services and trainings on scientific agriculture technologies will be provided to the affected parties. The forest loss will be compensated on the basis of the government policy. To mitigate the potential impacts caused by the reduced water flow, 10 % of the mean monthly flow of the driest month will be released downstream during the dry season. Additionally, the environmental flows thus released will be cannalized at the stretch of the cremation. The fish ladder will be constructed for the free migration of the fishes. The project will support livelihood restoration of affected households due to reduced water flows through employment, skill training and capacity development. The project will allocate adequate funds for improvement of existing infrastructure as needed. Provision of better and higher levels of services including water supply, sanitation, health and drainage will be carried out. Project will allocate funds for the support of schools and health posts. To prevent and mitigate labor force impacts, developing measures will be proposed with the participation of affected communities and incorporating these into contractual implementation arrangements with adequate financial provision. The local people will be given priority for jobs during the construction period.

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For the occupational health and safety issues an emergency response contingency plan will be prepared and the contractor(s) will be made responsible to adopt Safe Construction Practices (SCP) in order to minimize construction related accidents. The pondage area will be fenced or closed as a precautionary measure. Similarly, warning signs/posts, siren system will be installed to inform the local people about the potential dangerous areas. In order to address impact on the vulnerable and disadvantage group, a Vulnerable Community Development Program will be designed and implemented as a part of SAP. It is recommended to implement the project under the condition that the social safeguard measures outlined in the SAP are fully and effectively implemented followed by its monitoring process in action.

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