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This Environmental Review Summary is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision.
Any documentation which is attached to this Environmental Review Summary has been prepared by the sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
Environmental Review Summary with attachments : Other
Project number 11367
Project nameJamaica Pubic Service Co.
CountryJamaica
SectorHeavy Fuel Oil - Thermal Power Generation
DepartmentGbl Infrastructure & Natural Resources
Company nameJamaica Public Service Company
Environmental categoryB
Date ERS disclosedAugust 30, 2002
Date revised ERS disclosedMay 15, 2003
StatusActive
Previous EventsInvested: May 23, 2003
Signed: May 16, 2003
Approved: March 4, 2003

Project description
The project is to provide Jamaica Public Service Company Limited (JPSCo, the "company") with a corporate loan to help finance a development of 120MW diesel fuel-fired combined cycle power plant as a part of its capacity expansion program. JPSCo, a limited liability company, was incorporated in 1923 with the expressed purpose of generating, transmitting, distributing and supplying electricity throughout Jamaica.

Until 2001, JPSCo was a state-owned enterprise and the sole provider of electricity in Jamaica. In April 2001, Mirant Corporation acquired majority ownership (80%) and operating control of the Company. The remaining 20% of the issued shares of JPSCo are owned by the Government of Jamaica (GoJ) and a number of private and institutional shareholders. On March 30, 2001, JPSCo was granted a 20-year exclusive license to provide electricity transmission and distribution services to customers throughout Jamaica.

Since early 2001, the Company has been forced to curtail load to customers due to limited generation reserves, and problems with a number of Company owned power plants and independent power producers (IPPs). As a result, the Company has decided to build a new generation plant at a cost of US$127.5 million, and is seeking to raise US$105 million in debt financing for the plant. Since the commercial lending appetite for Jamaica is limited, Mirant has requested both IFC to work together to raise debt financing for the project. IFC is considering to provide a loan of US$45 million to the Company.

Environmental Category B disclosure requirements
IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors.

The Summary of Project Information (SPI) provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

To view the Summary of Project Information(SPI) for this project, click here


Environmental and social issues
This is a Category B project, according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor. The information reviewed include: (i) Environmental Impact Assessment (EIA), 120 MW Combined Cycle, Bogue, Montego Bay, prepared by JPSCO, September 2001; (ii) Final Report, Public Consultation, Jamaica Public Service Company Ltd. (JPSCo) Expansion at Bogue, St. James, November 2001; and (iii) updated information since the preparation of the EIA.

The following potential environmental, health and safety and social impacts of the project were analyzed:

(A) the development of the 120MW diesel fuel-fired combined cycle power plant:

Necessity of 120MW expansion at Bogue: The existing Bogue Power Station has 103.5 MW capacity, consisting of six simple cycle gas turbines, developed in 1973 (21.5MW, GT3), 1990 (14MW x 2, GT6, GT7), 1992 (14MW, GT8, and 20MW, GT9) and 2001 (20MW, GT11). The Company has a total generating capacity of 505 MW, and adding 120MW combined cycle power plant at Bogue was planned based on a least cost generation expansion plan to meet the growing electricity demand in Jamaica.

Technical Specifications: The 120MW expansion plant will consist of two GE PG6551B combustion turbines, two vertical Heat Recovery Steam Generators (HRSGs) and one Steam Turbine (ST) resulting in nominal output of 122MW. The gas turbines will have dual-fuel capability (No. 2 diesel fuel oil and natural gas), but will be using No. 2 diesel fuel oil only. NOx emissions will be reduced by using water injection to meet 80ppm (15% O2, 0 Celsius, 1 atm). The HRSGs will not be equipped with duct burners. The stack height is 25m. The existing oil storage facility at Bogue Power Station (3 tanks) will be expanded by two new tanks with 5.5 million litre capacity each. The fuel treatment system will be upgraded for the entire station. A circulating cooling water system consisting of a multi-cell evaporative cooling tower will be provided. The 120MW expansion is being developed in two phases: (i) Phase 1 to complete 2 x 40MW combustion turbines (simple cycle mode) in 2002, and (ii) Phase 2 to add HRSG and ST to complete the plant as 120MW combined cycle in 2003. The proposed expansion will be developed on a 6.5 ha land adjacent to the existing Bogue Power Station (4.1ha).

