Madagascar - Second Private Sector Development Project : environmental assessment (Vol. 1 of 5) : Environmental pre-audit of four (4) Public Enterprises (PEs)

PRIVATIZATION AND PRIVATE SECTOR COMPETITIVENESS PROJECT (PPSCP) E-407 ENVIRONMENTAL PRE-AUDIT OF ENTREPRISES SELECTION OF ENTREPRISES FOR AUDITS) SUBMITTED TO: THE TECHNICAL SECRETARIAT FOR PRIVATISATION MINISTRY FOR PRIVTISATION ANTANANARIVO - MADAGASCAR THE WORLDBANK PRIVATE SECTOR DEVELOPMENT 1818H STREET, N.W. WASHINGTON, D.C. 20433, USA SUBMITTED BY: KOBINA ATOBRAH, Ph.D. 10875 MAIN STREET, SUITE 205 FAIRFAX, VIRGINIA 22030, USA MALICK A.K.JOHN BANJUL, GAMBIA November 2000   TABLE OF CONTENTS 1. INTRODUCTION 4 1.1 LISTINGS 2. PROJECT OBJECTIVES 5 3.ENVIRONMENTAL SETTINGS 3.1 INITIAL CONDITIONS: 3.2 ENVIRONMENTAL CONCERNS: 4. RANKING 6 4.1 ENVIRONMENTAL PRE AUDITS EVALUATION CRITERIA: 4.1.1 Rating Components 4.1.2 Weighting Components 5. RESULTS OF RANKING:8 5.1 CONSULTATIONS 6. SECTOR ANALYSIS 10 7. DESCRIPTION OF KEY PRE AUDIT FINDINGS: 13 1. SIRAMA (Sugar Enterprise) 2. JIRAMA (Electricity & Water enterprise) 3. ADEMA (Airport enterprise) 4. HASYMA (Cotton enterprise) 5. TELMA (Telecom Madagascar) DECOMMISSIONING PLANS: 26 9.STATUTORY FRAMEWROK: 26 9.1 LEGAL FRAMEWORK ON LIABILITIES 9.2 MONITORING PROTOCOLS 9.3 ENVIRONMENTAL GUIDELINES AND REQUIREMENT: 9.4 TRAINING AND CAPACITY BUILDING: 10. COST ESTIMATES FOR AUDITS 11. RECOMMANDATIONS 31 12. LIST OF PUBLICATIONS USED FOR THE REPORT.   13. PERSONS CONTACTED 1. INTRODUCTION This report is an environmental pre-audit of four (4) Public Enterprises (PEs) in Madagascar that are being privatized under the Privatization and Private Sector Competitiveness Project (PPSCP) by the Government of Madagascar (GOM) and funded by the IDA, World Bank, Private Sector Development (Marie-Ange Saraka-Yao, Task Team Leader). Private Sector Development is crucial to poverty alleviation and economic growth. A survey of this sector in Madagascar identified deteriorating infrastructure as one of the main constraints to private sector development. Public Enterprises (PEs) have be found to be inefficient if not completely dormant and unable to support employment and poverty alleviation programs The Government of Madagascar embarked on a privatization program and has set up - the privatization committee - the technical secretarial for privatization It also proceeded to find in a first phase the privatization of SOLIMA, the national Petroleum Company. In addition, it has proceeded with reforms of various sectors of the economy including privatization of a certain number of enterprises. The assignment was carried out in two places as follows Phase I: Field mission by Malick A.K. John, Engineer/Environmental Assessment Specialist with back-up from Washington by Dr. Kobina Atobra as Team Leader. This phase entailed: a) A preliminary meeting with the PU of GOM headed by Norbert RAZANAKOTO, Secretaire Technique. In attendance were Erick RAJAONARY, Expert Financier Paul TOMBOZAFY, Responsible for Operations STP RAJAONSON Bienvenu, World Bank- Environmental Adviser as well as the TTL. b) Review of existing documentation and historical information and visual inspection of sites. Phase II entailed - assessment of risks, prioritization of environmental concerns and ranking of sites according to the need for comprehensive, partial and no audit at divestiture for the four (4) PEs listed below. - on request from the PU to carry out preliminary ranking of twenty two (22) others based on their activities  1.1. Listings The priority list of PEs for pre-audit was as follows: . The sugar enterprises (SIRAMA) . THE Water and Electricity enterprise (JIRAMA) . The cotton industry (HASYMA) . Madagascar airport (ADEMA) . Telecommunications (TELMA) Of the original list of PEs for preliminary ranking fourteen were subsequently retained (see Ch.5) 2. PROJECT OBJECTIVES The primary objective of the project is to carry out an environment pre audit of the public enterprises listed for divestiture and develop an ranking to determine which will need comprehensive or full audit, partial audit or no audit at all before divestiture. Furthermnore, the objectives include measuring the enterprises environmental conditions against the risk of being held responsible for contingent damages after privatization. In addition, assist the Borrower to prepare guidelines that will ensure that the privatization candidates will undertake the necessary audits according to the ranking study and that the guidelines should be able to help with the determination of the environmental liabilities and audit requirements for future privatization candidates. The objectives also include the review of the national legislative framework to ascertain the role of PEs and the new investors on clean-up responsibilities after privatization. 3. ENVIRONMENTAL SETTING 3.1. Initial conditions The country, with a total surface area of 590,000 sq kw has a population of 14 millions with a per capita income of $US. Madagascar is an island on the Indian Ocean bounded by Latitudes 12