SASOL NATURAL GAS PROJECT - World Bank€¦ · SASOL NATURAL GAS PROJECT Regional Environmental and Social Assessment E784 F I N A L Volume2 July 2003 M A R K WOOD CONSULTANTS 8 -Fl

SASOL NATURAL GAS PROJECT

Regional Environmental andSocial Assessment

E784F I N A L Volume2

July 2003M A R KWOODCONSULTANTS

8 -Fl

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SASOL NATURAL GAS PROJECT

REGIONAL ENVIRONMENTAL ANDSOCIAL ASSESSMENT

F I N A L

July 2003

PREPARED FOR:

SASOL TECHNOLOGY (PTY) LTD

PREPARED BY:

Mark Wood ConsultantsPO Box 2963, Honeydew 2040

South AfricaTel: +27-11-958-1920

Fax: +27-11-958-1858Email: [email protected]

Contributing AuthorsMr Sean O'Beirne, SE Solutions

Mr Johan van der Walt, Acer AfricaMr Mark Wood, Mark Wood Consultants

* c-F--- ,

- A -R'E,!w -

TABLE OF CONTENTS

FOREWARD i1 INTRODUCTION 11.1 Background 11.1.1 Purpose of this Report 11.1.2 Location of the Key Green Fields Elements of the Project 21.1.3 Definition of References made to "Sasol" in the RESA 21.1.4 Status of Environmental Reporting 51.1.5 Status of the Project 101.1.6 Disclosure of the RESA 11

2 TERMS OF REFERENCE 122.1 Study Approach and Methods 122.2 Scope of Work 132.3 Report Structure 14

3 ASSESSMENT OF REGIONAL IMPACTS IN MOZAMBIQUE 153.1 Effects on Natural Resources 153.1.1 Accelerated Hardwood Exploitation 153.1.2 Accelerated Wildlife and Other Natural Resource Exploitation 273.1.3 Habitat Loss and Ancillary Effects due to Increases in Settlement 323.1.4 Pollution Effects Caused by Discharge of Effluent into the Govuro River System 343.2 Socio-Economic Effects in Mozambique 413.2.1 Upstream and Downstream Economic Growth Opportunities 413.2.2 Combined (Cumulative) Effects of the NGP and Other Development on Existing 45

and Institutional Capacity in Southern Mozambique3.2.3 Impacts on Tourism in and around Vilanculos 513.2.4 Impacts on Agricultural Development around the Temane and Pande Production 59

Areas3.2.5 Impacts on Spatial Development Initiatives in Southern Mozambique 623.2.6 Impacts on Safety Restriction Zones around the Pipelines on Settlement 663.2.7 Impact of HIV/Aids 69

4 ASSESSMENT OF REGIONAL IMPACTS IN SOUTH AFRICA 704.1 Effects on Natural Resources in South Africa 704.1.1 Effects on Air Quality 704.1.2 Effects on Consumption of Natural Resources 764.1.3 Impacts on Job Creation 78

5 REGIONAL POLICY RELATED ISSUES 815.1 SADC Policies 815.1.1 Mozambique 815.1.2 South Africa 825.2 Proposed Actions and Responsibilities 835.3 Observations for Consideration by Other Parties 83

6 SOCIAL INTERVENTIONS PLANNED BY SASOL 846.1 Background 846.2 Management Structure to Administer Fund 846.3 Community Liaison 856.4 Evaluation Procedure for Social Spending in Communities Affected by the 86

Project6.5 Defining Needs 866.6 Project Delivery to Date 876.7 Making the Best Use of the Fund 886.8 Actions and Responsibilities 89

7 SUMMARY OF CONCLUSIONS AND RECOMMENDED ACTIONS 907.1 General 907.2 Regional Impacts in Mozambique 90

TABLE OF CONTENTS

7.2.1 Biophysical Environment 907.2.2 Social Environment 927.3 Regional Impacts in South Africa 937.3.1 Biophysical Impacts 937.3.2 Social Impacts 947.4 Policy Considerations 957.5 Summary of Actions and Responsibilities 95

REFERENCES

LIST OF FIGURES1-1 Sasol company structures involved in the NGP 31-2 Locality plan 41-3 Details ofthe gas field development 51-4 Organogram of environmental reports and relevant project related documents 6

prepared during the course of the planning of the Natural Gas Project1-5 Detailed document map of technical reports for the NGP 81-6 Organogram showing environmental teams involved in monitoring and auditing 10

construction of the Mozambique section of the pipeline3-1 Distribution of Androstachys johnsonii (Lebombo Ironwood) along the proposed 17

pipeline route3-2 Typical agriculture/woodland mosaic in the study area 183-3 Location of permanent infrastructure under construction in Inhambane Province 28

for the first phase of the Sasol Natural Gas Project3-4 Organogram showing the wastewater treatment logic at the CPF 353-5 Seasonal extent of flooding 383-6 Extent of agriculture in the Govuro River area 393-7 Approximate boundaries of the Corridor Sands and Rio Tinto project exploration 47

license areas3-8 A Schematic diagram of the process of acquiring land 533-9 Schematic diagram of the process to be followed to implement a proposed 54

development in Vilanculos3-10 Temane CPF construction site: analysis of construction complaints raised by local 56

communities and officials3-11 Agricultural potential in the exploration area 603-12 Area of the Limpopo Valley Spatial Development Initiative 633-13 Area of the Maputo Development Corridor 653-14 Areas of partial protection around the natural gas pipeline 674-1 Comparative emission factors for coal, fuel oil and natural gas expressed as mass 72

emitted (g) per unit of energy (GJ) (sourced from AP42)4-2 Sectoral breakdown of existing synthesis gas users 734-3 Sectoral breakdown of projected future gas users 746-1 Responsibility framework for implementation of the SDAP 85

LIST OF TABLES1-1 Venues at which the EIA Documents and the RESA, the RPIP and the 10

Consolidated Executive Summary and Update have been disclosed to the public2-1 Issues that have been evaluated in Chapter 5 of the RESA 133-1 Data concerning hardwood harvesting in the study area 203-2 Summary of information gathered at four sawmills in Inhambane Province 223-3 Volumes of the most common woods for which simple licenses are issued in the 24

Districts of Mabote, Vilanculos, Inhassoro and Govuro (period 2003)3-4 Animal species that will be under greatest pressure as a result of increasing 30

accessibility in the study area3-5 Limits for process wastewater, domestic sewage and contaminated storm water 36

for discharge to surface waters (Source: World Bank, 1998)

TABLE OF CONTENTS

3-6 Liquid effluents from onshore oil and gas production (Source: World Bank, 1998) 373-7 Possible gas users in the Maputo area that will be supplied with gas by the Matola 42

Gas Company3-8 Employment during construction and operation of the Corridor Sands project 48

compared with the Sasol NGP3-9 Comparison between existing traffic volumes on the EN-1 and the volumes 49

created by the NGP during operation of the CPF3-10 Comparison between Mozal (I and 11), Corridor Sands and Sasol NGP 57

employment and investment data4-1 Changes in air pollutant emissions from various Sasol operations as a result of 70

the change to natural gas4-2 Air pollution emissions (in kilotonnes) and their sources in South Africa in 1990 73

(after South Africa's SOE, 1998)4-3 Employee numbers reported in the November 2002 SCI board report 784-4 Sigma Colliery contractor figures 794-5 Personnel requirements current Sigma vs. Future Mooikraal 806-1 Overview of community needs 876-2 Existing and future project deliveries to date 887-1 Summary of Sasol actions and responsibilities 957-2 Summary of observations to be noted by the World Bank for purposes of further 99

discussions with third parties, if applicable and required.

LIST OF PHOTOGRAPHS1-1 Sasol Secunda Plant 72-1 Manufacture of charcoal along the pipeline right of way 143-1 Examples of ironwood forest 163-2 Large areas of ironwood east of the study area 183-3 Temporary shelters constructed in Ironwood forests during timber extraction 203-4 Use of the construction right of way for hardwood exploitation 253-5 Game meat (Cephalophus natalensis - Red Duiker) is an important dietary 29

supplement3-6 African Python (Python sebae natalensis) by pipeline trenching crew 293-7 Typha capensis (Bulrushes) sold to generate extra income 293-8 Sale of firewood supplements household income 29

LIST OF BOXES3-1 Monitoring system for controlling illegal hardwood extraction along access created 26

by the NGP3-2 Sasol NGP approach to construction employment issues 563-3 Record of discussions with key role players in the agricultural sector in 61

Inhambane Province6-1 Excerpt from Sasol Ltd Social Development Action Plan 84

TABLE OF CONTENTS

LIST OF ACRONYMS

ARA SUL Southern Regional Water AuthorityBIP Beluluane Industrial ParkBoP Balance of paymentsCDM Cleaner Development MechanismCER Carbon emission reductionsCIP Centre for Investment PromotionCPF Central Processing FacilityDDARD District Director for Agriculture and Rural DevelopmentDNCH Direcc3o Nacional de Carv3o e Hidrocarbonetos (National Directorate for Coal

and Hydrocarbons)DNFFB National Directorate of Forestry and WildlifeDWAF Department of Water Affairs and ForestryEIA Environmental Impact AssessmentEIS Environmental Impact StudyEMP Environmental Management PlanEMS Environmental Management SystemENH Empressa Nacional de Hidrocarbonetos de Mocambique, E.P.GDP Gross Domestic ProductGLTP Greater Limpopo Trans-frontier ParkGOM Government of MozambiqueGTL Gas to LiquidHIV/AIDS Human Immunodeficiency Virus / Acquired Immune Deficiency SyndromeHSE Health, Safety and EnvironmentIDC Industrial Development CorporationIFC Industrial Finance CorporationIFZ Industrial Free ZoneKAPS Knowledge, Attitudes and Practices SurveyLDC Limited Duration ContractLPG Liquid Petroleum GasLVSDI Limpopo Valley Spatial Development InitiativeMDC Maputo Development CorridorMGC Matola Gas CompanyMW MegawattMGJ Million GigaJoulesMICOA Ministry for the Coordination of Environmental Affairs (National Department -

MozambiqueMIGA Multilateral Investment Guarantee AgencyNDEA&T National Department of Environmental Affairs and TourismNGO Non Government OrganisationNGP Natural Gas Project (the current project)PARPA Action Plan for the Reduction of Absolute PovertyPLA Project Labour AgreementPLT Public Liaison TeamPM Particulate matterPPZ Partial Protection ZonePWV Pretoria-Witwatersrand-Vereeniging triangle (the heart of the urban and

industrial belt of South AfricaRESA Regional Environmental and Social AssessmentRPIP Resettlement Planning and Implementation ProgrammeROMPCO The Republic of Mozambique Pipeline Investments Company (Pty) LtdSADC South African Development CommunitySCI Sasol Chemical Industries (Pty) LtdSDAP Social Development Action PlanSDF Social Development FundSIC Sasol Investment CompanySMMEs Small and Medium EnterprisesSPFFB Provincial Services of Forestry and WildlifeSPI Sasol Petroleum International (Pty) Ltd

TABLE OF CONTENTS

SPM Sasol Petrole'um MozambiqueSPT Sasol Petroleum Temane LimitadaSSF Sasol Synthetic Fuels (plant situated in Sasolburg)TFCA Trans Frontier Conservation AreaTSS Total suspended solidsWHO World Health OrganisationWWTP Waste water treatment plant

FOREWORD

Sasol's commitment to the proposed recommendationscontained in the RESA

This document is submitted to the World Bank for DurDoses of meetina the financinarequirements in accordance with the Safeguard Recommendations issued to Sasol by theWorld Bank in December 2002. Drafts of this document have been submitted to the WorldBank and other stakeholders for input and comments prior to the finalization of the document.Comments have been noted, heeded or otherwise attended to. This document is submitted asa final version for clearance by the World Bank (AFTESj, aisciosure at the infoshop inWashington and for purposes of submission to the World Bank Board for financing approval.Sasol will a!ns rIiac-inea thea rdnoument tf atakeahonelara in Sonuth Africa ad Mnr zArnmhin..a n

explained in this document. The document reflects the status of the NGP at the end of June2003.

[ SASOL'S COMMITMENTS TO THE PROPOSED RECOMMENDATIONS CONTAINED INTHE RESA

oasoi weicomes mue opportunity to nave parucupated in and to nave made resources avaelaowefor the development of the RESA. Sasol considers the contents of the RESA to provd framewonrke for ani infa.rma$i n acordin., ton uhi,h thea cu mmulafive andn rg,ninna! imnai.4aof tIe

Natural Gas Project can be managed.

Sasol takes note of the contents of the RESA and the recommendations, findings andobservations made In the document. Sasol recognises that the NGP's operations andactivities, as well as those of its partners, may have cumulative and regional impacts, asindicated in the RESA. As a responsible global company, operating both locally andinternationally through various businew units, Sasoi accepts responsibiiity to manage iheregional and cumulative impacts directy associated wih the NGP, that are within its control,in irtA r In gn.. nn ihda Irnn ltin emoasi*#ahl ai k nf jih n lae4 ea4mirnnr ife lifai-r4a…ne, to ensur- Ut-e W -r" --- nabi - the - '.diU-J---.

Sasol further recoanises that this commitment will require a dynamic apvroach, which will beadaptable, adjusting to changing circumstances and including the availability of newinformation and the sharing of knowledge and further consultation with stakeholders, includingpartners and the govemments concemed.

Sasal Natural Gas Project-Final Regional and Social Env ronrnental Assessment jRESAI i

I INTRODUCTION

1.1 Background

1.1.1 Purpose of this Report

Over the last several years a range of agreements have been finalised between thegovernments of South Africa, Mozambique and Sasol about the extraction of natural gas fromdeposits in the Temane and Pande gas fields of Mozambique, for direct use in South Africa.Dubbed the Natural Gas Project (NGP), the extraction, transfer and use of natural gasrequires a range of activities and developments, including continued exploration in the gasfields, the development of gas extraction and processing facilities in the gas fields and theestablishment of a pipeline from the gas fields to Sasol's Secunda operation.

In December 2002, the World Bank Mission held discussions with Sasol to determine whetherthere were any social and environmental information gaps to be closed before finalizing theapplication for World Bank financing. The Mission visited the site in South Africa andMozambique and met with a range of people from Sasol and other organizations, includingthe consultants who were responsible for preparing several of the project-specificEnvironmental Impact Assessments (EIA's) and Environmental Management Plans (EMP's).

Based on the December visit, the Mission prepared a document referred to as the 'SafeguardRecommendations'. This document was issued to Sasol in December 2003 discussion andimplementation. In the Safeguard Recommendations, the Bank indicated that it had reviewedthe environmental and social assessments prepared for the project and that the quality of thework done was considered to be high with most of the documentation being consistent withthe bank's policies and procedures.

Four specific documentation needs were identified in order to fully comply with the Bank'srequirements for environmental and social evaluation. These were:

* Preparation of a Consolidated Executive Summary and Update;* Preparation of a Regional Environmental and Social Assessment (RESA);* Completion of pending EMPs for the Gas Field;* Packaging of the Components of the Resettlement Policy Framework and Resettlement

Action Plan.

The work presented in this document covers the second of the four items listed above,namely the Regional Environmental and Social Assessment (RESA). Sasol and the WorldBank agreed to jointly negotiate and develop a specific scope for the RESA based on thegeneral guideline provided by the Safeguard Recommendations. The Draft Scope waspresented to the World Bank on 1 April 2003 and the Final Scope agreed on 10 April 2003.

An extensive range of environmental documentation has been prepared for the Natural GasProject. Readers of this report are urged to consult the Consolidated Executive Summary andUpdate for an overview of the available information. In Chapter 1.1.3 of this report, asummary of available documents is presented together with details of where each of thesedocuments can be viewed. It is emphasised that the RESA covers only those issues of aregional nature. The scale of many of the project impacts is local in extent and these impactsare consequently not dealt with in the RESA. The reader is referred to the project-specificEnvironmental Assessment's for an account of the nature, magnitude and significance ofthese impacts.

Sasol Natural Gas Project-Final Regional and Social Environmerital Assessment (RESA) 1

1.1.2 Location of the Key Green fields Elements of the Project

The major new infrastructure for the project consists of three key elements:

* the development of the gas fields, including the installation of thirty-four productionwells (in the short and medium term) and the transport of the raw gas viaunderground gathering pipelines to a Central Processing Facility (CPF) 40kms north-west of Vilanculos. At the CPF, the gas will be cleaned and dried before insertion intothe main pipeline for transportation to South Africa;

* the transport of the gas within Mozambique by underground transmission pipelinefrom the Temane Central Processing Facility to Ressano Garcia;

* the transport of the gas within South Africa by underground transmission pipelinefrom Komatipoort to the Sasol Synfuels plant at Secunda;

* the upgrading and conversion of Sasol's plant infrastructure at Secunda andSasolburg to accommodate the use of natural gas. These plants presentlymanufacture synthetic gas from coal.

The location of these elements is indicated in Figures 1-2 and 1-3.

1.1.3 Definition of References made to "Sasol" in the RESA

Reference made to Sasol as part owner and operator of the NGP (unless otherwiseparticularly stated, or unless the context or usage in this document or any other documentcross referenced or summarized herein would indicated otherwise, in which case, referenceto Sasol in its context may refer to a particular business unit within the Sasol Group ofcompanies) refers to:

* Sasol Gas Holdings (Pty) Limited, the Guarantee Holder as defined in the Contract ofGuarantee entered into with the Multilateral Investment Guarantee Agency on orabout 20 December 2002 under No: 0384-01-01; and

* The Republic of Mozambique Pipeline Investments Company (Pty) Limited(ROMPCO) as the borrower under the Contracts of Guarantee to be entered into fornon- shareholder loans and the long term financing agreements already concludedand those yet to be concluded as far as the pipeline portion of the Sasol Natural GasProject (NGP) is concerned, and

* Sasol Petroleum International (Pty) Limited (SPI) as the Guarantee Holder defined inthe Contract of Guarantee entered into with the Multilateral Investment GuaranteeAgency on or about 20 December 2002 under No: 0384-01-02; and

* Sasol Temane Limitada (SPT) as the borrower under the Contracts of Guarantee tobe entered into for non- shareholder loans and the long term financing agreementsalready concluded and those yet to be concluded as far as the Upstream Portion ofthe NGP is concerned.

The Upstream Portion of the NGP means the finance, development, exploitation, operationand maintenance of the natural gas fields at the Pande and Temane gas fields inMozambique and the finance, design, construction, operation and maintenance of a centralprocessing facility in Mozambique, to the extent undertaken by SPT.

The Pipeline Portion of the NGP refers to the design, development, financing, construction,ownership, testing, commissioning, operation and maintenance of the natural gastransmission pipeline, undertaken by ROMPCO.

Sasol Natural Gas Project-Final Regional and Social Environmental Assessment (RESA) 2

To the extent that other parties are referred to in the RESA, the following should be noted:

* such references form part of observations only;

* are made in terms of the study approach and methods required by the World Bank asexplained in section 2.1 (e) and;

* when recommendations are made to, involving, or implicating such parties, suchreferences should not be construed to be binding on, or to form an obligation orpotential obligation made by Sasol on behalf of the party concerned.

FIGURE 1-1: Sasol company structures involved in the NGP

as Sasol Sytduel

(100%) ~~~~~~Holding (Pty) Ltd(PyLt nuri

. X , {100%1 . . .~~(1

SPI aso as ROMPCO(100%) (100%) (Pipeline Company)

Saso . Naurl Gas Project-Final RegionaandSilEnrnmena(100%)

t (70% J t(100%)

Sasol Natural Gas Project-Final Regionial and Social Environmnental Assessment (RESA) 3

BOTSWANA MOZAN-NAMIBIA I / ~~~ RIQUE

SOUTH ARICA

- L MozambiqueSouth Africa

\CENTRAL

I \ ff \ PROCESSING

ZIMBABWE | Cheda *' ATTEMANE

\ I . ' vZi~~~~~~~~~~naveN.-\ Gonarezho j _ I

) X / *~~~~~~~~~ ~ ~~~~~~~~~~ Mabote

MOZAMBIQUE

g+itBndgih ,a ,

Messes -~~~~~~~~~~~~ Pa~~~~~~ ~INKALMBANELouis Triairdt \ mapaiff 'anhine N.P Chiguh + , PROVINCE

- E " ,' * Fonhalouro

/ |ICautadal6|9& GAZA DiFdiza aPROVINCE "- '

Tzaneen-

/PeIersbtuIQ ,Y ^ @

Jozgletoesis - Kruqer N .Rltw=ghssrs\ Qt

SOUTH AFRICA ,W I .- s°:PROVINCE

> Lydebu$ Es Mage INDIAN OCEAN

PROVINCE NetspORTn/

)elfast n ba ResGAHooARCIA5 J noot & X hG ~~~~~~~LEGEND

Camlia M ap-uto Pipeline Route, Ca oSina ,,-taas \ - Intemational Borders

o°., - National RoadsTrjr,bardl. . ( i,SWAZILAND \,^ / _ National Parks

*;- -BeWa *Enneelo I F FLFU|IU th

SECUNDA a EmI

Note: For cross referencing with the project ElAs and EMPs, komnetre distances in South Africa and Mozarmbique are independent and as stated in the project tevelEMA & EMP report

FIGURE 1-2: Locality plan


- National Roads'':,J'Boundary of Exploration Area,r J Temane and Pande Production Blocks ^ SofalIa.

