Social Due Diligence Report

December 2014

ARM: Water Supply and Sanitation Sector Project –

Phase II

Prepared by Project Management Unit, Armenian Water and Sewerage Company for the Asian Development Bank. This social due diligence report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

LAND ACQUISITION AND RESETTLEMENT

REVISED DUE DILIGENCE REPORT

SUBPROJECT 3, LORI

ARMENIA: WATER SUPPLY AND SANITATION SECTOR PROJECT. Phase II

Project Number: L2860-ICB-1-04

Prepared by the Project Management Unit, Armenian Water and Sewerage Company

December 2014

This is a revised version of the due diligence

report that was originally posted on the

AWSC website in June 2014, with additional

information to comply with ADB’s

requirements for negotiated land acquisition.

2

ABBREVIATIONS

ADB Asian Development Bank

AH Affected Household

AP Affected Person

AWSC Armenia Water and Sewerage Company

CJSC Close Joint Stock Company

DDR Due Diligence Report

DRR Daily Regulating Reservoir

GoA Government of Armenia

HGSHN Haygyugshinnakhagic LTD

JV Joint Ventured

LA Local Authorities

LAR Land acquisition and Resettlement

LARF Land Acquisition and Resettlement Framework

LARP Land Acquisition and Resettlement Plan

PC Public Consultation

PS Pumping Station

SCWE State Committee for Water Economy

SPS Safeguard Policy Statement

WSS Water Supply and Sanitation

3

TABLE OF CONTENT

ABBREVIATIONS 2

TABLE OF CONTENT 3

I. INTRODUCTION 4

A. Project Background 4

B. Scope of the Project 4

C. Design Features of the Subproject 3 5

D. Objective and Scope of the Report 8

II. LAR REQUIREMENTS FOR THE PROJECT 8

III. MINIMIZING OF LAND ACQUISITION AND RESETTLEMENT IMPACTS 8

IV. SCOPE OF LAND ACQUISITION AND RESETTLEMENT IMPACTS 9

A. Impact on Land 9

B. Impact on Business 10

C. Impact on water supply and land access 10

V. COMPENSATION AND LIVELIHOOD RESTORATION 11

VI. CONCLUSIONS 14

Appendixes:

Appendix 1: A post-factum signed protocol for land acquisition under a negotiated settlement

Appendix 2: An English summary of Appendix 1

Appendix 3: Signed sale and purchase contract

Appendix 4: Some photos of the negotiation and agreement signing

4

I. INTRODUCTION

A. Project Background

1. On the back of the successful implementation of the Water Supply and Sanitation Sector Project,

Phase I, the Government of Armenia (GoA) through the State Committee for Water Economy

(SCWE) has requested Asian Development Bank (ADB) to support the funding of a new project

under Additional Financing. ADB agreed to provide GoA with a loan of 37 mln AMD to rehabilitate

and extend of the water supply and sanitation (WSS) systems across 10 subprojects and

improvements in operational efficiency and financial management of Armenia Water and

Sewerage Company (AWSC), a government-owned commercial company that is managed and

operated through a management contract by an international water utility company.

B. Scope of the Project

2. The Project is aimed at (a) rehabilitating and upgrade water supply infrastructure, (b) improving

the performance of water services, and (c) improving the management and operational efficiency

of the water utility company.

3. As a result, Project will ensure further public health and environmental improvements by providing

potable and reliable water supply to beneficiary households. It will also support poverty reduction

by (i) reducing the incidence of waterborne diseases and costs of medical care; (ii) improving the

time poverty of women due to labor intensive housework such as water collection, which may

allow them to participate more in social and economic activities; (iii) providing safer and more

reliable water supply; and (iv) improving the quality of life of households in all the project towns

and villages by improving their access to safe and sustainable drinking water.

