TA 8285-VAN: Energy Access Project -1

Draft Final Report – R0 Volume 3 - Feasibility Study of Sarakata-1 Extension Project

29 August 2014

Prepared by: SMEC International Pty Ltd

Sarakata Hydropower Project - 2014

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Table of Contents

TABLE OF CONTENTS VOLUME 2: FEASIBILITY STUDY OF SARAKATA-1 EXTENSION PROJECT Executive Summary 1 1 Introduction 3 1.1 Introduction 3 1.2 Approach 4 1.3 Report Structure 4 2 Project Rationale 6 2.1 Introduction 6 2.4 Luganville Power System 8 3 Project Area 10 3.1 Topography 10 3.2 Hydrology 10 3.3 Geology 14 4 Project Options 16 4.1 Project Options 16 4.2 Limitation to the extension 17 4.3 Project Options 24 4.4 Project Particulars Comparison 25 4.5 Recommended Option 28 5 The Proposed Project Arrangement 30 5.1 Project Description 30 5.2 Project Works 32 5.3 Energy 38 6 Environmental Assessment 39 6.1 Background 39 6.2 Project Description 39 6.3 Categorization 39 6.4 Implementation Arrangements 39 6.5 Policy, Legal and Administrative Framework 40 6.6 Environmental Management Plan 40 6.7 Information Disclosure, Consultation and Participation 40 6.8 Grievance Redress Mechanism 40 6.9 Conclusion and Recommendations 41 7 Social Assessment and Resettlement Plans 42 7.1 Introduction 42 7.2 Subproject Profile 42 7.3 Issues and Concerns 48 8 Cost Estimates and Financing Plan 52 8.1 Approach to Cost Estimates 52 8.2 Cost Estimates 52 8.3 Civil Costs 52 8.4 Summary of Cost Estimates 53 9 Financial Analysis 54 9.1 Introduction 54 9.2 Financial Assumptions 54

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9.3 Weighted Average Cost of Capital (WACC) 54 9.4 Financial Internal Rate of Return (FIRR) 55 10 Economic Analysis 56 10.1 Macroeconomic Context and Demand Analysis 56 10.2 Economic Valuation of Costs and Benefits 57 11 Project Implementation 59 11.1 Introduction 59 11.2 Access 59 11.3 Construction Material 59 11.4 Procurement Plan 59 11.5 Implementation Schedule 61 12 Conclusion and Recommendations 62 12.1 Conclusions 62 12.2 Recommendations 63

APPENDICES Appendix 1 Photographs 65 Appendix 2 Implementation Plan 67 Appendix 3 Drawings and Maps 69 Appendix 4 Hydrology 78 Appendix 5 Initial Environmental Examination 88 Appendix 6 Land Acquisition and Resettlement Plan 185 Appendix 7 Cost Estimates 228

List of Tables Table 1: Luganville Historical Trends 8 Table 21 Characteristics of Sample Households in Santo Table 2 Luganville Energy and MD Projections 9 44 Table 3 CTF Survey Details 10 Table 22 Educational Attainment of Heads of Sample Table 4 Flow Duration Curve data for Sarakata River 13 Households in Santo 45 Table 5 Ratings of the Equipment 17 Table 23 Occupation of Head of Sample Households by Table 6 Discharge for Different Options 17 Gender, Santo 46 Table 7: Sarakata-1 Extension Options 17 Table 24 Contribution of Sources of Income to total annual Table 8 Potential Limits to Sarakata-1 Extension 17 sample HH Income, Santo 46 Table 9 Sarakata-1 Discharges and their Availability for Table 25 Share of various expenditure items to total Different Options 18 annual expenditures, Santo 47 Table 10 Maximum Height of the Dam 19 Table 26 Sample Households with Savings, Santo 47 Table 11 Headrace Sections 21 Table 27 Access to Basic Amenities in Santo 47 Table 12 Summary of the Limits to Sarakata-1 Extension Table 28 Willingness to Connect to Electricity, Santo 48 23 Table 29 Income and Poverty Status of Male and Female Table 13 Proposed Configurations of Sarakata-1 Extension Headed Household - Santo 48 26 Table 30 Land Requirement and Affected Persons in Table 14 Cost Estimates for Options 3A and 3B 28 Sarakata I &II 50 Table 15: Result of Financial Analysis 28 Table 31 Entitlement Matrix 51 Table 16 Arrangements for Recommended Option 29 Table 32 Implementation Schedule 51 Table 17 Major Works for Sarakata-1 Extension 31 Table 33 Sarakata-1 HPP Extension Cost Estimates 53 Table 18 Elevations at the Headworks 32 Table 34: Weighted Average Cost of Capital (all Projects) Table 19 Amendment to Headrace 34 54 Table 20 Distribution of Sample Households of Santo44 Table 35: Weighted Average Cost of Capital (SHPP-1 Only) 55

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Table 36: Sensitivity Analysis 55 Table 40 Contract Packages and Procurement Methods Table 37: Summary of the Results of the Socio-economic 60 Survey 57 Table 41 Scope of Works in the Different Contract Table 38: Cost of Source of Lighting 58 Packages 60 Table 39: Sensitivity Analysis 58

List of Figures Figure 1 Project Location 3 Figure 14 Sarakata-1 Option 3A General Arrangement24 Figure 2 Flow Chart of the Approach taken in the Study4 Figure 15 Sarakata-1 Option 3B General Arrangement25 Figure 3 Sarakata River Catchment 11 Figure 16: 1800 kW and 1500 kW Sarakata 1 flow and Figure 4 Sarakata monthly rainfall distribution 12 generation duration curves 26 Figure 5 Flow Duration Curve for Sarakata River 13 Figure 17: Demand duration curves (hourly) 27 Figure 3 General Geological Map 15 Figure 18: Annual generation forecast 1800 kW and 1500 Figure 6 Sarakata-1 Discharge and their Availability for kW installed capacity 27 Different Options 18 Figure 19 Major Works for Sarakata-1 Extension 30 Figure 7 Sarakata-1 Dam 19 Figure 20 Rubber Dam 33 Figure 8 Generation from SHP-1 and Diesel in Year 2013 Figure 21 Amendment to Settling Basin 34 20 Figure 23: Sarakata 1 & 2 Transmission Configuration36 Figure 9 Headworks Arrangement at Sarakata-1 Dam20 Figure 24: 1500 kW Sarakata 1 Flow and Generation 38 Figure 10 Conveyance Capacity of Headworks 21 Figure 25: 1,500 kW Sarakata-1 Generation 38 Figure 11 Typical Headrace at Sarakata-1 HPP 21 Figure 22 Implementation Schedule 61 Figure 12 Headrace Channel Particulars 22 Figure 13 Sarakata-1 Forebay and Powerhouse Area22

Abbreviations and Acronyms ABC Aerial Bundled Conductor O&M Operation and Maintenance ADB Asian Development Bank O/H Overhead AEP Annual Exceedance Probability PCA Procurement Capacity Assessment ASTER Advanced Spaceborne Thermal Emission PEC Provincial Executive Committee and Reflection Radiometer PER Public Environmental Report BPEV Border Price Equivalent Value PFS Pre-feasibility Study CFO Chief Financial Officer PIC Pacific Island Countries CNO Coconut Oil PLC Programmable Logic Control

CO2 Carbon Dioxide PMU Project Management Unit CPS Country Partnership Strategy PPA Power Purchase Agreement DFR Draft Final Report PPTA Project Preparation Technical Assistance DMF Design and Monitoring Framework PREP Provincial Renewable Energy Project DOE Department of Energy PV Photovoltaic EA Executing Agency RBOV Reserve Bank of Vanuatu FS Feasibility Study ROW Right of Way GOV Government of Vanuatu S1HPP Sarakata-1 Hydropower Project GPS Global Positioning System S2HPP Sarakata-2 Hydropower Project HDPE High Density Polyethylene SCADA System Control and Data Acquisition IA Implementing Agency SEMP Site-specific Environmental Management IPP Independent Power Producer Plan ITCZ Intertropical Convergence Zone SHPP Sarakata Hydropower Project LiDAR Light Detecting and Ranging SHPP-2 Sarakata-2 Hydropower Project LV Low Voltage (≤ 1000 V) SHS Solar Home System MAF Mean Annual Flood Peak Flow SMEC SMEC International Pty Ltd MOCC Ministry of Environment, Climate Change SOE State-Owned Enterprise and Disaster Management SOPAC Pacific Islands Applied Geoscience MOF Ministry of Finance Commission MOU Memorandum of Understanding SPO South Pacific Oil Ltd NASA National Aeronautics and Space SPV Special Purpose Vehicle Administration SWL Safe Working Load NGO Non-governmental Organisation T&D Transmission and Distribution NREL National Renewable Energy Laboratory TA Technical Assistance

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TOR Terms of Reference VPMU Vanuatu Project Management Unit UNICEF United Nations International Children's WHO World Health Organisation Emergency Fund (or United Nations WHPP Wambu HPP Children's Fund) VEAP Vanuatu Energy Access Project-1

ADB Safeguards Terms AP Affected People HH House Holds DDR Due Diligence Report HHS House Hold Survey DD/SCAR Due Diligence / Social Compliance Audit IEE Initial Environmental Examination Report IP Indigenous Peoples EARF Environmental Assessment and Review IPP Indigenous Peoples Plan Framework IPPF Indigenous Peoples Planning Framework ECD Environmental and Conservation Division LA/RP Land Acquisition / Resettlement Plan EIA Environmental Impact Assessment PAP Project-affected Peoples EIS Environmental Impact Statement PSA Poverty and Social Assessments EMP Environmental Management Plan REA Rapid Environmental Appraisal ESMS Environmental and Social Management RP Resettlement Plan System SES Socioeconomic survey FAR Fish and Aquatic Report SPS Safeguard Policy Statement (2009) FGD Focus Group Discussion SPRSS Summary Poverty Reduction and Social GAP Gender Action Plan Strategy GFP Grievance Focal Point GRM Grievance Redress Mechanism

Financial and Economic Terms EIRR Economic Internal Rate of Return NPV Net Present Value ENPV Economic Net Present Value SERF Shadow Exchange Rate Factor EOCC Economic Opportunity Cost of Capital SoE Statements of Expenditure FIRR Financial Internal Rate of Return SWRF Shadow Wage Rate Factor FNPV Financial Net Present Value WACC Weighted Average Cost of Capital GDP Gross Domestic Product

Glossary: Units AUD Australian Dollar masl metres above sea level GWh Giga-Watt-hour (109 watt-hour) M Mega = Million = 106 k kilo = thousand = 103 MVA Mega Volt-Ampere (106 Volt-Ampere) km kilometre MWh Mega Watt-hour (106 Watt-hour) kV kilovolt (103 volt) MW Mega-Watt (106 Watt) kVA kilo-Volt-Ampere (103 Volt-Ampere) pa per annum kW kilo Watt (103 Watt) VUV Vanuatu Vatu kWh kilo Watt-hour (103 Watt-hour) USD United States Dollar m³/s cubic metre per second (‘cumec’)

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Executive Summary

I Introduction

II Technical

3. Sarakata Hydropower Project is a run-of-river type scheme with a dam on Sarakata River. It has an installed capacity of 1,200 kW. The recommended extension will increase its capacity by 300 kW. 4. The study shows that Sarakata-1 extension with 300 kW added capacity has adequate returns and it implementation is would be justified. Noting that an arrangement with 600 kW is the preference of the Concessionaire and DOE and the FIRR for such an arrangement is only marginally less, it would be reasonable option to implement. For this, it would be necessary for either the GoV and/or the Concessionaire to meet the additional costs. 5. The major work for the extension at Sarakata-1 consisting of adding 600 kW unit in the extension to the powerhouse while modifying the dam and intake for additional discharge of 1.5 m3/s for 300 kW are: . Dam: Increase the height of the dam by 0.4 m;; . Intake: Raise the platform of the intake by 0.4 m so that it will be accessible during normal operation and install a larger intake trashrack; . Settling basin: Raise the walls of the settling basin by 0.2 m; . Headrace:  Headrace 1: Increase the walls for the initial 765 m by 0.4 m;  Headrace 2: This will remain unchanged;  Headrace 3: Construct a new 30 m long channel with a capacity of 3 m3/s teed off from Headrace 2 to the new forebay; . Forebay: Construct a new forebay upstream of the existing forebay; . Penstock: Install a new 1.2 m diameter penstock from the new forebay to the powerhouse; . Powerhouse: Extend powerhouse by 8.4 m; and . Electromechanical equipment: Install a 600 kW turbine/generation unit in the new powerhouse. 6. If the extension of Sarakata-1 consists of adding only 300 kW unit, the necessary modification to the dam, intake, settling basin and Headrace 1 and 2 would be identical. The difference would be . Headrace:  Headrace 3: Construct a new 30 m long channel with a capacity of 1.5 m3/s teed off from Headrace 2 to the new forebay; . Forebay: Construct a new forebay upstream of the existing forebay; . Penstock: Install a new 0.9 m diameter penstock from the new forebay to the powerhouse; . Powerhouse: Extend powerhouse by 6.4 m; and . Electromechanical equipment: Install a 300 kW turbine/generation unit in the new powerhouse. 7. The construction cost of the project based on the assumption that it will be undertaken as an EPC in 20014 prices are: . For the arrangement with 600 kW unit, it is USD 4.17 M that includes USD 3.25M for the hydropower project and USD 0.9 M for the transmission line upgrade. . For the arrangement with 300 kW unit, it is USD 3.49 M that includes USD 2.56M for the hydropower project and USD 0.9 M for the transmission line upgrade. 8. In both cases, the cost includes initial preparatory works such as field investigations and access road of USD 0.13M.

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9. The implementation duration for the project is 3 years and includes 12 months for preparatory works (including ADB loan signing, consultant recruitment, land acquisition), 6 months tender level design and documentation, 6 months for EPC tendering process and 12 months for construction.

III Social and Environmental Outcomes

10. The project involves the expansion of an existing hydropower scheme that is wholly within the scheme’s current site boundaries. There potential environmental effect from the construction of the project will relatively minor, localised and acceptable provided the mitigation measures set out in EMP is properly implemented. 11. The IEE, including the EMP undertaken during the course of the feasibility study is considered sufficient to meet ADB’s and government environmental safeguard requirements in respect of the expansion of the Sarakata 1 expansion hydropower plant. No further or additional impact assessment is considered necessary at this stage. 12. The project is not expected to have impacts of physical displacement and/or loss of major income sources. There is no expected risk of landlessness, loss of home, and/or loss of major income source. 13. During interviews, all consulted APs express strong support to allow the national government to acquire the proposed sites for the project. Communities and APs are also aware that DOE and Department of Lands are the government agencies that will facilitate this process. 14. There are no prominent gender issues among APs identified in this Subproject. There are no female- headed household DPs identified during PPTA consultations. Instead the project will provide opportunities to improve women’s situation through provision of reliable power supply and stable tariff to households, reducing uncertainties in managing households’ energy supply and expenditures

IV Financial and Economic Outcome

15. When compared to ‘business as usual’ scenario whereby the current status is continued, The incremental FIRR for the SHPP-1 (with 600 kW unit) including transmission upgrade and project management costs but excluding the grid extensions is 7.9% and the FNPV is $5.5 million. If a 300 kW generation units was installed instead, the FIRR is 8.9% and the FNPV is $6.0 million. This indicates that the SHPP-1 is financially viable with the FIRRs above the WACC of 3.2% and would be viable if benchmarked against the overall project WACC of 7.1%. 16. For the option with 600 kW unit (including transmission and excluding the grid extensions), the incremental EIRR is 34.0% and the ENPV is $10.9 million. Similarly, for 300 kW unit the EIRR and ENPV are 36.9% and $11.3 million respectively. This indicates that the project is economically viable since the EIRR exceeds the Economic Opportunity Cost of Capital (ECOC) of 12%

V Recommendations

17. The project is financially and economically viable with the FIRR above the WACC. It has no environmental adverse effect and is generally acceptable to the affected communities, and hence it is recommended that the project be developed to the next stage. 18. In the next stage, to expedite the project implementation, it is recommended that the preparatory works and the investigation work be undertaken prior to appointing the contractor for the construction of the project. 19. The preparatory investigation works would cover: . Hydrological investigation work to firm up the projected river flows, flood flows and the flood levels; . Geotechnical investigation of the project area and geological mapping of the area; and . Preparation of tender design and documentation for main works. 20. The main works will cover the design of the project and its civil construction, procurement and installation of the electrical and mechanical equipment.

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1 Introduction

1.1 Introduction

1. SMEC International Pty Ltd (the Consultant or SMEC) has prepared this report under the Asian Development Bank (ADB, the Client) Contract N° 107142-S52270 for Consulting Services for TA-8285 VAN: Energy Access Project - 1. 2. This Energy Access Project will assist the Republic of Vanuatu (the Government) in its aim and overall vision to reduce the country’s heavy reliance on imported fossil fuel for power generation and thus provide a secure, sustainable and environmentally sound source of electricity for private and commercial consumers. The outcome of the project is to increase access to higher electricity from renewable energy source and consequently increase energy security in environmentally sustainable manner. 3. This part of the project - PPTA (Project Preparatory Technical Assistance) will assist the Government to increase access to electricity services for households and businesses in Vanuatu by preparing an implementation program to extend the existing power distribution networks and develop new hydropower projects. The main objective of the Government is to enhance the renewable generation options for Malekula and Santo Islands in Vanuatu. 4. During project kick off phases it was identified that, in addition to new projects on Brenwe, Wambu and Sarakata Rivers, extension of existing Sarakata 1,200 kW HPP may also be a feasible option. The Consultant therefore undertook a LCOE (Levelised Cost of Electricity) assessment and ranked the potential new hydropower projects in Malekula and Santo Islands. The expansion of Sarakata HPP was among the highest ranked (with lowest LCOE). This report details the feasibility study to add 300 kW to Sarakata-1 HPP on Sarakata River in Santo Island.

Project Area

Figure Project Location

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1.2 Approach

5. The overall approach has been to develop options for extension of SHPP-1 within the limits that the existing arrangement poses. This approach has the advantages of establishing a range of practical options that can be realistically developed and implemented quickly and is applicable to the existing conditions. Also because of the quick turnaround time and defined benefits, it would more likely be implemented. 6. As such, the first step was to broadly define the existing limits that the project poses. These limits are broadly of two types. The first type is those that are outside the boundary of the project such as availability of additional discharge in the river, demand for additional generation. The second type is those that fall within the project boundary namely those that the project itself poses such as the extent to which the project infrastructure can be modified. 7. Once these limits were defined, options to extend the project capacity were identified. The options were then developed to establish the necessary technical arrangements to an extent where their costs, the additional generation and potential environmental and social impacts could be determined. A financial analysis was undertaken to determine the recommended option. 8. The recommended option, which is The Project, was then developed further technically to establish its preferred arrangement. The Project was then scrutinised to determine its environmental and social impact and establish the costs of mitigating any adverse effects. Also, the project costs, its energy and an implementation plan were established that was then used to undertake its economic and financial analysis to decide whether its returns justified investment in the project.

Figure Flow Chart of the Approach taken in the Study 1.3 Report Structure

9. The structure of the report follows the approach described in the previous section and consists of: . Section 1: Introduction - This section describes the approach taken in the study. . Section 2: Project Rationale - This section describes the rationale for the project and includes the demand analysis for the Espiritu Santo area that determines the range of size and capacity of the generation project necessary for the region. It also determines the probable operational modes of the project to best supply the type and magnitude of the demand. . Section 3: Project Area - This section describes the physical characteristics of the project area and consists of assessment of the hydrology, topography and geology of the region. The

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physical characteristics of the region determine the potential for energy generation from the area while also identifying potential constraints on it. . Section 4: Project Options - This section identifies project options based on the limits on the extension of the project both external (such as availability of additional discharge, demand for energy etc. and internal (such as size and capacity of the existing project infrastructure, constructability of modifications necessary to extend the project). It assesses these options and recommends a project arrangement that matches the requirement. . Section 5: The Proposed Project Arrangement: This section describes the technical details of the project arrangement that is recommended in Section 4 and includes details on transmission. It describes the modifications to the existing infrastructure and any new construction and installation that are necessary. . Section 6: Environmental Assessment: This section includes the environmental assessment of the proposed project arrangement. . Section 7: Social Assessment, Land Acquisition and Resettlement: This section includes the poverty and social assessments and related actions as well as the proposed strategies to address social impacts. The land acquisition and resettlement concerns including proposed compensation measures are detailed in the Subproject Resettlement Plan. . Section 8: Cost Estimates: This section includes the cost estimate for the proposed project and a financing plan to take it forward. . Section 9: Economic Analysis: This section includes the economic analysis of the project. . Section 10: Financial Analysis: This section includes the financial analysis of the project based on life cycle costs and benefit of the project. The analysis determines its financial parameters and forms a basis for evaluating its financial performance. . Section 11: Project Implementation: This section includes various issues related to the implementation of the project. It presents the implementation schedule and discusses various aspects that determine how the project is implanted such as availability of construction material, contract types for construction and operation, training program necessary to develop the skills to manage the project. . Section 12: Conclusion and Recommendations: This section includes the conclusion of the study and recommends any other steps necessary to further develop the project.

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2 Project Rationale

2.1 Introduction

10. This section outlines the scope of this report and describes the rationale for the projects. The existing facilities are described and the basis for the proposed grid expansions. It does not revisit the demand forecast data detail presented in the main body of the DFR, however it does summarise the potential for system growth through grid extensions and new connections. A brief overview of the physical characteristics of the project area is provided identifying potential constraints. 11. Rationale. Current reliance on high cost diesel generation in provincial centres provides a direct disincentive for grid extension as the additional costs are not matched by additional revenues. Renewable energy such as hydropower has significant potential to reduce generating costs and allow the potential of more cost-effective expansion of the grid. Reduced generation costs combined with increased capacity will allow expansion of the distribution grids. 12. The Utilities Regulatory Authority (URA) monitors the concession contract and sets tariffs for the concession. Whilst Power tariffs in Vanuatu are high with a base tariff of VUV 47.07/kWh for Luganville and VUV 55.01/kWh ($0.59/kWh). Base diesel fuel costs are $0.36/kWh for Luganville and $0.41/kWh for Malekula due to generator efficiencies. Pricing excludes VAT. Further residential tariff rates include a significant lifeline cross-subsidy from high consumption consumers to low consumption customers. Selling rate for all customers for the first 60 kWh/month is VUV 17.9 ($0.19/kWh) in Luganville and VUV 18.7 ($0.20/kWh) on Malekula. This data is rounded for illustrative purposes only. 13. The bulk of new customers as a result of these projects will have an average usage typically of 30- 50 kWh/mth in villages away from urban centres and 50-70 kWh/mth in urban centres. With tariff revenues below the cost of generation it results in other consumers cross-subsidising energy costs. This drives up higher user tariffs, suppresses energy use or even results in high users disconnecting as they can produce their own power at lower cost. The major impact of suppression of growth with high tariffs is the opportunities for the underlying socio-economic community growth are also suppressed. 14. Under NERM the Government of Vanuatu has a concerted strategy to increase access to electricity for its citizens. There are numerous primarily Aid or Grant funded projects in train to support realisation of the Governments objectives. This project focuses on lower cost generation into existing power grids on Malekula and Espiritu Santo using hydropower options and grid extensions to reach additional customers wishing to connect. However, even with grid extensions taking place, there is a major barrier in that the cost for the customer to connect and provide basic house wiring is prohibitive for many: typically about $1,000/HH. To ease this barrier there is GPOBA funded aid to provide 4,375 new connections of up to $917/HH. As many of the proposed new connections under this Project are to lower income HHs, it is essential that the GPOBA funding remain on stream for the duration of the project. 15. Thus the proposed sub-projects are designed to bring lower cost hydro power to customers, in time leading to lower tariff structures and thus enabling socio-economic development of Vanuatu.

2.2 Power Sector Summary

16. Vanuatu is a South Pacific island nation: refer Figure . Espiritu Santo is the largest Island in the group with a total land area of 3,955.5 km2. 17. In 2009, the total population of Espiritu Santo Island excluding Luganville in Sanma Province was 38,307 composed of 7,864 households. Luganville the capital is primarily urban while the areas outside the town are primarily rural. Luganville the main provincial and government administrative centre of Sanma Province receives an influx of people from the other areas of Santo rural and the rest of the province as well as from other provinces of the country and according to the 2009 census, the annual urban growth rate is 2% compared with the national average of 3.5%. 18. Approximately 83% of households in Santo rural own their houses while 9% and 7% respectively are renting or rent free. Of the land where the house stands 46% are customary owners, 17% have urban lease and 9% rural lease while 20% occupy the land with informal agreement. 19. Per Census 2009 result, only about 30% of households in the island are reported to use the electricity grid with the majority (48%) using kerosene lamp as main source of lighting. The rest either use

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 6 2 Project Rationale solar (3%), candle (7%), gas (3%) or Coleman lamp (3%) as primary source of light. A few reported generator (2%) as their source of light also. VUI the power distributor in the area supplies electricity within the concession area utilizing the existing power grid where most of the urban households and a number of peri urban households including some villages within the zone of influence of the Sarakata II subproject are connected to grid power. 20. The Vanuatu economy has seen steady growth over the past decade - a rarity in the Pacific. In the medium term, growth is expected to be driven by rising public investment, in part financed by external loans. However, Vanuatu’s economy has been unable to grow quickly enough to meet the needs of its expanding population. A significant consequence is a high rate of youth unemployment. 21. Vanuatu has no known developable fossil fuel reserves though the country has capacity in renewable energy resources which include geothermal, hydro, solar, bio energy and wind. Electricity generation and transport are still mainly based on imported fossil fuel though both electricity generation and transport have significant potential for further conversion to renewable energy in the future. Per estimate1, around 57% of petroleum imports are used for transport (land, marine and aviation), 38% for electricity generation, 4% for household use and 3% for industrial/commercial use. 22. There is considerable interest by the government in reducing imports of fossil fuels since the cost of petroleum product imports typically exceeds 50% of the total value of Vanuatu’s exports. 23. In the power sector it is estimated2 in 2013 that around 24% of households (HH) in Vanuatu are connected to the electricity grid. This has deteriorated from 2009 when 28% of HH were estimated as grid connected. NERM3 states 68% of 18,500 HH within grid concession areas are connected. There are a further 3,000 HH close to concession areas not connected and of “off-grid” HH, <10% of 31,500 HH have access to basic solar or pico lighting and charging technologies. 24. To place focus on the underlying issues, the GOV Priorities & Action Agenda 2006-2015 (PAA) is the overarching development strategy that outlines the Governments economic and social development plan. It provides the fundamental National Vision “An Educated, healthy and Wealthy Vanuatu”. The main priority is to create an environment for private sector led economic growth including activities in the primary sectors or agriculture, forestry and fisheries, as well as tourism. This is supported by focus on primary sector development (Natural resources and the environment), provision of better basic services, especially in rural areas, education and human resource development, economic infrastructure and support services. 25. Vanuatu elected a new government in October 2012, and the preparation of an updated Priorities & Action Plan4 is in process. 26. The National Energy Road Map 2013 aligns to the PAA and integrates an overall policy framework, stating aims, goals and objectives and establishes key policy directives for the Energy Sector, electricity and petroleum. It is a high-level framework which central goal is to “To energise Vanuatu’s growth and development through the provision of secure, affordable, widely accessible, high quality, clean energy services for an Educated, Healthy, and Wealthy nation” and thus support the PAA objectives of sustainable improvements in the quality of life of all Ni-Vanuatu by promoting robust and broad-based economic growth. 27. The electricity policy is designed to address three strategic objectives of the Government: i) improving access in the provision of electricity services; ii) improving reliability of electricity supply; and iii) ensuring that power is affordable for consumers. 28. The Government is thus planning toward strong economic growth with overall growth indicators being robust. This PPTA is thus structured to support growth by improving generation capacity, reliability and to enable affordable electricity access to a greater sector of the peri-urban community to share in the overall economic and social prosperity improvements projected. 29. This Feasibility Study of the Sarakata HPP for Luganville directly supports GOV and NERM objectives.

1 NERM National Energy Road Map 20 p24 Figure 2.3. 2 Country Energy Security Indicator Profile 2009 states 28% but NERM estimates 24% in 2013 so has deteriorated. 3 NERM National Energy Road Map 2013 p9 table: “Electricity Access - baseline and Road Map Targets”. 4 Current Plan 2006 - 2015 is currently under review.

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2.3 Characteristics of the Sub-Project Area

30. The route from Luganville to Sarakata follows a sealed main road for about 4 km then turns off onto a wide metalled road - most of which was originally constructed during WW-II to enable military access to munitions dumps. In most places two vehicles may pass. After the initial 40 m steeper section out of Luganville the next 15 km gradually climbs to about 120 m so 19 km from town. The last 2 km then drops down to the Sarakata River weir at about 90-100 m elevation and then to the existing HPP. The route has mainly coconut plantations and cattle farming. The existing 20 kV overhead power line follows this route. Most of the route a second line could be run in parallel with removal of “rubbish” trees, of no economic or financial value (other than as firewood), as needed. There are a few shorter constrained sections where underbuilding on the existing line may be required. There are no significant communities along the route, though within a few kilometres Fanafo and Exil villages are located. These already have access to electricity from the present line. 2.4 Luganville Power System

31. Luganville Power Grid Facilities. Electricity is currently generated and supplied in Luganville via a MOU linking to a draft concession contract with VUI, the parent company being the Pernix Group. The present Maximum Demand (MD) of Luganville is 1.6 MW but more typically 1.4 MW. The existing installed capacities in the area are a 1.2 MW Sarakata Hydropower Project and 2.85 MW of diesel fuel oil generation. Customer base is approximately 2,350 with 1,700 consuming an average of <75 kWh/mth.5 32. There is a 20 kV combined transmission and distribution line from the Sarakata HPP with primary Medium Voltage distribution being provided at 5.5 kV in the immediate Luganville locality. 33. The Utilities Regulatory Authority (URA) monitors the concession contract and sets tariffs for the concession. Whilst Power tariffs in Vanuatu are high with a base tariff of VUV 55.01/kWh (USD0.59/kWh) the lower cost generation from the Sarakata HPP has enabled VUI and the URA to set lower tariffs in the Luganville concession with a base of VUV 47.07/kWh. Never-the-less residential tariff rates include a significant lifeline cross-subsidy from high consumption consumers to low consumption customers. 34. Luganville Historical Analysis. Table shows the historical growth trends since 1992. The prefeasibility study under RETA 7239 was based on marginal power injection from Wambu with first ranked dispatch from Sarakata and replacement of fuel oil generation. Load growth projection of 4.67% based on 1992-2010 data. Review of this data and normalising showed a demand growth of 4.42%, but from 2002- 2010 it was only 1.9%. A more realistic growth would appear to be under 2% taking out the one off impacts of grid extensions and related new customer connections as a result of the original new connections growth 1992-2001 of 9.67%. Table : Luganville Historical Trends

TRENDS 1992-2001 2002-2009 2010-2013 Annual rate 9.67% 0.46% 2.17% Average LF 0.54 0.57 0.61 35. System Losses. Prior to 2010 losses for Luganville were typically 3% so this establishes a base benchmark needing only adjustment for prevailing circumstances. But since 2010 losses have shown a sharp increase from 9.1 in 2011 to 12.9% in 2013 with an increasing trend.6 36. Break down of losses could not be provided by the concessionaires. MV load flows using PSS®E were conducted to provide an indicator. Three distinctive technical loss factors were identified. These account for 5.5% of the total 12.9% losses in 2013. These were i) losses on the 20 kV transmission/distribution line from Sarakata approximately 40 kW peak (280 MWh pa or 3.1% of system total); ii) the 1500 kVA 20/5.5 kV power transformer with about 120 MWh pa or 1.3%; and iii) on the short 0.8 km 5.5 kV line section from Sous Substation to the Central Substation of 15 kW (100 MWh pa 1.1%). The losses will substantially increase with the addition of 300 kW at Sarakata and if 600 kW the studies showed a second transmsion line and major substation upgrade at Sous is required.

5 This is based on the VUI 2012 Annual Electrical Technical Report. 6 The losses comprise technical and non-technical components.

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37. The solution to the high Luganville losses is to upgrade the conductors on the lines items i) and iii). Not much can be done in respect of the 20/5.5 kV power transformers other than taking the opportunity to install a second parallel unit or upgrade the existing transformer. Thus there is substantial scope for line loss reduction in implementing the line upgrade as part of this overall project. 38. Potential for Growth. Prefeasibility load growth assessments from RETA 7329 and the Energy Road Map were further reviewed and consultations held with Peter Allen of VUI and Leo Moli of DOE. These confirmed the modelling for Luganville was appropriate though at considerable variance to the Energy Road Map and RETA 7329. Thus MD for 2032 has been revised downward from 4.7 MW to 2.2 MW. This lower load growth has implications on the viability of Wambu as the system cannot absorb the additional 2.2 MW of generation capacity within a 20 year time frame. Table summarises growth projections. Table Luganville Energy and MD Projections

TA Study Year 2013 2017 2022 2027 2032 2037 2042 2047 Amended TA 8285 MWh 9,055 10,093 10,779 11,329 11,907 12,514 13,153 13,824 Amended TA 8285 MD, kW 1,707 1,903 2,032 2,136 2,245 2,359 2,479 2,606 TA 7329 original MWh 10,355 12,428 15,612 18,994 23,109 TA 7329 original MD, kW 2,117 2,541 3,192 3,883 4,724

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3 Project Area

39. This section describes the physical characteristics of the project area - namely its topographical, hydrological and geological characteristics. It also describes the information that is available about the area and the additional information that were collected during the study and its subsequent analysis. 3.1 Topography

3.1.1 Available Maps 40. The topographical information that is available consists of 1:50,000 scale maps that Government of Vanuatu produced in 2008. These maps have contours at 40 m intervals and include general information about the existing use of the land. These maps were used to establish the preliminary project layout and estimate the head that would be available. 41. The project area is included in the following map: . Turtle Bay, Sheet 1516705 (Edition 1-VDLS), Series X721 42. The maps that cover the area surrounding the project area are: . Navolala, Sheet 1516608 (Edition 1-VDLS), Series X721 . Tasriki, Sheet 1516612 (Edition 1-VDLS), Series X721 . Luganville, Sheet 1516709 (Edition 1-VDLS), Series X721. 3.1.2 Site Survey 43. As a part of this study, a topographical survey of the limited area was undertaken. The area covered the region from the dam to the powerhouse along the headrace alignment. 44. The purpose of the survey was to obtain preliminary information about the grade and the levels at the dam, along the waterway and at the powerhouse. This was essentially to check the levels in JICA’s design documents (reports and drawings). Another objective of the survey was to determine if there is sufficient space to construct any new structure necessary to increase the generation capacity of the project. 45. A Vanuatu based company, Cabinet Topographique et Foncier Ltd (CTF)7, undertook this survey work and prepared a map that showed the locations and the relative elevations at the dam, along the waterway and at the powerhouse area. They also established two bench marks at the powerhouse area that links to two existing survey control points at Luganville main town. This can be the reference point if any future survey work is necessary in the area. 46. CTF undertook the survey using the following details: Table CTF Survey Details Description 1 Instrument Theodolite LEICA TCR 1205 2 Method of Survey Hang Traverse 3 Reference Points A: Infra 40.30.15 29 449.124 N, 57 774.180 E B: infra 40.30.16 29 483.617 N, 87 912.944 E C: Reduced Level (RL) a. 2.36 b. 3.16 47. The map of the project area and the map showing the two benchmarks are included with the drawings in the Appendix 3 of this report. 3.2 Hydrology

3.2.1 Introduction 48. The Sarakata hydrology assessment was implemented under ADB TA-8285 in April 2014 to assess availably of hydrological data for the feasibility design of a) Sarakata 1 HEP expansion or b) Sarakata 2

7 Cabinet Topographique et Foncier Ltd, Port Vila, Efate. Ph: +678 26793

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 10 3 Project Area located downstream of the current installed dam and power plant. Despite two initiatives in the late 1990’s and mid 2000’s under donor funding to operate a flow station and raingauge upstream of the power station, the site could not be sustained and that no data was available. The only data available is that collected by the French Hydrology Agency, ORSTOM, between January 1982 and September 1985. This data was published in their 1985 report and along with the Pekoa long term rainfall data, is the basis of this hydrology assessment. 49. Detailed discussion and analysis on the Sarakata hydrology is provided in Appendix 4 . Detailed hydrological baseline data is not presented here which is being collected under ADB Project TA-7329 and is being reported on separately. 3.2.2 Catchment Characteristics 50. The Sarakata River is a large river located in the south east of Santo Island close to the major town of Luganville, also the Santo (Sanma Province) capital. Its importance relates to the Sarakata Hydro Electric power station commissioned in 1995 under JICA Funding and secondary, periodic downstream flooding in and around Luganville. The river rises in the high mountain lands central to the island at around 784 m falling moderately at around 3.6% gradient in an east then southerly direction over 18.8 km reaching power station at an altitude of 110 metres. The catchment with an area of 97.1 km2 has moderate to heavy old growth forest with limited grass clearings and areas for village food production. Land use is limited to animal grazing, forest hunting and foraging, food production for local use and sale in Luganville markets. Copra and cocoa production are also viable local industries. The catchment is complex with multiple incised channels and stream threads. The dominant limestone geology of the catchment complicates the hydrology in that it does not respond like a surface water catchment due to its karstic nature. Flood peaks are sharp and storm runoff declines rapidly as surface runoff appears to infiltrate into subterranean storage for slow release during the dry season. The river appears to take some months to attain a baseflow condition. 51. The altitude area distribution is proportioned as follows: . 110 m - 160 m 3.2% . 160 m - 200 m 19.5% . 200 m - 400 m 42.6% . 400 m - 560 m 28.9% . 560 m - 784 m 5.8% . Average altitude 335 m 52. Figure shows the catchment topography and stream threads to the water level station. Note the edge of the Wambu catchment in the SW corner. Photo shows the Sarakata River downstream of the spillway with the headrace channel on the right side.

Photo Sarakata River downstream of spillway, flow Figure Sarakata River Catchment estimated at 4 m3/s 3.2.3 Rainfall 53. The rainfall of Santo Island is poorly understood and apart from the long-term VMS rain gauge located at Pekoa 16 km to the south east at Luganville’s Airport, there is essentially no hydro-meteorological data. More recently in 2009, VMS has installed a daily raingauge at Fanafu, the location of the French rain gauge during 1982 - 1985. Based on data collected at Pekoa over the 43 years since 1971, the mean average rainfall is 2,401 mm with an annual maximum of 3,474 mm (1988) and a minimum of 689 mm (1983) being measured. There is insufficient existing rainfall data at Sarakata to establish a correlation at this stage.

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Indications are that there is some wet season correlation but in the transition months and dry season it is poor at best. In 2013 SMEC installed an automatic gauge at the Nambel Village 5.7 km WSW of the power station for the Wambu hydrology investigation. This serves a dual purpose for both catchments. Data is limited at this stage but in time will be very useful for intensity analysis and identification of temporal patterns. The monthly rainfall distribution is shown in Figure .

Pekoa monthly rainfall distribution 350 300 250 (mm)

200 150 100 Rainfall 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Month

Figure Sarakata monthly rainfall distribution 3.2.4 Runoff 54. The French Government Agency ORSTOM commenced hydrological activities in Vanuatu in 1981 with the installation of several hydrological stations; amongst these was the installation of a river flow station and rain gauge on the Sarakata River. Fortunately this data has located in the 1985 ORSTOM report and has all been updated to the hydrological database. Along with the data from DoWR, we have a complete flow record for 1982 to 1983 including discharge measurements. The data is of very good quality and covers the extreme dry year of 1983 and average year of 1984. The Sarakata station was recommissioned at Fanafu upstream of the dam by DGMWR in the late 1990’s but could not be sustained. Due to the comparative low capacity of both VMS and DGMWR (now DoWR) there is no published procedure for flow or flood estimation nor any IFD design rainfall data for flood estimation anywhere in Vanuatu. ORSTOM have done some analysis and this is documented in their 1985 report. 55. Based on the ORSTOM measured flow data it has been possible to develop a flow duration curve (FDC) based on a total of three years good data. This is a very short dataset on which to design and size power plant and given the shortfall in actual catchment rainfalls, it is not possible to model catchment flows, especially dry season flows which have more importance for a run-of-river scheme. Detailed flood modelling has not been possible. 56. ORSTOM undertook a very robust discharge measurement program and gauged the river frequently up to a flow close to 100 m3/s. The rating appears to be quite stable and the quality of the rated discharge is very good. ORSTOM also developed some provisional design rainfall intensities for the Sarakata and this data has been utilised using a regional flood estimation model, to develop flood estimates for 10, 20, 50 and 100 year recurrence intervals. 57. Measured data to date (1982 to 1985) shows a rated minimum flow of 2.81 m3/s and a maximum flow of 404 m3/s. 58. The Sarakata lease was initially operated by the French Company UNELCO, it is possible that they collected additional hydrological data but it has not been possible to source this from them. More recently, VUI have had the concession and have commenced collecting some basic water level data. 59. This ORSTOM data has allowed a flow duration curve to be developed for the lowest year on record and an average year, based on rainfall analysis. Figure and Table show the adopted flow duration curve.

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Sarakata River Flow Duration 512 Curve 400 20

200 12

0 River(m3/s) Flow 1 0.1 0.01 0.0001 Fraction of time flow is equalled or exceeded 0 site 2230101 Sarakata at Fanafo above intake 0 102030405060708090100 Flow Cumecs Exceedance (%) 30-Jan-1982 11:00:00 to 15-Sep-1985 15:00:00 (Note: Logarithmic Horizontal axis) Figure Flow Duration Curve for Sarakata River Table Flow Duration Curve data for Sarakata River % Flow River Flow % Flow River Flow Exceedance (m3/s) Exceedance (m3/s) 0 403.6 55 6.8 5 18.5 60 6.4 10 14.0 65 6.0 15 12.0 70 5.6 20 10.7 75 5.3 25 9.8 80 4.8 30 9.2 85 4.3 35 8.7 90 3.7 40 8.2 95 3.4 45 7.7 100 2.8 50 7.2 3.2.5 Risk 60. Hydrological risk for the project extends to flooding during any construction period, the risk to construction and permanent infrastructure and prolonged low flows during extended dry periods. Based on information for the Pacific Climate Change Science Program (2011) rainfall extremes are expected to increase bringing greater flooding and a decrease in dry season rainfalls. Overall, total rainfall is expected to marginally decrease and this is demonstrated in the long term trend at Lamap but not at Pekoa. There is substantial variation from year to year with short term trends identified trending with the southern oscillation index. 61. Cyclones on average approach Vanuatu two to three times per annum with 94 systems having approached or crossed the country in the 41 years since 1969. This season extends normally from November to April with January to April being the wettest months and the higher risk season, October to December and May to June the transition months and July to September the months of lowest flow with river base flow normally being attained in September. 62. Future climate predictions for Vanuatu are based on IPCC (Intergovernmental Panel on Climate Change) modelling and generally predict increasing temperatures (air and sea) more hot days, changing rainfall patterns, more extremes for floods and droughts and less frequent but more intense cyclonic systems. Without doubt this prediction and subsequent El Nino events will affect catchment runoff with increasing evapo-transpiration with respect to lower runoff for extended periods. Currently the low flows persist for the months of July, August and September, these periods could be expected to increase. 63. The Sarakata catchment can be considered small at less than 100 km2 but with intense wet season rainfalls it can flood quite rapidly with in excess of 400 m3/s being measured (rated flow) in November 1982. Nambel Village rainfall data shows daily rainfall in March 2013 approaching 200 mm and intensities of this magnitude appear to occur annually.

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3.2.6 Conclusions and recommendations 64. The available data sourced predominantly from ORSTOM has allowed provisional hydrological data to be analysed and presented for use in the study. Flow data is limited to date and can only be improved by implementing a hydrological monitoring program. VUI have recently installed a stick gauge above the dam and have implemented a program of twice daily measurements. A provisional spillway rating has been developed and this will allow the daily spills to be measured. 3.3 Geology

65. JICA, when it did the investigation work for constructing the Sarakata project undertook some geological assessment of the area. The extract from the report is provided below: 66. The southeastern portion of Santo Island, which includes the Project area, consists of elevated coral limestone dating from the Pleistocene epoch of the Quaternary period which occurred approximately two million years ago. In the Sarakata River basin, only a very alight amount of igneous breccia and sandstone can be found, the rest of the land is entirely covered by elevated coral limestone, and there are no significant faults at all. (Figure ) Due to the above-mentioned geological features and the process by which they were created, the topography of the Project area consists of flat land with gentle rolling hills. The Sarakata River erodes the flat land as it flows downstream, and forms a V-shaped channel and falls in the Project area. Results of the seven test pits dug in the Project area as part of the on-site survey show that the surface soil covering is from 0.8 - 1.40 meters deep, and the soil consists of clay light brown to brown in colour.

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Figure General Geological Map Source: Basic Design Study Report on the Project for Sarakata River Hydroelectric Power Development in Vanuatu, JICA, October 1991

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4 Project Options

67. This section describes the project options, their comparative assessment and selection of the recommended option. 4.1 Project Options

68. There is anecdotal evidence that there are seasonal surplus of water in Sarakata River that can generate additional energy. This evidence is from the observation of regular seasonal spill over Sarakata spillway. Given that VUI regular draws on diesel generation to generate electricity, any additional generation from Sarakata-1 HPP would replace this energy with effectively ‘free’ renewable energy and in doing so, reduce cost of generation. This is in line with the objective of the project whereby it intends to promote generation of renewable energy; and therefore formed the basis for investigating option to extend Sarakata-1 HPP. 69. In identifying the options to increase the capacity of Sarakata-1, the approach has been to take into account the following criteria and/or limitations: . Use equipment with configuration similar to the current sets to maintain similarity in design and operation of the project Minimal disruption to the operation of Sarakat-1 HPP to minimise alternate and more expensive diesel generation . Maximum use of existing generation and transmission infrastructure to reduce construction costs and minimize constructing new infrastructure . Minimum risk during construction to reduce disruption of operation of Sarakata-1 and extended construction periods . Avoid introducing or creating new risks and negative impacts that would need expensive mitigation measures or would not be acceptable to communities. 70. Preliminary load flow studies of existing 20 kV transmission line from Sarakata-1 to Luganville indicate that it has adequate ratings for 300 kW addition at Sarakata-1, but there would be severe voltage drops and high losses if the extension is 600 kW or larger. Using this as a criterion, the extent of capacity addition has been limited to between 300 kW and 600 kW. Then matching the additional capacities to the configurations of the existing equipment which are either 300 kW or 600 kW (Photo ) ,the options that were investigated were: . Option 3A 300 kW . Option 3B 600 kW.

Using the nameplate ratings for these equipment, and assuming similar characteristics, the additional discharges for the two options are set at 1.5 and 3.0 m3/s and the total discharges at 7.3 and 8.8 m3/s (Table and 71. Table ).

Photo Nameplate Rating of Units in Sarakata-1 HP

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Table Ratings of the Equipment Description Existing Unit Existing Unit Option 3A Option 3B 2 x 300 kW 1 x 600 kW 1 x 300 kW 1 x 600 kW Turbine Rated Output (kW) 343 674 343 674 Rated Nett Head (m) 27.8 27.3 27.8 27.3 Rated Flow (m3/s) 1.45 2.9 1.5 2.9 Efficiency 0.87 0.87 0.87 0.87 Number of Units 2 1 1 1 Generator Type Synchronous Synchronous Synchronous Synchronous Rated Capacity (kVA) 375 750 375 750 Power Factor 0.8 0.8 0.8 0.8 Rated Capacity (kW) 300 600 300 600 Efficiency 0.87 0.89 0.87 0.87 Number of Units 2 1 1 1 Notes: 1. The parameters for the existing units are nameplate ratings.

Table Discharge for Different Options Additional Total Discharges Discharge (m3/s) (m3/s) Existing Scheme NA 5.8 Add Option 3A 300 kW 1.5 7.3 Add Option 3B 600 kW 3.0 8.8

72. Accordingly, the options to increase the capacity of Sarakata-1 were: Table : Sarakata-1 Extension Options

Nos Option Name Additional Total Additional Total Capacity Capacity Discharge Discharge 1 Option 3A Sarakata-1 300 kW 300 kW 1,500 kW 1.5 m3/s 7.3 m3/s 2 Option 3B Sarakata-1 600 kW 600 kW 1,800 kW 3.0 m3/s 8.8 m3/s

4.2 Limitation to the extension

73. There are several constraints that determine the extent of increase of the capacity of Sarakata-1. Some are external to the project such as availability of additional discharge in the river and demand for electricity. Others are internal to the project such as capacities of existing infrastructure and the extent to which it can be modified to increase its capacity, operational constraints such as disruption to the generation. Table lists these limits and the subsequent section discusses them in more detail. Table Potential Limits to Sarakata-1 Extension N° Item Description Limits 1 Hydrology The additional discharge in the river that can Extent of spilled discharge be captured. 2 Floods The extent of the clearance above the dam Height of the dam that is necessary to pass the floods. 3 Demand The matching of the seasonality of the Timing and magnitude of demand and how it demand and availability of the additional coincides with surplus river discharge discharge in the river 4 Operations Disruption to the operation of Sarakata-1 Minimal disruption to the operation of Sarakata-1

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N° Item Description Limits 5 Headworks - The intake size and water levels in Flow through existing intake without Intake size subsequent structures [settling basin and modification canal] governs the additional discharge that it can pass at higher water levels. 6 Headrace The increase in the size of the canal Soil capacity to withstand the increased load from enlarged canal 7 Forebay size The size of the forebay and the area Extent of area necessary for forebay necessary 8 Powerhouse The increased size of the powerhouse, how Fit with existing powerhouse and extension the extension fits with the existing arrangement to use existing equipment powerhouse 9 Crane Use existing traveling crane Capacity of the crane and the heaviest piece of equipment it would have to lift 10 Transmission The necessary rating of the existing Capacity of the transmission infrastructure transmission line from Sarakata-1 to Luganville

4.2.1 Hydrology 74. The flow duration curve for Sarakata River shows that the additional discharges for 300 kW and 600 kW additional capacities would be available 50% and 34% of the time respectively. In comparison, the discharge for the current Sarakata-1 is available 68% of the time. Table Sarakata-1 Discharges and their Availability for Different Options Project Options Installed Additional Total Percent of Time Capacity Discharge (m3/s) Discharges Available (kW) (m3/s) Existing Scheme 1,200 NA 5.8 68% Add Option 3A 300 kW 1,500 1.5 7.3 50% Add Option 3B 600 kW 1,800 3.0 8.8 34%

Sarakata‐1 River and Plant Discharge 20 18 River Flow (m3/s) 16 Existing: 1,200 kW 14 /s) Option 3A: +300 kW 3 12 (m Option 3B: +600 kW 10 8.8 8 7.3 6 Discharge 4 5.8 2 34 50 68 0 0 102030405060708090100 Exceedance (%)

Figure Sarakata-1 Discharge and their Availability for Different Options 4.2.2 Floods 75. The dam on the Sarakata River is concrete dam and consists of 40 m long spillway with four equal sections (Figure ). The intake and the flushing gates are located in the section on the right bank. There is a bridge over the dam that is used to cross Sarakata River to reach Sarakata-1 powerhouse from the road from Luganville. 76. JICA’s design documents and drawings show that in the current arrangement, the sill of the spillway and the normal water level (NWL) is at RL 121.5 m. The high water level (HWL) presumably at highest design flood increases by 4 m to RL 125.5 m. In this condition, the clearance between the water level and the underside of the bridge is around 2 m.

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Figure Sarakata-1 Dam 77. If the dam is raised without altering the spillway length, notionally, during floods the water level behind the dam would rise proportionately. It is general practice to maintain at least 1.5 m clear space between the HWL and underside of the bridge (that is at RL 127.5 m) to allow large debris (such as trees) to pass over the spillway. Based on this approach and 4 m increase in water level during flood as a guide, the maximum height that the dam can be raised is 0.5 m to RL 126.0 m. 78. Raising the dam increases the inundated areas behind the dam, both during normal conditions and during floods. The higher levels during floods would be infrequent and transitional. During drier seasons the water levels would be lower. 79. This therefore set the maximum increase in the dam to 0.5 m to RL 126.0 m. Table shows that current and the proposed levels at the dam. Table Maximum Height of the Dam Existing Maximum Comments allowed High flood level (HWL) RL m 125.5 126.0 Normal water level (NWL) RL m 121.5 122.0 High flood level d/s of dam RL m 118.5 118.5

Spillway sill level RL m 121.5 122.0 Bridge invert level RL m 128.5 NA Bridge beam underside level RL m 127.5 NA River Bed Level (lowest) RL m 112.0 NA

Clearance above HWL m 2.0 1.5 Minimum recommended

Increase in Dam Height m 0 0.5 Dam Height m 9.5 10.0 Measured from the lowest point on the cross section

4.2.3 Demand 80. Currently VUI has to draw upon considerable amount of diesel generation to supply the demand for electricity. Generation data for 2013 show that generation from diesel is required 60% of the time with the generation at 200 kW or higher (Figure ) peaking at 1,400 kW presumably when the hydro is severely constrained. This indicates that if there was additional generation from hydro, it could replace the diesel

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 19 4 Project Options generation. Whether the additional demand coincides with the availability of the discharges in Sarakata River and the extent of diesel generation that would be displaced was assessed through generation modelling.

Figure Generation from SHP-1 and Diesel in Year 2013 4.2.4 Operations 81. Disruption to the operation of Sarakata-1 would require replacement and expensive generation from diesel. Therefore it is desirable to minimise such disruption. Work 4.2.5 Headworks 82. The existing intake arrangement at Sarakata dam consists of a side intake (7 m long and 1.9 m high) with a trashrack, a short channel approximately 6 m long that opens into a 19 m long settling basin (Figure ). JICA’s design documents (Drg. N° DC-003) indicate the drop in water level between the intake and the start of the headrace is 0.3 m (difference between NWL 121.50 and water level at RL 121.20 in the headrace) presumably at the design discharge of 5.8 m3/s (1,200 kW) . SMEC’s preliminary calculations indicate that the headloss for such an arrangement would be around 0.3 to 0.35 m which conforms to JICA’s estimates.

Figure Headworks Arrangement at Sarakata-1 Dam 83. Using JICA’s design information as a guideline to calibrate the intake, the increase in water level at the intake to provide sufficient discharge to increase Sarakata-1’s capacity by 300 kW (Option 3A) and 600 kW (Option 3B) are 0.4 m and 0.82 m. The corresponding increases in the height at the settling basin to convey the additional discharges are approximately 0.2 m (actual estimated 0.17 m) and 0.4 m (actual estimated 0.37 m). 84. While the increase at the dam for Option 3A 300 kW is within the limit (0.5 m increase of dam height) to pass the flood, the increase for Option 3B exceed this limit. The alternate arrangement for Option 3B would be to use the sand flush gate and modify the downstream arrangement to include a settling basin, a new canal parallel to the existing one. This would however be a significantly complicated construction.

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Figure Conveyance Capacity of Headworks 4.2.6 Headrace 85. The headrace from the settling basin to the forebay at Sarakata-1 is 900 m long trapezoidal concrete canal along the left bank of Sarakata River. The section is 2.5 m wide at the bottom, 1.6 m high with the side slopes at 5V:1H and a top width of 3.5 m (Figure ). The initial 765 m has an average slope of 0.001 m/m while the remaining 135 m has a steeper slope at 0.005 m/m.

Figure Typical Headrace at Sarakata-1 HPP Table Headrace Sections Headrace 1 - Headrace 2 - Total Flat Steep Length (m) 765 138 903 Average Slope (m/m) 0.0010 0.0050 86. In the original design for the headrace by JICA in 2007 indicated that the capacity of the trapezoidal section when flowing with a water depth of 1.6 m would be 8 m3/s (green curve in Figure ). However, observation at the site indicates that in Headrace-1 (with flat slope) generally flows almost full when the scheme is generating at close to its capacity of 1,200 kW and conveying approximately 6 m3/s. 87. With this condition as a calibration point and using a vertical extension to the canal wall to increase its height to convey additional discharge for Option 3A is 0.4 m. This includes 0.3 m freeboard. The conveyance capacity of Section 2 is sufficient for this increase without any modifications. 88. Theoretically, Headrace-1 would be able to convey the necessary discharge for Option 3B with an extension of 0.5 m to its height while Section 2 would require an extension of 0.1 m. 89. JICA’s assessment work in 2007 determined that sections of headrace canal were vulnerable to landslides both on the mountainside and the river side and ground instability from infiltration of rainwater. JICA and Government of Vanuatu put in a series of countermeasure works to stabilise and rehabilitate the

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Headrace Conveyance Capacity (m3/s) 2.00 2.3

1.8 1.7

1.50 1.8 Extension - Headrace-1 (0-765m) Rectangular Section Flat (= 0.001m/m) Headrace-2 (765-905m) Steep (=0.005m/m) 1.00 1.3 JICA 2007 Design

HR Ht Increase for 300 kW Depth of flow(m) HR Ht Increase for 600 Required Channel Ht (m) 0.50 Existing - 0.8 kW Trapezoidal Section Existing Channel Height

0.00 7.3 8.8 0.3 012345678910 Discharge (m3/s)

Figure Headrace Channel Particulars 90. While these measures may have arrested the instability, any modification to the canal may instigate them. These instabilities may result from construction work in the area and/or from additional load that the additional discharge imposes on the area. Transient conditions may also introduce additional load on the canal at the higher discharges. 91. JICA also installed a HDPE layer to decrease the roughness of the headrace to allow higher discharge through it. If the water level is raised, it may likely that this layer would have to be extended or replaced to cover the extended area. Alternately, the quality of the concrete work on the extension should be such that such layer should not be necessary. 4.2.7 Forebay

Proposed location for new forebay

Figure Sarakata-1 Forebay and Powerhouse Area 92. The existing forebay consist of main section designed for the operation of 1,200 kW scheme with a spillway arrangement on the riverside. It is a concrete structure 22 m long and 7.4 m wide. It consists of two outlets for penstock pipes. The spillway arrangement consists of an overflow section the riverside that then discharges into Sarakata River through a pipe. 93. Modifying the forebay to supply discharges necessary for extension of Sarakata-1 would disrupt its operation for long periods. Also, it would be significantly complex undertaking with risks that the work could

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 22 4 Project Options undermine the stability of the structure. Hence the approach has been to investigate construction of a new forebay. Therefore the approach was to use a new forebay and avoid any work on the existing forebay. 94. A new forebay can be located in the area upstream of the existing forebay and on the hillside where the previous access road is ends. This forebay would be supplied by a tee off from headrace from Section 2. This would fit in well if the powerhouse is extended on its access road end and supplied with a single penstock. The necessary sizes for the forebay for Options 3A and 3B are approximately 14.9 m x 2.6 m and 16.7 m x 3.1 m respectively. There is sufficient area at the proposed location for either of these sizes. 95. The advantage of this approach is that it would essentially have minimal disruption to the operation of Sarakata-1 during construction. 4.2.8 Powerhouse extension 96. The logical area for extension of the powerhouse is on its access road end. The size of the extension would depend on whether the extension is 300 kW or 600 kW. Irrespective of the size, in both cases, the extension would be connected to the existing powerhouse and designed to allow the crane in the powerhouse to travel across the extension. This approach would fit will with the proposed arrangement for the new forebay and penstock. 97. If the new equipment is similar to the existing ones in Sarakat-1, the length of the powerhouse would have to be extended by 6.4 m and 8.4 m for Option 3A and 3B respectively. There is adequate area for either of these extensions. 4.2.9 Crane 98. If the arrangement in the extended powerhouse is such that it allows the existing hoisting crane to travel into it the extension and service the area, both during installation and the operation phases, this would avoid the cost of new hoisting equipment. Therefore the design of the extension to the powerhouse should incorporate this requirement. Also the weight of the heaviest part of the equipment that the hoisting crane needs to move should be within its lifting capacity. The maximum lifting capacity of the crane is 7 ton and would generally be able to service the new equipment. 99. Therefore this is not a critical issue for the extension. 4.2.10 Summary 100. The summary of the analysis is as follows: Table Summary of the Limits to Sarakata-1 Extension N° Item Results Conclusion | Remarks 1 Hydrology:: The flows are generally available for the There is not obvious limitation on the availability additional generation available with flows of the flows in Sarakata River. available for the following % of time : Existing capacity (1,200 kW) 68%, Option 3A (+300 kW) 50%; and Option 3B (+600 kW) 34% of the time. 2 Floods To maintain at least 1.5 m between the above the flood level and the bridge over the dam, limits the increase in height to 0.5 m. 3 Demand There is demand for additional energy at The additional generation can be supplied to 200 kW and higher 60% of the time which is displace generation. currently provided by diesel. 4 Operations Minimal disruption to the operation of Amendment to flush gate area and forebay Sarakata-1 would disrupt the generation at SHPP-1. 5 Headworks The additional head necessary to convey the 0.4 m increase in dam height is within the flood discharges necessary are: limit, 0.8 m exceeds it. In Option 3A, the existing Option 3A - 0.4 m increase in dam height headworks for can be used with some Option 3B - 0.8 m increase in dam height modifications. For Option 3B, the flush gate will have to be used as additional intake and a new settling basin constructed downstream. 6 Headrace The increase in the height of the canal of the Option 3B would require arrangement to headrace for: discharge flows from new intake into headrace. Option 3A - 0.4 m ; and Alternately, a parallel canal over the first 765 m Option 3B - 0.5 m. can be constructed. 7 Forebay size The size of the forebay and the area There is sufficient area for forebay for both

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N° Item Results Conclusion | Remarks necessary options. 8 Powerhouse The increased size of the powerhouse, how There is sufficient area to extend the extension the extension fits with the existing powerhouse for both options. powerhouse Use existing crane 9 Crane New units weight to be within the lifting The equipment would be within the lifting capacity of crane capacity of the crane or it can be so specified when the equipment is procured. 10 Transmission The rating of the existing transmission line The transmission line has the capacity for from Sarakata-1 to Luganville would allow additional 300 kW without major changes but 300 kW addition but would incur substantial additional capacity is necessary to avoid large losses at 600 kW. losses when transmitting additional 600 kW.

4.3 Project Options

101. Conforming to the limitations posed by the issues in Section 0, the descriptions of the two options that were identified and assessed in this study are discussed below: 4.3.1 Option 3A - 300 kW

Figure Sarakata-1 Option 3A General Arrangement 102. The increase in dam height of 0.4 m to convey the necessary discharge through the existing intake and headworks arrangement is less than the limit posed by the maximum increase in dam height of 0.5 m. Therefore, there would be minimal modifications to the headworks other than raising the dam to increase its capacity to convey the necessary discharge to increase the generation capacity. The walls of the settling basin would have to be raised by 0.2 m and the walls of the first 765 m long section of the headrace by 0.4 m. A new forebay would have to be constructed in the area before the existing forebay that will be supplied through a new section of headrace canal teed off from the existing headrace approximately 30 m upstream of the forebay. A single penstock would lead to a 6.4 m extension to the powerhouse on the access road side. The generation unit would consist of a single unit located in the extension to the powerhouse.

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4.3.2 Option 3B - 600 kW

Figure Sarakata-1 Option 3B General Arrangement 103. The increase in dam height of 0.8 m to convey the necessary discharge through the existing intake and headworks arrangement exceed the limit posed by the maximum increase in dam height of 0.5 m. Therefore the headworks would require significant modifications before it can be used in this option. 104. The proposed modification is to modify the flushing gate into a second intake. On the upstream, it would require a trashrack arrangement while on the downstream, it would be necessary to construct a settling basin and a new headrace which could connect to the existing steeper headrace approximately 765 m downstream. The walls of the steeper headrace would have to increase by 0.1 m. 105. Similar to Option 3A, a new forebay would have to be constructed in the area before the existing forebay that will be supplied through a new section of headrace canal teed off from the existing headrace approximately 30 m upstream of the forebay. A single penstock would lead to an 8.4 m extension to the powerhouse on the access road side. The generation unit would consist of a single unit located in the extension to the powerhouse. 4.4 Project Particulars Comparison

4.4.1 Proposed Configuration of the Options 106. The proposed project configurations for the two options are presented in the table below. 107. The major modifications at the dam in Option 3A is the increase in its height by 0.4 m and lifting the platform at the intake by 0.4 m so that the trashrack is accessible during normal operation. The height of the wall in the 765 m long section from the dam would have to be increased by 0.4 m. 108. The modifications to the headworks and headrace is considerably more complex in Option 3B and would require modifying the flush gate to an intake gate, construction of a new settling basin and a 764 m long new headrace from the settling basin parallel to the existing headrace that connects to the steeper lower headrace. This lower 135 m length of the headrace would have its wall increased by 0.1 m. 109. While the sizes would be different, both options would need a new forebay supplied by a tee off from the existing headrace, a new penstock to an extension to the powerhouse on the access road side and a new set of generation unit.

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Table Proposed Configurations of Sarakata-1 Extension Description Option 3A - 300 kW Option 3B - 600 kW Remarks extension extension Installed Capacity kW 1 x 300 additional 1 x 600 additional Existing capacity 1,500 total 1,800 total 1,200 kW Discharge m3/s 1.5 additional 3.0 additional 7.3 total 8.8 total Dam Increase in Dam Height m 0.4 NA Headworks Intake Lift platform above intake Modify flush gate by 0.4 m Settling basin Increase wall height by New Settling basin with 0.2 m 3.0 m3/s capacity Headrace Section 1 approx. 765 m Increase height by 0.4 m New parallel headrace long with a capacity of 3m3/s Section 2 approx. 135 m No change Increase height by 0.1 m long Section 3 - Tee off from Section 2 to Forebay Length m 30 30 Size (Height x m x m 1.1 x 0.8 1.2 x 1.2 Width) Forebay New forebay New Forebay Size (length x width x m x m 14.9 x 2.6 x 4.8 16.7 x 3.1 x 5.8 Depth at Penstock depth) chamber Penstock New Penstock New Penstock Diameter m 0.9 1.2 Length m 56.0 56.0 Powerhouse Size m x m 6.4 x 6 8.4 x 6 Turbine kW 1 x 300 1 x 600 Generator kVA 1 x 375 1 x 750

4.4.2 Energy

Figure : 1800 kW and 1500 kW Sarakata 1 flow and generation duration curves 110. Annual energy of the Sarakata HPP was estimated by the flow duration curve method. An environmental discharge of 1.05 m3/s, which corresponds to 10% of mean flow, was considered in the calculation.