* Tomane Central Processing x -:Provie IFaclity (CPF) D

E3J Provincial Boundary - Nova Mambone 2 'S

~~~O 4 O~~~~~~5~~~~ ~~~~ ~Govuro

l I'and'h | INDIAN OCEAN

t ~~~~wacis 22S-- i ae - - -. - -- - --

' -f'~~~~~~~~~i'..R:........... .... . . .. . . .. . .

i Chigubo : ................ I

Inhambane~ I j . Province 23'S

GazaProvince MOZAMBIQUE M singe

X 0 1 ftn)arnb.no

FIGURE 1-3: Details of the gas field development

1.1.4 Status of Environmental Reporting

Figure 1-4 is an organogram of the various environmental reports and related documents thathave been prepared during the course of the planning and roll out of the Natural Gas Project,prior to the preparation of the RESA. An overall summary of key documents and reports hasbeen prepared in an Executive Summary and Update, as required by Sasol's financiers.

Sasol Natural Gas Project-Final Regional and Social Environmental Assessmenit (RESA)5

SASOL NATURAL GAS PROJECTEXECUTIVE SUMMARY & UPDATE

PROJECT SPECIFIC GENERIC REPORTSEIA/EMP REPORTS

Regional Environmental and. Temane/Pande Gas Field Social Assessment

Exploration* Temane/Pande Gas Field * Summary of Public Consultation

Development and Disclosure (as contained* Temane-Ressano Garcia herein)

Pipeline: Mozambique. Komatipoort-Secunda Pipeline: . Resettlement Planning and

South Africa Implementation Programme. Secunda Interface (Volumes 1-4)* Secunda Plant Expansion. Sasolburg Plant Conversion . Social Development Action Plan* Natural Gas Network Conversion

FIGURE 1-4: Organogram of environmental reports and relevant project related documentsprepared during the course of the planning of the Natural Gas Project'

These documents are available on the Sasol website (http://w3.saso1.com/natural gas/l). Thedocuments referenced as project-specific EA reports and additional EMPs, plus specializedsupporting studies, were disclosed by MIGA, in accordance with its disclosure policy, to theInfoshop on 29 April 2002 in electronic format on its website, using a link to the projectproponent's internet website. The Operations EMP for the Temane/Pande Gas FieldDevelopment, which was not then available, has subsequently been disclosed via the sameelectronic link. Disclosure of the documents in the host countries also followed MIGArequirements and were made available both in draft and final form in the local language,beginning from June 2000, at the most accessible district or provincial center in the projectarea.

Figure 1-5 divides the documentation prepared for the project into reports of a generic natureand the project-specific environmental assessments.

The project-specific documents consist of environmental impact studies, backgroundspecialist reports and environmental management plans that were compiled for seven of theeight project sub-components. One sub-component received EIA exemption from the SouthAfrican environmental authority and thus did not require more detailed assessmentdocumentation.

The generic project reports consist of this report, the Regional Social and EnvironmentalAssessment (RESA), a Resettlement Planning and Implementation Programme (Volumes 1-4), a Social Development Action Plan and a Consolidated Executive Summary and Update,including a summary of public consultation and disclosure.

The project-specific ElAs provide a detailed and systematic account of the impacts of eachcomponent of the project. The ElAs are accompanied by EMPs, which include mitigation andmonitoring measures for the management of the impacts through the various phases of theproject life cycle, including the design, construction and operational phases and, in some

' Source: J Hanks (2003). Present report (this document) highlighted.

Sasol Natural Gas Project-Final Regional and Social Environrmental Assessrnent (RESA) 6

instances, the decommissioning phase as well. Readers of the RESA are advised that wherethe management recommendations that are contained in these project-specific EMPs are notof regional significance, they are not repeated in the RESA.

Monitoring and auditing of compliance with the EMPs and other statutory conditions of projectapproval has been a hallmark of the initial phases of the development of the project. While theoperational EMPs are, in most instances, still being developed, the design and constructionEMPs have all been completed and compliance with them has been monitored and auditedby independent experts. Figure 1-6 shows a typical example of the environmentalmanagement approach that Sasol has followed in order to monitor and audit compliance withenvironmental commitments made in the construction EMPs and elsewhere. It is anticipatedthat similar procedures will be followed for the operational phase of the project which willcomply with ISO 14001 standards.

*~ ~ ~ ~ ~ ~ ~ -_ ,

- 7

_ _

PHOTO 1-1: Sasol Secunda Plant


FIGURE 1-5: Detailed document map of technical reports for the NGP

TEMANE/PANDE GAS FIELD EXPLORATIONBriefing Document and Terms of Reference as in Temane / Pande Gas Field DevelopmentSeismic Exploration Exploratory and Development Drilling Environmental Impact Study (January 2001)

* Environmental Management Plan - Chapter 10Record of Decision (February 2002)

TEMANE/PANDE GAS FIELD DEVELOPMENTBriefing Document (July 2000)Terms of Reference for an Environmental Impact Study Rev 02 (January 2001)Environmental Impact Study Vol. 1 - Main Report (August 2001)Environmental Impact Study Vol. 2a - Specialist Reports (August 2001)Specialist Report 01: Environmental Design ReviewSpecialist Report 02: Impact on Air QualitySpecialist Report 03: Impact on HydrologySpecialist Report 04: Impact on Flora and FaunaSpecialist Report 05: Impact on Socio-EconomicsSpecialist Report 06: Impact on Land Rights, Agriculture and SettlementSpecialist Report 07: Impact on Public Health and Social PathologiesSpecialist Report 08: Impact on ArchaeologySpecialist Report 09: Impact on Public SafetySpecialist Report 10: Impact of NoiseSpecialist Report 11: Impact on Sense of PlaceSpecialist Report 12: Impacts on the Marine EnvironmentEnvironmental Management Plan: Design (November 2002)Environmental Management Plan: Construction (February 2002)Environmental Management Plan: Operation (May 2003)Record of Decision (February 2002)

PIPELINE BETWEEN TEMANE AND RESSANO GARCIABrieflng Document (May 2000)Corridor Screening Report (August 2000)Terms of Reference for an Environmental Impact Study (October 2000)Environmental Impact Study Vol. 1 - Main Report (August 2001)Environmental Impact Study Vol. 2 - Specialist Report (August 2001)Specialist Report 01: Impact on Terrestrial Habitats, Flora & FaunaSpecialist Report 02: Impact on River SystemsSpecialist Report 03: Impact on Agriculture, Settlement and Other Land UseSpecialist Report 04: Socio-Economic ImpactsSpecialist Report 05: Impact on Cultural HeritageSpecialist Report 06: Public Health and SafetyEnvironmental Management Plan - Part 1: Design (November 2001)Environmental Management Plan - Part 2: Construction (November 2001)Environmental Management Plan - Part 3: Operation and Decommissioning (November 2001)

Environmental Management Plan - Part 4: Environmental Impact Monitoring (November 2001)

Environmental Management Plan - Part 5: Supporting Documentation (November 2001)Record of Decision (April 2002)

PIPELINE BETWEEN KOMATIPOORT AND SECUNDABriefing Document (March 1999)Corridor Screening Report (January 1999)Draft Scoping Report & Environmental Impact Assessment Plan of Study Vol. 1 - Main Report (November 1999)Draft Scoping Report & Environmental Impact Assessment Plan of Study Vol. 2 - Appendices (November 1999)

Comments Report on the Draft Scoping Report & Environmental Impact Assessment Plan of Study (March 2000)

Draft Scoping Report & Environmental Impact Assessment Plan of Study (March 2000)Specialist Report 01: Soils-VegetationSpecialist Report 02: River and Wetland CrossingsSpecialist Report 03: Selected Terrestrial HabitatsSpecialist Report 04: Threatened PlantsSpecialist Report 05: Threatened MammalsSpecialist Report 06: Red Data BirdsSpecialist Report 07: Reptiles and AmphibiansSpecialist Report 08: Agriculture and ForestrySpecialist Report 09: Archaeological StudySpecialist Report 10: Air Quality and Risk AssessmentComments Report on the Draft Scoping Report & Environmental Impact Assessment Plan of Study (October 2001)

Final Environmental Impact Assessment - Main Report (October 2001)Environmental Management Plan - Part 1: Design (October 2001)Environmental Management Plan - Part 2: Construction (October 2001)Environmental Management Plan - Part 3: Operation and Decommissioning (October 2001)Environmental Management Plan - Part 4: Project Database (October 2001)Environmental Management Plan - Part 5: Amendment (October 2001)Record of Decision (April 2002)

Sasol Natural Gas Project-Final Regional and Social Environmerital Assessment (RESA) 8

SECUNDA INTERFACEApplication for Authorisation (October 2000) (Exemption)Record of Decision (December 2001)

SECUNDA PLANT EXPANSIONFinal Environmental Impact Assessment for the Sasol Natural Gas Expansion Project (February 2000)

Environmental Management will be done in accordance with the Environmental Management System (ISO14001)

Record of Decision (June 2001)

SASOLBURG PLANT CONVERSIONFinal Scoping Report (January 2001)Environmental Impact Report Vol. 1 (December 2001)

* Environmental Management Plan - Chapter 5Specialist Report 01: Social Impact Assessment (August 2001)Specialist Report 02: Economic (August 2001)Specialist Report 03: Air Quality Impact Assessment (August 2001)Specialist Report 04: Human Resources (August 2001)Speclalist Report 05: Impact of Noise (July 2001)Specialist Report 06: Solid Waste Management (October 2001)Specialist Report 07: Surface Water Impacts (September 2001)Risk Assessment Review for the Environmental Impact Assessment (2001)Record of Decision (September 2002)

NETWORK CONVERSIONFinal Scoping Report (August 2001)Environmental Management Plan (October 2002)Record of Decision (December 2001)

GENERIC DOCUMENTATIONResettlement Planning and Implementation Programme (May 2003)

Regional Environmental and Social Assessment of the Sasol Natural Gas Project (May 2003)Social Development Action Plan for Mozambique (December 2001)


Other teams involvedMinistry for the Coordination during construction:

of Environmetal AffairsTask Team resettlement team(MIC'OA) . Public liaison team

Sasbol Independent||(SAST ECH) | lEnvironmental

,~~~~~~~~~~~~~~ .. .. .. . ........

aso ~~~~Independent _ SpecialistCentativeo Environmental

Consultant

S asol |INDEPENDENTC Environmental ENVIRONMENTAL

Site Officer ENITRENALG

TEAM

EP C i EPCContractor Environmental

F . ~~~~Marnagerl

S b- ! EF b ~ ~~C CONSTRUCTION

Contractor i ~Site Officer(s? ENVIRONMENTALi_.._.____ ..... ____._......TEAMX

FIGURE 1-6: Organogram showing environmental teams involved in monitoring and auditing

construction of the Mozambique section of the pipeline (a similar process has been followedin South Africa)

1.1.5 Status of the Project as of 19 June 2003

Aspect of Development Sta e of Completion %Design Construction Operation

Temane and Pande Gas Field 100 83 0

Mozambique Pipeline 93 82 0

South African Pipeline 93 61 0

Network Conversion 95 25 0

Conversion of Sasolburg 94 25 0


1.1.6 Disclosure of the RESA

This document has been disclosed for comment in the following ways:

* Newspaper advertisements in national Mozambique and South African newspapers;* Publication at the World Bank Infoshop;* Document lodged at the venues described in Table 1-1 below.

TABLE 1-1: Venues at which the EIA Documents, the RESA, the RPIP and the ConsolidatedExecutive Summary and Update have been disclosed to the public

Venue Location

MOZAMBIQU EWorld Bank Offices MaputoImpacto Lda MaputoMinistry for the Coordination of Environmental Affairs Maputo, Xai Xai, Inhambane, Matola(National Department - Mozambique (MICOA)Direcc3o Nacional de Carv3o e MaputoHidrocarbonetos (DNCH)Sasol Temane Lda MaputoMunicipal Offices Matola, Inhassoro, VilanculosGovernors Offices Matola, Xai Xai, InhambaneDistrict Administrators Offices Vilanculos, Inhassoro, Funhaloro, Mabote,

Chokwe, Moamba, Maputo, Vilanculos,Public Libraries Maputo, Matola

SOUTH AFRICAPublic Libraries Bethal, Badplaas, Barberton, Kanyamazane,

._______ Komatipoort, Malelane, Nelspruit

Mark Wood Environmental Consultants Honeydew, JohannesburgSasol Petroleum International (Pty) Ltd Rosebank, JohannesburgSasol Technology (Pty) Ltd L Secunda


2 TERMS OF REFERENCE

2.1 Study Approach and Methods

In terms of the Safeguard Recommendations submitted to Sasol by the World Bank inDecember 2002 and supplemented by the agreed scope of work, the purpose of the RESA isto look beyond the immediate zone of direct social and economic impacts of the project, toaddress induced and cumulative impacts in the geographic areas affected by the eight projectcomponents. A number of these impacts have already been identified by the independentproject-specific Environmental Impact Assessments ('ElAs') but have not been assessed,either cumulatively or in detail. In some cases this has been because the information is notavailable or cannot be obtained. In others, it is because of the limitations of project-specificenvironmental assessments when dealing with wider issues that are not necessarily theresponsibility of the developer to evaluate and manage. In such cases, the ElAs merelyflagged the wider issues. During the discussions about the scope of the RESA, the WorldBank and Sasol agreed that these aspects should be further considered.

A number of specific items in respect of the approach to the RESA and the methodology to beemployed were agreed in the discussions with the World Bank on 11 March 2003 and wereconfirmed by the final approval of the RESA scope on April 2002. These are summarizedbelow:

(a). The World Bank does not expect documentation involving significant green fieldsresearch. The Bank sees the RESA being prepared from information that is largelyavailable as a result of work already done by Sasol and by other parties involved inthe project. The approach by the Bank is that the RESA will broaden rather thandeepen the findings of the pre-existing ElAs.

(b). The RESA will not be able to solve all issues that could be considered at a regionallevel, but it should at least dimension the issues, and indicate appropriate steps thatcould be taken, whether they be monitoring, provincial land use planning or a rangeof other proposals. In cases where information is not available, and where evaluationof indirect, cumulative and regional impacts is necessarily speculative, the approachof the RESA should be to identify the possible and reasonable actions andresponsibilities necessary to monitor and manage the impact of the project, ratherthan expending effort on more detailed analysis at this stage;

(c). The RESA will rely upon the considerable scoping effort and consultations done inthe context of several ElAs for the project component. The RESA itself will not requirean additional public scoping effort, since it will bring together issues and informationfrom these and other sources. It will be aimed at key stakeholders most of whom (inMozambique) are already represented on the Project Task Group that meets monthly.Consultation during the course of the RESA will therefore be limited to this group andany other stakeholders that the consultants believe can provide a contribution to theinvestigation.

(d). The responsibility for managing regional, cumulative and indirect impacts over theduration of the project will not rest with Sasol alone, and is, indeed, in many caseslikely to rest with other parties. The RESA will provide a framework according towhich these impacts can be tracked and managed, as well make proposals for theallocation of the responsibilities for doing so.

(e). It is not expected that the consultants confer with all of the parties in Government whoare identified by the RESA as being potentially responsible for specific future actionsto manage regional impacts. It will be up to the consultants to present the proposalsin a way which prepares the ground for further discussion between the identifiedgovernment authorities and the Bank.

SasoI Natiiral Gas Project-Final Regional and Social Environrmental Assessment (RESA) 12

(f). In respect of questions and issues that extend beyond the requirements ot theSafeguard Recommendations - such as the handling of the question of transparencyof revenue allocation by the Government of Mozambique - the consultants shouldraise the concern but the answer will lie in discussions between the World Bank andthe Mozambique Government.

(g). The RESA will propose time frames for the implementation of all proposed actions.

2.2 Scope of Work

The RESA is structured on the basis of geographic and political boundaries. Because of theoverlap between issues at a regional level, the investigation has not been organizedaccording to the same framework that was used in the project-specific ElAs (six separatestudy areas). Issues that relate to the harvesting of hardwoods, for example, apply equally tothe gas field and the gas pipeline in Mozambique.

A simple breakdown between Mozambique and South Africa has been used to structure theevaluation. Each of the issues, defined in Table 2-1, was identified as a matter of regionalconcern on the basis of previous work done in the ElAs and agreement with the World Bank.The assessment has concentrated largely on Mozambique, since it is in this country that mostof the regional issues that could require intervention or further management action will occur.

It is important to emphasize that the RESA is intended only as a regional assessment anddoes not re-evaluate issues that are directly project-related and that have already beenassessed in the project-specific ElAs.2

TABLE 2-1: Issues that have been evaluated in Chapter 5 of the RESA

ISSUE SUMMARY DESCRIPTION: |Effects on natural resources in Accelerated hardwood exploitation)Mozambique

Accelerated Wildlife and other natural resource exploitationHabitat loss and ancillary effects due to increases in seiilementPollution effects caused by discharge of effluent into the Govuro Riversystem on aquatic biodiversity

Socio-economic effects in Upstream and downstream economic growth opportunitiesMozambique

Combined (cumulative) effect of the NGP and other development on existinginfrastructure and institutional capacity in southern Mozambique

Impacts on tourism in and around VilanculosImpact on agricultural development around the Temane and Pandeproduction areasImpacts on spatial development intiatives in Southern MozambiqueImpacts of safety restriction zones around the pipelines on settlement

Effects on natural resources in Effects on air qualitySouth Africa

Effects on consumption of natural resources

Socio-economic effects in South Impacts on job creationAfricaRegional policy related issues SADC, Mozambique and South African government policy objectives in

respect of the development of the natural gas industrySocial interventions planned by Interventions outside of the area of direct project impactSasol I

Chapter 6 of the report discusses Sasol's Social Development Action Plan. This plan isevaluated separately from the chapter on socio-economic effects in Mozambique becauseSasol does not tie the interventions which the plan funds to specific project-related impacts.

2 The project ElAs may be viewed on Sasol's website, http /lw3.sasof com/natural gas// or at the venues described inTable 1-1.

Sasol Natural Gas,Project-Final Regional and Social Environmental Assessment (RESA) 13

The final chapter of the RESA draws conclusions about the regional impacts of the NGP andsummarises the responsibilities and Proposed Actions and Responsibilities that should beconsidered to manage these impacts.

2.3 Report Structure3

The approach that has been followed in the preparation of the RESA has been issue driven.Each issue, as defined in Table 2-1, has been evaluated, based on supporting evidence.Where necessary, appropriate management actions and responsibilities have beenrecommended. To the extent that third parties are referenced, these have been noted asobservations, to be considered by the relevant parties, in accordance with the terms ofreference as explained in section 2.1 (e).

k

._~~~~k

PHOTOGRAPH 2-1: Manufacture of charcoal along the pipeline right of way

3Refer to Section 1.3 of the Final RESA Scope Definition, dated 23 April 2003.


3 ASSESSMENT OF REGIONAL IMPACTS IN MOZAMBIQUE

3.1 Effects on Natural Resources

The ElAs for the gas pipeline, the seismic and exploration work and the production facility4

considered the risk of significant direct effects on habitats, threatened species andbiodiversity to be moderately low. This low significance rating was mainly because relativelysmall areas would be directly affected by the project5, most of the plant communities andspecies within these areas were common and widespread and there would be few directactivities associated with the development and operation of the project that posed a threat tohabitats and species, if properly managed. The exception to this general conclusion was thepossible impact of discharge of treated effluent into the Govuro River where impacts wereconsidered to be uncertain and where the consequences of an incident could be severe.

The indirect and cumulative effects of the project were considered to be the more importantpotential influence on terrestrial and aquatic biodiversity and the area of more acute regionalconcern in respect of proposed management interventions. The ElAs for the gas pipeline, thegas exploration and gas field development highlighted concerns about the potential forincreased harvesting of natural resources as a result of two key indirect effects of the project:6

* the creation of temporary and permanent access. Accessibility away from mainaccess roads is very poor in Mozambique, being affected both by woodlands andthicket and by wetlands and flooding in low lying areas in the summer months.Access created for the project is likely to be used by surrounding communities; and

* the creation of a development node at the Central Processing Facility (CPF) whichinduces population growth in the area because of perceptions of greater jobopportunities and better access to resources.

For these reasons, it is probable that over a period of time there will be increased pressure onthe utilization of natural resources in the project area, particularly in respect of hardwoodsused in the building industry, wood used for charcoal manufacture and large mammals, smallmammals, birds and reptiles (bush meat). Depending on the extent of settlement broughtabout by the NGP and other development, more general effects on biodiversity could alsooccur, as a result of bush clearing, pollution, harvesting of medicinal plants and otheractivities that flow from increasing human presence in previously remote areas.

There are also concerns that the discharge of treated effluent from the CPF into a drainagesystem connected to the Govuro River could have downstream implications on biodiversity inthis highly productive and sensitive ecosystem7. Many communities are dependent upon theharvesting of natural resources from this system and any knock-on effects caused by theCPF's direct or indirect impacts would have major implications for these communities.

3.1.1 Accelerated Hardwood Exploitation

3.1.1.1 Hardwood Resources in the Studv Area

Within the study area8, as elsewhere in Mozambique, wood is extensively utilized for a varietyof purposes. Wood is the only fuel source available to most of the local communities, isextensively utilized for domestic construction purposes and also provides a source of incometo local residents involved in the harvesting and sale of commercially sought after wood

'Mark Wood Consultants (2001 a); Mark Wood Consultants (2001b); Mark Wood Consultants (2001 c).In relation to the total area of the affected plant communities.

5 Mark Wood Consultants (2001 a); Mark Wood Consultants (2001b): Mark Wood Consultants (2001c).Effluent discharges at the CPF will be regulated in terms of a license agreement with Ara Sul. This has not been

issued yet.8 The study area is defined as the area of potential influence of the NGP In the context of the RESA, this areaextends over much of Southern Mozambique between Maputo and Beira.

Sasol Natural Gas Project-Final Regional and Social Environmnental Assessrnent (RESA) 15

products. Hardwoods with commercial value in the study area can be divided into twocategories, namely, trees harvested for sale to the timber industry and trees harvested for theproduction of charcoal.

Description and Distribution of Hardwoods used in the Timber Industry

In the study area, the main hardwoods used in the timber industry are Androstachysjohnsonii(known as 'Lebombo Ironwood' or 'Cimbirre'), Afzelia quanzensis (known as 'Chanfuta') andPterocarpus angolensis (known as 'Kiaat' or 'Umbila').

Androstachys johnsonii (hereafter referred to as 'Ironwood') is a gregarious, slender, erect,evergreen tree up to 15m in height (Photograph 3-1). The wood is typically extremely hard,heavy, fine-grained, durable and almost completely termite proof and is categorized as a 'FirstClass' timber in Mozambique.9 The largest tree recorded during the EMP surveysl° was anexceptional specimen with a basal diameter of 47cm and a height of 1 3m.

n-~~~V

PHOTOGRAPH 3-1: Examples of ironwood forest. Note that these are monospecificformations characterised by poorly developed shrub and grass layers.

The distribution of this species is restricted to the Lebombo Mountains on the border betweenSouth Africa and Mozambique and adjacent areas of South Africa, Mozambique, Swazilandand Zimbabwe, as well as a small area around Beira in Mozambique."1 In the study area,Ironwood occurs on deep, light coloured, leached sands, where it forms numerous patches offorest in the 'Sand woodland' and 'Brachystegia-Guibourtia woodland' vegetation. Thesurveys for the Sasol project have shown that the species is more common than was

12originally believed.1 The forests occur in patches characterized by low plant diversity with anaverage of only six other woody species (trees and shrubs) per 400 m2 of Ironwood forestbeing found. The tree canopy cover is typically 80%, usually consisting entirely of Ironwood.The forests are very distinctive and are dense, with an average of 4000 trees per hectare inmost areas.

Bandeira et al. (1 994).Mark Wood Consultants (2001 d).Coates-Palgrave (1c984) and Van Wyk & Van Wyk (1 997).

12 Personal communication with Prof. B van Wyk (2002).

Sasol Natural Gas Project-Final Regional and Social Environmental Assessrmperit (RESA) 16

Along the pipeline corridor, Ironwood occurs mainly between km 342 and km 429 (Figure 3-1). Well-developed Ironwood forests also occur outside the pipeline corridor in the above-mentioned vegetation types. In total, the Ironwood forests occurring along the pipeline routeand adjacent parts of southern Mozambique are far larger in size than similar groves thatoccur in neighbouring countries. Within the pipeline corridor survey area, the forest patchesranged in size from less than lha to approximately 40ha, but local residents reported thatforests of approximately 1000ha occur, 10km to the north west of km 389. One such areaobserved from the air is shown in Photograph 3-2. In the Exploration Area, relict (poorlydeveloped) Ironwood patches have been found near the Govuro River mouth and in thesouth-west of the Pande Production Block (Figure 1-3).

P.d.alo.n Bloc

Inhassoro

/ -- INHAMBANE 4- ~ PROVINCE, .iI

lianculos

Chigubo b_.,INDIAN OCEAN

PROVINCE 4

inhambane

NN

/ : : , ~~~~~~Arua withinAndrostachys johnsonhlencountered along thepipolino route

tMaputo

FIGURE 3-1: Distribution of Androstachysjohnsonii (Lebombo Ironwood) along the proposedpipeline route


.~~~~ -* - -J 4 s-.- , l

x3-

f ~~- - - -JUr

,_r'IFo . ,', - _C ,;. -.,,,

PHOTOGRAPH 3-2: Large areas of ironwood north-east of the study area

The distribution of the Ironwood forests in this sub-region extends to Funhalouro(approximately 43km east of km 335 along the pipeline) in the east and to a point at least10km to the west of km 389. Small, relict patches of poorly developed forest. occur along thepipeline corridor between the Changane River and the Limpopo River, extending some 20kmeast of the pipeline at km 295.

Al IRerenl AgriC N '.7 /

IIronwood ~.Q fir 7 (Androsiachys ._ 'John sonq "

FIGURE"A 3-2 . al a m i tp,~~~~~~~~~ p

*h Pateipelines is uncommon inthtuyaraA.3

1~~~~~~~~~~~~~~~~~~~~~~~~

FIGURE 3-2: Typical agriculturel woodland mosaic in the study area

The only other species occurning in the study area which is extensively harvested for sale bythe timber industry are Chanfuta (Afzelia quanzensis) and Kiaat (Pterocarpus angolensis).The latter species is uncommon in the study area.

Chanfuta is a large deciduous tree with a spreading crown which reaches a height of up to25m in southern Africa. The largest individual recorded during the EMP survey had been


felled shortly before and had a stump diameter of 118cm. The valuable red-brown timber isused for a variety of purposes and is of great commercial importance. In Mozambique thewood is categorized as a 'First Class' timber.13

The species is widely distributed in Mozambique and neighbouring countries and its rangeextends into tropical Africa.'4 It is distributed along the entire pipeline route to the north of theLimpopo River, in a variety of vegetation types, on light coloured sands. It also occurs onloamy and even clayey sands, but is absent from sodic mananga soils.'5 Chanfuta alsooccurs in an unusual short closed woodland community, typically covering an area notexceeding 2ha. The frequency of occurrence of the tree is typically much higher in thesecommunities, with densities of 150 trees per hectare being recorded. Tree height was typicallyreduced to less than 6m. These small communities are uncommon and none was founddirectly on the pipeline route or in the areas affected by the seismic lines, access roads,wellheads and other infrastructure for the CPF. One example occurred close to the pipelineroute south of the Limpopo River near km 71. The community was not found north of km 90on the pipeline route nor in the Exploration Area. The distribution of the species is less wellknown in the Exploration Area, but from the work done for the seismic lines and productionwells, its occurrence also appears to be limited to individual trees at low densities.

To the north of the Limpopo River, Chanfuta is most common in 'Sand woodland' and'Brachystegia-Guibourtia woodland', but even here it is never dominant and is generally about8m high.16 It also occasionally occurs infrequently as a canopy species in the Ironwoodforests.

Commercially valuable timber species other than Ironwood, Chanfuta and Kiaat occur in thestudy area, but no harvesting was recorded despite the presence of suitable specimens.Species include Dalbergia melanoxylon ('Chelutzo'), Spirostachys africana ('Dzanvori') andGuibourtia conjugata ('Testosso'), all of which are widespread and are categorized as'precious' timbers in Mozambique.17

Hardwoods used for the Manufacture of Charcoal

Three species occur in the study area that are subject to targeted harvesting for theproduction of charcoal. These are Acacia nigrescens ('Knob-thorn or Mcaia'), Acaciaxanthophloea ('Fever Tree' or 'Camba') and Combretum apiculatum ('Red Bushwillow' or'Chicucutzo').

The Knob-thorn is a large tree that is common over large parts of Southern Africa andMozambique. It is distributed over the entire study area, occurring in Closed Woodland andOpen Woodland on loam soils, where it is common to dominant. This species provides goodquality firewood producing long-lasting coals which give off intense heat and is eminentlysuited to charcoal production.18

The Fever Tree is a large species that is common over much of Mozambique andneighbouring countries in low lying swampy areas, margins of lakes and pans and floodplainsof rivers. It derives its common English name from the fact that it was thought to beresponsible for malaria before the mosquito was identified as the carrier of the disease. Alongthe pipeline route this species does not occur to the north of the Changane River floodplain(km 314.9), but is common and often dominant to the south of this point on heavy clayey soilsof the floodplains of perennial and large non-perennial rivers. It occurs in the north of theExploration Area along the Save River and associated drainage lines, pans and floodplains.This species produces fairly hard and heavy timber that is suitable for charcoal production.

3 Bandeira et al. (1994).14 Coates-Palgrave (1984); Van Wyk and Van Wyk (1997).'5 Mananga' soils are typically distinguished on the basis of sub soil materials, signs and degree of wetness and

thickness of overlying sand sheets. All soil units have reasonable levels of salinity and sodicity. Hardpan andimpermeable layers in the subsoil resulting from hard sodic deposits are common.1 Maximum height of 12m recorded and average density of 4.6 trees per hectare.17 Bandeira et al. (1994).1 Venter and Venter (1996).

Sasol Natural Gas Project-Final Regional and Social Environrnental Assessment (RESA) 19

The Red Bushwillow is a small tree that is common or dominant over large parts ofMozambique and neighbouring countries. This species is distributed over the entire length ofthe pipeline route and over the whole Exploration Area on loamy soils where it is oftencommon or dominant. Although the stems are small in comparison to those of the othercharcoal species, the wood is extremely hard and heavy, produces excellent firewood, and isvery well suited to charcoal production. 9

3.1.1.2 Existing Harvestina and Processing of Hardwoods in the Study Area

Harvesting and Stockpiling

Many of the larger Ironwood forest patches are considerable distances from the nearestvillages. For this reason, the people harvesting poles often construct camps at harvestingsites and spend weeks at a time there. The camps consist of as many as ten huts constructedof thatch and Ironwood poles (Photograph 3-3). On average, a single harvester can produce20 to 25 treated poles per day. Selected stems are cut using a machete and are then treatedby removing the bark and a thin layer of the underlying sapwood, also using a machete.

Harvesting is widespread wherever Ironwood forest patches occur in the study area. Cutstumps were recorded in seven of the twelve transects surveyed in Ironwood forests situatedalong the pipeline route. Cut or burnt Ironwood trees do not re-sprout. It was evident from thefield survey that there is extensive existing harvesting pressure on these forests.

TABLE 3-1: Data conceming hardwood harvesting in the Study Area

Androstachys johnsonii (Ironwood) HarvestingTypical pole size harvested (diameter in cms) 6-10Range of pole size harvested (diameter in cms) | 3-12Density of harvestable trees in forest patches (harvestable trees per hectare) 400-1900Average harvesting intensity (stumps per hectare) ] 217Range of harvesting intensity (stumps per hectare) 0-750Re-sprouting after harvesting NoAfzelia quanzensis (Chanfuta) HarvestingMinimum log size (diameter in cms) | 400Minimum log size (length in cms) 2000_Density of trees (total number of trees per hectare) I 4.6Average harvesting intensity (stumps per hectare) '1.7Re-sprouting after harvesting | Yes

PHOTO 3-3: Temporary shelters constructed in ironwood forests during timber extraction

9 Venter and Venter (1996).


Stockpiles of Ironwood poles were recorded in most places where roads pass throughIronwood forest patches. The largest numbers of poles awaiting transport were recorded fromstockpiling areas within a 4km radius of km 389 along the pipeline route, where a total of over2000 poles were stockpiled. Harvesters sell the poles to dealers, who collect them by truck,paying approximately Mt3 000 (US$0.13) per pole of approximately 8cm diameter and 3.2mlengths. Harvesting of Ironwood poles therefore provides a significant income for people livingin areas in which there are few employment opportunities. Ironwood poles are offered for saleat practically all villages and towns along the EN-1 highway. In Massinga, a pole (8cm indiameter and 3.2m in length) costs MtlO 000 (US$0.43) and in Xai-Xai approximately Mt24000 (US$1.03). Almost all buildings in local villages are constructed from these poles. Mostlow cost houses in large villages and towns in the region (e.g. Vilanculos, Massinga,Mapinhane, Mabote and Funhalouro) are also constructed from Androstachys poles.

Commercial harvesting of Chanfuta (Afzelia quanzensis) was recorded wherever this specieswas found during the EIA and EMP surveys. Harvesting has been so intensive that noChanfuta trees of a suitable size for logging were recorded during the survey, and few largetrees are likely to remain in southern Mozambique. Harvesting has therefore had a severeimpact on Chanfuta populations occurring along the pipeline route and in the ExplorationArea. Nevertheless, this species is not regarded as being highly threatened at populationlevel (where population refers to all individuals of a taxon), or locally, since it produces seedvery early in the plant's life cycle and it sprouts easily from the cut stumps after harvesting.

Chanfuta and Kiaat logs were recorded in separate stockpiles from those of Ironwood. This isbecause this timber is not used as poles and is transported to the sawmills to be cut intoplanks. Kiaat does not occur in large numbers anywhere along the pipeline corridor or in theExploration Area. Kiaat logs were recorded from only one stockpiling site approximately 30kmto the east of the pipeline route20 on the road between Muabsa and Mapinhane. These logswere harvested at Mabote which is situated approximately 60km west of the pipeline on thewestern boundaries of the Exploration Area.

Only Chanfuta logs were recorded at the other sites. Chanfuta is cut and trimmed into logsusing chainsaws and is then transported to stockpiling sites by dragging each log through thebush behind oxen or a tractor. Characteristic concave furrows in the soil caused by dragginglogs are found wherever Chanfuta occurs. Of a total of 60 Chanfuta logs measured at thestockpiling sites only three were less than 2.0 m in length and 38cm in diameter. These wererotting and had been rejected by the dealers. The largest concentration of stockpiling sitesrecorded during the pipeline survey was between km 380 and km 430 along the pipelineroute, suggesting that this area is being targeted for high levels of harvesting.