4. The Project will establish safe, reliable piped water supply for 112 communities: 18 towns and 94

villages within 10 Marzes (Aragatsotn, Ararat, Amavir, Geharqunik, Tavush, Lori, Kotayq, Shirak,

Syunik, and Vayotz-Dzor). The Project will be implemented through subprojects. Subproject 3 is

divided into 3 packages. Ten communities (8 villages and 2 towns) from Lori marz are the

beneficiaries of the Subproject 3. Details are presented in Table 1.

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Table 1: List of Subproject Communities per Type

Name Type of Community

Package 1

Stepanavan urban

Metc Parni rural

Package 2

Metcavan rural

Sarchapet rural

Lernahovit rural

Package 3

Alaverdi urban

Arevatcag rural

Odzun rural

Tegut rural

Shnog rural

C. Design Features of the Subproject 3

5. Detailed design (DD) has been developed by AWSC consultant JV of HGSN and JINJ LTDs. The

network in beneficiary communities is mostly built in 1960s-70s. Water reservior in Alaverdi was

constructed in 1945. About 80% of the system is in emergency condition. Some waterlines and

water metering units were built in 2009-2010 in the frameworks of the projects financed by ADB.

6. The following elements are designed for Subproject 3: i) reconstruction and construction of

polyethylene pipes, ii) replacement of the entry lines for the private houses, iii) installation of

water metering units, iv) reconstruction and construction of DRRs, v) construction of water supply

and water metering chambers. Additionally, a pump station (PS) will be constructed in the Teghut

rural community. Details are presented below in the table (Table 2). In total near 58,000

community members will benefit from the replacement of the entry lines and installation of water

metering units.

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Table 2: Works to be implemented under the Subproject 3

Works to be implemented Unit

Package 1 Package 2 Package 3

Total

Ste

pan

avan

to

wn

Mets

Parn

i

Su

bto

tal

Mets

avan

Sarc

hap

et

Lern

ah

ovit

Su

bto

tal

Ala

verd

i to

wn

Are

vats

ag

Od

zu

n

Teg

hu

t

Sh

no

gh

Su

bto

tal

Reconstruction of internal water supply network with polyethylene pipes

km 9.5 6.8 16.3 8.6 6.1 1.8 14.7 10 7.3 1.2 6.5 4.3 29.3 60.3

Reconstruction of DRRs N

1 1 1 3 2 - - 1 - 3 6

Construction of PS N 1 - 1

1 2 3 - - - 1 - 1 5

Installation of private houses connections

km 4.05 2.8 6.85 5.1 1.6 - 6.7 4.34 2.05 0.174 1.315 2.21 10,089 23,639

Installation of private houses water metering nodes

set 450 420 870 600 180 - 780 405 231 36 150 200 1,022 2,672

Repair of inlet lines of apartment buildings

km - - - - - - - 2.75 - - - - 2.75 2.75

Valve nodes of the inlet lines of apartment buildings

set 10 - 10 - - - - 82 - - - - 82 92

Construction of water supply and water metering chambers

set 35 8 43 20 10 2 32 24 11 1 16 8 60 135

Construction of the segment of pressure pipeline from the PS to the DRR with de250 polyethylene pipes, their washing and disinfecting

lm 900 - 900 - - - - - - - - - - 900

Construction of buried valve node set 12 - 12 - - - - - - - - - - 12

Construction of de63 connections for apartment buildings

lm 400 - 400 - - - - - - - - - - 400

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Works to be implemented Unit

Package 1 Package 2 Package 3

Total

Ste

pan

avan

to

wn

Mets

Parn

i

Su

bto

tal

Mets

av

an

Sarc

hap

et

Lern

ah

ovit

Su

bto

tal

Ala

verd

i to

wn

Are

vats

ag

Od

zu

n

Teg

hu

t

Sh

no

gh

Su

bto

tal

Reconstruction/construction of intake reservoir

piece - - - - 1.00 1.00 2.00 - - - - - - 2

Reconstruction/construction of Hovdara water main with de200-250 polyethylene pipes,their washing and disinfecting

lm - - - 10.5 - - - - - - - - - 10.5

Construction of chlorination station on Hovdara water main

set - - - 1 - - - - - - 1

Construction of pressure reducing chambers on Hovdara water main

- - - - 2 - - - - - - 2

Project Beneficiaries Num 16,740 2,310 19,050 7,300 2,816 1,665 11,781 16,524 782 5,500 887 3,365 27,058 57,889