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111. Integrating the energy duration curve would yield the annual generation potential for a power station connected to a large grid. However in the case of Sarakata the demand will sometimes be lower than the potential generation and water will be spilled over the weir as there is no significant storage capacity. This will mainly happen at night, when the demand would typically be below 1,000 kW. 112. The annual generation estimated by the flow duration curve method was therefore corrected using the demand-duration curves. Sample curves are shown below:

Figure : Demand duration curves (hourly) 113. The calculations were carried out for the current maximum capacity of 1,200 kW, and the upgraded capacities of 1,500 kW and 1,800 kW. The difference in annual generation between the existing and the upgraded scenarios would be the benefit of the upgrade.

Figure : Annual generation forecast 1800 kW and 1500 kW installed capacity 114. The above energy estimate does not allow for does not allow for outages, not does it consider other constraints, such as minimum loading of Diesel engines. To allow for these factors, it would be prudent to consider a reduction in hydro energy by 5% in the sensitivity studies. 4.4.3 Costs 115. The cost of the increasing the height of the dam and the electrical and mechanical items to increase the generation are based on quotes supplied to VUI by international agencies. These quotes did not include civil costs which have been estimated by comparing to similar work in the region. This approach ensures that the costs are on the same basis and are comparative. 116. The electrical and mechanical costs are for a single unit and on the basis of their capacity. A 20% allowance for the freight has been included for items that are likely to be imported such as equipment. The cost of engineering includes the design and supervision costs. The development costs include cost of preparatory works such as survey and investigation necessary for design. 117. Transmission costs for Option 3B assumes full capacity of 600 kW machine is used (1800 kW for HPP total) or a 600 kW downstream plant is built. The existing transmission line even with uprated conductor has inadequate capacity to take an additional 600 kW. Thus a second transmission line is required with a switching station at Sarakata plus additional transformer capacity and expansion at Sous Substation. However, a simplified arrangement could be constructed only for Sarakata 600 kW expansion reducing costs from $3,440,300 to approximately $2,800,000.

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118. The summary of the costs are given in the table below. Table Cost Estimates for Options 3A and 3B Option 3A - 300 kW Option 3B - 600 kW Project Costs 2,604,000 4,254,000 Transmission Costs 920,710 3,440,300 Grand Total Costs 3,524,710 7,694,300

4.4.4 Financial Analysis 119. The financial analysis was done using a cashflow analysis by projecting future revenue and cost streams from the project based on certain assumptions. Under ADB guidelines, two streams of cashflows need to be developed, “with” and “without” project and the incremental cashflow determined. This stream of incremental cashflow is then discounted to its present value and financial indicators such as the Financial Internal Rate of Return (FIRR) and Financial Net Present Value (FNPV) calculated. The Weighted Average Cost of Capital (WACC) is determined based on the source and cost of financing which is then used as a benchmark to compare with the FIRR and FNPV. The details of the approach including the major assumptions used in the analysis and the complete incremental cashflow analysis are provided in Section 10 120. The FIRRs for the Option 3A (300 kW) and Option 3B (600 kW) are 8.9% and 6.3%. When the base case is considered while Option 3A is financially attractive as it’s FIRR is above the eventual WACC under concessionary financing, the FIRR for Option 3B is less than the WACC. 121. A variation of Option 3A in which a 600 kW equipment would be installed in the powerhouse but the diversion work at the dam and the modifications to the waterways would be limited to that is necessary for additional 300 kW (limiting the generation capacity to 1,500 kW). In this approach, it would avoid the high cost of transmission line upgrade work that is necessary if the capacity of Sarakata-1 is increased to 1,800 kW and the complex modification works at the dam. That means that overall the station would have 300 kW surplus capacity and that can be used when any of the machines are not operational such as during maintenance and outages. The FIRR for this arrangement is 7.9% which is slightly lower than for Option 3A but higher than for Option 3B. Table : Result of Financial Analysis Options FIRR 3A Option 3A - 300 kW Unit (1,500 kW 8.9% Generation Capacity) 3B Option 3B - 600 kW Unit (1,800 kW 6.3% Generation Capacity) Variant of Option 3A - 600 kW Uni 7.9% (1,500 kW Generation Capacity)t

4.5 Recommended Option

122. The financial analysis shows that Option 3A has better returns, and generally would be the preferred option. However, having some spare capacity would allow downtime for maintenance without any loss of generation. It would also allow minimal loss in generation when replacing old units. Noting that such an arrangement is the preference of the Concessionaire and DOE and the FIRR is only marginally less than for Option 3A, the variation to Option 3A would be a reasonable option to implement. For this, it would be necessary for either the GoV and/or the Concessionaire to meet the additional costs vis-à-vis Option 3A. 123. Accordingly, the option to add a 600 kW unit while limiting the diversion works to the additional 300 kW has been developed in the subsequent section. If in the subsequent stage the decision is made to pursue Option 3A and add only 300 kW unit in the extension, the design can be amended to suit. As such, the costs estimates and the financial analysis for both of these alternatives are presented in this report. 124. The arrangement would require that the new forebay, the section of the headrace supplying to it and the powerhouse built for have a capacity of 3 m3/s. The modifications at the dam, intake and headrace would be for an additional 1.5 m3/s (300 kW) only. This approach would avoid the high risk and complex

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 28 4 Project Options construction at the dam, headwork and headrace (i.e. modifying flush gate, new settling basin and parallel headrace) while still providing a spare capacity of 300 kW at Sarakata-1. The summary is shown in Table below. Table Arrangements for Recommended Option Particular Description of Works 1 Dam Increase height by 0.4 m. 2 Intake Lift intake platform by 0.4 m 3 Settling Basin Increase wall height by 0.2 m 4 Headrace Headrace 1 - Increase height by 0.4 m Headrace 2 - No modification Headrace 3 - New headrace with 3 m3/s capacity for 600 kW 5 Forebay New forebay with 3 m3/s capacity 6 Penstock New penstock for 3 m3/s capacity 7 Powerhouse Extension to house 600 kW unit 8 EM equipment 600 kW units 9 Electrical equipment 600 kW unit 10 Transmission 600 kW addition

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5 The Proposed Project Arrangement

125. This section consists of the description of the proposed project arrangement recommended in the previous section. 5.1 Project Description

126. The recommended extension at Sarakata-1 consists of adding 600 kW capacity while diverting additional discharge at the intake for 300 kW. This will result in the total capacity at Sarakata-1 at 1,800 kW, of which 300 kW will be spare capacity resulting in the total maximum generation capacity of 1,500 kW.

Figure Major Works for Sarakata-1 Extension 127. Accordingly, the divergence and the conveyance capacity will be modified to divert and convey an additional 1.5 m3/s discharge (necessary for 300 kW) whereas the new generation infrastructure and the system supplying discharge to it will be modified for 3 m3/s (600 kW). 128. The modification and addition to the existing project infrastructure will consist of the following: . Dam: The height of the dam will be increased by 0.4 m to provide additional head to pass a total of 1.5 m3/s through the intake; . Intake: The intake will be essentially unchanged but a platform from where the trashrack is accessed will be raised by 0.4 m so that it will be accessible during normal operation; . Settling basin: The walls of the settling basin will be raised by 0.2 m to allow the additional discharge to pass without overtopping; . Headrace: . Headrace 1: The walls for the initial 765 m will be increased by 0.4 m; . Headrace 2: This will remain unchanged; . Headrace 3: A new 30 m long channel with a capacity of 3 m3/s teed off from Headrace 2 will be added to connect to the new forebay; . Forebay: A new forebay will be constructed upstream of the existing forebay and on the hillside in the area where the previous access road was located; . Penstock: A new 1.2 m diameter penstock will be installed from the forebay to the powerhouse; . Powerhouse: A 8.4 m long extension will be added to the powerhouse on its side towards the access road and will include tailrace arrangement for a discharge capacity of 3 m3/s; and

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. Electromechanical equipment: A 600 kW generation unit will be installed in the extension to the powerhouse. 129. The major features of the extension work are shown in Figure and Table . Table Major Works for Sarakata-1 Extension Description Particular Objective Remarks Generation Capacity Added and total kW 1 x 600 addn Capacity installed in the new capacity of the 1,800 total powerhouse Installed units Increase in Capacity kW 300 addn Generation capacity added to 1,500 total Sarakata-1 with total generation capacity of 1,500 kW Discharge m3/s 1.5 addn Discharge to generate additional Additional discharge diverted 7.3 total 300 kW at the dam/intake with total of 7.3 m3/s Dam Increase in Dam m 0.4 Increase height to provide head to Height pass additional discharge 1.5 m3/s through the intake Headworks Intake Lift platform Replace with new trashrack that above intake by extends above the new NWL and 0.4 m raise the platform above it to an Replace with elevation above new NWL so that new trashracks the trashrack is accessible for cleaning during normal operation. Settling basin Increase wall Amend structure to pass the higher height by 0.2 m discharge Headrace Headrace- 1 approx. Increase wall Amend structure to pass the higher 765 m long height by 0.4 m discharge Headrace-2 approx. No change 135 m long Headrace-3 - Tee Supply new forebay with 3 m3/s Conveyance capacity for off from Section 2 to 3 m3/s (600 kW) Forebay Length m 30 Size (Height x m x 1.2 x 1.2 Width) m Forebay New Forebay Capacity for 3 m3/s (600 kW) Size (length x width m x 16.7 x 3.1 x 5.8 Depth at Penstock chamber x depth) m Penstock New Penstock Conveyance capacity for 3 m3/s (600 kW) Diameter m 1.2 Length m 56.0 Powerhouse House new generation units Capacity for 600 kW Size m x 8.4 x 6 m Tailrace m x Conveyance capacity of 3 m3/s Similar to tailrace for 600 kW m unit Turbine kW 1 x 600 New unit similar to existing. Generator kVA 1 x 750 New unit similar to existing. Access Road km Rehabilitate existing road from SHPP-1 access road to existing forebay to provide vehicular access to forebay area

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5.2 Project Works

130. This section describes the necessary works for extension of Sarakata-1. The descriptions are based on the preliminary information and describe major works only and the most probable methods of constructing them. It is also based on the premise that the work will be undertaken through an EPC type of contract where the site investigation and detailed design work will determine the final methodology of achieving the extension. 131. Overall, the purpose of the works would be to achieve the additional generation capacity with minimal disruption to the operation of Sarakata-1 HPP and ensure that all effects, if adverse, are mitigable. Also, the modifications to the existing infrastructure should not introduce new risks to the community and to the long term sustainability and operation of the project. 132. The section below describes the major work involved in extension of Sarakata-1 HPP. 5.2.1 Dam 133. The dam needs to be heightened by 0.4 m to provide necessary head to discharge additional flow of 1.5 m3/s and the total flow of 7.3 m3/s for 300 kW addition to Sarakata-1. This would raise the NWL to RL 121.9 from RL 121.5 and increase the dam height from 9.5 m to 9.9 m (Table ). Table Elevations at the Headworks Existing Proposed Comments High flood level (HWL) RL m 125.5 126.0 Normal water level (NWL) RL m 121.5 121.9 High flood level d/s of dam RL m 118.5 118.5

Spillway sill level RL m 121.5 121.9 Bridge invert level RL m 128.5 128.5 Bridge beam underside level RL m 127.5 127.5 River Bed Level (lowest) RL m 112.0 112.0

Clearance above HWL m 2.0 1.6 Minimum recommended is 1.5 m Increase in Dam Height m 0 0.4 Dam Height m 9.5 9.9 Measured from the lowest point on the cross section Intake Platform RL m 121.75 122.15 Top of the trashrack RL m 121.50 122.15 Settling basin wall RL m 121.75 122.15 Settling basin spillway RL m 121.30 121.70

134. There are various ways to heighten the dam. The conventional way is to use concrete extension attached to the existing dam using anchor bars grouted into the dam. These would generally be cast-in-situ. The other option is to use rubber dam attached to the crest of the dam. These are inflatable rubber body attached to the dam using clamp plates and anchor bolts. They can be inflated by pumping air or water inside the rubber body to inflate it to the necessary pressure and height. It can also be deflated by releasing the air or water. This require it to have a control system including pumping.

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Figure Rubber Dam8 135. While both solutions have merits and can be used for this project, the key advantage of concrete extension is that it is relatively simple and is low tech solution. Once installed it is maintenance free, however, it is permanent fixture and removing or modifying it in later stage would be difficult. In comparison, the rubber dam including its control system would require regular maintenance but it can be inflated and deflated as required. 136. In term of construction, rubber dam is relatively special work. Because of this, it would require a specialist contractor and this may affect the competitiveness of the project. Also during operation, if it needs any maintenance works, local contractors in Vanuatu would generally be unable to undertake them. 137. Because of these concerns, it is preferable to adopt concrete extension along the crest of the dam which is a low tech solution and would be virtually maintenance free. Local contractors would be able to undertake minor works on it if it becomes necessary during operation. 5.2.2 Intake 138. The existing intake arrangement consists of two rectangular 3.5 m x 2.0 m openings with vertical trashracks. The platform above the intake is at RL 121.75 which sets it at 0.25 m above the NWL at RL 121.5. As such the platform is accessible during normal operation to remove debris, mostly leaves, which generally deposited on upper sections of the trashracks. According to the operators at SHPP-1, they undertake this clearing operation twice a day at the start of their shifts using manual rakes to scrape the debris onto the platform. 139. When the dam height is increased, the NWL is raised by 0.4 m to RL 122.and without any modifications; both the platform and the trashrack would be underwater during normal operation. To ensure that the platform is accessible during normal operation, it would be necessary to raise it by similar height. It will also be necessary to extend the top of the trashrack above the water to ensure that the debris can be raked unimpeded. This is best achieved by replacing the trashracks with larger section. 140. The most practical solution would be to provide a steel platform on vertical supports, made of stainless steel, and bolted to the concrete platform. The existing trashracks will be replaced by slightly larger sections, such that their top is above the higher NWL. Table provides the recommended elevations for the raised platform and the trashracks. 5.2.3 Settling basin 141. The existing settling basin is a single chambered concrete structure with a lower trapezoidal section and the upper rectangular section. It is 6 m wide at the top and 4.35 m deep. The top of the side walls are at RL 121.75 while the spillway on its riverside has its top of the wall at RL 121.3 (red outline in Figure ). Water is conveyed to it through an intake gate on its upstream end.

8 Source: Rubber dam catalogue from www.dyrhoff.co.uk.

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Figure Amendment to Settling Basin 142. With the additional discharge, the walls for the settling basin and the spillway will have to be heightened by 0.2 m so that it is able to convey it without spillage. This heightening can be implemented by a concrete extension along the wall that is attached to the walls using reinforcement bars inserted into the walls and grouted to achieve required strength. To ensure that the attachment is watertight, there should be a waterstop placed along the new and existing concrete sections. 5.2.4 Headrace 143. The headrace works will consist of the following: . Headrace-1: This includes the first 765 m from the settling basin and is on a flatter slope. Its walls will be heightened by 0.4 m. This will be achieved by concrete extension 0.4 m high and 0.3 m thick attached to the headrace walls with a series of dowels drilled and grouted into the existing concrete section. The interface between the new and the existing concrete will include a waterstop to ensure that it is watertight . Headrace-2: This will remain unchanged except at the location where Headrace-3 connects. At this location, the right wall (looking downstream) will have to be amended to incorporate a manual vertical gate to control the flow into Headrace-3 . Headrace-3: This will consist of a new 30 m long rectangular channel (1.2 m x 1.2 m) from Headrace-2 to the new forebay and located on the hillside.

Table Amendment to Headrace Dimensions Slope Works Section -1 765 m long, trapezoidal section 0.001 Increase wall height by 0.4 m Section -2 138 m long trapezoidal section 0.005 Amend wall where Section 3 connects to incorporate vertical gate Section-3 30 m long, rectangular section 1.2 m x 1.2 m 0.005 New construction

5.2.5 Forebay, Penstock and Powerhouse 144. The existing forebay is a concrete structure and is 22 m long and 7.4 m wide and 7.1 m at the deepest section. It provides water to two 1.2 m diameter penstock pipes. It has a side spillway that discharges excess water to Sarakata River via a pipe which is also used to flush any sediment collected in the forebay. 145. A new forebay will be constructed upstream of this existing forebay and on the hillside in the area where the previous access road ends. The hillside would have to be excavated to provide area for the forebay. It will be supplied by a new Headrace-3 and will have a capacity of 3 m3/s [for 600 kW generation in the powerhouse]. Conceptually it will be similar to the existing forebay but smaller in size to cater for the reduced flow which is around half of that for the existing forebay. 146. The new forebay will be a single chambered concrete structure with a side spillway similar to the existing forebay but smaller. It will around 20 m long and 3 m wide. It will be supplied by the new Headrace-3

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 34 5 The Proposed Project Arrangement and will provide discharge to a single penstock of 1.2 m diameter. It will have a trashrack at the inlet to the penstock that will be accessible from a concrete platform placed across the top of the forebay 147. It will also have a side spillway arrangement to discharge excess flow into Sarakata River through a discharge pipe. The discharge pipe will have to under the existing headrace. This arrangement will also be used to flush sediments deposited in the forebay to the river. 5.2.6 Penstock 148. The new penstock from the new forebay to the extension to the powerhouse will be an above ground 1.2 m diameter steel pipe, similar to the existing arrangement. It will be located along the face of the slope that will be excavated to provide uniform fall and anchored and supported on concrete anchor blocks and pedestal. 5.2.7 Powerhouse 149. The existing powerhouse consists of a concrete structure with a machine floor at the ground level and control office and other facilities on the upper level accessible through a steel staircase from the machine floor. A travelling crane with a lifting capacity of 7 tons runs on a single crane beam that runs longitudinally through the powerhouse along the ceiling of the machine floor. The first section of the powerhouse was built in early 90’s and consisted of the infrastructure necessary for 600 kW with two 300 kW units and an assembly bay. In early 2000’s the capacity of the project was increased whereby the powerhouse was extended to house an additional 600 kW unit in the area towards the access road and after the assembly bay. The crane beam was extended over the extension so that the travelling crane could also operate in the extended area. 150. The extension to the powerhouse will house a 600 kW turbine-generation unit and the auxiliaries. It will consist of a concrete building extension on the access road side of the existing powerhouse. The wall on that side will be removed and the crane beam will be extended to service the new area. The penstock to the new unit will have to be buried upstream of the powerhouse to maintain the existing vehicular access through the upstream side. 151. The tailrace from the extension will consist of a concrete channel parallel to the existing tailrace and discharge into Sarakata River. 5.2.8 Electro-Mechanical Equipment 152. The new equipment in the powerhouse would consist of a 600 kW unit, preferably identical to the existing Francis unit. It would include an inlet valve, a governing system and would be directly coupled to a generator. Other installation would be low voltage switchgear and accessories. 5.2.9 Sarakata to Luganville: Transmission 153. Background. The existing transmission line was constructed in 1996 for the original 2 x 300 kW Sarakata HPP using 58 mm2 AAC equivalent (68 mm2 ACSR actual). In 2009 when Sarakata was extended by 600 kW the transmission line was not upgraded. The transformer at the Sous Substation was upgraded to 1,500 kVA. 154. The load flow studies in the DFR Appendix C Section 3.3 showed the present line have poor voltage with a volt drop of 4.5% and losses of 40 kW. With the increase of capacity, line losses were projected to increase 30% with voltage drop along the line exceeding 6%. Upgrading from the existing conductor to 111 mm2 AAAC was recommended. Furthermore a short section of 5.5 kV line from Sous Substation to Central was only of ACSR 58 and losses on this section of line were extremely high for a short line section peaking over 15 kW. 155. Proposed configuration. The single line diagram (SLD) in Figure on the following page depicts the proposed features of the substation and transmission with works in Green being related to Sarakata-1 and in Red Sarakata-2 future. 156. Sarakata-1 HPP Substation Extension. This facility will be constructed with the HPP plant, however it is proposed that the step up transformer and switchgear on the 20 kV side would be procured separately as part of a larger package for transformers and in the case of the switchgear by sole source direct contracting with Schneider. If the Brenwe project is actioned in parallel with the Sarakata projects similar equipment would also be used. This is to ensure compatibility with existing equipment without then the necessity of special tools, non-standard spare parts or additional operational training.

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Figure : Sarakata 1 & 2 Transmission Configuration

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157. Lack of available space at the existing Sarakata-1 HPP to extend the switchgear requires the existing switch room to be extended to accommodate separate switchgear with a separate cable to the overhead line. Budget is provided for switchgear and transformer but excluding building and installation. Installation will be completed by the HPP Contractor with the Transmission line contractor taking responsibility for cabling and connections from the 20 kV Switchgear line side terminals. The total budget $271,650 includes for VHF/UHF communications, basic remote control and data acquisition via a PC based system to be installed by a specialist supplier. Costs include for Sous and Central SS components. 158. Sous Substation. Figure depicts the proposed extension at the Sous Substation should Sarakata-2 proceed in the future. No additional works are required at Sous to accommodate 300 kW additional capacity from Sarakata. Budget is provided for remote control facilities at Sous and Central using UHF/VHF and PC based control. 159. However, a second transformer in parallel could be installed to reduce losses. The existing 20/5.5 kV transformer at Sous is 1500 kVA rated. The net output of the expanded Sarakata HPP will be approximately 1450 kW deducting auxiliaries’ supply. Existing loads along the line are >75 kW and with a major grid extension to Port Olry proposed likely to increase beyond 150 kW. Thus net import to Sous would be in the range 1275-1325 kW net of line losses. Very good power factor is maintained in Luganville; typically >0.93. At 1350 kW * 0.9 pf = 1500 kVA; at 0.93 the transformer is capable of 1395 kW. Transformer losses at maximum load will be about 2% or about 146 MWh pa at LF 0.8 which at the marginal cost of diesel of $0.40 is about $58,000 pa. By installing a parallel transformer, total cost about $350,000, losses would be reduced about 45%9 giving a benefit of $26,000 to fund an upgrade. With undiscounted payback of 13 years and discounted payback of 25 years10 being marginal, it is unlikely URA would approve this as a viable upgrade project. 146 MWh equates to 40 kW additional generation at peak and LF of 0.8. 160. A more complex option for the substation could be considered if funding was available with a full bus structure and two new dual rated transformers installed: or at least the main new transformer for the higher capacity dedicated transmission. However, consideration will be required of such arrangement anyhow should Sarakata-2 proceed in the future. 161. Substations Electrical Equipment Specification. The transformers are largely of standard specification except for the 5.5 kV voltage used at the Lakatoro end, so may be international bid along with proposed transformers for the grid extensions. 162. For switchgear compatibility with existing equipment both at Luganville/Sarakata and at Lakatoro is recommended. To have different equipment will require specialist tools, training of personnel in installation, O&M and cost of carrying spares and equipment. As the Schneider SM6 and RM6 equipment has been standardised it is recommended the procurement of the equipment be by sole source direct contracting. 163. The transmission line. Load flow studies of the existing Sarakata to Luganville 20 kV line indicate upgrading is required. Whilst with a 300 kW Sarakata-1 extension the existing line has adequate current rating, the losses increase significantly and severe voltage problems are indicated by the studies. Already there are voltage and significant loss issues and increasing capacity will increase losses about 30% and have about 6% volt drop along the line: this will also cause severe voltage problems for customers served by transformers along the line. Whilst upgrading of the line to a sub-transmission voltage of 33 kV is feasible in practice as this line also operates as a 20 kV feeder to convert existing transformers to 33 kV and provide a 33/20 kV tee transformer for the Valeteruru-Matevulu line is financially unviable. 164. It is recommended that the capacity of the line be increased for a 300 kW expansion at Sarkata by replacing the existing 58 mm2 AAC equivalent conductor (actually 6/3.5 mm Al + 1/3.5 mm Al Clad Steel = 68 mm2 ACSR) with a 106 mm2 AAC equivalent such as 111 mm2 Hydrogen AAAC. Larger diameter conductors would result in higher wind loading on the existing poles and may exceed design ratings of the poles. However detailed UTS analysis and testing of the existing poles may enable a larger conductor to be used. When Sarakata-2 comes on line, a second 20 kV line must be installed. The study also identified that the short section of 0.8 km (400 m OH and 400 m UG) of 5.5 kV line from Sous Substation into the Central Substation had very high losses. It is recommended the OH section of this line also be upgraded similarly. Alternatively the total section could be underbuilt using ABC (120 mm2) with additional poles inserted where necessary or UG cable, however budget only to re-conductor on the overhead section is provided.

9 Transformer Iron losses having two transformer will increase, though copper losses will reduce 50% overall. 10 At 7.5% WACC and real inflation in diesel of 1.85% pa.

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165. Upgrading the 20 kV and 5.5 kV lines to 111 mm2 AAAC (106 mm2 AAC equivalent) from the present 58 mm2 AAC equivalent would reduce total losses from these two line sections from 5.3% to approximately 2.9% total, thus reducing overall 2013 system losses of 12.9% to 10.5%. The savings in losses supports funding of this line upgrade in its own right. (refer to DFR Appendix C 4.2.6 for further detail). Costs total $396,500 for the materials, labour and plant for the line upgrades (21 km total). A provision could be made of $128,000 for additional diesel generation whilst the line is out of service for the upgrade. Ignoring that provision undiscounted payback to upgrade even under present 1200 kW is about 13 years and under expansion to 1500 kW 9 years. The discounted payback at WACC 7.5% and allowing real inflation of 1.85% in diesel fuel is about 23 and 12 years respectively. So the conductor upgrade is strongly commercially viable in its own right if the Sarakata 300 kW expansion proceeds. Definitely the short section of OH 5.5 kV line needs to be upgraded and standalone is viable. 166. Costs to install a full capacity 600 kW machine at Sarakata-1 with Station total capacity of 1800 kW is not viable due to the much higher cost of transmission at a minimum cost of $2.8 million as a second transmission line is required with a new switching station at Sarakata and Sous substation upgrade. This assumes the existing line is not then upgraded, and becomes a feeder line, with the new line a dedicated transmission system. 167. The costs of the upgrade of transmission 20 kV and 5.5 kV for Sarakata-1 Extension are considered in the FIRR/EIRR evaluation within this report as are the benefits in loss reductions. However, this work could be taken outside of the funding provisions and be separately funded by VUI or the Government, as URA would likely approve this as a viable upgrade project. 5.2.10 Access Road 168. There is an existing access road to the powerhouse. JICA in their 2007 assessment identified sections close to the powerhouse that might need strengthening work by protecting its bottom toes close to the river that is susceptible to erosion. 169. There was an access road from the existing access road to the forebay area during the construction of the different stages of the Sarakata-1 HPP. This part of the access road has not been used and would need to be rehabilitated to provide access during the construction of the forebay. 5.3 Energy

170. Figure shows the flow and the generation from the total extended Sarakata-1 HPP. The flows in the river for 1,500 kW capacity is available around 40% of the time, with flows for 400 kW being available almost all the time.

Figure : 1500 kW Sarakata 1 Flow and Generation Figure : 1,500 kW Sarakata-1 Generation 171. The generation modelling shows that the increase in the generation from the added capacity is around 6% in the initial years and increases to 14% when the demand increases, varying from around 500 MWh in the initial years to 1,200 MWh (Figure ). The utilisation of the added 300 kW capacity increases from 20% to 46% in the later years. In comparison, the existing 1,200 kW had a high utilisation of around 80%.

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6 Environmental Assessment

6.1 Background

172. The Asian Development Bank (ADB) is supporting the Vanuatu government through the Department of Energy (DOE) to develop reliable and sustainable supply of electricity in the provinces of Sanma and Malampa to assist economic growth and increase the capacity to support greater access to electricity for local residents, businesses and industry. 173. A project preparatory technical assistance has been undertaken and completed a feasibility study of a small run-of-river hydropower scheme located on the Sarakata River near Fanafo on Espiritu Santo Island, Sanma Province. The feasibility study includes this initial environmental examination (IEE). 174. This report is the IEE for the design construction and operation of the proposed hydropower scheme and associated transmission grid under the Vanuatu Energy Access Project (the project). The IEE is intended to meet the requirements of the ADB for Category B projects as described in the Safeguard Policy Statement 2009 (SPS) as well as comply with the requirements of an environmental impact assessment (EIA) report as required under the environmental assessment requirements of the government. 175. The objectives of the IEE are to: (i) describe the existing environmental conditions; (ii) identify potential environmental impacts; (iii) evaluate and determine the significance of the impacts; (iv) develop an environmental management plan (EMP) detailing mitigation measures, monitoring activities, reporting requirements, institutional responsibilities and cost estimates to address adverse environmental impacts; and (v) carry-out public consultations to document any issues/concerns and to ensure that such concerns are addressed in the project design. The IEE is based on field inspection including fish and aquatic resources surveys, discussions with key government agencies, information gathered during stakeholder consultations and data compiled from secondary sources. This IEE is submitted to ADB by the borrower and the final IEE report will be disclosed to the public by the government’s executing agency and uploaded to ADB’s website. 6.2 Project Description

176. The project involves expansion of the Sarakata 1 hydropower scheme located on the Sarakata River near Fanafo village in southeastern Espiritu Santo Island, Sanma Province approximately 25 km by road northwest of Luganville the provincial capital. The proposed expansion works involves the following components: . Raising the existing weir height by 0.4 m using either an inflatable rubber dam extension placed along the top of the existing weir or a permanent concrete extension; . Raising the walls of the sedimentation basin and headrace canal; . New forebay upstream of the existing forebay and a new penstock; . Extension of the existing powerhouse at its southern end; . New penstock from the new forebay to the powerhouse; . One set of 300 or 600 kW horizontal Francis turbine and synchronous generator and associated auxiliaries including the main transformer. 177. All facilities will be constructed within the existing Sarakata hydropower scheme boundaries. Access to the site from Luganville is via the existing Sarakata hydropower plant access road. 6.3 Categorization

178. The subproject is classified as Category B in accordance with the SPS, because the project’s potential adverse environmental impacts are site-specific, few if any of them are irreversible, and in most cases mitigation measures can be designed readily. The IEE was carried out in March and May 2014 and the results of this IEE and the environmental management plan (EMP) will be updated if necessary at the detailed design / tender preparation stage by the project management unit responsible for implementing the project. 6.4 Implementation Arrangements

179. The executing agency for the project is the DOE within the Ministry of Climate Change, Adaptation, Meteorology & Geohazards, Energy, Environment and Natural Disaster Management (MOCC) and the implementing agency is the Vanuatu Project Management Unit (VPMU) established within the Prime

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Minister’s Office. The VPMU will lead design and implementation of the project. The VPMU will be supported by a design and supervision consultant (DSC). The DSC will include international specialists who will provide capacity building to VPMU staff. The DSC will assist the VPMU in procurement (preparation of tender documents, tender evaluation) and supervision of construction. It is most likely that the project will be implemented under an Engineer, Procure and Construct (EPC) contract and under such an arrangement the EPC contractor will be responsible for the final design and construction of the project. The VPMU and DSC will include an international environmental specialist and national environmental specialist to assist the government meet all its obligations with respect to the EMP for the project as well as provide training to VPMU in monitoring the contractor’s compliance with the EMP and safeguard requirements. The facilities are likely to be operated by a private company under a concession arrangement. 6.5 Policy, Legal and Administrative Framework

180. The Project shall comply with requirements of the Environmental Management and Conservation Act 2010 and the Environmental Impact Assessment Regulations 2011 which require that for development of hydropower projects an EIA must be undertaken by the project proponent and clearance obtained from the Department of Environmental Protection and Conservation (DEPC). The Project will also comply with the requirements of ADB’s SPS 2009. Government environmental clearance and development consent (and other permits) must be obtained before any works commence. 6.6 Environmental Management Plan

181. Mitigation measures, environmental monitoring, and capacity development are required to minimize the environmental impacts in the pre- construction, construction and operation phases. The DSC and contractor will be tasked with finalizing the detailed design and compilation of updated EMP and the contractor will be responsible for implementing the EMP. 182. Implementation of internationally recognized good construction environmental practices forms the basis of the EMP which covers issues such as erosion and sedimentation control, materials sourcing and spoil management, waste management, minimization of habitat disturbance, and worker and community health and safety. The EMP will form part of the construction contract documents and the contractor will be required to prepare a site-specific environmental management plan (SEMP) based on the contract EMP. The contractor will submit the SEMP to VPMU for approval prior to commencement of works. 183. The operation of the project should have beneficial effects on the environment overall through more efficient provision of electrical power from renewable resources and improved environmental management by the government. 6.7 Information Disclosure, Consultation and Participation

184. The stakeholder consultation process disseminated information to the general public, project affected communities and key environmental stakeholders. Information was provided on the scale and scope of the project and the expected impacts and the proposed mitigation measures through consultation with government departments, local authorities and the general public in meetings. 185. The process also gathered information on relevant concerns of the local community for the project so as to address these in the project design and implementation stages. No significant environmental concerns were raised during consultations and the local communities were happy for the project to go ahead so that they could benefit from the electricity generated including employment opportunities. The IEE will be disclosed according to the provisions of ADB Public Communications Policy 2011 and requirements of the laws of Vanuatu. 6.8 Grievance Redress Mechanism

186. A grievance redress mechanism (GRM) will be established to receive, evaluate and facilitate the resolution of affected people’s concerns, complaints and grievances about the environmental and social performance of the project. The GRM is based on accepted practices in Vanuatu and provides an accessible, time- bound and transparent mechanism for the affected persons to voice and resolve social and environmental concerns linked to the project.

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6.9 Conclusion and Recommendations

187. The potential environmental impacts arising from design, construction, operation and maintenance of the project will be minor, localized and acceptable provided that the mitigation measures set out in the EMP are implemented properly. Key findings are summarized below: . The project involves the expansion of an existing hydropower scheme that is wholly within the scheme’s current site boundaries. . There is no minimum environmental flow specification for the existing Sarakata scheme. However, based on the flow duration curve it can be stated that for at least 68% of the time (assuming full capacity operating conditions) there is surplus water spilling over the weir. In reality spill is occurring much more than 68% of the time since the scheme frequently runs at below full capacity due to seasonal/demand variations. Raising the weir height by 0.4 m will result in an overall theoretical reduction of 18% of the existing environmental flows (based on the flow duration curve). However, the same caveats as noted above will apply. . Under the existing scheme the aquatic biodiversity appears somewhat intact with a diversity of goboid species and others, typical of the rivers and streams of Vanuatu. Previous aquatic studies on the reduced flow section have concluded that the impact of the Sarakata hydropower scheme were not significant and posed a low risk to the existing environment. . Given the existing disturbed situation and the fact that the current seasonal variation in flows and variation in operating conditions due to demand will continue, it is unlikely that a less than 18% overall reduction in current environmental flows between the weir and the power house will have a significant impact on the current aquatic ecosystem. . The potential loss of less than 0.1 ha of highly modified habitat of low ecological value within the existing hydropower site boundary, and impact on terrestrial wildlife due to the project will be insignificant. Loss of habitat can be further minimized by reducing the clearance corridors; . Nearby communities consulted are happy for the project to be implemented and expressed their desire to benefit from both electricity generated and employment opportunities during construction and operation; and . Appropriate climate change adaptation and resilience needs to be incorporated into the design of structures including: i) suitable erosion protection to prevent scour around the intake weir’s training walls, and ii) powerhouse - level of powerhouse discharge outlet needs to be sufficiently high so as to prevent any flood induced backflow resulting in flooding of the powerhouse and damage to electromechanical equipment. . An audit of the existing Sarakata 1 hydropower scheme concluded that the environmental impacts from the existing activities at Sarakata hydropower plant are not significant. With the exception of inadequate oil containment facilities and the absence of oil separation drainage provisions at the transformer bays, the existing operations are generally undertaken in accordance with internationally recognised good practice and thereby are in general compliance with the SPS. However, there are four recommended actions for the DOE in order to achieve full environmental compliance with SPS. They include: i) Request formal clarification from the Director of Environment (DEPC) as the environmental authority, concerning the current state of environmental compliance by DOE with regard to Sarakata hydropower plant. ii) Consult with DGMWR to confirm whether the expansion will trigger the need for a water resources permit. iii) Disclose the scope of the improvements for Sarakata hydropower plant upgrade and refurbishment and seek guidance from the Director of Environment on actions needed to establish regularization of environmental compliance of Sarakata hydropower plant. iv) Bring oil containment of transformer bays and oil separation facilities up to international standard 188. This IEE, including the EMP, is considered sufficient to meet ADB’s and government environmental safeguard requirements in respect of the expansion of the Sarakata 1 expansion hydropower plant. No further or additional impact assessment is considered necessary at this stage. This will be included in DFR.

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7 Social Assessment and Resettlement Plans

7.1 Introduction

189. As part of the overall Poverty and Social Assessment (PSA) undertaken of the VAN - EAP, the social and land acquisition impacts of the Brenwe HP Subproject was assessed. The PSA provides the assessment of risks and mitigation measures and potential benefits resulting from the planned interventions in the Project sites. Several methods were utilized to accomplish the requirements for social assessment. These include the following: . Review of various documents/related literature (Priority Plans and Agenda 2006-2015 of the National Government including that of respective subproject areas) specially the socioeconomic background, issues and concerns; . Focus Group Discussions: To reinforce the findings of the literature reviews, focus group discussions were conducted in the two subproject areas participated by various project stakeholders including women from low-income households. . Key Informants’ Interview: Key informants included heads of agencies, female-headed households, community residents/leaders, community facilitators and organizers. Data obtained qualitative perceptions on the current water sources, sanitation situation and road condition as well as poverty alleviation programs and current activities undertaken for the community including women. While district municipalities and town has the primary responsibility for the subprojects, relevant stakeholders in the low-income communities including local governments, NGOs and CBOs were also consulted to confirm/validate issues and identify initiatives, which are able to complement the Project. . Conduct of Socioeconomic Survey of sample households: Representative households from the Brenwe areas where the subproject interventions are planned were taken as samples for the SES. Information generated is used to develop a profile of the potential target beneficiaries of the Project, what are the issues and concerns as well as the possible mitigating measures to address potential negative impacts and ensure the inclusion of the vulnerable group in the project coverage. . Assessment of Project Impacts: Using the data from the above activities/documents, a poverty and social assessment (PSA) was prepared which are discussed in details in the preceding Sections, which include data on sample households, poverty profile, economic activity, access and constraints to access electricity (availability, affordability), health and employment and livelihood opportunities. An important element of the profile is the description of the poor, i.e. identification of vulnerable groups (the subsistence and poor households) and whether female- headed households, or the low-income residents are disproportionately represented. 7.2 Subproject Profile

7.2.1 Profile of Subproject Communities - Espiritu Santo Island and impacted villages 190. In 2009, the total population of Espiritu Santo Island excluding Luganville in Sanma Province was 38,307 composed of 7,864 households. The male ratio was slightly higher than female at 51.3:48.7 while average household size was 4.87, which was the same as that of the national average of 4.9. Luganville the capital is primarily urban while the areas outside the town is primarily rural. The population is predominantly Ni Vanuatu Melanesian. Luganville the main provincial and government administrative centre of Sanma Province receives an influx of people from the other areas of Santo rural and the rest of the province as well as from other provinces of the country and according to the 2009 census, the annual urban growth rate is 2% compared with the national average of 3.5% mainly because of Shefa (4.1%) where Port Vila is. 191. Approximately 83% of households in Santo rural own their houses while 9% and 7% respectively are renting or rent free. Of the land where the house stands 46% are customary owners, 17% have urban lease and 9% rural lease while 20% occupy the land with informal agreement. 192. Per Census 2009 result, only about 30% of households in the island are reported to use the electricity grid with the majority (48%) using kerosene lamp as main source of lighting. The rest either use solar (3%), candle (7%), gas (3%) or Coleman lamp (3%) as primary source of light. A few reported generator (2%) as their source of light also. VUI the power distributor in the area supplies electricity within the UNELCO concession area utilizing the existing power grid where most of the urban households and a number of peri urban households including some villages within the zone of influence of the Sarakata II subproject are connected to grid power.

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193. In terms of drinking water source, 25% have shared piped system while about 18% of households have village tanks and 17% their own household tank. On the other hand 14% have private piped system while 15% source their drinking water from river, lake or spring. The rest source their drinking water either from village stand pipe, unprotected well, bottled water or other unspecified sources.

There are several health facilities in Sanma as reported in 2009, namely hospital (1); health centre (11); dispensaries (12); and aid post (56). The ratio of facilities to per 1.000 population was 1:74. Educational facilities on the other hand are composed mainly of primary, secondary and vocational schools. 194. In 2009, of the population 15 years and above regardless of sex in Santo rural 27% was reported to have completed primary education; another 22% had some primary education, 10% had trio certificate and 7% senior secondary. Approximately 15% had no schooling at all while almost 7% and 2% had some college degree and completed bachelor’s degree respectively. A few either had post graduate or vocational degrees. The literacy rate of the province was reported to be about 93% with the women (94%) having higher literacy rate than male (91.9%) population. 195. In terms of toilet facility, majority (49%) of Santo rural households use the pit latrine (either individual or shared). Only about 6% reported the use of water sealed toilet wither individual or shared while about 14% of households use the flush type toilet. Likewise less than 1 percent reported having no toilet at all. 196. The 2009 Census reported that main sources of income of majority (48%) of Santo households are sale of agriculture, fishery or handicraft products. About 36% derive their cash income from salaries and wages while about 5% from operating their own business and 7% from unspecified sources. However, about 4% reported having no cash income at all. 197. Per HIES 2010 Report, the average monthly income of Sanma households was 94,000 vatu with an average per capita income of 18,800 vatu. Approximately 58% of household income is from cash sources; on the other hand, 26% of total household expenditures is in cash. However, Luganville households have comparatively lower average household monthly income at 74,100 vatu compared to the province; likewise its average per capita monthly income is much lower at 13,200 vatu. Majority of the income is derived from cash income and almost 60% of total expenditures are cash expenditures. The poverty situation of the urban area of the Province- Luganville compared to others, Port Vila and rural areas, is much worse off. From a rate of 10.4% in 2006 (HIES 2006), the proportion of households below BNPL had significantly risen by almost twice to 19.4% (2010). This was mainly due to in-migration to Luganville of poorer households from other areas of the country. On the other hand, the proportion of household below the BNPL in Sanma Province in 2010 was 8.3% compared to 9.0% in 2006. 198. The two major villages within the zone of influence of and closest to Sarakata II HP Subproject are Fanafo and Mon Exil. These two villages which are approximately 25 km away from Luganville can be accessed by gravel road starting from a diversion from the main highway. They are approx. 4-5 km away from the existing Sarakata HPP. 199. In 2009, Fanafo had a total population of 1,290 composed 258 households with 670 male and 620 female. Average household size like Sanma rural was around 5 person per household. On the other hand, Mon Exil a nearby village towards the east had a population of 309 person composed of 62 households with 157 males and 152 females. 200. In terms of basic infrastructure and social services the villages within the influence zone of the subproject can be reached by gravel road. Transport is limited to 1 public bus per day and some private vehicles. Fanafo the bigger village has 4 preschool and 2 primary schools. Likewise it has a health centre and 3 aid posts. It does not have its own market. All produce are brought to Luganville. Of the total households (269 - as per VAN EAP SES 2014) more than half (166) are not connected to electricity although the main grid passes along the road and a distribution line had been put up by VUI. On the other hand VUI is working on extending the line by almost a kilometer to cover more households in the area close to the forestry centre and school. 7.2.2 Socioeconomic Profile of Sample Households 201. Some households including the DPs from the surrounding villages of the proposed Sarakata II HPP were sampled and interviewed. Their socioeconomic profile based on selected indicators is discussed below. 7.2.2.1 Demography and Livelihood 202. Of the total members of the sample households of Sarakata II HP Subproject, 52% are composed of female while 48% are males. Households have an average size of 4.9 members (Table ).

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Table Distribution of Sample Households of Santo Indicators QTY % Number of sample households 76 100 Number of total persons in HH 370 100 Of which, # of female members 191 51.6 Of which, # of male members 179 48.4 Average # of persons in HH 4.9 -

203. In terms of the residency profile of the sample households, 17% have been living in their area of residence between 1-5years while about 22% have been resident there between 6-10 years. The rest (57%) has resided in the area for less than one year. On average the residence of the sample households is about half a kilometer away from an existing road, 1-2km away from primary level educational facility, more than 1- 2 km away from the existing health clinic and also about 20km away from major market in Luganville. In terms of physical characteristic of their houses, majority is made of semi-permanent sturdy but light materials. Majority (approx.84%) have their own toilet (mostly pit latrine) while 13% are sharing. Almost 50% reported owning the house while 4% are tenants and about 3.8% reported to be sharing residence. Most (65.2%) would have piped water from village water tank of individual tanks. See Table below for details. Table Characteristics of Sample Households in Santo

Length of Stay in place N° % Less than 1 year 0 0 1-5 years 27 17.0 6-10 years 35 22.0 Over 10 years 90 57.0 Not indicated 6 4.0 TOTAL 158 100 Physical characteristic of house Average distance from nearest facility (km) Road < 1 km Market 20 km School 1-2 km Health centre 1-2 km N° of HH by house type Modern permanent 28 24 Semi-permanent 76 48 Traditional strong 26 16.5 Traditional light 26 9.5 Others (specify) 15 0 Not indicated 3 2 TOTAL 158 100 N° of HH by tenure status - house No % Owner w/title 77 49 Owner(customary) 50 32 Tenant 6 4 Relative 11 7 Sharing 6 3.8 Informal 4 2 Others 3 2 Not stated 1 1 N° of HH by tenure status -land where house is Owner w/title 53 34 Owner(customary) 40 25 Tenant 9 6 Sharing 35 22 Informal 14 9 Others 3 2 Not stated 4 2

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N° of HH by power/energy sources 1 Power Grid 37 30.3 Generator 6 6.6 Solar 77 42.1 Oil 3 1.3 Gas 7 6.6 Others 25 13.2 Not stated 3 3.7 Total Sample 158 100 Presence of Toilet Owned 132 83.5 Shared 20 12.7 Water Source Piped 103 65.2 Well 19 12 River 23 14.6 Rain 6 3.8 Others 2 1.3 Not stated 5 3.2 Source: VAN EAP SES 2014 7.2.2.2 Education 204. Among household heads there is a high proportion of those who have no formal schooling (9%) with the ratio among the male and female heads found to be almost equal. The female household heads appear to have attained higher educational attainment compared to males (38% vs. 20% respectively with secondary education). (Table ). Table Educational Attainment of Heads of Sample Households in Santo Educational Attainment Total Male Female N° % N° % N° % TOTAL 77 100 69 100 8 100 Illiterate no schooling 7 9 6 9 1 13 No schooling; can read and write 3 4 3 4 0 0 Primary 37 48 35 51 2 25 Secondary 17 22 14 20 3 38 Tertiary 7 9 5 7 2 25 vocational 4 5 4 6 0 0 Others 0 0 0 0 0 0 Not stated 2 3 2 3 2 3 Source: VAN EAP SES 2014 7.2.2.3 Socio-economy a. Occupation and Income 205. The VAN EAP-SES 201411 showed that majority of household heads’ major occupation in the subproject areas of Santo is as subsistence farmer (34%), agricultural worker (20%), (business (12%). Private sector employment, civil service and other-not specified have 10% share each. Of the female-headed households, all have gainful occupation and none indicated they are housewife; 38% indicated their occupation as subsistence farmer while 25% indicated they are engaged in business and civil service each and another 13% in private employment. Of the male-headed households 33% reported being gainfully occupied as subsistence farmer while 22% as agricultural worker. Another 10% each are engaged in business and private employed while 9% in civil service while 12% are engaged in other non-specified occupation. See Table below.

11 A survey (VAN EAP-SES 2014) of sample households in three Subproject sites (Sarakata I & II and Brenwe HPP) was undertaken between April-May 2014.

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Table Occupation of Head of Sample Households by Gender, Santo Occupation Total Male Female N° % N° % N° % Total 77 100 69 100 8 6 Subsistence 26 0.34 23 0.33 3 0.38 farmer Agricultural worker 15 0.20 15 0.22 0 0 Business 9 0.12 7 0.10 2 0.25 Private Sector 8 0.10 7 0.10 1 0.13 employ Civil Service 8 0.10 6 0.09 2 0.25 Housewife 0 0 0 0 0 0 Others 8 0.10 8 0.12 0 0 Not stated 3 0.04 3 0.04 0 0 Source: VAN EAP SES 2014 206. The average annual income of sample households is reported to be VUV 299,095 with the male- headed household’s income (VUV 358,190) significantly higher than that of the female headed households (VUV 240,000). 207. The major contributors to total annual income of sample households in Santo is agriculture (29%), salaries and wages from employment (27%), and trading and business (23%) as shown in Table below. For women headed households, major contributors to annual income are salaries and wages (24%), trading/business (31%) and handicraft (11%); agriculture contributes only 8% to total household income. Table Contribution of Sources of Income to total annual sample HH Income, Santo Santo Contribution to overall income from various Male-HOH Female-HOH Total source Number of Households 68 8 76 Root crop farming (average) 4,218,202 17% 120,000 8% 4,338,202 17% Vegetables and pulse farming (average) 1,978,600 8% - 0% 1,978,600 8% Fruits from orchard(average) 554,600 2% - 0% 554,600 2% Animal husbandry (average) 454,000 2% - 0% 454,000 2% Handicrafts (average) 336,000 1% 180,000 11% 516,000 2% Fishing (average) 786,000 3% - 0% 786,000 3% Salaries and wages (average) 6,716,955 28% 375,600 24% 7,092,555 27% Trading small business (average) 5,587,200 23% 494,400 31% 6,081,600 23% Cash support from relatives in Vanuatu (average) 74,000 0% 24,000 2% 98,000 0% Cash support from relatives abroad (average) 8,000 0% - 0% 8,000 0% Pensions (average) 300 0% - 0% 300 0% Charity (average) 106,000 0% - 0% 106,000 0% Royalty__logging__mining__etc (average) 1,139,000 5% - 0% 1,139,000 4% Other income (average) 2,398,040 10% 400,000 25% 2,798,040 11% Overall Income Total 24,356,897 100% 1,594,000 100% 25,950,897 100% Source: VAN EAP SES 2014 b. Household Monthly Expenditures 208. VAN EAP-SES 2014 showed that the average annual total expenditure of sample households in Santo is about VT215,211 with the MHH (VUV 310,771) significantly higher compared to FHH (VUV 119,650). Food expenditure (30%) followed by education (19%) and transport (9%) take the biggest share of annual household expenditure in Santo sample households. The share of gas (3%), petrol (2%) and electricity (2%) constitute only 7% of total annual household expenses. On the other hand, expenses for fuel wood/charcoal is about 2%. (Table ).

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Table Share of various expenditure items to total annual expenditures, Santo Contribution to overall expenses Santo from various source Expenditure Activity Male-HOH % Female-HOH % Total % A .Crops (cereals/root crops/rice) 3,276,950 22% 647,500 22% 3,924,450 22% B .Meat/vegetable/spices 1,559,800 10% 272,800 9% 1,832,600 10% C .Clothing/footwear 931,200 6% 41,000 1% 972,200 5% D. Rental (house, land, etc.) 543,300 4% 49,790 2% 593,090 3% E. Education 3,054,600 21% 298,600 10% 3,353,200 19% F. Medical Care 424,100 3% 21,700 1% 445,800 2% G. Transportation 1,475,300 10% 182,400 6% 1,657,700 9% H. Hiring of labour 1,138,100 8% 408,000 14% 1,546,100 9% I. Hiring of farm equipment, animals, 79,600 1% - 0% 79,600 0% farm input J. Fuel wood/charcoal 112,310 1% 230,400 8% 342,710 2% K. Gas 323,170 2% 187,000 6% 510,170 3% L. Petrol 308,600 2% 80,000 3% 388,600 2% K .Electricity 174,270 1% 165,585 6% 339,855 2% L. Water 287,500 2% 104,000 4% 391,500 2% M. Social functions/festivities 666,700 4% 102,000 3% 768,700 4% N. Others (Specify) 532,000 4% 154,300 5% 686,300 4% Overall Total 14887500 100% 2945075 100% 17832575 100% Source: VAN EAP SES 2014 c. Household Savings 209. As shown in Table , of the total sample households 81.3%% indicated that they had been able to save; the rest (14.7%) indicated they were not able to save. Given the significantly higher average annual income of male-headed households, they are likely to save more than female headed households. Table Sample Households with Savings, Santo Possible for HH to MHH FHH Total save? YES 56 82.4 5 71.4 61 81.3 NO 10 14.7 1 14.4 11 14.7 Not indicated 2 2.9 1 14.4 3 4.0 Source: VAN EAP SES 2014 d. Access to Power and Other Basic Amenities and Services 210. While some of home in the rural villages of the Project site (rural) are covered by the electricity grid (30.3%) power for lighting normally comes from solar (42.1%), gas (6.6%) or communal diesel run generator (6.6%). Energy for cooking is normally from traditional sources. Sample household average annual expenditure for energy requirement for lighting and cooking (electricity = 2%, gas = 3%; petrol = 2% and fuel wood and charcoal = 2%) is approximately VUV 20,807/annum or VUV 1,733/mo. This is about 9% of the total average household expenditure. 211. Basic social services such as education and health as well as livelihood activities are limited by the absence of cheap and regular source of lighting. As such there is a need and strong demand for government to provide this need. See Table for details. Table Access to Basic Amenities in Santo Amenities N° of HH % Total Sample Households 76 100 Water (piped connection from village tank) 49 64.5 Electricity 23 30.3 Phone (hand held) 65 85.5 Latrine 75 98.7

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Source: VAN EAP SES 2014 e. Willingness to Pay for Electricity 212. As shown in Table below, of the total sample households in Santo 88.2% are willing to get connected; of those who indicated wanting to connect, only 77.6% expressed willingness to pay. Table Willingness to Connect to Electricity, Santo Willingness to connect Frequency Percent Total Sample Households 76 100 Willing to connect 67 88.2 Not willing to connect 1 1.3 Don’t know 8 10.5 Willing to pay Total Sample Households 76 100 Yes 59 77.6 No 2 2.6 Not Indicated 15 19.7

f. Health and Hygiene Knowledge and Practices and Experience with Disease 213. In the sample areas of Santo, of the total reported incidence of sickness except for the reported higher incidence of malaria (53% of sample households) and diarrhoea (61%) over the past, all other waterborne or water associated diseases are reported to have been experienced less (VAN EAP HHSES 2014). g. Who Normally Manages Power Requirement at the household level? 214. It is the women and girls of the household who normally have the primary responsibility for firewood collection. 7.3 Issues and Concerns

7.3.1 Poverty Status of Sample Households in the Project Area 215. Per findings of the SES, the average monthly income of sample households in Santo is VUV 24,925. The average monthly income of female-headed households is VUV 20,000 much lower compared to the male-headed households, which is Vt29,849. The Basic Needs Poverty Line in Vanuatu in 2101 was VUV 1,761 per capita per week or VUV 1,900 per capita per week adjusted for inflation in 2013. Based on this the proportion of total sample households in Santo equal to or below the national BNPL was estimated to be approximately 72%. The proportion of female headed households (75%) below the BNPL is higher compared to the male headed households (72%). See Table . Table Income and Poverty Status of Male and Female Headed Household - Santo Income Status Santo N° % Total N° of sample HH 76 100 Total FHH 68 89.5 Total MHH 8 9.5 Ave Annual Income - all VUV 299,094 Ave Annual Income - FHH VUV 240,000 Ave Annual Income - MHH VUV 358,190 Average Mo Income - all VUV 24,925 Ave Mo Income - FHH VUV 20,000 Ave Mo Income - MHH VUV 29,849 % of total households below BNPL 55 72% % of FHH below BNPL 6 75% % of MHH below BNPL 49 72% Basic Needs Poverty Level person/week VUV 1,761 (2010) Approx. VUV 1,900 (2013) Source: VAN EAP SES 2012 BNPL + Basic Needs Poverty Level; FHH = Female headed household; MHH = Male headed household.

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7.3.2 Impacts and Opportunity for Women and the Poor 216. The women and the poor will be the major beneficiary of the Project interventions. Women and girls are shown to be the primary stakeholders and major beneficiary of power supply interventions. Improvement of the service will have major beneficial impact on their quality of life especially in terms of improving personal safety during night time and opening up opportunities for livelihood endeavour. Likewise, improvement of delivery of basic services such as health and education will have greater impact for women and girls. However, on the downside there is risk that household work load may increase due to availability of better lighting thus putting women/girls at further disadvantage. Thus safeguards should be put in place to prevent this from happening. 7.3.3 Potential Impacts and Views of APs 217. Interview results with affected villages’ elected and traditional leaders, and sample APs as well as result from visual observation during site visits, affected parcels of land are generally not used for agricultural activities. The terrain is rugged and steep and land is undulating. The area is covered mainly by wild vegetation and invasive trees and is generally bush like in appearance. Hardly any economically useful trees and vegetation were observed. Through consultations/meetings and key informant interviews many people say that the project sites are located quite far from villages and communities. People do not have “food” garden close to the site. Furthermore, there is no plan in the immediate future to use the area for any development by the village communities. 218. There is no expected risk of landlessness, loss of home, and/or loss of major income source. Two customary landowners and three claimants on subproject site have been identified and will likely lose a total of 4.41 ha of bush or idle/unproductive lands. Loss of land from the subproject site is estimated to account for not more than 10 per cent of total land reported by DPs. Initial calculation was done through interview and/or discussions with APs and key community leaders. APs or their representatives reported that although they are unable to provide exact amount of land they own, they said that they currently have access to adequate lands in other parts of the island for food production or income. 219. Commonly all interviewed APs view the loss of their land as insignificant since the site is generally unsuited for cultivation, this being in a steep and rugged terrain. There are other available and more accessible plots for agriculture. The majority of interviewed landowners also view the development of the site for hydro facilities as an opportunity to stabilize power supply thus maximizing an otherwise unproductive or currently unused land. All APs expect stable power supply, reduced power bills, increased power security, and cash compensation for affected land. 220. All consulted APs and village and provincial Councils support the project and do not want to hold up the project by withholding access to land for further studies and development. Consistently APs and village and provincial Councils expressed keen interest for the project. 221. During interviews, all consulted APs express strong support to allow the national government to acquire the proposed sites for the project. Communities and APs are also aware that DOE and Department of Lands are the government agencies that will facilitate this process. A copy of an initial memorandum of agreement (MOA) on willingness to support and allow the Project access to site. 222. Consulted women leaders in particular support the hydro project and identified improved access to power, cheaper monthly power bills as well as access to skills training for the youth and women on use of electricity to increase income opportunities as expected benefits from the project. Commonly, majority of women in the subproject site are not formally employed and view the training opportunities on reliable energy if made available to the youth will help create income opportunities that may assist in discouraging outmigration. 7.3.4 Indigenous People or Cultural Heritage 223. There is no expected negative impact on the social structure of the APs and the communities around the project sites since land acquisition will not involve physical or economic displacement. There are no expected adverse impacts on cultural identities or heritage of the APs resulting from land acquisition. During the course of the PPTA fieldwork, no sacred sites or similar areas were identified. 224. The local people in the project sites do not meet the ADB criteria (distinctiveness and vulnerability) of Indigenous Peoples. The APs in the project sites are part of mainstream Ni-Vanuatu Melanesian society and are not considered to have a distinct culture and are not discriminated upon by other groups due to their language, skin colour and education level thus requiring protection and special attention from the project.

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Although they have dialect distinct from other outer islands, as other Melanesian they communicate with one another using either Bislama, French or English as the official languages, 7.3.5 Gender Impacts, Needs, Priorities of Women APs 225. There are no prominent gender issues among APs identified in this Subproject. There are no female- headed household DPs identified during PPTA consultations. Instead the project will provide opportunities to improve women’s situation through provision of reliable power supply and stable tariff to households, reducing uncertainties in managing households’ energy supply and expenditures. 226. Key priorities identified by women APs include (i) stable and cheaper power supply and (ii) access to skills training on use of electricity for male and female youth to increase income opportunities in the outer islands to reduce out-migration. A Draft Gender Action Plan has been prepared. 7.3.6 Land Acquisition and Resettlement Impacts 227. A Land Acquisition/Resettlement Plan (RP) (see Appendix 6) has been prepared for the two subprojects in Espiritu Santo, Sanma Province. The Sarakata II HPP) will require about 124,500 m2 (12.45 ha) of land area to construct the hydropower facilities on site. Sarakata I Expansion will not require additional land as the augmentation of facilities of the existing system will be confined within the existing occupied lands. 228. Affected persons of the proposed Sarakata II HPP are 5 customary landowners/ households and one claimant. Table Land Requirement and Affected Persons in Sarakata I &II12 Espiritu Santo Total Sarakata I Sarakata II - Expansion Santo Santo Ownership/type of land Custom land Custom land Land requirement sq.m (ha) None 124,500 m2 (12.45ha) (12.45ha) Number of Identified Landowning Families/ Households and Claimant None 6 HH 6 HH Estimated total subproject APs (based on a NA 30 persons 30 persons sample household size) Number of Female-Headed Households None None None Affected households losing 10% or more land None None None

229. The Sarakata I Expansion and Sarakata II HPP are not expected to have impacts of physical displacement and/or loss of major income sources. The landowners or displaced persons (DPs) on the one subproject site (Sarakata II HPP) will lose a total of 12.45 ha of bush or idle lands with mainly invasive trees.13 All interviewed DPs view the loss of their land as manageable since the sites are generally bush lands not used for cultivation or pasture. The DPs also view the possible development of the site as an opportunity to stabilize power supply thus maximizing an otherwise unproductive or currently unused land. During interviews, all consulted including the DPs expressed support for the project However, entry to site by Study team and actual development activities would only be allowed if land acquisition issues are agreed and settled particularly with regard to existing Sarakata HPP. 230. The project will follow ADB’s Safeguard Policy Statement (SPS, 2009) and Vanuatu’s applicable laws on land acquisition and compensation. The table below summarizes the entitlement for APs under the subprojects.

12 Data on land requirement are preliminary estimates based on PPTA. These are subject to confirmation or might change during the implementation. The updated RP will provide final data during implementation. 13 “ Ide land” in this report means that the land is not currently used by APs for any purpose such as agriculture, housing, etc. Other trees are naturally grown.

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Table Entitlement Matrix Type of Impact Entitled Persons Entitlements

Loss of land Land owners/users as Compensation at replacement cost based on current recognized market price (most recent transaction of comparable by customary leaders and value) will be paid for lands to be acquired by the government government. Loss of trees, crops APs and households It will be agreed with APs that any crops on affected land will be harvested by them before site clearance. If APs are not able to harvest crops, they will be paid compensation at replacement cost based on market prices. Fruit trees including any loss of production will be compensated at replacement cost or market/comparable price. Employment APs particularly women, youth APs will be provided training and priority employment in opportunities (project and vulnerable group civil works based on APs skills suitable to project benefit) needs. Impacts on vulnerable Vulnerable groups Necessary special assistance (identified through groups (if identified) consultations with affected communities) to be specified in the updated RP. Stable power supply All APs APs (as regular customers) will get stable power (project benefit) supply. Any unconnected AP household will be provided power connections (as regular customers). Unforeseen or Concerned affected people These will be determined as per the principles of this unintended impacts RP and ADB's SPS.

