The EBRD is considering providing a senior loan of $50 million to support CJSC Obolon, a leading Ukrainian beer and beverages producer, in restructuring its balance sheet and funding energy efficiency improvements.
The proposed project will help the company restructure its balance sheet and make improvements in the company’s practices from energy efficiency point of view. The Bank’s long-tenured loan will help the Company to put its operations on a more stable footing and provide room for growth. The energy savings as a result of the energy efficiency investment programme will be achieved mainly through modernisation of boiler house, upgrade of electricity distribution system and optimisation of production processes.
Obolon CJSC (the “Company” or “Obolon”) is a leading Ukrainian company in the beer and soft drinks sector with annual 2008 production volume of around 113 million dekalitres of beer and an estimated 30 per cent of market share in 2008.
Up to $ 50 million secured loan to Obolon comprising partial refinancing of short-term debt and energy efficiency component.
$ 50 million.
1. Screening categories and rationale for classification
This project was categorised "B" indicating that, where there are environmental and social impacts associated with the project, these are likely to be site-specific and easily addressed through mitigation measures.
2. Information reviewed
The Bank has provided finance to the Company before and, in the context of that operation, detailed environmental due diligence was undertaken and an environmental action plan agreed. Actions under the agreed environmental action plan ("EAP") were all completed by the Company to the satisfaction of the Bank. The previous reports and EAP were reviewed as part of the due diligence on this new operation. Given the age of those reports, and the fact that a revised policy has since been adopted by the Bank, a second due diligence report was commissioned by the Bank which has resulted in a new environmental and social action plan addressing key issues under the EBRD Environmental Policy 2008.
3. Environmental and Social issues
The environmental and social report for Obolon covered a wide range of topics as required under the Bank's Performance Requirements.
The Company has systems for environment, health and safety management in place although these are more developed for certain facilities than others. Such systems include certification to the ISO 9001 and 22000 quality systems, the ISO 14001 environmental management system and the OHSAS 18001 system for health and safety.
The Company's facilities are generally in compliance with national requirements for environment, health and safety although there are one or two issues at certain sites which will need to be addressed to ensure full compliance.
The Company is also generally in compliance with national labour requirements although, again, there are some minor issues which need to be addressed in order to reach compliance with EBRD PR2.
Obolon sites are not a source of significant environmental pollution nor are they of significant risk to local communities. Due diligence did not reveal and issues with regard to involuntary resettlement, cultural heritage or indigenous peoples.
- Finally, the Company has a variety of stakeholder engagement channels, for both workers and the external public although these need to be unified across all facilities within the group.
4. Summary of Environmental and Social Action Plan
An environmental and social action plan ("ESAP") has been developed which covers actions at both the corporate and individual facility level, notably the Kiev and Zibert breweries.
The ESAP includes actions related to the implementation of management systems, addressing air emissions and waste water discharges, improvements to waste management practices, the strengthening of occupational health and safety management and improvements on stakeholder engagement.
The ESAP is structured over the next three years and designed to ensure compliance with national and EU standards and EBRD Performance Requirements.
- The Company will provide the bank with regular reporting on the implementation of the ESAP.
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