Technical Assistance Report
Project Number: 46947-01
Capacity Development Technical Assistance (CDTA)
March 2013
Republic of the Philippines: Air Quality Management
for the Visayas Base-Load Power Development
Project
CURRENCY EQUIVALENTS
(as of 14 February 2013)
Currency unit
P1.00
$1.00
–
=
=
peso/s (P)
$0.02456
P40.715
ABBREVIATIONS
ADB
CRP
DENR
KSPC
MW
NO2
PM2.5
PM10
SO2
SPC
TA
TASF
WHO
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–
–
–
–
–
–
–
–
–
–
–
–
Asian Development Bank
Compliance Review Panel
Department of Environment and Natural Resources
KEPCO-SPC Power Corporation
Megawatt
nitrogen dioxide
particulate matter (fine)
particulate matter (coarse)
sulfur dioxide
Salcon Power Corporation
technical assistance
Technical Assistance Special Fund
World Health Organization
TECHNICAL ASSISTANCE CLASSIFICATION
Type
Targeting classification
Sector (subsector)
Theme (subtheme)
Climate change
Location (impact)
–
–
–
–
–
–
Capacity development technical assistance (CDTA)
General intervention
Health and social protection (health systems)
Environmental sustainability (urban environmental improvement)
Mitigation
Rural (high), urban (high), national (low)
NOTE
In this report, “$” refers to US dollars.
Vice-President
Director General
Director
L. Venkatachalam, Private Sector and Cofinancing Operations
P. Erquiaga, Private Sector Operations Department (PSOD)
C. Thieme, Infrastructure Finance Division 2, PSOD
Team leader
Team members
J. Limjap, Investment Specialist, PSOD
H. Cruda, Senior Safeguards Specialist, PSOD
B. Garcia, Project Analyst, PSOD
M. Ingratubun, Senior Procurement Specialist, Operations Services and
Financial Management Department (OSFMD)
V. Joshi, Senior Environment Specialist, Regional and Sustainable
Development Department (RSDD)
M. Tsuji, Principal Safeguards Specialist, PSOD
In pr eparing any co untry pr ogram or st rategy, financing any pr oject, or by m aking any
designation of or reference to a particular territory or geographic area in t his document, the
Asian Development Bank does not intend to make any judgments as to the legal or other status
of any territory or area.
I.
INTRODUCTION
1.
On 11 D ecember 2009, the Board of D irectors of t he Asian Development Bank (ADB)
approved a $ 100 million direct l oan to K EPCO-SPC Power C orporation ( KSPC) for t he
200 megawatt (MW) Visayas Base-Load Power Development Project in Naga City, Cebu. 1 The
ADB facility a greement was signed on 4 M arch 2010. To d ate, KSPC has drawn a total of
$86 million from t he ADB loan facility and $ 14 m illion r emain undi sbursed. KSPC’s loan
outstanding t o A DB i s $69.2 million after t he last principal r epayment on 29 November 201 2.
Commercial oper ations commenced on 28 Feb ruary 2011 for unit 1 and on 31 M ay 2011 for
unit 2.
2.
Pursuant to a request for compliance review received by the ADB Compliance Review
Panel (CRP) on 25 May 2011, 2 which the CRP determined eligible for compliance review and
which was subsequently aut horized b y t he B oard, the CRP conducted an i nvestigation,
including (i) document r eview; (ii) interviews with A DB st aff, complainants, K EPCO P hilippine
Holdings and KSPC officers, and other resource persons; and (iii) a site visit.
3.
Based on t he co mpliance r eview, t he C RP concluded t hat nonco mpliance existed
regarding policies on the environment, publ ic communications, and so cial di mensions in A DB
operations. The CRP also concluded that the project was not fully compliant with ADB’s Energy
Policy. 3
4.
To address its findings, the CRP made several recommendations that the Board
approved on 2 April 2012. One of the recommendations is for ADB to (i) undertake a
comprehensive ai r di spersion m odeling s tudy t hat i ncludes the key po llution so urces in the
project area of influence and to validate the predictions with actual air emissions and ambient air
quality m onitoring da ta, (ii) develop an act ion pl an base d on r ecommendations from the
modeling study, and (iii) emphasize the potential for continuous monitoring and recording of air
emissions and ambient air quality.