231. The RP has been prepared based on assessments and consultations undertaken during the PPTA. The RP will be endorsed by the EA, disclosed to APs, and posted on ADB website before the project appraisal. The RP will be updated after the detailed design during implementation. 232. The following is the implementation schedule for the project’s land acquisition/ resettlement activities: Table Implementation Schedule N° Activities Schedule 1 Confirmation of land requirement and identification of land owners Month 1 2 Land survey and valuation Month 2 3 Notification of APs and information dissemination re land acquisition Month 2-3 4 Submission of land survey report and to prepare for formal negotiation with Month 3-4 landowners and budget allocation for land acquisition 3 Negotiation with landowners: consultation with affected landowners to negotiate Month 3-6 for land acquisition/purchase. 5 Agreement on land acquisition/purchase and necessary approvals by the Cabinet Month 7-9 and the Executive Council 6 Department of Lands updates the RP including agreements on compensation Month 9 rates with landowners, and discloses updated RP to APs. 7 IA submits the updated RP to ADB for approval and posting on ADB website Month 10 8 Execution of land acquisition and payment of compensation Month 11-13 11 IA submits to ADB a land acquisition and compensation completion report Month 14 12 IA submits safeguard monitoring report Six-monthly

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8 Cost Estimates and Financing Plan

8.1 Approach to Cost Estimates

233. This section of the report describes the methodology used for the derivation of the project cost. 234. The cost estimates includes the costs for civil, electromechanical (EM) and transmission & distribution (T&D) works. 235. Wherever possible, the current cost of equipment and materials have been obtained from manufacturers and suppliers, locally and abroad. Where these have not been available, costs have been based on rates and prices obtained for recent projects carried out by SMEC in countries in the Pacific Region. 236. Some construction material and most of the equipment will have to be imported. This would expose the project costs to volatility of the exchange rates and international market rates. 237. The local factors that would affect the project costs are: . Remoteness of islands and difficulty of access to sites . Lack of technical professionals and tradesmen and local resources . Living cost and market price . Land owner issues . Lack of local contractors working in the hydropower sector. 8.2 Cost Estimates

8.2.1 Capital Costs 238. The major cost components of the project are heightening of the dam, construction of forebay and extension of the powerhouse, electro-mechanical plant (turbine, generators and control system) and T&D works. Other cost items include design engineering and project management and other preparatory works before the construction start. 239. The cost estimates for civil works are developed from preliminary design and the sizing of the major civil works and from quotes for similar works in the region. The recent quote provided to VUI for work similar in nature has also been used to benchmark the cost and to develop estimates. Additionally, the costs were developed using known costs for similar structures and rates for major works determined from the preliminary designs. 240. The cost estimates for all electrical, mechanical and T&D lines works for the scheme are based on some recent price quotations and SMEC’s experience. These figures have been based on information received from manufacturers of such equipment who have experience on similar projects in the region. The price of the equipment would depend on manufacturers and suppliers and their locations. 241. The final tender rates used for construction can vary from the current rates. At the tender stage, quantities can be estimated with greater accuracy from tender level designs that would be developed for the purpose of tendering. Construction items can be itemised to a greater details allowing development of costs to a greater accuracy. Also the inherent limitation in cost estimation at this stage is the limited information available to develop designs and estimate quantities. 242. The cost estimates does not include any physical or price contingencies. These are added separately during the financial analysis of the project. 8.3 Civil Costs

243. The estimation of civil works quantities and cost estimation is based on the following considerations: . identify major construction activities and determine bulk quantities . estimated rates for major construction activities . availability of local construction material (aggregates, sand, timbers, etc.) within project area; . assumption that there are no unforeseen geotechnical problems . assumption that the rock foundations for the diversion weir, headrace and powerhouse area are sound . availability of semi-skilled manpower in the area

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. construction works to be undertaken by an international contractor with relevant construction experience, with the support of local subcontractors for selected civil construction activities . Local preference clauses in the EPC contract encouraging local employment to the maximum practicable extent. 244. Some of the civil works are of very specialist nature - such as raising the dam. This would generally involve specialist inputs and international personnel. This has to be factored in when considering the cost of these work items. Also given their specialist nature, there may be limited number of contractors who can or are willing to undertake this type of work. 8.3.1 Electro Mechanical Costs 245. For recent projects, SMEC has obtained quotations for turbine-generator sets from European manufacturers of similar size and range. The quote included complete price for a set of generator unit consisting of turbine, generator, inlet valve, governing system, low voltage switchgear, step up transformer and all accessories. The estimates for this project is based on those prices 8.3.2 Engineering Costs 246. The engineering cost included in the estimate is for design work, generally undertaken under EPC contract. It does not include the cost of supervision during construction which is included separately in the cost for a project management unit that will oversee a portfolio of projects. This part of the cost is considered in the financial analysis of the larger technical assistance project within which this project is included. 8.3.3 Operation and Maintenance Costs 247. The electricity industry, including generation, transmission and distribution and retail activities in Vanuatu are operated by private operators under concessionaire agreement with the Vanuatu government and regulated by URA. There are two private operators in the country - VUI in Espiritu Santo Island and UNELCO in the rest of the country. 248. VUI currently operates Sarakata-1 HPP. If the project is extended, the most likely scenario is that VUI would continue to operate the project at its increased capacity, albeit with amendments to the existing concessionaire agreement. Therefore it would result in minimal increase in the operating cost. 249. The operating and maintenance cost based on this approach is included in the financial analysis of the project. 8.4 Summary of Cost Estimates

250. The table below presents the summary of the cost estimates. It is based on modification of the existing infrastructure to divert discharges for 1,500 kW total generation with installation of either 300 kW or 600 kW generation capacity at the powerhouse and construction of corresponding civil structure to supply it with the requisite discharge. 251. The electrical and mechanical cost includes the cost to supply and install the equipment but does not include transportation which is added separately as 20% of the total cost. Table Sarakata-1 HPP Extension Cost Estimates Description of Works Costs (US$) (600 kW unit) Costs (US$) (300 kW unit) A Civil Works 1,701,000 1,360,000 B Hydromechanical Works 25,000 25,000 C Electrical And Mechanical 598,000 353,000 D Freight 230,000 132,000 E Construction Costs (A+B+C+D) 2,554,000 1,870,000 F Engineering 563,000 563,000 G Total Epc Contract Work (E+F) 3,117,000 2,433,000 H Development Costs 130,000 130,000 Total Costs (E+F+G) 3,247,000 2,563,000 Transmission Cost 920,710 920,710 GRAND TOTAL 4,167,920 3,483,920

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9 Financial Analysis

9.1 Introduction

252. This section provides detail on the methodology and a summary of the project FIRR. As it is currently proposed the Government of Vanuatu (GOV) will not be on lending funds to the utilities which are private companies operating under Concessionaire Agreements. It is proposed that the GOV will own the concerned assets entering into O&M contracts with the Concessionaires. 253. Thus ADB instructed the Consultant to undertake Financial Management Assessments of: i) the Department of Energy (DOE); and ii) the Vanuatu Project Management Unit (VPMU). The FMA for both are included in Section 7.6 in Volume 1 Main Report. 9.2 Financial Assumptions

9.2.1 General Assumptions 254. The financial analysis is based on the following assumptions: (i) 30 year project economic life (ii) no residual value assumed at the end of the 30 year period (iii) all costs and revenues based on 2014 constant prices (iv) zero taxation of income in Vanuatu. 9.2.2 Sarakata-1 Extension Assumptions 255. The “without” project cashflows were developed using the following assumptions: (i) continued operation of the existing diesel generators (2,850 kW) to meet demand when hydro not available; (ii) rehabilitation of existing diesel and hydro plants in 2024 at a cost of $2.5 million; (iii) fuel consumption at 0.29 litres/kWh the existing consumption rate; (iv) fuel price of VUV 132.07/litre delivered; (v) fuel price increase in real terms of 1.85% per annum; and (vi) operations & maintenance (O&M) costs at 5% of replacement cost for diesel plant. 256. The project involves 300 kW extension to the existing 1,200 kW hydropower plant. It will displace existing thermal generation. The extent of such displacement has been developed using generation modelling. A significant reduction in thermal generation under “with” project is the main financial benefit of the project. The capital cost of the hydropower plant has been estimated inclusive of the transmission line and grid extensions. Physical contingencies of 10% have been included and O&M on the HPP estimated at 1% per annum of capital costs. 9.3 Weighted Average Cost of Capital (WACC)

257. The WACC has been calculated in real terms using the cost for the all projects included in TA-828514 and for SHPP-1 as a standalone project. The details are presented in Volume 1 Draft Final Report for TA- 8285. 258. The funding sources are from ADB loan funds, other grant funds15 and GOV Funds. . The ADB loan will have tenure of 40 years inclusive of a grace period of 8 years and carry an interest rate of 1% per annum during the grace period and 1.5% per annum during the repayment period. The grant and GOV contribution is assumed to have a cost of 10% per annum to recognize its opportunity cost in the use such funds in other financially attractive projects for the country. It is assumed that the GOV will not on-lend or if it does it will be on a back-to-back basis, at the same rate as its borrowing rate. ADB forecasts a grant long term annual local inflation rate of 2.5% and foreign inflation of 0.5%. Table : Weighted Average Cost of Capital (all Projects) ADB Loan Grant Govt Total A. Amount (USD million) 5.0 13.3 4.2 22.5 B. Weighting (%) 22% 59 19% 100% C. Nominal cost (%) 1.38% 10% 10%

14 Project included are Brenwe HPP and Sarakata-1 Extension HPP and Grid Extension Project. 15 It is assumed that ADB loan funds of $5 million and SREP (Scaling up Renewable Energy) World Bank grant funds of $7 million will be available for the project.

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ADB Loan Grant Govt Total D. Tax rate 0% 0% 0% E. Tax-adjusted nominal cost [C*(1-D)] 1.38% 10% 10% F. Inflation rate (%) 0.5% 0.5% 2.5% G. Real Cost [(1+E)/(1+F)-1)] 0.9% 9.5% 7.3% H. Weighted component of WACC 0.2% 5.6% 1.2% Weighted Average Cost of Capital (Real) 7.1 Source: PPTA Consultant 259. The WACC for Sarakata 1 as a standalone HPP inclusive of the transmission line and project management costs but exclusive of related grid extensions is as follows: Table : Weighted Average Cost of Capital (SHPP-1 Only) ADB Loan Grant Govt Total A. Amount (USD million) 5.0 1.1 1.1 7.2 B. Weighting (%) 69% 16% 15% 100% C. Nominal cost (%) 1.38% 10% 10% D. Tax rate 0% 0% 0% E. Tax-adjusted nominal cost [C*(1-D)] 1.38% 10% 10% F. Inflation rate (%) 0.5% 0.5% 2.5% G. Real Cost [(1+E)/(1+F)-1)] 0.9% 9.5% 7.3% H. Weighted component of WACC 0.6% 1.5% 1.1% Weighted Average Cost of Capital (Real) 3.2% Source: PPTA Consultant 9.4 Financial Internal Rate of Return (FIRR)

260. The incremental FIRR for the SHPP-1 (with 600 kW unit) including transmission upgrade and project management costs but excluding the grid extensions is 7.9% and the FNPV is $5.5 million. 261. If a 300 kW generation units was installed instead, the FIRR is 8.9% and the FNPV is $6.0 million. This indicates that the SHPP-1 is financially viable with the FIRRs above the WACC of 3.2% and would be viable if benchmarked against the overall project WACC of 7.1%. 262. Sensitivity Analysis. Sensitivity analysis of the project was undertaken using the following scenarios to evaluate the robustness of the investment to changes in major assumptions. The results of the sensitivity analysis demonstrate that the FNPV for all cases are positive while the FIRR for scenarios with ‘10% increase in cost’ and the most adverse scenario with ‘10% increase in cost and 10% decrease in revenue’ falls below 7.1% WACC. However the FIRR in all case are above the WACC (at 3.2%) for the SHPP-1 Extension only. Table : Sensitivity Analysis Scenario FIRR (%) FNPV ($mn) Base Case - 600 kW Unit 7.9% 5.5 10% increase in costs 5.4% 2.5 10% reduction in revenues 7.1% 4.6 10% increase in costs and 10% reduction in revenues 3.9% 1.1 Base Case- 300 kW Unit 8.9% 6.0 10% increase in costs 6.4% 3.2 10% reduction in revenues 8.2% 5.1 10% increase in costs and 10% reduction in revenues 4.8% 1.8

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10 Economic Analysis

10.1 Macroeconomic Context and Demand Analysis

263. Vanuatu has a population of 234,000. The population comprises of 47,000 households and the average per household is 4.8 people. 24% of the population is in urban areas. The proposed extension to the Sarakata Hydropower project is situated on the Island of Espiritu Santo (or Santo) which falls within the Sanma Province. Sanma Province has a 2009 census population of about 46,000 and an average annual population growth rate of 2.4%. Within Sanma Province, Santo accounts for 39,600 or 86% of the provincial population. The number of households on Santo is 7,900. The provincial capital is Luganville, the second largest town in Vanuatu with a 2009 census population of 10,734 and 2129 households. The island of Malekula falls within the Malampa Province with a population of 36,700 and an average annual population growth rate of 1.1%. Within Malampa Province, Malekula accounts for 22,900 or 62% of the provincial population. The number of households on Malekula is 4,950. 264. Vanuatu’s economy as measured by its GDP grew by an average of 3.5% per annum over the last five years to 2011. In 2012, GDP increased by 3.2% compared to 1.2% in the previous year largely due to recovery of agricultural production and increased tourist arrivals. GDP is expected to maintain this upward trend in 2014 and 2015 with increases of 3.5% and 4.0% being projected with increased contribution from the construction sector due to large donor funded projects. Agriculture is the largest contributor to the economy and accounts for 21% of GDP and grew by an average of 3.5% annually. The other economically significant sectors are tourism, trade, transport and telecommunications. Inflation as measured by the Retail Price Index averaged 2.8% annually over the last five year and as measured by the GDP Deflator 3.5%. 10.1.1 Historical Demand 265. In Malekula, demand increased from 525 MWh in 2005 to 620 MWh by 2012. The maximum demand was 110 kW in 2006 and 130 kW in 2012. Existing generation is entirely thermal, running on diesel or copra oil with 4 generators 90-129 kW totalling 429 kW. The customer base was 526 as reported in the 2012 Annual Electrical Technical Report with 441 averaging less than 30 kWh/month. Review of historical data revealed 3.91% growth in demand from 2002-2012 overall, but from 2006-2012 it was only 1.91%. Growth in 2002-2005 was 7.28% was as a result of new network installations and grid extensions. Therefore, the underlying growth after taking out the one-off impacts of grid extensions and related new customer surge in new connections is under 2%. 266. In Santo, demand increased from 6,500 MWh in 2006 to 9,000 MWh by 2013. The maximum demand was 1,300 kW in 2006 and 1,700 kW in 2013. Existing generation is a largely hydro, from the 1.2 MW Sarakata hydropower plant and some thermal generation from the 2.85 MW of diesel generating capacity. The customer base is approximately 2,350 with 1,700 consuming an average of less than 75 kWh/month. Review of historical data revealed growth rate of 0.46% from 2002-2009 and 2.17% from 2010-2013 mostly due streetlights and grid extensions. Therefore, the underlying growth after taking out the one-off impacts is estimated at 1% per annum. 10.1.2 Demand Projections 267. In Malekula, grid extension under EU/GOV funding from Norsup to Vao is in progress, with materials already procured and available in storage in Port Vila. There is funding to connect 550 new customers. A further 550 new customers can be to connected on the North East (total 1100 of about 2300 households) plus 400-450 more in the Unmet/Brenwe areas. Thus a total of 1500 new connections can be envisaged. There is funding also available from Global Partnership Output based Aid (GPOBA), from Australia for 4,375 households to connect to the grid, with GPOBA financing up to a total contribution of $917 with up to 80% of the cost of connection and 100% of basic household wiring which is a major deterrent for people to connect. About 90% of new customers would be in the low energy consumption category consuming about 35% of the energy with the other 10% consuming about 65%. This 10% customer base would constitute catholic churches and missions, schools, dispensaries and small businesses. The catholic facilities typically in the past used a 7-10 kW diesel generator but this is now non-operational and some small solar is used, with schools and shops using small petrol generators of 3-5 kW rating - with higher running costs but lower capital costs. These 1,500 new connections gives rise to an additional generation of 931 MWh per annual which has been factored into the demand projections together with the underlying growth of 2% per annum.

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268. In Santo, the demand projections take into account an additional 1,500 connections. This is on the assumption that GPOBA funding will be available for household wiring. The resultant generation requirement will be 825 MWh per annum. 10.2 Economic Valuation of Costs and Benefits

10.2.1 Estimation of Costs. 269. The assumptions used in determining the economic cost stream are: i) a 30 year project economic life ii) no residual value assumed at the end of the 30 year period iii) all costs based on 2014 constant prices which include physical contingencies but exclude price contingencies with taxes and duties excluded iv) fuel prices have been converted to economic prices by eliminating all taxes and duties. 270. Labour. The economic price of labour is measured through its supply price. There are large variations in the types of labour depending on a number of factors including skills, regions, economic sector and even individual jobs. The Shadow Wage Rate Factor (SWRF) is assumed to be 0.8 which is consistent with recent projects in the region. It is applied to 60% of the labour cost and the balance is assumed to be skilled where a SWRF is not applied. It is estimated that 15% of the overall project costs will be labour. 10.2.2 Estimation of Benefits 271. One of the economic benefits of the project is to reduce imports of oil for thermal generation and this will improve the balance of payments situation in the country. This is achieved due to displacement of thermal generation with hydropower. 272. There is also an economic benefit as a result of resource cost savings due to households that were using other forms of energy for lighting being connected to the grid. The economic benefit is quantified through the Consumer Surplus - a measure of wellbeing that relies on the difference between what the consumer is willing to pay and what is actually paid. A Consumer Surplus represents an increase in economic welfare. The results of the socioeconomic survey carried out in the project area under the TA, is summarized in the following table. Table : Summary of the Results of the Socio-economic Survey Malekula (81 HH) Santo (77 HH) Grid Connected 17% 30% Solar 55% 42% Generator 1% 6% Others 26% 22% TOTAL 100% 100% Source: PPTA Socioeconomic Survey 273. The dominance of solar power for lighting in the two project areas is due to the implementation of the “Lighting Vanuatu Project” funded by the Government of Australia in 2010. Under this project, solar lanterns with a solar panel of 1-2W, light source16 and a mobile phone charger were sold at a subsidized price of VUV 1,500/unit. These solar lanterns are still being sold in stores around Vanuatu and are now sourced from China and cost between VUV 2,000 to VUV 2,500 each. The average economic life of such lanterns is typically short, approximately two years. Vanuatu Electricity for Rural Development Program (VERD)17 funded by AusAid, commenced in 2011 where Solar Home Systems (SHS)18 were to be marketed at a subsidized price. These systems cost between VUV 20,000-50,000 per unit and the average economic lifetime about three years based on the average life of the battery unit. Both solar lanterns and SHS are used in both project areas. Other source of lighting consists of wick lamps, hurricane lamps and pressure lamps. 274. The table below summarizes the cost of generating power for lighting using the various sources of lighting as indicated from the socio-economic survey.

16 Light Emitting Diode (LED). 17 Designed as an AUD 20 million 6 year programme, was cancelled in 2013. The World Bank is currently trying to revive the programme. 18 Typically 4 LED, 20 W systems with mobile phone charger, battery and inverter.

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Table : Cost of Source of Lighting Solar Solar Home Community Kerosene Lantern System Generator Lamp Power (W) 2 20 2,000 7.5 N° of Units per Household 2 1 - 2 No of Households Connected - - 30 - Hours used per day 4 4 - 4 Annual Consumption (kWh) 5.8 29.2 10,950 21.9 Cost of Unit (VUV ) 2,200 20,000 1,600,000* 650 Average Lifetime (Years) 2 3 20 3 Operation & Maintenance - - 5% of capital - Fuel Consumption (litre/kWh) - - 0.33 0.35 Cost of Fuel (VUV /litre) - - 175 220 Average Cost VUV /kWh 377 228 72.50 636 Source: PPTA Consultant * Generator at USD 2,000 and Distribution System USD 15,000, An Economic Assessment of Renewable Energy Options for Rural Electrification in Pacific Countries, SOPAC Technical Report, 2007 275. Using the average cost per kWh above and the proportion of lighting from these sources as given by the socio-economic survey in the project areas in Malekula and Santo, the weighted average cost is VUV 386/kWh in Santo for lighting non-electrified households. This is the willingness to pay (WTP) to connect to the grid. In Santo, the total number of households is 7,864 of which 2,307 are electrified. Using the WTP for non-electrified households and the prevailing electricity tariff for electrified households it is possible to estimate a weighted average economic price of electricity both with and without the project. Since the number of households to be connected under the project have been estimated and also the demand with and without project has been identified it is possible to calculate the quantity of electricity with and without the project and thereby estimate the demand function. The economic benefit is in the form of a consumer surplus with increased quantity being supplied along the demand curve which results in the reduction of the economic price. The Consumer Surplus has been quantified based on the WTP of VUV 386/kWh for non- electrified households and the average cost of electricity from Sarakata 1 ($0.30-$0.33/kWh) and for electrified households the difference between the prevailing tariff and the average cost of electricity from Sarakata 1. 10.2.3 Economic Internal Rate of Return 276. The project will result in the savings of 9.4 million litres of fuel during its economic life of 30 years. This saving has been valued as an economic benefit using the methodology described above under the valuation of economic costs. 277. The incremental EIRR for the Sarakata-1 Extension Hydropower Project with 600 kW units including transmission and grid extensions is 34% and the ENPV 10.9 million. This indicates that the project is economically viable since it exceeds the Economic Opportunity Cost of Capital (ECOC) of 12%. 278. Similarly for the 300 kW option, the incremental EIRR for the Sarakata-1 Extension Hydropower Project including transmission and grid extensions is 36.9% and the ENPV $11.3 million. This indicates that the project is economically viable since it exceeds the Economic Opportunity Cost of Capital (ECOC) of 12%. 279. Sensitivity Analysis. Sensitivity analysis of the project was undertaken using the following scenarios to evaluate the robustness of the investment to changes in major assumptions. The results of the sensitivity analysis demonstrate that the project is resilient to adverse changes in costs and benefits. Table : Sensitivity Analysis

Scenario EIRR (%) ENPV ($mn) Base Case (600 kW Unit) 34.0% 10.9 10% increase in costs 31.8% 10.4 10% reduction in revenues 31.6% 9.4 10% increase in costs and 10% reduction in revenues 29.6% 9.0 Base Case (300 kW Unit) 36.9% 11.3 10% increase in costs 34.6% 10.9 10% reduction in revenues 34.4% 9.9 10% increase in costs and 10% reduction in revenues 32.2% 9.5

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11 Project Implementation

11.1 Introduction

280. This section describes the most likely plan for project implementation; based on the approach that: . Preparatory works will be undertaken via ADB’s shopping contracts or through national tendering. . The major construction of the project will be through a single EPC type contract with the selection of the contractor through International Competitive Bidding. . The supervision will be through a PMU set up either separately for the project or for several projects that are concurrent or through existing project management units that are overseeing other projects in the country. . The financing will be a mix of ADB grant and loan. 281. The schedule for the project considers the complexity of accessing, leasing and procuring the land for the project and duration to procure and transport the goods to project site. 11.2 Access

282. The access to the Espiritu Santo Island is through the airport at Luganville. There are also regular international and domestic flights to Luganville. 283. The project area is accessible from Luganville via road. The road from the main highway to Sarakata-1 HPP was built for the purpose of accessing the project for its operation and is unpaved. 284. No new roads will be necessary during the construction of the project. A short section of the road that leads to the forebay area will require rehabilitation for it to be motorable. 285. It is preferable to undertake this work via national contractors before commencing ICB for the main works. This will streamline the implementation while simultaneously allowing national contractors to be involved in the project. 11.3 Construction Material

286. Construction material such as cement, reinforcements, structural steel can be obtained in-country from local retailers who import them. Given the volume of the construction material necessary for the project, the contractor may want to import them directly. They may want to do so to ensure certainty of the material being available on time for the project. 287. Construction material such as sand, aggregates, stone and boulders may be sourced from local quarries or from new quarries established for the project. These quarries may be established by national contractors. 11.4 Procurement Plan

288. It is likely that the ADB grants and loans will be source of financing for the project. Accordingly, the project procurement will follow the appropriate ADB procedures. Depending on the nature of the goods and services, their capital value and the capacity of the local market, the ADB procurement models that are applicable will be: . International Competitive Bidding (ICB), as described in Section 2 of the ADB’s Procurement Guidelines (2013) . National Competitive Bidding (NCB), as in Section 3.3 the ADB’s Procurement Guidelines (2010) . Shopping for Goods procedure as described in Section 3.5 the ADB’s Procurement Guidelines (2010) (ADB, 2013) . Recruitment of Consulting Firms under ADB’s Guidelines on the Use of Consultants (2013) 289. In addition the process will also follow the applicable national public procurement laws. 290. The Procurement Plan is based on approach described in Section 11.1 . Accordingly the work is separated into packages that local and international contractors will likely undertake. It also reflects the packaging to deliver competitive prices, enforceable schedules and adequate standards.

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291. Major work will be according to EPC contract with several smaller preparatory works undertaken by local contractors. A set of investigation works needs to be in place before the project begins. These are identified as a separate set of works and, depending on their value their procurement method can be ADB’s Shopping Contracts or National Competitive Bidding. 292. The table below lists the likely contract packages and their procurement method. Table Contract Packages and Procurement Methods Package Description N° of Procurement Comments Contracts Method Project Management PM1 Concept Design, Assistant 1 QCBS The consultant will perform project during Tendering Procedures management services for all other and Supervision Works contracts in this table. This package may also combine the project management services for other components of the overall project and other projects that the EA will undertake during the same period. Development Works PW1 Topographical Survey 1 Shopping Short form contract conditions for small contracts. Undertaken by Vanuatu national companies. PW2 Geotechnical Investigation 1 Shopping Short form contract conditions for small contracts. PW3 Hydrological Investigation 1 Shopping Short form contract conditions for small contracts. PW4 Design and Construction of 1 NCB Access Roads Main Works MW1 Design, Supply, Install and 1 ICB EPC contract for Design Supply, Install Commission of the Project and Commission for civil works, electromechanical plant & equipment and hydro-mechanical equipment. It will include a functional Owner’s requirements placing ‘fit for purpose’ responsibility on the Contractor. The contract will include training of operation and maintenance staff. Notes: 1. Due to low capacity of the national economy, there will be no domestic preferences in the contracts for ICB.

The table below describes the general scope of works that each contract package includes. Table Scope of Works in the Different Contract Packages Package Contract Package Scope of Works Project Management PM1 Concept Design, Assistant during Prepare concept design and tender design document for the Tendering Procedures and transmission and distribution systems Supervision Works Prepare concept design and tender documents for the EPC contract which will include specification of the owner’s requirements in respect of all hydropower works and equipment Assist EA to tender and award the contracts Oversee the implementation of the EPC Contract Supervise and administer the other works and equipment contracts Prepare tender documents for the O&M Contract and assist EA with tendering and award. Preparatory Works PW1 Hydrological Survey Review the existing hydrological information Develop flood levels assessment at the intake and powerhouse area [using the topographical information from the topographical survey] PW2 Topographical Survey Review the existing survey of the project area and prepare any

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Package Contract Package Scope of Works additional topographical maps Undertake river survey to determine the necessary cross sections on the river at intake and powerhouse for hydrological modelling for floods PW3 Geotechnical Investigation Undertake geological and geotechnical investigation of the area including dam area, along the headrace alignment, forebay, penstock and powerhouse area to determine their stability and measure necessary to ensure they are stable during construction and operation period Develop geotechnical parameters for the design and construction Undertake seismic study and develop seismic parameters. PW4 Design and Construction of Rehabilitate the road to the forebay area from existing access road. Access Roads Main Works MW1 Design, Supply, Install and Design Supply, Install and Commission of all works including civil Commission of the Project works, electromechanical plant & equipment, hydro-mechanical equipment. 11.5 Implementation Schedule

The implementation schedule in Figure is based on the approach that the implementation of the project will follow ADB’s and GoV’s requirement. It includes the periods that are likely to be necessary for the agreement between GoV and ADB before the project can commence.

The detailed implementation schedule is provided in Appendix 2 and a summarized version is presented below. Accordingly the duration for the implementation is 3 years and consists of: . 12 months for preparatory works such as ADB loan signing, consultant’s recruitment and land acquisition; . 6 months for EPC tender level design and documentation, . 6 months for tendering; and . 12 months for construction.

IMPLEMENTATION SCHEDULE Advance procurement initiated by DOE/VPMU to ADB requirements 2015 2016 2017 2018 2019 2019 ID SP Task Name Duration Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Loan Effective (early by / latest by) Milestone * Wet Wet Wet Wet Wet 2 DS Consultant procurement (Advance) 6 months f fff ff* 3 ICS Consultant 12pm for DOE Support 24 months f ff f ff* ffffffffffff 4 Design and Supervsion Consultant (DSC) - Intermittent 40 months ffffffffffffffffffffffffffffffffffffffff 5 Land procurement 18 months ffffffffffffffffff 6 Warrenty Period (Performance Guarantee) 12 months ffffffffffff 7 ADB Project Closure 4 Months ffff SP-4 Sarakata-1 Ext Hydro Power Station (300 kW Ext) 40 DSC: Design, ICB Docs Preparation and Approval 6 months ffffff 41 DSC: Tendering Process and Contract Award 6 months ffff ff* 42 DSC: Design Preliminaries (incl tendering for services) 4 month ffff 43 Access Roads 6 months ffff ff 44 Contractor design 6 months ffffff 45 Equipment Procurement 10 months ffffffffff 46 Civil Works 12 months ffffffffffff 47 Water Control Plant Works 4 months ffff 48 Power Plant and Substation Works 6 months ffffff 49 Commissioning 1 month f Figure Implementation Schedule

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12 Conclusion and Recommendations

12.1 Conclusions

293. The study shows that Sarakata-1 extension with 300 kW added capacity has adequate returns and it implementation is would be justified. Noting that an arrangement with 600 kW is the preference of the Concessionaire and DOE and the FIRR for such an arrangement is only marginally less, it would be reasonable option to implement. For this, it would be necessary for either the GoV and/or the Concessionaire to meet the additional costs. 294. The major work for the extension at Sarakata-1 consisting of adding 600 kW unit in the extension to the powerhouse while modifying the dam and intake for additional discharge of 1.5 m3/s for 300 kW are: . Dam: Increase the height of the dam by 0.4 m;; . Intake: Raise the platform of the intake by 0.4 m so that it will be accessible during normal operation and install a larger intake trashrack; . Settling basin: Raise the walls of the settling basin by 0.2 m; . Headrace: . Headrace 1: Increase the walls for the initial 765 m by 0.4 m; . Headrace 2: This will remain unchanged; . Headrace 3: Construct a new 30 m long channel with a capacity of 3 m3/s teed off from Headrace 2 to the new forebay; . Forebay: Construct a new forebay upstream of the existing forebay; . Penstock: Install a new 1.2 m diameter penstock from the new forebay to the powerhouse; . Powerhouse: Extend powerhouse by 8.4 m; and . Electromechanical equipment: Install a 600 kW turbine/generation unit in the new powerhouse. 295. If the extension of Sarakata-1 consists of adding only 300 kW unit, the necessary modification to the dam, intake, settling basin and Headrace 1 and 2 would be identical. The difference would be . Headrace: . Headrace 3: Construct a new 30 m long channel with a capacity of 1.5 m3/s teed off from Headrace 2 to the new forebay; . Forebay: Construct a new forebay upstream of the existing forebay; . Penstock: Install a new 0.9 m diameter penstock from the new forebay to the powerhouse; . Powerhouse: Extend powerhouse by 6.4 m; and . Electromechanical equipment: Install a 300 kW turbine/generation unit in the new powerhouse. 296. The construction cost of the project based on the assumption that it will be undertaken as an EPC in 20014 prices are: . For the arrangement with 600 kW unit, it is USD 4.17 M that includes USD 3.25M for the hydropower project and USD 0.9 M for the transmission line upgrade. . For the arrangement with 300 kW unit, it is USD 3.49 M that includes USD 2.56M for the hydropower project and USD 0.9 M for the transmission line upgrade. . In both cases, the cost includes initial preparatory works such as field investigations and access road of USD 0.13M. 297. The implementation duration for the project is 3 years and includes 12 months for preparatory works (including ADB loan signing, consultant recruitment, land acquisition), 6 months tender level design and documentation, 6 months for EPC tendering process and 12 months for construction. 298. When compared to ‘business as usual’ scenario whereby the current status is continued, The incremental FIRR for the SHPP-1 (with 600 kW unit) including transmission upgrade and project management costs but excluding the grid extensions is 7.9% and the FNPV is $5.5 million. If a 300 kW generation units was installed instead, the FIRR is 8.9% and the FNPV is $6.0 million. This indicates that the SHPP-1 is financially viable with the FIRRs above the WACC of 3.2% and would be viable if benchmarked against the overall project WACC of 7.1%. 299. For the option with 600 kW unit (including transmission and excluding the grid extensions), the incremental EIRR is 34.0% and the ENPV is $10.9 million. Similarly, for 300 kW unit the EIRR and ENPV are 36.9% and $11.3 million respectively. This indicates that the project is economically viable since the EIRR exceeds the Economic Opportunity Cost of Capital (ECOC) of 12%.

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300. The project involves the expansion of an existing hydropower scheme that is wholly within the scheme’s current site boundaries. There potential environmental effect from the construction of the project will relatively minor, localised and acceptable provided the mitigation measures set out in EMP is properly implemented. 301. The IEE, including the EMP undertaken during the course of the feasibility study is considered sufficient to meet ADB’s and government environmental safeguard requirements in respect of the expansion of the Sarakata 1 expansion hydropower plant. No further or additional impact assessment is considered necessary at this stage. 302. The project is not expected to have impacts of physical displacement and/or loss of major income sources. There is no expected risk of landlessness, loss of home, and/or loss of major income source. 303. During interviews, all consulted APs express strong support to allow the national government to acquire the proposed sites for the project. Communities and APs are also aware that DOE and Department of Lands are the government agencies that will facilitate this process. 304. There are no prominent gender issues among APs identified in this Subproject. There are no female- headed household DPs identified during PPTA consultations. Instead the project will provide opportunities to improve women’s situation through provision of reliable power supply and stable tariff to households, reducing uncertainties in managing households’ energy supply and expenditures. 12.2 Recommendations

305. The project is financially and economically viable with the FIRR above the WACC. It has no environmental adverse effect and is generally acceptable to the affected communities, and hence it is recommended that the project be developed to the next stage. 306. In the next stage, to expedite the project implementation, it is recommended that the preparatory works and the investigation work be undertaken prior to appointing the contractor for the construction of the project. 307. The preparatory investigation works would cover: . Hydrological investigation work to firm up the projected river flows, flood flows and the flood levels . Geotechnical investigation of the project area and geological mapping of the area . Preparation of tender design and documentation for main works. The main works will cover the design of the project and its civil construction, procurement and installation of the electrical and mechanical equipment.

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Appendix 1 Photographs

Photo Sarakata-1 Headrace (01)

Photo Sarakata-1 Dam

Photo Sarakata-1 Headrace (01)

Photo Sarakata-1 Dam (Upstream) Photo Sarakata-1 Headrace (02)

Photo Sarakata-1 Forebay

Photo Sarakata-1 Intake and Settling Basin

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 65 Appendix 1 Photographs

Photo Sarakata-1 Penstock

Photo Sarakata-1 Powerhouse

Photo Sarakata-1 Tailrace

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 66 Appendix 2 Implementation Plan

Appendix 2 Implementation Plan

Sarakata-1 Extension Hydropower Project Implementation Schedule

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 67 Appendix 2 Implementation Plan

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TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 68 Appendix 3 Drawings and Maps

Appendix 3 Drawings and Maps

The drawings included in this section are: Dwg N° Dwg Title Sheets 5039006-SHPP1_SK0100 Location Map 1 5039006- SHPP1_SK0200 General Arrangement 1 5039006- SHPP1_SK0300 Dam 1 5039006- SHPP1_SK0400 Intake and Settling Basin 1 5039006- SHPP1_SK0500 Forebay and Powerhouse, General Arrangement 1 5039006- SHPP1_SK0701 Powerhouse, Plan and Sections 1

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 69 Appendix 3 Drawings and Maps

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TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 70 NOT FOR CONSTRUCTION INFORMATION DOCUMENT

SNOWY MOUNTAINS ENGINEERING CORPORATION 2

9 EXISTING HEADRACE SECTION 1 ~ 765 m SARAKATA RIVER SECTION 2 ~ 138 m

8 7 4

EXISTING FOREBAY, PENSTOCK & POWERHOUSE AREA.

NOT FOR CONSTRUCTION INFORMATION DOCUMENT

SNOWY MOUNTAINS ENGINEERING CORPORATION NOT FOR CONSTRUCTION INFORMATION DOCUMENT

SNOWY MOUNTAINS ENGINEERING CORPORATION SCALE METRES (m) 1 0 1 2 3 4 5 0.5

B 3

2 A A

SCALE METRES (m)

1 0.5 0 1 2 3 4 5

NOT FOR CONSTRUCTION INFORMATION DOCUMENT

SNOWY MOUNTAINS ENGINEERING CORPORATION ELEVATION 1.

ELEVATION 3.

NOT FOR CONSTRUCTION INFORMATION DOCUMENT

SNOWY MOUNTAINS ENGINEERING CORPORATION Appendix 4 Hydrology

Appendix 4 Hydrology

General discussion

Data associated with this hydrological study has been sourced from a variety of sources and as possible entered and compiled into SMEC’s hydrological database, TIDEDA, an acronym for TIme DEpendant DAta. This system was developed by the New Zealand Government in the 1970’s and has evolved from the mainframe, DOS to the Microsoft Windows platform. It was specifically developed for Hydrometeorological data and is an ideal robust and bug free archiving and analysis software package especially for use with data for Hydro Electric Power development projects. It is also used throughout the 14 Pacific Forum Nations as their primary hydrological Archive and has been used by the Vanuatu Department of Water Resources for in excess of 20 years. In ensuring this compatibility, DoWRE are able to act as the in-country backup for this data and should the hydrological monitoring program continue beyond the life of this project, act as the repository and main archive for the data.

TIDEDA has a suite of standard processes for analysis and presentation of data, using the most recent data updated to the database. Due to the proprietary nature of this software the user only has choice over the period of data to be analysed or presented, hence any user using the same dataset will present the same result exactly, consistent outputs whoever does the analysis.

Supporting software has been used for event analysis such as flood and drought estimation, ranking, flood estimates and for presentation in Excel as necessary.

Data sources are as follows;  DoWR TIDEDA archive  VMS supplied rainfall data  ORSTOM reports  VUI data  Pacific Regional CROP Agency reports (eg SOPAC, SPC, SPREP)  New data collected under SMEC’s monitoring program  Internet searches - limited data The Appendices will present basic data and analysis in graphical and tabular format from TIDEDA and specific analysis and outputs from analysis and/or modelling software. Separate reporting for ADB Project TA-7329 contains the detailed baseline data, quality assessment and ongoing analysis.

