Appendix A: NEDP Resettlement Policy Framework

Nigeria Electricity and Gas Improvement Project (NEGIP)

Resettlement Policy Framework

Prepared by

The Environment, Resettlement and Social Unit (ERSU),

Project Management Unit (PMU)

Power Holding Company of Nigeria (PHCN),

7 Kampala Street,

Wuse II, Abuja, Nigeria

August, 2008.

Acronyms

APLAdaptable Program Loan

BPBank Policy

ERSUEnvironment, Resettlement, and Social Unit

ESMFEnvironmental and Social Management Framework

GHGGreen House Gases

IDAInternational Development Association

IFCInternational Finance Corporation

IOCInternational Oil Company

IPPIndependent Power Producer

JVJoint Venture

LAALand Acquisition Assessment

NEDPNational Energy Development Project

NEPANational Electric Power Authority

NGONon-Governmental Organization

OPOperational Policy

PAPProject-Affected Person

PHCNPower Holding Company of Nigeria

PMUProject Management Unit

PRGPartial Risk Guarantee

RAPResettlement Action Plan

RPFResettlement Policy Framework

TCNTransmission Company of Nigeria

Acronyms

Table of Contents

Executive Summary

1Introduction

1.1Purpose of this document

1.2World Bank Resettlement Policies

1.3NEIPEnvironmental and Social Management Framework

2The Nigeria Energy Infrastructure Project (NEIP)

2.1TheProject Components

2.2Choice of Resettlement Instruments for NEIP

3Objectives and Principles underlying Resettlement procedures

4Process for Resettlement Action Plan preparation and approval

5Likely Populations Affected by the Project

6Eligibility Criteria

6.1Rights to Land

6.2Claims to Land

6.3No Rights or Claims to Land

6.4Eligible Communities

7Legal Framework

8Methods of Valuing Assets for the Purpose of Compensation

9Organizational Procedures for Delivering Compensation and Assistance

9.1Organizational Responsibilities

9.2Organizational Capacity-building

10Implementation Process

10.1Grievance Redress Procedures

10.2Budget and Funding Arrangements

10.3Participation of Affected Persons in Resettlement Process

11Monitoring

11.1Internal Monitoring

11.2External Monitoring

Appendix 1: NEIP Resettlement Action Plan template

Executive Summary

This Resettlement Policy Framework (RPF) is a mitigation tool for the proposed Nigeria Energy Infrastructure Project (NEIP). The RPF will serve the subproject implementers in addressing and mitigating the relocation of populations as a result of the NEIP, their loss of assets, income, or revenue. The NEIP will, most likely, trigger the Bank’s Policy on resettlement, and it is a category ‘A’ project which requires a full EIA. The likely impact of this project is to a large extent, covering a wide area and affecting large population. NEIP is an Adaptable Program Loan (APL) aimed at assisting the Federal Government of Nigeria, with a combination of Risk Guarantees and technical assistance in improving and developing the power sector by applying an International Development Association (IDA) investment It follows a programmatic approach, and will consist of numerous investments and guarantees over an extended time period, some of which will be determined long after project initiation. This RPF therefore, sets up a framework meant for carrying out detailed social assessments for each new subproject as it is proposed for investment, and it will direct the subproject sponsors in steps to be taken to protect affected people, their assets and income. For existing power stations and transmission lines that may be included in this project,social auditsof affected persons and evaluations of compensation will be conducted as a first step in the implementation process to determine the social conditions around the facilities, and the potential social impacts associated with the rehabilitation project. Further steps will be taken to fully compensate the affected persons.

Also, an Environmental and Social Management Framework (ESMF) for NEIP has been prepared and is disclosed as a separate document. Following the procedures set out in the ESMF, Environmental Impact Assessments (EIAs)or Environmental Audits will be prepared by each subproject sponsor whereadverse impacts areexpected.

Other Bank policies on Environmental Assessment, Natural Habitats, and Physical cultural resources will be triggered by this project. NEIP has the following potential impacts on population: loss of land, economic trees/crops, fishing and hunting resources and cultural assets (e.g., burial sites, places of worship) in addition to impacts on the natural environment (water and air pollution, loss of habitat, fragmentation of habitat) etc.

This RPF lays out the overall policies and procedures for identifying and providing compensation, assistance, or both, to people whose assets, income, or standard of living are harmed by the project activities.