5.
The proposed sovereign technical assi stance ( TA) will fund the (i) air di spersion
modeling s tudy r ecommended by t he C RP a nd appr oved by t he B oard, and (ii) capacity
development of the local D epartment o f E nvironment and N atural R esources o ffice in C ebu
covering Region 7 (DENR-7), which will a ct as the executing agency. The study will include (i)
preparation o f an air p ollutant em issions inventory for m ajor so urces; (ii) d ata collection o f
pollutant emissions from m ajor sources; (iii) ambient air q uality m onitoring, covering areas
surrounding key so urces of pol lution i n t he pr oject a rea; (iv) air dispersion m odeling and
prediction to assess compliance with the national ambient air quality standards and to compare
with international guidelines (e.g., World Health Organization air quality g uidelines for selected
1
2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan for the Visayas
Base-Load Power Development Project in the Philippines. Manila
2
The r equest claimed t hat t he pr oject w ould r esult i n ad verse i mpacts on the health of r esidents an d ne arby
communities resulting from (i) emissions of gases that could cause respiratory illnesses; (ii) spillage of coal during
transport, exposing residents to hazardous, toxic metallic elements; and (iii) seepage from the Balili coal ash
dumpsite, which could contaminate marine life for human consumption. The request also claimed that ADB failed
to comply with its Safeguard Policy Statement (2009), its Public Communications Policy (2011), and its policies on
clean e nergy and pub lic c onsultations and t hat t he conduct of t he environmental i mpact assessment and i ts
subsequent disclosure, including details on coal ash disposal, did not comply with ADB standards.
3
ADB. 2009. Energy Policy. Manila
2
parameters); and (v) recommendations for mitigation and management measures to improve air
quality in the project area.
II.
ISSUES
6.
The KSPC power plant is located in Naga City, which is the site of two other industrial
facilities—Apo Cement owned by CEMEX and Naga Power Plant Complex 4 operated by Salcon
Power Corporation si nce 1994. These two plants, i n addi tion t o quarries and m otor v ehicles,
may be contributing to air pollution. Thus, air pollution in the project area cannot be attributed to
the KSPC project alone. The TA c ould p rovide valuable i nformation on KSPC’s cumulative
impact to air quality in the area.
7.
The CRP interactions with the affected persons and the health records of affected
persons also indicated that air emissions may be affecting the health of residents of
communities directly impacted. Given the concerns expressed by the local community about air
pollution and its impact on human health, the TA will (i) identify the major pollution sources in
the study area, (ii) determine the levels of emissions of air pollutants (NO2, SO2 and PM) and
compare t hese w ith g overnment e mission st andards 5 or recommended i nternational em ission
guidelines or levels 6 , (iii) review the ambient air quality data for compliance with national
ambient air quality standards, (iv) interpret the study results (including the simulation findings)
against the l atest r esearch findings of t he World H ealth O rganization and i nternational heal th
research institute, (v) propose, along with DENR and other major stakeholders, target air quality
objectives, and (vi) develop an air quality management plan for the study area.
III.
THE TECHNICAL ASSISTANCE
8.
Under the TA, the ambient air quality for selected parameters (particulate matters [PM2.5
and PM10], sulfur dioxide [SO2], and nitrogen dioxide [NO2]) will be monitored in the KSPC area,
and e missions will be m easured and m onitored from the t hree major industrial f acilities—the
KSPC co al-fired pow er plant, the N aga P ower P lant complex, and t he A po C ement pl ant.
Automatic, continuous monitoring and recording equipment for air emissions will be i nstalled in
the sm okestack of these facilities. A dditional monitoring s tations w ill be installed i n ce rtain
barangays and o ther ar eas, a s recommended b y t he co nsultant and agreed to with t he local
DENR office. Meteorological data will be generated simultaneously and used as input for the air
dispersion model. If the results of ambient air quality parameters and the calibrated air
dispersion modeling study indicate violation of national ambient air quality standards, the study
will suggest mitigating and other measures for major polluters to reduce emissions.
4
The Naga Power Plant Complex consists of a 106 MW coal-fired plant and a 39 MW diesel-fired plant.
Will apply also to companies of major point sources of pollution not funded by ADB.