The TIDEDA Hydrological Archive developed and populated for the project is now very comprehensive containing all data relating to water level, gaugings, ratings and rainfall. A scan of the data is appended in the following scan.

~~~ NIWA Tideda ~~~ SMEC 23-MAY-2014 11:28

PSCAN of C:\Hydrology Data\Vanuatu HEP\TIDEDA data\Vanuatu HEP.mtd

SITE START TIME FINISH TIME ITEMS KIND KBYTES

Sarakata at Spillway 9995 1-Jan-2014 12:00:00 1-Jan-2014 12:00:00 1 rating 0.5 9995 21-Mar-2014 08:00:00 9-Apr-2014 16:00:00 1 instant 0.6 Sarakata daily mean Q at JICA 9996 1-Jan-1984 00:00:00 16-Dec-1984 24:00:00 1 histogrm 5.3 Lamap monthly rainfall at Airport 9997 31-Dec-1960 09:00:00 31-Jan-2014 09:00:00 1 incrmnt 10.4 Pekoa monthly rainfall at Airport 9998 31-Dec-1970 09:00:00 31-Dec-2013 09:00:00 1 incrmnt 30.1 Brenwe at auto rainfall (Spider) 9999 31-Jan-2013 17:00:00 19-May-2014 08:00:00 1 incrmnt 383.3 Wambu Rainfall at Nambel Village 223999 2-Mar-2013 15:56:51 17-May-2014 12:17:23 1 incrmnt 141.5 Leviam rainfall at Malekula

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 78 Appendix 4 Hydrology

298997 19-Mar-2012 09:00:00 5-Feb-2014 09:00:00 1 incrmnt 10.7 Lambubu rainfall at Malekula 298998 1-Sep-2009 09:00:00 28-Apr-2014 09:00:00 1 incrmnt 25.5 Brenwe Rainfall at above Waterfall (ML1) 298999 11-May-2013 13:52:42 24-Sep-2013 11:16:55 1 incrmnt 18.4 Sarakata at Fanafo above intake 2230101 1-Jan-1980 12:00:00 1-Jan-1980 12:00:00 1 rating 0.5 2230101 30-Jan-1982 11:00:00 15-Sep-1985 15:00:00 1 instant 71.8 2230101 4-Oct-1981 12:00:00 28-Sep-1984 12:00:00 2 gauging 4.0 Tafwakar Station at Nambauk 2230102 8-Jan-1981 12:00:00 8-Jan-1981 12:00:00 1 rating 0.1 2230102 6-Nov-1999 08:30:00 25-Jun-2001 13:00:00 1 instant 608.8 2230102 20-Jan-2000 11:30:00 3-May-2001 15:23:00 15 gauging 2.0 Sarakata HEP at Spillway 2230103 1-Jan-1986 12:00:00 1-Jan-1986 12:00:00 1 rating 0.5 Fanafo at PWD camp site 2230201 17-Oct-1990 13:15:24 17-Jul-1991 13:09:09 1 incrmnt 40.2 Wambu at Beleru 2235101 1-Jan-1996 12:00:00 1-May-2013 12:00:00 1 rating 0.5 2235101 9-Jul-1999 13:00:00 19-May-2014 07:00:00 1 instant 427.6 2235101 13-Jul-2013 15:05:00 17-Apr-2014 13:15:00 15 gauging 4.0 Brenwe at Upstream of Waterfall 2980101 1-Jan-1995 12:00:00 1-Jan-2013 12:00:00 1 rating 0.6 2980101 14-Jun-1995 14:36:00 19-May-2014 08:00:00 1 instant 642.8 2980101 14-Oct-1983 12:00:00 5-Feb-2014 12:00:00 15 gauging 2.0 Sarakata mthly rainfal at Fanafu 7126010 31-Oct-1981 09:00:00 1-May-2014 09:00:00 1 incrmnt 8.6 Sarakata mthly RF at Tankara 7126020 31-Oct-1981 09:00:00 30-Nov-1984 09:00:00 1 incrmnt 0.6 Sarakata mthly RF at Boutmas 7126030 31-Oct-1981 09:00:00 30-Nov-1984 09:00:00 1 incrmnt 0.6 Sarakata mthly RF at Peren 7126040 31-Oct-1981 09:00:00 30-Nov-1984 09:00:00 1 incrmnt 0.6

Data Size = 2417.1 Kbytes File Size= 3036.9 Kbytes 109 Batches in use 1536 Batches maximum

SARAKATA AT FANAFU Rainfall data - Pekoa Monthly totals 1971 to 2013 site 9998 Pekoa monthly rainfall at Airport

Mthly RF mm

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

1971 292 300 253 404 211 315 317 105 139 251 199 369 3156 1972 533 543 384 329 203 401 75 240 117 87 109 412 3433 1973 191 176 609 199 125 40 221 138 26 269 600 192 2786 1974 295 384 272 159 78 239 86 118 173 542 330 208 2884

1975 202 258 345 281 212 517 144 107 191 232 271 187 2948 1976 572 330 239 440 248 425 212 129 114 175 231 121 3236 1977 278 312 219 319 67 296 103 243 41 17 173 89 2158 1978 229 457 102 241 123 20 44 54 6 110 94 112 1593 1979 341 280 133 147 144 79 108 3 69 64 128 215 1709

1980 147 179 230 93 207 188 106 91 98 138 143 109 1730 1981 356 359 322 346 92 62 83 73 214 47 ? ? 1954? 1982 82 104 251 228 73 116 41 37 7 19 140 59 1158 1983 80 33 25 69 17 53 14 21 3 44 189 148 697 1984 258 246 240 231 465 311 64 30 63 170 471 100 2649

1985 532 80 188 254 253 279 173 74 154 107 200 154 2446 1986 247 511 331 218 145 105 20 80 72 37 101 253 2119 1987 63 493 170 407 200 49 29 93 69 113 105 273 2065 1988 628 589 121 118 336 354 125 105 168 271 218 441 3474

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1989 322 220 192 638 312 159 17 249 86 557 315 293 3359

1990 254 213 461 201 45 99 34 16 73 171 113 366 2045 1991 152 596 406 168 84 84 58 83 136 220 209 125 2322 1992 300 732 195 258 99 61 155 27 19 112 23 103 2084 1993 75 191 267 83 122 90 51 115 35 28 59 104 1220 1994 446 167 475 280 34 122 82 41 38 5 78 108 1877

1995 173 186 282 275 46 62 32 130 77 184 105 186 1738 1996 239 33 460 143 284 137 123 17 159 84 200 256 2136 1997 336 165 277 272 330 91 103 43 10 19 62 162 1870 1998 288 274 384 344 209 252 60 64 176 134 150 347 2681 1999 489 392 168 187 266 18 166 178 181 94 199 365 2704

2000 413 160 401 517 115 187 166 185 207 398 353 364 3465 2001 300 465 182 306 135 245 198 55 171 99 250 78 2483 2002 193 374 197 374 264 327 185 65 151 141 196 45 2512 2003 366 223 105 164 297 515 113 6 11 189 333 162 2486 2004 117 304 168 111 50 102 150 158 89 129 22 112 1512

2005 507 371 221 935 223 112 97 59 72 43 139 153 2932 2006 300 336 282 214 374 64 25 378 56 66 221 249 2565 2007 419 376 300 172 76 301 416 131 321 264 359 183 3319 2008 284 231 201 185 227 270 60 66 234 319 114 248 2440 2009 572 399 169 321 388 337 52 371 27 100 85 174 2993

2010 88 166 472 152 290 440 24 19 27 384 495 165 2723 2011 375 213 171 246 172 181 140 100 109 155 ? ? 1861? 2012 ? ? ? ? ? ? ? 115 ? ? ? 214 329? 2013 ? ? ? 137 283 218 340 11 126 145 210 ? 1470?

Min. 63 33 25 69 17 18 14 3 3 5 22 45 697 Mean 301 303 265 266 189 198 115 103 103 160 200 200 2403 Max. 628 732 609 935 465 517 416 378 321 557 600 441 3474 The Min Mean and Max of Annual means are for complete years only. Runoff

Discharge hydrographs Discharge measurements Site 2230101 Sarakata at Fanafo above intake 2 Items GAUGING From 4-Oct-1981 12:00:00 to 28-Sep-1984 12:00:00 WL Flow Date Time mm l/s

4900 9780 4-Oct-1981 12:00:00 4760 7620 5-Oct-1981 12:00:00 4670 6290 7-Oct-1981 12:00:00 4650 5500 8-Oct-1981 12:00:00 4490 3620 19-Oct-1981 12:00:00 4590 5200 17-Dec-1981 12:00:00 4730 7400 30-Jan-1982 12:00:00

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 80 Appendix 4 Hydrology

5790 24200 25-Mar-1982 10:00:00 5780 25200 25-Mar-1982 14:00:00 6400 41700 26-Mar-1982 08:00:00 6420 46300 26-Mar-1982 08:30:00 6430 45800 26-Mar-1982 09:00:00 6460 49800 26-Mar-1982 09:30:00 6530 50200 26-Mar-1982 10:00:00 6650 56700 26-Mar-1982 10:30:00 6750 72500 26-Mar-1982 11:00:00 6840 67700 26-Mar-1982 11:30:00 6920 77600 26-Mar-1982 12:00:00 6970 83700 26-Mar-1982 12:30:00 6990 84700 26-Mar-1982 13:00:00 7000 86800 26-Mar-1982 13:30:00 7010 84000 26-Mar-1982 14:00:00 7010 82600 26-Mar-1982 14:30:00 7030 86600 26-Mar-1982 15:00:00 7040 87500 26-Mar-1982 15:30:00 7050 92200 26-Mar-1982 16:00:00 5610 22200 13-Apr-1982 10:00:00 5510 20200 13-Apr-1982 12:00:00 5050 12100 13-Apr-1982 14:00:00 6400 49800 16-Apr-1982 09:00:00 6250 44000 16-Apr-1982 10:00:00 6210 43400 16-Apr-1982 11:00:00 6100 36100 16-Apr-1982 12:00:00 6010 32600 16-Apr-1982 13:00:00 5940 30800 16-Apr-1982 14:00:00 5240 14200 8-May-1982 12:00:00 4790 9020 14-Jun-1982 12:00:00 4680 7000 18-Jun-1982 12:00:00 4920 5930 5-Jul-1982 12:00:00 4700 5810 9-Jul-1982 12:00:00 4740 6240 12-Jul-1982 10:00:00 4740 6330 12-Jul-1982 12:00:00 4710 5620 13-Jul-1982 12:00:00 4890 8170 19-Jul-1982 10:00:00 4790 7280 19-Jul-1982 12:00:00 4760 6940 20-Jul-1982 12:00:00 4690 6690 21-Jul-1982 12:00:00 4630 6060 26-Jul-1982 12:00:00 4810 8800 11-Aug-1982 12:00:00 4830 9350 17-Aug-1982 12:00:00 4620 5560 7-Sep-1982 12:00:00 4600 5320 10-Sep-1982 12:00:00 4590 4320 13-Sep-1982 12:00:00 4560 4790 17-Sep-1982 12:00:00 4580 5050 24-Sep-1982 12:00:00 4580 4290 15-Oct-1982 12:00:00 4520 3920 22-Oct-1982 12:00:00 4860 10500 22-Nov-1982 12:00:00 4840 9930 26-Nov-1982 12:00:00 4860 11100 3-Dec-1982 12:00:00 4700 7440 10-Dec-1982 12:00:00 4660 6170 17-Dec-1982 12:00:00 4710 7310 28-Jan-1983 12:00:00 4640 6020 4-Feb-1983 12:00:00 4590 5620 11-Feb-1983 12:00:00 4770 8340 18-Feb-1983 12:00:00 4670 6740 25-Feb-1983 12:00:00 WL Flow Date Time mm l/s

4590 5690 5-Mar-1983 12:00:00 4620 5900 9-Mar-1983 12:00:00 4470 7360 15-Mar-1983 12:00:00 4700 7300 25-Mar-1983 12:00:00 4580 4880 5-Apr-1983 12:00:00 4750 8110 13-Apr-1983 12:00:00

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 81 Appendix 4 Hydrology

4650 6190 24-Apr-1983 12:00:00 4640 6050 23-May-1983 12:00:00 4520 4320 30-Jun-1983 12:00:00 4510 3910 4-Jul-1983 12:00:00 4520 4170 13-Jul-1983 12:00:00 4480 3370 4-Aug-1983 12:00:00 4450 3170 23-Aug-1983 12:00:00 4450 3010 24-Aug-1983 12:00:00 4430 2760 5-Sep-1983 12:00:00 4450 3010 6-Sep-1983 12:00:00 4450 2880 12-Sep-1983 12:00:00 4440 2900 14-Sep-1983 12:00:00 4480 3740 20-Sep-1983 12:00:00 4450 2960 26-Sep-1983 12:00:00 4440 3010 27-Sep-1983 12:00:00 4440 3010 28-Sep-1983 12:00:00 4520 4210 3-Oct-1983 12:00:00 4460 3130 13-Oct-1983 12:00:00 4640 6220 12-Dec-1983 12:00:00 4630 5850 14-Dec-1983 12:00:00 4920 11500 20-Dec-1983 12:00:00 4690 6910 27-Dec-1983 12:00:00 4860 10800 26-Jan-1984 12:00:00 4960 12600 31-Jan-1984 12:00:00 4820 9550 2-Feb-1984 12:00:00 4840 9700 16-Feb-1984 12:00:00 4940 11700 20-Feb-1984 12:00:00 4730 7310 28-Feb-1984 12:00:00 4670 6360 7-Mar-1984 12:00:00 4780 8400 26-Mar-1984 12:00:00 4790 8780 12-Apr-1984 12:00:00 4740 7890 16-Apr-1984 12:00:00 4820 9100 18-Apr-1984 12:00:00 4810 9390 27-Apr-1984 12:00:00 4810 9250 27-Apr-1984 14:00:00 4810 9380 27-Apr-1984 16:00:00 4830 9460 25-May-1984 12:00:00 4830 9840 25-May-1984 14:00:00 5000 13300 11-Jun-1984 12:00:00 4850 9900 5-Jul-1984 12:00:00 4580 9530 5-Jul-1984 14:00:00 4485 3690 28-Sep-1984 12:00:00

Streamflow rating curve

Streamflow Rating Curve The streamflow rating curve shows a plot of the 122 discharge measurements and the curve developed from these. Confidence in the rating is good based on the discharge measurements undertaken between 1981 and 1985.

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 82 Appendix 4 Hydrology

Daily mean flows Daily means Year 1982 site 2230101 Sarakata at Fanafo above intake Flow Cumecs

Day Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 ? 51.54 7.32 12.90 10.88 8.09 9.07 10.08 6.57 4.70 6.24 13.39 2 ? 25.60 7.17 12.53 10.41 7.84 8.94 10.83 6.42 4.63 6.71 10.50 3 ? 17.70 6.90 12.78 10.05 7.59 8.52 10.95 6.32 4.52 7.23 9.61 4 ? 13.45 6.82 12.43 9.78 7.36 8.05 11.06 6.17 4.42 74.39 9.01 5 ? 11.87 6.78 11.94 12.88 7.23 7.59 10.32 6.01 4.37 138.30 8.43 6 ? 10.97 6.73 11.84 13.45 7.14 7.12 9.72 5.85 4.32 162.26 7.89 7 ? 9.82 6.68 10.76 13.28 7.04 6.66 9.11 5.70 4.29 191.94 7.63 8 ? 8.94 7.39 10.05 16.63 6.94 6.19 8.50 5.58 4.39 49.73 7.43 9 ? 8.45 15.59 9.42 13.14 7.29 5.76 7.93 5.47 4.36 28.06 7.22 10 ? 8.03 15.37 9.11 11.46 9.81 5.67 8.62 5.38 4.30 21.47 7.02 11 ? 7.66 9.94 8.93 10.39 7.81 5.67 8.64 5.53 10.10 18.30 6.88 12 ? 7.56 8.87 8.83 9.78 7.55 5.97 9.07 5.63 7.36 16.22 6.76 13 ? 9.70 8.13 15.86 9.43 7.24 5.81 8.26 5.20 5.79 14.89 6.63 14 ? 12.45 7.62 13.02 9.10 7.94 7.15 7.76 5.04 5.34 14.04 6.51 15 ? 16.06 7.46 11.91 8.84 7.50 10.54 7.68 4.93 5.02 13.81 6.38 16 ? 13.16 7.35 31.31 8.63 7.12 13.47 8.64 4.83 4.80 12.32 6.54 17 ? 10.14 8.12 23.92 9.12 6.88 10.94 9.09 4.74 4.59 11.61 6.33 18 ? 11.76 8.16 22.63 12.05 6.67 9.02 8.60 4.73 4.43 11.02 6.34 19 ? 12.04 11.49 22.87 24.67 6.54 7.70 8.09 4.73 4.40 10.74 6.18 20 ? 10.78 13.55 18.99 31.98 6.43 7.02 8.08 4.73 4.33 10.86 6.90 21 ? 9.68 12.95 20.56 15.73 6.33 6.53 10.70 4.73 4.25 10.13 6.38 22 ? 9.09 9.99 21.95 12.82 6.28 6.24 21.58 4.73 4.11 9.62 6.40 23 ? 8.66 12.48 21.22 11.33 6.24 6.01 18.93 4.74 4.03 9.50 12.47 24 ? 8.27 23.17 18.96 10.50 6.20 5.87 14.17 4.97 3.96 9.42 12.81 25 ? 7.85 35.65 19.15 9.98 6.13 5.75 11.46 4.82 3.88 9.34 9.11 26 ? 7.67 67.34 16.05 9.55 6.13 6.34 9.79 4.61 3.82 9.27 8.25 27 ? 7.55 37.44 14.49 9.50 6.01 7.76 8.82 4.45 3.82 8.90 8.26 28 ? 7.44 26.70 13.19 9.24 6.06 7.18 8.10 4.50 3.82 8.65 7.47 29 ? 19.23 12.21 8.84 7.33 7.96 7.65 4.58 4.32 9.76 7.16 30 ? 15.93 11.41 8.59 7.36 20.47 7.26 4.64 5.03 13.17 7.11 31 24.94 14.16 8.34 11.73 6.91 5.63 7.67

Min 24.94 7.44 6.68 8.83 8.34 6.01 5.67 6.91 4.45 3.82 6.24 6.18 3.82 Mean 24.94 12.28 14.60 15.37 11.95 7.07 8.02 9.88 5.21 4.75 30.60 7.96 11.61 Max 24.94 51.54 67.34 31.31 31.98 9.81 20.47 21.58 6.57 10.10 191.94 13.39 191.94

Daily means Year 1983 site 2230101 Sarakata at Fanafo above intake Flow Cumecs

Day Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 9.62 6.27 5.97 5.09 5.78 4.65 4.12 3.57 3.06 4.96 ? 19.60 2 10.78 6.60 5.76 5.04 6.23 7.42 4.12 3.55 3.00 4.40 ? 14.86 3 9.26 6.28 5.56 5.04 5.69 6.61 4.12 3.53 2.93 4.00 ? 12.60 4 16.04 5.99 5.37 5.04 5.47 5.84 4.11 3.51 2.87 3.74 ? 10.30 5 16.01 5.71 5.23 5.06 5.25 5.38 4.01 3.44 2.85 3.59 ? 8.96 6 15.24 5.55 7.11 5.15 5.87 5.18 3.89 3.37 3.01 4.23 ? 8.65 7 13.61 5.45 6.09 4.95 5.54 5.40 3.82 3.29 3.51 4.45 ? 9.21 8 11.60 5.39 5.77 4.87 5.36 5.29 3.82 3.36 4.10 4.27 ? 7.87 9 12.25 5.49 6.21 4.78 5.17 6.10 3.82 3.61 3.36 3.88 ? 7.21 10 16.26 5.33 6.34 17.04 5.87 6.72 3.82 3.51 3.22 3.71 ? 6.80 11 13.42 5.53 7.25 8.64 5.70 5.81 3.83 3.49 3.16 3.56 ? 6.39 12 20.44 8.84 9.03 11.03 5.32 6.26 4.32 3.47 3.10 3.44 ? 6.00 13 26.30 8.80 11.26 8.18 5.31 12.19 4.10 3.45 3.03 3.41 ? 5.81 14 21.15 7.26 8.54 6.81 5.45 10.77 3.97 3.43 2.92 4.64 ? 5.69 15 14.94 6.32 7.23 6.25 5.48 8.71 4.02 3.40 2.95 3.67 ? 5.52 16 12.30 5.95 7.02 5.89 5.31 7.49 3.96 3.37 2.83 3.63 ? 7.51 17 10.90 6.86 6.93 5.66 5.38 6.84 3.91 3.30 2.82 3.49 ? 7.78 18 9.90 8.60 6.42 6.36 5.25 6.36 3.87 3.23 2.89 4.61 ? 10.01 19 9.71 14.60 6.35 5.75 5.10 6.04 3.82 3.15 3.17 4.46 ? 13.61 20 13.28 13.72 6.72 8.50 4.95 5.77 3.78 3.40 3.92 4.08 ? 11.56 21 12.11 9.99 7.39 9.30 4.88 5.51 3.74 3.49 3.50 3.90 ? 9.39

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22 9.50 8.19 7.92 7.43 5.07 5.25 3.69 3.26 3.46 ? ? 10.94 23 9.07 7.40 6.65 6.67 6.06 5.08 3.68 3.11 3.68 ? 18.59 10.14 24 9.21 6.79 6.46 6.62 5.81 4.95 3.56 3.10 3.51 ? 11.88 9.36 25 8.26 6.50 6.56 6.10 5.95 4.81 3.62 3.28 3.31 ? 11.20 8.23 26 7.89 6.36 6.20 5.75 6.38 4.67 3.66 3.28 3.12 ? 10.41 7.46 27 7.55 6.08 5.98 5.54 5.75 4.54 3.65 3.34 2.98 ? 12.90 6.83 28 7.21 6.18 5.80 5.42 5.40 4.40 3.64 3.16 2.96 ? 31.55 6.62 29 6.96 5.64 5.70 5.21 4.27 3.62 3.16 3.03 ? 24.96 6.41 30 6.73 5.47 5.39 5.01 4.14 3.60 3.18 3.15 ? 15.64 6.41 31 6.50 5.28 4.82 3.58 3.12 ? 6.32

Min 6.50 5.33 5.23 4.78 4.82 4.14 3.56 3.10 2.82 3.41 10.41 5.52 2.82 Mean 12.06 7.22 6.63 6.64 5.48 6.08 3.85 3.35 3.18 4.01 17.14 8.84 6.45 Max 26.30 14.60 11.26 17.04 6.38 12.19 4.32 3.61 4.10 4.96 31.55 19.60 31.55

Daily means Year 1984 site 2230101 Sarakata at Fanafo above intake Flow Cumecs

Day Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 6.90 9.71 6.91 12.48 7.42 13.19 9.60 5.75 4.15 3.52 15.59 8.30 2 6.12 9.21 6.65 17.63 10.41 15.34 9.41 5.66 4.12 3.41 12.72 9.31 3 6.13 8.41 6.52 14.45 16.03 20.59 9.61 5.56 4.06 3.32 9.57 8.51 4 7.11 7.92 7.58 11.26 14.91 15.90 10.06 5.48 3.99 3.25 8.35 7.59 5 9.62 7.60 6.55 9.94 10.65 14.35 9.58 5.42 4.03 3.24 7.83 6.87 6 9.69 7.39 6.41 9.21 9.34 15.27 9.04 5.35 4.10 3.24 8.43 6.55 7 12.26 13.21 6.48 11.53 8.62 14.42 8.75 5.28 4.02 3.24 8.27 5.99 8 9.44 15.49 8.17 13.53 12.29 15.23 8.50 5.20 3.97 3.24 7.13 5.95 9 8.67 13.72 11.55 10.60 12.20 13.55 8.36 5.09 3.93 4.14 6.31 7.44 10 9.51 11.66 10.08 10.08 14.53 12.67 8.38 5.04 3.83 4.52 5.90 7.32 11 9.11 10.38 8.29 8.90 12.16 12.08 8.19 5.00 3.72 3.61 6.49 8.70 12 8.03 10.91 9.68 8.39 16.94 11.67 7.93 4.88 3.67 3.44 12.38 7.37 13 8.22 8.97 8.86 8.17 12.45 11.42 7.78 4.86 3.67 5.09 9.40 6.70 14 8.35 9.35 9.69 7.99 10.55 15.81 7.58 4.76 3.60 6.71 8.20 7.47 15 12.79 11.18 9.91 7.82 9.51 140.01 7.43 4.73 3.53 4.79 16.83 9.28 16 32.02 9.22 10.53 7.71 8.87 58.82 7.33 4.73 3.53 4.13 16.26 7.88 17 30.04 8.71 8.67 7.87 17.44 26.56 7.24 4.73 3.53 3.74 14.31 7.08 18 20.87 9.71 7.76 9.04 15.90 20.48 7.17 4.74 3.53 3.67 13.74 ? 19 16.78 11.89 8.16 8.93 11.80 19.44 7.10 4.80 3.52 4.44 13.15 ? 20 14.25 11.58 9.33 8.93 10.52 18.04 6.86 7.59 3.47 5.10 10.69 ? 21 12.08 9.32 7.67 8.93 11.01 15.85 6.70 5.58 3.40 4.82 9.58 ? 22 12.34 8.83 8.01 8.93 11.42 14.71 6.53 7.92 3.38 4.27 10.06 ? 23 12.89 8.24 8.88 8.93 11.54 13.83 6.42 6.07 3.36 4.12 9.14 ? 24 10.33 8.03 7.57 8.93 9.75 12.89 6.34 5.26 3.32 3.81 8.47 ? 25 9.45 8.75 8.16 8.93 9.14 12.16 6.29 4.89 3.40 4.71 7.73 ? 26 10.03 8.50 9.43 8.93 8.73 11.49 6.25 4.73 3.28 5.00 7.15 ? 27 9.97 7.74 12.69 8.90 12.01 11.06 6.16 4.72 3.31 5.41 6.68 ? 28 9.90 7.41 12.08 8.54 47.55 10.63 6.01 4.49 3.61 7.07 6.45 ? 29 14.50 7.12 9.69 7.86 32.48 10.19 5.86 4.30 3.42 6.70 8.70 ? 30 14.12 8.92 7.57 19.19 9.83 5.83 4.27 3.44 49.69 9.50 ? 31 11.15 12.20 15.23 5.82 4.26 28.28 ?

Min 6.12 7.12 6.41 7.57 7.42 9.83 5.82 4.26 3.28 3.24 5.90 5.95 3.24 Mean 12.02 9.66 8.81 9.70 13.89 20.25 7.55 5.20 3.66 6.57 9.83 7.55 9.62 Max 32.02 15.49 12.69 17.63 47.55 140.01 10.06 7.92 4.15 49.69 16.83 9.31 140.01

Daily means Year 1985 site 2230101 Sarakata at Fanafo above intake Flow Cumecs

Day Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 ? ? ? 5.80 ? 7.18 ? ? 6.87 ? ? ? 2 ? ? ? 5.37 ? 6.57 ? ? 6.65 ? ? ? 3 ? ? ? 5.24 ? 6.14 ? ? 14.99 ? ? ? 4 ? ? ? 5.04 ? 5.75 ? ? 14.19 ? ? ? 5 ? ? ? 4.94 ? 5.50 ? ? 10.35 ? ? ? 6 ? ? ? 4.91 ? 5.37 ? ? 8.69 ? ? ? 7 ? ? ? 4.91 ? 5.21 ? ? 8.08 ? ? ?

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 84 Appendix 4 Hydrology

8 ? ? ? 5.27 ? 14.58 ? ? 12.66 ? ? ? 9 ? ? ? 5.63 ? 9.25 ? ? 11.20 ? ? ? 10 ? ? ? 5.29 ? 6.96 ? ? 9.41 ? ? ? 11 ? ? ? 16.11 ? 6.18 ? ? 8.60 ? ? ? 12 3.55 ? ? 9.47 ? 5.88 ? ? 8.17 ? ? ? 13 3.62 ? ? 11.69 ? 5.57 ? ? 8.12 ? ? ? 14 4.23 ? 7.23 12.99 ? 5.23 ? ? 9.83 ? ? ? 15 24.36 ? 9.53 10.12 ? 5.09 ? 5.35 ? ? ? ? 16 27.47 ? 9.51 9.03 ? 5.25 ? 5.35 ? ? ? ? 17 14.28 ? 8.64 10.21 ? 11.97 ? 5.64 ? ? ? ? 18 ? ? 7.04 9.56 ? 12.25 ? 6.56 ? ? ? ? 19 ? ? 6.20 ? ? 8.29 ? 7.76 ? ? ? ? 20 ? ? 5.78 ? ? 7.00 ? 8.44 ? ? ? ? 21 ? ? 5.53 ? ? 6.45 ? 8.83 ? ? ? ? 22 ? ? 5.42 ? ? 6.23 ? 11.54 ? ? ? ? 23 ? ? 5.83 ? ? 6.54 ? 10.95 ? ? ? ? 24 ? ? 6.41 ? ? 5.88 ? 10.48 ? ? ? ? 25 ? ? 6.57 ? 4.45 5.64 ? 9.55 ? ? ? ? 26 ? ? 6.97 ? 4.94 ? ? 8.07 ? ? ? ? 27 ? ? 6.98 ? 8.12 ? ? 7.58 ? ? ? ? 28 ? ? 6.30 ? 41.35 ? ? 10.31 ? ? ? ? 29 ? 6.03 ? 14.94 ? ? 8.38 ? ? ? ? 30 ? 6.56 ? 9.75 ? ? 7.68 ? ? ? ? 31 ? 6.74 8.01 ? 7.24 ? ?

Min 3.55 ? 5.42 4.91 4.45 5.09 ? 5.35 6.65 ? ? ? 3.55 Mean 12.92 ? 6.85 7.87 13.08 7.04 ? 8.22 9.84 ? ? ? 8.45 Max 27.47 ? 9.53 16.11 41.35 14.58 ? 11.54 14.99 ? ? ? 41.35

Sarakata flow analysis Flow Duration table Site 2230101 Sarakata at Fanafo above intake From 1-Jan-1983 00:00:00 to 31-Dec-1983 24:00:00 Flow Cumecs

0 1 2 3 4 5 6 7 8 9

0 71.51 23.28 19.05 16.38 14.94 14.01 12.99 12.24 11.57 11.03 10 10.61 10.24 9.90 9.61 9.32 9.04 8.81 8.57 8.35 8.14 20 7.93 7.73 7.53 7.34 7.17 7.02 6.91 6.81 6.73 6.66 30 6.58 6.50 6.44 6.36 6.30 6.24 6.18 6.14 6.09 6.03 40 5.98 5.92 5.87 5.82 5.77 5.72 5.68 5.66 5.61 5.56 50 5.51 5.47 5.43 5.40 5.36 5.33 5.29 5.24 5.20 5.14 60 5.07 5.03 5.00 4.88 4.84 4.72 4.54 4.38 4.21 4.12 70 4.10 3.99 3.95 3.89 3.83 3.82 3.79 3.72 3.67 3.64 80 3.61 3.59 3.56 3.53 3.51 3.48 3.44 3.41 3.38 3.33 90 3.28 3.24 3.20 3.15 3.11 3.09 3.04 2.98 2.94 2.86 100 2.82

Values in the exceedance table are not exact. They are good approximations based on linear interpolation of 2000 classes. Note: 1983 FDC coincides with the lowest rainfall year on record based on Pekoa data Site 2230101 Sarakata at Fanafo above intake From 1-Jan-1984 00:00:00 to 1-Jan-1985 24:00:00 Flow Cumecs

0 1 2 3 4 5 6 7 8 9

0 395.52 37.56 24.57 20.64 19.35 18.07 16.86 16.05 15.52 15.05 10 14.65 14.26 13.89 13.51 13.13 12.82 12.56 12.31 12.03 11.80 20 11.55 11.38 11.17 10.97 10.79 10.62 10.45 10.31 10.16 10.01 30 9.88 9.76 9.64 9.53 9.43 9.33 9.24 9.14 9.05 8.95 40 8.94 8.93 8.92 8.84 8.76 8.68 8.61 8.52 8.44 8.37 50 8.29 8.22 8.14 8.06 7.96 7.87 7.81 7.73 7.65 7.56 60 7.47 7.38 7.29 7.18 7.10 6.98 6.84 6.73 6.62 6.52

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70 6.43 6.35 6.26 6.14 5.98 5.83 5.76 5.62 5.44 5.29 80 5.13 5.02 4.86 4.74 4.73 4.55 4.28 4.13 4.08 3.97 90 3.85 3.70 3.67 3.56 3.53 3.47 3.39 3.36 3.29 3.23 100 3.24

Values in the exceedance table are not exact. They are good approximations based on linear interpolation of 2000 classes. WARNING: The data is between 8.91 and 8.95 for 3.1% of the time. Percentiles interpolated in this range may be less accurate. You could try adjusting the Min and Max to increase the resolution in this range if it is significant.

Note: 1984 FDC coincides with the average rainfall year based on Pekoa data Flood estimates Based on the ORSTOM IFD analysis for Sarakata catchment, the rational method of flood estimation has been utilised to provide flood estimates for various return periods. This is based on confirming the Sarakata catchment area and characteristics using GIS mapping based on the map presented above, using the following parameters and displaying the results; Catchment Characteristics Characteristics Catchment area (km2) 97.1 Length (km) 18.8 Elev head (m) 784 Elev base (m) 110 Slope % 3.59

Coefficient C2 0.3955 Coefficient C10 0.4928 Coefficient C50 0.5421 Coefficient C100 0.5750 Tc (time concentration) hrs 6.23

Flood Estimates Design rainfall Design rain Intensity I Return period Discharge SMEC (2011) (mm) (mm/hr) (years) (m3/s) (m3/s)

I2 (mm) 24h 152 24.4 2 261 28

I10 (mm) 24h 205 32.9 10 438 47 I50 (mm) 24h 238 38.2 50 559 64 I100 (mm) 24h 250 40.1 100 623 72 Design flood (JICA 1995) 640

Rainfall analysis Based on the long term data from Pekoa, the HFRC frequency programme has been used on the annual data to assign return periods for minimum values to the annual rainfall, in lieu of no long term runoff data, the results are as follows, Log Pearson III offered the most suitable distribution; Frequency analysis of minimum values Return period (years) 1 2 5 10 25 50 100 Rainfall (mm) 3025 2290 1730 1495 1280 1160 1060 Mean annual rainfall period 1961 - 2013 - 2014 mm

These estimates effectively offer the average recurrence interval for these rainfalls and can be applied to the Pekoa annual rainfall data for an indication of dry year below average rainfall recurrence intervals. Due to the

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 86 Appendix 4 Hydrology lack of runoff data, this will provide identification of the potentially low flow years when runoff may not meet generation demand.

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Appendix 5 Initial Environmental Examination

SHPP-1 Ext IEE follows. [PDF 95 pages]

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TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 89 Environmental Assessment Document

PPTA N°: 8285-VAN August 2014

Vanuatu: Energy Access Project Sarakata - 1 Extension Hydropower Project – Espiritu Santo Island, Sanma Province

Initial Environmental Examination

Prepared by the Department of Energy, Republic of Vanuatu

The 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. In preparing any country programme 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.

ABBREVIATIONS

ADB - Asian Development Bank CAC - Community Advisory Committee CPP - Consultation and Participation Plan DEPC - Department of Environmental Protection and Conservation DGMWR - Department of Geology, Mines and Water Resources DOE - Department of Energy DSC - Design and Supervision Consultant EIA - Environmental Impact Assessment EIS - Environmental Impact Statement EMP - Environmental Management Plan EPC - Engineer, Procure and Construct FAR - Fish and aquatic resources GRC - Grievance Redress Committee GRM - Grievance Redress Mechanism HSP - Health and Safety Plan IEE - Initial Environmental Examination IES - International environmental specialist IUCN - International Union for the Conservation of Nature kW - kilowatt L/s - litres per second MOCC - Ministry of Climate Change, Adaptation, Meteorology & Geohazards, Energy, Environment and Natural Disaster Management MSMP - Materials and Spoils Management Plan NDMO - National Disaster Management Office NES - National environmental specialist NGO - Non-governmental organisation PEA - Preliminary Environment Assessment PPE - Personal protective equipment PPTA - Project Preparatory Technical Assistance SEMP - Site-specific Environmental Management Plan SPC - Sanma Provincial Council SPS - Safeguard Policy Statement (June 2009) STI - Sexually Transmitted Infections UNDP - United Nations Development Programme UNELCO - Union Electrique du Vanuatu Limited VPMU - Vanuatu Project Management Unit VUI - Vanuatu Utilities and Infrastructure Limited WMP - Waste Management Plan

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CONTENTS

EXECUTIVE SUMMARY I I. INTRODUCTION 1 II. POLICY AND LEGAL FRAMEWORK 2 A. Government of Vanuatu 2 B. ADB Safeguards Policy 5 III. DESCRIPTION OF THE PROJECT 5 A. Project Components and Location 5 IV. DESCRIPTION OF ENVIRONMENT (BASELINE DATA) 7 A. Physical Resources 7 B. Biological Resources 11 C. Socioeconomic and Cultural Resources 17 V. ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES 20 A. Screening of Potential Impacts 20 B. Audit of Existing Facilities 20 C. Impacts on the Physical Environment 21 D. Impacts on the Biological Environment 24 E. Impacts on the Socio-economic Environment 25 F. Operation Impacts 27 G. Climate Change Effects and Adaptation Requirements 29 VI. INFORMATION DISCLOSURE AND CONSULTATION 32 A. National Level Consultation 33 B. Provincial and Community Consultation 33 VII. ENVIRONMENTAL MANAGEMENT PLAN 35 A. Introduction 35 B. Implementation Arrangements 35 F. Environmental Mitigation and Monitoring Matrix 40 VIII. CONCLUSION AND RECOMMENDATION 52 IX. BIBLIOGRAPHY 53 ANNEX 1 - POLICY, LEGAL, AND ADMINISTRATIVE DOCUMENTS 55 ANNEX 2 - FISH AND AQUATIC RESOURCES SURVEY FOR SARAKATA RIVER 65 ANNEX 3 - RAPID ENVIRONMENTAL APPRAISAL CHECKLIST 78 ANNEX 4 - AUDIT OF EXISTING FACILITIES AND OPERATIONS OF SARAKATA HYDROPOWER SCHEME 82 ANNEX 5 - STAKEHOLDER CONSULTATIONS 87

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EXECUTIVE SUMMARY

1. Background. The Asian Development Bank (ADB) is supporting the Vanuatu government through the Department of Energy (DOE) to develop reliable and sustainable supply of electricity in the provinces of Sanma and Malampa to assist economic growth and increase the capacity to support greater access to electricity for local residents, businesses and industry. 2. A project preparatory technical assistance has been undertaken and completed a feasibility study of a small run-of-river hydropower scheme located on the Sarakata River near Fanafo on Espiritu Santo Island, Sanma Province. The feasibility study includes this initial environmental examination (IEE). 3. This report is the IEE for the design construction and operation of the proposed hydropower scheme and associated transmission grid under the Vanuatu Energy Access Project (the project). The IEE is intended to meet the requirements of the ADB for Category B projects as described in the Safeguard Policy Statement 2009 (SPS) as well as comply with the requirements of an environmental impact assessment (EIA) report as required under the environmental assessment requirements of the government. 4. The objectives of the IEE are to: (i) describe the existing environmental conditions; (ii) identify potential environmental impacts; (iii) evaluate and determine the significance of the impacts; (iv) develop an environmental management plan (EMP) detailing mitigation measures, monitoring activities, reporting requirements, institutional responsibilities and cost estimates to address adverse environmental impacts; and (v) carry-out public consultations to document any issues/concerns and to ensure that such concerns are addressed in the project design. The IEE is based on field inspection including fish and aquatic resources surveys, discussions with key government agencies, information gathered during stakeholder consultations and data compiled from secondary sources. This IEE is submitted to ADB by the borrower and the final IEE report will be disclosed to the public by the government’s executing agency and uploaded to ADB’s website. 5. Project Description. The project involves expansion of the Sarakata 1 hydropower scheme located on the Sarakata River near Fanafo village in southeastern Espiritu Santo Island, Sanma Province approximately 25 km by road northwest of Luganville the provincial capital. 6. The proposed expansion works involves the following components:  Raising the existing weir height by 0.4 m using either an inflatable rubber dam extension placed along the top of the existing weir or a permanent concrete extension;  Raising the walls of the sedimentation basin and headrace canal;  New forebay upstream of existing forebay and a new penstock;  Extension of the existing powerhouse at its southern end comprising concrete substructure and prefabricated steel frame;  New penstock from the modified forebay to the powerhouse;  One set of 300 or 600 kW horizontal Francis turbine and synchronous generator and associated auxiliaries including the main transformer 7. All facilities will be constructed within the existing Sarakata hydropower scheme boundaries. Access to the site from Luganville is via the existing Sarakata hydropower plant access road. 8. Categorisation The subproject is classified as Category B in accordance with the SPS, because the project’s potential adverse environmental impacts are site-specific, few if any of them are irreversible, and in most cases mitigation measures can be designed readily. The IEE was carried out in March and May 2014 and the results of this IEE and the environmental management plan (EMP) will be updated if necessary at the detailed design / tender preparation stage by the project management unit responsible for implementing the project. 9. Implementation Arrangements. The executing agency for the project is the Ministry of Finance and Economic Management (MFEM) and the implementing agency is DOE within the Ministry of Climate Change, Adaptation, Meteorology & Geohazards, Energy, Environment and Natural Disaster Management (MOCC) supported by the Vanuatu Project Management Unit (VPMU) established within the Prime Minister’s Office. The VPMU manage the project on behalf of

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MOCC-DOE and will lead design and implementation of the project. The VPMU will be supported by a design and supervision consultant (DSC). The DSC will include international specialists who will provide capacity building to MOCC-DOE and VPMU staff. The DSC will assist the VPMU in procurement (preparation of tender documents, tender evaluation) and supervision of construction. It is most likely that the project will be implemented under an engineer, procure and construct (EPC) contract and under such an arrangement the EPC contractor will be responsible for the final design and construction of the project. The VPMU and DSC will include an international environmental specialist to assist the government meet all its obligations with respect to the clearances and EMP for the project as well as provide training to VPMU and MOCC-DOE in monitoring the contractor’s compliance with the EMP and safeguard requirements. The facilities are likely to be operated by a private company under a concession arrangement. 10. Policy, Legal and Administrative Framework. The Project shall comply with requirements of the Environmental Management and Conservation Act 2010 and the Environmental Impact Assessment Regulations 2011 which require that for development of hydropower projects an EIA must be undertaken by the project proponent and clearance obtained from the Department of Environmental Protection and Conservation (DEPC). The Project will also comply with the requirements of ADB’s SPS 2009. Government environmental clearance and development consent (and other permits) must be obtained before any works commence. 11. Environmental Management Plan. Mitigation measures, environmental monitoring, and capacity development are required to minimise the environmental impacts in the pre-construction, construction and operation phases. The DSC and contractor will be tasked with finalising the detailed design and compilation of updated EMP and the contractor will be responsible for implementing the EMP. 12. Implementation of internationally recognised good construction environmental practices forms the basis of the EMP which covers issues such as erosion and sedimentation control, materials sourcing and spoil management, waste management, minimisation of habitat disturbance, and worker and community health and safety. The EMP will form part of the construction contract documents and the contractor will be required to prepare a site-specific environmental management plan (SEMP) based on the contract EMP. The contractor will submit the SEMP to VPMU for approval prior to commencement of works. 13. The operation of the project should have beneficial effects on the environment overall through more efficient provision of electrical power from renewable resources and improved environmental management by the government. 14. Information Disclosure, Consultation and Participation. The stakeholder consultation process disseminated information to the general public, project affected communities and key environmental stakeholders. Information was provided on the scale and scope of the project and the expected impacts and the proposed mitigation measures through consultation with government departments, local authorities and the general public in meetings. 15. The process also gathered information on relevant concerns of the local community for the project so as to address these in the project design and implementation stages. No significant environmental concerns were raised during consultations and the local communities were happy for the project to go ahead so that they could benefit from the electricity generated including employment opportunities. The IEE will be disclosed according to the provisions of ADB Public Communications Policy 2011 and requirements of the laws of Vanuatu 16. Grievance Redress Mechanism. A grievance redress mechanism (GRM) will be established to receive, evaluate and facilitate the resolution of affected people’s concerns, complaints and grievances about the environmental and social performance of the project. The GRM is based on accepted practices in Vanuatu and provides an accessible, time-bound and transparent mechanism for the affected persons to voice and resolve social and environmental concerns linked to the project. 17. Conclusion and Recommendations. The potential environmental impacts arising from design, construction, operation and maintenance of the project will be minor, localised and acceptable provided that the mitigation measures set out in the EMP are implemented properly.

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Key findings are summarised below:  The project involves the expansion of an existing hydropower scheme that is wholly within the scheme’s current site boundaries.  There is no minimum environmental flow specification for the existing Sarakata scheme. However, based on the flow duration curve it can be stated that for at least 68% of the time (assuming full capacity operating conditions) there is surplus water spilling over the weir. However, spill is occurring much more than 68% of the time since the scheme frequently runs at below full capacity due to seasonal/demand variations. Raising the weir height by 0.4 m will result in an overall theoretical reduction of 18% of the existing environmental flows (based on the flow duration curve). However, the same caveats as noted above will apply.  Under the existing scheme the aquatic biodiversity appears somewhat intact with a diversity of goboid species and others, typical of the rivers and streams of Vanuatu. Previous aquatic studies on the reduced flow section have concluded that the impact of the Sarakata hydropower scheme were not significant and posed a low risk to the existing environment.  To ensure that the Sarakata 1 expansion project will not result in adverse impacts on the existing aquatic ecosystem a minimum environmental flow release of 1.05 m3/s (equivalent to 10% of the mean annual flow) will be discharged through the weir’s flushing gate into the reduced flow stretch of the Sarakata River at all times. This will be attained by keeping the existing flush gate open to a pre-set position all the times except when used for flushing the reservoir.  The potential loss of less than 0.1 ha of highly modified habitat of low ecological value within the existing hydropower site boundary, and impact on terrestrial wildlife due to the project will be insignificant. Loss of habitat can be further minimised by reducing the clearance corridors;  Nearby communities consulted are happy for the project to be implemented and expressed their desire to benefit from both electricity generated and employment opportunities during construction and operation;  Appropriate climate change adaptation and resilience needs to be incorporated into the design of structures including: i) suitable erosion protection to prevent scour around the intake weir’s training walls, and ii) powerhouse - level of powerhouse discharge outlet needs to be sufficiently high so as to prevent any flood induced backflow resulting in flooding of the powerhouse and damage to electromechanical equipment.  An audit of the existing Sarakata 1 hydropower scheme concluded that the environmental impacts from the existing activities at Sarakata hydropower plant are not significant. With the exception of inadequate oil containment facilities and the absence of oil separation drainage provisions at the transformer bays, the existing operations are generally undertaken in accordance with internationally recognised good practice and thereby are in general compliance with the SPS. However, the four recommended actions for DOE in order to achieve full environmental compliance with SPS include: (i) Request formal clarification from the Director of Environment (DEPC) as the environmental authority, concerning the current state of environmental compliance by DOE with regard to Sarakata hydropower plant. (ii) Consult with DGMWR to confirm whether the expansion will trigger the need for a water resources permit. (iii) Disclose the scope of the improvements for Sarakata hydropower plant upgrade and refurbishment and seek guidance from the Director of Environment on actions needed to establish regularisation of environmental compliance of Sarakata hydropower plant. (iv) Bring oil containment of transformer bays and oil separation facilities up to international standard This IEE, including the EMP, is considered sufficient to meet ADB’s and government environmental safeguard requirements in respect of the expansion of the Sarakata 1 expansion hydropower plant. No further or additional impact assessment is considered necessary at this stage.

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I. INTRODUCTION

1. Vanuatu comprises around 80 islands with a total land area of 12,300 square kilometres spread over some 1,300 kilometres in a north to south direction, between latitudes 12° to 23° south and longitudes 166° to 173° east (Figure 1.1). The current population is estimated to be 215,000, of which 80 percent live in rural villages on the seven main islands of Efate, Espiritu Santo, Tanna, Malekula, Pentecost, Ambae, and Ambrym. Figure 1.1 - Republic of Vanuatu

Sarakata & Wambu

Brenwe

Source: Vanuatu Statistics Office

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2. Since 1994, the country has been divided into six provinces:  TORBA (Torres and Banks)  SANMA (Santo and Malo)  PENAMA (Pentecost, Ambae and Maewo)  MALAMPA (Malekula, Ambrym and Paama)  SHEFA (Shepherds and Efate)  TAFEA (Tanna, Aniwa, Futuna, Erromango and Aneityum) 3. Each province hosts a provincial government that delivers services to the inhabitants. 4. Electricity in Port Vila and two provincial administrative centres of Lakatoro (Malekula, Malampa Province) and Lenakel (Tanna, Tafea Province) is provided by Union Electrique du Vanuatu Limited (UNELCO) and in Luganville (Santo, Sanma Province) it is provided by Vanuatu Utilities and Infrastructure Limited (VUI). UNELCO operates mainly diesel power station and VUI operates a hydropower station at Fanafo and diesel generator in Luganville. 5. There are also several micro-hydropower stations operated by rural communities, on Maewo and Epi. The government through the Department of Energy (DOE) has requested support from Asian Development Bank (ADB) to develop reliable and sustainable supply of electricity in the provinces of Sanma and Malampa to assist economic growth and increase the capacity to support greater access to electricity for local residents, businesses and industry. 6. A project preparatory technical assistance has completed a feasibility study of expansion of the Sarakata hydropower scheme located on the Sarakata River on Espiritu Santo Island, Sanma Province. The proposed expansion involves increasing the current 1.2 MW capacity to 1.5 MW. The feasibility study includes this initial environmental examination (IEE). II. POLICY AND LEGAL FRAMEWORK

The implementation of the project will be governed by the environmental laws and regulations of the Republic of Vanuatu and the safeguard policies of the ADB. A. Government of Vanuatu

1. Constitution and Environmental Sector Policy 7. Environmental management is enshrined in the 1980 Constitution of the Republic of Vanuatu. The Constitution provides the overarching administrative and legal mandate for the protection of all Vanuatu lands and other associated environmental resources such that:  “All land in the Republic of Vanuatu belongs to the indigenous custom owners and their descendants.” (Article 73)  “Every person has the following fundamental duties to himself and his descendants and to others to protect Vanuatu and to safe guard the national wealth, resources and environment in the interest of present and of future generations” (Article 7(d)) 8. The protection of land and all associated environmental resources, for future generations is therefore a fundamental responsibility for all people of Vanuatu mandated by the Vanuatu constitution. Following on from this the sustainable use and management of land in Vanuatu is addressed within existing Vanuatu national laws and policies that supports economic development. 9. The government’s policy on environment and conservation is to provide an affordable framework of environmental protection and compliance within Vanuatu. This policy has been materialised through the enactment of the Environmental Management and Conservation Act N°12 of 2002. As of March 2003, this represents the only legislation governing environmental protection of all natural resources in Vanuatu. 10. A number of important sectorial policies, strategies and aspirational documents that support the environmental management commitments of the Vanuatu Constitution and/or are relevant to the project are listed below. Relevant aspects of these documents are summarised in Annex 1A. They include:  The National Biodiversity Strategy and Action Plan 1999 PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 2

 National Energy Policy Framework 2007  National Rural Electrification Policy 2000  National Energy Road Map (2013-2020) 2013  Priorities and Action Agenda of Government of Vanuatu 2006  Productive Sector Policy (2012-2017)  National Forest Policy 1997 2. Environmental Legislation 11. Environmental Management and Conservation Act. The defining national environmental legislation is the Environmental Management and Conservation Act No. 12 of 2002 which was amended to Environmental Protection and Conservation Act (CAP 283) in 2010 (the Act). The Act resulted in the establishment of the Department of Environment and Conservation (DEPC), which admsinisters the Act. The Act establishes the protection of the environment within Vanuatu and makes provision for the conservation, sustainable development and management of the environment and the regulation of related activities. This includes land, air and water. Specifically the Act introduces the requirement for environmental assessment and provides for the conservation of biodiversity and the establishment of protected areas in Vanuatu. 12. In Vanuatu all development, other than residential buildings or custom structures, requires an environmental clearance before construction can commence. Furthermore, any development on the coast requires the written consent of the Minister for Lands through a Forshore Development Consent. The Act is supported by the accompanying regulatory instrument, the Environment Impact Assessment Regulations (Amendment) Order N° 105 of 2013. 13. Environmental Impact Assessment Regulations. The Regulations (amended in 2012)1 establishes the procedures for undertaking the environmental assessment of prescribed activities. The developer is required to first submit a development consent application following which the DEPC will conduct a preliminary environment assessment (PEA) which determines whether (i) no further assessment is required, (ii) no further assessment is required but an environmental management and monitoring plan is required, or (iii) where major projects are considered such as logging, large agricultural developments, mining and other prescribed activities as noted above, an EIS is required. The DEPC prepare terms of reference for the EIS which would include technical, economic, environmental and social investigations. The EIS also requires public consultation. A steering committee reviews the EIS and recommends to the Director of the DEPC for approval, refusal or for more information. The Director can approve a prescribed activity with or without conditions. 14. Importantly, no development can commence without an approval from the DEPC. The Director of the DEPC may issue a notice to stop or restrict the activity if the approval conditions are not being met. 15. Environmental standards are not provided in the Regulations as Vanuatu currently does not have national environmental standards. However, the DEPC requires World Health Organisation standards to be used. The Regulations do provide guidelines for licenses to discharge waste or emissions but without clearly defined national standards the enforcement of these is difficult. 16. This IEE will be submitted to DEPC for approval (as an EIS) under the procedures outlined above. The Director of DEPC advised the Consultant that the ADB approved IEE for the Sarakata 1 Expansion Project will be accepted by DEPC as meeting the EIA requirements for the project under the Act.2 On this basis, a development consent shall be issued. 17. However, should any additional/supplementary assessment be required by DEPC to obtain approval under the Act and its regulations, this will be undertaken during the pre-construction phase of project implementation.

1 The Environment Impact Assessment Regulations (Amendment) Order N° 102 2012 replaced the original Environmental Impact Assessment Regulations Order N° 175 of 2011. 2 This advice was provided to the Consultant during a meeting with the Director of DEPC 15 May 2014. (See Annex 5 Table A5.1.) PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 3

3. Other Legislation Relevant to the project 18. The government has enacted a series of laws across multiple sectors that contain provisions that apply to the management of the environment and natural resources. These laws including the government institutions responsible for their implementation are listed below. A summary of the sections these laws that address environmental management issues including their relevance to the project, is provided in Annex 1B.  Public Health Act 22 1994 - Department of Health  Water Resources Management Act 2002 - Department of Geology, Mines and Water Resources (DGMWR)  Pollution Control Act 2013 - DEPC  Draft Waste Management Bill3 2012 - DEPC  Forest Act 2001 - Department of Forests  Quarry Act 2013 - DGMWR  Control of Nocturnal Noise Act 1965 - DEPC  National Parks and Nature Reserves Act 1993 - National Parks Board  Preservation of Sites and Artefacts Act 1965 - Vanuatu Cultural Centre  Wild Bird Protection Act 1989 - DEPC  National Disaster Act 2000 - National Disaster Management Office  Pesticides Control Act 1998 Department of Agriculture 19. While these laws provide a basic legal framework for environmental management, the system has several significant weaknesses. 20. Firstly, there are instances where conflicts occur due to inconsistencies between various national laws, or where the national laws are not in tune with local laws and policies especially the by-laws and policies of the provincial councils.4 21. Another significant weakness is the fact that, while environmental legislation has been enacted into law, apart from the Environmental Regulations, there are no rules and regulations to require and guide the enforcement of the laws. For example, the Pollution Control Act was enacted by Parliament in 2013 but with no regulations there is no formal legal basis for enforcement. Similarly, there are no regulations for waste management under the Waste Management Act or for conservation under the National Parks and Conservation Act and until such regulations are enacted, there is no formal legal basis for enforcement. 22. Institutionally, there is lack of coordination between and among the government departments and other institutions at various levels that handle environmental concerns and management responsibilities. This results in legal and procedural overlaps, gaps and conflicts. 23. Based on a review of the legislation relevant to the project, a summary of the national consents and permits required for the project, including supporting documentation, is presented in Table 2.1.5 Table 2.1 - Permitting Requirements for the project

Permit Required Agency Responsible Documentation

Development Application as per the Environmental Impact Assessment Development Consent DEPC Regulations Order N° 175, 2011 (amended in 2012) Water Use Right Application to Director of Water DGMWR (as per Water Resources Management Act 2002) Resources (no prescribed form6)

3 This Bill is scheduled to go before Parliament in 2014. 4 It is noted that there are no specific by-laws for Malampa or Sanma Provinces which would be in conflict with the hydropower projects proposed under the the project. 5 It is noted that the Draft Waste Management Bill is expected to be passed by parliament into law in 2014 and if so, a waste disposal permit will be required from the Director of DEPC. 6 There are currently no Regulations for the Act PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 4

Permit Required Agency Responsible Documentation

Right to construct, operate and maintain works associated with resources that do not comply with customary rights and rights of occupiers as DGMWR As above specified in Part 2 Division 1 Section 4 of the Water Resources Management Act. Permit for any discharge of pollution (as per Application to Director of DEPC (no DEPC Pollution Control Act 2014) prescribed form7) Building Materials Permit (as per criteria defined Application to Director of DGMWR. (No DGMWR in Quarry Act N° 9 2013) prescribed form8.) Source: Distilled from review of existing legislation 4. International Treaties and Agreements 24. Vanuatu is a signatory to a number of international conventions, treaties and agreements with environmental and conservation implications as well as for the protection, promotion and safeguarding of cultural heritage and traditional knowledge. These are presented in Annex 1C. B. ADB Safeguards Policy

25. The ADB Safeguard Policy Statement 2009 (SPS) has the objectives to (i) avoid adverse impacts of projects on the environment and affected people; (ii) where possible; minimise, mitigate, and/or compensate for adverse project impacts on the environment and affected people when avoidance is not possible; and (iii) help borrowers/clients to strengthen their safeguard systems and develop the capacity to manage environmental and social risks. The environment safeguard requires due diligence which entails addressing environmental concerns, if any, of a proposed activity in the initial stages of project preparation. 26. The SPS categorises potential projects or activities into categories of impact (A, B or C) to determine the level of environmental assessment required to address the potential impacts. The Project is categorised as environment Category B because potential adverse environmental impacts are site-specific, few if any of them are irreversible, and in most cases mitigation measures can be designed readily. Accordingly this IEE has been prepared as the requisite level of assessment to address the potential impacts in line with the SPS. III. DESCRIPTION OF THE PROJECT

A. Project Components and Location

27. The Sarakata hydropower scheme is located on the Sarakata River near Fanafo village in southeastern Espiritu Santo Island, Sanma Province, Republic of Vanuatu approximately 25 km by road northwest of Luganville the provincial capital. 28. The proposed Sarakata 1 expansion works involves the following components:  Raising the existing weir height by 0.4 m using either an inflatable rubber dam extension placed along the top of the existing weir or a permanent concrete extension;  Raising the walls of the sedimentation basin and headrace canal;  New forebay upstream of existing forebay and a new penstock;  Extension of the existing powerhouse at its southern end comprising concrete substructure and prefabricated steel frame;  New penstock from the modified forebay to the powerhouse; and  One set of 300 or 600 kW horizontal Francis turbine and synchronous generator and associated auxiliaries including the main transformer

7 Regulations for the Act are currently in draft form. 8 Regulations for the Quarry Act are currently in draft form. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 5

29. All facilities will be constructed within the existing Sarakata hydropower scheme boundaries. Access to the site from Luganville is via the existing Sarakata hydropower plant access road. Figure 3.1 - Location and General Layout of Sarakata - 1 Expansion Project

30. Construction of the expansion works will involve small-scale construction activities consisting of largely manual labour under the supervision of trained personnel. The site is easily accessible by access road and transportation of construction material and components is not an issue. Civil works will be relatively straightforward and could involve some disruption to the existing power plant operations. The use of prefabricated equipment, reinforced concrete and masonry, minimises the quantities of building materials that need to be transported to the site. It is estimated that temporary employment for 30 to 50 workers (60% skilled) will be required for the project over the construction period, estimated to be about 12 months. 31. Limited excavation works will be required to expand the existing forebay and form a stable slope for the new penstock and to prepare for the concrete slab foundation for the powerhouse extension.

PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 6

IV. DESCRIPTION OF ENVIRONMENT (BASELINE DATA)

A. Physical Resources

1. Climate, Air Quality and Noise 32. Espiritu Santo situated in the northern part of the Vanuatu archipelago experiences a wet tropical climate. Average temperatures range from between 21°C and 27°C and average humidity ranges between 75% and 80%. Temperatures vary slightly between the dry season (from July to September) and the wet season (from November to April). The warmest months are January- March and the coolest are July to September. The mean annual rainfall at Luganville (Pekoa Airport Gauging Station) over the 43 year period 1971 - 2013 is 2401 mm However, the range of annual rainfall maxima over that period shows significant variability with an annual maximum of 3,474 mm (1988) and a minimum of 689 mm (1983)9. 33. Rainfall is associated with the monsoon winds, which change direction due to the movement of the inter-tropical convergence zone in winter and summer. In the summer (wet season) months of October to April, north-easterly wind conditions bring warm humid airstreams, and associated cyclonic disturbances. During this period about 68% of the annual recorded rainfall occurs. From May to September (dry season) south-easterly trade winds affect the country. The driest month as recorded at the Pekoa gauging station is August where mean monthly rainfall of 98 mm has been recorded as shown in Figure 4.1. 34. While no air quality measurements are available for Vanuatu air quality is good due to the remoteness of the archipelago, a small population and good exposure which promotes reliable air movement. Fires for disposing of rubbish and vehicle emissions particularly in Port Vila provide localised areas of poor air quality. CO2 emissions are considered to be 0.4 mt/capita which is very low in comparison to the East Asia and the Pacific Region at 2.1 mt/capita.10 Figure 4.1 - Mean Monthly Rainfall at Pekoa Station (1971-2013)

Source Vanuatu Meteorological Service 2. Topography and Soils 35. Espiritu Santo Island is the largest island in the Vanuatu archipelago encompassing approximately 3,900 km2 in area. The island has two main geomorphic features. The first is a deeply dissected western mountain range of volcanic and volcaniclastic rocks extending from the northern end of the Cumberland Peninsula to the southwest tip of the island and including Vanuatu’s highest mountain Mt Tabwemasana at 1,879 m. The second feature is an eastern reef

9 Data obtained from Vanuatu Meteorological Service 10 IEE for Litzlitz Wharf,VAN- Interisland Shipping Support Project , November 2011 PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 7

limestone plateau comprising a series of terraces. The limestone terraces also form a fringe along the southern margin of the island. 36. The limestones are overlain by thick clay soils and only locally by small amounts of river and coastal alluvium. Soil cover on the limestones is derived from ancient air fall ash from nearby volcanoes. The soils are mature and comprise light brown clays showing relict tuffaceous texture with thickness increasing with altitude of the limestone.11 37. The volcanic mountains of Espiritu Santo and Malekula are overlain by shallow, less mature, but generally fertile, volcanic soils (Mueller-Dombois and Fosberg 1998).12 Soils developed on alluvium are immature but fertile and low in potassium. 38. The project area is located within the limestone plateau. The Sarakata River drains the eastern limestone plateau and meanders south to Luganville. 3. Geology, Seismicity, and Natural Hazards a. Geology 39. The islands of Vanuatu along with the Santa Cruz group to the north collectively form the subaerial expression of the New Hebrides Arc. The New Hebrides Arc is part of a narrow chain of Tertiary to Holocene volcanic island arcs extending from Papua New Guinea and the Solomon Islands through Fiji, Tonga and the Kermadec islands in the north to the islands of Matthew and Hunter in the south, and is a partly emerged ridge of around 200km in width. The ridge is underlain by an east dipping subduction zone where the India-Australia tectonic plate to the west is being consumed by the Pacific plate to the east. 40. The geology of Espiritu Santo and Malekula reflects a dynamic geological history controlled by evolving plate boundary tectonism that has occurred from Late Oligocene to the present. This has included associated phases of volcanic activity, uplift and submergence in an overall island arc setting. Such a geological history and setting has given rise to a complex assemblage of Late Oligocene to Early Pliocene marine and subaerial volcanic and volcaniclastic sedimentary rocks intercalated with reef carbonates. Typical rock types include tuffs, breccias, turbidites sandstones, reef limestones, mudstones and pelagic sediments. These have been intruded by occasional stocks of gabbro, andesite and diorite. This assemblage is represented by the rocks that form the central and western mountain ranges of Espiritu Santo and Malekula and has undergone extensive dissection due to uplift and erosion during the Quaternary period.13 41. Late Pliocene to recent reef limestone terraces abut the eastern margin and fringe the southern edge of the western mountain range, reflecting the interplay between tectonic uplift and sea level changes that have occurred in the area during the Quaternary period. 42. The gorge through which the Sarakata River flows (in a north-south direction) is controlled by structural features such as bedding, joints/faults and lithological contacts (limestone/basalt). Rocks within the Sarakata project area comprise uplifted limestones interbedded with conglomeratic limestone and occasional basaltic/andesitic volcanic rocks. b. Seismicity and Natural Hazards 43. Vanuatu is exposed to a wide range of geological, hydrological and climatic hazards. The United Nations Office for Coordination of Humanitarian Affairs assesses that Vanuatu is one of the most natural disaster prone countries in the world and is highly vulnerable to the impacts of natural disasters.14 This is reflected in the World Risk Report 2012 which ranks Vanuatu as the world’s most at risk country in respect to exposure and vulnerability to natural disasters.15 44. Between 1980 and 2010 the country experienced 31 major disaster events, costing over $205 million. Of these events there were nine earthquakes, fourteen tropical cyclones, and five

11 Loan,C and Lum, J 1997. Soil Geochemistry Mobile Metal Ion Survey on Eastern Santo, Vanuatu. SOPAC Technical Report No. 253. 12 Mueller-Dombois, D & Fosberg, F. 1998. Vegetation of the Tropical Pacific Islands. Springer Verlag, New York 13 Brief overview distilled from McFarlane A and Carney J,N 1985 op.cit. 14 United Nations Office for the Coordination of Humanitarian Affairs (OCHA); Vanuatu: Natural Hazard Risks (2011) 15 University Institute for Environment, Human Security and Alliance Development Works. 2012. World Risk Report. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 8

volcanic eruptions directly impacting over 200,000 people with over 200 deaths. Climate-related events, including floods, landslides and storms, comprised approximately half the disaster events, but were markedly predominant in terms of the number of people affected and damage and losses experienced. For example, the proportion of reported people affected by climate related disasters was 88% compared with 12% affected by earthquakes and volcanoes.16 45. Vanuatu lies in a seismically active region, located just to the east of the boundary between the Australian and Pacific tectonic plates. This means that earthquakes and tsunamis are likely to affect the area and therefore the relative sea level. 46. The Pacific Catastrophic Risk Assessment and Financing Initiativenotes that Vanuatu has a 40% chance in the next 50 years of experiencing, at least once, very strong to severe levels of shaking resulting in moderate to heavy damage to well-engineered buildings. 17 More severe damage is expected to structures built with less stringent criteria. 4. Water Resources 47. The Sarakata River is a large river located in the southeast of Espiritu Santo Island close to the Sanma provincial capital of Luganville and provides abundant water resources for the island’s population. Its importance relates to i) the Sarakata hydropower station (Sarakata 1) commissioned in 1995 under JICA funding and ii) periodic downstream flooding in and around Luganville. 48. Fanafo village is located on the left side of the Sarakata River some 4 km north of Sarakata 1. Two families live adjacent to the Sarakata 1 powerhouse access road between the weir and the powerhouse.18 49. For drinking water, communities use lateral streams and rainwater collection tanks. On occasions the Sarakata River is used for food in the form of eels, fish and prawns as part of their subsistence livelihood but is not a significant or critical source of food supply. The catchment area above the intake is inhabited by a number of scattered village communities. 50. Since 2010 DGMWR in cooperation with DEPC, other government agencies and NGOs has been implementing the Global Enviornment Fund financed integrated water resources management Ridge to Reef Programme within the Sarakata catchment. A key objective of the programme is watershed protection to reduce the impacts of downstream flooding, and restoration of the watershed ecosystem. 51. This is being realized by the establishment of sustainable forest and land management practices through community awareness raising and demonstration projects. A target of the project was to increase the amount of land managed, rehabilitated and protected in the Sarakata Watershed. 52. Community awareness raising activities have focused on stressing the importance of protecting water resources and the role of forest conservation and sustainable gardening practices to watershed health. In particular, communities have been encouraged to protect forested areas close to the river from gardening activities, designate forest conservation areas and support reforestation activities. 53. To date more than 1000 hectares of upland catchment areas have been proposed for conservation in two areas Butmas (15 km upstream northwest of Sarakata 1) and Nambauk (4 km upstream in the Tafwakar tributary catchment) and more than 20 hectares have been identified as priority for forest rehabilitation (all these areas are upstream of the existing and proposed Sarakata hydropower plant). The conservation areas have been agreed by land owners and draft management plans have been established with the communities involved and are in the process of being registered under the Act. Nurseries have been established with a number of communities

16 Government of Vanuatu. Disaster Statistics www.preventionweb.net 17 SOPAC, ADB, World Bank, JICA, GFDRR, AirWorldwide, GNS Science; Pacific Catastrophe Risk Assessment and Financing Initiative, Vanuatu (2011) 18 These two families are some of the landowners of the Sarakata project site that moved to this location after construction of the Sarakata 1 hydropower project. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 9

within the watershed and the seedlings will be distributed to other communities and schools for planting when they are ready for transplanting. 19 a. Sarakata River Hydrology 54. The Sarakata River rises in the high mountain lands in the centre of the island at around 784 m falling moderately at around 3.6% gradient in an east then southerly direction over 18.8 km reaching Sarakata 1 at an altitude of 110 metres.20 The catchment area of 97.1 km2 has moderate to heavy forest cover interspersed with grass clearings and subsistence garden plots. Land use is limited to animal grazing, food production for local use and sale in Luganville markets and forest hunting and foraging, Copra and cocoa production are also viable local industries. The catchment is complex with multiple incised channels and stream threads. 55. The dominant limestone geology of the catchment complicate the hydrology in that it does not respond like a surface water catchment due to its karstic nature. Flood peaks are sharp and storm runoff declines rapidly as surface runoff appears to infiltrate into subterranean storage for slow release during the dry season. The river appears to take some months to attain a base flow condition. Figure 4.3 shows the catchment topography and stream threads to the water level station. 56. The hydrology report for the feasibility study developed flow duration statistics based on hydrological data gathered from a river flow station and rain gauge installed on the Sarakata River by the French government agency ORSTOM during the 1980s. ORSTOM undertook a robust discharge measurement program and gauged the river frequently up to a flow close to 100 m3/s. ORSTOM also developed some provisional design rainfall intensities for the Sarakata and this data has been utilised using a regional flood estimation model, to develop flood estimates for 10, 20, 50 and 100 year recurrence intervals. Measured data to date (1982 to 1985) shows a rated minimum flow of 2.81 m3/s and a maximum flow of 404 m3/s. Figure 4.3 - Sarakata Catchment

Source: Project Feasibility Study (2014) 57. This ORSTOM data has allowed a flow duration curve to be developed for the lowest year on record and an average year, based on rainfall analysis. Figure 4.4 and Table 4.1 show the adopted flow duration curve.

19 GEF Pacific. 2012. IWRM Project Results Note. RSC 4 Sustainable Management of the Sarakata Watershed. Pers comm. DEPC and DGMWR. 20 Description of hydrology is summarised from the Feasibility Study hydrology report. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 10

Figure 4.4 - Flow Duration Curve for Sarakata River

Source: Project Feasibility Study (2014) Table 4.1 - Flow Duration Curve Data for Sarakata River

% Flow Exceedance River Flow (m3/s) 0 403.6 5 18.5 10 14.0 15 12.0 20 10.7 25 9.8 30 9.2 35 8.7 40 8.2 45 7.7 50 7.2 55 6.8 60 6.4 65 6.0 70 5.6 75 5.3 80 4.8 85 4.3 90 3.7 95 3.4 100 2.8 Source: Project Feasibility Study (2014) B. Biological Resources

1. Terrestrial Habitats 58. General. The regional terrestrial ecosystems of Vanuatu vary with altitude, major substrate type windward versus leeward position and human influences. Mueller-Dombois and Fosberg summarises the ecosystems in landscape21 terms as follows: 22

21 Landscape is the geographical equivalent of the term ecosystem. However, while the term ecosystem is often interpreted as an interactive system involving the functional relations of primary producers, consumers and PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 11

 Lowland rain forest (with six variations)  Mountain cloud forest and related vegetation  Seasonal forest scrub and grassland (with three variations)  Vegetation on new volcanic surfaces  Coastal vegetation including mangroves  Secondary and cultivated woody vegetation 59. The terrestrial biodiversity in Vanuatu is significantly less rich than its neighbouring countries such as New Caledonia, the Solomon Islands, Fiji and Papua New Guinea. Overall biodiversity richness and endemism in Vanuatu range from low to moderate. This is largely because the islands of Vanuatu are geologically younger and smaller in size and are isolated from large land masses. 60. Generally, larger and older islands support a greater diversity of terrestrial ecosystems, plants and animals. However, both the sea that separates the islands and the rugged interiors separating catchments and lowland habitats are barriers to many species providing conditions that have favoured relatively rapid sub-speciation and speciation. Frequent disturbance due to tropical cyclones or volcanic activity has also had a significant effect on the distribution of species especially on smaller islands. Consequently there is a considerable distribution variation of species within and between islands, and Vanuatu’s biodiversity is of particular interest for its ongoing processes of immigration, range extension and contraction and sub-speciation. 61. Vanuatu’s flora is thought to be more closely allied with that of the Solomon Islands to the north with some elements from Fiji and very few from Australia or New Caledonia. Similarly the fauna demonstrates closer affinities with Solomon Islands. Internally there is a biogeographic divide with islands to the north of Efate demonstrating significant differences to the islands in the south. Overall, Vanuatu’s biodiversity remains poorly known with detailed studies of only a few genera and few studies of the biota of the smaller or less accessible islands. Available information suggests that Vanuatu’s biodiversity is relatively intact and possibly better preserved than in most Pacific Island countries. A few plants and animals that have been studied in detail (orchids, palms, lizards and flying foxes) show that a significant number of endemic species are found on some islands. 62. A review on studies on the flora and fauna for the Vanuatu Biodiversity Strategy and Action Plan (1999) noted the presence of more than 1100 plant species, 297 coral species, 80 species of insects, 13 mammal species and more than 469 shallow fish species. However, many species are in decline. The only terrestrial mammal species in Vanuatu are bats including four pteropodids (fruit bats) and eight microchiroptera. Six of these species are endemic or near endemic. About 121 bird species have been recorded in Vanuatu comprising 32 seabirds, 15 shorebirds, and 74 land and freshwater birds.23 63. Of the 74 land and freshwater birds, 56 bird species are considered resident breeding species; ten introduced, one is a non-breeding visitor and seven have been recorded less than five times.24 Isolation has led to the development of nine endemic species in Vanuatu and one the Buff- bellied Monarch, Neolalage banksiana belongs to an endemic genus. 64. Threats to Vanuatu’s biodiversity. Over-exploitation of plants and animal resources is the most likely cause for the reported decline in the abundance and distribution of many species. Examples include the coconut crab (Birgus latro), green snail (Turbo marmoratus). Plants such as kava (Piper methysticum) sandalwood (Santalum austrocaledonicum) white wood (Endospernum medullosum) and the melektree (Antiarus toxicana) are also in decline. 65. Degradation of habitats mainly through the destruction of rainforest for subsistence agriculture is considered a significant factor affecting Vanuatu’s biodiversity. Along with this new

decomposers by energy transfer and nutrient dynamics the term landscape is more generally understood as a larger land segment with its built-on component. The functional relationships in a landscape are seen as an interaction of climate geology, geomorphology, soils and disturbance regimes with the prevailing built-on component. 22 Mueller-Dombois, D & Fosberg, F. 1998. Vegetation of the Tropical Pacific Islands. Springer Verlag, New York. 23 Parr, J. 2007. Important Bird Areas in Vanuatu. Birdlife International, Fiji. 24 Ibid. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 12

development practices coupled with declining respect for traditional resource management systems and traditional authority structures contribute to the degradation of habitat. Degradation of freshwater habitats through over exploitation of freshwater species and clearing of catchment vegetation on some islands have resulted in much reduced aquatic diversity. 66. Introduction of invasive species imported in the past such as Mile-a-Minute (Mikania sp) and American rope (Meremia sp) are suppressing regrowth of tree forests and can cause loss of wildlife. Other invasive species of concern include: water hyacinth (Eichhornia sp), rats and feral pigs, the fire ant (Wasmania auropunctata), African snail (Euglandina fulica) and the Indian Mynah Bird (Acridothera tritis). 67. Project Area. Lowland rainforest is recognised as the natural vegetation on all islands of Vanuatu on their southeastern windward sides inland of the coastal zone up to about 500-600 m elevation. This is the characteristic landscape type and setting of the hydropower project watersheds considered for the the project. In particular the project areas correspond with lowland rainforest sub-category C: complex forest scrub densely covered with lianas. This complex vine forest and scrub is the most widely distributed lowland rain forest type on Espiritu Santo and Malekula islands. It is in various stages of recovery following disturbances by cyclones and human activities. It is interpreted as secondary successional vegetation in different stages of adjustment to the prevailing rainforest climate. 68. Distinguishing features of this lowland forest sub-category include its floral heterogeneity often made up of forest islands. Meremia and Mucuna species are dominant among the lianas or vine genera. Principal canopy tree species include Kleinhovia hospita, Intsia bijuga and Gyrocarpus americanus. The subcanopy typically includes Diospyros acris, Syzygium sp, Garcinia pancheri, Myristica fatua, Terminalia, Tieghemopanax and (endemic) Veitchia palms. The undergrowth is rich in ferns (Tectaria, Asplenium and Selaginella). 69. Other tree species characteristic of southern Espiritu Santo as identified by the Department of Forestry include Pterocarpus indicus (Rosewood), Dracontomelon vitiensis (Nakatambol), Antiaris toxicaria (Melek tri), Castanospermum australe (Black bin) Endospermum medullosum (Whitewood) and Pometia pinnata (Nandau).25 70. Within the Sarakata 1 expansion project affected area, this complex forest scrub subcategory is confined to the steep slopes of the left bank between the weir and the powerhouse and the riparian area immediately downstream of the powerhouse. This area will not be affected by the expansion works. 71. Elsewhere vegetation within the Sarakata 1 scheme boundary is mainly small trees, scrub and grasses that have been either planted or is natural regrowth. Trimming of vegetation is undertaken routinely within the scheme boundary, especially adjacent to the main facilities and access ways, as part of routine operational maintenance. It is only this highly modified, low habitat value vegetation that will be affected by the expansion works. 72. It was noted during community consultations at Fanafo that birds, wild pigs and giant fruit bats are occasionally hunted for their meat. Overall the natural habitat of the immediate project area is classified according to the SPS definition as a highly modified habitat with what is considered to be of relatively low biodiversity value. 2. Terrestrial Fauna 73. Whilst a range of wildlife was reported during community consultations as being present in the catchment including birds, frogs, lizards and aquatic fauna, the modified to highly modified habitat is considered generally poor in terms of wildlife for village hunting purposes. Wild pig populations are low and occasionally hunted. 3. Fish and Aquatic Resources 74. A fish and aquatic resources (FAR) survey was undertaken in the project area to establish a baseline inventory of fish and aquatic resources through a rapid biodiversity survey

25 Species list provided by Department of Forestry during stakeholder consultations PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 13

methodology.26 The full FAR survey report is presented in Annex 2. Information was gathered through direct observations and informant interviews. The survey involved selection of 5 sampling stations at various points in the river channel around the Sarakata hydropower station; one station located 50m downstream of the tail race two stations between the weir and the power house and two stations upstream of the weir. 75. Observations at sampling stations included: i) type and quality of riverine and riparian habitats; ii) fish species present in the various habitats including relative abundance, conservation status, endemism, rarity etc; and, iii) assessing the fish and aquatic resource usage of the project area through informant interviews. 76. The FAR survey report notes that there were limitations to the survey due to heavy rain encountered and rising river flow which made conditions along the river bank hazardous. The key findings of the FAR survey report are summarised below. 77. Aquatic habitats identified and sampled along the surveyed river stretch included pools, riffles, runs and boulders. Fish live mainly in pools and under boulders and cobbles. Fourteen fish species and four species of crustacean were sighted in the Sarakata River during the field survey. Sampling station 1 was located downstream of the Sarakata powerhouse, stations 2 and 3 were located in the stretch of reduced river flow between the weir and the powerhouse (including either side of a 10m high waterfall), and stations 4 and 5 were located upstream of the weir. 78. The relative abundance of aquatic biota (fish and crustaceans) sighted during the survey is presented in Table 4.2. Table 4.2 - Relative Abundance of Aquatic Species in the Sarakata River Species Sarakata River Stations Vanuatu IUCN Level of Migratory 1 2 3 4 5 Endemic Status Exploitation Behaviour Freshwater Fish, Class: Osteichthyes Awaous ocellaris 2 2 No LC Low Yes Awaous gaumensis 2 3 No LC Low Yes Oreochromis mossambicus 3 2 No DD Medium Yes Gambusia affinis 5 20 10 No DD Medium Yes Khulia marginata 2 3 No LC High Yes Khulia rupestris 1 2 No LC High Yes Sicyopterus lagocephalus 4 4 2 1 1 No LC Low Yes Sicyopterus aiensis 1 1 Yes NT High Yes Sicyopus zosterophorum 1 No LC Low Yes Sicyopus (Smilosicyopus) 1 No LC High Yes chloe Ryacicthys guilberti 1 No NA Medium Yes Stiphodon atratus 1 1 1 2 No LC High Yes Stiphodon semoni 3 4 3 LC Low Yes Stiphodon autropurpureus 1 LC Low Yes Crustaceans, Subphylum: Crustacea Macobrachium lar 6 5 5 7 8 No LC High Yes Macrobrachium bariense 3 3 No LC Low Yes Utica gracilipes 1 No NE Medium No Atyoida pillipes 2 3 No LC Medium No Keys: LC-Least Concern, NA-Not Assessed, NE-Not Evaluated, NT-Near Threaten, DD-Data Deficient. Source: FAR survey report (2014) 79. The dominant element of the fauna consists of goboid fishes (Sicyopterus, Awaous, Stiphodon, Sicyopus) which is typical of clear rocky streams in the interior of Vanuatu islands, the Solomon Islands and Papua New Guinea.27,28 Freshwater fish species inhabiting these islands are

26 The survey was conducted for the IEE by a university degree qualified and experienced freshwater ecologist from Pacific Horizons Consulting Group, Honiara, Solomon Islands. 27 Keith. P, Marquet. G, Lord. C, Kalfatak. D, Vigneux. E. 2010. Vanuatu Freshwater Fish and Crustaceans. Societe Francaise d’Ichtyologie, Paris. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 14

forms that possess a pelagic larval stage, hence are widely dispersed. Many species have distributions that encompass most of Melanesia or range beyond this into Australia and Indonesia. Pelagic goboid larvae enter the island streams at periodic intervals in prodigious numbers and are likely to play an important role in the food web and overall stream ecology. However, there is little reliable information about the details of such larval migrations in the Vanuatu. 80. The stretch of Sarakata River surveyed is characterised by riparian areas that have been highly modified by human activities through construction and operation of the Sarakata hydropower scheme including intake, headrace canal penstock and powerhouse on the right bank as well as an 8m high weir across the river. The weir has resulted in reduced flows in the river between the weir and the powerhouse (approximately 1 km) for nearly 20 years. The reduced flow stretch includes a 10 m high waterfall which in itself is a natural barrier to most aquatic species apart from those with special adaptations such as goboids enabling them to scale waterfalls. 81. Apart from the endemic Sicyopterus aiensis which is listed as near threatened in the International Union for the Conservation of Nature (IUCN) Red Book all other species sighted are classified as least concern status or unlisted in the IUCN Red Book. 82. Sicyopterus aiensis was sighted at two sampling stations on the Sarakata River notably at a station below the waterfall and weir, and a station above the weir. Sicyopterus lagocephalus was sighted at all five stations which indicates that both the waterfall and the weir appear not to be barriers to migration of these species. This is not unexpected as Sicyopterus aiensis, Sicyopterus lagocephalus and other goboids are known to be able to climb over waterfalls by using alternately their pelvic suction cup and lips.29 Furthermore, these species appear to be tolerant of the reduced natural flow of the Sarakata River between the weir and powerhouse. It is also noted that Sicyopterus aiensis was sighted at sampling stations surveyed in the Wambu River (Espiritu Santo) and Brenwe River (Malekula) during the FAR survey for the project. Keith et al (2010) note that, Sicyopterus aiensis is reported to be present in rivers on six islands in Vanuatu including Malekula, Espiritu Santo, Pentecost, Maewo, Efate and Tanna. 83. Two species of jungle perch (Khulia rupestris and Khulia marginata) were sighted at one sampling station, below the powerhouse tailrace. These species are occasionally caught for food by local residents. Khulia sp. are predatory to gobies and typically abundant in the lower reaches of Vanuatu rivers, below the first waterfall but are absent above it. 30 Gobies and crustaceans (Macrobrachium sp.) are often more abundant in areas above cascades where predators are less numerous. 84. Two non-native species Oreochromis mossambicus (Mozambique tilapia) and Gambusia affinis (mosquito fish) were sighted at three stations above the waterfall. These species were introduced to some parts of Vanuatu for food and malaria control respectively. However, due to uncontrolled retaining systems these species have become widespread in some of Vanuatu’s rivers such as Sarakata and Wambu. Such species are known to be invasive and can affect local populations of native species. They are able to tolerate harsh conditions such as low oxygenated water. 85. In respect of its natural fish fauna, the following key facts are noted regarding the freshwater ecosystems of Vanuatu rivers.31  The main type of lifecycle for freshwater fish species in Vanuatu is amphidromic;32  Vanuatu’s distinctive river habitats are oligotrophic33 rivers subject to extreme climatic and hydrological seasonal variation (including floods and droughts). These river systems are colonised by fish (Gobiidae, Eleotridae) and crustaceans (Palaemonidae, Atyidae) with a lifecycle adapted to these distinctive habitats;

28 Polhemus.D, Englund. R, Allen.G, Bosetto. D, & Polhemus.J. 2008. Freshwater Biotas of the Solomon Islands Analysis of Richness, Endemism and Threats, Bishop Museum Technical Report N° 45, Honolulu, Hawaii. 29 Ibid p.18-20. 30 Ibid p. 21 31 Ibid pp18-22 32 Amphidromous species spawn in freshwater, the free embryos drift downstream to the sea where they undergo a planktonic phase, before returning to rivers to reproduce. 33 Oligotrophic rivers are relatively low in plant nutrients and contain abundant oxygen. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 15

 The first major waterfall acts as a barrier for species not adapted to climbing waterfalls and is a barrier against predators for goboids; and  Freshwater flow (floods) in estuaries seems to trigger migration inland for amphidromous species. 4. Protected Areas and Areas of Conservation Value 86. There are no protected areas or recognised areas of conservation value within or immediately adjacent to the project area. The nearest recognised conservation areas include the proposed Nambauk Conservation Area located approximately 4 km west of the proposed Sarakata 2 project area in the Tafwakar River catchment and the proposed Butmas Conservation Area located 15 km north of Sarakata hydropower scheme. Both conservation areas are in the process of being legally recognised and both will not be affected by the project (See Section IV A. 4). 5. Rare and Endangered Species 87. The IUCN Red Book lists 17 endemic species in Vanuatu for which Red Book list categories have been assigned. Four species of bird are categorised as vulnerable and one species of bird is categorised as near threatened. A further four endemic birds are least concern. The remaining listed species include three reptile species of which two are least concern and one is data deficient and four freshwater fish species of which one is near threatened, two are least concern and two are data deficiant. Details are provided in Table 4.2 Table 4.2 - IUCN Red Book List of Endemic Vanuatu Fauna

