The proposed investment will contribute to finance the Company’s acquisition and capital expenditure program and the associated increase in working capital during the period to 2012, which will include the development of a network of compressed natural gas (“CNG”) stations nationwide.
The Project will build on the transition impact achieved through the 2005 and 2007 financings. Transition impact potential arises primarily from:
1) Support to private ownership and greater competition in the project sector. The purpose of this equity financing is to allow the Company to capitalise on market consolidation opportunities and develop its CNG operations in order to diversify geographically and in terms of product range. This will enable this pure private sector retailer to consolidate its position as a key national player and expand its quality driven business model nationwide; and
2) Setting standards in health & safety and business conduct. The Project will accelerate the ongoing implementation of the Company’s corporate governance plan. High corporate governance standards will be extended to the entities that may be acquired through this financing. The extension of the Company’s model to other competitors will also enhance the overall level in the industry in terms of environmental and health & safety standards. Finally, the planned development of a CNG network will set an example for other industry players of the viability of this business in Ukraine.
OJSC GALNAFTOGAZ (“GNG” or “the Company), an independent Ukrainian fuel distribution company operating a network of filling stations under the “OKKO” brand.
An equity investment into the Company for a total of $50 million.
Environmental due diligence, particularly in relation to development of CNG stations nationwide is still underway. However, the environmental investigations to date, including an independent environmental, health and safety audit and a site visit by the Bank’s Environmental Specialist confirmed that, as a result of control, preventive and mitigation measures applied, the environmental, health and safety issues are unlikely to present significant impacts. The Bank's previous due diligence confirmed that the Company adheres to high international standards and has resulted in further modernisation of the filling stations in line with international good practice, including compliance with the relevant EU Directives relating to fuel quality, vapour recovery, recycling and energy efficiency.
There are a number of improvements, which when implemented would further increase EHS performance. These are included in an extensive environmental action plan (EAP) which has already been developed.
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