Site Selection: The Bogue Power Station is located in the parish of St. James, the Northwestern section of Jamaica. The parish contains the tourist capital Montego Bay. The site is about 8 km south-west of the Sangster International Airport and about 4 km from downtown Montego Bay. The immediate surroundings of the site has no direct tourist interests. Over a period of years, the company has been exploring options for the siting of new power facilities to accommodate the increase in demand for electricity. In late 1980s, a total of 28 sites were studied. Eleven sites were selected for further studies. Recently, five sites were evaluated and screened based on evaluation factors of (i) land availability, and (ii) economic / environmental factors. Expansion at Bogue Power Station was determined as a preferred site for the 120MW new generating capacity.

Land Acquisition: The land for the expansion (6.5 ha) was acquired by JPSCo from a single land owner whose family has owned a large sugar cane plantation, including this parcel of land, in the area for many years. They have been selling portions of the estate over the past few years. The land was cultivated with sugar cane at the time of the sale, and although it was low grade cane, the laborers who cleared the site took the cane for some productive use.

Associated Facilities (Transmission line / Oil pipeline): The transmission system in the Bogue area will be capable of exporting the full output of the Bogue Power Station even after the 120MW expansion is completed, and therefore no expansion of transmission lines is planned. Only the substation within the Bogue Power Station will be expanded. The diesel fuel oil is currently being delivered to Bogue Power Station by the existing pipeline from Petrojam's fuel facility located in Montego Bay Freeport. No additional pipeline is planned because of the 120MW expansion.

Fuel Supply and Treatment: Fuel delivered by Petrojam by existing pipeline will be pumped, metered and filtered to the final condition required by the combustion turbine manufacturer. The fuel oil management system will include fuel shut-off valve, sump tank and sump pump, spill containment structures - including secondary structures and oil-water separators.

Air Quality: Air quality in the vicinity of the Bogue Power Station is expected to be fairly good due to the rural setting along the coast with no other major industrial activity near the site. The EIA included a detailed ambient air dispersion modeling report prepared by an independent environmental consulting firm, Parker & Associates. The EIA concludes that with the addition of more energy efficient and less polluting units, 20MW gas turbine (GT11) in 2001 and the additional 120MW expansion under development, the use of existing, older units will be reduced, and as a result, there will be a reduction in the total emissions of the facility. The maximum predicted ground level concentrations by the Bogue Power Station (after completion of the 120MW expansion) in the EIA indicate that ambient air quality levels will be below the Jamaican ambient air quality standards for NOx, CO, SO2 and PM10.

Noise: The EIA states that the measured noise level at the perimeter of the existing Bogue Power Station with all the turbines in operation is exceeding the Jamaican draft noise standards of 70 to 75 dB (applicable to Industrial zone) at three locations of the six boundary locations. The range was from 76 dBA to 81 dBA. The EIA concludes that introduction of additional turbines (120MW expansion) should cause some residents to perceive an increase in noise, but the measured noise should still be within the Community Noise Equivalence Level (CNEL) of 65 dBA if the Company ensures that the silencers attenuate noise to meet 93 dBA at one meter and other mitigative measures are implemented. The EIA proposed several mitigation measure to ensure that noise requirements are met.

Water Supply and Water Treatment: The groundwater resources in the area are restricted to a deep limestone aquifer. One potable water well is currently located on the facility. Bogue Power Station, after expanding 120MW, will receive water from two sources: potable water from the existing well and effluent from the National Water Commission Bogue Sewage Treatment Plant (stabilization ponds), located about 2.5km from the Station. The effluent water will be pumped to the site via 250 mm coated carbon steel pipe, processed through microfiltration system, and chlorinated before it is discharged to a 2.3 million litres raw water storage tank at the plant. The effluent (raw) water storage tank will supply water to the water treatment (demineralizer) plant.About 4.5 million litres per day of water will be used by the 120MW expansion plant. The water treatment system will produce high quality boiler make-up water and high quality injection water for NOx abatement. The water treatment system will have 2 x 100% capacity trains to treat 456.6 - 909.2 litres per minute of raw water. Each train will consist of a mixed media filter, strong acid cation unit, decarbonator, a strong base anion unit followed by a mixed bed unit. A neutralization system will be provided. Chemical feed system will be provided for boiler water, cooling water, and auxiliary cooling water and condensate treatment. The chemical feed system will include the necessary tanks for storage, measurement and mixing of the chemicals, mixers, feed pumps and associated controls. Chemicals will include sodium phosphate, hypochloride, sulfuric acid, copper corrosion inhibitor, etc.

Wastewater Treatment: Effluent from the plant (including cooling tower blowdown) will be treated where necessary to be in compliance with the 1995 Trade Effluent Standards and World Bank liquid effluent guidelines. The estimated discharge from the plant at the end of Phase 2 is to be finalized.

Natural Hazard Vulnerability: Jamaica is located in a high intensity earthquake zone. Engineering designs of the 120MW expansion have incorporated relevant regulations and code.