In respect of harvesting of hardwoods for charcoal production, the Fever Tree (A. xanthophloea)is fairly extensively cut wherever it occurs in close proximity to human settlement, e.g. in theCimbe River floodplain near km 91.8 on the pipeline route. Intensive harvesting of the RedBushwillow (Combretum apiculatum) for the purposes of charcoal production was onlyrecorded in the heavily settled foothills of the Lebombo Mountains, between km 0 and km 10of the pipeline route. Here, harvesting has been so intensive that very few of these trees witha basal stem diameter of more than 15cm remain. The charcoal is transported to Maputo forsale.

Processing at Sawmill Sites

Four sawmills in the study area were visited in order to give an indication for hardwood harvestingpreferences in the study area. The information gathered is summarized in Table 3-2.

Chanfuta appears to be the most important species to the timber industry in this region ofInhambane and probably within southern Mozambique as a whole. The demand for Ironwoodlogs is comparatively small, to the extent that the wood is used for planks or parquet floors.The majority of ironwood demand is for poles. The operators indicated that at least asignificant percentage of the Chanfuta and Ironwood used at these sawmills, with the

20 At 22° 14' 25" S and 340 59 39" E.

Sasol Natural Gas Project-Final Regional and Social Environrnental Assessrnent (RESA) 21

exception of the sawmill at Xai-Xai, is obtained from the immediate vicinity of the pipelineroute. The source of the Chanfuta used at the Xai-Xai sawmill is not known. The approximateminimum size for commercially acceptable logs of Chanfuta is a diameter of 40cm and alength of 2m, and for Ironwood logs a diameter of 18cm and a length of 3m.

TABLE 3-2: Summary of information gathered at four sawmills in Inhambane Province

Distance fromTown pipeline route Information gathered*

Mapinhane ± 80km east of * 10 Chanfuta and 4 Kiaat logs in stock.km 450 * Chanfuta logs ranging from 40cm to 70cm in diameter and from 2.2m(pipeline route to 3.Om in length.and * Kiaat logs ranging from 28cm to 38cm in diameter and 2.5m to 3.5mExploration in length.Area) * Only sell planks.

* Chanfuta obtained from various sources but mostly from Muabsa andMabote. Kiaat obtained from Mabote.

Marilane ± 20km west . 40 Chanfuta and 50 Ironwood logs in stock.of km 448 * Chanfuta logs ranging from 40cm to 80cm in diameter and from 2.3m(pipeline route to 2.8m in length.and * Ironwood logs ranging from 18cm to 28cm in diameter and 3.2 m toExploration 3.8m in length.Area) * Only procure Chanfuta logs with a diameter of greater than 40cm

and Ironwood logs with a diameter greater than 20cm for sawing.* Sell both planks and unprocessed logs.* Planks of both species cost Mt3 million/m3 and unprocessed logs of

both species cost 1.2 million/m3.. Chanfuta is used by clients for purposes of manufacturing doors,

window frames and furniture.. Ironwood is used by clients for manufacturing of parquet flooring

blocks.* Both Chanfuta and Ironwood logs are obtained locally.

Funhalouro ± 43km east of * 30 Chanfuta logs in stock but can obtain Ironwood and Kiaat logs onkm 335 request.(pipeline route) * Chanfuta logs ranging from 42cm to 11 Ocm in diameter and from

2.Om to 3.2m in length.* Only procure Chanfuta logs with a diameter of greater than 40cm.* Chanfuta planks cost Mt5 million/m3.. Many of the Chanfuta logs are obtained from the two wood cutting

camps recorded within 4km of Km 389.2 and the rest aroundFunhalouro.

Xai-Xai ± 160km to E * 5 Chanfuta, 5 Ironwood and 10 Pinus sp. (pine imported from Southof km 65 Africa) logs in stock.(pipeline route) . Chanfuta logs ranging from 60cm to 130cm in diameter and from

2.2m to 3.8m in length.* Ironwood logs ranging from 20cm to 30cm in diameter and from 3.5m

to 4.6m in length.* Do not sell logs or planks but only finished items.. Manufacture doors, window frames and furniture on site from Afzelia

and Pinus.* Articles manufactured from Pinus more than those manufactured

from Chanfuta.* Ironwood logs sold to parquet flooring manufacturers in Maputo.* 20 people employed/ pine furniture more expensive than Chanfuta.

Diameter of logs measured at widest end.

21 Reference to kilometre distances along the pipeline (e.g. km 450) is a convenient way of locating an area. Pleaserefer to Figures 1-2 and 3-1 for maps showing the kilometre distances.


3.1.1.3 Government Hardwood Management Policy

Since the signing Peace Accord in 1992 there has been an increase in the harvesting ofnatural resources (both legally and illegally). The National Directorate of Forestry and Wildlife(Ministry for Agriculture and Rural Development) has the responsibility to manage the forestestate of Mozambique (both inside and outside of forest reserves).

According to the forestry regulations, permission to harvest hardwoods may be acquiredthrough acquiring (a) a "simple" license (licenga simples) or (b) a forestry concession. Simplelicenses may be issued by the Provincial Services of Forestry and Wildlife (SPFFB) whereasconcessions are authorized at the central level (National Directorate of Forestry and Wildlife -DNFFB).

A simple license permits the harvesting of a quota (in cubic metres to a maximum of 500m3)of specified tree specie(s) within a particular area over a limited period of time (usually sixmonths). Renewal of a license is only permitted if valid reasons are given. A concessionlicense on the other hand authorizes a concessionaire to acquire long term, exclusive rights toharvest hardwoods within a particular area over a period of time (up to 50 years) according toa prescribed forest management plan.

There are only a few areas in Mozambique where the forestry concessions have beengranted. However, the new forestry and wildlife policy is promoting longer-term forestryconcessions based on forestry management plans as it is believed that this will lead toexploitation on a more sustainable basis. Local communities living within a concession areamay continue to reside in the area but are not permitted to exploit hardwoods.

Most legal harvesting of hardwoods is currently carried out through acquisition of a simplelicense. Under the simple license system, the operator must first carry out a harvest inventory("inventario exploratorio") to determine the volumes and species for harvesting in a particulararea. Based on the "inventario exploratorio" the operator must submit the followinginformation as part of the request for a simple licence:

* Identification of area plus quantities for extraction;* Composition of operators;* On 1:50,000 map identification of existing roads, important landmarks,

populations and other reference points;* A simple management plan, including a preliminary indication of principal species

in the area, estimates of quantity and quality and nature of products to beextracted, and the means for extraction;

* An extraction plan, showing the ability and means to extract;* Number of posts of employment created for locals;* Evidence of community consultation

This information is submitted to the Provincial Services of Forestry and Wildlife with a copysent to the District Director for Agriculture and Rural Development. Before issuing a licencethe SPPFB must confirm that the volumes and species requested for harvesting are within thesustainable limit (from the forestry inventory data bank). On approval the operator will receivea licence and a "croquet" issued by the Provincial Services of Forestry and Wildlife in theprovincial capital. The croquet indicates the species, volume and geographical area that maybe harvested.

The hardwood operators and/or drivers must carry the croquets at all times, which must bepresented on request to the competent authorities viz. the Provincial Forestry and Wildlifeguards (control posts are located at strategic point along most main and some secondaryroads).

However, it is difficult to control the legal harvesting of hardwoods (i.e., the permitted quotas)as well as illegal harvesting, owing to lack of human resources and logistical support such as

Sasol Natural Gas Project-Final Regional and Social Environmental Assessrnent (RESA) 23

transport and radio communication. This lack of capacity throughout the country is the majorconstraint to the enforcement of forestry and wildlife regulations.

3.1.1.4 Existing Situation regarding Extraction in the Study Area

To date, only one permit for a forestry concession has been issued in Inhambane Province.22

The exact location and terms and conditions of this permit could not be established. All otherharvesting is still being done in terms of simple licenses (refer to Box 3-1). Forty-three simplelicenses have been issued in Mabote, Vilanculos, Inhassoro and Govuro Districts (refer toTable 3-3). Generally, these licenses are issued to an individual in a community but a numberof members of the community are involved in the extraction of the logs.23

TABLE 3-3: Volumes of the most common woods for which simple licenses have been issuedin the districts of Mabote, Vilanculos, Inhassoro and Govuro (period 2003)

SPECIES QUANTITY (m3)For PlanksPterocarpus angolensis (Kiaat) (m3) 2550Afzelia quanzensis (Chanfuta) (mi) 2845TOTAL 5395

For PolesAndrostachys johnsonii (Ironwood) (m3) 250TOTAL 250

The GOM proposes to improve control over the extraction of hardwoods, increasingconcessions while phasing out simple licenses. This may be effective by simplifying theadministration, management and monitoring of hardwood use, but it may also result in localcommunities losing access to resources that have traditionally been theirs.

3.1.1.5 Problems affectinq the Management of Hardwoods

Problems affecting the management of hardwoods in Southern Mozambique include thefollowing:

(a) The extent of the resource is not always accurately known. To date, forest inventorieshave been carried out in only four districts of Inhambane Province, namely Funhalouro,Massinga, Govura and Mabote. Forest inventories are underway for the remainder ofthe districts. Given the extent of existing harvesting and the fact that some of thehardwoods already appear to be severely depleted over large areas, this is afundamental problem.

(b) There is no obvious and clearly defined relationship between the quantities of timberbeing removed and sustainable levels of harvesting. In the absence of a thoroughunderstanding of the extent of the resource, adequate planning for sustainableextraction is not possible.

(c) The capacity of government to monitor hardwood quotas is low. Officials often do nothave vehicles or radios and they therefore lack the fundamental means of monitoringquotas. If the quantities of timber that pass through a checkpoint are not recorded onthe permit, then the same permit may be used over and over again.

(d) The new management system, in which concessions are likely to be favoured, couldrun the risk of alienating local communities from access to natural resources.

22 Personal communication with Snr. Renato Timane.23 Information provided by the Mozambique Provincial Forestry and Wildlife Services.


3.1.1.6 Possible Effects of the Natural Gas Proiect

The extent to which harvesting of forest resources will increase as a result of access createdalong the pipeline construction right of way and gas field infrastructure is not accuratelyknown. The assessment made in the EIA for the main transmission pipeline remains the bestgeneral overview of the possible consequences:24

"The Androstachys johnsonii forest belt between km 271 and km 288 and between km 342and km 441 along the pipeline route would be the natural resource most prone to over-exploitation if the pipeline were to significantly improve access into the area. The habit of thisspecies makes harvesting a simple task (very little understorey; easy access). At present,harvesting is already evident in many of the forest patches in proximity to the pipeline.

It is possible that the pipeline right of way will alter the intensity of harvesting in this area.Access to the forest patches will be easier along the cut line25, particularly for the trucks thatare used to haul the timber. While it is true that dry season access to trucks is reasonablyunhindered via the Mabote - Funhalouro Road or via the Mapinhane - Tome road, the sectionof forest north of Macuene, in particular, will become more accessible if vehicles can use thecut line [and existing access roads upgraded for pipeline construction].

Overall, in the absence of management and monitoring, there is moderate to high probabilitythat harvesting in the area will increase as a result of the pipeline although the likelymagnitude of this is difficult to determine with confidence. It is noted that this would not be anegative impact, perceived from the point of view of local woodcutters, who are having totravel long distances to obtain timber as a result of the depletion of the areas closer to themain markets. The concem, from the perspective of resource conservation and biodiversity,is the risk that harvesting will be uncontrolled and unsustainable and that hardwoodresources in proximity to the cut line will eventually be lost."

There is already some evidence of the use of the construction right of way for the transport ofcharcoal although no other hardwood extraction has been recorded. The environmentalmonitors have reported some construction vehicles transporting charcoal on behalf of localinhabitants and there is frequent evidence of charcoal stockpiling near the right of way forfuture transport out of the area.

PHOTO 3-4: Use of the construction night of way for hardwood exploitation

24 Mark Wood Consultants (2001 a).25 The cut line for the main pipeline to South Africa consists of corridor, typically 20-25m wide, cleared through the

bush with a bulldozer in order to provide access for the specialized vehicles used to lay the pipeline. The cut line willbe rehabilitated once construction is completed, and the naturally occurring woodland that exists over most of thearea will be encouraged to recover, except in the 6m-8m wide strip over the pipeline itself. In this area, naturalgrassland cover will be maintained in order to provide the visibility to monitor the pipeline during its operation.


3.1.1.7 Actions and Responsibilities

Action Description Responsibility

1 Prepare and implement a long term programme to Sasolmanage and monitor third party use of the pipeline rightof way and other access created by the NGP (refer toBox 3-1 for an outline of a management/monitoringapproach).

2 Reach agreement with responsible Government Sasol, GOMministries about procedural steps in the event thatlogging vehicles begin to use NGP cut lines and roads foraccess.

BOX 3-1: Management and monitoring system for controlling illegal hardwood extractionalong access created by the NGP

Closure of the Construction Right of Way: Sasol will fully rehabilitate the construction right of way. This includesencouraging the natural woodland vegetation which is predominant over much of the route to reinstate itself. Sasoland the GOM have agreed that neither a road nor a track will be left along the right of way, so as to discourage theuse of the alignment for vehicle access after construction finishes. The construction area will be ripped with abackactor. Seeding will depend on the area concerned. .

Aerial Monitoring: Sasol is likely to monitor safety along the main pipeline between Temane and Secunda byhelicopter. Checking for third party use of the pipeline servitude will be done as a part of this standard monitoringand maintenance procedure. Sasol will develop a monitonng system to ensure that the checking is donesystematically. This will include:

* training of the monitoring crew as to what to look out for;* development of a structured documentation system;* development of procedures to be followed in the event that evidence of harvesting along the pipeline routes is

found.

Community Interaction: Understanding and managing issues related to the use of the NGPs cutline and roadinfrastructure will be strongly related to the effectiveness of Sasol's communication networks in local communities.Sasol is to develop networks with local community leaders and govemment officials in the study area and maintainsthese networks by regular communication with the people concerned. This will make the handling of any issuesrelated to illegal use of lines of access will be very much easier. Sasol's Public Liaison Team (PLT) proposes toimplement a long term communications strategy as a part of the NGP (refer to Section 3.2.6). This team must beinformed about hardwood issues and must interact with the personnel responsible for the-helicopter monitoring.Joint field visits should be made to ascertain the extent of the problem in the event that evidence of hardwoodextraction along the lines of access is found.

Reporting to Government: A formal reporting procedure must be developed with the GOM.According to which Sasol will notify the government of any significant problems concerning the use of NGP accessto harvest hardwoods.

Assistance to Government: In order to help build capacity to manage hardwood resources along the NGP lines ofaccess, Sasol should:

* Assist the provincial and district Directorates of Agrculture and Rural Development to prepare managementguidelines for the rational control and sustainable use of hardwoods and other natural resources in the area ofinfluence of the pipeline;

* Assist in the training of forest warders to patrol and verify that quotas are not being exceeded and to manageany illegal harvesting along the pipeline corridor;

* Assist in campaigns for education of local communities and traditional authorities with respect tosustainable use of natural resources.


3.1.1.8 Observations for Consideration by Other Parties

Recommended Description RecommendedAction Responsibility

A Complete the hardwood resource inventory for GOM, WorldInhambane Province. Bank

B Estimate (using independent field checks) the existing GOM, Worldextent of harvesting in excess of official quotas and Bankconsider ways of managing this.

C Evaluate ways of ensuring that the benefits of GOM, Worldsustainable hardwood use are not alienated from local Bankcommunities as a result of the concession system.

D Review existing capacity to manage hardwood extraction GOM, Worldin the province and implement capacity building and Banktraining programmes.

*-Note: The preparation of the above work consists of tasks for which the WorHd Bank could be requested toconsider technical assistance to the GOM.

3.1.2 Accelerated Wildlife and other Natural Resource Exploitation

3.1.2.1 Background

In addition to a potential escalation in hardwood exploitation described in Section 3.1.1 above,there are other possible effects of the project on natural resources, all of which are related tothe improvement of access into the study area. This applies both to access that will becreated by the construction right of way for the pipeline to South Africa and the permanentaccess created to serve the production wells at the Central Processing Facility. Figure 3-3shows the layout of the first phase of production wells and permanent road access. In thefuture, production wells and their accompanying access may extend across much of theExploration Area. Seismic lines to support gas exploration work will also create access,although in a less formal and more easily controllable way, since the cut lines are generallynot kept open after the seismic work is completed.


____11_ P1r_f--P. a

P.AAl

t lP4t [ rP14 < | INDIAN

! P." P-Il CEAN

~Pen de ~ P-A

A ~1 \"" 0"

INHAMBANE PROVINCE

Road, -- Pipeline. - Flow Unes | -

* CPF T45T. T

* Wellheads AOa.Z

Production T

.,l

o rn-u:. ia ~~~~~ I -~~~ - -- T antulos

FIGURE 3-3: Location of permanent infrastructure under construction in Inhambane Provincefor the first phase of the Sasol Natural Gas Project

Bush meat is a vital source of food for poor rural communities and it also commands anincome through sale in local villages. Practically all medium and large mammals encounteredwithin the Exploration Area and along the pipeline route are hunted as sources of meat andfor their skins and other medicinal purposes. As a result, large mammal populations are nowlargely restricted to remote areas where population densities are very low. Even the smallmammal populations are under pressure and are significantly reduced within 10km or so ofvillages. Birds are also hunted as a source of food and observations during the ElAs andEMPs26 for the NGP showed that snakes too appear to be less frequent near humansettlement, both because they are feared and persecuted and for their meat and skins,particularly in the case of the African Python, which is a Red Data species27 (refer toPhotograph 3-6).

Species are caught in a variety of ways. Wire snares are the most common method, whichimpact not only on the targeted species but also on other small mammals, such as smallcarnivores and even domestic dogs. The most commonly used methods are called 'log traps',which consist of a heavy log suspended above two parallel stick fences which channel theanimal to a trigger mechanism. This method also unintentionally kills many species, such aslarge snakes. A 3m Forest Cobra and a number of Banded Mongoose were found during the

26 Mr Tony de Castro in Mark Wood Consultants (2001d).27 Red Data species are those listed according to the various categories of threat affecting the survival of the speciesand measured in accordance with the IUCN (2001) criteria.


EIA surveys. The use of dogs and fire to drive game is also a common technique and largeareas are burned each year by this practice.

Much of the hunting observed during the EIA studies was for subsistence purposes but thereappears to be escalating commercial hunting as well, which significantly increases the threatto animal populations. Many of these hunters are well equipped with vehicles, spotlights andrifles, and abandoned hunting camps and gunfire at night were recorded during the pipelineEMP in even the remotest parts of the study area.29 The Red Duiker in Photograph 3-5 weretrapped in snares. The Python was killed by members of the local community near theconstruction site on the pipeline project. Killing of snakes has been strongly discouraged onthe NGP construction project and has been managed as part of the EMP. The species listedin Table 3-4 are most under threat as a result of hunting.

PHOTOGRAPH 3-5: Game meat (Cephalopus PHOTOGRAPH 3-6: African Python (Pythonnatalensis - Red Duiker) is an important sebae natalensis) killed by the pipeline

dietary supplement trenching crew

Households harvest a wide variety of plants and other natural resources for use or for sale onlocal markets (refer to Photographs 3-7 and 3-8). Medicinal plants are also harvestedalthough there is less evidence of a commercial market for them in Inhambane province. 30

This is primarily because most people still have access to these resources. They aregenerally collected by women, working from their home villages, and the extent of harvestingis therefore dependent on ease of access.

17r-~~~~~~~ ~ 4'

, ,... ..\

PHOTOGRAPH 3-7: Typha capensis PHOTOGRAPH 3-8: Sale of ffrewood(Bulrshes) sold to generate extra income supplements household income

2Hs Dr Alan Batchelor, personal communication.2l Mr Tony de Castro in Mark Wood Consultants (2001 d).30 Mr Tony de Castro, personal communication.


TABLE 3-4: Animal species that could be under greater pressure as a result of increasingaccessibility in the study area (Red Data species shaded)

I NtesGreater Cane Rat Very common bush meat species in the Exploration Area and along the pipeline route. Most common(Thryonomys between km 320.and km 521 on the pipeline route. Widely hunted for protein by rural inhabitants.swinderianus) Regularly sold at small village markets where animals are skewered on sticks and sold as 'fast food'.

Mostly caught in winter by driving from hiding places using fire. The fleeing animals are then caught withdogs. Species still common but will decline with increasing pressure from human settlement.

Porcupine Occurs through the EA and along the pipeline route wherever population densities are fairly low. Snared(Hystrix for subsistence and for commercial purposes.AfricaneaustralislSpringhare Red Data species. Occurs throughout the EA and the pipeline route, restricted to but fairly common in(Pedetes open woodland areas on sandy soils Caught in snares and often sold at village markets. Carcasses seencapensis) on sale at Pambara and Mapinhane.Scrub Hare Fairly common only in the remote parts of the study area where hunting pressure less intense. Absent(Lepus saxatilis) from dense thicket and forest. Hunted for subsistence and commercial purposes using snares and dogs.

Commercial hunters using rifles and spotlights at night take very large numbers which probably explainsabsence of species close to settlement.

African Elephant Recorded only from a pan near km 352 along the pipeline and in the EA. At least one herd of elephant(Loxodonta visits this remote pan regularly. Increased access will aggravate the risk of poaching for ivory.Africana)Burchell's Zebra Recorded only from the area around km 372 on the pipeline route. This population could be exposed toiEauus burchelli increased poaching pressure for bush meat trade as a result of improved access.Bushpig Common in study area wherever surface water is available and human influence low. The most abundant(Potamochoerus large ungulate. Highly sought after for bush meat for subsistence and commercial trade. Species isporcus) secretive and very aggressive when comered, taking a heavy toll on dogs used to hunt it. Explains why

populations are resilient even in the face of human pressure.Blue Duiker One Blue Duiker carcass recorded in the market at Vilanculos during studies for the pipeline and Gas(Cephalopus Field. Apparently snared in a patch of Milletia forest along the coast between Vilanculos and Inhassoro.monticola) Highly territorial and very vulnerable to snaring and hunting with dogs. Populations probably severely in

decline in all areas where there is human settlement or access to huntingR1dlE)FikQer I I Iblietlenk-m- 3 and I iR 6alon I he pin

e phlus guiHowevers one of th Os t commonbushmeats inhe markets nancuInhaPambar;adI rapetb natziledsTs _inhn Bnx,ptiRi -a g tteen -il Noie bert i arndraiq

. :h.i nleii.vitl 3eiSiiPdrdlib et-sftLh.Stbittatc- ho-m-or,Yl3r,ap-peLdib7l8Ed.A n yscin a rpeLsteGrey Duiker Widespread species, extensively hunted. One of the few ungulates that persists near human habitation.(Sylvicapra The only ungulate recorded along the heavily settled area between km 1 and km 30 of the pipeline routearimmia) alignment.

U;ii Irague R Fs'rta sec esi altIi common inosparse P attl nI iaszf Q and km1mosche X 0r.of .the fixelidblhiuneLdifor subsistenceianD[tcmmer.ciali ipup.iseus,ioigsnar.esian adidogImpala Not recorded in the EA, but found along the pipeline route in remote areas between km 315 and km 352(Aepyceros and at km 423 and common in South Afnca and elsewhere. Species uncommon in the study area andmelampus) much sought after by commercial hunters. Populations likely to continue to decline if access to remote

areas is improved.Kudu Uncommon but widespread, found in remote areas throughout the EA and along the pipeline route. Along(Tragelaphus pipeline recorded at km 215 (Changane River) and km 480. Species much sought after by commercialstrepsiceros) hunters. Populations likely to continue to decline if access to remote areas is improved.Nyala Like other large ungulates has been eradicated from most of the study area. Small herds recorded in(Tragelaphus remote areas at km 315 and km 400 along the pipeline route. Species much sought after by commercialangasii) hunters. Populations likely to continue to decline if access to remote areas is improved.Bushbuck Recorded from the EA and from remote areas on the pipeline between km 315 and km 435 where still(Tragelaphus fairly common. Carcasses found on sale at Mapinhane. Species much sought after by subsistence andscriptusJ commercial hunters. Populations likely to continue to decline if access to remote areas is improved.

_ i B t h insth-thasb-ee-n ceLQor.dedonc-l;iERniEth- ;NErEihltSASLr nliEykffeetah _____t_______IJ__________

r(b a 7 Fbecome extinctiinithestudy area unlaffordedaspecaElrotection.Increased 1a1cess willleadtpoaching (for skins). IfPsettlement incrreases inremoteTar-easlit[willlalso be persecuteo tf

ssto lis.ck.hEE;imiBSbooi to b1beco--ejextinct ii;i

EThoti-ep-alshunt_ :ditorAif.dM aMi tbe1 w ia s-c.ouo.dioIbe\&lacuosmakeVervet Monkey Recorded throughout the EA and along the pipeline route. Often hunted for subsistence purposes.(Ceropithecusaethiof S

Note: (a) All ungulates are hunted for their meat and by-products, such as skins, wherever they occur in the studyarea Carcasses and/or skins of almost all ungulate species have been recorded in feld surveys at homesteads or forsale in local villages, especially along the EN-I.Note: (b) Study area refers to the Exploration Area (EA) and pipeline combined.



It is anticipated that hunting and persecution of animals and harvesting pressures formedicinal and other plants along the new lines of access will increase. A number of thestakeholders who were interviewed during the course of the ElAs expressed support for theproject simply on the basis that the access that would be created would improve accessibilityto natural resources.3 '

Large game would be the first to suffer as a result of improvement of access into theremaining remote areas in the study area. The smaller and more cryptic species would follow.Biodiversity losses may also be expected as a result of the knock-on impacts of the reductionin numbers of game.

As is the case of other types of resource exploitation, it is not possible to accurately predictthe magnitude of the impact that will be caused by the access created for the project. Few ofthe areas impacted by the project's temporary and permanent road infrastructure arecompletely inaccessible. The existing harvesting of timber in the remote areas north-west ofFunhalouro shows the extent to which sufficient access already exists for the purpose ofhardwood resource extraction. However, it is clear that in the case of game and plantexploitation, which is entirely unregulated, improved access provided by the NGP willincrease the distance that hunters and harvesters can travel from their villages in order toacquire natural resources.


It is proposed that the Sasol extends the work done for the ElAs to include a more detailedresource inventory of the Exploration Area. The work should serve to define areas of naturalresource sensitivity more precisely than is possible at present. Such a survey would help toverify the boundaries and extent of the areas identified by the ElAs as being of highestsensitivity, either because of biodiversity, vulnerability to increased human pressures (takinginto account the species targeted for commercial or subsistence use), occurrence ofthreatened species or for other reasons. This, in turn would direct and focus any necessaryinvestment in further research, monitoring and/or management efforts and would, in thebroadest sense, assist Sasol's managers to plan future infrastructure so as to minimise itseffects while meeting the objectives of gas field exploration.

Action Description Responsibility3 Prepare a natural resource inventory for the Exploration Sasol

Area. Define areas of natural resource sensitivity. Planfuture development of the gas field infrastructure tominimize impact on these areas.32

4 Evaluate and, where necessary, close all lines of access Sasolcreated for the project that are (a) not permanent(seismic lines) and which (b) open access into sensitiveand remote habitats. Do this in consultation with localcommunities in accordance with the procedureestablished in the Exploration EMP.3 3

5 Encourage sustainable resource use in local Sasolcommunities around the NGP by assisting local NGOsinvolved in community education.

3.1.3 Habitat Loss and Ancillary Effects due to Increases in Settlement

3.1.3.1 Background

31 Mr B Salema in Mark Wood Consultants (2001a&b).32 Details of the terms of reference for this study to be confirmed in consultation with the assistance of theconsultants currently reviewing the proposed scope of work of the biodiversity monitoring for the project.33 Mark Wood Consultants (2001c)


An indirect impact of the project that could affect habitat loss (and possibly biodiversity) is anincrease in settlement in the project area. This could be as a result of two causes:

(a) The provision of access into areas that were previously inaccessible: Rural settlementpatterns and agriculture in Mozambique have been as much determined by access as bysuitable soils and water availability.34 To the extent that the project roads and cut lines willimprove access into areas that were previously isolated and which have good or reasonablearable soils and water supply, then rural settlement and consequent habitat loss may follow.

(b) The perception that Vilanculos and surrounding area offer opportunities for employmentthat do not exist elsewhere in the sub-region. The area around Vilanculos, stretchingnorthward towards the CPF, may experience induced population growth, resulting fromexpectations of job opportunities from the NGP and other (mainly tourism) developments. Ifthe perception exists that an incipient growth node is developing around Vilanculos, theninformal settlement around the town is likely to expand as people seek opportunities there.This may be aggravated by the fact that opportunities are very limited elsewhere and peopleare consequently willing to take risks that they would not otherwise consider.

The effect of settlement on biodiversity is typically negative. With increased permanentpopulation comes a variety of human activities which impact on habitats, plant and animalcommunities and directly on species themselves. Among these are vegetation clearing forhomesteads and arable lands, hunting and fishing and pollution caused by domestic andsewage waste.

3.1.3.2 Possible Effects of the Natural Gas Project

There are many uncertainties affecting the forecasting of increased informal or formalsettlement caused by the NGP. Experience along the 400kv power line to the MozalAluminium smelter in Maputo Province has shown that the road constructed to build thepower line is being used to reach previously inaccessible areas, and settlement in theseareas has increased significantly as a result of this.35 By way of contrast, in InhambaneProvince, the seismic cut lines35 constructed by Arco in 1988 and by Sasol in 2001 in thesouthern part of the Temane Exploration Area have not resulted in an extensive change inuse patterns and settlement, notwithstanding the occurrence of fairly good arable soils alongmany of them. While there is evidence that some of the cut lines are being used, many ofthem have recovered and dense secondary thicket has re-established along them.37

In addition to improved access, demand for settlement may therefore depend on a number offactors that are not immediately recognizable. In the case of the pipeline to South Africa,taking into consideration Sasol's intention to rehabilitate the construction right of way (i.e.: notto leave a permanent access road along the pipeline), there does not appear to be asignificantly increased risk of settlement caused by the population access:

* in the southern section of the route, the alignment creates a short cut which could takeseveral hours off a trip between Ressano Garcia and Chokwe. While this would appear toincrease the attractiveness of southern areas along the pipeline for settlement, the actualaccess would be difficult as there will not be a bridge across the Komati River and there isinaccessible terrain along the edge of the Komati River floodplain;

* in the vicinity of Chokwe, the right of way may encourage settlers to expand southward onthe soils in the Limpopo River flood plain, using the main road to Massingir as a point ofaccess to the pipeline right of way. However, access already exists in much of this areaand it seems unlikely that the pipeline will increase the pressure for expanding settlement;

34 Mr R Marques, Specialist Study 3 in Mark Wood Consultants (2001 b); Specialist Study 3.3 Personal communication with Dr R English, IFC.36 Seismic cut lines consist of a narrow and fairly straight corridor, typically about 7m wide, cleared through the bushwith a bulldozer in order to provide access for specialized vehicles used in the geotechnical work for gas exploration.37 Mr Tony de Castro, personal communication.


* between the Limpopo River and the Changane River significant population increases inthe more remote areas are considered to be unlikely. The soils are Mananga's, and theyare often badly drained and poorly suited to agriculture. While there may be someincrease in settlement, the right of way will not be opening access to productive arablesoils that were previously unexploitable.

In the gas field exploration and production areas, higher land capability and under-utilisedsoils could increase the likelihood that the access roads will be used to extend accessibilityinto remote areas (refer to Figure 3-3). Over the entire project area, this is likely to provide thegreatest opportunity to inhabitants looking for land, and any efforts to use the new accesswould probably be most pronounced here. Nevertheless, consultation during the course of theRESA with stakeholders knowledgeable about agriculture in the province has shown that thelimitations affecting the use of the soils in the production and Exploration Areas are morecomplex than lack of access alone. Limited water availability and patchiness of good soilswould constrain both commercial and subsistence farming. The absence of developedmarkets, financing limitations and lack of farming knowledge and education are additionalfactors that will combine to further restrict the potential for commercial agriculture along thenew lines of access.

In respect of habitat loss and biodiversity effects as a result of induced growth caused by thepresence of the NGP, there is evidence of some growth in Vilanculos over the last year but itis questionable whether much of it is due to the construction of the project. The investigationprepared for the RESA suggests that there is little risk of significant levels of inducedmigration caused by the NGP. The construction phase is nearing completion and no large-scale population changes have been observed in and around the town. It is more likely thatthose changes which exist are occurring because of general economic growth in the countryand the development of the tourism industry in particular (refer to Section 3.2.3 for details).

After 2003, during the operating life of the plant, only 50 - 60 people will be accommodated onthe site, and it is unlikely that this will have a significant effect on growth in the town. Thereasons for this are described in more detail in Section 3.2.3.


