Ghana Grid Company Limited (IFC-33512)

Countries
  • Ghana
Where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Hold
Bank Risk Rating
B
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Voting Date
Apr 3, 2014
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower
GHANA GRID CO LTD
The holder of the loan, grant, or other investment.
Sectors
  • Energy
The service or industry focus of the investment. A project can have several sectors.
Potential Rights Impacts
  • Healthy Environment
  • Housing & Property
  • Labor & Livelihood
  • Right to Food
  • Right to Health
  • Right to Water
Only for projects receiving a detailed analysis, a broad category of human and environmental rights and frequently at-risk populations.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD)
$ 170.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Feb 2, 2018

Disclosed by Bank Jan 14, 2014


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Project Description

IFC is considering a loan of up to $170 million to the Ghana Grid Company to support development of an electrical substation, construction of some 1.5 km of high voltage transmission line and upgrade of 10 km of existing transmission lines.

The location for the electrical substation to be supported by IFC is located within the site where the 350 MW Kpone gas-fired thermal power plant is being constructed by the Volta River Authority (VRA), the state owned power generation utility. The power plant is being constructed in Tema, located at Nmlitsapko, about 2 kilometres off the road from the Kpone Barrier on the Tema-Aflao road (One kilometre from the barrier to the turn-off junction and about one kilometre off the junction on the Tema-Aflao road to the project). The new section of transmission line will be constructed from the substation to link into the broader GRIDCo transmission network. The power plant will be commissioned in December 2014 and construction of the substation and transmission lines is expected to commence in early 2014. GRIDCo is yet to appoint a construction contractor for the substation. This will be undertaken by a public tender process.

Relationship between GRIDCo Transmission Lines & the Kpone "VRA" plant:

According to the IFC, this US$ 42 million additional investment in transmission lines will allow the Company to evacuate power from the 350MW Kpone Thermal Power Plant ("KTPP"), currently under construction by Volta River Authority (a state-owned electric utility, "VRA"), into the national grid. This means that the functioning of GRIDCo's transmission lines is reliant on the functioning of the Kpone Power plant. However, the Kpone power plant can function and evacuate power via alternative lines. For this reason, the Kpone power plant would be an associated facility from GRIDCo's perspective. IFC does not explicitly state Kpone to be an associated facility in its documentation, but did utilize the Kpone EIA in assessing GRIDCo's environmental and social impacts in order to determine the applicability of IFC Performance Standards.

Early Warning System Project Analysis

RISk ASSESSMENT: CATEGORIZATION

IFC states that "this is a Category B project according to IFC's Environmental and Social Review Procedure because the limited number of specific impacts that may occur are generally site specific, and those impacts can be avoided or mitigated by adhering to generally recognized performance standards, procedures, guidelines or design criteria."

IFC identified key issues relating to i) effective integration of environmental and social issues when planning projects; ii) occupational health and safety during construction and operations, including public health and safety; iii) management of environmental issues solid and liquid waste, disturbance to fauna and flora during construction and operations; and iv) management of social issues notably resettlement and livelihood restoration during construction.

IFC found that PS4 is not considered applicable to this investment because "[n]o specific public health, safety or security-related risks have been identified with respect to GRIDCo's activities, including the new substation and transmission line project, and there have been no related incidents recorded in the past three years."

With regards to PS 5, IFC found that "economic displacement and resettlement associated with the Kpone power plant and the transmission line has already occurred (in 2009) and was the responsibility of VRA."

Because "the Environmental Impact Assessment undertaken for the power plant identified no biodiversity issues and the land was already disturbed," IFC determined that PS6 is not applicable to the substation either.

Lastly, IFC determined that PS 7 on cultural heritage is not applicable, though the company will develop and implement a chance find protocol, and states that there are no indigenous people in Ghana thus PS8: Indigenous Peoples is not found to apply to any of GRIDCo's activities.

 

APPLICABLE PERFORMANCE STANDARDS

PS 1 - Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention

People Affected By This Project

ENVIRONMENTAL AND SOCIAL RISK ASSESSMENT

It is important to note that while IFC funding is limited to the transmission lines in this project, the property and power plant have been acquired and constructed by the Volta River Authority, and the transmission lines and underlying infrastructure will operate together, making any possible human rights violations due to the overall operation of the system attributable to the cumulative effect of both projects.

LABOR RIGHTS

GRIDCo employs 801 people of whom 768 are permanent staff and the remaining are on contract. Of the total staff, 95 employees are female. IFC states that, in accordance with national legislation, employees are free to join unions and there is a signed collective bargaining agreement with the Public Service Workers Union valid for two years. Of the total staff at GRIDCo (801 employees), 353 are unionized and Senior Staff are represented via the Senior Staff Association.