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D. Objective and Scope of the Report

7. The objective of this due diligence report (DDR) is to review the Subproject 3 land acquisition and

resettlement (LAR) impacts based on the DD and propose mitigation measures, if necessary in

accordance with ADB Safeguard Policy Statement (2009).

II. LAR REQUIREMENTS FOR THE PROJECT

8. In terms of safeguard categories, the Project is defined as B category for involuntary resettlement

impact (limited impacts). The preliminary design and later on the DD shows that the rehabilitation

and construction will be conducted mostly on property owned by the AWSC, on

municipal/community land, or within the rights-of-way assigned to municipal/community

infrastructure.

9. Land Acquisition and Resettlement Framework (LARF) for AWSS Project (Phase II) has been

prepared by the AWSC and was endorsed first by the SCWS under the RA Ministry of Territorial

Administration and then by the Government of Armenia in March 2012. The document details

mechanisms, procedures and compensation entitlements to be applied in the planning and

implementation of Land Acquisition and Resettlement (LAR) activities. A sample Land Acquisition

and Resettlement Plan (LARP) for AWSS Project (Phase II) was developed in December 2011.

The document addressed project LAR impacts based on the preliminary design and respective

budget for its implementation. The sample resettlement plan was also endorsed by SCWE and

uploaded on ADB’s website together with the Project LARF on 19 December 2011.

III. MINIMIZING OF LAND ACQUISITION AND RESETTLEMENT

IMPACTS

10. One of the main preconditions of the DD was the avoidance of the LAR impacts as the LARF

states that subprojects involving acquisition of private properties and/or that cause significant LAR

impacts are ineligible for project financing and thus must be dropped from the project.

11. Therefore, prior to each section DD, the cadastral maps for each community were examined to

understand if there are any overlaps between the private or used lands and the existing water

pipes. Verification of the cadastral maps was done also in the field based on the survey and

measurement where applicable. After the exercise, impact on the legally/illegally used

lands/structures was avoided in the DD.

12. Main principles followed during the detailed design:

i. Pipes were located on sites that were already used for the same purpose and/or were

owned by the community authorities;

ii. New lines were selected on the community streets, which helped to avoid the LAR as well

as usage of the used lands by community members in the future. Also it will ensure easier

maintenance of the infrastructure as well as prohibit illegal use of water from the pipes

network.

iii. Where the private usage of the land was identified a new design solution was given to

avoid the impact (see Figure 1 as an example).

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iv. All the designs were presented, reviewed, agreed and confirmed by Local Authorities

(LAs). LAs also confirmed minor replacements of the water pipes. The design was also

reviewed and confirmed by the owners of the public utilities such as Armentell CJSC,

ArmRusGazProm CJSC, Electric Networks of Armenia CJSC.

v. In case of the reinstallation of the water pipes on the community lands, it is envisaged in

the design, that the pavement of the road/land will be replaced with the same type of the

pavement.

Figure 1. Alaverdi Urban Community

Note: Blue lines: old pipes; red lines: new pipes

13. Project design was implemented in the close cooperation with beneficiary communities.

i. Public awareness about the project and the design was ensured by the Public

Consultations (PC) with Local Authorities (LA) representatives and the members of

beneficiary communities during detailed design stage.

ii. All the designs were presented, discussed and agreed with LAs. In a result of an

agreement all the designs were sealed by LAs.