It is recommended that Sasol monitor land use change in the study area and conduct an initialbase line study for this purpose. An analysis of land use change along NGP lines of accessshould be prepared three years after commencement of the project. Any significant patternsof change should be compared with the information provided by the natural resource surveyconducted as a part of recommended Action 3. In this way, the effects of Sasol's activities oninduced settlement could be monitored. If no significant change in land use patterns is foundafter the first three years, then either the frequency of the monitoring or the physical extent ofthe surveys could be reduced.

There are a number of methods that may be considered as a basis for the monitoringprogramme. In the remote areas, satellite monitoring would be an inexpensive and effectivetool for tracking changes in settlement patterns. By using Landsat (or similar) imagery atintervals, and by making use of the Landsat thematic mapper which is capable of analysingand presenting differences in land cover between one photo and another, it would be possibleto monitor changes in settlement patterns and to assess whether these changes are relatedto improved accessibility caused by the NGP or for any other reason. In other places wherethe project results in permanent access roads or where surveys are being done for otherreasons, such as routine pipeline maintenance, monitoring could be done by simple drive-by's. The approach should be tailored to the local circumstances.

Sasol Natural Gas Project-Final Regional and Social Envirorlrnental Assessment (RESA) 33

Action Description Responsibility6 Prepare baseline-monitoring report of land cover along Sasol

NGP lines of access in the Exploration Area and alongthe pipeline to South Africa. Prepare monitoring reportafter three years. If no significant change is measuredover a decade, then consider altering the frequency orextent of the monitoring programme.

7 Assess the risk, caused by any areas of increasing Sasolsettlement activity, to the known areas of naturalresource sensitivity (refer to Item 3 above). Notify MICOAin the event of an increasing level of risk to areas ofconservation significance.

3.1.4 Pollution Effects Caused by Discharge of Effluent into the Govuro River System

3.1.4.1 Effluent Quantity and Treatment

The following discharges are expected from the plant in the operational phase of the project:

(a) Domestic effluent: Up to 130 personnel will be on site during a typical working day. Thedomestic effluent disposed from the offices and housing quarters will be treated by a sewagetreatment plant (STP) on site at the CPF. The hydraulic load to the plant will be in the order of12,5m3 per day. The treated effluent will be released to a stabilization pond. The purpose ofthe stabilization pond is to provide a holding point for sampling and analysis of treated effluentbefore its release for sterilization. The STP includes for two ponds which will be operatedalternately so that one is available at all times for the management of any sub-standardeffluent produced under upset plant conditions. Release of treated effluent will only beundertaken if the discharge meets the criteria described in Table 3-5 below. In the case whereit does not, it will be recycled back into the STP (Figure 3-4).

Once the effluent is deemed suitable for discharge, the water is sterilised by addition of ahypochlorite solution (similar to the pool chemical used in any household). An on-line analyserreports the residual chloride level, giving an alarm in the control room should any problemarise. The residual chloride level is maintained at a level suitable for the effluent to bedischarged to the environment without detrimental effect (< 0.2 ppm).

UV sterilisation was considered, but potential operational problems (particularly the difficultiesof monitoring whether the UV source is off or malfunctioning) precluded this as a reliablemethod. The other major drawback is that all sterilisation stops the moment the source isturned off. With residual chloride, even if a problem arises and dosing stops, somesterilisation would still occur for a short period of time, giving the operators the opportunity tostop outflow and tend to the problem, thereby minimising the risk that un-sterilised effluentleaves the plant.

Following sterilisation, the effluent is released to the final effluent sump from which it isdischarged along with any water from the waste water treatment plant to the environment(Figure 3-4).


Storm water overflowmn Sabliatonpnd Serliafodischarged intolan buseshc Pipese (cloneatorw)ln

DrIn IrD Dosrtmetsadr

the plant W-. 20day~~~~~~~~~~~~~~es f ovroRie

eWastewater treatment(b) n Storiwateffalnum planNt(industrial Provin nd sulntfoth operationdrains system (mainly conainng quea.efuent) design form such a

I ~~~~3t)0m7dayY

contminaed srfac w te, asdw an aqueous maintenancen eflet)Ih

fl~ ~ ~ ~~~~~~~~~~~~~ ml metsMdr

Storm watr overdlow i tdischarged info bush r 5 Pipeline weiand

be in the order of day The treatment plant i designed with an emer west of aovum River

pond i

Specialised treatment(eg. remnoval to

specialist facilities)

FIGSUwRE 3-4: Organogram showing the wastewater treatment logic at the CPF

(b) Industrial Effluent: No continuous industrial effluent streams will result from the operationof the CPF. ontermiftent streams will be caused by occasional discharges from the opendrains system (mainly containing aqueous liquid with limited contamination such ascontaminated surface water, washdown and aqueous maintenance effwluents). Thecontaminated water will be treated in an industrial effluent plant on site. The designers of theplant estimate that the average eff-luent discharge from the CPF reporting to this system willbe in the order of 2-3m3/day. The treatment plant is designed with an emergency capacity totreat 30pM3/day, mainly to cater for any contaminated runoff generated during heavy rainfalland for emergency situations such as the collection and treatment of fire-water.

Storm water run-off from the plant will be collected on a "first flush" basis - the first 10minutes of rainfall from the furthest point in the plant will be collected. Subsequent run-off isallowed tr planthe chamber weir and is discharged into the surrounding bush. Thisensures that any contaminated water from the plant is captured, after which the site isdeemed to be flushed of potential contaminants and the remadning run-off hence clean. Theexcess (post-flush) runoff is not routed to the Govuro River but is discharged locally aroundthe plant where its effects can be monitored. Normal run-off due to cleaning of the plant ormaintenance activities will also be collected in the storm water pond and treated beforedischarge. This kind of run-off, however, will be under control of the plant operating personnelwho will decide when these activities take place, and whether run-off is suitable to be drainedto the treatment plant. Concentrated fluids (such as cleaning fluids and lubrication oils) will becollected in containers and disposed of in a manner appropriate to that fluid (appropriatemethods of disposal have been determined and will be included in the operational EMP forthe CPF).

In the event of a fire at the CPF and the use of water sprays and foam deluge for fire fightingthe contaminated run-off would be routed to the WWTP. For this reason, should the fire alarmbe activated, automated valves on the outlet of the storm water chamber swing for a period of30 minutes to divert run-off to the fire water pond instead of the storm water pond (normal

38 Foster Wheeler, Ref FWS/SAS-F-2583, 25 March, 2003.

Sasol Natural Gas Project-Final Regional anid Social Environmental Assessment (RESA) 35

route for any run-off). After the time has elapsed, the valves automatically revert to theiroriginal positions. The water in the fire water pond can then be tested for contaminants(expected to be mainly oil) and a decision made as to what course of treatment is required toclean the water. This will ensure that species (such as dissolved hydrocarbons and otherchemicals) that cannot be separated in the oily water treatment plant are handled correctlybefore discharge to the environment.

An analyser for total oil contamination (TOC) will be provided at the proving pond (refer toFigure 3-4). The analyser will normally extract a sample (on a continuous basis) from theproving pond (where treated oily water effluent is collected post-treatment) and the signal issent to the control room. A set point (which can be adjusted if required once the plant hasbeen commissioned) of 20 mg/litre will be used.

The purpose of the TOC analyser is to provide an indication of hydrocarbon contamination inthe final effluent. The source of this contamination could be anything from oils to dissolvedhydrocarbons such as glycol or paraffin's. As such, the purpose of the analyser is not todetect specific species, but to give an indication of overall contaminant level from the point ofview of oils and greases. Sasol will also take regular manual samples from the proving pondand accurately analyse these for total suspended solids, oil and grease, biological oxygendemand, chemical oxygen demand, pH and conductivity. The results will be correlated withthe reading on the'TOC analyser. Once a reliable correlation has been established, the TOCanalyser can then be trusted to give an accurate and reproducible indication of contaminationlevel, with alarm set points realistically set to allow proper control over the quality of theeffluent stream. Manual samples will still be taken for quality control and environmentalauditing, but the frequency can be relaxed once the TOC analyser has been proven to betrustworthy.

Should the effluent at the proving pond be unsatisfactory for discharge (refer to the standardin Table 3-6), it will be pumped back to the storm water pond for storage and re-treatment.Once the effluent in the proving pond is acceptable it will be discharged to the final effluentsump. The final effluent sump has been enlarged to a capacity of 100 m3 since the preliminarydesign in order to provide a further holding point in the event of an emergency and to complywith Sasol's fail safe design philosophy. From the final effluent sump the in-specificationeffluent will be discharged into the environment (Figure 3-4).

3.1.4.2 Effluent Discharge Standards

Sasol will meet the World Bank guidelines for the discharge of treated sewage effluent (Table3-5) and for the discharge of industrial effluent from oil and gas facilities (Table 3-6).

TABLE 3-5: Limits for domestic sewage discharge to surface waters (Source: World Bank,1998)

Pollutant / Parameter Limit milligrams per litre (mg/I)pH 6-9Biochemical oxygen demand (BOD) 50Ohemical oxygen demand (C0D) 250Oil and grease 10Total suspended solids (TSS) 50Heavy metals, total 10Metals, specific

Arsenic 0.1Cadmium 0.1Chromium, hexavalent 0.1Chromium, total 0.5Copper 0.5Iron 3.5Lead 0.1Mercury 0.01Nickel 0.5Selenium 0.1


Silver 0.5Zinc 2.0

Ammonia 10Cyanide, free 0.1Cyanide, total 1.0Fluoride 20Chlorine, total residual 0.2Phenols 0.5Phosphorous 2.0Sulphide 1.0Coliforms Less than 400 MPN/100ml (MPN - Most Probable

Number)Temperature increase Max. 3°C' above ambient temperature of receiving

waters

The effluent should result in a temperature increase of no more than 3 degrees Celsius at the edge of the zonewhere initial mixing and dilution takes place. Where the zone is not defined, use 1 00 metres from the point ofdischarge.

TABLE 3-6: Liquid effluents from onshore oil and gas production (Source: World Bank, 1998)

Parameter Maximum value milligrams per litre (mg/1)pH 6-9Biochemical oxygen demand (BOD) 50Total suspended solids (TSS) 50Oil and grease* 20Phenol 1Sulphide 1Total toxic metals** 5Temperature increase Less than 30C'

' The effluent should result in a temperature increase of no more than 3 degrees Celsius at the edge of the zonewhere initial mixing and dilution takes place. Where the zone is not defined, use 100 metres from the point ofdischarge.

Up to 40mg/l is acceptable for facilities producing less than 1 0,000 tonnes per day (tpd).Includes antimony, arsenic, beryllium, cadmium, chromium, copper, thallium, vanadium and zinc.

Note: Effluent requirements are for direct discharge to surface waters.

3.1.4.3 The Receiving Environment

Hydrology: The Govuro River is a coastal river system, flowing from south to north. The riverhas a catchment area of approximately 11200 km2, with a roughly rectangular shape. Meanannual rainfall in the catchment area varies between 800-1000 mm. The river isapproximately 150 km long. The catchment is confined to the coastal plain, with an averageelevation of 80masl. The highest elevation is about 140masl at the extreme southern end ofthe catchment. While the river flows to the east of the EN-1 road, most of the catchment liesto the west of the road.

The Govuro River is perennial but has small flows during the dry season. Records exist for ahydrometric station that functioned between 1964/65 and 1978/79. The mean annual runoff(MAR) derived from this limited data series is 117million mi3, equivalent to approximately 3.7m3/s. The maximum recorded flow was about 23 m3/s and the minimum was 0.3 m3/s. Theriver never dried up during the record period.

No data exist for flood years. During the year 2000 rainy season, the extreme floodsexperienced in the southern part of Mozambique affected the Govuro River, which rose to alevel that inundated the EN-1 in places. The area remained inundated for several months,possibly due to insufficient transverse drainage along the road and to the flat topography.Seasonal flooding is most severe east of the EN-1 but is not uncommon elsewhere in theTemane production block. Figure 3-5 gives an idea of the seasonal extent of surface water.


Low lying areas tend to waterlog during the wet season because of poor drainage. This hasbeen exacerbated by the high rainfall of the last two summers. Many areas that are typicallydry in the winter season remained wet during the year 2001 and 2002 dry seasons.

Wetland /pan

FIGURE 3-5m Temporary inundation

Sensitive Haias h otiprataqai n eln aiasWoodland-Road /cut line

Flow linePipeline

0 Well headol CPF

OO0km JJJE 3lllllll

FIGURE 3-5: Seasonal extent of flooding

Sensitive Habitats: The most important aquatic and wetland habitats within the ExplorationArea are associated with the Govuro River and its floodplain. Approximately 13km of theGovuro River and its associated wetlands drain through the north-east of the TemaneProduction Block into the Mangrove swamps in the Govuro River estuary.

A north-south orientated chain of small coastal barrier lakes occur parallel to the GovuroRiver. The area to the east of the river comprises a patchwork of seasonal and permanentwetland habitats. The prevalence of coastal lakes and lagoon systems is partly aconsequence of the sandy lowland nature of the coastal plain and the pattern of sanddeposition. Changes in sea level have stranded old coastline, dune systems, and lagoonsinland in parallel to the present coastline. Where coastal lagoons have become completelyisolated, barrier lakes have formed. These vary greatly in size, the largest having an openwater surface area greater than 5 000 ha. In the study area these lakes are uniformly small.Small perennial and seasonal streams feed the lakes. Water quality varies widely. Generally,the lakes are not saline, lying on sandy beds with substantial organic deposits. The ph valuesrange from 4 to 7.5. The smaller lakes are often completely covered in emergent vegetationwhich has distinct zones according to water depth and the degree of disturbance.

Little is known about the vertebrate and invertebrate fauna that occur in the Govuro River andassociated wetlands and barrier lakes. The consensus of opinion is that aquatic biodiversity islikely to be high, notably avifauna and herpetofauna.3 9 Historically, the mammal fauna wasalso rich and diverse, especially wetland specialists such as reedbuck, duiker, mongoose,genet, and otter, but these species have declined significantly with increasing population inthe area.

Overall, these extensive, diverse and highly productive aquatic and wetland habitats contain awide diversity of plant and animal species, many of which have restricted distributions. Theysupport eight of the twenty-one Red Data listed animal species recorded in the study area(seven birds and one anuran amphibian). The barrier lakes may also contain populations ofthree rare fish species previously recorded from barrier lakes in the Maputo region. Thesehabitats are therefore regarded as sensitive, and are of considerable conservationimportance.

39 Mr Tony de Castro in Mark Wood Consultants (2001 b).


3.1.4.4 Socio-Economic Importance of the Govuro River and Associated Water Bodies

The Govuro River and associated wetlands and barrier lakes have become an increasinglyimportant source of food for local populations. The availability of permanent water and theopportunity to supplement diets with fish and to harvest other aquatic resources has led towidespread and intensive settlement east of the EN-1. Figure 3-6 shows the extent ofagriculture in these areas.

TF 3

_ River Closed Woodland Road/cut line

Wetland/pan L Open Woodland Pipeine

E Temporary inundation [ Agrculture o Weli headSettlements Q CPF 0.0U11 1 km

FIGURE 3-6: Extent of agriculture in the Govuro River area

Within the rural areas, many families, especially those living near the Govuro River andsurrounding wetlands, rely on fish to supplement their diet. There is no accurate informationavailable about the quantity of freshwater fish that is being caught but it is generally not donefor commercial purposes. Fish are caught by driving them into woven fishing baskets. Noresearch has been done to establish the contribution of fresh water fish to family nutrition, noron the sustainability of the extraction of fresh water fish from the Govuro River system.


Sasol will manage effluent discharge in accordance with criteria based on the World Bankguidelines described in Section 3.1.4.2 above. The effluent treatment systems are appropriatefor the nature and quantity of effluent being released to the natural environment and thenecessary provision has been made in the design of the water treatment plants to deal withemergencies at the CPF and upset conditions at the treatment plants. While the designprovides for a practical and effective way of managing the quality of discharge from the plant,the analysis of effluent quality and treatment according to a set (World Bank) standard doesnot consider the effect of discharge on downstream ecosystems, which is the final test of theadequacy of any water quality standard in a specific aquatic environment. This effect willprobably be small, but it cannot be demonstrated beyond reasonable doubt.


The ecological sensitivity of the Govuro River system to industrial effluent discharges isunknown. The system's importance, on the other hand, both as a natural resource and as asource of food and other resources that sustain sub-regional populations is recognized. Thissuggests the need for routine monitoring to ensure that damage to this system does notoccur.


Best practice in the management of the effects of treated industrial effluent discharges intothe environment has shifted from a source to an effects-based approach. This is particularlyimportant in cases where the receiving environment could be very sensitive to impact. It isrecommended that both approaches should be followed. This will involve the proofing ofeffluent, as proposed by Sasol's wastewater design engineers, to meet a specified standardbefore release into the outfall in the wetland draining into the Govuro River. The second is tomonitor the actual impact of the discharge over a period of time, using appropriate bio-monitoring techniques. The monitoring should be done in the wetland into which the effluent isbeing discharged and in the Govuro River immediately upstream and downstream of theconfluence of the wetland and the Govuro River. The results of this monitoring can be usedto:

* demonstrate that compliance with the World Bank standard does not cause'unacceptable' impact on the local wetland and the adjoining Govuro River system. Thedefinition of what is acceptable change and over what distance any change would beconsidered to be acceptable, will need to be decided in consultation with Ara Sul.

* reassure local leaders and communities that the resource base upon which local peopledepend is not being adversely affected;

* protect Sasol from accusations that its actions have led to damage to the Govuro Riversystem and a decrease in its biodiversity.

It is further recommended that the bio-monitoring records are specifically used as a tool toverify that the treated effluent discharge standards are appropriate or whether improvementsin the design or operating conditions of the plant are warranted to ensure that receiving waterimpacts are negligible.

Actions Description Responsibility

8 Develop baseline records in the receiving water (Govuro SasolRiver) before operation of the CPF begins.

9 Employ a method of monitoring that establishes the Sasolimpact of the CPF effluent discharge on the biodiversityof the Govuro River System and associated wetland andwhich verifies that any changes are localized and oflimited magnitude and significance.

10 If material/significant changes are identified that are Sasoldirectly linked to the contaminants from the effluentsystem of the CPF, then modify the design and/oroperating conditions of the waste water treatmentplant(s) to produce a higher standard of treated effluent.The definition of material/significant changes in riverbiodiversity to be determined with reference to a point ofdeparture that biological and social impacts should benegligible.

11 Prepare annual independent audits of all aspects of Sasoleffluent management and disclose the findings to MICOAand Ara Sul.


3.2 Socio-Economic Effects in Mozambique

3.2.1 Upstream and Downstream Economic Growth Opportunities

3.2.1.1 Introduction

The project-specific ElAs provide limited information about the potential for economicdevelopment provided by:

(a) the revenue from the sale of the gas;(b) the potential for the expansion of the gas industry in the future;(c) the supply of downstream industries and communities with gas as a source of energy;(d) the development of upstream small and medium enterprises (SMMEs) to supply the

gas industry; and(e) the potential for regional synergies because of the availability of natural gas as an

energy source.

The purpose of this section is to present a desktop analysis of indirect economic opportunities(both upstream and downstream) flowing from the development of the first and later phases ofthe gas industry in Mozambique. The section contains a description of the available gas,current and anticipated future demand, possible gas-based development as well as short,medium and long term prospects for gas use. The section is concluded with a description ofadministrative, capacity and any other bottlenecks that could limit the effectiveness of thedownstream development of the gas industry.

3.2.1.2 Expected gas field reserves and other exploration activities

Sasol's aim is to source some 122 Million Gigajoules per annum (MGJ/a) of natural gas fromthe Temane and Pande reservoirs in the next 25 years. In the approved development, whichis due to start production by 2004, Sasol will bring capacity of 80 MGJ/a on line, which will beramped up to 122 MGJ/a in 2008. The development of these reserves would depend upon thenegotiation of new commercial agreements between GOM and Sasol. Over and above 122MGJ/a, the potential reserves are speculative.

Sasol will also produce condensate as a result of cleaning the gas at the CPF. Thecondensate will consist of a clear mix of liquid sulphur-free hydrocarbons. It can be used as afuel, in the manufacture of diesel, petrochemicals and synthetic fuels and as an additiveduring the refining of crude oil. At peak production (±5.5 years into the project), approximately471m3/day of condensate will be produced with the average ranging between 312m3/day and471m3/day. Sasol's agreement with the GOM permits the sale of the condensate to a thirdparty that meets acceptable technical and commercial criteria.

Apart from Sasol's continuing exploration at Temane and Pande, Petronas will soon begin anexploration programme in the off shore Zambezi Delta Block. The work is scheduled to start in2004 and follows the signing of an agreement with ENH in 2002. The exploration permit is forseven years, of which the first three will be used for geological and geophysical assessmentand analysis. Although there is evidence of broader interest in further gas exploration, thePetronas initiative appears to be the only major initiative likely to manifest within theimmediate future. Apart from Sasol's continuing development of the Pande and Temane gasfields, it is therefore unlikely that any other gas fields will be in production within the next 5years.

3.2.1.3 Envisaged development opportunities using gas

The GOM currently holds a 30% shareholding in the Matola Gas Company (MGC), which hasbeen licensed to distribute gas in the Maputo area. In the short term, Matola Gas Companyplans to establish a gas supply pipeline from Ressano Garcia to several possible users in

Sasol Natiral Gas Project-Final Regional and Social Environmental Assessment (RESA) 41

Maputo.40 The users are summarised in Table 3-7. The Mozal Aluminium Smelter provides agood example of one of the potential gas users. Mozal plans to use natural gas to replace theheavy fuel oil (HFO), diesel and liquid petroleum gas. (LPG) that is currently used. Thepresent market demand in Maputo is some 2.0 to 2.5 million GJ/a (approximately 2% of thegas that will be produced at the CPF) and it is expected that this demand will grow a further0.5 MGJ/a to 3.5 million GJ/a to a total demand of between 2.5 and 6.0 million GJ/a.4 '.

TABLE 3-7: Possible gas users in the Maputo area that will be supplied with gas by theMatola Gas Company

Driver Market Gas Quantities TimingSubstitution of HFO, Aluminium smelter 1-1.5 MGJ/a Short termdiesel and LPG Small industrial users 0.5 MGJ/a Short term

(various)Medium industrial users 1.0 MGJ/a Short term(breweries, cementmanufacturing)

Availability of gas New industrial 0.5 to 1.0 MGJ/a Medium termSpecific projects being investmentdriven by the GOM and Electricity generation 3.0 MGJ/a Medium termMGC Domestic users Not specified Medium term

Natural gas vehicles Not specified Long term

It is expected that gas will be supplied to Maputo towards the end of 2004.42 The local use ofgas will provide a number of potential benefits to the GOM of which the most significant will beimported fuel substitution with related balance of payments savings and tax revenues.Consequently, the GOM is driving hard to promote the use of gas in the Maputo area, to theextent that it has insisted on a 9 MGJ/a pipeline (with a 10 MGJ/a take-off) to provide additionalcapacity for long term growth of the gas market. An attractive private investment environmenthas been created which includes the benefits of free trade zones, competitively priced powerand the availability of natural gas. In addition, the GOM is in the process of establishing thevalues of possible carbon credits that could be realised with the introduction of natural gas.Such carbon credits could then be used to enhance the economics of gas projects andsupply, particularly to smaller gas users.

It is understood that the possibility of gas supply to domestic users is being considered by theGOM.43 While the economic viability of domestic supply of gas is questionable taking intoconsideration the cost of establishing the distribution network, the GOM may decide tosubsidise the supply for developmental reasons. It is likely, however, that the use of gas togenerate electricity will prove to be a more viable option for domestic power supply. The GOMis considering this option, and is presently calling for concessionaires to investigate thefeasibility of a 30-40MW gas fired power station in Inhambane Province. Demand for power insouthern Mozambique is currently some 150MW and is set to grow by 8-10% per annum. Byincreasing its capacity to supply power, the GOM will reduce its dependence on South Africaand will provide the impetus for further investment in southern Mozambique.

The GOM also has a longer-term interest in using natural gas for vehicles (compressednatural gas vehicles) and would like to see coal and charcoal use replaced by natural gas toimprove environmental quality in the urban areas. The country loses a significant quantity ofhardwood trees every year to charcoal manufacture, 60% of which is sold in the Maputomarket." Whether these goals will eventually met will depend on a range of factors theanswers to which are not immediately apparent. It is, however, unlikely that a significantquantity of gas could be put to these uses in the short or medium term.

40 An Environmental Impact Assessment for these proposals will be undertaken in accordance with Mozambiqueenvironmental regulations (Decree number 76/98 of 29 December 1998, published under the FrameworkEnvironmental Law of October 1997).

J J de Vos, personal communication.42 J de Vos, personal communication.43 J de Vos, personal communication" J de Vos, personal communication


3.2.1.4 Royalty and other agreements with the GOM

The royalty agreement with the GOM is for 6 MGJ/a at full production.45 The GOM may takethis in either the cash equivalent or the gas itself. Of the 6MGJ/a, 1 MGJ/a will be transportedfree while the GOM must pay for the cleaning and transport of the remainder. The agreementmakes provision for five off-take points along the pipeline, which Sasol must supply at placesthat have been chosen by the GOM. Revenues generated to the GOM, if it decides to takethe cash value, will be paid to the Ministry of Finance.

The agreement between Sasol and the GOM also makes provision for third party access touncommitted space in the Pande-Temane-Secunda pipeline. The costs to third parties usingthe pipeline will be determined on commercially negotiated terms. This requirement issignificant since it will provide an opportunity for smaller players to enter the market without

46the prohibitive capital cost of the pipeline infrastructure needed to supply customers.

3.2.1.5 GOM Policies or plans for the development of the gas industry

While no formal policies or plans are readily available, there is a strong drive by the GOM todevelop the gas industry. It is likely that the GOM will continue to encourage the developmentof 'mega-projects' such as the Mozal Aluminium Smelter. These projects provide both thefoundation for the growth of gas-using SMMEs, as possible service providers to the mega-industry itself, as well as the base load which makes distribution of gas to other smallindustries competitive and commercially viable. However, there is still the problem of findingcapital and building capacity in the SMMEs so that they can exploit the opportunitiespresented in this manner.

3.2.1.6 Possible gas use in towns such as Vilanculos and Maauto

The likelihood of cost-effective domestic supply of gas to small towns like Vilanculos islimited. The distribution networks for gas supply are expensive. If gas is to be used fordomestic power, it is more likely that it will be committed to drive small gas turbines forelectricity generation. This is the case at present between Inhassoro and Vilanculos (includingBazaruto Island), where ENH supplies domestic users with electricity from two gas-firedgenerators.

As indicated in the previous section, the key to promoting small and medium scale gas use isto build the industry around large base load customers. Once the base load supply isestablished, the cost of gas to other nearby customers becomes competitive. Very few urbancentres in Mozambique currently have the industrial capacity necessary to provide for thebase load and the possibility of extensive small and medium scale use of the gas anywhereother than in Maputo is presently remote.47

3.2.1.7 Overall short. medium and lona term ootential for economic growth in Mozambiaueprovided by the develooment of the Temane/Pande gas fields.

The development of the Temane and Pande gas fields will promote some short and mediumterm economic growth, but the potential is likely to be far greater in the long term should gasavailability attract a large industrial development. The supply of natural gas to Maputo in theshort term (potentially by end 2004) will see at least balance of payment (BoP) savings andadditional revenues from the sale of the Royalty Gas, on the basis of the initial consumptionof 1.5MGJ/a to 2.5 MGJ/a. However, it seems unlikely that this gas load will result in asignificant industrial/economic development in its own right, apart from the economicstimulation of the construction of the gas pipeline.

45 Personal communication with Mr P Greeff of Sasol. The agreement is for 5% of production, which at peakproduction is expected to be 6MGJ/a." Third parties introducing gas into the pipeline may be required to meet Worid Bank safeguards as a condition ofuse.47 J de vos, personal communication.

Sasol Natural Gas Project-Final Regional and Social Environmental Assessrment (RESA) 43

The expected growth of market demand in the Maputo area in the medium term is also likelyto be principally for fuel substitution with a possibility for use in some new industrialdevelopment as well.. Such projects will probably be large industrial or chemical plants. Thisagain points to a conclusion that economic benefits in the medium term, as in the short term,will be principally a function of the gas revenues generated, together with the potential BoPsavings from decreased importation of fuel. The establishment of a large-scale industrialdevelopment (of the scale of a Mozal) would depend upon additional reserves being proven inthe development of the Temane and Pande fields. This also applies to the current proposal toinvestigate a gas-fired power station in Inhambane Province.

3.2.1.8 Up-stream development opportunities

The establishment of the gas industry in Mozambique presents opportunities for up-streameconomic development through the development of a network of local service providers.Sasol has committed to maximising these opportunities to the extent that most services to theCPF and the pipeline have been allocated to SMMEs. These services include:

* security (already in place for the construction phase and will probably be extended tooperations)

* plant catering* food* provision of various consumables* housekeeping and laundry* gardens and landscaping* pipeline corridor maintenance* transport (particularly during the construction phase).

Sasol estimates that a total of 100 permanent contract jobs will be created in this way. Thiswill be twice the number of permanent employees that will be engaged to run the plant (50).

3.2.1.9 Administrative, capacity or any other bottlenecks that could limit the development ofthe gas industrv.

Several administrative and capacity bottlenecks could limit the development of the gasindustry. The first of these bottlenecks is limited government resources. ENH for example,has few resources to do prospecting and exploration work of its own and is dependant on jointventures with private companies to implement any field evaluations. Norad assistance to ENHhas provided important additional capacity but concerns exist as to its sustainability.48

Capacity is also limited in government ministries such as MICOA. It is not clear whether thiswill affect the growth of the gas industry, other than there being an absence of pressure,within government, to reduce industrial emissions and promote gas use among users of fueloils.

3.2.1.10 Conclusions

On the basis of current agreements, 6 MGJ/a of natural gas (at peak production) is availablefor distribution within Mozambique. In response, planning is well advanced for theestablishment of a pipeline from Ressano Garcia to Maputo, under the auspices of the MatolaGas Company. Existing demand in the Maputo area is between 2 and 2.5 MGJ/a and isexpected to grow by another 0.5 MGJ/a to 3.0 MGJ/a over and above the existing demand.Potential users of the gas include the Mozal Aluminium Smelter and a number of smallerindustries, but in the long term it is the GOM's intention to extend that use to smaller anddomestic users and even compressed natural gas vehicles. The use of the gas in the Maputoarea will result in balance of payment benefits, as well as direct revenues from the sale of theroyalty gas.

48 J de Vos, personal communication.


For gas use to grow indefinitely, Mozambique need to develop large, gas-using anchorprojects. It is policy within Mozambique to promote large-scale developments with a view togrowing SMME service providers to these developments. In this manner economic growth ispromoted. Given the existing levels of industrial activity it is unlikely that gas use will grow, atleast in the short to medium term, in urban areas other then Maputo.

An initiative is currently underway to investigate revenue generation through carbon creditsthat may accrue with the development of the gas industry. Such revenues could be used tosubsidize gas supply to small and domestic users. Upstream development opportunities areavailable in terms of service provision to the gas industry itself. These opportunities will beextended once operations commence.


- Action Description Responsibility12 Sasol to declare in its annual statements the royalties Sasol

and taxes paid to the GOM in Mozambique.13 Maximize up-stream service provider opportunities in all Sasol

facets of the Mozambican gas production operations atTemane.


Recommended Description RecommendedAction Responsibility

E Promote large-scale developments in Maputo/southern GOMMozambique and elsewhere that can act as a base loaduser/anchor for the supply of greater quantities of gasinto the.local market.

F Present information on the planned and actual use of gas GOM_royalties and taxes in a transparent manner.

3.2.2 Combined (Cumulative) Effects of the NGP and Other Development on ExistingInfrastructure and Institutional Capacity in Southern Mozambique

3.2.2.1 Background

The cumulative effect of the Sasol NGP and other development in Southern Mozambiquecould increase pressures on national and regional infrastructure as well as institutionalcapacity at the various levels of government. In many developing countries, the capacity toaccommodate large industrial projects is limited, and the introduction of such projects mayresult in a series of knock-on effects which can involve significant financial, social andenvironmental costs for the host nation.

This section examines the cumulative effects of the NGP together with other industrial andgeneral economic growth south of the Save River.

3.2.2.2 Foreseeable Mining-Industrial Development in Mozambique

