D’Appolonia’s experience as “External Compliance Monitoring Group”

to “Lenders’ Independent Environmental and Social Consultant” in the private sector

Challenges and Opportunities

IAIA 15 – April 21st 2015

2000 – 2012 External Compliance Monitoring Group - Chad Cameroon pipeline

ECMG at the beginning - Chad

Cameroon

2000-2005 2006-2010 2011-to date

Commercial Banks

< 5 projects

< 5 projects

> 40 projects

> 40 projects

Growth

2004 – ongoing ECMG BTC Pipeline, Georgia, Azebijan, Turkey

•Chad-Cameroon Export Pipeline2001 2003

•Baku Tiblisi Ceyhan Pipeline •Perù LNG •Newmont Ahafo Gold Mine - Ghana

2004-2006

•Papua New Guinea LNG •Nord Stream pipeline•Ichthys LNG - Australia•Socar Turcas Aegean Refinery STAR - Turkey2007-2011

•Oyu Tolgoi mine - Mongolia•South Stream Pipeline - Black Sea•Etileno XXI Project - Mexico•Nacala Corridor - Mozambique•Anadarko LNG - Mozambique•Punta Catalina Power plant – Dominican Republic …………

2012 - 2015

Cat A projects

2006-2014 ECMG Newmont Ahafo Mine, Ghana

Sectors

2001-2003

2003-2006

2006-2011

2011-2014

2015-2017

€-

€5,000,000

€10,000,000

€15,000,000

Infrastructures & othersEnergy

?

Complexity

APPLICABLE STANDARDSFrom a single applicable standard (“WB Pollution and prevention & abatement handbook” and “IFC Environmental Assessment Guidelines”) to multiple and tailored standards (IFC PS, EP, OECD Common Approaches, Specific IFIs, and ECAs Standards…) to comply with for a specific project

BATTERY LIMITS & RISKS The actual definition of the project area of influence, associated facilities and the leverage, control and influence over third party’s actions

2008 – 2013 ECMG CAIRN pipeline system, India

A former ECMG team

Project Manager

Environmental Expert

Social Expert

Health &Safety Expert

SPECIALIZED TEAM Today, a different and more complex expertise is required

Increasing geographical specialization and technically specialized experts in those fields as required by the projects

2009 – ongoing IESC PNG LNG, Papua New Guinea

A current IESC team

2010 – ongoing IESC Tullow Oil, Ghana

Sector specific process experts (hydro, petrochemical, heavy industry, …)

• ESMS specialist• Biodiversity

specialist• Marine

specialist• Air Emissions

specialist

• SEP specialist• Human

resource specialist

• Cultural heritage specialist

• Indigenous peoples specialist

• Emergency preparedness and response specialist

• OHS specialist• QRA specialist

Project Manager

Environmental Expert

Biodiversity

Specialist

Marine Expert

Social Expert

RAP specialis

t

Labor Specialis

t

Health &Safety Expert

Community

Specialist

Process safety

Specialist

Evolving Trends

From environmentally viable projects to social, economical, environmental sustainable projects

Management of social impacts, gender equality, labor risks, implementation of safety management systems are now key aspects of the IESC evaluation

Stakeholder engagement, Compliance of the compensation process with EMS/RAP commitments, Resettlement and Livelihood Restoration measures, Communication aspects importance is increasing

EIA ESIA + ESMPs2009 – 2014 IESC Nord Stream pipeline, Russia, Finland, Germany

2011 – ongoing IESC Ichthys LNG, Australia

BeforeIFI

Project Sponsor

Lenders technical consultant

TodayPool of Lenders (IFIs, ECAs

Commercial Banks)

Sponsor, Borrower

Project Sponsor Advisor

Technical Advisor

Commercial Advisor

Legal Advisor

Players

Commercial banks and Export Credit Agencies involvement add value and bring additional challenges:

Increasing awareness of the banking systems towards EHSS issues - IESC to provide early warnings on issues/risks

adapting to their decision making process and to internal procedures to respond to the OECD Common Approaches, to the Equator Principles’ standards, to Lenders’ specific standards

2011 – ongoing IESC Socar Turcas Aegean Refinery STAR, Turkey

Commercial Banks /Export Credit Agencies

involvement

Proactive interaction with key players

Quickly response and timely advice to Lenders

Integrity and Independence

Ability to manage potential conflicts of interest perceived by Sponsors/Lenders

Capability to understand and manage the prevailing standards

Training to support Sponsors on EHSS issues, as needed

Adaptive response to changes

2012 – ongoing OHS Advisor Enerjisa Power Plant, Turkey

2012-ongoing IESC Etileno XXI, Mexico

Streamlined Due Diligence process

IESC involved at early stage of the process

ESHS Company policies and procedures already in line with international requirements (this was not the case in the past)

Awareness of the project sponsors towards the IESC role

Think positive (Lessons Learned)

Growth of internal resources to cover the most specialized role(s) (Team Leader, Project Manager)

Outsourcing to address specific requirements through a selected roster of freelances and local partners

Due Diligence schedules might be unrealistic: IESC needs to be flexible and to guarantee long lasting commitment

IESC is the “Eyes and Ears” throughout the project lifecycle

IESC adaptation process

2014 - ongoing IESC Nacala Corridor project, Mozambique

If this is not done, future ages will certainly look back upon us as a

people so immersed in the pursuit of wealth as to be blind to higher

considerations

Alfred Russel Wallace

Thank you

IAIA 15 – April 21st 2015

D’Appolonia S.p.A. Via San Nazaro,19 - 16145 Genova – Italy

Giovanni De Franchi Tel. +39 010 3628148 Fax +39 010 3621078

E-mail: dappolonia@dappolonia.it