Although the minimum age for employment in Ghana is 18 years, Ghana has had a history of child labor abuse in the construction and operation of development projects, such as mining, according to Human Rights Watch. Ghana is a member of the International Labor Organization and has ratified 46 Conventions including those related to minimum wage, weekly rest, child labor and discrimination. GRIDCo must require any employees or private contractors that may be employed in the future undertaking activities core to the company's activities, to comply with the requirements of this Performance Standard where applicable. Additionally, GRIDCo must ensure that personal records be checked at the time of employment to ensure potential employees are over the age of 18.

According to IFC documentation, occupational safety and health hazards expected during the operational phase of the project during maintenance activities by the worker including the risk from falling and/or swinging objects, potential collapse of towers due to rainstorms or vandalism, electrocution, falling from heights and snakebites. These hazards pose a potential threat to the safety and health of the workers.

The following questions may be relevant in determining whether your community has suffered a violation of your labour rights during the construction or operation of GRIDCo's transmission lines, or the combined energy activities of the GRIDCo and the VRA Kpone plant:

  • Are your working conditions safe and healthy?
  • Do all workers receive equal pay for work of equal value?
  • What opportunities (legal or other) are available if you consider that your working conditions are not just and favourable?
  • Are your wages sufficient to feed yourself and your family?
  • Are children under 14 being recruited and employed by the company (or any joint venture partners, subsidiaries or sub-contractors) in the context of this investment project?

RIGHT TO HEALTH

The 2006-2010 Ghana United Nations Development Assistance Framework (UNDAF) noted that health care remains poor in Ghana, and that the national average of access to health care is just over 50 percent. When the VRA was conducting its environmental and social impact assessment in 2005 for the construction of the Kpone power plant, 21% of individuals surveyed in local communities expressed their concern regarding noise and health implications stemming from construction and operation of the project. According to IFC documentation, during operation of the plant, the main sources of noise are likely to be the exhaust stacks, exhaust diffuser, air inlet, turbine building and main transformers. High noise levels as a result of operation of the plant could be a health concern to the workers, while external noise at the plant boundary has the possibility of posing a disturbance to the local community. Additionally, dust levels due to construction in the area could pose a health concern to local residents. According to the Kpone EIA, when the power plant was constructed, the medical officer on site attributed an increase in the respiratory infection in the area to the increase in the dust level in the area as a result of quarry activities and other constructional activities resulting from the project. Any additional health concerns may exacerbate the already vulnerable health situation in the area.

In addition to hazards posed to the public due to transportation of equipment and materials during construction of the transmission lines, other hazards such as potential exposure to Electromagnetic field (EMF) effects, potential collapse of poles and electrocution will exist during the project. Falling live electrical conductors could cause severe burns, and mechanical failures of insulator strings and conductor joints could result in harm and death to individuals in the vicinity.

With regard to operation of the Kpone plant, the Kpone EIA states that the generation of wastes and commercial waste, if not treated properly, may result in contamination of the site and local groundwater, creating a health hazard for those in the vicinity.

The EIA for the Kpone power plant notes that potential public safety hazards are increased for a project such as the proposed Kpone project when the local populace has not been properly educated with regard to the potential hazards. Therefore it is imperative to provide the local populace with information related to the safety risks posed by the project.

The following questions may be relevant to determining whether your community has suffered a violation of the right to health from the construction or operation of GRIDCOs transmission lines or the combined energy activities of the GRIDCo and the VRA Kpone plant:

  • Has your health been affected since the beginning of the investment project?
  • If there have been public health problems related to the investment project, were you informed of these problems in advance?
  • If there have been public health problems related to the investment project, were you given adequate information with respect to the problems?
  • If there have been public health problems related to the investment project, were you given adequate information regarding your access to healthcare services or treatment?
  • What opportunities (legal or other) are available if you feel that your right to health has been affected?

RIGHT TO A HEALTHY ENVIRONMENT

As a Party to the African Charter on Human and Peoples' Rights (Banjul Charter), Ghana is obliged to respect the individual right to a healthy environment enshrined in Article 24.

The Kpone EIA states that transmission lines are known to experience "corona discharge" and this tends to increase with the increasing voltage. Corona is defined as a discharge occurring at the surface of a conductor or between two (2) conductors of the same transmission line, accompanied by ionisation of the surrounding atmosphere. Corona is frequently luminous (spark of light) and produces noise of a hissing character. Corona produces unstable ozone, and reacts quickly with other gases. Environmental effects of corona are still widely unknown, but since the transmission project is intended to operate ultimately at 161,000 volts, "it is essential to consider this phenomenon as an issue of environmental relevance."