6
These i nternational emission gui delines or l evels, w hich are gen erally s tricter t han the gov ernment emission
standards will only apply to the ADB-funded project in accordance with the Environment Policy (2002), and based
on the ADB-funded project environmental assessment. The Environment Policy prescribes that ADB follows the
standards and approaches laid out in the World Bank’s Pollution Prevention and Abatement Handbook in
determining appropriate environmental standards for ADB projects. This handbook describes generally acceptable
pollution prevention and abatement measures and emission levels. However, there is flexibility in the use of these
emission guidelines or levels in that government emission standards will apply if the project environmental
assessment justifies its use in view of, among others, project-specific circumstances and/or local conditions.
5
3
A.
Impact and Outcome
9.
The impact will be controlled air pollution in Naga City and other industrial areas through
the replication of improved air quality monitoring measures by the local DENR office in Cebu.
Performance targets and indicators include emissions of NO2, SO2, PM10, and PM2.5 maintained
within national am bient air quality st andards an d t arget ai r quality obj ectives to be se t usi ng
international air q uality guidelines in the KSPC area and other industrial areas covered by the
local DENR office in Cebu, and secure baseline data on air quality in the project area.
10.
The ou tcome will b e t he enhanced ca pacity o f t he local DENR office and selected
qualified members of the project multipartite monitoring team and Airshed Governing Board 7 to
monitor and mitigate air pollution in the project area. Performance targets and indicators include
training of local DENR o fficials and possi bly other qualified multipartite monitoring t eam and
Airshed Governing Board members on improved air quality monitoring and government budget
allocation for air quality monitoring.
B.
Methodology and Key Activities
11.
The TA w ill be st ructured ar ound two out puts: ( i) co mpletion o f the air di spersion
modeling study; and (ii) agreement on measures, if necessary, to reduce air pollution to mitigate
its adverse e ffects. To ensu re the success of t he T A, A DB, w ith t he h elp o f D ENR-7 as the
executing agency, will work closely with the major industrial facilities in the KSPC area and
consistently sh are w ith t hem and their respective multipartite monitoring t eam, data co llected
from the air quality monitoring stations and findings of the air dispersion modeling study. Risks
related t o p rocurement of m onitoring equipment and r elated ha rdware and so ftware w ill be
mitigated by se eking t he adv ice o f the TA co nsulting firm and through sound application of
ADB’s Procurement Guidelines (2010, as amended from time to time). To ensure the credibility
of results, DENR-7, assisted by the consultant, will ensure that procedures for quality assurance
and quality control are an integral part of the study.
C.
Cost and Financing
12.
The TA is estimated to cost $1,010,100, of which $1,000,000 will be financed on a grant
basis by ADB’s Technical Assistance Special Fund ( TASF-other sources). The government will
provide counterpart support in the form of counterpart staff, office accommodation, equipment,
and other in-kind contributions.
D.
Implementation Arrangements
13.
The TA will be implemented over an estimated 18-month period, commencing April 2013
and ending on 31 October 2014. The success of the TA also depends on the full cooperation of
the industrial plants in the project area. DENR-7 will be the executing agency and will take
charge of liaising with the major industrial facilities in Naga City to secure their cooperation and
participate in the study. An implementation agreement, setting out the responsibilities of the
executing agency, will be executed between ADB and DENR-7. The executing agency will be
7
The Airshed Governing Board was formed by the local government of metropolitan Cebu to oversee and monitor
environmental and social safeguard impact of the operation of various industrial facilities located in the
metropolitan area. The Board is chaired by the Regional Director of DENR-7 and its members include
representatives from the local government, the industrial facilities and certain civil society organizations.
4
primarily responsible for (i) coordinating with the industrial facilities participating in the project;
and (ii) monitoring and, when appropriate, providing guidance to the consulting firm.
14.
The TA will require an estimated 12 person-months of international consulting services.
The i nternational co nsultant will have at l east 10 y ears of ex perience i n ai r quality m odeling,
preferably i n the power i ndustry, and a proven t rack record o f unde rtaking ai r di spersion
modeling on ai r em issions from poi nt so urces. The t erms of reference are out lined i n
Appendix 3. C onsulting services will be provided t hrough a firm, recruited using q uality- and
cost-based selection at a ratio of 90:10 and a simplified technical proposal. The consulting firm
will be eng aged i n acc ordance w ith A DB’s Guidelines on t he U se o f Consultants (2010, a s
amended from time to time).
