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Case Study

Due Diligence Assessment for an Integrated Power Project

By October 14, 2019December 14th, 2021No Comments

EBS Advisory was commissioned by a private equity client to conduct an environmental and social due diligence (ESDD) assessment for a prospective investment into an Integrated Power Project (IPP) in a West African country. The IPP is an open cycle gas turbine power project that consists of a power plant, dedicated gas pipelines (more than 20km), substations and other ancillary facilities for the generation and distribution of electricity under a concessional arrangement. Although the development of the project had reached an advanced stage, the project Sponsor had to contend with financial, technical, and regulatory hurdles, which stalled the completion of the project. Considering equity investment in the project, the PE client requested EBS to conduct an ESDD for the project to identify, evaluate, and propose mitigation measures with respect to the environmental and social risks and impacts.

Other than the site-specific impacts which needed to be investigated, the linear nature of the gas pipeline and transmission network meant that a large area needed to be reviewed during the assessment.  Key environmental concerns addressed included construction site waste generation, alteration of terrestrial and aquatic habitats associated with the installation of transmission network and gas pipeline, collision and electrocution of avifauna and bats along the transmission network, and the release of effluent and hazardous gaseous pollutants to atmosphere from the power station.

Occupational health and safety concerns were also addressed including exposure to physical and chemical hazards, dust and noise pollution, electrocution, and the potential for minor and fatal injuries with the use of tools and machinery.  Risks to local communities included the degree of exposure to communicable diseases (associated with influx of temporary construction workers), the impact of noise and dust emissions from construction activities, increased traffic intensity resulting in injuries to community members, and the presences of armed security personnel on site.

Bearing in mind the strategic contributory value of the project in reducing the infrastructural deficit in the country’s power sector, EBS executed the due diligence through a combination of approaches that seek to identify both the E&S risks and opportunities. The focus was to ensure compliance with local regulatory requirements and international standards, including the IFC Performance Standards and the African Development Bank Operational Safeguards. In the final ESDD report, the environmental and social action plan (ESAP) detailed mitigatory measures for addressing the E&S gaps associated with the project. Also, EBS provided recommendations on E&S opportunities that would enhance the positive impacts associated with the project.