BAKU TBILISI ÇEYHAN PIPELINE PROJECT (BTC) SOCIAL AND RESETTLEMENT ACTION PLAN MONITORING PANEL AUGUST 2003

Transcription

1 BAKU TBILISI ÇEYHAN PIPELINE PROJECT (BTC) SOCIAL AND RESETTLEMENT ACTION PLAN MONITORING PANEL AUGUST 2003 Robert Barclay Frédéric Giovannetti

2 Part B Azerbaijan SRAP Expert Panel Review August 2003 Rev. 2 B-2 CONTENTS PART A OVERVIEW 1. INTRODUCTION...A-8 2. LAND ACQUISITION...A LIVELIHOOD RESTORATION...A RAP IMPLEMENTATION...A COMMUNITY RELATIONS AND BENEFIT SHARING...A SUMMARY OF ISSUES ARISING...A KEY RECOMMENDATIONS...A CONCLUSION...A SUMMARY OF RECOMMENDATIONS OVERALL PROJECT...A-30 PART B AZERBAIJAN 1. SCOPE OF AZERBAIJAN REVIEW... B-4 2. LAND ACQUISITION & RESETTLEMENT STATUS AT TIME OF REVIEW... B-4 3. LAND ACQUISITION... B-5 4. LIVELIHOOD RESTORATION... B RAP IMPLEMENTATION... B COMMUNITY RELATIONS... B CONCLUSION... B SUMMARY OF RECOMMENDATIONS AZERBAIJAN... B-23 APPENDIX B.1 NOTES ON VILLAGE CONSULTATIONS & INTERVIEWS... B-30

3 Part B Azerbaijan SRAP Expert Panel Review August 2003 Rev. 2 B-3 PART C GEORGIA 1. SCOPE OF GEORGIA REVIEW...C-4 2. LAND ACQUISITION & RESETTLEMENT STATUS AT TIME OF REVIEW...C-4 3. LAND ACQUISITION...C-5 4. LIVELIHOOD RESTORATION...C RAP IMPLEMENTATION...C COMMUNITY RELATIONS...C CONCLUSION AND KEY RECOMMENDATIONS...C SUMMARY OF RECOMMENDATIONS GEORGIA...C-36 APPENDIX C.1 NOTES ON VILLAGE CONSULTATIONS & INTERVIEWS...C-44 PART D TURKEY 1. SCOPE OF AUGUST 2003 REVIEW...D-3 2. LAND ACQUISITION AND RESETTLEMENT STATUS AT TIME OF REVIEW...D-3 3. LAND ACQUISITION...D-4 4. LIVELIHOOD RESTORATION...D RAP IMPLEMENTATION...D COMMUNITY RELATIONS...D CONCLUSION...D SUMMARY TABLE OF ISSUES...D-20 APPENDIX D.1 NOTES ON VILLAGE CONSULTATIONS & INTERVIEWS...D-28 APPENDIX I - SRAP MONITORING TERMS OF REFERENCE

4 PART A OVERVIEW OF SRAP REVIEW FINDINGS AUGUST 2003

5 PART A OVERVIEW CONTENTS 1. INTRODUCTION...A REQUIREMENT FOR EXPERT PANEL REVIEWS...A PROJECT DESCRIPTION...A EXPERT PANEL REVIEW OBJECTIVES...A EXPERT PANEL REVIEW ACTIVITIES...A SCOPE OF THE AUGUST 2003 REVIEW...A REPORT FORMAT...A LAND ACQUISITION...A LAND ACQUISITION STATUS AT TIME OF REVIEW...A COMMUNITY PREPARATION AND SUPPORT DURING LAND ACQUISITION...A COMPENSATION RATES...A PAYMENT PROCEDURES...A EXTORTION AND CORRUPTION...A ADDITIONAL LAND REQUIREMENTS FOR CONSTRUCTION...A RETURN OF USE RIGHTS AND/OR OWNERSHIP RIGHTS...A LIVELIHOOD RESTORATION...A LIVELIHOOD RESTORATION...A RAP FUNDS...A VULNERABLE GROUPS...A RAP IMPLEMENTATION...A ORGANIZATION AND RESOURCES...A DOCUMENTATION AND REPORTING...A GRIEVANCE PROCESSING...A MONITORING...A-23

6 5. COMMUNITY RELATIONS AND BENEFIT SHARING...A COMMUNITY PERCEPTION OF ENVIRONMENTAL AND SOCIAL IMPACTS...A RECRUITMENT OF LOCAL WORKERS AND LOCAL PROCUREMENT...A COMMUNITY INVESTMENT PROGRAMS...A ONGOING COMMUNITY CONSULTATION AND DISCLOSURE...A SUMMARY OF ISSUES ARISING...A GENERAL...A GRIEVANCES...A COMPENSATION PAYMENT AND LAND ENTRY...A MONITORING...A ADDITIONAL LAND REQUIREMENTS, RESTRICTIONS OF USE, AND RETURN OF LAND RIGHTS TO PREVIOUS USERS...A RESPECTIVE RESPONSIBILITIES OF BTC CO AND EPC CONTRACTORS...A PROJECT BENEFIT-SHARING...A KEY RECOMMENDATIONS...A CONCLUSION...A SUMMARY OF RECOMMENDATIONS OVERALL PROJECT...A-30

