The proceeds from the loan will be used to primarily to refinance and restructure ad-hoc short-term debt provided by local banks with long-term financing. There will be a small amount for the development of Cherkizovsky’s core business and financing of working capital requirements.
The transition impact of the Project is expected to be good and will derive from:
(i) corporate governance improvement including the introduction of US GAAP accounting and integrated MIS systems
(ii) backward linkages with local meat suppliers, which will benefit the Russian primary processing sector especially through skills transfer
(iii) improvements in food safety systems.
ZAO Ekotorg is the holding company for the Cherkizovsky meat processing group and incorporated in Russia.
Up to US$ 62 million syndicated loan, of which up to US$ 40 million for the Bank’s account and the remaining US$ 22 million to be provided by a combination of parallel lenders and B lenders.
US $62 million.
1. Environmental classification and rationale
The project has been classified C/1. This project involves the provision of a loan, to an existing company with a number of meat processing facilities, for the re-financing of existing ad-hoc debt. As such, this operation will not result in a material changes to the current environmental impacts of the Company. However, there may be a number of environmental issues associated with the current and past operations and so an environmental audit was required.
2. Information reviewed during the environmental appraisal
The Company commissioned an independent environmental consultancy to conduct an environmental audit of each of the Company’s major facilities. The aim of the auditing programme, among other things, was to assess facility compliance with national and applicable EU and World Bank environment, health and safety (“EHS”) standards, assess specific risks associated with past and current operations and make recommendations for the improvement of EHS management. The completed audits included recommendations for improvements which have been formalised in a costed, time-bound environmental action plan (“EAP”). The completed audit reports were provided to the EBRD for review and approval.
3. Key environmental issues and mitigation
Key issues were as follows:
The Company has developed and approved an EHS policy and procedures for EHS management. The Company is in the process of introducing the procedures, including an EHS reporting system, in all facilities to ensure that the Company’s environmental policy is met.
A number of air emissions are released by the Company’s facilities all of which are within the required limits and meet the recommendations of the World Bank’s Guideline on Meat Processing and Rendering. All facilities operate boilers powered by natural gas and are in the process of implementing measures to reduce air emissions. Some facilities include measures to reduce local nuisance from odours. Some areas for improvement have been noted by the auditing consultants and, where necessary, actions have been included in the EAP.
Water consumption is regulated and controlled through annual quotas of water - all enterprises comply with the state controlled limits and internal indicators. In all facilities water consumption per ton of meat produced meets the recommended figures in the World Bank’s Guideline on Meat Processing and Rendering. Facilities do not utilize wet transport of wastes and undertake dry pre-cleaning prior to wet cleaning to help minimise water use. Majority of enterprises separate cooling water from the process water and re-circulate cooling water.
All facilities utilise primary treatment of waste waters prior to discharge to the municipal system - none of the facilities discharge waste waters directly into surface waters. Waste waters discharged into the municipal system generally meets the national requirements although there are some parameters for which improvements are required and requisite actions have been built into the EAP.
Solid waste management
Solid wastes are disposed of in accordance with Russian requirements. Certain items such as bones or other organic materials are utilized to make bonemeal flour or technical fats. Some materials such as sawdusts and non-oiled cleaning rags are re-used where possible, some wastes such as paper and cardboard are recycled. with whatever is left being sent to landfill.
4. Environmental opportunities
The improvement of the environmental performance of the Company is a key aspect of the Company’s environmental management system and the EAP includes the development of a programme to reduce fresh water use and energy consumption and further minimise waste production.
5. Summary of Environmental Action Plan
The consultants have developed an EAP which includes measures to be implemented for the Company as a whole and for each individual facility. At the central level, actions include the further development of the environmental department of the Company, improvements to information management and flow for environmental issues and the initiation of the process for certification to ISO 14001. At the individual facility level, many of the required actions are aimed at improving waste water management and, in particular, the modernization of treatment facilities. The aim of the EAP is to ensure Company compliance with national and EU environment, health and safety standards.
6. Disclosure of information and consultation
In accordance with EBRD policy the Company is required to carry out its actions in accordance with national requirements for public disclosure and consultation.
7. Monitoring and reporting
The Company will be required to provide the Bank with an annual environmental report which includes information on the implementation of the EAP. The Company will also be required to provide the Bank with immediate notification of any material incidents or accidents likely to have an effect on the environment or worker and public safety.
Mr. A.M. Minossyants
Tel: +7 095 788 32 32
Fax: +7 095 162 32 46
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