Project Description
Provision of up to USD 250 million sovereign loan to Alexandria Petroleum Company (APC) to exclusively finance a package of energy and water efficiency investments to modernize and upgrade the refinery with processes capable of producing higher value added products, improving the energy efficiency and the overall performance, as well as reducing the environmental impacts.
The Project will install a number of Resources and Energy efficiency investments (namely Energy Management System, Cooling Water Tower, Emissions Monitoring System), pollution and emissions reduction investments, in addition to implementing an Energy & Water Efficiency Investment Programme (EWEIP) from implementing a Waste Water Treatment as well as other modernization investments.
Project Objectives
The Project aims to improve the refinery's efficiency, reduce its energy consumption and overall environmental impact while enhancing the plant productivity from (i) saving emissions of greenhouse gas (GHG) from increasing the refinery's output of higher quality and lower sulphur fuels in line with Euro 5 standards in addition to installing a Continuous Emissions Monitoring System (CEMS); (ii)Reducing the fuel consumption through the installation of Energy Management System (EMS) and a Vapour Recovery Unit (VRU) among other Energy efficiency investments; and (iii) Decreasing the seawater pollution risk and reducing the water usage through the installation of a Waste Water Treatment using Best Available Technology (BAT).
Transition Impact
ETI score: 60
The sources of Transition Impact qualities for the Project consist of: (i) Green and (ii) Well Governed. The Project will enable the Bank to put energy efficiency at the heart of the strategy of the refining sector in Egypt and further enhance its policy dialogue initiatives, in particular in the context of the Oil & Gas Modernisation Programme launched by Egyptian Ministry of Petroleum.
Client Information
EGYPT SOVEREIGN
The loan will be provided on a sovereign basis to the Arab Republic of Egypt. The ultimate beneficiary will be APC.
EBRD Finance Summary
USD 250,000,000.00
Total Project Cost
USD 647,299,968.00
Additionality
EBRD offers financing terms and conditions that are not available in the market from commercial sources. The bank's investment is needed to close the funding gap in the market in terms of hard currency (USD). The client seeks EBRD's expertise on higher enviromental and best international procurement standards.
Environmental and Social Summary
Categorised B (2014 ESP). The Project is part of a programme of investments to improve the environmental performance of the Alexandria refinery and produce better quality (Euro 5) diesel for the local market. The Project includes pollution prevention and resource and energy efficiency investments leading to better quality wastewater, reduced water demand through recycling, a significant reduction in seawater use for cooling, vapour recovery and reduced flaring and a reduction in greenhouse gas emissions,. Wastewater and cooling water investments will reduce impacts on the marine environment through reduced pollution and thermal changes. The wider programme will also result in a significant on and off site reduction in sulphur emissions through the installation and operation of sulphur recovery equipment. The Project and wider programme are in line with EU Best Available Techniques (BAT) for the sector and, together with an E&S Action Plan which has been agreed with the Company, will bring the refinery into compliance with the Bank's E&S requirements (the PRs) and EU BAT. The Company has the necessary capacity to implement the ESAP and the PRs but will be supported by a PIU consultant to ensure that the required standards are maintained.
Independent environmental and social due diligence (ESDD) has considered the potential E&S risks and impacts of the Project and wider programme; the E&S benefits; the alignment of the refinery with the PRs and EU BAT; and the capacity of the Company to implement the programme and operate the refinery in line with the PRs. The ESDD also considered linkages with adjacent refineries, as hydrogen will be procured from a nearby refinery and diesel from nearby refineries will be directed to the Company for treatment to Euro V standards.
