Initial Environmental Examination Document Stage: Final Project Number: 54107-001 August 2020 NEPAL: Electricity Grid Modernization Project Part 1 Prepared by Nepal Electricity Authority, Government of Nepal for the Asian Development Bank. CURRENCY EQUIVALENTS (as of 12 August 2020) Currency Unit = Nepali Rupee/s (Rs) Rs1.00 = $0.008344 $1.00 = Rs119.8400 ABBREVIATIONS ADB Asian Development Bank AIS air insulated substation CBS Central Bureau of Statistics CE common era CO2 carbon dioxide COD chemical oxygen demand DHM Department of Hydrology and Meteorology DO dissolved oxygen EGMP electricity grid modernization project EHS environment, health, and safety EIA environmental impact assessment EMF electromagnetic field EMP environmental management plan EPI environmental performance index GIS gas insulated substation GRM grievance redress mechanism HDI human development index IEE initial environmental examination IEEE Institute of Electrical and Electronics Engineer Inc. ICNRP International Commission on Non-Ionizing Radiation Protection IUCN International Union for Conservation of Nature kV kilovolt LPG liquefied petroleum gas masl meters above sea level mm millimeter µg/m³ micro gram per cubic meter NEA Nepal Electricity Authority PM2.5 fine particulate matter below 2.5 micrometers PMD project management directorate PTDEEP Power Transmission and Distribution Efficiency Enhancement Project Power Transmission and Distribution System Strengthening PTDSSP Project ROW right of way SASEC South Asia Sub-regional Economic Cooperation SF6 sulfur hexafluoride SNNP Shivapuri Nagarjun National Park SPCC spill prevention control and countermeasures UNESCO United Nations Educational, Scientific and Cultural Organization WEIGHTS AND MEASURES ha – hectare amp - ampere Hz - hertz km – kilometer (1,000 meters) kV – kilovolt (1,000 volts) kW – kilowatt (1,000 watts) mG - milligauss NOTES In this report, "$" refers to US dollars unless otherwise stated. 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. CONTENTS EXECUTIVE SUMMARY i I. INTRODUCTION 1 A. Project Background and Rationale 1 B. Objective and Scope of the IEE 2 C. Methodology of the IEE 3 D. Structure of the IEE 4 II. POLICY, LEGAL AND ADMINSTRATIVE FRAMEWORK 5 A. National (Nepal) Environmental, Health and Safety Policy Framework 5 B. NEA’s Environmental and Social Management Framework 25 C. ADB’s Safeguard Policy Statement (2009) Requirements 28 D. Other Applied Standards 29 E. International and Regional Treaties, Agreements and Conventions 30 III. DESCRIPTION OF THE PROJECT 32 A. Project Components and Locations 32 B. Nature, Size and Location of Project Facilities under each Component 35 C. Design Principles and Construction Works 70 D. Operation and Maintenance 76 E. Existing Facilities 77 F. Associated Facilities 77 G. Project Benefits 80 H. Analysis of Alternatives 80 I. Climate Change Risks 82 J. Project Cost and Implementation Schedule 82 IV. DESCRIPTION OF THE ENVIRONMENT 85 A. Environmental Setting of the Project Components 85 B. Physical Environment 124 C. Biological Environment 149 D. Socio-Economic Resources 170 V. ANTICIPATED ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 183 A. Introduction 183 B. Analysis of the Impacts 183 C. Impact Assessment, Mitigation and Compensation (Offset) Measures 201 D. Cumulative and Induced Impacts 261 VI. INFORMATION DISCLOSURE, CONSULTATION, AND PARTICIPATION 264 A. Consultation Process 264 B. Concerned Stakeholder Consultations 267 C. Public/Community Consultations 275 D. Meaningful Ongoing Consultation 289 E. Information Disclosure 291 VII. GRIEVANCE REDRESS MECHANISM 292 VIII. ENVIRONMENTAL MANAGEMENT PLAN 300 A. Introduction 300 B. Proposed Corrective Action Plan 301 C. Proposed Mitigation Plan 302 D. Proposed Monitoring Plan 302 E. EMP Work Plan 304 F. Institutional Arrangement and Responsibilities for EMP 305 G. Capacity Development 312 H. Environmental Management Budget 314 IX. CONCLUSION AND RECOMMENDATIONS 316 i EXECUTIVE SUMMARY 1. This initial environmental examination (IEE) including an environmental management plan (EMP) for the proposed Electricity Grid Modernization Project (EGMP or the Project) by Nepal Electricity Authority (NEA) has been prepared in compliance with the Asian Development Bank’s (ADB) Safeguard Policy Statement (2009) and national (Nepal) environmental assessment health, and safety requirements. 