Translated version of this PSD: Russian
The EBRD is providing equity investment to a new Investee Company (see “the Client” below) for: i) construction of a new integrated poultry farm, a meat processing plant; ii) acquisition and renovations of a feed mill in Northern Kazakhstan; and iii) the additional working capital needs for the new farm and production facilities.
The Project will help boost local production and sales of poultry meat : the new integrated production facility, which will be built in Makinsk, is expected to supply up to 24,000 tonnes per year of various chilled and frozen broiler meat products to regions of Northern and Central Kazakhstan where the supply of locally produce poultry meat, particularly in the chilled segment is negligible.
The proposed project is expected to have transition impact derived from the introduction of new products with associated demonstration of replicable distribution development, and setting standards of corporate governance and business conduct.
The Investee Company, which is to be established, will consolidate the broiler farm and meat processing operations in Northern Kazakhstan under the proposed investment project: it will fully own Ust-Kamenogorsk Poultry Farm JSC (“UKPF” or the “Company”), and three other operating companies established in Kazakhstan (collectively, the “Group”). Ust-Kamenogorsk Poultry Farm JSC is one of the largest vertically integrated poultry producers in Kazakhstan.
Prior to the Bank’s investment, the Investee Company will be a direct subsidiary of Aitas Group LLP, another group holding entity, 100% owned by Mr. Serik Tolukpayev.
Up to USD 20 million through equity investment.
Approximately up to USD 105 million.
Environmental and social categorisation, impact, and mitigation
Categorised A (ESP 2014): Greenfield poultry production facilities may be associated with various, potentially significant, environmental and social (E&S) impacts, which at the time of categorization, cannot readily be identified or assessed, and which, therefore, require a formalized and participatory environmental and social impact assessment (ESIA) process. The Client has developed an ESIA package, which is likely to be disclosed by the beginning of May, for a minimum of 60 days before the Project will be presented to the EBRD's Board of Directors for consideration. In addition, an Environmental and Social Action Plan (ESAP) has been agreed with the Client to ensure that the Project is developed and operated in line with the Bank's PRs. This PSD will be updated once the ESIA package has been released, the 60 day disclosure period has expired and thereafter on an annual basis.
Environmental and social due diligence (ESDD) was undertaken by independent consultants and focused on existing production facilities owned by UKPF, and the proposed production facilities at the Makinsk Poultry Farm, in northern Kazakhstan. ESDD on the Project included a review of documents produced to date for national permitting processes (including the OVOS) and a review of stakeholder identification, analysis and engagement actions undertaken to date. The consultants also performed a baseline audit of the existing UKPF facilities including an assessment of animal welfare and biosecurity issues. Following these reviews and site visits, the consultants have developed a range of documents including the ESAP, an Environmental and Social Management Plan (ESMP), and prepared a disclosure pack including supplementary information, a Non-Technical Summary, and a Stakeholder Engagement Plan.
The proposed MPF site is located within a typical Kazakh Steppe landscape and comprises flat terrain, relatively uniform in character. The site is mainly undeveloped land with no buildings (residential or other) being located on site prior to the beginning of construction works. Baisuat village to the south-west is in immediate proximity to the incubator building (125 m). The proposed feed mill that will supply feed for the chickens is immediately adjacent to the north-east site boundary. No other residential or industrial buildings are immediately surrounding the proposed farm site. There are no ecologically protected areas within the immediate vicinity of the proposed MPF sites. Likewise there are no designated historical or cultural monuments within the project area.
In relation to the existing UKPF operations, the ESDD has confirmed that the Company is operating in general compliance with the requirements of national environmental, health, safety and labour law. The Company has the required permits to operate and is providing the required monitoring data to the authorities. Some minor non-compliances have been noted with regard to air emissions, waste water discharges, and soil contamination at selected sites. Permits for the waste collection and wastewater treatment plant and the boiler plant are in place although these facilities are controlled by separate entities.
In terms of compliance with the Bank’s Performance Requirements there are a number of areas where issues have been identified during the ESDD. The Company does not currently operate a formalised environmental, or health and safety, management system and there are no clearly defined roles and responsibilities for staffing of EHS issues. The high level BAT assessment revealed a number of issues including the lack of continuous dust monitoring at the feed mills. Also, with the expansion of chicken production, it is anticipated that manure storage facilities will not have sufficient capacity for the handling and storage. The Company does not have a formal grievance mechanism for handling either internal or external complaints and the human resource management processes will need to be expanded to cover all employees including contractors and sub-contractors. Finally, there has been no structured analysis of affected stakeholders particularly in relation to those that might be affected by the expansion project. Following measures have been built into the ESAP and ESMP to address the above identified issues:
- Adoption of formalised environmental, and health and safety management systems and the assigning of appropriate staffing to oversee the implementation of the these;
- Adoption of formal grievance mechanisms for both internal and external purposes;
- Measures to ensure BAT compliance including installation of continuous monitoring systems for feed mills and boilers, monitoring of total phosphorous and nitrogen excreted, monitoring of ammonia emissions and undertaking of a GHG inventory and assessment;
- Undertaking of additional water resource assessments for MPF;
- Development of protocols to manage handling, storage and use of chicken manure in accordance with BAT; and
- Implementation of a Stakeholder Engagement Plan;
A key issue to be addressed for the project is the management of animal welfare. To date, management of this issue has been done in accordance with national requirements. The review of UKPF’s broiler farms to the EU requirements demonstrated some issues in the area of: i) broiler stock density; ii) monitoring and maintenance of certain environmental conditions; and iii) monitoring and follow up processing of bird mortality cases.. The ESAP and ESMP for the planned new MPF farms further incorporates plans for implementation of a range of animal welfare actions covering identified issues as stocking density, monitoring of mortality rates, as well as ammonia and carbon dioxide levels, lighting environment in barns, and processing of rendered bird remains in compliance of EU requirements.
The company undertook a programme of stakeholder engagement for the MPF project in accordance with its requirements to consult publically under national planning legislation. This was advertised both locally and nationally. Attendance records are maintained, as well as record of all comments and questions raised.
A number of additional measures have been built into the ESAP and ESMP to address issues identified in the ESDD. These include:
- Inclusion of relevant E&S requirements in supplier contracts to ensure compliance with the PRs;
- Adoption of a land acquisition and compensation framework; and
- Undertaking of further studies on biodiversity impacts.
Monitoring of the project will be undertaken via the submission of annual environmental and social reports by the Company including updates on the implementation of the ESAP, ESMP, and SEP. The Bank, or consultants retained on behalf of the Bank, will also undertake site visits as necessary.
There is an Environmental and Social Impact Assessment available for this project.
An energy and resource efficiency audit was conducted under the EBRD’s Energy and Resource Efficiency Programme for the Corporate Sector funded by the EBRD Shareholders Special Fund. The audit was focused on reviewing the UKPF’s current operations, MPF’s investment plan for its new plant, performing a resource efficiency benchmarking to its peers and international best practices, and on the identification of incremental energy and resource efficiency investments.
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