Provision of a multicurrency senior loan of up to EUR 125 million equivalent in support of Grupa Azoty Polyolefins S.A. ("PDHP"), a subsidiary of Grupa Azoty Zaklady Chemiczne "Police" S.A. ("GA Police") and Grupa Azoty S.A. ("Grupa Azoty"), which is considering the construction and operation of an integrated propane dehydrogenation unit ("PDH") and polypropylene unit ("PP") to manufacture propylene and polypropylene. The facilities will be located in the town of Police, adjacent to the existing facilities of GA Police and will have access to its utilities and infrastructure.
The project will diversify Grupa Azoty's business by improving the efficiency of its operations as well as expanding the product range. The latter is being addressed by adding new products allowing the Group to diversify away from the fertiliser business.
ETI score: 61
The project is expected to diversify the Group's business and lower its reliance from the fertiliser business by entering into higher-margin and more value-added polymer products. This will enable the Group to become more resilient to the fertilizer sector's cyclicality. The process technology proposed in the project is highly innovative, being the second application in the EU (first in EBRD countries of operations). The main facilities of the project will be designed on the basis of best-in-class technologies with a good track record of operations provided by renowned licensors. The selected PDH technology was based on lower emissions and higher energy efficiency compared to cracking technologies.
GRUPA AZOTY POLYOLEFINS SA
PDHP is a subsidiary of Grupa Azoty and GA Police established to implement an integrated petrochemical complex consisting of propylene (based on propane dehydrogenation/PDH technology) and polypropylene production facilities.
EBRD Finance Summary
The EBRD to provide up to EUR 125 million equivalent multicurrency senior loan with the proceeds to be used to finance the construction of the PDH Unit and associated contingencies.
Total Project Cost
The EBRD is additional because it offers a large volume instrument filling the funding gap, its long-term relationship with a client provides comfort to other investors and it supports the company in mitigating carbon transition risks and in taking climate action.
Environmental and Social Summary
Category A (ESP 2014). The construction of a greenfield Propane Dehydrogenation (PDH) facility for propylene and polypropylene production facility has required an Environmental and Social Impact Assessment (ESIA) of the proposed investment in accordance with the Bank's Environmental and Social Policy (2014). An ESIA in line with Bank requirements was disclosed on 29th November 2019 prior to Board consideration in line with the Bank's Environmental and Social Policy.
The Bank has provided finance to Grupa Azoty (GA) in the past and the Company is implementing the agreed Environmental and Social Action Plan (ESAP) aimed to ensure compliance with National and EU environmental standards, and best industry practises. The new joint venture will be majority owned by Grupa Azoty and GA Police and therefore share the same corporate Environmental and Social Governance (ESG) practises.
The Project will be located in north west Poland in Police next to the existing GA Police chemical fertiliser and titanium dioxide plant. The new plant will consist of propylene and polypropylene production facilities, logistic infrastructure, handling and storage sea terminal located next to existing harbour of Grupa Azoty Police as well as auxiliary units. This includes the expansion of the existing harbour. The site is away from residential areas and will not be associated with resettlement of livelihood loss. The Company has commitment to high Health and Safety standards as well as full compliance with Seveso III requirements, as confirmed by an independent consultant.
The new plant is not located in protected areas, however, the shipping canal is within a Natura 2000 area, and a number of Natura 2000 areas are located nearby. Given the vicinity of a number of nature conservation and protected areas, including these Natura 2000 sites, a full Appropriate Assessment has been undertaken by the developer together with a review of compliance with PR 6 by the independent consultant. This has confirmed that the Project will not have any adverse impacts on protected areas or affect the Critical Habitat and Priority Biodiversity Areas.
An ESIA for the current Project has been undertaken by an independent advisor on behalf of the Project Company in line with National and EU requirements and includes cumulative assessment and an assessment of the impacts on nearby Natura 2000 areas. The project has been subject to National EIA process and the environmental permit was granted in January 2019.
The Bank's Environmental and Social Due Diligence (ESDD) was undertaken by an independent Lenders' consultant and included a review of current operations at the existing facility as well as the designs and site for the new plant and the associated infrastructure. The ESDD concluded that the Company has the institutional capacity to implement the Bank's Performance Requirements and is fully compliant with the Bank's PR 3. The implementation of good international corporate and EHS management systems as well as BAT compliance has been included in the Environmental and Social Action Plan (ESAP). In terms of technology, the new plant will meet the Bank's PRs and comply with EU Industrial Emissions Directive and Best Available Techniques (BAT) for the sector. The proposed technology will be among the best in sector and attain high process efficiency, low emissions and will include continuous emission monitoring systems.
Specific direct (process) GHG emissions correspond to 50 per cent lower compared to the EUiETS benchmark. Overall plant direct (Scope 1) emissions are expected to be circa 220,000 tCO2/y. Scope 2 (indirect electricity) emissions are estimated to be around 260,000 tCO2/y, thus the project Scope 1 and 2 emissions will be in the order of 480,000 tCO2/y. Scope 2 emissions are expected to decline following the decarbonisation of the power sector in Poland.
The Project will enable the use of generated hydrogen within the PDH unit and in the GA Police ammonia plant, yielding c. 114,000 tCO2/y savings. Additionally, the company plans to purchase renewable electricity through a Guarantees of Origin (GO) system and new renewable energy Power Purchase Agreements ("PPAs"). Overall, the ESIA has shaped the project to limit environmental impacts through the design and implementation of good international practice, which are described in more detail in the NTS and ESIA reports.
The Company will comply with all EU regulation dealing with non durable plastics and will not sell its output for prohibited by law single use plastics applications. According to letters of intent, direct agreements with non-packaging plastic producers represent the majority of product . The Company is committed to following EU best practice, has agreed to be part of the European Circular Economy Stakeholder Platform for Poland and plastics recycling platforms. The ESAP commits the new facility to attain circular economy and the decarbonisation goals in the long term .
The Bank will monitor the Project implementation through monitoring visits and reports issued by an independent Lenders Advisors. The ESIA is available for this Project on the Bank's and the Company's websites.
Technical Cooperation and Grant Financing
The EBRD will consider supporting the Company and GA Police in:
(a) Increasing awareness of the implications of climate change for economies and businesses and for the need to internalise information about climate change impacts in financial and business decision-making. This would translate to an enhancement of climate corporate governance and related disclosures by means of development of the Low Carbon Pathway that will align the entire industrial complex with the Paris Agreement.
(b) Assessing and reviewing climate related reporting procedures that will allow the Company to maintain reporting system in line with the Task Force for Climate Related Financial Disclosures.
Company Contact Information
Grupa Azoty Polyolefins S.A. Kuznicka 1 72-010 Police
PSD last updated
17 Apr 2020
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Environmental and Social Policy (ESP)
The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.
More information on the EBRD’s practices in this regard is set out in the ESP.
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The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.
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Access to Information Policy (AIP)
The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.
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Project Complaint Mechanism (PCM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g., through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s accountability mechanism.
The accountability mechanism independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.
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