Introduction

1.1Purpose of this document

The World Bank plans to finance a NigeriaEnergy Infrastructure Project (NEIP) that will be national in scope. The project will include, among others, subprojects to:

i)upgrade power stations,

ii)construct transmission lines, and

iii)construct distribution lines. These would entail land acquisition, itself leading to potential resettlement of people, loss of assets or access to resources, leading to loss of income or means of livelihood.

However, these subprojects have not yet been fully defined in any detail. For instance, the specific sites that will be acquired have not yet been selected. Therefore, it is not yet known whether and how the subprojects may affect people or people’s property, places of business, homes, crops, or trees. Every effort will be made not to harm people’s livelihood, incomes, assets, or access to assets, in any way. Nonetheless, the subprojects may cause some displacement of either people or loss of assets.

In order to safeguard people’s interests, the Bank requires that policies and procedures be worked out in advance as to how project proponents will remedy any adverse effect of the project on the social environment, and people compensated for lost assets and income.

This document, the “NEIP Resettlement Policy Framework” (RPF), lays out the overall policies and procedures for identifying and providing compensation, assistance, or both, to people whose assets, income, or standard of living are harmed by the project activities. It also contains a preliminary description of the population and categories of people that might or might not be negatively impacted by the project and spells out the eligibility criteria. Furthermore, it describes the Nigerian legal frameworks, laws and regulations that will be used to compensate the affected population as well as reviewing the fits and gapsbetween the Nigerian legal framework and Bank Policy (OP/BP4.12) and its requirements. The document further proposes measures to bridge any gaps.

If Bank policy (i.e., BP 4.12 and OP 4.12) and Nigerian policy and law on involuntary resettlement differ as to people’s entitlement to compensation and other assistance, the policy that provides for the higher level of compensation and assistance will take precedence. For instance, compensation will be for full replacement costs, without depreciation, even if Nigerian policies and laws normally deduct depreciations.

This document also describes the methods of landacquisition, and valuation of assets; it describes the implementation process, the grievance redress mechanisms, and the arrangements for funding resettlement costs. It also presents an initialbudgetary provision within the project to finance possible resettlement, and identifies the flow of funds and contingency arrangements. Finally it describes the mechanisms for consultation with and participation of displaced persons in planning, implementation and monitoring as well as the arrangements that will be taken for monitoring activities by the implementing agencies and, if need be, by independent monitors.

1.2World Bank Resettlement Policies

The World Bank has ten Safeguard Policies to reduce or eliminate the adverse effects of infrastructure projects. One of the Safeguard Policies deals with resettlement. As explained below, “resettlement” in Bank parlance means not only the physical relocation of people, but also compensation for any loss of land, other assets, income, etc. due to project implementation.

The Equator Principles and IFC Performance Standards which are equivalent to Bank policy on land acquisition and resettlement policy will be adhered to by NEIP investors.The IFC handbook for preparing a Resettlement Action Plan (RAP), consistent with Bank policies, requires the following:

Involuntary resettlement should be avoided

Where involuntary resettlement is unavoidable, all people affected by it should be compensated fully and fairly for lost assets.

Involuntary resettlement should be conceived as an opportunity for improving the livelihoods of the affected people and undertaken accordingly.

All people affected by involuntary resettlement should be consulted and involved in resettlement planning to ensure that the mitigation of adverse effects as well as the benefits of resettlement are appropriate and sustainable.

All the Bank Safeguard Policies, including the ones on resettlement just cited, may be obtained at the Bank web site,

The Bank’s Disclosure Policy requires that safeguard-related documents, such as a RPF and a RAP be

prepared before project appraisal, and
made available in Nigeria before project appraisal, at publicly accessible locations and in a form that the potentially affected people can understand and
also be made available at the Bank’sInfoShop.

The RPF and the RAP can be revised as necessary during project appraisal.

1.3NEIP Environmental and Social Management Framework

The Environmental and Social Management Framework (ESMF) which was developed for the National Energy Development Project (NEDP) in Nigeriahas been upgraded using lessons learnt as basis for the NEIPat the same time as this RPF. The two documents complement each other. The RPF addresses potential adverse social impacts that might stem from resettlement of people affected by the project, whereas the ESMF addresses other possible harmful social and environmental effects of the project.

