The Project under consideration by IFC consists of a "greenfield" (i.e., built from scratch) heavy fuel oil (HFO) thermal power plant and auxiliary installation with an installed capacity of 87.5 MW and a guaranteed capacity of 70 MW at 91% availability. The power plant will use 4.5 hectares of land and will be connected to the existing Tobene 220/90kV substation which is being upgraded and is located less than 100m away from the Project site. The Project is located approximately 90km North-East of Dakar, Senegal within the Rural Community of Taiba Ndiaye, in Regional Department of Tivaouane. The HFO will be supplied via trucks by La Socite Africaine de Raffinage (SAR) with whom terms of agreement are still under negotiation.

MATELEC is developing the Project as an Independent Power Producer (IPP) incorporated under Tobene Power SA, selling power under a 20-year Power Purchase Agreement to the Senegal's state-owned electric utility, SENELEC, which will be the sole purchaser of the electricity generated. Construction of the plant is planned to take place for a period of 16 to 18 months.

The Project is a joint project with the World Bank. Project documentation notes that "IFC is working closely with the WBG to structure a partial risk guarantee to cover the offtaker's [SENELEC] payment obligations risk."

While the Project is not projected to be presented to the Board until October 17, 2013, land acquisition has already occurred, as has "full compensation" of Project-affected people.

RISK CATEGORIZATION: Category A

According the IFC, *The Project will have limited environmental and social impacts that can be managed through existing project design, and/ or readily available mitigation measures as defined in the management plans to be applied to the Project. Nonetheless and despite the limited E&S impact, the proposed IFC investment has been categorized as *A* to maintain consistency with the World Bank's categorization procedures.*

APPLICABLE SOCIAL AND ENVIRONMENTAL 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
PS 4 - Community Health, Safety and Security
PS 5 - Land Acquisition and Involuntary Resettlement

ENVIRONMENTAL AND HUMAN RIGHTS RISK ASSESSMENT

Right to a Healthy Environment

According to the Australian NGO National Toxics Network, "Heavy Oil power plants are renowned for their high levels of air pollution including the release of extremely toxic chemicals called PCDD and PCDF, otherwise known as dioxin and furans. These chemicals are known to deposit in soils for kilometres around the emission source (i.e., the power plants) as well as drifting through the atmosphere for thousands of kilometres to contaminate other countries. The transboundary nature of the pollution impacts from dioxin has led to global restrictions on activities which produce them. In addition to dioxin contamination, heavy oil power plants contribute heavily to atmospheric acidification, heavy metal contamination and a significant risk to marine and coastal environments due to oil contamination of cooling waters discharged as waste. While heavy oil may currently appear to be a "cheap" fuel for energy production, international carbon accounting and trading may soon place a heavy price tag on such dirty fuel."

Malta provides an example of recent experience with HFO electricity generation. In a 2011 article, the Times of Malta stated that "Prior to Malta's entry in the EU, the power stations used fuels with 3.5 per cent sulphur content. This high amount caused distress and protests in the Marsa area, with episodes of schools in the vicinity closing down because of the unbearable smell. The protests stopped when Malta joined the EU and converted to one per cent sulphur oil in accordance with European legislation. With the further tightening of EU limits, the maximum limit of sulphur in imported fuel oil was lowered to 0.5 per cent." The HFO at Tobene will have a 2% sulfur content.

Project documentation notes that the major source of income in the surrounding area comes from agriculture, including fruit trees. The potential consequences of emissions from the Tobene plant on the health of the surrounding environment will be important to the quality and quantity of agricultural yields.

Project documentation notes there will be a "mock drill" undertaken to ensure emergency spill and/or fire responses are adequate. It may be important for community members to ensure that such a drill is carried out, that it demonstrates that such measures are indeed sufficient, and that details of the results of the drill are made publicly available.

The Project documentation also undertakes to carry out two years of seasonal ambient air quality sampling. Community members may wish to request prompt access to the complete results of this testing, as it becomes available.

Finally, Project documentation notes that the Project station is "easily convertible" to gas generation. Community members may wish to inquire whether this is a reasonable possibility in the medium-to-long term, especially in circumstances where negative environmental consequences from HFO electricity generation may occur.