The Kpone EIA states that operation of the plant will result in the generation of wastes and commercial waste that, if not treated properly, may result in contamination of the site and create a health hazard for workers. Wastes arising from the processes are: oil sludge, waste lubricating oil, oily water wastes, and sewage. The Kpone EIA also states that operation of the Kpone power plant could result in oil and water drainage and the generation of potentially contaminated water from runoff from machine areas, wash-down areas and accidental spills, which has the possibility of contaminating local groundwater.

Additionally, the Kpone EIA notes that the operation of the transmission lines and gas pipelines has the potential to impact soils as a result of maintenance activities to gain access to the site and in the periodic clearance of vegetation, exposing soils to rainwater erosion. Furthermore operation of the plant, including construction and operation of the transmission lines, could potentially have an impact on flora and fauna as a result of damage due to the movement of workers and vehicles on and around the site and long-term impacts as a result of air emissions.

The following questions may be relevant to determining whether your community has suffered a violation of the right to a healthy environment from the construction or operation of GRIDCOs transmission lines or the combined energy activities of the GRIDCo and the VRA Kpone plant:

  • Has the company adequately analyzed the potential environmental impact of its proposed operations?
  • What means do you have to seek redress if the environmental impact of the operations become a problem for local communities and/or the local ecosystem?
  • Where will solid waste, hazardous waste, and other waste products be disposed of and what impact is this likely to have on the local environment?

RIGHT TO FOOD

The EIA for the Kpone power plant noted that food crops such as maize, cassava and cowpeas are cultivated in the rural segment of the project area. Irrigated market-oriented production of vegetables such as okra, tomatoes, onion, cabbage etc. are also practiced along main drains and water bodies. During the EIA process, 28% of local residents interviewed expressed their concern that the project would stop them from farming and living on land. Any resettlement or pollution resulting from construction or operation of the transmission lines to the plant may result in less access to fertile land, and deprive local residents of their subsistence.

The Universal Periodic Review of Ghana reports that the Special Rapporteur on Food has indicated that areas of land previously used for cultivation have been contaminated with mercury, zinc and arsenic from gold mining activities and by toxic water pollution from development activities, contributing to the erosion of people's access to livelihoods and food. The Special Rapporteur was particularly concerned by allegations that community members in several villages had limited access to their farms which they have cultivated for many generations and to their only source of income and means to procure sufficient and adequate food, as a result of the location of a number of waste rock dumps in the area from construction.

The following questions may be relevant to determining whether your community's right to food has been violated by the construction or operation of the GRIDCo transmission line project, or the combined energy activities of the GRIDCo and the VRA Kpone plant:

  • Has your access to good and affordable food in sufficient quantity been affected since the beginning of the investment project?
  • What opportunities (legal or other) are available if you feel that your right to food has been affected?

RIGHT TO WATER

The Kpone power plant EIA noted that, while the majority of settlements within the Metropolitan area have access to pipe-borne water from the Kpong water works, the rural parts of the Metropolitan area still have some settlements still lacking pipe-borne water facility and depend on water from streams, rivers and wells. Any pollution that may result in contamination of the local rivers may diminish access to adequate and safe drinking water for those resident relying on rivers and streams for sanitation and drinking purposes.

In its Universal Periodic Review of Ghana, the UNHCHR noted that the Special Rapporteur on the right to food raised concerns about allegations that rivers and streams have been polluted with arsenic, iron, manganese and heavy metals from past gold mining and development activities. The allegations claimed that an estimated 60 local streams in Ghana have been contaminated and pose a significant hazard to local people who used them for drinking water, fishing and irrigation. It is important to note that the Kpone power EIA acknowledged fishing is one of the major economic activities especially for the indigenous inhabitants of Tema.

The following questions may be relevant to determining whether your community's right to water has been violated by the construction or operation of the GRIDCo transmission line project, or the combined energy activities of the GRIDCo and the VRA Kpone plant:

  • Has your access to good and affordable water in sufficient quantity been affected since the beginning of the investment project?
  • What opportunities (legal or other) are available if you feel that your right to water has been affected?

RIGHT TO HOUSING AND PROPERTY

The Kpone EIA noted that the nearest towns and communities to the project site are Community 25 (east of the project site) and Nmlitshakpo Community (west of the project site). There are 1,000 plots located within the Community 25, which will eventually be home to approximately 4,200 people. The entire 1,000 serviced plots are located on the south of the site. Nmlitshakpo is estimated to have about 70,000 people. During the Kpong EIA process, 51% of local residents that were interviewed expressed their concern regarding relocation, and 79% of those interviewed were worried about adequate compensation for the use or relocation of their land.