7 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-7 Figure 1-1 BTC Pipeline Route

8 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-8 1. INTRODUCTION 1.1 Requirement for Expert Panel Reviews The first Expert Panel monitoring review of the Baku-Tbilisi-Ceyhan (BTC) Pipeline was conducted in July and August At this time, land acquisition activities in all three countries were in an advanced state (Georgia and Turkey), or nearing completion (Azerbaijan). Pipeline construction was underway in all countries. Six-monthly Expert Panel reviews are a requirement of the Baku-Tbilisi-Ceyhan Pipeline Resettlement Action Plan (hereinafter referred to as the RAP ) and the BTC Environmental and Social Action Plan (ESAP). Scope of the Expert Panel Review is defined in the Terms of Reference for Social and Resettlement Action Plan (SRAP) Monitoring Implementation, which forms Appendix A of this report. Expert Panel SRAP monitoring reviews will be undertaken at six monthly intervals and will continue for 36 months following completion of the pipeline construction, or until such time as the Expert Panel determines affected people s living standards and income levels have been fully restored, whichever occurs earliest. At this time, a Completion Audit will be undertaken. The purpose of the Completion Audit will be to verify that BTC Co. has complied with resettlement undertakings defined by the RAP. The next Expert Panel monitoring review will take place in February Project Description The BTC Pipeline will be a dedicated pipeline system to transport up to one million barrels per day (bpd) 50 million tonnes per annum - of crude oil from the Sangachal Terminal near Baku in Azerbaijan, through Georgia to a new marine terminal at Ceyhan on the Mediterranean Coast in Turkey. Tankers will then ship the oil to international markets. The 1,760 kilometre pipeline is due to become operational in early The BTC pipeline will be constructed and operated to international standards. It will be buried and will avoid the need for any physical displacement of houses or settlements, as it passes through Azerbaijan (442 kilometres), Georgia (248 kilometres) and Turkey (1,070 kilometres), as illustrated in Figure 1.1. Most agricultural and land based activities currently being carried out in the pipeline corridor will be able to be resumed following construction completion, subject to some restrictions, and thus most impacts are temporary in nature. The pipeline will incorporate a number of Above Ground Installations (AGIs) such as valve stations, pump stations, a metering station, custody transfer facility and a terminal and jetty at Ceyhan. Land for AGIs will be permanently acquired. A summary of land owners, lessees and informal dwellers affected by temporary or permanent loss of land, assets, impacts to existing livelihoods or restrictions of use is included in the Table 1-1. This approximates the total number of project affected

9 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-9 households (see footnote (2)). The BTC pipeline will affect an estimated 17,716 households. The majority of these households will only be affected for the nominal three - year construction period but the elapsed time from initial excavation to reinstatement is expected to average only 2-3 months. A much smaller number will experience permanent loss of use of land that is required for AGIs and related access roads. Land requirements for the project are summarised in Table 1-2. The proposed project is being developed by Baku-Tbilisi-Ceyhan Pipeline Company (BTC Co.), formed in July In addition to the BTC pipeline, the South Caucasus Pipeline (SCP) is being proposed to transport up to 7.3 billion cubic metres of gas per year from the Sangachal Terminal, through Georgia to the Georgian/Turkish border, for onward distribution to Turkish domestic customers. The SCP pipeline will be constructed parallel to the BTC pipeline, and within the same 44-metre construction corridor, through Azerbaijan and Georgia. The SCP partners are not presently seeking finance through multilateral lenders. 1.3 Expert Panel Review Objectives Objectives of the six-monthly Expert Panel reviews are as follows: - To assess overall compliance with the RAP - To verify that measures to restore or enhance project affected peoples quality of life and livelihood are being implemented and to gauge their effectiveness - To assess the extent to which the quality of life and livelihoods of affected communities have been restored The Panel will also assess overall compliance with other mitigation measures to address social impacts described in the ESAP and its Component Contractor Control Plans insofar as these require actual visits and interaction with community members to verify whether the commitment has been implemented or complied with. The types of commitments that will be verified by the SRAP Expert Panel include the following: - Pollution prevention - dust and noise management in communities. - Community safety - awareness raising programmes in communities on communicable diseases; community awareness of project traffic routes and traffic safety briefings - Infrastructure and services - reinstatement of damaged infrastructure and compensation process; project use of water not affecting communities; and roads used by the project are maintained in reasonable condition. - Community liaison - community awareness of project activities; complaints procedures; camp rules; recruitment process; project traffic speed limits; pre-warning of noisy activities and other planned disruptions; procurement process and regular community meetings and access to community liaison officers (CLOs).