Additionally, the following questions may be relevant:

• 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 proposed 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 Education

Project documentation notes that there is a school located 600m from the Project site, and that "the ESIA predicted noise exceedance by 4 dB during construction phase" for this school. As construction of the Project is forecast to take 16 to 18 months, the right to education of the students who attend this school may be impacted. Project documentation proposes to "mitigate" noise pollution for the school by "restricting" construction activity to the hours between 7am and 7pm. As this will mean that construction will occur during school hours, community members may wish to query what other steps could be taken to address this problem. Furthermore, the following questions may be relevant:

• Do you have reasons to believe that the planned investment project could affect the right to education in your community?
• What opportunities (legal or other) are available if you feel that your right to education, or the right to education of your children, has been affected?
• Does the government consider that the planned investment project could affect the right to education?
• Has the company inquired about possible problems related to the right to education (in terms of availability, accessibility, acceptability and adaptability) in the planned investment project area?

Right to Water

The Project documentation notes that the project will take 200 cubic meters of water a day from municipal water networks. Community members may wish to assure themselves this will not place undue stress on other water use in the area. Additionally, they may wish to ask:

• Do you have reasons to believe that your access to safe, affordable and sufficient water could change as a result of the planned investment project?
• What mechanisms for redress (legal or other) are available if you feel that your right to water has been affected?
• Have you been informed of any potential changes that could affect your access to water?
• Are there laws, policies or programmes protecting the right to water in the country?
• Does the government consider that the planned investment project could affect people's right to water?
• Does the company consider that the planned investment project could affect people's right to water?

Right to Housing and Property

Project documentation notes that some people have been relocated as a consequence of this Project. Documentation notes that there has been "full compensation" of all people to be relocated, but that some of these people are continuing to cultivate Project land. Community members may wish to confirm they have all been fully, fairly and legally compensated for their land.

Project documentation states that a review will be conducted with a sample of relocated people to verify the status of their livelihood restoration. Community members may wish to ensure this review occurs, and that the results are made promptly available.

It may also be important to ask:

• Have people in your community ever been forcibly evicted from their homes?
• Has the housing provided following relocation been adequate and of an equal or better quality than the housing previously occupied?

Right to Health

This right is impacted because emissions from heavy fuel oil electricity generation include chemicals that can be damaging in excessive amounts, and therefore need to be carefully monitored and controlled (see articles from the Times of Malta and National Toxics Network, above). With this in mind, the following questions may be relevant:

• Have you been informed of any potential public health problems that could be caused by the planned investment project?
• What mechanisms for redress (legal or other) are available if you feel that your right to health has been affected?
• Does the government consider that the planned investment project could affect people's right to health?
• Are there mechanisms through which people can file a complaint and/or obtain a remedy when their right to health has been affected?
• Has the company inquired about possible problems related to the right to health in the planned investment project area?
• Has the company inquired about the possible past involvement of its joint venture partners, subsidiaries or sub-contractors in violations of the right to health?
• Has the company (or any joint venture partners, subsidiaries or sub-contractors) been accused of causing public health problems or affecting people's right to health in other regions or countries?
• Does the company have a policy or programme to ensure that its activities do not cause public health problems or affect people's right to health?

Labor Rights

Labor rights are implicated by this Project for two reasons. Firstly, Project documentation notes that at least 100 jobs will be provided to members of the local community by the Project. It will be important to ensure this commitment is complied with. Second, the livelihoods of others in the community who are not employed in the Project may still be impacted. For example, emissions from the completed project, or from its construction, may negatively impact agriculture near the plant, an important source of employment for the community. With this in mind, the following questions may be relevant:

• Are working conditions in your community, and/or in this industry, safe and healthy?
• What opportunities for recourse (legal or otherwise) are available if you consider that your working conditions are not just and favourable?
• Can workers in your community and/or in this industry bargain for better working conditions (i.e. engage in collective bargaining with the company)?
• Are women and men in your community and/or in this industry equally free to form unions, join the union of their choice, bargain for better working conditions and/or go on strike?
• Does the company have a policy or programme to ensure respect for the right of its workers to freedom of association and collective bargaining?

Right to Food

This right is implicated because food is grown near the Project site. Any negative impact on that agricultural production would, therefore, impact this right. Such negative impacts could arise from pollution generated during construction (traffic pollution, dust from construction, chemicals used in construction) or from pollution once the Project is operational (as discussed above with regard to the right to a healthy environment). With that in mind, the following questions may be relevant:

• Do you have reasons to believe that the planned investment project could affect your access to food?
• Does the company have a policy or programme to ensure that the planned investment project does not affect people's right to food?

Right to Freedom of Expression

Amnesty International has noted that the right to freedom of expression has not been consistently respected in Senegal. Community members should be aware they are entitled to express their opposition to the Project without fear of retribution.