According to IFC documentation, VRA acquired the land for the Kpong power station in the 1970's at which time it was vacant. Up until the construction of the plant, however, several subsistence farmers commenced growing crops on the land and several informal residential structures were established. During construction, residential houses adjacent to the site were relocated to accommodate the right of way for the transmission lines evacuating power from the plant. For purposes of the project, including the power plant, VRA and not GRIDCo was responsible for land acquisition and resettlement, including the associated compensation. This included consultation with affected communities and an independent valuation was undertaken of land, buildings and crops. On the actual site occupied by the plant,10 individuals were identified as requiring compensation for crops and 2 for purposes of informal settlements on the site. With respect to land required for the buffer zone and transmission lines, a total of sixty-seven individuals were identified as requiring compensation by VRA. However, even if there is no additional relocation due to the construction and operation of GRIDCOs transmission lines, the Kpone plant operates via use of GRIDCOs transmission lines, and operation of the lines could result in additional traffic and maintenance that may result in intrusions on the right to property and land use.

The Kpone EIA has noted that the "operation of the power plant could have an impact on land use by disturbing access to land uses through the operations themselves or indirectly through traffic movements. The site of the power plant is within an area of developed structures. As natural gas and water will be pumped to the site, movement of traffic to and from the site will be limited primarily to that of workers vehicles and waste fuel or diesel tankers."

The following questions may be relevant to determining whether your community's right to property and housing has been violated by the construction or operation of the GRIDCo transmission line project, or the combined energy activities of the GRIDCo and the VRA Kpone plant:

  • Has your access to adequate housing (whether rented or owned) been affected since the beginning of the investment project?
  • Does the company have a housing policy or programme?
  • If you have been relocated, have you been adequately compensated for your housing and property?
  • Are there mechanisms through which people can file a complaint and/or obtain reparation when their right to adequate housing has been affected?
Investment Description
  • International Finance Corporation (IFC)

IFC is considering a corporate loan of up to $170 million to the Ghana Grid Company ("GRIDCo" or the "company") to support development of an electrical substation, construction of some 1.5 km of high voltage transmission line and upgrade of 10 km of existing transmission lines. In addition, a portion of the funds will be used to refinance some of the company's existing debt.

Private Actors

Established in December 2006 as the Independent Transmission System Operator, GRIDCo is wholly owned by the Government of Ghana. GRIDCo carries out the transmission of electricity from facilities of wholesale suppliers to distribution companies and bulk customers across the Country. GRIDCo owns and operates over 4,000 km of 330 kV, 225kV, 161 kV transmission lines. These lines transmit electricity from various generating stations to over 40 transformer substations. 

Contact Information

Contact person: Rev. S.F. Kwofie
Physical address: GRIDCo Engineering Office, Tema
Postal address P.O Box CS 7979 Tema, Ghana
Phone: +233-30-3304818
Fax: +233-302-676180
Email: sfkwofie@gridcogh.com

CONSULTATION PROCESS
Stakeholder engagement by GRIDCo is typically limited to the development phase of projects including construction. IFC states that the focus is on communities potentially affected by the project. All new transmission lines require an EIA undertaken by external consultants and consultation on projects is undertaken within this context and takes the form of one-on-one meetings, focus group meetings and public meetings. In accordance with national legislation, EIA documentation is made available for a period of 30 days prior to the relevant department taking a decision on the project. In addition, a public hearing may also be convened. However IFC notes that there is no clearly defined and consistent approach to stakeholder engagement, including a grievance mechanism ,and thus the company must develop a Stakeholder Engagement Plan inclusive of a grievance mechanism.

Stakeholder engagement for the Kpone power plant, inclusive of the sub-station and transmission line section, was conducted by VRA and their consultants as part of the environmental impact assessment process. The process involved identification and consultation with various interested and affected parties including local and national authorities, land users and representatives from adjacent properties. This consultation took the form of one-on-one meetings with stakeholders and there was a public hearing on 29 April 2010, which was advertised in national newspapers. As part of this process the environmental impact assessment documentation was also made available for comment for a period of 30 days. The latter process was repeated on 30 May 2012 when there was a subsequent public meeting as the project was being registered as a Cleaner Development Mechanism project; this also required the environmental impact assessment documentation to be disclosed. Both the public hearing and the public meeting were attended by authorities, community members residing in the area and the traditional authorities. Notably, however, during the EIA process 33% of local residents interviewed regarding their views on the project said it was not a good project and 66% of the residents interviewed said they would not benefit in any way from the project.

ACCOUNTABILITY MECHANISM OF IFC

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/