Social Due Diligence Report 41957-014 30 June 2012 Social Due Diligence Report of Dalkia Harbin Heating Network Project for the PRC: Municipal District Energy Infrastructure Development Project Prepared by Dalkia Sunshine (Harbin) Heat Power Co., Ltd. for the Asian Development Bank (ADB) This social due diligence 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. 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. Social Due Diligence Report of Dalkia Harbin Heating Network Project Dalkia Sunshine (Harbin) Heat Power June 30, 2012 CONTENT 1 Project Introduction ................................................................................................................4 2 Resettlement ............................................................................................................................4 2.1 Main Plant ..........................................................................................................................4 2.2 Primary Heating Pipelines .................................................................................................5 2.3 Substations ........................................................................................................................8 2.4 Secondary Heating Pipelines ......................................................................................... 10 3 Employment of Workers from HOBs Connected .............................................................. 10 4 Conclusions .......................................................................................................................... 15 5 Corrective Plan ..................................................................................................................... 15 6 Appendix 1. Certificate of Land Using on State-owned Land ......................................... 16 7 Appendix 2. Approval of transferring of land using right from the State-owned Assets Supervision and Administration Commission of Harbin People’s Government................... 17 II TABLE AND FIGURE Table 1 Summary of the Primary Heating Pipelines (2008-2011) ...............................................7 Table 2 Summary of Substations ..................................................................................................8 Table 3 Employment of Workers of HOBs Connected (2009-2011) ........................................ 12 Figure 1 Location of the Project ........................................................................................................4 Figure 3 Main Plant...........................................................................................................................5 Figure 4 Relocated Community for HHs affected by Road Construction .........................................6 ABBREVIATIONS ADB - Asian Development Bank AAOV Annual Average Output Value AHs Affected Households APs Affected Persons HD House Demolition LA&R Land Acquisition and resettlement PRC - People’s Republic of China PMC Property Management Company Units Currency unit = Yuan (CNY) 1.00 yuan = $0.15 1 hectare = 15 mu 2 1 mu = 667 m III 1 Project Introduction 1. Dalkia Harbin acquired a majority interest in Sunshine (Harbin) Heat Power Co.Ltd., a company which undertakes the development and operation of the South West heating network that supplies the southern part of Nangang District in the southwest of Harbin city, capital of Heilongjiang Province. 2. Southwest Heating Network Project was approved by National Development and Reform Committee on May 20, 2005. Generally, the project includes heating plant construction and heating network expansion. Its service scope is south to Xihuan Road, north to Harbin-Mudanjiang railway, west to Harbin-Changchun railway, east to Haping Road. The total service area is 51.6 square kilometer. The location of the project is shown in Figure 1. Figure 1 Location of the Project 2 Resettlement 2.1 Main Plant 3. The area of land occupied by main plant of Sunshine (Harbin) Heat Power is 440 mu (293,302 square meters), which was acquired in 2005 by the local government. The land using right of state-owned land was transferred to Sunshine (Harbin) Heat Power in 2007 when the joint venture was established. Certificate of Land Using Right on State-Owned Land is presented in Appendix 1. Approval of transferring of land using right from the State-owned Assets Supervision and Administration Commission of Harbin People’s Government is presented in Appendix 2. 4 Figure 2 Main Plant 4. Land acquisition was implemented by the Nangang District Land Resource Bureau and other government agencies in 2005. Qianjin village of Chaoyang Town was affected. The compensation rates were calculated based on the Land Administration Law of the People’s Republic of China (effective from January 1, 1999) ,Land Administration Regulation of Heilongjiang Province (effective from January 1, 2000), and Notice of Annual Average Output Value of farmland issue by Harbin People’s government (Hazhengfa200021 ). Land compensation and resettlement subsidy was 16 times of AAOV, which was 40,533 yuan/mu for vegetable land and 29,760 yuan/mu for dry land respectively. The affected village is located near the urban area and is included in the new zone for urbanization. Agricultural income only accounts for 20% of the total income per capita in this village. The AP lost 0.4 mu farmland per capita which is 20% of the 2 mu of per capita land holding before land acquisition. Accordingly, land acquisition induced 8% income loss per capita averagely in 2005, and the impact was minor. Consultation with the APs verified this minor impact. APs preferred to get the cash compensation so that they can invest on small business and high-value agriculture. All compensation was paid to the APs before August 2005 before commencing land acquisition activities. 5. This village established an industrial park in 1993, so the APs think land acquisition was an opportunity for them to release from the land. Also, Xiangfang District Labor Bureau provided free trainings to the APs in 2005. The trainings include driving, cooking, hairdressing, motorcycle maintenance, machine tools maintenance and electric welding and the training helped them quickly find a job in the village industrial park. In 2005, this village industrial park was awarded as provincial level industrial park due to the repid development and contribution to the local farmer’s income. Interviews with the women also verified that these trainings are very useful to them. Women’s contribution to the family income is higher than before which also improve their status in the household. 6. Phase II of Southwest Heating Network Project plans to install 2 turbo-generator sets with the capacity of 50MW and 4 steam boilers with the capacity of 220T/H and associated facilities. The construction needs 6,300 square meters land and all are reserved land in the boundary (red line) of the plant. 2.2 Primary Heating Pipelines 7. Expansion of district heating systems was carried out under existing public roads in Nangang District, mainly in Haxi New Development Zone. 8. Construction Administration Committee of Haxi New Development Zone had 5 acquired the land and demolished houses for road construction as early as in 2004 according to Land Administration Regulation of Heilongjiang Province (effective from January 1, 2000) and Measures for Urban House Demolition Management of Harbin City issued by Harbin People’s Government in 2004. Totally, 422 households in 3 villages were affected. Two options were provided to the AHs, including cash compensation and relocation houses. All AHs have been relocated in the new Sunshine Community constructed by the government. Compared with before, the living condition is better with central heating system, tap water, public bus, kindergarten. The LA&R was successfully completed and all the acquired land became state-owned construction land in this area. So, there’s no LA&R involved in the primary heating pipeline networks construction. Figure 3 Relocated Community for HHs affected by Road Construction 9. From 2008 to 2011, the total length of primary heating pipelines completed is 33,189.8 meters. For some roads, Dalkia Harbin laid the pipes firstly, then the government built the roads, so Dalkia Harbin didn’t need to pay any cost to the government. As for those networks constructed under the existed roads, Dalkia Harbin should just pay road dig fees to the Construction Bureau and restore the road after alying the pipes. By the end of last year, the project owner totally paid CNY 6.09 million for road dig fees. Detailed conditions are shown in Table 1. 6 Table 1 Summary of the Primary Heating Pipelines (2008-2011) Length of Width of the Construction Road dig the Name of Road Pipelines period fees Pipelines (unit: m) (year/month) (10,000yuan) (unit: m) Haxi Road 4329.5 2.55~4.16 2008/6-2011/10 0 Baojian Road 736 2.42~3.05 2006/9-2010/10 0 the first stage of main 0 networks of Yangguang 807 2.55~2.42 2007/6-2007/10 Company Zixing Street 857.7 2.55~3.05 2006/9-2006/10 0 Xichang Road 1296 2.16~2.69 2010/6-2011/10 0 Wuwei Road 402.1 2.84~3.62 2010/6-2010/10 0 Xihu Road 789.5 3.05 2010/6-2010/10