Additional Issues

The Project documentation notes that the Project may have either one person responsible for Environmental Health and Safety and another person acting as a community liaison, or it may combine both roles in one person. It may therefore be important for community members to establish whether their liaison person at the Project has this dual role, and, if so, whether they have adequate time and resources to carry out their community liaison work to the highest possible standard.

Also, the Project documentation notes that Matelec will take "commercially reasonable steps and establish policies and procedures" to ensure that third party contractors abide by the Performance Standards. It may be important for community members to ensure that these steps are adequate.

The total project cost is estimated at EUR 120.0 Million (c. US$ 150.0 Million).

Matelec has approached IFC to join efforts for the development, and finance a portion of the debt as lead debt arranger of the Project. The proposed IFC investment is composed of an A loan for IFC;s own account of EUR 27.0 million, and a B Loan/Parallel Loans of EUR 63.0 million. IFC will also be investing EUR 3.0 Million in the form of an equity investment. These terms are explained below:

When the IFC makes an "equity investment" it obtains some percentage ownership in the project's sponsoring company, which means IFC involvement with that company continues after completion of the project.

An "A" loan for IFC/s own account means the IFC provides a direct loan for the project from its own funds, and keeps that debt on its books until the sponsoring company repays in full, again directly to IFC.

For a syndicated "B" loan, IFC seeks participation from commercial banks and other financial institutions. All money still passes through IFC, however, so it remains responsible for the impacts of that financing.

The sponsor and co-developer of this Project is Melec PowerGen Inc. ("MPG"), an international company incorporated in the British Virgin Islands and part of the Matelec Group of Companies. Matelec was formed in Lebanon in 1975 and specializes in manufacturing electrical products such as transformers, switchboards, control panels and packaged substations. It is one of the few manufacturers of transformers in the Arab countries and a leader in its lines of business at a regional level. Both MPG and Matelec are privately owned companies.

Matelec is a subsidiary of the Doumet Group, an industrial conglomerate based in Lebanon.

PAST IFC FUNDING
MATELEC also developed the operating Kounoune power plant in Senegal and the Thika power plant in Kenya, which are both IFC-financed projects. IFC's review of the Tobene project included a review of the E&S performance of these two projects. The IFC stated that the "Kounoune Power project has been rated partly unsatisfactory by IFC from an E&S perspective due to the encroachment of the buffer zone which presents a community health and safety risk, however, the enforcement of this buffer zone is beyond Kounoune Power's control. Notwithstanding the above, Kounoune Power's E&S, health and safety performance at the plant is generally satisfactory. Thika Power is in construction and so far no E&S performance issues have been identified."

The Project documentation also notes that "Since 2005 IFC has been actively engaged in the dialogue with various actors of the sector. Its knowledge of Senegal power sector and experience in sub-Saharan IPPs financing will also be critical in (i) fast tracking the development stage and (ii) structuring and negotiating bankable project and finance documentation that would get consent from other lenders."

Independently of this Project, the IDA arm of the World Bank approved, in June 2012, a US$85 million loan to Senelec in order to "upgrade and modernize electricity transmission and distribution components; create more transparency and accountability within the energy sector; develop a medium and long-term strategy for the energy sector; and upgrade SENELEC billing systems to reduce high collection costs and losses related to fraud." Additional details are available at the link above ("World Bank 2012 Announcement of Loan to Senelec").

Tobene Power
Address: Yoff Virage, Route de l a roport, Villa KP
Contact Person: Said JALKH
Email: sjalkh@tobenepower.com

CONSULTATION PROCESS

According to the IFC, "As part of the ESIA, a comprehensive stakeholder engagement was undertaken to meet the requirement of PS1 and included individual as well as group interviews to obtain views on the Project from the local communities, the local, regional, and national authorities; more specifically Rural Community of Taba Ndiaye; village chiefs and notable of Mbayenne, Keur-Mall, and Minam Diop; women and young girls; regional and national technical services departments, etc. These consultations took place in August and September 2012 as part of the ESIA process."

IFC states that "No objections to the Project have been raised during the ESIA stakeholder engagement process. However, further comments from these stakeholders could be forthcoming following the public consultation that will take place shortly and will be included in the final approved version of the ESIA."

A community grievance mechanism will be put in place to allow community to lodge their grievances. Tobene Power will maintain a register of complaints during construction and operation phases including actions taken to address such complaints.

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/