2The NigeriaEnergy Infrastructure Project (NEIP)

2.1Project Components

The NEIP will support continued reform and privatization of the electricity sector, which the Bank is already assisting through the NEDPcredit and the Privatization Support Credit.

2.2Project Concept

The development objectives of the Project are to increase availability and reliability of power supply along with financial sustainability of the power sector. Its secondary but important global objective would be the reduction of GHG emissions through reduced gas flaring and enhanced share of cleaner generation.

NEIP is an Adaptable Program Loan (APL) i.e. a long-term engagement in the energy sector that is implemented in phases linked to progress in accomplishing planned sector reforms. An APL with two tranches is proposed as the lending instrument of the project. The first phase has two portions aimed at assisting the government of Nigeria in:

(i)Risk coverage to facilitate private investment in generating capacity and

(ii)IDA funding for investments. The project will have a structure of due diligence for selecting credible projects that will ensure compliance with relevant international technical standards.

The project would also implement a temporal subsidy mechanism to attract investments in generation while favorable tariff regimes are being developed. Also, the project would include additional investments (e.g. IDA) to develop extra capacity in generation, thus reducing subsidies, initiating alternative energy sources, driving positive changes in the domestic gas supply for the electric power sector, and would include a mechanism to reduce gas flaring and gain carbon credits for Nigeria. The APL is in two stages from 2009 to 2015 and is expected to add additional capacity of 1,500 - 2,000 MW to the national grid.

2.3Project Components and Intervention Plan

The project is divided into three main components based on the kind of investment proposed and the Sector in which the investment is being made:

Component 1 is a Partial Risk Guarantee (PRG) scheme with investments totaling about $500 million of which $125 million is an IDA allocation. It is aimed at providing comfort for private sector investors in generation as well as assist government in establishing frameworks for the IPPs.
Component 2 is a set of selective investments for improving generation, transmission and distribution infrastructure. US$ 330 million has been budgeted for this purpose and is aimed at reducing losses, ensuring efficient evacuation of power generated by the IPPs, restoring capacity at existing generating stations, helping power companies meet set objectives and enhance skill transfer.
Component 3 (US$ 20 million) supports policy frameworks and capacity building by developing Power Purchasing Agreements (PPAs), gas policies, long term power plans, designing gas infrastructure and assisting government to assess carbon credits. This component will support training programs for supporting companies, regulatory and implementing agencies as well as help prepare feasibility reports on coal-fired thermal plants.

The APL structure will have two phases which can run concurrently, with the purpose of demonstrating the WBG risk mitigation scheme in APL-I and scaling-up in APL-II, after the critical sector reforms already described have been put in place and begin to show results.

Phase I: APL I and Partial Risk Guarantees (2009 - 2014): In this phase, IDA would provide:

(a)PRGs for amounts of up to US$160 million (IDA allocation of US$40 million[1]). The Government has nominated a number of candidate projects for the first phase,[2] as the first demonstration projects for PRG support, although whichever one would be supported has not been finalized. Additional PRG support may be considered in support of PHCN’s payments for gas supplied by the International Oil Company (IOC) Joint Ventures (JVs);

(b)IDA Credits of US$18.7 million for rehabilitation of public sector generation plants;

(c)IDA Credit of US$36.3 million for investments in critical transmission infrastructure and “best practice” distribution projects; and

(d) Technical assistance for an amount of US$ 5 million.

Phase II: APL II and Partial Risk Guarantees (2010 - 2015): This phase will be launched after the following pre-agreed objectives are met:

(a) A transition subsidy mechanism is in place to meet the revenue requirement of PHCN companies until cost reflective tariffs levels are reached as per the Multi-Year Tariff Order (MYTO);

(b) There is sustained gas supply to power plants with enabling gas policies; and

APL II will include:

(a) PRGs for US$340 million (IDA allocation of US$85 million) for additional IPPs and possibly for gas supplies to PHCN;

(b) IDA credits for transmission and distribution investments (US$300 million); and

The NEIP is national in scope. The exact locations for new generating plants will depend on the IPPs that are accepted after due diligence. This will in turn determine the corridors for the transmission lines to connect the plants to the national grid. Gas will be sourced from the oil fields in the Niger River Delta, and it is possible that some of the generating plants will be located in the Delta as well. The gas-fired generating plants that are potential candidates for rehabilitation are mainly in southern Nigeria. The net impact on gas flaring in the Delta will be positive, but the magnitude of the reduction cannot be predicted at this stage of the project development

NEIPincludes generation, transmission, and distribution, amongst other sub-components, which may trigger the environmental, social or resettlement policy. The remaining sub- components are mainlypurely for technical assistance, and therefore have no impact on resettlement issues.

