DFF - Kokhavynska Paper

Location:

Ukraine

Project number:

51718

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

15 Dec 2020

Status:

Disbursing

PSD disclosed:

21 Dec 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 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.

Project Objectives

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.

Transition Impact

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. 

Client Information

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

EUR 13,800,000.00

Total Project Cost

EUR 28,500,000.00

Additionality

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
findirector@kpf.ua
+380323948142
+380323948144
https://kpf.ua/
81740 Ukraine, Lviv region, the village of Hnizdychiv, 6 Konovaltsia Str. Kokhavian Paper Factory

PSD last updated

21 Dec 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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