IV. SCOPE OF LAND ACQUISITION AND RESETTLEMENT IMPACTS

14. Subproject 3 will not cause significant permanent and any temporary impacts, as the operation

and maintenance activities will be mostly conducted on property owned by the AWSC, on

municipal land, or within the rights-of-way assigned to municipal infrastructure. However, in spite

of all the efforts to escape impact on private lands or lands used by private persons or

businesses, the Subproject 3 could not avoid impact on a part of a private land plot.

A. Impact on Land

15. The acquisition of a part of one agricultural land plot was required for the pump station to be

constructed in Teghut community. The total area of the affected arable land plot is 6000sq.m from

which 191.7 sq.m. will be acquired. The land plot is irrigated and used by the APs for cultivating

some fruit trees. In total 16 fruit trees on the affected part of the land will be affected from which 5

10

are seedlings, 4 adult-not fruit bearing and 7 productive trees. Details are provided in the tables

below (Table 3 and Table 4).

16. The land plot is owned by one AH. Only 3.2 % of the land will be affected. The AH will be able to

plant trees on the remaining part of the land.

Table 3: Impact on Land

Type of

land

Land plots

(No)

Total

(sq.m)

Affected

(sq.m)

% of

impact Irrigation

AHs

(No) Community

Arable 1 6,000.0 191.7 3.2 Irrigated 1 Teghut

Table 4: Impact on Fruit Trees

Tree Seedling Adult-not

fruit bearing

Fruit

bearing

tree

Total

Land

plot

(No)

AH

(No)

Blood orange 5 0 0 5

1 1

Plum 0 0 3 3

Cherry 0 0 4 4

Pear 0 4 0 4

Total 5 4 7 16

17. All impacts were addressed and mitigated in accordance with the LARF provisions (details are

presented in the chapter V Compensation and Livelihood Restoration), after a successful

negotiation for the price of the land parcel for a negotiated settlement.

B. Impact on Business

18. Construction of the water transmission pipeline will not cause any impact on the businesses. The

roads and shoulders are wide enough so customers should not be impeded and there will be no

loss of income. Additionally, constructors will provide temporary access during construction

works.

C. Impact on water supply and land access

19. No impacts on the water supply to households and businesses is expected in the project areas

during the reconstruction of the water supply pipes and reservoir. The following measures are

foreseen to eliminate such impacts, despite these disturbances being rather short in duration:

i. Informing all residents and traders about the nature and duration of work well in advance so

that they can make necessary preparations;

ii. Increasing the workforce and using appropriate equipment to complete the work in a

minimum timeframe on these stretches; and

iii. Ensuring that the connection to the new system is well coordinated before disconnecting

households and business from the old system.

20. During implementation of construction works, temporary restriction of access or difficult

passability situation may occur. The following provisions will be included in the construction

Contractors’ contract for the purpose mitigation or neutralization of the impact due to the above-

mentioned issues.

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i. Before the commencement of civil works, the construction Contractor will ensure the

alternative solution for the access of community members to their land or place of residence;

ii. In case of unavailability of alternative solution for the access, the Contractor will have to

arrange/plan his works so that they do not affect local residents. Contractor also should

inform all residents and traders about the nature and duration of works well in advance so

that they can make necessary preparations;

iii. To maintain customer access to the acting businesses, Contractor will provide wooden

walkways and appropriate vehicle access across trenches at intervals.

iv. In certain unforeseen cases when the land user loses his crop due to the restriction of

access to the land the contractor has to report to the supervision consultant and stop the civil

work activities in the affected areas until the crops/trees are compensated as indicated in the

LARF provisions.

v. AWS CJSC will monitor Construction impact in terms of relevance to the described

procedures and approaches.

V. COMPENSATION AND LIVELIHOOD RESTORATION

21. The identified land parcel measuring 191.7 m2 was acquired through a successful negotiated

settlement with the owner, Mr. Kamo Hobosyan. As such, the requirements of the SPS Safeguard

Requirements 2 were not applicable and a resettlement plan was not prepared. This due

diligence report details the negotiated settlement process.