Ecological Environment: The Bogue Power Station is in a zoned industrial site. According to the EIA, the land/area does not support any endangered or threatened species, and there are no wetlands in the immediate surrounding area of the proposed site.

Economic Impacts: The EIA summarizes that the proposed 120MW expansion will cause positive economic impacts through payments for construction material, labor (unskilled and skilled), transportation (local and shipping), salaries and maintenance activities, etc.

Compliance with Jamaican environmental regulations and World Bank Group environmental and social policies and guidelines: The National Environmental Protection Agency (NEPA), formerly known as Natural Resources Conservation Authority (NRCA), is the environmental agency implementing Jamaican environmental regulations. NEPA has issued various draft environmental regulations that may become applicable to the new 120MW plant in the areas of air emissions, noise, liquid effluent, environmental monitoring, hazardous waste management, etc. The EIA explains that the development of the 120MW expansion will be implemented in conformance to all Jamaican regulations and standards (including the draft versions) , and where local standards do not exist, US EPA and World Bank Standards should be adopted. The Company has further confirmed that the 120MW expansion will also meet World Bank Group Standards regardless of the existence of local standards. According to IFC's review of the EIA, there are no issues related to World Bank Group Social Policies on cultural property, indigenous people, involuntary resettlement, forced labor and harmful child labor.

Greenhouse Gas Emissions and Energy Efficiency: Assuming 70% annual capacity factor and 40% thermal efficiency (LHV), the 120MW expansion plant will generate 736 GWh of electricity per year, combusting 6,600 TJ of diesel fuel oil. Using a carbon emission factor of 20.2 tC/TJ and a fraction of carbon oxidized of 0.99 recommended by the Intergovermental Panel on Climate Change, the annual combustion of 6,600 TJ diesel fuel oil will emit 132,000 t-C or 486,000 t-CO2 of carbon dioxide per year. The 120MW expansion plant will be the first combined cycle power plant in Jamaica, and its high energy efficiency will increase the overall thermal generation efficiency of the Bogue Power Station (currently about 22 % thermal efficiency in 2001/2002).

Public Consultation / Disclosure of the EIA and Environmental Permit: The company prepared the Environmental Impact Assessment in September 2001, and held a public meeting as required by NEPA, in October 2001. Many stakeholders were invited to the meeting, and the main issue raised was regarding the reliability of power supply. Regarding the expansion of the power station on the site, there were some concerns over increased noise which were adequately addressed by the project team present at the meeting. The company received the Environmental Permit from the Jamaican Natural Resources Conservation Authority on November 19, 2001.

Labor Issues: Prior to acquisition by Mirant, JPSCo carried out necessary retrenchment of staff who voluntarily accepted the severance packages offered by the company. Mirant does not have a plan to carry out any further retrenchment of labor forces.

(B) for existing operation of the Company:

Corporate Environmental Management System: After Mirant's acquisition of JPSCo, the Company strengthened its corporate Environmental Management System. The company has established Environmental Affairs Department consisting of Manager and three staff (Environmental Specialist, etc.). Each thermal power plant has Environmental Coordinator. Environmental Task Force was established to coordinate cross-departmental issues. The company is completing the corporate environmental management procedure document to implement the Environmental Management System. Environmental Performance Indicators were established within the Company to evaluate yearly performance and identify opportunities for improvement. After these are reviewed by senior management of JPSCo, the evaluation and recommendation are communicated to the Mirant's Vice President of Environmental Affairs.

Environmental Audits: The company retained environmental consulting firms to carry out environmental audits on (i) air emissions to identify stack emission compliance with the Jamaican draft air emission standards in 2001, and (ii) soil and water contamination to refine the estimated remediation associated with the recognized environmental conditions at each facility in 2000. Based on these and other reviews by Mirant's experts, the company is developing (i) Compliance Program to determine mitigation measures required to bring the facility into compliance, and (ii) Remediation Project to deal with a number of issues at their existing facilities. The Remediation Project includes construction of a landfill to dispose existing solid waste and waste generated during the remediation project, including PCB contaminated waste. A total cost of US$9.2 million is estimated to implement environmental projects described above during 2001-2004.

Proposed mitigation for environmental and social issues
The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor is summarized in the paragraphs that follow. The actions below will be included in the Environmental Action Plan which will be finalized prior to signing the Loan Agreement.

(A) the development of the 120MW diesel fuel-fired combined cycle power plant:

Construction Phase:

Erosion and Drainage: The sediment and erosion control plan will include silt fences, check dams, drain swales, erosion control pond and associated pipes where necessary. If necessary, a storm water retention pond will be provided to settle suspended particles. The storm drainage system will be sized to discharge the 10 year, 24-hour run-off without flooding roads and the 50-year, 24-hour storm event without flooding the facility.

