Mozambique - Economic Management and Private Sector Operation Project : environmental impact assessment

E538 REPUBLIC OF MOZAMBIQUE ECONOMIC MANAGEMENT AND PRIVATE SECTOR OPERATION (EMPSO) ENVIRONMENTAL PRE-AUDIT OF PETROMOC AND SELECTION OF FACILITIES FOR AUDITS SUBMITTED TO THE INTERNATIONAL FINANCE CORPORATION AND THE WORLD BANK August 6, 2001 FILE COPY  Table of Contents EXECUTIVE SUMMARY .......................................................1 A. BACKGROUND .......................................................1 B. KEY PRE-AUDIT FINDINGS ............1........................................... C. RECOMMENDATIONS ......................................................2 I. INTRODUCTION, OBJECTIVES AND SCOPE OF WORK ................................ 3 A. INTRODUCTION ......................................................3 B. LISTINGS ......................................................3 C. BACKGROUND ......................................................3 D. OBJECTIVES OF THE ENVIRONMENTAL PRE-AUDIT ...........................................4 E. SCOPE OF WORK ......................................................4 11. ENVIRONMENTAL SETTINGS ......................................................5 A. INITIAL CONDITIONS ......................................................5 B. ENVIRONMENTAL CONCERNS ...............6.......................................6 III. RANKING .......................................................6 A. THE ENVIRONMENT PRE-AUDIT EVALUATION CRITERIA ................ .................6 B. RATING COMPONENTS ......................................................7 C. WEIGHTING COMPONENTS .......................................................7 D. RESULTS OF RANKINGS .......................................................8 IV. SECTORAL ANALYSIS .......................................................9 V. KEY PRE-AUDIT FINDINGS .......................................................9 A. SUMMARY DESCRIPTION OF THE PETROMOC COMPLEXES ..............................9 B. BUNKERING FACILITIES ........... .............. ............................. 10 D. THE MATOLA FACILITY .......................................................11 E. RETAIL OUTLETS (SERVICE STATIONS) ...................................................... 12 F. AUDIT ACTION PLAN ...................................................... 12 G. DECOMMISSIONING ...................................................... 13 VI. STATUTORY FRAMEWORK ...................................................... 14 VII. RECOMMENDATIONS ...................................................... 14 VIII. COST ESTIMATES OF AUDITS ...................................................... 17  LIST OF ACRONYMS BOD Biological Oxygen Demand COD Carbon Oxidation Demand C02 Carbon Dioxide CO Carbon Monoxide DP Decommissioning Plan EAT Environmental Audit Team EET Environmental Evaluation Team EIA/S Environmental Impact Assessment or Statement EMP/S Environmental Management Plan/System GIS Geographical Information System GOM Government of Mozambique IDA International Development Agency ISO International Standards Organization MICOA Ministry of the Environment MP Monitoring Protocol NEAP National Environmental Action Plan NGO Non Governmental Organization N02 Nitrous Oxide; Nitrogen Dioxide ODC Other Direct Costs O&M Operation and Maintenance PCD Project Concept Document PE Public Enterprise PPD/E Personal Protection Device/Equipment PPM Parts Per Million PETROMOC Mocambique Petroleum Company RAP Resettlement Action Plan S02 Sulfur Dioxide TAM Turn-Around Maintenance TOR Terms of Reference TTL Task Team Leader USEPA United States Environmental Protection Agency VOC Volatile Organic Compounds WB The World Bank WHO The World Health Organization  ACKNOWLEDGEMENTS The Consultant wishes to express his gratitude to Mr. Casimiro Francisco, the Managing Director of PETROMOC, and to the staff of the Facility at Matola, in particular Ms. Jorgino Francisco Manhangane, Mr. Cesar Maoze, Mr. Luis Hana Geraldes and Mr. Jose Manhique for the time they spent with the Consultant in spite of their pressing tasks, the documents furnished as well as the visit to the sites. Editing work was done by Ligia Murphy. The task managers were Peter G. Moll on the Bank side and Marcelo Lessa on the IFC side. The Senior Environmental Specialist is Mr. Serigne Omar Fye. The Sector Manager (Macroeconomics I) is Philippe Le Houerou. The Country Director is Darius Mans.  -1- EXECUTIVE SUMMARY A. BACKGROUND 1. PETROMOC comprises: three (3) big facilities at Matola, Beira and Nacala with refinery, defunct since 1984 in the Matola complex. Capacity at the time was 17,000 barrels a day, five (5) smaller units for small ships. All eight (8) units have bunkering facilities, pipelines, storage and distribution systems and safety equipment (fire-fighting). Gas storage tanks fed by gas tanks using a rail system and pipe distribution to a retailer were also installed in Matola. In addition PETROMOC had three hundred and twenty retail outlets with automatic pumping systems, one hundred and seventeen (117) hand-pumped retail outlets, 19 depots. B. KEY PRE-AUDIT FINDINGS 2. Apart from decommissioning of a) the refinery at Matola and the associated cooling towers, b) two (2) cannibalized 600 kw generators and replacement of the water tower for fire fighting, the main concerns were - the impacts of plumes below the refinery, storage and distribution tanks, and retail outlets on soils and the aquifers which were never monitored, - the efficiency of the oil/water separators at the eight complexes cited above, as the composition of the mixtures was not known before entry and exit from the separators, and hence the composition of the water effluent discharged into the river systems was not known, - the disposal of the solid waste (including some toxic waste) found throughout the yards, depots and retail outlets, - the impact of the recent floods on PETROMOC facilities and contamination from air/water mixtures emanating from these, - gas distribution safeguards and pipeline monitoring in general for all hydrocarbons, - cool loading facility at the entrance to the MAT Barkein  -2- C. RECOMMENDATIONS a) A full audit is required for the three main and five smaller facilities as well as partial audits for at least 20 representative retail outlets and a representative sample of the 19 depots. b) The audit will lay emphasis on: * following the plumes below the refinery and around storage and distribution tanks, * assessments of the efficiency of the separators at all facilities, * assessments of the health and safety measures for all hydrocarbons including the coal facility at the Matola bunkering site * assessments of the efficiency of all separators at the facilities, * assessment of the health and safety measures for all hydrocarbons including the coal facility at the Matola bunkering facility * on EMP and monitoring as well as the capacity of PETROMOC to carry these out. * Total cost of Audit $594,600 to $894,600.  -3- I. INTRODUCTION, OBJECTIVES AND SCOPE OF WORK A. INTRODUCTION 3. The World Bank, in an effort to assist several countries in Africa, has embarked on a partnership with these in order to formulate a rational program for the privatization of certain key enterprises within the framework of several support projects in agreement with the Governments. In this case, the Government of Mozambique has agreed with the World Bank on the privatization of PETROMOC, the Mozambique Petroleum company. In order to sustain the performance of this enterprise and to establish liabilities before divestiture, the potential partners have agreed on a certain number of actions to be taken, one of which is the environmental pre-audit of the enterprise. 4. In this connection, the Govermnent has asked the International Finance Corporation and the World Bank to pilot the process. B. LISTINGS 5. The Enterprise retained for this pre- audit is: PETROMOC-The Mozambique Petroleum Company. 6. At this time, there is information available only with regard to the PETROMOC refinery in Maputo. A pre-audit will provide a better understanding of the status of facilities in other parts of the country. C. BACKGROUND 7. The facility in Maputo was built in the 1 960s, but refining operations were discontinued in 1984. The refinery site, which includes approximately 70 bulk storage tanks, is now used solely as PETROMOC's main distribution center. Products storage on the site include various types and grades of fuel, asphalt, bitumen, and natural gas. Several private oil companies (i.e. BP, Mobil, Total, Engen, Shell) store products in PETROMOC's storage tanks. Several of the major oil companies also have their own facilities, including bulk storage tanks, in the area around PETROMOC's premises. 8. The premises cover about 5 hectares. Very little maintenance has been conducted on the refinery since it ceased operating. All of the refinery's tanks, equipment, pipe works and pumps are badly rusted. The rest of the property is still operational, and the storage tanks, pipe work, pumping stations and other equipment appear to be fairly well maintained. 