DFF - Akabe

Location:

Azerbaijan

Project number:

51406

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

14 Apr 2020

Status:

Disbursing

PSD disclosed:

29 May 2020

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

Senior secured loan of up to USD 10.6 million (EUR 9.8 million) to Akabe LLC.

Project Objectives

The company is seeking financing for (i) the reorganization of the balance sheet through refinancing of its short-term loans, (ii) increased working capital needs to respond to the challenging market environment and (iii) the construction of a warehouse and auxiliary facilities.

Transition Impact

ETI score: 80

The DFF SME framework primarily targets the "Competitive" quality by helping SMEs to restructure and become more efficient or professional. Sub-projects can target any of the other transition qualities as secondary objective. The project is supporting framework objectives by supporting an SME in the following areas: "Competitive" and "Resilient".

Client Information

AKABE LLC

Akabe LLC is a retailer of ceramic tiles and home improvement products in Azerbaijan.

EBRD Finance Summary

USD 10,600,000.00

Total Project Cost

USD 13,300,000.00

Additionality

Additionality stems from tenor and repayment structure of the proposed loan, which is necessary to undertake the capex programme for construction of the warehouse. Local banks mostly provide shorter tenor loans with restrictive repayment schedule (amortizing structure without grace period) that limits the company's capacity to implement investment programme.  

Environmental and Social Summary

Categorized B under ESP 2014 (Low to Medium Risk). In-house Environmental and Social Due Diligence (ESDD) has established that investments into the working capital and warehouse construction for the distributor of ceramic tiles, bathroom furniture and accessories are associated with site-specific and moderate E&S risks and impacts that will be managed through the implementation of the Environmental and Social Action Plan (ESAP) that has been fully accepted by the client. 

ESDD included the completion of a detailed corporate ESDD questionnaire by the company, and follow-up Q&As. ESDD has been established that the company has some elements of the Environmental and Safety Management Systems in place and staff dedicated to the coordination of these issues. The company is in compliance with the national legislation and the project can be structured to meet EBRD ESP requirements.

There has been, however, a number of ESP gaps identified, such as insufficient supply chain and contractor management, lack of the robust Environmental and Social Management systems, stakeholder engagement and grievance management.

An ESAP has been prepared and agreed with the company covering all aspects of the Bank's Performance Requirements including further improvement of the Environmental, Social, Health and Safety management systems, inter alia, appointment of the dedicated EHS coordinator, review and update of the HR procedures, implementation of supply chain management, fire safety, construction safety and, workers and community safety, stakeholders engagement.

The client will be required to provide the Bank with annual reporting on the implementation of this ESAP and on any other environmental and social issues arising in the year.

Technical Cooperation and Grant Financing

Legal due diligence to be financed 80% by "EBRD Shareholder Special Fund" and 20% by the company.

Company Contact Information

Samad Hajiyev
Samed.Haciyev@akabe.az
+994502186911
www.akabe.az
Binagadi highway 12, Rasulzade settlement, Baku, Azerbaijan

PSD last updated

29 May 2020

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

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.

Specific requests for information can be made using the EBRD Enquiries form.

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.

 

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