Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 55892-NG

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT FROM THE

GLOBAL ENVIRONMENT FACILITY TRUST FUND

IN THE AMOUNT OF US$6.3 MILLION

TO THE

FEDERAL REPUBLIC OF NIGERIA

FOR A

POLYCHLORINATED BIPHENYLS (PCB) MANAGEMENT PROJECT

AUGUST 2, 2011 Environment and Natural Resources Management Unit Sustainable Development Department Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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2

CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2011)

Currency Unit = Nigerian Naira US$1 = 155 Nigerian Naira US$1 = SDR 0.63

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS AfDB African Development Bank ASP African Stockpiles Project BAT Best Available Technology BAU Business As Usual BEP Best Environmental Practices CAS Country Assistance Strategy CFAA Country Financial Accountability Assessment CIDA Canadian International Development Agency COP Conference of Parties CPAR Country Procurement Assessment Review CPS Country Partnership Strategy CPTF Canadian POPs Trust Fund CR&E Chemicals, Resettlement and Environment Department of PHCN DFID Department For International Development EIA Environmental Impact Assessment EMP Environmental Management Plan ESMF Environmental and Social Management Framework GEF Global Environmental Facility GON Government of Nigeria FAO Food and Agricultural Organization FCT Federal Capital Territory FEPA Federal Environmental Protection Agency FM Financial Management FMEnv Federal Ministry of Environment FMI&C Federal Ministry of Information and Communication FPFMD Federal Project Financial Management Division FPM Financial Procedures Manual ICB International Competitive Bidding IDA International Development Association IUFR Interim Unaudited Financial Report ISC Inter-Ministerial Steering Committee M&E Monitoring and Evaluation MIS Management Information System NAFDAC National Agency for Food and Drug Administration and Control

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NAP National Action Plan NCB National Competitive Bidding NEEDS National Economic Empowerment and Development Strategy NESREA National Environmental Standards Regulation and Enforcement Agency NEGIP Nigeria Energy and Gas Improvement Project NIP National Implementation Plan OAGF Office of the Accountant General of the Federation PCB Polychlorinated Biphenyls PCEHD Pollution Control and Environmental Health Department PDO Project Development Objective PEMFAR Public Expenditure Management and Financial Accountability Review PFM Project Financial Management FPFMD Federal Project Financial Management Division PHCN Power Holding Company of Nigeria PIC Prior Informed Consent PIM Project Implementation Manual PMU Project Management Unit POPs Persistent Organic Pollutants SAICM Strategic Approach to International Chemicals Management SOE Statement of Expenditure TC Technical Committee TOR Terms of Reference TTL Task Team Leader UNEP United Nations Environmental Program UNDP United Nations Development Program UNIDO United Nations Industrial Development Organization UPOPS Unintentional Persistent Organic Pollutants USAID United States Agency for International Development WAPCO West African Portland Cement Company Vice President: Obiageli Katryn Ezekwesili Country Director: Onno Ruhl Sector Manager: Idah Pswarayi-Riddihough Task Team Leader: Africa Eshogba Olojoba

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NIGERIA

PCB MANAGEMENT PROJECT

CONTENTS

 

I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 9

A. Country and Sector Issues ....................................................................................................... 9 B. Rationale for Bank involvement ........................................................................................... 14 C. Higher level objectives to which the project contributes ...................................................... 16

II. PROJECT DESCRIPTION ............................................................................................... 17

A. Lending instrument ............................................................................................................... 17 B. Project development objective and key indicators ................................................................ 17 C. Project components ............................................................................................................... 17 D. Alternatives considered and reasons for rejection ................................................................ 19

III. IMPLEMENTATION .................................................................................................... 21

A. Partnership arrangements ...................................................................................................... 21 B. Institutional and implementation arrangements .................................................................... 21 C. Monitoring and evaluation of outcomes/results .................................................................... 23 D. Sustainability and Replicability ............................................................................................ 23 E. Critical risks and possible controversial aspects ................................................................... 24 F. Loan/credit conditions and covenants ................................................................................... 26

IV. APPRAISAL SUMMARY ............................................................................................. 27

A. Economic and Financial analyses ......................................................................................... 27 B. Technical ............................................................................................................................... 27 C. Fiduciary ............................................................................................................................... 27 D. Social..................................................................................................................................... 29 E. Environment .......................................................................................................................... 29 F. Safeguard policies ................................................................................................................. 30 G. Policy Exceptions and Readiness.......................................................................................... 30

Annex 1: Country and Sector or Program Background ........................................................ 31 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 43 Annex 3: Results Framework and Monitoring...................................................................... 45 Annex 4: Detailed Project Description ................................................................................. 52 Annex 5: Project Costs.......................................................................................................... 60 Annex 6: Implementation Arrangements .............................................................................. 61 Annex 7: Financial Management and Disbursement Arrangements .................................... 71 Annex 8: Procurement Arrangements ................................................................................... 82 Annex 9: Economic and Financial Analysis ......................................................................... 90 Annex 10: Safeguard Policy Issues ....................................................................................... 91 Annex 11: Project Preparation and Supervision ................................................................... 97 Annex 12: Project Governance Measures ............................................................................. 98

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Annex 13: Statement of Loans and Credits ........................................................................ 101 Annex 14: Country at a Glance ........................................................................................... 104 Annex 15: Incremental Costs Analysis ............................................................................... 106 Annex 16: Map of Nigeria .................................................................................................. 112 

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NIGERIA

PCB MANAGEMENT PROJECT

PROJECT APPRAISAL DOCUMENT

AFRICA

AFTEN Date: August 2, 2011 Country Director: Onno Ruhl Sector Manager/Director: Idah Pswarayi Riddihough Project ID: P113173 Focal Area: Persistent Organic Pollutants Environmental Assessment: B - Partial Assessment Lending Instrument: Specific Investment Loan

Team Leader: Africa Eshogba Olojoba Sectors: General Energy Sector (35%); Petrochemicals and fertilizers (30%); Power (20%); Other industry (15%) Themes: Pollution Management and Environmental Health (67%); Environmental Policies and Institutions (33%) Joint IFC:

Project Financing Data

[ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other:

Financing Plan (US$m) Source Local Foreign Total

RECIPIENT/BORROWER 12.20 0.00 12.20 Global Environment Facility (GEF) 6.30 0.00 6.30 Total: 18.50 0.00 18.50 Recipient: Federal Republic of Nigeria Federal Ministry of Finance Finance Building Central Business Area Abuja Nigeria Responsible Agency: Federal Republic of Nigeria Federal Ministry of Environment 7th Floor Federal Secretariat, Phase 1 Nigeria Tel: /Fax: (234-9) 523-4119

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Estimated disbursements (Bank FY/US$m) FY 2011 2012 2013 2014 2015 2016 Annual .5 2.8 2.3 0.5 0.2 0 Cumulative .5 3.3 5.6 6.1 6.3 6.3 Project implementation period: Start: August 23, 2011 End: June 30, 2015 Expected effectiveness date: October 17, 2011 Expected closing date: December 30, 2015 Does the project depart from the CAS in content or other significant respects? Ref. PAD I.C.

[ ]Yes [X] No

Does the project require any exceptions from Bank policies? Ref. PAD IV.G. Have these been approved by Bank management? Is approval for any policy exception sought from the Board?

[ ]Yes [ X]No [ ]Yes [ ] No [ ]Yes [ X] No

Does the project include any critical risks rated “substantial” or “high”? Ref. PAD III.E.

[ X ]Yes [ ]No

Does the project meet the Regional criteria for readiness for implementation? Ref. PAD IV.G.

[X ]Yes [ ]No

Project development objective Ref. PAD II.B., Technical Annex 3 The Project Development Objective (PDO) is to: strengthen national capacity for management of Persistent Organic Pollutants (POPs) and in particular Polychlorinated Biphenyls (PCBs) as required under the Stockholm Convention on Persistent Organic Pollutants. Global Environment objective Ref. PAD II.B., Technical Annex 3 The global environmental objective is to strengthen national capacity for management of Persistent Organic Pollutants (POPs) and in particular Polychlorinated Biphenyls (PCBs) as required under the Stockholm Convention on Persistent Organic Pollutants. Project description Ref. PAD II.C., Technical Annex 4 The project will be implemented in four years and has the following components:

1) Component 1: Capacity-Building for POPs and PCB Management 2) Component 2: Environmentally Sound Management of On-line and Off-line Electrical

Equipment 3) Baseline National Inventory of PCBs and PCB-containing Equipment and Development

of a National PCB Management Plan 4) Project Management and Monitoring and Evaluation

Which safeguard policies are triggered, if any? Ref. PAD IV.F., Technical Annex 10 Environmental Assessment (OP/BP/GP 4.01) Significant, non-standard conditions, if any, for: Ref. PAD III.F. Board presentation: None Grant effectiveness conditions:

(i) The Recipient has designated and put in place PMU project staff acceptable to the Bank: Project Coordinator, Procurement Specialist, Environmental Specialist and M&E Expert;

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and (ii) the Recipient has adopted a Project Implementation Manual containing, among others, sections on Financial Management and Procurement. 

Covenants applicable to project implementation: The Recipient shall: (a) on or about the date twenty four (24) months after the Effective Date, submit to the World Bank a mid-term report, in such detail as the World Bank shall reasonably request and (b) review with the Bank the mid-term report, on or about the date one month after its submission; The Recipient shall have its Financial Statements audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Financial Statements shall cover the period of one fiscal year. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end of such period; and there shall be appointment of independent auditors not later than six months after the effective date; The Recipient shall prepare and furnish to the World Bank for its approval, not later than November 1 of each year during the implementation of the project, an Annual Work Plan and Budget; The Recipient shall furnish to the World Bank progress reports covering each calendar semester, not later than 45 days after the end of the period covered by such report; The Recipient will ensure that interim unaudited financial reports for the project are prepared and furnished in form and substance satisfactory to the Bank not later than 45 days after the end of each calendar semester; and The Recipient shall, not later than six months after the Effective Date, appoint independent procurement auditors acceptable to the World Bank, for reviewing the procurement of goods, works and consultants’ services financed under the project, and shall, not later than six months after the end of each fiscal year, or such later date as the World Bank may agree, furnish to the World Bank the procurement audit report prepared by the said independent procurement auditors.

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I. STRATEGIC CONTEXT AND RATIONALE

A. Country and Sector Issues

Background: Persistent Organic Pollutants (POPs) 1. POPs are a set of toxic chemicals that are persistent in the environment and able to last for several years before breaking down. POPs circulate globally and chemicals released in one part of the world can be deposited at far distances from their original source through a repeated process of evaporation and deposition. This makes it very hard to trace the original source of the chemical. 2. POPs are lipophilic, which means that they accumulate in the fatty tissue of living animals and human beings. In fatty tissue, the concentrations can become magnified by up to 70,000 times higher than the background levels (bioaccumulation). As they move up the food chain, concentrations of POPs tend to increase so that animals at the top of the food chain—such as fish, predatory birds, mammals, and humans—tend to have the greatest concentrations of these chemicals, and therefore are also at the highest risk for acute and chronic toxic effects. 3. In 1995, the United Nations Environment Program expanded its research and investigation on POPs with an initial focus on what became known as the “Dirty Dozen.” These were a group of 12 highly persistent and toxic chemicals: aldrin, chlordane, DDT, dieldrin, endrin, heptachlor, hexachlorobenzene, mirex, polychlorinated biphenyls, polychlorinated dibenzo-p-dioxins, polychlorinated dibenzofurans, and toxaphene. The fourth Conference of the Parties (COP‐4) of the Stockholm Convention on Persistent Organic Pollutants (POPs) in 2009 reached a consensus to add nine new POPs to the treaty’s original “Dirty Dozen.” 4. The nine added include: Alpha hexachlorocyclohexane (unintended by-product of lindane manufacture); Beta hexachlorocyclohexane (unintended by-product of lindane manufacture); Commercial octaBDE—hexabromodiphenyl ether and heptabromodiphenyl ether—(used as a flame retardant); Commercial pentaBDE—tetrabromodiphenyl ether and pentabromodiphenyl ether—(used as a flame retardant); Chlordecone (an agricultural pesticide); Hexabromobiphenyl (a flame retardant); Lindane (used in creams for treatment of head lice, previously used in agriculture—“specific exemption” for pharmaceutical use to control head lice and scabies); Pentachlorobenzene (used as a dyestuff carrier, fungicide, and a flame retardant); and PFOS, perfluorooctane sulfonic acid, its salts and perfluorooctane sulfonyl fluoride. PCB Issues 5. Polychlorinated biphenyls (PCBs) are a class of organic compounds originally manufactured in 1881. PCBs were found to be fire-resistant, stable, and non-conductive to electricity and with low volatility under normal conditions. As early as 1929 these characteristics made them ideal for many industrial applications and consumer products, though they were predominantly used between 1950 and the late 1970s. Most well known is the use of PCBs for dielectric fluid in electrical equipment, from large transformers to small capacitors in lighting fixtures. Industries used PCBs extensively as heat transfer fluids and as coolants for high temperature processes. PCBs were also used in hydraulic fluids, surface coatings, and carbonless

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copy paper, but also as plasticizers in sealants, caulking, synthetic resins, rubbers, paints, waxes and asphalts, and additionally as flame retardants in lubricating oils. 6. Due to the toxicity characteristics of PCBs and their classification as Persistent Organic Pollutants (POPs), their production was banned globally in the early 1980s. They are one of the 21 classes of POPs which, due to their damaging effects on human health and the environment, are targeted for elimination by the 2001 Stockholm Convention on Persistent Organic Pollutants. Probable health effects associated with PCBs include cancer, reproductive and development toxicity, impaired immune function, effects on the central nervous system, and liver changes. Detailed information on human, ecological and economic costs of known incidents of exposure to PCB-containing oils is discussed elsewhere in this document. 7. Effective on May 17, 2004, the Stockholm Convention requires its parties to submit a National Implementation Plan (NIP) to the Conference of the Parties within two years of ratifying the Convention. For PCBs, it requires all parties to eliminate the use of PCB-containing equipment by 2025 and to make concerted efforts to dispose of liquid PCBs and equipment contaminated with PCBs via environmentally sound waste management as soon as possible, but no later than 2028. Before 2025, the Convention does allow all parties to use PCBs in intact and non-leaking equipment in areas where the risk of environmental release can be minimized and quickly remedied. However, no PCB-containing equipment should be used in areas close to human food or animal feed production and processing facilities. Special measures apply for any use of PCB-containing equipment in populated areas, including near schools and hospitals. 8. Nigeria signed the Stockholm Convention in May 2001, ratified it in May 2004, and submitted its NIP to the Stockholm Convention in April 2009. Twenty-three areas of action were identified as Priorities for Nigeria in view of meeting its obligations. PCB inventory and treatment was listed as Priority No. 1 (inventory, remediation and treatment of areas polluted with POPs), while disposal options were listed as Priority No. 9 (disposal of obsolete pesticides, PCBs and equipment contaminated with PCBs). Country Situation 9. Nigeria was never known to produce PCBs. However, between the late 1940s and early 1980s, the country imported a good deal of PCB-containing equipment, such as transformers, capacitors and ballasts, as well as paint additives, hydraulic fluid additives, etc. PCBs were used as an additive in dielectric fluids and functioned mainly as insulating oil for electrical and hydraulic equipment. However, the most prevalent use of dielectric fluid was in electrical equipment, such as power transformers, in which the oil alone could weigh thousands of kilograms. The Power Holding Company of Nigeria (PHCN) is by far the largest Nigerian consumer of dielectric fluids and owns a great deal of equipment that potentially contains PCBs. Other possible significant users of equipment that potentially contains PCBs are private electrical generators, major industrial facilities, oil refineries, textile mills and cement industries. 10. Subsequent to signing the Stockholm Convention in 2001, the Federal Government of Nigeria requested and received financial assistance from the Global Environment Facility (GEF) through the United Nations Industrial Development Organization (UNIDO). The sum of US$499,000 was approved as a grant under the GEF POPs Enabling Activity (EA) to finance the

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preparation of the country’s NIP. However, given the size of the country, the level of economic development and structural complexity of the Government, and taking into account the amount of GEF resources available, the level of detail that could have otherwise been expected from these initial inventories was inadequate. 11. The UNIDO-proposed PCB inventory was completed, but it provided only skeletal information as to the volume of PCB stocks and the number of PCB-containing equipment present. The majority of the data compiled for the project was provided by 10 PHCN transmission stations in six states of the North Central Zone and the Federal Capital Territory (FCT). The report did not provide any indication as to why those particular states were selected or whether they are representative of the national context. In addition, no information was included regarding privately owned equipment. In the report, only 22 transformers were identified, most of which range in age from 15 to 30 years. No standardized testing was conducted on the transformer oils to ascertain the presence of PCBs. No data regarding other types of PCB-bearing equipment, such as capacitors, was included in the report. Insufficient information was presented on PCB spills, PCB contaminated soils and groundwater and PCB stocks at some of the transmission stations. 12. As a gesture of firm commitment to the Convention, in 2008 the Nigerian Government undertook a more refined PCB evaluation in facilities that generate, transmit and distribute electric power spread across 10 out of 36 states. Financial support in the amount of $250,000 Canadian dollars from the World Bank’s executed Canadian POPs Trust Fund (CPTF) was applied to project. It was estimated that the project captured about 10 percent of potentially contaminated electrical equipment in the power sector. Subsequently, based on field observation, the project team made the following conclusions:

Over 80 percent of the transformers surveyed were manufactured after 1980. Therefore, the installed capacity of the country will not need replacing until about 2020.

PHCN is the greatest user of dielectric fluid in Nigeria.

Awareness about PCB use in transformer oil is very low and, consequently, there is often failure to follow proper procedures in its handling, storage and disposal.

Based on the screening test results performed on oil samples collected from 281 transformers, it was found that:

o Eleven (24 percent) of the transformers manufactured before 1980 were chlorinated;

o Eight (15 percent) of the transformers manufactured between 1981 and 1990 were chlorinated, and

o Eighteen (13 percent) of transformers manufactured after 1990 were chlorinated.

The total amount of PCB-contaminated waste in Nigeria is estimated to be 3,400 tons.

13. As follow up to this study, the CPTF financed another study in 2009 called the “Location and Assessment of the Status of PCB-Containing Equipment in all Power Holding Company of Nigeria (PHCN) Facilities.” Among other things, this second study found the following:

High levels of PCB contamination exist within and around surveyed and assessed PHCN facilities. Additionally, in many PHCN facilities across Nigeria potentially PCB-

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contaminated waste is poorly managed. Ijora Power station B in Lagos State was judged the most environmentally insecure facility surveyed.

There is very little knowledge of the full concept of PCBs among PHCN workers. This finding was quite alarming, since it revealed that personnel who engage daily in the retro-filling, filtration, recycling and storage of transformer oil were quite oblivious to the hazardousness of PCB-contaminated equipment and oils.

This study conservatively estimates the amount of PCB-contaminated oil at 421 tons and the combined weight of PCB-contaminated equipment at 1,061 tons.

It was also found in the course of field work that workers routinely “top-off” smaller transformers with dielectric oil from larger capacity transmission and generating transformers (when the oil no longer has the dielectric strength to power these) without first testing for the presence of PCB. This has the potential to occasionally result in the contamination of a non-PCB-containing transformer with oil from a PCB-containing one.

Unaware of its harmful effects, the population regularly uses discarded transformer oil as fuel (in cooking, roasting animal hides, burning farm lands, etc.). Both PHCN personnel and members of the public have routinely used transformer oil as cream, or as a salve in the treatment of head lice, eczema and various skin dermatitis. It has also been used as a weed killer on farms.

The Main Sector Issues to be Addressed by the Project 14. The PCB studies undertaken with assistance from the CPTF and facilitated by the World Bank in 2008 and 2009 presented the following recommendations with a view to better managing the handling, storage and disposal of PCBs and PCB-contaminated equipment in Nigeria and in an effort to bring Nigeria into full compliance with the Stockholm Convention by eliminating PCBs by the year 2025:

A comprehensive and expanded PCB Inventory covering the entire country and all users of dielectric fluids is imperative. This could be conducted routinely by PHCN on all new and older transformers under their control. PHCN maintenance practices may have resulted in the cross-contamination of newer transformers. Transformer maintenance records should be checked and a sampling strategy established to identify whether some transformers have been cross-contaminated.

While field screening kits are an effective method for testing PCB-containing equipment, the results need to be verified by a more refined laboratory analysis. The analysis should be performed by a commercial environmental laboratory with experience in analyzing oil samples for the presence of PCBs.

The Government should develop and implement a regulation that is specific to PCBs and PCB-bearing equipment with respect to their control, use, handling, storage and disposal.

Once the Government of Nigeria has implemented PCB management regulations, all the affected sectors can initiate a gradual drawdown on their PCBs and PCB-containing equipment, which will ultimately lead to final disposal.

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While it is acknowledged that 80 percent of the transformers in use in Nigeria still have significant useful life, those contaminated with PCBs may be disposed of in advance of the Stockholm Convention timeline requirements if they are found to be posing risks to humans and/or the environment.

The removal of transformers with PCB-containing oil should be prioritized, especially for those located within sensitive areas, such as hospitals and schools, or those located near sensitive environmental receptors, such as lakes and rivers.

Mandatory testing for PCB content should be implemented on oil samples from electrical transformers purchased by private individuals before these transformers are connected to the PHCN grid and energized.

A tracking system should be developed to monitor the movement of all electrical equipment containing PCB-contaminated oil.

The awareness of electrical utility workers and managers as well as that of the general public needs to be improved with respect to PCBs. Awareness training should incorporate the basis of established protocols for the proper handling, storage and disposal of PCBs and PCB-contaminated waste.

Institutional (interim) controls should be implemented in an effort to limit exposure to contaminants and reduce the risk to humans and the environment until these risks can be further reduced to acceptable levels by other management options (there are four general categories of institutional controls: government controls, proprietary controls, enforcement tools with institutional control components, and informational devices).

PHCN technical personnel—especially in transformer repair facilities—should be made to stop dumping oils on the ground and into water bodies. Further, within PHCN facilities there is a need for the procurement and provision of the analytical capabilities necessary for the screening of PCB in transformer oil.

Interim storage of potentially PCB-containing equipment and oil in PHCN facilities should be done in accordance with pertinent safeguards.

There is an urgent need for an awareness-raising and training program on the subject of PCB and its environmentally sound management aimed at all administrative and technical personnel in any PHCN facility or workshop around the country involved in generating, transmitting, and distributing power.

There are also other industries within the private sector that potentially deal with large quantities of PCBs and PCB-containing materials and equipment. These include airports, dockyards, oil refineries (and depots or facilities for the bulk storage of crude oils and petroleum products), garages and gasoline stations, as well as industries that manufacture or process the following: cement and asphalt, disinfectants, fire chemicals, fertilizer, pharmaceuticals, rubber, metals (manufacturing, refining and finishing), pulp and paper, textiles, sewage (works and farms). At present, there has not been a concise assessment of the quantity of PCBs, and PCB-containing materials and equipment in these private entities. There is a need for the identification and inventory of PCB stockpiles in the

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private sector of the economy, and for regulations to ensure that they are managed in an environmentally sound manner, together with those in PHCN holdings.

Long-term monitoring and evaluation of potentially PCB-contaminated sites should be conducted to determine the level of risk they pose and, accordingly, the management approach, to evaluate the effectiveness of the chosen management option, and to ensure adequate, continuous protection of humans and the environment.

There is a need for the construction of facilities for the temporary storage of PCB-containing waste (including suitable drums and steel trays) in PHCN facilities. A target of 3,000 tons of PCB oil and 5,000 tons of PCB-contaminated equipment are expected to be safeguarded by the project; this is against the background that, with the assistance of the CPTF study of 2009, there already exists a baseline amount of 421 tons of PCB oil and 1,061 tons of PCB-contaminated equipment.

The Africa Stockpiles Project managed by the World Bank and implemented by the Federal Ministry of Environment is tackling the issue of obsolete POP pesticide stocks and POP pesticide-contaminated sites in the country. The proposed project is expected to draw lessons from the existing project and to help improve the in-country capacity for the management of POPs in general. Where the project calls for upgrading laboratory facilities, targeted are those laboratories analysing not only PCBs but also other POP chemicals, such as Aldrin, Lindane, Mirex, Hexachlorobenzene, Heptachlor, etc.

15. Building on all the above recommendations, the development objective of this project is to strengthen the national capacity for management of Persistent Organic Pollutants (POPs) and, in particular, Polychlorinated Biphenyls (PCBs) as required under the Stockholm Convention on Persistent Organic Pollutants. It will also endeavor to key the project into other on-going POP management activities in the country and, as such, enhance the national capacity for the identification, analysis and environmentally sound management of other POPs, including pesticides and unintentional POPs. 16. The proposed project is designed to improve public health and environmental quality by preventing the environmental release of PCBs from active and decommissioned electrical equipment in PHCN facilities as well as from other private sector industries that have PCB stocks (oil refineries, airports, textile mills, etc.), so as to ensure their sound management and, ultimately, their safe disposal.

B. Rationale for Bank involvement

17. The Federal Government of Nigeria recognized the environmental and health threats posed by POPs at an early stage and fully participated in the negotiations leading to the Stockholm Convention. It was a signatory in 2001 and ratified the Convention on May 24, 2004. The proposed project is consistent with the Government policy documents: the seven point agenda and vision 2020 with special attention to pollution prevention, abatement, remediation and management theme. 18. The project will support some of the national priority actions called for in the NIP, i.e. comprehensive PCB inventory and some of the recommendations of the recently concluded studies: the Baseline National Inventory of PCBs and PCB-containing equipment in Nigeria; and

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the Location and Assessment of the Status of PCB-Containing Equipment in Power Holding Company Facilities all over Nigeria, undertaken with support from the World Bank executed CPTF. 19. Previous activities in the inventory and management of PCBs in the country have not taken into account PCB stockpile holdings in the private sector of the Nigerian economy. The project will identify and integrate the private sector sources of PCB waste and PCB-containing equipment into the full PCB inventory and management plan, to ensure the continuing minimization and ultimate elimination of POPs. 20. The Bank, as one of GEF implementing agencies, has a responsibility to help its client countries achieve the global environmental objectives that are supported by the international conventions and by the GEF. The Bank has been very active in supporting Nigeria in addressing environmental challenges and recently completed two studies on PCBs and PCB-containing equipment with financial assistance from the CPTF. 21. The proposed project is well aligned with the second Country Partnership Strategy (the Bank’s CAS) under the pillar of achieving sustainable and inclusive non-oil growth, especially as limited institutional capacity for pollution risk assessment, prevention and remediation was identified as a major issue and obstacle. The project is also consistent with the second pillar (vulnerability and resilience) of the New African Strategy, as the project will address health and environmental quality concerns associated with the use and handling of PCB contaminated equipment and oil. 22. The Bank's long-standing and broad involvement in the power sector in Nigeria allows for synergies to be developed. For example, the ongoing Nigeria Energy and Gas Improvement (NEGIP) project co-funded by Work Bank will benefit from the design of this project to help properly manage transformers and capacitors. NEGIP involves the following: (i) rehabilitation and reinforcement of aging transmission stations; (ii) rehabilitation of existing power transformer workshops; (iii) rectification of switchyard deficiencies and malfunctioning in transmission stations; and (iv) reinforcement of distribution networks to increase electricity supply. NEGIP overall objectives will most likely involve the decommissioning and replacement of PCB-contaminated equipment and the disposal of PCB waste, either directly or indirectly through the project. 23. It is therefore critical that the Government, through the Federal Ministry of Environment (FMEnv), PHCN and other relevant stakeholders, is adequately prepared to handle the sound management of all PCB contamination, such that they can assist in the removal of PCBs, guaranteeing that no additional risks to human health and the environment are taken. The proposed GEF project is therefore very timely, as it will focus primarily on strengthening the Government’s capacity for PCB management, ensuring that appropriate measures are taken consistently throughout the country, as the power sector reform and the NEGIP are carried out. In that sense, the proposed GEF project is fully complementary and will directly support the objectives of the NEGIP. Coordination between the NEGIP and the GEF projects will be enhanced to ensure that capacity-building and safeguard efforts are not duplicated, and that all activities are being carried out according to the new PCB/POP management regulations that will be developed in the upcoming years.