10 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-10 - Grievance management follow up of grievances reported; accessibility of CLOs; community awareness of complaints procedures and complaints close out. 1.4 Expert Panel Review Activities Activities to be undertaken during Expert Panel reviews are listed in the TOR in Appendix A. 1.5 Scope of the August 2003 Review The first Expert Panel review was conducted between 21 July and 8 August The review was conducted with two panel members, rather than the three specified under the SRAP Terms of Reference. It was considered preferable that an Expert Panel review be undertaken in the middle of the land acquisition process rather than being delayed until the full complement of panel members could be assembled. Mr. Ted Pollett, a social specialist with the International Finance Corporation, participated in the reviews for Azerbaijan and Georgia. The focus of the initial review was on the land acquisition process encompassing the preparation and support provided to communities in the lead up to land agreement negotiations, affected peoples experience of the negotiation and agreement signing, and their satisfaction with compensation outcomes. As the August 2003 review was the first mobilization of the Expert Panel, there was insufficient time for the Panel to become familiar with the Contractor Control Plans (CCPs) and Contractor Implementation Plans and Procedures (CIPPs) reporting processes and outputs. For future reviews, these will form essential background from which the Panel will design monitoring and verification activities. As part of the next review, the Expert Panel requests that it receive a 1-2 day briefing on project construction phase social and environmental management and reporting systems. The Expert Panel also needs to understand the scope of the Quarterly Environmental and Social Lender Monitoring reviews, and have access to their reports ahead of Expert Panel visits. The timing of future SRAP Expert Panel reviews has subsequently been adjusted so that the requisite Quarterly Environmental and Social Lender Monitoring review reports are available prior to the Expert Panel s mobilization. The review was conducted very shortly after a majority of people had just received their compensation payments. It is probable that the high levels of satisfaction expressed by affected people in this honeymoon period will subside, and more pragmatic views may become evident in subsequent reviews.

11 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-11 Table 1-1 Summary of Project Affected Households Category of Project Affected Azerbaijan Georgia Turkey Total Households (58 metre corridor) 1 (58 metre corridor) (28 metre corridor) Land owners 2 3,921 3,110 5, ,017 16,018 zilyet 3 Lessees ,080 1,490 Informal users 6 - About Enterprise workers N/A N/A 152 Total Affected Households 4,232 3, ,117 17,716 Table 1-2 Summary of Project Land Requirements Project Component Pipeline construction corridor Construction camps, pipe yards AGIs & access roads Temporary use of land Land Area Required for the BTC Project (Hectares) Azerbaijan Georgia Turkey Total Permanent use of land Temporary use of land Permanent use of land Temporary use of land Permanent use of land Temporary use of land Permanent use of land 1,970-1,088-2,903-5, Total 2, , , , Land owner and lessee numbers for Azerbaijan and Georgia are based on the 58 metre wide corridor of land affected by restrictions of use, but which also encompasses the 44-metre wide construction corridor and 8-metre pipeline corridors. In each of Azerbaijan, Georgia and Turkey, it is common for there to be multiple land owners listed on the title deed for a parcel of land. For the purposes of this table, the numbers shown best represent the number of land agreements that will be signed, and therefore roughly the number of households that will be affected. Some land parcels in Turkey have owners from more than one family, so there are cases where the project may impact on one land parcel but affect two or more households. In Turkey, Zilyet rights are customary or usufruct rights, which are recognized as ownership rights where the user can demonstrate they have used the land for 20 years without any dispute or interference. These users have equal rights to land owners with title deeds, and will be compensated fully. In Azerbaijan, some employees of state enterprises are reliant on grazing of private cattle in lieu of receiving wages. See RAP Part B Section for further explanation. This total does not take into account 438 parcels of land in Georgia affected (all or in part) by pipeline construction that have been allocated to sakrebulos, and are typically used communally for haymaking or pasture.

12 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-12 Recommendations: a. BTC Co. to organize a thorough briefing for the Expert Panel on construction phase social and environmental management and reporting systems at the outset of the February 2004 SRAP review. b. BTC Co. to ensure that latest Quarterly Environmental and Social Lender Monitoring Reports are available ahead of SRAP Expert Panel mobilizations. 1.6 Report Format This Part A Overview provides a high level summary of the Expert Panel s social and resettlement review findings and recommendations insofar as these relate to the overall BTC project. Detailed and country specific review comments and recommendations are contained in separate country reports as follows: - Part B Azerbaijan - Part C Georgia - Part D Turkey The following additional information is provided in Appendices: Appendix A Terms of Reference for Social and Resettlement Action Plan (SRAP) Monitoring Implementation Appendix B Summary of Meetings and Consultations 2. LAND ACQUISITION 2.1 Land Acquisition Status at Time of Review BTC Co. reported land acquisition progress as of 31 July 2003 as follows: - In Azerbaijan, land acquisition was essentially complete with 99 percent of project affected land owners, lessees and users having received their compensation. - In Georgia, the land acquisition program had secured 2,948 of 4,092 land parcels, which represents 72% of the total requirement. - In Turkey, land acquisition was 88 percent complete. 2.2 Community Preparation and Support during Land Acquisition Overall, project arrangements in all three countries for supporting project affected people in the lead up to, and during, land negotiations are assessed as equal to or better than comparable world-scale projects. At the time of the review, 20,279

