Social Monitoring Report Social Due Diligence Report August 2012 THA: Ayudhaya Natural Gas Power Project THA: Gulf JP UT Power Project Social Safeguards Compliance Due Diligence Report I. INTRODUCTION 1. The Uthai Power Plant of The Gulf JP UT (GUT) Co., Ltd. covers an area of 350 rais in the Rojana Industrial Park at Ban Chang Sub-district, Uthai District, Phra Nakhon Si Ayutthaya Province. The power plant is estimated at 80 km north of Bangkok. The proposed Uthai Power Plant will utilize natural gas as main fuel and diesel oil as back up fuel. The total installed capacity of this power plant, comprising two 850 MW blocks of combined cycle facilities, is approximately 1,700 MW. The length of the transmission line is about 15.83 km and will be constructed and owned by Electricity Generating Authority of Thailand (EGAT). The substation that will be tapped for the dispatch of power is the 500 kV Phachi 2 Sub-station. Both transmission line and substation are in EGAT’s scope or work under the existing power purchase agreement (PPA). The natural gas requirement of the project will be supplied by Petroleum Authority of Thailand (PTT) Co., Ltd. and will require the construction of gas pipeline of 20 km. Raw water will be provided by the Rojana Industrial Park and will be sourced from the Pa Sak river and Rapeepat canal through existing water channels and pipelines. The nearest community is Nom Nang Som, comprised of small clusters of households about 630 meters away from the southern boundary of the project. More than 3,500 individuals participated in the public consultation and participation activities conducted, and involved different community sectors such as provincial and district level government officials, community leaders and local residents in the adjacent and nearby districts, environmental groups, representatives of various educational institutions, local media, and other key public figures. 2. A Mission1 was fielded on 8-10 May 2012 to conduct an environmental and social due diligence. The Mission visited the Project site including the point of connection of water and gas pipelines, drove along the alignment of the gas pipeline, met with the officials of the Rojana Industrial Park, and interviewed nearby local residents outside the industrial park. This report was prepared in compliance with the 2009 ADB Safeguards Policy Statement (SPS).The due diligence aims to (i) identify past or present concerns related to land acquisition (physical or economic displacement) and ethnic minorities/Indigenous Peoples aspect; and (ii) determine whether or not corrective actions are necessary to ensure compliance with safeguard requirements. II. AUDIT FINDINGS A. Involuntary Resettlement Safeguard Scope of Land Procurement 3. The Project components requiring land are the following: Power Island, Utility/ Support Systems, Storage Facilities, General Site Buildings, Main Transformers and Switchyard, and General Areas, all within the 350 rai or approximately 56 ha inside the phase VI of the Rojana 1 The site visit mission comprised contingents from the JBIC, ADB, KBank, BTMU, BBL, SMBC, SCB, LH, A&O, Poyry, Willis, and environmental and social experts commissioned by lenders and Gulf JP UT. 1 Industrial Park (Details of the Project components in Attachment 1). The territorial area of the power plant can be described as follows: North borders the area of the Rojana Industrial Park Phase VI, South borders the area of the Rojana Industrial Park Phase VI and connects to paddy fields, East borders the area of the Rojana Industrial Park Phase VI, and connects to paddy fields, and West borders the area of the Rojana Industrial Park Phase VI. The development of the procured land within the industrial park is in compliance with all local regulations and land utilization planning policies of the Department of Public Works and Town & Country Planning. 4. The gas pipeline will connect between GUT Project site and PTT Wang Noi Metering Station, located in Wang Noi district, Ayutthaya province. The total length of the gas pipeline is about 20 km and will pass through 7.3 km stretch of private land, ROW of Royal Irrigation Department for about 10 km, and Rojana Industrial Park for about 3 km. Of the ROW passing through 7.3 km private land, all 7.3km has an existing PTT’s gas pipelines and 6.7 km has an existing EGAT’s transmission line facility, with ROW already acquired by PTT and EGAT. All private land that will be affected by the ROW will be compensated at fair value determined by Energy Regulatory Commission of Thailand (“ERC”). A block valve will be constructed almost halfway from the metering station. The valve construction required the acquisition of about 3 rais, comprising two lots and owned by the same person. There are a total of 97 land plots affected by the gas pipeline: 19 are institutional owners such as local district offices, educational institution, and private enterprises; and the remaining 78 are private individuals or households. The land for the block valve was acquired following an agreed purchase price while the payment for the ROW followed agreed market value. (See Attachment 2 for the land parcels affected by gas block valve and gas pipeline). 