Species Name Red List Habitat Group Category Birds Vanuatu Imperial Pigeon VU Forest Ducula bakeri Vanuatu Kingfisher NT Forest Todiramphus farquhari Vanuatu Scrub Fowl VU Forest Megapodius layardi Vanuatu Starling VU Forest Aplonis santovestris Royal Parrot Finch VU Forest Erythrura regia Tanna Fruit Dove LC Forest Ptilinopus tannensis New Hebrides Honey Eater LC Forest Phylidonyris notabilis Buff-bellied Monarch LC Forest Neolalage banksiana Yellow fronted White Eye LC Forest, plantations, gardens Zosterops flavifrons Reptiles Lepidodactylus vanuatuensis LC Scrubland Vanuatu Silver Vineskink LC Forest Emoia nigromarginata Vanuatu Sawtailed Gecko DD Marine coastal Perochirus guentheri Fish Akihito vanuatu LC Rivers (Ambae, Pentecost) Schismatogobius vanuatuensis LC Rivers (common in Santo, rare elsewhere) Sicyopterus aiensis NT Rivers (Malekula, Santo, Maeo, Efate,Tanna) Stiphondon astilbos DD Rivers (Santo, Pentecost, Efate) Stiphondon kalfatak DD Rivers (Santo) Source: IUCN website: www.iucnredlist.org

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6. Persistent Organic Pollutants 88. There is no legislation governing the intentional production and use of persistent organic pollutants in Vanuatu. The Global Enviornment Fund Evaluation Report noted that DDT was used for the control of malaria carrying mosquitoes until 1989, and some of the used stocks of transformers in Vanuatu contained polychlourobyphenals.34 The main sources of dioxin and furan releases in Vanuatu are from the incineration of quarantine and medical waste and uncontrolled burning, including landfills and backyard rubbish fires. Vanuatu lacks the capacity to record control or monitor releases of dioxins and furans. The knowledge and application of best available techniques and best environmental practices for new or existing sources in Vanuatu is very limited or non-existent. C. Socioeconomic and Cultural Resources

1. Population and Communities 89. Espiritu Santo is the third largest island of Vanuatu. In 2009, the total rural population of Espiritu Santo Island (excluding Luganville) in Sanma Province was 38,307 composed of 7,864 households. The male ratio was slightly higher than female at 51.3:48.7 while average household size was 4.87, which was the same as that of the national average of 4.9. Luganville the capital is primarily urban while the areas outside the town are primarily rural. The population is predominantly Ni Vanuatu Melanesian. Luganville the main provincial and government administrative centre of Sanma Province receives an influx of people from other areas of Santo as well as from other provinces of the country and according to the 2009 census, the annual urban growth rate is 2% compared with the only other urban area in Vanuatu, Port Vila which has a growth rate of 4.1%. 90. Approximately 83% of households in Santo rural own their houses while 9% and 7% respectively are renting or rent free. Of the land where the house stands 46% are customary owners, 17% have urban lease, and 9% rural lease while 20% occupying the land with informal agreement. 91. The two major villages within the zone of influence of and closest to Sarakata hydropower plant are Fanafo and Mon Exil. In 2009, Fanafo had a total population of 1,290 comprising 258 households with 670 male and 620 female. Average household size like rural Sanma was around five people per household. On the other hand, Mon Exil a nearby village towards the east had a population of 309 person comprised of 62 households with 157 males and 152 females 92. These two villages which are approximately 25 km away from Luganville can be accessed by gravel road starting from a diversion from the main highway. They are approx. 4-5 km away from the existing Sarakata hydropower plant. Neither Fanafo nor Mon Exil has their own market. All produce is brought to Luganville. 2. Health and Education 93. According to the UNDP Human Development Report 2013 the human development index of 0.626 ranks Vanuatu 124th out of 187 countries. This value is below the average of 0.64 for countries in the medium human development group and below the average of 0.68 for countries in East Asia and the Pacific and indicates an overall relatively low level of development (based on health, education, and income). 94. Amongst infectious diseases, malaria and tuberculosis are major public health concerns. However, the incidence of sexually transmitted infections (STIs), acute respiratory tract infections, diarrhoea, and viral hepatitis is significant. 95. Urbanisation and population growth are two major factors that places pressure on the government to continue providing communities with good health services. Remoteness and vastly dispersed communities are a challenge in providing proper healthcare especially to the rural population, where due to lack of medical infrastructure, preventable diseases are prominent.

34 Global Environment Facility (2014) GEF Vanuatu and SPREP Portfolio Evaluation (1991-2012) Volume I: Evaluation Report PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 17

However, nationally, with half the population aged less than 20 years and an increased life expectancy, disease patterns and demands on the health system are changing. 96. There are several health facilities in Sanma Province as reported in 2009, namely one hospital; 11 health centres; 12 dispensaries; and 56 aid posts. The ratio of facilities per person was 1:74. Of the two villages near the project area Fanafo the bigger village has four preschools and two primary schools. Likewise it has a health centre and three aid posts. 97. In 2009, of the population 15 years and above in Santo, 27% of the rural population was reported to have completed primary education; another 22% had some primary education, 10% had trio certificate and 7% senior secondary. 98. Approximately 15% had no schooling at all while almost 7% and 2% had some college degree and completed bachelor’s degree respectively. A few either had post graduate or vocational degrees. The literacy rate of the province was reported to be about 93% with the women (94%) having higher literacy rate than male (91.9%) population. 3. Cultural Heritage 99. Vanuatu has a rich history, and Ni-Vanuatu people adhere closely with many ancient traditional practices, even up to the present day. The concept of “kastom” relates to cultural, historical and religious traditions. It is most intimately tied to the land, natural resources and revenue for the spiritual forces of nature. While there are many sites that are preserved by their custom owners, sites that are officially designated as having cultural and historical significance are limited in numbers. 100. Vanuatu is rich in settlement sites from these ancient times, but many of the sites have disappeared and have not been relocated. 101. Within the proposed project site, no significant cultural or archaeological discoveries have been reported. However, the forest and bush areas contain traditional herbal medicines and food. According to the landowners, these important plants and food sources are also in abundance in other areas outside of the project area. 4. Land use, Livelihoods and Employment 102. The main use of land by majority of rural Ni-Vanuatu (>80%) is subsistence farming. Due to population growth, pressure has been placed on the land and the forest mainly for new gardens. Almost every household in rural Vanuatu owns a small patch of garden as the main source of food. The main crops grown are coconut, cocoa, root crops such as cassava, taro, yam, sweet potato, banana, and recently kava for which demand has increased significantly. After land clearance, lands are normally cultivated for one to three years followed by a longer fallow period ranging from 1 to 5 years however due to decreasing amount of space fallow periods are becoming shorter. 103. Coconut and copra are the major cash earning activities in the provinces. The level of smallholder copra and livestock production is increasing although there are fluctuations in the world price year to year. The production for cocoa on the other hand is also increasing over the years because of the high world price and the increased number of buying points in the provinces. The 2009 Census reported that main sources of income of majority (48%) of Santo households are sale of agriculture, fishery or handicraft products. About 36% derive their cash income from salaries and wages while about 5% from operating their own business and 7% from unspecified sources. However, about 4% reported having no cash income at all. 104. According to the Household Income and Expenditure Survey Report 2010, the average monthly income of Sanma households was 94,000 Vatu with an average per capita income of 18,800 Vatu. Approximately 58% of household income is from cash sources; on the other hand, 26% of total household expenditure is in cash. Luganville households have comparatively lower average household monthly income at 74,100 Vatu compared to the province; likewise its average per capita monthly income is much lower at 13,200 Vatu. The majority of the income is derived from cash income and almost 60% of total expenditures are cash expenditures. 105. The poverty situation of the urban area of the Province- Luganville compared to that of Port Vila and rural areas, is much worse. From a rate of 10.4% in 2006, the proportion of households

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below national poverty line had significantly risen by almost double to 19.4% (2010). This was mainly due to in-migration to Luganville of poorer households from other areas of the country. On the other hand, the proportion of household below the national poverty line in Sanma Province in 2010 was 8.3% compared to 9.0% in 2006. 106. Espiritu Santo is one of the main exporting ports of Vanuatu and it produces more copra than any other island of Vanuatu. Espiritu Santo is a significant producer of livestock. 107. Logging activities have removed significant stands of natural forest and contributed to the degradation of soil on the main islands of Vanuatu including Santo and Malekula. 108. Formal and informal consultations with local communities confirmed that the use of aquatic resources in the Sarakata River was supplemental to their overall subsistence livelihood. Fishing is primarily a recreational activity. 5. Infrastructure 109. Water Supply. From the 2009 Census data, 25% of households have a shared pipe system while about 18% of households have village tanks and 17% their own household tank. On the other hand 14% have a private piped system while 15% source their drinking water from a river, lake or spring. The rest source their drinking water either from village stand pipe, unprotected well, bottled water or other unspecified sources. 110. In terms of toilet facility, the majority (49%) of Santo rural households use pit latrines (either individual or shared). Only about 6% reported the use of water sealed toilet whether individual or shared while about 14% of households use the flush type toilet. Likewise less than 1% reported having no toilet at all. 111. Energy. According to the 2009 Census data, only about 30% of households on the island are reported to use the electricity grid with the majority (48%) using kerosene lamp as main source of lighting. The rest either use solar (3%), candle (7%), gas (3%) or coleman lamp (3%) as source of light. A few (2%) reported generator as providing their source of light. 112. Nationally, only 15% of Vanuatu’s population is connected to the local grids in Port Vila, Luganville, and Lakatoro/Norsup where electricity is generated by diesel and/or hydropower. 113. Waste Management. There is no organised waste management system in any rural areas of Vanuatu. The six provincial councils have adhoc waste disposal sites with no proper management systems in place. From the 2009 Census data, about 32% of all households dispose of their waste by burning. In urban areas of Port Vila and Luganville about two thirds of households dispose of their waste using authorised waste collection. 114. Transport. Private transport services, including buses and taxis, are common in the islands with an increase in the number of vehicles registered. In terms of basic infrastructure and social services the villages within the influence zone of the subproject can be reached by gravel road. Transport is limited to one public bus per day and some private vehicles. 115. Of the 269 total households surveyed as part of the poverty and social assessment work for the project, more than half (166) are not connected to electricity although the main grid passes along the road and a distribution line had been put up by VUI. On the other hand VUI is working on extending the line by almost a kilometre to cover more households in the area close to the forestry centre. 116. Industries Vanuatu has a small industrial sector. The manufacturing sector, located mainly in Port Vila and Luganville is mostly food processing and is actually declining. There are no major processing industries in the project areas or in other parts of islands. However, Malekula and Santo are major contributors to the national economy through, copra, cocoa and kava commodities. Handicrafts are also produced by small home or village enterprises and incomes are not regular. 6. Tourism 117. Tourism is the most significant contributor to the national economy, and accounts for about 75% of the foreign exchange, 20% to the gross domestic product and an estimated 5,000 jobs.

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118. Most tourism activities in Vanuatu are closely linked to the coastal and marine areas. Fundamental among these are the relatively clean, pristine and scenic shorelines and coastal waters where most of the tourist resorts are located. 119. Santo and Malekula receive a large number of tourists annually due to reliability of sea and air transport, accommodation and the pristine and scenic shorelines. The strong, unique and diverse culture and the undisturbed way of life in some parts of the islands are also the main attraction which contributes significantly to the increase in the number of tourist arrivals to Vanuatu. 120. Tourism is becoming the most important sector in Vanuatu, with visitor numbers growing each year along with the increase in cruise ship visitors (who have a short onshore visit and return to the ship). Vanuatu is also a popular destination for the yachting fraternity. Most tourism activity has been in the vicinity of the capital, Port Vila, but the recent opening of new airports and airline routes is beginning to spread tourism to the other islands. 121. In 2011 there was a 5% increase in the total number of visitors to Vanuatu compared to 2010, mostly from the buoyant cruise ship industry. In 2011 tourism arrivals numbered 248,898. 122. Eco-tourism activities and forest conservation have been encouraged, notably through the establishments of community conservation areas and marine protected areas by the local communities. V. ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES

A. Screening of Potential Impacts

123. ADB’s rapid environmental appraisal checklist for hydropower projects and climate risk screening checklist were used to screen for potential impacts. The checklists were prepared during the project inception stage following review of previous studies and finalised following field inspection and community consultations at Sarakata and Fanafo in March and May 2014. The completed checklists are presented in Annex 3. The checklist confirms the project is Category B for environment. The climate risk screening indicates moderate risk primarily due to potential impact of climate change on rainfall patterns. 124. The following section provides an assessment of the project’s likely impacts on physical, biological, socio-economic and physical cultural resources, and identifies mitigation measures to ensure all such environmental impacts will be avoided or managed/reduced to acceptable levels. 125. An audit of existing facilities has also been undertaken to identify if existing operations and facilities that are linked with the project comply with the SPS. Through due diligence, review, and supervision ADB ensures that borrowers comply with the SPS requirements during project preparation and implementation. The audit report is included in Annex 4 and the findings are included in this section while required actions are integrated into the EMP presented in Section VII. 126. The mitigation measures identified below along with other environmental management requirements normally associated with international best practice will be implemented in accordance with the EMP presented in Section VII. B. Audit of Existing Facilities

127. Due diligence has been undertaken through a review of the available documentation, interviews with staff of VUI and site visits during March 2014 in order to explore with the facility operator whether the facility is in compliance and/or can be brought into compliance with SPS, and if so to agree on required corrective actions and a time-line for their implementation as a part of international good practice. 128. In preparing the DDR the consultants have exercised due diligence and studied where VUI’s current practices meet ADB SPS requirements and where there are gaps that need to be filled. This section summarises the results set out in Annex 4 and identifies how any gaps can be addressed so that the loan procedures can proceed with confidence that the requirements of SPS will be complied with.

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129. Current status of compliance. The Sarakata hydropower project was commissioned in 1995. At the time of commissioning there was no statutory requirement under Vanuatu law for environmental impact assessment nor any requirement for an environmental permit or water use permit to operate the hydropower project. As of today, the Sarakata hydropower project does not have a water use permit. No EIA was undertaken during the planning and development of the Sarakata hydropower project. 130. In 2002 the Water Resources Management Act came into force. Under this Act, if a land lease grants the right to use any water the lessee must apply to the Director of Water Resources for the right to use the water for any other purpose other than the customary rights or for domestic purposes. The Act also stipulates that works and uses undertaken prior to the commencement of the Act are lawful. In this respect the Sarakata hydropower project does not need to apply for the right to use the water. 131. The Environmental Management and Conservation Act came into force in 2003. Under the Act all projects, proposals or development activities that impact or are likely to impact on the environment of Vanuatu and require any license permit or approval under any law are subject to EIA provisions as specified in Part 3 of the Act. 132. In 2004 the government signed an agreement with the Government of Japan to upgrade the existing 600 kW capacity Sarakata hydropower project to 1200 kW. During the course of intergovernmental discussions and field surveys on the upgrading project it was agreed that environmental and social assessment of the project was vital. The JICA study team produced a draft terms of reference to be used for monitoring, mitigation, social and environmental considerations of the project site for a period of six months. The government took responsibility to undertake the agreed studies and surveys and established a Technical Advisory Group to oversee the studies. The Technical Advisory Group comprised representatives from the various government departments which undertook the studies. 133. The studies culminated in preparation of the report by the TAG in October 2005.35 It is not clear what the status is of that report is in terms of compliance with the Environmental Management and Conservation Act. 134. Actions required for compliance. There are several recommended actions for DOE in order to achieve environmental compliance with SPS. The recommended actions include:  Request formal clarification from the Director of Environment (DEPC) as the environmental authority, concerning the current state of environmental compliance by DOE with regard to Sarakata hydropower plant.  Consult with DGMWR to confirm whether the expanstion triggers the need for a water resources permit.  Disclose the scope of the improvements for Sarakata hydropower plant upgrade and refurbishment and seek guidance from the Director of Environment on actions needed to establish regularisation of environmental compliance of Sarakata hydropower plant.  Bring oil containment of transformer bays and oil seperation facilities up to international standard C. Impacts on the Physical Environment

1. Erosion and Loss of Top Soil 135. Some erosion could occur during construction of the forebay, penstock and powerhouse Erosion could also occur in these areas during operation of the facility. Erosion could result increased siltation/sedimentation of the Sarakata River. This impact can be avoided or minimised through recognised good engineering design and construction practices incorporating the following mitigation measures:  Minimising the vegetation clearance corridor for all components;

35 Government of Vanuatu-TAG. October 2005. Report of the Monitoring/Mitigation on Social and Environmental Consideration on the Sarakata Hydropower Project. Vanuatu PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 21

 Installing cut-off drains when excavating on steep slopes;  Ensuring slope cuts are appropriately designed and engineered for the prevailing conditions (geotechnical, climate etc);  Cut slopes to be re-vegetated as soon as practicable to minimise the exposure of bare surfaces;  Re-vegetation of cut slopes to incorporate appropriate bioengineering practices utilising local native species as much as possible;  Scheduling the construction in the dry season (May - Oct). 136. The scale of the construction activities and limited scope of the expansion works within the footprint of the Sarakata hydropower scheme means there will be limited direct loss of top soil. However, indirect loss of topsoil could occur through erosion as described above. Nevertheless, following site clearance top soil will be stockpiled for later use in landscaping or made available to the local community for their use. 137. The relatively small scale nature of the works coupled with local labour intensive approach and rigorous implementation of the above mitigation measures will ensure that the potential impact of erosion and loss of topsoil due to the project will be minimised to acceptable levels. 2. Sedimentation and Water Quality 138. There is potential for localised and short term water contamination from runoff of suspended sediment from exposed surfaces, slope erosion and concrete residues into the Sarakata River during various construction activities as outlined below:  Vegetation clearance and stockpiling of excavated materials;  Excavation works associated with construction of: o Expansion of forebay and installation of penstock and associated slope protection works o powerhouse foundations  Spoil disposal from excavation works. 139. Construction activities will involve some use of powered mechanical equipment however it is envisaged that the majority of the construction activities will be undertaken using manual labour. This should help in minimising the potential for erosion and sediment runoff into the Sarakata River. 140. A range of proven mitigation measures normally associated with good construction practice will be implemented during construction of the facilities to avoid or minimise sedimentation impacts on the Sarakata River. As a minimum these mitigation measures will include:  Minimising the vegetation clearance corridor or footprint for all components;  Re-vegetating and/or stabilising exposed surfaces and excavated materials  Implementing effective construction site drainage such that runoff is directed to sediment traps before discharge to water courses;  Use of cut-off drains above excavated areas on steep slopes to reduce erosion;  Close construction supervision to ensure the above measures are implemented; and  Scheduling the construction in the drier months (May - Oct). 141. Effective implementation of the above mitigation measures will ensure that the potential short term impacts on water quality due to construction of the project will be insignificant. 142. Operation of the project will not give rise to any significant impact on water quality. 3. Dust and Noise 143. Owing to the limited scope of works, largely manual construction methods and distance away from residential communities, the impact of dust and noise generation will be negligible. The largest impact of dust and noise will likely be from construction site traffic transporting materials and equipment to the site along the road from Luganville. This will be temporary and sporadic over a 12 month period. Implementation of good practice construction methods such as watering of access roads adjacent to residential areas during dry spells and using well maintained powered mechanical equipment equipped with silencers will ensure impacts are minimised and acceptable. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 22

4. Materials and Spoil Management 144. Moderate amounts of sand and cement and other equipment and materials will be required for construction. It is envisaged that a dedicated borrow pit /quarry will not be required for the project and that aggregates could be obtained from existing sources on the island. Materials sources will be identified by the contractor and will be detailed in Materials and Spoil Management Plan (MSMP). Excavation activities will be limited with a corresponding limited volume of excess spoil needing to be disposed of. 145. The contractor will be required to prepare and implement a MSMP to minimise the use of non-renewable resources and provide for safe disposal of excess spoil. As a first priority, where surplus materials arise from the removal of the existing surfaces these will be used elsewhere on the project for fill (if suitable) before additional rock, gravel or sand extraction is considered. The MSMP will include as a minimum consideration of the following:  Required materials, potential sources and estimated quantities available;  Impacts related to identified sources and availability;  Excavated material for reuse and recycling methods to be employed;  Excess spoil to be disposed of and methods proposed for disposal;  Endorsement from Sanma Provincial Council (SPC) and local landowners for use of sources and disposal of excess spoil; and  Methods of transportation to minimise interference with normal traffic. 146. The contractor will be responsible for; i) identifying suitable sources and obtaining all agreements associated with the sources and preparing a MSMP; ii) balancing cut and fill requirements to minimise need for aggregates from other sources; iii) managing topsoil, overburden, and low-quality materials so they are properly removed, stockpiled near the site, and preserved for reuse; and, iv) arranging for the safe disposal of any excess spoil including provision for stabilisation, erosion control, drainage and re-vegetation provisions at the disposal site 147. Effective implementation of the MSMP by the contractor as outlined above will ensure that potential environmental impacts associated with the management and disposal of construction materials will be negligible. 5. Waste Management 148. Uncontrolled waste disposal during construction (including contractor’s camp and work sites/yard) and operation activities can cause significant impacts including water and land pollution and public safety. Mitigation measures for the waste arising from the project will seek to reduce, recycle and reuse waste as far as practicable and dispose of residual waste in an environmentally sustainable way. 149. As part of the site-specific EMP (SEMP) prepared by the contractor waste management measures will be included in a waste management plan (WMP) to cover all matters related to solid and liquid waste disposal arising from construction related activities (including storage, disposal and accidental spills). The WMP will cover the following issues:  Expected types of waste and volumes of waste arising;  Waste reduction, reuse and recycling methods to be employed;  Agreed reuse and recycling options and locations for disposal/endorsement from SPC;  Methods for treatment and disposal of all solid and liquid wastes;  Establishment of regular disposal schedule and constraints for hazardous waste;  Program for disposal of general waste / chain of custody for hazardous waste;  Designation of waste disposal areas agreed with local authorities;  Segregation of wastes to be observed. Organic (biodegradable - such as tree trimmings) shall be collected, stockpiled and given to the local community (no burning is allowed on site);  Recyclables to be recovered and sold to recyclers;  Residual waste to be disposed of in disposal sites approved by local authorities and not located within 500m of rivers or streams;  Camp, construction offices/facilities and work’s yard to be provided with garbage bins;

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 Burning of construction and domestic wastes to be prohibited;  Disposal of solid wastes into drainage ditches, rivers, other watercourses, agricultural fields and public areas shall be prohibited; and  All solid waste will be collected and removed from work camps and disposed in designated local waste disposal sites. 150. The contractor’s WMP, as part of the SEMP, will need to be approved in writing by the implementing agency prior to start of construction. 151. Hazardous Materials and Hazardous Waste Disposal. Use of hazardous substances during construction, such as oils and lubricants can cause significant impacts if uncontrolled or if waste is not disposed correctly. Mitigation measures will aim to control access to and the use of hazardous substances such as oils and lubricants and control waste disposal. 152. The contractor’s mitigation measures in the hazardous materials section of the WMP will include but not necessarily be limited to the following measures. The contractor shall ensure implementation of such measures.  Ensure that safe storage of fuel, other hazardous substances and bulk materials are agreed by VPMU and follow internationally recognised good practice;  Hydrocarbon and toxic material will be stored in adequately protected sites consistent with national and local regulations and codes of practice to prevent soil and water contamination;  Segregate hazardous wastes (oily wastes, used batteries, fuel drums) and ensure that storage, transport and disposal shall not cause pollution and shall be undertaken consistent with national regulations and code of practice;  Ensure all storage containers are in good condition with proper labelling;  Regularly check containers for leakage and undertake necessary repair or replacement;  Store hazardous materials above possible flood level;  Discharge of oil contaminated water shall be prohibited;  Used oil and other toxic and hazardous materials shall be disposed of off-site at a facility authorised by the VPMU;  Adequate precautions will be taken to prevent oil/lubricant/ hydrocarbon contamination of drainage channel beds;  Spill clean-up materials will be made available before works commence (e.g., absorbent pads, etc.) specifically designed for petroleum products and other hazardous substances where such materials are being stored; and  Spillage, if any, will be immediately cleared with utmost caution to leave no traces. 153. All areas intended for storage of hazardous materials will be quarantined and provided with adequate facilities to combat emergency situations complying with all the applicable statutory stipulations. 154. Provided the WMP is prepared, approved and implemented in accordance with the above recommendations the environmental impacts associated with waste management are expected to be negligible.

D. Impacts on the Biological Environment

1. Impact on Aquatic Ecosystem 155. Information gathered in the FAR survey indicates an aquatic ecosystem that has been disturbed by reduced flow between the weir and powerhouse. The ecosystem has also been affected by the introduction of exotic species Oreochromis mossambicus and Gambusia affinis and forest degradation due to invasive vines and clearance for subsistence gardening and cattle farming. Despite this disturbance the aquatic biodiversity appears somewhat intact with a diversity of goboid species and others, typical of the rivers and streams of Vanuatu. 156. Construction stage impacts on the aquatic ecosystem include erosion, pollution, sedimentation and effects from run-off which have been described above. Effects of dewatering and requirement for environmental flows are discussed under operational impacts. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 24

2. Impacts on Terrestrial Habitat and Biodiversity 157. The project will involve minor clearance of vegetation within the boundary of the Sarakata hydropower plant. The vegetation to be cleared comprises grass and scrub which has colonised the site following clearance during the original construction and later upgrading of the scheme. Such vegetation is highly modified habitat of low biodiversity value. Less than 0.1 ha of such vegetation will be removed. The loss of less than 0.1 ha of such habitat due to the project is considered to be insignificant. Likewise the potential impact on terrestrial wildlife is also considered insignificant. 158. The proposed use of predominantly manual labour over mechanical equipment during construction will reduce the risk of excessive vegetation clearance. However, this will require close construction supervision to ensure vegetation clearance is minimised. Such provisions shall be included in the SEMP. 159. Workers will be prohibited from poaching or hunting any birds or wildlife from within the project area or adjacent catchment.

E. Impacts on the Socio-economic Environment

1. Construction Camp/Site Office Impacts 160. The workforce is expected to be in the order of 40 with 40% being unskilled labour which can be recruited locally from Fanafo and Mon Exil and surrounding settlements and 60% skilled labour which will likely come from outside the area can be accommodated in Luganville town therefore it is unlikely that there will be need for large-scale accommodation at the site. However, a site office and storage/maintenance area is likely to be established for the duration of the construction period. 161. The contractor will be required to adopt good management practices to ensure that both physical impacts and social impacts associated with a camp and/or office/yard are minimised. As noted previously fuels and chemicals, raw sewage, wastewater effluent, and construction debris associated with the construction site office and storage maintenance area is disposed of appropriately. As part of implementation of the WMP waste will be disposed of under controlled conditions to reduce impacts (refer to section B.5). 162. It is expected that the contractor’s camp and/or office/yard will be located within the boundary of the Sarakata hydropower scheme. 163. Social impacts include i) potential for conflict between workers from outside and local residents and communities; ii) risk of spread of communicable diseases including STIs and HIV; and iii) risk of contamination of local water sources. 164. The proposed measures to mitigate the above risks and impacts include:  Induction of workers on requirements of the project’s consultation and participation plan (CPP) 36 and grievance redress mechanism (GRM) 37 and protocols established for any contact between local communities and contractor/workers;  Implementation of a communicable disease awareness and prevention program targeting risk of spread of STIs and HIV as outlined in the project’s poverty and social assessment and gender action plan;  The contractor will put up notice boards regarding the scope and schedule of construction, as well as certain construction activities causing disruptions or access restrictions;  Location of site office and facilities to be agreed with local community including land owners) with facilities approved by the VPMU and managed to minimise impacts and any negotiation or lease arrangements to follow established procedure as per the resettlement plan;

36 A framework CPP has been prepared for the project. The CPP will be further developed during the initial stage of project implementation. 37 See Section VII. 4. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 25

 The facilities (camp and yard) will be fenced and sign-posted and unauthorised access or entry by general public will be prohibited;  Potable water, clean water for showers, hygienic sanitation facilities/toilets with sufficient water supply, worker canteen/rest area and first aid facilities will be provided onsite. Adequate toilet facilities shall be installed and open defecation shall be prohibited and use of toilets encouraged by keeping toilet facilities clean at all times separate toilets shall be provided for male and female workers;  For unskilled activities and labour, as many local people (including women) as possible will be recruited and trained;  Standing and open water (including puddles, ponds, drains etc) within the camp or office/yard shall not be permitted to reduce possible disease vectors;  To reduce risk of contamination of local water sources, wastewater effluent from contractors’ workshops (if any) will be passed through gravel/sand beds or an oil separator and all oil/grease contaminants will be removed before discharging it into natural water courses. Oil and grease residues shall be stored, handled and disposed of as per the agreed WMP;  The contractors facilities area will be cleaned up to the satisfaction of VPMU and local community after use; and  Post-construction the area shall be fully rehabilitated and all waste materials shall be removed and disposed to disposal sites approved by local authorities. 165. Effective implementation of the above measures will ensure that potential social impacts associated with the contractor’s camp and/or site office/yard will be negligible. 2. Occupational Health and Safety 166. A Health and Safety Plan (HSP) will be submitted by the contractor to establish routine safety measures and reduce risk of accidents during construction. The HSP will cover both occupational health and safety (workers) and community health and safety. The HSP will be appropriate to the nature and scope of construction activities and as much as reasonably possible meet the requirements of good engineering practice and World Bank’s Environmental Health and Safety Guidelines. 167. The HSP will include agreement on consultation requirements (workers and communities) established in the project’s CPP, establishment and monitoring of acceptable practices to protect safety, links to the complaints management system for duration of the works (in accordance with agreed GRM), and system for reporting of accidents and incidents. 168. Mitigation measures to be implemented by the contractor to ensure health and safety of workers are as follows:  Before construction commences the contractor will conduct training for all workers on environmental, safety and environmental hygiene. The contractor will instruct workers in health and safety matters as required by good engineering practice and Environmental Health and Safety Guidelines;  Regular meetings will be conducted to maintain awareness levels of health and safety issues and requirements;  Workers shall be provided (before they start work) with appropriate personnel protective equipment (PPE) suitable for civil work such as safety boots, helmets, gloves, protective clothes, goggles, and ear protection at no cost to the workers. Site agents/foremen will follow up to see that the safety equipment is used and not sold on;  The camp and/or office/yard will be equipped with first aid facilities including first aid kits in construction vehicles. A suitable vehicle will be available for transport to Santo for medial or emergency treatment if required;  Provision of potable water supply in all work locations;  The camp and/or office/yard will be securely fenced and warning signs erected. Unathroised people shall not be permitted within the cam and work sites/yards; and

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 Fencing shall be installed on all areas of excavation greater than 1m deep and at sides of temporary works. 169. All measures related to workers’ safety and health protection shall be free of charge to workers. The worker occupational HSP to be submitted by the contractor before construction commences and in tandem can be extended to cover public safety and approved by VPMU. 3. Community Health and Safety 170. Community safety can be threatened by works in public areas. General measures and requirements of the HSP which apply equally to community and workers have been discussed above. The HSP will cover measures to minimise risk to community safety including:  Communication to the public through public/community consultation as per the provisions of the CPP including notice boards and meetings etc. regarding the scope and schedule of construction, as well as certain construction activities causing disruptions or access restrictions;  Barriers (e.g. fence) and signboards shall be installed around the camp and construction areas to deter access to or through the sites;  The general public/local residents shall not be allowed in the sites which are high-risk areas;  Provision of warning signs at the periphery of the site warning the public not to enter; and  Strict imposition of speed limits along access through residential areas and where other sensitive receptors such as schools, hospitals, and other populated areas are located. 171. Such measures will manage risk to community health and safety to acceptable levels. 4. Physical Cultural Resources 172. Consultations with the local communities confirmed that there are no known physical cultural resources (including tambu sites) within the area of influence of the project. However, during earthworks and excavation, accepted “chance find” procedures will be followed for any accidental discovery of burial sites or archaeological artefacts, so that such artefacts are properly recorded and preserved.

F. Operation Impacts

173. Flood manaegment. Raising the weir height by 0.4 m will result in a slightly enlarged area of ponding in the Sarakata River immediately upstream of the weir. This is considered to be a minor and acceptable impact in that it will not result in flooding of riparian areas over and above what is normally experienced during frequent flood flows under existing conditions. Furthermore, the rubber dam provides the opportunity for limited regulation of flood flows which could have marginal benefits in respect of flood mitigation in the populated flood plain area near Luganville. 174. Oil containment. It was noted during the audit that the transformer bay at Sarakata hydropower plant does not have adequate oil containment facilities that would normally be expected in accordance with international best practice. No evidence of oil leakage from existing transformers was noted and the risks of leakage are considered low. Furthermore, the size of the transformers is not much larger than distribution level which does not normally require such containment. 175. Nevertheless, international best practice requires switchyard transformers to be housed on platforms with sufficient oil containment facilities to prevent release of oil to the surrounding environment in the unlikely event of release of oil due to catastrophic failure of a transformer. It is therefore recommended that upgrading of the existing transformer bay to internationally recognised standards with respect to oil containment facilities including oil separator at drainage outlet be included as part of the expansion works. 176. Environmental flows. The Project involves raising the existing weir height by 0.4 m in order to increase the intake design flow from 5.8 m3/s to 7.3 m3/s. There is no minimum environmental flow specification for the existing Sarakata 1 scheme and the government does not

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have any statutory requirement for minimum environmental flow for hydropower schemes. However, it can be stated that based on the flow duration curve, for at least 68% of the time the design flow would be exceeded at the intake such that under full capacity operating conditions there would be surplus flow spilling over the weir into the river channel. With increased weir height of 0.4m and proposed design flow of 7.3 m3/s, this would mean that for about 50% of the time the design flow would be exceeded under full capacity conditions and there would be spilling over the weir. In theory this represents an approximate 18% overall reduction of existing environmental flows (spilling over the weir) due to the expansion project. In reality there is additional spill when the hydro operates below its capacity, even though there is water available. Such situations are:  The demand for electricity is less than what the hydro could generate from the discharge available. This occurs in the dry season (cooler period) and at nights and weekends (all year around)  The generation from hydro is pulled back to allow diesel to operate in acceptable range (periodic) 177. The overflow currently is (and will be under the expansion) significantly more than what is estimated in the flow duration curve. Not only is there (and will be) significant continuous spill during the wet season but during dryer years and outside the wet season there will be more spill than estimated by the flow duration curve due to the scheme(s) operating at less than full capacity. 178. A fish assessment undertaken by DEPC at three sampling points between the weir and powerhouse on two occasions - wet season (February 2005) and dry season (July 2005) noted that seasonal migration of aquatic fauna had been affected to some extent by the Sarakata Hydropower scheme. However, it also noted that the waterfall was already a natural barrier to migratory species as well as crustaceans. The report noted that erosion of embankments, cracking of waterfall structure and changes in vegetative structure of the area such as formation of an island below the waterfall area were part of the impacts arising since the weir was constructed. Overall such impacts were considered not significant and that the existing hydropower scheme posed a low risk to the existing environment.38 179. As noted above, raising the weir height by 0.4m and subsequent increase in design flow from 5.8 to 7.3 m3,s theoretically would result in an overall 18% reduction of existing environmental flow release over the weir. This would likely result in longer periods, particularly in the dry season, when there would be no water flowing across the weir and thereby potentially having an adverse impact on the flora and fauna in the dewatered stretch. Mitigation measures will be required for this project to ensure there will be no significant impact on the existing aquatic ecosystem. 180. The current focus of international best practice for minimising impacts on river flows uses the natural flow regime as a guide. Ideally a modified flow regime should mimic the natural one so that the natural timing of different flows is preserved. 181. To some extent the operation of the existing Sarakata scheme demonstrates this since the weir allows for high natural flows characteristic of the wet season to pass across the weir. On the other hand during the dry season there are times when there is no flow spilling over the weir, with all the water diverted for power generation such that the dewatered channel may have very little flow for some periods. 182. To ensure the Sarakata 1 expansion project will not result in adverse impacts on the existing aquatic ecosystem it is proposed to provide for a minimum environmental flow release into the reduced flow stretch at all times equivalent to 10% of the mean annual flow at the weir. The proposed minimum environmental flow will be 1.05 m3/s and will be delivered continuously during operation of the Sarakata 1 expansion project through the existing flushing gate which will be preset (calibrated) for this discharge. The requirement for the minimum environmental flow will be included in the standard operating procedures for the project.is requirement will be confirmed 183. Based on the information provided above including the fact that a continuous minimum environmental flow of 1.05 m3/s will be released from the weir through the existing flushing gate

38 Government of Vanuatu-TAG. 2005. Report of the Monitoring/Mitigation on Social and Environmental Consideration on the Sarakata Hydropower Project. Vanuatu PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 28

into the reduced flow channel of the Sarakata 1 hydropower scheme will ensure that the Sarakata 1 expansion project will have no significant impact on the existing aquatic ecosystem. 184. Given the existing disturbed situation and the fact that the current seasonal variation in flows and variation in operating conditions due to demand will continue, it is unlikely that a less than 18% overall reduction in current environmental flows between the weir and the power house will have a significant impact on the current aquatic ecosystem.

G. Climate Change Effects and Adaptation Requirements

185. The following paragraphs rely primarily on review of available information on climate risks in Vanuatu with a view to proposing practical measures for integrating adaptive measures into project design. Unless where referenced otherwise, information has been gleaned from the following reports.  Profile of risks from draft report climate change and geo-hazards in Vanuatu (2013);  National Climate Change Adaptation Strategy for Land-based Resources 2012-2022 (Second Draft July 2011);  Vanuatu National Adaptation Program for Action (2007);  Australian Bureau of Meteorology and CSIRO; Climate Change in the Pacific: Scientific Assessment and New Research. Volume 2: Country Reports (2011); and  ADB’s Climate Risk and Adaptation in the Power Sector (2012). 186. Climate change is concerned with long term changes in weather patterns often averaged over 30 years. These include things like increases in average temperatures, changes to average rainfall and changes to the intensity and frequency of extreme events, such as cyclones. Climate change risk management approaches focus on predicting how these changes could impact on natural systems including hydrologic, geological processes, agricultural systems, ecological equilibrium and the built environment, and building resilience in these systems through adaptive interventions. 187. Based on the available information, an assessment of climate risks is presented and recommendations made for resilience building adaptive measures into the project. 1. Review of Relevant information 188. Fairly clear projections exist which suggest that temperature has been steadily rising and is expected to increase by 0.4-1.0°C by 2030 in Vanuatu. Projections in terms of rainfall changes are less consistent and climate change models are unable to resolve many of the physical processes involved in producing extreme rainfall.39 However, increases in extreme rainfall days are expected in terms of both frequency and duration. For the design of most infrastructure, peak rainfall is more important than annual average rainfall. 189. Sea level has risen near Vanuatu by about 6 mm per year since 1993 which may or may not be due to climate change, yet is nevertheless an issue that needs to be considered in long- term infrastructure development. Sea-level changes across the country will vary but is assumed to increase in general, along with its associated storm surges and wind strength. 190. Sea-surface temperatures have also gradually risen around Vanuatu since the 1950s and ocean acidification has increased which puts the health of coral reefs at risk. These are important because coral reefs protect the shoreline from impacts from storms and support the tourism and fishing industries, which are important to the country. 2. Exposure of Small Hydropower Infrastructure 191. Key civil infrastructure components associated with the small hydropower projects of the project including intake structure, canal, penstock, powerhouse and access road are located away from the coast in hilly areas.

39 Government of Vanuatu, Australian Bureau of Meteorology. 2011. Pacific Climate Change Science Program: Current and Future Climate of Vanuatu (2011) PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 29

192. These components are somewhat less exposed to climate driven extremes than most of the other infrastructure for which power will be supplied through distribution lines. 193. Distribution lines and their receiving infrastructure including schools, clinics, airstrips and community households are located mainly on the coast and are thus more exposed to extremes such as intense storms, tropical cyclones and flash floods including storm surges. 194. Vanuatu is expected to incur on average, US$47.9 million per year in losses due to earthquakes and tropical cyclones and in the next 50 years Vanuatu has a 40% chance of experiencing one or more events in a calendar year that will cause casualties exceeding 900 people.40 195. A 2011 Natural Hazard Risk Mapping prepared by the United Nations Office for the Coordination of Humanitarian Affairs identified that there is a 10% probability that Malekula and Espiritu Santo will experience a Category 4 tropical storm (wind speed 210-249 km/hr) in the next 10 years. 41 There is also a 20% chance of these islands experiencing the highest category of earthquake intensity within the next 50 years. 196. Figure 5.1 below illustrates the highest risk areas in the country for tropical cyclones and earthquake (ground shaking and tsunami), in terms of average relative annual losses. Northwest Malekula and southern Sanma (Project area) are cited as being among the highest risk areas of the country. Figure 5.1 - Loss/Value from Earthquake and Tsunami Damage by Ward

Source: Pacific Catastrophe Risk Assessment and Financing Initiative (2011) 197. Climate change is expected to change the patterns for tropical storms. Generally there is a projected decrease in the number of events but an increase in their intensity or severity (i.e. category 4 and 5 being the highest). Windstorms, including cyclones, tidal surges and storms are

40 SOPAC, ADB, WB,JICA, GFDRR, AirWorldwide, GNS Science. 2011. Pacific Catastrophe Risk Assessment and Financing Initiative 41 United Nations Office for the Coordination of Humanitarian Affairs. 2011. Vanuatu Natural Hazard Risks PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 30

already the leading hazard cause of losses of life and assets across the Pacific.42 Earthquakes are the most important hazard for building damage. 198. It should be noted that the above assessment does not include risks from sea-level rise and associated storms, increased temperatures and land based flooding. This type of hazard assessment does not exist on a country scale. It should be noted however that overall Vanuatu has high exposure to tropical storms and earthquake risks. Sea level rise will increase exposure where elevations are lower and floods may increase in more mountainous areas. 199. Some of the identified risks posed by climate change and natural hazards in the Pacific, specific to the energy sector are described in Table 5.1. This table is adapted from ADB’s Climate Risks and Adaptation in the Power Sector (2012). It includes various adaptation options that could be considered for the risks identified in respect of the small run-of-river type hydropower projects proposed under the project. 200. Energy production, utilisation, conversion and transportation have and will be affected by most natural weather phenomena such as cyclones, floods, droughts and storm surge. Table 5.1 - Summary of Impacts and Adaptations on Hydroelectricity Infrastructure

Potential Resilience Climate change/hazard Potential Impact Complementary Measures Measure

Sea-level rise Most hydro is located inland Materials substitution for Coastal zone protection to protect and not directly affected by less corrosive materials estuaries and watersheds sea-level rise, possibly increased rate of deterioration of concrete structures due to increased salinity from sea- level penetration upstream Increase/decrease in Energy from hydropower Where flow is expected to Develop improved hydrological rainfall relies on rainfall and reduced increase, modify the forecasting techniques and river flow over a period of number and type of adaptive management operating time could reduce or disrupt turbines that are better rules; develop basin-wide entirely energy generation. suited for expected water management strategies that take flow rates, reduce into account the full range of expected turbine lifetime downstream environmental and due to higher suspended human water uses; restore and sediment loads, modify better manage upstream land canals to better handle including afforestation to reduce changes in water flows, floods, erosion, silting, and modify spillway capacities mudslides.

Improved watershed modelling to inform better management Cyclones/hurricanes Flooding of riverbanks could Design more robust and frequent strong adversely affect stream flow infrastructure for heavier storms particularly where hydropower flooding and extreme

is generated. events Transmission/distribution lines and poles are damaged. Increased temperatures Higher evaporation rates, Water cooling systems in

reduced turbine efficiency turbines Earthquakes Damage to infrastructure, oil Use design standards spills and fire hazards. applicable to high earthquake risk areas. Source: Asian Development Bank (2012)

42 World Bank. 2006. Not if But When: Adapting to Natural Hazards in the Pacific Islands Region (Policy Note) PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 31

3. Recommendations for Integrating Climate Change Adaptation Measures into the Project Design 201. Integrating climate change adaptation measures into the design of the hydropower scheme needs to be based on the economic considerations associated with the relatively small-scale nature of the scheme. The expected increase in extreme rainfall days in terms of both frequency and duration is the prime climate change issue in respect to the design of small run-of-river hydro projects in Vanuatu. Therefore design criteria in respect of peak flood size and levels need to take account of the potential effects of climate change. 202. Critical structures that need to be considered for possibly increased peak floods include: (i) intake weir - suitable erosion protection to prevent scour around the intake weir’s training walls; and (ii) powerhouse - level of powerhouse discharge outlet needs to be sufficiently high so as to prevent any flood induced backflow resulting in flooding of the powerhouse and damage to electromechanical equipment. 203. Appropriate climate change adaptation and resilience needs to be incorporated into the design of structures including: i) suitable erosion protection to prevent scour around the intake weir’s training walls, and ii) powerhouse - level of powerhouse discharge outlet needs to be sufficiently high so as to prevent any flood induced backflow resulting in flooding of the powerhouse and damage to electromechanical equipment. Design criteria need to be established for these structures that take account of future climate change induced peak flood size and levels during the design life of the plant. In practical terms this could mean increasing the maximum design flood level for each of the above structures and/or increasing the level of design flood freeboard. If possible, the establishment of design criteria needs to be based on available climate change modelling data to develop synthetic extreme event data. In the absence of climate change modelling data the design criteria should be demonstrably conservative. Design criteria for the hydropower projects will be established by the consultant responsible for preparation of the tender documents. 204. Other measures to mitigate the effect of an increase in intensity and frequency of extreme rainfall and consequent floods on the project components centre on enhanced erosion protection. Such measures could include: (i) additional river bank protection / rock armor placed around the intake structures and powerhouse tailrace; and (ii) enhanced slope protection works along steep sections of the headrace canal routes (benching, cut off drains, masonry etc). 205. The extent to which such climate change adaptive measures are employed for erosion protection needs to be balanced against the marginal economics of small scale hydropower projects. For example, for project components that are repairable and any resulting outage not significant, normal best practice design criteria should apply. Any additional erosion protection measures such as benching of headrace canal slopes (over and above normal design criteria for such works), can be implemented during project operation if required. On the other hand if there is a plentiful supply of nearby rock material able to be utilised for erosion protection it might be that a small incremental cost for enhanced erosion protection for climate change adaptation purposes during construction may have a significant economic benefit. 206. In principle, it is suggested that the project only makes climate change design decisions on structures that cannot be practically modified or adapted later during the project’s operational life. This includes the critical structures that need to be protected against peak flood size and levels as indicated above. However, if the incremental cost of providing enhanced river bank and/or slope protection as a climate change adaptation measure is low, this should also be incorporated into the project design otherwise such measures can be implemented as needed during the operational life of the project. VI. INFORMATION DISCLOSURE AND CONSULTATION

207. Stakeholder consultations on environmental issues for the project were undertaken at both the national, provincial and community level.

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A. National Level Consultation

208. Consultations at the national level were undertaken on a one on one basis with relevant agencies. Key institutions and their responsible personnel were identified by the environmental safeguards team and meetings arranged accordingly. This was undertaken in Port Vila and Luganville. The purpose of the consultations was to i) briefly outline the key features of the the project project (sub-project location, indicative lay out/footprint etc) ii) ascertain key stakeholders’ views and concerns in relation to the proposed developments and iii) obtain information from the stakeholders on environmental and social characteristics of the sites that would assist in the preparation of the IEEs including any constraints that need to be addressed. 209. A list of key national stakeholders consulted including summary of information obtained and significant comments made is provided in Annex 5 Table A5.1. Relevant information obtained and comments made during the consultations have been integrated into the IEE where appropriate. No significant environmental constraints on the proposed the project were identified through the national level consultations with all those consulted being supportive of the project. The most significant comment came from DEPC’s Biodiversity Officer who expressed the importance of ensuring that aquatic biodiversity of project areas was surveyed so that adequate mitigations can be implemented as necessary to protect any vulnerable species that might be present. B. Provincial and Community Consultation

210. Provincial and community consultations in respect of both environmental and social issues were undertaken in Luganville (Sanma Provincial Council) 20th March and Fanafo Village (including participants from nearby Mon Exil village) on 16 May.2014. The project consultation personnel included the Consultant’s international environment specialist (IES) and international and national social/resettlement specialists. Owing to a national meeting of provincial councils on 16 May, representatives of SPC were unable to accompany the team to Fanafo Village. Key activities during the consultation visit included:  Introductory meeting with SPCl  Consultation meeting with project affected land owners, interested stakeholders and community members of Fanafo and Mon Exil villages 211. The purpose of the provincial and community consultation was to disseminate basic project information and obtain the views and concerns of communities with respect to environmental issues related to the project with a view to addressing these issues in the project design and implementation. The consultations also provided the opportunity to gather relevant site specific information from the stakeholder’s perspective on the physical biological and social environments of the project area. 212. Sanma Provincial Council. An initial meeting was held with the SPC to introduce the Safeguards team, explain the purpose of the visit and consultation process within the context of the overall TA objectives including government and ADB safeguards requirements, obtain information relating to the community’s readiness for the project including any issues of concern they might have, and to request the SPC’s assistance in supporting the consultation process. Four members of the SPC attended the meeting. Other members were absent due to their involvement in responding to a local landslide disaster in which six people lost their lives as a result of tropical cyclone Lusi. A list of the attendees is provided in Annex 5, Table A5.2. 213. A power point presentation delivered by the IES provided the opportunity to inform the SPC of what the proposed Sarakata 1 extension, Sarakata 2 and Wambu hydropower projects entailed. The presentation included sketches of the key project components, a summary of potential environmental and social impacts and benefits arising from the project, and a preliminary assessment of the significance of such impacts and likely mitigation measures required to ensure impacts are minimised and acceptable. 214. The SPC were very familiar with the key components of the hydropower project through the existing Sarakata hydropower project and expressed overall support for the project and advised they would be available to assist in coordinating and participating in community consultations. On environmental issues the Consultant was referred to the SPC’s Environment Extension Officer who PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 33

was unable to attend the meeting. The IES met with SPC’s Environment Extension Officer on 27 March. He advised there were two community based conservation areas in Santo including Nambauk and Butmas. Nambauk conservation area is 6 km west of the Sarakata powerhouse within the Tafwakar River catchment and will not be affected by the project. Butmas conservation area is located about 10km north of the Sarakata hydropower plant and will also not be affected by the project. 215. He advised that he had been undertaking community awareness activities at Fanafo on need for watershed protection above existing Sarakata hydropower plant, namely avoidance of tree cutting and limiting fishing activities. He also advised that Sarakata catchment was logged during 1990s along with some parts of Wambu catchment. Most large trees were taken. He had no specific concerns about the presence of endangered or endemic species within the Sarakata or Wambu project areas. 216. Community consultation/information dissemination. Community consultations were held at Fanafo (including participants from nearby Mon Exil Village) on 16 May. A total of 20 people attended the meeting. The meeting commenced with introduction of the consultant team by the national social/resettlement specialist. The IES then outlined overall purpose of the stakeholder consultation to provide project information and listen to any concerns and answer any queries the community might have with respect to the project and particularly environmental and social impact issues. The social/resettlement specialist addressed land and social issues. 217. The communities were fully aware of what was involved in the construction and operation of a hydropower project due to their experience with the Sarakata hydropower scheme located some 3 km away and had benefitted from grid connected electricity for many years. Recent expansion of household connections within the village is also currently planned by VUI, the Sarakata hydropower plant operator. 218. No significant environmental concerns were raised in respect of Sarakata 1 expansion. The community was advised that the findings of the IEE would be integrated into the design and operation of the project and that the IEE will be publically available once completed. 219. One participant expressed keen interest that local people might be employed as labourers during project construction and recieve skills training with possible flow on work during operation of the plant. As verified with VUI, the plant provides direct employment to a number of residents in the area (currently 11 employees at the plant are from Fanafo). 220. With regard to social concerns, the participants inquired on what direct benefit the communities would derive from the project considering that even Fanafo, which is relatively close to the existing hydropower plant, is not fully electrified. It was clarified that the power availability in Fanafo is the direct result of the hydro and that part of the objectives of the project is to expand coverage and ensure access to electricity by the rural communities. 221. Rural communities like Fanafo are beneficiaries of cross subsidy where the consumers only pay a third of the cost of the service. The hydro operator also provides other services such as the grading of the Fanafo road and contributed funds to the Public Works Department to enable them to do periodic maintenance. It was explained that communities like Fanafo will benefit from the employment opportunity to be provided by the subproject. Local labour will be mainly sourced from the area and construction activities will generate income earning opportunities particularly for women who may engage in food vending and the like. 222. In addition to the above, the social safeguards team undertook focus group discussions, socioeconomic survey of sample households and key informant interviews within the influence zone of Sarakata I. Results of these have been integrated into the IEE. 223. Disclosure. Initial disclosure of the project to local communities and key Government stakeholders was undertaken during the community consultation and participation process. This included a description of the project using maps and diagrams, and its potential social and environmental impacts and proposed mitigation measures. The communities were advised that the finalised IEE would be made available to the communities as well as being posted on the ADB website. The IEE will be disclosed appropriately to the communities in accordance with the projects

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CPP, ADB Public Communications Policy 2011, and government requirements as per EIA Regulations Order No. 175 of 2011. VII. ENVIRONMENTAL MANAGEMENT PLAN

A. Introduction

224. The environmental assessment of the construction, operation, and maintenance of project has determined that the project will have an insignificant impact on the local environment. Environmental mitigation measures have been proposed to avoid or minimise environmental impacts to acceptable levels. The proposed environmental mitigation measures are proven technologies normally associated with internationally recognised good engineering practice. 225. An EMP for the project is presented below and complies with government and ADB requirements. The EMP includes the following information:  Implementation arrangements for the EMP including: o institutional roles and responsibilities for EMP implementation throughout all stages of the project (procurement, design, construction, operation) o capacity building requirements for executing agency to ensure environmental management requirements are properly understood and fully implemented o Grievance redress mechanism  Environmental mitigation and monitoring matrices including: o potential environmental impacts that could occur during each stage of the project (pre-construction/design, construction, operation) o proposed mitigation measures to address each impact identified o agency responsible for implementing each mitigation measure o monitoring tasks to ensure mitigation measures have been implemented effectively during each stage of the project o schedule and responsibility for monitoring  Costs associated with implementation of all aspects of the EMP.

B. Implementation Arrangements

226. General. It is likely that the project will be implemented under an engineer, procure and construct (EPC) contract and design and supervision consultant (DSC). Under such an arrangement the EPC contractor will be responsible for the final design of the project based on the feasibility study design, project construction, project commissioning, and training of the operator. Currently Vanuatu’s generation and distribution facilities are operated under concession agreements by two operators, UNELCO (Efate, Malekula and Tanna) and VUI (Espiritu Santo).

C. Institutional Roles and Responsibilities

227. Department of Energy. The DOE (within MOCC) is the implementing agency for the project. The DOE will be responsible for ensuring that sufficient resources are in place to undertake its environmental safeguards responsibilities. 228. Environmental management responsibilities. The VPMU will implement the project on behalf of MOCC-DOE. The VPMU will be responsible for overall implementation including procurement, construction, and commissioning. The VPMU will be supported by the DSC which will include an international environmental specialist (IES) to support the existing environment officer (EO) in the VPMU and to ensure environmental safeguards are implemented in accordance with government and ADB requirements. 229. The VPMU will be responsible for ensuring that the environmental assessment is submitted to DEPC for issue of environmental permit and confirming whether a water resources permit is required, the EMP is updated, cleared and then implemented during each stage of the project (procurement, construction and operation), that the EPC contractor prepares and submits a

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suitable SEMP, and monitoring compliance with the approved SEMP. This includes ensuring that all government and ADB requirements and procedures relating to environmental safeguards are complied with. The VPMU will be supported by a DSC during all aspects of project implementation. In respect of environmental management and safeguards application the IES will support the VPMU in the following tasks:  Preparation of the EPC tender documents including integration of the EMP from the approved IEE and draft method statements for various aspects of the EMP such as HSP, MSMP and WMP;  Consult with DEPC to check whether the IEE meets the EIA requirements of the EMC Act and Environment Regulations Order 2013, re-format/upgrade the IEE as necessary, make the application for development consent on behalf of the DOE and obtain a development consent as required;  Ensure that VPMU and the EPC contractor are aware of any consent conditions and implications those might have for project implementation;  Consult with DGMWR with regard to application requirements and process for obtaining water resource permit and building permit;  Work with the VPMU’s social specialists in respect of implementation of the CPP and GRM;  Supporting tender evaluation with respect to contractors’ environmental management capability and proposed EMP provisions;  Providing training/induction on EMP updating (based on detailed design) and requirements to successful contractor;  Review and approval of contractor’s SEMP;  Monitoring compliance of the contractor with the approved SEMP and other provisions of the EPC contract;  Review of contractor’s monthly reports on safeguards application;  Providing inputs to quarterly progress reports and safeguards monitoring reports to be submitted to VPMU and ADB; and  Capacity building of government in environmental management and supervision aspects of project implementation. 230. The IES will oversee that EMP design and construction requirements are fully integrated into the tender documents and assist government meet all its obligations for EMP and safeguards implementation as outlined above. A key aspect of the IES’s role will be training and capacity building of the VPMU’s in-house environment officer and other staff (including management) in implementation of its obligations under government law and regulations. Given that the existing VPMU is already responsible for coordinating safeguard issues for three large projects, it is recommended that an additional environment officer be recruited. 231. A terms of reference for the IES has been prepared. To meet the TOR it is recommended that three person months of IES time is required intermittently over the procurement and construction period. 232. EPC contractor. The EPC contractor will be responsible for ensuring that all environmental design and construction environmental mitigation requirements specified in the EPC contract are included in the design and properly implemented during construction. The EPC contractor will include staff to be specifically responsible for preparation and implementation of the SEMP. 233. Based on the detailed design of the project, the EPC contractor will be required to prepare the SEMP which describes the contactor’s construction methodology and measures and plans for implementing the SEMP (including method statements for WMP, HSP and MSMP) as specified in the EPC contract. This includes maintaining a site diary and a grievance registry (as per the GRM). The SEMP shall be approved by the VPMU prior to the EPC contractor’s mobilisation to the site. The EPC contractor will be required to report on the implementation status of the SEMP. 234. Department of Environmental Protection and Conservation. As of 2013, the DEPC comes under the Ministry of Climate Change, Adaptation, Meteorology and Geohazards, Energy, Environment and Natural Disaster Management. The DEPC is responsible for the administration and enforcement of the Act and Environment Impact Assessment Regulations 2011 (amended PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 36

2012). As such the DEPC is responsible for i) issuing a development consent for the project by way of review and approval of the IEE (as EIS) and ii) monitoring and enforcing compliance of the project with the conditions of the development consent. 235. Department of Geology Mines and Water Resources. The DGMWR has overall responsibility for water resources management in Vanuatu as per the Water Resources Act. The Act requires that if a land lease grants the right to use any water the lessee must apply to the Director of Water Resources for the right to use the water for any purpose other than the customary rights or for domestic purposes. The Act also stipulates that works and uses undertaken prior to the commencement of the Act are lawful. In this respect the existing Sarakata hydropower project does not need to apply for the right to use the water. However, as Sarakata expansion will involve abstraction of additional water for the scheme the DOE is required to apply for and obtain water use rights from the Director of Water Resources for Sarakata expansion works. This will be undertaken during the detailed design / pre-construction stage.

D. Capacity Building Requirements

236. DEPC. The DEPC operates from its office in Port Vila. However, certain environmental management and monitoring functions can be delegated to provincial administrations if and when they have the resources and capacity to conduct these activities. Currently Sanma Province is the only province that has a full time resident Environmental Officer. DEPC currently has 17 staff, 10 of whom are permanent, seven on contract and two volunteers. The staff are in four divisions: i) Biodiversity Conservation; ii) Environmental Protection; iii) Environmental Assessment and Planning (one EIA officer and one compliance officer); and iv) Support Services. Within the current structure there are skill gaps across all divisions. 237. The Environmental Assessment and Planning Division has the mandate for overall coordination and effective implementation of the EIA process and procedures, as well as implementation and enforcement of the Act. A number of institutional constraints to effective implementation of the Act have been identified by others in previous reviews. These include:  Lack of capacity and funding for carrying out the DEPC’s functions under the Act;  Environmental officers are uncertain about their powers to enter land in the course of their duties;  Many rural subdivisions around Vanuatu, particularly for Efate, Malekula and Santo have not complied with the Act; and  Complications associated with the fact that various Ministerial responsibilities are in potential conflict. For example the DEPC was part of the Ministry of Lands, which also has functions of promoting development, while the subject of foreshore development lies within the responsibility of the Ministry of Internal Affairs.

238. ADB has recently commenced institutional support to DEPC through Technical Assistance for Strengthening and Use of Country Safeguard Systems (RETA 7566-REG), which aims to address the above constraints. Key components of the technical assistance include:  Capacity assessment and review of DEPC’s track record in implementing the Environment Act and EIA regulations;  Diagnostic of environmental related laws and regulations;  Preparation of an action plan based on i) recommendations of capacity assessment and legal diagnostic study, and ii) consultation with key government agencies, development partners and NGOs; and  Strengthening procedures through development of tools for DEPC to improve capacity in implementing the Environment Act and EIA regulations. This will involve, interalia, preparation of manuals and development and delivery of training materials 239. VPMU. The VPMU currently has five staff comprising Director, Project Management Advisor, Civil Engineer, Environment (Safeguards) Specialist and Financial Specialist. Three additional staff are expected to join the VPMU later in 2014. They include a Communications and Public Relations Officer, Monitoring and Evaluation Officer, and Executive Secretary.

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240. The VPMU is currently the implementing agency for three major infrastructure projects financed by government and development partners including the Port Vila Urban Development Project, Vanuatu Interisland Shipping Support Project and Lapetasi International Multi-purpose Wharf Development Project. It is understood that additional projects may be added to VPMU’s current portfolio over the next year. All of the projects are supported by international technical consultants which will include an international and national specialists responsible for supporting the VPMU in undertaking its environmental responsibilities (as described above for the project). 241. VPMU’s environment specialist has more than six years' experience supervising and coordinating environmental and social/resettlement requirements for infrastructure projects and as such has benefitted from significant on-the-job training and mentoring from international environmental consultants. That being said, additional resources will be required as additional projects are added to the VPMU’s portfolio. Whilst support is provided through consultants, currently there is only one experienced national environmental consultant specialist in Vanuatu and that person is working on all three of VPMU’s projects. Thus it is recommended that VPMU recruits an additional NES to support implementation of the the project. 242. It is recommended that the TOR of the DSC’s IES under the the project include a significant component for training of graduate national environmental specialists. Such training could involve a series of modules ranging from preparation of EIAs and EMPs to implementing, monitoring and reporting of EMP implementation including the various EMP activities required through the project procurement and implementation process.

E. Grievance Redress Mechanism

243. In order to receive and facilitate the resolution of affected peoples’ concerns, complaints, and grievances about the project’s environmental performance a grievance redress mechanism (GRM) will be established for the project. The GRM is intended for addressing environment related grievances as well as social issues (including land acquisition/resettlement issues) in relation to construction activities. 244. The GRM will be used for addressing any complaints that arise during the implementation of the project. 245. The GRM will include a proactive component whereby prior to commencement of construction a meeting will be convened by VPMU and the implementation team (DSC, EPC contractor) to formally advise the community of project implementation details (designs, activity schedule, access constraints etc.), so that all necessary project information is communicated effectively to the community and their immediate concerns can be addressed. This will include explaining to the community how the GRM will work. If required, following comments and agreement with the community at this meeting, the GRM may be amended and updated by the VPMU. 246. The GRM will address affected people's concerns and complaints proactively and promptly, using an understandable and transparent process that is gender responsive, culturally appropriate, and readily accessible to all segments of the affected people at no costs and without retribution. The mechanism will be consistent with the government administrative and judicial processes. 247. Type of grievances covered. The GRM will cover any complaints or concerns made by stakeholders or affected communities and will include:  Negative impacts on a person or a community (e.g. financial loss/loss of subsistence resources, physical harm, nuisance, impacts on social infrastructure, damage to property outside designated site boundary);  Dangers to health and safety or the environment;  Failure to comply with mitigation measures, standards or legal obligations;  Harassment of any nature;  Criminal activity;  Improper conduct or unethical behavior;