13 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-13 agreements had been signed involving consents from an estimated 50,000 co-owners or shareholders 6. Based on BTC Co. s grievance logs, about 345 formal land-related complaints were received arising from these transactions, indicating about 1.7 percent of transactions resulted in a complaint. Many of the complaints are relatively minor. No pattern pointing to any systemic failure or recurrent lack of understanding amongst project affected people was evident from the complaints. The high level of understanding exhibited by project affected people during the Expert Panel s reviews is in no small measure attributable to the extensive role played by the partner NGOs (CLEE 7, APLR 8, and RUDF 9 ) who were appointed by BTC to assist people to understand agreements and compensation arrangements within each country. This was an innovative feature of BTC Co. s land acquisition program that has worked very well. BTC Co. s upfront investment in providing training and running workshops to develop country-specific land acquisition frameworks based on World Bank OD 4.30 principles for State and company personnel, and the subsequent commitment of these staff in applying those principles, is also assessed as a key contributory factor. Affected people interviewed during the Expert Panel review were satisfied with the legal support they had received in interpreting and understanding land agreements. Many people reported using the partner NGOs or other project funded legal services to assist them with court processes such as obtaining powers of attorney, transferring ownership from deceased persons, or obtaining other administrative rights. No complaints were received that people had had difficulty in accessing legal services or had incurred un-met legal expenses. The Expert Panel was generally critical of the complexity and technical language of the legal agreements to be signed by land owners and users, but acknowledges this is in part attributable to the complex transfers in rights required to realise the project. On the basis of views expressed to the Panel by affected people and other stakeholders, it appears that the level of legal assistance provided by BTC Co. was adequate to offset any shortcomings in agreement legibility It is common for land parcels to have multiple owners in all three countries. Land transactions therefore require the consent of all co-owners for any given parcel. Centre for Legal and Economic Education (CLEE), Azerbaijan Association for the Protection of Land Owners Rights (APLR), Georgia Rural and Urban Development Foundation (RUDF), Turkey

14 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A Compensation Rates Satisfaction with compensation rates for land and crops across all three countries was widespread, a positive finding on a project of this scale. In Turkey, which has comparatively more developed procedures for land valuation and expropriation than the other two countries, the Expropriation Law provides land owners the opportunity to reject compensation proposals offered by BOTAS/DSA 10, and to seek independent valuation through the courts. BOTAS/DSA has not challenged any court decisions. Court decisions have resulted in payments both higher and lower than those offered by BOTAS/DSA. Indications of satisfaction amongst compensation recipients in Turkey included: - Where people had experienced expropriation activities carried out by other agencies (previous pipelines, hydraulic works, highways), they stated that rates offered by the BTC Project were much higher. - In several villages of the North-East, villagers asked when the gas pipeline (SCP) will be constructed, because they hope for a second round of compensation with the same rates applied. - Independent, external observers of the process, like judges, or lawyers defending affected people at Court indicated that they view rates as adequate. In Azerbaijan, the project offered compensation rates for land very significantly exceeded the State Fixed Rates 11 disclosed in the RAP. Project offered rates for crops were on average 30 percent higher than the equivalent State Fixed Rates. State Fixed Rates had previously been assessed by BTC Co. s resettlement specialist as meeting World Bank OD 4.30 full replacement rates. Given the high rates, the rapid acceptance of compensation offers by project affected people is hardly surprising. Many interviewed compensation recipients were openly delighted with the rates they had received. In Georgia, as a consequence of BTC Co. s conservative strategy to purchase ownership rights to the construction corridor, and adoption of the State Land Replacement Fee as the basis for determining land compensation, project offered prices are well above those realized in the small number of recent land market transactions, or valuations based on Net Present Value In Turkey, BOTAS, the state-owned petroleum company, is responsible for acquiring land and constructing the Turkish section of the BTC pipeline under the terms of a Lump Sum Turnkey Contract. BOTAS has been authorized by the Turkish Government to be the designated State Authority (DSA). For an explanation of State Fixed or Cadastral rates, reference should be made to the BTC RAP Part B.

15 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-15 On feedback received during the August 2003 monitoring review, the Expert Panel has no doubt that compensation rates in all three countries meet or exceed the World Bank OD 4.30 criterion that affected people be compensated at full replacement value. The principal risks from the relatively high levels of compensation paid by the project are (i) potential distortion of local land markets; and, (ii) potential risk of creating tension between those who receive compensation and those who do not. Inquiries were made during the review to ascertain the likelihood of problems arising in these two areas. No specific evidence of problems in either area encountered by the Expert Panel, although it remains very soon after payment, so these risks will need to be periodically re-assessed. As a precaution, it is strongly recommended that BTC Co. undertake annual monitoring of market prices for private land sales along the project corridor over the next five years. Trends in the project area should be compared to national land price movements in rural areas. Making public realistic information about land sales prices is one way to improve rural people s understanding of their land s value, and to create realistic expectations about future market prices, thus reducing any risk of price distortion. BTC Co. s ongoing social monitoring program should be vigilant for any intra-village tensions between compensation recipients and non-recipients. The Expert Panel will also closely monitor for such cases. Adjustments to the Community Investment Program to provide offsetting benefits may be required if such problems in communities are observed. A secondary area of risk may be in near-international border areas where friends and relatives are able to compare their compensation packages across two countries. BTC Co. should remain watchful for any tensions or dissatisfaction arising from this source. If necessary, BTC Co. may need to prepare a more detailed explanation of the differences and similarities between country compensation frameworks. Recommendations: c. BTC Co. social monitoring teams to remain vigilant for tensions arising from compensation within villages, and in the near-border areas. d. BTC Co. to monitor land sales prices along the pipeline corridor and compare with national trends. Information to be publicized annually. 2.4 Payment Procedures Compensation is paid prior to entry into land, in compliance with World Bank OD Some departures from this principle were however identified by the Panel in each of the three countries, although in a relatively small number of cases and with limited actual impact on affected people. These are reported in the individual country reviews together with recommended corrective actions.

