11234 - Productos Gutis S.A.

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Environmental Review Summary

Project Number

11234

Company Name

Productos Gutis S.A.

Date ERS Disclosed

Apr 29, 2002

Country

Costa Rica

Region

Latin America and the Caribbean

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 24, 2002
Signed : Jan 10, 2003
Invested : Aug 9, 2004

Sector

Other Medical

Industry

other

Department

Regional Industry MAS LAC & EUR

Project Description

Productos Gutis S.A. (Gutis, or the company), a Costa Rican pharmaceutical company, is undertaking a US$14.5 million project to expand into and to modernize its operation in a relocated facility on the outskirts of San Jose. The new plant will be equipped with modern production equipment that will increase capacity and product lines. Existing warehouses are now scattered throughout the city. They will also be consolidated at this new location. The proposed investment is part of Gutis''s strategy to improve sales and margins by reducing dependence on government business, increasing its share in the private market, increasing exports, and obtaining Good Manufacturing Practice (GMP) certification from regulatory agencies such as the World Health Organization (WHO) and the United States Food and Drug Administration (FDA).

Environmental and Social

Gutis has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the Company is summarized in the paragraphs that follow.

The new site is in an industrial park on the outskirts of San Jose. Gutis purchased the site in November 1996 from another company. The site currently has a warehouse, offices and a parking lot. An environmental impact assessment (EIA) is being prepared. The EIA will delineate specific requirements to ensure compliance of the Project with Costa Rican laws. Additionally, IFC will review the document for consistency with World Bank/IFC requirements.

Some buildings at the old site will be demolished to make way for the construction of office buildings. Existing buildings were constructed after restrictions on using asbestos were in effect, and glass wool was used as insulation around the boiler and pipes. Closure and clean-up activities at the existing facility will follow an action plan developed to ensure compliance with the local Occupation Health Regulations manual. The underground oil tank will be decommissioned, first by undertaking an integrity test to ensure that the tank is not leaking, then filling it with concrete and sand. Should the integrity test show leakage, the tank will be excavated and the contaminated soil removed and appropriately disposed of. In either case, the Company will notify any and all new owners of the existing site about the presence of the tank and its disposition. All machinery will be moved to the new facility. Thus, the potential for problems from past contamination at the existing site appears to be negligible.

The construction contract for the new facility will contain safety and environmental clauses to ensure contractor compliance with national regulations governing construction impacts.

With respect to air emissions from its production processes, Gutis uses only water and ethanol (alcohol) as solvents in its products. [Ethanol has a low vapor pressure and will be used in closed systems]. Because the Company doesn''t use other volatile solvents, it doesn''t need or use a vapor recovery system. The new site will have two small boilers, generating approximately 1.7 million BTUs per hour. These boilers are not considered significant sources of air emissions under World Bank Group guidelines, but are subject to Costa Rican regulations. The boilers are maintained to function according to manufacturer''s specification and are inspected once a year to ensure compliance with local environmental requirements.

The above-ground oil tank feeding the boiler at the new facility will have a containment wall to prevent spills from contaminating surrounding ground.

As part of its commitment to quality, Gutis will obtain FDA certification and will follow European Agency for Evaluation of Medical Products (EMEA) Good Manufacturing Practice (GMP). FDA guidelines require that liquid and solid waste "be disposed of in a safe, timely, and sanitary manner." Because of limited space for appropriate facilities, the Company currently does not pre-treat process wastewater prior to releasing it into the municipal sewage system. At the new site, however, the Company will need to meet government pre-treatment requirements. The EIA will determine the characteristics of the effluent from the new plant and will designate the physical and/or chemical treatment needed to meet those pre-treatment requirements. The resulting appropriate treatment technology will be part of the Project.

Under GMP, the Company''s premises must be designed to minimize the risk of contamination. The premises must also be carefully maintained and cleaned. The Company has a hazardous chemical procedure that internally codes raw materials and provides Material Safety Data Sheets to employees. Active pharmaceutical ingredients are quarantined pending assay by the Quality Assurance Department, then released to plant stores for use in manufacture. The facility keeps only 15 days supply of reactive inventories. Employees are trained in labeling, handling and storage of materials. Gutis stores solid waste in an secured area away from the factory and will do so at the new factory. The Company pierces old containers with holes to prevent reuse and sends them to be recycled to a licensed handler of hazardous material, as appropriate.

The new facility will meet NFPA 101 and local requirements fire and life safety. Additionally, it will meet local building standards for withstanding earthquakes. [Employees will be trained in the use of fire suppression equipment and evacuation procedures. Three fire drills per year will be carried out.] The sponsor has prepared an emergency response plan.

Employee health, safety and training are essential parts of GMP under both the FDA and EMEA. For example, under FDA GMP regulations, each employee must (i) receive education and training that enables them to carry out their assigned tasks, (ii) wear appropriate protective gear, and (iii) practice good sanitation and be healthy. The use of personal protective equipment and safety rules also adhere to national labor codes.

Conclusion & Monitoring

IFC will evaluate the Project''s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering: ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.

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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