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 Financial malpractice or impropriety or fraud; and  Improper disclosure or attempts to conceal any of the above. 248. GRM Establishment and Procedure. During the EPC tender process, VPMU with support from the SPC will assist the affected communities/villages establish a community advisory committee (CAC) made up of affected persons representatives, community representatives and representatives of the customary land owners. The CAC will be chaired by the village chief. In the event that the village chief is a “customary owner” the chair of the CAC may be represented by the community religious leader. The community will be advised that the CAC will be the first point of contact for any person with a grievance in regard to the project. The chair of the CAC will be responsible for communicating community members’ grievances to the EPC contractor or to the VPMU. The chair of the CAC will form part of the grievance redress committee (GRC) which will be made up of the CAC chair, contractor’s representative, SPC representative and VPMU. 249. Prior to the selected contractor’s mobilisation, the VPMU will convene a public consultation meeting in Fanafo. The meeting will be attended by the EPC contractor, VPMU, SPC and any other interested community members. The objectives of the meeting will be as follows:  Describe the disclosure requirements and process for the project including engagement with the community as per the provisions of the CPP;  Introduction of key personnel including roles and responsibilities;  Presentation of project information of immediate concern to the communities by the EPC contractor (timing and location of specific construction activities, design issues, access constraints etc.) This will include a brief summary of the EMP - its purpose and implementation arrangements;  Establishment and clarification of the GRM and communication activities to ensure communities are continually advised of project progress and associated constraints throughout project implementation;  Identification and confirmation of CAC for affected communities and membership of the GRC; and  Elicit and address any immediate concerns of the community based on information provided above. 250. Following the pre-mobilisation public consultation meeting, complaints associated with the construction activity or other project related matters will be routinely handled through the GRM as explained below and shown schematically in Figure 7.1. The GRM will be updated if necessary as per any agreement reached during the pre-mobilisation public meeting. 251. Step one. Individuals will lodge their environmental complaint/grievance with the CAC. The CAC will discuss the complaint and either resolve it with the complainant or where this is not possible or the complainant is not satisfied with the CAC’s solution the chair of the CAC will bring the individual’s complaint to the attention of the EPC contractor’s environmental engineer. He/she will record the complaint in the onsite environmental complaints register. The environmental engineer will discuss and resolve the complaint with the chair of the CAC. 252. Step two. If the complaint is not resolved within one week, then the chair of the CAC will bring the complaint to the attention of the GRC. The GRC will meet to resolve the issue. The GRC is expected to resolve the complaint within a period of two weeks. The resolved complaint will then be communicated back to the complainant via the chair of the CAC. The EPC contractor’s environmental engineer will then record the complaint as resolved and closed in the environmental complaints register. 253. Step three. Should the complaint not be resolved through the GRC, the issue will be adjudicated through established forums including the Customary Land Tribunal, the Ombudsman and the Judiciary depending on the nature of the complaint. DOE will keep track of the status of all complaints through the EPC contractor’s monthly report and QPR and will ensure that they are resolved in a timely manner. All GRM matters will be subject to monitoring and disclosure.

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Figure 7.1 - Grievance Redress Mechanism

Affected Person through CAC

EPC contractor Redressed

Not Redressed

Appeal to GRC Redressed

Not Redressed Grievance Redress Committee (CAC, Contractor, SPC, VPMU)

Resolve through established forums (Customary Land Tribunal, Ombudsman Judiciary)

F. Environmental Mitigation and Monitoring Matrix

254. The EMP matrix for the project is provided in Table 7.1 and identifies the following:  Potential environmental impacts that could occur during each stage of the project;  Proposed mitigation measures to address each impact;  Agency responsible for implementing mitigation measures;  Monitoring tasks to ensure mitigation measures have been implemented effectively during each stage of the project; and  Schedule and responsibility for monitoring.

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Table 7.1 - EMP Matrix: Environmental Mitigation and Monitoring Plan

Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor DESIGN / PRE CONSTRUCTION Project disclosure 1. Submit ADB-approved IEE to DEPC for 1 to 5: 1 and 2 1 to 4: Cost Environmental Prior to signing VPMU Cost included in approval using applicable form and obtain a VPMU/DSC Immediate. included in approval for the of EPC contract VPMU budget Development Consent as per the EIA Act. 6 EPC 3: During VPMU/DSC project obtained and start of site for additional 2. Obtain Water Use Right from DGMWR and contractor tender staffing from DEPC. works. Once. NES to support Right to construct, operate and maintain works preparation 5: Cost Complete check the project associated with resources that do not comply 4:Before start included in of items 1 to 5. procurement with customary rights and rights of occupiers as of civil works EPC contract and impl. specified in Part 2 Division 1 Section 4 of the 5:EPC detailed Estimate is USD Water Resources Management Act. design phase 40,000 per year. 3. Ensure DEPC approved EMP and any conditions of Development Consent are included in EPC tender documents including i) requirement for EPC contractor to seek DEPC approval and update EMP in the case of significant changes to FS design ii) requirement for EPC contractor to prepare a SEMP (based on EMP) for approval of VPMU/DSC before commencement of construction. The SEMP will demonstrate the manner (location, responsibilities, schedule/ timeframe, budget, etc.) in which the contractor will implement the mitigation measures specified in the EMP approved under DEPC Development Consent. 4.Tender document to include upgrading of the existing transformer bay to internationally recognised standards with respect to oil containment facilities including oil separator at drainage outlet. 5. Implement plan for Grievance Redress Mechanism as described in the IEE 6. EPC contractor’s project design to adhere to all design related mitigation measures in FS EMP or in updated EMP as approved under DEPC Development Consent.

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor Environmental capacity 1. VPMU to commit to provide sufficient 1: VPMU Initiate during 1: & 2: IES 1.ADB loan Prior to start of VPMU As above. development resources for project duration to oversee EMP 2: DSC procurement and NES cost covenants site works and implementation. 3: EPC period and included as 2.IES TOR, throughout 2. DSC to train VPMU/EO in implementation of contractor continue part of VPMU DSC progress construction EMP as well as general training in ADB throughout (project) reports to phase. safeguards requirements to raise awareness project costs VPMU/ADB and build capacity of environmental construction 3:Included in 3. EPC Tender management in VPMU. A mix of workshops EPC contract documents and and on-the-job training to be used. cost check during 3. Conduct contractor / workers’ orientation on construction. EMP provisions. Environmentally 1. EMP is included in EPC tender documents to 1 & 2: 1 & 2: Bid Included in 1 & 2: Inclusion Bid preparation VPMU/IES & VPMU – as responsible ensure that mitigation measures are budgeted DSC for VPMU preparation bid cost in bid docs stage. NES above. procurement and to prepare the contractor for environmental 3: Preparation 3 & 4: Before IES & NES – responsibilities. of SEMP - EPC start of civil 3 & 4: Check included in DSC 2. Specify in tender document that contractor contractor, works compliance Before start of staffing shall engage appropriately qualified and Approval of site works experienced staff to take responsibility for the SEMP-DSC environmental management and safety issues 4: EPC and monitor the effectiveness and review contractor mitigation measures as the project proceeds. 3. EPC contractor to submit site specific environmental management plan (SEMP) based on contractual EMP for approval by DSC (i.e., site clearance, site drainage, waste and materials management, traffic, noise and dust management etc.). 4. Contractor recruit qualified and experienced staff to oversee implementation of environmental and safety measures specified in the EMP. Disclosure of CPP and 1: Project documents disclosed to public and VPMU Before EPC Included in EPC tender Monthly EPC Included in GRM and establishment communities in an appropriate form and contractor bid cost document; Grievance contractor, project cost of procedures manner and accessible place mobilisation Grievance registry, monthly VPMU VPMU - as 2: Inclusion of appropriate measures from CPP registry, reports above. and GRM in tender documents monthly reports

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor Workers and public Prepare a Workers and Public Safety Plan EPC contractor Before start of Cost included EPC tender During EPC VPMU/IES & VPMU – as safety (WPSP) to identify interfaces between the in civil works in EPC document. tender NES above. works and the public, formulate measures to preconstruction contract. Check at preparation and IES & NES – ensure safety of workers and the public, and preconstruction. again before included in DSC prevent accidents due to the construction start of works staffing works. Climate change Design criteria in respect of peak flood size and VPMU/DSC EPC tender Included in Civil design Prior to signing VPMU/DSC VPMU – as adaptation measures to levels need to take account of the potential document overall specifications in of EPC contract (IES & NES) above. be properly considered effects of climate change. Critical structures preparation project cost tender and start of site IES & NES – and incorporated into that need to be considered for possibly document works. Once. included in DSC design as necessary increased peak flows include: staffing 1 Intake weir - level of the training walls need to EPC be sufficiently high to prevent overtopping, contractor’s stilling basin design to address energy detailed civil dissipation requirements; design 2. Intake structures isolation facilities - level of intake deck sufficient to ensure gate is available at all times to deal with any need to close down operation of the hydropower scheme; and 3. Powerhouse - Level of powerhouse discharge outlet needs to be sufficiently high so as to prevent any flood induced backflow resulting in flooding of the powerhouse and damage to electromechanical equipment. There are many examples in the past of powerhouse flooding due to extreme flood events. Appropriate design criteria to be established based on available climate change modelling data to develop extreme event data. In the absence of such data, design criteria to be demonstrably conservative. Grievance Redress Establishment and implementation of GRM VPMU Before start of Met by GRM confirmed Before start of VPMU Incl. in VPMU Mechanism established confirmed by VPMU. civil works VPMU/ and agreed with civil works budget for project community. additional NES

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor Raise awareness of Induction safeguards training for EPC DSC Before Cost included Approved Before VPMU Included in EPC contractor on contractor submission of in project and SEMP submission of VPMU budget environmental SEMP contract SEMP for additional management matters NES Construction permits Obtain environmental permit form DEPC; VPMU Before start of Cost included Documents Once before VPMU As above Obtain Permit for any discharge of pollution EPC contractor construction in contract start of (DEPC) and Building Materials permit Construction (DGMWR) if required. Audit of Sarakata 1. Request formal clarification from the Director VPMU on 1 and 2 Cost included 1,2 Documents 1,2 Prior to VPMU As above hydropower plant – of Environment (under the Ministry of Climate behalf of Immediate in contract 3 Works signing EPC corrective actions Change Adaptation, Meteorology & VPMU; DOE 3 and 4 EPC included in contract. Once required Geohazards, Energy Environment & National tender tender 3 Once bid Disaster Management Office) as the document documents preparation environmental authority, concerning the current preparation stage state of environmental compliance by DoE with regard to Sarakata hydropower plant. 2. DOE to consult with DGMWR to confirm whether the expansion will trigger the need for a water resources permit 3. Disclose the scope of the improvements for Sarakata hydropower plant upgrade and refurbishment and seek guidance from the Director of Environment on actions needed to establish regularisation of environmental compliance of Sarakata hydropower plant. 4. Bring oil containment of transformer bays and oil seperation facilities up to international standard CONSTRUCTION STAGE Physical Impacts Noise and dust 1. Construction equipment and vehicles will be EPC contractor Throughout Cost Check Twice a month DSC As above nuisances maintained to a good standard and provided construction included in implementation as part of routine (IES/NES) with muffler silencers. phase contract construction 2. Watering of access road during dry periods monitoring 3. Monitor and investigate complaints; propose alternative mitigation measures.

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor Erosion and loss of 1. Schedule excavation activities in the drier EPC contractor Throughout Cost Check Twice a month DSC Included in topsoil months (Jun - Oct) construction included in implementation as part of routine (IES/NES) DSC staffing 2. Minimise vegetation clearance corridor or phase contract of all items construction footprint of components monitoring 3. Ensure slope cuts are properly engineered and re-vegetated immediately after cutting 4. Install cut-off drains above excavated areas on steep slopes 5 Install river bank protection measures (Masonry, gabion baskets etc) in river channel adjacent to headworks structures and powerhouse tailrace 6. Stockpile topsoil for later use in landscaping or made available to local community for their use 7. As far as possible ensure cut to fill balance Water Quality impact 1. Schedule excavation activities in the drier EPC contractor Throughout Cost Check Twice a month DSC As above. due to site runoff months (Jun - Oct); construction included in implementation as part of routine (IES/NES) 2. Minimise width of vegetation clearance; phase contract of all items construction 3 Immediately re-vegetate and/or stabilise monitoring exposed surfaces and stockpiles of excavated material; 4. Implement effective construction site drainage such that runoff is directed to sediment traps before discharge to water course; 5. Install cut-off drains above excavated areas on steep slopes to reduce erosion; 6. Effective construction supervision to ensure above measures implemented Materials and Spoil 1. Prepare and implement MATERIALS AND 1: EPC 1: One month Cost Check 1: Before DSC As above Management SPOIL MANAGEMENT PLAN (MSMP) one contractor to before start of included in implementation construction (IES/NES) month before construction commences to cover prepare MSMP, site works contracts of items 1-10 2 - 10 all aspects of materials management and spoil VPMU/DSC to 2 to 10: and MSMP Implementation disposal. Contractor to implement MSMP assist and Throughout provisions of MSMP provisions. approve construction provisions:

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor 2. Balance cut and fill requirements to minimise 2 to 10: EPC phase Monthly need for aggregates from other sources contractor 3. Topsoil, overburden, and low quality materials shall be properly removed, stockpiled near the site, and stored for reuse. 4.Areas for disposal to be agreed with land owner and SPC and recorded by the VPMU/DSC and monitored 5. Spoil will not be disposed of in rivers and streams or other natural drainage path. 6. Spoil will not be disposed of on fragile slopes, flood ways, wetland, farmland, forest, religious or other culturally sensitive areas or areas where a livelihood is derived. 7. Surplus spoil will be used where practicable for local repair works to fill eroded gullies and depression areas and degraded land in consultation with local community. 8. Disposed spoil will be spread in 15cm layers and compacted to optimum moisture content, covered with topsoil, landscaped and provided with drainage and vegetation to prevent erosion in line with best practice. 9. Spoil disposal shall not cause sedimentation and obstruction of flow of watercourses, damage to agricultural land and densely vegetated areas. 10. Spoil disposal sites shall be located at least 50 m from surface water courses and shall be protected from erosion by avoiding formation of steep slopes and grassing. Waste Management 1. Prepare and implement WASTE 1: EPC prepare 1: One month Cost Check 1: Before DSC As above MANAGEMENT PLAN (based on draft method WMP, before start of included in implementation construction (IES/NES) statements) as part of SEMP to cover all VPMU/DSC site works contracts of items 1-9 and aspects of waste storage disposal and IES to assist WMP provisions accidental spills. and approve

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor 2. Areas for disposal to be agreed with land 2 to 9: EPC 2 to 9: 2 to 9: owner and SPC and checked, recorded and contractor Throughout Implementation monitored by the VPMU/DSC. construction of WMP 3. Segregation of wastes shall be observed. phase provisions: 4. Recyclables shall be recovered and sold to Monthly recyclers. 5. Residual wastes shall be disposed of in disposal sites approved by local authorities and not located within 500m of rivers or streams. 6 Construction offices and facilities shall be provided with garbage bins 7. Burning of construction and domestic wastes shall be prohibited. 8. Disposal of solid wastes into drainage ditches and public areas shall be prohibited. 9. All general solid waste will be collected and removed from the work areas and disposed in local waste disposal sites as identified by the SPC. Use of hazardous 1. Hydrocarbon, toxic material will be stored in EPC contractor Throughout Cost Check Monthly DSC As above. substances and adequately protected sites consistent with construction included in implementation (IES/NES) hazardous waste international best practices to prevent soil and phase contracts of all items disposal water contamination. 2. All areas intended for storage of hazardous materials will be quarantined and provided with adequate facilities to combat emergency situations. 3. Segregate hazardous wastes (oily wastes, used batteries, fuel drums) and ensure that storage, transport and disposal shall not cause pollution and shall be undertaken consistent with international best practice. 4. Ensure all storage containers are in good condition with proper labeling. 5. Regularly check containers for leakage and undertake necessary repair or replacement.

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor 6 Store hazardous materials above possible flood level 7. Discharge of oil contaminated water shall be prohibited. 8. Used oil and other toxic and hazardous materials shall be disposed of off-site at a facility authorized by the VPMU/DSC. 9. Ensure availability of spill cleanup materials (e.g., absorbent pads, etc.) specifically designed for petroleum products and other hazardous substances where such materials are being stored. 10. Spillage, if any, will be immediately cleared with utmost caution to leave no traces. Biological Impacts Loss of Forest Habitat 1. Minimise width of vegetation clearance EPC contractor Site surveying Cost Visual 1, 3 , 4: Before DSC (IES & As above and impacts on fauna corridor and removal of large trees – only and vegetation included in observation of start of site NES) marked trees to be removed; clearance. contract surveyed works 2. Mark boundary of clearance corridors with penstock 2: Within one high visibility tape to ensure construction alignment route week of start of workers are aware of clearance boundaries; Sanctions construction 3. Workers prohibited from poaching, hunting or imposed on fishing (sanctions to be imposed); workers not 4. No timber or local materials to be cut or used adhering to item other than specified under 1. 3 and 4 Socioeconomic Impacts Operation of contractor 1. Location of site office and facilities to be 1:EPC 1: One month Cost Check 1: Before DSC As above camp / Site offices agreed with local community with facilities contractor with before start of included in implementation construction (IES/NES) approved by VPMU VPMU/DSC and managed VPMU/DSC site works contracts of items 1-8 2 - 8: Monthly to minimise impacts; Protocols established as approval 2 to 8: per CPP and GRM 2-8: EPC Throughout 2. Potable water, clean water for showers, contractor construction hygienic sanitation facilities/toilets with phase sufficient water supply, worker canteen/rest area and first aid facilities will be provided onsite.

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor 3. Separate toilets shall be provided for male and female workers. 4. As many local workers as possible will be hired and trained. 5. Adequate toilet facilities shall be installed and open defecation shall be prohibited and use of toilets encouraged by keeping toilet facilities clean at all times. 6. Wastewater effluent from contractors’ workshops (if any) will be passed through gravel/sand beds and all oil/grease contaminants will be removed before discharging it into natural water courses. Oil and grease residues shall be stored in drums awaiting disposal in line with an agreed WMP. 7. The Contractors facilities area will be cleaned up to the satisfaction of VPMU and local community after use. 8 All waste materials shall be removed and disposed to disposal sites approved by local authorities Occupational Health 1. Contractor to prepare a HEALTH AND 1:EPC 1: One month Cost Check 1: Before DSC As above. and Safety SAFETY PLAN (HSP) instructing workers in contractor with before start of included in implementation construction (IES/NES) health and safety matters. Plan to be approved VPMU/DSC site works contracts of items 1-5 2 - 5: Monthly in writing by VPMU/DSC one month prior to approval 2 to 5: starting works. Contractor to implement HSP 2-5: EPC Throughout provisions. contractor construction 2. Before construction commences the phase contractor will conduct of training for all workers on environmental, safety and environmental hygiene. The contractor will instruct workers in health and safety matters as required by good engineering practice and provide first aid facilities. 3. Workers shall be provided (before they start work) with appropriate PPE.

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor 4. Fencing shall be installed on all areas of excavation greater than 1m deep and at sides of temporary works. . 5. Provision of potable water supply in all work locations. Community Health and 1. Include in HSP for barriers (e.g., temporary EPC contractor At all times Cost Check Monthly DSC As above. Safety fence), shall be installed at construction areas throughout included in implementation (IES/NES) to deter pedestrian access except at construction contracts of items 1-6 designated crossing points. phase Cost for item 2. The general public/local residents shall not 6 included in be allowed in high-risk areas, PSA 3. Provide warning signs at periphery of site warning public not to enter 4. Strict imposition of speed limits along access through residential areas and where other sensitive receptors such as schools, hospitals and other populated area are located 5. Communication to the public through public consultation, SPC and notice boards regarding the scope and schedule of construction as well as certain construction activities causing disruptions and access restrictions. 6. Implementation of communicable diseases (incl. STIs and HIV) awareness and prevention measures OPERATION STAGE Public safety around Security fencing to be provided to ensure no Concessionaire Operation Included in Security fencing Periodically Concess./ Included in project facilities public access to the headrace canal and fore- /Facility phase overall intact and during routine Facility Concessionaire/ bay especially where facilities are adjacent to Operator project cost effective maintenance Operator Facility access road. activities Operator’s Operation and maintenance costs

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Environmental Mitigation and/or Enhancement Measures Monitoring Plan Issue/Project activity Measures and Actions Responsible Timing to Cost Parameter to Frequency & Responsible Cost to Implement Implement monitor Verification to Monitor Maintenance of aquatic Continuous environmental flow release of not Concessionaire Operation Included in Flow rate at the At Concess./ Included in ecosystem in reduced less than 1.05 m3/s to be discharged through /Facility phase overall flushing gate commissioning Facility Concessionaire/ flow stretch of Sarakata the weir into the river channel via the flushing Operator project cost then four times Operator Facility River gate which will be preset for this discharge per year during Operator’s operation. Operation and maintenance costs

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VIII. CONCLUSION AND RECOMMENDATION

255. The IEE concludes that the potential environmental impacts arising from design, construction, operation and maintenance of the project will be minor, localised and acceptable provided that the mitigation measures set out in the EMP are incorporated into the design and implemented properly. Key findings are summarised below:  The project involves the expansion of an existing hydropower scheme that is wholly within the schemes current site boundaries.  There is no minimum environmental flow specification for the existing Sarakata scheme. However, based on the flow duration curve) it can be stated that for at least 68% of the time (assuming full capacity operating conditions) there is surplus water spilling over the weir. In reality spill is occurring much more than 68% of the time since the scheme frequently runs at below full capacity due to seasonal/demand variations. Raising the weir height by 0.4 m will result in an overall theoretical reduction of 18% of the existing environmental flows (based on the flow duration curve). However, the same caveats as noted above will apply.  Under the existing scheme the aquatic biodiversity appears somewhat intact with a diversity of goboid species and others, typical of the rivers and streams of Vanuatu. Previous aquatic studies on the reduced flow section have concluded that the impact of the Sarakata hydropower scheme were not significant and posed a low risk to the existing environment.  To ensure that the Sarakata 1 expansion project will not result in adverse impacts on the existing aquatic ecosystem a minimum environmental flow release of 1.05 m3/s (equivalent to 10% of the mean annual flow) will be discharged through the weir’s flushing gate into the reduced flow stretch of the Sarakata River at all times.  The potential loss of less than 0.1 ha of highly modified habitat of low ecological value within the existing hydropower site boundary, and impact on terrestrial wildlife due to the project will be insignificant. Loss of habitat can be further minimised by reducing the clearance corridors;  Nearby communities consulted are happy for the project to be implemented and expressed their desire to benefit from both electricity generated and employment opportunities during construction and operation; and  Appropriate climate change adaptation and resilience needs to be incorporated into the design of structures including: i) suitable erosion protection to prevent scour around the intake weir’s training walls, and ii) powerhouse - level of powerhouse discharge outlet needs to be sufficiently high so as to prevent any flood induced backflow resulting in flooding of the powerhouse and damage to electromechanical equipment.  An audit of the existing facilities and operations of Sarakata 1 hydropower scheme concluded that the environmental impacts from the existing activities at Sarakata hydropower plant are not significant. With the exception of inadequate oil containment facilities and the absence of oil separation drainage provisions at the transformer bays, the existing operations are generally undertaken in accordance with internationally recognised good practice and thereby are in general compliance with the SPS. However, there are four recommended actions for the DOE in order to achieve full environmental compliance with SPS. They include: (i) Request formal clarification from the Director of Environment (DEPC) as the environmental authority, concerning the current state of environmental compliance by DOE with regard to Sarakata hydropower plant. (ii) DOE to consult with DGMWR to confirm whether the expansion will trigger the need for a water resources permit (iii) Disclose the scope of the improvements for Sarakata hydropower plant upgrade and refurbishment and seek guidance from the Director of Environment on actions needed to establish regularisation of environmental compliance of Sarakata hydropower plant.

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(iv) Bring oil containment of transformer bays and oil seperation facilities up to international standard. 256. An EMP has been prepared and will be updated based on detailed design and implemented during all phases of the project. The EMP identifies potential environmental impacts arising from the project along with a corresponding schedule of mitigation measures to ensure potential impacts are maintained at insignificant levels and that international best practice is applied. It also includes the institutional arrangements for implementing the EMP to ensure its effectiveness. 257. This IEE, including the EMP is considered sufficient to meet ADB’s and government environmental safeguard requirements in respect of the expansion proposed for Sarakata 1 hydropower plant. No further or additional impact assessment is considered necessary at this stage. IX. BIBLIOGRAPHY

Asian Development Bank: (2012) Climate Risks and Adaptation in the Power Sector (2012) TA 7329-REG Promoting Access to Renewable Energy in the Pacific (Vanuatu Component) Pre-Final Report (2012) TA 7753-REG Strengthening Coastal and Marine Resources Management in the Coral Triangle of the Pacific (Phase 2) - Institutional Assessment Report- Vanuatu, (2011) TA 7345-VAN Port Vila Urban Development Project, PPTA Consultant Report (2007) Country Environmental Analysis: Vanuatu Government of Australia - Bureau of Meteorology and CSIRO (2011) Climate Change in the Pacific: Scientific Assessment and New Research. Volume 2: Country Reports. Global Environment Facility (2014) and SPREP Portfolio Evaluation (1991-2012) Volume I: Evaluation Report Government of Vanuatu: (2014) Department of Environmental Protection and Conservation Annual Report 2013 (2013) Vanuatu National Energy Road Map, 2013-2020 (2013) Profile of risks from climate change and geo-hazards in Vanuatu (Draft Report) (2012) Health Service Delivery Profile Vanuatu (prepared by MOH and WHO) (2011) Vegetation and Land Cover Map of Espiritu Santo (2011) National Climate Change Adaptation Strategy for Land-based Resources 2012-2022 Second Draft (2007) National Adaptation Program for Action (2006) Third National Report to the Conference of Parties of the Convention on Biodiversity (2005) Report of the Monitoring/Mitigation on Social and Environmental Consideration on the Sarakata Hydropower Project (2005) Environment Profile Loan.C & Lum.J (1997) Soil Geochemistry Mobile Metal Ion Survey on Eastern Santo, Vanuatu. SOPAC Technical Report No. 253. McFarlane A and Carney J,N (1985) Vanuatu: A Brief Account of the Onshore Geology in Green H,G and Wong F,L (eds) 1985 Geology and Offshore Resources of Vanuatu - Joint Cruise Report. US Geological Survey, Menlo Park, California, USA. Mueller-Dombois, D and Fosberg, F (1998) Vegetation of the Tropical Pacific Islands. Springer Verlag, New York Parr, J. 2007. Important Bird Areas in Vanuatu. Birdlife International, Fiji Polhemus DA, Englund RA, Allen GR,Bosetto D & Polhemus JT; (2008) Freshwater Biotas of the Solomon Islands Analysis of Richness, Endemism and Threats, Bishop Museum Technical Report N° 45, Honolulu, Hawai

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Societe Francaise d’Ichtyologie and Keith.P, Marquet.G, Lord.C, Kalfatak. D, Vigneux.E (2010) Vanuatu Freshwater Fish and Crustaceans. Paris, France SOPAC, ADB, WB, JICA, GFDRR, AirWorldwide, GNS Science; (2011) Pacific Catastrophe Risk Assessment and Financing Initiative, Vanuatu United Nations Office for the Coordination of Humanitarian Affairs (2011) Vanuatu: Natural Hazard Risks United Nations University Institute for Environment and Human Security and Alliance Development Works (2012) World Risk Report 2012. World Bank (2006) Policy Note - Not if But When: Adapting to Natural Hazards in the Pacific Islands Region

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ANNEX 1 - POLICY, LEGAL, AND ADMINISTRATIVE DOCUMENTS

ANNEX 1A - SECTORAL POLICIES, STRATEGIES AND ADMINISTRATIVE DOCUMENTS National Biodiversity Strategy Action Plan 1999. Vanuatu completed its National Biodiversity Conservation Strategy in 1999. The strategy highlights six key objectives for effective management of biological resources: (a) Ensure sustainable management and conservation of Vanuatu's biodiversity; (b) Develop appropriate policy, planning and legal mechanisms for the management of biodiversity; (c) Improve knowledge about biodiversity in Vanuatu; (d) Improve the capacity of national, provincial, NGO and community organisations to manage biodiversity; (e) Increase local awareness of the importance and value of biodiversity; (f) Foster community participation in the management and conservation of biodiversity. The strategy identified 20 priority actions to meet the objectives mentioned above1. National Energy Policy Framework. The Vanuatu National Energy Policy Framework is focused in areas such as the promotion of energy efficiency and conservation, promotion of renewable energy sources and the provision of electricity to rural and remote areas. The ultimate goal of the policy is to provide a long term development plan for the energy sector and the provision of reliable and affordable energy services to all people in Vanuatu. National Rural Electrification Policy 2000. The National Rural Electrification Policy of Vanuatu is to provide electricity to all rural people in Vanuatu. Specifically the National Rural Electrification Policy has the following objectives:  To address the electricity needs of the consumers in the rural areas both for social and economic development;  Ensure the provision of electricity to rural consumers while clearly defining the overall level of Government subsidy;  Incorporate the Government Station, medical institutions such as health centre/clinic/aid posts and education institutions such as secondary schools, primary schools and rural training centres within the rural electrification network;  Be consistent with Government Policies.2 National Energy Road Map (2013-2020). The Government has developed a National Energy Road Map to put the sector on the path to achieving objectives shared by the Government, members of the public, development partners, and private energy sector operators. The Road Map provides a consistent basis for tracking energy sector challenges, recognising that streamlining government policy, legislation, and investment is needed to enable Vanuatu to achieve its development objectives. The vision for the National Energy Road Map is: “To energise Vanuatu’s growth and development through the provision of secure, affordable, widely accessible, high quality, clean energy services for an Educated, Healthy, and Wealthy nation.”3 The investments presented in the Road Map are expected to provide net environmental and social benefits. For example, investing in renewable energy sources will reduce local noise and air pollution near existing diesel generation plants, and will reduce Vanuatu’s emission of greenhouse gases. Similarly, improving the petroleum supply chain between islands will reduce the incidences of small spills. The Road Map identifies ways to ensure that environmental impacts are mitigated. Special consideration has also been given to groups with specific vulnerabilities, women and the poor, and to incorporate an element of equity. It also includes the provision of sustainable, affordable electricity supply that meets the needs of the poor and those living in remote areas.4

1 National Biodiversity Strategy Action Plan,1999 2 Government of Vanuatu. Revised Rural Electrification Policy, Port Vila, December 2000 3 Government of the Republic of Vanuatu, Vanuatu National Energy Road Map, 2013-2020, Port Vila, March 2013 4 Government of the Republic of Vanuatu. Vanuatu National Energy Road Map, 2013-2020, Port Vila, March 2013 PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 55

Priorities and Action Agenda of Government of Vanuatu (PAA) 2006. The Priorities and Action Agenda of the Government of Vanuatu published in 2006 introduced a long- term national vision - ‘an educated, healthy and wealthy Vanuatu’. A recent review of the PAA of 2010 to 2012 identified the necessity to address Governance issues as a means to improve effectiveness and efficiency of the Public Sector. The primary policy objective and strategies in the PAA 2006 have been re-organised to make policy directions clear and more focused on key issues facing the sector. Strategies covering the Environment have been strengthened to include strengthening of the Department of Environmental Protection and Conservation (DEPC). New strategies have been introduced covering the Biodiversity Advisory Council, protected areas and pollution control measures and the Environmental Impact Assessment Regulation. The Government of Vanuatu clearly states its objectives in the PAA (2003) as follows: “The general objective of the Government is to contribute towards achieving balanced and mutual supportive policies in the economic, social and environmental dimensions of sustainable development. Specific objectives to achieve this goal are:  To develop appropriate legal framework for the conservation and management of the environment;  To promote sound and sustainable environmental management practices;  To ensure ecosystems must be managed in an integrated manner and at appropriate scale;  To ensure sustainable management and conservation of Vanuatu’s biodiversity;  To implement the Environmental Management and Conservation Act N°12 of 2002 and as amended in 2010 and the regulations of related activities, e.g. EIA Regulation; and  To ensure that biodiversity must become an ever greater priority, with resources pooled and political will mobilised behind winning strategies to protect it.” Productive Sector Policy (2012-2017). Under the Government’s Overarching Productive Sector Policy (2012-2017), supporting policy statements on environment include the need to:  enhance capacities to utilise natural resources in a sustainable manner; and  Assess and take into consideration the competing demands on the environment and differentiated impacts in climate change when formulating strategies to address the development challenges that the productive sector faces.5 National Forest Policy 1997. One of the important sectorial policies is the national forest policy (NFP) of 1997, which sets minimum standards, which will allow selected forest areas in Vanuatu to be harvested with minimum adverse impacts. It balances the need for protection of environmental values with safety and commercial consideration. The objectives of the national forest policy include:  Forest management objectives such as timber production, conservation and conversion and conserving ecosystems,  Environment and conservation which deals with protection and conservation for the current and future generations, establishment and management of conservation areas with landowners.6

5 Government of Vanuatu ,Overarching Productive sector Policy (2012-2017) 6 Vanuatu National Forest Policy, 1997 PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 56

ANNEX 1B - LAWS Public Health Act 1994. Under the Public Health Act, the Ministry of Health retains an important responsibility for many waste management activities. The Ministry acknowledges the need for minimum standards in the areas of Environmental Health: clinical waste, food, water, solid waste management, housing, pollution, and sanitation and port health. The Ministry recognises that there are special stresses/ problems faced by the urban environment including: collection and disposal of large quantities of rubbish, sub-standard housing, water quality, water supply not keeping up with population growth, unhygienic conditions of food for sale, industrial pollution, and lack of proper drainage system. With respect to the water sector, there is a chapter of the Act for the Provision and Protection of Water Supply. Other aspects relating to the water sector as defined by the Act are as follows:  The administrative powers of the Minister (of Health) of supervision and inspection over local authorities in all matters relating to maintenance and promotion of public health;  Obligation of provision of proper and sufficient supply of wholesome water to all buildings and premises and all inhabitants of the rural area within local government council Powers of Environmental Health Officers to enter any premises, land at all times for the purpose of, water sampling for examination of the source of water supply, and to inspect the appropriateness and adequacy of sanitation system Obligation of maintaining clean conditions and protection from contamination of any storage of water.  Powers of local authorities to examine sanitation and water supply apparatus and facilities  The right of the Minister to make regulations prescribing all matters that by the Act are required or convenient to be prescribed for giving effect to the Act, as the standard, quality and adequacy of water for domestic purposes and as ― for the control and maintenance of general Environmental Health quality in matters such as to prevent soil, water, noise and air pollution. The Minister allocates responsibility to the relevant local authorities to take all lawful, necessary and practicable measures to maintain its respective areas free from nuisance. Nuisance is defined to include any…. River, stream, spring or other sources of water supply….which is likely to be used for human drinking or domestic purposes…which in the opinion of the environmental health officer polluted…7 In Vanuatu, both ground and surface water resources are utilised for domestic purposes. In rural areas, there are various sources of water such as wells, springs, rivers and rainwater are used. Water supply systems in rural areas vary from good to poor and some do not exist. Throughout Vanuatu no provincial government is responsible for the operation and maintenance of rural water supply systems. Relevance for the project - No permit required. Project must comply with requirements of Act during all phases of project Water Resources Management Act 2002. The Water Resources Management Act (2002) provides for the protection, management and use of water resources in Vanuatu. The Act is administered by the Minister of Lands and Natural Resources. In addition, the Public Health Act provides for general public health in Vanuatu including prohibition of pollution of water resources and the regulation of adequate sanitary systems. Vanuatu has not developed its own water quality standards to date and relies on the World Health Organisation (WHO) standards as a reference. The overall responsibilities for water resources management rest with the Department of Geology Mines and Water Resources (DGMWR) under the Ministry of Lands and Natural Resources. The Water Resources Act gives the Director of the DGMWR overall power to establish groundwater protection zones among other powers vested by the Act. The Act defines the following aspects:  The rights and general rules in respect to the utilisation and protection of water resources  Administrative aspects and the formation of a National Water Resources Advisory Committee

7 Public Health Act 1994, section 24(c) PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 57

 Water resources planning, management and development plans, designation of water protection zones  Access over adjoining lands  Water utilities (formation of water utility board to facilitate the management, control and regulation of water utilities involved in water supply services)  Water quality guidelines and criteria Relevance for the project: The Act requires that if a land lease grants the right to use any water the lessee must apply to the Director of Water Resources for the right to use the water for any other purpose other than the customary rights or for domestic purposes. The Act also stipulates that works and uses undertaken prior to the commencement of the Act are lawful. In this respect the Sarakata hydropower project does not need to apply for the right to use the water. However, Wambu, Brenwe and Sarakata 2 projects are required to apply for and obtain water use rights from the Director of Water Resources. Pollution Control Act 2013. The objectives of this Act are to minimise and manage the discharge and emission of pollution and encourage all levels of government to work together to control the discharge and emission of pollution. Clause 8 imposes a requirement on owners and occupiers of premises to comply with prescribed standards for the discharge of pollution, wastewater and the emission of noise, odour or electromagnetic radiation and Clause 9 establishes a permit scheme for the discharge or emission of pollutants and creates offences for the discharge or emission of pollutants without a permit. Clause 11 confers power on the Director to revoke or suspend a permit if a permit condition has been breached or if the discharge or emission of pollution is likely to endanger human health or cause excessive harm or damage to the environment. If it appears to the Director that: (a) a pollutant is being or is likely to be discharged or emitted from the premises into the environment; or (b) a pollutant or matter is being discharged or emitted which does not comply with a prescribed standard; or (c) a pollutant, is causing or likely to cause pollution, he or she may serve a pollution abatement notice to the owner or occupier of the premises. Such a notice is to be issued in writing and is to: a).state the grounds upon which the notice is issued; and (b) require the person identified in the notice to take any measure that the Director considers necessary to prevent, control or reduce the discharge or emission of pollutants, in the manner specified in the notice. The Director may in writing, vary or revoke a notice. The Act does not have a regulation to enforce the provisions of the Act, including standards for waste water disposal from an operation or premises. Relevance for the project: A permit is required from the Director of the Department of Environment Protection and Conservation (DEPC) for any discharge of pollution, wastewater and emission of noise or odour resulting from the project. Draft Waste Management Bill 2012. Scheduled to go before parliament in 2014, this Bill provides for the protection of the environment through encouragement of effective waste services and operations. Once passed into law the Director of the DEPC will be responsible for the evelopment, coordination and, where appropriate, implementation of the Government’s waste and litter minimisation policies and programmes. In carrying out the functions, the director must carry out the following:  administer the system the waste management system,  in the absence of relevant regulations, prepare guidelines and standards for the purpose of giving effect to the Act;  undertake environmental assessment, monitoring, and inspection generally; and  undertake such other duties and responsibilities as may lawfully be required. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 58

The Director may also assist the Provincial Government Councils to ensure that each Provincial Government Council develop a Waste Management Strategy. The Director will be responsible for the implementation of the Act. The Bill covers local, regional and international waste issues under Vanuatu’s commitments, for example, the Stockholm Convention and Montreal Protocol on Substances that Deplete Ozone Layer. The Director will be responsible for developing regulations under the Act. At the national level the government has developed and endorsed its first ever-national waste management policy in 2001, which embraces the importance of managing waste at the national provincial and community level. The overall goal of the national waste policy is “prevent, protect and control the adverse effects of waste on human health, environment and the economy of the country”8 Relevance for the project: Once passed into law, any waste disposal on the project sites will require the approval of Director of DEPC. Forestry Act 2001 The Forestry Act of 2001 provides for the protection, development and sustainable management of forests and the forest industry. The Act is administered by the Department of Forests under the Ministry of Agriculture, Quarantine, Forestry and Fisheries (MAQFF). The Forestry Act also establishes the Forests Board of Vanuatu whose main task is to supervise negotiations for timber rights agreements and advise the Minister on matters relating to forestry policy and administration. The Forestry Act 2001 repealed the previous Act, but it kept in force the Regulations and Orders made under that Act, adapted as necessary. Licences, permits, etc., made under the previous Act were continued in force as if they were made under the new Act. The main features of the new Act are to establish structures and processes for administration, planning, resource access, environmental protection, and reforestation. Relevance for the project: The project will involve removal of some secondary vegetation for various components of the hydropower projects. Such vegetation removal is not expected to involve tree species which have significance for timber Quarry Act 2013. This Act provides for the regulation of quarries and for related purposes. A holder of a Quarry Permit granted by the Commissioner of Mines has the right to prospect for and extract building materials, which are defined as “mineral substances and rocks commonly used for building, road making or agricultural purposes.” The Quarry Act N° 9 of 2013 has the following classes of quarry permits: (i) commercial permit; (ii) landscaping permit;(iii) public works department permit; and (iv) occasional permit. The quarry permit is ranked into three categories as large, medium and small. For a large quarry, a permit issued must not exceed a period of 10 years and is renewable. The volume of materials extracted per annum may exceed 50,000 m³ and the quarry operations must not exceed 100 hectares. A quarry permit issued for medium quarry operations must not exceed a period of 10 years and renewable with a volume of materials extracted per annum ranges from 20,000 to 49,999 m³ and an operations area must not exceed 10 hectares. A quarry permit issued for small quarry operations must not exceed a period of 3 years and is renewable. The volume of materials extracted for small quarry operations ranges from 501 to 19,999 cubic metres and the area must not exceed 5 hectares. Relevance for the project: If any construction material is sourced from quarries such quarries are required to have a Quarry Permit under the Act. Whilst legal responsibility for a Quarry Permit rests with the owner/operator of the quarry, as part of general duty of care it is necessary for the contractor to ensure that all suppliers have the necessary legal permits and approvals. Control of Nocturnal Noise Act 1965. This Act prohibits excessive noise between 9pm and 5am particularly in the urban areas. This is mainly for the urban areas, but where noise is an issue in rural areas, the Act can also be applied.

8 National Waste Management Policy, 2001 PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 59

Relevance for the project: No permit required. Unlikely to be an issue since night time construction work is most unlikely and noise during operation will not be a problem due to distance of powerhouse from nearby communities. National Parks and Nature Reserves Act 1993. The National Parks and Nature Reserves Act N° 07 of 1993 provides for the declaration of national parks and nature reserves; for the protection and preservation of such areas and all related matters. The Minister responsible for environment and conservation regulates the provisions of this Act upon the advice of the National Parks Board. Legal declaration of national parks and nature reserves under the Act involves a set of community consultation procedures along within development of a park or reserves Management Plan that is approved by the Minister. Currently there are six legally registered protected areas in Vanuatu along with a further four areas either in the process of being legalised or under consideration for legal designation. However, the focus of much present work in country is on resource use and management systems that are both applicable and practical at a local level and that are compatible with in-situ conservation of biodiversity. This has led to the development of a number of community based protected areas. All in all there are 28 protected areas 14 of which have a terrestrial component. Existing community based protected areas include Loru protected area, Vathhe Conservation Area, Ringhi te Suh (Maskelynes), Hideaway Island (Efate), Narong marine reserve (Uri Island), Mystery Island Reef (Aneityum), Nguna-Pele marine protected area, Epi, Central Pentecost, Lelepa marine protected area, Mangaliliu marine protected area, Spuaki conservation area (Nguna), and Wiawi (Malekula). Community based management practices and taboo areas are also widespread. One of the few efforts by the Government to create a publicly owned protected area, the Erromango Kauri Protected Area, has now lapsed as government funding of the lease could not be sustained. Relevance for the project: Community consultations conducted during preparation of the IEE along with desk study on designated protected areas in Vanuatu indicates that no protected areas (legally protected or community based initiatives) will be affected by the proposed hydropower projects proposed under the the project. A full list and breakdown of the of protected areas in Vanuatu is given in Table A.1 Preservation of Sites and Artifacts Act 1965. The Act provides for the preservation of sites and objects of historical, ethnological or artistic interest. The Minister responsible for Culture must inform the owners of the site classified and allow three months for representations to be made by the owners. Once a site is classified, the owner is obligated under the Act to prevent modification or deterioration of the site and must inform the Minister of the likelihood of modification or deterioration of the site. Relevance for the project: No sites or objects of historical, ethnological or artistic interest have been declared or classified in the vicinity of the project sites. In the event that any suspected items are found during construction, this shall be reported to the Vanuatu Cultural Centre with immediate effect and physical activity on the site shall cease until assessment is done. Wild Bird (Protection) Act 1989. This Act prohibits the destruction of certain bird species (which may occur through clearing of site vegetation) without a permit; Other major regulations that concern ecosystems and biodiversity conservation are: International Trade (Fauna and Flora) Act of 1989, Convention on Biological Diversity (Ratification) Act (1992), and the Animal Importation and Quarantine Act (1988) which regulates the control of animal importation including the importation of animal products and biological products. Relevance for the project: Vegetation required to be cleared for the projects is relatively small in scale and involves removal of mainly secondary vegetation in areas that are currently modified by human activities. Such disturbance is most unlikely to result in any significant impact on protected or endangered bird species.

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Table A.1 - Vanuatu Conservation Areas

Terrestrial Govt/NGO Community Supporting Partners Traditional Proposed for Legally Name Location Island Size Management Plan Marine/ Initiative (NGOs or Govt Management Legal Recognised

Top of island Will be Govt in consultation DEPC EMC Act & FPAM Lake Letas CA at foot of Mt. Gaua Terrestrial - Yes - developed with communities & Dept. of Forestry site Garet through the FPAM

Draft Management Mondoro Draft Management Mondoro CA SE Gaua Marine Community Initiative Dept.of Fisheries - Yes - Plan developed for Village Plan legal registration

Yes, currently DEPC.SPREP, Lands Govt in consultation updated and will be Legally recognised Vathe CA Matantas NE Santo Both Dept & Royal Forest 2,740 ha - - with communities launched in June as of 2004 & Bird Society of NZ 2014

East NGO/VPAI/Live & VPAI/Live & Legally registered Loru Protected ea Khole Both - Yes - Yes Santo Learn Learn/DEPC in 2011

Community initiative Panora NW Legally registered Panora CA Terrestrial with government DEPC/LCIP 2,500 ha - - Yes Village Santo strengthening from in 2011

Guyon Reef Marine Melcoffee, DEPC/Department of Under Santo Marine Community Initiative - - - - CA Luganville Fisheries consideration

Legally recognised under the Fisheries Million Dollar Point South Santo Marine Government Dept. of Fisheries - - Yes - Act and Maritime Zone

Legally recognised under the Fisheries President Coolidge South Santo Marine Government Dept. of Fisheries - - - - Act and Maritime Zone

Government in DGMWR, DEPC, Draft In the process of Butmas CA South Santo Terrestrial - - Yes consultation with SOPAC Management being legalised communities Plan Govt in consultation DGMWR, DEPC, Draft Man. In the process of Nabauk CA South Santo Terrestrial - - Yes with communities SOPAC Plan being legalised

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Terrestrial Govt/NGO Community Supporting Partners Traditional Proposed for Legally Name Location Island Size Management Plan Marine/ Initiative (NGOs or Govt Management Legal Recognised

Edenhope Forest Lessor in consultation DGMWR,DEPC, West Santo Terrestrial 700 ha - Yes In process In process Reserve with the communities Dept. of Forestry

Marine DEPC, Dept. of Amal/Krab Bay Tabu Legally registered Northeast Malekula and Community Initiative Fisheries, - - Yes - Area under the EMC Act mangrove IUCN,SPREP

Naron/Uri Marine DEPC, Dept. of Northeast Malekula Marine Community initiative - Yes - - - Conservation Area Fisheries

Government in DEPC, Dept. of Wiawi CA Northwest Malekula Both consultation with - Yes - - - Forestry community

Pelonk, Ringi Te Suh Maine South Dept. of Fisheries, Maskelye Marine Community Initiative - Yes - - - Protece Area Malekula FSP Island

Explore the process for South Avok Avok II Island CA Marine Community Initiative DEPC - Yes - legal - Malekula Island registration under the Act

Duviara North Ambae Terrestrial Community Initiative - - Yes - - -

Requested DEPC to assist with the Manaro Tourist CA West Ambae Terrestrial Community Initiative - Yes - - - Development of the Management Plan

Community initiative Live & Learn, ADB- DEPC will assist Pentecos Ranputor CA South Both with funding support CTI, DEPC, Dept of - YES with drafting of - - t from ADB-CTI Fisheries Management Plan

Will draft man. Government in Pentecos Plan during the Homo Bay South Terrestrial consultation with FPAM - - - - - t phase of Project, FAO FPAM Project

Approved by Proposed Marine Around Island Epi Marine Community Initiative DEPC - Yes - DEPC for legal - Protected Areas -registration

Pearce Corp,GTZ- Approved by Nguna/Pele Marine Nguna & CCA Project with North Efate Marine Community Initiative - Yes - DEPC for legal - PA Pele support from DEPC registration and Dept of Fisheries

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Terrestrial Govt/NGO Community Supporting Partners Traditional Proposed for Legally Name Location Island Size Management Plan Marine/ Initiative (NGOs or Govt Management Legal Recognised

DEPC, Dept of Mere-Sauwia Northeast Nguna Both Community Initiated Forests, UNDP Small - Yes Management Plan - - Conservation Area Efate Grant

Unakapa MPA South Efate Nguna Marine Community Initiated Peace Corp and AYA - Yes - - -

Draft Epau Conservation East Efate Efate Both Community Initiated DEPC - Yes - Management - Area Plan

Efate Land Community initiated Explore possibility SHEFA, DEPC & Management Area Central Efate Efate Terrestrial through SHEFA - - Provincial Bi-Law - of legal registration Dept of Forests (ELMA) province through EPC Act

Hide Hide Away Hide Away Island Southwest Hideaway Island Resort Hide Away Island Away Marine Dept. of Fisheries - - Island Resort - Sanctuary Efate Initiative Resort Management Island Management

Eruiti Marine South Efate Eruiti Marine Lessor Initiated DEPC - - - - - Protected Area

Lelepa Island Tours Northwest Lelepa Draft Management Marine Community Initiative DEPC - - - - MPA Efate Island Plan

Source: Donna Kalfatak, Biodiversity Officer, DEPC, March 2014

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National Disaster Act 2000. The Department of Disaster under the Ministry of Climate Change and Natural Disaster is mandated to develop strategies for the prevention of, preparation for, response to and recover from natural disaster, ensure that strategies are implemented to counter the effect of natural disaster. A National Disaster Plan has been developed to operationalise the national plan. The Plan has been very useful as it identifies the major risk that any health facility in Vanuatu is faced with such as earthquakes, droughts, tropical cyclones and it also identifies climate change and sea level rise. The Government is promoting a Comprehensive Hazard And Risk Management (CHARM), Disaster Risk Reduction (DRR) and Disaster Management (DM) through the National Disaster Management Office (NDMO) with the overall objective that communities at all levels are aware of the hazards that exist to a vulnerable group as well as identifying adaptive or mitigation measures to reduce the impact lives, property and socio-economic development. Pesticides Control) Act 1998. The Pesticides Control Act makes provision for the regulation and control of the importation, manufacture, sale, distribution and use of pesticides, including persistent organic pollutants. The Act provides for the (i) registration of all pesticides for import, manufacture, packaging or export purposes maintained by the Registrar of Pesticides, and (ii) setting out minimum standards when dealing with pesticides in Vanuatu. Relevance for the project: Any use of pesticides during project implementation will be undertaken in accordance with the Act. ANNEX 1C - International Treaties and Agreements Multilateral environmental agreements supported by Vanuatu are listed in Table A.2 below. Table A.2 Multilateral Environment Agreements Supported by Vanuatu Government

International Treaties Status United Nations Convention on Biological Diversity (UNCBD) Ratified 1993 United Nations Convention to Combat Desertification (UNCCD) Ratified 1999 United Nations Convention on Law of the Sea (UNCLOS) Ratified 1999 United Nations Framework Convention on Climate Change (UNFCCC) Ratified 1992 Kyoto Protocol to the UNFCCC Acceded 2001 Montreal Protocol on Substances that Deplete the Ozone Layer Acceded 1994 Vienna Convention for Protection of the Ozone Layer Acceded 1994 London Amendment Ratified 1994 Copenhagen Amendment Ratified 1994 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) Ratified 1989 International Convention on the Establishment of an International Fund for the Compensation for Ratified 1989 Oil Pollution Damage International Convention on Civil Liability for Oil Pollution Damage Ratified 1983 International Convention for the Prevention of Pollution of the Sea by Oil Ratified 1983 Treaty on the Non-Proliferation of Nuclear Weapons Ratified 1995 Plant Protection Agreement for South East Asia and the Pacific Ratified 1997 Agreement on the International Dolphin Conservation Programme Ratified 2003 Millennium Development Goals Adopted 2000 Stockholm Convention of Persistent Organic Pollutants (POPs) Adopted 2010 Protocol of 1978 Relating to the International Convention for the Prevention of Pollution from Ratified 1989 Ships Basel Convention on the Control of Trans-boundary Movements of Hazardous Wastes and their Acceded 2002 Disposal Nagoya Protocol on Access to Genetic Resources and Benefit Sharing In progress for accession Bio-Safeti Cartagena Protocol In progress for accession

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ANNEX 2 - FISH AND AQUATIC RESOURCES SURVEY FOR SARAKATA RIVER

1 REPORT SUMMARY

This report presents the findings of the fish and aquatic resources (FAR) survey undertaken on the Sarakata River on 30 April 2014. The survey team went from Luganville through North road to the Sarakata weir before descending to the existing powerhouse. The poor weather conditions made it too hazardous for the team to travel downstream to the Sarakata – 2 project site. Heavy rainfall was occurring all day with the river rising more than 0.5 m from its normal level. The river also became increasingly turbid throughout the field trip. Information gathered through direct observation indicates an aquatic ecosystem that has been disturbed by human activities, primarily the Sarakata hydropower scheme which has reduced the natural flow of the Sarakata River over the stretch between the weir and the powerhouse but also the introduction of exotic species Oreochromis mossambicus and Gambusia affinis and forest degradation due to invasive vines and clearance for subsistence gardening and cattle farming. Despite this disturbance the aquatic biodiversity appears somewhat intact with a diversity of goboid species and others, typical of the rivers and streams of Vanuatu.

2 SURVEY ACTIVITIES

The survey covered a stretch of the river from approximately 50 m downstream of the existing Sarakata powerhouse (SST1) to an area approximately 100 metres upstream from the weir (SST5). Survey methods included observation and sampling of the aquatic biota, observation of the terrestrial ecosystem and defining the habitat status with respect to species of fish, plants, reptiles and birds of Vanuatu and especially the island of Espiritu Santo. The study sites are shown on Figure 1. Figure Study Sites at Sarakata River, Upper Catchment

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3 RESULTS

The following are the results of the studies undertaken at each of the sites. The summary sheets are provided in Appendix 1.

3.1 Terrestrial Biota

Sarakata watershed is dominated by generally degraded lowland rainforest in various states of regeneration interspersed with subsistence garden plots. Riparian vegetation surrounding the rivers and streams within the catchment has floral diversity such as trees, palms, shrubs and herbs. Secondary forests were patchy due to subsistence agriculture, human activities and other disturbance. The general status of the forest in Sarakata water shed is disturbed. In parts it is intact, natural in appearance, structure and composition. The floral diversity resembles native forest in composition, as there were native trees notably impenetrable patches of multi stemmed rattan or ‘lawyer canes’ (Calamus sp), native palms (Veticha sp) and a species of bamboo (Bambusa sp) useful for traditional house construction. Goodyera species dominated the ridge-tops, slopes, gullies and valley bottom on river banks. Commercial trees were also seen in the area such as Pometia sp and Vitex sp. Table - Dominant terrestrial biota (birds, reptiles and plants) of riparian habitats

Species Sarakata River Vanuatu IUCN Level of Migratory Endemic Status Exploitation behaviour 1 2 3 4 5

Birds, Class: Aves Collocalia esculenta 2 3 No LC Low No Aerodramus spodiopygius 1 No LC Low No Ptilinopus tannensis 2 Yes LC Low No Ptilinopus greyii 1 No LC Low No Ducula pacifica 1 No LC Low No Reptiles, Class: Reptilia Emoia caeruleocauda 1 3 No LC Low No Emoia cyanura 1 No LC Low No Plants, Kingdom: Plantae Calamus vanuatuensis 1 Yes NA Low No Cyathea spp. 1 2 3 4 No NA Low No Capoxylon spp 2 Yes NA High No Calophyllum neo-ebudicum 1 1 No LC Medium No Pometia pinnata 1 No NA Medium No Timonius timon 1 No NA Medium No Calophyllum peekelli 1 No NA Bambusa spp 1 No NA High No Inocarpus fagifer 1 1 No LC Medium No Veitchia spp. 3 Yes NA Low No Goodyera spp X X X X X No NA Low No Potamogeton spp. X X No NA Low No Merremia peltata X X No LC Low No Key: LC-Least Concern, NA-Not Assessed

3.2 Aquatic Biota

The area of aquatic environment surveyed was within a 10 m radius from each of the five sampling stations. The Sarakata River has steep terrain and very thick vine forests that dominate riparian area. 80% of the river course has gullies and surface water outflows into the river which increases the river flow to more than 10 metres/seconds during heavy rain. The riverine area is narrow 10-15 metres with slopes from 50% to gorge. The depth was from 1 m to more than 10 m in pools and bend areas. Most of the sides were subjected to minor landslides due to the fragmented limestone and

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clay. Sedimentation is a threat to the aquatic ecosystem as substrates were dominated by muck mud and silts. Table Summary table of fish species in the Sarakata region

Species Sarakata River Vanuatu IUCN Level of Migratory Stations Endemic Status Exploitation behaviour

1 2 3 4 5

Freshwater Fish, Class: Osteichthyes Awaous ocellaris 2 2 No LC Low Yes Awaous gaumensis 2 3 No LC Low Yes Oreochromis mossambicus 3 2 No DD Medium Yes Gambusia affinis 5 20 10 No DD Medium Yes Khulia marginata 2 3 No LC High Yes Khulia rupestris 1 2 No LC High Yes Sicyopterus lagocephalus 4 4 2 1 1 No LC Low Yes Sicyopterus aiensis 1 1 Yes NT High Yes Sicyopus zosterophorum 1 No LC Low Yes Sicyopus (Smilosicyopus) chloe 1 No LC High Yes Ryacicthys guilberti 1 No NA Medium Yes Stiphodon atratus 1 1 1 2 No LC High Yes Stiphodon semoni 3 4 3 LC Low Yes Stiphodon autropurpureus 1 LC Low Yes Crustaceans, Subphylum: Crustacea Macobrachium lar 6 5 5 7 8 No LC High Yes Macrobrachium bariense 3 3 No LC Low Yes Utica gracilipes 1 No NE Medium No Atyoida pillipes 2 3 No LC Medium No Key: LC-Least Concern, NA-Not Assessed, NE-Not Evaluated, NT-Near Threaten, DD-Data Deficient.

3.3 Habitat Description

Table 3 describes the types of habitat within the river and immediate riverbnaks and watershed area and identifies fish species within those habitats. It should be noted that table presents species known to inhabit the the areas but necessarily observed during the site visit. Table 4 provides fish species observed, known to be present, and not present according to fish species checklist. Table – Fish Species by Habitats

Types of Habitats Description Species Pools Pools are areas at bends which have an approximate Anguilla marmorata depth of 1-10 metres. Habitats were under rocks and Khulia rupestris boulders with sediments (mud, silt and clay) from Khulia marginata surrounding gullies. Mesopristes cancellatus Pools were at areas beneath cascades and waterfalls. Macrobrachium lar Stiphodon semoni Stiphodon ataratus Stiphodon mele Sicyopterus lagocephalus Atyoida pillipes Sicyopus (Smilosicyopus) chloe Ryacicthys guilberti Riffle The river is flowing at an average of 0.5-1 m/s at a Awaous gaumensis depth of 2-3 metres. Habitats were under rocks, Awaous ocellaris boulders, cobbles and pebbles. Stiphodon semoni Sicyopterus lagocephalus

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Types of Habitats Description Species Sicyopterus aensis Khulia rupestris Khulia marginata Stiphodon autropurpureus Run This habitat is an area in which the river is running clear Stiphodon rutilaureus over a stretch due to rough slopes every 20 to 40 Awaous gaumensis metres The velocity is between 1-2m/s. The depth is Awaous ocellaris approximately 1-2 metres. Sycyopterus lagocephalus Boulders, cobble, These are areas where >80% of the banks and the Awaous gaumensis gravel, sand, silt, physical stretch of the substrate. Such areas are Awaous ocellaris detritus and clay present in the other 3 habitats mentioned above. Mesopristescancellatus areas Macrobrachium lar Ryacicthys guilberti Atyoida pillipes Utica gracilipes Below altitude of 90 These areas are in lower altitudes which were under Anguilla marmorata metres more pressure of population and villages are present. Khulia rupestris Most of the habitats (mentioned) are exposed due to Khulia marginata access from people. Most of the area is of boulders, Mesopristes cancellatus cobble, gravel, sand, and silt and clay. Macrobrachium lar Stiphodon semoni Stiphodon ataratus Stiphodon rutilaureus Sicyopterus lagocephalus Atyoida pillipes Sicyopus (Smilosicyopus) chloe Schismatogobius vanuatuensis Stiphodon astilbos Stiphodon mele Cestraeus goldei Cestraeus plicatilis Eleotris melanosoma Eleotris fusca Stiphodon autropurpureus

Table - Species present relative to potential fish checklist for the Sarakata River

Species observed Species present but not observed Species not present Awaous ocellaris Schismatogobius vanuatuensis Ambassis interrupta Awaous gaumensis Stiphodon astilbos Ambassis miops Oreochromis mossambicus Stiphodon mele Crenimugil heterocheilos Gambusia affinis Stiphodon rutilaureus Toxotes jaculatrix Khulia marginata Cestraeus goldei Gymnothorax polyuranodo Khulia rupestris Cestraeus plicatilis Akihito vanautu Sycopterus lagocephalus Eleotris melanosoma Glossogobius sp Sycopterus aiensis Eleotris fusca Stenogobius sp Sicyopus zosterophorum Lentipes kaaea Apogon amboinensis Sicyopus (Smilosicyopus) chloe Redigobius bikolanus Ryacicthys guilberti Stiphodon atratus Stiphodon autropurpureus

4 FINDINGS

4.1 Sarakata Watershed Surveyed

Parts of the surveyed watershed of Sarakata River are relatively intact, although most areas appeared modified by human activities (gardening, cattle ranching) and development (hydropower

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scheme). The surveyed area covered a stretch of the river that is used by the local Fanafo community for fishing and recreation despite the fact that a large amount of the surveyed area is within the Sarakata hydropower scheme boundaries. The stretch of river downstream of SST1 was not accessible during the field survey due to heavy rainfall. Local residents (including guides) do not venture downstream of SST1 during such conditions. Endemic plants. The Sarakata watershed hosts a number of endemic plants. These include the protruding 'lawyer cane' or Rattan Calamus vanuatensis, the palm Veitchia spp and Carpoxylon spp. Carpoxylon spp occurs in and along the riparian vegetation belt and is used in the horticultural and landscaping industry. These three endemic species recorded during the field survey are typical of deep thick wet jungles of the larger islands in the Vanuatu archipelago. Exotic plants. Introduced species of plants also occur inside the area, either through human introduction or by other dispersal agents such as birds, bats and flying foxes and animals. The exotic invasive vine (Merremia pintata) has established its presence right in the middle of the catchment. It is thought that this species was introduced to Vanuatu during WWII as a camouflage tool. The vine covers almost 60% of the area. It grows rapidly onto the large trees and chokes the. The invasive vine is present at SST3 and SST4 and is likely to be widespread in other areas of the river as it is in many parts of Vanuatu Ridge top flora. Uphill forests occur along the ridges were dry and display typical mountainous (mountain) forest features. There are overlaps (due to the wet condition and calcite) between plant species composition and structures due to the wide range of distribution of some plants and trees along the water course. Most trees are small to medium in size, with total tree heights rarely reaching fifteen metres (15m) and stem diametres at breast height well below forty centimetres (40cm DBH). The forest is clear with species of Goodyae to be common. Common species of trees were Calophyllum neo-ebudicum, Calophyllum peekelli, Pometia pinnata, and Timonius timon.

4.2 Impacts and Mitigation and Management Measures

4.2.1 Aquatic Ecology Surface water flows along the areas observed supports a diversity of fauna, characterised by a range of aquatic habitats, intact riparian vegetation and limited erosion. The value of these ecosystems was relatively high having healthy flow and clean water, and healthy connection for liberal movement of organisms along waterways despite the presence of the Sarakata weir, canal and powerhouse. Eighteen aquatic faunal species were observed in this expedition. Ten of the species were known to be in the gobiidae family, and are commonly found in most reaches from lowland to the higher elevations, and are adapted to obstructed environments such as waterfalls and to extreme climatic and hydrological seasonal variation (including floods and droughts). Four species of crustaceans are common in the lowland areas. All of these crustaceans were regarded as sources of protein by the local population. At certain locations there is elevated fishery pressure via pole line and spear methods. This is primarily in the reaches below the 10 m waterfall where mullet (Cestraeus sp.) and Jungle Perch (Khulia sp.) are caught. This waterfall acts as a natural up-stream barrier to these species unlike for goboids which are able to climb waterfalls due to special adaptations. A significant ecological threat to the aquatic system arises from sedimentation which appears to be increasing due to changes in the forest composition in the vicinity of the river. Large swathes of vegetation are under threat of the invasive species Merremia pintata which climbs emergent flora and closes off the canopy from light, driving a change in the understory composition. The predominance of shrubs that results appears to permit increased runoff to be dominant in the riverine slopes, so that with heavy rain falls runoff has direct effects on the natural condition of the river course. 4.2.2 Fish Migration Characteristics Migration is one of the main issues to consider in studying fish and aquatic resources. The fish species observed in this report are important to the ecosystem due to their availability over time in the freshwater systems of Santo. According to the fish species observed during this survey, two types of migratory behaviour are represented, (1) Catadromous and (2) Amphidromous.

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Catadramous refers to fish species such as Khulia sp, and Cestraeus sp, Amphidromous refers to the majority of fish species present in this river under the family gobiidae. Amphidromous fish are born in the estuary or freshwater system, and then drift into the ocean as larvae before migrating back to the freshwater system to grow into adults and spawn. Catadromous fish are born in the ocean/saltwater and migrate into freshwater systems as juveniles to grow into adults before migrating back to the ocean to spawn. Local evidence and literature suggests that the lunar cycle plays a major role in fish migration, together with high rainfall events and the flowering of higher plants (Manicop, 1953). For most gobiidae species presented in this report, maturing, mating and spawning occurs in the upper catchment before floating downstream to drift in the ocean for several months before migrating upstream as post-larvae. The fish juveniles migrate from the lower reaches of river habitats to the habitats they will occupy as adults. As a rule the first major waterfall is a crucial factor for species’ distribution along a river. Predatory species of the genus Khulia are abundant in the lower reaches below the first waterfall, but are absent above it (as observed in this survey). This limitation in the movements of predators of the genus Khulia affects the distribution of other organisms. Gobies and Palaemonid crustaceans such as Macrobrachium sp. or Atyid shrimps are often more abundant in areas above cascades where predators are less numerous. 4.2.3 Potential Impacts Potential Impacts of the project on the aquatic ecology (freshwater ecosystem) are considered to include: 1. Increased turbidity and subsequent sedimentation in the freshwater systems due to road construction, vegetation clearing and earthworks and construction of weir and headrace canal. 2. Loss of freshwater habitats due to vegetation clearing and earthworks and construction of weir. 3. Spillage of hydrocarbons and other potential contaminants from vehicle operation, heavy machineries, transport or handlings of materials/substances into the freshwater ecosystem. 4. Introduction of freshwater pests from substances/materials transported or excavated. 5. Introduction of litter and waste into rivers, surface flow rivers and streams contributing to degradation of water quality affecting the freshwater biota. 6. Increased vulnerability for migratory fish especially goboids. 4.2.4 Mitigation and Management Measures Mitigation of the potential impacts above includes taking practical measures to minimise short and long term soil erosion and adverse effects of sediment transport by creating temporary sumps and sediment traps during construction of roads, weir and waterways. Fuel, oil and chemical storage design will need to ensure containment of spillages and proper plans for remediation to avoid impacts on the rivers and streams. Weir design for the Sarakata 2 hydropower scheme needs to facilitate migration of species that have the ability to climb the 10 m high waterfall that exists between the existing Sarakata weir and powerhouse. As noted above, and is clear from the species sighted in the survey above the waterfall and above the existing Sarakata hydroscheme weir (8 m), gobies have specialised adaptations enabling them to climb waterfalls, whereas Khulia sp. (Jungle Perch) and Cestraeus sp (Mullet) cannot pass across major waterfalls. Whilst the proposed weir height (up to 8 m high) is unlikely to be a significant barrier to aquatic species (goboids and crustaceans) able to scale a 10 m high waterfall and the existing Sarakata weir (8 m). The key issue will be to ensure that as far as possible there is a continuous flow of water over the weir during operation, thereby enabling fish migration both upstream and downstream across the stretch of river affected by the project. The extent of abstraction from the main river channel into the power system needs to be considered from the perspective of habitat modification in the dewatered reach of the river.

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In addition, conservation of the upper catchment would facilitate protection of the aquatic ecosystem. 4.3 Terrestrial Ecology

Flora. In an overview, 60% of the areas observed were covered with old growth forest. Some areas were currently used by local village communities for cropping, hunting for birds and pigs and fishing. There were two environments observed in this expedition: the highlands which include slopes and above cascade areas of the river, dominated by endemic palms of Vanuatu, and lowlands indicated by vascular plants of ferns and ginger trees (Alpania sp). There were two plants identified to be endemic to Vanuatu, Calamus vanuatiensis and Vetchia sp.. The two species were common around thick riparian vegetation along slopes and near the river. These two species are not declared in the IUCN Red List Fauna. There were diverse birds endemic to Vanuatu, however due to unfavourable weather conditions only two species were observed in the areas that could be impacted by the project. They include Zosterops flavirons and Ptilinopus tannensis. and were common in the areas observed. Reptiles were also observed, active only during morning sunshine, around 0730 am to 0900 am. During the trip the weather was cloudy, humid, cold and dull so that fauna observation was not performed as expected. 4.3.1 Potential Impacts There are several possible impacts to the terrestrial ecology that need to be considered;

1. Habitat removal by vegetation clearing and excavation, resulting in habitat transformation 2. Habitat fragmentation, leading to overcrowding and increase competition among individuals and species 3. Edge effects, such as microclimatic changes that can cause ecological shifts creating ecology patches 4. Pollution of local habitats (example, landfill, waste, sludge and discharge from water and sewage) that will increase invasive species or tolerant species to survive in the area

4.3.2 Mitigation and management measures To reduce the impacts on the terrestrial ecology the following measures are recommended.

1. Minimise habitat removal, modification and fragmentation; 2. Minimise indirect impacts from construction and operational activities 3. After vegetation losses rehabilitation needs to be conducted to minimise land degradation. 4. All areas for road access should have proper drainage that directs runoff to sediment traps before release into the river.

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Appendix 1 – Study Sites

Station SST1. Date: 30/04/2014 Location: Sarakata River, Espiritu Santo Coordinates: 15°25'44.66"S- 167° 6'41.68"E Location: 50 metres downstream from the existing River: Sarakata power house. Elevation: 130 m Access: By vehicle from Luganville passing Fanafo River section: Upper Sarakata River village and the Sarakata weir. Nearest village: Fanafo Physical environment Valley geomorphology: SST1 was located about 50 metres from the powerhouse and was accessed by descending a steep (60%) formed slope from the powerhouse access road for 50 m. The slope was designed for drainage runoff from the road. Downstream of SST1 a gorge section extends to the confluence with the Tafwakar River near the site for the proposed Sarakata 2 powerhouse. River system: There were no secondary tributaries around the SST1 although tributaries do enter the Sarakata river downstream of SST1 from the left and right banks. During heavy rain there is abundant surface runoff from the slopes into the river which would contribute to significant increase in river flows. Banks & river bed: The width of the river is approximately 10m and extends over 2 metres flooding on the right bank. The side slopes are 60-95% on the right bank and 95% slope on the left bank. The station was partially covered by vegetation. The substrate is dominated by large deposits of cobbles and pebbles, with locally coarse sand and vegetal detritus (leaves and tree branches). Flow pattern: During the survey, the velocity ranged approximately 1 to 3 m/s indicating rising water level. The flood level mark on the river banks was >5 metres due to the narrow passage. Water depth: Cross sectional depth in front of SST1 ranged from 0.2 m to 10 ms on the left bank. Water quality: The water was fairly turbid due to continuous rainfall. Weather Condition: The weather was dull with continuous heavy rain and thunder storm from 24 hours. The temperature was fairly cold around 20oC. Biological environment Aquatic vegetation: There were no aquatic plants. A film of brown algae was noted on the rocks and the substrates. Fish: Fish species observed included Khulia rupestris, Khulia marginata, Sicyopterus lagocephalus, Sicyopterus zosterophorum, Awaous ocellaris, Awaous gaumensis, Sicyopus chloe, Ryacicthys guilberti, Stiphodon atratus, Stiphodon autropurpureus, Stiphodon semoni, Crustacea: Macrobrachium lar, Utica gracilipes Human activities It was evident that people in the village near to the weir use the SST1 for recreation, bathing, water collection, bird hunting and fishing.