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24. The proposed project will also coordinate and build upon other related and ongoing POP projects. These include: (a) the National Implementation Plan, which was submitted to the Stockholm Convention in April 2009; (b) the African Stockpiles Project (ASP); (c) the Gas Phase Chemical Reduction of POPs project; (d) the UNDP’s Less Burnt for a Clean Earth: Minimization of Dioxin Emissions from Open Burning Sources in Nigeria; (e) the UNEP’s regional project on Supporting the Implementation of the Global Monitoring Plan of POPs in West Africa; and (f) UNIDO’s regional project on Developing Appropriate Strategies for Identifying Sites Contaminated by Chemicals Listed in Annexes A, B and/or C of the Stockholm Convention. Already some of these projects have provided useful information that has been used in the development of this project, in particular to avoid repetition of activities and components. 25. The Bank’s technical knowledge on POP management and its experience in the design and implementation of GEF projects give it a comparative advantage among the GEF Implementing Agencies in providing this assistance. Specifically, the Bank’s experience is reflected in the preparation and implementation of GEF funded POP/PCB management projects in China, Moldova, Vietnam, and Philippines, as well as the African Stockpiles Project (ASP).

C. Higher level objectives to which the project contributes

26. The project will contribute to both global and national objectives. At the global level, the project will assist Nigeria in meeting its obligations under the Stockholm Convention and contribute to global efforts to control toxic chemicals in general, eliminate/reduce POP releases to the environment, and manage PCB waste and PCB-contaminated equipment in an environmentally sound manner. On the national level, it will support the implementation of the NIP, the National Strategy for Environmental Protection, the Federal Government’s seven point agenda and vision 2020 with special attention to pollution prevention, abatement, remediation and management theme. It will also contribute to the Federal Ministry of Environment’s ongoing efforts to reduce the risks to human health and ecosystem integrity from industrial pollution and improve its capacity and performance in Solid and Hazardous Waste Management. In addition, Nigeria currently has no legislative framework and only limited professional capacity for managing PCBs. The project will establish the needed framework, demonstrate technology options, and undertake the training required to manage PCBs in order to reduce environmental and health risks associated with PCBs and PCB-containing equipment.

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II. PROJECT DESCRIPTION

A. Lending instrument

27. The proposed project is a Sector Investment Loan (SIL) financed through a GEF grant of US$6.3 million. This will be complemented by a government counterpart contribution of US$12.2 million.

B. Project development objective and key indicators

28. The development and global environment objective is to: strengthen the national capacity for management of Persistent Organic Pollutants (POPs) and, in particular, Polychlorinated Biphenyls (PCBs) as required under the Stockholm Convention on Persistent Organic Pollutants. To track progress towards the PDO, the key project outcome indicators are: a) a national POP/PCB policy adopted by the Government and b) a national PCB management plan adopted by the Government.

C. Project components

29. The project consists of four major components. Annex 4 provides a detailed description of these components. 30. Component 1: Capacity-Building for POPs and PCB Management (Total: US$2,106,078. GEF: US$1,179,754. Government: US$926,324.): This component aims to strengthen the Government’s capacity to manage, monitor, and control POPs but also, ultimately, phase out the use of PCBs. Activities under this component will include a comprehensive review of current hazardous waste management regulations, and the development and incorporation of a new regulatory framework that will specifically address POPs in general, and PCBs in particular. In addition, the regulatory framework will adequately address the financial question of who is responsible for the management and disposal of PCBs. Further, the component will contain a communication strategy and will address the issue of training and awareness (including a stakeholders workshop), and will involve the preparation and dissemination of training materials, including TV programs/documentaries, posters and the production of brochures/pamphlets for the purpose of raising awareness on PCBs and other POP issues. 31. Component 2: Environmentally Sound Management of On-line and Off-line Electrical Equipment (Total: US$9,419,396. GEF: US$3,273,208. Government: US$6,146,188.): This component will involve a series of investment activities that will provide the Government with the enabling capacity to handle PCBs, other POP chemicals and hazardous chemicals in the future. This will consist of:

a) Adaptation within the context of Nigeria of the various procedures, manuals, management protocols and guidelines that have already been prepared by UNEP and the Secretariat of the Basel Convention for the identification and management of PCBs, PCB-containing or PCB-contaminated equipment and waste. The sub-component will also entail labelling of all identified PCB-containing electrical equipment and waste so as to ensure good maintenance practices.

b) Identification and upgrading of laboratories for analyzing PCBs and other POPs in oils, water and soil samples. Activities under this component will assess the capacities of the

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existing laboratories in analyzing PCBs and other POP chemicals with a view to selecting appropriate in-country analytical techniques. This component will also entail training on new testing procedures and the purchase of some upgraded equipment. Upgrading the laboratories does not have for objective the analysis of PCBs alone, but also other POPs chemicals, such as Mirex, Lindane, Heptachlor, Aldrin etc. A total of four laboratories will be identified and upgraded.

c) Upgrading of interim PCB storage facilities. This will involve the identification and enhancement of storage locations that will safely handle PCB waste and PCB-containing equipment to prevent the release of such waste into the environment. These facilities will be used to store decommissioned PCB-containing equipment and PCB waste in an environmentally sound manner. Existing locations—such as the Ijora workshop in Lagos and sub-stations at Kontagora, Kaduna, and Oji River—will be assessed for their suitability as interim storage locations. There is a Government commitment to resolve the issue in the long term, and not to leave these PCBs forever in their temporary storage places. A target of approximately four interim storage locations will be enhanced and upgraded. With a baseline amount of 421 tons of PCB oil and 1,061 tons of PCB-contaminated equipment, as indicated in the 2009 study financed by the CPTF and executed by the Bank, the proposed project has a set a target of safeguarding 3,000 tons of PCB oil and 5,000 tons of PCB-contaminated equipment.

d) Pilot PCB Disposal. The proposed project will fund one pilot disposal demonstration in order to gain experience and build the capacity of public and private sector stakeholders to address the whole suite of activities pertaining to the management of PCB waste. The pilot for disposal demonstration will be selected based on an analysis of the type of PCB waste to be eliminated, on the broader need for hazardous chemicals destruction in the country, and on the possibilities that exist to leverage ongoing initiatives, as well as on the requirement that any in-country disposal or destruction meet high international standards, including those under the Stockholm and Basel Conventions. The demonstration will also include the development of arrangements and partnerships for the financially sustainable operation of destruction or disposal activities.

32. Component 3: Baseline National Inventory of PCBs and PCB-Containing Equipment and Development of a National PCB Management Plan (Total: US$4,871,148. GEF: US$1,373,197. Government: US$3,497,951.): This component will be built on the recently conducted partial PCB inventory that covered 10 out of the 36 states and the Federal Capital Territory. Activities under this component will include the establishment of a database for PCB-containing equipment and waste in 15 additional states and the development of a comprehensive methodology for conducting inventories. The inventory will also cover the sampling and testing of potentially contaminated equipment owned by members of the private sector. The outcome of this inventory will provide a clear picture on the extent of PCB contamination across the country, especially as the proposed project targets the safeguarding of 3,000 tons PCB oil and 5,000 tons of PCB-contaminated equipment. Based on the outcome of this inventory, a long-term PCB management plan will be developed. As PCB inventory is a bit of a living database, the project will make it possible for the Government to complete, maintain and update it until final decommissioning of the last contaminated piece of equipment. Under this component, the

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Government will build its capacity to carry out an inventory and to update/revise the existing one; it will subsequently apply this same methodology to cover the remaining 11 states and the Federal Capital territory in the future. 33. Component 4: Project Management and Monitoring and Evaluation (Total: US$2,103,377. GEF: US$473,841. Government: US$1,629,536.): This component will finance costs related to the establishment of the Project Management Unit (PMU) and incremental operational costs of the PMU. This component will also ensure the proper coordination and timely delivery of project outputs. The PMU will carry out the usual project management functions of financial management, procurement, auditing, managing, monitoring and evaluating project implementation, as well as dissemination of project results. The M&E manual to be developed under this project is expected to be institutionalized for the management of all PCBs in Nigeria. The PMU will include a Project Coordinator, a procurement specialist, an Environment Specialist and an M&E Expert.

D. Alternatives considered and reasons for rejection

34. In selecting the proposed approach for this project, three alternatives were considered: 35. Business-As-Usual (BAU) Option. Under this option, the risk of leakage and/or release of PCBs to the environment would continue due to a lack of technical capacity and resources for sound PCB management. By allowing the full load of PCBs in existing oils and equipment to be released into the environment, this option would subject the Nigerian population and its environment to a high risk of PCB contamination. Because Nigeria is signatory to the Stockholm Convention and is bound by obligation to take PCB control measures, including identifying and ensuring the environmentally sound management of PCBs remaining in use, the Business-As-Usual Option will not be considered. 36. Presently in Nigeria, disused and obsolete equipment and oil are scattered all over the country in PHCN facilities and in the holdings of private sector stakeholders without any effort being made to manage these in an environmentally sound manner. Illegal sale for private sector uses (soap-making, creams, frying of foods, direct uses on skins, etc.) in several local manufacturing and heating processes is the norm. The poor management of PCB-contaminated equipment and oil both in PHCN facilities and by the private sector holders in Nigeria coupled with widespread ignorance of the dangers posed by its unsafe management expose humans, animals and the environment to severe consequences. The cost implications of this option are enormous in terms of human health (morbidity and mortality), environmental and socio-economic impacts, both locally and globally. In view of the critical health and environmental impacts generally known to be associated with POP chemicals, including PCBs, this option is definitely unacceptable. 37. Complete Replacement and Disposal Option. This option has been adopted by some countries in their respective energy sectors. This would require a major effort for proper identification of all PCB-containing oils and equipment and the destruction thereof. This option not only results in high disposal costs but also in the high cost associated with the early retirement of equipment. Nigeria, being a less developed country, cannot bear this type of cost and adopt the option of complete replacement. At this stage it will be costly for Nigeria to mobilize funds for early retirement and disposal of PCB-containing equipment.

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38. Based on data collated from previous PCB studies in Nigeria (2008 and 2009), the quantities of PCB-contaminated oil and equipment were 421 and 1,016 tons respectively. These figures do not cover private sector holdings and were confined to about 10 out of 37 states in Nigeria. At present, there is no in-country capacity for the destruction of hazardous waste, including POPs, in Nigeria. The possibility of destroying the PCBs in high temperature incinerators in-country may be considered, but the cost of setting up such a facility is quite high. A high temperature incinerator (HTI) of acceptable standards with adequate emissions management capability to suit the needs of POP disposal in Nigeria will cost at least US$9 to US$12 million. A good quality shredder for disposing of contaminated transformers and capacitors will cost over US$2 million. Infrastructure provision (including electricity and water) along with operation and maintenance costs will definitely add costs of over US$3 million. This option will take several years to achieve and must take into consideration the cost per ton of PCB incineration as estimated in OECD communities. 39. The recently concluded ASP project in Nigeria indicated that the disposal of POPs in an environmentally sustainable manner required the sum of US$4,500/ton. To spend close to US$20 million for the establishment of an incineration facility for the destruction of PCBs in-country is thus not cost-effective. This will make sense only when the PCBs, other POPs and hazardous chemicals stocks in Nigeria and other countries in the region are identified and quantified and Nigeria could then act as a regional centre for their disposal. Accepting this option will also entail the early withdrawal of transformers and capacitors currently in operation and replacing them with new ones. This will be of enormous cost to the country. Based on the above stated consideration, the cost effectiveness of this option at present is low and thus unacceptable. 40. PCB Management with Pilot Disposal Option. Under this option, a small project component would be developed to invite a specialized contractor to collect and remove some PCB-containing materials that are identified at various sites for destruction. Although it is the fastest solution with the lowest risk for the disposal of PCB waste, this option would not achieve any of the capacity-building or public awareness objectives that are an integral part of this project in particular and the Government’s plan in general. This will also divert scarce resources from addressing the most urgent PCB and POP issues in Nigeria, such as the issue of cross-contamination and the unintentional release of PCBs. 41. Proposed Option. The proposed option will put the necessary capacity and infrastructure in place for Nigeria to manage its stockpiles of PCBs and other POPs, while at the same time building POP and PCB identification and analytical capacity through enhancement of laboratories, training of key technical personnel, and pilot demonstrations of the disposal/destruction of PCBs. This option would allow Nigeria to continue using PCB-containing equipment in an environmentally sound manner until the end of its useful life, thus avoiding significant economic costs associated with the early retirement of a large body of electrical equipment, while minimizing potential risks to the Nigerian population and environment. There is a Government commitment to resolve the issue in the long term, and not to leave these PCBs forever in their temporary storage places. The Federal Government of Nigeria, through the Federal Ministry of Environment, has made a commitment to ensure the environmentally sound management of POPs (including PCBs) in Nigeria and discussions are ongoing for the establishment of a hazardous waste management facility in Nigeria that will service the West and Central African sub-region of Africa. Further, the Government is exploring options with the Japanese Government concerning Geostream technology, which is essentially a means of

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degrading PCBs, dioxins and residual agricultural chemicals in contaminated soil. At appraisal, the Government team had already held three meetings with the Japanese on this topic. III. IMPLEMENTATION

A. Partnership arrangements

42. Financial Partnerships: The Global Environment Facility (GEF), as the interim financial mechanism for the Stockholm Convention, will provide one-third of project funds. Co-financing will come from the Federal Government of Nigeria. 43. Coordination among project partners and other stakeholders: PCB/POP issues in Nigeria have been examined by a number of donors, including FAO, UNIDO, and CIDA. The PMU will look at these various donors’ activities in order to achieve synergy with the proposed project. The Federal Ministry of Environment (FMEnv), being the designated focal agency for the implementation of the Stockholm Convention in Nigeria, will be the lead implementing agency. Coordination among the various government agencies, partners and NGOs involved with PCB management will be undertaken through the formation of an Inter-Ministerial Steering Committee. The details are outlined in the implementation arrangements below.

B. Institutional and implementation arrangements

44. Policy and Overall Project Direction: The Federal Ministry of Environment (FMEnv) has been designated as the national implementing agency for all POP activities and implementation of the POP convention. The FMEnv, working with associated ministries and key stakeholders, will create an Inter-Ministerial Steering Committee (ISC) and a Technical Committee (TC). The ISC will be chaired by the Minister of Environment (or his representative) and its members will include the ministers (or representatives), heads of agencies and organizations of concerned ministries, agencies and organizations. The ISC will provide overall guidance and direction in implementing the project, particularly regarding inter-ministerial coordination, policy development, and inter-ministerial pronouncements related to the project. The TC will be composed of senior technical staff from among the ISC members and will be chaired by the Director of Pollution Control and Environmental Health Department (PCEHD). The TC will provide technical guidance to the project, including reviewing outputs and recommendations. Overall implementation of the project will follow detailed procedures as defined in the Project Implementation Manual (PIM). The Annual Work Plans and Budgets document that details the activities to be carried out by the project on an annual basis will be subject to review and approval by the Bank. 45. International Implementing Agency: The World Bank is the international implementing agency for the project. The World Bank will be responsible for supervising implementation of all project activities specified in this project document along the lines of the following:

i. Supervising overall project progress; ii. Carrying out supervision missions;

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iii. Helping Nigeria to set up an operating mechanism to allow effective and transparent implementation of the project;

iv. Ensuring that disbursements made to Nigeria are based on agreed disbursement procedures;

v. Vetting the financial management system of the project to ensure that it complies with international standards of accounting;

vi. Ensuring that procurement arrangements are carried out based on agreed procurement procedures;

vii. Ensuring that the project is carried out in accordance with the agreed environmental safeguard requirements;

viii. Providing Nigeria with the necessary policy, management and technical support; and ix. Reporting to GEF on the project progress.

Overall Project Operation and Coordination 46. National Implementing Agency: FMEnv through the PCEHD will be the national implementing agency for the project. Its responsibilities will include: (1) assignment and supervision of project activities; (2) providing direction to the PMU; and (3) coordination with stakeholders, including GEF, donors and relevant domestic ministries and agencies. 47. Project Management Unit (PMU): The PMU for this project, which will be supervised by the FMEnv, will be in charge of: (i) day-to-day activities under the project, in particular monitoring and evaluation and project implementation, including environmental safeguards management; (ii) coordination with the other entities responsible for project implementation; (iii) preparation of annual work plans, budgets, and procurement plans under the project; (iv) dissemination of internal and external audit reports; and (v) implementation of their recommendations. Financial Management and accounting will be provided by the Federal Project Financial Management Division (FPFMD) in the Office of the Accountant General of the Federation. The FPFMD have designated an accountant, an accounting technician and an internal auditor to work with the PMU. There will be no flow of funds to other agencies and all fiduciary responsibilities will be discharged at the PMU-FMEnv level. Due to the technical nature of components 2 and 3, and given that most of the activities take place around and within PHCN facilities, the PMU will work on the technical aspects of these activities with a small technical unit established at the Chemicals, Resettlement and Environment (CR&E) department of the PHCN under the Federal Ministry of Power. 48. The PMU will also collaborate closely with other agencies to implement the project. The concerned agencies and organizations include the following:

i. Chemical Safety Department of the Federal Ministry of Health ii. National Agency for Food and Drug Administration and Control (NAFDAC) of the

Federal Ministry of Health iii. The Customs and Excise Department of the Federal Ministry of Finance iv. Factory Inspectorate Division of Federal Ministry of Labour and Productivity v. National Environmental Standards Regulation and Enforcement Agency (NESREA)

vi. The private sector (electrical companies, oil companies and suppliers and distributors of electrical equipment).

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vii. Federal Ministry of Information and Communication

C. Monitoring and evaluation of outcomes/results

49. Monitoring of project activities and evaluation of their results will facilitate tracking progress towards meeting project objectives. The monitoring indicators for the development objective and for each component, along with the arrangements for results monitoring, are detailed in Annex 3. The monitoring of project implementation is the responsibility of the PMU under PCEHD-FMEnv and will rely on reports from the CR&E - PHCN. The PMU will prepare a biannual progress report for submission to the Inter-Ministerial Steering Committee and the World Bank. 50. The World Bank will be responsible for supervising the implementation of the project to ensure that the financing is used only for the purposes intended, with due regard to project objectives, expected outcome, efficiency and economy. Bank supervision missions to review the project’s progress and outcomes will be undertaken twice yearly: a midterm review will be organized two years after project implementation begins to assess the project’s status, make adjustments as needed and discuss potential improvements in project design, if necessary; a project completion workshop will be held to provide stakeholders with a chance to review project results and identify lessons learned and experience gained from it.

D. Sustainability and Replicability

51. As a party to the Stockholm Convention, Nigeria is obligated to identify, manage, and dispose of PCBs in an environmentally sound manner by 2025. The proposed project supports activities identified under the Nigeria National Implementation Plan (NIP) that was submitted to the Convention in April 2009. Completing a POP inventory was listed as the number one priority in the NIP. In this light, the project will follow the lines indicated in the NIP, especially with respect to the inventory of PCBs, PCB-containing equipment and waste and the development of a PCB Management Plan. 52. The project’s component on capacity-building is designed to create awareness of PCB issues in particular and POPs in general. It will also entail the development of strategies, regulations and legal mechanisms for POP management in general and PCB management in particular. Ministries, agencies and the private sector will be fully involved in this project with clear responsibilities outlined and will ensure the dissemination of relevant information. Thereby, project sustainability will be ensured by the country’s ownership of the project and stakeholders’ full participation during project implementation and following its completion. 53. The project’s sustainability will also be ensured by the storage facilities to be built and the disposal technology to be demonstrated in the framework of the project, as well as the MIS to be developed for recording identified and treated PCB waste. All hardware will continue to be used by the country after the project’s completion in order to achieve PCB phase-out by 2028 in accordance with the Stockholm Convention. The PCB management plan to be developed in the framework of the project will guide the follow-up PCB management beyond the project period. 54. The project does not seek to introduce a new approach to PCB/POP management, but rather to adopt well tested methodologies and established models being used in other countries.

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The project further seeks to ensure replicability by including a component on inventory of PCBs and PCB-containing equipment and the development of a national PCB management plan. This component will adopt the methodology used for the partial inventory (financed by the CPTF in 2008) of 10 states to cover an additional 15 states. It is expected that the Government, whose capacity will be built through the project, will replicate this practice to cover the remaining 11 states beyond the initial scope of the project. Participating ministries, agencies and the private sector will help ensure the dissemination of information and the project’s website will make its results available, as well as provide access to new information on PCB management and interim storage concerns.

E. Critical risks and possible controversial aspects

Risk Risk Rating Prior to Mitigation

Risk Mitigation Measures Risk Rating

To the project development objective Delays in promulgation, adoption, and timely implementation of regulations and policies

S The Ministry will ensure that, from the onset, all stakeholders are carried along during the drafting reviews, adoption and implementation of the regulations and policies.

M

Lack of awareness and appreciation of POP issues in general and PCB issues in particular among decision makers, PHCN technical staff and government agencies.

S The project includes a capacity-building component including a communications strategy that will ensure that decision makers and PHCN technicians are aware of the harmful effects of PCBs. Government agencies and the general public will be sensitized on the risks and mitigation measures associated with PCBs and other POPs.

L

Project Financial Management

S Practical, simple and sound financial procedures manual and training provided to the FM team

Strong and robust systems and controls, including institution of independent and effective internal audit function

Risk-based supervision and external audit

S

To component results Poor coordination among national agencies, associated ministries and donors such as

M Formation of Inter-Ministerial Steering Committee for guidance and coordination among agencies.

L

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Risk Risk Rating Prior to Mitigation

Risk Mitigation Measures Risk Rating

the World Bank, UNIDO, CIDA and UNDP Failure to properly identify and locate all PCB waste, sites and contaminated equipment

S Detailed inventories will be complemented by sensitization and awareness campaigns to encourage the stakeholders, the public and the private sector to disclose locations of PCB sites and equipment.

M

Procurement and financial management risks: insufficient knowledge and experience with Bank procurement may cause delays in project implementation

S Procurement and FM training will be provided to key staff during implementation; experienced procurement and FM specialists will be hired to assist the PMU; intensive supervision of PMU staff by the Bank’s country office procurement and FM specialists. A qualified internal auditor will be seconded from the ministry to the project. Flexible accounting package used for other Bank projects will also be used for the proposed project.

S

Lack or absence of Counterpart funds

S The Government team was sensitized right from the identification stage on the need to pay counterpart contribution. The Ministry of Environment has already written to the Ministry of Finance to include the counterpart funds commitment of the project in the 2011 budget. During the wrap-up of the appraisal mission, the team was assured that the Ministry of Finance will include the co-financing in the 2011 budget.

M

Lack of capacity by the PMU at the Federal Ministry of Environment to coordinate project activities, and thus project implementation might be slow

M A well defined project management system will be followed, including the selection of skilled individuals

L

Lack of coordination and collaboration of the PMU with the PHCN

M There has been close collaboration between the Ministry of Environment and the PHCN, in particular during the two studies financed by the CPTF. This collaboration and coordination will be reinforced and built-upon during implementation; especially as it is envisaged that a small unit will be created at CR&E of PHCN to help the PMU implement components 2 and 3 that will mainly take place around and within

L

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Risk Risk Rating Prior to Mitigation

Risk Mitigation Measures Risk Rating

PHCN facilities. Accidental leaks of PCB waste during packaging and transport to interim storage locations

S Incorporation of environmental and social clauses in bidding and contract documents. Independent supervision by consultant of contractor’s or service provider’s compliance with environmental, health and safety conditions in the contract.

M

Overall Risk Rating M

F. Loan/credit conditions and covenants

55. The following are conditions of Grant effectiveness: (i) The Recipient has designated and put in place project staff acceptable to the Bank: Project Coordinator, Procurement Specialist, Environmental Specialist and M&E Expert; and (ii) the Recipient has adopted a Project Implementation Manual including a section on Financial Management. 56. Dated covenants and conditions applicable to project implementation are: The Recipient shall: (a) on or about the date twenty four (24) months after the Effective Date, submit to the World Bank a mid-term report, in such detail as the World Bank shall reasonably request and (b) review with the Bank the mid-term report, on or about the date one month after its submission; The Recipient shall have its Financial Statements audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Financial Statements shall cover the period of one fiscal year. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end of such period; and there shall be appointment of independent auditors not later than six months after the effective date; The Recipient shall prepare and furnish to the World Bank for its approval, not later than November 1 of each year during the implementation of the project, an Annual Work Plan and Budget; The Recipient shall furnish to the World Bank progress reports covering each calendar semester, not later than 45 days after the end of the period covered by such report; The Recipient will ensure that interim unaudited financial reports for the project are prepared and furnished in form and substance satisfactory to the Bank not later than 45 days after the end of each calendar semester; and The Recipient shall, not later than six months after the Effective Date, appoint independent procurement auditors acceptable to the World Bank, for reviewing the procurement of goods, works and consultants’ services financed under the project, and shall, not later than six months after the end of each fiscal year, or such later date as the World Bank may agree, furnish to the World Bank the procurement audit report prepared by the said independent procurement auditors.

