Turkey - Second Export Finance Intermediation Loan Project : environmental assessment

E806 October 2003 TURKEY EFIL II PROJECT SUB-PROJECT AND SUB-BORROWER ENVIRONMENTAL REVIEW PROCEDURES I. Background 1. All sub-loans to be financed under the EFIL II should be subjected by PFIs to an environmental review process incorporating the procedures described in this section. The PFIs should use these procedures in reviewing and appraising sub-borrowers/sub-projects, and to inform Beneficiary Enterprises of environmental requirements for sub-loan appraisal, so that sub-projects can be implemented in an environmentally sound manner. These procedures and requirements incorporate the Republic of Turkey's regulatory requirements for Environmental Review (Regulation on Assessment of Environmental Impact (ER) published in Official Gazette No:23028 and dated June 23rd,1997, as supplemented by Article 10 of Environmental Act No:2872 dated August 9th, 1983). 2. The procedures essentially consist of Environmental Screening, Environmental Impact Assessment, and Environmental Mitigation where necessary. The Environmental Screening will be carried out by the PFIs at an early stage in their sub-loan review procedures to determine the appropriate environmental risk category for the sub-borrowers/sub-projects, and may require the contracting of external expertise. Following screening, an Environmental Impact Assessment (EIA) in line with the environmental classification of the sub-borrower/sub-project will be recommended. The sub-borrowers will be responsible for carrying out any environmental analysis and for confirming that the proposed sub-projects comply with national environmental guidelines, and for obtaining the necessary clearance from the appropriate licensing authorities. Once the analysis is performed and recommendations incorporated into the sub-project, the PFI will appraise the proposed sub-loan package which would include, where appropriate, an environmental mitigation plan. The implementation of the mitigation plan will be monitored by the PFI. The overall review process will be monitored by the Project Implementation Unit (PIU). The environmental screening process and responsibilities of key parties are described in detail below. II. Environmental Screening Categories 3. Environmental Screening is the first step in the environmental due diligence process of reviewing the sub-loan application to determine the environment risk category of the sub- borrower/sub-project and identifying the type of EIA that will be required. Each sub-loan application package submitted by the PFIs to the PIU should include an environmental screening form (Appendix VI.C), of which there are two parts, the first half to be completed by the sub-borrower and the second to be completed by the PFI. The environmental screening form will summarize the nature of the sub-borrower/sub-project and the screening category. I f an EIA is required, a description of the relevant aspects addressed by the assessment including an indicative timetable for the preparation of the assessment (integrated into the preparation of the sub-project) should be provided. The form will also provide a section to indicate an estimated cost of the environment analysis. 4. Sub-borrower/sub-project environment screening categories (I, II ,III & IV) are defined as follows, with examples of sub-borrowers/sub-projects likely to be included under each category listed in Appendix VI.B. A 1 Category I (low risk): These would include sub-borrowers/sub-projects whose environmental impacts are expected to be negligible, for which no EIA would be required. These can generally be described as sub-borrowers/sub-projects which do not belong to categories II, III and IV. Category II (intermediate risk): These would include sub-borrowers/sub-projects whose environmental impact is certified as negligible by report given by the LEA. This category also includes sub-borrowers/sub-projects which may have intermediate levels of regular and accidental emissions. A pre-EIA (simpler form EIA) would be recommended in these cases, which may simply require specifying well-defined mitigating measures and adopting accepted operating practices. Category III (high risk): These would include sub-borrowers/sub-projects which may have highly significant, negative and/or long-term environmental impacts, the magnitude of which are difficult to determine at the sub-project identification stage. A full EIA (in-depth EIA) would be prepared by the sub-borrower in parallel with the techno-economic feasibility study of the sub-project. The costs of the mitigation measures would be included in the EIA and incorporated in the feasibility study. Category IV: Comprises sub-borrowers/sub-projects which would include the production and/or use of materials (listed in the related section of Appendix VI.B) which will not be financed by the IBRD. III. Environmental Impact Assessment (EIA) 5. An EIA is a process conducted by the sub-borrower to identify, predict, evaluate, and mitigate the environmental impacts and risks which may arise from the proposed sub-project. The purpose of the EIA is to recognize environmental impacts/consequences early in the sub- project preparation process, so that they can be incorporated into the sub-project design. EIAs identify ways of improving sub-projects environmentally by minimizing, mitigating or compensating for adverse impacts. An EIA would also describe the steps that were taken for public consultation. 