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Station SST2. Date: 30/04/2014 Location Coordinates: 15°25'37.33"S- 167° 6'48.45"E Location: 50 m upstream from the existing power River: Sarakata house. Elevation: approx. 135 m Access: A bush track from the powerhouse and then River section: Upper Sarakata River crossing the river, passing the forebay overflow Nearest village: Fanafo outlet and walking along the rock edge to the station (SST2). Physical environment Valley geomorphology: SST2 was about 50 metres (upstream) from the power house. Slopes on the left bank were about 85% and at the right bank about 60%. The environment at this station has been modified due to reduced water flow from the weir and headrace canal off-take. At the right bank there were gullies as a result of overflowing water from the headrace canal. The bedrock was Karst limestone layered like natural slate. River system: There were no secondary tributaries around SST2. During heavy rain there is abundant surface runoff from the slopes into the river which contribute to significant increase in river flows in this section of the river which has been subject to reduced flows because of the weir and intake upstream. Banks & river bed: The width of the river is approximately 10 m. The side slopes are 80% on the right bank and 60% slope on the left bank. The station was covered and shaded by large trees (Banyan tree). The substrate is dominated by large deposits of cobbles and pebbles, with locally coarse sand and vegetal detritus (leaf litter and tree branches). The river bed limestone substrate was exposed. Flow pattern: During the survey, the velocity ranged approx. 1 to 2 m/s indicating rising water level. The flood level mark on the river banks was >5 metres due to the narrow passage. Water depth: Cross sectional depth at SST2 was uniformly 2 m to 5 m on the left and right bank. Water quality: The water was fairly turbid due to continuous rainfall. Weather Condition: The weather was dull with continuous heavy rain and thunder storm for 24 hours. Temperature was fairly cold, around 20oC. Biological environment Aquatic vegetation: There were no aquatic plants. A film of brown algae was noted on the rocks and substrates. Sides of the channel were covered with green algae (Chlorodesmis sp) as result of localised nutrient run-off. Fish: Fish species observed included: Khulia rupestrais, Khulia marginata, Sicyopterus lagocephalus, Sicyopterus aiensis, Awaous ocellaris, Awaous gaumensis, Stiphodon atratus, Stiphodon semoni, Crustacea: Macrobrachium lar Human activities Only permitted personnel from VUI company can enter this area.

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Station SST3. Date: 30/04/2014 Location Coordinates: 15°25'31.85"S-167° 6'44.53"E Location: 50 m downstream from the existing weir. River: Sarakata Access: A bush track from the weir descending Elevation: approx 145 metres about 40% slope to a site 5 metres from the top of a River section: Upper Sarakata River 10m waterfall. Nearest village: Fanafo village Physical environment Valley geomorphology: SST3 was located about 50 metres downstream from the weir. The left and right banks had continuous contoured slopes of about 50%. Like station SST2, SST3 has a modified channel due to weir and headrace canal. Bed rock was exposed with limestone dominant throughout the river channel. River system: There were no secondary tributaries around SST3. During heavy rain there is abundant surface runoff from the slopes into the river which contribute to significant increase in river flows in this section of the river which has been subject to reduced flows because of the weir and intake upstream. Banks & river bed: The width of the river is approximately 15m and extends 2-3 m either side. The side slopes are 50% on the left bank and 50% slope on the right bank before dropping over a 10 m cascade where the slopes are sub vertical. The station was exposed with shrubs and ferns. The substrate is dominated by large deposits of fragmented limestone, with locally coarse sand and vegetal detritus (leaves and tree branches). The bedrock in the river bed was limestone. Flow pattern: During the survey, the velocity ranged approximately 1 to 2 m/s indicating rising water level due to heavy rain. The flood level mark on the river banks was >5 metres due to the narrow passage. The water level at the time appeared to be about 0.5 m above normal. Water depth: The cross sectional depth in front of SST2 was uniformly 2 metres from the left to right bank. Water quality: The water was fairly turbid due to continuous rainfall. Weather Condition: The weather was dull with continuous heavy rain and thunder storms for 24 hours. Temperature was fairly cold around 20oC. Biological environment Aquatic vegetation: There were no aquatic plants. A film of brown algae was noted on the rocks and substrates. Sides of the channel were covered with green algae (Chlorodesmis sp) as result of localised nutrient run-off. Fish: Fish species observed included: Sicyopterus lagocephalus, Stiphodon atratus, Gambusia affinis. Crustacea: Macrobrachium lar, Macrobrachium bariensi Human activities Only permitted personnel from VIU company can enter this area.

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Station SST4. Date: 30/04/2014 Location Coordinates: 15°25'16.76"S- 167° 6'30.97"E Location: 50 metres upstream from the existing River: Sarakata weir. Elevation: approximately150 metres Access: A bush track from the weir River section: Upper Sarakata River Nearest village: Fanafo village Physical environment Valley geomorphology: The left bank slope was around 70% and the right bank about 40%. The station was a pool. 50% of the sides were gullies, with exposed fragmented limestone as bedrock. The right bank has flood plain of 1.5 metres at the foot of the slope. The left bank has uniform slope as mentioned above. River system: There were no secondary tributaries around SST4, During heavy rain there is abundant surface runoff from the slopes into the river which contribute to significant increase in river flows. Banks & river bed: The width of the river is approximately 15m and extends 2-3 metres on either side. The station was partially exposed with, Alpania spp, moss, shrubs and ferns. The substrate is dominated by large deposits of fragmented limestone, with locally coarse sand and vegetal detritus (leaves and tree branches). River bed was limestone. Flow pattern: During the survey, the velocity ranged approximately 0.5 to 2 m/s indicating rising water level. The flood level mark on the river banks was about 6 m. Water depth: Cross sectional depth in front of SST4 was uniformly 2 metres to 5 metres on the left and right bank. Water quality: The water was fairly turbid due to continuous rainfall. Weather Condition: The weather was dull with continuous heavy rain and thunder storms for 24 hours. Temperature was fairly cold about 20oC. Biological environment Aquatic vegetation: The aquatic plant Potamogeton spp was dominant in still pool areas. There was a film of brown algae on the rocks and the substrates. Sides were dominated by green algae (Chlorodesmis sp) as result of localised nutrients from land runoff. Fish: Fish species observed included: Oreochromis mossambicus, Gambusia affinis. Sicyopterus lagocephalus, Low water clarity made fish identification difficult. Crustacea: Macrobrachium lar, Macrobrachium bariensi, Atyoida pillipes Human activities The area was a restricted area (leased area) however, it is commonly used as a recreational and fishing spot by local people.

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Station SST5.Date: 30/04/2014 Location Coordinates: 15°25'5.82"S- 167° 6'26.23"E Location: 100 metres upstream from SST4. River : Sarakata Access: A bush track from the road. Elevation : 150 metres River section : Upper Sarakata River Nearest village: Fanafo village Physical environment Valley geomorphology: Several minor landslides were identified as evidenced by boulders in the river course. The area comprised loose and fragmented limestone on bed rock, creating gullies. River system: There were no secondary tributaries around SST5 although springs and surface water flows emanated from rocks on the river banks. During heavy rain there is abundant surface runoff from the slopes into the river which contribute to significant increase in river flows. Banks & river bed: The width of the river is approximately 15 m and with clay and silt from runoff. The slope on the left bank was gorge and right bank was 40-50% with a flood plain of about 2 metres. Fine sediment was seen flowing at a slow rate and settling to the bottom. The station was surrounded by shrubs and ferns. The substrate is dominated by large deposits of fragmented limestone, with locally coarse sand and vegetal detritus (leaves and tree branches). River bed was exposed with limestone bedrock. Flow pattern: During the survey, the velocity ranged approximately 1 to 2 m/s indicating rising water level. The flood level mark on the river banks was about 5 metres due to the narrow passage. The water level at the time appeared to be about 0.5 m above normal Water depth: The cross sectional depth at SST5 was uniformly 2-5 metres from the left to right bank. Water quality: The water was fairly turbid due to continuous rainfall. Weather Condition: The weather was dull with continuous heavy rain and thunder storms for 24 hours. Temperature was fairly cold, around 20oC. Biological environment Aquatic vegetation: There were no aquatic plants. A film of brown algae was noted on the rocks and the substrates. The sides of the channel were dominated by green algae (Chlorodesmis sp) and brown algae as result of localised nutrient run-off. Fish: Fish species identified included: Oreochromis mossambicus, Gambusia affinis, Sicyopterus lagocephalus, Sicyopterus aiensis, Stiphondon atratus, Stiphondon semoni Crustacea Macrobrachium lar, Atyoida pillipes Human activities The area was restricted (leased area) however, human use the area as fishing spot and recreational site.

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5 REFERENCES

DUTSON, G., 2011. Birds of Melanesia: Bismarks, Solomons, Vanuatu and New Caledonia. Christopher Helm, London. IGUCHI, K. 2007. Limitations of Early Seaweed Migration Success in Amphidromous Fishes. Bsihop Museum Bulletin in Cultural and Environmental Studies, 3, 75-85. IUCN 2013. The IUCN Red List of Threatened Species. Version 2013.2. . Downloaded on 27 November 2013. JENKINS, A. P., ALLEN, G.R AND BOSETO, D 2008. Lentipes solomonensis, a new species of freshwater goby (Teleostei: Gobioidei: Sicydiinae) from the Solomon Islands. aqua, International Journal of Ichthyology, 14, 165-174. KEITH, P., MARQUET, G., LORD, C. KALFATAK, D., AND VIGNEUX, E. 2007. Vanuatu Freshwater Fish and Crustaceans, Vanautu Environemnt Unit, Vanuatu. KEITH, P. 2003. Biology and ecology of amphidromous Gobiidae of the Indo-Pacific and the Caribbean regions. Journal of Fish Biology, 63, 831-847. MANICOP, P. R. 1953. The life history and habits of the goby Sicyopterus extraneus Herre(Anga) Gobiidae, with an account of the goby-fry fishery of Cagayan River, Oriental Misamis. Philippine Journal of Fisheries, 2, 1-57 . ROUGHAN, P., SEBASTINE, M., AND HEVALAO,S.R. 2013. Study of migratory and potential migratory species in Brenwe-Ngalimbiu River System. Honiara: Islands Knowledge Institute (IKI). TEICHERT, N., VALADE, P., BOSC, P., RICHARDSON, M.,AND GAUDIN, PHILLIPPE. 2013. Spawning-habitat selection of an Indo-Pacificamphidromous gobiid fish, Sicyopteruslagocephalus (Pallas). Marine and Freshwater Research, 1, 1-10. VISHWANATH, W. & MAILAUTOKA, K. 2012. Anguilla marmorata. In: IUCN 2013. IUCN Red List of Threatened Species. Version 2013.2. . Downloaded on 27 March 2014.

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ANNEX 3 - RAPID ENVIRONMENTAL APPRAISAL CHECKLIST

Country/Project Title: Vanuatu: Energy Access Project – Sarakata 1 hydropower plant expansion

Sector Division: PATE/PARD

A. Basic Project Design Data

1. Dam height, m = weir approx. 2 m

2. Surface area of reservoir, (ha) = no reservoir

3. Estimated number of people to be displaced = nil

4. Rated power output, = 600 - 900 kW

Other Considerations:

1. Water storage type: run of river

2. River diversion scheme: in-stream flow regulation

3. Type of power demand to address: base load, possible daily peaking

SCREENING QUESTIONS Yes No REMARKS Project Location Is the dam and/or project facilities adjacent to or within any of the following areas? X Natural river above Sarakata 2 has been regulated . Unregulated river and modified through operation of Sarakata 1. . Undammed river tributaries below the X proposed dam X Disturbed riparian forest area in steep sided narrow valley/gorge immediately adjacent to river. This gives . Unique or aesthetically valuable land or way sharply to flat terraces which are used for water form plantations (left bank) and cattle farming/ kava plantations (right bank) due to activities of local villages. . Special area for protecting biodiversity X No known area in the catchment X Community watershed protection currently practised . Protected Area upstream of Sarakata 1 hydropower plant. . Buffer zone of protected area X None known X Catchment was subject to commercial logging by a Malaysian company around 1990. Most big trees . Primary forest removed. Regeneration and protection of secondary forest in upper watershed is practiced by local population. . Range of endangered or threatened animals X Not known . Area used by indigenous peoples X For traditional building materials and garden activity . Cultural heritage site X None within vicinity of project impact area. . Wetland X None reported . Mangrove X None reported . Estuary X None reported Potential Environmental Impacts - will the project cause… . short-term construction impacts such as soil X Soil erosion on steep slopes as a result of road erosion, deterioration of water and air construction and clearance of the penstock and canal quality, noise and vibration from construction corridors. Water quality will be impacted. equipment? . disturbance of large areas due to material X No quarrying required. Existing quarries for road quarrying? surface material will be used.

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SCREENING QUESTIONS Yes No REMARKS X Moderate amount of construction spoil from . disposal of large quantities of construction powerhouse access road construction and headrace spoils? canal will be required. . clearing of large forested area for ancillary X 1.5km access road to powerhouse through highly facilities and access road? modified habitat with only a few large trees.. . impounding of a long river stretch? X No dam or reservoir . dryness (less than 50% of dry season mean X None expected with other perennial flows below flow) over a long downstream river stretch? intake structure . construction of permanent access road near X See above. or through forests? . creation of barriers for migratory land X No risk animals . loss of precious ecological values due to X No flooding of lands. Insignificant loss of wildlife flooding of agricultural/forest areas, and wild habitat due to small scale activity. lands and wildlife habitat; destruction of fish spawning/breeding and nursery grounds? . deterioration of downstream water quality X No dam or reservoir due to anoxic water from the reservoir and sediments due to soil erosion? . significant diversion of water from one basin X Water used returned to same river system to another? . alternating dry and wet downstream X Water used returned to same river system conditions due to peaking operation of powerhouse? . significant modification of annual flood cycle X affecting downstream ecosystem, people’s sustenance and livelihoods? X The river system is not unique to Espiritu Santo. . loss or destruction of unique or aesthetically Utilising existing regulated river in cascade valuable land or water forms? arrangement avoids disturbance of an unregulated river. . proliferation of aquatic weeds in reservoir X No dam or reservoir and downstream impairing dam discharge, irrigation systems, navigation and fisheries, and increasing water loss through transpiration? . scouring of riverbed below dam? X No dam . downstream erosion of recipient river in X No trans-basin diversion trans-basin diversion? . increased flooding risk of recipient river in X No trans-basin diversion trans-basin diversion? . decreased groundwater recharge of X No risk downstream areas? . draining of downstream wetlands and X No risk riparian areas? . decline or change in fisheries below the dam X Relatively minor impacts expected. River catchment due to reduced peak flows and floods, is already regulated upstream of the weir where submersion of river stretches and resultant significant natural waterfalls present a greater barrier destruction of fish breeding and nursery to fish migration than the existing Sarakata 1 and grounds, and water quality changes? proposed Sarakata II weirs. . loss of migratory fish species due to barrier X As above imposed by the dam? . formation of sediment deposits at reservoir X No reservoir entrance, creating backwater effect and flooding and waterlogging upstream? . significant disruption of river sediment X No reservoir transport downstream due to trapping in reservoir? . environmental risk due to potential toxicity of X No dam sediments trapped behind the dams? . increased saltwater intrusion in estuary and X Water is returned to the river several kilometres low lands due to reduced river flows? upstream of river mouth. . significant induced seismicity due to large X No reservoir or dam reservoir size and potential environmental hazard from catastrophic failure of the dam? . cumulative effects due to its role as part of a X Insignificant due to small scale nature of cascade PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 79

SCREENING QUESTIONS Yes No REMARKS cascade of dams/ reservoirs? system and the fact that the powerhouse will be located at the confluence of a major undisturbed tributary joining the Sarakata River on the right bank . depletion of dissolved oxygen by large X No reservoir or dam quantities of decaying plant material, fish mortality due to reduced dissolved oxygen content in water, algal blooms causing successive and temporary eutrophication, growth and proliferation of aquatic weeds? . risks and vulnerabilities related to X Physical hazards associated with machine operation occupational health and safety due to and construction activities on steep slopes can be physical, chemical, biological, and mitigated with appropriate HSE Plan radiological hazards during project construction and operation? . large population influx during project X Small-scale construction using local labour where construction and operation that causes possible increased burden on social infrastructure and services (such as water supply and sanitation systems)? . creation of community slums following X Small-scale project with no large work force. construction of the hydropower plant and its facilities?  social conflicts if workers from other regions X GoV committed to socially responsible working or countries are hired? conditions . uncontrolled human migration into the area, X Not anticipated in this customary land made possible by access roads and transmission lines? X No negative impacts expected. Project will have . disproportionate impacts on the poor, positive impacts on these groups by providing women, children or other vulnerable groups? improved access to electricity as well as providing improved road access to remote villages. . community health and safety risks due to the X No negative impacts expected transport, storage, and use and/or disposal of materials likely to create physical, chemical and biological hazards?  risks to community safety due to both X Potential for accidental falls into headrace canal and accidental and natural hazards, especially forebay increased due to presence of villages and where the structural elements or possible use of canal corridor for access. Awareness components of the project (e.g. Dams) are campaign required. accessible to members of the affected community or where their failure could result in injury to the community throughout project construction, operation and decommissioning?

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Checklist for Preliminary Climate Risk Screening Country/Project Title: Vanuatu: Energy Access Project – Sarakata 1 hydropower plant Sector: Energy Subsector: Renewable Division/Department: PATE/PARD

Screening Questions Score Remarks51 Location and Is siting and/or routing of the project (or its 1 hydropower plant components Design of components) likely to be affected by climate likely to be subject to increased project conditions including extreme weather related events extreme flood events such as floods, droughts, storms, landslides? Would the project design (e.g. the clearance for 1 hydropower plant components bridges) need to consider any hydro-meteorological need to be designed to take parameters (e.g., sea-level, peak river flow, reliable account of likely extreme flood water level, peak wind speed etc)? events Materials and Would weather, current and likely future climate 1 Potential increased extreme floods, Maintenance conditions (e.g. prevailing humidity level, increased rainfall intensity and temperature contrast between hot summer days and potential increased frequency and cold winter days, exposure to wind and humidity intensity of cyclones needs to be hydro-meteorological parameters likely affect the considered in selection of selection of project inputs over the life of project construction materials. outputs (e.g. construction material)? Would weather, current and likely future climate 1 Potential increased extreme floods, conditions, and related extreme events likely affect increased rainfall intensity and the maintenance (scheduling and cost) of project potential increased frequency and output(s) ? intensity of cyclones needs could result in increased maintenance costs including scheduling of routine maintenance Performance Would weather/climate conditions and related 0 Possible decreased generation of project extreme events likely affect the performance (e.g. potential in dry season offset by outputs annual power production) of project output(s) (e.g. increased generation potential in hydro-power generation facilities) throughout their wet seasons design life time?

Options for answers and corresponding score are provided below:

Response Score Not Likely 0 Likely 1 Very Likely 2

Responses when added that provide a score of 0 will be considered low risk. If adding all responses will result to a score of 1-4 and that no score of 2 was given to any single response, the project will be assigned a medium risk category. A total score of 5 or more (which include providing a score of 1 in all responses) or a 2 in any single response will be categorised as high risk project. Result of Initial Screening (Low, Medium, High): MEDIUM

Other Comments:

51 If possible, provide details on the sensitivity of project components to climate conditions, such as how climate parameters are considered in design standards for infrastructure components, how changes in key climate parameters and sea level might affect the siting/routing of project, the selection of construction material and/or scheduling, performances and/or the maintenance cost/scheduling of project outputs. PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 81

ANNEX 4 - AUDIT OF EXISTING FACILITIES AND OPERATIONS OF SARAKATA HYDROPOWER SCHEME

1 INTRODUCTION

The project preparatory technical assistance has completed feasibility studies of three subprojects which will be connected to existing local grids in Malekula and Espiritu Santo islands. The feasibility studies include environmental assessment documents comprising initial environmental examination (IEE) of each subproject. This report documents the audit of existing facilities and operations at Sarakata hydropower plant currently operated by Vanuatu Utilities and Infrastructure Limited (VUI), which will be upgraded as part of the Sarakata 1 upgrade component of the the project. Environmental impacts of the Sarakata-1 subproject have been assessed in the IEE for the subproject in line with the ADB Safeguards Policy Statement (SPS). The focus of the audit is on the environment in the existing facility in which the subproject will operate and if the facility's environmental management is generally consistent with ADB’s safeguard objectives and requirements as defined in SPS. The audit also identifies any mitigation measures that are needed (corrective actions) to bring the facility's environmental management in to line with ADB’s safeguard objectives and requirements. Through due diligence, review, and supervision ADB ensures that borrowers comply with the SPS requirements during project preparation and implementation. The process outlined in the SPS notes that, over time, ADB’s safeguards may require updating of existing operations to enhance environmental effectiveness, respond to changing needs, and reflect evolving best practices. Due diligence has been undertaken through a review of the available documentation, interviews with staff of VUI and site visits during March 2014 in order to explore with the facility operator whether the facility is in compliance and/or can be brought into compliance with SPS, and if so to agree on required corrective actions and a time-line for their implementation as a part of international good practice. In preparing the audit report the consultants have exercised due diligence and studied where VUI’s current practices meet ADB SPS requirements and where there are gaps that need to be filled. This report summarises the results of that study and identification of how any gaps can be addressed so that the loan procedures can proceed with confidence that the requirements of SPS will be complied with. 2 CURRENT STATUS OF ENVIRONMENTAL COMPLIANCE

The Sarakata hydropower project was commissioned in 1995 as a result of technical and financial assistance from the Government of Japan (JICA). At the time of commissioning there was no statutory requirement under Vanuatu law for environmental impact assessment nor any requirement for an environmental permit or water use permit to operate the hydropower project. As of today, the Sarakata hydropower project does not have a water use permit. No EIA was undertaken during the planning and development of the Sarakata hydropower project. In 2002 the Water Resources Management Act came into force. Under the Water Resources Management Act 2002 if a land lease grants the right to use any water the lessee must apply to the Director of Water Resources for the right to use the water for any other purpose other than the customary rights or for domestic purposes. The Act also stipulates that works and uses undertaken prior to the commencement of the Act are lawful. In this respect the existing Sarakata hydropower project does not need to apply for the right to use the water, consultations with DGMWR should be undertaken in respect of the expansion requirements. The Environmental Management and Conservation Act N° 12 of 2002 came into force in 2003. Under the Act all projects, proposals or development activities that impact or are likely to impact on the environment of Vanuatu and require any license permit or approval under any law are subject to EIA provisions as specified in Part 3 of the Act.

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In 2004 the government an agreement with the Government of Japan to upgrade the existing 600 kW capacity Sarakata hydropower project to 1200 kW. During the course of intergovernmental discussions and field surveys on the upgrading project it was agreed that environmental and social assessment of the project was vital. The JICA study team produced a draft Terms of Reference to be used for monitoring and mitigation for social and environmental considerations of the project site for a period of six months. The government took responsibility to undertake the agreed studies and surveys and established a Technical Advisory Group (TAG) to oversee the studies. The TAG comprised representatives from the various government departments which undertook the studies. The studies culminated in preparation of a report representing compilation of six studies undertaken by different government departments, the salient points of which are summarised in Table 1.52 It is not clear what the status is of the report is in terms of compliance with the Environmental Management and Conservation Act. 3 REVIEW OF OPERATIONAL IMPACTS

Through site inspection interviews with operational staff and review of documentation it is apparent that the Sarakata hydropower plant is in general compliance with SPS requirements. The visual impression is of a well-managed and maintained, tidy and safety conscious operation. Key areas examined by the consultant during the audit process included: (i) waste disposal procedures and methods, (ii) maintenance of drainage and access roads near buildings (iii) occasional road maintenance and drainage, (iv) maintenance of header pond, intake and penstock, (v) delivery and installation of spare parts and equipment, (vi) storage and disposal of lubricating oil arising from routine plant maintenance (iv) maintenance of toilets and washrooms, and (vi) management of worker health and safety in and around the site. In all the areas described above the operations and maintenance of the Sarakata hydropower plant are considered to be consistent with internationally recognised good practice. However, it was identified that in the switchyard area whilst there was no evidence of any previous oil leakage or spill, there was limited provision for containment of any potential oil spill from the transformers as well as no evidence for an oil separation facility to prevent oil spillage discharging via the stormwater drainage system. An audit checklist of SPS environmental requirements in respect of the audit for Sarakata hydropower plant is presented in Table 2. The findings of the environmental studies undertaken as part of the compilation report, summarised in Table 1, suggest that environmental impacts associated with the ongoing operation of the Sarakata project are acceptable and manageable.

52 Government of Vanuatu – TAG. 2005. Monitoring/Mitigation on Social and Environmental Consideration on the Sarakata Hydropower Project. Port Vila, Vanuatu PPTA 8285-VAN: IEE - Sarakata 1 Hydropower Project Page | 83

Table 1 - Salient Points of 2005 Compilation Report

Government Department Study/Activity Objectives Key Findings /Recommendations Responsible for Study Four vegetation types were identified, mapped and compared in terms of species composition and structure in the To establish baseline information on riparian area between the weir and the powerhouse. Vegetation types included: virgin forest, disturbed forest, vegetation cover within the occupied revegetation from manmade cliff and riverbank vegetation. Vegetation Forestry land so as to enhance decision making The study recommended that i) vegetation studies be undertaken in the catchment upstream of the weir, ii) Study on monitoring/mitigation within the awareness raising be undertaken in villages in the catchment on how to manage the forests to ensure water quality area in future and quantity is sustained, and iii) enrichment planting of deep rooted meso-phanerotypes within the manmade cliff be undertaken to avoid further soil erosion and landslides The implementation of activities arising from recommendations made during the vegetation study described above To develop control measures to were reported. This included enrichment planting in landslide areas and establishment of soil entrapment structures Soil Erosion Forestry prevent further soil erosion along the where soil erosion had occurred as well as community awareness raising with villages on how to manage forests in canal slope order to sustain the hydropower resource. The report assessed the stability of slopes on either side of the canal platform and identified longitudinal cracks and Land Cracks To investigate ground cracks between landslides on the riverside embankment that indicate the area is unstable and could affect the structural integrity of and Public Works the canal and river and propose long the canal. Landslides and short term control approaches Recommendations were made for immediate and long term remedial measures to stabilise the unstable slopes including regular slope monitoring. These measures have since been implemented i) To record water level data over the Monitoring stations for the three parameters were established at the following locations: i)1.3 km upstream of the period February to July 2005 and weir, ii) 250 m downstream of the weir and iii) adjacent to the powerhouse. Hydrology Division of Hydrological ii)To undertake monthly flow Water quality was tested using the palintest and quanta probe which measured: temperature, conductivity, Geology, Mines and Water Monitoring measurements and water quality dissolved oxygen, pH, salinity, depth, alkalinity and hardness. Resources testing at three points along the river Monitoring reports were presented for February, March, April and July 2005. Monitoring reports included a between February and July 2005 summary of the data recorded with no other comments. To resolve land issues associated with Following detailed consultation with all parties concerned the government decided to abandon its intention for legal Land the hydropower project’s occupation of acquisition in favour of leasing the land .The land owners clearly did not want to relinquish ownership of their land. Acquisition for two parcels of land with separate Lands Also both parcels of land are under registered ownership disputes and as such the Ministry of Lands has Hydropower ownerships where the government’s management powers under the Land Reforms Act to sign a lease on their behalf while the Land Tribunal proceeds project intention is to legally acquire the land with boundary identification. for the existing hydropower project. To establish baseline information on Fish assessment was undertaken at three sampling points between the weir and powerhouse and on two the aquatic species in the river occasions - wet season (February 2005) and dry season (July 2005). between the weir and the powerhouse The report noted that seasonal migration of aquatic fauna has been affected to some extent by the project Aquatic Life However, the waterfall is already a natural barrier to migratory species as well as crustaceans. Erosion of Fisheries Study embankments, cracking of waterfall structure and changes in vegetative structure of the area such as formation of an island below the waterfall area were part of the impacts arising since the weir was constructed. Overall such impacts were considered not significant and that the current development activity poses low risk to the existing environment.

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Table 2 - Audit Checklist of SPS Environmental Requirements of Sarakata Hydropower Plant

Relevant SPS Environmental Requirement Comments on Compliance Status Corrective Action Required (SPS Appendix 1 Reference) DOE to request formal clarification from the Director of Environment on current status of environmental EIA not undertaken during initial planning and construction of project (1993-95) at which time compliance of the project under the Environment Act there was no national requirement for EIA in place . Environmental Assessment (D.1) 2002; An environmental assessment was undertaken in respect of existing operations prior to project DOE to consult with DGMWR to confirm whether the upgrading in 2005. (See main text) expansion will trigger the need for a water resources permit Environmental Planning & Management (D.2) As above As above VUI has a transparent approach to information sharing with the public concerning its Information Disclosure (D.3) Addressed in IEE operations Local community has been consulted regarding land acquisition issues and operational Consultation & Participation (D.4) Addressed in IEE requirements including community safety and watershed protection (see Table 1) Grievance Redress Mechanism (D.5) No formal GRM in place GRM established and documented in IEE Monitoring and Reporting (D.6) No clearly defined routine monitoring and reporting system in place. Procedures identified in IEE Unanticipated Environmental Impacts during No procedure in place to address unanticipated impacts Procedures identified in IEE project implementation (D7) Biodiversity issues addressed to some extent in Report of the Monitoring/Mitigation on Social Biodiversity Conservation and Sustainable and Environmental Consideration on the Sarakata Hydropower Project 2005 (see Table 1 and Addressed in IEE. Resource Management (D.8) text) Site observations, document review and discussions with operational staff indicate that current operational practices in respect of pollution prevention, waste management, hazardous materials management, pesticide use and management and greenhouse gas emissions are Pollution Prevention & Abatement (D.9) generally consistent with internationally recognised good practice. Addressed in IEE However, in the switchyard there is limited provision for containment of any potential oil spill from the transformers as well as no evidence for an oil separation facility to prevent oil spillage discharging via the Stormwater drainage system. Occupational and Community Health and Site observations, document review and discussions with operational staff indicate that Addressed in IEE Safety (D.10) practices and procedures are consistent with internationally recognised good practice. Physical Cultural Resources (D.11) No significant noncompliance identified None

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4 ACTIONS REQUIRED FOR EXISTING SARAKATA HYDROPOWER PROJECT OPERATIONS TO COMPLY WITH SPS

The recommended actions for DOE in order to achieve environmental compliance with SPS are to:  Request formal clarification from the Director of Environmental Protection and Conservation (under the Ministry of Climate Change Adaptation, Meteorology and Geohazards, Energy Environment and National Disaster Management Office) as the environmental authority, about current state of environmental compliance by DOE with regard to Sarakata hydropower plant.  Consult with DGMWR to confirm whether the expansion will trigger the need for a water resources permit.  Disclose the scope of the improvements for Sarakata hydropower plant upgrade and refurbishment and seek guidance from the Director of Environment on actions needed to establish regularisation of environmental compliance of Sarakata hydropower plant.  Bring oil containment of transformer bays and oil seperation up to international standard

The IEE provides additional recommendations to ensure the upgraded Sarakata hydropower project complies fully with the ADB’s SPS with respect to all phases of project implementation (pre- construction, construction and operation).

5 CONCLUSIONS

This audit concludes that the environmental impacts from the existing activities at Sarakata hydropower plant are not significant. With the exception of inadequate oil containment facilities and the absence of oil separation drainage provisions at the transformer bays, the existing operations are generally undertaken in accordance with internationally recognised good practice and thereby are in general compliance with the SPS. The EMP in the IEE presents a more detailed analysis of the environmental impacts and the required mitigation measures based on the type, extent and duration of the identified environmental impacts.

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ANNEX 5 - STAKEHOLDER CONSULTATIONS

Consultations at the national level were undertaken on a one on one basis. Key relevant institutions and their responsible personnel were identified by the environmental safeguards team and meetings arranged accordingly. The main purpose of the meetings was to:  briefly outline the key features of the the project projects (location, indicative lay out/footprint etc);  ascertain key stakeholders views and concerns in relation to the proposed developments; and  obtain information from the stakeholders on environmental and social characteristics of the sites that would assist in the preparation of the IEEs including any constraints that need to be addressed. A list of key national stakeholders consulted including summary of information obtained and significant comments made is provided in Table A5.1. Table A5.1 Key National Stakeholders Consulted during PPTA Agency Name & Position Date Information Obtained / Comments made (2014)

DEPC Albert Williams 15 May  General discussion on institutional set up, function Director of Environment and and capacity of DEPC. Conservation Department  Provided copy of DEPC Annual Report 2013. and Acting Director General  Advised that ADB approved IEE for the project shall of Ministry of Climate be deemed as meeting EIA requirements of executing Change Adaptation, agency Act and shall therefore be the basis for Meteorology, Geohazards, issuing a Development Consent. Energy, Environment and Disaster Management. DEPC Donna Kalfatak 18 Mar  Inventory of protected areas in Santo and Malekula Biodiversity Officer 24 Mar  Recent research and publications on Freshwater fauna of Vanuatu provided.  Commented on need to ensure aquatic biodiversity of project areas surveyed and adequate mitigations implemented as necessary to protect any vulnerable species.  Provided list of conservation areas in Vanuatu DEPC Trinison Tari 28 Mar  Provided information about the structure for the Environment Education & 14 Apr DEPC. Concern that there was not enough staff for Information Officer (EEIO) the department to enforce the laws with new project initiatives  Advised that the Waste Management Bill for Vanuatu is not yet law.  Also advised that Pollution Control Act is enforced but without a Regulation. A draft Regulation was prepared but it has not yet been approved. DOF Hanington Tate 18 Mar  Provided latest vegetation maps of Malekula and Director Santo Phyllis Berry  Provided species lists of trees that are known to be GIS Mapping Officer found in project areas  Identified history of passed logging activities (or not) in project areas. Sanma Anaclet Philip 27 Mar  Advised there were two community based protected Provincial Environment Extension areas in Santo including Nambauk and Butmas. Both Government Officer areas are outside proposed project areas in Santo  Community awareness activities undertaken at Fanafo on need for watershed protection above existing Sarakata HP scheme, namely to avoid tree cutting and limit fishing activities.  Advised that Sarakata catchment was logged during

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Agency Name & Position Date Information Obtained / Comments made (2014)

1990s along with some parts of Wambu catchment. Most large trees were taken.  Had no concerns about endangered or endemic species in Sarakata or Wambu project areas. Ministry of Benuel Tabi 27 Mar  Provided advice on water use rights in respect of Lands, Officer in Charge existing Sarakata hydropower plant Sanma Province DoE Leo Moli 24 Mar  Provided structure of the DoE as approved by the Officer Manager Public Service Commission  Also provided vegetation study report for the Sarakata Hydropower  Provided information on the Energy Roadmap for Vanuatu DoE Chris Simelum 24 Mar  General information on energy issues and needs in Power Off-grid Officer Vanuatu. Also referred to the Energy Roadmap DGMWR Brooks Rakau 7 Apr  Provided information on the new Quarry Act. Advised Geologist that the Regulation has not yet been approved and confirmed that the Director can approve a Quarry Application in writing in the absence of a Quarry Permit Application Form DGMWR Benjamin Titus 17 Mar  Provided geological maps and associated geology Geologist 9 Apr reports of the project areas Christopher Ioan  Advised that due to the absence of a Regulation for Director the Water Resources Management Act to grant approval for Right of Use of Water, the Director has powers to approve in writing. Malampa Palen Arthur 11 Apr  General information on the project and the Provincial Provincial Planner commitment to support the project. Information on Council Provincial By-Law was lacking for the province in environmental issues DoMG, Brian Philips 16 Apr  Provided information on the role of the National VPMU Manager Advisory Board (NAB) on Climate Change and Disaster Risk Reduction VUI Jun Fernandez 25 Mar  Provided information on VUI’s current environmental Operations Supervisor health and safety procedures and protocols in respect Sarakata Hydropower of the Due Diligence Review undertaken for Sarakata Scheme Hydropower Scheme VPMU Tony Telford 28 May  Provided information on VPMU’s current portfolio, Project Management Advisor staffing and capacity.

A list of attendees at the meeting with Sanma Provincial Council on 20 March is provided in Table A5.2 Table A5.2 List of Attendees at Consultation Meeting with Sanma Provincial Council Luganville 20 March 2014 Name Responsibility Summary of Comments made Sakaraia Secretary General (SG) of the  The SPC were very aware of what the hydroproject would Daniel Sanma Provincial Council involve and supported the project  The SG remarked to visitors as ‘ bringing blessings to the William President, Sanma Provincial Islands of Espiritu Santos’. Mallon Council, Luganville  The SG welcome the SMEC team and stated that Sanma province would be ready to assist in any activity that is Prosper Provincial Planner, Sanma associated with the Vanuatu Energy Access Project. Buletare  On the environmental questions, the President of Sanma province said there is plenty of bushland and villagers live far Juliet Sanma Provincial Council away from the project sites.

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Name Responsibility Summary of Comments made Sumbe Women’s affairs  The Consultant was referred to Mr Anaclet Philip SPC Environment Extension Officer to discuss environment issues. He was unable to attend the meeting due to involvement in disaster response in relation to cyclone Lusi.  Refer to summary of discussion with SPC Environment Extension Officer Table A5.1.

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Appendix 6 Land Acquisition and Resettlement Plan

SHPP-1 Ext LARP follows. [PDF 41 pages]

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Land Acquisition/Resettlement Plan

PPTA N°: 8285-VAN August 2014

Vanuatu: Energy Access Project Sarakata-1 Extension and Sarakata-2 Hydropower Subproject

Land Acquisition/Resettlement Plan

Prepared by the Department of Energy, Republic of Vanuatu

This Land Acquisition/Resettlement Plan 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 programme 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 judgment as to the legal or other status of any territory or area.

CURRENCY EQUIVALENTS

Currency Unit - Vanuatu Vatu VND $1.00 = US$ 0.01053 US$ 1.00 = Vatu$ 92.00

ABBREVIATIONS

ADB – Asian Development Bank AF – Affected Families AH – Affected Household AP – Affected Person/People CBO – community based organisation DD – Due diligence DOE – Department of Energy DMS – Detailed Measurement Survey EA – Executing agency EAP – Energy Access Project GAP – Gender Action Plan GDP – Gross Domestic Product GRM – Grievance Redress Mechanism GWh – Gigawatt per hour HH – Household HIES – Household Income and Expenditure Survey IR – Involuntary Resettlement kWh – kilowatt per hour MWh – Megawatt per hour M&E – Monitoring and Evaluation MLNR – Ministry of Lands and Natural Resources NGO – Non-government organisations NSO – National Statistics Office (Vanuatu) OEC – Office of Energy Commissioner PMU – Project Management Unit PPTA – Project Preparatory Technical Assistance RP – Resettlement Plan SPS – Safeguard Policy Statement SPREP – South Pacific Renewable Energy Project TOR – Terms of Reference TA – Technical Assistance USD – United States Dollar VG – Valuer General VT or VUV – Vanuatu Vatu ZOI – Zone of Influence

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CONTENTS

EXECUTIVE SUMMARY 4 I. INTRODUCTION 6 A. Background and Rationale 6 B. Project Outputs 6 C. Sarakata-1 Expansion & Sarakata-2 HPP Subprojects 6 II. SCOPE OF LAND ACQUISITION/RESETTLEMENT 9 A. Scope of Land Acquisition 9 B. Land Acquisition Impacts/Vulnerability of Affected Households 10 III. SOCIOECONOMIC INFORMATION AND PROFILE OF AFFECTED PERSONS AND SUBPROJECT COMMUNITIES 12 A. Subproject Communities 12 B. Profile of Santo Rural and Subproject Communities 12 C. Socioeconomic Profile of Affected Households/Persons 13 IV. INFORMATION DISCLOSURE, CONSULTATIONS, AND PARTICIPATION 18 A. Stakeholders 18 B. Community Consultations Held 18 C. Consultation on RP Preparation 19 D. Disclosure of Draft RP 20 E. Consultations and Information Disclosure during Project Implementation 20 V. GRIEVANCE REDRESS MECHANISM 21 VI. LEGAL AND POLICY FRAMEWORK 22 A. Legal Instruments in Land Acquisition and Resettlement in Vanuatu 22 B. ADB’s Policy on Involuntary Resettlement 25 C. Policy Differences and Reconciliation 26 D. Principles and Policies for the Project 28 VII. ENTITLEMENTS, ASSISTANCE AND BENEFITS 29 A. Eligibility for Compensation 29 B. Entitlements 30 VIII. INCOME RESTORATION AND REHABILITATION 30 IX. LAND ACQUISITION/RESETTLEMENT BUDGET AND FINANCING SOURCE 30 X. INSTITUTIONAL ARRANGEMENTS 32 A. Institutional Arrangements 32 B. Implementation Arrangements 32 C. Resettlement Database Records 33 D. Post-Resettlement Plan Implementation 33 XI. IMPLEMENTATION SCHEDULE 33 XII. MONITORING AND REPORTING 34 XIII. APPENDICES 34 Appendix 1: Copy of the Memorandum of Agreement on Project Access 34 Appendix 2: Newspaper Clippings 35 Appendix 3: Consultations 37

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EXECUTIVE SUMMARY

1. The proposed Energy Access Project (the project) will assist the Republic of Vanuatu’s (the government) efforts to reduce the country’s heavy reliance on imported fossil fuels for power generation by providing a secure, sustainable and environmentally sound source of electricity for private and commercial consumers. The impact of the Project will be improved livelihoods of households in targeted provinces. The outcome of the Project will be increased supply of affordable grid-connected electricity to households in targeted provincial centres. 2. The project will have the following outputs: (i) construction of small hydropower plants and access roads; and (ii) transmission lines including expansion of existing distribution network in Santos. Three subprojects are comprised of Sarakata-1 Expansion & Sarakata-2 HPP. 3. This Land Acquisition/Resettlement Plan (RP) has been prepared primarily for Sarakata 2 HPP in Espiritu Santo, Sanma Province. The Sarakata-2 HPP will require some 124,500 m2 (12.45 ha) of land area to construct the hydropower facilities on site. Sarakata-1 Expansion located upstream of the proposed Sarakata 2 will not require additional land as the proposed development will be confined within the existing Sarakata HPP occupied lands. Accordingly, this RP also documents findings of the screening of impacts of Sarakata 1 Expansion. A Due Diligence/Social Compliance Audit Report has been prepared separately for the existing hydropower facilities as well as due diligence for the transmission lines. 4. Affected persons of the proposed Sarakata-2 HPP are 3 customary landowners/ households and 4 claimants. Table E1. Land Requirement and Affected Persons in Sarakata-1 & 21 Espiritu Santo Total Sarakata-1 Sarakata-2 - Expansion Santo Santo Ownership/type of land Custom land Custom land Land requirement sq.m (ha) None 124,500 m2 (12.45ha) (12.45ha) Number of Identified Landowning None HH 7 HH Families/ Households and Claimant Estimated total subproject APs (based on NA 26 persons 26 persons a actual household size) Number of Female-Headed Households None None None Affected households losing 10% or more None None None land Other Affected Assets None None None Note: NA = Not Applicable

5. The Sarakata-1 Expansion and Sarakata-2 HPP are not expected to have impacts of physical displacement and/or loss of major income sources. The landowners or affected persons (APs) on the one subproject site (Sarakata-2 HPP) will lose a total of 12.45 ha of bush or idle lands with mainly invasive trees.2 All interviewed APs view the loss of their land as manageable since the sites are generally bush lands not used for cultivation or pasture. The APs also view the possible development of the site as an opportunity to stabilise power supply thus maximising an otherwise unproductive or currently unused land. During interviews, all consulted including the APs expressed support for the project. However, during the subsequent visit to site the APs indicated that entry to site by the Study team would only be allowed if certain land acquisition issues with regard to existing Sarakata HPP are settled. The Government and concerned landowners are now concluding agreement on negotiated land purchase and the partial payment of the agreed amount for the compensation of the 18.63 ha parcel where most of the hydro facilities are located.

1 Data on land requirement are preliminary estimates based on PPTA. These are subject to confirmation or might change during the implementation. The updated RP will provide final data during implementation. 2 “Ide land” in this report means that the land is not currently used by APs for any purpose such as agriculture, housing, etc. Other trees are naturally grown.

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6. The project will follow ADB’s Safeguard Policy Statement (SPS, 2009) and Vanuatu’s applicable laws on land acquisition and compensation. The table below summarises the entitlement for APs under the subprojects. Table E2. Entitlement Matrix Type of Entitled Persons Entitlements Impact Loss of land Land owners/users as Compensation at replacement cost based on current recognised by customary market price (most recent transaction of comparable leaders and government value) will be paid for lands to be acquired by the government. Loss of trees, crops APs and households It will be agreed with APs that any crops on affected land will be harvested by them before site clearance. If APs are not able to harvest crops, they will be paid compensation at replacement cost based on market prices.

Fruit trees including any loss of production will be compensated at replacement cost or market/comparable price. Employment APs particularly women, APs will be provided training and priority opportunities (project youth and vulnerable group employment in civil works based on APs skills benefit) suitable to project needs. Impacts on vulnerable Vulnerable groups Necessary special assistance (identified through groups (if identified) consultations with affected communities) to be specified in the updated RP. Stable power supply All APs APs (as regular customers) will get stable power (project benefit) supply. Any unconnected AP household will be provided power connections (as regular customers). Unforeseen or Concerned affected people These will be determined as per the principles of this unintended impacts RP and ADB's SPS.

7. The RP has been prepared based on assessments and consultations undertaken during the PPTA. The RP will be endorsed by the EA, disclosed to APs, and posted on ADB website before the project appraisal. The RP will be updated after the detailed design during implementation. 8. The following is the implementation schedule for the project’s land acquisition/ resettlement activities: Table E3. Implementation Schedule N° Activities Schedule 1 Confirmation of land requirement and identification of land owners Month 1 2 Land survey and valuation Month 2 3 Notification of APs and information dissemination re land acquisition Month 2-3 Submission of land survey report and to prepare for formal negotiation with 4 Month 3-4 landowners and budget allocation for land acquisition Negotiation with landowners: consultation with affected landowners to negotiate 3 Month 3-6 for land acquisition/purchase. Agreement on land acquisition/negotiated purchase and approval by the Ministry 5 of Finance and Council of Ministers on allocation and release of fund for land Month 7-9 compensation/ payment. VPMU in coordination with Department of Energy and Department of Lands 6 updates the RP including agreements on compensation rates with landowners, Month 9 and discloses updated RP to APs. 7 IA submits the updated RP to ADB for approval and posting on ADB website Month 10 8 Execution of land acquisition and payment of compensation Month 11-13 11 IA submits to ADB a land acquisition and compensation completion report Month 14 12 IA submits safeguard monitoring report Six-monthly

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I. INTRODUCTION

A. Background and Rationale 9. Vanuatu is a South Pacific island nation composed of more than 80 islands with a total land area of about 12,190 km2 spread over an ocean area of 612,300 km² in the South Pacific stretching from Hiu Island in the north to Mathew and Hunter Islands in the south. Most (around 60%) of these islands are permanently inhabited, and around half are mountainous and densely forested with narrow strips of farming land on the coasts. Five volcanoes are still active and volcanic eruptions are not uncommon. In 2009, the country had a total population of 234,023 (NSO: 2009) 3 in 47,582 households with almost 80 per cent of them living on the twelve largest islands. The two main cities are Port Vila (44,039 people) and Luganville (13,156 people). 10. Vanuatu’s economy is primarily agriculture-based. More than three-quarters of inhabitants live in rural areas and rely on traditional subsistence farming methods. Unfortunately, Vanuatu’s economy has been unable to grow quickly enough to meet the needs of its expanding population. A significant consequence is a high rate of youth unemployment. The main exports are copra (35 per cent), coconut oil, cocoa, coffee, kava root, cattle and timber. The country’s tax haven status and unspoilt natural beauty has led to a growing reliance on the finance and tourism industries. Overseas aid from Australia, New Zealand, France and Britain is also important. 11. Vanuatu has no known developable fossil fuel reserves though the country is relatively rich in renewable energy resources which include geothermal, hydro, solar, bio-energy and wind. Electricity generation and transport are still mainly based on imported fossil fuel though both electricity generation and transport have significant potential for further conversion to renewable energy in the future. Per estimate, around 65% of petroleum imports are used for transport, 30% for electricity generation and 4% for household use. According to SPREP in 2012, only about 7% of rural dwellers have access to any sort of electrical services other than portable lights and radios powered by dry cell batteries. 12. There is considerable interest by the government in reducing imports of fossil fuels since the cost of petroleum product imports typically exceeds 50% of the total value of Vanuatu’s exports. The ADB is providing technical assistance and eventually financing to the Government of Vanuatu through the Energy Access Project to increase energy access to households and businesses across Vanuatu through expansion of existing distribution grids and the development of low cost renewable energy generation from hydropower. The impact of the Project will be improved livelihoods of households in targeted provinces. The outcome of the Project will be increased supply of affordable grid-connected electricity to households in targeted provincial centers.

B. Project Outputs 13. The Project will have following outputs: 1) Extension of the electricity distribution grids, 2) Two hydropower plants plus an extension to a third put into operation, 3) Capacity building undertaken for implementing agency and project beneficiaries; 4) Efficient project management services.

C. Sarakata-1 Expansion & Sarakata-2 HPP Subprojects 14. The subprojects for which this RP has been prepared are located on the island of Espiritu Santo in Sanma Province within the Sarakata River system where the existing hydropower project is located. Figures 1 & 2 following provides location maps of the subprojects. 15. The existing Sarakata River Hydropower Project is located about 25 km from the town of Luganville. It draws water from the Sarakata River for power generation. Sarakata River begins its descent from the heights north of Luganville and meanders towards the southerly direction to the

3 Vanuatu National Statistical Office (2009), Port Vila. National Population and Housing Census, Vol. 1&II

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town of Luganville. The total catchment area of Sarakata River above the Sarakata-1 weir is approximately 97 km2 with an annual average rainfall of 5,500 mm. Close to the location of the existing HPP is a waterfall of 15 m. Land around the area of the HPP facilities is described as undulating with rugged terrain characterised by deep ravines and steep ridges. 1. Sarakata-1 Expansion HPP Subproject 16. Sarakata-1 Expansion envisages augmenting the existing power generation through elevation of the existing weir level and canal height thus augmenting the capacity of the water channel to conduct the extra water to the power station to increase power generation. 17. All upgrading/rehabilitation works under the Sarakata-1 Expansion HPP subproject will be confined within the facilities and area of the existing Sarakata HPP. Although no resettlement impact is anticipated and no person will be affected a due diligence/social compliance audit has been undertaken to confirm and review the land acquisition and compensation processes carried out under the existing HPP. The DD/SCAR is subject of a separate report.

Figure 1: Location of Existing Sarakata HPP and Sarakata-1 Expansion HPP Subproject - Santo.

2. Sarakata-2 HPP Subproject 18. Sarakata-2 HPP on the other hand intends to develop a new system downstream of the existing HPP to generate up to an additional 1,200 kW of hydro generated power.4 Sarakata-2 is based on a concept of capturing the water outflow from the existing Sarakata-1 and its expansion HPP and via canal or pipe take the flow to a site located downstream near the confluence of Sarakata and Tafwakar Rivers. 19. The Sarakata-2 hydropower project is located immediately downstream of the existing Sarakata hydropower scheme near Fanafo village, a significant village located some 25 km northwest of Luganville in Espiritu Santo Island, Sanma Province. The location and general layout of the proposed Sarakata-2 hydropower project is shown in Figure 2.

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Figure 2: Location of Sarakata-2 - Santo

20. The intake of the run-of-river scheme is located at 80-85 m above sea level about 500- 1,000 m downstream of the existing Sarakata HPP tailrace and comprises a low weir (up to 5 m high) with a single gated sluice on the right side. Water is diverted into a side intake and sand trap on the right bank before being conveyed along a headrace canal following the alignment of the river for approximately 3.2 km. The headrace canal passes alongside a gorge where it is cut into a steep slope. The canal discharges into a forebay (27 m x 84 m). A 30 m steel penstock conveys water from the forebay to the powerhouse (27 m x 8 m) located on the right bank of the Sarakata River approximately 50 m upstream from its confluence with the Tafwakar River at elevation 60 m above sea level which is targeted to provide an output of 1200 kilowatt (kW) with a design flow of 4-7.2 m3/sec. From the powerhouse water is returned to the Sarakata River upstream of its confluence with the Tafwakar tributary. 21. Project interventions proposed for Sarakata-2 include development and construction of river weir, conduction canal, penstock/forebay, power house and the installation of up to 1,200 kW plant and approximately 3.2 km access road to connect to the existing one. Along this access road the transmission line will be put up to convey the power to a switching station. This detail is shown in Figure 3.

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Figure 3: Sarakata-2 HP Scheme

II. SCOPE OF LAND ACQUISITION/RESETTLEMENT

A. Scope of Land Acquisition 1. Sarakata-1 HPP 22. Sarakata-1 Expansion will not require additional land acquisition and no households or persons or assets will be displaced as the subproject only proposes the heightening of the existing weir and canal. Land for the existing HPP has already been acquired. There is already an existing lease agreement between the customary landowners (18.6372 ha) and the government as well as with the lessee and lessors of the affected PRV5 leased parcel (5.97 ha). Compensation had been provided fully to PRV for loss of the 5.97 ha portion from the entire land. On the other hand the four customary landowners of this parcel of land have already entered into lease agreement for this parcel with the Government. Furthermore, four customary landowners of the other affected parcel (18.6372 ha) has been paid land premium, good-will compensation as well as land rental fees covering the beginning period (1994) of land occupation to 2013 while the negotiated purchase of the parcel is being concluded. A Due Diligence Report on the resettlement impact assessment of the existing Sarakata-1 HPP had been prepared separately. 2. Sarakata-2 HPP 23. Sarakata-2 subproject requires approximately 124,500 m2 (12.45 hectares) of land area to develop a new hydropower system downstream of the existing. Some 3 custom landowning families and 4 claimants will lose this much land to the subproject; however, said land is idle and unproductive.6

5 PRV stands for “Plantations Reunies de Vanuatu”. This is a French agricultural company who has leased lands mainly for cattle raising, coconut plantations, kava, vanilla and pepper plantations. PRV’s lease in Santo commenced on 29th August 1986 for a period of 50 years. Their leased land covers an area of 1,095 ha at the lower catchment area of the Sarakata River watershed area. 6 “Idle land” means that the land is not currently used by APs for any purpose such as agriculture, housing, etc.

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24. The proposed site of Sarakata-2 is located in areas of primarily steep and rugged terrain with slopes ranging from 5 to >100 degrees. They are covered mostly with lush, wild and invasive vegetation. The affected parcels are not the major source of subsistence and income. Home gardens are located much closer to residences. Established process is followed in Vanuatu in identifying the rightful landowners. Aside from the four landowners, there is a claimant of the entire area who wants to stake his claim during the ownership identification process. Identifying the rightful owners would be challenging and time consuming process. The village land tribunal sits with the tribal chiefs and elders and try to trace customary ownership through anecdotal history of generations of users. When the land tribunal finally passes its decision on who the rightful owners, such decision can be appealed if claimants are in disagreement.

B. Land Acquisition Impacts/Vulnerability of Affected Households 25. Affected persons and households (APs/AHs) of Sarakata-2 HPP will not be vulnerable to loss of homes/incomes, unemployment or food insecurity resulting from the subprojects. Instead, they are expected to benefit from the subproject through increased access to basic services particularly reliable power supply as well as potential benefits from income opportunities, e.g. employment during subproject construction. 26. From site inspections and interviews with “landowners/claimant”, traditional leaders and provincial and community council members, it is estimated that no APs will lose 10 per cent or more of their land used for food production or income generation from the project. All sites are idle bush lands invasive trees located mainly in the upper catchment area of Sarakata watershed. Interviews with landowners also confirmed availability of lands on other parts of the island near their residence where they do food gardening and are closer to town for other sources of livelihood and income. APs expect to benefit from the subprojects through regular power supply using renewable energy and reduce dependency on imported diesel fuel. The exact extent of need for clearing of trees and vegetation on the proposed sites will be determined after the detailed design study. Table 1 provides a summary of features of subprojects including estimated land requirements and numbers of APs in the subproject sites: Table 1: Subproject Features and Land Requirements7 Santo Subprojects Feature Sarakata-1 Expansion Sarakata-2 Total Number of Total Fanafo = 269 HH Fanafo = 269 HH Fanafo = 269 HH Households within the Mon El = 62 HH Mon El = 62 HH Mon El = 62 HH Sarakata communities Geographical Location Sarakata watershed area Sarakata watershed area Sarakata watershed in Santo in Santo Proposed Interventions Increase elevation of the Construction of water Increase the elevation of the dam; increasing capacity intake/water conduction dam; increasing capacity of of water conduction structures, power house water conduction system; system; provision of and short access road and provision of additional additional generator power line along the generator. Construction of water access road to connect to intake/water conduction existing. Acquire 12.45 ha structures, power house and of land. short access road and power line along the access road to connect to existing. Acquire 12.45 ha of land. Location of proposed Within the existing Downstream of existing sites for subprojects Sarakata HPP Sarakata HPP where the confluence area of the Sarakata River and its tributary Ownership of required NA Customary land Customary land land

7 Data on land are preliminary estimate based on PPTA. These are subject to confirmation and might change during the implementation. The updated RP will provide final data during implementation.

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Santo Subprojects Feature Sarakata-1 Expansion Sarakata-2 Total Land requirement m2 Land already held by (ha) Government. No extra land requirement 2 Weir/water intake area - 200 m2 200 m 2 Settling basin - 450 m2 450 m 2 Head race canal - 64,000 m2 64,000 m 2 Forebay - 450 m2 450 m 2 Penstock - 400 m2 400 m 2 Switch Yard - 600 m2 600 m 2 Accommodation - 600 m2 600 m 2 Power station site - 1,800 m2 1,800 m 2 Access road/power line - 15 m x 3,600 m = 54,500 15 m x 3,600 m = 54,500 m m2 2 Storage/Site set up - 2,000 m2 2,000 m 2 Total None 124,500 m2 or 12.45 ha 124,500 m or 12.45 ha Number of Identified NA 7 7 Landowning Families/Affected households Estimated total subproject APs (based NA 7HH x 3.7person/hh = 26 7HH x 3.7 person/hh = 26 on actual household size) Affected households NA None None losing 10% or more productive land Other Affected Assets NA None None

27. The number of affected peoples (customary landowners, claimants and other community members) are listed in Table 2 below: Table 2: List of Affected / Displaced Households of Sarakata 2 HP Subproject List of landowners in Sarakata-2 List of Claimants Affected communities Sakaria Daniel Loi & family Moli Franky Steven Molisakele Some villagers in the surrounding 8 Ben Tulala Mauritonasanto on behalf of the 15 communities of Fanafo and Mon Islands in the Nagriamel Movement Exil in one way or another

James Tangis

Rukon Perei Bensive Tosu Tari Buluk TOTAL: 3 4 2 villages

28. The subprojects have tried to minimise land requirements during PPTA design. The project will follow appropriate engineering designs during detailed design to further minimise land acquisition and resettlement impacts, whenever possible. The measures include: 1) Appropriate siting/ location9 of hydro facilities along the river system downstream of the existing Sarakata 1 HPP especially the weir to optimise geo/physical configuration in hydropower generation; 2) Utilise existing public roads to access the project sites to minimise land acquisition requirement.

8 Mr. Steven Molisakele is a son of one of the leaders of the independence movement in the early 80s. His deceased father is not from the area and would therefore have no customary right to the land. During the consultations, he expressed his desire to lay claim to the land on the basis of his father’s participation in the movement; thus his inclusion as a claimant to enable the local land court to officially rule on his claim and once and for all rest his case. 9 As part of the technical investigation, the appropriate siting of the weir downstream of the existing HPP is being investigated to optimise the generation of hydropower.

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3) Utilise existing road right of way as site for the location of the transmission/ distribution lines. 29. While no APs will be physically displaced or expected to lose 10% or more of their land, a total of 7 households will lose part of their land as a result of land acquisition for Sarakata-2 HPP subproject. Therefore, the project is classified as Category B on involuntary resettlement according to the ADB's Safeguard Policy Statement (SPS).

III. SOCIOECONOMIC INFORMATION AND PROFILE OF AFFECTED PERSONS AND SUBPROJECT COMMUNITIES

A. Subproject Communities 30. Meetings with key leaders such as the Provincial Councils including the President and Secretary General, community leaders, key respondent interviews of APs and site visits were conducted by PPTA Safeguards Team to collect socioeconomic data of sample households particularly landowners of affected lands of the Sarakata-2 subproject sites during March - May 2014. Sample size was 76 households in Sarakata-1 impact villages including customary landowners, claimants and users of the affected lands. The survey covered Fanafo, Mon Exil and other nearby settlements within the influence zone of Sarakata-2 HPP. 31. The following section summarises the findings of the socio-economic survey of APs and communities of Sarakata-1 Expansion HPP & Sarakata-2 HPP.

B. Profile of Santo Rural and Subproject Communities 32. In 2009, the total population of Espiritu Santo Island excluding Luganville in Sanma Province was 38,307 composed of 7,864 households. The male ratio was slightly higher than female at 51.3:48.7 while average household size was 4.87, which was the same as that of the national average of 4.9. Luganville the capital is primarily urban while the areas outside the town are primarily rural. The population is predominantly Ni Vanuatu Melanesian. Luganville the main provincial and government administrative centre of Sanma Province receives an influx of people from the other areas of Santo rural and the rest of the province as well as from other provinces of the country and according to the 2009 census, the annual urban growth rate is 2% compared with the national average of 3.5% mainly because of Shefa (4.1%) where Port Vila is. 33. Approximately 83% of households in Santo rural own their houses while 9% and 7% respectively are renting and rent free. Of the land where the house stands 46% are customary owners, 17% have urban lease and 9% rural lease while 20% occupy the land with informal agreement. 34. Per Census 2009 result, only about 30% of households in the island are reported to use the electricity grid with the majority (48%) using kerosene lamp as main source of lighting. The rest either use solar (3%), candle (7%), gas (3%) or Coleman lamp (3%) as source of light. A few reported generator (2%) as their source of light also. VUI the power distributor in the area supplies electricity within the concession area utilising the existing power grid where most of the urban households and a number of peri-urban households including some villages within the zone of influence of the Sarakata-2 subproject are connected to grid power. 35. In terms of drinking water source, 25% have shared piped system while about 18% of households have village tanks and 17% their own household tank. On the other hand 14% have private piped system while 15% source their drinking water from river, lake or spring. The rest source their drinking water either from village stand pipe, unprotected well, bottled water or other unspecified sources. 36. There are several health facilities in Sanma as reported in 2009, namely hospital (1); health centre (11); dispensaries (12); and aid post (56). The ratio of facilities to per 1,000 population was 1:74. Educational facilities on the other hand are composed mainly of primary, secondary and vocational schools.

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37. In 2009, of the population 15 years and above regardless of sex in Santo rural 27% was reported to have completed primary education; another 22% had some primary education, 10% had trio certificate and 7% senior secondary. Approximately 15% had no schooling at all while almost 7% and 2% had some college degree and completed bachelor’s degree respectively. A few either had post graduate or vocational degrees. The literacy rate of the province was reported to be about 93% with the women (94%) having higher literacy rate than male (91.9%) population. 38. In terms of toilet facility, majority (49%) of Santo rural households use the pit latrine (either individual or shared). Only about 6% reported the use of water sealed toilet wither individual or shared while about 14% of households use the flush type toilet. Likewise less than 1 percent reported having no toilet at all. 39. The 2009 Census reported that main sources of income of majority (48%) of Santo households are sale of agriculture, fishery or handicraft products. About 36% derive their cash income from salaries and wages while about 5% from operating their own business and 7% from unspecified sources. However, about 4% reported having no cash income at all. 40. Per HIES 2010 Report, the average monthly income of Sanma households was 94,000 vatu with an average per capita income of 18,800 vatu. Approximately 58% of household incomes are from cash sources; on the other hand, 26% of total household expenditures are in cash. However, Luganville households have comparatively lower average household monthly income at 74,100 vatu compared to the province; likewise its average per capita monthly income is much lower at 13,200 vatu. Majority of the income is derived from cash income and almost 60% of total expenditures are cash expenditures. The poverty situation of the urban area - Luganville compared to the rural areas of the Province, is much worse off. From a rate of 10.4% in 2006 (HIES 2006), the proportion of households below BNPL had significantly risen by almost twice to 19.4% (2010). This was mainly due to in-migration to Luganville of poorer households from other areas of the country. On the other hand, the proportion of household below the BNPL in Sanma Province in 2010 was 8.3% compared to 9.0% in 2006. 41. The two major villages within the zone of influence of and closest to Sarakata-2 HP Subproject are Fanafo and Mon Exil. These two villages which are approximately 25 km away from Luganville can be accessed by gravel road starting from a diversion from the main highway. They are approx. 4-5 km away from the existing Sarakata HPP. 42. In 2009, Fanafo had a total population of 1,290 composed 258 households with 670 male and 620 female. Average household size like Sanma rural was around 5 person per household. On the other hand, Mon Exil a nearby village towards the east had a population of 309 person composed of 62 households with 157 males and 152 females. 43. In terms of basic infrastructure and social services the villages within the influence zone of the subproject can be reached by gravel road. Transport is limited to 1 public bus per day and some private vehicles. Fanafo the bigger village has 4 preschool and 2 primary schools. Likewise it has a health centre and 3 aid posts. It does not have its own market. All produce are brought to Luganville. Of the total households (269 - as per VAN EAP SES 2014) more than half (166) are not connected to electricity although the main grid passes along the road and a distribution line had been put up by VUI. VUI is working on extending the line by almost a kilometre to cover more households in the area close to the forestry centre and school where there is a concentration of population. Coverage of other areas however is constrained by low density of population.

C. Socioeconomic Profile of Affected Households/Persons 44. Three customary landowners and four claimants had been identified from the surrounding villages of the proposed Sarakata-2 HPP as affected persons/households (APs/AHs) (APs). Their socioeconomic status was determined and a profile based on selected indicators is discussed below.

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1. Demography and Livelihood 45. All affected households (AHs) of Sarakata-2 HP Subproject are male headed. Gender composition of these households is as follows: 58% are females while 42% are males. Households have an average size of 3.7 members (Table 3). Table 3: Distribution of Affected Households of Santo Indicators QTY % Number of sample households 7 100 Number of total persons in HH 26 100 Of which, # of female members 15 58 Of which, # of male members 11 42 Average # of persons in HH 3.7 - Source: VAN EAP SES 2014 46. In terms of the residency profile of the sample households, all have been living in their area of residence for more than 10 years on average. On average the residence of the affected households is less than a kilometre away from an existing road, 1-2 km away from primary level educational facility, more than 1-2 km away from the existing health clinic and also about 25 km away from major market in Luganville. In terms of physical characteristic of their houses, majority are made of semi-permanent sturdy but light materials. All have their own toilet (mostly pit latrine). All reported owning the house and the land where house is.. Most (71%) would have piped water from village water tank or individual tanks while 29% draw its water from the river. All are landowners whether with title or customary ownership. Energy source (for lighting) comes from electricity grid for most while 2 APs reported solar as the source (See Table 4). Table 4: Characteristics of Affected Households in Santo Characteristics N° % Length of Stay in place Over 10 years 7 100.0 TOTAL 7 100 Physical characteristic of house - Average distance from nearest facility (km) Road < 1 km Market 25 km School 1-2 km Health centre 1-2 km - No of HH by house type Semi-permanent 7 100 TOTAL 7 100 - No of HH by tenure status - house Owner w/title 7 100 - No of HH by tenure status -land where house is Owner w/title 5 71 Owner (customary) 2 29 - No of HH by power/energy sources Power Grid 5 71 Presence of Toilet Owned 7 100 Water Source Piped 5 71.4 River 2 28.6 Source: VAN EAP SES 2014

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2. Education 47. Among household heads there is a high proportion of APs who attained higher education with 1 having attained tertiary level and another with vocational level. Two had completed primary level and 1 with no formal education but can read and write. Only one had no education at all and considered illiterate. (Table 5). Table 5: Educational Attainment of Heads of Affected Households in Santo Education Level Attained Sarakata Illiterate No Schooling 1 No Schooling but can read and write 1 Not Stated 1 Primary education 2 Secondary education 0 Tertiary education 1 Vocational/technical 1 Grand Total 7 Source: VAN EAP SES 2014 3. Socio-economy a. Occupation and Income 48. The VAN EAP-SES 201410 showed that majority of affected household heads’ major occupation and source of income is from agriculture, civil service, private sector employment, and business. A number of the APs have multiple occupation and various sources of income. One major source of income reported is from land lease. See Table 6 below. Table 6: Occupation of Head of Affected Households, Santo Occupation Total (multiple responses) N° % Subsistence farmer 5 71 Business 4 57 Private Sector employ 2 29 Civil Service 2 29 Source: VAN EAP SES 2014 49. The average annual income of sample households is reported to be VUV 442,571 with a monthly average of VUV 36,881. Per capita monthly income is VUV 9,968. 50. The major contributors to total annual income of the APs is agriculture, (salaries and wages from employment , and trading and business while land rental has major contribution to total income as shown in Table 7 below. Table 7: Contribution of Sources of Income to total annual Income of 7 HH?, Santo Main Source of Income Sarakata (VUV ) Root crops farming 706,000 Vegetables and pulse farming 95,000 Animal husbandry 50,000 Salaries and wages 150,000 Trading small business 126,000 Land rental, etc. 939,000 Other income 1,032,000 Overall Income Total 3,098,000 Source: VAN EAP SES 2014 b. Household Monthly Expenditures 51. The average annual total expenditure of affected households in Sarakata 2 subproject is about VUV 404,114.

10 A survey (VAN EAP-SES 2014) of sample households in three Project sites (Sarakata I Extension, Sarakata II and Brenwe HP Subprojects) was undertaken between April-May 2014.

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4. Assessment of Impacts a. Poverty Status of Affected Households in the Project Area 52. Per findings of the SES, the average monthly income of affected households in Sarakata subproject is VUV 36,881. The average per capita per week income is estimated to be.VUV 9,968. The Basic Needs Poverty Line in Vanuatu in 2011 was VUV 1,761 per capita per week or VUV 1,900 per capita per week adjusted for inflation in 2013. Based on the average per capita per week income of the APs, there are three households falling below the adjust BNPL of 2013. b. Impacts and Opportunity for Women and the Poor 53. The women and the poor will be the major beneficiary of the Project interventions. Women and girls are shown to be the primary stakeholders and major beneficiary of power supply interventions. Improvement of the service will have major beneficial impact on their quality of life especially in terms of improving personal safety during night time and opening up opportunities for livelihood endeavour. Likewise, improvement of delivery of basic services such as health and education will have greater impact for women and girls. However, on the downside there is risk that household work load may increase due to availability of better lighting thus putting women/girls at further disadvantage. Thus safeguards should be put in place to prevent this from happening. A grievance redress mechanism is addressed in Section VI of this report. A Gender Action Plan (GAP) has also been prepared and is included in the Draft Final Report Volume 1 Appendix K. c. Potential Land Acquisition Impacts 54. Interviews with affected village elected and traditional leaders, and sample APs as well as result from visual observation of affected parcels during site visits reveal that the affected land is generally not used for agricultural activities. The terrain is rugged and steep and land is undulating. The area is covered mainly by wild vegetation, invasive trees and is generally bush like in appearance. Hardly any economically useful trees and vegetation were observed. Through consultations/meetings and key informant interviews many people say that the project sites are located quite far from villages and communities and confirmed to be so during site visits. People do not have “food” garden close to the site. Furthermore, there is no plan in the immediate future to use the area for any development by the village communities. Fanafo and Mon Exil the closest villages to site are approximately 5-7 km away from the proposed Sarakata-2 HPP. d. Extent of loss 55. There is no expected risk of landlessness, loss of home, and/or loss of major income source. The APs on the Sarakata-2 HPP will lose a total of unproductive 12.45 ha of bush or idle lands and mainly invasive trees. Loss of land from the subproject sites is estimated to account for not more than 10 per cent of total land for food and income generation reported by APs. Initial calculation was done through interview and/or discussions with APs and key community leaders. APs or their representatives reported that although they are unable to provide exact size of land they own, they said that they currently have access to adequate lands in other parts of the watershed for food production or income and have their food gardens close to the villages. The proposed sites are idle and left unused. e. Views of APs on Impact of Loss of Land 56. Commonly all interviewed APs view the loss of their land as insignificant since the site is idle and there are other available and more accessible plots they have access for agriculture. Consistently APs and village and provincial Councils expressed keen interest for the project. The majority of interviewed landowners also view the development of the site for hydro facilities as an opportunity to stabilise power supply thus maximising an otherwise unproductive or currently unused land. All APs expect stable power supply, reduced power bills, increased power security, and cash compensation for affected land. They also expressed hope that available power would stimulate economic activities in the villages. All consulted APs and village and provincial Councils support the project and do not want to hold up the project by withholding access to land. However affected landowners expressed the hope that Government will be forthright in the implementation of resettlement and compensation and do better than the existing Sarakata HPP experience.

