Brochure_eng

Strategic Environmental and Social Assessment

KOSOVO C

Strategic Environmental and Social Assessment

Introduction Revitalizing Energy Sector in Kosovo Energy and mining have been mainstays of the Kosovo economy for over 40 years, providing direct and indirect employment, export earnings, and support for the growth of private industries. However the power sector has transformed from a contributor to economic growth to a drain on public resources due to outdated and polluting power plants, lack of funding for maintenance and investments due to electricity theft and inadequate bill collection, and therefore an increasing demand for power which is outpacing supply. The result has been rolling blackouts, which are especially painful during the heating season.

With foreign assistance grants declining rapidly, the Government recognizes that it urgently needs to revitalize the economy, and that energy and mining are the development areas with the greatest potential to contribute to this goal in a relatively short time period.

The situation is not only negatively impacting the daily lives of Kosovars now, but is impeding the economic growth needed to secure the future development of the country. Poverty and unemployment are critical challenges which Kosovo still needs to overcome. ­ ­­

The dedicated coal reserves of the Bardh and Mirash mines were known to be insufficient to supply both power plant units until the end of their operational lives; therefore, a new mine was planned to ensure supply for Kosovo B and possible expansion of its generation

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The development of Kosovo’s power sector occurred primarily between 1962 and 1984, and included development of the Bardh and Mirash mines, with total coal reserves of 300 million tonnes, and construction of the power plants Kosovo A and Kosovo B, with a total installed capacity of 1,478 MW.

Strategic Environmental and Social Assessment

capacities, in a second phase (two additional units of 340MW each).

During the 1990s, due to the political and economic situation, the power sector stagnated; there was no startup of a new mine and the second phase of Kosovo B was not built.

Since 1999 more than 50 technical studies, papers and reports have been prepared by consultants funded by the international donor community, focusing on mining, generation, power sector restructuring, and legal, environmental and social issues in the power sector.

Conclusions and recommendations of these studies were presented in the Kosovo Energy Strategy in 2005. To implement the recommendations of the Strategy within the framework of a competitive and liberalized energy market, adhering to European standards and international best practice, the Lignite Power Technical Assistance Project (LPTAP) was initiated in 2006.

Based on the recommendations of the Kosovo Energy Strategy and later studies, the Government proposed and LPTAP supported the “Kosovo C” energy and min-

ing project to be developed through foreign direct investment. The project will have three components: ●● Construction of a new power plant, “Kosovo C,” with a capacity that would allow for phased replacement of the old generation capacities and secure long term electricity supply at competitive prices while meeting domestic demand; ●● Rehabilitation of certain units at the existing power plants until the first units of Kosovo C are built, to meet domestic demand in the short to medium term, and ●● Development of a new mine to supply Kosovo A and B in the short to medium term as well as fueling Kosovo C for the duration of its 40-year operational life.

The pre-qualification process resulted in four highly qualified short-listed bidders that are ready to help develop the power sector in an environmentally and socially sustainable way to make it a business from which all Kosovars can benefit.

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Strategic Environmental and Social Assessment

Project benefits Independence, Integration and a Cleaner Environment for Kosovo Building an effective democratic government, securing energy supplies, supporting economic growth, reducing poverty, and maintaining a healthy environment are fundamental to Kosovo’s independence and integration into Europe. The Kosovo C Project will make important contributions in all of these areas.

In addition to ensuring self-sufficiency in power supply, the Kosovo C power project will allow the country to become an energy exporter, generating revenues which could be used by the Government of Kosovo to support programs such as targeted social assistance for those in extreme poverty, support for education and job training, and improved health services. By improving the lives of the people of Kosovo, such initiatives will strengthen the country’s prospects for human development and future peace and prosperity.

The Government recognizes that Kosovo’s future is also likely to depend on greater European integration. As an energy exporter, Kosovo will increase its role in Southeast Europe. At the same time, the project will increase the Government of Kosovo’s capacity to meet European

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Union social and environmental standards in the development of infrastructure, paving the way for Kosovo’s potential integration within the EU. On the environmental front, clean-up of previous pollution, along with new, cleaner technology and better regulation, which are all included in the Kosovo C project proposals, are expected to actually result in a cleaner environment for Kosovo. Anticipated environmental benefits from the project include: ●● Soil remediation; ●● Reclamation of mining areas, ash dumps and overburden (at the new mine as well as previously contaminated areas); ●● Lower total atmospheric emissions (NOx, SO2, particulate); ●● Improvement/modification of existing infrastructure (Iber Lepenc canal, electricity grid, roads, etc.);