16 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-16 Banks have been used to disburse compensation in all countries. In spite of widespread mistrust of banks in Azerbaijan and Georgia, compensation recipients from all three countries were satisfied with arrangements for their payment. Retention of monies in bank accounts was low in Georgia (15 percent of recipients retained some money in accounts) and near non-existent in Azerbaijan. This was predicted in the RAP. 2.5 Extortion and Corruption No instance of extortion or corruption was reported in Turkey. The highest risks of extortion are in Azerbaijan and Georgia, with anecdotal information suggesting that on some previous corridor projects, upwards of 80 percent of recipients were subjected to pressures to make illicit payments. Reportedly, the predominant form of pressure was from local government officials imposing informal taxes. It is always difficult to gauge the extent of extortion. Based on feedback from incountry NGOs and the Expert Panel s own inquiries within a number of affected villages, incidence of extortion amongst affected villagers is thought to be comparatively low. Findings were as follows: - In Azerbaijan, villagers interviewed by the Expert Panel indicated they had not experienced any pressures to make illicit payments, nor were interviewees aware of any such cases in their villages. - Azeri legal NGO, CLEE, indicated that they had heard some rumours of corruption, but that they had not been able to substantiate these, nor had they received any direct complaints. - A survey in Azerbaijan undertaken by a pro-btc NGO group, Azerbaijan NGOs Coalition for Supporting and Monitoring BTC 12, encompassed about 119 project affected landowners and found that 96 percent of landowners reported not having experienced any pressure to make informal payments, while 4 percent (n=5) had experienced some pressure. - In Georgia, none of the project affected people interviewed during the Expert Panel review indicated they had experienced any form of coercion or extortion with respect to their compensation payment, nor were they aware of any such cases (or rumours of such cases) within their villages. - APLR in Georgia indicated that they had heard rumours of compensation recipients experiencing claims for protection money from outside criminal elements in Akhaltsikhe District, although no cases elsewhere along the pipeline. - According to APLR in Georgia, the case of an Atskuri (Akhaltsikhe District) woman who had refused to pay protection money, and who was 12 Azerbaijan NGOs Coalition for Supporting and Monitoring BTC undertook interviews with about 1,200 villagers in project affected communities, including 119 project affected landowners, in the period 3-7 June Members of the coalition include: Agro-Eco Consulting Centre, National Environmental Forecasting Centre, Social and Economic Development Centre and Odar Public Association.

17 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-17 subsequently assaulted, had been reported on local television. Subsequently, police claim to have arrested one of the perpetrators. - In Georgia, neither APLR nor BTC Co. had received any direct complaints or requests for assistance as a result of extortion activities. - In Turkey, interviewed villages and other informants were not aware of any cases of extortion or corruption. Opinions differed as to why the incidence of extortion was comparatively low in Azerbaijan, but the most commonly held view amongst affected people was that the BTC project had a very high profile, was sanctioned by the president, and was therefore regarded as untouchable. BTC Co. s efforts in seeking district and local government leader s support for the project s anti-corruption stance, making available corruption reporting hot-lines, and in widely publicizing that compensation recipients were under no obligation to pay any part of their compensation to third parties may also have contributed. Apparent initial low levels of extortion should not lead to complacency. Compensation recipients are well known within their communities and may yet be targeted. Police, in these jurisdictions, are not widely regarded as a deterrent. A combination of the measures listed at the end of this section and persistent anticorruption campaigning at all levels of government are recommended. Lands teams in Azerbaijan and Georgia have made references to a small number of cases where irregular registration of land parcels has been encountered and some instances where they are aware that the State has initiated investigations into irregular land dealings. Failure to provide factual information about such investigations fuels local rumour and innuendo that undermine the BTC project s anti-corruption credibility. It is strongly recommended that BTC Co. Management continue to reinforce its anticorruption stance with high-level government in each country. Where country teams become aware of possible irregular land registrations or transactions, BTC Co. should encourage the responsible State authorities to investigate the irregularities and to make public details of any outcomes and prosecutions that might arise. To all accounts, the States and project have performed well in minimizing corruption, and should not be backward in demonstrating that where cases are proven, sanctions are administered. Recommendations: e. BTC Co. to continue to reinforce its anti-corruption stance with high-level government in each country. f. BTC Co to regularly reinforce its anti-corruption stance with regional, district and local governments and actively seek leaders support. g. BTC Co. to publicize its partner NGO s (CLEE, APLR, and RUDF) as avenues where people can make a confidential complaint. h. Where country teams become aware of possible irregular land registrations or transactions, BTC Co. should encourage the responsible State Authorities to