22. It was planned to build a drinking water pumping station in the administrative area of Teghut

community of the RA Lori marz. Relevant investigations and surveys were conducted to select the

most suitable location from technical viewpoint. Based on such surveys the agricultural land of

Kamo Hobosyan residing in the aforementioned community was selected as the most

advantageous. After a series of consultations on the issue, the owner agreed to sell the land

parcel for the project purpose. The head of the AWSC Assets Management Department entered

into a negotiation with the land owner. AWSC explained to the owner that there is a LARF for the

project for compensation of land, including trees, at replacement cost. For the land the owner is

entitled to the current market value plus 15% additional as a solatium. AWSC also informed the

owner that they will cover all registration costs and will assist him in re-measurement of the land

plot and preparation of the documents necessary for registration of the deal.

23. As a result of the negotiation an agreement was reached with the land owner to purchase the

land plot of 191.7 m2 with 250,000 AMD (two hundred fifty thousand). However, LAR tasks under

the project were implemented according to the compensation eligibility and the entitlements

matrix defined in the project LARF in line with both Armenian laws and regulations and ADB SPS.

Hence, given the applicable LARF provisions within the above mentioned ADB financed project,

the final estimated cost of the land was 394,106 AMD. Based on the negotiation, a Sale and

Purchase (S&P) Contract was signed with notary verification on 10th of February 2014 between

AWSC and the land owner. A post-factum signed protocol for land acquisition under a negotiated

settlement is in Appendix 1; an English summary is in Appendix 2. The signed S&P Contract is in

Appendix 3. Some photos of the negotiation and agreement signing are in Appendix 4. The

entitlements relevant for the subproject 3 are presented in Table 5 below.

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Table 5: Project Specific Entitlement Matrix

Type of loss Entitlement

Agricultural land Compensation is calculated at replacement value (market price) plus addition

of 15 %

Fruit

trees

Seedling Compensation for the market value of the seedling.

Adult-not fruit bearing

Regardless of their age these trees will be compensated at replacement cost

of productive inputs for the number of years needed to grow a tree to the

productive age;

Productive

Compensation at replacement cost for lost income based on the net market

value of one year’s income multiplied by the number of years needed to grow

a fully productive tree;

Fence The compensation is calculated at replacement value plus addition of 15 %

24. Compensation was already paid prior to construction works in the first quarter of 2014. The

compensation rates were determined by a certified independent evaluator using transparent

methodology in accordance with the project LARF. All costs, including compensation and

administration/registration costs was financed from the ASWC budget.

25. In total 394,106 AMD was paid to the landowners: 22,045.5 AMD for 191.7 sq. m of affected land;

106,260 AMD for the fence affected; 265,800 AMD was paid for 16 fruit trees. Details are

provided in the Table 6-10 below.

Table 6: Compensation for the land

Type

of

land

Affected

land plot

Unit

Price

Market

Value

Compensation

including 15%

No Sq.m AMD/m AMD AMD

Arable 1 191.7 100 19,170 22,045.5

Table 7: Compensation for the fence

Name L.m. Unit Price

(AMD/M)

Replacement

Cost (AMD)

Compensation

including 15%

(AMD)

Metal Fence 28 3,300 92,400 106,260

Table 8: Compensation for productive fruit trees

Type Affecte

d No

No of years to re-

grow new tree

Productivity

(kg/year)

Price per

kg (AMD)

Compensatio

n per 1 tree

Total

compensation

Plum 3 4 30 321 38,520 115,560

Cherry 4 4 20 310 24,800 99,200

Total - - - - - 214,760

Table 9: Compensation for adult- not fruit bearing trees

Type Affected

trees (No)

Years

(No)

Price for

seedling

(AMD)

1st year

investment

(AMD)

Investment for the

other years (AMD)