2. The project will finance high-priority transmission and distribution systems investments under three outputs. Output 1: electricity transmission capacity in project areas strengthened and modernized; Output 2: electricity distribution system in project areas modernized; and Output 3: capacity of NEA and electricity users in project areas strengthened. Only the first two outputs involve physical activities. Output 1 will involve the construction of construction of 88 km of 132 kV and 25 km of 220 kV new transmission lines. It also involves the upgrade of 185 km of existing 132 kV and 66 kV transmission lines and automation of 34 existing substations. Output 2 will involve the construction of 30km of 33 kV distribution lines and a distribution command and control center. It also involves the installation of an estimated 350,000 smart meters. Between Outputs 1 and 2, 8 new or extended transmission/distribution substations will be constructed. The project is aligned with the following impacts: Reliable and efficient electricity for all achieved by 2028 and NEA developed as modern and sustainable corporate entity providing reliable services to its customers. The project will have the following outcome: coverage, reliability, efficiency, and financial sustainability of electricity supply in Nepal improved. 3. The project is estimated to cost $195 million. ADB will finance the project through a $156 million project loan while the balance of funds will come from counterpart funding by the Government of Nepal. NEA will serve as the executing agency and will implement the EGMP through its Project Management Directorate (PMD). The EGMP will be implemented over 5 years and is expected to be completed by March 2026. 4. Under ADB’s Safeguard Policy Statement (2009), the EGMP has been classified as “B” for environment requiring the preparation of an IEE. Following the requirements of ADB’s Safeguard Policy Statement (2009) and national (Nepal) environmental assessment health, and safety requirements, this IEE has been prepared, covering all components of the EGMP having environmental impact. 5. The transmission line and substation work under Output 1 will be spread across various locations in Province number 1, Bagmati province, Gandaki province, province number 5, and Karnali province. 6. A total of 227.5 ha will fall under the rights of way of the 3 new overhead transmission lines, including 86.7 ha of forest land for which a compensatory reforestation program will be implemented. Compensatory reforestation at a ratio of 1:25 will be provided for the 12,950 trees to be felled on forest land (8,358 private trees will also be lost) as well as forest land replacement for 3 ha of land to be planted at 1,600 trees/ha under tower footings. In particular, 7.4 km of the new Ghorahi-Madichaur transmission line runs ii along a river valley that falls within the IUCN category VI Chure Conservation Area which is designated to conserve natural habitats whilst allowing sustainable use of natural resources. 400 m of this section also passes through the outskirts of the Dang Deukhuri Foothill Forests and West Rapti Wetlands Important Bird Area. Due to the location of Ghorahi substation within the protected area, whilst alternative routings were considered to minimize forest loss, it has been unavoidable to pass through it. However, its protected area management plan specifically includes improving access to energy including through “extension of access to national electricity power transmission” as an objective. 13.32 ha of land within the Chure Conservation Area will fall under the right of way of the transmission line which is mainly agricultural land (modified habitat) with existing road access; thus no forest land is impacted with the protected area and the transmission line will not open up access to it. Dang Deukhuri Foothill Forests and West Rapti Wetlands Important Bird Area was recently extended to include the Charinge Community Forest, this forest land supports a breeding site for critically endangered vultures, located approximately 2 km distant. To ensure ADB’s Safeguard Policy Statement (2009) critical habitat requirements can be met, and there will be no reduction in their population due to electrocution or collision, “bird sensitive” design following international good practice will be adopted including installation of bird divertors along the entire transmission line to minimize collision risk. During detailed design towers will also be located as far west as is possible from Charinge Community Forest and the river. Whilst the other new transmission lines do not affect protected areas,