Notice

Category A project supported: Lauca Electrical Transmission Lines

Published 17 April 2019

1. Project description

UK Export Finance (UKEF) has agreed to provide reinsurance to EKF, the export credit agency in Denmark, for the design, construction and operation of 3 transmission lines, totalling approximately 280km in length, in Angola (the project). New Horizons of Infrastructure in Denmark (NHID) is the principal works contractor (PWC) for the project, with Beroa Bierrum (the Exporter) providing technical advisory services. The Angola Ministry of Energy and Water (MINEA) will have oversight of the project through the Office of Utilisation of the Middle Kwanza (GAMEK) and the National Electricity Transmission Network Company (RNT). MINEA will have responsibility for the project once constructed.

The project will facilitate distribution of electricity from the Lauca Dam to Luanda, the capital city of Angola. Increasing access to electricity is a priority for the government of Angola.

Specifically, the project includes the construction and operation of:

• one 238-km long, 400 kV overhead electrical transmission line that will connect an existing 400 kv Lauca substation to a new substation in Bita, which is close to Luanda
• two 7.5-km long, 220 kV overhead electrical transmission lines to connect an existing 220 kV Lauca substation to the existing Cambutas-Capanda transmission line
• supporting infrastructure, such as access roads

Associated facilities^{[footnote 1]} include:

• A substation at Bita, near Luanda, which has not yet been constructed. The 400 kV overhead electrical transmission line will terminate at the Bita Substation

2. Project sector

The project is in the power sector.

3. Project sponsor

The project is being developed by the government of Angola, represented by MINEA, who have entered into a supply contract with NHID for design and construction of the project. The Angola Ministry of Finance is acting as the borrower.

4. UK exporter

Beroa Bierrum

5. Export credit agent bank

Standard Chartered Bank and DekaBank

6. Amount of UKEF support

The principal value of the support is approximately 49.5 million euros.

7. OECD common approaches

In November 2017, UKEF screened and categorised the Project as Category A (having potentially significant environmental, social and human rights (ESHR) impacts) in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”).

As required by the OECD Common Approaches, UKEF disclosed its possible involvement in the project. A notification was posted on the UKEF website on 13 February 2019 and remained for a period of at least 30 days. The notification contained a description, project location, a contact point for any enquiries to signpost interested parties to environmental information, and links to a Non-Technical Summary, the Environmental and Social Impact Assessment, and the Resettlement and Compensation Action Plan. UKEF is not aware of any comments received from interested parties.

8. ESHR standards

Project-related ESHR documentation and information were reviewed for their alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines. The applicable IFC PS and World Bank Group EHS Guidelines were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts
• PS2: Labour and Working Conditions
• PS3: Resource Efficiency and Pollution Prevention
• PS4: Community Health, Safety and Security
• PS5: Land Acquisition and Involuntary Resettlement
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
• PS8: Cultural Heritage

• World Bank Group EHS Guidelines, of which the following are relevant:

• General EHS Guidelines (2007)
• EHS Guideline on Electric Power Transmission and Distribution (2007)

IFC PS7 (Indigenous Peoples) is not considered relevant for the project as people in the nearest communities are not considered Indigenous Peoples for the purposes of the application of PS7.

In addition to the standards above, the EBRD/IFC Worker Accommodation Processes and Standards, 2009 was also included within the ESHR review.

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues:

• Noise and vibrations
• Stormwater and wastewater
• Hazardous material management
• Solid waste
• Emissions to air
• Energy and water consumption
• Terrestrial habitats and biodiversity, including species of conservation concern
• Management of third-party contractors and suppliers
• Grievance mechanisms
• Occupational health and safety, including demining due to the potential presence of land mines
• Emergency planning and response
• Community health and safety
• Electromagnetic fields
• Influx management
• Cumulative impacts
• Worker conditions of contract and accommodation
• Land acquisition, resettlement and livelihood restoration
• Cultural heritage
• Community engagement

10. Assessment of ESHR impacts

A review was undertaken, in line with the requirements of the OECD Common Approaches, to identify potential ESHR issues for the project and how these would be effectively managed. The review was conducted with the support of an Independent Environmental and Social Consultant (IESC), who was commissioned to undertake an environmental and social due diligence assessment of the project for the financing parties, in collaboration with EKF.

The review included:

• desk-based review of project-related documentation: Environmental and Social Impact Assessment, Environmental and Social Management Plan, Resettlement and Compensation Action Plan and Stakeholder Engagement Plan
• site visit to the Project area, interviews with relevant personnel, and meetings with Government of Angola representatives, local authorities, and community representatives
• follow-up meetings and interviews with relevant Project representatives

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

The review found that a suite of ESHR controls has been developed to mitigate and manage the project-related environmental and social impacts and risks over time.

11. Decision

Various actions have been agreed between the project developers, operators, and parties involved in the financing, which are necessary to ensure the project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the project should meet the relevant international standards over the project cycle and UKEF therefore decided to provide support to the project in respect of the supply of capital goods and services by UK exporters to the project.

A condition of support is that project will be subject to monitoring by an IESC so it can be satisfied that the project is aligned with the relevant international standards throughout the duration of support.

1. OECD Common Approaches defines “Associated Facilities” as: those facilities that are not a component of the project, but that would not be constructed or expanded if the project did not exist and on whose existence the viability of the project depends; such facilities may be funded, owned, managed, constructed and operated by the buyer and/or project sponsor or separately from the project. ↩