TPPD Privatisation

Location:

Turkey

Project number:

49044

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Target board date:

13 Dec 2017

Status:

Signed

PSD disclosed:

11 Oct 2017

Translated version of this PSD: Turkish

Project Description

The provision of debt financing to Turkuaz Petrol Urunleri A.S., a fuel distribution company incorporated in Turkey.

Project Objectives

Supporting the company in financing the acquisition of state-owned Turkiye Petrolleri Petrol Dagitim A. S. or TPPD. TPPD is the sixth largest fuel distributor in Turkey.

Transition Impact

The project targets the "competitive" and "well-governed" transition qualities.

Competitive: The project will support more widespread private ownership through the privatisation and transfer of management controls of state-owned TPPD to a private investor. Successful privatisation of TPPD will lead to full private ownership in the sub-sector of fuel distribution in Turkey, and increase the company's market share in the fuel distribution sector, allowing it to compete more effectively with larger market players.

Well-governed: Through the project, the Bank has worked closely with the company to ensure implementation of the best international corporate governance practices.

Client Information

TURKUAZ PETROL URUNLERI AS

EBRD Finance Summary

EUR 26,556,155

Total Project Cost

EUR 163,000,000.00

The remainder of the project costs will be financed through equity and parallel loans from Turkish financial institutions.

Environmental and Social Summary

Categorised B (ESP 2014): Financing of the privatisation/acquisition of the fuel distribution network is associated with typical risks such as soil and groundwater contamination, labour and public safety, supply chain and fire and explosion hazards, which can however be readily identified and addressed through the implementation of the corrective measures.

Environmental and Social Due Diligence (ESDD) of the project has been conducted in parallel with the Energy Efficiency Due Diligence by an independent consultant and has included an environmental, health and safety (EHS) audit of several terminals and fuel stations (both Turkuaz and TPPD), an analysis of the potential environmental and social impacts associated with the project and company's activities, as well as a review of the current EHS management systems and practices, regulatory and permitting compliance, risk management procedures and capacities, to understand its ability of the company to manage the potential impacts and meet the EBRD's performance requirements.

The resource efficiency due diligence included the analysis of the energy and resource saving options and assessment of the associated benefits.

The key environmental and social issues associated with the company's operations include compliance of the terminal and stations with Turkish and EU environmental and safety regulations, labour and working conditions, supply chain management, emergency preparedness, air emissions
and waste management, soil and groundwater impacts, as well as overall environmental and social management system.

Due diligence identified a number of gaps in these areas that need to be addressed through the implementation of the Environmental and Social Action Plan (ESAP), which includes a number of recommendations, amongst others: 1) Improvement and alignment of the environmental, health and safety, and social management systems of the two companies in line with the requirements of ISO 14001/OHSAS 18001 standards and other good international industry practices; 2) Upgrades of the existing facilities and bringing them into compliance with Turkish and EU environmental and safety regulations; 3) Improvement of the social and labour procedures including worker grievance mechanism, 4) Implementation of the volatile organic compounds recovery systems at all eligible sites; 5) Stakeholder Engagement Plan and information disclosure procedure; 6) Additional technical and organisational measures aimed at the reduction of the negative impacts associated with air emissions, water and waste management and their monitoring; 7) Enhancement of the safety culture and practices; 8) Improvement of the emergency preparedness, fire and explosion safety; 9) Implementation of a proper contractor management system; 10) Fleet and traffic management improvement.

ESAP includes items that will bring the risk management systems up to the standards required by the Bank and will enable project implementation in line with the EBRD'S performance requirements.

An ESAP has been shared with the company and will be approved prior to the Board meeting.

Overall environmental and social performance will be monitored by the Bank on the annual basis.

Technical Cooperation

TC support for this operation was provided for the resource efficiency audit of both Turkuaz and TPPD's facilities and funded by EU IPA.

Company Contact Information

Fatih Özmen
fozmen@tppd.com.tr
+ 90 216 481 90 00
+ 90 216 481 91 00
www.turkuazpetrol.com.tr
Bulgurlu Mahallesi Gurpinar Cad.No:15 34660 Üsküdar / Istanbul Turkey

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