The only large-scale mining-industrial development in Southern Mozambique (north ofMaputo and south of the Save River) which is planned and will be implemented in the short tomedium term (5 years) is the Corridor Sands Project. This project is being developed byWMC, an Australian mining group, in partnership with the Industrial Development Corporation(IDC) which is a South African based finance/venture capital institution. The project will


consist of a titanium dioxide49 mine near the town of Chibuto in Gaza Province, Mozambique.The site of the mining and smelting operation will be approximately 240 km north of MaputoCity and 65 km inland from the town of Xai-Xai.50

It is estimated that the mineral deposits are so substantial that the scale of operations couldultimately rival that of Richards Bay Minerals (South Africa), which is currently the largestproducer of heavy minerals in the world.51 The minerals are located in 10 distinct depositsbetween the towns of Chibuto and Xai-Xai, totalling approximately 14 billion tons ofmineralised sand. The first phase development is concentrating only on mining the resourcein the so-called Deposit 1, which has the potential to sustain large-scale mining operations formore than 100 years.52 The project cost (Table 3-8) includes the cost of a 190 km 400 kVpower line from Maputo to Chibuto. Initially, a railway line linking Chibuto and the mainMozambique network was envisaged as a means of transporting the processed product to thePort of Maputo. However, more recently, an alternative means of transportation has beenconsidered and is favoured by the developers. This will involve the construction of 56 km"road train" from Chibuto to the coast (Figure 3-7). There a jetty will be established for loadingdirectly onto ocean-going ships. It is expected that the project could be first producing by theyear 2007.53

49 As well as other heavy minerals.50Coastal and Environmental Services, 2000.' http://www.sdi.orq.za.

52 Coastal and Environmental Services, 2000.53 Business Day, May 22, 2003.

Sasol Natural Gas Project-Final Regional and Social EnvironrTlental Assessment (RESA) 46

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FIGURE 3-7: Approximate boundaries of the Corridor Sands and Rio Tinto project exploration

license areas

Sasol Natural Gas Project-Final Regionial and Social EnvironirTental Assessment (RESA) 47

TABLE 3-8: Employment during construction and operation of the Corridor Sands Projectcompared with the Sasol NGP

Project Direct Direct operation Indirect Investmentconstruction employed (& jobsemployed54 contracted)

Corridor 3 450 1 400 3 100 US$ 482 m up to US$Sands 777 m

Sasol NGP 3 000 (1900)b" 150e US$ 1,2 billion:"

In addition to the Corridor Sands project, Rio Tinto has an exploration license in the samearea and is presently pursuing resource evaluation of the deposit (refer to Figure 3-7). Thecompany has indicated that it is unlikely that the resource could be developed before the year2007. Further north, a $200m titanium oxide project has recently been announced byKenmare Resources. The titanium mineral sands that will be mined are situated at Moma inZambezia Province, some 750km north of the Save River and 550 km north of Beira.Kenmare does not intend to build a smelter and the project is scheduled to enter productionby the year 2005.58 It is anticipated that approximately 400 people will be directly employed bythe project.59

3.2.2.3 Other developments in the sub-region and elsewhere in Mozambique

Over and above the Corridor Sands Project, the GOM is attempting to re-vitalize agriculture inthe sub-region, particularly in the Limpopo River Valley where production is only a smallpercentage of historical levels. This is discussed in greater detail in Section 3.4.

3.2.2.4 Overall Development Outlook

The International Monetary Fund has predicted that Mozambique's GDP would increase by9% in 2002 and 5,6% in 2003. Growth of 15% per annum was forecast in the mining sectorbetween 2002 and 2005. Rapid growth would continue in the construction sector in 2002-most of this increase would be attributable to the Mozal 2 project.


General Impacts on Services

The NGP and the Mineral Sands projects do not spatially interact, with the exception of thecommon use of the EN-1 for road access. The NGP pipeline is,- at its nearest point, some 70km to the west of the mineral sands deposits (refer to Figure 3-7). No negative interactionbetween the location of the pipeline and the Mineral Sands or any other known mineraldeposits is expected to occur.

With two possible exceptions, which will be examined in this report, the overall effect of theoperation of the NGP will be insufficient to significantly influence development pressures inthe sub region. The first exception may be the combined effects of the project and otherdevelopment on road safety and pavement life of the EN-1 (Sasol proposes road transport asthe preferred method of conveying condensate). The second exception could be thecumulative impact of the NGP and other development on institutional capacity, particularlythat of the planning and environmental authorities.

54 At peak construction.55 Three thousand employees at peak construction on the pipeline and the CPF. Nineteen hundred employees atpeak construction at the CPF alone.

The total of 150 employees includes 50 individuals on the Sasol pay-roll as well as 100 contracted positions, e.g.cleaning, catenng, security etc.57 Total investment - includes gas pipeline and gas fields.58 Business Day, May 22, 2003.59 Agencia de informacao de Mocambique, posted to the web on December 21, 2002.

Sasol Natural Gas Project-Final Regionial and Social Environrnental Assessment (RESA) 48

The limited scale of general impact of the NGP on regional infrastructure may be illustrated bya comparison between the project and other users of roads, power and water:

Existing Road Infrastructure: Table 3-9 shows the approximate volumes of traffic that aregenerated by existing uses on the EN-1, compared with the projected traffic caused by theNGP. The anticipated vehicle numbers related to the NGP are negligible, consisting of a smallfraction of the total current vehicle usage of the road and having no significant impact on thecapacity of the road or the life of the pavement surface. Future expansion of the plant (to saydouble the existing capacity) would probably add 50% to the operating vehicle numbersquoted below, which would also be insignificant in relation to total traffic volumes.

It is likely that growth in tourism and general expansion of road use as a result of theeconomic reconstruction of Mozambique will make up the major proportion of traffic growth onthe EN-1, north of Inhambane, in future. If development in Beira accelerates, then this wouldalso serve as an attractor for north-bound traffic. No forecasts of future traffic on the EN-1could be obtained during the course of the study.

TABLE 3-9: Comparison between existing traffic volumes on the EN-1 and the volumescreated by the NGP during the operation of the CPF

Location Vehicles Northbound Vehicles Southbound(daily) (daily)

EN-1 approximately 1 km 224 (44) 167 (26)south of the turnoff to theCPFProjected number of 20 (1) 20(1)vehicles generated by theSasol NGP

Note: Vehicles numbers in brackets denote heavy vehicles. The total number of vehicles consists of the sum of thetwo figures. Vehicles generated by the NGP do not include those related to condensate transport. Refer below for adiscussion about condensate.

Power Supply: Corridor Sands proposes to introduce power to the plant via a new 400kV linewhich will be built between the Maputo substation and a new substation owned near Chibuto.The power line will supply the Corridor Sands project but will also be the first phase of theEDM future national grid and additional power lines supplying other users will eventuallybenefit from the capacity provided.60 Thus, although Corridor Sands will be a large consumerof energy, a net improvement in capacity in the province can be expected as a medium andlong term result of the project.

The NGP will generate its own electricity. Power to operate the plant and ancillary facilitieswill be supplied by gas turbine-driven generation at the CPF. Since one of the GOMsobjectives is likely to be to use royalty gas to improve the security and distribution of powersupply to communities near the project, the short, medium and long term effect of the NGP, inrespect of power supply, will be positive. Furthermore, if the gas fired power station inInhambane province is built (refer to Section 3.2.1), then the NGP will be an indirect cause ofa marked improvement in the GOMs ability to generate and distribute power.

Water Use: Industrial users are often major consumers of water. Corridor Sands is a goodexample of this, since the mine and processing plant will consume some 50 000m 3/dayincreasing by 17 000m3/day every second year over ten years, resulting in a final dailydemand of 135 00Om 3/day. This water will be supplied from a purpose built weir on theChangane River and, during low flow winter season, from the Limpopo as well. Water in theLimpopo will be augmented from Massingir Dam to provide sufficient supply.61

The Sasol NGP, by way of contrast, will require very small quantities of water, principally fordomestic use, fire protection around the plant and cleaning and washdown. Total water

60 Coastal and Environmental Services, 2000.61 Coastal and Environmental Services, 2000.


consumption is estimated to be some 215 m3/day,62 to be supplied by boreholes drilled at theplant. The NGPs demand is too small to contribute to any concerns about the cumulativeeffects of water use, including other industries and domestic growth. Even in the event of adoubling of the capacity of the CPF, the total water demand of the NGP can be suppliedwithout risk of conflict with other users in the vicinity, groundwater reserves or naturalecosystems.

Impacts of Condensate Transport from the CPF

The cumulative effects of increases in heavy vehicle traffic on the EN-1, as a result ofindustrial growth in Mozambique, will be small. The NGP and Corridor Sands will notsignificantly overlap in this respect. Both projects will utilize the EN-1 (Figure 3-7) as generalaccess to Maputo and South Africa. However, neither project intends to use the EN-1 to andfrom Maputo for the transport of product. Corridor Sands latest proposal is to construct adedicated road to a new jetty on the coast, starting at the mine and extending eastward forapproximately 56km. It may be assumed that any major shipments of supplies would alsoutilize the purpose built jetty. Traffic to and from the development on the EN-1 will consistlargely of technical administrative and support vehicles. Exact numbers are unknown.

For the NGP, the extent of use of the EN-1 for transportation of product will depend upondecisions about how to handle the condensate that will be produced at the CPF. At peakproduction, which will be about 5-6 years into the project, approximately 470m3/day ofcondensate will be produced. Options that have been considered include:

* transport overland by pipeline to a port for onward shipping to a refinery;* transport overland by road tanker to a port for onward shipping to a refinery;* transport by overland and marine pipeline to an offshore buoy (SPM) for further

transport to a refinery by oil tanker.

Sasol favours the second option. Subject to a decision that the quality is sufficient to makerefining viable, and statutory approvals (including approval of an independent EnvironmentalImpact Assessment), the condensate will be transported by road to a local port and from thereto a refinery for further processing.

The condensate volumes would result in approximately one road tanker every twenty minutesto half an hour during daylight hours. While the initial proposal was to transport thecondensate via Maputo, a recent study for Sasol suggests that the preferred port should beBeira.63 This recommendation was primarily because of the lower risks of an accident (muchless traffic) and reduced risk to communities (far fewer roadside communities) if the lesstravelled section of the EN-1 between Vilanculos and Beira is used to transport condensate.The Maputo-Vilanculos section of the EN-1 carries sequentially more traffic with proximity toMaputo, and is narrow and dangerous in places, particularly through villages and towns.

Overall, if this recommendation is implemented, the NGP will have no significant impact onthe operating capacity or the pavement capacity of the EN-1 between Vilanculos and Maputo.The impact on the EN-1 north of Beira will need to be considered in more detail in theindependent EIA. The operation of the condensate tankers is highly unlikely to change thelevel of service of the road but no investigation has been done concerning the pavementcapacity, nor has a transport risk assessment been completed yet to evaluate the safetyimpacts of the proposal. These investigations will need to be included in the terms ofreference for the EIA.

Institutional Capacity

The increasing pace of economic regeneration in Southern Mozambique is resulting insignificant capacity constraints at several levels of Government. In the environmental ministry(MICOA), there are capacity constraints at district level and almost no support infrastructure

62 Personal communication with Dr Russell Gillespie of Metago.r Logistics International SA (2003).


and equipment. The same is true of the Ministry of Agriculture and Rural Development (whichat district level administers the forestry permit regulations) and the Provincial Services of theDirectorate of Forestry and Wildlife. Officers at district level rarely have specialised training,there are no or few facilities available (offices, computers) and few of them have vehicles. Itwas for this reason that most of the district officers who attended meetings for the Sasol ElAshad to be re-imbursed for transport and other costs or they would have been unable toparticipate.

MICOA, in particular, is faced with the unenviable task of administering fairly comprehensiveenvironmental legislation. With many large projects under investigation in Mozambique, andincreasing tourism development, MICOAs capacity is overstretched, even at the National tierof EIA evaluation and decision-making. The ministry's capacity to monitor compliance withconditions of approval is also stretched and it is forced to rely heavily upon consultantsworking as monitors on specific projects.


Actions Description Responsibility14 Include requirements for a full EIA and risk assessment Sasol

of road-based condensate transport options in the tenderdocuments of bidders for use of the condensate.

15 Support a capacity building programme to assist MICOA Sasol, GOMto train environmental officers. This could, among otherthings, include experience at Sasol installations in SouthAfrica or elsewhere.


Recommended Description RecommendedActions Responsibility

G Examine ways of strengthening the institutional capacity GOM, Worldof the government agencies with environmental Bankmandates (MICOA, DWFF, Ara Sul).

3.2.3 Impacts on Tourism in and around Vilanculos

3.2.3.1 Background to the Issue

The Sasol Central Processing Facility is situated some 50km north-west of Vilanculos and5km west of the EN-1. While there are typically employment benefits which flow fromindustrial projects in developing economies, they may also often overburden the capacity oftheir host country in respect of social services as well as resulting in an influx of people intothe area in search of work (induced migration). Many problems may accompany inducedmigration, including health and pollution issues, the spread of HIV/Aids, social tensionsbetween immigrants and existing inhabitants and pathologies such as increased levels ofcrime and prostitution. Induced migration is particularly prevalent where projects aredeveloped in very poor countries and where individuals and families find that the risks ofrelocating in the hope of finding work are less than the risks of remaining where they are.

In the case of the Central Processing Facility for the Sasol NGP, these concerns occur in thecontext of an area which has important tourism potential and which is regarded by theNational Tourism Policy as a place of regional and international tourism significance. Thecoastal area from Vilanculos to Bartholomew Dias (which includes Inhassoro) has been

6' National Policy for Tourism and the Development of Tourism for 1995/1999 (BOLETIM DA REPUBLICA, 3rdsupplement, Council of Ministers Resolution no 2/95 of 30 May).

Sasol Natural Gas Project-Final Regional and Social Envfronmental Assessment (RESA) 51

defined as a Partial Protection Zone (ppZ) 6 5 for tourism. This provides statutory protection forthe coastal strip according to a defined set of criteria determined in accordance with thedefinition of PPZs in the Mozambique Land Act (Act 19 of 1 October, 1997). Managingchange and development in Vilanculos and the adjoining coastal areas is therefore animportant pre-requisite for the protection of this resource and its sustainable use anddevelopment.

The purpose of this assessment is to consider the likelihood that the Sasol project may impacton tourism development at this important tourism destination as well as add significantly tothe burdens of local government, both because of induced migration into the area andbecause of increased project use of social infrastructure and demand for social services. Theassessment also considers the effects of the project on local businesses as a result of thewinding down of temporary employment at the end of construction.

3.2.3.2 Capacity of Local and Provincial Government in Inhambane Province

Vilanculos Municipality has an Urban Plan for the area within the municipal boundaries, drawnup with assistance from MICOA and consistent with the National Policy for Tourism, as wellas provincial and national guidelines. The Urban Plan does not cover the whole district. It hasspecific zones, including residential (includes luxury holiday homes), public services,commercial, industrial (light and heavy), conservation (along the coast and River Chimome toprotect mangrove areas and areas prone to erosion), and tourism (areas along the coast tothe north and to the south of the town. This is consistent with the National Policy for Tourism.Each zone defines the activities allowed and the minimum size of a property.

Vilanculos Municipality is the only urban area in the vicinity of the Sasol NGP that has azoning plan. The NGP is 50km from Vilanculos and is outside the municipal area. Inhassoroand Novo Mabone have maps with the urban limits defined, but these do not distinguishzoning. Rural areas are not zoned.

The process of acquiring land in rural areas is described in Figure 3-8. The purchase of aproperty in a municipal area such as Vilanculos (which has a zoning plan) is set out in Figure3-9. Once a property has been purchased, the owner has 2 years within which to commencedevelopment (Note: this is only the case for foreigners and not nationals). In other urbanareas or rural areas the process is the same except that approval for development is obtainedfrom the District Administrator rather than the Municipality. The approval is not based onzoning but on Governmental Policy documents, such as the Tourism Policy.

65 The Partial Protection Zone prohibits development other than tourism from the high water mark on the beach for adistance one hundred metres inland. The term 'toursm' is loosely defined in the legislation and may include touristhousing, hotels, lodges or other tourism-related facilities or infrastructure.


Land has a title Land has no titlee|(usually rural ara)

Land sold between Community consultationtwo parties (requires explanation of proposed

development, payment,community benefits)

I ICommunity Community

agrees I mdisagrees

Processl_ends

Take consultation papersto Servicio Provincial deGeografica e Cadastro:

- Define area- Issue the provisional title- Lay the comerstones

Note: Provisional title is valid for two years for foreigners and 5 yearsfor Mozambicans

FIGURE 3-8: A schematic diagram of the process of acquiring land

Tourism is developing rapidly, accelerated by the crisis in Zimbabwe which has resulted inmany Zimbabwean's investing in Mozambique and in and around Inhassoro in particular.Tourism statistics show that national tourism growth is in the order of 10% per annum and it isforecast that this will continue or even accelerate. The coastline in Inhambane Province isrecognised as one of the best beach destinations in Southern Africa. Local and foreigninvestment is likely to increase, particularly once issues related to land ownership becomeclearer and investors become more confident about the security of their assets.

Within all the districts affected by the NGP and in Vilanculos Municipality itself, governmentexperiences many constraints. Facing the immense demands of reconstruction after the war,there are financial shortages at all levels and district and municipal offices are severely underresourced. Problems within the study area that have been identified through informaldiscussions with local and provincial government officials include:

* lack of infrastructure to support tourism and other development, including poor roads(in Inhassoro developers drive on the beach to gain access to their coastal properties,inadequate sanitation (no area has reticulated sewage), unreliable electricity supply(the system is over-extended) and uncontrolled waste disposal (Vilanculos is the onlymunicipality with a formal waste disposal site, although this is simply a pit into whichthe waste is dumped);

* lack of technical capability at district and provincial level to evaluate developmentproposals. When the Urbanisation Plan was prepared in the year 2000, only 4% ofthe staff within Vilanculos Municipality had technical skills. Most officials were alsovery young and lacked experience.65 Similar incapacity exists at provincial level. Theenvironmental authority (MICOA) experiences severe capacity constraints atprovincial and district levels and recognises the problems it faces in managing thelegal EIA process and the subsequent aspects of environmental compliancemonitoring;

6 Direccao National de Planeamento e Ordenamento Territorial, 2000.

Sasol Natiral Gas Project-Final Regional and Social Environrnental Assessrnent (RESA) 53

* budget shortages to fulfil all of the functions of government. Equipment such asvehicles, maps, and computers are in short supply in the municipal, district andprovincial offices. On the whole, budgets cover salaries with limited funds availablefor additional expenditure;

* insufficient re-investment in local and provincial infrastructure by central government.With many demands affecting central government spending, there are inevitableshortages at district and local levels and officials are faced with many infrastructuralproblems with no effective means of solving them.

Developer submits adevelopment application

Vilankulo Municipality assesses the proposal toensure it is consistent with the Urbanisafton Plan

and other criteria (eg. Fees due, appropriateconstruction of buildings)

FIGREovmcheatc ara Governor Process ends orGov = d does not w rke/uire further

|MICOA at Provincial|level is approachedSo ascertaln wheaher n

an EIA is required|

I D_EIAA

EIA approved I

at Provincial Lel| Por National Lel

depending othe scale

PRtOJECT PROCEEDS |

Perrnanent itile issuedlonce projetct lis

completed L

FIGURE 3-9: Schematic diagram of the process to be followed to implement a proposeddevelopment in Vilanculos

Sasol Natural Gas Project-Final Regionial and Social Environrnental As-sessment (RESA) 54

3.2.3.3 Possible Effects of the Natural Gas Project

Construction Effects

According to the World Bank, the induced population increase associated with a developmentinitiative like the Sasol NGP may be estimated to equal the number of people employed onthe project.67 This formula must be used cautiously, taking into account the geographical,social and socio-economic context within which the development is taking place, as well asany employment agreements reached between the developer and the Government, as theseare factors that may increase or decrease the multiplier.

As a yardstick, the use of this formula would imply that induced migration of some 1900people into the Vilanculos area could be expected as a result of the construction phase of theproject and some 150 people as a result of its operation. Although statistical evidence is notavailable to verify this conclusion, it is our professional opinion, having worked continually inthe area over the past two years, that the induced migration caused by the construction phaseis very much less than the above figure. While there is evidence of some population growthover the past year during which construction has taken place, much of it is not clearlyassociated with the NGP and is more likely to be related to the increase in economic activityresulting from post war development in general and tourism development in Vilanculos inparticular. There has been a small change in settlement along the access road to the CPF,but this is not shack development and appears to be relocation of people closer to the access

68provided by the road, rather than migrants. Some additional activity is also evident at theintersection of the EN-1 and the access road to the CPF where traders have established tocapitalize on the ready cash available from construction employees.

In accordance with the requirements of the EIA and the Project Labour Agreement, Sasol hasfollowed a construction employment policy which was specifically designed to discourageinduced migration. Box 3-2 describes the agreed construction approach to employmentissues, some of the background to the PLA, and the requirements that have flowed from it.

Overall, it is likely that the implementation of this approach has been responsible forminimizing the risks of induced migration during construction. There has been no incipientinformal settlement developing around the construction site and, apart from the developmentsreferred to above, there is no evidence of any specific settlement encouraged by theconstruction of the NGP. The isolated location of the plant, out of sight of the main road andlocal villages, and 50km from Vilanculos town, may also have contributed to the lack of impactin this regard.

The issues relating to construction impacts have had more to do with the impact of the projecton local services and infrastructure. Sasol and its contractors maintain a complaints registerwhich shows the nature of the issues that have arisen as result of construction. Most aretypical of the impacts caused by large construction sites and include problems with access,livestock disappearance, damage to fences and so on. Figure 3-10 shows an analysis ofrecorded incidents. It is noteworthy that issues typically related to the influx of migrants(prostitution, factional disputes) have not occurred. The mechanisms established by Sasol torespond to complaints appears to be systematic and well structured, and it is clear from theavailable documents which issues are still to be resolved.

6? World Bank Technical Paper No. 139 of 1991.A view supported by Mr LW Nhapendo, Agricultural Technician from the Department of Agriculture.


Complaint Analysis

24-22-

.4 20 _ _ _ _ _

E 18-0L 16- E 14 , l

o 12 ,-* [ l_ (- |II Total complaints

O2 *l 1 L L-b j,, IcComplaints closedlE 6 -

A B C D E F G H IComplaint category

Category key DescriptionA Water resourcesB ROW affecting properties and peopleC Labour related issues0 Compensation paymentE Transport of heavy equipment on roadsF Damage to infrastructureG EnvironmentalH Traffic accidentsI Social development projects

FIGURE 3-10: Temane CPF construction site: analysis of construction complaints raised bylocal communities and officials

BOX 3-2: Sasol NGP Approach to Construction Employment Issues

Sasol's project employment approach during construction has been to maximize the use of local labouras far as possible and to discourage induced migration through appropriate dissemination of informationto prospective job seekers. This was a requirement of the environmental license granted on the basis ofthe EIA prepared for the project. In addition, the Project Labour Agreement (PLA) (compiled by Sasol andnegotiated with the Construction, Wood and Mineworkers Union of Mozambique (SINTICIM)), regulatesand controls conditions of employment in the construction of the project (Louw, 2003). At the request ofGraca Machel, particular attention was also paid to making posts available to women (Marja Prinsloo,Sasol; personal communication).

In order to source as much local labour as possible, and to minimize induced migration, Sasol held aworkshop prior to construction with community leaders and other stakeholders. The basis for arecruitment procedure for unskilled labour was agreed at this workshop. The outcome was a quotasystem for the supply of labour, the creation of a pool of labour from which contractors could hire and theelimination of the need for third parties in the recruitment process (Louw, 2003). In addition, it wasunderstood that all recruitment would be done in accordance with Mozambican labour legislation.

In accordance with the PLA, recruitment of unskilled workers during construction has taken place from thepool of candidates provided by the local chiefs from the districts surrounding the site(s). Furthermore, thecontractor has established recruitment offices in population centres in regions of the site(s) from where allrecruitment takes place (no on-site recruitment permitted). Prior to commencement of employment,employees attend induction programmes that explain the specific conditions of employment governing thework, as well as Contractor's rules, regulations and requirements. In addition, Sasol sponsors a skillstraining programme, thereby further reducing the need to outsource labour. It is a requirement of the PLAthat Mozambican employees are recruited on a temporary basis on a Limited Duration Contract (LDC),which clearly defines the job group, category and all other conditions relating to employment. Termination

Sasol Natural Gas Project-Final Regional and Social Environrnental Assessmernt (RESA) 56

of the LDC is carried out in terms of the Demobilization Procedure (as stated in the PLA), uponcompletion of the contract. The Demobilization Procedure aims to provide a smooth process ofdemobilization of labour from the NGP and is implemented following consultation with shop stewards.

Finally, the establishment of a Labour and Immigration Task Team has ensured that there is a bodydedicated to dealing with labour matters and PLA compliance.

The NGP is scheduled to be operational before the end of year 2003. Construction is nearing completionand demobilization of construction teams has already started.

The most important pre-operational issue will be the wind down as construction contractscome to and end and temporary employment is terminated. For many employees, this willhappen over a short period towards the second and third quarters of the year 2003. This willimpact both on the individuals themselves who will be losing temporary employment from theNGP and the local cash economy that their increased disposable income has supported.There is potential for considerable labour volatility during this period, particularly if there aremisunderstandings about the Limited Duration Contracts (LDCs) that employees have signedor if they have grievances for other reasons that have not been identified and dealt with by theemployer.

Operational Effects

The operation of Sasol's CPF will require only 50 full-time employees. 69 An estimated further100 people will be employed on a contract basis in cleaning, landscaping, maintenance,security and other service activities. Total employment will therefore be approximately 150people.

The small scale of employment impacts becomes apparent when comparing the operatingemployment figures with the other two major industrial developments that are or will beoperating in Southern Mozambique in the short term, namely the Mozal Aluminium Smelter inMaputo and the Corridor Sands Titanium Mine and Smelter near Chibuto. The NGP willemploy nearly one order of magnitude (10 times) fewer employees than either of these twodevelopments over the life of the project.

TABLE 3-10: Comparison between Mozal (I and 11), Corridor Sands and Sasol NGPemployment and investment data70

Project Direct Direct operation Indirect Investmentconstruction employed jobs

employedMozal I 9 000 at peak 745 2 500 US$ 1.36 billionMozal II 5 000 at peak 305 1 500 US$ 860 m (budget)Corridor 3 450 1 400 3 100 US$ 482 m up toSands US$ 777 mSasol NGP 3 000" 150"'- US$ 1,2 billion's

The most important short, medium and long-term impact in the District of Vilanculo is likely tobe development created directly and indirectly by tourism. Tourism in Mozambique is growingat 10% per annum74 and existing and future lodge and hotel destinations around Vilanculosand the Bazaruto Archipelago are likely to be major beneficiaries of the increasing demand.

69 Temane and Pande Gas Field Development Mozambique/Secunda Pipeline, Volume 1, RPIP, Revision 4,February 2003).

(Spectrum 2001; www.mozal.com/news.htm; wwwsdi.oro.za; IFC Project Summary Sheet, Undated; Coastal andEnvironmental Services, 2000; Maire, N, April 2003, Personal Communication).71 At peak construction. Includes all construction employees on the pipeline and CPF for the NGP project.72 The total of 150 employees includes 50 individuals on the Sasol pay-roll as well as 100 contracted positions, e.g.cleaning, catering, security, transport etc.73 Total investment including gas pipeline and gas fields.7"Agencia de Informacao de Mozambique, Maputo, 3,d February 2003.


As indicated in Section 3.2.1.2, the capacity of local and provincial government to manage anupsurge of tourism development in and surrounding Vilanculos is limited. Sustained andappropriate growth that will serve as a catalyst for further development will need to becompetently planned and managed. The local and provincial authorities recognize theincapacity and attempts are being made to improve the available infrastructure and servicesand the capacity of local and provincial government to manage tourism and other growth.

While the Sasol NGP may add slightly to local development pressures caused by tourism, theproject is likely to be a very small component of total development around Vilanculos. Asindicated in the previous section, the operation of the Field Production Operations will belargely self-sufficient and no demands will be made of local infrastructure and services inrespect of water, power, sewage and sanitation, domestic and industrial waste disposal, roadaccess (except the EN-1), health care or emergency services. Overall, if Sasol continues tocontribute to local development initiatives through the company's social developmentprogramme, and if this contribution is made in accordance with an agreed approach in whichthe key stakeholders are all consulted or involved, then the NGPs local presence shouldcause very little additional strain on social infrastructure and should be predominantlypositive.

The project is also unlikely to have any significant direct negative or positive impact ontourism itself. Once operating, the Field Production Operations will be out of sight, beinginland of the sensitive coastal strip and 50 km from the population centre at Vilanculos. Trafficgeneration will be small, with the possible exception of the traffic caused by condensatetransport, which is discussed elsewhere (refer to Section 3.2.2). Some benefits and support oflocal B&Bs is likely to materialize but most visitors to site will be accommodated at the plantand Sasol's activities will not be a major driver of tourism-related activity. Sasol will notmaintain an office in Vilanculos or elsewhere away from the CPF. Even in the constructionphase, with several thousand construction workers on site and fairly large numbers ofexpatriate specialists visiting the site, there has not been a significant increase in demand atthe existing tourism lodges.

The NGP will have some impact on institutional capacity. The environmental performance atthe CPF will have to be monitored and there is limited district and provincial capacity inMICOA and other agencies responsible for environmental monitoring.

3.2.3.4 Actions and ResDonsibilities

Action Description Responsibilty16 Implement a task team to monitor the closing phase of Sasol

the construction contracts and to ensure the smoothestpossible transition due to employment layoffs.

17 Continue social development spending in the local Sasolcommunities around the CPF during the constructionlayoff phase so as to help offset perceived grievancesabout temporary job losses.76

18 Maximize local opportunities for SMMEs to provide Sasolservices to the Field Production Operations.77

19 Contribute to capacity building of MICOA staff through Sasol, GOMsecondment to Sasol environmental units in South Africaand other appropriate means of assisting to capacitatethe Mozambican environmental authority.78

7 Personal communication with Mr J Novo (Mainland Representative, Indigo Bay Resort, Bazaruto Island).7 It is noted that of the $5 million allocated to Social Development spending by Sasol, only $600 000 has been spentor approved for spending to date (refer to Section 6)7 Refer also to Recommended Action 13.7 Refer also to Recommended Action 15.

Sasol Natural Gas Project-Final Regional and Social Envirotirnental Assessment (RESA) 58


Actions Description ResponsibilityH Periodically review the strategic plans for tourism and GOM

other development in and around Vilanculos. Encouragebalanced growth which promotes opportunities in the keydevelopment sectors, particularly tourism. Monitor andcategorize any significant changes in settlement patternsand other land use that do not meet the criteria for thepromotion of sustainable development in the area.

3.2.4 Impacts on Agricultural Development around the Temane and PandeProduction Areas

3.2.4.1 Background

As a result of the construction and subsequent operation of flow lines from the productionwells to the CPF, Sasol will upgrade a number of existing roads and will also build new roads.This has the potential to create access into areas that were previously remote.

The EIA for the gas field identified large areas of moderately high potential agricultural land inthe Exploration Area.7 9 This information came from pre-existing regional soils mapping,prepared by the FAO. The EIA postulated that permanent access roads to the productionwells and the improved infrastructure around Vilanculos could encourage settlement in thesearable areas or even provide the impetus for some commercial agriculture. It was, however,recognized that the present absence of settlement could be caused by a range of limitingfactors (such as water availability) that were not immediately recognizable, and that if thiswere the case, then little change would be likely to occur as a result of the improvedaccessibility alone.