Subprojects for generation and transmission will involvegenerating electricity and transmitting it through transmission lines to the other parts of the country. Thesemay involveresettlement issues and therefore involve the enforcement of safeguards policy guidelines. In addition, resettlement may occur as a result of possible land acquisition for new customer service centers. However, every effort will be made to minimize the displacement of people and where it becomes inevitable, adequate compensations will be paid.

As indicated above, the third component aims atinvest models for expanding and intensifying access to electricity and through supporting Local Government initiatives.

2.4Choice of Resettlement Instruments for NEIP

In the course of planning NEIP activities in particular locations, it may emerge, as it is always the case, that the subprojects will have a negative impact on people’s assets or incomes. For instance, the development of power infrastructure may impact homes, businesses, or other structures and these assets will have to be relocated. However, it is impossible to know at this stage what those impacts will be, since the subproject areas have not been selected. During implementation, for each subproject, a Land Acquisition Assessment (LAA) will be prepared to determine whether the subproject will entail displacement and/or land acquisition, and whether or not a RAP will be needed. If and when needed a RAPthat integrates whatever foreseen negative impacts will be prepared and presented to the Bank for approval.

Any RAP prepared for NEIP must be in line with the objectives, principles, and policies outlined in the remainder of this Framework, bearing in mind the Bank’ssafeguard policies on resettlement.

3Objectives and Principles underlying NEIP Resettlement procedures

The following principles apply to resettlement in the context of NEIP.

“Resettlement” refers not just to the physical displacement of people, but also covers taking land that results in the
relocation or loss of shelter,
loss of assets or access to assets, and/or
Loss of sources of income or means of livelihood (OP 4.12, paragraph 3)...

Resettlement will be avoided if possible and otherwise minimized by exploring all viable alternatives.

All affected people will be entitled to compensation and/or other forms of assistance. “Affected people” includes not only people with rights or claims to lost land and assets, but also squatters, tenants, artisans, wage earners, etc., whose livelihoods, living standards, or use of resources may have been affected. However, people who move to a site just in order to get compensation or assistance do not qualify (OP 4.12, paragraph 15-16). For this reason a cut-off date will be provided for each subproject for compensation purposes.

Every effort will be made to provide alternative land to affected people, such as farmers and herdsmen, whose livelihoods depend on land, and who will lose land or access to land due to the subprojects.

Alternative land will be provided to people who have to relocate physically because of the subprojects. These people must receive housing or residential plots that have all the advantages and productive potential of the previous site (OP 4.12, paragraph 6 (b) and (c).

If community infrastructure or services, such as schools, roads, bridges, water supplies, etc., are lost through project activities, these will be replaced in-kind.

Affected persons and communities will be meaningfully consulted, and have the opportunity to participate in planning and implementing the resettlement program. This includes workshops and information campaigns to inform the public. Other means of information include the organization of local public forums to discuss theproposed mitigation measures, their content and means of their implementation, including timing and requirement, and to inform stakeholders about their rights and the alternatives available to them.

A RAP will be prepared and approved by the Bank as well as responsible Nigerian Government Agencies before beginning any construction that will entail resettlement. An accurate and complete summary of comments that affected people and communities have made on the plan in public forum discussions will be submitted to the Bank and/or the designated Agencies along with the project plan.

The compensation and other assistance outlined in the RAP will be discussed and agreed upon with the stakeholdersbefore the subprojects in question begin.

The resettlement policies laid out in this document, and in BP 4.12 and OP 4.12, apply to all activities under NEIP, regardless of whether the funding comes from the Bank or the Nigerian Government. They also apply to other activities resulting in resettlement if, in the judgment of the Bank, these activities are
directly and significantly related to NEIP,
necessary in order to achieve the objectives of NEIP, and
carried out at the same time as NEIP implementation (OP 4.12, paragraph 4).

Many of the above principles are reiterated in more detail in the remaining sections of this RPF.