11321 - Hotel Lietuva

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Environmental Review Summary

Project Number

11321

Company Name

LIETUVA UAB VIESBUTIS

Date ERS Disclosed

Mar 20, 2002

Country

Lithuania

Region

Europe

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : May 17, 2002
Signed : Jun 26, 2002
Invested : Sep 12, 2002

Sector

City and Business Hotel

Industry

other

Department

Regional Industry MAS LAC & EUR

Project Description

The proposed project consists of the refurbishment and repositioning of Hotel Lietuva in Vilnius, Lithuania. the hotel, which targets the conference market currently underdeveloped and underserved in Vilnius, will be operated by Reval Hotel Group, a leading mid-market hotel operator in the Baltics. Linstow International AS of Norway (the sponsor) acquired a majority of the company that owns the hotel in 1998. The proposed project cost is estimated to be US$36.5 million equivalent, to be financed by sponsor equity and IFC A and B loans. The hotel is located in the Šnipiškës district of Vilnius, Lithuania, about 200 meters up from the north bank of the Neris River. A major four lane road (Ukmergës) runs on the north side of the hotel, with a parallel secondary road (Upës) on the south side. The area surrounding the hotel is a mix of shops, offices, public buildings, and parks. Opened in 1982, Hotel Lietuva is about a 10 minute walk from Vilnius’ historic Old Town and provides easy access for cars and buses. Originally designed as a landmark hotel with 324 rooms on 18 floors, the hotel has suffered from insufficient maintenance and a lack of upgrading. The refurbished hotel will have 275 rooms, as well as restaurant, bar, conference and banquet facilities. The sponsor plans to renew all of the internal infrastructure, upgrade all common areas and the façade, and improve fire and life safety standards to conform with EU and World Bank guidelines. The renovation is expected to start in the second quarter of 2002 and to be completed within 12 months.

Environmental and Social

The sponsor has presented plans to address these issues and demonstrate that the proposed project will comply with applicable governmental and World Bank Group requirements. The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.

Environmental Management
Hotel Lietuva will ensure that construction and operating practices comply with industry norms, local requirements, and World Bank policies and guidelines. The hotel will comply with Reval Group’s environmental management system and a site-specific environmental management plan is scheduled for mid-2002 completion. Reval Hotel Group’s environmental manager will be the designated person reporting to top management regarding environmental matters at Hotel Lietuva. Hotel Lietuva is also committed to comply with the Estonian Green Key Criteria as part of Reval Group’s overall commitment to environmental responsibility.

Labor Relations
In the fall of 2001, Hotel Lietuva’s Board made a decision to dismiss the majority of existing employees in order for extensive refurbishments to take place. The hotel has been temporarily closed for these renovations. The company has confirmed to IFC that these employees were dismissed according to Article 29 of Lithuania’s Law on Employment Contract. The dismissed employees received a compensation package including compensation for unused holidays and taxes for social security. Five dismissed employees have argued in court against the dismissal and are asking for reinstatement. If the court finds the employees’ claims reasonable according to the national Law on Employment Contract, it may decide on appropriate compensation. These cases are still pending.

In March 2000, Hotel Lietuva’s Board approved a collective bargaining agreement with the employees’ trade union. The agreement contained a number of agreements including conditions of employment contracts, working time and holidays, remuneration for work, safety at work and social guarantees (e.g., safe working conditions, employee training on safety, funeral expenses in case of employee death, etc).

Water Use and Waste Disposal
The hotel will be connected to city water supply and sewerage systems. IFC requires that for projects discharging to a municipal sewage system, the treatment plant must have sufficient capacity to take effluent flow from the project, and the treated effluent from the municipal plant must meet local regulations. Hotel Lietuva has an agreement with the Municipal Water Supply Company in Vilnius and has confirmed that local standards are met by the municipal system. Measures to prevent noise to the surroundings include silencers on ventilation air intakes and exhausts and screening/sound damping walls around dry coolers/condensers for HVAC and refrigeration plants.

Solid waste will be sorted and collected by the municipal waste collection company and disposed of in designated landfills. All waste associated with construction will be disposed to a special landfill meant for construction waste only. All furniture, equipment, sanitary appliances and to a large extent also interior elements have been sold to the wider public for reuse and removed. Reinforcement steel will be sorted out for recovery. The hotel will outsource its laundry services and the company has committed that all cold storage and central cooling systems are and will be CFC-free.

During refurbishment, asbestos waste was found and will be treated according to Lithuanian Ministry of Environment rules and national law. At the site, the waste will be kept in leak proof multifold use containers and will be transported and registered by a waste treatment plant for proper disposal.

Fire Safety
Fire safety and control measures include fire alarm and control system, complete sprinkler plant, an escape system, emergency evacuation procedures, including staff training. Hotel Lietuva has commissioned an independent audit of the as-built/operating condition to assess compliance with EU and World Bank guidelines for fire protection and life safety. The sponsor has already committed to complying with IFC’s fire and life safety requirements and will prepare and submit a timetable for implementation prior to Board approval. As in the case of Hotel Latvia (Riga), FPC of Antwerp has prepared a Fire and Life Safety Master Plan (August 2001) which will be implemented by the sponsor.

Employee training in fire safety and health and safety practices is conducted for all new employees as part of induction and health and safety training for staff will be conducted once every six months. A Department of Health and Safety will be set up in accordance with Lithuanian law and the company, if employing more than 50 workers, will assist in setting up an employees’ Committee of Safety at Work. Departmental fire safety and security training will be provided once a year and practical training on safety and evacuation for staff is provided once a year.

Conclusion & Monitoring

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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