Strategic Environmental and Social Assessment

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Bivolak Bivolak Plemetin Plemetin Hamidi Hamidi Zhilivodë Zhilivodë

TPP Kosovo B TPP Kosovo B Ash dump Ash dump

TPP TPP Kosovo Kosovo BB

Sibovc Sibovc

Obiliq Obiliq

TPP TPP Kosovo Kosovo A A

Palaj Palaj

Shipitullë Shipitullë

Overburden Overburden

dump Mirash Mirash dump

Hade Hade

Overburden Overburden dump dump

Sitnica mine Sitnica mine

Dardhishtë Dardhishtë TPP Kosovo A

TPP Kosovo A Ash dump Ash dump

Graboc Graboc ii Epërm Epërm Sitn ica Sitn ica

Mirash Mirash mine mine Bardh Bardh mine mine

Overburden Overburden

dump Nakaradë Nakaradë dump

Graboc Graboc ii Poshtëm Poshtëm Lismir Lismir

Dr Dren enica ica

Bardh Bardh ii Madh Madh

Overburden Overburden dump dump

Overburden Overburden dump dump

Prishtina Prishtina

a nic a Drreenic D

Lajthishtë Lajthishtë

Mazgit Mazgit

Fushe Fushe Kosove Kosove

Pomazotin Pomazotin

Si Sit tn ni i c ca a

Kuzmin Kuzmin

Overburden Overburden dump dump

Drenica Drenica

Area Area of of interest interest and and existing existing facilities facilities Settlements Settlements

IL canal IL canal

TPP Kosovo A TPP Kosovo A

Settlement area Settlement area

Rivers Rivers

TPP Kosovo B TPP Kosovo B

Overburden dump Overburden dump

Streams Streams

KEK mining license KEK mining license

Ash dump Ash dump

Main road Main road

KEK new mining license KEK new mining license

Forest Forest

Railways Railways

New mining area New mining area

Water body Water body

Coal belt conveyor Coal belt conveyor

1,000 500 1,000 500

Meters Meters 0 0

1,000 1,000

Strategic Environmental and Social Assessment

Strategic Environmental and Social Assessment Meeting the highest possible standards Kosovo is developing principles of good governance, transparency, and adherence to international environmental and social standards, which will support its integration into the international community. The Government of Kosovo, in implementing the LPTAP, has committed to building its capacity to meet such standards while expanding and improving its activities in energy and mining.

Its first major undertaking towards this end is the Strategic Environmental and Social Assessment (SESA) of the Kosovo C project. The SESA evaluates the effects of the proposed project, and uses the findings in a publicly accountable decision-making process. This SESA is in line with the European Commission’s Directive on Strategic Environmental Assessment of Plans and Programs and the World Bank’s Safeguards Policies and Procedures.

Phase II - Evaluation Process, including: ●● Comparison of potential development scenarios; ●● Evaluation of environmental and socio-economic impacts of the development scenarios; ●● Preparation of the Environmental Management Plan, including mitigation measures and environmental monitoring plan.

The process of developing the SESA has also provided the Ministry of Environment and Spatial Planning with information needed for the preparation of a new Mining Field Development Plan (NMFDP). This information includes: ●● Lignite power sector development schemes;

The SESA was prepared in two phases: Phase I - Baseline Study, including: ●● Environmental and socio-economic baseline data; ●● Detailed household surveys and establishment of Community Development Forums to fill socio-economic data gaps; ●● Local/regional power sector development strategies; ●● SESA legislative and regulatory review.

●● Planned or anticipated regional developments in other sectors, such as land-use and infrastructure; ●● Interactions and linkages among the various developments in different sectors; ●● Measures and conditions to optimize sector development and minimize negative impacts; and ●● Administrative procedures and regulations and institutional roles and responsibilities under which the NMFDP will be implemented.

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Strategic Environmental and Social Assessment

Environmental and Social Baseline

Environmental and socio-economic indicators include: ●● Environment: air, soil and groundwater, surface water and wastewater, noise, waste, natural environment; ●● Socio-economic: demographics, economy, land use, water use, infrastructure, health, education, community attitudes.

The Environmental and Social Baseline section of the SESA report concludes that the environmental situation in the area of interest is very complex for various reasons: ●● The setting has been affected by historical mining activities with significant land modifications; ●● Air quality is poor due to existing power plant emissions that are not compliant with EU standards, and the spontaneous burning of lignite and dust emissions from ash dumps, which are the main sources of air pollution;

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●● Water resources are stressed due to competing demands, resulting in periodic shortages in potable water supply during summer months. ●● Soil and ground water quality have been harmed by ash and other waste disposal and from former activities of fertilizer and gasification plants; ●● Surface water has been contaminated by untreated wastewater discharges from power plants, mining activities and urban waste water; ●● Noise emissions from mine activities disturb people living around the mine border; ●● Environmental controls (for air or water) are absent or insufficient in the area; ●● No formal waste management procedures are in place at the industrial sites.

