LDC Rail Ukraine

Location:

Ukraine

Project number:

50228

Business sector:

Transport

Notice type:

Private

Environmental category:

B

Target board date:

10 Jul 2019

Status:

Board Approved

PSD disclosed:

07 May 2019

Translated version of this PSD: Ukrainian

Project Description

The provision of a US$ 35 million senior loan to finance the acquisition of up to 1,000 grain hopper railcars by a subsidiary of Louis Dreyfus Company in Ukraine.

Project Objectives

The Project will support the client's strategy of building a reliable and efficient supply chain in Ukraine and will aim to address the existing shortage of railcars on the Ukrainian market.

Transition Impact

The Project is expected to result in a significant reduction in GHG emissions by promoting efficient utilisation of new railcars for inland grain logistics, thus avoiding the shift to other transport modes, particularly to road transportation (Green quality). Furthermore, the Project will support a private operator in a market dominated by the state-owned company (Competitive quality).

Client Information

Founded in 1851 and active in more than 100 countries, Louis Dreyfus Company is a leading international merchant and processor of agricultural goods, originating, processing, merchandising and transporting over 80 million tonnes of products annually.

EBRD Finance Summary

USD 35,000,000.00

Senior loan of up to US$ 35 million.

Total Project Cost

USD 70,000,000.00

Environmental and Social Summary

Category B (ESP, 2014). The purchase and operation of railcars for transport of grain and oilseed is not associated with significant environmental and social (E&S) impacts. Due diligence confirmed that the E&S are site specific and can be readily mitigated through the implementation of standard mitigation measures and a targeted action plan.

Environmental and Social Due diligence (ESDD) was carried out internally and included review of a detailed questionnaire completed by the client and follow up discussions with Health, Safety and Environment and procurement specialists. ESDD has shown that the Sponsor has an existing E&S management system, Code of Conduct and other documentation which aligns with the applicable Performance Requirements and can be used as a basis for the new SPV that will be formed to purchase and lease the railcars.

The SPV will need to establish management systems for the E&S impacts in line with the EBRD Performance Requirements. Such management systems will need to be adapted from the current policies and systems of the Sponsor and will need to account for appropriate management of risks and impacts, particularly occupation health and safety, in the rail car leasing operations. This will include procedures for the evaluation of E&S aspects during freight forwarder selection, inclusion of E&S requirements within lease and maintenance contracts and implementation of a programme to monitor contractor E&S performance.

Rail cars will be built and maintained in accordance with national and manufacturer's standards and an emergency response plan prepared to assign roles, responsibilities and response requirements between the entities involved in rail car movements. In addition, the Client will be required to develop HR policies and procedures, a code of conduct and a worker grievance mechanism scaled to the Project.

An Environmental and Social Action Plan (ESAP) has been developed and agreed with the client and includes requirements to be included in lease agreements to ensure their implementation. The Project will be monitored through implementation of the ESAP, review of annual E&S reports and site visits it deemed necessary.

Technical Cooperation

None.

Company Contact Information

Louis Dreyfus Company Suisse S.A
herve.sahores@ldcom.com
Tel: +41-58 688 26 66
29, route de l' Aéroport, PO Box 236 CH-1215 Geneva 15

Business opportunities

For business opportunities or procurement, contact the client company.

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