Looking after Workers’ Well-Being in an Infrastructure Project

Pakistan suffers from a severe power shortage, which hinders its economic growth and efforts to reduce poverty. Through support for the hydropower project, ADB and financing partners aim to both foster confidence among potential investors and lenders and promote private sector investment in renewable energy in the country.

The project built a 102-megawatt (MW) run-of-river hydropower plant on the Poonch River near Gulpur village in Kotli district, which is around 160 kilometers from the capital, Islamabad. The aim is to provide low-cost power generation and additional supply to the national grid of 465 gigawatt hours per year.

Project challenges include ensuring country’s labor laws, internationally recognized core labor standards, and the requirements of the multilateral and bilateral financing partners are followed, and that ADB adds value not only through financial investments but also through promoting good social and environmentally sustainable practices in infrastructure development. Aside from land compensation at replacement cost, livelihood restoration, and corporate social responsibility programs, the social aspect of the project also includes advancing work opportunities of the people. For construction workers hired for the project, this means ensuring their well-being in terms of labor hours, compliant wages, fair treatment, health and safety, and living conditions, among others.

Labor and working conditions are an area that proved to be challenging in managing this large infrastructure project, and it is through strong collaboration between the financiers, the project sponsors, and the implementers that we can share some valuable lessons learned through the course of project implementation.

The project will provide generation capacity and increase the reliability of electricity supply in a country that is facing a severe power shortage. The Government of Pakistan, through the Private Power and Infrastructure Board, issued a Letter of Support to Mira Power Limited (MPL), the developer and ADB’s Borrower, on 23 May 2013 to develop the Gulpur Hydropower Project, following the build, own, operate, and transfer (BOOT) model.^[1] The special purpose company Mira Power Ltd. was set up for the project by three Korean companies, Daelim Industrial Company Limited, Korea South-East Power Company, and Lotte Engineering and Construction. The hydropower plant will be transferred to the government at the end of a 30-year concession period. The consortium comprised of Daelim Group and Lotte Engineering & Construction Co., Ltd. were appointed as the engineering, procurement, and construction (EPC) contractor for the project while the Korea South East Power Company is the operations and maintenance (O&M) provider.

A reservoir of 292 hectares was developed by construction of a concrete gravity dam 66.5 meters high across the Poonch river. During construction phase, the river inflow was diverted through two diversion tunnels. During the operation, the river inflow (except environmental flow) is diverted for the power generation through two power tunnels from 700 meters of the river section. This entails excavating 1 million cubic meters of soil and rock to meet the requirement of rock-fill at cofferdams and stone pitching.

The construction of the hydropower plant was estimated to take 55 months to complete. It required management of about 4,000 workers during the peak of main construction activities. Workers were hired from the project area and from surrounding provinces. Pre-construction activities commenced in February 2015. The project started commercial operations on 10 March 2020.

Based on the labor management plan and other environmental and social action plans, the lenders’ environmental and social safeguard officers and consultants monitored compliance with standards, including the core labor standards. They performed regular reviews and reported the status of compliance. They monitored and documented workers’ grievances and how these were resolved. They coordinated with the grievance committee, the management, community liaison officer, workers, and managers. They scrutinized the contracts and subcontracts and the facilities for labor and working conditions. Any issues found during these review meetings were recorded and discussed in the wrap-up meetings, and lists of corrective actions were shared with Mira Power management seeking its commitment to resolve the highlighted issues.

In the early stages of construction, several complaints were received on labor and working conditions. These included workers’ overtime not being paid, late payments, nonissuance of formal contracts, and issues related to accommodations and health and safety. These were flagged as non-compliances during monitoring and supervision missions conducted by ADB, its financing partners, and external environment and social advisor. A third-party labor audit was conducted to do a gap analysis of the implementation of the labor management plan and check compliance with the country’s labor laws, international core labor standards, and ADB and its financing-partners' standards and requirements on labor and working conditions.