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IV. APPRAISAL SUMMARY

A. Economic and Financial analyses

57. The proposed project is essentially contributing to the local and global public good by reducing the risk of contaminating the environment through the release of POPs in general and PCBs in particular. Typical economic or financial analysis is thus difficult and problematic at best. While it may be theoretically possible to apply cost-benefit analysis to the process, the lack of reliable base data and the controversial aspects related to the valuation of human life make such an analysis impractical. The project has used maximum risk reduction as the criterion to prioritize among the POP/PCB issues being addressed, and will seek maximum cost-effectiveness in all of its interventions.

B. Technical

58. PCB Management: The SNC-Lavalin study on PCBs carried out in 2008 established a methodology for performing a detailed inventory, including testing for PCB oils and waste. Under the proposed project, training and support will be provided to enhance and improve upon the methodology so that it can be applied to the other states not covered by the 2008 study. The proposed project will entail one pilot demonstration of a disposal technology and will cover activities such as identification of PCB-contaminated oil, equipment and waste, conducting oil sampling and analyzing the samples to determine the level of PCB contamination and management practices. The achievements of the field implementation measures at the demonstration pilots will be available for replication and implementation in other areas of the country. 59. Identification and enhancement of possible interim storage facilities: The project will also cover the identification and enhancement of storage locations that will safely handle PCB waste/oils and PCB-containing equipment to prevent the release of such waste into the environment. If the selected locations are found suitable, they will be upgraded by installing the appropriate infrastructure to prevent any leakage of PCB into the environment. The proposed project will assess the suitability of the locations identified in the 2009 study as major sites that might be eligible for storing PCB waste and equipment and also pose no serious environmental and human health risks. These locations include: Ijora Power Station B, Lagos; Kontagora Transmission Substation, Kontagora, Niger State; Mando Work Centre, Kaduna; Central Store (old power house), Kaduna; Akangba Work Centre, Lagos; and PHCN workshop services Ijora, Lagos.

C. Fiduciary

60. Financial Management: Implementation of the CFAA (2000) recommendations was confirmed in the January 2005 review and by a recent PEMFAR, which also showed that the Federal Government has made significant efforts to advance the reform of the Public Financial Management (PFM) system since 2003. Major achievements so far have been: (i) the adoption of an oil-based fiscal rule that has greatly improved the quality of macroeconomic management; (ii) undertaking significant steps toward increased transparency in the budget process; (iii) more efficient cash management; (iv) procurement reforms; (v) updating the legal framework for PFM; (vi) reallocation of budget resources in support of MDG-related government functions; (vii) strengthening monitoring and evaluation; and (viii) introducing a more strategic longer term focus in budget management. This has clearly helped to reduce waste of public resources,

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particularly on the capital budget and payroll sides. The impact of these early measures is also evident in the significantly improved fiscal and broader macroeconomic outcomes. There is, nevertheless, much more to be done, and PFM initiatives and reforms are articulated in the Government’s PRSP NEEDS, which are supported under the CPS, specifically through three Bank-assisted projects (i.e., EMCAP—closed December 2007, ERGP, and SCBGP) as well as funding from other donors and the Government. Financial management services for the implementation of the project will be provided by the FPFMD. An experienced and relevantly qualified accountant and Internal Auditor will be assigned. 61. The FM arrangements for this project are designed to: (i) ensure that funds are used only for the intended purposes; (ii) ensure the production of timely information for project management and government oversight; and (iii) facilitate compliance by the project with World Bank fiduciary requirements. The Financial Management will be provided by the FPFMD and will essentially entail: (i) all the key elements of FM, including budgeting, funds flow, accounting, internal control, reporting and audit; (ii) a computerized system and robust FM procedures manual; (iii) relevantly qualified staff that are well-trained in relevant Bank procedures and requirements, including procurement; (iv) robust segregation of functions/duties; (v) a strong control environment, which is required to mitigate fiduciary risks; and (vi) a highly independent and well-trained internal auditor. 62. FPFMD will maintain adequate FM arrangements to ensure compliance with the financial management requirements of the Bank and the Government. These arrangements will support the deployment of project resources in an economic, efficient, and effective manner to achieve the stated development objectives. The arrangements will also provide relevant information to facilitate the performance of oversight functions. Experienced and well-qualified external auditors will be appointed (on a TOR acceptable to the Bank) to audit project accounts, financial statements and transactions, irrespective of the source of financing. The overall gross FM risk for the project is assessed as Substantial. Various measures to mitigate FM risks are outlined in Annex 7. With these measures, the overall FM residual risk remains Substantial. A Project Financial Manual detailing the appropriate internal control framework and risk management strategy will be developed. In addition, the internal audit unit will be adequately trained in risk-based audit techniques. Regular reporting arrangements and a supervision plan will also ensure that the implementation of the project is closely monitored and that appropriate remedial actions are taken expeditiously. The FM risks will be reviewed during project implementation and updated as appropriate. 63. Procurement. In 2000, a Country Procurement Assessment Review (CPAR) was conducted and it identified procurement capacity in the public sector as weak. Since then, substantial progress has been made, both at the federal and state levels, to improve this weak capacity. Through an IDA Credit, the Economic Reform and Governance Project—which has a substantial component on procurement reforms—and an IDF Grant, the Bank has been assisting the Government to address this weak capacity and build appropriate partnerships with the private sector. Though most of the required tools (procurement codes and implementing regulations, national procurement manuals, national standard bidding documents) are being finalized, most of the elements therein are being implemented using the provisions of the revised Financial Regulations. Improvement in public procurement practice, especially at the federal government level, has reached an advanced stage with the recent enactment of the Procurement Bill and the

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setting up of the Bureau of Public Procurement. Public expenditure has been more efficient and cost-effective. 64. Key issues and risks concerning procurement in the implementation of the project has been discussed with the project team and an action plan to address them has also been put in place. The assessment of the procurement capacity of the PMU, saddled with the responsibility of implementing this project, was carried out in accordance with Procurement Services Policy Group guidelines dated August 11, 1998. The assessment reviewed the organizational structure for implementing the Project and the roles of the key actors in project implementation. The detailed assessment report is in the project files. The annex 8 gives more detailed information on the procurement process and arrangements in the project.

D. Social

65. The project will not fund activities that would cause any form of land acquisition or restriction of access to sources of livelihood, as the proposed interim storage facilities are within the confines of PHCN facilities. The project is expected to have measurable and significant social benefits by reducing public health risks associated with past, current and potential future releases of POP pesticides and PCBs. The benefits of the project are primarily related to the removal, transport and storage at interim locations of selected POP pesticides and PCBs and avoidance of future costs from their accumulation. The project’s benefits accrue principally through the elimination or avoidance of contamination and its consequences, caused by the existence of the stockpiles of POP pesticides and PCBs. It will therefore be of significant benefit to both local and regional levels, as well as to the health and well-being of local and regional communities, that these banned chemicals are safely and completely destroyed as quickly as possible. The project will reduce opportunity costs that are lost when resources are diverted to management and replacement of POPs and it will lower economic losses associated with land contamination (lost productivity), health (healthcare costs, lost labor), livestock (death or illness), crops (crop losses or contamination), natural resources (water and soil contamination) and wildlife (poisoning of natural pest predators). 66. To address safeguard issues, an Environmental and Social Management Framework was prepared by the project proponents. The ESMF has been reviewed by the World Bank and subsequently disclosed in-country and at the InfoShop on April 30, 2010 and May 10 respectively. The ESMF contains a section dealing with social issues, including consultation and communication strategies. In particular, consultation held with stakeholders during the preparation of the ESMF has fostered interaction with all stakeholders and will continue during implementation.

E. Environment

67. The Nigeria PCB management project is classified in EA Category B, meaning that the potential adverse environmental impacts of the project’s activities will be small-scale and site-specific and thus easily remediable, as is typical of category B projects. Considering the activities that will be funded by the project, the overall environmental and health impacts of the project will be positive. There are three potential environmental impacts: (i) the inventory, evacuation and temporary storage of PCB oil and PCB-containing equipment; (ii) the environmental, public health and safety risks involved in transporting PCBs through the existing

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road networks to designated storage facilities; and (iii) impacts associated with upgrading laboratories and those that relate to construction or rehabilitation of interim storage locations. 68. These potential impacts of the project will be prevented or mitigated through the preparation and implementation of the environmental impact assessments, including the Environmental Management Plan (EMP), as required under the ESMF prepared by Government. The PMU will have an Environmental Specialist that will be responsible and accountable for all environmental issues related to the project. The EIA unit of the Federal Ministry of Environment will provide oversight for the activity and approve the site specific EMPs to be prepared during project implementation (see Annex 10 for details). The ESMF has been reviewed by the Bank and publicly disclosed in Nigeria and World Bank Infoshop.

F. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Indigenous Peoples (OP/BP 4.10) [ ] [X] Physical Cultural Resources (OP/BP 4.11) [ ] [X] Involuntary Resettlement (OP/BP 4.12) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects on International Waterways (OP/BP 7.50) [ ] [X] Projects in Disputed Areas (OP/BP 7.60)* [ ] [X]

G. Policy Exceptions and Readiness

69. The project does not require any policy exceptions and is ready for implementation. The Environmental and Social Management Framework (ESMF) has been prepared, reviewed, approved and disclosed country-wide in Nigeria and at Bank’s Infoshop on April 30, 2010 and May 10, 2010 respectively.

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas.

31

Annex 1: Country and Sector or Program Background

NIGERIA: PCB MANAGEMENT PROJECT

Persistent Organic Pollutants: 1. POPs are a set of toxic chemicals that are persistent in the environment and able to last for several years before breaking down. POPs circulate globally and chemicals released in one part of the world can be deposited at far distances from their original source through a repeated process of evaporation and deposition. This makes it very hard to trace the original source of the chemical. 2. POPs are lipophilic, which means that they accumulate in the fatty tissue of living animals and human beings. In fatty tissue, the concentrations can become magnified by up to 70,000 times higher than the background levels (bioaccumulation). As you move up the food chain, concentrations of POPs tend to increase, so that animals at the top of the food chain—such as fish, predatory birds, mammals, and humans—tend to have the greatest concentrations of these chemicals, and therefore are also at the highest risk for acute and chronic toxic effects. The Stockholm Convention on POPs 3. In 1995, the United Nations Environment Programme expanded its research and investigation on POPs with an initial focus on what became known as the “Dirty Dozen.” These were a group of 12 highly persistent and toxic chemicals: aldrin, chlordane, DDT, dieldrin, endrin, heptachlor, hexachlorobenzene, mirex, polychlorinated biphenyls, polychlorinated dibenzo-p-dioxins, polychlorinated dibenzofurans, and toxaphen. On May 23, 2001, the first phase of the POP negotiation was concluded in Stockholm, Sweden, leading to the adoption of an agreement: the Stockholm Convention. The Convention entered into force on May 17, 2004 with ratification by an initial 128 parties and 151 signatories. Co-signatories agreed to outlaw nine of the POPs chemicals, limit the use of DDT to malaria control, and curtail incidental production of dioxins and furans. The Convention requires its parties to submit a National Implementation Plan (NIP) to the Conference of the Parties (COP) within two years after ratifying the Convention. 4. The fourth Conference of the Parties (COP‐4) of the Stockholm Convention on Persistent Organic Pollutants (POPs) held in Geneva, Switzerland on May 8, 2009, reached a consensus to add nine new POPs to the treaty’s original “Dirty Dozen.” These modifications will come into force on August 26, 2010, except in those countries that submit a notification pursuant to certain exemptions in the Convention’s articles. 5. The nine POPs added include: Alpha hexachlorocyclohexane (unintended by-product of lindane manufacture), Beta hexachlorocyclohexane (unintended by-product of lindane manufacture), Commercial octaBDE—hexabromodiphenyl ether and heptabromodiphenyl ether—(used as a flame retardant), Commercial pentaBDE—tetrabromodiphenyl ether and pentabromodiphenyl ether—(used as a flame retardant), Chlordecone (an agricultural pesticide), Hexabromobiphenyl (a flame retardant), Lindane (used in creams for the treatment of head lice, previously used in agriculture—“specific exemption” for pharmaceutical use to control head lice

32

and scabies), Pentachlorobenzene (used as a dyestuff carrier, fungicide, and a flame retardant), and PFOS perfluorooctane sulfonic acid, its salts and perfluorooctane sulfonyl fluoride. 6. Persistent Organic Pollutants (POPs) are chemical substances that persist in the environment and bio-accumulate through the food web, posing potential risks to human health and the ecological environment. POPs include such organic chemical substances as industrial chemicals and their respective by-products: certain pesticides, and incidentally produced POPs (or unintentional POPs - UPOPs) produced in the combustion of waste or agricultural products and in forest fires. With evidence of the long-range transport of these substances to regions where they have never been used or produced and the consequent threats they pose to the global environment, the international community in 1995 called for urgent global actions to reduce and eliminate the release of these chemicals. 7. Consequently, the Intergovernmental Forum on Chemical Safety (IFCS) and the International Programme on Chemical Safety (IPCS) prepared an assessment of the 12 worst offenders, known as the “Dirty Dozen.” On May 23, 2001, the first phase of the POP negotiation was concluded in Stockholm, Sweden. The Convention entered into force on May 17, 2004 with ratification by an initial 128 parties and 151 signatories. Co-signatories agreed to outlaw nine of the dirty dozen chemicals, limit the use of DDT to malaria control, and curtail incidental production of dioxins and furans. The Convention requires its parties to submit a National Implementation Plan (NIP) to the Conference of the Parties (COP) within two years of ratifyingthe Convention. 8. A process was also agreed by the parties by which additional POPs can be reviewed and added to the Convention if they meet certain criteria for persistence and trans-boundary threat. On May 8, 2009 in Geneva, Switzerland, nine (9) additional organic chemical substances were reviewed and agreed to be included in the POPs’ list. These modifications will come into force on August 26, 2010, except for those countries that submit a notification pursuant to certain exemptions in the Convention’s Articles. 9. Nigeria signed the Stockholm Convention on May, 2001, ratified it on May 2004, and submitted its National Implementation Plan (NIP) to the Stockholm Convention in April 2009. Twenty-Three areas of action were identified as Priorities for Nigeria in meeting its obligations. The principal objectives of the NIP is to allow Nigeria to meet her reporting obligation under the Stockholm Convention, prepare grounds for the implementation of the Convention and strengthen the national capacity to manage POPs and other hazardous chemicals. PCB USE IN NIGERIA 10. Nigeria was never known to produce PCBs; however, between late 1940s and early 1980s, the country imported a good number of PCB-containing equipment such as transformers, capacitors, ballasts, paint additives, hydraulic fluid additives, etc. PCBs were used as an additive in dielectric fluids and functioned mainly as insulating oil for electrical and hydraulic equipment. However, the most predominant use of dielectric fluid was in electrical equipment where the weight of oil in one single power transformer may have been thousands of kilograms. The Power Holding Company of Nigeria (PHCN) is by far the largest consumer of dielectric fluids and major owner of equipment that potentially contain PCBs. Other possible significant users of

33

equipment that potentially contains PCBs are private electrical generators, major industrial facilities, oil refineries, textiles and cement industries. 11. The Federal Ministry of Environment, in the course of conducting previous partial inventories in the country, had sent questionnaires and held stakeholder consultations with major private sector organizations on the PCB problem in the country. During the identification and preparation phase of the proposed project, the Government informed the private sector about the proposed project and its intention to conduct a full inventory and test electrical equipment in their facilities for PCB contamination. The organizations have shown their commitment by sending in data on their equipment that may contain PCB-contaminated oil. Data garnered to date from private companies showing their holdings of electrical equipment that will need testing is found below.

Table 1.1: Holdings Needing Testing S/N Company Name and

Address Equipment Types and Number Others Transformer Capacitor Hydraulic

Equipment Type Number

1 UAC Foods Km 16, Ikorodu Road, Ojota Lagos State

1 36 NA1 UPS NA

2 Crown Flour Mills Ltd 20, North Av. Apapa Lagos State

9 3 5 NA NA

3 Nasco Houshold Products Ltd 44, Yakubu Gowon Way P.M.B 2243, Jos Plateau State

2 None None None

4 West African Household Utilities Manufacturing Company (Nig.) Ltd 3, Adeniyi Jones Ave. Ikeja Lagos State

2 1 None None

5 Steyr Nigeria Ltd Fritz Felsinger Road Industrial Area P.M.B 0135, Bauchi Lagos State

6 24 7 None

6 Star Paper Mill Ltd 114/116 Aba Owerri Road Umungasi, Aba Abia State

9 4 8 Oil Switches

6

7 Beta Glass Nig. Plc Km 32, Lagos Badagry Exp. Rd Agbara Industrial Estate Ogun State

15 NA 4 None

8 Nestle Nigeria Plc 22/24 Industrial Avenue

10 2 38 None

34

Ilupeju, Lagos Lagos State

10 PZ Cussons Plc (Ilupeju Site) 45/47 Town Planning Way Ilupeju, Lagos Lagos State

16 7 13 None

11 PZ Cussons Plc (Ikorodu Site) PMB 1009, Losi – Oba Ikorodu Lagos State

28 36 25 None

12 PZ Cussons Plc (Aba Site) 23, Mar Great Avenue P. O. Box 843, Aba Abia State

12 5 4 None

Total Number of Equipment

110 117 106 6

12. The proposed project will go further in involving all private stakeholders that maintain electrical equipment and will endeavor to carry out a full inventory and analysis of equipment and oil in private sector holdings all over Nigeria. Nigeria Environmental Overview 13. Soil degradation, rapid deforestation, urban air and water pollution, desertification, chemical and oil pollution (water, air, and soil; serious ecological damage from oil spills), loss of arable land and rapid urbanization accompanied by unsustainable waste management are major environmental challenges facing the country. Uncontrolled open burning of solid waste is the rule rather than the exception which, although convenient, is environmentally unacceptable. 14. Air pollution (especially from poorly serviced automobiles and industries), poor solid and liquid waste management (including dumping into water bodies), soil contamination, and poor management of hazardous chemicals and waste are critical health and environmental issues in the country. There is a critical need to improve on the legal, regulatory and enforcement frameworks for hazardous chemicals management in the country. 15. The 1989 National Policy on the environment is hinged on sustainable development as the policy goal. Institutional and regulatory frameworks on environmental protection and natural resources conservation were put in place in 1988 through the establishment of the Federal Environmental Protection Agency (FEPA) by Act 58 of 1988. FEPA metamorphosed into the Federal Ministry of Environment (FMEnv) in 1999 on the return from military rule to democratic governance. The FMEnv has the overall mandate for green and brown environmental issues, including chemicals and waste management.

35

Environmental Policy, Sustainable Development Policy and General Legislative Framework 16. Environmental management in Nigeria is hinged on the 1989 National Policy on the Environment, as revised in 1998, as well as on a set of laws, regulations and guidelines to ensure the conservation of natural resources and the protection of the environment and human health. The goal of the National Policy on the Environment by the Government of Nigeria is to achieve environmentally sound sustainable development in Nigeria, and in particular to:

Secure for all Nigerians a quality of environment adequate for their health and well-being;

Restore, maintain and enhance the ecosystems and ecological processes essential for the functioning of the biosphere to preserve biological diversity and the principle of optimum sustainable yield in the use of these natural resources and ecosystems;

Raise public awareness and promote understanding of essential linkages between environment and development and encourage individual and community participation in environmental improvement efforts; and

Cooperate in good faith with other countries, international organizations/agencies to achieve optimal use of trans-boundary natural resources and effective prevention of trans-boundary environmental pollution.

17. Before and after Independence in 1960, most of the laws that can be considered as belonging to the category of environmental legislation in Nigeria were resource-specific or sector-specific and were also piecemeal and not coordinated. Following the discovery of about 4,000 tons of toxic waste illegally dumped in Koko port in the old Bendel state (Koko port is now in Delta State) in 1988, the Federal Government promulgated on December 30, 1988 Decree No. 58 of 1988 establishing the Federal Environmental Protection Agency (FEPA) (as amended by Decree No. 59 of 1992) as the apex organization for all matters relating to environmental protection and natural resource conservation in the country. The decree is now incorporated as an Act in Chapter 131 Laws of the Federation of Nigeria of 1990. The intention is that, while the Federal Level controls all conservation and environmental protection issues, roles for participation in the implementation of the national policy on environment should be allocated to the states and local governments. 18. Consequently, State Environmental Protection Agencies (SEPAs) were established in the states while Environmental Committees were also established at the local government level. The National Council on Environment provides the platform for periodic federal–states consultations on environmental issues, as well the harmonisation of implementation strategies for implementing environmental laws and regulations. The Federal Environmental Protection Agency (FEPA) Act is the major law on environment in Nigeria, as its provisions provide the framework for further legislation in specific aspects of the environment. FEPA metamorphosed into the Federal Ministry of Environment in June 1999. All FEPA’s laws are still in force because they have not been repealed. Since a ministry is a policy-making organ, in November 2006 the Federal Government established the National Environmental Standards and Regulations Enforcement Agency (NESREA) with powers similar to those of the defunct FEPA for the effective enforcement of environmental regulations in the country. The federal laws are the

36

minimum standards in the states. The Constitution allows states to establish stricter standards than these, however, and also to impose stiffer penalties on violators. 19. The defunct FEPA advocated the inclusion of environmental considerations in the planning and decision-making process as well as in the execution of major developmental projects in Nigeria. This led eventually to the enactment of Decree No. 86 of 1992, which makes Environmental Impact Assessment (EIA) mandatory for all new major development projects, such as industrial chemicals manufacturing, oil and gas development projects, infrastructure development projects (e.g., road, airport and seaport construction, etc.). The enactment of this law was a major and strategic follow-up action by FEPA to AGENDA 21 of the Rio Earth Summit held in Brazil in 1992. Roles and Responsibilities of Ministries, Agencies and Other Governmental Institutions Involved in POPs Life Cycles 20. In Nigeria, the national infrastructure for the management of chemicals is cross-sectoral in nature. As such, there are a number of piecemeal legal instruments addressing various aspects of chemicals management. The four main organizations identified as major players in the management of chemicals in the country are the Federal Ministry of Environment, Federal Ministry of Health, National Agency for Food and Drug Administration and Control (NAFDAC) (an agency under the Federal Ministry of Health), and the Factory Inspectorate Division of the Federal Ministry of Labour and Productivity. The laws in place require that chemicals usage be tracked through registration and management—from “cradle to grave” —that is, from importation through formulation, usage, distribution and disposal, based on the life cycle approach. 21. There is a policy framework, the National Policy on Environment, which approves policies for infrastructure and enforcement requirements, for laws and guidelines for the management of potentially bio-accumulative and toxic substances such as POPs in Nigeria. The Federal Ministry of Environment has specific powers to:

Develop plans of action and advise the Federal Government on national environmental policies and priorities;

Prescribe standards for and make regulations on air quality, water quality, pollution and effluent limitations, atmosphere and ozone protection, and control of toxic and hazardous substances, including hazardous chemicals;

Monitor and enforce environmental protection measures;

Enforce international laws, conventions, protocols and treaties on the environment;

Promote cooperation with similar bodies in other countries and international agencies connected with environmental protection; and

Cooperate with federal and state ministries, local governments, statutory bodies and research agencies on matters relating to the protection of the environment.

37

Other international conventions relevant to the sound management of POPs and other hazardous chemicals to which Nigeria is party include: The Rotterdam Convention on the Prior Informed Consent for Certain Hazardous Chemicals and Pesticides in International Trade 22. The Rotterdam Convention is a global agreement that seeks to promote shared responsibility and cooperative efforts among parties in the international trade of certain hazardous chemicals in order to protect human health and the environment. It establishes a Prior Informed Consent (PIC) procedure, which seeks agreement from importing countries to accept shipments of certain hazardous chemicals. The POPs listed in the Stockholm Convention are all included in the Rotterdam Convention, which Nigeria ratified in 2004. The Basel Convention on the Control of Trans-Boundary Movements of Hazardous Waste and their Disposal (1989) 23. The Basel Convention is a global agreement that addresses the problems and challenges posed by the trans-boundary movement and management of hazardous waste, including those consisting of, containing or contaminated with POPs. It was adopted on March 22, 1989 and came into force on May 5, 1992. Nigeria became a party to the Convention in 1992. 24. The Convention uses a Prior Informed Consent (PIC) procedure to control trans-boundary movements of waste, whereby hazardous waste cannot be shipped from one country to another without the consent of those countries involved, including countries of transit. The Convention has developed guidelines for managing waste contaminated by chemicals in Annexes A and B of the Stockholm Convention and recognizes these guidelines as BATs and BEPs. The Convention was amended in 1995. The amendment prohibits the export of all hazardous waste from parties that are members of the EU, OECD and Liechtenstein to all other parties to the Convention. The ban is not yet in force in its own right. ILO Convention on the Safety of Chemicals at the Workplace (1990) Bamako Convention on the Control of Trans-Boundary Movements of Hazardous Wastes (1991) 25. This convention is the only regional convention on hazardous waste. It was put together by the African Region with the inclusion of radioactive waste, which is missing from the Basel Convention. Nigeria has ratified this convention. FAO International Code of Conduct for the Distribution and Use of Pesticides (as amended in 2003) The Strategic Approach to International Chemicals Management 26. The International Conference on Chemicals Management held in February 2006 finalized and adopted the Strategic Approach to International Chemicals Management. SAICM is a global framework to improve chemicals management. It is a voluntary agreement supported by a high-level declaration and contains a toolkit of policies and activities aimed at raising the standards of

38

chemicals management, particularly in developing countries. SAICM will pull together international bodies with responsibility for chemicals management and will support and enhance the global treaties that cover chemicals and hazardous waste. Nigeria is actively involved in SAICM activities. Nonetheless, none of the aforementioned Multilateral Environmental Agreements (MEAs) has been domesticated as part of national environmental legislation.

39

Table 1.2: Existing Legal Instruments that Address the Management of Chemicals in Nigeria Legal Instrument (Type,

Reference Year) Responsible Ministries or

Bodies

Chemical Use Category Covered

Objectives of Legislature Relevant Articles, Provision

Resources Allocated

Enforcement Ranking

S.1.8 National Environment Protection (Effluent Limitation) Reg S.1991

FEPA Chemicals and Chemical Waste

Environmental Protection; Effluent and Waste Water Pollution Control

Section 1-6 n/a 2

S.1.9 National Environment protection (Pollution Abatement in ind. and facilities Generation waste). Rags 1991

FEPA Chemicals and Chemical Waste

Environmental Protection, Pollution Abatement; Safety

Section 1-23 n/a 2

S.1.5 National Environment Protection (Management of Solid and Hazardous Waste).Regs.1991

FEPA Industrial and Consumer Chemicals Radioactive Substances Agrochemical

Environmental Protection, Sound Environmental Management of Solid and Hazardous Waste, including Storage, Trans-Boundary Movement, Treatment and Disposal

Part 1-12 N/A 2

FEPA Decree 58 of 1998 (Amended by FEPA Decree 59 of 1992)

FEPA Industrial Agrochemical Domestic

Environmental Protection, Pollution Abatement and Control; Human Health est. FEPA Enforcement of FEP Regulation

Section 15,16,17,18,19,20

30 Million 1

Decree 86 –Environmental Impact Assessment 1992

FEPA Industrial Environmental Protection, Human Health (by evaluation/assessment of the suitability of locating a new industry at a site in light of its environmental impact)

Section 13,sub section 8

N/A 1

Guidelines and Standards FEPA All chemicals Environmental Protection Part 1-1V N/A 2 Harmful Waste (Special Criminal Provision etc.) Decree 1988

FEPA Agrochemical; Industrial and Consumer Chemicals toxic hazardous waste

Environmental Protection; Human Health

N/A 2

NAFDAC Decree 15 1993 NAFDAC Chemical Control of Importation, Exportation, Section 5 N/A 1

40

Legal Instrument (Type, Reference Year)

Responsible Ministries or

Bodies

Chemical Use Category Covered

Objectives of Legislature Relevant Articles, Provision

Resources Allocated

Enforcement Ranking

Manufacture, Advertisement, Distribution, Sale of and Use of Chemicals; Health Hazard prevention

Factories Fed. Min. of Labor and Productivity

Industrial Chemicals

Occupational Safety and Health Section 2,3,11,1,30,45

N/A 2

Pesticides Registration Regulation 1996

NAFDAC Pesticides Registration of Pesticides, Safety of Pesticides

Section 1-9 N/A 1

Pharmacy Council Decree 1992

Fed. Min. of Health

Pharmaceuticals Regulation, Appointments and Discipline

N/A 1

IPAN Decree No.100 of 1992

Fed. Min. of Health

All chemicals Regulation/Appointment and Discipline of Public Analysts

N/A 2

Customs and Excise Act 1990

Fed .Min. of Finance

All chemicals Regulation of all importation N/A 2

Standard Organization of Nigeria

Fed. Min. of industry

Standards for Quality of Chemicals

Standardizations of products, including chemicals

N/A 2

Occupational Safety and Health Guidelines

Fed. Min. of Labor and Productivity Fed. Min. of Health

Cement, Textile Industrial Chemicals

Safety and health of workers N/A 2

Nig. Port Authority Act Fed. Min. of transport

All chemicals Transporting of chemical goods Part 11 section 3,subsection 2

N/A 2

Nig. Maritime Decree

Fed. Min. of Transport

All chemical Transporting of chemical goods N/A 2

DPR Guidelines and Standards

DPR Drilling Chemicals, Explosives and Chemical Additives

Regulates petroleum N/A 2

NDLEA Decree Fed. Min. of Justice

Narcotics and psychotropics

Regulation and Monitory N/A 2

Enforcement ranking:1-Effective 2- Fair 3-Weak Adapted from: Federal Republic of Nigeria-National Implementation Plan for the Stockholm Convention on Persistent Organic Pollutants

41

Complementarity with Ongoing Projects 27. The proposed PCB management project has been designed to be complimentary to other on-going POP-management projects in Nigeria and the West African sub-region.

- The African Stockpiles Project, which is funded by a CIDA Trust Fund, coordinated by the World Bank and being implemented by the Federal Ministry of Environment, Nigeria. The project started in September 2006 and was just completed in June 2010. The project achieved the inventory of obsolete pesticides and associated waste in Nigeria and also succeeded in creating awareness among various stakeholder groups and the populace on the dangers associated with obsolete pesticides and pesticide-contaminated sites. Since the ASP-Nigeria does not include a disposal component, the Federal Government of Nigeria has started the process for the identification of funding sources for disposal activities.

- UNIDO Regional Project (involving Ghana and Nigeria), which is aimed at developing appropriate strategies for building capacity in Ghana and Nigeria to identify land/sites contaminated with POPs. It deals with barrier removal in the areas of intervention with respect to policy/legal framework and enforcement, and centers on capacity-building in the region to develop a systematic approach to the identification of lands/sites contaminated with POPs. Its specific objectives are: to collect information, develop and manage an Information Management System (IMS) on contaminated sites; highlight social economic indicators affecting human health and the environment due to POPs and other persistent toxic substances (PTS); address exposures from contaminated land and other sources; identify, monitor and analyze samples from POP-contaminated lands; and set up model experiments to develop appropriate environmentally and economically acceptable remediation technologies for POP-contaminated land/sites based on risk assessment involving all relevant stakeholders. The project is expected to develop a Geo-environmental laboratory in Nigeria to assist with the analysis of POPs.

- The Nigeria Electricity & Gas Improvement Project (NEGIP) is designed to improve the availability and reliability of gas supply in an effort to increase power generation in existing public sector electricity power plants and to improve the power network’s capacity and efficiency to transmit and distribute quality electricity to consumers. There are three components to the project: risk mitigation through a series of Partial Risk Guarantees (PRGs) in support of gas supplies to increase power generation from existing public sector power plants; enhancement of transmission and distribution infrastructure; and technical advisory services.

28. Experiences garnered from the implementation of these previous and ongoing projects will be utilized in achieving success in the PCB-management project. The geo-environmental laboratory that will be established by the GEF-UNIDO project on POPs will provide a basic foundation for the in-country analysis of POPs. The upgrading of four laboratory facilities in this PCB project will complement this initial capacity developed within the framework of the GEF-UNIDO project, since the laboratories are designed for the analysis not only of PCBs, but also other POPs and hazardous chemicals. Additionally, knowledge and technical capacity acquired

42

in the design and development of the interim storage facilities envisaged in this project will be applied to the management of other POPs (particularly pesticides) and hazardous chemicals. The NEGIP project is expected to improve electricity supply and utilization in the country. The success of the project will depend on the improvement of the existing electricity infrastructure and will require the purchase and installation of new and more efficient transformers and capacitors. This will ultimately serve as a driver for the early retirement of a body of old electrical equipment, some of which are PCB-contaminated and will need to be managed in an environmentally sound manner. 29. Generally, the project will contribute to both global and national objectives. At the global level, the project will assist Nigeria in meeting its obligations under the Stockholm Convention and contribute to global efforts to control toxic chemicals in general, eliminate/reduce POP releases to the environment, and manage PCB waste and contaminated equipment in particular in an environmentally sound manner until their final disposal is feasible. On the national level, it will support the implementation of the NIP, National Strategy for Environmental Protection, the Federal Government’s seven point agenda and vision 2020 with special attention to pollution prevention, abatement, remediation and management theme. It will also contribute to the Federal Ministry of Environment’s ongoing efforts to reduce the risks to human health and ecosystem integrity from industrial pollution and improve its capacity and performance in Solid and Hazardous Waste Management. In addition, Nigeria currently has no legislative framework and only limited professional capacity for managing PCBs. The project will establish the needed framework, demonstrate technology options, and undertake the training required to managing PCBs in order to reduce environmental and health risks associated with PCBs and PCB-containing equipment. 30. The main outcomes of the project will include: (i) increased awareness among key stakeholders and the general public on POPs and PCBs, (ii) improved regulations for POP management in Nigeria, (iii) enhanced analytical facilities for POPs and, (iv) improved national capacity to manage PCBs in particular and all other POPs in an efficient and environmentally sound manner.

43

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

NIGERIA: PCB MANAGEMENT PROJECT

Table 2.1: World Bank Operations Country Project Name Target Sector Issues Status Regional – Africa

African Stockpiles Program, P1

The program aims to dispose of African stockpiles of obsolete pesticides, including POPs, and introduce the preventive measures that would ensure sustainability of the operation by preventing the creation of new stockpiles (The 1st phase targets 15 countries, including 7 countries for full clean-up, and 8 countries for preparatory activities leading to clean-up)

Implementation Progress

Egypt Integrated and sustainable POPs Management Project

To assist Egypt in meeting its obligations under the Stockholm Convention for the sound management of POPs (PCBs, Dixons and Furans and obsolete pesticides) and contribute to the sustainable development of capacity for the management of POPs.

Preparation

Tunisia Demonstrating and Promoting Best Techniques and Practices for Managing Healthcare Waste and PCBs

This project entails developing a sound and integrated program for the management of healthcare waste in Tunisia, and the implementation of a national strategy for the management of PCBs, including stocks of PCB oils and on-line electrical systems.

Implementation Progress

Belarus Integrated Solid Waste Management

This project aims to reduce environmental and health risks associated with the presence and release of POPs in the global as well as local environment through securing POP stockpiles and proceeding with the environmentally sound destruction of priority POP stockpiles while improving capacity for the orderly management and elimination of future stockpiles and releases.

Preparation

China PCB Management and Disposal Demonstration

This project aims to remove the threats to human health and the environment posed by PCBs presently in unsafe temporary storage, as well as PCBs in use, in a demonstration area to be determined during project preparation.

Implementation Progress

Philippines Integrated POP Management Project: Dioxins and Furans, PCB and Contaminated Sites Management

To assist the Philippines in minimizing the risk of human and environmental exposure to POPs by strengthening the regulatory and monitoring framework and improving capacity for and providing demonstrations of safe management of PCBs, reduction of releases of unintentionally produced POPs, and reduction of exposure to POPs in contaminated sites.

Implementation Progress

Vietnam PCB Management Project Develop national capacity in Vietnam to manage all PCBs and on a pilot basis in selected provinces safely store significant

Implementation Progress

44

Country Project Name Target Sector Issues Status amounts of PCBs in anticipation of future disposal.

Kazakhstan Elimination of POP Waste This project aims to support the development of environmentally sound management of POPs in Kazakhstan and also support priority implementation activities identified in the country’s NIP to achieve impacts in the reduction of POP releases. Project will help rehabilitate territories in accordance with obligations under the Stockholm Convention.

Preparation

Moldova POP Management and Destruction Project

The project would assist the government of Moldova in confining stockpiles of pesticides and PCBs in such a way that harm to the environment or human health is prevented, as well as strengthening institutional capacity in Moldova to address POP-related issues and raising awareness at various levels of society.

Implementation Progress

Table 2.2: Related Operations in Nigeria Implemented by Other Agencies

Agency Project Name Target Sector Issues Status UNDP Less Burnt for a Clean Earth:

Minimization of Dioxin Emission from Open Burning Sources

Enhance human health and environmental quality by reducing releases and exposure to unintentional POPs originating from unsustainable waste operations

Preparation

UNIDO Enabling Activities to Facilitate Early Action on the Implementation of the Stockholm Convention on Persistent Organic Pollutants (POPs) in Nigeria

The objective is to strengthen national capacity and enhance knowledge and understanding of POPs among decision-makers, managers, industry leaders and workers, NGOs and the public at large to develop and formulate a National Implementation Plan (NIP). Specifically, the project allowed Nigeria to: (i)meet its reporting obligations under the Stockholm Convention; (ii) prepare the ground for the implementation of the Stockholm Convention in Nigeria; (iii) strengthen national capacity to manage POPs and strengthen chemicals management capacity in general; (iv)maximize government commitment and facilitate ratification of the Stockholm Convention.

Completed

UNIDO Regional Project to Develop Appropriate Strategies for Identifying Sites Contaminated by Chemicals listed in Annexes A, B and/or C of the Stockholm Convention

The objective of the project is to build capacity and strengthen institutional arrangement and develop appropriate strategies for identifying sites contaminated by chemicals listed in annexes A, B and or C of the Stockholm Convention, along with other persistent toxic substances as appropriate. The project will also assess the viability of environmentally sound and low-cost remediation technologies.

Implementation progress

UNEP Regional: Supporting the Implementation of the Global Monitoring Plan of POPs in West Africa

Assist countries in the West Africa region to develop adequate capacity to participate actively in the national POPs analysis and reporting under the Global Monitoring Plan of POPs

Preparation

45

Annex 3: Results Framework and Monitoring

Nigeria: PCB MANAGEMENT PROJECT

Table 3.1: Results Framework PDO Project Outcome Indicators Use of Project Outcome

Information The project development objective (PDO) is to: strengthen national capacity for Persistent Organic Pollutants (POPs) management and in particular Polychlorinated Biphenyls (PCBs) as required under the Stockholm Convention on Persistent Organic Pollutants.

A national POP/PCB policy adopted by the Government. A national PCB management plan adopted by the Government.

To confirm Nigeria’s ability to meet its obligations under the Stockholm Convention.

Intermediate Outcomes Intermediate Outcome Indicators

Use of Intermediate Outcome Monitoring

Component 1: Capacity-Building for POPS and PCB Management Strengthened Government’s legal and regulatory capacity to manage, monitor, control and ultimately reduce/phase out POPs. Awareness on POP/PCB issues is increased in Nigeria.

Hazardous Chemicals/waste management regulations are reviewed and harmonized. A POP/PCB issues Communication Strategy is developed and implemented.

To ensure environmentally sound management of POPs in general and PCBs in particular. To protect public health and ensure sustainable management of POPs/PCBs by enforcing these new policies and regulations. To provide enabling mechanisms for the implementation of POP management

Component 2: Environmentally Sound Management of On-Line and Off-Line PCB Electrical Equipment Government capacity for sound- PCB management is enhanced.

Number of procedures, manuals, management protocols and monitoring guidelines on PCB management adapted. Number of laboratories for POP sampling and testing are identified and upgraded. Number of interim safe storage locations for PCB waste/oils and PCBs identified and upgraded. Quantity of PCBs safely transported and stored. Pilot disposal demonstrated

To manage and maintain all equipment and waste contaminated with PCBs. To understand the level of POP/PCB contamination. To manage PCB-contaminated equipment and waste in an environmentally-sound manner until their final disposal can be realized. Based on lessons learned from pilot demonstration of destruction technology, adopt or fine-tune techniques as needed.

Component 3: National Baseline Inventory for PCBs and PCB -Containing Equipment and

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Development of a National PCB Management Plan Database of PCB contamination covering 15 additional states (as the 2009 Canadian Trust fund study has covered 10 states) in Nigeria is established. A comprehensive methodology for conducting inventories is developed.

Quantity of PCBs identified, and labeled. Inventory of PCB owners completed in 15 additional states (as the 2009 Canadian Trust fund study has covered 10 states) in Nigeria

To continue to identify and quantify PCB-contaminated equipment and waste in Nigeria. To certify the degree of PCB contamination of equipment and sites. To evaluate possible disposal options and develop a health and environmental management plan.

Component 4: Project Management and Monitoring and Evaluation Progress of project is monitored and effectiveness of project implementation is evaluated.

The M&E manual prepared and in use. Implementation progress report produced annually.

To manage and monitor progress in addressing project implementation risks.

Arrangements for results monitoring Objectives of the Monitoring and Evaluation arrangements 1. The objectives of the result-based M&E system for this project are to:

Provide continuous feedback on the extent to which the project is achieving its intended objectives;

Promote early detection of potential constraints and devise corrective measures; Monitor the efficiency with which different components of the project are being

implemented and make recommendations for possible improvements; Enable the implementation team to keep track of progress, and subsequently adjust

operations to incorporate experiences and lessons learned. Monitoring and reporting: roles and responsibilities 2. State and Local Government Level. The Pollution Control & Environmental Health Department (PCEHD) of the FMEnv in close collaboration with the project Monitoring and Evaluation officer and, when necessary, state environmental personnel, will oversee the monitoring and reporting of project activities and ensure that these are in tune with the M&E manual that will prepared for the project. The implementation progress of some components/subcomponents—such as PCB inventory and POP/PCB information dissemination, which are targeted to cover the entire country—will be reviewed every quarter to ascertain consistency with annual work plan. A bi-annual report on implementation gaps and possible recommendations for improvement in the next project year will be prepared by PCEHD and submitted to the Inter-Ministerial Steering Committee (ISC). The ISC will review the report at their bi-annual meeting and advise the PMU accordingly. 3. Regional Level. On quarterly basis, PCEHD, working in close collaboration with the Chemicals, Resettlement and Environmental department (CR&E) of PHCN, will monitor and report the implementation progress for the project activities that are conducted at PHCN facilities

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in the six geo-political regions. The ISC will review the monitoring reports during their bi-annual meeting and validate the implementation progress against the annual work plans. In addition, the PCEHD will routinely assist the PMU to address problems adversely affecting implementation. 4. Federal level. A combined project-wide implementation progress report will be prepared by the FMEnv every quarter to assess the degree of deviation from the project objective. The report will evaluate the progress on a component-by-component basis, considering such indicators as budget utilization, technical proficiencies, administrative and sectoral coordination, etc. against the overall annual work plan and recommend corrective measures to the PMU. Every six months, the Technical Committee (TC) of the ISC will review the report and provide technical insight into the recommended improvement strategies. Corrective measures that are more policy-related than technical would be referred to other members of ISC for decisions. Impact Evaluation: Roles and Responsibilities 5. State and Regional Level: At the end of each project year, the FMEnv, PHCN and other relevant stakeholders will jointly conduct a component-by-component assessment of the impacts and accomplishments of the project on both state and regional levels. The appraisal will be based on impacts and productivity. Experiences from the evaluation and approved improvement strategies will be incorporated into the following year’s work plan. 6. Federal level: An independent team approved by the World Bank will be retained to conduct two impact evaluations of the Nigerian PCB Management Project during the life of the project. The evaluations will be conducted at the mid-term and at project completion (2012 and 2014 respectively). The FMEnv, PHCN and other relevant stakeholders will work with the independent team to ensure the success of the evaluations. The ISC will review the reports of the evaluations and devise possible corrective measures.

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Table 3.2: Arrangements for Results Monitoring

Data Collection and Reporting Project Outcome Indicators

Baseline YR1 YR2 YR3 YR4 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

A national POP/PCB policy adopted

POP/PCB policy framework has not been developed

POP/PCB policy framework in draft

Draft POP/PCB policy framework has gone through consultation process

POP/PCB policy framework finalized and validated by stakeholders

Bi-annual Studies and consultants reports

PMU, FMEnv and NESREA

National PCB management plan adopted.

0 National PCB management plan in draft

Consultations and stakeholder workshops on the draft and possible modifications

National PCB management plan adopted

Bi-annual Studies, progress and consultant reports

PMU, PHCN, NESREA & FMEnv

Intermediate Outcome Indicators

Hazardous Chemicals/waste management regulations are reviewed and harmonized (target : 5)

0 5 Bi-annual Studies and consultant reports

PMU, NESREA and FMEnv

A POP/PCB issues communication strategy is developed and implemented

0 POP communication strategy in draft

Draft POP/PCB communication strategy has gone through consultation process

POP/PCB communication strategy is finalized and validated by key stakeholders

POP/PCB communication strategy is being implemented

Bi-annual Progress and consultant reports

PMU, FMEnv, PHCN and Federal Ministry of Information and Communication

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Data Collection and Reporting Project Outcome Indicators

Baseline YR1 YR2 YR3 YR4 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

and is being implemented

(FMI&C)

Number of procedures, manuals, management protocols and monitoring guidelines are adapted (target 10 total – 8 procedures, manuals and monitoring guidelines and 2 protocols

0 3 procedures, manuals and monitoring guidelines;1 protocol adapted

6 procedures, manuals and monitoring guidelines;1 protocol adapted

8 procedures, manuals and monitoring guidelines; 2 protocols adapted

Bi-annual Studies and consultants reports

PMU and PHCN

Number of laboratories for POP sampling and testing are identified and upgraded (target: 4)

0 2 3 4 Bi-annual Surveys, Progress and consultant reports

PHCN, FMEnv and PMU

Number of direct project beneficiaries of which are females (%) (CORE)

2,750,000 2,115,000 (Female: 57%)

2,870,000 2,190,000 (Female: 57%)

3,005,000 2,277,000 (Female: 57%)

3,145,000 2,362,000 (Female: 57%)

3,315,000 2,477,000 (Female: 57%)

Annual Census/Annual estimates and Progress reports

PHCN, FMEnv and PMU

Number of Interim safe

0

2

3

4

Bi-annual Surveys, Progress and

PMU, FMEnv and PHCN

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Data Collection and Reporting Project Outcome Indicators

Baseline YR1 YR2 YR3 YR4 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

storage locations for PCB waste/oils and PCB-contaminated equipment identified and upgraded (target: 4)

consultant reports

Pilot disposal demonstrated

0 1 Annual Progress report PMU and FMEnv

Inventory of PCB owners completed

0 TOR completed and consultant recruited

Commencement of the inventory

Inventory of PCB owners completed

Bi-annual Studies, Progress reports, consultants reports and database

PMU, FMEnv and PHCN

Quantity of PCBs identified & labeled (target: 3,000 tons of PCB oil; 5,000 tons of PCB-contaminated equipment

421 tons of oil and 1,016 tons of contaminated equipment

421 tons of oil and 1,016 tons of contaminated equipment

842 tons of oil and 2,032 tons of contaminated equipment (cumulative)

1,684 tons of oil and 4,064 tons of contaminated equipment (cumulative)

3,000 tons of oil 5,000 tons of contaminated equipment (cumulative)

Bi-annual Studies, Progress reports, consultant reports and database

PMU, FMEnv and PHCN

The M&E manual developed and implemented

0 M & E manual developed

Manual in use Manual in use Manual in use Quarterly Study, Progress and consultant reports; and database

PMU

Implementation 0 1 1 1 1 Quarterly Progress report PMU, FMEnv

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Data Collection and Reporting Project Outcome Indicators

Baseline YR1 YR2 YR3 YR4 Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

Progress Report produced annually (target : 4)

and PHCN

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Annex 4: Detailed Project Description

NIGERIA: PCB MANAGEMENT PROJECT 1. The project consists of four major components: (1) capacity-building for POPs and PCB management; (2) environmentally sound management of on-line and off-line electrical equipment; (3) baseline national inventory of PCBs and development of national PCB management action plan; and (4) project management and monitoring and evaluation. Component 1: Capacity-Building for POPs and PCB Management (Total: US$2,106,078. GEF: US$1,179,754. Government: US$926,324): 2. This Component aims to strengthen both the capacity of Government and that of stakeholders to monitor, control and ultimately phase out the use of POPs in general and PCBs and PCB-containing equipment in particular. Activities under this Component will include a comprehensive review of current hazardous waste management regulations and the development of new regulatory framework that will specifically address PCBs. This Component will also address the issue of training and awareness to solicit public support for sound PCB management through better understanding of the adverse effect of PCBs on public health and the environment. This component will also entail the preparation and dissemination of sensitization and training materials, including TV programs/ documentaries, posters and the production of brochures /pamphlets etc. 3. Sub-Component 1.1: Policy, Regulatory and Institutional Review and Strengthening (Total: US$760,000. GEF: US$415,000. Government: US$345,000): This sub-component will support Nigeria in the development of a comprehensive policy and regulatory framework for the sound management of PCBs. Activities under this sub-component will include: (i) Review and update of current POPs and PCB Management policies and regulations; and (ii) Development of a strengthened policy, institutional and regulatory framework for the management of POPs in general, and PCB in particular. Further, there will be review and update of the following policies and regulations related to PCB management:

Amend regulations related to hazardous waste management;

Update regulations that are related to occupational health and safety;

Carry out revision to classify PCBs as toxic chemicals and update policies and regulations at the national level.

4. Sub-Component 1.2: Training and Public Awareness Development (Total: US$1,346,078. GEF: US$764,754. Government: US$581,324): This sub-component proposes to conduct the following activities: (i) Carrying out of training and workshops for Government officials and other stakeholders to build their knowledge and capacity. This will involve training in:

a) Export/Import Control of PCB-containing Materials. The objective of this training is to raise awareness and capacity among customs officers to identify and prevent any contaminated oil, equipment, or waste entering into or leaving the country without proper

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clearance and endorsement by relevant authorities. The scope of the training will need to meet domestic and international requirements pertaining to the transport of hazardous materials and waste. With this training, customs officers would put in place a screening system on the imports/exports suspected to contain PCBs;

b) PCB Screening and Sampling. The target audience for this training includes laboratory technicians of the FMEnv, PHCN, and selected laboratories providing environmental services, as well as customs officials, manufacturers and service workshops, hazardous waste management facilities operators, and oil/equipment recyclers. The objective of the training is to strengthen capacity to properly identify PCB-containing oil, equipment and waste, which is primarily the first step in ensuring sound PCB management. The training course will cover in detail proper procedures for screening and sampling of equipment, oil, and waste. It will also entail training on the use of field test kits and on-site analytical equipment forms for data collection and reporting;

c) Technical PCB Management. This proposed training will be conducted in parallel with the PCB sampling and testing training during the first two years of project implementation. Training under this component would include both in-class and field training. The target audience for this training will be FMEnv and PHCN technical specialists, but will also include technical and administrative personnel of PCB-containing equipment users, electrical equipment manufacturers and service shops. The scope of the training would cover the overall PCB management framework, detailed technical and administrative guidelines pertaining to registration and reporting of PCB-containing oils and materials, as well as guidelines for the identification, management, repair and retro-filling of PCB-containing equipment. Essentially teams will be trained to upgrade their knowledge on proper PCB waste handling and management of PCB-containing equipment. The training will be based on international standards for handling and collection of PCBs; and  

d) Emergency Response. This activity will focus on strengthening the capacity of FMEnv and PHCN technical officials to respond to PCB spills and/or accidents. The training will also cover proper use of personal protective and communication equipment. (ii) This sub-component will also involve training of mass media representatives, preparation and dissemination of informational and educational materials, and development of a website to build public awareness of the impacts and management of PCB and other POPs. This will include the following:

i. Training of journalists. The project proposes to organize a series of training sessions for journalists and news reporters of the local and national media (newspapers, radio, TV, etc.);

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ii. Production and distribution of public awareness materials. This will include pamphlets, posters, hand-outs, and CDs, focusing on PCBs, POPs, the Stockholm Convention, health and environmental impacts;

iii. Development of a PCB website. A specific PCB website will be developed to provide the general public with information on PCB policies and regulations and technical information and guidelines pertaining to sound PCB management. This PCB website will be updated periodically during project implementation to include new information and experiences.

Component 2: Environmentally Sound Management of On-Line and Off-Line Electrical Equipment (Total: US$9,419,396. GEF: US$3,273,208. Government: US$6,146,188): 5. This Component will involve a series of activities that will provide the Government with the enabling capacity to handle PCBs in the future. This will consist of: (2.1) Development of PCB technical and administrative guidelines (Total: US$675,000. GEF: US$225,000. Government: US$450,000): This will involve adoption of procedures, manuals, and management protocols and guidelines for the identification, labeling and management of on-line and off-line electrical equipment and wastes containing PCB. Technical and administrative guidelines useful to manage PCB-containing oils and equipment will be adapted from existing ones prepared by UNEP and the Secretariat of the Basel Convention. These will include:

i. Guidelines for the identification, management, repair and retro-filling of PCB-containing equipment. The new guidelines will prevent any potential PCB cross-contamination during repair, maintenance, recycling and retro-filling of PCB-containing equipment.

ii. Guidelines for the registration process for PCB waste generators and PCB owners. These guidelines will provide clear definitions of PCB waste, PCB-free oil, as well as detailed reporting instructions including the type and quantity of equipment PCB-containing oil and waste; tracking and monitoring procedures; reporting frequency; and reporting channels.

iii. Guidelines for labelling, packaging, transporting, and storing hazardous waste, including PCBs. These guidelines will provide detailed requirements and proper procedures for handling PCB-containing materials.

iv. Guidelines for decontamination of PCB-containing transformers. These guidelines will provide detailed procedures for decontaminating PCB-containing transformers, including testing procedures for decontaminated equipment and final disposal of waste generated from the decontamination process. In essence, standardized procedures will be developed for draining PCB contaminated oil from the transformers and its treatment.

v. Guidelines for emergency responses. The guidelines would describe detailed response actions for various scenarios of spillage or accident during the use or management of PCB-containing oils and materials. The guidelines will cover reporting protocols in case of spillage or accident, including roles and responsibilities of concerned agencies. In

55

addition, technical requirements in relation to personal protection equipment, training of personnel responsible for emergency responses, and treatment and disposal of contaminated materials will be fully described.

(2.2) Upgrading of Laboratories (Total: US$2,350,000. GEF: US$850,000. Government: US$1,500,000): 6. Activities under this item will include identification and upgrading of the capacities of existing laboratories to analyze PCBs. Laboratories at the FMEnv, PHCN and in some of the universities that conduct analysis on oils will be upgraded through the provision of up-to-date equipment and appropriate training of technicians in order to properly test for presence of PCBs in oils sent for analysis. A target of four laboratories—two at universities and one each at FMEnv and PHCN—are expected to be upgraded. (2.3) Upgrading of Interim PCB Storage Facilities (Total: US$5,648,208. GEF: US$1,698,208. Government: US$3,950,000: 7. Activities under this item will include identification and enhancement of storage locations that will safely handle PCB waste/oils and PCB-containing equipment to prevent the release of such waste into the environment. If the selected locations are found suitable, they will be upgraded by installing the appropriate infrastructure to prevent any leakage of PCB into the environment. The proposed project will assess the suitability of the locations identified in the 2009 study as sites that might be eligible for storing PCB waste and equipment and also pose no serious environmental and human health risks. These locations include: Ijora Power Station B, Lagos; Kontagora Transmission Substation, Kontagora, Niger State; Mando Work Centre, Kaduna; Central Store (old power house), Kaduna; Akangba Work Centre, Lagos, and PHCN workshop services Ijora, Lagos. These sites will be evaluated as interim storage facilities; if found suitable, they will be further upgraded to prevent any leakage of PCB into the environment. This process will involve on-site inspections, which cover environmental risks, aspects of accessibility, distance to human settlements, water bodies, etc. The project will encourage the development of a feasibility study to upgrade the storage locations to meet the requirements for environmentally sound safe storage of PCB waste. The feasibility study will consider the design of the facility, emergency precautions, necessary infrastructures as well as human resources needed. It is pertinent to underline the fact that selected locations will be followed up by detailed Environmental Impact Assessment (EIA) studies. Further, technicians from PHCN and private sector companies will also be trained on handling PCB-containing waste within the context of the interim storage locations. There is a Government commitment to resolving the issue in the long term, and not to leave these PCBs forever in their temporary storage places. A total of about four interim storage locations are expected to be enhanced under the project. 8. The Federal Government of Nigeria, through the Federal Ministry of Environment, has made a commitment to ensure the environmentally sound management of POPs (including PCBs) in Nigeria and discussions are ongoing for the establishment of a hazardous waste management facility in Nigeria that will service the West and Central African sub-region. Further, the Government is exploring options with the Japanese Government with respect to the

56

Geostream technology of remediation of PCB-contaminated soil. At appraisal, the Government team had already held three meetings with the Japanese on this soil remediation technology for degrading PCBs, dioxins and residual agricultural chemicals. (2.4) Pilot PCB Disposal (Total: US$746,188. GEF: US$500,000. Government: US$246,188): 9. The proposed project will fund one pilot disposal demonstration in order to gain experience and build the capacity of public and private sector stakeholders to address the whole suite of activities pertaining to the management of PCB waste. The pilot for disposal demonstration will be selected based on an analysis of the type of PCB waste slated for disposal, on the broader need for hazardous chemicals destruction in the country, on the possibilities that exist to leverage on-going initiatives, as well as on the requirement that any in-country disposal or destruction meet high international standards, including those under the Stockholm and Basel Conventions. The demonstration will also include the development of arrangements and partnerships for the financially sustainable operation of destruction or disposal activities. Component 3: National Baseline Inventory for PCBs and PCB-Containing Equipment and Development of a National PCB Management Plan (Total: US$4,871,148. GEF: US$1,373,197. Government: US$3,497,951). 10. The key goal of this component is to establish a cost-effective, economically sustainable and environmentally sound means by which Nigeria can respect its obligations at the Stockholm Convention. This component has two sub-components: (3.1) PCB Inventory (Total: US$4,347,500. GEF: US$1,157,500. Government: US$3,190,000). 11. The study undertaken with the CPTF in 2008 was a partial inventory covering only 10 out of 36 states in the country. The proposed project will adopt the same methodology and will apply it to an additional 15 states. Sampling and testing of potentially contaminated equipment owned by PHCN, as well as PCB-containing equipment owned by the private sector—in particular private power generators—will be an integral part of the inventory. This sub-component consists of: (i) establishment of a database of PCB-containing equipment, including the sampling and testing of potentially contaminated equipment; and (ii) development of a comprehensive methodology for conducting PCB inventories. The project will also develop a PCB management information system (MIS) in the form of a database for tracking the transportation, storage and maintenance of PCBs and on-line/off-line PCB-containing equipment. Using the MIS, and as more PCB data becomes available, the inventory will be updated to reflect the new data. 3.2 National PCB Management Plan (Total: US$2,103,377. GEF: US$473,841. Government: US$1,629,536). 12. The management plan envisaged in this component will consist of a cost-effective schedule to phase out all potentially contaminated PCB-containing equipment in a manner that is

57

consistent with the targets of the Stockholm Convention and in accordance with, among other factors, the age of equipment as well as its level of risk, location, capacity, and ownership. 13. The management plan will include an assessment of disposal options for off-line equipment and PCB waste oil. Safeguarding, storage and disposal options will be evaluated for equipment and contaminated oil that are currently in storage as well as for those that will be taken off-line prior to the 2025 deadline. A long-term plan, which will include options for financing the cost of disposal, will be developed. The overall PCB management plan will be developed in conjunction with PHCN. As part of the management plan, the project will develop a PCB management handbook, which will detail the general management procedures for PCBs and PCB-containing equipment. Component 4: Project Management and Monitoring and Evaluation (Total: US$2,103,377. GEF: US$473,841. Government: US$1,629,536). 14. This Component will finance costs related to the establishment of the Project Management Unit (PMU) and incremental operating costs of the PMU. In addition, this component will ensure the effective and timely project management, coordination and setup of a project performance monitoring system, all of which are prerequisites for successful project implementation. The Project Management Unit (PMU) will facilitate project implementation. 15. The GEF grant will support the operating costs of the PMU during the project implementation period. This support will cover, among others, office rental, procurement and maintenance of office equipment and supplies, local transportation of the PMU staff and members of the Project Steering Committee (PSC), travel costs to supervise implementation of project activities, Monitoring and Evaluation, MIS development, etc. The table 4.1 below details the cost per component and sub-components:

Table 4.1: Funds allocation to Components and Sub-components Component/Sub-components GEF (USD $) Government (USD $)

Component 1: Capacity-Building for PCB Management

1,179,754 926,324

Sub-comp 1.1: Policy, Regulatory and Institutional Review and Strengthening

415,000 345,000

Sub-comp 1.2: Training and Public Awareness Development

764,754 581,324

Component 2: Environmental Sound Management for Electrical Equipment (On – Line and Off – Line)

3,273,208 6,146,188

Sub-comp 2.1: Development of PCB Technical and Administrative Guidelines

225,000 450,000

Sub-comp 2.2: Upgrading of Laboratories 850,000 1,500,000 Sub-comp 2.3: Upgrading of Interim Storage Facilities

1,698,208 3,950,000

Sub-comp 2.4: Pilot PCB Disposal 500,000 246,188 Component 3: National Baseline Inventory of PCBs and Development of Management Plan

1,373,197 3,497,951

Sub-comp 3.1: PCB Inventory 1,157,500 3,190,000

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Sub-comp 3.2: National PCB Management Plan 215,697 307,951 Component 4: Project Management and Monitoring and Evaluation

473,841 1,629,536

16. The M&E model to be developed under the project will be standardized for long-term management of PCBs in Nigeria, and will allow the country to:

a. Set performance targets and assess progress toward achieving them; b. Improve the quality of the project by requiring the specification of clear objectives, the

use of performance indicators, and assessment of risks; c. Provide an objective basis for activity review, monitoring, and evaluation; d. Improve planning and management; e. Compare actual PCB conditions with the targets established in the project design; f. Provide expeditious feedback for management decision-making, especially at the project

level; g. Provide evidence on delays, “leakage,” and corruption in project implementation; h. Draw lessons for improving the design and management of future activities; i. Strengthen accountability for results; and j. Evaluate objectively the effectiveness and sustainability of the project in meeting

Nigeria’s Stockholm Convention obligations and in minimizing health and environmental risks to Nigeria’s population and natural resources.

17. PCB Management Information System (MIS): PCB and PCB-containing equipment tracking, key project data including technical and financial information, and eventually the national PCB inventory, will be accommodated within the MIS. The system will be web-based and accessible to both the public and private sector PCB and PCB-containing equipment users. 18. Project Launch Workshop: Immediately after the project effectiveness assessment, a Project Launch Workshop will be held in Abuja. The Workshop will inform the management of relevant ministries, the media, the private sector and all project participants of the project, including its objectives, scope, and activities. It will enable all project participants to begin implementation directly following the workshop. The launch workshop will also serve as a public awareness event to educate all stakeholders on the adverse health and environmental impacts of unmanaged PCBs. 19. During project implementation, regular progress reports will be prepared by the PMU. Workshops and meetings will include:

a. Project Steering Committee meeting. This is an annual meeting of all steering committee members to approve annual plans, budget and key activities in the project.

b. Annual review workshops. Three annual national stakeholder workshops for project progress reviews and four semi-annual project implementation review workshops will be organized. These workshops will be held together with Bank supervision missions so that

59

suggestions and comments received from these workshops can be used for adjusting implementation arrangements for various project activities.

c. Mid-term and project completion reviews. A mid-term review will be conducted in 2012 (two years following project implementation) for performance review and balance scorecard. Solutions to issues that may constrain the project implementation will be discussed during the review. The mid-term review will provide an opportunity for stakeholders to re-evaluate and re-structure project activities, if needed, based on initial results of project implementation. The project completion review then provides stakeholders a chance to review results achieved by the project and identify lessons and experience learned. Such lessons will help stakeholders to update and better manage the implementation of the National PCB Management Action Plan in the future.

22. Implementation Completion Workshop: Upon completion of the project, an implementation completion workshop will be conducted by key stakeholders (PHCN and FMEnv) to evaluate results, effectiveness and impact of the project, and to draw experience and lessons learned from the project for the benefit of similar projects to be designed or implemented in the future. The Bank will also prepare an Implementation Completion Report.

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Annex 5: Project Costs

NIGERIA: PCB MANAGEMENT PROJECT

Table 5.1: Project Costs Summary (US$)

Project Cost By Component and/or Activity Local US$ million

Foreign US$ million

Total US$ million

1. Capacity-Building for POPs and PCB Management

1,822,610

155,166

1,977,776

2. ESM of on-line and off-line electrical equipment 6,236,665 678,030 6,914,694 3. National Baseline Inventory of PCBs and PCB-Containing equipment and Development of a National PCB Management Plan

3,336,778 1,062,464 4,399,241

4. Project Management and Monitoring and Evaluation 1,737,384 365,993 2,103,377 Total Baseline Cost

13,133,437

2,261,652

15,395,089

Physical Contingencies 711,750 77,293 789,042 Price Contingencies 2,290,362 25,507 2,315,869 Total Project Costs1 16,135,548 2,364,451 18,500,000 Interest during construction - - - Front-end Fee - - - Total Financing Required 16,135,548 2,364,451 18,500,000

Table 5.2: Component by Financiers (US$) Components/Activities GoN GEF Totals In-Kind Cash Total % Cash % Amount % 1. Capacity-Building for POPs and PCB Management

705,657 220,667 926,324 44.0

1,179,754

56.0 2,106,078

11.4

2. ESM of on-line and off-line electrical equipment

5,750,892 395,296 6,146,188

65.3

3,273,208

34.7

9,419,396

50.9

3. National Baseline Inventory of PCB and PCB-Containing equipment and Development of a National PCB Management Plan

2,533,075

964,876

3,497,951

71.8

1,373,197

28.2

4,871,148

26.3

4. Project Management and Monitoring and Evaluation

987,593

641,944

1,629,537

77.5

473,841

22.5

2,103,377

11.4

TOTAL 9,977,217 2,222,783

12,200,000

65.9

6,300,000

34.1

18,500,000

100.0

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Annex 6: Implementation Arrangements

NIGERIA: PCB MANAGEMENT PROJECT A. Partnership arrangements 1. The Global Environment Facility (GEF), as the interim financial mechanism for the Stockholm Convention, will provide one-third of project funds. Co-financing will come from the Federal Government of Nigeria through the Federal Ministry of Finance. 2. The World Bank (WB), as the international project implementing agency for GEF, will ascertain that the project implementation activities are consistent with the terms and conditions stipulated in the project document. As part of this responsibility, the Bank will monitor the progress of project and ensure that funds are made available to the executing partners in accordance with fund disbursement procedures. 3. The Federal Ministry of Environment (FMEnv) is the counterpart ministry for this project, and will be responsible for supervising the Project Management Unit (PMU). Its primary responsibility is to ensure that the PMU is in full compliance with the financial management requirements of the World Bank and Government. B. Institutional Arrangements 4. The national infrastructure for chemicals management in Nigeria is cross-sectoral in nature; as such, there are a number of legal instruments and frameworks addressing various aspects of chemicals management. The four main ministries that oversee to the management of chemicals are the Federal Ministry of Environment (FMEnv), the Chemicals Safety Department of the Federal Ministry of Health (FMoH), the Nigeria Customs Services (NCS) under the Federal Ministry of Finance, and the Factory Inspectorate Division of the Federal Ministry of Labor and Productivity (FID-FML&P). The four ministries, along with the Power Holding Company of Nigeria (PHCN) of the Federal Ministry of Power, the Federal Ministry of Information and Communication (FMIC) and relevant private sectors, will constitute the stakeholders for this project. The Inter-Ministerial Steering Committee (ISC) that will be established as part of the project implementation team will draw a majority of its members from among these stakeholders. 5. Lead Implementing Agency. The Federal Ministry of Environment (FMEnv) will serve as the national lead agency for this project. This is consistent with the status of the Ministry as the lead institution charged with the responsibility of protecting the Nigerian environment against hazardous chemicals and the implementing agency for all POP-related activities under the Stockholm Convention. Within FMEnv, the Pollution Control and Environmental Health Division (PCEHD), responsible for regulations and monitoring of the use and disposal of various hazardous chemicals in Nigeria, and the designated NIP implementing department under the FMEnv, will oversee the implementation of the project. 6. The National Environmental Standards, Regulation and Enforcement Agency (NESREA), a specialist agency under the FMEnv responsible for the enforcement of all

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environmental laws, policies, and standards, will assist the PCEHD in the implementation of those aspects of the project that relate to the formulation of policies, regulations and standards. 7. Power Holdings Company of Nigeria (PHCN) stocks more than 90 percent of PCBs and PCB-containing equipment in Nigeria and has prior experience participating in World Bank-funded project activities. The Chemicals, Resettlement and Environment (CR&E) section is a department within the PHCN that will work and collaborate with the PCEHD on this project; CR&E will work closely with the Project Management Unit (PMU) in the implementation of project activities, especially components 2 and 3. 8. The Chemical Safety Department of the Federal Ministry of Health (FMoH) is responsible for human health risk assessment policies and practices for different chemical substances with the aim of ensuring that chemical use within the country is safe and sustainable. The department maintains human health standards for chemicals, including the scheduling of drugs, poisons, first aid instructions and safety directions for chemicals. It provides policy advice and administers’ programs to address threats to human health posed by various environmental factors, with a primary focus on prevention. Key technical staff of the department will serve on the Technical Committee (TC) and will bring their broad expertise on the toxicological effects and inherent risks associated with exposure to chemicals such as PCBs, including preventive strategies, to the implementation team. 9. The Nigeria Customs Services (NCS) under the Federal Ministry of Finance regulates the import and export of prohibited and controlled chemical substances and undertakes national monitoring of these substances as part of the Government’s strategy to monitor the flow of various chemical substances in and out of the country. The Nigerian Government prohibits the importation of PCBs since the 1990s, and NCS has been working actively with other law enforcement agencies to track the flow of PCBs and PCB-containing equipment into the Nigerian market. 10. Factory Inspectorate division of the Federal Ministry of Labor and Productivity (FID-FMoL&P) is responsible for the safety and protection of Nigerian workers from exposure to hazardous chemicals in their respective work environments. Its responsibility includes prevention of workplace related injuries, illnesses, and occupational fatalities through the issuance of standards for workplace safety and health. FID will play a technical advisory role to the ISC and TC, and will bring its vast experiences in chemical hazards analysis and exposure prevention to the committee. 11. The Federal Ministry of Information and Communication (FMIC) is responsible for the development of programs, policies, rules and regulations that will ensure the existence and maintenance of civilized and orderly information and communication systems in Nigeria. The Ministry provides the citizenry with credible and timely information on various government activities, programs and initiatives. Participation of FMIC in the implementation process will ensure that the proposed public awareness program will be appropriately communicated to the Nigerian people through a well coordinated information dissemination strategy.

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12. Policy and Overall Project Direction. The FMEnv, working with relevant stakeholders, will form an Inter-Ministerial Steering Committee (ISC) and a Technical Committee (TC). The ISC will be chaired by the Minister of Environment (or his representative) and its members will include the ministers (or representatives), heads of department of the relevant stakeholders, agencies and organizations. The ISC will provide overall guidance and direction in implementing the project, particularly regarding inter-ministerial coordination, policy development, and inter-ministerial pronouncements related to the project. The TC will be composed of senior technical members of the ISC and will be chaired by the Director of PCEHD. The TC will provide technical guidance to the project, including reviewing outputs and making recommendations. 13. Project Operation and Coordination: The Project Management Unit (PMU). The PMU will carry out the usual project management functions of financial management using the Federal Project Financial Management Division (FPFMD), procurement, auditing, managing, monitoring and evaluating project implementation, as well as the dissemination of project results. 14. The recruitment of the PMU will be through a competitive process based on advertisements published in two widely read national newspapers. To ensure a good working relationship between the relevant stakeholders and the PMU, the staff of the implementing ministries/agencies with the necessary experience will be encouraged to apply for the vacant project management positions. 15. The PMU will be responsible for overall day-to-day management of the project on behalf of the Federal Government of Nigeria. It will oversee the implementation of all the components/subcomponents and will supervise the activities of respective implementing ministries/agencies to ensure consistency with the project document. Overall implementation of the project will follow detailed procedures as defined in the Project Implementation Manual (PIM). The Annual Work Plans and Budgets document that details the activities that will be carried out by the project on annual basis will be subject to review and approval by the Bank. 16. The PMU will be comprised of full-time officers. The full-time positions will include the Project Coordinator, Monitoring and Evaluation/Database Management Officer, Project Accountant, Procurement Officer, Internal Auditor, Accounting Technician and Environment Specialist. 17. The Project Coordinator (PC) will coordinate and oversee the activities of the PMU and will receive advisory support through routine project supervisory missions from the World Bank. He/she will be responsible for the implementation of the approved work plans, review all reports and assess the performance of other PMU officers. Other responsibilities of the PC include: Effect expenditure in accordance with the approved procurement plan; Assign rolls to other PMU staff and supervise their respective activities; Make arrangements for the Bank’s supervision mission; Organize training for PMU personnel; Submit necessary documents to the ISC and TC for review and approval; and Sign all contracts and agreements.

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18. The Monitoring and Evaluation Expert will report to the PC and will be responsible for: Planning and conducting capacity assessment and project implementation activities; Evaluating human and ecological risks associated with exposure to PCBs; Monitoring the level of capacity developed by the implementing agencies to manage

PCBs; Collection and analysis of data from other project personnel and drafting progress

reports; Operation of the management information system (MIS), registration of data supplied by

various officers and updating the MIS as appropriate; Tracking the activities of the implementation at every stage of the project cycle; Generating data and supporting tables for progress reports; and Monitoring the level of involvement of all the stakeholders in the project implementation.

19. Project Accountant will report to the Head of FPFMD. The primary responsibilities include: Ensure that all accounting records are maintained in accordance with approved

accounting standards and in line with the Bank’s requirements and Government’s regulations;

Draw annual budgets; Render periodic reports in the formats approved by the Bank; and Ensure that monthly Bank reconciliation statements are prepared for all bank accounts.

20. The Procurement Officer will report to the PC. The officer’s main responsibilities include: Ensuring that all bidding process are carried out in accordance with World Bank

procurement guidelines; Participating in bid opening and issuing contracts to the winning bidder; Reviewing and approving change order requests; Ensuring fair and transparent procurement processes; and Assisting the PC and the technical teams in developing the technical terms of reference

for the selection and engagement of consultants.

21. The Internal Auditor will report to the Inter Audit Coordinator at FPFMD. The auditor’s role will include: Risk-based internal auditing but without adopting a prepayment audit system; Verification of project assets; Reviewing whether programs or operations are being carried out as planned; Reviewing the effectiveness of internal control established on the project; and Preparing internal audit reports.

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22. The Environment Officer will work on the project part-time and, like other personnel, will report to the PC. His/her role will include: Following up project implementation to ensure environmental sustainability; Preparing TORs for EIA studies; Reviewing EIA and collaborating with the EA division in disclosures; and Reviewing site assessment and characterization plans.

23. Recruitment of Consultants and Contractors. As and when necessary, qualified companies and/or institutions will be selected through a competitive bid process to participate in the project implementation. The PMU will coordinate all recruitment and procurement activities and will ensure that all works, goods and services are procured in accordance with the World Bank Procurement and Consultant Guidelines. The PMU will maintain close fiduciary control over the procurement processes and will prepare the procurement documentation to be issued for works, goods and services contracts, in close collaboration and consultation with the relevant technical departments of FMEnv and PHCN. The PMU will evaluate all bids for contracts, recommend contract awards, and prepare and sign contract agreements with contractors, suppliers and consultants.

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Figure 6.1: Project Implementation Flow Diagram - Nigeria PCB Management Project

 

Project AuditorEnvironmental

Officer

World Bank

PHCN

GEF

FMoH, NCS, FMoL&P, NESREA &

FMIC

Private Sector, NGOs, etc.

FMoF

Project Accountant M&E Expert Procurement Officer

FMENV

FMENV-PCEHD

ISC/TC

PMU

Project Coordinator

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24. Implementation Strategies by Project Component. The various components and subcomponents of the project will be implemented through collaborative efforts of the PMU and the respective implementing ministries/agencies. At the discretion of the ministries/agencies, a Task Team may be established that will be dedicated to individual subcomponents/sub-activities under the project. The PMU will develop work-plans, assign roles to the Task Teams and supervise the implementation progress to ascertain consistency with the project document. On a routine basis, the Task Team will transmit its output to the PMU for verification and certification. As and when needed, the PMU will recruit consultants/contractors who will assist the Task Team in the implementation process. Due to the comparative advantage of the Power Holding Company of Nigeria (PHCN) in terms of technical expertise and for ease of accessibility to their facilities, the PHCN will be empowered through the establishment of a small unit of technical specialists at Chemicals, Resettlement and Environment to follow-up and work with the PMU in the implementation of components two and three. 25. Table 6.1 details the various activities under the project components/subcomponents and the lead implementing agencies, including other relevant agencies/institutions that may be invited to participate at the discretion of the lead implementing agency.

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Table 6.1: The Nigeria PCB Project Activities and the Relevant Implementing Agencies Project Components Project Activity Lead Implementing

Agency Other Relevant Agencies

1: Capacity-Building for POPS and PCB Management

Policy, Regulatory and Institutional Review and Strengthening

Revision of existing regulations and development of PCB-specific regulations and policies

PMU & FMEnv-PCEHD NESREA

Communication Strategy, Training and Public Awareness Development

PCB Training and awareness creation among government, institutional and private stakeholders

PMU & FMEnv-PCEHD PHCN-CR&E, FMoH, Nigeria Customs, NESREA, NAFDAC, private sectors, etc.

2: Environmentally Sound Management (ESM) of On-line and Off-line Electrical Equipment

Development of Procedures, Manuals, Management Protocols and Guidelines

Development of all requisite documents required for sound management of PCBs and PCB-containing equipment

PHCN – CR&E; and PMU & FMEnv-PCEHD

FMEnv-PCEHD, NESREA

Identification and Upgrading of Laboratories for Analyzing PCBs in Oils, Water and Soil Samples

Identification and upgrading of four chemical analysis laboratories within the FMEnv and PHCN facilities; and two selected universities

PHCN-CR&E, PMU & FMEnv-PCEHD

Private sector and FMoH

Identification and Enhancement of Interim Storage Locations

Enhancement of storage locations for safe handling of PCBs and PCB-containing equipment to forestall releases into the environment. Upgrading existing suitable locations by installation of appropriate infrastructure.

PHCN-CR&E and PMU PMU & FMEnv-PCEHD

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Project Components Project Activity Lead Implementing Agency

Other Relevant Agencies

Pilot disposal of the PCBs stocks. The project will fund one pilot disposal demonstration process using an appropriate technology selected based on type of PCB waste, other related hazardous waste, synergies with existing and planned programs, and adherence to high international standards.

PHCN-CR&E, PMU & FMEnv-PCEHD

FMEnv-PCEHD, NESREA Private sector

3: National Baseline Inventory for PCBs and PCB-containing Equipment, and Development of a National PCB Management Plan

National Baseline Inventory for PCBs and PCB-containing Equipment and the development of a PCB Management plan

Development of a comprehensive data-gathering methodology that will enrich existing PCB inventory, and the application of a new methodology to develop a comprehensive PCB inventory for 15 or more states. A national PCB Management plan will also be put in place.

PMU, FMEnv-PCEHD PHCN-CR&E, Private Sector Nigeria Customs, FMoH, etc.

4: Project Management and Monitoring and Evaluation Carrying out project management functions including M&E and MIS development; Project Launch Workshop & Implementation Completion Workshop.

Overall project management functions PMU & FMEnv-PCEHD PHCN-CR&E

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C. Coordination among International IAs, EAs, and Donors 26. The FMEnv is the government agency selected to oversee this project and all other POP-related activities in Nigeria. Pertinent international and bilateral donor agencies will be notified about the project and will be encouraged to offer advice on its design. On an as-needed basis, the agencies will be briefed on the progress and impacts to guarantee information sharing among all interested stakeholders, both local and international. D. Monitoring and Evaluation of Outcomes/Results 27. The Project Coordinator and the Monitoring and Evaluation Expert will be responsible for monitoring the implementation process. The management information system (MIS) developed by this project will, among other things, serve as the project implementation database and, from time to time, data required for the determination of project value indicators will be retrieved from the database and will be circulated to the appropriate authorities. 28. A Mid-Term Review mission will be organized two years after launching the implementation process (2012) to re-evaluate the status of implementation and discuss potential improvements in project design. The project completion review will provide the stakeholders with a chance to review results achieved by the project and identify lessons and experience learned from this project. Such lessons will help stakeholders to update and better manage the implementation of the project in the future. E. Interrelationship with Other POP-related Projects in Nigeria 29. This project will augment and enhance other PCB-related projects undertaken by the Nigerian Government. Experience garnered and lessons learned from the implementation of those previous projects—especially with regard to the previously executed PCB inventories—will be thoroughly reviewed during the implementation process. All the shortfalls and constraints of the previous projects will be fully noted and proper corrective measures will be devised to prevent reoccurrence.

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Annex 7: Financial Management and Disbursement Arrangements

NIGERIA: PCB MANAGEMENT PROJECT Summary 1. The financial management assessment, in accordance with the Financial Management Manual (March 1, 2010) of the Financial Management (FM) Board, has the objective of determining whether the implementing entities have acceptable financial management arrangements, which will ensure: (i) that funds are used only for the intended purposes in an efficient and economic way; (ii) the preparation of accurate, reliable and timely periodic financial reports; and (iii) the safeguarding of the entity’s assets. 2. The PCB Management Project will be implemented by the PMU. The PMU will be responsible for day-to-day management of the project on behalf of the Federal Government of Nigeria. Financial Management will be handled by the Federal Project Financial Management Division (FPFMD) in the Office of the Accountant General of the Federation (OAGF). The FPFMD is being established. The Division will feature strong and robust systems and controls to mitigate fiduciary risks. 3. The FM risk is substantial. The risk will be reviewed during various supervision missions. A Financial Procedures Manual (FPM) will be developed and will include the arrangements for reporting, details on the internal control framework and risk management strategy, and the chart of accounts and financial statements specific to the project. In addition, the internal auditor will carry out a regular risk-based review of the project’s FM activities. Regular supervision will also ensure adherence to implementation guidelines and that appropriate remedial actions are taken expeditiously. Country Issues 4. Implementation of CFAA (2000) recommendations was confirmed in the January 2005 review. In addition, the 2006 PEMFAR for Nigeria observed that the Federal Government of Nigeria (FGN) has made significant efforts to advance reform of the PFM system since 2003. Major achievements so far have been: (i) the adoption of an oil-based fiscal rule that has greatly improved the quality of macroeconomic management; (ii) launching of significant steps toward increased transparency of the budget process; (iii) more efficient cash management; (iv) procurement reforms; (v) updating the legal framework for PFM; (vi) reallocation of budget resources in support of MDG-related government functions; (vii) strengthening monitoring and evaluation (M&E); and (viii) introducing a more strategic longer-term focus in budget management. These have clearly helped to reduce waste of public resources, particularly with respect to the capital budget and payroll. The impact of these early measures is also evident in significantly improved fiscal and broader macroeconomic outcomes. There is, nevertheless, still a long way to go, and PFM initiatives and reforms are stated in the Government’s PRSP – NEEDS and further articulated in the 7-Point Agenda, which sets out policy priorities that will strengthen reforms and build the economy so that the gains of reforms are felt widely. These are supported under the Country Partnership Strategy (jointly developed by IDA, AfBD, USAID and DFID), and specifically through three Bank assisted projects: EMCAP, SCBGP and ERGP.

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Table 7.1: Risk Assessment and Mitigation

Risk Risk

Rating Rating after Mitigation

Risk Mitigating Measures Incorporated into Project Design

Conditions for Negotiation, Board or Effectiveness

Residual Risk Rating

Inherent Risks 1 Country Level

Funds may not be used in an efficient, accountable and transparent way. Government’s periodic budget reports are still untimely and delays are experienced in the preparation of public accounts and audit and review by PAC.

H The Country Partnership Strategy (CPS) supports Nigeria’s NEEDS aims to achieve improved transparency and accountability for better governance, which minimize opportunities for corrupt practices. Reforms in budgeting, FM systems, procurement and auditing are being supported. Robust financial management arrangements will be established for the project and these are designed to mitigate the country level risk.

None S

2 Entity Level Weak institutional capacity to implement the project components and to effectively monitor progress and embrace accountability for results.

S The project will be implemented by PMU. ISC and TC will be established. ISC will provide overall guidance and direction in implementing the project, particularly inter-ministerial coordination, policy development, and inter-ministerial pronouncements related to the project. The TC will provide technical guidance to the project, including reviewing outputs and making recommendations.

None S

3 Project Level Presence of some prior Bank-assisted project implementation experience.

S

Recruit qualified and relevantly experienced accountants who will oversee the fiduciary work. New Project staff will be trained on Bank procurement guidelines and financial management procedures as soon as they are appointed.

Before effectiveness

M

Control Risks 4 Budgeting M Budget preparation procedures Formats and M

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Failure to prepare comprehensive budgets, effectively monitor periodic budgets and incorporate project finances in budgets and financial records.

will be documented in the FPM. Budget execution to be monitored through quarterly Interim Financial Reports, and monitoring of budget variances in IFRs. Project budget to be synchronized carefully with federal budget time-wise.

arrangements for preparing calendar semester IFR agreed upon at appraisal.

5 Accounting Failure to appropriately account for project funds and provide full and reliable supporting documentation in a timely manner.

S Accounting and internal control procedures, including chart of accounts, will be established and documented in the project FPM. Competent FM staff will be recruited and trained on Bank FM procedures.

None S

6 Internal Control Lack of adequate Internal Audit/Internal control policies and procedures.

S Institutionalizing of independent and effective internal audit and risk management function in the FPFMD. Project accounting and reporting guidelines and service standards will be included in the FPM and adhered to.

None S

7 Funds Flow Delay in release of counterpart fund.

S Follow up Federal Government budget processes and liaise with the Treasury for prompt release of budget appropriation.

None S

8 Financial Reporting Delay in the submission of good quality periodic financial reports to Government and to Bank.

S Computerized financial accounting system will be used for reporting purposes (project reporting guidelines and timelines will be documented in the FPM).

Formats of IFR and Annual Financial Statements agreed upon prior to/at appraisal.

S

9 Auditing Delay in the submission of audit reports and unacceptable audit reports.

M Independent external auditors will be appointed based on TOR acceptable to the Bank.

Format of audit and TOR for the auditor agreed upon at appraisal.

L

Overall FM Risk Rating

S The overall risk exposure is considered Substantial for this project. This will be mitigated

None S

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by implementing and adhering to the proposed risk management regiment. The internal audit unit will be robust, applying a risk-based approach. Finally, a living, practical, simple and sound FM manual of financial procedures will be in place at PMU. Professionally qualified FM staff will be engaged.

H-High S-Substantial M-Moderate L-Low Weakness 5. The PMU is yet to be established. This is one of the conditions of effectiveness. Action Plan 6. The plan below indicates the actions to be taken for the project to further strengthen its financial management system:

Table 7.2: Action Plan

Ref No.

Action Date due by Responsible

1 Draft FPM

Before effectiveness

PMU/FPFMD

2 Appoint external auditor Within 90 days after effectiveness

PMU/FPFMD

3 Computerize accounting system (off the shelf accounting software)

Within 180 days after effectiveness

PMU/FPFMD

4 Agreement on Memorandum of financial services and service standards between PMU and FPFMD

At effectiveness PMU/FPFMD

Financial Management Arrangements 7. Financial Management will be provided by the Federal Project Financial Management Division (FPFMD) in the Office of the Accountant General of the Federation (OAGF). The PFPMD will assign an accountant, an accounting technician and an internal auditor to work with the PMU. In this regard, a working agreement will be reached between FPFMD and the PMU. 8. Specifically, the FPFMD will be responsible for: (a) preparing activity budgets, monthly US$ Designated Account reconciliation statements, bank reconciliations, expenditure control systems, accounting, internal audit, monthly SOE withdrawal schedule, monthly financial

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reporting, calendar semester Interim Financial Reports (IFRs) and annual financial statements (AFS); and (b) ensuring that the project financial management arrangements are not only acceptable to the Government and the Bank, but they continue to be improved and updated through the life of the project. They will also forward the IFRs and AFS to the Federal Ministry of Finance and the Bank. The FM risk is Substantial. This will be monitored and reviewed during various Bank implementation support and supervision missions. Planning and Budgeting 9. Budget preparation will follow the federal government procedure and will be synchronized carefully with federal budget time-wise. Financial projections or forecasts for the life of the project (analyzed by year) will be prepared on the basis of realistic estimates. On an annual basis, the project Accountant (in consultation with key members of the implementing unit) will prepare the cash budget for the coming period based on the work program. The cash budget should include the figures for the year, analyzed by quarter. The cash budget for each quarter will reflect the detailed specifications for project activities, schedules (including procurement plan), and expenditure on project activities scheduled respectively for the quarter. All annual cash budgets will be sent to the TTL at least two months before the beginning of the project fiscal year. Detailed procedures for planning and budgeting will be documented in the FPM. Internal Control, Including Internal Auditing 10. Internal control comprises the whole system of control, financial or otherwise, that will be established by PMU in order to: (i) carry out the project activities in an orderly, transparent and efficient manner; (ii) ensure adherence to policies and procedures; (iii) safeguard the assets of the project; and (iv) secure the completeness and accuracy of financial and other records. 11. Project activities will also be periodically reviewed by the Internal Auditor of PMU. The Internal Auditor will report to the Project Coordinator and will be responsible for evaluating the reliability of the accounting systems, data, and financial reports. At a minimum, the Unit will: (i) carry out periodic reviews of project activities, records, accounts and systems; (ii) ensure effectiveness of financial and accounting policies and procedures, as well as compliance with internal control mechanisms;(iii) review SOEs; (iv) physically verify purchases and assets; and (v) carry out other functions as stated in the their approved charter. The Internal Auditor will submit reports to the PCEHD with copies to the Project Coordinator, Ministry of Finance and the Bank. The internal auditor will be a professional accountant and will be trained in the Bank’s financial management and disbursement procedures, as well as in risk-based auditing. Accounting 12. GEF funds will be accounted for by the project on a cash basis, augmented with appropriate records and procedures to track commitments and to safeguard assets. Accounting records will be maintained in dual currencies (i.e. Naira and U.S. dollars).

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13. The Chart of Accounts will facilitate the preparation of relevant monthly, quarterly and annual financial statements, including information on the following:

Total project expenditures.

Total financial contribution from each financier.

Total expenditure on each project component/activity.

Analysis of total expenditure into civil works, goods, training, consultants and other categories. Variances from the planned level of activities will be investigated and a remedial measure taken expeditiously.

14. Annual financial statements will be prepared in accordance with relevant International Public Sector Accounting Standards (IPSAS). 15. All accounting and control procedures will be documented in the FPM and regularly updated by the Project Accountant and shared with the Bank and the Federal Government. Financial Reporting 16. Within PMU, the Project Coordinator will ensure that the designated Project Accountant in the FPFMD prepares on a timely basis monthly financial statements, calendar semester unaudited Interim Financial Reports (IFRs), and Annual Financial Statements. In compliance with government reporting requirements, monthly returns will be made to the Federal Accountant General for incorporation into government accounts, as will be described in the FPM. These reports and financial statements are outlined below. Calendar semester and Annual reports are to be submitted respectively to: (i) Ministry of Finance, for consolidation with the financial reports prepared by the Treasury Office; and (ii) the World Bank, for the purpose of monitoring project implementation. 17. Monthly Reports: On a monthly basis, the FPFMD will prepare and submit monthly reports to the Project Coordinator. Details of the monthly report will be documented in the FPM. 18. Calendar Semester Reports: Interim Financial Reports (IFRs) will be prepared by the FPFMD on a calendar semester basis and submitted to the Project Coordinator for review and signature. The IFRs will be submitted to the Bank within 45 days of the end of each calendar semester. Details of the calendar semester IFRs will be documented in the FPM. 19. Annual Financial Statements: The annual Project Financial Statements will be prepared and submitted to the Bank by PMU within six months of the end of the government fiscal year. Details of the annual financial statement will be documented in the FPM. Auditing External Audit 20. PMU will appoint a relevantly qualified, experienced and independent external auditor to perform the audit of the project based on Terms of Reference acceptable to the Bank.

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21. The auditor will express an opinion on the Annual Financial Statements in compliance with International Standards on Auditing (ISAs). In addition to the audit report, the external auditors will prepare a Management Letter detailing observations and comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Financing Agreement. The audit reports that will be submitted to the Bank by the PMU are as follows:

Audit Report Due Date Annual Financial Statements for PCB Management Project and related management letter.

Submitted within six months after the end of each fiscal year.

The FMEnv is currently not implementing any Bank-financed projects. The last projects—Local Environmental and Empowerment Project (LEEMP) and the GEF component (LEEMP-GEF) —closed last year and there were no issues of ineligible expenditures or outstanding audit reports. Fund Flows and Disbursement Arrangements Bank and GEF Accounts 22. Project funding will consist of a GEF grant and government counterpart contributions, including cash and in-kind contributions. GEF will disburse the grant proceeds through a US$ Designated Account (DA) to be managed by PMU. The specific funding, banking and accounting arrangements are as follows:

A US$ DA in which the initial deposit and replenishments from GEF funds will be lodged.

A Current (US$ Interest) Account with bank X, acceptable to IDA, to which interest on the DA will be credited.

A Current (draw-down) Account in Naira with bank X to which draw-downs from the DAs will be credited once or twice per month in respect of incurred eligible expenditures, maintaining balances on this account as close to zero as possible after payments.

A Current Account in Naira with bank X, acceptable to IDA, into which counterpart funds will be deposited.

23. All bank accounts will be reconciled with bank statements on a monthly basis with detailed review of copies of bank reconciliation statements and the relevant bank statements with expeditious investigation of identified differences. Detailed banking arrangements, including control procedures over all bank transactions (e.g., check signatories, transfers, etc.), will be documented in the FPM. 24. Additionally, the PMU will maintain a Ledger Grant Account in US dollars to keep track of withdrawals from the GEF grant. The account will show: (i) deposits made by GEF, (ii) direct

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payments by GEF, and (iii) opening and closing balances. The cumulative record of draw-downs from the GEF grant will be reconciled monthly with the Disbursement Summary provided by the Bank. 25. PMU will be responsible for preparing and submitting to the Bank applications for withdrawal, as appropriate. Appropriate procedures and controls, which will be documented in the FPM, will be instituted to ensure disbursements and flow of funds is carried out in an efficient and effective manner. The Withdrawal Applications will be supported by a Bank statement and a reconciliation of the Designated Account, and such other appropriate supporting documents for expenditures as may be required. Detailed disbursement procedures will be documented in the FPM. 26. The project will use the Transaction-Based Disbursement Procedures (as described in the World Bank Disbursement Handbook), i.e., advance, direct payment, reimbursement, and special commitments. The IFRs will be prepared on a calendar semester basis and due within 45 days of the end of each reporting period. The format of the semester IFR will be designed during appraisal and agreed upon at Negotiations. These will be attached to the FPM as an annex. Detailed disbursement procedures will be documented in the FPM. 27. To the extent possible, GEF’s share of expenditures should be paid through the Designated Account, and all disbursements will be channeled through the Designated Account, except for large value items procured from overseas suppliers that could be processed through Direct Payment and Special Commitment disbursement methods.

Figure 7.1: FUNDS FLOW DIAGRAM Sources of Funds

Bank Accounts 28. Details of the Disbursement Arrangements, Withdrawal of Financing Proceeds, and Reporting on use of Financing Proceeds and Other Disbursement Instructions will be

GEF Government

Budget

DA in US Dollars

Current ( Draw-down) Account in Naira

Project ( Naira Counterpart Funds) A/C

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documented in the Disbursement Letter. Details of contributions from GEF and the Government (cash and in-kind) are shown below: Component 1: Capacity-Building for PCB Management (US$2,106,078): GEF US$1,179,754, cash contribution from GON US$220,667 and in-kind contributions of US$705,657. In-kind contributions from GON cover the following:

Provision of training venues (and facilities to be used).

Local technical personnel.

Provision of logistics.

Component 2: Environmentally Sound Management for On-Line and Off-Line Electrical Equipment (US$9,419,396): GEF US$3,273,208, cash contribution from GON US$395,296 and in-kind contribution of US$5,750,892. In-kind contributions from GON cover the following:

Provision of sub-regional offices (6) under the PHCN for anchoring country-wide project activities since most of the activities of this component reside within and around PHCN facilities.

Provision of PHCN technical personnel.

Administrative and logistical support in accessing PHCN facilities country-wide for project implementation purposes.

Provision of interim storage locations within PHCN facilities.

Component 3: National Baseline Inventory and Development of a National PCB Management Plan (US$4,871,148): GEF US$1,373,197, cash contributions from GON US$964,876 and in-kind contributions US$2,533,075. In-kind contributions from GON cover the following:

Logistical arrangements for the identification of stakeholders and all likely PCB holders.

assistance in development, distribution and collection of questionnaire

provision of ministry/PHCN staff to follow-up with consultants (international and national) concerned with the inventory

Component 4: Project Management and Monitoring and Evaluation (US$2,103,377): GEF US$473,841, cash contributions from GON US$541,944 and in-kind contributions from GON US$987,593. In-kind contributions from GON cover the following:

assistance in the development of M&E framework

facilitating ease of access and tax exemptions for equipment and vehicles

Disbursement Categories 29. The project will be financed by both GEF and GON, inclusive of taxes. The allocation of grant proceeds is presented in the table 7.2

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Table 7.2: Allocation of Grant Proceeds

Category Amount of the Grant

Allocated (expressed in U.S. dollars)

Percentage of Expenditures to be financed (inclusive of Taxes)

(1) Consultant Services, Goods and Works

$5,100,000 75%

(2) Training and workshops $500,000 100%

(3) Operating costs $700,000 75%

TOTAL AMOUNT $6,300,000

(a) Expenditure items to be financed under “Training and workshops” means the costs

associated with the participation of personnel involved in project-supported activities in training and workshops, including travel and subsistence costs for training and workshop participants, costs associated with securing the services of trainers and resource persons, rental of training and workshop facilities, preparation and reproduction of training and workshop materials, and other costs directly related to training course or workshop preparation and implementation.

(b) “Operating Costs” means the operating costs incurred for the purposes of the implementation of the project, including office rental expenses, maintenance and insurance of vehicles and equipment, fuel, office supplies, utilities, communication expenses, consumables, bank charges, advertising expenses, travel, per diems, accommodation and salaries of support staff. This category excludes, however, the salaries of consultants and officials of the Recipient’s civil service.

Financial Management Supervision Plan 30. FM supervision will be consistent with a risk-based approach, and will involve a collaborative approach with the TTL and procurement. The first FM review will be carried out within six months of grant effectiveness. The detailed review will cover all aspects of FM, internal control systems, overall fiduciary control environment and tracing transactions from the bidding process to disbursements. On-site supervision intensity will be based initially on the PAD FM risk rating and subsequently on the updated FM risk rating during implementation. Additional supervision activities will include desk review of calendar semester IFRs, quality internal audit reports from FPFMD, audited Annual Financial Statements and management letters as well as timely follow up of issues arising, and updating the financial management rating in the Implementation Status Report (ISR) and the Portfolio and Risk Management System. The Bank project team will play a key role in monitoring the timely implementation of the action plan.

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Conclusion Statement: 31. The FM risk is substantial. Subject to the recommended mitigation measures and action plan being implemented within the designated timeframe, the project has met the minimum FM requirement in accordance with OP/BP 10.02. Further, this objective will be sustained by ensuring that strong and robust financial management arrangements are maintained throughout the project’s duration. Frequency of the detailed FM reviews will be based on the risk rating and in accordance with the regional FM quality arrangement.

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Annex 8: Procurement Arrangements

NIGERIA: PCB MANAGEMENT PROJECT A. General 1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement Under IBRD Loans and IDA Credits” dated May 2004 and revised October 1, 2006 and again May 1, 2010, along with “Guidelines: Selection and Employment of Consultants by World Bank Recipients” dated May 2004 and revised October 1, 2006 and again May 1, 2010, as well as with the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the GEF Trust Fund, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and timeframe are determined by the Recipient and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity. Further, the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006, with modifications set forth in Section II of the Appendix in the grant agreement will apply to this project. 2. Procurement of Goods and Works. (a) Goods: Goods procured under this project would include: motor vehicles, PPE, laboratory equipment, field test kits, sampling bottles (oil, water, and soil), computers and printers, scanners, heavy photocopiers, office furniture, air conditioners, etc. The procurement will be implemented using the Bank’s SBD for International Competitive Bidding and National Competitive Bidding procedures. Procurement for readily available off-the-shelf goods that cannot be grouped, or for standard specification commodities for individual contracts of less than the equivalent of US$50,000, may be procured under shopping procedures as detailed in paragraph 3.5 of the “Guidelines: Procurement Under IBRD Loans and IDA Credits” of May 2004 and revised on May 1, 2010, and also as described in the “Guidance on Shopping Memorandum” issued by IDA and dated June 9, 2000. (b) Works: Works procured under this project would include enhancing and upgrading interim storage facilities, etc. The procurement will be implemented using the Bank’s SBD for International Competitive Bidding (ICB) and National Competitive Bidding procedures. Procurement for works that cannot be grouped into NCB of less than the equivalent of US$100,000 may be procured under shopping procedures as detailed in paragraph 3.5 of the “Guidelines: Procurement Under IBRD Loans and IDA Credits” of May 2004, and revised on May 1, 2010 and as further outlined the “Guidance on Shopping Memorandum” issued by IDA and dated June 9, 2000. 3. Selection of Consultants: Consultancy Services, which include Advisory Services, Technical Assistance, etc., will be available for which consultant firms, individual consultants, public and private research institutions and centers will compete to provide problem-solving oriented research and technology transfer services. Consultant Services to be selected under this project would include: development and production of standard Operating Procedures (SOP), review of the training documents for consistency with the International Standards, emergency response training, project workshops, communication strategy and awareness creation, development of M&E model, development of new PCB technical and administrative guidelines,

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identification of upgrading labs for analyzing PCBs in oils, water and soil samples, identification and enhancement of possible interim storage locations, and destruction of PCB stocks. These services will be selected using the Request for Expressions of Interest, short lists, and the Bank’s Standard Requests for Proposal where required by Bank Guidelines. Short lists of consultants for services estimated to cost less than the equivalent of US$200,000 per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Research institutes, public training institutions, and NGOs may be hired to carry out specific researches, training, distribution and monitoring services in accordance with paragraph 1.11 (b–d) and 3.16 of the Consultant Guidelines. 4. Operating Costs. The operating costs shall include staff, travel expenditures and other travel-related allowances with prior clearance from the Bank; equipment rental and maintenance; office rental and maintenance, materials and supplies; utilities and communication expenses; and bank charges. Operating costs financed by the project will be procured using the implementing agency’s administrative procedures, which shall be acceptable to the Bank. 5. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for goods procured, are presented in the PCB management Project Implementation Manual, the Procurement Manual, and the equivalent documents. C. Procurement Capacity Assessment of the Agency and Mitigating Measures for the Procurement Risks 6. The PCB Management Project will be implemented by PMU and housed outside but supervised by the FMEnv. Key issues and risks concerning procurement in the implementation of the project has been discussed with the project team and an action plan to address them as agreed is shown in table 8.1. The assessment of the procurement capacity of the PMU, saddled with the responsibility of implementing this project, was carried out in accordance with Procurement Services Policy Group guidelines dated August 11, 1998. The assessment reviewed the organizational structure for implementing the Project and the roles of the key actors in project implementation. The detailed assessment report is in the project files. 7. The key issues and risks concerning procurement in the implementation of the Project and action plan to address them were discussed with the project teams. The corrective measures that will be put in place to address the issues and risks are reflected in Table 8.1 below. The Overall Risk Rating in view of the lack of procurement capacity in the FMEnv could be considered substantial.

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Table 8.1: Procurement Action Plan

Action Responsibility

Due Date Remarks

1 Strengthening PMU capacity to manage and coordinate Bank-financed projects.

Bank and PMU

On a continuous basis

Experienced Procurement Specialist to be engaged to strengthen PMU.

2 Procurement Plan for the first 18 months prepared and approved by the Bank

PMU By Negotiations Draft developed during appraisal, but finalized and agreed upon during negotiations.

3 Preparation of Project Implementation Manual (PIM), including adoption of the Generic Procurement Manual for Bank-Financed Projects in Nigeria.

PMU Before effectiveness

To be reviewed before effectiveness

4 Adoption of the Bank Standard Bidding Documents for use under NCB in lieu of a National Standard Bidding Document

PMU To be agreed upon at negotiations

First set of NCB bidding documents to be prepared by PMU and reviewed by the Bank before effectiveness.

5 Training of PMU relevant staff on contracting and monitoring arrangements to promote accountability and transparency.

The Bank and PMU

Not later than 2-3 months after project effectiveness

Training to be repeated by PMU.

6 Establish proper procurement filing system and develop procurement tracking system.

PMU During project implementation

To ensure easy retrieval of information/data.

7 Publication of Contract awards PMU On a quarterly basis

On a continuous basis.

8 Establish a centralized online procurement complaints database and/or hotline.

PMU During implementation

To reduce the risk of misuse of project funds.

9 Conduct Independent Technical Audit (separate from annual external financial audit)

Bank Bi-annually/annually

To reduce the risk of misuse of project funds.

10 Organize Contract Management training for project staff

PMU Not later than 3 months into project implementation

To improve project staff cont. mgt. skills.

D. Procurement Plan 8. The Recipient, at appraisal, developed a procurement plan for project implementation that will provide the basis for the procurement methods of the PMU. This plan has been reviewed and agreed between the Bank, Recipient and the Project Team at Appraisal and

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Negotiations respectively, and will be made available in the PMU of the PCB Management Project Office in Abuja. It will also be available in the project’s database and on the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team, either annually or as required, to reflect the actual project implementation needs and improvements in institutional capacity. E. Frequency of Procurement Supervision 9. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended one supervision mission to visit the field to carry out post-review of procurement actions every year. All relevant actions required to support procurement supervision are as applicable under Bank-financed projects in the Nigeria Portfolio. F. Publication of Results and Debriefing. 10. On-line (DG Market, UN Development Business, and/or Client Connection) publication of contract awards will be required for all ICB, NCB, Direct Contracting and the Selection of Consultants for contracts exceeding a value of USD 200,000. In addition, where prequalification has taken place the list of pre-qualified bidders will be published. With regard to ICB and large-value consulting contracts, the Recipient will be required to ensure publication of contract awards as soon as IDA has issued its ‘no objection’ notice to the recommended award. With regard to Direct Contracting and NCB, publication of contract awards can be in aggregate form on a quarterly basis and in local news papers. All consultants competing for an assignment involving the submission of separate technical and financial proposals, irrespective of its estimated contract value, should be informed of the result of the technical evaluation (number of points that each firm received) before the opening of the financial proposals. The PMU will be required to offer debriefings to unsuccessful bidders and consultants should the individual firms request such a debriefing. G. Details of the Procurement Arrangements

Table 8.2: Thresholds for Procurement Methods and Prior Review

Expenditure Category

Threshold for Method (US$)

Procurement Method

Contracts Subject to Prior Review

Goods and non-consulting services

>=$750,000 <$750,000 <$50,000

ICB NCB Shopping Direct Contracting

All First two contracts First contract $10,000 or more (procedures for under $10,000 are specified in the PIM)

Works

<$5,000,000 >=$5,000,000

NCB ICB

All

Consulting services from firms & NGOs

<$100,000

QCBS CQS Single Source

All contracts of $200,000 or more First contract per country All

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Individual consultants

IC

As specified in the procurement plan

ICB – International Competitive Bidding QCBS -- Quality and Cost-Based Selection method NCB – National Competitive Bidding CQS – Consultants’ Qualification Selection method LIB – Limited International Bidding IC – Individual Selection method

Table 8.3: Procurement - Goods

1 2 3 4 5 6 7 8 9 Ref. No.

Contract (Description)

Estimated Cost US$

Procurement Method

Prequalification (yes/no)

Domestic Preference (yes/no)

Review by Bank (Prior / Post)

Start Date

Expected Bid-Opening Date

Comments

PCB 28KVA Generator, Office furniture and equipment $62,318

NCB No No Post Feb 2010 May 2011

4 No.4x4WD Pickup vehicles for PMU, to enhance storage location and for National baseline inventory. $276,180

NCB No No Post Feb 2010 May 2011

Acquisition of equipment to upgrade lab

$1,736,857 ICB No No Prior March 2011

Nov 2011

Field test kits $694,743 NCB No No post June 2011 Dec 2011 Labeling of

contaminated equipment and oil equipment

$434,214 NCB No No Post Nov 2011 April 2012

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Table 8.4: Procurement – Works

1 2 3 4 5 6 7 8 9 Ref. No.

Contract (Description)

Estimated Cost US$

Procurement Method

Prequalification (yes/no)

Domestic Preference (yes/no)

Review by Bank (Prior / Post)

Start Date

Expected Bid-Opening Date

Comments

PCB

Upgrading/Construction of selected sites.

$5,739,731

ICB No No Prior Aug 2011

Dec 2012

Selection of Consultants

Table 8.5: Prior Review Threshold

Selection Method Prior Review Threshold

Comments

1. QCBS (Firms) ≥200 All 2. Single Source (Firms) All values All 3 Consultants Qualifications (CQs) <100 None 4 Least Cost Selection <100 None 5 Individual Consultants (IC) ≥100 All 6 Individual Consultants (IC) <100 None QCBS = Quality and Cost-Based Selection CQ = Consultants Qualifications LCS = Least Cost Selection IC = Individual Consultants SS = Single Source

(a) Short list comprised entirely of national consultants; short list of consultants for services, estimated to cost less than the equivalent of US$200,000 per contract, may be comprised entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultants Guidelines.

(b) Any Other Special Selection Arrangements: NA (c) Consultancy Assignments with Selection Methods and Time Schedule

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Table 8.6: Procurement - Consultancy

1 2 3 4 5 6 7 Ref. No.

Description of Assignment

Estimated Cost (US$)

Selection Method

Review by Bank (Prior / Post)

Expected Proposal Submission Date

Comments

PCB National Procurement Consultant to support the PMU

$53, 594 IC Post June, 2011

International consultant for policy review

$122,517 IC Prior Sep 2011

National consultant to develop standard operation manual (SOP)

$48,986 IC Post Dec 2010

National consultant to provide training on PCB management

$8,681 IC Post Feb 2011

National firm to develop the communication strategy and PCB website

$333,784 QCBS Prior June 2011

Consultant for communication tool kits (for communication strategy)

$53,594 IC Post Oct 2011

National consultant to develop M&E software and manuals

$99,338 IC Post Aug 2011

Project audit firm $79,470 LCS Post Dec 2012 Development of new PCB

technical and administrative guidelines

$130,211 CQ Post Sept 2011

National consulting firm to assess sites for possible interim storage facilities

$12,247 CQ Post Apr 2011

Environmental assessment $198,675 IC Prior Aug 2011 Consultant on risk

assessment $346,564 IC Prior May 2012

International consulting firm to develop the PCB long term management plan

$463,576 QCBS Prior May 2011

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Table 8.7: Procurement – Workshops & Training Seminars No. Expected outcome/Activity

Description Estimated Cost (US$)

Estimated Duration

Start Date Comments

PCB Workshop to review draft policy and regulatory framework

$66, 260 1 wk Aug, 2011

Stakeholders’ (FMENV, PHCN, Journalists) training on PCB management; 1 per 6 geopolitical zone for each sector

170,382 3 wks Sep 2011

Training of trainers in PCB by zone

$95, 874 2-3 wks Nov, 2011

Project launch/inception $54, 238 1-2 days June, 2011 National stakeholders

workshops; 3 years @ $13,245.033 per year

$13,245 2 wks Jan, 2012

PHCN, FMENV & Project staff participation in various training sessions that include external and Bank training in environment management, procurement, M&E, FM & PM

$100,000 2-3 wks June, 2011

$499,999 (b) Consultancy services estimated to cost over US$200,000 per contract, as well as single source selection of consultants (firms) and Individual Consultants for assignments estimated to cost over US$50,000 will be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: short lists of consultants for services estimated to cost less than the equivalent of US$200,000 per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

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Annex 9: Economic and Financial Analysis

NIGERIA: PCB MANAGEMENT PROJECT 1. This GEF-supported project is essentially contributing to the local and global public good by reducing the risk of contaminating the environment through the release of POPs in general and PCBs in particular. Typical economic or financial analysis is thus difficult and problematic at best. While it may be theoretically possible to apply a cost-benefit analysis to the process, the lack of reliable base data and the controversial aspects related to the valuation of human life make such an analysis impractical. It is nonetheless clear that the benefits from reducing damage to the environment and to human health from the release of POPs will substantially exceed the costs associated with implementing this project. In addition, the project seeks maximum cost-effectiveness in all of its interventions, and has used maximum risk reduction as the criterion to prioritize among the POP activities being addressed. 2. Please refer to Annex 15 for Incremental Cost Analysis.

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Annex 10: Safeguard Policy Issues

NIGERIA: PCB MANAGEMENT PROJECT This project falls into Environmental Assessment Category B, as no significant adverse long-term impacts are anticipated. Indeed no long-term or cumulative adverse impacts were identified during the preparation of the safeguard instrument known as the Environmental and Social Management Framework (ESMF). The project will not fund activities that would lead to any form of land acquisition or restriction of access to sources of livelihood. The ESMF carried out during the project preparation period provided insights and included mechanisms meant to identify potentially significant adverse impacts beyond the generic ones, for which standard mitigation measures are built in and applied during implementation. Specifically, the potential significant environmental and social impacts identified by the ESMF are those associated with: (i) inventory and labeling of PCBs and PCB-containing equipment; (ii) transportation to designated storage facilities; (iii) PCB storage and management at designated facilities; and (iv) enhancement of interim storage locations. Environmental and social protection clauses related to each of these activities will be included in the bidding and contract documents. Project Location and Salient Physical Characteristics Relevant to the Safeguards Analysis This project would be implemented throughout the 36 states of Nigeria and in the Federal Capital Territory (FCT). 1. Potential Environmental Impacts: Environmental Assessment Policy (OP 4.01). The project is considered to fall within category B for Environmental Assessment based on the environmental impacts that were identified during project preparation. In accordance with this policy, an environmental and social management framework (ESMF) was developed that included an analysis of the anticipated project-related impacts. Potential impacts that are important to consider in ensuring that adverse impacts are avoided or minimized include: environmental management in relation to enhancing interim storage location interventions; ensuring safe environmental management of PCBs; and the safe cleanup and management of contaminated sites chosen for pilot demonstrations. Measures Taken by the Recipient to Address Safeguard Issues: 2. In recognition of the fact that environmental and social concerns may result from sub- project activities—in particular from the enhancement of interim storage locations and the upgrading of selected laboratories—the Government of Nigeria commissioned an Environmental and Social Management Framework (ESMF) study. This ESMF was prepared to satisfy national and state regulatory requirements as well as the World Bank’s safeguard policies that address the environmental and socio-economic consequences of the project. Since the location and potential negative localized impacts of the project were not known at appraisal, the proponent has prepared and disclosed an environmental and social management framework (ESMF) to guide safeguard work that would be required during implementation. The PMU will be responsible for the implementation of the ESMF. The PMU will have in place an environmental officer. This specialist will be responsible for implementing the recommendations contained in the ESMF and

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subsequent EMP instruments, and he/she will be complemented with short-term consultants as and when the need arises. The ESMF was disclosed in Nigeria on April 30, 2010 and at the Bank’s Infoshop on May 10, 2010. Content of the ESMF In addition to its summary and introductory material, the ESMF covers the following topics:

A general description of the environment

Relevant World Bank safeguard policies

The Nigerian regulatory framework

A summary of the potential impacts of a PCB management project

Institutional capacity for environmental management

Annexes, including environmental management clauses and guidelines for preparing environmental impact assessments

The Biophysical and Social Environment: 3. The existing environment is described only for those aspects of the physical, biological, social and economic environment that are relevant to the project. The legal framework also identifies the project-environment interactions during the operational phase. In addition, the ESMF defines standard procedures and methods for incorporating potential environmental and social impacts and their associated mitigation measures into the selection, planning and implementation of all activities carried out under the project. The ESMF also provides guidelines for preparing an Environmental Management Plan (EMP) during project implementation. The project will have beneficial impacts on the physical, biological and social environment as it intends to address the problems associated with the PCB oils and PCB-contaminated equipment and wastes. In the prepared ESMF, impacts and their associated mitigation measures are discussed, as well as the institutional mechanisms used to implement the ESMF. Roles and responsibilities are clearly stated, including capacity-building efforts for participating stakeholders in the project. The monitoring plan defines roles and responsibilities for routine monitoring of the project. Routine monitoring focuses mainly on construction supervision and health, safety and environmental (HSE) protection awareness. Routine monitoring requirements are defined according to potential impacts and recommended mitigation measures. Finally, a consultation plan was developed to provide a framework for achieving effective stakeholder participation in the project. Consultation Strategies 4. The focus of this public involvement program/plan is to inform the public and invite input relating to the plan and its implementation. As elements of the plan proceed from planning into execution, the Nigeria PCB project’s objective will be to maintain public awareness and understanding of the plan. The implementing agencies (FME, PHCN-PMU, etc.) shall execute a program comprising strategic elements to accomplish the public consultation objective. A comprehensive public awareness program will:

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Develop and distribute a project newsletter

Organize seminars and workshops

Develop and maintain a project web site

Develop radio and television advertisements

Prepare project press releases

Prepare posters and erect billboards

5. The level of stakeholder involvement will be based on the project phase, location and expected outcome. 6. The extent of stakeholder involvement will be based on the following:

the project is likely to have a significant impact, that is, a high impact in one area/location, or relatively small impacts spread out over a large area; and

the project involves significant issues, that is, the wider stakeholder may be affected.

7. Safeguards Review and Approval. No proposed civil works can be implemented for the Nigeria PCB management project until the required EMP has been approved and disclosed by the proper agency and the Bank. For any activity requiring an EMP, approval from FMEnv is the first formal step. FMEnv has the authority to require a public hearing as part of its review process and to refer projects to a Joint Review Panel when it deems that to be appropriate. FMEnv’s review report is a public document, and the EIA Act requires that it be provided to any interested party. The FMEnv after-review and clearance will issue a certificate that indicates satisfactory completion and approval of the environmental assessment instrument. The PMU and the Bank will also review and approve EMPs for the different activities that might trigger the preparation of an environmental assessment instrument—such as the enhancement of interim storage facilities and the pilot disposal demonstration—to ensure compliance with its safeguards policies. In particular, the EMPs must be prepared, reviewed, approved and disclosed in-country and at the Infoshop prior to the commencement of civil works. 8. The Importance of EMP Implementation. The key to ensuring the sustainability of the Nigeria PCB project lies in the implementation of the EMP. If this is not done well, most of the potential risks highlighted in this document will become real causes for concern. To mitigate this risk, the Environmental Officer of the PMU must be equipped to monitor the implementation of the EMPs. Table 1.1 shows the environmental and social issues associated with project activities. 9. Institutional Capacity for Environmental Management. The ESMF includes a section on the capacities of the main actors in environmental management for the Nigeria PCB management project. Under the project, the Environment Officer’s role will be expanded to include oversight functions in compliance with the ESMF. The Environment Officer will be monitoring the project’s safeguards performance and keep the PMU and the Bank informed. For this purpose, it is recommended that the Environmental Officer receive additional training to cover environmental and social aspects of PCB management, Bank policies and operations, and

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issues related to global warming, climate change, biodiversity conservation and ecosystem management.

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Table 10.1: Environmental and Social Issues Associated with Project Activities Activity Environmental

Component Affected

Potential Impact/Hazard

Description Likelihood Consequences

Rating

Component: 2B- Identification and Upgrading of Laboratories for Analyzing PCBs in oil, water and soil samples

Construction and refurbishment of physical structures

Soil, vegetation, beneficial environmental micro and macro organisms, animals, surface and ground waters

Alteration of natural geophysical properties of soil

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

Medium high Considerable Moderate

Destruction of flora and fauna habitats and bioaccumulation

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

High Extreme Moderate

Dust production, noise pollution, solid waste generation, occupational H&S

Direct, Negative Short/Long-term Local, Reversible/Irreversible

Medium high Considerable Moderate Major

Transport of heavy mechanical equipment and reagents

Soil, health/safety Work-related accidents Direct, Negative Short-term, Local, Reversible

Low Considerable Minor

Weight-induced ground compaction

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

Medium low Little Minor

Standard laboratory-based operations

Health/safety Work-related accidents

Direct, Negative Short-term, Local, Reversible

Medium high Major

Positive

Excavation Water bodies, adjacent structures, human and animal activities

Alteration of natural geophysical properties of soil, destruction of nearby animal and plant aquatic habitat, forced resettlement, contamination of surface and ground waters

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

Medium high Major Moderate

Accumulation of dust in Direct, Negative Medium high Considerable Moderate

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Activity Environmental Component Affected

Potential Impact/Hazard

Description Likelihood Consequences

Rating

the air Short/Long-term Local, Reversible/Irreversible

Major

Earthworks and construction

Soil, vegetation, beneficial environmental micro and macro organisms, animals, surface and ground waters

Alteration of natural geophysical properties of soil

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

Medium high Considerable Moderate

Destruction of flora and fauna habitats and bioaccumulation

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

High Extreme Moderate

Dust production, noise pollution, solid waste generation, occupational H&S

Direct, Negative Short/Long-term Local, Reversible/Irreversible

Medium high

Considerable Moderate Major

Cleaning oil leaks from disused equipment

Soil, groundwater, health/safety

Work-related accidents Direct, Negative Short-term, Local, Reversible

Low Considerable Minor

Contact dermatitis Direct, Negative Short/Long-term, Local, Reversible/Irreversible

Medium low Little Minor

Sorting and stacking disused oil circuit breakers, current transformers and voltage transformers

Health/safety Work-related accidents Direct, Negative Short-term, Local, Reversible

Medium high Major Positive

Contamination of groundwater via seepage

Direct, Negative Long-term, Local, Reversible

Medium high Major Positive

Hiding places for dangerous animals, such as snakes and other reptiles

Direct, Negative Long-term, Local, Reversible

Medium high Considerable Moderate

Haulage and transportation

Health/safety Work-related accidents Direct, Negative Short-term, Local, Reversible

Low Considerable Minor

Weight-induced ground compaction

Direct, Negative Short/Long-term, Local, Reversible/Irreversible

Medium low Little Minor

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Annex 11: Project Preparation and Supervision

Nigeria: PCB MANAGEMENT PROJECT

Table 11.1 Planned Actual PCN review 03/13/2009 06/29/2009 Initial PID to PIC 03/18/2009 07/30/2010 Initial ISDS to PIC 03/18/2009 07/30/2010 Appraisal 10/02/2010 06/22//2010 Negotiations 10/30/2009 Board/RVP approval 08/09/2010 Planned date of effectiveness 10/15/2010 Planned date of mid-term review 11/12/2011 Planned closing date 06/30/2015 Key institutions responsible for preparation of the project: Federal Ministries of Environment, Power and Finance

Table 11.2: Bank Staff and Consultants Who Worked on the Project Name Title Unit Africa Eshogba Olojoba TTL/Sr. Environment Specialist AFTEN Amos Abu Rajiv Sondhi Chau-Ching Shen Manush Hristov Mekonnen Ayano Akinrinmola Akinyele Mary Asanato Daniel Kajang Oluwatoyin Jagha Gayatri Kanungo Salimata Follea Obi Anene Anyadiegwu

Sr. Environment Specialist Sr. Finance Officer Sr. Finance Officer Sr. Counsel ET Consultant Financial Management Specialist Sr. Procurement Specialist ET Consultant M&E Specialist Operations Specialist Operations Analyst Consultant

AFTEN CTRFC CTRFC LEGAF LEGJR AFTFM AFTPC AFTPC AFTOS AFTEN AFTEN AFTEN

Felix Ukeh Consultant AFTEN Chita Oje Ella Iklaga

Team Assistant Team Assistant

AFCW2 AFCW2

Douglas Graham Catalina Marulanda Qing Wang John Morton

Peer Reviewer Peer Reviewer Peer Reviewer Peer Reviewer

EASVS LCSEN EASER EASER

Bank funds expended to date on project preparation: Bank resources: BBGEF: US$105,000 Remaining costs to approval: US$15,000 Estimated annual supervision cost: US$50,000

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Annex 12: Project Governance Measures

NIGERIA: PCB MANAGEMENT PROJECT

A. General Governance Issues 1. Governance in Nigeria remains a challenge. Coming from a history of military authoritarianism for a greater part of its post-Independence years, there is a limited accountability mechanism in place. B. Recent Efforts to Reduce Corruption by Government 2. Nigeria has made some progress in recent years to tackle corruption and improve public resource management. This is being done principally in a two-pronged manner: (i) through policy reforms at the national and state levels, and (ii) the strengthening of public institutions with the mandate and potential to tackle corruption. 3. Policy Reforms: Achievements in public financial management reforms include the enactment of public procurement and fiscal responsibility legislation in 2007, as well as the introduction of medium-term and policy-based expenditure frameworks at the federal level. The passage of the procurement laws was followed by the establishment of the Bureau of Public Procurement, the development of procurement tools and the establishment of a professional procurement cadre in the public service. Though these reforms are not automatically applicable to sub-national levels of government as a result of Nigeria’s brand of federalism, several states have, on their own, adopted these reform initiatives and are currently putting in place their own legislation and implementing reforms. Furthermore, governments at both the federal and state levels now ensure that all resources expended in any given year are reflected in the budget to avoid double-dipping and allow for public scrutiny. 4. Institutional Strengthening: Among the early measures adopted by the post-military federal Government of Nigeria to tackle corruption were the establishment of the Independent Corrupt Practices and other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC). These two Commissions were given extensive powers to fight official corruption as well as money laundering and all forms of economic crime. Though both Commissions appear to have lost some momentum in the fight against corruption in the last two years, nevertheless the fight against corruption is still ongoing with some reasonable successes being recorded. The latter Commission only recently secured the conviction of a top stalwart of the ruling political party in Nigeria for official corruption—a conviction that is not only significant but also symbolic of the Government’s resolve to fight corruption and enthrone accountability. 5. In addition to the these measures, both the federal and some state governments in Nigeria, with support from the Bank and other donors, are now making significant progress in strengthening external audit functions in the public service. This is being done through the process of revising the obsolete audit legislation currently applied by the different tiers of

99

government as well as supporting the efforts at building adequate and sustainable capacity for the thorough performance of this function. It is intended that audits will now go beyond the statutory and routine financial audits hitherto carried out by the Auditors-General on MDAs at the different tiers but will now include “value for money” audits, as are obtainable in the private sector. 6. Results to date: While corruption remains a challenge, the Government’s efforts to curb it are producing results. Nigeria’s rating on Transparency International’s Corruption Perception Index moved from 90th out of 91 countries in 2001 to 144th out of 146 countries in 2004 and, most recently, to 130th out of 180 countries in 2009. Similarly, the ratings of the WBI governance indicator for corruption control in Nigeria moved from 4.4 in 2002 to 12.1 in 2007. C. World Bank Efforts to Reduce Corruption 7. To date, the Bank has committed significant resources to help improve governance in Nigeria. Currently, the Economic Reform and Governance Project is providing the equivalent of about US$140 million for governance reforms at the federal level, while the State Governance and Capacity-Building Project is providing the equivalent of about US$18.1 million at the state level. The Lagos Metropolitan Development and Governance Project, also currently underway, is providing about US$5.97 million for governance reforms in Lagos State. A new project for further support at the sub-national level of government in the amount of approximately US$120 million is being finalized under the Second State Governance and Capacity-Building Project, which would become effective in 2010. These funds are deployed to help strengthen governance institutions and build the capacity of the public officers who run them. 8. In the implementation of World Bank-assisted projects, a system of fiduciary controls of procurement, financial management, and disbursement procedures are in place, overseen by Bank staff who are members of the task teams. Based on a risk assessment of the project and its implementing agencies, larger contracts are subject to prior review by the Bank at key stages of the processes, while smaller expenditures are subject to post-review on a sample basis, to confirm that procurement and financial management processes adopted by the implementing agencies are consistent with Bank policies. Where government implementation capacity is limited, the projects are allowed to engage consultants who provide support services as well as on-the-job capacity-building. 9. Implementation support missions are periodically made to the projects and Activity Implementing Agencies, where reviews are conducted on physical achievements, funds utilization, and development impacts of project expenditures. Audit reports are also made periodically and exceptions are examined by Bank FM staff. Where anomalies are noted, the implementing agencies are requested to follow up and report on remedial actions. D. PCB Management Project Governance Issues 10. In the power sector wherein PHCN operates, corruption is deep-rooted. While the reforms generally being introduced in Nigeria to curb corruption are gradually taking hold in various sectors, governance and corruption challenges are, however, very slowly being felt in the

100

power sector. The sector’s performance continues to be disappointing in spite of the huge resources that have been allocated to it and are released for the development of its infrastructure. Analytical work undertaken by the Bank alludes to the serious governance gaps in the sector as being responsible for its persistent underperformance. 11. However, to mitigate the likelihood of corruption in the implementation of the project, the Bank’s fiduciary controls and systems outlined in paragraphs 8 and 9 above will be applicable. In the area of procurement, to ensure transparency the projects will be required to publish all their procurements at key stages of the process and, finally, when a contractor is selected for any assignment or service. This ensures that information is available to non-state actors for external oversight, as well as to participants to ensure a level playing ground in all procurement dealings and provides an opportunity for aggrieved persons to seek redress. 12. In the area of financial scrutiny, the project will have a dedicated Project Management Unit (PMU) with its own complement of financial management staff. The PMU will be answerable to a higher level Inter-Ministerial Steering Committee, including necessary key stakeholders and chaired by a cabinet rank Minister. Project expenditure would be subject to two distinct audits: (i) the routine audit of the project, as will be stipulated in the Financing Agreement, and (ii) the annual statutory audit usually conducted by the Office of the Auditor General of the Federation on the annual accounts of the Government for the year, bearing in mind that the grant/project funds will reflect in the budgeted expenditure of the Government for the financial year.

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Annex 13: Statement of Loans and Credits

NIGERIA: PCB MANAGEMENT PROJECT

Table 13.1

Original Amount in US$ Millions

Difference between expected and actual disbursements

Project ID

FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

P096648 2009 NG-Commercial Agriculture Development

0.00 150.00 0.00 0.00 0.00 149.14 6.74 0.00

P096572 2009 NG-Fadama Development-III SIL (FY08)

0.00 250.00 0.00 0.00 0.00 199.49 44.55 0.00

P090644 2009 NG-Comm. Social Dev. (FY09) 0.00 200.00 0.00 0.00 0.00 168.94 19.39 0.00 P102119 2009 NG-HIV/AIDS Prog. Dev. II

(FY09) 0.00 225.00 0.00 0.00 0.00 231.50 2.00 0.00

P106172 2009 NG-Electricity and Gas Improvement

0.00 200.00 0.00 0.00 0.00 206.87 0.00 0.00

P106280 2009 NG-Lagos Eko Secondary Education (FY09)

0.00 95.00 0.00 0.00 0.00 79.37 -8.60 0.00

P072644 2008 NG-Rural Access & Mobility - Ph. 1 0.00 60.00 0.00 0.00 0.00 53.19 10.06 0.00 P090135 2008 NG-Federal Roads Development 0.00 330.00 0.00 0.00 0.00 321.54 20.41 0.00 P096151 2007 NG - State Edu Sector Project 0.00 65.00 0.00 0.00 0.00 35.70 18.91 1.03 P097921 2007 NG-Malaria Control Booster Project

(07) 0.00 280.00 0.00 0.00 0.00 184.42 -1.54 -15.90

P074132 2007 NG-S&T Educ in Post-Basic Ed (FY07)

0.00 180.00 0.00 0.00 0.00 120.15 94.94 0.00

P071340 2007 NG-Lagos Metropolitan Dev & Governance

0.00 200.00 0.00 0.00 0.00 166.98 65.16 0.00

P100122 2006 Avian Influenza Emergency ERL (FY06)

0.00 50.00 0.00 0.00 0.00 8.24 4.89 0.00

P090104 2006 NG-Natl Energy Dev SIL (FY06) 0.00 172.00 0.00 0.00 0.00 66.50 58.62 0.00 P071391 2006 NG-Natl Urb Water Sec Ref SIM 2

(FY06) 0.00 200.00 0.00 0.00 0.00 127.35 73.67 0.00

P088150 2005 NG-Econ Reform & Govern SIL (FY05)

0.00 140.00 0.00 0.00 0.00 80.03 72.47 9.85

P086716 2005 NG-Min Res Sustain Mgmt (FY05) 0.00 120.00 0.00 0.00 0.00 42.92 34.80 -3.55 P074447 2005 NG-State Governance & Cp Bldg

TAL (FY05) 0.00 18.10 0.00 0.00 0.00 9.40 9.28 9.26

P083082 2004 MSME 0.00 32.00 0.00 0.00 0.00 14.15 11.82 0.00 P071075 2004 NG-Urb Water Sec Reform 1 SIL

(FY04) 0.00 120.00 0.00 0.00 0.00 21.87 15.83 0.00

P074963 2003 NG-Lagos Urb Trans SIL (FY03) 0.00 150.00 0.00 0.00 0.00 13.56 -52.12 -2.12 P070291 2002 NG-HIV/AIDS Prog Dev (FY02) 0.00 140.30 0.00 0.00 0.00 17.39 -48.65 -19.50 P070290 2002 NG- Health System Dev. II (FY02) 0.00 217.00 0.00 0.00 0.00 66.17 -46.34 -42.48 P069901 2002 NG-Com Based Urb Dev (FY02) 0.00 110.00 0.00 0.00 0.00 45.65 49.17 21.67 Total: 0.00 3,704.40 0.00 0.00 0.00 2,430.52

455.46 - 41.74

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NIGERIA STATEMENT OF IFCs

Held and Disbursed Portfolio In Millions of US Dollars

Table 13.2

Committed Disbursed IFC IFC FY Approval

Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

1999 AEF Global Fabri 0.32 0.00 0.00 0.00 0.32 0.00 0.00 0.00 1999 AEF Hercules 1.30 0.00 0.00 0.00 1.30 0.00 0.00 0.00 2000 AEF Oha Motors 0.84 0.00 0.00 0.00 0.84 0.00 0.00 0.00 2000 AEF SafetyCenter 0.41 0.00 0.00 0.00 0.41 0.00 0.00 0.00 1995 AEF Vinfesen 0.00 0.00 1.00 0.00 0.00 0.00 1.00 0.00 1994 Abuja Intl 1.75 0.00 0.00 0.00 1.75 0.00 0.00 0.00 2005 Accion Nigeria 0.00 1.89 0.00 0.00 0.00 0.57 0.00 0.00 2003 Adamac 25.00 0.00 0.00 15.00 11.56 0.00 0.00 6.94 2000 CAPE FUND 0.00 6.17 0.00 0.00 0.00 5.76 0.00 0.00 2001 Delta Contractor 0.00 0.00 15.00 0.00 0.00 0.00 0.20 0.00 2000 Diamond Bank 0.00 0.00 2.00 0.00 0.00 0.00 2.00 0.00 2005 Diamond Bank 0.00 0.00 30.00 0.00 0.00 0.00 30.00 0.00 2006 Diamond Bank 0.00 0.00 20.00 0.00 0.00 0.00 0.00 0.00 2000 FSB 5.25 0.00 3.75 0.00 5.25 0.00 3.75 0.00 1992 FSDH 0.00 0.86 0.00 0.00 0.00 0.86 0.00 0.00 2000 GTB 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 2004 GTB 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2005 GTB 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2006 GTB 30.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 GTFP Access Bank 33.58 0.00 0.00 0.00 33.54 0.00 0.00 0.00 2006 GTFP Access Bank 0.00 0.00 15.00 0.00 0.00 0.00 0.00 0.00 GTFP Diamond

Bnk 30.28 0.00 0.00 0.00 29.38 0.00 0.00 0.00

GTFP GTB Nigeria 20.41 0.00 0.00 0.00 20.41 0.00 0.00 0.00 GTFP IBTC Plc. 5.03 0.00 0.00 0.00 4.69 0.00 0.00 0.00 GTFP Zenith 32.18 0.00 0.00 0.00 32.18 0.00 0.00 0.00 2000 IBTC 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2006 IBTC 0.00 0.00 30.00 0.00 0.00 0.00 0.00 0.00 1981 Ikeja Hotel 0.00 0.06 0.00 0.00 0.00 0.06 0.00 0.00 1988 Ikeja Hotel 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2002 MTNN 70.00 15.00 0.00 0.00 40.00 14.56 0.00 0.00 2002 NTEF 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2005 OCC 75.00 0.00 0.00 0.00 59.12 0.00 0.00 0.00 2006 SOCKETWORKS 0.00 0.00 2.50 0.00 0.00 0.00 1.88 0.00 2004 UPDC Hotels Ltd. 10.62 0.00 0.00 0.00 4.82 0.00 0.00 0.00 Total portfolio:

427.97 23.99

119.25

15.00

311.57

21.82

38.83

6.94

103

Table 13.3

Approvals Pending Commitment FY Approval

Company Loan Equity Quasi Partic.

2006 UBA/STB 0.03 0.00 0.05 0.00 2005 Zenith Bank 0.03 0.01 0.00 0.00 2007 Eleme Petrochem 0.06 0.00 0.02 0.08 Total pending

commitment: 0.12 0.01 0.07 0.08

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Annex 14: Country at a Glance

NIGERIA: PCB MANAGEMENT PROJECT

Nigeria at a glance 12/9/09

Sub- Lo wer-P OVER T Y and SOC IA L Saharan middle-

N igeria A frica inco me2008Population, mid-year (millions) 151.2 818 3,702GNI per capita (Atlas method, US$) 1,170 1,082 2,078GNI (Atlas method, US$ billions) 177.4 885 7,692

A verage annual gro wth, 2002-08

Population (%) 2.4 2.5 1.2Labor force (%) 2.6 2.8 1.6

M o st recent est imate ( latest year available, 2002-08)

Poverty (% of population below national poverty line) .. .. ..Urban population (% of total population) 46 36 41Life expectancy at birth (years) 48 52 68Infant mortality (per 1,000 live births) 96 89 46Child malnutrition (% of children under 5) 27 27 26Access to an improved water source (% of population) 47 58 86Literacy (% of population age 15+) 72 62 83Gross primary enro llment (% of school-age population) 93 98 109 M ale 99 103 112 Female 87 93 106

KEY EC ON OM IC R A T IOS and LON G-T ER M T R EN D S

1988 1998 2007 2008

GDP (US$ billions) 22.8 32.1 165.9 207.1

Gross capital formation/GDP .. .. .. ..Exports o f goods and services/GDP 23.1 33.5 41.0 41.6Gross domestic savings/GDP .. .. .. ..Gross national savings/GDP .. .. .. ..

Current account balance/GDP -10.9 -9.6 18.8 20.4Interest payments/GDP 6.6 1.7 0.2 0.1Total debt/GDP 129.6 94.2 5.2 5.4Total debt service/exports 29.5 11.8 1.7 0.6Present value of debt/GDP .. .. 4.8 4.8Present value of debt/exports .. .. 11.7 10.4

1988-98 1998-08 2007 2008 2008-12(average annual growth)GDP 3.3 6.0 6.4 6.0 4.4GDP per capita 0.7 3.5 4.0 3.6 1.6Exports o f goods and services .. .. .. .. ..

ST R UC T UR E o f the EC ON OM Y

1988 1998 2007 2008(% of GDP)Agriculture .. .. 32.7 ..Industry .. .. 40.7 .. M anufacturing .. .. .. ..Services .. .. 26.6 ..

Household final consumption expenditure .. .. .. ..General gov't final consumption expenditure .. .. .. ..Imports o f goods and services 22.0 38.1 25.9 24.7

1988-98 1998-08 2007 2008(average annual growth)Agriculture .. 7.0 7.4 ..Industry .. 3.8 -2.9 .. M anufacturing .. .. .. ..Services .. 14.4 12.9 ..

Household final consumption expenditure .. .. .. ..General gov't final consumption expenditure .. .. .. ..Gross capital formation .. .. .. ..Imports o f goods and services .. .. .. ..

Note: 2008 data are preliminary estimates.

This table was produced from the Development Economics LDB database.

* The diamonds show four key indicators in the country (in bo ld) compared with its income-group average. If data are missing, the diamond will be incomplete.

0

3

6

9

12

03 04 05 06 07 08

GCF GDP

Growth of capital and GDP (%)

Nigeria

Lower-middle-income group

Development diamond*

Life expectancy

Access to improved water source

GNIpercapita

Grossprimary

enrollment

Nigeria

Lower-middle-income group

Economic ratios*

Trade

Indebtedness

Domesticsavings

Capital formation

105

Nigeria

P R IC ES and GOVER N M EN T F IN A N C E1988 1998 2007 2008

D o mest ic prices(% change)Consumer prices 54.5 10.3 5.5 11.6Implicit GDP deflator 21.4 -5.6 4.8 11.0

Go vernment f inance(% of GDP, includes current grants)Current revenue .. 16.2 28.4 32.8Current budget balance .. 5.8 8.4 11.6Overall surplus/deficit .. -9.3 -1.1 3.6

T R A D E1988 1998 2007 2008

(US$ millions)Total exports (fob) 7,069 10,114 66,605 84,117 Fuel 6,456 9,218 58,164 74,304 Liquified natural gas .. .. 6,844 7,709 M anufactures 28 140 .. ..Total imports (cif) 6,393 10,269 30,440 36,885 Food 505 1,397 .. .. Fuel and energy 64 123 .. .. Capital goods .. .. .. ..

Export price index (2000=100) 58 45 253 344Import price index (2000=100) 96 112 138 161Terms of trade (2000=100) 61 40 183 214

B A LA N C E o f P A YM EN T S1988 1998 2007 2008

(US$ millions)Exports o f goods and services 7,403 10,972 68,061 86,077Imports o f goods and services 7,052 12,671 43,039 51,105Resource balance 351 -1,700 25,022 34,972

Net income -2,904 -2,892 -11,853 -12,005Net current transfers 63 1,516 18,016 19,295

Current account balance -2,490 -3,075 31,185 42,262

Financing items (net) 2,159 2,960 -22,150 -40,594Changes in net reserves 331 115 -9,035 -1,667

M emo :Reserves including go ld (US$ millions) .. .. 51,333 77,484Conversion rate (DEC, local/US$) 6.4 88.0 125.8 118.5

EXT ER N A L D EB T and R ESOUR C E F LOWS1988 1998 2007 2008

(US$ millions)Total debt outstanding and disbursed 29,621 30,294 8,696 11,221 IBRD 2,728 2,278 381 211 IDA 31 564 1,929 2,243

Total debt service 2,210 1,332 1,187 609 IBRD 429 467 201 205 IDA 1 4 35 37

Composition o f net resource flows Official grants 36 33 1,321 843 Official creditors 72 -473 150 63 Private creditors 150 -25 -312 -37 Foreign direct investment (net inflows) 379 1,051 6,032 3,636 Portfo lio equity (net inflows) 0 0 1,447 -4,684

World Bank program Commitments 793 0 685 887 Disbursements 244 221 335 353 Principal repayments 196 314 196 209 Net flows 49 -93 139 144 Interest payments 235 157 41 34 Net transfers -187 -250 99 110

Note: This table was produced from the Development Economics LDB database. 12/9/09

-10

-5

0

5

10

15

20

25

30

02 03 04 05 06 07 08

Current account balance to GDP (%)

0

20,000

40,000

60,000

80,000

100,000

02 03 04 05 06 07 08

Exports Imports

Export and import levels (US$ mill.)

05

101520253035

03 04 05 06 07 08

GDP deflator CPI

Inflation (%)

A: 211

B: 2,243

D: 535

E: 323

F: 453G: 7,456

A - IBRDB - IDA C - IMF

D - Other multilateralE - BilateralF - PrivateG - Short-term

Composition of 2008 debt (US$ mill.)

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Annex 15: Incremental Costs Analysis

NIGERIA: PCB MANAGEMENT PROJECT Overview of the Incremental Costs Analysis 1. The Global objective of the proposed PCB management project is to strengthen national capacity for the management of Persistent Organic Pollutants (POPs), and in particular Polychlorinated Biphenyls (PCBs), as required under the Stockholm Convention. 2. It is expected that the implementation of interventions proposed under the PCB management project would help to: (i) develop national capacity to manage POPs in general and PCBs in particular, and (ii) identify and upgrade laboratories for testing the presence of PCBs and enhance interim storage facilities for PCBs. 3. The GEF alternative proposes to achieve these objectives at an incremental cost of US$18.5 million, of which US$6.3 million is requested from the GEF (US$12.2 million of the incremental cost will be financed by government counterpart contributions). Broad Development Goals 4. Nigeria has never produced PCBs. The bulk of PCBs and PCB-containing equipment used in the country was imported between the late 1940s and early 1980s from such countries as Russia, the United States, etc. Over 90 percent of PCBs and PCB-containing equipment brought into the country is used as dielectric fluid in electrical equipment. The Power Holding Company of Nigeria (PHCN) is by far the largest consumer of dielectric fluids and, therefore, a major owner of equipment that potentially contains PCBs. 5. PCB issues have not received as much attention in Nigeria as they have in most developed countries, and there is limited information available in-country on the subject of PCB management. There is no definitive data on the exact amount of PCB stock in the country; however, an inventory conducted as part of the National Implementation Plan (NIP) process indicated that there may be up to 3,400 metric tons (MT) of PCBs in both off-line and on-line electrical equipment. There are no existing policies, regulatory frameworks or guidelines on the sound management of the country’s PCB stock. The level of awareness among the general public on the human and ecological effects of PCBs is relatively low. 6. A recent study on the location of various PCBs and PCB-containing equipment in PHCN facilities revealed the existence of high levels of PCB contamination within and around PHCN facilities. The study also revealed the existence of the following practices:

(i) Illegal sale of discarded transformer oil to roadside traders as “auto top-off” oil; (ii) Sale of discarded transformer oil to local soap and cosmetics manufacturers; (iii) Use of disused transformer oil for cooking, roasting animal hides, etc. (iv) Mixing disused transformer oil with Low Pour Fuel Oil (LPFO) for industrial and

space heating purposes; and

107

(v) Other uses of transformer oil include direct use as body cream; use in treatment of head lice, eczema and various other skin dermatitis; use as weed killer, etc.

Baseline Scenario 7. Under this scenario, Nigeria will have a limited capacity to improve its management of POPs in general and PCBs in particular. The country will be unable to fulfill its obligation under the Stockholm Convention by applying the limited amount of work done on PCBs as part of the NIP preparation. The use and disposal of PCBs is likely to continue with limited intervention. Due to lack of proper management awareness and inadequate storage facilities to contain the chemicals, cross-contamination and releases into the environment are bound to continue, which may eventually dilute the concentrations below the established threshold levels under the Stockholm Convention. 8. Due to a lack of training in the appropriate maintenance procedures for PCB-containing equipment, technicians will continue to service PCB-containing electrical equipment in an unsafe manner, which could lead to increased human and environmental exposure to PCBs. 9. The general public and the global environment will continue to be susceptible to POPs and PCB exposure since most laboratories in Nigeria lack adequate capabilities to detect PCBs in oil, which could eventually lead to cross-contamination of PCB-free oil. Under this scenario, PCBs will spread into the open market due to the available retail market for waste PCB oil; this could potentially lead to endemic PCB poisoning among the general public. 10. Also due to limitations in technical and management capabilities at the government level, it would be daunting for the respective ministries charged with various chemical management responsibilities to develop a broad management and policy framework to ensure the environmentally sound management and eventual elimination of PCBs and PCB-containing equipment. GEF Alternative 11. The GEF alternative proposes a wide range of safe and environmentally sound PCB management strategies to reduce the risk of PCB contamination and leakage into the local and global environment. Under this option, usage of PCB-containing equipment that is within the manufacturers’ warrantee may continue in such areas where risk of release and contamination is minimal, pending the expiration of their respective service lives but not later than 2025. The maintenance and repair of such equipment will be conducted in accordance with international standardized PCB Best Management Practices to avoid contamination and release into the human and ecological environment. Such PCB-containing equipment, upon approaching the end of its useful life, will be retired and replaced with newer and non-PCB-containing equipment, thereby avoiding the costs that would have been otherwise incurred in early retirement and replacement. 12. Under this option, Nigeria will develop comprehensive policies, guidelines and regulations that are tailored towards sound management of both on-line and off-line PCBs and PCB-containing equipment, and create awareness among stakeholders and the general public.

108

This option will also include the performance of a comprehensive PCB inventory, which will augment the existing inventory conducted by SNC Lavalin in 2008. Part of the inventory will include identification of some PCB-contaminated sites across the country. 13. This scenario will enhance the country’s PCB testing capabilities by equipping at least two laboratories with state-of-the-art technologies for PCB analysis. In addition, the project will upgrade interim storage locations for the safe containment of PCBs, PCB-containing equipment, and waste, pending their ultimate disposal. 14. The overall cost associated with tasks under this proposed option is US$18.5 million (refer to Annex 5 for a detailed cost estimation). This estimated total does not include costs associated with the ultimate disposal of PCBs and PCB-containing equipment, which fall outside the scope of this project. Incremental Cost Analysis 15. The difference between the cost of the Baseline Scenario (US$12.2 million) and the cost of the GEF Alternative (US$18.5 million) is estimated at US$6.3 million. This represents the incremental cost for achieving global environmental benefits. Of the US$18.5 million, US$6.3 million is requested from the GEF and US$12.2 million will be financed from government counterpart contributions.

109

Table 15.1: Incremental Cost Matrix Component Category Estimated

Expenditures US$ Domestic Benefit Global Benefit

1. Capacity-Building for POP and PCB Management

Baseline Gov: $926,324

Nigeria’s general laws on hazardous waste and chemicals are reviewed.

N/A

With GEF Alternative

Gov: $926,324 GEF: $1,179,754

Nigeria’s legal and regulatory capacity for POP management in general and PCB management in particular is strengthened in line with international standards. Increased public awareness on PCB’s adverse health impacts will reduce the risk of the public being exposed to PCBs.

The basis for future implementation of the Stockholm Convention is established through demonstration of Best Available Technology (BAT) and Best Environmental Practices (BEP) in addressing POP management in general, and PCB management in particular.

Incremental $1,179,754 2. Environmentally Sound Management of on-line and off-line electrical equipment.

Baseline

Gov: $6,146,188

Applied strategies for PCB sound management will reduce health risks.

Some reduction of release of PCBs from on-line and off-line electrical equipment in the environment.

With GEF Alternative

Gov: $6,146,188 GEF: $3,273,208

Procedures, manuals, and management protocols in line with international standards will further reduce health risks associated with exposure to POPs in general and PCBs in particular.

Increased reduction of release in the environment of PCBs from on-line and off-line electrical equipment, through sound management of PCB and PCB-containing equipment.

Incremental $3,273,208

3. National baseline inventory for PCBs and PCB-containing equipment and development of a national PCB management plan.

Baseline

Gov: $3,497,951 Nigeria will have a centralized PCB database managed in a sound manner for future disposal.

Safe handling and interim storage of PCBs and PCB-containing equipment will reduce adverse impacts on health and prevent harmful releases in the global environment.

With GEF1 Alternative

Gov: $3,497,951 GEF: $1,373,197

A comprehensive methodology for conducting inventories, and a national PCB management plan aligned with international standards, will enable Nigeria to compile more reliable data and ensure proper

PCBs are no longer a source of contamination of the global environment.

1 Because the GEF financing is fully mainstreamed, the GEF alternative scenario comprises the baseline actions augmented with additional interventions to achieve both national and global environmental benefits.

110

Component Category Estimated Expenditures US$

Domestic Benefit Global Benefit

handling and interim storage for future disposal.

Incremental $1,373,197 4. Project Management and M&E

Baseline Gov: $1,629,536

Nigeria will have M&E tools that are institutionalized for the management of all PCBs in the country.

Project components are closely monitored to achieve expected outcomes.

With GEF Alternative

Gov: $1,629,536 GEF: $473,841

The institutionalized M&E tools will be aligned with international standards for better management of POPs in general and PCBs in particular.

Project components are closely monitored to achieve expected outcomes, including GEO to ensure sustainability of project results.

Incremental $473,841

Total Baseline* US$12.2 million With GEF

Alternative US$18.5 million

Incremental US$6.3 million

111

Table 15.2: GEF Alternative - Breakdown of Funding Sources by Component

Financing Plan in US$ Components Government GEF Total 1. Capacity-Building for POPs and PCB Management $926,324 $1,179,754 $2,106,078

2. ESM of On-Line and Off-Line Electrical Equipment $6,146,188 $3,273,208 $9,419,396

3. National Baseline Inventory of PCBs and PCB-Containing Equipment, and Development of a National PCB Management Plan

$3,497,951 $1,373,197 $4,871,148

4. Project Management and M&E $1,629,536 $473,841 $2,103,377 Total $12,200,000 $6,300,000 $18,500,000

Chappal WaddiChappal Waddi(2,419 m )(2,419 m )

B a u c h i B a u c h iP l a t e a uP l a t e a u

S a h e l S a h e l

J os P

l at e

au

U d i H i l l sU d i H i l l s

Ma

nd

ar

a

M

t s.

Goth

M

ts.

BORNOBORNOYOBEYOBE

ENUGUENUGU

AN

AM

BRAA

NA

MBRA

ABIAABIAIMOIMO

AKWA-AKWA-IBOMIBOM

CROSSCROSSRIVERRIVER

RIVERSRIVERS

D E L T AD E L T A

B A U C H IB A U C H I

J I G A W AJ I G A W A

KANOKANO

K A T S I N AK A T S I N A

S O K O T OS O K O T O

KEBBIKEBBI

N I G E RN I G E R

K A D U N AK A D U N A

FEDERALFEDERALCAPITALCAPITAL

TERRITORYTERRITORY

P L A T E A UP L A T E A U

T A R A B AT A R A B AB E N U EB E N U E

K O G IK O G I

OYOOYO

O G U NO G U N

LAGOSLAGOS

OSUNOSUNO N D OO N D O

E D OE D O

AD

AM

AW

A

AD

AM

AW

A

K W A R AK W A R A

ZAMFARAZAMFARA

EKIT IEKIT I

EBONYIEBONYI

BAYELSABAYELSA

NASARAWANASARAWA

GOMBEGOMBE

Benue

Niger

Nig

er

Sokoto

Yobbe

Rimma

Niger

Kaduna

Bung

a

Jamm

aarii

Hadejia

Gongola

Be

nue

Yobe

Komad

ugu Gana

Taraba

WarriWarri

BaroBaro

KontagoraKontagora

IllelaIllela

KauraKauraNamodaNamoda

ZariaZaria

BiuBiu

BaliBaliWukariWukari

ShendamShendam

NguruNguru OamasakOamasak

PokiskumPokiskum

WawaWawa

AbaAba

SapeteSapete

UyoUyo

JosJos

AwkaAwka

YolaYola

GombeGombe

KanoKano

AsabaAsaba

YenogoaYenogoa

EnuguEnugu

AkureAkure

MinnaMinna

DutseDutse

OwerriOwerri

IbadanIbadan

IlorinIlorin

BauchiBauchiKadunaKaduna

SokotoSokoto

GusauGusau

LokojaLokojaAdo-EkitiAdo-Ekiti

CalabarCalabar

AbakalikiAbakaliki

UmuahiaUmuahia

MakurdiMakurdiOshogboOshogbo

JalingoJalingo

KatsinaKatsina

AbeokutaAbeokuta

DamaturuDamaturuMaiduguriMaiduguri

BeninBeninCityCity

BirninBirninKebbiKebbi

PortPortHarcourtHarcourt

LafiaLafia

ABUJAABUJA

N I G E RN I G E R

N I G E RN I G E R

C A M E R O O NC A M E R O O N

B E N I NB E N I N

C H A DC H A D

To To KandiKandi

To To KandiKandi

To To BoriBori

To To LoméLomé

To To DoulaDoula

To TahouaTo Tahoua To AgadezTo Agadez To NguigmiTo Nguigmi

1963 Level

1973 Level

2001 Level

BORNOYOBE

ENUGU

AN

AM

BRA

ABIAIMO

AKWA-IBOM

CROSSRIVER

RIVERS

D E L T A

B A U C H I

J I G A W A

KANO

K A T S I N A

S O K O T O

KEBBI

N I G E R

K A D U N A

FEDERALCAPITAL

TERRITORY

P L A T E A U

T A R A B AB E N U E

K O G I

OYO

O G U N

LAGOS

OSUNO N D O

E D O

AD

AM

AW

A

K W A R A

ZAMFARA

EKIT I

EBONYI

BAYELSA

NASARAWA

GOMBE

Warri

Baro

Kontagora

Illela

KauraNamoda

Zaria

Biu

BaliWukari

Shendam

Nguru Oamasak

Pokiskum

Wawa

Aba

Sapete

Uyo

Jos

Awka

Yola

Gombe

Kano

Asaba

Yenogoa

Lagos

Enugu

Akure

Minna

Dutse

Owerri

Ibadan

Ilorin

BauchiKaduna

Sokoto

Gusau

LokojaAdo-Ekiti

Calabar

Abakaliki

Umuahia

MakurdiOshogbo

Jalingo

Katsina

Abeokuta

DamaturuMaiduguri

BeninCity

BirninKebbi

PortHarcourt

Lafia

ABUJA

N I G E R

N I G E R

C A M E R O O N

Bioko I.(EQ. GUINEA)

B E N I N

C H A D

Benue

Niger

Nig

er

Sokoto

Yobe

Rima

Niger

Kaduna

Bung

a

Jam

aari

Hadejia

Gongola

Be

nue

Yobe

Komad

ugu Gana

Taraba

Gulf of Guinea

KainjiReservoir

Lake Chad

To Kandi

To Kandi

To Bori

To Lomé

To Doula

To Tahoua To Agadez To Nguigmi

B a u c h iP l a t e a u

S a h e l

J os P

l at e

au

U d i H i l l s

Ma

nd

ar

a

M

t s.

Ni g e r D e l t a

Goth

M

ts.

Chappal Waddi(2,419 m )

10°E 15°E

5°E 10°E

10°N10°N

5°N5°N

NIGERIA

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 50 100 150

0 50 100 150 Miles

200 Kilometers

IBRD 33458

SEPTEMBER 2004

N IGERIASELECTED CITIES AND TOWNS

STATE CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

STATE BOUNDARIES

INTERNATIONAL BOUNDARIES