IFC requires that this document is made available through the World Bank InfoShop and to the locally affected community no less than 30 days prior to project consideration by the IFC Board of Directors. The Summary of Project Information (SPI) also provides details of where the ERS has been made available to the locally affected community. The SPI must be sent to World Bank InfoShop no less than 30 days prior to project consideration by the IFC Board of Directors.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor. The following potential environment, health and safety and social impacts of the projects were analyzed. - Quality and sustainability of water resources; - Storm water management; - Process wastewater management; - Solid waste and spent grain management; - Employment; - Occupational health and safety; - Local crops; and - Ammonia refrigeration.

The sponsor has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. Information about how these potential impacts will be addressed by the sponsor and the proposed project is summarized in the paragraphs that follow and in the attached corrective action plan (CAP). - Quality and sustainability of water resources. Water for malt house and brewing operations is extracted from three wells on the brewery property some 130 meters deep. Water pumped from these wells is stored in a 1000 m3 concrete reservoir and then used for malting and beer production. The facility’s water supply license allows extraction of 730,000 m3/year. In 2002 the operation used 303,000 m3. No water treatment is provided. Iron is high in the water from all three wells. Manganese is high in the third well. Production plans will evaluate the existing water licenses and the volume of water required to ensure that there is an adequate amount for the proposed 8 brews/day and the potential need for iron and/or manganese removal. The water source for bottled mineral water consists of two 230 meters deep wells with a capacity of 60 m3/hour. Use of the two wells must be alternated. The facility is currently using 96% capacity of the two wells. The need for alternative water supply and treatment will be examined in production planning to ensure a viable source of water for future production adequate quality for products from the facility. - Storm water management. Local authorities tightly regulate storm water and discharge to surface water must meet specific quality regulations. Existing data show that storm water is contaminated by movement through facility operations (BOD5 is 440 mg/l versus a local regulation of 5 mg/l; COD is 624 mg/l versus the local regulation of 15 mg/l). Accordingly, water management activities for the project will include storm water to ensure compliance with strict local regulatory requirements. - Process wastewater management. Process wastewater emanates from a variety of operations including brewing and spent grain transfer and drainage from the storage silos. Untreated wastewater is discharged to municipal sewers and treated by a regional wastewater authority that charges on a volume and strength basis for the service. The baseline charge of US$0.125/m3 (243 Rubles/m3) is augmented with premium charges for exceedances of set values for a specific parameters including: pH, suspended solids, phosphate, BOD5, oil and grease, chlorides, and sulfates. Using the production of wastewater from 2002 and the actual strength of wastewater strength measured during production in 1991 the potential cost for wastewater treatment for the proposed eight (8) brews/day in the refurbished facility could be ~$200,000 or more/year. Thus, the development plan must incorporate not only waste minimization but also be prepared to treat or pretreatment of its wastewater to be able to predict and to control operating costs. - Solid waste and spent grain management. The issue of spent grain must also be managed for the proposed operation. The initial production runs will double those of the former operation. During previous operations and governments, the municipal authorities required local farmers to collect spent grain and spread it on their fields during the summer months when spent grain was not used for cattle food. At present very little of the former scale of farming remains and most of the farmers are producing small crops for themselves. Undigested spent grain is not a particularly good fertilizer, as it needs to be digested prior to use. Thus, an alternative system for spent grain management will be incorporated into project development plans in accordance with the attached corrective action plan. - Employment. Approximately 351 individuals are presently employed by the operation. Existing staff was paid only 50% of their salaries from October 2002 to January 2003. And, they have not been paid from January 2003 to the present. DBBC’s privatization plan includes a provision to pay salaries in arrears in accordance with the requirements of the privatization agreement and the government of Belarus. Additionally, DBBC will make an effort to bring former employees back to work at the new production facility. - Occupational health and safety. Existing operations suffer from lack of investment into lighting and other environmental improvements that are required to promote job health and safety. As part of the development plan, DBBC will institute a systematic approach to occupational health and safety to include a policy statement, improved employee training, job hazard analyses and monitoring of safety statistics in accordance with IFC’s guideline requirements. - Local crops. As the quality of barley and hops grown locally is of inferior quality and farming has and continues to suffer from lack of investment, DBBC intends initially to import these raw materials from the Russian Federation. In the future DBBC will work with local universities to stimulate local, entrepreneurial farming operations and to provide technical assistance to support higher quality grain and hops harvests. Supplemental services from the brewery may include the availability of treated wastewater for irrigation and fertilizer made from spent grain. - Ammonia refrigeration. The existing system is operational, contains six (6) tons of ammonia and is currently utilized for refrigeration of the beer remaining from the last production run. However, the compressors and piping systems need improvement. The odor of ammonia is strong in the compressor room and operators have no isolated control room or other isolated place to work. As part of the investment, the ammonia refrigeration system will be brought up to international standards to protect not only employees but also the surrounding community. Isolation areas, protective equipment, warning signs, exhaust systems and other safety considerations will be incorporated into retrofit of the existing system.

The following Corrective Action Plan (CAP) provides further details of remedial measures to correct existing environmental and/or social issues.

Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environment and social policies and the environmental, health and safety guidelines upon successful implementation of the agreed mitigation measures.

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: - the status of implementation of all measures contained in the Corrective Action Plan and - 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.