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INTEGRATED SAFEGUARDS DATA SHEET APPRAISAL STAGE Report No.: ISDSA5535 Public Disclosure Authorized Date ISDS Prepared/Updated: 06-Nov-2013 Date ISDS Approved/Disclosed: 06-Nov-2013 I. BASIC INFORMATION Public Disclosure Copy 1. Basic Project Data Country: China Project ID: P133531 Project Name: Shanxi Gas Utilization (P133531) Task Team Ximing Peng Leader: Estimated 10-Oct-2013 Estimated 06-Mar-2014 Public Disclosure Authorized Appraisal Date: Board Date: Managing Unit: EASCS Lending Investment Project Financing Instrument: Sector(s): Oil and gas (60%), Thermal Power Generation (40%) Theme(s): Climate change (100%) Is this project processed under OP 8.50 (Emergency Recovery) or OP No 8.00 (Rapid Response to Crises and Emergencies)? Financing (In USD Million) Total Project Cost: 272.90 Total Bank Financing: 100.00 Financing Gap: 0.00 Public Disclosure Authorized Financing Source Amount Borrower 54.60 International Bank for Reconstruction and Development 100.00 Local Sources of Borrowing Country 118.30 Public Disclosure Copy Total 272.90 Environmental A - Full Assessment Category: Is this a No Repeater project? 2. Project Development Objective(s) Public Disclosure Authorized The proposed Project Development Objective (PDO) would be to increase gas utilization to reduce greenhouse gases emission in selected counties of Shanxi province. The proposed project would be part of the provincial gasification program and the objective would be achieved by the investment in Page 1 of 13 both distributed gas-fired combined heat and power (CHP) and the expansion of the gas distribution network in selected counties. 3. Project Description The proposed project has three components: (a) distributed gas-fired CHP; (b) expansion of gas distribution network; and (c) technical assistance. Total six investment sub-projects are included in the project based on their locations – Baode and Xiyang gas-fired CHP sub-project under Component (a), and Xiangyuan, Changzhi, Tunliu and Qingxu gas distribution sub-project under Component (b) – these sub-projects are located in six different counties in Shanxi province. Component 1: Distributed Gas-fired CHPs (indicative cost estimate: US$237.60, of which US$ 79.25 Public Disclosure Copy from IBRD loan). This component includes two investment sub-projects with the same size: Baode 3x42MW and Xiyang 3x42MW gas-fired CHP plants and affiliated facilities. Both sub-projects are green-field power plants and will be built for power generation and heating supply to the adjacent county level cities (Baode and Xiyang County City). The gas source of both sub-projects is the provincial gas network which has been extended to both cities, and the provincial gas network is operated by Shanxi Natural Gas Company (SNGC), who is also the implementing agency of both sub-projects. The annual gas consumption is estimated at 285 million cubic meters for both sub-projects. The electricity will be delivered to the provincial power grid, an estimate of about 1,160 GWh annually, to meet the electricity demand in the province; while the heating will be supplied to the two county cities to meet the expanded heating demand of total floor area of about 2.37 million square meters. SNGC plans to start the construction of both investment sub-projects in April 2014 and complete the construction in October 2015. Component 2: Expansion of Gas Distribution Network (indicative cost estimate: US$32.25 million, of which US$18 million from IBRD loan). This component included four investment sub-projects located in four county cities, namely Xiangyuan, Changzhi, Tunliu and Qingxu County. The proposed sub-projects would install pipelines and pressure regulating stations in the four counties to expand the gas distribution network to residential, commercial and industrial consumers, as well as the establishment of SCADA systems to monitor the operation of each gas distribution network. The main gas source is the provincial gas network, operated by SNGC, though the gas for Changzhi sub-project is to be supplied by a local CBM developer which is also connected into the provincial gas network. The proposed four sub-projects are expected to meet the incremental gas demand in the four cities by 2030, amounted to total 136,700 households and 21 industrial consumers, with an annual gas supply of about 244.15 million cubic meters. The project implementing agencies plan to start the construction of all four sub-projects in October 2014, and complete the construction in late 2019. Public Disclosure Copy Component 3: Technical Assistance (indicative cost estimate: US$2.75 million, financed from IBRD loan). Technical assistance component is included to mitigate the risks related to project design and management, covering activities for capacity building and technical support to the implementing agencies, and activities to upgrade the provincial gas network system. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if known) The proposed Project consists of six subprojects, which include two distributed gas-fired CHP subprojects, and four gas distribution subprojects. The two distributed gas-fired CHP subprojects are located in Baode County, Xinzhou Municipality and Xiyang County, Jinzhong Municipality. The four gas distribution subprojects are located in Xiangyuan, Changzhi, Tunliu, and Qingxu Counties with first three counties located in Changzhi Municipality and the remaining one in Jinzhong Municipality. Page 2 of 13 Shanxi Province is located on the Loess Plateau with a rolling terrain. Shanxi has a complex landform formed with a variety of mountains, low hills, plateaus, basins and terraces. As the province of Shanxi extends along a narrow area, which slopes from north to south, between the Yellow River and Taihang Mountains, the mountain area accounts for over 70% of the total area of Shanxi Province. The groundwater layers are very deep even in the alluvial areas the drilling exercise shows that the shallow aquifer is more than 30 m. The temperate continental climate dominates in Shanxi province. The annual precipitation averages 400 mm-600 mm with 60% being distributed within the period from June to August. 5. Environmental and Social Safeguards Specialists Public Disclosure Copy Youxuan Zhu (EASCS) Yiren Feng (EASCS) 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/ Yes The project involves two distributed gas-fired BP 4.01 CHP plants (3x42MW each) for power generation and heating supply to the adjacent county cities, and expansion of gas distribution network in four cities. The proposed project will facilitate the gas utilization in Shanxi Province, which will have significant environmental benefits including replacement of coal consumption and reduction of pollutants discharge. The potential adverse impacts such as dust, wastewater, solid waste, noise, soil erosion and social impacts will occur during construction phase, and NOx emission, noise, wastewater from gas-fired CHP plant, and potential risks related to fire and explosion during operation phase. The relevant mitigation measures were incorporated into the EIA/EMP. The project was classified as Category A project due to its potential impacts and risks. Public Disclosure Copy An Environmental Impact Assessment (EIA) including Environmental Management Plan (EMP) and an EA Summary Report have been prepared by the project implementing agencies. To enhance the environmental benefits of the project, the project has integrated the mitigation measures into the project design, construction phase and operational phase respectively. These environmental and social impacts are thoroughly analyzed in the EIAs, and preventive and mitigation measures have been developed in the EMPs. Bank review has concluded that these adverse environmental and social impacts can be Page 3 of 13 adequately avoided, minimized and mitigated with good management practice and mitigation measures, as developed in the EIAs/EMPs. Two rounds of public consultations including expert consultations, questionnaires, symposia, and interviews were conducted with the different stakeholders during EA preparation according to the requirements of both Chinese legislations and the World Bank’s OP 4.01. The project Public Disclosure Copy information has been disclosed locally throughout the public consultation process. The availability of the EIA reports, and how to access to them, was announced in local major newspaper of each project county in early August 2013, and EIAs/ EMPs were also disclosed at Shanxi Economy Daily on August 6, 2013. The EA report was also disclosed on the website of GXED on October 3, 2013, and the World Bank’s InfoShop on November 6, 2013. Natural Habitats OP/BP 4.04 No Based on the information available and site visit, there are not any natural habitats or critical natural habitats found in the proposed project areas, all the project components locate in the urban or town areas. The rivers to be crossed by the pipelines are considered sensitive receptors for the concern of flood protection safety reason as required by China's EA requirements. The rivers, as described in the EA, have no flow in most months of a year, and the local authorities confirmed that there are no rare species in the river. Forests OP/BP 4.36 No While the project will affect 90 mu of woods (1,800 poplar trees) land which is scattered along Public Disclosure Copy the pipeline in small plots of trees and are artificially planted trees, the area affected is insignificant (very small percentage) and there are no communities dependent on the 90 mu reforestation area. Project activities will not affect forest areas. It will not involve any logging or planting activities in forest areas. Pest Management OP 4.09 No The project will not procure pesticides or increase use of pesticides. Page 4 of 13 Physical Cultural Resources OP/ Yes The whole territory of Baode County - project BP 4.11 site of one gas-fired CHP sub-project - has been classified into the Vertebrate Fossil Area protected at provincial level, and Baode CHP plant will be located in the protection area of Diaoyutai Rock Cave protected at municipal level.