11536 - Bavaria

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Environmental Review Summary

Project Number

11536

Company Name

BAVARIA S A

Date ERS Disclosed

May 7, 2002

Country

Colombia

Region

Latin America and the Caribbean

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 13, 2002
Signed : Jun 26, 2002
Invested : Jul 18, 2002

Sector

Breweries

Industry

other

Department

Regional Industry MAS LAC & EUR

Project Description

The Grupo Empresarial Bavaria (GEB), founded in 1889, is Colombia''s largest beverage company. It produces and distributes beer and non-alcoholic beverages (water, juices, soft-drinks, and malt-drinks) out of manufacturing plants in Colombia, Panama and Ecuador.

GEB has approached IFC for assistance with an expansion, modernization and rationalization program. The project includes the following components: (a) modernizing GEB’s Colombian plants in Bogota, Barranquilla, Boyaca, Bucaramanga, and Medellin; (b) expanding its brewery facility in Cali, Colombia; (c) modernizing and rationalizing its facilities in Ecuador (Guayaquil and Quito) and in Panama (Panama City); (d) on-going capital expenditures; (e) reducing redundancies and retraining of employees; (f) upgrading the environment standards at its plants in Colombia (Bogota, Barranquilla, Boyaca, Bucaramanga, and Medellin), Ecuador (Guayaquil and Quito) and Panama (Panama City);and (g) refinancing of maturing debt; and (h) undertaking selective acquisitions in the region.

Environmental and Social

1. Location of existing plants and land acquisition. GEB currently owns a total of 12 operating plants (9 in Colombia, 2 in Ecuador and 1 in Panama). Table 1 contains information on the plants’ locations, the land use in the surrounding areas, and the plants’ outputs. The expansion and modernization of these plants will not require land acquisition, except for the plant in Cali, Colombia, which will be relocated to a new site. None of the plants are located near environmentally or culturally sensitive areas.
2. GEB’s policy is to acquire land for new plants or for the expansion of existing plants in industrial areas. The Company is also committed to abstain from implementing expansions or improvements that will result in the resettlement of individuals or business until the Company has submitted to the IFC, and the IFC has approved, a specific Resettlement Action Plan to deal with such situation in compliance with IFC policies on involuntary resettlement.

Table 1. Plant''s Locations and Products

Plant	Location	Land Use in the Surrounding Areas	Products
Cervecería de Bogota	Bogotá, Colombia	Industrial/residential	Beer, malt drinks, bottled water, fruit juices
Cervecería Leona	Bogota, Colombia	Rural with industries nearby and a few residential areas nearby	Beer, malt drinks
Malteria Tibito	Bogota, Colombia	Rural	Malt preparation
Cervecería Aguila	Barranquilla , Colombia	Industrial/commercial	Beer, malt drinks, bottled water, fruit juices
Malteria Tropical	Cartagena, Colombia	Industrial	Malt preparation
Cervecería Unión	Medellín, Colombia	Industrial/residential	Beer, malt drinks, bottled water, fruit juices
Cervecería Boyaca	Boyacá, Colombia	Rural	Beer, malt drinks, bottled water
Cervecería Bucaramanga	Bucaramanga, Colombia	Industrial/residential areas planned in the near future	Beer, malt drinks, bottled water
Cervecería de Cali	Cali, Colombia	Industrial/commercial	Beer, malt drinks, bottled water
Compañía de Cervezas Nacionales (CCN)	Guayaquil, Ecuador	Industrial	Beer, malt drinks,
Cervecería Andina	Quito, Ecuador	Industrial/Human resettlements in nearby areas	Beer, malt drinks,
Compañía de Cervezas Nacionales (CCN)	Panama City, Panama	Industrial/residential nearby areas	Beer, malt drinks, soft drinks, milk

