11138 - Orascom Construction Industries Private Placement

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Environmental Review Summary

Project Number

11138

Company Name

ORASCOM CONSTRUCTION INDUSTRIES SAE

Date ERS Disclosed

Oct 5, 2001

Country

Egypt, Arab Republic of

Region

Africa

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jan 23, 2002
Signed : Feb 27, 2002
Invested : Jun 5, 2002

Sector

Cement

Industry

other

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

This project involves a corporate loan to Orascom Construction Industries (OCI). OCI operates three main business lines: (i) construction providing civil, electrical and mechanical engineering and construction services for major projects in Egypt and the Middle East; (ii) building materials consisting of the manufacture of a wide variety of basic and specialized construction related products, such as cement, manufacture of cement bags and packaging, ready mixed concrete, steel fabrication, aluminum and glass curtain walling, paints and industrial gases; and (c) infrastructure mainly consisting of the development and operation of a new industrial park and adjacent port facilities on the Red Sea. This corporate loan will enable OCI to access scarce long-term financing and provide access to international investors and thus assist in the continued development and expansion plans of the company. For instance the project will allow OCI to make additional investments in the cement business both in Egypt and elsewhere in the region, acquire a gypsum manufacturing plant and continue their Red Sea infrastructure project. IFC has already made a number of investments in OCI including a major investment in 1997 in Egyptian Cement Company (ECC).

Environmental and Social

The sponsor has presented plans and information to address these issues and to demonstrate their commitment to environmental and social issues as well as worker health and safety. The information provided by OCI and the results of the site visits can be summarized as follows:

Environmental Management System (EMS). OCI has committed to prepare a detailed EMS by October 31, 2001. IFC will review the draft EMS and provide comments to OCI. OCI will then finalize the IFC-approved EMS. The EMS will then be implemented by OCI including necessary staff training, communication with local communities and government agencies, monitoring of performance and reporting.

Compliance with the requirements of the Government of Egypt. Based on the information provided by the project sponsor (OCI) it is clear that their operations fully comply with the environment, social, and worker health and safety requirements of the Government of Egypt. The following are examples:

1. full Environmental Impact Assessments were prepared for the new Red Sea port and industrial park. These EIAs were approved by the Government;

2. a number of operations have retained well-qualified environmental consultants who assist plant management in addressing environmental issues and have prepared an EMS for their plant;

3. a number of the plants have extensive quality control programs that conform to ISO standards; and

4. detailed environmental monitoring data, including data on air emissions, liquid effluents, solid wastes, was provided to IFC for review.

Compliance with IFC requirements. IFC’s existing investment in OCI’s Egyptian Cement Company (ECC) must comply with all IFC environmental and worker health and safety requirements. Detailed monitoring data provided by the company shows that the operation now fully complies with all IFC requirements as well as those of the Government of Egypt. A detailed EIA was prepared and approved prior to the construction of the cement plant. The plant has a very detailed EMS, including an environmental policy, detailed administrative procedures, and emergency response and action plans. In addition the plant has extensive worker health and safety procedures (and associated training). ECC operates the plant to the highest international standards. ECC is located in the desert 100 km east of Cairo as such this is an inherently dusty environment – the company is concerned about elevated ambient dusts levels and has already instituted a number of projects to reduce these levels.

Conclusion & Monitoring

IFC will evaluate the ongoing compliance with the applicable environmental and social requirements during the lifetime of the investment in this project by:

Reviewing annually the EMS and discussing any proposed upgrades or other changes with OCI;
Reviewing the annual monitoring reports (AMRs) prepared for the project by OCI covering ongoing performance of project-specific environmental, health, safety and social activities addressed by Government of Egypt and IFC requirements; and
Conducting periodic site supervision visits.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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