Translated version of this PSD: Russian
Project Description
The Bank will acquire shares of Servolux Capital LTD for a total amount of €10m.
Project Objectives
The proposed facility will be used to finance (i) the construction of a small-scale Combined Cooling Heat and Power (CCHP) unit to supply the Group's meat processing facility located in Smolevichi,
Minsk region; (ii) the construction of a workshop for the production of meat processed products with a total production capacity of 70 tonnes/day.
Transition Impact
The project supports the Well-Governed transition quality through the implementation of a Corporate Governance Action Plan. The fulfilment of the actions in the CGAP will be covenanted in the transaction document. The project also supports the Green transition quality through financing the construction of a small-scale Combined Cooling Heat and Power (CCHP) unit to supply the Group's meat processing facility.
Client Information
SERVOLUX CAPITAL LTD
The holding company for a privately owned vertically integrated agricultural group operating in several segments in Belarus (the "Group" or the "Servolux").
EBRD Finance Summary
EUR 10,000,000.00
Total Project Cost
EUR 13,000,000.00
Environmental and Social Summary
Categorised B (2014 ESP). The funds are earmarked to finance the construction of a small-scale CCHP unit with an installed capacity of ca 6.58MW for the Group's own use in Smolevichi, and the construction of a new workshop for meat processed products with a total production capacity of 70 t/d. Environmental and social due diligence (ESDD) included previous site visits by the Bank's Environment and Sustainability Department (ESD) in 2015 and an independent third party environmental and social (E&S) assessment of Servolux's environmental and social management system, their past and current performance against the applicable Performance Requirements (PRs), including an analysis of E&S impacts and benefits of the proposed investments.
ESDD established that construction of a new meat processing workshop is underway at the Group's existing premises, and will not require any land acquisition, resettlement or displacement. A local environmental impact assessment (OVOS) has recently been prepared for this facility, and a positive conclusion of State Environmental Expertise (SEE) and the respective permits have already been obtained. The CCHP system will use eligible technologies that are EU BAT (Best Available Technique) compliant and will achieve considerable reductions in energy supply from external sources and use of waste heat, resulting in GHG emission reduction of 6,200 tonnes of CO2.
The Group's facilities are largely compliant with Belarusian and EU requirements, however a number of minor issues were noted and corrective actions to address these have been formulated into a time-bound E&S Action Plan (ESAP). This ESAP includes actions such as the development and implementation of a company-wide environmental management system and occupational health and safety (OHS) management system in line with internationally recognised standards such as ISO 14001 and ISO 45001 respectively; enhancing environmental impact assessment procedures to include adequate social assessment and stakeholder engagement procedures; ensuring compliance and timely permitting for major investment projects to be constructed and operated in line with EU BAT standards; improvements in OHS oversight for contracted workers; developing a stakeholder engagement plan (SEP) including a grievance mechanism. Servolux is a large employer with 8,500 employees, and independent labour due diligence covered management and recording of the working hours and overtime, terms of employment and resignation, as well as freedom of association. Servolux will be required to further enhance its HR contracting practices, review use of one-year fixed-term contracts, and be open to constructive engagement with independent trade unions including developing a policy to ensure that all workers are free to join or form a representative organisation of their choosing.
An independent animal welfare audit has also been conducted with emphasis on poultry and cattle operations. An Animal Welfare Action Plan (AWAP) has also been developed and includes a number of actions that relate to biosecurity and animal welfare such as gradual phasing out the use of cages, undertaking a review of the use of antibiotics and taking steps to consider suitable alternatives to develop and implement best practice in antimicrobial resistance (AMR) prevention, implementing an appropriate HACCP system for the feed mills to improve animal health and welfare implications, additional staff training on animal welfare practices and ensuring live animal transport adheres to EU standards. Animal welfare audits to be undertaken on behalf of EBRD every 3 years to monitor progress.
Both ESAP and AWAP have been agreed with the Group and will be attached to the legal agreements. The Group will submit annual E&S reports on the project's compliance with the PRs and implementation of the follow up action plans.
Technical Cooperation
None.
Company Contact Information
Sergei Zinkovich
office@servolux.by
+375222294999
servolux.com
4 Mironova str. Mogilev, Republic of Belarus 212030
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