Senior secured loan of up to EUR 13.8 million in two committed tranches to Kokhavynska Paper Factory PrJSC (hereinafter the "Company"), one of the Ukrainian leading producers of base paper and sanitary tissue products manufactured from waste paper.
The Project assumes the construction of a facility for the production of pulp-based tissue products to meet growing demand for high quality tissue products. It will enable the Company to enter the higher quality retail tissue segment, double its tissue production capacity and improve operating efficiency. The CapEx for capacity expansion comprises tissue and converting machines, the construction of an industrial production and storage workshop.
ETI score: 80
Competitive. The introduction of higher value added production.
Green. The increase of environmental performance through better management practices; resource efficient technologies and business models.
KOKHAVYNSKA PAPER FACTORY JSC
Kokhavynska Paper Factory PrJSC is an SME based in the Lviv region and is Ukraine's second largest base paper manufacturer. The Company is producing base paper and sanitary tissue products from recycled paper.
EBRD Finance Summary
Total Project Cost
The EBRD offers to the Company financing not available from the commercial banks which provides mechanisms for risk mitigation and helps to achieve higher standards including environmental, energy efficiency and financial management practices.
Environmental and Social Summary
Categorised B (ESP 2019, Low-Medium Risk). Investments into paper-making equipment and the construction of a production and storage workshop are associated with site-specific environmental and social impacts that can be addressed through the implementation of an Environment and Social Action Plan (ESAP) agreed with the client. The client will be required to ensure compliance of the existing facilities with national regulatory requirements through modernization of the water-treatment plant to ensure that it is capable of bearing the additional wastewater load from the new project; and developing a national Environmental Impact Assessment (EIA) for the existing operations, as condition precedent for disbursement.
The environmental and social due diligence (ESDD) of the company and the project was carried out by an independent environment and social (E&S) consultant and included a site visit and review of the company's existing documentation, E&S management systems and operational practices; as well as analysis of the impacts and benefits associated with the proposed project. The ESDD focused on the occupational health and safety, working conditions, air emissions, water and wastewater management, and the sustainability of the raw material supply.
The assessment has also included an energy efficiency and BAT compliance assessment for the proposed project performed by the Bank, which confirmed that the selected technology is in line with EU best requirements for available technologies.
The Company currently does not use round wood as raw material for paper production, but recycled/recovered fibre. The new production line will require sourcing of pulp from suppliers certified by the Forest Stewardship Council (FSC).
The Company has developed an EIA for the new project, which was subject to public consultation and state environmental expertise, and formal authorization has been received. The ESDD has established some non-compliances within the existing operations, specifically absence of the national EIA for the facilities constructed in the past. The company has started development of the feasibility study and national EIA for the existing operations, inclusive of the cumulative impacts resulting from the new facility, and will have to obtain the required permits and authorization prior to commencing operations at the new facilities. In addition, the existing obsolete water treatment facilities will require modernization, to be able to process the increased amount of waste water.
ESDD identified other areas of the Company's operations, which require corrective and mitigation measures and are included in the ESAP, amongst others, rehabilitation or closure of the existing settling ponds; improved management of hazardous materials and waste; fire safety improvements, emergency response planning; enhanced environmental monitoring; formalization of the labour and social management systems; further improvement of the safe working practices in line with ISO 45001 standard; improvement of the contractor management; development and implementation of the Stakeholders Management Plan and grievance mechanism; implementation of FSC sustainable forest management chain-of-custody and controlled wood certifications.
The Non-Technical Summary was also developed for the Project as published at the following link: http://www.kpf.ua/?page=news.
Technical Cooperation and Grant Financing
The Company benefited from the Technical Cooperation component funded from European Union's EU4Business programme for Ukrainian SMEs. The TC funds for total amount of EUR 147,000 were used as a pre-investment support in conjunction with the EBRD financing.
The Company also conducted an energy audit under the EBRD's FINTECC Ukraine TC support, which allowed to identify energy efficient measures in existing facilities. Project will benefit from FINTECC incentive grant in the amount of USD 131,433 for system of heat recuperation, energy management systems and re-use of waste water.
Company Contact Information
Roman Chebotaryov, Chief Financial Officer
81740 Ukraine, Lviv region, the village of Hnizdychiv, 6 Konovaltsia Str. Kokhavian Paper Factory
PSD last updated
21 Dec 2020
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