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 physical inspections of the new mill and cogeneration facilities under construction at Haidergarh; the proposed site for the distillery at Babhnan; and a technical evaluation of Balrampur’s other operating mills at Balrampur and Tulsipur. In addition, environmental assessment of the project included review of 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. - Environmental assessments and permitting of proposed projects; - Environmental issues management at Haidergarh; - Environmental issues management at Babhnan; - Occupational health and safety; - Cane farmer extension services; - Greenhouse emission reductions and potential INCaF funding; and - Community development and other social initiatives

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. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. [Further information is provided in the attached documentation.] - Environmental assessments and permitting of proposed projects. Balrampur has completed an environmental impact assessment (EIA) for the proposed sugar mill and cogeneration plant at Hairdergarh and the EIA for the new 60 kiloliter ethanol distillery in Babhnan is in process. Both EIA documents also contain environmental management, and disaster management plans that will be implemented for operation. The Uttar Pradesh Pollution Control Board has reviewed the Haidergarh EIA and issued a no objection certificate (NOCs) clearing the way for construction. Permitted construction is underway at Haidergarh and preliminary civil works (land filling and land clearing) are underway at Babhnan. Once construction is complete both operations will be required to obtain permits to operate consistent with Indian regulatory requirements. Granting of the operating permit will be contingent upon verification that construction has been carried out in accordance with the plans and the EIAs. - Environmental issues management at Haidergarh. The new mill and cogeneration plant at Haidergarh will positively benefit from Balrampur’s extensive experience in upgrading and expanding old mills. A bagasse-fired cogeneration plant will provide steam and electricity for the sugar mill, housing facilities and ancillary operations. Six (6) MW of electric power will be used for the mill, ancillary facilities and the electrostatic precipitator and 14 will be sold into the local grid (UPPCL). The electrostatic precipitator will maintain particulate emissions in compliance with IFC guidelines and Indian regulatory requirements. The cogeneration facility will produce ~ 8500 tonnes/year of fly and bottom ash. Ash management at other Balrampur mills is utilized for landfill. For the Haidergarh mill, Balrumpur will embark on a strongly engineered program to employ waste ash to level depressions created by clay mining for brick manufacture and return the land to productive use in accordance with the corrective action plan. Additionally, Haidergarh will continue research into supplemental uses of waste ash such as the production of bricks or other construction materials. Excess bagasse will be stored for use in the power plant in the non-crushing season (~6 months). Mill and housing operations will produce 1580 m3/day of wastewater that will be treated in a wastewater treatment plant with effluent quality of <30 mg/l BOD5, COD <250 mg/l and suspended solids in the 20-30 mg/l range. Treated effluent will be discharged to irrigation canals where it will ultimately be reused for irrigation of croplands. Water supply will originate from ground water wells and locally available irrigation canals. Extensive measures are planned for the new mill to manage water effectively and to reuse the resource to the extent feasible. Produced molasses will be shipped either to Balrampur distillery or to the new operation at Babhnan. Cane mud and dried wastewater treatment plant sludge, which are high in nitrogen and phosphorus, will be composted to produce soil amendment and fertilizer for local farmers. - Environmental issues management at Babhnan. Babhnan currently operates an 8500 TCD sugar mill where the new 60-kilo liter/day distillery will be completed in early 2004. Molasses generated by this mill and the new 4000 TCD mill situated at Haidergarh will be used for the new distillery. Excess bagasse not burned in the Babhnan mill has previously been sold to the paper industry and in future will be partially used for the distillery boiler and the remainder will be shipped to Haidergarh for the new cogeneration plant. Air emissions from this operation will comply with IFC guideline limits. Plans for distillery liquid waste management are well conceived and are based upon the successful operation at Balrampur. Specifically, some 700,000 liters/day of spent wash will be generated per day. Typically this waste has a very high organic strength (42,000-45000 mg/l BOD5) and requires extensive treatment. Wastewater management includes biological digestion of spent wash to produce biogas (methane) that will along with bagasse, be used to co-fire the distillery boiler. Digester effluent will then be biologically treated to further reduce the BOD5 to approximately 200 mg/l. Final effluent will then be sent to bio-composting operation. In this facility sugar mill press mud (cane mud), wastewater sludge and other solids are combined to produce bio compost (organic manure) that is then sold as fertilizer for the tea industry and to farmers for use as a soil amendment. Fly and bottom ash (generated by the sugar mill and distillery) are to be used for land filling operations that will be formalized and more beneficially engineered in accordance with the corrective action plan. - Occupational health and safety. There are significant shortcomings in existing programs in all mills that will be addressed as part of the investment. Balrampur will establish a formal program to improve occupational health and safety in all of its operations. This effort will include hiring of appropriate management and operations staff, a more technical approach for employee training, job hazard analysis and mitigation, and promotion and use of personal protective equipment. Additionally, Balrampur will ultimately seek international certification of the OH&S system that they put into place. - Cane farmer extension services. The Haidergarh cane production area is 12000 ha. Although cane is currently produced, production needs to be stimulated to ensure a viable supply for the mill. Balrampur is working closely with IFC to design a pilot program to provide scientific agricultural training for farmers in the Haidergarh area. Supplemental objectives of the training program will be to promote integrated pest management and the use of modern methods to enhance production and reduce operating costs. Once the program has been fine-tuned it will be extended to the other mills for local implementation. - Greenhouse emission reductions and potential INCaF funding. In Uttar Pradesh (UP) there is currently a 400-500 MW/day electricity shortage. In March 2003, Balrampur commenced dispatching power from its 19.55 MW cogeneration plant at Balrampur in accordance with the terms of a 10yr power purchasing agreement with the state owned UP Power Corporation Limited (UPPCL). A similar contract has been signed for the 20 MW plant under construction at Haidergarh. Upon completion of the new cogeneration facility at Haidergarh, the two sugar mills will meet their own energy needs and collectively sell ~30 MW of biomass generated electric power to UPPCL. Electric power generated by the Haidergarh cogeneration project alone could displace approximately 100,000 tonnes of CO2 equivalent/year (greenhouse gas emissions). The IFC-Netherlands Carbon Facility (INCaF) is currently evaluating the viability of long-term carbon credit purchases from both of the cogeneration projects. A Letter of Intent (similar to a mandate letter) is being prepared for presentation to BCML. The LoI would allocate responsibilities between INCaF and BCML for completing documentation requirements for INCaF and under the Kyoto Protocol, including obtaining approval from the Government of India. INCaF hopes to sign an Emissions Reduction Purchase Agreement with BCML for the purchase of eligible greenhouse gas emission reductions resulting from both projects for a period of 10 years. The purchase would be in the form of a forward contract with payment for emission reductions after an independent auditor has verified the reductions. - Community development and other social initiatives. Balrampur routinely provides funding for a variety of community development activities and will continue this tradition in general and specifically in the Haidergarh and Babhnan areas. In the past these have included health, education, human services, arts, and culture. Selected projects include Anandalok a charitable health trust that provides free and subsidized healthcare facilities for the poor in Calcutta; Divya Chhaya Trust, a Calcutta-based trust that undertakes educational projects for women and children; and the Ramakrishna Mission Institute of Culture. Other employee-specific programs provide health care, education and advanced education tuition and supplies for exceptional students.

Corrective Action Plan.

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 Environmental and Social Corrective Action Plan and ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic, quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.