The refinery is located on the Mediterranean coast in Alexandria. The areas around the refinery include industrial, commercial and residential areas. East of the refinery is a coastal lake. Industrial salts are produced in evaporation ponds to the southwest. E&S impacts associated with programme implementation have been identified during due diligence as being limited and can be addressed through standard mitigation and construction practices. Key considerations will include the management of occupational health and safety and labour management. Works will take place largely within refinery boundaries although the diesel hydro-treater (DHT) is expected to be installed on an unused plot of land owned by EGPC outside the refinery but within an industrial area. The Company will need to undertake appropriate local EIAs for permitting, and risk assessments, and ensure that adequate controls are in place to avoid risk and impacts associated with programme implementation, particularly offsite works, including connection of the DHT with the refinery. This will involve the construction of some limited pipelines (l1km), which may temporarily affect public roads. All land is owned by EGPC and no land acquisition and resettlement impacts are expected. Further, the Company will need to consider potential impacts associated with the discharge of brine generated through the recycling of process water. The supply of hydrogen and diesel is not expected to be associated with significant impacts and is expected to use existing infrastructure.
Operational E&S risks and impacts are managed through an integrated and ISO certified environmental and health and safety management system. This is a robust system supported by a well-staffed and qualified team. Nevertheless the ESDD confirmed that some on the ground improvements, particularly with respect to health and safety and creating safe working conditions, will be required. Further improvements and upgrades will be required to reflect the Project and the programme and actions required by the EBRD. The management system will be complemented through an energy management system to be certified to ISO 50001 standards.
The refinery broadly operates in line with Egyptian standards but requires substantial investments to align with EU BAT for the sector as required by EBRD's E&S requirements. Areas of legal non-compliance include certain emissions and discharges. The Project and the programme will do much to align the refinery with EU BAT although some further improvements will be required, including an EU BAT aligned emissions and discharges monitoring programme, and review of emissions and discharges post programme implementation, to determine whether further optimisation and improvements are required. This will be enabled by the Project continuous emissions monitoring system (CEMS) and a burner management system. Further improvements required by the ESAP including improved waste management, site wide contamination review and risk assessment, review of bulk storage tank secondary containment as well as underground tank integrity, the review of fugitive emissions (VOCs) and control thereof, and improved housekeeping.
The refinery has been reviewed in terms of occupational and industrial safety provisions, specifically the EU Seveso III Directive and the ATEX Directive. The refinery, if in an EU Member State, would trigger both Directives. Quantitative risk assessments (QRAs) have been conducted and various industrial and occupational safety controls are in place. Nevertheless, further improvements are required to meet these directives and good international practice for industrial and occupational safety. These include: revising the safe management system to manage Major Accident Hazards, implementing existing QRA recommendations, updating such QRAs and including additional scenarios, improving emergency preparedness and response planning including external communications on safety issues, Hazard and Operability studies (HAZOP) for the investment programme, improved training, chemical storage, workplace monitoring and asbestos surveys.
Human resources and labour provisions were generally found to be in line with PR2 requirements although the Company will need to develop a non-discrimination and equal opportunities policy. Further controls to avoid labour risks by contractors will also need to be improvement, specifically defining the minimum age for works and verification thereof. The ESDD has included the development of a Non-Technical Summary (NTS) and a Stakeholder Engagement Plan (SEP). These have been made available disclosed in English and in Arabic. The SEP will is critical to raise awareness and address potential stakeholders concerns, particularly with offsite activities such as the DHT and connect pipelines. To meet Seveso III requirements the refinery will need to engage with stakeholders, including the public, on industrial safety risks associated with the refinery. This is important considering the location of the refinery in an urban area.
Technical Cooperation and Grant Financing
TC funds consist of EUR 587k for the technical due diligence, economic assessment and the environmental and social due diligence.
Company Contact Information
Dr. Mohamed Hamdy - General Manager Assistant and Deputy Project Manager (APC)
mohamedhamdyabdo@alx-pc.com
PSD last updated
22 Nov 2021
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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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.
Integrity and Compliance
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.
OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.
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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Independent Project Accountability Mechanism (IPAM)
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 Independent Project Accountability Mechanism (IPAM).
IPAM 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.
Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.