18 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-18 investigate the irregularities and to make public details of any outcomes and prosecutions that might arise 2.6 Additional Land Requirements for Construction Use of additional land for temporary facilities like construction camps and pipe storage yards is typically negotiated by the Construction Contractors (EPC Contractor in Turkey) on the basis of short term leases or rental agreements. A majority of such sites in all countries are on State land. Probable sites were nominated (and screened) as part of RAP planning, although the Contractors are not precluded from using alternatives provided they comply with country EIA requirements. There are other circumstances where Contractors may need land beyond the construction right-of-way. These include for temporary construction roads, or additional working width for pipe installation on steep or otherwise difficult terrain. To ensure that temporary land acquisition activities by the Contractor are carried out in accordance with the RAP and World Bank OD 4.30, it is recommended that BTC Co. reviews Contractors temporary land requirements (all three countries) and agrees brief protocols or other strengthening measures with the Contractors to cover inventory, compensation and matters to be covered by agreements with owners. It is also recommended that if private landowners or users are to be involved in transactions with Contractors, they should be offered legal assistance such as through NGOs. Recommendation: i. BTC Co. to review and formalize procedures for Contractor acquisition of land through simple protocols, or other appropriate strengthening measures, taking into account RAP and World Bank OD 4.30 principles. j. BTC Co. to make arrangements for NGOs to monitor transactions with the Contractor, and provide support and assistance as needed to any private parties these may involve. 2.7 Return of Use Rights and/or Ownership Rights Return of use of the pipeline construction right-of-way to original owners/users upon construction completion is a core commitment of the RAP. In Azerbaijan, where corridor land is leased, the mechanism for return is clearly defined in the lease agreements, and with one exception 13, compensation for restrictions of use has already been paid. 13 The exception is municipal lands. Under the terms of the Azerbaijan Host Government Agreement, it is the State s responsibility to compensate municipalities for project rights to municipal land. The State Authorities are expected to complete such payments not later than November It should be noted that BTC Co. has paid in full compensation for all pastures, crops and attachments for all leased municipal land and to all other identified users of municipal lands.

19 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-19 In Turkey, agreements cover purchase of permanent ownership rights of the 8-metre strip over the pipeline, and acquisition of temporary usage rights for 3 years for the 20-metre construction right of way, with return of cultivation rights for both corridors to the former users after reinstatement, subject to certain restrictions. The legal mechanism through which ownership and/or usage rights for both corridors will be returned is clearly established, but it was apparent from discussions with affected people that information by the Project on this matter needs to be improved. In Georgia, two critical matters are yet to be addressed: (i) the mechanism to be used to acquire and compensate for the right to apply restrictions over the two 7-metre strips either side of the 44-metre corridor (7 m m. + 7 m. = 58 metres) to establish the 58-metre protection zone; and, (ii) the mechanism to be used for return of use of the 44-metre construction corridor to original owners and uses. Both these issues are of intense interest and a subject of speculation amongst affected people. In this climate, there is a very real risk of misinformation leading to unrealistic expectations. BTC Co. is urged to address these two matters and provide clear information to affected people as soon as possible. During discussions with the Expert Panel, BTC Co. has reiterated its commitment to returning use of land in the construction right-of-way and pipeline corridor to affected people. BTC Co. confirmed that it is working on formal mechanisms for achieving this in Georgia. Recommendation: k. BTC Co. to finalize formal mechanisms for returning use rights in Georgia as soon as possible. l. Closer to the return of use of the corridor, BTC Co. to undertake an information dissemination campaign in all three countries to reiterate the procedures that will be followed for returning the use of land, and to remind households of the restrictions that will apply.

20 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A LIVELIHOOD RESTORATION 3.1 Livelihood Restoration At the time of the review, no land restoration had been commenced. Many households reported being able to continue to crop their construction corridor land even though they had received compensation for loss of this year s crop income as part of the three year pipeline construction period. BTC Co. s flexibility in allowing continued use of the corridor ahead of the construction spread was a bonus for many households, and has helped foster goodwill towards the project. It was encouraging to the Expert Panel that many of the initial expenditures reported by households in Azerbaijan and Georgia were on productive goods or assets. Purchases of seed, livestock and farm equipment were commonly mentioned. Purchase of trucks for transporting farm produce, minibuses to establish public transport businesses and cars, also widely used in the project area for transporting farm goods to markets, were also nominated. A small number mentioned investments in enterprises. Particularly in Azerbaijan and Georgia, where economic development has been severely constrained by very low liquidity, the cash injection from compensation may provide a significant stimulus to village economies, contributing to household incomes through diversification, improved access to markets, funds to start or expand family enterprises, and equipment and chemicals to lift production on remaining lands. Expenditures were not examined in Turkey during the August 2003 review. Interviewed villagers in all three countries demonstrated a sound understanding of the period during which their crops and grazing incomes will be impaired and generally indicated they had made budgetary provision for the three year construction period. Where compensation is cash based and delivered as an up-front lump sum, there is always a risk that some households will spend early and fail to make adequate allowance for the full three year period. The majority of households have lost only a small portion of their overall productive landholdings, so there is a reduced risk of hardship resulting. BTC Co. s social monitoring should remain vigilant for any cases of hardship, particularly in the final 12 months of the construction period. Monitoring should also specifically investigate households affected by land acquisition for larger above ground installations where quantitative impacts on landholding and landderived livelihood may be more significant. It is recommended that BTC Co. undertake annual replicate surveys of household income and expenditures for a cross-section of households as part of ongoing social monitoring. This will also provide one of the indicators for use by the Expert Panel in monitoring progress with livelihood restoration.