9. About two years ago, the Ministry of Environment (MICOA) conducted an investigation of oil storage facilities in the area, including PETROMOC, after oil was observed in the Maputo port. The source of the oil was never determined. As a result of  -4- this incident, MICOA and the oil companies initiated a program to improve the maintenance and monitoring of the pipeline from the port (about 3 km in length) and facility drainage systems. PETROMOC is currently developing a series of recommended practices to improve its environmental management and monitoring and efforts in these areas. D. OBJECTIVES OF THE ENVIRONMENTAL PRE-AUDIT 10. According to the terms of reference of the work, the purpose of environmental pre-audit will be to: X carry out a pre-audit of a representative number of the facilities of PETROMOC, including selected petrol stations located in peri-urban areas, and to develop a ranking to determine which types of facilities will need a full, partial, or no environmental audit or environmental assessment before divestiture; X determine the potential liabilities of the facilities and rank them in order of priority of full audit, partial audit, and no audit required; * measure the environmental conditions of the facilities against risk of being held responsible for damages after divestiture; * use this baseline information to assist the Borrower in preparing guidelines which will ensure that, as the divestiture proceeds, the necessary audits will be undertaken according to the ranking study; the guidelines should facilitate the determination of the environmental liabilities of PETROMOC as well as audit studies needed for future divestiture in the petroleum sector; * review the national legislative framework to ascertain whether the Government or the new private investors will be legally responsible for clean-up measures. E. SCOPE OF WORK 11. According to the terms of reference of the work, the environmental pre-audit will be conducted as follows: * There will be initial briefing meetings between the consultant, the management and relevant staff at the facilities of PETROMOC, as well as with relevant Government representatives. * With the assistance of PETROMOC the consultant will (a) gather and review all existing relevant in-house documentation, including compliance records; (b) study available historical information; and (c) perform visual inspections of representative sites to help determine pre-existing liabilities and to help in the ranking of the facilities. The consultant will contact the IFC Environmental Specialist (located normally in Harare) and work with the Specialist during the latter's visit to Maputo for this purpose.  -5- * The consultant will visit areas where practices of waste management, storage and use of dangerous substances may have caused contamination, and/or damage to human health and the environment. * The consultant will prepare assess hazards or risks for local communities and the adequacy of procedures for warning and emergency responses. * The consultant will prepare a prioritized list (i.e. high, medium, low) of concerns related to past activities; * The consultant will prepare a prioritized list (i.e. high, medium, low) of concerns related to ongoing activities. * The consultant will review the capacity of the Government of Mozambique as well as the national environment agency to enforce the regulation and execute the remediation action plans. * Based on these reviews and assessments, the consultant will rank the facilities according to their potential environmental liabilities and requirements for full. Partial or no environmental audit / assessment prior to divestiture. * The consultant will prepare guidelines which will enable the institution responsible for divestiture to determine the environmental requirements for future divestiture in the petroleum sector. II. ENVIRONMENTAL SETTINGS A. INITIAL CONDITIONS 12. Mozambique is situated in the south-east corner of Africa bordered by Tanzania, Malawi, Zambia, Zimbabwe, Swaziland and South Africa. The country is divided into 1O provinces, with a total population of about 17 million and a surface area of about 800,000 sq. KM. 13. The topography of the country is dome-like from north to south rising from 1219 meters in the north to the high points of 2419, 2095 and 2436 meters dropping to the Inhambane depression at 238 meters and rising to 801 meters at Maputo. 14. There was no time to examine the morphology of the different regions which bear on the operations of PETROMOC. 15. Average temperatures and rainfall follow the same patterns with the former from highs of 26