3.2.4.2 Soil Capabilitv in the Exploration Area

A specialist investigation of the potential impact of the NGP on agriculture was undertaken aspart of the Environmental Impact Study.80

79 Mark Wood Consultants (2001 b).80Mr M R Marques, Specialist Study 6 on Agriculture, in Mark Wood Consultants (2001b).


II: Intense COltiationr_[1 IV: Limited Cultiation

r7 V: lIIIICIsC GiazingVI'I .riuted Grul8 I I l _ jIoi a.s

F-] Production Blocks /District Boundaries

j*JExploration Area * CPF 0.0 25 km

FIGURE 3-11: Agricultural potential in the exploration area

According to the information reported, the Temahe and Pande Production Blocks consist offour main soil groups:

* reddish brown soils that correspond to the Urrongos and post-Mananga reddishbrown soil units WV and PA. These soils are reportedly good for the cultivation ofmaize, sorghum, cowpea, cassava and fruit trees;

* dark hydromorphic soils (Ah) that are found in depressions. These soils requirecare and should not be worked when very wet;

* mixed soils (WK) that are shallow and s~usceptible to erosion in most places; and* sandy soils that have a -low inherent fertility and that require fallow periods of

between seven and ten years. These, soils reportedly support 9roundnut, millet,pigeon pea, cassava and fruit trees (such as cashew.and mango).

Households are located on these soils and household members undertake subsistencefarming on all soil groups. In general climatic conditions, combined with the nature anddistribution of soils, make the area (Temane and Pande Production Blocks) moderatelysuitable for successful long-term dryland crop produbtion. Reference should be made to thespecialist study for a more detailed analysis of specific soil types and their suitability forcultivation.

Briefly, however, 54% and 59% of the Temane and Pande Production Blocks respectively areconsidered to have moderate potential (Class II) for rain fed food crop production. Further,53% and 37% respectively are reported to have moderate to highly suitable soils (Class 11,slight limitations) able to support irrigated crop production. Finally, 22% of the Pande Blockhas been classified as suitable for special use, such as sprinkler irrigation. The remaining

FM R Marques, Specialist Study 6 on Agriculture, in Mark Wood Consultants (2001 b).


areas are not suitable for irrigation. Soils that are moderately to highly capable for fruit treeproduction occur in 45% and 93% of the Temane and Pande Production Blocksrespectively.82

From the specialist study, it was ascertained that the majority of agricultural activities are of asubsistence nature, and comprise:

* rain fed farming (food crop production and agro-forestry);* fuel wood and charcoal production;* small-scale livestock production;* wildlife utilisation;* fishing; and* gathering of natural resources for trade.83

Agricultural productivity is dependant on soil quality and water and this, in turn, has an effecton settlement patterns and population distribution. It is from this perspective that the potentialof people moving into the area to take up farming must be considered.

3.2.4.3 Possible (Positive) Effects of the NGP

Box 3-3 summarizes the discussions held with a number of knowledgeable role players in theregion. While the FAO soils mapping suggests that large areas of the soils in the Temane andPande Production Blocks may be suitable for fairly intensive cropping and even commercialagriculture, key role-players in the area are of the opinion that this is unlikely. This is partlybecause the soils are not uniformly good and partly because various other constraints limitfarming production in the region apart from access. These include low and erratic rainfall, noor distant markets and limited financial support to the commercial agricultural sector. None ofthese constraints are likely to be reduced simultaneously with the provision of access into thehinterland around the Temane and Pande Field Production Operations.

BOX 3-3: Record of discussions with key role players in the agricultural sector in InhambaneProvince

Meeting: Mr LW Nhapendo, Agricultural Technician from the Department of Agriculture, based in Inhassoro,Inhambane Province

Mr Nhapendo said that while access to areas in the Inhassoro District has improved considerably due to theconstruction of welihead access roads, no noticeable in-migration has occurred. It has been noted that peoplecurrently residing in the area are simply moving their dwellings closer to the road edge, giving the appearance ofnew migrants moving into the area.

Mr Nhapendo explained that should a new farmer wish to establish him/hersetf in the area he or she would firstspeak with the local secretary and, once a plot of land has been approved, the Department of Agriculture isinformed. Mr Nhapendo did report, however, that this does not always occur as the area under control of theDepartment of Agriculture is large and, for the most part, land allocation is left to the discretion of the localleaders. Hence, no formal documentation is received once a plot is allocated, making it almost impossible for theDepartment of Agriculture to quantify the number of farmers in the area. Furthermore, Mr Nhapendo is the onlytechnician and has to operate without transport, making interaction with farmers difficult. There is, therefore, littlethat prohibits a person from settling on a plot of land unhindered.

Meeting: Ms C Futtenkwecut of the NGO CARE

Ms Futtenkwecut explained that implementation of commercial farming activities faces a number of constraints:e there is a lack of access to seed;* bush clearing of land destroys the nutrients;* local farmers lack the knowledge and are sceptical of new ideas. In addition, they are resistant to change

as they cannot afford for their crops to fail;* there is generally a lack of water and what there is has an erratic supply;* good soils occur in patches and do not cover large and contiguous areas;* financial constraints prevent farmers from being able to afford chemicals and equipment; and* the District Administration does not have extension officers and, therefore, implementation of any farmer

support programme is difficult.

82 M R Marques, Specialist Study 6 on Agriculture, in Mark Wood Consultants (2001b).83 M R Marques, Specialist Study 6 on Agriculture, in Mark Wood Consultants (2001b).


Mr Alwyn Schuchmann of Agro Action, an agricultural NGO operating in Inhambane Province

He substantiated concerns that constraints to commercial farming are:* financial -there is a need for farmers to be able to obtain loans in order to start off. At present, there are no

opportunities as loans are restricted to private investment from commercial banks;* there are no sufficiently large tracts of land of good quality soil;* the rainfall is too low; and* tsetse fly, an inadequate water supply and high start up costs limit cattle farming.

Mr Anastacio Pascoal Palege Macucule The Director of Agriculture, Vilanculos

Mr Macucule stated that the following are key constraints to farming in Inhambane Province:* erratic and generally low rainfall;* no financing for subsistence farmers;* poor road conditions hinder transport of surplus product;* there is no market for the surplus product locally as people are too poor to purchase goods;* storage of agricultural products is problematic;* resistance from the farmers to grow new crops or to try new techniques.

At subsistence level, however, there can be little argument about the importance of small

areas of good soil and the role that it plays in household food security. For such people,

access to relatively small (patchy) areas of good soils may be more viable than for

commercial agriculture. The access created by the NGP may improve opportunities for

subsistence use of the soils in hinterland areas which have been previously inaccessible.


The NGP will have a small and mostly temporary impact on agricultural production. This is

being managed through compensation procedures agreed with the GOM. 4 Sasol may wish,

however, to consider support to small farmers in the area of influence of the NGP as part of

the SDAP.

Actions Description Responsibility20 Involve NGO's, as part of the SDAP, in planning and Sasol

implementation of subsistence farming programmes in

the areas made more accessible by NGP access.

3.2.5 Impacts on Spatial Development Initiatives in Southern Mozambique

3.2.5.1 Key Regional Initiatives

Limpopo Valley Spatial Development Initiative (LVSDI)

The Government of Mozambique launched the LVSDI shortly after the year 2000 floods,

which devastated the Limpopo Valley region (Figure 3-12). With the support of the South

African Government, Mozambican authorities are investigating ways to encourage private

sector investors into the area.

At present, there are two major projects in the development stage that have the potential to

benefit the Limpopo River Valley by providing an industrial base and a new dimension for

tourism. These are the Corridor Sands Mining project and the Greater Limpopo Trans-frontier

Park (GLTP) respectively.

4 Of the approximately 2000 mashambas (fields) that have been impacted by construction of the NGP, most can bereturned to normal agricultural production once the construction teams have left (only deep rooted crops areprohibited directly over the pipeline). A comprehensive compensation process has been undertaken to ensure thatthis impact is appropriately managed.


us na s \

0 L1 M%P MOZAMBIQUE

M sq\tombomune \ MAofl I - ombomu!(|IlhambAnIeI

.Xai~~~~~~~~~~~--)~~~'mapc XXafrX"l

Ressano, .XI _<)GarcGarciaNelspy ,

i ~~ : .f_ "

FIGURE 3-12: Area of the Limpopo Valley Spatial Development Initiative

The Corridor Sands project is discussed in Section 3.2.2. Once operational, the GreaterLimpopo Transfrontier Park will combine major conservation areas in three countries, viz. theKruger National Park (South Africa), the Gonarezhou National Park (Zimbabwe) and theCoutada 16 area (a previous hunting preserve in Mozambique). The Park will cover 35 000kM2, and enabling the free cross-border movement of tourists between the signatorycountries. A project implementation unit has been established and is based in Massingir, onthe southern boundary of the Park, from where it will facilitate its development over the nextfive years.

Within the agricultural sector, the LVSDI has commissioned studies aimed at re-stimulatingfarming in a region where agricultural land use has dropped to about one sixth of the areaunder cultivation in the 1960s. Only 460 000 hectares is presently being used for agriculturecompared with 2.5 million hectares before Mozambique's civil war. The region has vastirrigation potential, particularly in the Chokwe District, and an abundance of water in areaswith the greatest agricultural potential. Only 50 000 hectares are currently under irrigation, butit is estimated that up to 150 000 hectares are irrigable85.

The area has a tradition of high levels of agricultural production, and excellent potential forexports to South Africa and international markets, particularly to the United States andEuropean Union, as they offer favourable trading terms to African countries. Crops that couldbe exported in raw and processed form include rice, coconuts, cashew nuts, sunflower oil andseed, tomatoes, dried beans, mangoes, pineapples, bananas, grapefruit and tangerines.

The LVSDI has synchronized its strategies with the Integrated Development Programme ofthe Chokwe region where rehabilitation of the area's major irrigation scheme is in progress.

85 Intemet site: http://www.sdi.org.za.


The region comprises the Chokwe, Guija, Mabalane and Massingir Districts. Studiescommissioned by the LVSDI have identified three anchor projects:

* rehabilitation of the Conhane rice-processing factory in the Chokwe District. Rice isintensively grown in this area which is easily accessible, has good roads and water andelectricity supplies. Modernization of the plant would encourage increased riceproduction;

* rehabilitation of the Chilembene tomato processing factory and its development into ageneral vegetable and fruit processing plant. This would provide markets for fruit andvegetable farmers and encourage increased production. A study suggests that productsproduced by the plant could be marketed under a brand name, such as "Limpopo Valley";and

* construction of an export-driven coconut derivatives factory in Inhambane or Maxixewhere palms grow in abundance. The factory would produce crude and refined copra oil,margarine, bagasse, coconut milk, charcoal and fibre.

Maputo Development Corridor (MDC)

The MDC stretches from Gauteng Province in South Africa, through Mpumalanga Province,across the border between South Africa and Mozambique to Maputo, essentially following therecently completed N4 highway (Figure 3-13). The MDC was launched by the South Africanand Mozambique Governments to establish a seamless transportation route and toencourage investment along the N4 highway, linking Gauteng Province and MpumalangaProvince to Maputo (in particular, to Maputo Harbour).

The key objective of the MDC is to stimulate regional co-operation and economic integrationby restoring the traditional trade route linking southern Mozambique to South Africa'sheartland in Gauteng, Mpumalanga and Limpopo Provinces, as well as Swaziland.

The main transport infrastructure is the N4 highway, the railway line between Gauteng andMaputo as well as the Port of Maputo. The operation of the railway line and the port hasrecently been awarded to two concessionaires who will operate and upgrade theinfrastructure over a 30-year and a 15-year concession respectively.

One of the largest developments that has already occurred in the MDC is the establishment ofthe Beluluane Industrial Park (BIP). The BIP is located 16 km from Maputo City in the BoaneDistrict of Maputo Province. Beluzone, a Free Trade Zone within the BIP, and is therealization of a plan conceived more than three years ago when the Government ofMozambique (GOM) and Chiefton, an Australian facilities management company, joinedforces to develop an industrial park in Beluluane. It is the GOM's intention that Beluzone'sFree Trade Zone will become a premier location in Southern Africa to undertake exportorientated and general industrial business.

The anchor tenant in Beluzone at present is Mozal, which is an advanced technologyaluminium smelter that was commissioned in the last quarter of 2000. Phase II is nearingcompletion, which will effectively double production (Section 3.2.1). Businesses establishing

86in Beluzone will have opportunities to bid for the supply of goods and services to Mozal. Inaddition, there are attractive investment packages for exporters within the GOM's Free TradeZone under the auspices of the Centre for Investment Promotion (CPI), an initiative under thedirect guidance of the Mozambican Minister of Finance. Approximately 70% of industries inthe Beluzone Free Trade Zone will be Industrial Free Zone (IFZ) industries with the remaining30% undertaking normal industrial activity.S7

86 Intemet site: http://www.beluzone.com." Acer (2002).


$ f t CAMB t~~~~~~~~~~~~MOAB~I

FIGURE 3-13: Area of the Maputo Development Corrndor


Promoting Regional Economic Growth through the Supply of Gas

There is some potential for synergies in respect of the supply of gas to the large industrialdevelopments in the spatial development areas (at this stage, principally Mozal) and toSMMEs. Gas supply to Beluzone is discussed in detail in Section 3.2.1. In addition, theproject manager of the Limpopo Valley SDI (LVSDI), Mr S Matsulu, has suggested that thereis a need for the relevant parties to discuss a strategy for the multi-use of gas for LVSDIinitiatives, e.g. at SMME level and small investors (e.g. ceramic industry and cashew nutprocessing). It is also conceivable that gas could be used in the food processing plantsreferred to above. That said, the price of gas will be a major obstacle to these opportunitiesbeing realized and creative options will need to be considered to assist in the financing ofcommercially viable gas supply. Cross subsidisation using carbon credits is one such optiondescribed in Section 3.2.1.

In the Beluzone Free Trade Zone, developments around the smelter. were initially sluggish,but recent actions by PIB-ZF have started what appears to be a chain reaction ofdevelopments with a substantial number of secondary and tertiary industries establishingthemselves. A take-off point and designated BIP/Beluzone gas line from the main gas pipelineis being planned to the BIP/Beluzone. Natural gas can be provided as part of the servicesmade available to developers when taking up a serviced site (together with water, electricityand sewage disposal facilities). The availability of natural gas to BIP/Beluzone developers canpotentially serve as a further stimulus for secondary and tertiary industries to establishthemselves in the zone. The opportunities for growth of the gas industry are certainly greaterhere than anywhere else in Mozambique at present.

Other Potential Impacts

There do not appear to be any significant conflicts between the NGP and the intent of theSpatial Development Initiatives. The restrictions placed on development around the pipeline(as discussed in Section 3.2.6) are unlikely to have any negative effect on economicdevelopment in the sub-region. There are few restrictions on agriculture, even over thepipeline itself, and restrictions on settlement and other significant infrastructure are limited toa small area parallel to the pipeline.


The Limpopo Trans-Frontier Park is at least 50km from the NGP pipeline, at its nearest point,and even if some of the issues relating to poaching along the pipeline cutline were to manifestthemselves (discussed in Sections 3.1.1 and 3.1.2), it is highly unlikely that these impactscould extend as far as the park.


Actions Description Responsibility21 Incoming investors in SDI's close to the pipeline are to be Sasol, GOM

made aware of the alignment and the restrictions ondevelopment in proximity to the pipeline (particularlyimportant for land intensive investments/ developmentssuch as commercial agricultural estates, agriculturalprocessing plants and conservation areas).

Note: Recommendations for the B/P/Beluzone are made in Section 3.2.1



The LVSDI and ENH/MGC devise a strategy for the GOMmulti-use of gas for LVSDI initiatives.

3.2.6 Impacts of Safety Restriction Zones around the Pipelines on Settlement

3.2.6.1 Background

In Mozambique, the pipeline delivering gas to South Africa and the flow lines from thewellheads to the CPF have development restriction zones around them for safety andmaintenance reasons. While there is little restriction on agricultural development, settlementover and above a small agreed increase is prohibited. The purpose of this section is toevaluate the significance of the restrictions on future use of land along the pipelines.

3.2.6.2 Exclusion Zones

The exclusion zones associated with the pipeline route from Ressano Garcia to Temane8a areas follows (Figure 3-14):

* 400m wide (200 m either side of the centre line). The area across which theconstruction of large buildings and large numbers of buildings is restricted;

* 200 m wide (100 m either side of the centre line). The safety zone of the pipeline. Nosettlement of more than five dwellings per kilometre;

* 100 m wide (50 m either side of the centre line). The area across which the constructionof new buildings will be prohibited. This is termed the Partial Protection Zone (PPZ) andis defined as land for which no right to land use by third parties exists and in which theexercise of any other activity other than that for which the PPZ was defined, must belicensed;

* 30 m wide (15 m either side of the centre line). The area from which existing buildingsand members of the local population will be resettled.

8 Exclusion zones in terms of permanent rights of the owner and the agreement between owner and the GOM. Theexclusion zones are defined partly in order to ensure a practical and enforceable process for the management of landuse adjacent to the pipeline in Mozambique. In South Africa, where virtually all of the land affected by the pipeline isin private ownership, restrictions on land use and settlement are more easily managed and are in terms of therequirements of the risk assessment. These restrictions are minor and are discussed in the project-specific EIA forthe South African section of the pipeline (Mark Wood Consultants, 2001e).

Sasol Natural Gas Project-Final Regional and Social Environrnerntal Assessmrrent (RESA) 66______ ___ . ___..___.___ -___~~

In practice, however, Sasol will not place unnecessary restrictions on land use within theexclusion zones. For the most part, once the pipeline trench has been rehabilitated,temporarily affected people will be able to return to their lands and agricultural practices. Onlydeep-rooted perennial trees will be prohibited from the 15m zone on either side of thepipeline. Crops such as maize, rice sugar cane, vegetables, millet, wheat, bananas and manyothers will be unaffected by any restrictions.

Settlement Exclusion Zone

400m

i < 200~~~~~~~~Om *

K20m

i~~~~~~~1 i oo . ,0m it . .

P50m:

'15m:

4 Gas pipeline

FIGURE 3-14: Areas of partial protection around the natural gas pipeline


The restrictions affecting the use of land in proximity to the pipelines are limited and aregenerally not onerous given the isolation of the pipeline from most areas of settlement. In thefollowing areas, there is a possibility that conflicts could arise, particularly if people are notaware of the restrictions and commit resources to building or agricultural projects within therestricted areas before the limitations are spelled out to them:

* km 0-3 Ressano Garcia* km 32-34 Sabie River* km 130-165 Limpopo River

In these areas, the layout of any proposed settlement and agriculture will need to beconstructively planned and managed so as not to deny communities the productive use of the400m wide strip of land for agriculture, while ensuring their safety and the integrity of thepipeline. This implies good communications between the Sasol and the relevant authorities,local leaders and communities.

3.2.6.4 Sasol Communication Strategy

Sasol has established a Public Liaison Team (PLT) whose primary responsibility is to engagestakeholders/affected individuals and communities along the route. The PLT's objectives areto raise awareness about the project at local level, both in respect of the permissible uses ofthe right of way for agriculture and about the restrictions that the project imposes onsettlement.


The methodology adopted by the PLT has been to consult with stakeholders (anyonepotentially affected by the project, including local residents, local organizations, NGOs andGovernment Authorities) within a 20 km radius of the gas field development and along a 20km corridor along the pipeline route.89 Communication methods used to date includetelevision, radio, public meetings, videos, pamphlets and handouts, continuous participationand interaction and other traditional means. All communication has been done in the locallanguage of the affected person and/or group.

The communication strategy has been divided into three phases:

* Phase 1: Pre-project implementation. This involved the introduction of the project tocommunities and concerns, issues and recommendations registered and forwardedto Sasol for comment and action as necessary;

* Phase 11 Project implementation. Phase 11 is largely activity dependent. Prior to anactivity commencing in the field, the communities are notified in advance (2-3 days) ofthe potential impacts it may have on them. This continues throughout projectimplementation (construction). A complaints register has been established wherebyall concerns and complaints are captured and forwarded to the responsible party forcomment and action as necessary;

* Phase Ill: Post-project implementation. Phase Ill will commence following thecompletion of construction, with the objective being to continue interacting with thecommunity, and to monitor any community issues in relation to the pipeline thatrequire action.90

In this regard, Sasol's PLT is currently developing a programme founded on the sameprinciples as the programme to date, dealing specifically with communication and informationdissemination regarding safety and settlement along the pipeline route.


Actions Description Responsibilities22 Sasol's Public Liaison Team (PLT) to develop the post- Sasol

construction communication strategy. The PLT to ensurethat it includes the necessary ongoing communicationwith relevant stakeholders in areas where the risk ofillegal settlement and of agricultural development overthe pipeline are more likely.

23 Sasol to develop a monitoring strategy to check that Sasolsettlement or other actions that could compromise thesafety of people or the efficient functioning of the pipelineare timeously identified and managed.

24 Sasol and the Government of Mozambique to agree on Sasol, GOMremedial protocols should the integrity of the exclusionzones be compromised.

B Lawal, 2003.90 Lawal, 2003.


3.2.7 Impact of HIV/Aids

Sasol HIV/AIDS management strategy has been divided into two phases, short term(construction) and long term (operation).

3.2.7.1 Construction Phase

The construction strategy has involved the dissemination of information through toolbox talksand weekly Health, Safety and Environment (HSE) meetings. Information has included thebasic knowledge of the way in which the virus is transmitted, as well as how transmission canbe prevented. This has included workplace safety issues and Universal Precautions asoutlined by the Centre for Disease Control, Atlanta, USA. Resources that have been availablefor this phase have included the on-site clinic, the showing of videos used by local NGO's inappropriate languages and the SASOL AIDS kit. The education and awareness programmehas been delivered in a way which is culturally appropriate, literacy appropriate and non-judgemental. This is important since the workforce of this project is culturally diverse with atleast 7 different nationalities being represented.

In respect of concerns about the spread of HIV/Aids by truckers, Sasol's contractor (GLMC)has transported all abnormal cargo (the predominant transport requirement for construction ofthe pipeline) under police escort. This has involved pre-specified truck stops, which hassignificantly reduced the risk of spreading HIV/Aids in proximity to the project. In addition,condoms have been made available to all GLMC personnel and to truck drivers specifically.

All construction workers will undergo an HIV/AIDS information session as part of theirdemobilisation medical briefing.

3.2.7.2 ODerational Phase

Future HIV/AIDS awareness management planning with employees and contractors will bedeveloped as an integral part of the Social Development Action Plan (SDAP) of the NaturalGas Project. All contractors performing work on Sasol's behalf will be contractually required toprepare and implement a comprehensive HIV/Aids management programme for theirworkforce. Sasol will audit this programme in each case in order to ensure that it meets anappropriate standard.

Sasol will also implement a long term HIV/Aids management programme among itsemployees and service providers to the NGP. This programme will include:

* Regular HIV/Aids awareness training;* Encouraging discussion and openness about HIV/Aids between employees and

Sasol Health and Safety personnel;* Enforcing a stigma free environment in the workplace in respect of HIV/Aids;* Networking with NGO's to ensure that consistent messages regarding HIV/AIDS and

other relevant issues are being disseminated by Sasol and others.

3.2.7.3 Actions and ResDonsibilities

Actions Description Responsibilities25 Continue to participate and assist in the HIV forum in Sasol

Inhambane Province26 Develop and implement a long term HIV/AIDS Sasol

awareness programme in conjunction with theMozambican authorities and NGOs.


4 ASSESSMENT OF REGIONAL IMPACTS IN SOUTH AFRICA

4.1 Effects on Natural Resources in South Africa

4.1.1 Effects on Air Quality


It is anticipated that the changeover to natural gas will result in a significant net reduction inair pollution in South Africa, per unit of energy produced. Sasolburg, in particular, will be abeneficiary of the change to natural gas and a reduction in air emissions. Increased supply ofnatural gas to industries with time will also reduce dependence on coal and light and heavyfuel oils, all of which will further reduce air pollution loads in South Africa. The purpose of thissection is to provide a preliminary regional forecast of air pollution benefits with regard topriority pollutant emission reductions resulting from the change over to natural gas.

4.1.1.2 Natural gas implications for air pollution emissions from Sasol operations

The difference in air pollution emissions as a result of replacing coal with natural gas as afeedstock at Sasol operations is dramatic. The coal gasification process results in emissionsof sulphur dioxide (SO2), nitrogen oxides (NO.), hydrogen sulphide (H2S) and particulatemaiter (PM), and these emissions are obviously prevented if natural gas is used as afeedstock (foregoing the need to gasify coal). Neither, Secunda nor Sasolburg will stop usingcoal altogether. Although Sasol Chemical Industries (SCI) in Sasolburg will decommissiontheir gasifiers, coal will still be used for electricity and steam generation. At Sasol Synfuels inSecunda, the existing synthesis gas loads produced from coal will be maintained, but therewill be a 3% increase in those gas loads using natural gas as a feedstock.

Emissions of S02, NO,, H2S and particulates are summarised in Table 4-1 prior to andfollowing the introduction of natural gas. The most significant reduction is evident in H2Semissions, which reduce to zero following the introduction of natural gas as a feedstock atSCI (H2S is only produced during coal gasification and not during the combustion of coal).SO2 and NO, will both be reduced by some 35% at SCI, with the remaining emissions afunction of coal combustion at the plant. Particulate emissions from SCI will be reduced bysome 25%.

TABLE 4-1: Changes in air pollutant emissions from various Sasol operations as a result ofthe change to natural gas

Pollutant Scenario Emissions ('000 tons per annum)CPF Secunda Sasolburg TotalCurrent 0 214.8 29.2 244.0

S02 Post NG 0 210.0 18.9 229.0502 Total 0 -4.7 -10.3 -15.1

% change 0 -2% -35% -6%Current 0 126.8 24.3 151.1Post NG 0.8 124.0 15.8 140.6

NO, Total 0.8 -2.8 -8.5 -10.5% change 100% -2% -35 -7%Current 0 96.6 20.6 117.3Post NG 0 97.4 0 97.4

H2S Total 0 0.8 -20.6 -19.9% change 0 1% -100% -17%Current 0 13.7 5.4 19.1Post NG 0.04 13.4 4.1 17.5

PM Total 0.04 -0.3 -1.4 -1.7% change 100% -2% -25% -8%

Please note that figures have been rounded off.


Although the emission reductions at Sasol Synfuels, do not appear to be significant (and insome cases even increase slightly) following the introduction of natural gas, it must beremembered that these occur despite a 3% increase in synthesis gas production. In broadterms, each of the pollutant emissions would have increased by an equivalent percentagewas coal to have been used as the feedstock for the expanded production. When emissionreductions from the two plants are combined, reductions of 6%, 7%, 17% and 8% will bemanifest for S02, NO,, H2S and particulates, respectively. Relatively small emissions ofoxides of nitrogen and particulate matter will be introduced at the CPF in Mozambique.

Fuel substitution

(a) Major coal users

Due to its relative abundance In South Africa, coal is an important fuel source in South Africaand is used in a variety of fuel burning devices. South African coal tends to have a relativelyhigh ash content (some 20 to 40%) and relatively lower, but still significant, sulphur content.Undoubtedly the most significant user of coal in South Africa is Eskom, where coal-firedpower stations form the backbone of electricity generation in the country. It is highly unlikelythat the availability of natural gas would see any changes in the current emissions from coal-fired power stations but obviously gas-fired (co-generation) power stations could beconsidered for meeting future energy requirements for peak sharing.

A second significant user of coal, are township residents who use coal for cooking and spaceheating. Air pollution as a result of domestic coal burning, poses a significant risk of adversehealth effects amongst a large percentage of the population. This practice sees significanthuman exposure to unacceptability high air pollution concentrations of particulates, sulphurdioxide, nitrogen oxides, carbon monoxide and volatile organic compounds. Various studieson domestic fuel use and exposure have indicated that household coal use can contributebetween 40% and 80% to particulate concentrations in the air 9' (see also earlier reference toaerosol monitoring in Sasolburg) and that domestic coal use is associated with a 9.3 timeshigher incidence of respiratory illnesses in children between ages of eight and twelve years.92

As stated in the previous section, it seems unlikely that the availability of natural gas in SouthAfrica would result in a significant change in this condition (at least in the short to mediumterm) although the potential of natural gas to address this problem is self-evident.

(b) Other industries

Apart from the direct reductions in emissions from SCI and the prevention of further emissionsat Sasol Synfuels, the greatest air quality benefit of introducing natural gas lies in industriesconverting from fuels, such as coal and residual oils, to natural gas. The effect of this changecan be illustrated by using air pollution emission factors associated with coal and fuel oils andcomparing these with the emission factors associated with the combustion of natural gas(Figure 4-1).

The most significant emissions from the combustion of natural gas are nitrogen oxides;emissions that are principally a function of combustion efficiency rather than the compositionof the fuel. Nitrogen oxide emissions from natural gas combustion are some 27% of thoseemitted from the combustion of coal, and 45% of those emitted from the combustion of fueloil. The use of low NO, burners, as a relatively affordable abatement technology, would resultin even lower nitrogen oxide emissions.

91 Asamoah, 1995.92 Terreblanche et al., 1990.


10.000

0.001

PM I S02 NOx

o Coal 3.719 0.707 0.409*Fuel oil 0.167 2.571 0.241

* Natural gas 0.003 0.0002 0.109

0 Coal i Fuel oil * Natural gas

FIGURE 4-1: Comparative emission factors for coal, fuel oil and natural gas expressed asmass emitted (g) per unit of energy (GJ) (sourced from AP42)

The benefit of natural gas in respect of sulphur dioxide and particulate matter (PM) emissionsis far more significant. Emissions of PM from the combustion of natural gas are less than 1%of those from the combustion of coal and fuel oil. PM emissions from coal combustion areespecially problematic given the high ash content (between 20 and 40%) of South Africancoal. In similar vein, sulphur dioxide emissions from the combustion of natural gas are lessthan 0.1% of emissions from the combustion of coal, and less than 0.01% of emissions fromthe combustion of fuel oil. The sulphur content of fuel oil is typically some 3% whereas thesulphur content of coal is some 1%.

4.1.1.3 Industries currently fuelled by gas

A number of industries are currently serviced by Sasol coal-based gas. The gas is suppliedvia two pipelines, one of which runs from Secunda to Empangeni (in KwaZulu-Natal) and fromthere on to Richards Bay and Durban. This coal-based gas is methane rich and is very similarin property to natural gas. Some 16.5 MGJ/a of gas is currently supplied, but could beincreased, in terms of pipeline capacity, to 21 MGJ/a. The second pipeline runs fromSasolburg and Secunda, to large industries on the Gauteng and Mpumalanga Highveld.These large industries include steel and stainless steel producers, glass manufacturers, themotor industry and others. These consumers will be converted from coal-based gas to naturalgas. A gas similar to that which is now provided will be especially produced from natural gasfor the largely domestic market supplied via the Johannesburg based Egoli companyservicing this market.

The supply of gas to these industries has seen fuel substitution from coal, fuel oil, electricity(in itself dependent on coal combustion) and Liquid Petroleum Gas (LPG). The current gasmarket is shown in Figure 4-2.93 The metal industry is currently the largest consumer of gas atsome 47% of the current supply. In this sector, gas has replaced coal as a furnace fuel withsignificant emissions reductions. No direct figures are available but using the emission factorspresented earlier estimates can be made of the emissions reductions. These are estimated tobe 84,000 tonnes/a of particulate matter, 16,000 tonnes/a of sulphur dioxide and 9,000tonnes/a of nitrogen oxides. Both sulphur dioxide and nitrogen oxides are especially important

93 The emission figures have been based on estimated fuel substitution ratios for each industry sector. Thereafter,emission factors have been used for the various pre-gas fuel types, viz. coal or HFO to calculate emissions as afunction of equivalent energy use. These figures were then compared to emissions using natural gas and thedifference presented as estimated emissions 'savings'.

Sasol Natural Gas Project-Final Regiornal and Social Environmental Assessment (RESA) 72

because of threats of acidification on the Gauteng and Mpumalanga Highveld due to the highpollution loading that prevails.

3.763.76

7.52 22.56

9.40

ED Metal industry * Chemical pulp and paper

o Mining and non-metal 3 Manufacturing

* Food and comm

FIGURE 4-2: Sectoral breakdown of existing synthesis gas users

In the remaining sectors, gas has replaced coal, fuel oil and black liquor in the chemical andpulp and paper industries, coal and LPG in the mining sector, LPG and electricity in themanufacturing sector and LPG alone in the food and commercial sectors. Given the relativepercentage of fuel substitution in these sectors, the emission reductions can be estimated at114,000 tonnes/a of particulate matter, 32,000 tonnes/a of sulphur dioxide and 14,000tonnes/a of nitrogen oxides.

Emissions of sulphur dioxide and nitrogen oxides in South Africa in 1990 are shown in Table4-2 together with their sources. It is not clear to what degree energy generation at individualindustries has been accounted for in the energy sector, neither what the current emissionsare, but the emission reductions as a result of the introduction of gas are significant within theindustry sector.

