Enforta Expansion Phase II

Location:

Russia

Project number:

42037

Business sector:

Information and Communication Technologies

Notice type:

Private

Environmental category:

C

Target board date:

07 Dec 2010

Status:

Completed

PSD disclosed:

03 Nov 2010

Translated version of this PSD: Russian

Project Description

The EBRD is considering providing RUB 450.0 million loan facility to LLC Prestige Internet (the Company), fully owned by Enforta B.V., to support the Company’s further roll-out of wireless broadband networks in cities of the Russian Federation and for possible corporate acquisitions upon approval from the Bank.

Transition Impact

The proposed project is expected to continue to drive the transition impact rationale of the existing loan facility in the following transition impact dimensions:

(i) Broadband market expansion in the Russian Federation, and
(ii) Further enhancing the competition in the Broadband market in Russia.

Broadband penetration in Russia is still below 20.0% (excl. Moscow and St Petersburg), with discrepancies between Moscow (with almost 80.0% penetration) and the other regions of Russia. Small and medium size companies located in the outskirts of major cities and in the regions will benefit from a greater access to information and communication means as well as from the access to products such as secure virtual private networks (VPNs) offered by Enforta.

The project is also expected to continue enhancing competition mainly through development and consolidation of the broadband market in Russia. Enforta currently operates in 68 cities and is competing with larger fixed-line internet and telephony operators.

The Client

The Company is a wholly owned subsidiary of Enforta B.V. (domiciled in the Netherlands) and is one of the leading wireless broadband operators in Russia with 33,167 corporate and 19,495 residential subscribers at the end of June 2010 across 68 Russian cities. The Company offers high speed internet broadband services to small and medium enterprises (“SME”), corporate and residential customers in the Russian regions using Wi-MAX technology.

EBRD Finance

RUB 450.0 million loan in addition to the existing USD 15.0 million loan exposure to the Company.

Project Cost

RUB 450.0 million

Environmental Impact

Categorised C. Based on the completion of an IESE, the project was categorised as C as the company is an existing client and regularly provides annual environmental reports as well as their operation is considered environmentally low-risk. Risk rating: Low.

PR 1 – Environmental & Social Appraisal & Management

The company is an existing client of the Bank and the 2009 annual report confirms the company's environmental legal compliance. The company's internet broadband services do not involve significant environmental and social impacts. The completed E & S Questionnaire for the telecoms sector and HR Due Diligence Questionnaire indicated that there are no significant E & S and HR issues regarding the company and its operations.

PR 2 – Labour & Working Conditions

The completed HR Due Diligence Questionnaire indicates that the company's HR management is in line with PR2.

PR 3 – Pollution Prevention & Abatement

The annual report confirms that the company is in compliance with environmental legal requirements. The completed E & S Questionnaire indicates that the company's environmental management is in line with PR3. The project is not expected to exceed the air emissions threshold of 100,000 tonnes CO2 equiv/yr.

PR 4 – Community Health, Safety & Security

The annual report and completed E & S Questionnaire indicated that the company is in compliance with PR4.

PR 5 – Involuntary Resettlement & Displacement

Due diligence indicated that involuntary resettlement and displacement is not associated with the project.

PR 6 - Biodiversity Conservation & Sustainable Natural Resource Management

Due diligence indicated that biodiversity & sustainable natural resource management is not associated with the project.

PR 7 – Indigenous Peoples

Not relevant due to the locations of the project's implementation.

PR 8 – Cultural Heritage

Due diligence indicated adequacy of the Company's procedures for site selection and cultural heritage protection.

PR 10 – Information Disclosure & Stakeholder Engagement

Due diligence indicated that the company complies with local and national disclosure requirements and that adequate grievance mechanisms for the employees and the public are in place.

No ESAP (Environmental or social opportunities) is required for the project.

Categorised C. The 2009 annual environmental report and completed E & and HR Due Diligence Questionnaires indicated the company's compliance with environmental, health and safety, and social legislation and the relevant PRs. The project is unlikely to be associated with any significant environmental and social impacts. The company is required to continue to comply with national EHS law and relevant PRs for the upcoming operation.

Technical Cooperation

None.

Company Contact

Ivan Kapustin, Chief Financial Officer of the Company.
Address: 127083, Moscow, Mishina Street, 56/2.

E-mail: i.kapustin@enforta.com
Tel.: +7-495-739-7559 ext. 7730 Fax: +7-495-685-9589
Web: www.enforta.ru

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP 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. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.