21 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-21 Recommendation: m. BTC Co. to incorporate annual replicate surveys of household income and expenditure as an integral part of its social monitoring program across all three countries. 3.2 RAP Funds Significant progress has been made in both Turkey and Georgia since RAP finalization to further define and target the use of RAP Funds. In Turkey, developments noted by the External Panel reviewer included: - Compensation payments have been made to 1,542 formal and 2,971 informal users without tenancy agreements based on University of Ankara loss assessments. - Losses of yields in communal meadows and pastures, reduction of produce from forests, various restrictions of access, and damage to village property and infrastructure are being assessed by the University of Ankara on the whole route, and related compensation is being paid to communities from the RAP Fund for the first 100 kilometres of pipeline. - University of Ankara has completed a detailed livelihood study for the Golovasi fishermen (Ceyhan Terminal). BTC Co. with KORA and University of Ankara is finalizing a compensation strategy for review and feedback from the fishermen. In Georgia, developments reported to the Expert Panel reviewer included: - The RAP Fund had been used to support seminars conducted by the Bank of Georgia and APLR in 45 villages to provide advice on compensation use including risks (theft, fraud), ways to secure funds, sensible expenditures (purchase of seeds, fertilizers, agricultural chemicals), microinvesting and how to operate a bank account. The RAP reports that in Azerbaijan, there is no requirement for a RAP Fund (see Section 4.9, Part A, BTC RAP). No evidence of gaps in compensation that may have warranted use of a RAP Fund in Azerbaijan was identified during the current Expert Panel review. 3.3 Vulnerable Groups A limitation of the August 2003 review was that consultation with project affected vulnerable households was very limited. Vulnerable households will form a particular focus of the next Expert Panel review. BTC Co. internal monitoring reports for each country have included information about initiatives directed towards vulnerable people.

22 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-22 In Azerbaijan, legal assistance to support women headed households (particularly those with missing husbands) to obtain powers of attorney or administration rights, has been provided. This was confirmed by legal NGO, CLEE, and through interviews with a number of women landowners. BTC Co. had reportedly made special arrangements for signing and payment of landowners who were unable to travel, or who, like some employees of cattle breeding enterprises, were at distant locations. In Turkey, internal monitoring reports indicate that vulnerable groups located within the first 100 kilometres of the pipeline have received compensation through the RAP Fund, based on loss assessments being undertaken progressively along the pipeline corridor by the University of Ankara. In Georgia, vulnerable groups have been targeted for assistance through the RAP Fund. BTC Co. s Environmental and Social Department will manage the implementation of measures to provide non-cash based assistance to vulnerable groups. 4. RAP IMPLEMENTATION 4.1 Organization and Resources BTC Co. human and logistical resources for social and resettlement management were assessed as adequate in all three countries. During the period of the review, Azerbaijan and Georgian teams were in the process of transitioning from community preparation and land acquisition roles to construction phase activities. Roles, responsibilities, auditing and reporting tasks were still being resolved. The Expert Panel noted some gaps in community liaison relating to construction activities and has recommended country-specific measures to improve coordination between BTC Co. s and the Contractor s community liaison officers. 4.2 Documentation and Reporting Databases kept by BTC Co. within each country were found to be efficiently maintained. The BOTAS/DSA land acquisition management system was impressive and very effectively managing the complex task of tracking all stages of the Turkish land expropriation process. Documentation, record keeping and land titles registration processes in Azerbaijan and Turkey were performing efficiently. In Turkey, BOTAS/DSA has seconded staff to strengthen the capacity of some local Land Registration offices to assist with the additional work load generated by the BTC pipeline. It has also supported District Courts and Cadastral Offices through provision of stationary, computers and typists. In Georgia, district Lands Departments are responding steadily, but the high occurrence of errors and discrepancies in the Land Register has resulted in land acquisition delays. 4.3 Grievance Processing Project affected people interviewed during the Expert Panel review generally showed a clear understanding of the avenues that were available to them to make a complaint

