In 2012 FMO invested in Senegal’s Sendou project. This project was designed to improve access to electricity for the country and increase supply by 30%, while enabling economic growth and improving livelihoods. In May 2016, a complaint was logged with FMO’s Independent Complaint Mechanism (ICM). The Independent Expert Panel (IEP) that further assessed the complaint, published its Compliance Review Report (FR | EN) in 2017. FMO published its Management Response (FR | EN) soon after.
The Compliance Review Report noted six non-compliances with FMO environmental and social safeguard policies. These are: (i) impacts on drinking water; (ii) marine impact assessment; (iii) coal transport impacts; (iv) air quality; (v) economic displacement impacts on fish-drying women; (vi) land title issues. FMO acknowledged that, during the due diligence phase (2009), several key Environmental & Social (E&S) items, especially community engagement, should have been considered more carefully and contextual risk should have been better analyzed. We have since incorporated the lessons learned from this project and others in our E&S policies and procedures.
On 27 January the IEP published its first monitoring report (FR| EN) in which it shared its concerns regarding limited progress made. We share these concerns, take our responsibility to address these seriously and are actively working towards resolution. To successfully address the six issues raised, three things are needed.
First, we will continue to engage with Senegalese authorities regarding the issues related to the economic displacement impacts on fish-drying women and the compensation to communities regarding disputed land titles, as we have done in the past. The progress made to date is not satisfactory and we will continue to address this when and where we can.
Second, making further progress in these two areas in particular needs to be spurred by follow-up from local parties involved.
But most importantly, together with the other lenders and the client, we need to find a solution to tackle the technical issues of getting the plant up and running, so we can address the drinking water impacts, marine impacts, coal transport and ambient air quality monitoring. Progress has mainly been hampered by shareholder and management changes which significantly impacted prioritization and local buy-in to address the E&S issues.
Our key priority for the Sendou project is to get to a satisfactory plan with a credible partner; non-negotiable in this plan are an independent assessment on water impacts as well as a baseline study for the fish-drying women. Despite all our efforts to make this happen, we have not yet been successful at achieving this.
Our objective was and is to get the plant up and running, and to resolve all of the non-compliances. As long as we see opportunities to make progress, we will continue our efforts to make this happen.
Sendou is a coal-based power plant located in Bargny, Senegal. It is operated by project company Compagnie d’Electricité du Sénégal SA (CES). The plant would add much needed base load capacity and contribute to stabilizing the energy system, which would enable the growth of intermittent, renewable power production, like wind and solar. Energy supply would be less dependent on Heavy Fuel Oil (HFO) power generation, a polluting, more costly and CO2-inefficient source of energy. The plant would be Senegal’s largest and most modern substation, significantly improving grid management. Lastly, the high number of direct and indirect jobs the project would create during both construction and operation, were particularly significant in view of the high youth unemployment in this area.
In 2015 FMO introduced its no-coal policy, which means that FMO no longer directly finances any new coalfired power generation, nor coal mining projects. FMO’s decision to invest in the Sendou project preceded the adoption of this policy, although the plant design would allow for conversion to accept gas from domestic offshore gas fields once this becomes available. FMO cannot change existing commitments.
We care about climate action. Our strategy towards 2025 specifically steers on three Sustainable Development Goals, of which SDG 13 (Climate Action) is one. In January 2017 FMO pledged that through our investments in developing countries, we contribute to limiting global temperature increase to 2°C and preferably 1.5°C, as agreed at the Paris Climate Summit in 2015. To that end, we are aligning our portfolio with a 1.5 degree pathway, actively steer on a growing green portfolio, and set targets and report on the GHG avoidance linked to our investments.