Project number:


Business sector:


Notice type:


Environmental category:


Approval date:

08 Apr 1997



PSD disclosed:

05 Mar 1997

Project Description

The project entails the establishment of an integrated soft drinks distribution system in eastern Russia by setting up bottling facilities and distribution centres.
The objectives of the project are to establish an integrated soft drinks distribution system in eastern Russia by setting up bottling facilities in Samara and Yekaterinburg and by establishing distribution centres in at least 20 cities in eastern Russia.

Transition Impact

The project will create approximately 2,100 jobs and will result in a substantial transfer of skills in the areas of management, marketing and accounting. It is anticipated that as a high-profile foreign investment, the project will have an important demonstration effect in the region. In addition, it will introduce further competition into the soft drinks industry.

The Client

The client is Pepsi International Bottlers (PIB), a group of companies organised to bottle and distribute Pepsi soft drinks and water in eastern Russia. The sponsors for the proposed project are Leucadia National Corporation and Pepsi Cola International, which have a 75 per cent and 25 per cent ownership position respectively.

EBRD Finance

Loan of US$ 45 million (ECU 36 million), of which US$ 10 million (ECU 8 million) will be syndicated to commercial banks.

Project Cost

US$ 210.7 million (ECU 168.6 million).

Environmental Impact

This operation has been screened B/1, requiring an environmental audit of the existing sites and an environmental analysis of the proposed development, including the review of the sponsor's environmental policy and procedures, which would be applied at subsequent stages of the operation.
Environmental audits of the existing sites were carried out by independent consultants and comprised: (i) site assessment questionnaires; (ii) site appraisals; and (iii) environmental site assessments. The audit of the Samara Bottling Facility did not identify any significant environmental risks or liabilities which would require corrective action. The audit of the site proposed for the Yekaterinburg Bottling Facility identified two areas of potential soil contamination. As a result of the findings, soil investigations, including intrusive sampling, have been conducted to confirm the level of contamination and the need for corrective action. The contamination was limited to two areas of 720 m² and 250 m² respectively and was relatively shallow (around 60 cm). PIB assumed responsibility for the clean-up action. The Yekaterinburg site had also some other minor issues associated with it, such as the presence of asbestos in insulation and the lack of adequate housekeeping. These issues will be addressed within the new project development.
Environmental analysis comprised the review of the environmental impact associated with the proposed development and the adequacy of mitigation measures. The analysis also covered the review of the sponsors' environmental records associated with their operations world-wide as well as their methodology and procedures for environmental site assessment, the design and construction of the facilities, cleaner production and energy efficiency initiatives and occupational health and safety standards and procedures.
PIB's procedures regarding site selection, site evaluation as well as design and operational practices have been found fully satisfactory, in line with the best international practices. Production lines, water supply, waste-water treatment, refrigeration systems, CO2 supply as well as all construction activities will meet national and Pepsi corporate standards, which are compatible with the European Union requirements. The waste-water treatment process considered by PIB will include: (i) equalisation and neutralisation; (ii) organic matter removal via trickling filters; (iii) further biological oxygen demand (BOD) reduction through aeration. All water used will conform to the United States Public Health Service, the World Health Organisation and all local standards for drinking water. In addition, it will conform to Pepsi corporate standards. This will also ensure compliance with EU environmental standards. The introduction of returnable bottles will bring in new technology with a positive environmental impact in line with the requirements under the European Union Directive on Packaging and Packaging Waste (94/62/EC).
The company will report annually to the EBRD on environmental, health and safety matters, including compliance status and progress made on the implementation of environmental protection measures, and will notify the Bank in cases of significant environmental accidents or incidents.

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