6. A pre-EIA would be required for Category II type sub-borrowers/sub-projects where the potential for negative impacts are localized, easily identified and the required mitigating actions are well-known and easily prescribed. 7. A full EIA would be required for Category III type sub-borrowers/sub-projects in which there is potentially long term or irreversible impacts of unknown extent. They would include regular emissions as well as the potential risk of accidental releases. Each EIA will have to be publicly disclosed on the TSKB's website at www.tskb.com.tr once a sub-project is approved by TSKB and the Bank 8. The scope of the EIA will vary widely depending on the nature and location of a sub- borrower/sub-project; thus, it is difficult to give clear guidance on the length of time required for an EIA or the associated costs. The preparation and financing of the EIA, including the role of public participation, is the responsibility of the sub-borrower and normally closely linked to the feasibility study of the proposed activities. IV. Environmental Review Process (Role of PIU, PFIs and IBRD) 9. All sub-borrowers/sub-projects will follow the environmental review process presented schematically below. STEP 1: The sub-borrower prepares an initial sub-project concept. Following informal discussion with the PFI, in which the PFI alerts the sub-borrower of its environmental assessment requirements, the sub-borrower prepares Part A of the environmental screening form (Annex B) and includes this with the initial sub-project concept. At this time, it is the responsibility of the sub-borrower to initiate discussions with the LEA in order to fulfill any local and national environmental review requirements (such as investment incentive certificate and/or other official approval/permits). It will be the responsibility of the sub-borrower to obtain the appropriate permits and licenses as required by national law in order to facilitate the clearance process with the local LEA. These requirements are considered separate, but parallel, to those presented here and satisfying them is the responsibility of the sub-borrower. STEP 2: The PFI screens the sub-project and informs the sub-borrower of the EIA category prior to appraisal and subsequent follow-up requirements for sub-loan processing. STEP 3: The sub-borrower, or its consultants, submits the environmental analysis (if applicable). The sub-borrower will obtain a positive EIA report, given by the relevant LEA, in conformity with applicable Environmental Regulations for the activities listed in Category II and III of Appendix VI.B. STEP 4: T he P FI reviews t he environmental analysis that has b een submitted a nd reports i ts findings to the sub-borrower. The PFI provides its clearance once the analysis is judged to be satisfactory. STEP 5: The sub-borrower incorporates the recommendations provided in the analysis into the sub-project design and implementation plan, including associated estimated costs. STEP 6: The sub-borrower finalizes the sub-loan application p ackage, including the relevant environmental documentation, and submits it to the PFI for its appraisal. STEP 7: The sub-loan becomes effective upon verification of the LEA approval and clearance, which can be obtained at any step in the sub-project preparation cycle. STEP 8: The sub-borrower submits the clearance letter of the LEA to the PFI. STEP 9: The PFI monitors the implementation of the EIA mitigation plan and informs the PIU. 10. Prior and Post-Review - IBRD/PIU. Environmental evaluations and review procedures will b e subject to ad-hoc review by the PIU and IBRD supervision missions. The review o f evaluations will ensure that: the work was of satisfactory quality, community participation took place when a ppropriate, t he appropriate r ecommendations w ere m ade, a 11 d ocumentation w as properly filed and recorded, and that t he c onditions o f approval by t he 1 ocal LEA were m et. During EFIL II implementation, IBRD missions will supervise the overall screening process and implementation of environmental recommendations for selected sub-borrowers/sub-projects. The IBRD supervision team will also review, ad-hoc, environmental documentation. Therefore, all this documentation should be kept on file with the PFIs and forwarded to the PIU as needed. 11. Environmental Documentation. The PFIs need to include the following environmental documentation in sub-loan application packages they submit to the PIU: Table 1 Environmental Environmental Documentation to be included in Category Sub-loan Application Package Category I Environmental Screening Form (Appendix V.B) (Investment Incentive Certificate and/or other official approval/permits if applicable) Category II Environmental Screening Form (Appendix V.B) Positive Pre-EIA statement from related LEA Pre-EIA report Category III Environmental Screening Form (Appendix V.B) Positive Full EIA statement from related LEA Full EIA report Schedule for Implementation of EIA recommendations V.5 Environmental Review Process Flow (*) - Prepares Initial Project Concept (1) - Satisfies Environmental Certification Requirements (Investment Incentive certificate or other official approval/permits) - Presents the sub-project to PFI for category screening CATEGORY I (2) (2) o CATEGORY IV Projects can proceed Projects not to be financed without an EIA CATEGORY II 4 (2) (2) Projects requiring a Projects can proceed with a full EIA Pre EIA CATEGORY III Review EIA, provides Submit a positive EIA Report clearance or conditionality V regarding respective category for clearance (3)(4 