Strategic Environmental and Social Assessment

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Strategic Environmental and Social Assessment

Consultation and Inclusion The SESA process began with an extensive consultation process which identified key stakeholders, informed them about the project, and relayed their concerns and suggestions back to the government.

The Initial public hearing, followed by village consultations, revealed that small focus discussions were the most effective. This lead to establishment of Community Development Forums. These Forums would represent village concerns and act as a point of contact between the project and the community.

During the period from January - May 2008, a total of 58 meeting in ten different settlements were held with over 920 participants. Ten Community Development Forums were successfully established with around 248 members.

From 60 representatives elected in a transparent manner, 45 percent are youths, 16.7 percent are women and 1.6 percent are minorities. At the same time, a Detailed Household Survey was carried out in the area of interest and some 1,580 households were interviewed. Results of the HH Survey helped improve the socio-economic data gap, since the last census was carried out in 1981.

The consultation process found that the main community issues and concerns were the following:

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●● Community knowledge of the proposed project was generally high, although the level of detailed knowledge varied; ●● There were a number of common concerns, with the most frequent being: employment; lack of infrastructure (roads, water supply, sewerage system); pollution of air, water and soil; irregular electricity supply; land expropriation and compensation for resettlement and maintaining village as whole when resettled; ●● Generally, communities were in favor of the project and hoped that it would bring economic and employment opportunities.

The Baseline section of the report also considered water supply as a potential limiting factor for the development project. Although the water supply has been clearly confirmed as sufficient to support the proposed project, the Iber-Lepenc system is increasingly under stress, and competing demands are likely to emerge in the medium to long term. This situation requires urgent development of a comprehensive policy, institutional and planning framework for water resource management in the IberLepenc system.

Strategic Environmental and Social Assessment

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Sitnica Sitnica

Bivolak Bivolak Plemetin Plemetin Hamidi Hamidi Zhilivodë Zhilivodë

TPP TPPKosovo KosovoBB Ash Ashdump dump

Mazgit Mazgit

TPP TPPKosovo KosovoBB

Sibovc Sibovc Lajthishtë Lajthishtë

Obiliq Obiliq

2033 2033

201 20177

Hade Hade

7 2200117

Graboc Graboc ii Epërm Epërm

Mirash Mirash Sitnica Sitnica mine mine

3 2200113

TPP TPPKosovo KosovoAA Ash Ashdump dump

Mirash Mirash mine mine

DDre rennici a ca

Dardhishtë Dardhishtë

Bardh Bardh mine mine

Overburden Overburden dump dump

Nakaradë Nakaradë

Prishtina Prishtina

Shipitullë Shipitullë

TPP TPPKosovo KosovoAA

Palaj Palaj

22002233

Sitnica ica Sitn

Drreeni ncicaa

p LLlalap

Graboc Graboc ii Poshtëm Poshtëm Lismir Lismir Overburden Overburden dump dump

Bardh Bardh ii Madh Madh

Overburden Overburden dump dump

Fushe Fushe Kosove Kosove

Alternative Alternative sites sites and and mine mine development development

1,000 1,000 500 500

Settlements Settlements

Settlement Settlementarea area

TPP TPPKosovo KosovoAA

New NewTPP TPPalternative alternativesitting sitting

Main Mainroad road

Overburden Overburdendump dump

TPP TPPKosovo KosovoBB

New NewTPP TPParea areaof ofimpact impact

Railways Railways

Ash Ashdump dump

KEK KEKmining mininglicense license

Downwind Downwindarea area

Rivers Rivers

Forest Forest

KEK KEKnew newmining mininglicense license

Receptors Receptors

Streams Streams

New Newmining miningarea area

IL ILcanal canal

New Newmine minedevelopment development

Meters Meters 00

1,000 1,000

Strategic Environmental and Social Assessment

Alternative Development Scenarios While the final installed capacity has yet to be decided by the Government of Kosovo, the SESA report foresees development of a new lignite-fired thermal power plant with a total installed capacity of up to 2,000 MW and development of a new lignite mine in the New Mining Field, an area previously known as “Sibovc Mining Field”.

The main recommendations of the SESA and the analysis of the possible development scenarios are the following: ●● The power plant should be developed in a phased approach, in which a first stage (1,000 MW) would allow for replacement of Kosovo A power plant, meet domestic demand with some export, and permit a major overhaul of the Kosovo B power plant to increase reliability and bring it in compliance with EU environmental standards. The second stage (1,000 MW) would meet growing demand and allow for a later retirement of Kosovo B. ●● Kosovo A is the preferred site for construction of Kosovo C, although the score given to the alterna-

tive site close to Kosovo B was similar. Choice of the final site will depend on which of the existing power plants are included in the final tender for the project, and the outcome of the SESA public hearing; ●● Both available technologies (pulverized fired ‘PF’ or circulating fluidized bed ‘CFB’) are acceptable and would comply fully with EU standards. The limiting factor from a grid stability perspective is a maximum unit size of 500 MW. With regard to CFB technology, the largest unit size in operation is 300 MW. Smaller unit size translates to slightly higher CO2 emission due to lower efficiency (39% vs 42% using PF) and higher space requirement (more units). The advantage of CFB technology is that it does not require the FDG (Flue Gas Desulphurization) and thus uses less water. In moving forward to a commercial transaction, the Government will want to consider the trade-offs between the environmental benefits of larger units and the more flexible system operating characteristics of smaller units.

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Strategic Environmental and Social Assessment

Managing environmental and social impacts – Past, Present and Future Environmental pollution, in particular as a result of mining and power generation, already represents a serious problem in Kosovo, which previously did not have environmental controls.

●● Higher water consumption; ●● People/villages to be resettled; ●● Land use modification;

LPTAP will help Kosovo develop an environmental management plan to improve air quality in Prishtina, clean up polluted soil, and mitigate impacts from mines and power plant operation. SESA is the first step in this direction The SESA report identified and weighed two main impacts on local communities: land acquisition and resettlement, and air and noise pollution. These impacts stem primarily from mining development rather than power plant location.

The major anticipated impacts of the project are the following:

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●● Higher total lignite consumption; ●● Higher total CO2 emissions (but lower specific CO2/ MWh emissions).

Proposed mitigation measures may include: ●● Reducing water consumption through recycling of industrial water; ●● Developing a comprehensive policy and institutional framework for water management and river basin planning

Strategic Environmental and Social Assessment

●● Installing appropriate noise barriers to reduce noise disturbances; ●● Supporting research on best methodology to reduce CO2 emissions; ●● Reclaiming old mine areas; ●● Urgently reducing dust emissions from mines, power plants and ash disposal; ●● Revamping Kosovo A and Kosovo B to bring them in line with EU standards; ●● Construction of a wastewater treatment plant and sewer system.

Public Hearing The Draft Final SESA report will be the subject of a public hearing where the affected communities, civil society, NGOs and other stakeholders are encouraged to raise questions and concerns relevant to the proposed project.

The findings of the public hearing will be incorporated in the Final SESA Report.

The Final SESA report will provide policymakers with information and analysis to help them evaluate and determine the optimal site for construction, size and number of power plant units; identify CO2 mitigation alternatives; and ensure that the local community also benefits from the proposed project.

●● Establishing an adequate monitoring system; The SESA reports can be downloaded at: ●● Adoption of a resettlement policy framework ●● Adoption of a spatial development plan

www.lignitepower.com/sesa

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Strategic Environmental and Social Assessment June 2008 Government of Kosovo Ministry of Energy and Mining Lignite Power Technical Assistance Project (LPTAP) The World Bank grant: IDA H 254 KOS / H 318 KOS Environmental and Social Safeguard Advisory Services for Private Sector Participation in the Development of New Generation Capacity, Related Transmission and the Development of the Sibovc Lignite Field

ERM Italia S.p.A. Riccardo Corsi, Project Team Leader Via San Gregorio, 38 I-20124 Milano T: +39 02674401 F: +39 0267078382 E-mail: Riccardo.Corsi@erm.com URL: www.erm.com

The LPTAP Project Office Lorik Haxhiu, Project Manager 24 Maji Street No. 15 10000 PrishtinĂŤ, Republic of Kosovo T: + 381 38 213 770 F: + 381 38 213 772 E-mail: Lorik.Haxhiu@lignitepower.com URL: www.lignitepower.com/sesa

For inquiries contact:

also Municipal Project Information Office, Obiliq/Kastriot Municipality building, Office no. 24 Ms. Safete Grajqevci, Chief of Information Office and Public Relations E-mail: safeteg@yahoo.com, Phone: + 381 (0)38 560 310

Design: www.rrota.com

The LPTAP Project Office Ms. Ardiana Efendija Zhuri, Environmental and Social Task Manager E-mail: Ardiana.Zhuri@lignitepower.com, Phone: + 381 (0)38 213 771