Provision of a USD 12.5 million loan to finance the modernisation and implementation of an energy-efficient capex programme, and local currency loan for the equivalent of USD 10 million to finance initial working capital needs of the recently privatised JSC Kokand Superphosphate Plant, renamed post-privatization to JSC Indorama Kokand Fertilizers and Chemicals ("IKF" or the "company"), an outdated phosphate fertiliser plant located in Uzbekistan (the "project").
The project aims to (i) enhance operational efficiency of the obsolete plant by bringing in new equipment and modernising the plant infrastructure, (ii) improve health, safety, economic inclusion and environmental standards of the company, and (iii) increase production and contribute to enhance the overall competitiveness of the sector in the country.
ETI Score: 75
The project will deliver competitiveness and enhanced inclusion as transition impact. Namely, it will support the turnaround of a recently privatised, obsolete company resulting in significant efficiency gains and greater profitability. Also, the project will bring in a global and strategic player in the fertiliser production market of Uzbekistan and is expected to lead to FDI inflows.
The project will also create employment opportunities for women, supporting IKF to achieve a more balanced gender representation by implementing a dedicated equal opportunities action plan. This will strengthen entry-points, skill acquisition and retention of women workers.
TOMS Score: 75
INDORAMA KOKAND FERTILISERS AND CHEMICALS JSC
Indorama Holdings B.V. currently owns 95.54 per cent of the company. The remaining shareholding belongs mainly to current and former cmpany employees. Indorama Holdings B.V. is a wholly-owned subsidiary of Indorama Corporation Pte. Ltd., domiciled in Singapore ("IRC").
IRC is the holding company of Indorama Group, one of Asia's leading industrial conglomerates with wide interests in petrochemicals, fertilisrs and related downstream businesses. IRC is wholly-owned for the benefit of Mr. S.P. Lohia and his family. Indorama Group was established in 1975 in Indonesia. It is West Africa's largest of petrochemicals, including olefins, polyolefins, phosphoric acid, phosphate fertilisrs, ammonia, and urea, and one of the world's largest producers of synthetic disposable gloves.
Together with its associate, Indorama Ventures Public Company Limited, domiciled in Thailand, Indorama Group is the world's leading producer of polyester and the leading producer of polyester feedstock (PX, PTA, and MEG) and man-made fibers. Its manufacturing activities are spread across 136 sites in 37 countries with a total sales volume of almost 25 million tons a year and annual sales value of over US$15 billion.
EBRD Finance Summary
EBRD Finance Summary:
CAPEX loan (in USD) - USD 12,500,000.00
WC loan (in UZS) equivalent - USD 10,000,000.00
Total Project Cost
Including related WC loan: USD 45,000,000.00
The EBRD provides financing on terms not readily available in the local market. The Bank's presence also brings additional comfort to clients and investors by mitigating non-financial risks. The project also helps the company achieve higher environmental standards, as well as access to support in energy and resource efficiency & climate resilience financing.
Environmental and Social Summary
Categorised B (2014) ESP. Environmental and Social Due diligence (ESDD) was carried out by Environment and Social Department (ESD) and included review of the local Environmental Impact Assessment (EIA) (approved by the authorities in August 2019), a site visit and follow up discussions with the Company. ESDD has shown that the Sponsor has an existing corporate E&S management system, Code of Conduct and other documentation, which are aligned with the applicable Performance Requirements (PR). The Company will need to implement a similar E&S management system for the Project to ensure plant related E&S impacts are appropriately mitigated and managed.
The Company's production facilities and warehouse are located in Kokand in Fergana valley which it will modernize by implementing a turn-around programme aimed at enhancement of operational efficiencies and improvement of health, safety, economic inclusion and environmental standards. Impacts of the construction works will be mitigated through the implementation of an E&S Management Plan. Soil and groundwater sampling has been conducted and no major legacy issues have been identified. The modernised plant will be designed to meet EU Best Available Techniques (BAT) and emission limits for the sector through installation of emission control equipment, emissions monitoring programme and a wastewater re-circulation system. With the application of BAT, emission rates will further decrease compared to those considered in the national EIA, updated air quality modelling has been completed which indicates with the application of mitigation measures no significant impacts to local air quality. The Company will develop a major accident prevention policy and conduct a detailed quantitative risk assessment (QRA) including implementation of any recommendations.
The Company will retain and expand the current workforce during the operation of the new plant. Both the Company and contractors will be required to implement applicable Performance Requirements and develop the appropriate policies and procedures, including an employee grievance mechanism. An independent labour audit will be undertaken during the first year of operation. Also, the Company will develop a stakeholder engagement plan and external grievance mechanism and routinely disclose pertinent E&S information to stakeholders. This would include communicating any process safety risks and controls and emergency preparedness and response provisions to stakeholders. An ESAP including these items has been agreed with the Company.
Technical Cooperation and Grant Financing
The Company will benefit from Technical Cooperation (TC) funds of up to EUR 50,000 for design and implementation of an equal opportunities action plan targeting women from pre-approved SSF funds for Uzbekistan under the Gender Advisory Services Programme (TCRS 296). The TC assignment will be delivered with a 10% contribution by the Company.
The Company will also benefit from non-TC USD 122,000 grant for advanced climate technologies from EBRD Finance and Technology Transfer Centre for Climate Change (FINTECC) programme funded by the Global Environment Facility (GEF) in the ETC region.
Company Contact Information
Mr. Rahul Singh
+998 71 2332264
11/1 Amir Temur Avenue, Mirobod district, 100100 Tashkent, Uzbekistan
PSD last updated
27 Jan 2020
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