Fugitive Dust Control: Road areas and construction areas will be water dampened at a minimum twice a day. Transportation vehicles carrying marl or earth will be covered. Earth and marl stockpiles will be dampened to prevent dust nuisance.

Landscaping: Landscaping and grassing of the yard areas will be provided for the promotion of storm water infiltration and aesthetics.

Safety Signs: Safety signs will be provided and installed throughout the facility in accordance with general industrial practice and OSHA guidelines.

Occupational Health & Safety: Clear guidelines will be given to all contractors, employees and visitors authorized to visit the site as to the safety requirements for the site. Head protection, steel toed shoes, eye protection and where necessary hearing protection will be part of the minimum requirements on the site. The requirements of the Safety Program will be adhered to at all times during construction and initial operation to ensure the facility is not injurious to the health and welfare of all personnel involved on or in the vicinity of the facility.

Supervision of Construction Activities: Construction activities and implementation of required mitigation measures / monitoring activities will be supervised by personnel from JPSCo's Environmental Affairs Department.

Operational Phase:

Air Emissions: The sulfur content of No. 2 fuel oil will be specified maximum 0.5% sulfur content. Water injection will be used to reduce the NOx emission to achieve (i) 80 ppmv (15% O2, 0 Celsius, 1 atm), below the World Bank guidelines of 165 mg/Nm3 (equivalent to about 80.3ppm, 15% O2, 0 Celsius, 1 atm) and (ii) 530 ng/J (NOx emission limit specified in the Environmental Permit of November 19, 2001). In 2002, Jamaican draft NOx emission standard applicable to non-peaking gas turbines larger than 20MW) was published as 380 ng/J. The expansion unit will meet this as well. Ambient air quality will be monitored by a mobile continuous air quality analyzer (initially for SO2 only as required by NEPA in their permit to GT11. Adding a parameter of NO2 is being considered by the Company). Annual stack emission testing will be carried out to check compliance with the above emission limits.

Noise: The expansion units will be equipped with 10-foot silencer. Insulation, lagging and other methods will be provided to meet the specified sound levels necessary to meet the guidelines at the boundary of the property. Trees will be planted around the perimeter of the property. The doors of the main turbine, GT3 will be closed as best as possible to lower noise from that turbine. Periodic monitoring of noise levels at the plant boundary and in the communities will be performed to ensure that the noise levels are within the Jamaican draft noise standards and the World Bank Group noise guidelines (55 dBA daytime and 45 dBA nighttime for residential receptors, and 70 dBA for industrial receptors).

Fuel Oil Management (Oil Spill Prevention): The fuel oil management system will include fuel shut-off valve, sump tank and sump pump, spill containment structures - including secondary structures, and oil-water separators. In addition, a spill control plan will be prepared. The water discharge of the oil water separator will be sent to the storm water run-off pond. The oil collected within the oil-water separator will alarm on high level and will be removed for storage and disposal. A separate storage tank for skimmed oil and sluge removal will be provided with the separator. All equipment having the potential to spill oil and not buried underground will be contained in a curbed area in order to prevent spillage to the land. All these will be included in "Oil Spill Prevention Control and Countermeasure Plan" and "Waste Oil Management Plan" both being prepared by the Company.

Liquid Effluent: Use of Effluent from Nearby Sewage Treatment Plant will be environmentally beneficial to minimize fresh water intake by the plant. Effluents from the plant will be treated to be in compliance with Jamaican effluent standards and World Bank liquid effluent guidelines, before they are discharged into the drainage system. The Company is designing the final discharge system. Quality of effluents and water quality of the receiving water will be monitored periodically. Parameters, frequency and sampling points will be determined in Wastewater Management Plan, currently being prepared by the Company.

Solid Waste: All solid waste (non-hazardous) will be removed by Contractor for waste management in Montego Bay and disposed of at the Retirement Dump site.

Training: All responsible personnel at JPSCo will be provided necessary training programs on fuel management, operation and maintenance of pollution control equipment, sampling and analysis of effluents and emissions, operational aspects of the turbines to ensure that all equipment are operated according to manufacturer's specifications. The training program will be incorporated into JPSCo's Environmental Management System.

Emergency Response Plan: Emergency response procedure for 120MW expansion will be incorporated into Emergency Response Plan for the Bogue Power Station, and the revised plan will be prepared within three months of the date of commissioning the plant.

