TUPRAS Resource Efficiency Loan

Location:

Turkey

Project number:

48256

Business sector:

Natural resources

Notice type:

Private

Environmental category:

B

Target board date:

20 Jul 2016

Status:

Disbursing

PSD disclosed:

01 Jun 2016

Translated version of this PSD: Turkish

Project Description

An eight-year unsecured loan of USD 150 million to TURKIYE PETROL RAFINERILERI A.S. ("TUPRAS") to finance a number of investments in its Izmir and Kirikkale refineries during the period 2016-2018.

Project Objectives

The financing of resource efficiency investments in the Izmir and Kirikkale refineries.

Transition Impact

The project is in line with the EBRD's Green Economy Transition approach and will result in reduction of CO2 and energy and water savings.

Client Information

TURKIYE PETROL RAFINERILERI A.S

TUPRAS owns and operates all active refineries in Turkey. It is the largest listed energy company nd a subsidiary of the Koc Holding A.S., the country's largest diversified conglomerate.

EBRD Finance Summary

USD 150,000,000.00

Total Project Cost

USD 232,000,000.00

Environmental and Social Summary

Categorised B (ESP 2014). Independent environmental and social due diligence (“ESDD”) has shown that the impacts and risks associated with the proposed investments at two existing refineries will result in environmental benefits (GHG savings, water use reduction and energy efficiency improvements).  Any Environmental and Social (E&S) impacts associated with the construction and operation of the Project components are expected to be site specific, readily identified and addressed through the implementation of standard mitigation and management measures. The Company has a robust approach to the management of E&S issues, with good in-house capacity; but the ESDD did identify various areas where improvements are required to address EBRD E&S policy compliance in regard to air emissions; grievance mechanisms for employees and external stakeholders; environmental protection; and community, worker and facility safety. An Environmental and Social Action Plan (“ESAP”) has been agreed with the Company to address these issues and bring the Project and existing operations in line with the Performance Requirements (“PRs”) and EU standards.

Typical issues associated with the operation of refineries include high energy and water use, emissions to air, waste management, occupational and community health and safety risks, labour issues and contractor management, transport risks, noise and potentially legacy issues such as soil and groundwater contamination. Many of these issues will be mitigated, and overall environmental performance improved, through implementation of the Project and the Project ESAP, particularly GHG emissions, emissions such as NOx and SOx and water use. ESDD included a corporate audit of existing Company E&S provisions and capacities, as well as a site audit and E&S assessment of facilities subject to investment (Izmir and Kirikkale). The Project and existing operations have also been reviewed against EU standards, in particular the Industrial Emissions Directive (including EU Best Available Techniques or “BAT” for the sector), the ATEX Directive and the Seveso Directives.

The proposed investments are at various stages of local environmental permitting, with many investments screened by the authorities as not requiring an Environmental Impact Assessment (EIA) considering they will be developed at existing refineries.  All required permits are in place for existing operations. The Company has in place an integrated environmental, health and safety, energy and quality management system that is certified to ISO and OHSAS standards. The most recent verification audit took place in 2015 which identified a few minor areas for improvement.  The management system is supported by strong in-house capabilities. A key element of the management system is performance improvement with targets set on an annual basis together with a variety of key performance indicators.

Company labour provisions are generally in line with Turkish Employment Law and PR2.  The existing grievance mechanism will be improved both for the Company and contractors. In addition, further HR improvements with respect to equal opportunities and non-discrimination are also required. Workers are free to join a union of their choice but there is only one worker union currently.  A collective bargaining agreement is in place. For non-union employees “out of scope personnel standards” are in place. The Company reported no legal labour disputes in the last 5 years.

The Project will be required to meet the EU Industrial Emissions Directive (“IED”) as required by the Bank’s PRs. In addition, existing operations will be further reviewed to bring them in line with the IED through implementation of the ESAP.  Turkey’s legislation is currently aligned with the previous Large Combustion Plants Directive rather than the IED. Emissions are monitored continuously at emission points which require CEMs (Continuous Emission Measurement Systems) according to national legislation.  Most emissions are within BAT limits for the sector although further abatement will be required. The proposed investments will be required to meet BAT for the sector. The proposed investments will result in substantial GHG savings of approximately 270,000 CO2t per year.  The proposed investments will significantly reduce water use.  Current discharges are in line with permitted limits. Waste generated is appropriately stored, sorted and removed by licenced companies.

Health and safety is managed through the integrated management system and performance has improved over the last three years. The management system is supported by various procedures and assessments, such as Management of Change Standard, HAZOP, FTA, ETA, QRA, permit to work, mechanical/electrical isolation standards, confined space entry standards, work instructions, Job Safety Analysis, working at height, etc., to ensure that a high level of health and safety performance in maintained. All accidents are subject to reporting and investigation.  All staff are subject to environmental and health and safety training.  Contractors are required to comply with Company standards and the Company does regular audits of existing operations and areas subject to maintenance, new projects and repairs.  While Health and Safety performance is generally good, the ESDD identified a number of areas for improvement, which are captured in the ESAP.

Both refineries are classified as upper tier sites in terms of the Seveso II Directive, which was transposed into Turkish legislation in 2010.  The Company has already submitted its Safety Report and Seveso II complaint Risk Assessment and mitigation measures to the authorities in June 2016 together with various other actions required for Seveso II compliance including a quantitative risk assessment, major accident prevention policy and emergency planning.  Turkey has not yet transposed the requirements of the Seveso III Directive, which includes the further requirement of information sharing with stakeholders.  While the Company’s progress in meeting the Seveso II Directive is good, the ESAP includes a number of actions to ensure Seveso II compliance but also bring the Company into compliance with Seveso III and therefore going beyond local requirements.  Meeting Seveso III requirements will place more emphasis on potential risks to people outside the refinery areas. Fire and explosion risk management and emergency response provisions are in place and these are being reviewed in terms of meeting Seveso requirements.

All investments will take place on existing industrial sites and no PR 5 issues have been identified. Similarly no biodiversity issues have been identified. In order to meet the Bank’s stakeholder engagement and information disclosure requirements, the ESDD included the development of a Stakeholder Engagement Plan (“SEP”) including a grievance procedure and Non-Technical Summary for each facility.  This will be complemented with the sharing of specific Seveso Directive information. 

NTS Kirrikale: English | Turkish

NTS Izmir: English | Turkish

Technical Cooperation

None.

Company Contact Information

Cem Güner
Cem.Guner@tupras.com.tr
+90 262 316 30 83
www.tupras.com.tr
Petrol Caddesi No:25 41790 Körfez, Kocaeli

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