PF1 Review subloanInoprtsEArcmedin documentation(ianreurdinosbpjcteig and approves adpeet tt F Enterprise (7) Subloan is effective and is monitored for environmental Submit the clearance letter of compliance LEA to PFI PFI (9) Provides PIU monitoring Information SThis process as depicted in the chart above is required for manufacturer, manufacturer-exporter Appendix A Responsibilities of Key Participants Participant Activity Supporting Documentation Beneficiary * Submission of sub-project concept to PFI * Part A of environmental Enterprise * Arrangement and financing of EIA screening form (sub-borrower) * Obtain required permits/licenses * Copies of permits, licenses * Obtain clearance from related LEA * Clearance statement * Implementing and financing of EIA * Periodic reports and sub- * Maintain files documenting EIA process project completion report and selection of expert * Files Participating * Explain environmental screening of sub- * Include environmental Financial borrowers/sub-projects information with sub-loan Institutions * Review of sub-loan application package application (PFIs) for required environmental documentation * Environmental screening form * Maintain complete files of environmental * Documentation as in Table 1 documentation for review by the PIU and * Include environmental IBRD documentation in normal PFI * Monitoring compliance with mitigation records plans * Periodic monitoring reports Project * Distribution of Operations Manual to PFIs * Include environmental Implemen- * Verification that PFIs have followed EIA category and EIA status in tation Unit procedures normal periodic reporting (PIU) activities Environmental * Review and clear sub-borrowers/sub- * Provide sub-borrower with Official projects according to national/local clearance letter Institutions regulatory requirements * Issuance of appropriate (National and * Issue permits and license requirement documentation Local EAs) information IBRD * Carry out prior and post reviews * Appendix B * Identification of problems/ issues and proposal of solutions Appendix B Examples of Sub-borrower/sub-project Categories The following examples of sub-borrowers/sub-projects and their suggested categorization are indicative only and will need to be reviewed throughout EFIL II implementation to assess their appropriateness concerning the types of sub-projects which are actually submitted to the PFIs. As it would be impossible for this list to be exhaustive, sub-borrowers/sub-projects which can not be identified as belonging to one of the categories below should be brought to the attention of the PIU to transmit to the IBRD for further guidance. Category I Sub-borrowers/sub-projects (Low Risk) This category includes the sub-borrowers/sub-projects which have no environmental impacts and do not belong to categories II, III and IV. Some examples of this category are: 1. Manufacture of wood products/small scale furniture manufacturing, carving, crafting, etc., 2. Small scale stone crafting, 3. Small scale meal fabrication and upgrading, 4. Small scale instruments and hardware manufacturing, 5. Software development and manufacturing, 6. Establishment and equipping of art, design and telecommunications studios, 7. Purchase of computer equipment, and 8. Purchase of transportation equipment. Category II Sub-borrowers/sub-projects (Intermediate Risk - Requiring pre-EIA according to the ER) 1. Processing of intermediate product, and production and storage of every kind of chemicals. 2. Petroleum, petrochemicals or chemical product depots (total storage capacity more than 500 but less than 5.000 in3 3. Food and spirit industry a) Slaughterhouses, facilities processing meat and meat byproducts (1000 tons/year inclusive, up to 4000 tons/year live weight), b) Facilities producing animal or vegetable oils, c) Production of milk and milk products (capacity 5000 1/day and above) d) Beer or malt production facilities, e) Alcohol spirits and beverage production facilities, f) Facilities producing and processing fresh water and marine products, and g) Canneries. 4. Textile plants, a) Synthetic yam, fiber factories b) Individual finishing, dyeing, and sizing facilities, c) Wool squeezing, oil removal and bleaching plants, 5. Industries where wood is subjected to chemical treatment, plywood, wood veneer, and artificial wood factories, 6. Cement grinding, filling and packaging facilities, 7. Brick and roof tile factories, 8. Steel making, a) Facilities producing liquid steel scarp metal (those not included in Category (III) b) Rolling mills ( those not included in Category III), c) Hot forgery and cold pressing facilities (those not included in Category III), d) Cast factories (those not included in Category III), e) Facilities producing pipes (those not included in Category III), 9. Production and assembly of railway equipment, wagons and every kind of railway vehicle, 10. Factories producing every kind of motors and engines, 11. Electronics and electromechanical facilities, 12. Coal and lignite briquette facilities, 13. Geothermal power production, 14. Kitchen gas and coke facilities, 15. Petroleum exploration and production activities, and 16. Mining activities: mine exploration and mining of the metals which are covered by the Mining Law and not referred to in Category III, as well as quarries which are specified in the S tone Quarries Ordinance and Salt Water and/or ore preparation process. Category III Sub-borrowers/sub-projects (High Risk - Requiring full EIA According to the ER) 1. Refineries, gasification and