Fire Protection System: Fire Protection System proposed in the EIA consists of the following:

(i) Fire Protection System for the turbines and gas compartment areas of the accessory module, lube and hydraulic area, meeting the Local and National Fire Protection Association code requirements. The automatic operating system will include the carbon dioxide storage and detector system.

(ii) Detection, alarm, actuation and signalling systems.

(iii) Firewater pumps consisting of 2 x 100% capacity (one AC motor driven and one standby diesel driven) pumps supplemented with a jockey pump. The firewater loop with a minimum of 250 mm diameter.

(iv) All fire trouble and water flow alarms which will sound in the control room.

(v) An automatic FM200 gas fire protection system for the electrical equipment and control rooms.

(vi) Automatic fire detection (heat and smoke) provided in the electrical equipment and rack room, control room and chemical feed enclosure, in addition to hand held fire extinguishers.

(vii) Low-pressure carbon dioxide fire protection system for the combustion turbines.

(viii) Transformer deluge system designed to operate automatically, actuated by a heat sensitive (thermal) pneumatic pilot system.

(ix) Firewalls around transformers designed in accordance with the requirements of NFPA 850 3.1.4.

(x) Fuel oil storage tanks protected with a double ring deluge spray system on the outside and with form/water spray on the inside.

(xi) Steam turbine lube oil system protected with deluge spray system.

(xii) Cooling tower protected with deluge spray system.

(xiii) Wet pipe sprinkler systems at the administration building, the office space in the control building, the maintenance shop and the chemical feed enclosure.

(xiiii) Fire hydrants installed and protected if subject to mechanical damage.

(xv) Firewater storage tank with capacity of 682,000 litres.

Chemical Feed System: The chemical storage facility needed for treatment of boiler water, cooling water, auxiliary cooling water, and condensate, will be equipped with the necessary spill control / prevention structure.

Occupational Health and Safety: The existing ear protection program for the existing Bogue Power Station will be extended to the new 120MW expansion.

Adjacent Land Use and Related Mitigation Measures: The Bogue Power Station site is surrounded by light industry, agriculture (sugar cane), a cemetery, with few existing residential receptors in close proximity. There is a proposed affordable housing development to be built on existing agricultural land, which will require a buffer zone between it and the plant. Mitigation measures incorporated into the plant expansion project include building a 6 foot high perimeter fence around the site to screen the graveyard, industrial and residential areas. Along the sides of the site, between the cemetery and power plant, there will be some trees and other vegetation planted. In addition, the municipal storm water runoff channel has been upgraded from a ditch to a cement drainage channel along the site perimeter by the company. The portion of this storm water runoff channel that passes beyond the plant site through the cemetery, on its way to a nearby river, is being upgraded and paid for in equal parts by the company and the local municipality.

(B) for existing operation of the Company:

Environmental Projects: Environmental projects currently being planned by JPSCo for the period of 2001 to 2004 include: (i) Installment of Ambient Air Quality Network, US$125,000; (ii) Remediation Project (PCB Treatment & Disposal, Plant Improvement, Soil Remediation, Construction of Land Fill, Construction of Facility, etc, sub-totalling US$7,736,000); (iii) Construction of Wastewater Treatment Plant (Hunts Bay Power Station, Old Harbour Power Station, sub-totalling US$1,100,000); and (iv) Other items (US$200,000). The total estimate of these projects is US$9,161,000. The company is evaluating whether additional capital expenditure is needed to implement air emissions compliance program. This will be determined when the draft Jamaican air emissions regulations are finalized.

HIV/AIDs Programme: JPSCo does contribute to some community health and education initiatives by either giving money in the form of scholarships, providing work placements for students or providing electricity to some non profit organizations. There is at present no HIV/AIDs related program with employees. However, one of the non profits JPSCo supports is a foundation that looks after people living with HIV/AIDs and children who have been made orphans as a result of the disease.

Mirant Management is aware of the many social and environmental issues in Jamaica, and in discussions with the Mirant, Director of External Affairs for the Caribbean, they appear to be interested in identifying some initiatives. They have been quite active both on the social and environment side, in other countries where they have operations, such as the Philippines, Bahamas, Trinidad and Tobago. There may be an opportunity to set up an HIV/AIDs awareness program, based on a proposal by a US Business School Class Project, which outlined an HIV/AIDs Education and Awareness Program for JPSCO. This project and others will be explored further in the future.

Conclusion
Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environmental and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

Monitoring and compliance
IFC will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: (i) the status of implementation of any measures contained in the Environmental Action Plan, to be finalized prior to signing the Loan Agreement and (ii) ongoing performance of project-specific environmental, health and safety and social activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.


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