Bangladesh: North Dhaka Waste to Energy Project

OBJECTIVE

To reduce landfill waste and generate renewable energy by processing municipal solid waste in North Dhaka, Bangladesh.

DESCRIPTION

The Project involves financing the development of a WtE facility located on the south side of the Amin Bazar landfill in North Dhaka and a six-kilometer 132kv transmission line to be connected to the Savar substation (the Project). It comprises four incineration lines and two sets of 35 MW turbo-generator systems. It will be the first WtE project in Bangladesh.

China Machinery Engineering Corporation (CMEC) was chosen to develop the Project after a series of negotiations with the Government of Bangladesh (GoB), Dhaka North City Corporation (DNCC) and Bangladesh Power Development Board (BPDB) in 2020 and signed all main project agreements, including the Implementation Agreement (IA), the Power Purchase Agreement (PPA), the Waste Supply Agreement (WSA), and the Land Use Agreement (LUA) in late 2021.

The Project is granted a concessional period of 25 years. BPDB will purchase electricity from the Project. DNCC will supply municipal solid waste and is responsible for providing land for the Project.

The estimated total project cost is around USD467 million, which is expected to be funded by CMEC equity and debt financing from a lender group comprised of multilateral development banks, commercial banks, and a local development financing institution.

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Categorization. The Bank’s Environmental and Social Policy (ESP) including the Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL) is applicable to this Project. ESS1 – Environmental and Social Assessment and Management and ESS2 – Land Acquisition and Involuntary Resettlement are applicable. As per the Bank’s ESP, the Project is classified as Category A, based on the environmental and social (ES) due diligence considering the scale and significance of the environmental impacts and risks.

Environmental and Social Instruments. For the Waste to Energy (WTE) plant, an Environment and Social Impact Assessment (ESIA) has been prepared in line with AIIB requirements. The ESIA also includes a detailed Environmental and Social Management Plan (ESMP), which summarizes the impacts identified as well as the mitigation measures and monitoring requirements to be implemented throughout the Project cycle. A third-party ES Due Diligence Report (ESDD) has been conducted, given that the land acquisition and land preparation processes had been completed prior to AIIB’s entry. The ESDD report includes an Environmental and Social Corrective Action Plan (ESCAP) with recommendations for improvement of ES measures to align with AIIB’s ESP.

Environmental Aspects. The Project will generate several environmental benefits by processing more than 3,000 tons/day of waste to reduce the pollution of air, water, and land from overflowing landfill. The Project will also reduce greenhouse gas emissions, particularly methane. The Project will use Best Available Technology (BAT) and adhere to EU pollutant emission standards for project operation; however, the Project will cause adverse environmental risks associated with the construction and operation of the Project, those are mainly limited to the Project site and can be mitigated using conventional risks management techniques. The Project’s emissions are generally well-controlled with minimal contributions to PM and CO; however, the NO₂ and SO₂ levels exceed WHO standards when combined with the already exceeded background concentrations. While the Project is not responsible for this exceedance due to high baseline concentrations, it will add to the already degraded air quality environment. These impacts have been addressed in the design of the Project and mitigation measures listed in the ESMP will be implemented for plant operations to manage these impacts. In addition, the baseline health assessments, as required by the ESIA and ESCAP, will be conducted prior to the first disbursement. Additionally, the Project will draw water from the Karnatali River during normal operations to meet the cooling requirements. CMEC has obtained a license from the Water Resources Planning Organization for this abstraction and ESIA concludes that this will not impact ecological species, local communities, and other stakeholders.

Social and Gender Aspects. The Project will contribute to socio-economic development of the Project area and reduce existing problems due to the current landfill system with a reduction in community health risks and bad odors. The major adverse impacts include the acquisition of private land, displacement of businesses and ragpickers. As part of the ESCAP, corrective actions are included to address the legacy issues related to land acquisition and disburse the balance amount. The Sponsor will also develop a Resettlement Planning Framework (RPF) for the purchase of additional land required for the transmission line footings. The ESCAP recommends Sponsor to undertake a women’s empowerment program by engaging a social team to identify vulnerable women from among the affected households, who will be willing to undergo skill development and take up capacity building and empowerment programs to facilitate employment for such skilled women. For the female rag pickers, the ESCAP recommends Sponsor to include additional benefits to the vulnerable women in the overall Livelihood Restoration Plan (LRP). Furthermore, the ESMP includes worker awareness, Code of Conduct, GRM and community engagement to deal with Gender Based Violence (GBV). The ESCAP also recommends Sponsor to develop a policy for the prevention of Sexual Exploitation and Abuse and Sexual Harassment.

Occupational Health and Safety (OHS), Labor and Working Conditions. The due diligence completed for the preliminary site works identified inadequate facilities in the workers camp and working conditions. The ESCAP proposes measures such as regular health checks, ILO accommodation standards, provision of minimum wages and benefits, and a training calendar for regular training among others to mitigate these identified gaps and to improve OHS and working conditions.

Stakeholder Engagement, Consultation and Information Disclosure. Extensive stakeholder consultations and engagement were carried out as part of the ESIA process. Key Informant Interviews had been carried out with stakeholders such as local political representatives and community leaders, administrative officials, waste management officials and supply chain participants. Focused Group Discussions had been held with landowners, women’s groups, non-titled business owners, ragpickers, local youth, etc. The Sponsor will schedule ongoing regular consultations with identified stakeholders. The ES instruments in English and the summary in Bengali language have been disclosed by the Sponsor on its website and hard copies will be made available in all sub-project areas. AIIB’s website includes links to the documentation on Sponsor’s website.

Project Grievance Redress Mechanism (GRM). Two separate GRMs at the project level are proposed to be established to deal with grievances from project affected parties and project workers. The Project affected parties would include those affected by loss of assets and those from the nearby community likely to be affected by project works. The GRM for affected parties would be a two-tier system with (i) Site Level Committee; and (ii) Project Implementation Unit (PIU) Level Committee. Further, the information of established GRM and Bank’s Project-affected People’s Mechanism (PPM) will be timely disclosed in an appropriate manner, such as ESCAP recommends Sponsor to install grievance boxes at Project sites and conduct orientation cum awareness programs about GRM and the PPM for contractors, sub-contractors and workers, as well as for the nearby community.

Monitoring and Reporting Arrangements. CMEC will deploy an independent team of environmental, health and safety, and social specialists to monitor the ES performance. The company will maintain all the monitoring records and submit reports to AIIB aligned with the agreed reporting schedule. The AIIB team will conduct regular supervision missions to the Project sites to monitor the ES performance of the Project.