Labor issues that were identified for the management to address included the need to hold all contractors and subcontractors to the same labor standards as that of the lead EPC contractor. Thus, contracts and subcontracts were revised to reflect the cascading of labor responsibilities down to the subcontractors.

It is also important to report and document environmental accidents and mitigation, health and safety accidents and mitigation, fatality, loss time injury, restricted workdays case, medical treatment case, first aid case, near-miss incident, traffic accident, fire incident, unsafe acts/conditions, regular health and safety training and toolbox talks, and inspections of labor and working conditions.

The project developed a checklist to help the EPC contractor with a systematic way of ensuring that existing and new subcontractors are complying with local labor laws and the 2009 Safeguards Policy Statement requirements on occupational health and safety, internationally recognized core labor standards, and other financing partners' standards. The documented checklist was shared with the EPC contractor and Mira Power and once a month, the company’s environmental and social safeguards officer was able to use the checklist to interview a random sample of workers from all subcontractors and suppliers working on the project at that point in time. The lead EPC contractor also increased the number of its environment and health safety staff as per Good International Industrial Practice (GIIP) to allow more closer supervision of its subcontractors.

As the project was responsible for a large workforce of over 4,000 workers at its peak construction, the accommodation and care for those who lived and worked on site were important. It was through extensive feedback on follow-up of complaints and management making changes based on feedback that the project was able to improve. Some of the significant changes were related to the well-being of workers, such as safe movement of workers at the project site; security measures (such as allowing entry only of workers with proper identification); adequate and clean drinking water according to standards of the World Health Organization; adequate and clean toilet facilities with separate facilities for men and women; clean and acceptable living quarters; first aid kits, ambulance, and site clinic, which were easily accessible and regularly replenished; people trained in the use of first aid; and well-maintained food facilities, proper food handling, and food handlers, who were medically examined for good health. Mira Power also ensured that the international industry practice of maintaining a ratio of one health, safety and environment (HSE) officer for every 50 workers is followed, and the appropriate number of HSE staff to be on site during day and night shifts.

As the project moved from the construction to the operational phase, ADB asked for a clear demobilization plan since the workforce was to be reduced from around 4,000 to just over 100 during the operational phase. It recommended that the EPC contractor start the conversation with workers on the upcoming demobilization and provide any necessary support to help them adjust. A “moving on” ceremony was also suggested to help workers as they approach their final working days at the site. They received certificates of appreciation and certificates of skill-based and safety trainings they had received on the project. The demobilization plan was carefully prepared and successfully implemented.

The outcome of the carefully planned labor management is important to a large and complex project of this size with construction over a period of several years. Workers who engage in construction are often part-time due to the nature of the work, where specified workers are brought in at different phases. Manual laborers mostly come from poorer populations, who may even have migrated from other areas to look for work.

It is important that project proponents are aware of the myriad of social challenges in managing a large workforce from recruitment to demobilization. Understanding the impact of the influx of workers into a project site and into the community as well as the dynamics among the workers themselves—the mix of workers and their backgrounds—is important for management to anticipate potential problems and issues.

ADB learned through this project not to underestimate the importance of labor management. It is important to have good contractor management as large infrastructure projects can often have between 20 and 30 subcontractors to manage. The Gulpur Hydropower Project had 25 subcontractors and service providers over the life of the construction period. A clear labor management plan that can be monitored and regular visits from financing partners and consultants to monitor, review, and identify any issues, while working with contractors and project owners to address them in a timely manner, are important actions to help projects resolve labor and social issues. It is also essential to include external labor audits by labor specialists as part of large infrastructure projects’ environmental and social action plans.

The Gulpur Hydropower Project aims to meet not only the electricity needs of the public but also the needs of workers who contribute to this development by working for months and years on the project. At the same time, it seeks to establish good relations with the local community to uplift their standard of living and avoid any social unrest.

All constituents are important in the development process, and ADB’s role as a facilitator of good development practices is tantamount.

^[1] Mira Power Ltd.  2015. MPL signs EPC contract for Gulpur Hydropower Project. News.

Asian Development Bank. Pakistan: Gulpur Hydropower Project.