Compens

ation per

tree

Total

compens

ation

Pear 4 5 1,500 1,710 1,450 9,010 36,040

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Table 10: Compensation for seedlings

Type Affected

trees (No)

Price per

seedling

Total

compensation

Blood orange 5 3,000 15,000

Table 11: Summary of Compensation Paid

Type of Compensation Compensation Amount

AMD

Compensation for the land 22,045.5

Compensation for the fence 106,260

Compensation for productive fruit trees 214,760

Compensation for adult- not fruit bearing trees 36,040

Compensation for seedlings 15,000

Total 394,106

26. The Affected household received compensation for the affected assets. Affected agricultural land

is supplementary income source for the family. As it was demonstrated in the Table 3 only 3.2% of

the land is affected, so AH will be able to plant the affected trees on the remaining 96.8% part of

the land. Table summarises census and socio-economic information on the affected household.

Table12: Census of AH and Socio-economic Profile

No APs

No

Gender Age

Education

Status Employment Status

AH

No

Vulnerable

AH No Male Female

1 1 1 0 45 Higher Civil Servant

1 0 2 2 1 1 35-45 Secondary Employee in private sector

3 1 1 0 0-18 - Pupil

4 1 0 1 70 Secondary Pensioner

Total 5 3 2 - - - 1 0

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VI. CONCLUSIONS

27. A final screening and due diligence for involuntary resettlement impacts for Subproject 3 was

implemented to ensure that the Subproject did not cause any significant LAR impacts. Both

permanent and temporary impacts were considered and analysed during this process.

28. The Subproject 3 included upgrading and rehabilitation of existing physical facilities. The detailed

design confirmed that rehabilitation and construction will be done on property owned by the

AWSC, on municipal land, within the rights-of-way assigned to municipal infrastructure and on 1

private land plot.

i. The activities did not require significant permanent or temporary land acquisition

irrespective of the ownership status and current usage of the land. Only one land plot

(191sq.m) belonging to one AH was affected. The acquisition did not affect livelihood of

the AH. The AH was compensated in accordance with LARF provisions in amount of

394,106 AMD.

ii. There were no impact on businesses or other income-generated activities.

iii. No one lost access to any facilities, services, or natural resources.

29. During the construction phase AWSC will monitor the construction works in terms of any

temporary/permanent impact, such as limitation of access to businesses or other livelihood

resources etc. Any impact identified during construction works to be compensated based on the

LARF provisions.

Appendix 1: A post-factum signed protocol for land acquisition under a negotiated settlement

Appendix 2: An English summary of Appendix 1

ProtocolProtocolProtocolProtocol

6 November, 2014

Within the frame of the ADB financed Water and Sanitation Sector Project-Additional

Financing it was planned to build drinking water pumping station in the administrative

area of Teghut community of the RA Lori marz. Relevant investigations and surveys have

been conducted to select the most suitable location from technical viewpoint. Based on

such surveys the agricultural land of Kamo Hobosyan residing in the aforementioned

community was selected as the most advantageous.

Sergey Adamyan, the head of the AWSC Assets Management Department entered into

negotiations with the land owner Kamo Hobosyan.

As a result of negotiations an agreement was reached with land owner to purchase the land

plot of 191,7sqm. with 250,000 AMD (two hundred fifty thousand).

Given the applicable LARF (Land Acquisition and Resettlement Framework) within the

above mentioned ADB finance project the final estimated cost of the land constituted

394,106 AMD.

Based on conducted negations Purchase and Sale Contract was signed with land owner

with notary verification.

This Protocol is signed by the following persons:

Kamo Hobosyan Land owner

Frunzeh Norekyan Mayor of Teghut community

Sergey Adamyan Head of AWSC Assets Management Department

Hrachik Harutyunyan Head of AWSC Assets Management Division

Appendix 3: Signed sale and purchase contract

Appendix 4: Some photos of the negotiation and agreement signing