23 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-23 against the project or its personnel. Project grievance logs and information on petitions to courts showed that people in all countries have been actively utilizing project, administrative and judicial complaints resolution avenues. All countries had established grievances logs. Processes and channels for reporting and recording grievances need clarification and strengthening in all countries. It is recommended that grievances need to be periodically (at least quarterly) collated from all sources to provide the management team with an overview of project performance. BTC Co. needs to be more pro-active in ensuring that Construction Contractors are diligently recording complaints and effectively implementing corrective actions. It is recommended that BTC Co. or its partner NGOs (CLEE, APLR and RUDF) should be responsible for periodic, random checking of grievance close-outs and outcomes. This should encompass confirming directly with complainants that they are satisfied with outcomes. Special attention should also be directed to consulting with vulnerable groups to confirm whether they have any complaints arising during the course of the project. These groups may either be physically not able, or not feel sufficiently empowered to make complaints through formal channels. Partner NGOs may also be able to play a useful role in undertaking this type of consultation. Recommendation: n. BTC Co. to organize workshops to clarify grievance processing roles and responsibilities. o. BTC Co (or its partner NGOs) to undertake regular reviews of grievance close-outs to verify that agreed corrective actions have been completed and that complainants are satisfied with outcomes. p. BTC social monitoring teams to pay particular attention to consulting with vulnerable groups to ascertain whether they have any complaints or concerns. 4.4 Monitoring Internal RAP Monitoring Reports have been produced on a quarterly basis in each of three countries. These proved a very useful resource for the Expert Panel to understand progress that has been made and issues that have been encountered. Some strengthening measures have been recommended as a result of country-specific reviews. External monitoring by NGOs was found to be efficient and useful in all three countries. In Turkey however, RUDF s observations to BTC Co. are not always shared with the implementation organization (BOTAS/DSA). See Part D of this review report.

24 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A COMMUNITY RELATIONS AND BENEFIT SHARING 5.1 Community Perception of Environmental and Social Impacts In Turkey, villages in the vicinity of active works areas in Ceyhan and Osmaniye Provinces were generally satisfied with the contractor s performance in mitigating environmental impacts and responsiveness to complaints such as about project generated dust. According to interviewed villages, continuity of irrigation and drainage channels was also being adequately managed. In Azerbaijan and Georgia, the Expert Panel heard some complaints about project impacts, though these generally related to specific locations and were not widespread along the corridor. Villagers in Chiyni (Azerbaijan) had complaints about unmitigated damage to infrastructure, trespass and dust, while in Kisil Kilisa (Georgia), there were complaints about damage to village roads and construction of a temporary access road on village pasture. The Expert Panel has made countryspecific recommendations about timely acknowledgement of complaints and the need to clarify roles and responsibilities for reacting when complaints are received. These remain relatively isolated incidents but point to a need for some tightening of performance. 5.2 Recruitment of Local Workers and Local Procurement Local workers, including workers from project affected communities, were engaged in the construction workforces of all three countries. Villagers generally had a clear understanding of the small number of jobs on offer, and of their short duration. In Turkey, it was found that insufficient leverage was exerted on Contractors to procure locally as they are committed to. Local procurement activities in Azerbaijan and Georgia were not assessed during this review. q. BTC Co. to look at measures to improve Contractors performance with respect to local procurement. 5.3 Community Investment Programs Community Investment Programs were in the early stages of implementation in Georgia and Turkey. In Azerbaijan, contracts were awarded during the period of the review. Most interviewed villagers were aware of the Community Investment Programs either through contact with the implementing NGOs, or through information disclosed earlier by BTC Co. Villagers understood that they would be required to provide 25 percent of inputs to match any outside assistance. A key issue that emerged from consultations was the need to keep reinforcing to villages that the program will unfold over three years. Communities are eagerly anticipating the programs and may become frustrated, or concerned that they are missing out, if action does not immediately appear to be forthcoming.

25 Part A Overview BTC SRAP Expert Panel Review August 2003 Rev. 2 A-25 It is critical to ensure that CIP activities are developed in close coordination with other players that include various Government organizations, donors, NGOs/CBOs and Contractors who may be interested in partnering, leveraging or otherwise extending BTC Co. s programs. The CIP programs should encompass an evaluation component so that successful programs can be targeted for extension as part of operations phase community investments. This should be incorporated into BTC Co. s forward planning. r. BTC Co. to look for synergies with other parties through partnering or leveraging to extend the geographic or temporal coverage of its CIP programs. s. BTC Co. to include evaluation of CIP investments with a view to the possible extension of funding during operations, as part of its community investments forward planning. 5.4 Ongoing Community Consultation and Disclosure The RAP highlights the need for ongoing public consultation and disclosure program. With pending elections in Georgia, there is a heightened risk of misinformation gaining currency in communities along the pipeline corridor and an increased need for community liaison and lands team personnel to regularly visit villagers to provide clear and accurate information, and dispel any rumours. BTC Co. must remain mindful that it ultimately has to maintain it s local license to operate and that affected communities do not distinguish between BTC Co. personnel, project contractors or sub-contractors. Throughout the construction phase, BTC Co. must remain actively involved in community liaison, information dissemination, ongoing consultation and dispute resolution. These are not responsibilities that can be completely divested to the contractor. In addition, BTC Co. must actively monitor the Contractor s social and community liaison performance. As the honeymoon period immediately following compensation payment subsides, it will become important that affected communities are provided with regular updates about construction progress, employment, CIP implementation, new enterprises and other benefits and opportunities accruing to communities and businesses as a result of the project. News and experiences of communities can be shared along the pipeline widening their world view. Many people during interviews expressed the view and the hope that the BTC project would benefit their country. Providing tangible evidence of benefits, small and large, can contribute to communities acceptance of the project, and of the inconvenience it causes in their everyday lives. Production of a six monthly news sheet targeting affected people and other stakeholders is highly recommended.