The EBRD is considering providing a senior loan of up to €8 million to a Russian subsidiary of AB Rani Plast OY for the acquisition of a turnkey constructed plastic film extrusion plant in the region of Kaluga.
The Project is expected to have transition impact through:
(i) transfer and dispersion of skills and know-how to the sector of plastic film extrusion and flexible packaging;
(ii) demonstration effect of foreign investment in the Russian regions including the promotion of an industrial park concept in Russia through support of the I-Park’s tenant; and
(iii) application of EU environmental standards.
AB Rani Plast OY (the “Sponsor” or “Rani Plast”), a Finnish family-owned film extrusion company specialising in the manufacturing of polyethylene films for flexible packaging for agriculture, consumer goods, electric insulation, pallet wrapping etc.
- Project Company (the “Project Company” or the “Borrower”) to be established, operated and wholly owned by the Sponsor in the Kaluga Region.
The Bank will provide a senior loan of up to €8 million loan to the Project Company.
Potential significant adverse environmental and social impacts associated with the project are site specific and can be readily identified and addressed through mitigation measures. Therefore, the project has been screened B in accordance with the EBRD Environmental Policy (2008).
Environmental and Social Issues
An Environmental Analysis of the proposed project and an Environmental Audit of the existing facilities were carried out by independent consultants. Below is the summary of the outcomes of the due diligence:
- Both Rani Plast and Lemcon, the turnkey contractor for the project holds certified ISO 9001 and ISO 14001 quality and environmental management systems.
- The Company's and Lemcon’s overall labour standards and working conditions including occupational health and safety performance are adequate and in compliance with the international good practice, EU and Finnish requirements. The plant in Kaluga is only in preliminary design stage. Main issues to be considered in the design and implementation of the operations are identified as storage, use and handling of chemicals and hazardous wastes; especially to mention solvents and natural gas which are flammable posing potential explosion and health risk.
- The operations in Rani Plast's site in Bjölas in Finland are in general in compliance with local/national and EU standards were found. The target site in Kaluga, Russia is in preliminary design stage at the moment. The specific local/national and EU standards shall be considered in the detailed design of the plant and implementation of the operations, e.g. regarding air emissions, wastes, storm water and wastewater treatment etc.
Elevated concentrations of iron, lead, cadmium and oil products have been found in surface and ground waters at the Kaluga site. The due diligence has concluded that:
- The potential risks of groundwater contamination correspond primarily to Lemcon Company as the land owner; however detailed allocation of liability would need further assessment;
- Based on publicly available sources (Rosprirodnadzor authority web-site) water supply in Vorotynsk city is generally provided from water wells. Thus environmental or health risks can not be excluded. However also in this respect further assessment would be needed. Now only five monitoring points have been chosen for investigation, and only in one case such high level of contamination was revealed. Also the source of pollution is unknown;
- Finally for Rani Plast- it is important to monitor GW quality onsite before the operation starts in order to confirm that their activity does not result in GW contamination. No other environmental risks, liabilities or impacts were identified during the due diligence.
Summary of Environmental Action Plan
An Environmental and Social Action Plan (ESAP) has been developed as part of the due diligence process. The main action items in the ESAP, which will need to be applied by Rani Plast and its contractors can be summarised as follows:
- Detailed design and permitting of the plant and operations (including local EIA) to be completed prior to the start of any operations;
- ISO 14001 and ISO 9001 certification;
- Baseline study to assess contamination of groundwater in Rani Plast's site and associated risks; Clarification of allocation of associated liability to be considered in the agreements to be completed within 2009;
- Development of waste disposal options before any operations starts;
- Preparation of an emergency preparedness plan;
- Preparation of a stakeholder engagement plan;
- Planning and implementation of EHS training for workers.
The Sponsor will be required to provide an annual environmental and social report to the Lenders, including updates on the monitoring undertaken, implementation of the agreed ESAP, and notification on any material accidents or incidents.
Ab Rani Plast Oy
FI-68700 Teerijärvi, Finland
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Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
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