Agrofusion Expansion

Location:

Ukraine

Project number:

53229

Business sector:

Agribusiness

Notice type:

Private

Environmental category:

B

Approval date:

26 Jan 2022

Status:

Concept Reviewed

PSD disclosed:

09 Nov 2021

Project Description

Provision of an up to €20m senior secured financing from the EBRD account (the "Loan") to Agrofusion Group (the "Group" or "Agrofusion"), Ukraine's leading tomato paste producer. The Loan proceeds will be used to finance the construction of the Group's fourth tomato processing plant and new greenhouses, as well as the purchase of equipment for tomato pomace processing, new agricultural equipment and eco-plastic containers for tomato paste (the "Project").

Project Objectives

The Project is expected to enhance the Group's scale and competitiveness, with a 30% increase in total paste production capacity, improved production efficiency and environmental footprint. The Project is expected to result in a significant reduction in CO2 emissions from use of precision farming technologies, logistics and packaging optimisation, commissioning of energy efficiency equipment, and higher automation. In paralell, the Group is expected to benefit from an improved resilience given the larger amount of irrigated land bank.

Transition Impact

ETI score: 60

Transition Quality: GREEN.

The Project's use of proceeds includes the construction of a state-of-the-art tomato paste production facility and the construction of a tomato pomace processing unit compliant with BAT standards, as well the construction of new efficient greenhouses, the purchase of new farming machinery, the expansion of the drip irrigation systems and the replacement of metal drums with reusable eco-plastic containers for product delivery. These investments are expected to lead to efficiency improvements in terms of energy, fuel and water consumption. 

Client Information

INTEGRATED AGROSYSTEMS FE

The Borrower is Farm Enterprise "Integrated Agrosystems", a Group company incorporated in Ukraine, which operates one of the Group's three existing tomato paste production plants. 

EBRD Finance Summary

EUR 20,000,000.00

Total Project Cost

EUR 69,200,000.00

Additionality

Standard-setting: Client seeks EBRD's expertise on higher environmental standards, to expand capacities while achieving higher efficiency and lower emissionss.
Financing structure: The EBRD offers a tenor, which is longer compared to the average tenor available to the client in the market on reasonable terms and conditions.

Environmental and Social Summary

Categorised B (ESP 2019).  The Project involves the development of a new facility for the processing or tomatoes and production of tomato paste and the construction of greenhouses for growing of tomato seedlings. The facility will be located on the outskirts of the town of Chaplynka on land previously used for both industrial and agricultural purposes. The Group has conducted engineering studies to confirm the suitability of the site. The Competent Authorities have determined that the facility requires an Environmental Impact Assessment under national law and the Group have initiated the process to undertake the required studies. The Bank's due diligence for this Project was undertaken internally and included review of an Environmental and Social Due Diligence Questionnaire completed by the Group, review of the AESRs for the previous deals, and submission of additional information to supplement the questionnaire.

The Project is considered to be aligned with the climate change mitigation goals of the Paris Agreement as it features in the joint MDB "aligned list" (Low-GHG agriculture, climate smart agriculture). Climate risks identified at the screening stage have been subject to further assessment and adequate measures are in place to ensure that the Project is aligned with the adaptation goals of the Paris Agreement.

Agrofusion is an existing client of the Bank with a good track record on previous projects operating robust, certified, environmental and social management systems, and with the capacity to implement the Project in line with the PRs.  Existing farming and production facilities are certified, as applicable, to food safety (ISO 22000), environmental (ISO 14001), health and safety (ISO 45001) and Global Gap standards.  The Group has demonstrated a strong focus on resource efficiency by seeking to reduce water and energy use, minimise waste and limit impacts on the local environment and biodiversity.  Existing facilities have been developed in accordance with EU BAT requirements.

The proposed Western Facility will be the fourth processing facility put into operation by the Group and, to date, no significant environmental or social risks have been identified. Key issues to consider include energy and water usage, air emissions, discharge of waste waters, disposal of wastes and use of hazardous materials for elements such as refrigeration. The facility will be the Group's most advanced in terms of resource usage going beyond BAT requirements for selected aspects notably water and energy consumption.  Waste waters will be treated and selectively recycled back into the production process.

Previously approved human resource, and health & safety, management practices will be extended to the new facility.  The Group operates in accordance with a Collective Agreement and has adequate policies in place to comply with the requirements of PR2 including an appropriate grievance mechanism. As stage previously, the Group is certified to the ISO 45001 Health and Safety Management System and monitoring to date has indicated adequate management of health and safety issues including identification of key risks, provision of appropriate training and protective equipment and monitoring of, and reporting on, incidents and accidents.

To address issues identified during due diligence and ESAP will be drafted and agreed with the Group prior to Board approval of the Project.  The ESAP will focus on ensuring that the EIA is completed and approved, that construction activities are correctly managed, and that current approaches to pollution prevention, human resource and health & safety management are carried across into the new facility.  The ESAP will be structured to ensure on-going compliance with the Bank's Performance Requirements and the Group will be required to provide annual reporting on the implementation of the ESAP.

Technical Cooperation and Grant Financing

The Project will likely have a Technical Cooperation (TC) component (corporate climate governance assessment to strengthen the Client's capacity to identify, assess and manage climate-related risks and opportunities) provided by the Clean Technology Fund (CTF) under its CTF High Impact Programme. In addition, the Japan-EBRD Technical Cooperation Fund will partially cover the legal due diligence costs associated to the Project.

Company Contact Information

Integrated Agrosystems FE
olga.zhukova@inagro.ua
+38 0512 58 79 01
+38 0512 58 79 01
www.inagro.ua
34 Prospect Myru, 54034, Mykolayiv, Ukraine

PSD last updated

09 Dec 2021

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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