15.
The co nsulting firm w ill guide A DB in identifying the equipment f or t he T A and will
procure the equipment for the project in accordance with ADB’s Procurement Guidelines (2010,
as amended from time to time). Installation and commissioning will be carried out by the
equipment supplier; the consulting firm will supervise these activities and test the equipment to
ensure its satisfactory operation. The proceeds of the TA will be di sbursed in accordance with
ADB’s Technical Assistance Disbursement Handbook (2010, as amended from time to time).
16.
In addition to the above consulting services, ADB may also engage, on an intermittent
basis, an individual consultant for up to 3 months to assist ADB in reviewing the reports and the
air dispersion modeling outputs to be submitted by the consulting firm. The individual consultant,
to be hired through individual consultant selection, will have expertise and work experience in
air dispersion modeling studies. Separate terms of reference will be prepared for this
engagement if ADB requires it.
IV.
THE PRESIDENT’S DECISION
17.
The P resident, ac ting u nder the au thority del egated by t he B oard, has appr oved t he
provision of technical assistance not exceeding the equivalent of $1,000,000 on a grant basis to
the Government of the Philippines for the Air Quality Management for the Visayas Base-Load
Power Development Project, and hereby reports this action to the Board.
Appendix 1
DESIGN AND MONITORING FRAMEWORK
Design Summary
Impact
Controlled air
pollution in Naga City
Replication of
improved air quality
monitoring measures
in other industrial
areas covered by the
regional DENR office
in Cebu
Outcome
Enhanced capacity of
the local DENR office
in Cebu and/or
selected qualified
project multipartite
monitoring team and
Airshed Governing
Board members to
monitor and manage
air pollution
Outputs
1. Completion of air
dispersion modeling
study including
baseline data for
Naga City
2. Agreement on
measures, if
necessary, to reduce
air pollution to
mitigate adverse air
pollution effects
Performance Targets and
Indicators with Baselines
Data Sources and
Reporting Mechanisms
Emissions of NO2, SO2,
PM10, and PM2.5 in project
area below national
ambient air quality
standards and/or within
target air quality objectives
set using international air
quality guidelines (e.g., by
WHO) for NO2, SO2, PM10,
and PM2
Data on monitored
ambient air quality at
local DENR office
Emissions of NO2, SO2,
PM10, and PM2.5 below
national ambient air quality
standards and/or within
target air quality objectives
set using international air
quality guidelines (e.g., by
WHO) for NO2, SO2, PM10,
and PM2.5 in other
industrial areas covered by
the regional DENR office
in Cebu
Data on monitored
ambient air quality at
local DENR office
Local DENR officials and
selected project
multipartite monitoring
team and Airshed
Governing Board members
trained and assigned to
monitor air quality and
manage air pollution
Reports submitted by
the local DENR office on
air quality monitoring
initiatives
Air quality monitoring
completed by May 2014
Compliance monitoring
reports submitted by the
industrial plants
Final report submitted by
September 2014
Inter-industry
memorandum of
understanding on
addressing air pollution in
Naga City
Emission monitoring
reports submitted by the
industrial plants
Assumptions and
Risks
Assumption
Full cooperation by the
industrial plants and
local DENR office
Risk
Weak implementation
and monitoring of
environment policies
Emission monitoring
reports submitted by the
industrial plants
TA review mission and
final report
TA review mission and
final report
Assumption
Full cooperation by the
local DENR office
Government budget
allocated for air quality
monitoring
Assumptions
Full cooperation by the
industrial plants
Strict monitoring and
implementation by the
local DENR office
5
6
Appendix 1
Activities with Milestones
1. TA implementation
1.1 Execution of TA implementation agreement
with local DENR office (March 2013)
1.2 Engagement of consultants (April 2013)
1.3 Purchase or lease of automatic continuous air
quality monitoring equipment (May 2013)
1.4 Setup of monitoring stations (June 2013)
2. Start of air quality monitoring (June 2013)
2.1 Monitoring of air emissions for at least
12 months
2.2 Generation of meteorological data (June 2013)
Inputs
ADB (TASF-other sources): $1,000.000
Philippine Government
The government will provide counterpart support in
the form of counterpart staff, provision of office
space and equipment, and other in-kind
contributions.
3. Start of air dispersion modeling (August 2013)
4. Share with local DENR office, industrial plants,
and their respective multipartite monitoring
teams, data generated and findings of
modeling study (starting November 2013)
5. Agree on mitigating and other measures, if
necessary, to be implemented by all parties
and monitored by the local DENR office, the
multipartite monitoring teams, and the Airshed
governing board (July 2014)
6. Training of local DENR officials and staff and/or
selected qualified project multipartite
monitoring team and Airshed Governing Board
members on improved air quality monitoring
(September 2014)
ADB = A sian D evelopment Bank, DENR = Department of E nvironment an d N atural Resources, T A = t echnical
assistance, WHO = World Health Organization.
7
Appendix 2
OUTLINE TERMS OF REFERENCE FOR CONSULTANTS
1.
Consistent with its objectives under Strategy 2020 1 and its country partnership strategy
with the Philippines 2, the Asian Development Bank (ADB) is committed to support projects that
are environmentally sustainable and do not contribute to environmental degradation. In support
of t hese ob jectives, A DB w ill undertake capacity dev elopment t echnical assi stance ( TA) that
aims to e nsure t hat t he ADB-financed 200 megawatt ( MW) coal-fired po wer pl ant ow ned an d
operated by KEPCO-SPC Power Corporation (KSPC) in Naga City, Cebu does not exacerbate
air pollution in its project area. If the findings of the TA prove otherwise, ADB, together with the
consultant and the Executing Agency, will recommend measures that will mitigate possible air
pollution impacts in the KSPC area. ADB will recruit a consulting firm to monitor air emissions in
the KSPC area and undertake air dispersion modeling on air emissions from point sources.
Based on the results of the air dispersion model, the consulting firm will recommend measures
to mitigate air pollution. This project will require consultant services spread over 18 months
commencing in April 2013. The TA will engage and finance a total of up to 15 person-months of
consulting services, inclusive of 3 person-months for the individual consultant whom ADB may
engage, if needed. The detailed tasks and qualifications for the TA are outlined below. Please
note t hat subject terms of r eference is onl y for t he I nternational C onsultant (firm)--12 per sonmonths--and does not include the potential hiring of the additional individual consultant for up to
3 months, if needed by ADB.
2.
Under the supervision of ADB and DENR staff, the consultant will be responsible for the
following:
1
(i)
Development of quality assurance and quality control procedures to ensure that
measurements meet stipulated standards of quality fit for the purpose.
(a)
Quality assurance. The consultant will determine the monitoring and data
quality objectives, evaluate the continuous ambient air quality monitoring
and s tack emission monitoring equipments to be procured, a nd e nsure
the equipment operators are trained.
(b)
Quality co ntrol. The co nsultant w ill w ork w ith DENR t o ensu re pr oper
operation o f ambient air quality and em issions monitoring equipments,
sound data collection and m anagement, calibration of equipments
according to standards, and deployment of trained staff.
(ii)
Demarcation of modeling air shed or the study area; assessment of existing data
(air quality, land use, topography, and meteorology); and identification of sources
of pol lution and se nsitive r eceptors and si tes for ai r quality monitoring and
meteorological observations. Under this task, the consultant will
(a)
identify and del ineate o n a sca led m ap (1:25,000) the st udy a rea, 3 all
major so urces of ai r p ollution, and sensitive ar eas (e.g., residential
localities, schools and hospitals);
(b)
develop or source a digital elevation model (at 5 meter resolution) of the
study area based on topographic maps and satellite data for use in the air
quality dispersion model;
ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020.
Manila.
2
ADB. 2011. Country Partnership Strategy: Philippines, 2011–2016. Manila.
3
The area over which the air pollutants from major sources of pollution are likely to get dispersed.
Appendix 2
(c)
(d)
4
8
study the existing air quality and meteorological data to site six automatic
continuous air quality monitoring and three meteorological stations; and
assist ADB and DENR t o p rocure su itable automatic continuous
monitoring units 4 and commence ambient data collection.
(iii)
Computation of air emissions. Under this task, the consultant, with the assistance
of DENR, will
(a)
install and ope rate co ntinuous stack monitoring equipment at the K SPC
power plant, the Naga power plant, and the APO cement plant, covering
all stacks from each o f t he plants. The da ta co llected w ill i nclude
concentration o f ai r pol lutants, temperature, v elocity, and hum idity to
compute the ai r e missions released from the st acks; corresponding f uel
consumption an d p ower generation da ta w ill al so be co llected on a
continuous basis to establish correlation; and
(b)
estimate other emissions in the study area based on secondary data and
appropriate emission factors.
(iv)
Establishment o f air quality di spersion m odel f or t he study ar ea. This modeling
application ex pects the use o f a CALPUFF (or similar) multilayer, multi-species
non-steady-state puff dispersion model that simulates the effects of time- and
space-varying meteorological conditions on pollution transport, transformation
and removal. To establish the model for the study area, the consultant will
(a)
obtain from global and/or regional circulation models the time-varying
meteorological data at the suitable grid for the study region;
(b)
downscale the m eteorological dat a to p rovide t ime-varying inputs for
running a non-steady state puff dispersion model, and calibrate the
downscaling model using the observed meteorological data;
(c)
run the air quality dispersion model for the observed source inventory and
established meteorological conditions, and obtain simulated air quality in
terms of hourly, 24-hour, and monthly averages and maximums covering
a 1-year period;
(d)
calibrate the air q uality dispersion model using observed air quality for
four st ations and v erify the model usi ng t he dat a for the remaining t wo
monitoring stations;
(e)
develop air q uality m odeling sce narios for cr itical meteorological
conditions and develop ground level concentration contours for the study
area; and
(f)
recommend relocation of the automatic continuous monitoring stations if
needed.
(v)
Development of air quality management plan for the study area. Under this task,
the consultant will
(a)
present air quality observations and modeling simulation results to DENR
and stakeholders, and provide scientific interpretation of the results based
on the latest research of the Health Effects Institute or the W orld Health
Organization on impacts of air quality on human health;
SO2, NO2, PM10 and PM2.5 are pollutants of concern for this application.
9
Appendix 2
(b)
(c)
(d)
establish with the participation of DENR and the stakeholders the target
air q uality objectives in terms o f sh ort- and l ong-term av erage l evels of
NO2, SO2, PM10, and PM2.5 for the study area;
develop pollution control strategies for the project area to meet the target
air quality obj ectives and est imate the c ost o f i mplementation; present
cost–benefit analyses of the strategies, prioritize them, and propose
institutional arrangements for implementation; and
present the findings and recommendation to stakeholders in Cebu as well
as in Manila to delineate the course of action for air quality management
in the study area.
(vi)
Training o f DE NR st aff, selected q ualified project multipartite m onitoring t eam
and Airshed G overning Board members on air q uality modeling appl ication.
Under t his task, the c onsultant will train t he D ENR st aff, selected qual ified
multipartite monitoring t eam and A irshed Governing B oard members on dat a
collection, da ta p rocessing, ai r quality m odeling, and the use of m odels f or air
quality management. Two hands-on training programs of 5 days each are
expected.
(vii)
Reports. To facilitate timely review of the study outputs, the consultant will submit
the following reports to ADB:
(a)
Quality assu rance and quality co ntrol procedures and i nitial site
assessment and planning report (3rd month). This report will provide the
output of tasks (i) and (ii) and the detailed implementation plan of the
study.
(b)
Pollution inventory and base line ai r q uality r eport (6th month). This will
provide the output of task (iii), air quality observations under task (ii), and
the results of tasks (iv)(a) and (b).
(c)
Air quality m odeling r eport (12th month). This will pr esent t he ou tput o f
task (v) and the detailed plan for completing task (vi).
(d)
Draft final r eport (15th month). This will present t he co mplete results o f
the study and the draft air quality management plan for the study area.
(e)
Final report (18th month). This will be the final output of the study and will
incorporate ADB’s comments on the draft report.
3.
The co nsultant should hav e (i) at l east 10 y ears of ex perience i n ai r quality
management, preferably in the power industry and urban environment; (ii) a proven track record
of undertaking air dispersion modeling on air emissions from point and nonpoint sources; and
(iii) experience in m odel-based ai r quality m onitoring net work desi gn. The consultant should
hold a master’s degree or equivalent in environmental engineering, meteorology, or physics.