5. During the mission, the presence of 12 letters of objection was noted from some land owners affected by the gas pipeline ROW procurement. The letters are noted to be related to the level of payment, timing and procedure. The objections are not expected to impact the project implementation since land plots under objection have already been vacated by PTT and EGAT for an already existing PTT’s gas pipeline ROW and existing EGAT’s transmission lines. The GUT is of the opinion that since the concerned land have been vacated by PTT and EGAT for an existing gas pipeline and EGAT’s transmission line, the intent on the part of the land owners to object the gas pipeline route of the GUT is essentially for bargaining reasons. 6. The ROW for the transmission line is the responsibility of EGAT under the current power purchase agreement. The transmission line will be designed, constructed, tested, commissioned, owned, operated and maintained by EGAT, while the Pa-Chi 2 substation is owned and operated also by EGAT. From the power plant site, it will connect to the Pa-Chi 2 Substation located in Pachi district, Ayutthaya province. The length of transmission line is approximately 15 km and will be passing through paddy fields mostly. A preliminary route survey is available as follows: (i) irrigation canal, Nong Nam Som canal, Huai Ba canal, Nong Ngu Lueam canal, (ii) rural road Aor Yor 4015, rural road Aor Yor 3043, rural road Aor Yor 3012 and rural road Aor Yor 3027, (iii) a 69-kV electricity network from Ang Thong 1 to Phachi substation, (iv) section A3-A4 of the transmission line will pass through the area near Ban Chang and Ban Saphan Hin. The EGAT’s practice of acquiring ROW is always based on market rate to ensure ROW is procured timely so as not to hamper the construction of transmission line. The transmission line is expected to be completed in June 2014. As of due diligence date, actual representation with land owners has not taken place. 2 Procedure for Procuring ROW for the Gas Pipeline and Transmission Line 7. The ROW acquisition for energy facilities in Thailand is guided by the Energy Industry Act of 2007, it provides the procedure for energy network system to acquire private land, among others. If the gas pipeline or transmission line route passes on private land, it is required to apply for the Energy Network System with Energy Regulatory Commission of Thailand (“ERC”) to secure proper regulatory permits. The procedure of the Energy Network System is summarized below: - For the benefit of exploration or survey for a location for the construction of an energy network system, an indicative route plan is submitted to ERC. - Upon ERC’s approval of the route plan; ERC announces the designation of the area to be surveyed by posting up a written notification at the local area such as the district office or the minor-district office, etc. In addition, ERC sends letters to inform land owners that a gas pipeline or transmission line will be passing on their land. - ERC sets up the Compensation Committee to determine the fair amount for the private land owners. On immovable property, if any damage or depreciation of the immovable property or asset occurs, a notification on the amount for the damages to the concerned person according to the criteria is sent following the procedures and conditions specified by the ERC. In this regard, the amount shall be fairly assessed based on prevailing market rate, including the charge for loss of economic benefits that should have been gained from the use of the concerned property. - The owner or occupying person or right holder of the immovable property or assets may lodge an appeal against the amount to the ERC. The ERC shall finalize the deliberation on the appeal. However, the ERC’s decision on the appeal shall be treated as final. The committee ensures that the compensation is based on market rate. 8 In addition to the procedure prescribed by the Energy Industry Act of 2007, EGAT also has its own internal policy to select transmission line route and consider the following criteria to minimize the impact on local communities and environment: (i) impact minimization covering the avoidance of development areas, historical sites, main roads, buildings and houses and farm land, (ii) environmental impact minimization covers avoiding route that will traverse wildlife sanctuary, national park, watershed (level 1A and 1B), mangrove forest, conservation areas, (iii) engineering feasibility covering criteria on shortest straight line route, avoidance of wind and lightning factors, avoiding intersection of highways, significant distance from road, railways, irrigation canals and river banks.