liquefaction facilities, a) Crude oil refineries (excluding those facilities producing lubrication agents out of crude oil), b) Facilities where coal or bituminous schist are liquefied or gasified (500 ton/day or above) 2. Petrochemical complex 3. Tire producing factories (tire, tube, column, back rubber, plane tire, cord cloth, etc.) 4. Those plants where agricultural herbicides and pesticides or pharmaceutical products are produced, 5. Battery or cell producing factories, 6. Factories where flammable and explosive compounds are produced, 7. Petroleum, petrochemical or chemical product storage facilities (total storage capacity is 5000 m3 and above), 8. Integrated facilities producing chemical fertilizer and intermediate fertilizer products, 9. Cement factories, clinker producing facilities, 10. Ceramic, porcelain, glass factories, 11. Textile or carpet factories with finishing, dyeing and sizing facilities, 12. Raw leather processing facilities (exclusive of those facilities producing finished products from processed leather), 13. Cellulose and celluloid producing facilities, factories producing paper pulp, and every kind paper, 14. Sugar factories, 15. Yeast factories, 16. Integrated meat facilities complete with slaughterhouses, side product processing and similar facilities (4000 ton / year live weight and above), 17. Specialized industrial zones, 18. Manufacture and assembly of every kind of motorized vehicle, 19. Steel plants, a) Integrated steel facilities producing raw product from ore, b) Facilities producing liquid steel from junk material (Production capacity 100.000 tons/year and above), c) Rolling mills (production capacity 100.000 tons/year and above), d) Hot wrought and cold pressing facilities (production capacity 10.000 ton/year and above), e) Cast factories (production capacity 5.000 tons/year and above), f) Facilities producing pipes (production capacity 100.000 tons/year and above), 20. Non-ferrous metal production, 21. Thermal power plants, 22. Hydro-power plants, 23. Petroleum and gas pipelines (pipe diameter 600 mm and above), 24. Power transmission lines with a voltage of 154 kilovolts or above, 25. Bottom dredging (200.000 m3 and above), 26. Ship dismantling shipyards, 27. Shipyards, 28. Water supply activities with an annual underground water pumping capacity of 10 million m3 and above, as well as water supply activities with an annual surface water pumping capacity of 3 million m3 (exclusive of water storage facilities), 29. Mining activities, the licenses for which are obtained pursuant to Mining Law no 3213, a) Coal mines, b) Ferrous metal mines, c) Industrial metal mines for Boron compounds, Barite, Diatomite, Phosphate, Sulfur, Fluorite, Zeolite, Calseon, Feldspar, Trona, and trace soil elements, d) Every kind of ore enrichment facilities (except for simple ore enrichment facilities such as crashing, sieving etc.), 30. Petroleum production activities at sea, and 31. Solid waste storage facilities (garbage disposal areas larger than 10 hectares, or with a storage capacity of more than 100 tons per day). Category IV Sub-borrowers/sub-projects ineligible for IBRD financing/IBRD Negative List 1. Trade in wildlife and wildlife products prohibited under the CITES convention, 2. Release of genetically altered organisms into the natural environment, 3. Manufacturing, distribution and sale of banned pesticides and herbicides, 4. Drift seine netting in the marine environment, 5. Radioactive products, 6. Hazardous waste storage, treatment and disposal, 7. Manufacturing of equipment and appliances containing CFCs, halons and other substances regulated under the Montreal Protocol, 8. Manufacturing of electrical equipment containing polychlorinated biphenyls (PCBs) in excess of 0,005 % by weight, 9. Manufacturing of asbestos-containing products, 10. Nuclear reactors and parts thereof, 11. Tobacco, unmanufactured or manufactured, 12. Tobacco processing machinery, and 13. Manufacturing of asbestos containing products. Appendix C: Environmental Screening Form (a) PART A: To be completed by sub-borrower PFI: Sub-project title: Manufacturing Sector/Product:- Brief description of sub-project (nature of project, sub-project cost, physical size [site area, production per year, etc], existence of any property transfer, or on-going operations, plans for expansion of operations or new construction, potential estimated impact on production) Preliminary environmental information (list of environmental documents already available at time of screening) PART B: (To be completed by PFI) * Screening Category: * Environmental issues apparent at screening (what environmental issues are raised by the sub-borrower/sub-project) * Reason for screening category * Compliance with pollution control standards (discuss status of compliance of current and planned operations) * Proposed mitigation (indicate measures to be taken to address the environmental issues raised by the sub-borrower/sub-project, how they may be incorporated into the sub-project design, and any potential covenants) * Terms of Reference for environmental studies to be undertaken (indicate s cope, time frame, and appropriate cost of any environmental analysis required) * Community participation requirements (list any requirements under national or local laws for the sub-borrower/sub-project sponsor to inform, consult or involve the public, NGOs etc.) * Next Steps (list actions for the PFI, the sub-borrower, the environmental consultant if any) SIGNATURES DATE SUB-BORROWER PFI LOAN OFFICER ENVIRONMENTAL SCREENER: