Environmental Monitoring Report. Loan 2671 & Grant 0218-KGZ: Power Sector Improvement Project. Semiannual Report January June 2016

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1 Environmental Monitoring Report Semiannual Report January June 2016 Loan 2671 & Grant 0218-KGZ: Power Sector Improvement Project Prepared by OJSC National Electric Grid of Kyrgyzstan for the Kyrgyz Republic and the Asian Development Bank.

2 Table of Content Abbreviations... 3 I. Introduction Project Information Goal of the Project Project description Upgrading of substations SCADA Project implementation area Project Implementation Progress Project Organizational Structure... 6 II. ENVIRONMENTAL MONITORING Environmental monitoring... 6 III. ENVIRONMENTAL MANAGEMENT Environmental Management Plan On-Site Inspections and Audits PCBs Grievance Redress Mechanism Information Support Corrective Action Plan... 8 Appendix 1. List of participants of the training Polychlorinated biphenyls in energy sector conducted in NEGK on 25 May Appendix 2. Photos from the training Appendix 3. Photos of equipment at substations

3 Abbreviations ADB AMDA SAEPF PIU KR MoEn ME NEGK NEHK OAO EMP SSEMP PCBs IEE SCADA CAPS Asian Development Bank Automated Metering & Data Acquisition System State Agency for Environmental Protection and Forestry under the Government of the Kyrgyz Republic Project Implementation Unit Kyrgyz Republic Ministry of Energy Ministry of Economy National Electric Grid of Kyrgyzstan National Energy Holding of Kyrgyzstan Open type Joint Stock Company Environmental Management Plan Site Specific Environmental Management Plan polychlorinated biphenyls Initial environmental examination Supervisory Control and Data Acquisition System Central Asian Power System 3

4 I. Introduction This semiannual report on environmental monitoring, which covers the period of 1 January to 30 June 2016 for the Power Sector Improvement Project, was prepared in accordance with requirements of Initial environmental examination (IEE) developed in 2014, and approved by ADB. IEE received a positive opinion from the State Environmental Examination Unit of SAEPF on No /205. The objective of this semiannual report on environmental monitoring is a follow-up of the project activity for compliance with the requirements of the EMP. According to Safeguard Policy Statement of ADB (SPS, 2009), the Project is classified as category B. Its potential adverse environmental impacts are site-specific, few if any of them are irreversible. 1. Project Information 1.1. Goal of the Project (i) To advance transparency and accountability of commercial transactions in the power sector through establishment of the automated metering and data acquisition system; (ii) To improve overall efficiency and reliability of Kyrgyz power supply system through rehabilitation and upgrading of substations, and communications system Project description. The project aims at: (i) upgrading of substations; and (ii) establishment of Supervisory Control and Data Acquisition System (SCADA) to manage the system of energy equipment Upgrading of substations. Upgrading of substations through replacing dilapidated circuit breakers and instrument transformers that have reached their economic lives, are technologically obsolete, or do not meet the accuracy requirement for regional power trade will improve the reliability of the system SCADA Establishment of Supervisory Control and Data Acquisition System (SCADA) will connect seven major substations and the control centers via optical fiber. The system will allow improving overall efficiency and reliability of Kyrgyz power supply system and the CAPS. The Northern fiber-optic communication line (FOCL) will be installed under Lot 2 of the project for connecting several substations and facilities in Bishkek city, and laying fiber optic cable in Bishkek city. According to the scope of work, FOCL (fiber-optic communication line) will be installed for hanging on supports of transmission lines with a total length of 330 km in the following transmission lines 1 : i. 220 kv Glavnaya Chuiskaya (59.9 km); ii. 220 kv Chuiskaya Bystrovka (39.4 km); iii. 220 kv Bystrovka Ala-Archa (93.4 km); iv. 220 kv Ala-Archa Frunzenskaya (108.8 km); v. 110 kv Glavnaya Karagachovaya (8.3 km) vi. 110 kw Power and District Heating Plant (PDHP/ТЭЦ) Bishkek Parkovaya (11.8 km); vii. 110 kv Parkovaya Ala-Archa (7.8 km). 1 Information is provided by OAO NEGK 4

Laying of 16.2 km optical power ground wire in Bishkek city is carried out to connect the central control office (CCO) of NEGK to the main fiber-optic system.

PDHP Bishkek ChuPVES (Chui Enterprise of High-Voltage Networks) (4 km); iv. SS Karagachevaya CCO/NEGK (6 km) 1.3. Project implementation area.

5 Laying of 16.2 km optical power ground wire in Bishkek city is carried out to connect the central control office (CCO) of NEGK to the main fiber-optic system. The following sections will be connected to the new telecommunication system by optical power ground wire (OPGW): ii. PDHP Bishkek CCO/NEGK (6.2 km); iii. PDHP Bishkek ChuPVES (Chui Enterprise of High-Voltage Networks) (4 km); iv. SS Karagachevaya CCO/NEGK (6 km) 1.3. Project implementation area. The project will be implemented at 107 substations in Chui, Issyk-Kul, Talas, Naryn, Osh and Jalal-Abad oblasts. (Figure 1) Scheme of the Main Electric Grid of the Kyrgyz Republic Figure 1. Power Sector Improvement Project implementation area, Lot 1 Upgrading of Substations Figure 2. Project implementation area, Lot 2 Laying of fiber-optic communication line (SCADA) in Chui oblast 1.4. Project Implementation Progress 5

6 In May 2016 AK-AY ELEKTRIK, which is a contractor of NEGK for the Component 2: SCADA and AMDA, signed a contract with environmental specialist In May 2016 AK-AY ELEKTRIK recruited a subcontractor OsOO ChuiElectroStroy for works under Lot 2: Rehabilitation of supports and Laying of fiber-optic communication line. During the reporting period organizational and preparatory works for project implementation were carried out Project Organizational Structure The Project has Executing Agencies: National Energy Holding of Kyrgyzstan (NEHK), and Open type Joint Stock Company (OAO) National Electric Grid of Kyrgyzstan (NEGK). Due to the change of the structure of the Government of the Kyrgyz Republic in November 2015, the functions of the Ministry of Energy were transferred to the Ministry of Economy of the Kyrgyz Republic Ministry of Economy is responsible for: (i) capacity-building of NEGK regarding corporate and financial management, including development of business plan for NEGK; (ii) elaborating proposal for establishment of the settlement system for wholesale electricity supply transactions; and (iii) supervising NEGK's project implementation performance NEGK is responsible for: (I) installing communication system for recording electricity commercial consumption data, and collection of metering data through the national electric grid. This work includes installing meters and related equipment in substations of NEGK and facilities of electric power plants; (II) rehabilitation of about 54 substations by replacing circuit breakers, and current and voltage transformers; (III) installing communications and supervisory control and data acquisition system (SCADA) that includes the fiber-optic communication line that connects seven major NEGK substations and control centers; and (IV) ensuring NEGK support in Project implementation management AK-AY ELEKTRIK DIS TICARET KOLLEKTIF SIRKETI Contractor for supplying, designing, laying, and commissioning of optical fiber network of SCADA International consultant expert on SCADA and communications carries out independent supervision. II. ENVIRONMENTAL MONITORING 2.1. Environmental monitoring Environmental Monitoring was not envisaged this reporting period, since no physical works conducted. III. ENVIRONMENTAL MANAGEMENT 3.1. Environmental Management Plan In April 2016 NEGK developed and sent to ADB the Site Specific Environmental Management Plans (SSEMP) for Lot 1, and in May 2016 the Contractor AK- AY ELEKTRIK developed, and NEGK approved the SSEMP for Lot 2, after agreeing it with ADB: 1) SSEMP for Changing Oil-Filled Transformers at Substations of NEGK; 2) SSEMP for Changing Oil-Filled Circuit-Breakers at Substations of NEGK; 6

7 3) SSEMP for Changing PCB-free equipment: air, vacuum and electronegative gas circuit breakers, outdoor switchyards at Substations of NEGK; 4) SSEMP for 9 SCADA lines. SSEMPs include: (i) Types of environmental impacts; (ii) Suggested measures to mitigate environmental impacts; (iii) Management of road safety while transporting oils and equipment, including PCBs contaminated ones; (iv) Compliance with safety measures while working on equipment replacement; (v) Waste management, including toxic wastes, such as PCBs contaminated oils and equipment; (vi) Environmental Management System for implementation of EMP; (vii) Institutional conditions and measures on capacity development to implement the EMP; (viii) Grievance redress mechanism in the field; (ix) Monitoring and reporting. The potential negative impact on environment may be mitigated through implementation of EMP. Additional environmental investigations shall be continued during project implementation, and the EMP shall be updated depending on the new data obtained to achieve the project environmental goals On-Site Inspections and Audits On June 2016 the national environment safeguards consultant of NEGK visited substations: Frunzenskaya, Kara-Balta, Glavnaya in Chui oblast and Chui Enterprise of High- Voltage Networks to examine the situation on preparation of sites for temporary storage of equipment, which will be replaced under the ADB-funded Power Sector Improvement Project. During the visit to substations it was established that: 1) Sites for temporary storage of equipment released from transformer oil are not prepared at substations; 2) Oil-free equipment (air and vacuum circuit breakers) replaced in 2015 up to date is stored in designated sites until legal issues are addressed related to transfer of used equipment for scrap. As a result of visits to substations the proposals were sent to NEGK management: 1) Not to replace oil-filled equipment until the results of tests of transformer oil on PCBs are received; 2) Prepare the sites for temporary storage of circuit breakers, and current and voltage transformers after draining the oil and removing them from supports in accordance with requirements of project IEE and SanPiN Hygienic requirements to placement and treatment of production and consumption waste ; 3) Speed up the transfer of replaced not oil filled equipment (air circuit breakers) to recycling firms PCBs In May 2016, two express analyzers for transformer oil testing for presence of PCBs procured for grant funds allocated to the Ministry of Economy of the Kyrgyz Republic, which is the successor of the Ministry of Energy of the Kyrgyz Republic. However, due to procedure of registration of transfer between the parties of procurement of equipment, express analyzers as of 30 June 2016 were not yet received by NEGK. Therefore, the works on 107 substations of NEGK for oil testing for presence of PCBs in oil-filled equipment to be replaced (circuit breakers, and transformers) have not been carried out during the reporting period. 7

8 On May 25, 2016, the Environmental Consultant recruited by Ministry of Energy of the Kyrgyz Republic conducted a training Polychlorinated biphenyls in energy sector. The training was attended by 20 participants. The participants were specialists of high-voltage networks of Osh, Naryn, Jalal-Abad and Chui oblasts, which are part of NEGK, specialists of OAO Electric Power Plants, and OAO SeverElectro. (List of participants is in Appendix 1). Before the start of the civil works, NEGK submitted the schedule of transformer oil testing for presence of PCBs, which includes particular timing of transformer oil testing for presence of PCBs of oil filled circuit breakers to be replaced under the ADB-funded Power Sector Improvement Project for all substations. Given that as of 30 June 2016 express analyzers were not yet received by NEGK, the schedule will be finalized after the express analyzers are received by NEGK 3.4. Grievance Redress Mechanism Requirements for grievance redress mechanism of ADB Accountability Mechanism Policy (2012) and ADB Safeguard Policy Statement (SPS, 2009) principally meet the requirements of the Law of the Kyrgyz Republic On processing of complaints of citizens (2007). The existing differences in timing of processing the complaints, specified as 30 days in the Law of the Kyrgyz Republic, and 14 days specified in ADB Accountability Mechanism Policy, were eliminated by the Order of the General Director of the NEGK issued on May 22, The Order aims at NEGK s quick response to process the complaints. The received applications (written requests) and complaints are registered in the General Clerical Department of NEGK in the Log Book and handed over to Management for consideration. The nature and the subject matter of a complaint is taken into account, and the next step is to assign responsible person, who is competent to consider the complaint received, after that the complaint shall be considered within 30 days, the applicant or claimant shall be provided with an answer, that is noted in the Log as implemented. There were no complaints or requests received, related to the project, during the reporting period of Information Support In order to inform the public on the project implementation and measures to be taken to ensure environmental safety, NEGK continuously updates the information on project implementation progress and during the reporting period posted on the web-site the SSEMPs for two Lots Corrective Action Plan During the reporting period the project has been implemented in accordance with ADB Environmental Safeguards Policy, however there is some delay of project implementation due to an outstanding issue related to procurement of PCBs express analyzers. EMP provides for furnishing the sites that protect the soil from contamination by oil with rain water during temporary storage of oil circuit breakers and current and voltage transformers at the sites. However, during the reporting period, the sites have not been furnished and NEGK plans to start these works only in July Table 1 below specifies the progress of corrective actions to resolve the above issues, and which corrective actions should be implemented to comply with EMP. 8

9 Status of Corrective Actions Plan Table 1 # Environmental issues identified 1. Absence of portable PCB analyzers for rapid test of 2. Absence or presence of PCBs in transformer oil 3. Absence of SSEMP for SCADA 4. Absence of SSEMP for upgrading of substations 5 Absence of sites for temporary storage of old equipment including oil filled equipment Corrective actions taken Procurement of express analyzers for testing transformer oils for PCBs Conducting of trainings and testing of transformer oil for presence/absence of PCBs Development of SSEMP for SCADA Development of SSEMP for upgrading of substations Furnishing the site for temporary storage of old equipment including oil filled equipment Due Date March 2016 April June 216 January- February 2016 January February 2016 June 2016 Compliance Responsible for implementation/ supervision Not ME, NEGK complied with Not complied with Complied with Complied with Not complied with ME, NEGK NEGK NEGK NEGK In order to achieve the compliance with project IEE and EMP, the following corrective actions should be carried out in close cooperation with ADB, ME, and Contractor (Table 2). Table 2 Plan of Corrective Actions # Environmental issues identified 1. Absence of portable PCB analyzers for rapid test of transformer oil 2. Absence or presence of PCBs in transformer oil 3. Absence of sites for temporary storage of old equipment including oil filled equipment Corrective actions taken Procurement of express analyzers for testing transformer oils for PCBs Conducting of trainings and testing of transformer oil for presence/absence of PCBs Furnishing the site for temporary storage of old equipment including oil filled equipment Due Date July - September 2016 July - September 2016 July - September 2016 Responsible for implementation/ supervision ME, NEGK ME, NEGK NEGK 9

10 Appendix 1. List of participants of the training Polychlorinated biphenyls in energy sector conducted in NEGK on 25 May

11 11

12 Appendix 2. Photos from the training Exhibit 1 Exhibit 2 12

instead of air circuit breakers Exhibit 4.

13 Appendix 3. Photos of equipment at substations Exhibit 3. SF6 circuit breakers installed at Frunzenskaya substation instead of air circuit breakers Exhibit 4. Current and voltage transformers to be replaced at Frunzenskaya substation 13

14 Exhibit 5. Oil-filled circuit-breakers to be replaced at Kara-Balta substation under the project Exhibit 6. SF6 circuit breakers installed at Glavnaya substation instead of air circuit breakers 14

15 Exhibit 7. New current and voltage transformers to be installed at Glavnaya substation instead of old ones 15

Prepared by the Joint Stock Company National Electric Grid of Kyrgyzstan for the Kyrgyz Republic and the Asian Development Bank.

Prepared by the Joint Stock Company National Electric Grid of Kyrgyzstan for the Kyrgyz Republic and the Asian Development Bank. Environmental Monitoring Report Bi-annual Report Covering the period of January June 2015 KGZ: Power Sector Improvement Project Project Number: 43456-023 ADB Loan/Grant Number: L2671/G0218-KGZ Prepared: