Azerbaijan republik

ANNEX 4. ACCEPT/REJECT DECİSİON MAKİNG

It is the responsibility of the VCDS and PFI to accept or reject a sub-project proposal on the grounds of environmental issues. Providing that the sub-project has been adequately screened into Bank Categories B or C and that adequate EMP is proposed to mitigate significant environmental issues and adequately monitor the results, there should be no reason to reject a sub-project on environmental grounds. The decision-making procedure for credit applications is detailed in the Agribusiness Investment Guidelines (Manual), and for grant applications in Porject Operational Manual respectively.

If the sub-project is rejected on environmental grounds after an unsatisfactory site visit the proponent, at the discretion of the PFI, may submit an improved environmental proposal. Re-appraisal should be restricted to one iteration, and the proponent should not expect to make multiple applications on the basis of continued marginal improvements to the scheme. Any further consideration of the sub-project should be at the discretion of the PFI .
In some instances, however, there may be a number of environmental issues associated with a sub-project, and cumulatively the issues could be more serious than any one individual issue would indicate. For example, a sub-project may have several issues that individual screening would put in Category B or C. Cumulatively, however, the environmental issues may be more serious, and the sub-project may need a more stringent EMP, be screened into a higher Environmental Category or be rejected out of hand.
The possibility of cumulative environmental impacts of projects will be given special consideration:  

1. 
   Sub-project applications will undergo ‘cumulative impact verification’ at the stage of assigning environmental category.  This will involve VCDS and PFIs comparing each application to other proposed and approved projects in the same area to determine whether they are likely to have significant negative impacts on a common ecological resource (e.g., impacts on quality or quantity of water in the same river or lake basin, impacts on air quality in the same airshed, excessive overall noise levels in a residential area, etc.).  When VCDS or PFIs find that this is may be the case, they will consult with  the PMU Environmental Specialist regarding the possible need to carry out a cumulative impact assessment as part of the EIA for the project;   and
   

2. 
   As part of PMU’s annual reporting to the World Bank on safeguard issues, the PMU Environmental Specialist, in collaboration with M&E Specialist, will report on the potential for cumulative environmental impacts among projects within the portfolio and on the measures being taken to address this issue.
   

The PFI may use a checklist to provide a score of magnitude of impacts to produce a cumulative index. The higher the index the higher the environmental risk of the sub-project. Using Table-A4-1 as a guide and noting that each activity requires its own individual score – the cumulative score of impacts will provide the overall score for that sub-project.

Table A-4.1: Guideline for screening cumulative environmental impacts

Activity Risk	Significance of Impacts	Examples	Score
None	There is no detectable impact of any kind as a result of the activity	A procurement project with no direct impacts	0
Low	Small changes, measurable, usually confined to a small area, mitigation is simple or not necessary	Market facilities: small social disruption. Small scale processing, small scale farming; creates minor pollution	1
Low-moderate without mitigation	Measurable losses, or ecosystem disruption; ecosystem able to cope without mitigation	Small-medium scale agro-processing, livestock production, slaughter facilities; potential to produce some minor pollution	2
Moderate with mitigation	Measurable losses, or ecosystem disruption; Proposed EMP is adequate but in the event it is not fully used, ecosystem would be disrupted	Medium scale agro-processing, livestock production, slaughter facilities, most category B sub-project activities with potential for pollution or disruption	3
High	Substantial losses or ecosystem disruption: Ecosystem would probably still function at a lower level. EMP inadequate or difficult/costly to operate and maintain	Livestock overgrazing or deforestation causing land erosion. Paper mills, chemical mix plants, leather production etc	5

The sub-project may comprise many activities, and the cumulative score of the activities would indicate to the PFI the overall risk of the sub-project Determination of cumulative score is indicative and should be used for revisiting the overall sub-project category on a case-by-case basis. Overall, the cumulative score thresholds for revisiting sub-project category are as follows:

• 
  If cumulative score is 5 or less the screened Environmental Category for individual activities is probably adequate.
  
• 
  If cumulative score is >5 the appraised Environmental Category may be inadequate, and additional requirements may be placed on the sub-project.
  

In case, the sub-project has to be re-categorized and additional requirements are to be applied, these should be incorporated into the sub-project EMP. In order to identify these additional requirements, the applicant, PFI and PMU will need to take additional steps for the preparation of ‘extended’ EMP. Specifically:

1. 
   The applicant may be required to:
   

• 
  Describe in detail the cumulative impacts likely to be experienced.
  
• 
  Determineand describe practical and reasonable measures and good practices to be followed, to address impacts.
  
• 
  Update a monitoring schedule, if necessary
  

1. 
   The VCDS and PFI will be required to:
   

• 
  Consult with PMU Environmental Specialist and Government environmental agency
  
• 
  Ensure the ‘extended’ EMP is incorporated into sub-loan agreement.
  

1. 
   The PMU will be required to:
   

• 
  Ensure the extended EMP implementation.
  
• 
  Monitor activity on a regular basis, or more frequently if required by the nature of identified cumulative impact.