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f. Willingness to sell land 57. During interviews conducted at the early phase of PPTA undertakings, all consulted APs expressed strong support to allow the national government to acquire the proposed sites for the project. Communities and APs are also aware that DOE and Department of Lands are the government agencies that will facilitate this process. 58. Consulted women leaders in particular support the hydro project and identified improved access to power, cheaper monthly power bills as well as access to skills training for the youth and women on use of electricity to increase income opportunities as expected benefits from the project. Commonly, majority of women in the subproject site are not formally employed and view the training opportunities on reliable energy if made available to the youth will help create income opportunities that may minimise movement of people out to urban areas. 59. However, the delay in payment of 2013 rental fee of land leased by the existing Sarakata HPP appears to have taken toll on the patience of customary landowners. (There are at least two of them who are also believed to be landowners of the area proposed for the Sarakata-2). This was also aggravated by the efforts of the Government to permanently acquire the land for which an offer was rejected because the rate was deemed too low. Accordingly incidence of declaring tabu to entry to the existing hydro facilities had been occurring lately (see Appendix 3) which had disrupted operation and threatened electricity supply to Luganville. This matter is now resolved in respect of Sarakata-1 Extension (Refer to Draft Final Report Volume 1 Appendix H). However one claimant is refusing to sign an MOA for Sarakata-2 access. g. Indigenous People or Cultural Heritage 60. There is no expected negative impact on the social structure of the APs and the communities around the project sites since land acquisition will not involve physical or economic displacement. There are no expected adverse impacts on cultural identities or heritage of the APs resulting from land acquisition. During the course of the PPTA fieldwork, a tabu rock in the middle of the river was identified but this is downstream of the proposed location of the power station and water drawn out for the hydro would already be returned to the river. 61. The local people in the project sites do not meet the ADB criteria (distinctiveness and vulnerability) of Indigenous Peoples. The APs in the project sites are part of mainstream Ni Vanuatu Melanesian society and are not considered to have a distinct culture and are not discriminated upon by other groups due to their language, skin colour and education level thus requiring protection and special attention from the project. Although they have dialect distinct from other outer islands, as other Ni Vanuatu Melanesian they communicate with one another using either Bislama, French or English as the official languages. h. Gender Impacts, Needs, Priorities of Women APs. 62. There are no prominent gender issues among APs identified in this Subproject. While the SES showed that approximately 10% of households in the Project area is woman-headed, there are no female-headed household APs identified during PPTA consultations. Instead the project will provide opportunities to improve women through provision of reliable power supply and stable tariff to households, reducing uncertainties in managing households’ energy supply and expenditures. Key priorities identified by women APs include (i) stable and cheaper power supply including to service facilities such as schools and health centres (ii) access to skills training for male and female youth to increase income opportunities in the outer islands to reduce out-migration and (iii) provision of livelihood training and income generating opportunities. 5. Conclusion 63. Based on the result of the household survey, access of households to electricity grid in the area is limited. Majority of the households in the service area wants to have access to the planned facility and are willing to pay for improved services. Land acquisition is expected to have minimal impact and APs are willing to give up parcel of land to enable the project to proceed. There is high need and demand for the project. It is also expected to contribute to the general improvement of the social services as well as stimulate income generation activities. The project will help improve the general wellbeing of the population of the coverage area.

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IV. INFORMATION DISCLOSURE, CONSULTATIONS, AND PARTICIPATION

A. Stakeholders 64. There are several categories of project stakeholders: government and non-government. Landowners, traditional leaders, private sector, non-government organisations (NGOs) and communities groups including women and youth are non-government stakeholders as well as relevant national government agencies or stakeholders. 65. The government agencies are committed to providing support in achieving government’s target of increasing renewable energy source for the country; thus are willing to provide necessary legal, technical and financial support to acquire necessary lands. The Government of the Republic of Vanuatu is committed to identify an alternative energy source to lessen dependence on imported oil and be able to sustain viability of its investment. 66. Key stakeholders’ specific interests which are common across subprojects are: 1) Provincial and island councils - Supportive of the proposed hydropower subprojects. Would like to see the subprojects to start as soon as possible. Consultations have been going on for some time initiated during the conduct of the pre-FS. 2) Affected landowners - Interested to benefit from reduced power bills, receive fair and just compensation. 3) Women’s groups - Inclusion in accessing additional income opportunities through training to reduce trend of young people leaving the outer islands in search of economic opportunities. 4) Communities around the sites - Supportive of the national governments’ project to develop alternative sources of reliable and affordable power supply to stabilise power tariffs. 5) Youth groups - Access to information, additional skills and employment opportunities. 6) Business groups - Ensure that reduction of fuel consumption in the islands through use of hydropower which is cheaper and reliable source of power supply. 7) DOE/DOL, Provincial Council and Parliament- Ensure land acquisition procedures for government priority projects as well as gain support of community landowners/APs to secure land for public purposes such as power infrastructure. B. Community Consultations Held 67. As part of social impact assessments during PPTA, stakeholders and community consultations were carried out during field visits in the month of March - May 2014. Stakeholder consultations were carried out through meetings with key officers at offices of different government and non-government agencies in Port Vila, Luganville as well as at village council offices in the subproject sites in Santo. Key respondent interviews, focus group discussions and questionnaire surveys were also used for community/public consultations. 68. In Santo, a total of approximately 10-15 stakeholder consultation meetings/discussions were conducted during the PPTA involving at least 200-250 officials/participants from various agencies, i.e., Energy and Lands Departments, Environment Authority, Statistics Office, utility office (VUI), landowners/APs/leaseholders, women groups, etc. The list of officials/stakeholders consulted is presented in Appendix 3. The consultations included both discussions with stakeholders and discussions with community/island/provincial level authorities including APs, traditional and elected leaders and women’s groups from the subproject sites. A number of landholders/stakeholders (involving women participants as well) and women groups were consulted during the field visits. 69. During PPTA Safeguards Team site visit, the village councils in Fanafo and Mon Exil areas and the island (Santo) and Sanma provincial councils confirmed general awareness of the proposed hydro project/subprojects and general site locations. 70. Details of consultations carried out during PPTA field visits are presented in Table 13.

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Table 13: Stakeholder/ Community Consultations during Visits of Subproject Site Date / Venue N° of participants/ Activities/Issues discussed / remarks11 organisations 20 March 2014 - 5 officials of province Discussion of objectives and concerns of Project; requirement Sanma Provincial for support in terms of data /site access. Office April-May 2014 at Various informants: Socio economic concerns; demand/need for projects, provincial and landowners/claimants, lease satisfaction with power services, etc., due diligence on community levels holders, officials, women existing Sarakata HP groups, etc. First week of May 4 Focus Group Discussions Environment and social issues; concerns on land acquisition 2014- communities composed of 10-15 people and compensation, community development issues such as within Sarakata HPP per group livelihood and income opportunities, gender and participation concerns, access to power and willingness to participate in the project First week of May 60-80 Sample households Socioeconomic profile of households, issues and concerns re 2014 - communities including APs environment and land acquisition and willingness to within Sarakata HPP participate May 16 2014 at 21 participants - women Re Sarakata-2 HP Environmental and Social Safeguards, Fanafo Health Centre health/school teacher, chief, scope of land acquisition and willingness to participate in the farmers, villagers project. Concerns on benefits for the community.

71. Overall, the landowners/APs and village and island leaders have expressed support for the project during PPTA consultations. APs are willing to allow the Government to acquire their land to construct hydropower infrastructures. Their willingness is due to a desire to help the communities and the government so that communities may benefit collectively from stable power prices as well as an expectation to receive compensation for unproductive land. A copy of an initial memorandum of agreement (MOA) on willingness to support and allow the Project access to site is shown in Appendix 1. This has not been signed by the APs due to a land dispute in process in relation to the Sarakata-2 land area.. 72. On issues raised, some stakeholders were concerned about the direct benefits derived by the communities from the project, i.e., there is currently lack of access to electricity by communities near the hydro facilities - how these are to be managed by the project, it was clarified that the power availability in Fanafo is the direct result of the hydro and that part of the objectives of the project is to expand coverage (VUI is currently undertaking expansion work on distribution lines in the area) and ensure access to electricity by the rural communities. Likewise, as verified with VUI, the hydropower operator, provide direct employment to a number of residents in the area (currently 11 employees of hydro is from Fanafo). Also, rural communities like Fanafo is beneficiary of cross subsidy where the consumers only pay a third of the cost of the service. the hydro operator likewise provide other services such as the grading of the Fanafo road and contributed funds to the public works to enable them to do periodic maintenance. C. Consultation on RP Preparation 73. This RP has been prepared in close consultation with representatives of the affected parties. The project team has also visited the affected site. The following consultations were conducted:  Meeting with the affected landowners/claimants, villages leader, provincial council (April- May 2014) - Issues discussed are presented in Appendix 3.  Meeting with representative of Department of Lands in April 2014, as part of the PPTA preparation in order to discuss the processes by which the Government acquires Land according to the laws of Vanuatu.  The Valuer General’s office also assisted in preparing the compensation entitlements valuations for this RP.

11 Queries raised by people were answered to their satisfaction and it was assured that their concerns would be addressed in the process of project design.

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74. The review of this RP during the detailed design and the update of impacts and AP surveys will be carried out along with a new round of AP/community information/consultation to ensure full stakeholder participation in project preparation. This task will be carried out by international and national specialists engaged for updating the RP in coordination with the DOE - PMU, Department of Lands (DOL) of the Ministry of Lands and Natural Resources (MLNR) Valuer Generals Office, who are in charge of the land acquisition and compensation process under the laws of Vanuatu. 75. During project implementation, AP/public consultation and awareness will be ensured through regular meetings organised by the resettlement specialists. These will be used to ensure that those affected are aware of the construction implementation plans, detailed design and updated RP implementation. They will also identify with the APs any RP implementation problems and undertake timely remedial actions. Given the small magnitude land acquisition and those affected, only internal monitoring has been recommended.

D. Disclosure of Draft RP 76. The RP was prepared based on PPTA findings and consultations with all concerned stakeholders particularly the APs. As soon as a draft had been prepared discussion with the 7 APs (3 customary landowners and 4 claimants) on related issues was carried out during a meeting conducted in Fanafo in May 16, 2014. A formal disclosure of the draft RP is yet to be undertaken with the provincial government and other local stakeholders. The draft RP will be disclosed to all local stakeholders in the subproject site by IA in coordination with DOL as soon as issues related to design are finalised and the pending issues related to land acquisition of existing HPP are resolved. The draft RP will be posted on ADB website as well. 77. For the local disclosure, the DOE in coordination with provincial councils helped by village councils will organise disclosure meetings at subproject sites and will explain relevant information from the draft RP to APs and stakeholders at each project site. The full RP document will be made available in accessible public locations such as Village/Provincial Councils’ offices. 78. The Resettlement Plan will be disclosed to affected parties in English, with the notices including summary of land acquisition translated to other 2 official local languages - Bislama and French as required by Vanuatu law. A copy of the RP will be made available at the DOE/DOL offices in Port Vila and provincial government offices in Luganville. If an affected party requests, the summary of the RP may also be translated into French and/or Bislama. 79. During the updating this RP (design and supervision phase), the DOE assisted by DOL, with provincial council, will be responsible for disclosure requirements, as necessary under the law of Vanuatu, and as below:  A notice of intent to acquire land will be disclosed on the site for 30 days prior to RP completion and approval by DOE and Santo Island Council;  Updated RP will be provided APs and stakeholders;  After updated RP is approved by DOE and ADB, the land acquisition notice will be published in the newspaper, on radio and a notice placed on the site in order to comply with Vanuatu disclosure laws in full; and  The updated RP will similarly be disclosed on the ADB Website.  At each stage consideration will be given to disclosing the RP through awareness sessions in affected communities (if any) in order to ensure the illiterate community residents are kept informed. E. Consultations and Information Disclosure during Project Implementation 80. Consultations will continue at next stages i.e. during the detailed design and updating of the RP before start of the civil works construction as well as at the implementation stage. IA with DOE/DOL representative will continue consultations with leaders in the Island Councils, village leaders including traditional chiefs, affected landholders/APs and all other interested members of the community. Separate meetings will also be organised with women to continue to understand and discuss their preferences and concerns at that stage.

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81. During these consultations it will be also explained to the landowners and other APs that representatives of the IA in coordination with DOL will finalise the size of affected land; the boundaries of parcels will be marked and recorded. DOE/DOL will also inform affected landholders/claimants about the policies and procedures regarding land acquisition and compensation for land. Specific modes or terms of land acquisition and compensation rates as well as grievance redress procedures will follow procedures stipulated in the Land Law. In addition, DOE/DOL and Councils will inform the landowners when and how compensation will be paid.

V. GRIEVANCE REDRESS MECHANISM

82. Grievance and Complaints Procedures are set up to: 1) Provide support to APs on problems arising from land acquisition and associated impacts; and 2) Provide a means by which the various conflicting stakeholders may be consulted and negotiated agreement reached. 83. In order to receive and facilitate the resolution of APs’ any concerns, complaints, or grievances about the project’s social and environmental safeguards performance, a Grievance Redress Mechanism (GRM) is developed for the project to be established in each subproject site. When and where the need arises, this mechanism will be used for addressing any complaints that may arise during the implementation and operation of the project. The GRM will address APs’ concerns and complaints promptly and transparently through the process outlined in this RP. The GRM will be gender responsive and readily accessible to all APs at no costs. 84. The key functions of the GRM are to: (i) record, categorise and prioritise the grievances; (ii) settle the grievances in consultation with complainant(s) and other stakeholders; (iii) inform the aggrieved parties about the solutions; and (iv) forward the unresolved cases to higher authorities. 85. Vanuatu already has a Grievance redress system for general village matters, followed by the chief. Department of Lands has also recently set up a system at Provincial level, through the Customary Land Tribunal. However, in line with ADB SPS 2009 an additional project level grievance redress system will also be established, which allows AP participation, relatively rapid action and results, as well as encompassing existing grievance procedures. 86. The following levels of grievance redress are adopted. 1) Community Level (in the case of any community residents having a grievance) 87. A community committee made up of AP representatives, community representatives and representatives of the customary owners shall be set up by the Project as soon as the RP is approved and the land acquisition process commences. Complaints are to be submitted to the Committee through the Chair, who inform the VPMU verbally or in writing of complaints/grievance referred to it. The committee will meet in the case a complaint is lodged.12 VPMU however will not take part in the committee deliberation. The meeting will be chaired by the village chief; proceedings and outcome of meetings will be fully documented. Decision passed by the Committee on a particular case should be made with 7-days of the complaint being lodged. In the event that the Village Chief is a “customary owner” (if identified in future), the chair of the committee may be represented by the community’ religious leader. 2) Project level 88. If not satisfied with the decision, the complainant has the option to appeal to the Project level, represented by the Vanuatu Project Management Unit and on advice of Department of Lands in case of land issues. The appeal shall be submitted by the complainant to the VPMU through the Provincial Council and will be duly noted and documented by the designated community liaison officer (national social/resettlement specialist) of the Project. This will be the first level of entry, in

12 A complaint may be lodged with the PMU, DOE if the complaint is to be lodged prior to a committee being set-up, which in this case, the PMU will be obligated to set up the community level committee to hear the Grievance. The PMU will set up the Community level committee immediately within 5 days of the complaint submission.

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the case of affected landholders/claimants having a grievance. A decision must be made with 14 days of receipt of appeal. 3) Customary Land Tribunal 89. If not satisfied with the Project level decision or at any time, the complainant may choose to appeal to the Customary Land Tribunal and MLNR, as per the current Land Acquisition Law. Under the Law and current procedures in Vanuatu, the complaints procedure can last up to 30-days. The decision of the tribunal is generally final, unless the tribunal procedures are challenged. 4) Legal Procedures 90. Further appeal may be made through the Supreme Court of Vanuatu, only in the case that the Customary Tribunal procedures were faulty in the specific case. The judicial system or the judiciary is the last level where the aggrieved party may raise his complaint.  The Island Court has jurisdiction over causes or matters in which all the parties are residents or within the territorial jurisdiction of the court. It cannot hear and decide civil cases relating to lands. Decisions of the Island court may be appealed to the Magistrate Court.  The Magistrates” Court has jurisdiction to try and decide civil proceedings where amount or value of property involved is not more than 1 million vatu. It can also hear and decide criminal complaints.  The Supreme Court has unlimited jurisdiction to hear and decide civil and criminal cases and involving custom matters. Decisions of the Magistrates Court on cases originating from the island Court may be appealed to the Supreme Court and the latter’s decision may no longer be appealed to the Court of Appeals  The Court of Appeals - Decisions of the Supreme Court may be appealed to the Court of Appeals except on cases that originate from the Island court.

VI. LEGAL AND POLICY FRAMEWORK

91. The policy framework for the Project is based on the ADB’s safeguard requirements on involuntary resettlement as embedded in the Safeguards Policy Statement (2009), the Constitution of Vanuatu and the laws of Vanuatu. Where differences exist between the local laws and ADB requirements, the resettlement policy will be resolved in favour of the latter.

A. Legal Instruments in Land Acquisition and Resettlement in Vanuatu 92. Land acquisition, resettlement and associated land issues are recognised, in legal terms in Vanuatu, by the Constitution and more than 10 laws (or Acts). This section presents a brief overview of the salient national legal instruments pertaining to land acquisition and resettlement. 1. Constitution of Vanuatu 93. The Constitution of the Republic of Vanuatu came into being on 30 July 1980. The Constitution, “as the supreme Law of Vanuatu”, contains 2 relevant sections which have relation to land acquisition and resettlement. 94. Chapter 5, Articles 29 to 32, of the Constitution refers to the “National Council of Chiefs”. Of relevance is the Article 30 which recognises the National Council of Chiefs membership having the competence to discuss, and may be consulted on, any issue related to customs, culture and its preservation in any matter, as required by the National Government. When described under the constitution, the Council is NOT a decision-making body but rather a high-level advisory group. 95. Although a very short Chapter, considering the traditional ties between Vanuatu nationals and the land, Chapter 12 of the Constitution of the Republic of Vanuatu is devoted to Land. Most discussions related to Land have centred on Articles 30 (in Chapter 5) and Articles 73, 74, 75 and 76 of Chapter 12. However, of relevance to Land Acquisition and Resettlement are all nine articles (Article 73 to 81), but dependent upon the situation. This includes that all land is owned by its traditional, customary owners; parliament prescribes the criteria for compensation payment for

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land; the Government may own and acquire land for State interest and may redistribute land away from traditional owners, in such cases as informal settlements and relocating of residents from other islands; and disputes in land ownership. 2. Legal Acts Pertaining to Land Acquisition and Resettlement 96. As previously mentioned, there are several Acts related to Land Acquisition and Resettlement. The primary ones included herein relate to land acquisition and land ownership/development/usage as follows: 1) The Land Acquisition Act N° 5 of 1992 (Amendment Act N° 34 of 2000): is the key law directly related to Land Acquisition and Resettlement. This Act, gives the Minister for Lands and Natural Resources, full discretionary powers to acquire land on the Government’ behalf. It covers to an extent, that which will be compensated under the Act; compensation for damages made during the process of land valuation; compensation entitlements for land and for rents and business losses; basic rights for grievance and appeals; and notice periods, as mentioned in Section 3.2 above. This Act does recognise market value compensation for land but is very vague in compensation entitlements for rents and businesses, making it very open to misinterpretation. There is well documented evidence as to how compensation is determined for land acquisition and structures. However, there is no published compensation method that could be identified determining how compensation is determined for losses in income to business and for vulnerable (female headed households, poor, elderly and landless) affected people. 2) Land Reform Act 35 (1980 and updated 1981, 1983, 1985, 1992 & 2000) : This Act specifies that all land titles will be customary or transferred to the traditional owners, whose percentage can be traced back locally to 200 years. It outlines specifically about indigenous owners and the non-indigenous land users. This Act, like the Land Acquisition Act is an important one to understand, when preparing an RP for involuntary land acquisition and resettlement. 3) Customary Land Tribunal Act N° 7 (2001): As per the title, this Act details the set-up of the Customary Land Tribunal at village, Island etc. level, its basic terms of reference, especially for dispute resolution and process for affected person to appeal the tribunal decision. 4) Valuation of Land Act N° 22 (2002): relates to the organisation of the “Valuer General” Office and their role. The Act does not stipulate minimum approach to valuation of the land, which is more directly specified in the “Land Acquisition Act”. Furthermore, this Act is unclear about the role of the Valuer General office in terms of relocation/involuntary resettlement of households as well as valuation of structures, incomes and businesses. 5) Land Surveyors Act N° 11 (1984): This is basically a code of conduct, or a terms of reference for registered land surveyors, whom must be registered through the Land Surveyors Board. 6) Land Leases Act (1983): The Act details the rights and obligations of person or entities entering into an arrangement or agreement with another person and/or entity for the use of land under a lease or rent agreement. 3. Current Practices in Resettlement and Land Acquisition/Land Lease for Government Purposes in Vanuatu a. Identification of areas for acquisition 97. A majority of Government land acquisition in Vanuatu has been for smaller social services projects such as for village health facilities and educational institutions. More recently, apart from Tanna airport, in Port Vila the Government has acquired land along the river at Freswota, in order to maintain a level of river protection and reduce urban encroachment issues. The Sarakata HPP land acquisition and compensation is the most significant experience in the power sector. The Due Diligence/Social Compliance Audit Report provides a comprehensive documentation of the process and outcome.

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98. In the year prior to an infrastructure development project, each Ministry and other Government agencies will develop their work plans for the following fiscal year. This is inclusive of the other feasibility study requirements such as budgeting, environmental, engineering etc. At this time, proposals for projects where land acquisition is involved should be submitted. This is subject to the approval of the Council of Ministers. There is no minimum standard that requires the projects to minimise land acquisition and impact on the community. 99. Interestingly, the “Council of Chiefs”, which is the supreme body representing customary issues, including land in Vanuatu at a national level, does not necessarily have an input at this or any other stage of the process. At the same time, the MLNR is in the process of developing “Customary Lands Tribunals” in each Province of the country especially to assist in settling customary land disputes. Customary lands identification is still an ongoing process, since 1980, given that there are limited records to prove the ties of people to a certain plot(s) of land that, by law, must show to go back over 200 years. b. The process for relocation or acquiring of land 100. On an annual basis, the Government allocates in its National budget 200 Million Vatu for Government Land Acquisition projects. According to MLNR, if the budget is not spent the remaining amount accrues on top of the normal, annual 200 million Vatu budget. In the event that the budget is used up, with finances still required, the Government and Ministry executing a project, is responsible to find further finances to cover the necessary Land Acquisition budget requirement. 101. Once an area of land is selected by the Government for the government project, a notice signed by the Minister of MLNR is provided to the customary owners/title holders and a public notice is erected in full public view. The notice is made for a minimum of 30 days. 102. After this period, the land is assessed and valued. The land valuation is stipulated by Law (refer to 3.3), but generally involves valuing of the following: 1) Lease type - residential/agricultural/commercial/special industrial. 2) Marketability - number of properties marketed nearby in recent times and price range of those transactions 3) Physical characteristics - terrain, vegetation, soil type, improvement made, size, etc., 4) Intangibles - interest, customary and other resource rights attached. 103. According to thee MLNR, valuations include both Land and structures affected and may include value of income produced from land. However, this does not include “non-land producing” incomes such as income from shop business etc. 104. Any damage to the land, caused by valuation investigations, is by law, liable for compensation to the existing owners. Once the valuation has been made and signed by the Minister, the owners have 30 days to file objections, at the same time, the MLNR must disclose information on the valuation and proposed land acquisition over a 30-day period by Radio at least 3 times on separate occasions, in one national newspaper each week, on the main notice boards and on the land itself. Objections must be lodged within this 30 days period, and on decision by the Minister, the objector, if dissatisfied, may appeal the Ministers decision through the Supreme Court of Vanuatu. However, if the issues are related to tradition and custom, then the National Council of Chiefs may be consulted if necessary, although not compulsory. c. Carrying out the acquisition of land/structures 105. After a 30 day notice period, and as long as all conflict claims and complaints are resolved, the physical compensation processes can then commence. The Ministry of Lands is responsible for this process, monitored by the Ministry of Finance and Economic Management (MFEM). However, problems in moving through this stage may include complaints about the process of valuation to compensation itself; and process of the assessment of disputes. This is generally supposed to be settled through the Customary Lands Tribunal or if unresolved through the Supreme Court system.

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d. Negotiating land acquisition through purchase/lease agreement 106. The Land Acquisition Act N° 5 of 1992 (amendment) Act N° 34 of 2000 stipulates the processes and procedures for land acquisition either through purchase or lease arrangement. It involves the following:  The Government to serve a 30-day notice before declaring the hydro land as public land.  The Notice would be posted in public conspicuous places near the land to be acquired in 3 languages (Bislama, English and French) as well as published in newspaper both local and national.  The notice will include specification that if there are objections to the proposed acquisition such would have to be conveyed to the land officer not less than thirty days from the date on which such notice is given.  Furthermore the notice will state that claims for compensation for the acquisition of that land or easement may be made to the acquiring officer;  In case there are conflicts in terms of land ownership and claim, the issue shall be referred to the local land tribunal for review and resolution. A 21 day notice is given to the landowners/claimants to make known their claim to the local land tribunal. At the end of the 21 day period the land court proceeded to make its decision on who the rightful customary landowners are  The Government through the acquiring officer will request the customary landowners to propose compensation taking into consideration market value of land during the time of publication of notice, damage made to the land resulting from the activities undertaken in regard to land acquisition objective, loss of income as result of the loss of land as well as displacement or relocation as a result of land acquisition. The acquiring officer through his principals shall likewise prepare their own estimate.  The Government would compare the requested compensation package of the customary landowners with that of the Government (Valuer General). The estimate to be provided by the Valuer General is the final valuation of the Government; if the custom owners still reject the said valuation their recourse is to appeal to the Supreme Court.  If a determination on compensation is made and no appeal is made, the decision of the acquiring officer is final. B. ADB’s Policy on Involuntary Resettlement 107. The ADB Safeguards Policy Statement (2009) requires ADB-assisted projects to (i) avoid resettlement impacts wherever possible; ii) minimise impacts by exploring project design alternatives; iii) enhance, or at least restore the livelihoods of all APs in real terms relative to pre- project levels; and iv) improve the standards of living of the affected poor and other vulnerable. It covers both economic and physical displacement. 108. The key principles of the ADB safeguards policy on resettlement are as follows: 1) Screen early the projects resettlement impacts and risks 2) Carry out meaningful consultations with participation of affected persons (APs)/Displaced persons (APs), inform all APs of their entitlements and resettlement options paying particular attention to the needs of vulnerable groups. 3) Establish a grievance mechanism 4) Improve, or at least restore the livelihoods of all APs through (i) land-based resettlement or cash compensation at replacement value as relevant, (ii) prompt replacement of assets, iii) Prompt compensation at full replacement cost, and iv) additional revenues and services through benefit sharing schemes where possible. 5) Provide APs with needed assistance including i) if there is relocation, secured tenure to relocation and better housing; ii) transitional support and development assistance; and iii) civic infrastructure and community services as required.

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6) Improve the standards of living of the displaced poor and vulnerable groups to at least national minimum standards 7) Develop procedure in a transparent, consistent and equitable manner if land acquisition is through negotiated settlement 8) Ensure that APs without titles are eligible for resettlement assistance and compensation for loss of non-land assets 9) Prepare a RP elaborating on APs entitlements, income and livelihood restoration strategy and so on 10) Disclose a RP in an accessible place and a form and languages understandable to the APs and other stakeholders 11) Conceive and execute resettlement as part of a development project or programme 12) Provide compensation and other entitlements before physical or economic displacement 13) Monitor and assess resettlement outcomes and their impacts on the standards of living of APs. C. Policy Differences and Reconciliation 109. A comparison between ADB policies and the laws and practices of land acquisition and resettlement used by the Government of Vanuatu has been conducted and a summary has been prepared (Table 14). Any differences between the laws and practices of the Government of Vanuatu and ADB SPS 2009 will be resolved in favour of the latter. Table 14 - Comparison of Land Acquisition and Resettlement in Vanuatu and ADBs SPS 2009 N° ADB SPS 2009 Safeguards Comparisons to Vanuatu Law Reconciliation Provisions 1 Avoid resettlement impacts There is no minimum standard that The Project will ensure all resettlement wherever possible. requires the projects to avoid and land acquisition and impacts on resettlement impacts. community and business/productive interests are avoided, wherever possible. 2 Minimise impacts by There is no minimum standard that The Project will ensure all resettlement exploring project design requires the projects to minimise land and land acquisition and impacts on alternatives. acquisition and impact on the community and business/productive community. interests are minimised wherever possible. 3 Enhance, or at least restore Compensation is determined based on For this project, compensation for losses the livelihoods of all APs in issues including land type, crops etc. by businesses and for employees’ real terms relative to pre- However, this does not include “non- salaries will be considered in the project levels. land producing” incomes such as entitlement. income from shop business etc. It also does not necessarily require that Land is valued by Valuer General in compensation be provided and that MLNR. The VG will be used (refer to SN conditions of the affected people be the 8). same level or better than pre-project situation. 4 Improve the standards of Laws and practices in Vanuatu do not ADB SPS 2009 will be enforced in that living of the affected poor recognise the standards of living of the assistance will be provided to vulnerable and other vulnerable. It poor and vulnerable, in determining APs, if any identified, to ensure that living covers both economic and compensation for land acquisition and standards the same as, or wherever physical displacement. resettlement per-se. possible better than, pre-project levels. 5 Screen early, the projects Laws and practices in Vanuatu, relating ADB SPS 2009 will be enforced to resettlement impacts and to Government Capital Works Projects, recognise resettlement impacts and risks. require that the Project budget consider risks, including through this RP and and includes associated resettlement subsequent RP updates. and land acquisition costs. However, there are no other assessments of resettlement impacts required prior to budget approval, hence capital works commencing. 6 Carry out meaningful The law, and current practices, does ADB SPS 2009 will be enforced in that consultations with require the land acquisition and the prepared RP and its implementation participation of APs, inform relocation orders to be disclosed will require a level of participation and all APs of their entitlements several times over radio and in the consultation.

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N° ADB SPS 2009 Safeguards Comparisons to Vanuatu Law Reconciliation Provisions and resettlement options. printed media over a 1-month period, Pay particular attention to as well as display on-site. However, the needs of vulnerable there is no recognition of vulnerable groups. groups nor the consultation with, or participation of, APs at any part of the process, except in the case of people given opportunity to make objections. 7 Establish a grievance Vanuatu already has a Grievance ADB SPS 2009 will be enforced to mechanism redress system for general village ensure an appropriate multiple level matters, followed by the chief. MLNR grievance redress system, which allows has also recently been set up at AP/DP participation, relatively rapid Provincial level, through the Customary action and results, as well as Land Tribunal. encompassing existing grievance procedures. 8 Improve, or at least restore In Vanuatu valuation of land is Land is valued by Valuer General in the livelihoods of all APs stipulated by Law, and is conducted MLNR. The VG will be used to determine through (i) land-based based on several factors regarding that compensation requirements relating to resettlement or cash specific plot of affected land such as land, land-based income losses. All compensation at lease and ownership type; location of compensation, including for non- replacement value as property; amenities; market price of agricultural business and employee relevant, (ii) prompt nearby properties; physical land entitlements will be at the existing market replacement of assets, iii) characteristics; and intangibles. rates. Prompt compensation at full replacement cost, and iv) The law specifically points out times for At the end of the disclosure period, as additional revenues and disclosure prior to valuation, time for soon as practicably possible, as per ADB services through benefit objection to valuation and acquisition of SPS 2009, compensation will be sharing schemes where lands and assets. However, the law provided promptly. possible. does not provide any clauses for compensation, income restoration and entitlements to be provided to the AP/DP in “prompt” manner. 9 Provide APs with needed In Vanuatu, land acquisition, ADB SPS 2009 will be enforced in assistance including i) if resettlement and compensation for supplementing the Law of Vanuatu, in there is relocation, secured land-based losses are included under order to cover transition assistance tenure to relocation and the law. However, impacts on business requirements, business and employees better housing; ii) transitional and their employees are less clear and impacted, as required. support and development there is no recognisable transitional assistance; and iii) civic support mechanism under the law. infrastructure and community services as required. 10 Develop procedure in a Vanuatu laws provide procedures on This aspect of the SPS 2009 relating to transparent, consistent and land lease and purchase. “Negotiated Land acquisition” is equitable manner if land applicable. Vanuatu laws and practices acquisition is through will be adopted for this purpose. negotiated settlement. 11 Ensure that APs without Laws have no clauses that recognise ADB SPS 2009 will be enforced to titles are eligible for encroachers in any way to be entitled or recognise encroachers, who are resettlement assistance and NOT entitled to compensation or legitimately affected at the time of the compensation for loss of rehabilitation. census/detailed measurement survey non-land assets. conducted. 12 Prepare an RP elaborating Under Vanuatu Law, land acquisition ADB SPS 2009 will be enforced to on APs entitlements, income and resettlement and compensation is ensure an RP is prepared and is updated and livelihood restoration carried out focusing on households at the time of detailed design. strategy and so on. affected and the values of the land a structures affected. However, an RP per-se is not necessarily required. 13 Disclose a RP in an Although the Law does not require an This practice will be maintained in accessible place and a form actual RP to be prepared, its clauses addition to the RP being disclosed on the and languages do necessitate notices and official ADB website. If APs are found to have understandable to the APs valuations by the MLNR to be prepared. low literacy a further disclosure through and other stakeholders. The law, and current practices, also public meeting may be held. requires that land acquisition and relocation orders for a specific site be disclosed several times over radio and in the printed media over a 1-month

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N° ADB SPS 2009 Safeguards Comparisons to Vanuatu Law Reconciliation Provisions period, as well as display on-site. However, only the radio would be useful for the illiterate to become informed of any pending land acquisition and resettlement activity on a specific site. 14 Conceive and execute The MLNR does have a 200 Million Laws and practices in Vanuatu, relating resettlement as part of a Vatu budget for Land acquisition and to Government Capital Works Projects, development project or resettlement for Capital Works Projects require that the Project budget consider, programme. allocated on an annual basis. The year and includes, associated resettlement prior to an infrastructure development and land acquisition costs. project, Government agencies will develop their work plans for the No supplementary measure required. following fiscal year. At this time proposals for projects where land acquisition is involved should be submitted. This is subject to the approval of the Council of Ministers. 15 Provide compensation and Compensation is to be provided after a ADB SPS 2009 will be enforced to other entitlements before period of disclosure and a period for ensure land acquisition, resettlement and physical or economic objection has finished. However, / or compensation measures are displacement legislation does not clearly state that completed prior to construction compensation will be provided prior to commencing. commencement of construction, which would force physical/economic displacement impacts to occur. 16 Monitor and assess There is no specific clause in the law of ADB SPS 2009 will be enforced to resettlement outcomes and practice in Vanuatu that required ensure that internal monitoring and their impacts on the Monitoring and assessment of APs evaluation programme is set up for this standards of living of APs. during or after land acquisition and Sub-project. Although not expected resettlement commences under the current project design conditions, external monitoring programme may be required if land acquisition and resettlement impacts became significant, based on SPS 2009 policy definitions.

D. Principles and Policies for the Project 110. Given the assessment of the Vanuatu laws and practices and the ADB policy differences referred to above, some additions have been made on top of the provisions set out under the Vanuatu laws, in order to ensure consistency with the resettlement principles of the ADB’s SPS (2009), especially safeguards on Land Acquisition and compensation. For the reference of DOE in preparing and subsequent implementation of resettlement activities under the project, the following project principles and policies will apply:13 1) Involuntary resettlement and loss of land, structures and other assets and incomes shall be avoided and minimised by exploring all viable options. 2) APs shall be provided with compensation for their lost assets, incomes and businesses, and provided with rehabilitation measures sufficient to assist them to improve or at least maintain their pre-project living standards, income levels and productive capacity. 3) Lack of legal rights to the assets lost will not preclude affected persons receiving entitlement in form of compensation for non-land assets and/or rehabilitation measures. 4) Affected land assets shall be replaced at their current market values, based on Valuer Generals approval. 5) Preparation of resettlement plans and their implementation shall be carried out with participation and consultation of affected people and the Vanuatu government and authority - Ministry of Lands and Natural Resources.

13 These are the project’s general resettlement principles which will be applied to different project components/subproject to varying degrees.

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6) Schedule of budget for resettlement planning and implementation will be incorporated into DOE’s budgetary cycle as required at the time of financing. This will require close consultation with MFEM, MLNR and approvals by the Council of Ministers of Vanuatu 7) Payment of compensation or replacement of affected assets and any resettlement to new locations will be completed prior to civil works implementation. 8) Rehabilitation measures will also be in place before start of civil works, but not necessarily completed, as these may be ongoing activities. There will be no perceived negative impact on both APs and host community, if any, otherwise mitigation measures should be introduced. 9) Compensation and rehabilitation assistance for socially disadvantaged such as households headed by women, the disabled and elderly will be carried out with respect for their cultural values and specific needs. 10) Where significantly large or entire land holdings are affected by a project, the general mechanism for compensation for affected agriculture, residential or commercial land shall be through provision of "land for land" arrangements of equivalent size and productivity and at location acceptable to the AP, if possible. 11) APs whose land or assets are temporarily taken by the works under the project shall be fully compensated for their net loss of income, damaged assets, crops and trees, as the case may be. The contractor shall also ensure that all temporarily acquired land and structures are returned in its pre-project state. 12) Compensation for affected populations dependent on land and natural resource-based activities will be land-based or access-based14 wherever possible. 13) Affected populations that stand to lose only part of their physical assets will not be left with a proportion that will be inadequate to sustain their current standard and convenience of living; such a minimum size being identified and agreed during the resettlement planning process. 14) Affected populations will be systematically informed and consulted about the Project, the rights and options available to them and proposed mitigating measures. 15) Adequate budget support by DOE, with MFEM of Vanuatu approvals and guarantees, will be fully committed and made available to cover the compensation and resettlement with the agreed implementation period. Clear budget commitments are required for critical activities such as formal detailed physical surveys and administrative functions associated with compensation and resettlement. 16) Community facilities and infrastructure damaged due to the Project shall be restored or repaired as the case may be, at no cost to the community. 17) While the Government has the option to pursue compulsory acquisition, negotiated land purchase or possibly lease agreement shall be followed in acquiring land for the Project.

VII. ENTITLEMENTS, ASSISTANCE AND BENEFITS

A. Eligibility for Compensation 111. The initial identification of APs and affected land and the ensuing negotiation for land acquisition has started during the conduct of the PPTA. IA in this case DOE in coordination with Department of Lands and provincial councils will further consult with APs and undertake detailed land surveys and investigation to collect detailed information. The date of land survey and investigation will be the “cut-off date” for eligibility for compensation. Following are the procedures summarising eligibility for compensation and other assistance to APs:

14 This is to ensure coverage of affected communities who rely on traditional accessibility to aquatic-based livelihoods.

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1) Landowners and/or users that have documented legitimate claims to the affected land, trees, etc. as of the cut-off date will be eligible for compensation and/or rehabilitation assistance as per the project policy. 2) Any person or group that occupies or uses the land identified for the subproject construction after the cut-off date will not be eligible for any compensation and/or assistance. 3) APs with legal rights or claims will receive compensation for land. If applicable, non-titled APs are not eligible for compensation for the land, but will receive compensation for assets attached to land and other assistance as required.

B. Entitlements 112. Table 15 below summarises the entitlement matrix. Table 15: Entitlement Matrix Type of Impact Entitled Persons Entitlements

Permanent loss of land Land owners/users as Compensation at replacement cost based on current recognised by customary price will be paid for lands to be acquired by the leaders and government Government Loss of trees, crops APs and households It will be agreed with APs that any crops will be harvested by them before site clearance. If APs are not able to harvest crops, they will be paid compensation at replacement cost. Fruit trees including any loss of production will be compensated at replacement cost/market price. Employment APs particularly women, APs will be provided training and priority employment opportunities (project youth and vulnerable group in civil works based on APs skills suitable to project benefit) needs. Impacts on vulnerable Vulnerable groups Necessary special assistance (identified through groups (if identified) consultations with affected communities) to be specified in the updated RP. Stable power supply All APs APs (as regular customers) will get stable power (project benefit) supply. Any unconnected AP households will be provided power connections (as regular customers). Unforeseen or Concerned affected people These will be determined as per the principles of this unintended impacts RP and ADB's SPS.

VIII. INCOME RESTORATION AND REHABILITATION

113. While the loss of land will not impact on APs’ livelihoods and will not result to loss of residential structures, the following assistance will be provided by IA to affected APs: (i) skills training for APs interested to work in project construction; and (ii) priority employment in project works such as vegetation clearance and maintenance works. Any vulnerable individual or group APs will be given special support by the project. There are no female-headed households out of the 7 identified APs. However, if continued consultations will identify any such affected households, they will be provided priority employment in these activities. The project design will reflect this and the updated RP will describe its details including special assistance to vulnerable groups.

IX. LAND ACQUISITION/RESETTLEMENT BUDGET AND FINANCING SOURCE

114. Necessary costs for the project’s land aspects will be financed by the project as counterpart funds. The costs of consultants and experts will be funded under ADB loan. These will include land acquisition costs, land survey, consultation costs, training and legal costs (see table below). Actual costs for such activities under hydropower subproject will be updated after the detailed design of relevant subproject and detailed assessments of land aspects. The government will release sufficient budget for implementation of land related activities in an appropriate and timely manner. 115. The project will adopt the principle that the compensation for affected land and other assets will be paid based on current comparable market prices/replacement costs as discussed in

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previous section. Land compensation costs were estimated by PPTA Consultant based on current market prices/most recent transactions provided by Department of Lands on a similar project as well as the Sarakata HPP experience and prevailing market price of lands similar to Sarakata areas. 116. Per existing Sarakata HPP experience, land compensation paid by the Government to customary land owners were both for land premium15 (for transfer of acquired parcel - a one-time payment) and land lease with rental fee16 on annual basis. Findings of the due diligence on Sarakata HPP showed that compensation for land premium amounted to approximately 1,000,000 vatu/ha while land rental per annum was approximately 8,000 vatu per ha. On the other hand, if land were to be compulsory acquired, compensation for land would be based on current market price with the current value (as provided by the office of the Valuer General) for land similar to Sarakata area ranging from 200,000-400,000 vatu per hectare. According to the MLNR, valuations include both land and structures affected and may include value of income produced from land. However, this does not include “non-land producing” incomes such as income from shop business etc. Thus the rate provided by the Valuer General is subject to negotiation and appeal by APs. 117. The RP includes a budgetary envelope of approx., USD367,699 for the project’s land acquisition and compensation requirements. This is based on available data and is considered adequate to cover land acquisition and compensation and other necessary items (e.g. surveys, consultations, skills training, etc.). 118. The budget estimate for land compensation used the approximate figures (rates) used for Sarakata HPP compensation as these rate are already acceptable to APs of the existing Sarakata HPP. However, the prevailing rates will be reconfirmed and the cost-estimate with necessary details will be finalised while updating the RP once the detailed land investigation is completed, and final compensation rates are agreed through negotiation between the government and landowners. 119. In addition the budget estimate covers the period of 75 years of lease contract. Specific compensation rates and amounts will be determined during the RP update based on market value of land and all other assets within that parcel of land.17 The current estimate provided by the Valuer General’s office of market value per ha for similar parcel of land is way below what has been paid by Sarakata HPP for land premium on a per ha basis. It is however recommended that the Project pursue lease contract and rental agreement as this is less complex and the more preferred mechanism. The customary landowners prefer to maintain land ownership. 120. The IA will inform affected landowners/APs about the policies and procedures regarding payment of compensation for land. In addition, the agency will also inform the landowners when and how compensation will be paid prior to project implementation. 121. A summary of the land acquisition/compensation budget estimate for the core subproject follows.

15 Premium is a lump sum tax levied on a land. Normally this lump sum is calculated based on the prevailing premium percentage applied at that time. The rate to be adopted depends on the title condition (residential, commercial, agricultural, or special condition) and the category of the land (rural, urban, semi-urban, dark bush). 16 Land rental will the cover the period of 75 years following the Land Law starting from the actual occupation of the land by the Project. 17 As part of discussion (6 May 2014) with the Land Valuer (DOL-MLNR), if and when land (rural) is required for a project, valuation of required land is to be established with involvement of concerned parties including the customary owners and/or lessee. Current rates range between 200,000 - 400,000 vatu per hectare (rural undeveloped land). Virgin land (takbus) is approximately 200,000 vatu/ha. When government acquires land through the Land Acquisition Act provisions, the customary owners and lessees (if any) forfeit their rights perpetually. Calculations are based on two scenarios - Landowner/Lessor and claimant (fully custom-owned); - Lessee/Lessor (combined) interest - or land that is subject to lease. Current Market Value of (land) is used as a guide only - as determined by the Lessor and lessee. These two parties work together.

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Table 16: Estimated Budget - Sarakata-2 HPP Subproject N° Items Details Cost (VUV ) Cost (USD)(1) A Compensation Land premium : 1,000,000 vatu/ha x 13 ha(2 ) = 13,000,000 13,000,000 141,304 Compensation costs for 1 Land rental(3): 10,000 vatu per ha per Customary Lands annum x 13 ha = 130,000/yr x 75 years = 9,750,000 105,978 9,750,000 For Ancillary assets 2 Lump sum = 1,000,000 1,000,000 10,870 (significant trees) affected Sub-Total (A) 23,750,000 vatu 23,750,000 258,152 B Implementation 1 Land Survey (DMS) 2,000,000 (lump sum) 2,000,000 21,740 2 Consultations 2,000,000 (lump sum) 2,000,000 21,740 3 Legal Expenses, etc. 2,000,000 (lump sum) 2,000,000 21,740 Sub Total (B) 6,000,000 6,000,000 65,220 Skills Training & Gender C 100,000 vatu (Lump Sum)(4) 500,000 10,900 Support A + B + C Total 9,200,000 30,250,000 334,272 Contingency (10%) 920,000 302,500 33,427 TOTAL VUV /USD 10,120,000 30,5552,500 367,699 Note: (1) Vatu : USD = 92:1 approximately as of 17 May 2014. (2) The land rate is based on the approximate value (VUV 1,000,000 per ha) for land premium of as paid for by the Government to customary landowner in Sarakata HPP. (3) Land rental rate is based on what is already being paid for by the government to the customary landowners of Sarakata HP land. The rate is approx. 8,000vatu/ha/annum but rounded off to VUV 10,000/ha/annum for budget estimation purpose. (4) The lump sum allocation for training only includes direct training expenses and does not include travel, which is usually part of Consultant and Counterpart staff budget

X. INSTITUTIONAL ARRANGEMENTS

A. Institutional Arrangements 122. The DOE will be the executing agency (EA) responsible for overall guidance and project implementation. The Vanuatu Project Management Unit (VPMU) under the Office of the Prime Minister will act as the Project PMU. The VPMU will be supported by a team of international and national Design and Supervision Consultants (DSC). The VPMU together with the Design and Supervision Consultant (DSC) will provide the Department of Energy (DOE) technical support and coordination during implementation if the Project is eventually financed by ADB. The VPMU will also ensure compliance with assurances, including safeguards and preparing and submitting the resettlement plan update, reports, resettlement plan monitoring reports. 123. To ensure effective implementation of the land acquisition and resettlement aspects, at least one resettlement international and a national resettlement specialist will be recruited to assist the VPMU in this regard. The VPMU will submit reports on a quarterly basis to ADB and EA. Corrective actions to be taken when necessary based on close monitoring and results of grievance redress process. 124. The MFEM will work also together with the VPMU and the MLNR at the time of actual handing over of compensation money.

B. Implementation Arrangements 125. The resettlement/ safeguards specialist will be recruited (Appendix 4 - provides a generic terms of reference) to: 1) Update the resettlement plan, based on the detailed design of the hydropower infrastructures. 2) Coordinate with MLNR Valuer General Office regarding land ownerships, titles and compensations.

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3) Assist the VPMU management in RP implementation and preparing an internal monitoring report to be submitted to ADB confirming compliance with the RP. 126. When the updated RP is finalised through identification of specific impacts and revised compensation costs, the APs will sign a document signifying their satisfaction on the compensation. The Resettlement/Safeguard Specialist will prepare a pro-forma document to be used for the settlement of obligation in land acquisition and compensation. 127. Disbursement of cash will follow the approval of budgets for cash compensation. The VPMU, with resettlement specialist, will inform the APs of the schedule of fund release. They will also advise the APs to produce acceptable legal documents pertaining to their identification for claiming the compensation. It is the main responsibility of VPMU to ensure that all the compensations and entitlements have been paid to and settled with APs prior to clearing the construction sites. The DOE will arrange with the MFEM, as per the law of Vanuatu, for the compensation to be dispersed directly to APs on presentation of identification. APs will sign a document indicating the receipt of their compensation and entitlements. The compensation for the purchase of land, will be placed with the Government Trustee, that is responsible for managing the trust account for this land area, on behalf of the yet to be identified (or yet to claim) customary land owners. For all land of Vanuatu, since 1980, the law gives all land title back to its customary owner, once attachment to land plot is shown.

C. Resettlement Database Records 128. All information concerning resettlement issues related to land acquisition, socioeconomic information of the acquired land and affected structures, inventory of losses by individual APs, compensation and entitlements, payments and relocation will be recorded by the VPMU. These data records will form the basis of information for implementation, monitoring and reporting purposes and facilitate efficient management and monitoring of compensation distribution.

D. Post-Resettlement Plan Implementation 129. Monitoring of compliance of the project policies is the main agenda in this phase. Internal monitoring is the responsibility of the VPMU, but will be conducted with the assistance of the resettlement specialist. No external monitoring is recommended. Internal monitoring reports will be submitted to ADB with the quarterly progress reports. The ADB will issue to the EA/VPMU a no objection, which will then signify for the contractor to commence civil works in the affected area. The details of Monitoring and Evaluation are discussed in Section VII below. During mid-term review ADB will also ensure that there are no other adverse involuntary resettlement effects.

XI. IMPLEMENTATION SCHEDULE

130. The implementation schedule for updating the RP and implementation of land acquisition and compensation follows. Table 17: Implementation Schedule N° Activities Schedule 1 Resolution of ownership/boundary dispute and compensation issues of existing HPP Month 1-2 2 Confirmation of land requirement and identification of land owners/claimants Month 1 3 Land survey and valuation Month 2 Submission to MLNR/Provincial council of land survey report and to prepare for formal 4 Month 3-4 negotiation with landowners and budget allocation for land acquisition Negotiation with landowners: consultation with affected landowners to discuss land 5 Month 3-6 acquisition through negotiated purchase or lease arrangement. Agreement on land acquisition/purchase and necessary approvals by the Ministry of 6 Month 7-9 Finance and Council of Ministers IA updates the RP including agreements on compensation rates with landowners, and 7 Month 9 discloses updated RP to APs. 8 IA submits the updated RP to ADB for approval and posting on ADB website Month 10

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N° Activities Schedule 9 Execution of land acquisition and payment of compensation Month 11-13 10 IA submits to ADB an land acquisition and compensation completion report Month 14 11 IA submits safeguard monitoring report Six-monthly

XII. MONITORING AND REPORTING

131. Based on the RP, EA and IA will monitor all activities associated with land acquisition and payment of compensation to APs. Direct compensation payment will be through MFEM/Department of Lands. The scope of monitoring includes: (i) compliance with the agreed policies and procedures for land acquisition and compensation; (ii) prompt approval, allocation and disbursements of funds and payment of compensation to APs, including supplemental compensation for additional and/or unforeseen losses; and, (iii) remedial actions, as required. The monitoring will also cover whether APs are able to and restore, and preferably improve, their pre- project living standards, incomes, and productive capacity. 132. The IA will maintain proper documentation of consultation process and keep relevant records of land acquisition and transaction. The Resettlement/ Safeguard specialists at the VPMU will assist in documentation of the consultation, negotiation and transaction process. 133. The IA will prepare and submit semi-annual progress reports to ADB as part of project performance monitoring. The IA will also submit a subproject land acquisition and compensation completion report to ADB following compensation payment before start of the civil works.

XIII. APPENDICES

Appendix 1: Copy of the Memorandum of Agreement on Project Access

A signed document cannot be provided due to dispute by landowners and claimants. A copy of the draft document is provided

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Appendix 2: Newspaper Clippings

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Appendix 3: Consultations Documentation of Consultations Conducted in Santo, Sanma Province, Mar-May 2014 Provincial and Community Consultation 1. Provincial and community consultations in respect of both environmental and social issues were undertaken in Luganville (Sanma Provincial Council) 20th March and Fanafo Village (including participants from nearby Mon Exil village) on 16 May.2014. The project consultation personnel included the Consultant’s international environment specialist (IES) and international and national social/resettlement specialists. Owing to a national meeting of provincial councils on 16 May, representatives of Samna Provincial Council (SPC) were unable to accompany the team to Fanafo Village. Key activities during the consultation visit included:  Introductory meeting with Sanma Provincial Council  Consultation meeting with project affected land owners, interested stakeholders and community members of Fanafo and Mon Exil villages 2. The purpose of the provincial and community consultation was to disseminate basic project information and obtain the views and concerns of communities with respect to environmental issues related to the project with a view to addressing these issues in the project design and implementation. The consultations also provided the opportunity to gather relevant site specific information from the stakeholder’s perspective on the physical biological and social environments of the project area. 3. Sanma Provincial Council. An initial meeting was held with the SPC to introduce the Safeguards team, explain the purpose of the visit and consultation process within the context of the overall TA objectives including ADB’s safeguards requirements, obtain information relating to the community’s readiness for the project including any issues of concern they might have, and to request the SPC’s assistance in supporting the consultation process. Four members of the SPC attended the meeting. Other members were absent due to their involvement in responding to a local landslide disaster in which six people lost their lives as a result of tropical cyclone Lusi. 4. A power point presentation delivered by the IES provided the opportunity to inform the SPC of what the proposed Sarakata 1 Extension and, Sarakata 2 hydropower projects entailed. The presentation included sketches of the key project components, a summary of potential environmental and social impacts and benefits arising from the project, and a preliminary assessment of the significance of such impacts and likely mitigation measures required to ensure impacts are minimised and acceptable. 5. The SPC were very familiar with the key components of the hydropower project through the existing Sarakata hydropower project and expressed overall support for the project. And advised they would be available to assist in coordinating and participating in community consultations. On environmental issues they Consultant was referred to the SPC’s Environment Extension Officer who was unable to attend the meeting. Details regarding land acquisition issues discussed with the SPC are reported separately in the RP. 6. The IES met with SPC’s Environment Extension Officer on 27 March. He advised there were two community based conservation areas in Santo including Nambauk and Butmas. Nambauk CCA is 4 km west of the proposed Sarakata 2 powerhouse within the Tafwakar River catchment and will not be affected by the project. Butmas CCA is located about 10km north of the existing Sarakata hydropower Scheme and will also not be affected by the project. 7. He advised that he had been undertaking community awareness activities at Fanafo on need for watershed protection above existing Sarakata HP scheme, namely avoidance of tree cutting and limit fishing activities. He also advised that Sarakata catchment was logged during 1990s. Most large trees were taken. He had no specific concerns about the presence of endangered or endemic species within the project areas. 8. Community consultation/information dissemination. Community consultations were held at Fanafo (including participants from nearby Mon Exil Village) on 16 May. A total of 20 people attended the meeting. The meeting commenced with introduction of the consultant team by the

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national social/resettlement specialist. The IES then outlined overall purpose of the stakeholder consultation to provide project information and listen to any concerns and answer any queries the community might have with respect to the project and particularly environmental and social impact issues. The International Social/Resettlement Specialist addressed land and social issues. 9. The communities were fully aware of what was involved in the construction and operation of a hydropower project due to their experience with the existing Sarakata project located some 3 km away and had benefitted from grid connected electricity for many years. Recent expansion of household connections within the village is also currently planned by the Sarakata HPP operator (VUI). 10. Two environmental concerns were raised by one participant (not a land owner). The first concern was the potential impact on fish within the section of Sarakata River to be subject to reduced flow by the Sarakata 2 project and its impact on recreational fishing in that area. The meeting was advised that a detailed survey of the fish and aquatic resources of the affected section of the river was currently being undertaken as part of the IEE and that the findings including any necessary environmental mitigations would be integrated into the design and operation of the project and that results of the IEE will be publically available once completed. No further comments were raised on this point. 11. The second concern was the potential impact of the project on a tabu site, namely a significant rock outcrop within the Tafakwar River near its confluence with Sarakata River. This tabu site had been previously pointed out to the IES by local landowners during a site inspection of the proposed Sarakata 2 powerhouse site in March when it was established at that time that the location of the Tambu rock would be unaffected by the project. This information was conveyed in the meeting and accepted by participants with no further comment. 12. Another participant expressed keen interest that local people might be employed as laborers during project construction and receive skills training with possible flow on work during operation of the plant. It is noted that at least one member of the Fanafo community currently works as a trained plant operator at Sarakata 1 and a number of local people are currently employed at the power station as maintenance laborers. 13. The participants were informed re intent of project to acquire the area adjacent to the proposed Sarakata-2 HPP site wherein their (particularly the landowners/claimants) participation is crucial. The participants to the meeting inquired on what direct benefit would the communities derive from the project considering that even Fanafo which is just proximate the existing HPP is not even fully energised. 14. With regard to issues raised, it was clarified that the power availability in Fanafo is the direct result of the hydro and that part of the objectives of the project is to expand coverage (VUI is currently undertaking expansion work on distribution lines in the area) and ensure access to electricity by the rural communities. Likewise, as verified with VUI, the hydropower operator, provide direct employment to a number of residents in the area (currently 11 employees of hydro is from Fanafo). Also, rural communities like Fanafo is beneficiary of cross subsidy where the consumers only pay a third of the cost of the service. The hydro operator likewise provide other services such as the grading of the Fanafo road and contributed funds to the Public Works to enable them to do periodic maintenance. For Sarakata-2 development, it was explained that communities like Fanafo will benefit from the employment opportunity to be provided by the subproject. Local labour will be mainly sourced from the area and construction activities will generate income earning opportunities particularly for women who may engage in food vending and the like. 15. The Team likewise emphasise that in the course of the Project development, the community and local officials will enter into a memorandum of agreement to document their willingness to participate in the project, allow the project personnel to access the area and continue with the dialogue to ensure an open line for the purpose of pursuing the realisation of the Project. 16. Immediately after the meeting the team visited some key landowners of the Sarakata 2 project area who were not in attendance at the meeting to specifically seek their views on the

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project. They expressed strong support of the project echoing the same view conveyed by the landowners during the technical teams site visit in March. 17. Conduct of FGD/HHSES/KII - In addition to the above consultations, the Team undertook focus group discussions, socioeconomic survey of sample households and key informant interviews (KII). Four FGD attended by 10-15 participants per FGD, 80 households within the influence zone of Sarakata-2 as well as a number of KII were conducted. Results of these information gathering and consultations have been integrated in the social and environmental reports as well. Consulted groups and persons are included in the list of persons consulted as indicated below. List of Attendees at Consultation Meeting with Sanma Provincial Council Luganville, 20 March 2014 Name Responsibility Summary of Comments made Sakarata Secretary General (SG) of the  The SPC were very aware of what the hydro project Daniel Sanma Provincial Council would involve and supported the project  The SG remarked to visitors as bringing blessings to William President, Sanma Provincial the Islands of Espiritu Santos’. Mallon Council, Luganville  The SG welcome the SMEC team and stated that Sanma province would be ready to assist in any Prosper Provincial Planner, Sanma activity that is associated with the Vanuatu Energy Buletare Access Project.  On the environmental questions, the President of Sanma province said there is plenty of bushland and Juliet Sumbe Sanma Provincial Council villagers live far away from the project sites. Women’s affairs  The Consultant was referred to Mr Anaclet Philip SPC Environment Extension Officer to discuss environment issues. He was unable to attend the meeting due to involvement in disaster response in relation to cyclone Lusi.  Refer to summary of discussion with SPC Environment Extension Officer Table A5.2.  After discussion of potential land acquisition issues in regard to present project, the provincial planner was requested to arrange the various meetings with the affected communities to discuss land issues and concerns

18. Consultation with Affected Households – and concerned local officials/utility firm on Land Acquisition Issues and Concerns. In the conduct of various consultation activities land acquisition issues were discussed with local and provincial officials and utility firm representatives as well as the affected person/households.

19. Concerns raised were as follows:

 Customary landowners/claimant – Primary concerns raised was the schedule of implementation, compensation and other benefits that APs are entitled to  Local Officials – brought up the issues of benefit that the Project will get from the Project considering that the present system (Sarakata 1 HPP) has not provided electricity coverage to the entire community  Provincial Officials – expressed full support to the project  Utility Agency (VUI) – primary concern was disruption to operation due to declaration of tabu by customary landowners to entry to land where the hydro facility is. In the past several disruptions had occurred mainly due to issues of land compensation.

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List of Persons Consulted March-April 2014

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Appendix 4 – Terms of Reference: Resettlement/ Safeguard Specialist

i. Review the draft resettlement plan (s) RPs. If needed, recommend measures to update and fill the gaps along the country systems and ADB’s safeguard requirements on involuntary resettlement. ii. Coordinate the collection of necessary data/information to update the RPs iii. Organise and conduct social surveys. iv. Coordinate with relevant government agencies, including the Department of Lands and the Provincial Councils, for necessary information on affected land and land-based assets, and for coordination with the government's formal land acquisition procedures in accordance with the Land Acquisition Act. v. Update the RP in accordance with the country's laws and regulations related to land acquisition and resettlement, and ADB's SPS. The contents of the RP should follow the outline of the SPS, and include assessment of the impacts, eligibility criteria for entitlement, compensation rates for assets lost, specific measures for the poor and vulnerable, time frame for implementation of RP, consultation and grievance redress mechanism, budget, implementation mechanism, and a monitoring and evaluation plan vi. Assist the implementing agency in undertaking consultations/disclosure activities re RPs with APs and other stakeholders and for disclosure of relevant information including the draft safeguard documents in accordance with the country’s laws and ADB’s policies. vii. Assist the EA/VPMU in ensuring that the Project grievance redress mechanism is set up and fully appreciated by the stakeholders especially the APs viii. Assist the VPMU in establishing the mechanisms to implement and monitor the RPs. As per PPTA recommendation, assist in developing capacity of the EA to undertake social safeguard measures including RP implementation. ix. Provide technical assistance in ensuring that the other social safeguard measures are addressed. x. Conduct workshops and meetings, and provide guidance to the EA on project-related resettlement issues and ADB's policy and procedural requirements on resettlement safeguards. xi. Ensure that the implementation of the RPs are properly monitored and issues and concerns reported to appropriate authorities and that corrective measures are carried out. xii. Prepare social safeguard/resettlement monitoring reports. xiii. Provide inputs to the project in preparing quarterly progress reports and other relevant reports.

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Appendix 7 Cost Estimates

Table 7-1 Cost Estimates Breakdowns Description Unit Quantity Cost (USD) Cost (USD) 600 kW Unit 300 kW Unit

A CIVIL WORKS Preliminary and General LS 1 60,000 60,000 Intake and Approach channel LS 1 18,000 18,000 Dam and Abutments LS 1 332,000 332,000 Settling Basin LS 1 18,000 18,000 Headrace LS 1 139,000 137,000 Forebay LS 1 287,000 144,000 Penstock + Civils LS 1 173,000 130,000 Powerhouse LS 1 460,000 351,000 Miscellaneous LS 1 214,000 170,000 Subtotal 1,701,000 1,360,000 B HYDROMECHANICAL WORKS Intake Trashrack nos 1 4,000 4,000 Forebay trashrack nos 1 3,000 3,000 Forebay sluice gate nos 1 4,000 4,000 Tailrace stoplogs nos 1 2,000 2,000 Headrace2 Gate nos 1 4,000 4,000 Headrace3 Gate nos 1 4,000 4,000 Miscellaneous LS 1 4,000 4,000 Subtotal 25,000 25,000 C ELECTRICAL AND MECHANICAL C1 Plant Mechanical Powerhouse equipment - Turbine, nos 2 476,000 263,000 Inlet Valve, Generator and auxilliaries - supply and complete install Miscellaneous LS 64,000 40,000 C2 Switchyard Electrical Switchyard and substation, supply 50,000 50,000 and install including all auxiliaries Subtotal 590,000 353,000 D FREIGHT Water Control Plant 98,000 61,000 Plant Electrical and Mechancals 98,000 61,000 Switchyard Electricals 10,000 10,000 Subtotal 206,000 132,000

E CONSTRUCTION COSTS 2,522,000 1,870,000 (A+B+C+D)

F ENGINEERING Engineering and Design 563,000 563,000 PM and Construction Supervision 0 0 Subtotal 563,000 563,000 G TOTAL EPC CONTRACT WORK 3,085,000 2,433,000 (E+F)

H DEVELOPMENT COSTS

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 228 Appendix 7 Cost Estimates

Description Unit Quantity Cost (USD) Cost (USD) 600 kW Unit 300 kW Unit Topographical Survey LS 1 10,000 10,000 Geotechnical Investigations LS 1 40,000 40,000 Hydrological Investigation LS 1 20,000 20,000 Access Road LS 1 60,000 60,000 Subtotal 130,000 130,000

I Total Cost (E+F+G) 3,215,000 2,563,000

J Transmission Upgrade LS 1 920,710 920,710

K TOTAL COSTS (I+J) 4,167,920 3,483,920

TA-8285 VAN: Energy Access Project | FS of Sarakata-1 Extension Project – R0 | August 14 | Page | 229