Project Description
The Project comprises financing of MHP's seasonal working capital needs for its edible oil crushing segment in Ukraine.
Project Objectives
The main objective of the Project is to enable sufficient financing to cover the procurement and accumulation of sunflower seeds for crushing into oil for subsequent export.
Transition Impact
ETI score: 70
Primary Quality Resilient:
The Project will increase MHP's resilience by supporting it to continue sunflower oil production, which is essential for food security.
Secondary Quality Inclusive:
The Project will help to preserve MHP's human capital and the livelihoods of its employees and oilseeds suppliers in Ukraine.
Client Information
MHP FOOD TRADING LLC
MHP Group is one of the leading grain, poultry and edible oils producers in Ukraine and Southeastern Europe. The Group operates three sunflower crushing plants in Ukraine. MHP Food Trading LLC (the "Borrower") is an MHP Group subsidiary, incorporated in the United Arab Emirates, and is the Group's trading arm for sunflower oil produced by Ukrainian companies of the Group. The Borrower will channel the Loan proceeds down to MHP's subsidiaries in Ukraine to purchase sunflower seeds for further processing into sunflower oil for export.
EBRD Finance Summary
USD 90,000,000.00
Total Project Cost
USD 100,000,000.00
The Project includes financing of up to USD 90 million equivalent for the EBRD's account and up to USD 10 million for the account of participants, availability of which will be subject to successful syndication.
Additionality
Additionality stems from the following:
Terms: As a result of the war on Ukraine, the market for liquidity financing in Ukraine is nearly closed. EBRD financing effectively bridges a financing gap left by the withdrawal of commercial banks finance.
EBRD attributes: Relevant experience in terms of financing of private clients in the target sectors and EBRD's lead may allow MHP to mobilise funds from commercial lenders.
Standard-setting (Gender SMART): The Project is Gender Additional in line with the client's upcoming support programmes for women workers affected by the ongoing war.
Environmental and Social Summary
The purchasing, transport and processing of sunflower seeds is associated with a number of environmental and social issues although these are typically site-specific and readily addressed through standard mitigation measures. Given current circumstances, ESDD was carried out internally by ESD and utilising knowledge from previous site visits and reporting, additional documentary evidence and selected updates from the Group. The Group is a long-standing client of the Bank and has been subject to due diligence processes on five occasions and monitoring exercises on two occasions. Besides third party due diligence and monitoring, staff from ESD have visited the Group a number of times and witnessed a range of Group facilities relevant to the proposed projects. Finally, as part of its obligations under the variety of agreements with the Bank, MHP has always provided comprehensive and satisfactory annual E&S reporting.
Based on the above, it is judged that MHP can carry out the Project utilising existing management systems and procedures. These are generally comprehensive and well understood and implemented by MHP staff. Experience from site visits has demonstrated that MHP production facilities are generally modern and well maintained. Each facility has the necessary capacity to ensure that environmental, health & safety, and labour issues are adequately managed. As part of this latest due diligence effort, the Group was requested to provide an update on the last ESAP agreed as part of a third-party monitoring visit in 2019. The Group has provided that update, including procedural documentation covering a number of health and safety areas including an updated corporate OHS Policy, and new procedures for tasks with increased risk and procedures for accident investigation.
Also, as part of the update, the Group has provided information on the latest International Sustainability and Carbon Certifications (ISCC) obtained for a number of facilities operated by the Group. ISCC is an international certification system covering all kinds of bio-based feedstock and renewables and is the leading voluntary scheme based on the European Renewable Energy Directive (RED), covering the environmental and social aspects of biomass production. The continued development of MHP's approach to environmental and social management is evidenced by its green investments programme, including investments into irrigation using waste water from poultry production facilities, bio methane production investments, digital farming and strip tillage investments, and agricultural machinery upgrade. Besides policies and procedures to cover environment and health and safety, the Group also has appropriate HR systems in place to ensure compliance with PR2.
No additional actions will be requested from the Group for this Project, beyond the standard requirements to continue to comply with the Bank's Performance Requirements and to also continue to provide annual environmental and social reporting to the Bank. It should be noted that the Group produces public environmental and social reporting, from 2015 as a non-financial report, but from 2020 as a GRI compliant sustainability report. The latest 2021 Sustainability Report was released in June 2022 and is available on the Group's website.
Two past projects with MHP have been the subject of a previous Problem Solving Initiative under the former Project Complaint Mechanism (PCM), and are currently the subject of a Compliance Review under the current Independent Project Accountability Mechanism (IPAM).
Technical Cooperation and Grant Financing
TC: Legal due diligence costs will be partially covered by the Shareholder Special Fund.
Technical cooperation grant for up to EUR 75,000 will be provided under EBRD's Action for Equality and Gender Multi-Donor Account to enhance the Group's capacity for economic inclusion of people with disabilities and war veterans in the design and launch of its new 'No Limit Project', aligning its core features with best practices.
Non-TC: The EBRD loan is approved on the basis of first loss risk cover provided by the United States through its contribution to the EBRD Crisis Response Special Fund.
Company Contact Information
Anastasiya Sobotyuk
a.sobotyuk@mhp.com.ua
+38 050 339 2999
https://mhp.com.ua/
PrJSC "MHP", 158, Ak.Zabolotnogo Str Kyiv, Ukraine, 03143
PSD last updated
11 Feb 2023
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.
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Tel: +44 20 7338 7168
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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.