3. Environmental management. GEB applies an integrated approach to address the environmental, health, and safety impacts of its projects in the plants in Colombia, Ecuador and Panama based on the principles of adoption of clean technologies and continuous improvement. This integrated approach is based on the ISO 9001, ISO 14.001, and OSHAS 18001 international standards. The integrated approach includes the definition of an environmental policy and the development and implementation of documented procedures to identify, control, and improve the environmental aspects of GEB’s activities, products, and services. The integrated system, at each plant, has been designed to ensure compliance with host country environmental regulations. As part of this project, GEB will upgrade as needed its integrated management system to reflect its commitment to comply with applicable World Bank guidelines.
4. Presently, Cervecería Unión (Medellin) has been ISO 14001 certified. The Boyacá and Bogotá breweries will be audited for ISO 14001 certification during 2002. The remaining plants, Cervecería Bucaramanga, Cervecería Aguila (Barranquilla), Cervecería Leona, CCN (Panama), Cervecería Andina (Quito) and CCN (Guayaquil), are currently implementing/applying the integrated management system.
5. GEB’s management system is decentralized; much of the decision making power is delegated to the specific plants. However, there is a corporate structure in charge of guiding and directing the implementation of GEB’s environmental, health, safety, and social policy. Capacity is built at the plant level and resources are assigned accordingly. The system’s general policies, guidelines and procedures are defined at the corporate level, while the leader of the integrated management system at the plant level is responsible for their implementation.
6. Air emissions. GEB plants use boilers for energy and vapor generation. Cervecería Aguila, and Malteria Tropical use natural gas. Cervecería de Bogotá, CCN (Panamá), Cervecería Andina (Quito), CCN (Guayaquil), and Cervecería Leona use crude oil. Cervecería de Boyacá, Cervecería de Cali and Malteria Tibito use coal as fuel. Cervecería Union uses both coal and fuel oil. Cervecería Bucaramanga uses both gas and crude oil.
7. All plants have air emission controls installed and are monitored periodically. Processes that can generate dust (such as loading of raw materials into the silos, spent grain dryers, and transport of raw materials) are duly controlled to reduce air emissions to the atmosphere. The boilers combustion efficiency is controlled and control systems are also installed to reduce the concentration levels emitted to the atmosphere. All plants fully comply with local regulations. Upgrades, as needed, will be conducted to ensure compliance with applicable World Bank guidelines. The CO2 gas generated during the fermentation process is collected and either sold or reused.
8. Water use and liquid effluents. GEB plants obtaining water from nearby rivers include Cervecería Aguila, Cervecería Boyacá, Cervecería de Bucaramanga, Cervecería Unión, and Malteria Tibito. Cervecería de Bogotá, Cervecería de Cali, CCN (Panamá), CCN (Guayaquil) and Malteria Tropical obtain water from the municipal supply system. Cervecería Andina (Quito) obtains its water from their own wells, Cervecería Nacional (Guayaquil) will begin obtaining its water from wells in the near future. Cervecería Leona uses both superficial as well as ground waters.
9. As part of its environmental policy, GEB implements rigorous environmental recycling water measures at all its plants, including increasing reusable cycles in bottle pasteurization section, recuperation of the bottle cleaning waters and further use for cleaning grounds, recuperation of purge waters in the cooling tower, installation of water meters, efficient/rational use of cleaning waters, water leak controls, etc. As a result of these measures, the GEB operations have achieved significant water use reduction levels which have been carefully quantified since the beginning of the implementation of the integrated management system.
10. GEB also has a program to significantly reduce the concentration of organics in the wastewaters by rigorously reducing beer losses throughout the process. This reduction is carefully monitored at all plants. The majority of the plants treat their liquid effluents prior to being discharged into the environment; the exceptions are CCN in Panama and Cervecería Andina in Quito where no effluent treatment is conducted yet. Wastewater treatment plants at Cervecería of Bucaramanga and Cervecería Aguila are in the construction phase. The operating wastewater treatment plants have anaerobic treatment with the exception of Malteria Tibito that has oxidation ditches.
11. The treatment plants installed have been designed to comply with local environmental requirements but not necessarily with those of the World Bank. As part of this project, GEB has committed to install and upgrade as needed its wastewater treatment systems to ensure that all its operations fully comply with the applicable World Bank requirements. GEB will submit to IFC a detailed corrective action plan specifying the actions, timeframe, and implementation costs for the liquid effluents treatment upgrade/installations before this project is submitted to the Board for approval.
12. Solid waste handling. GEB has a program that first reduces the generation of wastes and then reuses and recycles the wastes generated. Processed solid wastes including spent grain, yeast, and filtrate material, are dried, packed, and sold as concentrated for animal feed. Many of the plants already have waste segregation areas for glass, aluminum, paper, carton, waste oils, scrap and domestic residues where they are collected. Glass and plastic boxes from all plants are fully recovered in the bottling and plastic box manufacturing processes. The additional recyclable materials are sold for reuse and the non-recyclable are sent to either authorized municipal landfills or to their own properly designed industrial landfills.