TABLE 4-2: Air pollution emissions (in kilotonnes) and their sources in South Africa in 1990(after South Africa's SOE, 1998)

Source SO2 NO.-Energy 1,695 1221Transport 569 995Industrial 28 13

4.1.1.4 Possible growth in gas users

With the introduction of natural gas, the coal gasifiers at Sasol Chemical Industries (SCI) inSasolburg will be decommissioned. This will require some 40 MGJ/a of natural gas to replacethe gas loads previously generated in the gasifiers. In addition some 40 MGJ/a will berequired to replace the current gas supply to industrial users in the Gauteng and MpumalangaHighveld and the largely household market of Egoli gas. Finally, the expansion at SasolSynfuels will require 15 MGJ/a. Given the 120 MGJ/a that will be supplied from Mozambiquethere is a further 20 to 25 MGJ/a that can be used to grow the gas market in South Africa.


The projected growth in the gas market is shown in Figure 4-3. There are two new sectors(compared to Figure 4-2) and these are the natural gas supply to the Sasol operations, andco-generation. Co-generation (i.e. generating both electricity and steam using gas as anenergy source) is seen by Sasol to be an important mechanism for the growth of the gasmarket. Although the capital outlay for co-generation is high, the technology is typicallypursued for one or more of the following reasons:

* where fuel burning appliance technology is dated and maintenance is expensive;

* requirements for improved environmentpl performance - this is likely to becomeeven more significant with the implementation of the National Air QualityManagement Act (currently out for comment but likely to be promulgated withinthe next 18 months); and

* unstable power supply - this is especially true for Kwazulu-Natal where there arefrequent power dips;

* peak drawing - where an electricity generating company is prepared to pay apremium for electricity to avoid new capital expenditure.

8 6 4

14g X 55

1 9

23

o Sasol plants * Metal industryo Cogeneration o Chemical pulp and paper* Mining Es Manufactunng* Food and comm

FIGURE 4-3: Sectoral breakdown of projected future gas users

The development of the co-generation market will have an important effect on air quality,especially where industries replace existing fuel-burning devices that use either coal or fueloil. Potential air pollution emissions savings are estimated at 44,000 tonnes/a of particulatematter, 28,000 tonnes/a of sulphur dioxide and 6,000 tonnes/a of nitrogen oxides.

4.1.1.5 Health benefits as a result of emissions reductions in Sasolburq

H2S is notorious for its pungent 'rotten egg' smell due to its low odour threshold and odourepisodes are known to occur frequently in the Sasolburg area.94 It has been a nuisance fordecades. Given that there are no other sources of H2S in the Sasolburg area, the reduction ofemissions from SCI will see H2S odour episodes cease in the area.

The reductions in particulate matter emissions will also be important given the possibleimpacts on human health, where the smaller size fractions (the inhaleable and respirablefractions that are typically associated with combustion processes), can result in damage tothe lower airways and gas exchanging portions of the lung. Aerosol monitoring in theSasolburg area indicates, however, that the most significant source of particulate matter in thearea is domestic fuel combustion (at some 25% of the measured aerosol loading)

I it is noted that H2S levels in Sasolburg have never been exceeded intemationally accepted health thresholds.


(Engelbrecht et al., 1998). The reduction in particulate mafter emissions from SCI, whileimportant, is unlikely to result in a significant reduction in the ambient concentrations of PM.

4.1.1.6 Greenhouse gas emissions

Sasol is a significant generator of greenhouse gases currently, especially carbon dioxide(CO2) where current emissions from Sasol Synfuels and SCI total some 57 million tonnes perannum. Given that there will be no significant change in the quantity of coal currentlyconsumed at Sasol Synfuels, CO2 emissions will remain largely unchanged (there will be anapproximately 0,1% increase). However, there will be a significant reduction in CO2 emissionsfrom SCI of some 47% or 3,5 million tonnes per annum. Sasol and Eskom collectively emit216 million tonnes per annum of carbon dioxide (2000 figures), which contributes significantlyto South Africa's greenhouse gas emissions.

The Kyoto Protocol makes provision for emissions that are prevented as a result of the use ofa Cleaner Development Mechanism (CDM) - in this case the substitution of coal as afeedstock with natural gas. This will be the case at Secunda where a potential 3% increase incarbon dioxide emissions, for example, has been avoided as a result of using natural gas as afeedstock for the 3% increase in gas loads.

In these terms it can be argued that the CERs generated by the introduction of natural gas willamount to some 4.7 million tonnes per annum. That figure has been derived from thecombination of the direct reduction in greenhouse gas emissions that will occur at Sasolburg,with the greenhouse gas emissions that have been prevented at Secunda, and that wouldotherwise have occurred were coal to have been used as the feedstock for the expansion ingas loads.

4.1.1.7 Conclusions

The introduction of natural gas will result in significant air pollution emission reductions at theSCI operations in Sasolburg. In addition, possible increased emissions at Sasol Synfuels inSecunda will be prevented as a result of using natural gas as the feedstock for thatexpansion, rather than coal. The emission reductions at Sasolburg, include 10,300 tonnes/aof sulphur dioxide, 8,500 tonnes/a of nitrogen oxides, 20,600 tonnes/a of hydrogen sulphideand 1,400 tonnes/a of particulate matter. These reductions will serve to reduce the air qualityburden and related risk of adverse health effects, in the Vaal Triangle.

It seems unlikely that the introduction of natural gas will have any material impacts onemissions related to electricity generation (although it could be used for future generatingcapacity). Neither will it have an impact on emissions from domestic fuel use (especially coaluse). These two sources are significant in terms of pollution volume and risk of adverse healtheffects respectively.

The introduction of natural gas also holds promise for further significant reductions inemissions and/or the prevention of increases as a result of new industrial development giventhe additional gas volumes that will be available for growing the market. It is estimated thatthe conversion of industries to sulphur-free coal-based gas has reduced and/or saved some114 000 tonnes of particulate matter, 32 000 tonnes/a of sulphur dioxide and 14 000 tonnes/aof nitrogen oxides. The additional 20-25 MGJ/a of gas for further industrial development holdsthe promise of estimated emission reductions and/or savings of 44 000 tonnes/a of particulatemaiter, 28 000 tonnes/a of sulphur dioxide and 6 000 tonnes/a of nitrogen oxides.

Greenhouse gas emissions, specifically CO2, will be reduced by some 3.5 million tonnes atSasolburg. A potential 3% increase in CO2 emissions at Secunda will be prevented by the useof natural gas as a feedstock. Collectively the reduced emissions, together with the savedemissions, imply carbon emission reduction credits of some 4.7 million tonnes per annum.




27 Further investigate and promote the possibility of Sasolcarbon credits under CDM with a view to encouragingwider use of natural gas rather than other fuels.

28 Promote the use of natural gas as a replacement for Sasol, DEATcoal and/or fuel oil. Sasol to initiate discussions with theAir Pollution Directorate of the National Department ofEnvironmental Affairs and Tourism, with a view topromoting fuel substitution as a means of emissionsabatement in industries where the presence of pipedgas make this economically feasible.



J National DEA&T to consider initiating a process to DEATestablishing a national emissions database in theimmediate future (information on national air pollutionemissions is extremely limited.

K Re-consider the possibilities for the promotion of DME, DEATnatural gas use in the domestic environment,particularly in the former townships, taking intoconsideration the possibility of carbon credits as anincentive scheme.

4.1.2 Effects on Consumption of Natural Resources


The mining of coal and the coal gasification process result in a range of environmentalaspects including natural resource use. The most significant of these resources is water givenboth the quantity of water used as well as the water scarcity of the region. Other resourcesinclude biodiversity and land potential as a function of the direct physical changes to land as aresult of mining activities, as well as the need to dispose of ash. In the section that followsthese aspects are briefly described to highlight the resource use implications of theconversion to natural gas.

4.1.2.2 Water use

Sasol operations are highly water consumptive, to the extent that 13.3 tonnes of water is usedfor every tonne of petrol that is ultimately produced at Sasol Synfuels95. The gasificationprocess requires significant quantities of water and with the decommissioning of the gasifiersat Sasolburg, water use will drop by 5,475 Mt per annum (a 27% reduction). Based on thequantity of coal gasified, the quantity of water used in the gasification process and the energycontent of the synthesis gas (pure gas), an estimate can be made that 73 t is required forevery GJ of synthesis gas. Using that estimate for Secunda, a water saving of at least 1 095M?per annum will be achieved, by using natural gas as the feedstock for the 3% increase in gasloads, rather than coal. This amounts to a combined water saving of some 6,570 Mt perannum.

O5 O'Beirne et al., 2000.

Sasol Natural Gas Project-Final Regional and Social Environinental Assessment (RESA) 76

That water use figure excludes the water that is pumped out of the coalmines during miningoperations. Two principal types of mining are used namely strip mining and undergroundmining. Some 0.6 Mt of water is decanted per 1000 tonnes of coal during strip miningoperations and 0.2 Mt of water per 1000 tonnes of coal during underground mining. In termsof the replacement of coal with natural gas as a feedstock, savings in groundwater will resultof some 3,000 Mt per annum at Sasolburg and some 712M? per annum at Secunda thatwould otherwise be pumped from the mines.

4.1.2.3 Biodiversitv and land potential

Mining

Coal mining, especially strip mining, has an obvious impact on land potential given the direct,physical changes to the land. Underground mining can affect biodiversity and land potentialthrough subsidence and sinkholes. On average some 79m2 of land area is affected per 1000tonnes of coal mined. This translates into a figure of approximately 42 hectares a year that isaffected by the mining needed to supply coal for gasification at Sasolburg. In the Secundaarea, assuming that the 3% expansion at Sasol Synfuels was based on coal as a feedstock, afurther 10 hectares a year would have been affected by mining operations. In these terms,the conversion to natural gas as a feedstock at Sasol operations will see the 52 hectares ayear that would otherwise have been required for mining, unaffected.

The bulk of the land affected is agricultural land and any areas of important natural habitatwould obviously be avoided by a reduction in the area affected by mining operations. While itis recognized that as a responsible operator, Sasol rehabilitates most of the area affected bymining, even the most effective rehabilitation programme cannot re-establish natural habitatsto their pre-existing condition. Given the rehabilitation programme implemented by the mines,it is difficult to estimate the significance of the land potential and biodiversity 'savings' that willresult from the conversion to natural gas. Nonetheless, the fact that these areas will now beunaffected together with the saving of rehabilitation costs, is an important benefit of theconversion to natural gas.

Ash disposal

Due to the high ash content of the coal that is used in Sasol operations, the land areasrequired for ash disposal are significant. In 2000 for example, approximately 20 hectares wererequired for ash disposal. The reduced ash generation will result in a saving of 3 hectares ayear that would otherwise have been required for ash disposal.

4.1.2.4 Conclusions

The coal gasification process is a significant consumer of water. Water savings that will beachieved by the conversion to natural gas amount to at least 6,570 Mt per annum. Thisexcludes the quantity of ground water that is pumped from coal mining operations. In termsof biodiversity and land potential some 52 hectares a year, which would otherwise have beenaffected by mining, will remain unaffected as a result of the introduction of natural gas Thedevelopment of the natural gas supply infrastructure will also affect a significant land area, butno direct comparisons have been drawn here because of the difference in impacts betweenthe land affected by mining versus that affected by the installation of the natural gas supplyinfrastructure.



29 Continue to investigate water savings so as to ensure Sasolthat the savings brought about by natural gas arerealised to the full.


4.1.3 Impacts on Job Creation


Sasol anticipates job losses in both the Sasol owned and operated coalmines and at theSasol Chemical Industries (SCI) plant in Sasolburg. The company has implementedmeasures to minimize the associated job losses. These include, inter alia, the absorption oflosses by re-deployment of personnel.

4.1.3.2 SCI Strategv Concerning Re-deployment

The SCI plant in Sasolburg is in the process of converting from the use of coal-basedsynthesis gas, to natural gas supplied by the NGP. In the conversion of SCI, a number of jobswill become redundant and, due to a change away from coal usage, a number of Sasoloperated coalmines are to scale down operations or, in some instances, close downcompletely.

Since the announcement of the changeover to natural gas, SCI's strategy has been toaccommodate the maximum possible number of affected employees into alternative positionsthrough re-deployment. Where possible, SCI is also re-training employees to gear them forthese positions during the preparation phase for the introduction of natural gas. By doing so,the need for forced transfers and relocation, with associated negative impacts, is beinglimited.

SCI states that the circumstances of employees who cannot be accommodated in thismanner will be managed through a more structured process, by committing affectedemployees, wherever possible, to upcoming positions with either expansion, new plants orvacancies that become available at existing plants.

The success of the current strategy can be measured against the fact that none of theemployees transferred to date have done so as a result of mandatory action by the employer.All transferred employees have relocated as a result of successful personal applications forpositions elsewhere. Table 4-3 provides the numbers of affected employees, from December2000 to the present, and illustrates the manner in which the job losses were reduced.95

TABLE 4-3: Employee numbers reported in the November 2002 SCI Board Report

Affected Affected Dec '00 Affected Oct '02 Possible future Projectedredeployments

Managers 23 10 0 10Maintenance 114 50 30 20Production 176 70 38 32Human resources 2 1 1 0Admin support 6 3 3 0Financial support 2 1 1 0Technical support 42 21 6 15

Steam station 45 0 0 0Total 607 156 79 77

From Table 4-3 the following is evident:

* In December 2000 when the process started, the number of affected employeeswas 607;

The employment numbers and data provided by SCI are provisional and are subject to change as further projectrefinement is done. Not included in the figures are the 280 Fixed Term Employees (FTEs), who have been employedin various Syngas and Utilities plants to enable Sasol to re-deploy more affected permanent employees to alternativepermanent positions. The 280 FTEs were recruited from local communities and received the same training aspermanent employees. The FTEs will eventually form a major source from which Sasol could recruit employees forfuture plants, but only once the currently affected employees are re-deployed. According to SCI, the demand withinthe Sasol Group for these well-trained individuals currently exceeds the numbers available. Therefore, there shouldnot be any difficulty in their re-deployment.


* In October 2002, the number of affected employees has decreased to 156,through voluntary internal transfers and re-deployment;

* In December 2002, the identified number of Possible Future Redeployments wasestimated to be 79;

* In December 2002, the projected number of employees to be still affected byMarch 2003 was 77;

* At the end of March 2003, the identified number of Possible Positions to whichemployees could be re-deployed was in excess of approximately 277.

In addition, the impact of job losses in Sasolburg will be further mitigated through theestablishment of new plants, namely n-Butanol and the Acrylic Acid and Acrylates complex inSasolburg, rather than in Secunda, at a total cost in excess of $400million. The incrementalcost to establish at Sasolburg rather than Secunda was about $7million.

A stakeholders' forum has also been established by Sasol from the Gas to Liquid (GTL)projects side to have a better perspective of the personnel requirements for all upcomingprojects. Sasol's aim is to align the staffing requirements with the potential skills shortages inthe market, taking into account the number of affected employees.

Therefore, at present, it appears that there are more potential opportunities than affectedemployees, and all employees should be able to be re-deployed or accommodated. Peoplewith skills to operate Sasol's proposed GTL plants in Qatar and Nigeria will also be required.

4.1.3.3 Sigma Colliery Mine Closures

The Sigma Colliery comprises of strip mining (above ground) and underground mining. Thestrip mining (Wonderwater Strip mine) is operated in its entirety by a mining contractor. TheSigma Colliery's reserves are depleted and the mining operation is to move onto a newresource body which will be called the Mooikraal Colliery. The move of operations itself is notto lead to any changes in personnel.

Due to the availability of natural gas, Sasol's current demand for coal will decrease from 6,8million tonnes per annum to only approximately 1,7 million tonnes. This would be a finergrade coal, used for the generation of electricity. Therefore, the mining operations at theMooikraal Colliery will require a substantially smaller number of personnel than currentoperations at the Sigma Colliery. Tables 4-4 illustrates the difference between the currentcontractor personnel numbers against what will be required at Mooikraal, while Table 4-5illustrates current Sigma personnel numbers vs. the demand from the new Mooikraaloperations.

TABLE 4-4: Sigma Colliery contractor figures

Wonderwater Sigma Total Difference Actual vs. Mooikraal450 90 540 540

According to Mr A Coetzee (Sigma Colliery Human Resources Manager), contractors areresponsible for their own personnel placements at the time of partial mine closure and thatnotice has been given to all relevant stakeholders of the intended partial mine closure date.With the many strip mine operations in South Africa, these positions are likely to be absorbedelsewhere.


TABLE 4-5: Personnel requirements current Sigma vs. future Mooikraal

Personnel Sigma Approved Actual Mooikraal Difference ActualCategory Manpower March 03 Manpower vs.

MooikraalSalaried 76 74 40 34personnelMonthly salaried 60 56 40 16personnelWages personnel 347 334 226 108Total 483 464 306 158

On the basis of the above data, in the order of 698 (540 + 158) people could lose theiremployment due to the availability of natural gas in Sasol's operations. Owing to thedifference in the type of activities that take place at a mining operation, when compared withthose of a chemical plant, approximately only 30% of the affected individuals could potentiallybe re-deployed elsewhere within the Sasol operations.

While it is not in a position to re-deploy a large number of its employees, Sigma Colliery hasprepared and is implementing the following action plan:

* ongoing consultation with respective Unions and Salaried Personnel Forum(weekly/monthly);

* re-deployment meetings on a monthly basis with all relevant stakeholders (including SCI);* timeous and ongoing sharing of information about the over-strength situation at Sigma

Colliery in all personnel categories;* encouragement of employees to accept re-deployment at other Sasol companies;* monthly meetings where Union organizers are present and the over-strength situation and

its implications at mid April 2004 are discussed;* agreement (as requested by Unions and the SP Forum) that when Mooikraal is approved,

a manpower plan with the relevant names will be made available on a basis to bemutually agreed upon;

* encouragement of employees over 55 years old to take early retirement;* creation of reasonable alternatives for affected employees;* training of employees for potential re-deployment.


Actions Description Responsibility30 Implement the planned labour re-deployment strategy. Sasol31 Provide assistance to employees who may be Sasol

redundant between old plants being de-commissionedand new plants being commissioned.

32 Continue to publicize Sasol's efforts to prevent job Sasollosses as a result of the NGP and pro-actively managemedia attention in this regard.


5 REGIONAL POLICY RELATED ISSUES

Given the regional context of the natural gas project and indeed the RESA, it is important tounderstand possible impacts on existing or envisaged regional policies. These wouldobviously include policies in both Mozambique and South Africa, but include also SADCpolicy. The purpose of this section is to identify national polices in Mozambique, South Africaor SADC, that could be affected by the natural gas project and then to determine salientpoints from each policy which are relevant in respect of the natural gas project. Finally, thechapter provides a broad assessment of areas where such policy intent would be/would notbe supported by the natural gas project.

5.1 SADC Policies

At the regional level, relevant commitments are captured in the SADC Protocol on Energy.Principles in the protocol that relate to natural gas are that member states shall:

* use energy to support economic growth and development, alleviation of poverty andthe improvement of the quality of life throughout the region;

* use energy to promote collective self-reliance among member states;* ensure that the development and use of energy takes cognisance of the gender

realities of the region;* promote and encourage the direct participation of citizens and communities in the

development and use of energy; and* ensure that the development and use of energy is environmentally sound.

The relevant objectives of the protocol are:

* to co-operate in the development of energy and energy pooling to ensure securityand reliability of energy supply and the minimisation of costs; and

* to co-operate in the development and utilisation of energy in various sub-sectors,including natural gas.

Clearly, the introduction of natural gas complies with all or nearly all of the protocol principlesand contributes to its objectives. NGP will contribute substantially to economic development,although its contribution to poverty alleviation will be indirect and dependent on how royaltiesand taxes are used. Because both South Africa and Mozambique have set poverty alleviationas national priorities, the gains from NGP should assuredly contribute to reducing poverty.Although the contribution to reducing poverty will be monitored by the governments of the twocountries, NGP will obviously have an influence and it would benefit Sasol to report onprogress in its contribution as part of its annual environmental publications. An appropriateindicator would be the change in terms of energy trade between the two countries, ascribableto NGP.

5.1.1 Mozambique

Mozambique's Government Programme for 2000-2004 has among its four objectives two thatwill be affected by the NGP. These are:

* the absolute reduction in the levels of poverty in Mozambique; and* rapid and sustainable growth of the economy, at a target rate of 7-8% per annum.

A key supporting policy is the Action Plan for the Reduction of Absolute Poverty (PARPA),2001-2005. This has the central objective of a substantial reduction in the levels of absolutepoverty in Mozambique through the adoption of measures to improve the capacities of, andthe opportunities available to, all Mozambicans especially the poor.

Sasol Natural Gas Project-Final Regional and Social Environmental Assessmerit (RESA) 81

Regarding energy, the programme has two objectives, which are:

* expansion of access by the population to energy sources; and* expanding the contributions of the energy sector to exports.

Through its substantial contribution in royalties and taxes, NGP will provide the Governmentof Mozambique with the direct means to combat poverty. The project will also contributematerially to the economic growth objectives, both directly and potentially through supply ofgas to industrial consumers. Thus the most important indicators for the MozambiqueGovernment are, first, the revenue it will receive from the gas delivered from the fields, in theform of royalties and taxes and, secondly, the contribution to growth of the GDP.

5.1.2 South Africa

In the White Paper on Energy Policy,97 South Africa has committed itself to deal effectivelywith the international aspects of gas transmission pipelines and international gas trade. Thiscommitment is being substantiated through the Gas Bill. The structure of the companies thatwill be established for gas extraction and distribution is a primary criterion for thisconsideration. Since the structuring of the companies that make up the NGP has the approvalof both governments, the enterprise as a whole will meet this policy objective.

There are several other relevant policy objectives in the White Paper which deserve specialmention. The first is to promote access to affordable energy services for disadvantagedhouseholds, SMMEs, small farms, and community services. The second is to stimulateeconomic development through competition in energy markets. The third is to gain from theenvironmental benefits inherent in the use of natural gas as an energy source. The finalobjective is to secure energy supply through diversifying sources of energy. Each of theseitems is addressed in more detail below.

5.1.2.1 Increase in Access to Enerav for Households

Although there are no immediate plans by Sasol to make natural gas directly available tocommunities as a domestic energy source, the potential for natural gas to enhance access toenergy for households is an important consideration. The projected price and especially thecost of infrastructure to provide natural gas is the major obstacle to its adoption as a domesticenergy source, given the low levels of income that prevail in many South African households.

5.1.2.2 Stimulating Economic Growth

The second requirement of the White Paper is to stimulate economic development throughcompetition in energy markets, which includes several relevant supporting objectives, i.e.

* stimulate inter fuel competition; clearly the NGP will contribute to this objective;* encourage competition within energy markets, remove (price) distortions;* promote black economic empowerment; the indicator here would be the level of black

ownership in the various NGP companies in Mozambique, and the level in Sasol as awhole (see Chapter 3.2.1).

5.1.2.3 Environmental Benefits

The third is to gain the environmental benefits arising from the use of natural gas as a sourceof energy, which in turn includes supporting objectives such as reduced carbon dioxideemissions relative to equivalent energy from other fossil fuels, low particulate emissions, andnegligible sulphur content in regional deposits. The benefits of the use of natural gas as afeedstock in place of coal have been described in detail in Chapter 4.1.1. The furtherdevelopment of the use of natural gas in South Africa would present the opportunity for

97 Government of South Africa.

Sasol Natural Gas Project-Finial Regional and Social Environmental Assessrrierit (RESA) 82

increased economic development without the environmental costs that might otherwise haveprevailed.

5.1.2.4 Diversity in Supplv

The White Paper seeks to secure energy supply through diversity, i.e. to pursue energysecurity by encouraging a diversity of both supply sources and primary energy carriers.Obviously, the NGP contributes to this objective. The development of the gas industry willincrease the diversity of fuel supplies and hence improves South Africa's energy security.

5.2 Proposed Actions and Responsibilities

None.

5.3 Observations for Consideration by Other Parties


L Re-examine the feasibility of domestic gas use in South DMEAfrica, including means of overcoming barriers to morewidespread domestic use.


6 SOCIAL INTERVENTIONS PLANNED BY SASOL

6.1 Background

Sasol is implementing a Social Development Action Plan (SDAP) in Mozambique. Thecompany manages development assistance spending in the communities affected by theproject in accordance with the plan. Decisions that are made about projects that Sasol willcontribute financial assistance to are based on an evaluation procedure set out in the planand are discussed and agreed with the Govemor's of the respective provinces before beingimplemented. Apart from developing goodwill between Sasol and local people, the plan isintended to bring real development benefits to communities in the affected areas (refer to Box6-1).

BOX 6-1: Excerpt from Sasol Ltd Social Development Action Plan98

'Social investment forms an integral part of the corporate policy of Sasol Ltd. The company recognises theimportance of sustainable community development in the regions where it conducts its business operations,specifically in Mozambique as a developing country.

To give effect to the corporate commitment of Sasol Limited to sustainable community development, a socialdevelopment policy and strategy for Sasol Mozambique has been developed. A social development fund hasbeen created for the Natural Gas Project in Mozambique. Sasol has approved USD 5 million for the socialdevelopment fund (SDF) to cover the period to the end of the construction phase of the Project. Thereafter,funds will be provided on an annual basis for the continuation of community development.

The SDF was publicly launched during March 2002 prior to the commencement of the construction activities.Initial introduction of the SDF took place over a period of approximately one month at various levels, namely:

* Ministerial* Central government* Provincial government* District administrator* Community

Care was taken to involve and consult with NGO's who were already active in communities that the projectwould interface with. The SDF was launched as a community focused fund. It was emphasised and madeabundantly clear that the communities most affected by the project are those in the Pande and Temane Gasfields around the CPF operations and along the pipeline route and these communities will be the primarybeneficiaries of the fund."

6.2 Management Structure to Administer the Fund

Management Committee: Comprising two executive directors of Sasol Ltd, project director,two business managers, project manager (gas field development and pipeline) and countrymanager.

Steering Committee: Formed to attend to smaller urgent requests. This committee comprisesthe project director of the NGP, business managers, country manager and the manager of theSDF.

Country Manager: Initially to be accountable for establishing and maintaining the structuresand procedures to give effect to Sasol's commitments to the social development policy.

Social Development Fund Manager: Responsible for the management of the affairs of theSDF and the approved projects, including responsibility to:

* identify and evaluate projects in close consultation with communities;* motivate and present projects for approval;

98 Source: Sasol Social Development Action Plan (2003), with minor editing.


* manage the overall implementation of the various projects; and* monitor project performance.

Project Management: Two project managers responsible for implementation of individualprojects in respect of:

* assisting the SDF manager in finding cost effective solutions for identified communityneeds;

* assisting the SDF manager in motivating projects for approval;* implementing approved projects in accordance with sound project management

principles; and* implementing after care/maintenance programme to ensure sustainability.

Commercial Services: Sasol's commercial manager in Mozambique is responsible for thecommercial aspects of approved projects. His responsibilities include:

* preparation and issuing of tender/quotation documents;* evaluation of tenders/quotations; and* appointment of suppliers/contractors.

Financial services: Financial services are rendered by the Sasol Mozambique financial office.Specific responsibilities are:

* assist SDF manager with budget control;* financial reporting on the SDF and individual projects;* auditing of the SDF; and* financial recording and cost reporting.

| ountr | , Overall |Manager Accountabilityl

Manager ||Overall Responsibility for||Community Development || Social Development |

| Project ||ROMPCO ||Procurement &| Project R| sorcExecution F inancial || Supply Champions | |Allocation|

FIGURE 6-1: Responsibility framework for implementation of the SDAP

6.3 Community Liaison99

The gas field facilities and pipeline will extend over a large physical area and Sasol thereforeinterfaces with many communities. Five community liaison officers have been deployed tointeract with the communities. They report to the Public Affairs Manager. This team alsoassists the manager of the SDF in consulting with community leaders and other stakeholdersand identifying community needs.

The communities affected by the project have different needs and priorities, but they all haveexpectations that the project could have benefits for them. According to Sasol, many of theseexpectations fall outside the ambit of the SDF, such as employment, compensation fordamage to crops, housing in the case of relocation and restoration of the affected

99 Sasol Social Development Action Plan (2003).

Sasol NatLiral Gas Project-Final Regional and Social Environmental Assessment (RESA) 85

environment. A Community Interface Forum (CIF) has therefore been established tocoordinate Community Interface matters.

Sasol intends the CIF to ensure that community initiatives are not undertaken in isolation andthat a holistic approach is followed. This forum meets on a monthly basis and is attended byrepresentatives of the various community interface areas. A community complaints procedureand control system has been initiated and the CIF has proved to be an effective managementand control tool.

6.4 Evaluation Procedure for Social Spending in Communities Affected bythe Projectl00

The SDF management team has developed a project-specific work methodology to deliversustainable community upliftment projects. It comprises 5 steps, as summarised below.

Step I - Define needs: The team embarks on a process of consultation with local communitymembers and other stakeholders. Priority needs are distinguished from apparent needs.Ranking of project importance is done with comprehensive input from the local communities

Step II - Generate solutions: Alternative projects are generated in order to meet the definedpriority needs. The optimal and most cost effective solution is selected. Buy in is obtainedfrom all stakeholders. The proposed projects are tested for sustainability.

Step I/I - Approve project: The project is motivated for project approval both from the Sasolmanagement in accordance with the management structures and responsibilities definedabove and by the Provincial Governor. The motivation is based on a full and structured writtensubmission which describes the process that was followed in Steps 1&2.

Step IV- Implement project: The project is implemented according to Sasol's standard projectmanagement procedures to ensure that it is done according to the defined standards, agreedtime frames and budgets. The project is overseen by a Sasol project manager. Whereverpossible, local content is maximized in the implementation of the project. Consultation withthe recipient community continues during this phase and includes official handover andacceptance of the project.

Step V - After care: The results of the project are monitored to ensure that it has met itsintended objectives and that the identified needs are satisfied. The project is monitored and,where necessary, corrective action is taken.

6.5 Defining Needs

The initial consultation to define needs has been completed for all the larger communitiesaffected by the project and, only a few smaller communities in the south of Inhambane stillneed to be consulted.

An overview of the needs of the communities in the gas fields and along the 570 km pipelineroute in Mozambique is reflected in Table 6-1 below.

'°0 Sasol Social Development Action Plan (2003).

Sasol Natural Gas Project-Final Regional and Social Environmnental Assessment (RESA) 86

TABLE 6-1: Overview of community needs

Need/Projects Number of Province

Identified Inhambane Gaza Maputo1. Drinking water 40 20 15 52.Cultural events (garments) 40 20 10 103. Agriculture 10 5 3 24. Education -Schools 3 3 - -5. Health - Clinics 2 1 16. Roads 3 3 -7. Skills training 2 28. Bush Bakeries 3 39. Women's sewing groups 2 2

Source: Sasol Social Development Action Plan (2003).

From Table 6-1 Sasol draws the following conclusions:

(a) the single biggest generic need is for fresh drinking water(b) need for assistance with agricultural projects for subsistence and commercial farming

is widespread. This is not surprising, since most of the communities are directlyinvolved in, and are dependant on, agriculture for their livelihood

(c) the shortage of clinics and schools are important and feature prominently in thehierarchy

(d) although small in monetary terms, the need for garments to wear during cultural andsport events is widespread and generic.

Sasol is establishing special task teams for the following areas of need:101

* drinking water;* education;* health;* agricultural* gas and electricity supply; and* roads.

These task teams, championed by a Sasol project manager, are intended to expedite projectdelivery and facilitate coordination at national, provincial and district level. A detailed plan ofaction is being finalised by Sasol for each area.

6.6 Project Delivery to Date

To date, 32 community projects to the value of approximately $248 000 have beenimplemented, 24 of which are for drinking water (refer to Table 6-2). A further twelve projectsto the value of approximately $1,5 million have been identified and approved.102 A further 35projects are currently under consideration. Five of these projects comprising a value of $1,28million have already been submitted for approval. Sasol forecasts that the full budget of $5million will be committed within the next six months.

Sasol indicates that the reaction of the beneficiary communities has been very positive. Greatcare is taken to ensure that false expectations for future assistance are not created. It isemphasised that the budget is limited and that many other communities also need to benefitfrom the SDF.103

' Sasol Social Development Action Plan.102 Sasol Social Development Action Plan.103 Sasol Social Development Action Plan.


TABLE 6-2: Existing and future project deliveries to date

Project Description Value (S)Projects Completed24 x bore holes for fresh drinking water benefiting approximately 3000 79 000peopleCashew Nut Spraying programme - Pande 5 900Macarretane Agricultural Project 64 000Roof repairs to Vilanculos hospital 11 000Soccer development programme for Inhambane Province 5 000Community bakeries - Temane and Maimelane 1 800VHF Radio for Nalazi Community 2 425Garments for cultural group 871Earthworks for informal shops - CPF 5 000Administration costs to date 73 000Projects being implementedRehabilitation of the water reticulation system of Ressano Garcia (date 450 000of completion January 2003)6 x boreholes for fresh drinking water 27 000Vilanculos sports stadium 900 000Cattle breeding programme for Sabie 72 000Mpunguine Dam rehabilitation 110 000

TOTAL (US$) 1,806,996

6.7 Making the Best Use of the Fund

Sasol has clearly put a considerable effort into the establishment and initial management ofthe SDAP. A range of interest groups at all levels have been consulted and a procedure hasbeen set up to deliver projects to communities affected by the Natural Gas Project on arational and defendable basis. In the complex social environment into which these projectsare being introduced it is, however, not surprising that there are conflicts of interest thatoccasionally have to be resolved, misunderstandings between parties that were not foreseenand issues on all sides from which the various people who are involved in social developmentmust learn. This is a healthy rather than unhealthy sign, although it is important that whereissues do arise they are openly discussed and resolved as soon as possible.

It is understood that Sasol is aware of some of the initial teething problems of the SDAP, andhas been working to resolve them. The key issue has been the perception of some of theNGOs such as CARE, who are involved in rural water supply delivery, that their activities arebeing undercut by Sasol. In the CARE case, the issue has arisen as a result of Sasol's quickand free delivery of boreholes to the community in the Vilanculo District. CARE's approach toworking with communities is driven by the need for sustainability. The organization has foundthat unless the recipients of the water supply schemes contribute towards them financiallyand are trained in their maintenance, the scheme eventually fails. Delivery therefore takes aconsiderable period, involves intensive interaction with the community and a financialcommitment from them. Obviously, the method employed by Sasol is very attractive tocommunities who see rapid delivery following initial discussions and who are not aware of thelonger-term issues. This results in tensions between the communities and CARE.

Sasol has responded to CAREs concerns through consultation with them. CARE has beenused to train a Sasol employee so that he can advise communities about water management,hygiene, borehole maintenance and so on. An agreement has been reached in which Sasolwill meet with the key NGOs based in Vilanculos every 2-3 months to discuss the projects thatall parties are engaged in and other matters of common interest.


Other issues that warrant consideration by Sasol have to do with the selection of projects.Consideration could be given to funding some projects that are more strategically based andare not driven simply by the requests of communities. Involvement in the establishment ofwoodlots would be one such example. Another would be involvement in re-establishment ofhardwood forests through re-planting, which is an initiative that is being investigated by theDepartment of Wildlife and Forestry. Sasol's involvement in this kind of project would have theadvantage of linking the company's social development spending to some of the potentialindirect impacts of the gas field development itself.

6.8 Actions and Responsibilities

Actions Description Responsibility33 Continue to develop and refine the procedures and Sasol

approach to social development spending in areasaffected by the project. Document changes to theprocedures, based on experience.

34 Continue consultation with NGOs and other community Sasolrepresentatives in the sub-region and make specificattempts to reach agreement with them aboutapproaches to community development that satisfy allparty's needs. Develop a protocol for working with NGOsand community representatives.

35 Continue to involve NGO's in the SDAP. Sasol36 Implement an annual workshop dealing with lessons Sasol

learned in social development, to which key Government,NGO and community stakeholders should be invited.

37 Fund some projects that are strategically driven. Sasol


7 SUMMARY OF CONCLUSIONS AND RECOMMENDED ACTIONS

7.1 General

(a) The RESA has identified and evaluated issues that lie outside of the envelope of the'direct project effects' of the NGP. As such, it considers impacts that are typically widerand less easily pigeonholed than the direct impacts that are considered by the projectElAs. There are, however, no sharp boundaries between direct and indirect, local andregional impacts and, in the future, it will be necessary to assimilate all of Sasol'scommitments into a series of responsibilities and specific actions governed by arecognised Environmental Management System (EMS). This applies principally to theoperational phase of the project. Sasol is already implementing commitments made ineach of the project-specific Environmental Management Plans for the construction ofthe NGP'04. An EMS for the operational phase of the project will assist the company tostructure the roles and responsibilities for social and environmental management of theNGP and the interrelationships between the various task teams, with social andenvironmental mandates, that will be operating during the life of the project.

(b) The operation of the Sasol Natural Gas Project will result in a number of positive andnegative regional impacts, the magnitude, physical extent and significance of whichhave been the subject of this report. Where the management of these impacts is clearlythe responsibility of Sasol, the actions that need to be considered have been stated andthe recommendations can be implemented without further investigation. There are,however, a number of suggestions that the authors have made which, if implemented,would necessitate actions by other parties, in particular, the Government ofMozambique and the World Bank. These suggestions have been presented separatelyas a basis for discussion between the parties and should in no sense be interpreted asfirm or binding recommendations.

(c) The RESA has been divided into two main areas of investigation in each of the twocountries affected by the NGP. Specifically, the report investigates the regionalbiophysical and social impacts of the NGP in the context of Mozambique and SouthAfrica respectively. In accordance with the scope agreed with the World Bank, thereport is weighted to concentrate on Mozambique.

7.2 Regional Impacts in Mozambique

7.2.1 Biophysical Environment

(a) The NGP will result in a range of impacts on the natural environment, most of which willbe local in extent and can be managed using tools defined in the project-specific ElAs.At a regional scale, the key concern will be the indirect consequences of opening linesof access. This will be the result of pipeline cut lines, permanent access roads andseismic lines, all of which, to a greater or lesser degree, could improve accessibility intopreviously remote areas. Better access may result in an escalation of natural resourceuse, particularly in respect of hardwoods, but also game (bush meat) and medicinalplants. Better access may also result in increased settlement and associated bushclearing for arable use, although the RESA considers this to be unlikely.

(b) It is not possible to predict the magnitude of the NGPs impact on natural resourceexploitation with any degree of certainty. Very significant (pre-NGP) resource harvestingtakes place in most areas affected by the project, even in the apparently remotelocalities. Access therefore already exists and it is uncertain to what extent theimprovement caused by the NGP will accelerate resource extraction. There is alsosome evidence along the existing seismic lines, cut in 2001, that access can beeffectively closed if not required again, although this will not be as easy along the main

'04 An indication of the extent of the commitment to sound environmental practices during construction has beenprovided in Figure 1-6.


pipeline to South Africa, since a de-bushed strip along the pipe must remain formonitoring purposes. An integrated effort will be needed to bring hardwood harvestingand natural resource management in the Province under effective control. Sasol willneed to play its part in this by monitoring the use of its access roads for resourceextraction and by improving knowledge about the areas of greatest natural resourcesensitivity in the places that could be indirectly affected by the project. This knowledgewill assist in formulating management objectives and actions in the future.

Protocols with the GOM will need to be developed which formalize how informationprovided by Sasol's monitoring of access lines will be followed up and acted upon. It isalso suggested that the GOM could step up its efforts to determine sustainable yields ofhardwoods in the province and to improve its capacity to enforce quotas that aregranted to licensed harvesters. The World Bank could consider and discuss with theGOM some form of assistance in these tasks.

(c) The design philosophy that Sasol has committed to with regard to the discharge ofliquid effluent from the CPF is sound. With the necessary management, water pollutionrisks that may be caused by the plant should be minimised. Sasol has accepted that nosignificant impact whatsoever will be permissible on the Govuro River system as aresult of effluent discharges from the factory. The final design, operation, managementand monitoring of the water treatment plants will be based on compliance with thisrequirement.

The quantities of effluent reporting to the sewage treatment and industrial waste watertreatment plants will be small (typically less than 15m3/day in dry weather), made up ofdomestic effluent and intermittent factory discharge, the latter with some contamination,mainly consisting of hydrocarbons. While this would normally be considered to be alocal issue, dealt with in the project specific ElAs, it has warranted examination in theRESA because of the possible knock on effects if significant levels of pollution were toimpact on the nearby Govuro River. Sasol proposes to contain and proof all effluentbefore discharge into a wetland east of the EN-1, approximately one kilometer from theGovuro River. Design and operating mechanisms have been established to ensure thatthis system will be fail-safe. The criteria used for evaluation of effluent discharge will bebenchmarked against the World Bank guidelines for domestic and industrial (onshoreoil and gas production) effluent discharges into the natural environment. In addition, it isa recommendation of this report that Sasol undertakes a long-term programme ofbiodiversity monitoring around the discharge point and in the Govuro River itself inorder to verify the absence of direct impacts on the Govuro river system.

(d) Apart from the issues raised above, there are few significant regional concerns aboutthe impact of the NGP on the natural environment in Mozambique. Some questionsabout the transport of condensate remain outstanding, and Sasol recognizes that thesemust be fully investigated in a project-specific EIA and risk assessment when thequantities are better known. While Sasol's agreement with the GOM allows for the saleof the condensate at the factory gate, the preparation and government approval of theEIA and risk assessment will a condition of any sale agreement reached.

The NGP's impacts do not combine spatially with any other large industrial or miningdevelopments planned in the foreseeable future. The project will, however, togetherwith the growth of other mining industrial projects, and economic and tourism growth ingeneral, impact on the capacity of the environmental authorities responsible forindustrial evaluation and management (MICOA). The RESA recommends thatconsideration is given to ways of assisting MICOA. While assistance and training bySasol in some of the company's plants in South Africa might be considered to result inconflicts of interest, the experience would be invaluable in building environmentalcapacity in MICOA and other industry-wide options could be considered in order toremove the stigma of assistance from one donor only.


7.2.2 Social Environment

(a) The main socio-economic benefit that Mozambique will derive from the NGP will be thereceipt of taxes and royalty payments. The geographical areas in which the royaltybenefit is experienced will depend on decisions made by the GOM. On the basis of theagreement with Sasol, the GOM will receive 6MGJ/a of natural gas from the project, atpeak production. This may be taken in kind or as the cash equivalent. Any royaltypayment taken in cash will accrue to the Central Government and will be spent inaccordance with national priorities.

(b) The amount taken in kind is more likely to hold some direct benefit for the communitiesin proximity to the project. Provision for five take-off points along the main pipelinebetween Temane and the Mozambique border town of Ressano Garcia has beenincluded in the agreement. One of these is allocated to the field area to upgrade ENHsexisting gas turbine driven supply of electricity to the communities between Inhassoroand Vilanculos. There has also been a request by the Limpopo Valley SDI to investigatethe opportunities for gas use in the Limpopo valley, where there is a drive to restoreagricultural production to pre-war levels and to re-build several agricultural processingplants. A take-off point has also been situated at this location.

(c) The most significant demand for gas in the short to medium term will almost certainly bein Maputo. Potential users of the gas include the Mozal Aluminium Smelter and anumber of smaller industries. Advanced planning of a pipeline from a take off point atRessano Garcia to Maputo has already started, under the auspices of the Matola GasCompany. Existing demand in the Maputo area is between 2 and 2.5 MGJ/a, which isexpected to grow by a further 0.5 MGJ/a to 3.0 MGJ/a. The initial use of the gas in theMaputo area will result in balance of payment benefits primarily as a result of fuelsubstitution. The GOM is driving hard to create conditions attractive to 'mega-industries'which is sound energy and socio-economic policy, since it will, among other things, helpto foster the development of the downstream gas industry. However, given the existinglevels of industrial activity in Mozambique, and the lead time required for the planningand implementation of 'mega-projects', it is unlikely that gas use will grow in the short tomedium term in urban areas other than Maputo.

(d) For gas use to grow in Mozambique as a whole, there would need to be large anchorprojects to carry the cost of the major gas supply infrastructure. Once an anchor is inplace, gas distribution to surrounding users becomes a more realistic commercialprospect and opportunities increase for the development of small and medium sizeenterprises (SSMEs), both linked to the anchor (as service providers) andindependently of it. A further possible mechanism to make gas more affordable forsmall and medium enterprises is to cross-subsidize them through the use of carboncredits. An initiative is currently underway to investigate revenue generation by meansof carbon credits that may accrue with the development of the gas industry.

(e) The GOM is also considering the possibility of power generation from a gas fired powerstation. A preferred concessionaire is currently being identified to investigate thefeasibility of a 30-40MW power station in Inhambane Province. While domestic supplyof gas to households is also being considered, electricity generation appears to be themore feasible alternative as a means of improving the security and distribution of powerto communities in southern Mozambique. The construction of the power station willdepend on additional gas reserves being found at the Temane and Pande fields and,among other issues relating to its economic feasibility, will depend on the negotiation ofa gas supply on commercially agreed terms.

(f) For communities living around the NGP project, social and economic benefits resultingdirectly from the operation of the plant will be low. Apart from the possibilities referred toabove, in respect of power supply, the NGP will employ only 50 people with a further100 on contract, supplying the plant with services. While Sasol has committed to sourceand train all of these people over a period of time from Mozambique, the numbers are


small and are roughly one order of magnitude (10 times) less than other projects ofcomparable capital investment, such as Mozal and Corridor Sands. Much of the incomeearned by employees at the production facility is likely to leak to Maputo or SouthAfrica, given the absence of retail and service infrastructure in the local towns.Consequently, economic multipliers in the towns around the production facility will bevery limited. The extent of social and economic benefits of the NGP in localcommunities around the project will therefore be determined mainly by other factors,and, in particular, by Sasol's Social Development Action Plan (SDAP) which isdescribed in Item (g) below.

(g) The SDAP has been designed to provide development assistance to Mozambiquecommunities within the areas that are potentially affected by the NGP infrastructure. Forthe construction phase of the project, Sasol has allocated $5 million, some $1,75 millionof which has already been committed to specific projects, in consultation with key roleplayers. The benefit of the SDAP in the future will depend on the continuing allocationof funds to local development projects. Sasol has indicated its commitment to thecontinuation of the SDAP during the operating phase of the project, although it has notindicated the allocation of funds that could be expected. The RESA recommends thatSasol continues to strengthen consultation and cooperation with key roleplayers,including NGOs, in order to ensure that the funding results in the greatest possiblebenefit to the recipients.

(h) While the operation of the NGP may provide limited positive impact in communitiesliving nearby, there will be a corresponding by low negative impacts caused by theproject. There are a number of reasons for this, the most important of which are:

* the social disruption caused by the operation of the project will be small. Only 14homesteads had to be resettled for the entire project. This may be compared withthe 75 homesteads for the establishment of the Beluluane Industrial Park;

* the numbers of staff and contracted personnel for service requirements are toolow to create significant demands on local or regional infrastructure. For example,average daily traffic created by the project is expected to be twenty light vehiclesand one heavy vehicle, in each direction, per day (this excludes condensatetraffic which is subject to a complete economic and environmental evaluation andEIA GOM approvals);

* the project will be almost totally self sufficient in respect of all services includingpower supply, water supply, solid waste, sewerage treatment, health care,emergency services and accommodation;

* risk management limitations determining the use of land near the CPF andpipelines are not onerous and should not restrict future development in anymaterial way.

7.3 Regional Impacts in South Africa

7.3.1 Biophysical Impacts

(a) The introduction of natural gas will result in significant air pollution emission reductionsat the Sasol Chemical Industries operations in Sasolburg, as a result of thedecommissioning of the gasifiers. In addition, possible increased emissions at SasolSynfuels in Secunda will be prevented as a result of using natural gas as the feedstockfor that expansion, rather than coal. The emission reductions at Sasolburg will include10,300 tonnes/a of sulphur dioxide, 8,500 tonnes/a of nitrogen oxides, 20,600 tonnes/aof hydrogen sulphide (emissions of H2S reduce to nil) and 1,400 tonnes/a of particulatematter. These reductions will serve to significantly reduce SCI's contribution toindustrial air pollution in the Vaal Triangle, which is an area of intense industrial activity.

(b) The introduction of natural gas to South Africa will also result in fuel substitution in otherindustries which will reduce air pollution emissions and/or prevent increases inemissions. The conversion of a number of industries to Sasol's coal-based gas hasalready demonstrated the effectiveness of gas as a clean burning alternative to fuel oils


in heavily industrialized areas where air pollution issues are a source of concern andconflict with local communities. Out of the total of 40 MGJ/a currently sold for thepurpose, up to 30 MGJ/a will be replaced with natural gas.

(c) Natural gas will have the added advantage of generating insignificant air pollution atsource. During the initial development of the NGP, between 20MGJ/a and 25MGJ/amay be available for sale to third parties, over and above what is currently providedfrom coal, which will be marketed by Sasol to customers in South Africa. Assuming thatthis substitutes for fuel oils, the estimated air pollution reductions or savings that willresult from this would be in the order of 114 000 tonnes/a annum of particulate matter,28 000 tonnes/a of sulphur dioxide and 6 000 tonnes/a of nitrogen oxides. Furtherreductions will be realized in later phases of the project, but will depend on the volumeof gas available for third party use. The RESA recommends that Sasol and the DEATpromote fuel substitution as a means of emission abatement in industries where thepresence of piped gas make this economically feasible.

(d) Greenhouse gas emissions, specifically CO2, will be reduced by some 3.5 milliontonnes at Sasolburg. A potential 18% increase in CO2 emissions at Secunda will beprevented by the use of natural gas as a feedstock for the proposed increase in gasloads. Collectively the reduced emissions, together with the saved emissions, implycarbon emission reduction credits of some 5.3 million tonnes per annum which can becredited to the project.

(e) It is unlikely that the introduction of natural gas will have any material impact onemissions related to electricity generation in South Africa (although it could be used forfuture generating capacity). Neither is it likely to have an impact on domestic emissionscaused by domestic fuel use (especially coal use). The former source generates verysignificant volumes of industrial pollutants while the latter is implicated in health riskproblems particularly in the former black townships. While the availability of natural gascould be considered to address the issue of domestic fuel use, it is recognized that thecost of the gas distribution infrastructure strongly prohibits such use.

(f) The coal gasification process is a significant consumer of water. Water savings that willbe achieved by the conversion to natural gas amount to at least 6,570 Mt per annum.This excludes the quantity of ground water that is pumped from coal mining operations,where a total saving of some 3,700 Mt per annum will be realized with the conversion tonatural gas.

(g) In terms of biodiversity and land potential, some 57 hectares a year, which wouldotherwise have been affected by coal mining, will remain unaffected as a result of theintroduction of natural gas. The development of the natural gas supply infrastructure willalso affect a significant land area, but no direct comparisons have been drawn herebecause of the difference in impacts between the land affected by mining versus thataffected by the installation of the natural gas supply infrastructure.

7.3.2 Social Impacts

(a) The conversion of the Sasol Chemical Industries (SCI) plant to natural gas will result insome 600 jobs becoming redundant. Since the announcement of the NGP, Sasol'sstrategy has been to accommodate as many of the affected employees as possible inalternative positions through redeployment. At present, it appears likely that all of theaffected employees should be able to be re-deployed.

(b) The conversion from coal to natural gas will also reduce the demand for coal at SigmaColliery. Sasol estimates that some 650 positions could be lost as a result of the switch.Because of the differences between mining and other aspects of Sasol's chemicalbusiness, not all of the affected employees can be re-deployed. Sasol indicates that it isworking with the unions to minimize actual losses including, among other things, re-training of employees for re-deployment, encouraging employees over 55 to take early

Sasol Natural Gas Project-Final Regional and Social Environmental Assessmnent (RESA) 94

retirement packages and the sourcing of reasonable alternatives for affectedemployees.

7.4 Policy Considerations

(a) Various polices exist for the Southern African Development Community (SADC),Mozambique and South Africa which have a bearing on the NGP. The NGP willcontribute positively to the objectives of all of these polices to a greater or lesserdegree. SADC policy focuses on cooperation between member states in the provisionof energy, with a view to poverty alleviation and improved quality of life.

(b) In Mozambique, relevant policy objectives that will be supported by the NGP includeabsolute reduction in poverty and rapid and sustainable growth of the economy. In theshort term this will principally be driven by revenue generated through sales of royaltygas and taxes, but in the medium to longer term it will also be through industrialdevelopment as a result of the supply of energy (either directly as natural gas orthrough the generation of electricity).

(c) Relevant South African policy objectives that will be met by the NGP include anincrease in energy supply diversity and the realization of the environmental benefits ofclean energy sources. An important policy objective common to the SADC,Mozambique and South Africa, but which is unlikely to be directly supported by theNGP, is greater access by the general population to affordable energy.

7.5 Summary of Actions and Responsibilities

Table 7-1 presents the actions and responsibilities based on the regional evaluation preparedfor this report.

TABLE 7-1: Summary of Sasol actions and responsibilities

Actions I Descri tion Res onsibilityImpacts on natural resources In MozambiqueAccelerated hardwood exploitation

Prepare and implement a long-term programme Sasolto manage and monitor third party use of thepipeline right of way and other access created bythe NGP (refer to Box 3-1 for an outline of amanagement/monitoring approach).

2 Reach agreement with responsible Government Sasol, GOMministries about procedural steps in the eventthat logging vehicles begin to use NGP cut linesand roads for access.

Accelerated wildlife and other natural resource exploitation:3 Prepare a natural resource inventory for the Sasol

Exploration Area. Define areas of naturalresource sensitivity. Plan future development ofthe gas field infrastructure to minimize impact onthese areas.

4 Evaluate and, where necessary, close all lines of Sasolaccess created for the project that are (a) notpermanent (seismic lines) and which (b) openaccess into sensitive and remote habitats. Dothis in consultation with local communities inaccordance with the procedure established in theExploration EMP.

5 Encourage sustainable resource use in local Sasolcommunities around the NGP by assisting localNGOs involved in community education.


Habitat loss and ancillary effects due to increases in settlement6 Prepare baseline-monitoring report of land cover Sasol

along NGP lines of access in the ExplorationArea and along the pipeline to South Africa.Prepare monitoring report after three years. If nosignificant change is measured over a decade,then consider altering the frequency or extent ofthe monitoring programme.

7 Assess the risk, caused by any areas of Sasolincreasing settlement activity, to the known areasof natural resource sensitivity (refer to Item 3above). Notify MICOA in the event of anincreasing level of risk to areas of conservation

I significance.Pollution effects c used by discharge of effluent into the Govuro River system8 Develop baseline records in the receiving water Sasol

(Govuro River) before operation of the CPFbegins.

9 Employ a method of monitoring that establishes Sasolthe impact of the CPF effluent discharge on thebiodiversity of the Govuro River System andassociated wetland and which verifies that anychanges are localized and of limited magnitudeand significance.

10 If material/significant changes are identified that Sasolare directly linked to the contaminants from theeffluent system of the CPF, then modify thedesign and/or operating conditions of the wastewater treatment plant(s) to produce a higherstandard of treated effluent. The definition ofmaterial/significant changes in river biodiversityto be determined with reference to a point ofdeparture that biological and social impactsshould be negligible.

11 Prepare annual independent audits of all aspects Sasolof effluent management and disclose the findingsto MICOA and Ara Sul.

Socio-economic effects in MozambiqueUpstream and downstream economic growth opportunities12 Sasol to declare in its annual statements the Sasol

royalties and taxes paid to the GOM inMozambique.

13 Maximize up-stream service provider Sasolopportunities in all facets of the Mozambican gasproduction operations at Temane.

Combined (Cumulative) Effects of the NGP and Other Development on ExistingInfrastructure and Institutional Capacity in Southern Mozambique14 Include requirements for a full EIA and risk Sasol

assessment of road-based condensate transportoptions in the tender documents of bidders foruse of the condensate.

15 Support a capacity building programme to assist Sasol, GOMMICOA to train environmental officers. Thiscould, among other things, include experience atSasol installations in South Africa or elsewhere.


Impacts on tourism in and around Vilanculos16 Implement a task team to monitor the closing Sasol

phase of the construction contracts and toensure the smoothest possible transition due toemployment layoffs.

17 Continue social development spending in the Sasollocal communities around the CPF during theconstruction layoff phase so as to help offsetperceived grievances about temporary joblosses.1 05

18 Maximize local opportunities for SMMEs to Sasolprovide services to the Field ProductionOperations.' 0 6

19 Contribute to capacity building of MICOA staff Sasol, GOMthrough secondment to Sasol environmentalunits in South Africa and other appropriatemeans of assisting to cacacitate the Mozambicanenvironmental authority. _ _ __7

Impacts on agricultural development around the Temane and Pande g s fields20 Involve NGO's, as part of the SDAP, in planning Sasol

and implementation of subsistence farmingprogrammes in the areas made more accessible

.by NGP access.Combined (Cumulative) Effects of the NGP and Other Development on ExistingInfrastructure and Institutional Capacity in Southern Mozambique21 Incoming investors in SDI's close to the pipeline Sasol, GOM

are to be made aware of the alignment and therestrictions on development in proximity to thepipeline (particularly important for land intensiveinvestments/ developments such as commercialagricultural estates, agricultural processingplants and conservation areas).

Impacts of Safety Restriction Zones around the Pipelines on Settlement22 Sasol's Public Liaison Team (PLT) to develop the Sasol

post-construction communication strategy. ThePLT to ensure that it includes the necessaryongoing communication with relevantstakeholders in areas where the risk of illegalsettlement and of agricultural development overthe pipeline are more likely.

23 Sasol to develop a monitoring strategy to check Sasolthat settlement or other actions that couldcompromise the safety of people or the efficientfunctioning of the pipeline are timeously identifiedand managed.

24 Sasol and the Government of Mozambique to Sasol, GOMagree on remedial protocols should the integrityof the exclusion zones be compromised.

25 Continue to participate and assist in the HIV Sasolforum in Inhambane Province

26 Develop and implement a long term HIV/AIDS Sasolawareness programme in conjunction with theMozambican authorities and NGOs.

10 It is noted that of the $5 million allocated to Social Development spending by Sasol, only $600 000 has been spentor approved for spending to date (refer to Section 6).106 Refer also to Recommended Action 13."' Refer also to Recommended Action 15.


Impacts on natural resources In South AfricaEffects on air qual ty27 Further investigate and promote the possibility Sasol

of carbon credits under CDM with a view toencouraging wider use of natural gas ratherthan other fuels.

28 Promote the use of natural gas as a Sasol, DEATreplacement for coal and/or fuel oil. Sasol toinitiate discussions with the Air PollutionDirectorate of the National Department ofEnvironmental Affairs and Tourism, with a viewto promoting fuel substitution as a means ofemissions abatement in industries where thepresence of piped gas make this economicallyfeasible.

Effects on consum ption of natural resources29 Continue to investigate water savings so as to Sasoi

ensure that the savings brought about by naturalgas are realised to the full.

Socio-economic effects in South AfricaImpacts on job creation30 Implement the planned labour re-deployment Sasol

strategy.31 Provide assistance to employees who may be Sasol

redundant between old plants being de-commissioned and new plants beingcommissioned.

32 Continue to publicize Sasol's efforts to prevent Sasoljob losses as a result of the NGP and pro-actively manage media attention in this regard.

Social interventi ns planned by Sasol33 Continue to develop and refine the procedures Sasol

and approach to social development spending inareas affected by the project. Document changesto the procedures, based on experience.

34 Continue consultation with NGOs and other Sasolcommunity representatives in the sub-region andmake specific attempts to reach agreement withthem about approaches to communitydevelopment that satisfy all party's needs.Develop a protocol for working with NGOs andcommunity representatives.

35 Continue to involve NGO's in the SDAP. Sasol36 Implement an annual workshop dealing with Sasol

lessons learned in social development, to whichkey Government, NGO and communitystakeholders should be invited.

37 Fund some projects that are strategically driven. Sasol

Sasol Natural Gas Project-Final Regional and Social Environmnental Assessrnent (RESA) 98

TABLE 7-2: Summary of observations to be noted by the World Bank for purposes of furtherdiscussions with third parties, if applicable and required.

Recommended Description RecommendedActions I Responsibility

Impacts on natural resources In MozambiqueManagement of Hardwoods (Provincial Level)A Complete the hardwood resource inventory for GOM, World

Inhambane Province. BankB Estimate (using independent field checks) the GOM, World

existing extent of harvesting in excess of official Bankquotas and consider ways of managing this.

C Evaluate ways of ensuring that the benefits of GOM, Worldsustainable hardwood use are not alienated Bankfrom local communities as a result of theconcession system.

D Review existing capacity to manage hardwood GOM, Worldextraction in the province and implement Bankcapacity building and training programmes.

Soclo-economic effects in MozambiqueUpstream and downstream economic growth opportunitiesE Promote large-scale developments in GOM

Maputo/southern Mozambique and elsewherethat can act as a base load user/anchor for thesupply of greater quantities of gas into the localmarket.

F Present information on the planned and actual GOMuse of gas royalties and taxes in a transparentmanner.

Combined (Cumulative) Effects of the NGP and Other Development on ExistingInfrastructure and Institutional Capacity in Southern MozambiqueG Examine ways of strengthening the institutional GOM, World

capacity of the government agencies with Bankenvironmental mandates (MICOA, DWFF, AraSul).

Impacts on tourism in and around VilanculosH Periodically review the strategic plans for GOM

tourism and other development in and aroundVilanculos. Encourage balanced growth whichpromotes opportunities in the key developmentsectors, particularly tourism. Monitor andcategorize any significant changes in settlementpatterns and other land use that do not meet thecriteria for the promotion of sustainabledevelopment in the area.

Spatial development initiatives.I The LVSDI and ENH/MGC devise a strategy for GOM

Ithe multi-use of gas for LVSDI initiatives.Impacts on natural resources in South AfricaEffects on air quality

. National DEA&T to consider initiating a process DEATto establishing a national emissions databasein the immediate future (information on nationalair pollution emissions is extremely limited.

K Re-consider the possibilities for the promotion DME, DEATof natural gas use in the domestic environment,particularly in the former townships, taking intoconsideration the possibility of carbon creditsas an incentive scheme.


Regional policy related IssuesL Re-examine the feasibility of domestic gas use DME

in South Africa, including means of overcomingbarriers to more widespread domestic use.


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