Jordan: Mafraq Power Plant

OBJECTIVE

To meet Jordan’s critical electricity peak demand growth and strengthen grid stability and reliability for increased renewable energy integration by developing a combined-cycle gas-fired power plant as dispatchable generation capacity.

DESCRIPTION

The Project involves financing the development, construction, operation of a greenfield combined-cycle gas-turbine (CCGT) power plant of 700MW capacity and associated infrastructure in Mafraq, Jordan. The Project is sponsored by Etihad Development Company (EDC) and will be implemented through a dedicated project company, Sharikat Al Khanasri Lil Taqa PSC.

The Project is supported by a 25-year Power Purchase Agreement (PPA) signed between the Project Company and the National Electric Power Company (NEPCO) of Jordan. 

The Project forms part of NEPCO’s Electricity Master Plan 2025-2035 and will serve as a dispatchable generation to cover Jordan’s rising peak loads and to address the structural mismatch between its load profile and renewable generation. Moreover, as a synchronous generation, the plant will provide inertia and voltage support to maintain grid stability, thereby supporting Jordan’s target to increase the share of variable renewable energy in the power generation mix. The Project will also contribute to lowering the carbon intensity of Jordan’s power system by displacing older and more emission-intensive fossil fuel generation.

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP), including the Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL), applies to the Project. The Project’s environmental and social (ES) risks and impacts are being assessed in accordance with the ES policies and standards of co-financiers via a common approach. The Bank will carry out the ES Due Diligence (ESDD) of the Project, confirm the applicability of ESSs, assess ES instruments against AIIB’s ESP and include appropriate actions in the Environmental and Social Action Plan (ESAP) to address gaps identified during the due diligence. The Project is categorized as Category A considering the potential significant adverse ES impacts associated with the nature and scale of the Project, a greenfield 700 MW of CCGT power plant and with potential associated facilities of natural gas pipeline of imported fuel supply and power evacuation through 400 kV high voltage substation and transmission lines. 

Environmental and Social Instruments. The primary ES instruments for the Project will be the (i) an Environmental and Social Impact Assessment (ESIA) with an Environmental and Social Management Plan (ESMP), the scope of which has been confirmed, is currently under preparation according to national requirements, (ii) ESDD conducted by the Independent ES Consultant (IESC) to Lenders following agreed Terms of Reference (ToR), and (iii) an ESAP developed as a result of the ESDD to bridge the gaps in compliance with applicable ES Policies and Standards. ESDD and ESAP are currently under preparation. The need for appropriate supplemental ES documents will be assessed as part of ESDD and included as needed in the ESAP. 

Environmental Aspects. The ESIA will identify and assess key environmental risks and impacts of the Project and of any potential associated facilities (such as Transmission Lines, gas supply lines and water pipeline) and propose mitigation measures in the ESMP proportionate to nature and scale of the environmental impacts. Potential construction phase environmental risks and impacts inherent to a CCGT Project may include a) noise, vibration and dust from construction works of the Project, development of potential associated facilities impacting the air quality of the arid Mafraq region, b) waste (including hazardous waste) and wastewater from construction activities, c) soil contamination and erosion, and d) archeological finds from excavations, among others. The operational risks and impacts mainly relate to air emissions (particularly NOx, CO and GHG emissions), water consumption in the severely water-scarce Mafraq region, wastewater generation, hazardous materials and waste management, operational noise, and potential impacts associated with the gas pipeline, transmission infrastructure and other associated facilities. Consistent with AIIB ESP, IFC/WBG EHS Guidelines and GIIP, the Project will undergo a BAT assessment to demonstrate that the selected CCGT technology represents the optimal balance of efficiency, reliability and environmental performance. 

Social and Gender Aspects. The information indicates that the Project site to be at least 0.76km away from the closest community. The ESIA and subsequent ESDD will identify any potential Project-affected people and determine the extent and nature of adverse social impacts on Project-affected people, project workers, and vulnerable groups (if any in the Project’s proximity). This will inform the ESMP and monitoring plans. As a water-scarce region, attention will be paid to (i) any adverse impacts of water use by the Project towards exacerbating water stress on any identified proximal communities and their livelihoods, and (ii) subsequent mitigations will be included in ESMP and ESAP. Land acquisition and land-use related aspects will also be assessed to determine the applicability of ESS2. In case of any potential physical or economic displacement, adequate resettlement and/or livelihood restoration plans will be developed accordingly. In addition, the potential impact of Project activities on women in the community will be assessed. In consultation with relevant stakeholders, including the client and community members, measures will be identified to prevent potential negative impacts caused by the influx of migrant workers in the community and the risk of gender-based violence/SEAH, and included in the management plans. 

Occupational Health and Safety (OHS), and Labor and Employment Conditions. The ESIA will identify and assess the major OHS and Labor and Employment related risks associated with the Project and the potential associated facilities to develop adequate mitigation measures in the ESMP. During the construction phase, activities such as operation of heavy machinery, lifting of heavy equipment (turbines, heat recovery steam generators, etc.), works at height, electrical and mechanical works, heat stress and exhaustion, exposure to dust and noise, and the vehicular traffic and logistics pose significant occupational health and safety (OHS) risks. At Operations and Maintenance stage, OHS risks may include those related to process safety, noise and emissions exposure, fuels and fire safety, chemicals storage, handling, and disposal, and electrical safety, among others. 

Stakeholder Engagement, Consultation and Information Disclosure. Consultations in various forms, including interviews with key stakeholders and meetings with communities, will be conducted as part of Project preparation. The Borrower will be advised to conduct meaningful, timely, and culturally appropriate consultations with key stakeholders. Disclosure of relevant ES information will also be done through the Borrower’s website with hard copies made available on the Project site, following the AIIB ESP timelines and language requirements. 

Project Grievance Redress Mechanism (GRM) and Monitoring Arrangements. A Project-level GRM for affected people will be established in accordance with the requirements of AIIB’s ESP, including requirements on public consultation and disclosure of the GRM to Project stakeholders. A commensurate mechanism will also be established for Project workers. The Bank will coordinate with the Borrower and co-lenders to plan the monitoring and reporting arrangements for the Project. Adequate frequency of field visits by IESC and Lenders will be planned during project preparation and ESDD alongside the mutual agreement on the format and frequency of ES monitoring reports and Project development progress updates.