13. Those plants without designated segregation areas for solid wastes also segregate and sell the recyclables for further use and properly dispose the non-recyclable. These plants will also build waste segregation materials as part of this project to better facilitate the handling of such materials.
14. Health and safety programs. GEB has comprehensive health and safety programs designed to ensure that workplace accidents/incidents are reduced to the minimum. Each plant has a safety committee made up of workers and managers, a medical doctor, and the person in charge of safety and health programs. Personal protection equipment is provided to and required to be used by all employees. Detailed operating procedures have been developed to reduce the possibility of accidents in identified risk/exposure areas and periodic measures of various parameters including ammonia, carbon dioxide, carbon monoxide, chlorine, and ozone (at the water bottling plants only) are conducted. In addition, several plants have completed a workplace risk analysis and have begun implementing preventive actions. The remaining plants are in the implementation/development stage. The main refrigerant used is ammonia. Freon which is still used in Cervecería Andina (Quito) is in the process of being replaced with less harmful refrigerants.
15. In general, the plants exhibit excellent housekeeping with safety routes and adequate safety prevention signals. All plants have in place fire prevention measures including trained fire brigades available at all times, conduction of fire drills, and installation of fire prevention/response equipment such as extinguishers throughout the plant for the various fire precursors, hydrants, alarms, equipment for detection of gases (ammonia, carbon dioxide, etc.) in working areas. Chemical substances and fuels used are stored in isolated areas with control systems (i.e., safety valves, level meter, etc.) and have double containment walls to prevent soil contamination from spills, leaks, and/or accidental releases. Most of the plants have already completed detailed emergency response and contingency plans. The few pending are in developmental stage and will be soon completed.
16. Currently, GEB is implementing a monitoring program to determine whether there are PCB-containing transformers in any of its plants. The preliminary monitoring results indicated that several of the plants did not have PCB-containing transformers. The results also indicated that Cerveceria Union (Medellin) had PCB contaminated transformers. GEB, working with a qualified hazardous materials recycling/disposal firm, sent this hazardous material to France for adequate final disposal. As part of its environmental commitment, GEB will complete the PCB monitoring program and will inform IFC of the results of the analysis and of the specific actions for the adequate final disposal of the PCBs if needed.
17. GEB conducts rigorous environmental, health, and safety training program for all its employees, including managers and in some instances sub-contractors as is the case of transport contractors in the Cervecería Nacional in Guayaquil, recycling programs with out-sourcing operations (i.e, Aguas Brisas, beer warehouses). With the assistance of GEB’s full-time physicians, GEB conducts periodic medical exams of all employees including hearing tests, other occupational tests depending on a worker’s specific activities, and general medical conditions. In addition, sound ergonomic practices at some plants such as Cervecería Aguila (Barranquilla) have been implemented.
18. GEB plants have received several awards in recognition of their commitment to operate under rigorous environmental, health, and safety practices. Cervecería Union and Cervecería Leona plants received the “Planeta Azul” (Blue Planet) award for efficient water use, Cervecería de Bogota received “Program de Excelencia Ambiental” (Environmental Excelence Program) and Malteria Tropical was awarded “Manejo de Zona de Manglar” for their programs aimed at recuperation of wetlands.
19. GEB has specific programs to implement environmental upgrades at each of its plants in response to (a) its continuous improvement policy, (b) the need to ensure that all good environmental, health, and safety practices exhibit at various plants are implemented in all GEB plants, and (c) its commitment to fully comply with applicable World Bank guidelines.
20. As part of this project, GEB has committed to inform IFC prior to the acquisition or construction of any new plant. GEB will ensure that new plants will be built to comply with all applicable World Bank guidelines and new acquisitions will be upgraded as needed to achieve full compliance with World Bank guidelines in a time-frame agreed upon by GEB and IFC.
21. Social programs and community development activities. GEB supports social programs and community development activities through the Mario Santo Domingo Foundation and Corpocebada (Corporation for the Modernization of Barley Cultivation and Crop Diversification). Details on these programs can be found in GEB’s web page: www. bavaria.com.co
22. GEB developed a retrenchment program in view of the plant closures during the 1997 to 2001 period. The severance packages offered exceeded the local requirements. GEB has mitigated the impact of plant closures by facilitating the formation of micro enterprises staffed by retrenched workers. As part of this program, GEB offered technical assistance and training.

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: (i) list of the projects with the most significant environmental and social impacts, along with a summary of the actions implemented to mitigate any adverse impact of the projects; (ii) significant accidents/incidents and corrective measures; (iii) interaction with the communities (i.e., awards, recognitions, complaints, interaction with NGOs, etc.); (iv) ongoing overall environmental and social improvements of GEB operations; (v) land acquisition for new plants or expansion of new plants; (vi) status of implementation of programs to reduce the workforce; and (vi) summary of social programs and community development activities. Site supervision visits will also be conducted as appropriate.

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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