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, and on-site inspection of the facilities. The following potential environment, health and safety and social impacts of the projects were analyzed: implementation of an Environmental Management System to cover all operations; compliance with air emissions, wastewater effluents and solid waste handling requirements; worker health and safety; implementation of social programs; and source of and arrangements for wood supply and the compliance of forest operations with IFC policy and guidelines.

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. -- Andhra Pradesh Paper Mill The APPM mill, originally established in 1921, is generally clean and well managed with good housekeeping, and shows close attention to environmental issues. The power plant is coal-fired, and stacks are fitted with electrostatic precipitators to ensure that emissions meet local and IFC limits. Stack emissions from the lime kiln and three recovery boilers are similarly treated and meet IFC guidelines. Dust control is good, and odors are well controlled and barely noticeable on site. The plant is fitted with an NCG system for combustion of odiferous gases from the digesters and the evaporation plant. The pulping process currently uses elemental chlorine in bleaching, and in the upgrade this will be converted to an ECF process with oxygen delignification prior to chlorine dioxide bleaching. Other upgrades to be carried out as part of this investment include a new recovery boiler, new lime kiln, and other process improvements which will further reduce emissions below the already low levels. Liquid effluents receive conventional primary and secondary (activated sludge) treatment and meet IFC guidelines. This treated effluent is then subject to tertiary treatment through engineered land application (612 acres) for further reduction of BOD and AOX to negligible levels. The effluent is well within World Bank Group guidelines. The main solid waste is coal ash which is sold to brick manufacturers. Other high organic sludges are also sold for recycling into other products. Chemical supplies are handled appropriately to minimize hazards. Health and safety is handled appropriately throughout the plant, with proper equipment guarding and use of personal protective equipment (PPE). Fire protection is provided through a system of hydrants and extinguishers, and the plant has its own fire team with 30 trained staff. However, the paper packing and storage areas are relatively lacking in fire protection measures and a review of fire safety will be required prior to disbursement. The Company will commission a full Life and Fire Safety audit of the APPM mill and implement any recommended remedial action to ensure compliance with IFC guidelines. The mill has active programs for waste minimization and energy and water conservation, and is certified to ISO 9002 and ISO 14001 standards. These operations have won numerous local and regional awards for environmental performance. APPM is a socially responsible company that supports a number of healthy, education, drinking water supply, road construction and charity initiatives in around Rajamundry. It has also actively supported an HIV/AIDS awareness program. -- Coastal Papers Mill This pulp and paper mill, located just south of Rajamundry, was recently acquired by APPM. The facilities include a straw pulp mill, waste paper pulping, three paper machines, and power boiler. The straw pulp mill is in very poor condition, with significant non-compliance with IFC emission and health and safety guidelines. APPM plans to phase out its straw pulping operations and close this mill by March 2006. Black liquor from the pulping process has been stored in a lined lagoon at a quarry site with the approval of local environmental authorities. The Company will ensure that this site is cleaned and rehabilitated as part of this investment per the attached Environmental Action Plan. Power boilers for the pulp and paper operations are fitted with electrostatic precipitators or mechanical dust collectors, and the collected fly ash is used by third parties in brick manufacturing. Effluents from the boiler are within IFC guidelines. Liquid effluents receive conventional treatment and are subsequently used for irrigation in the area. Effluent from the de-inking plant is treated and released, with sludge from the treatment taken by other small manufacturers in the area for use in other products. Some wastewater is treated and recycled internally in the paper mill area. The effluents released are within IFC guidelines. There is considerable demand from local farmers for this water for agricultural purposes, and management is planning to extend the area to which this water is provided. Health and safety measures need considerable improvement in this plant, particularly regarding PPE use by workers. Fire protection in the plant requires upgrading, particularly in product storage areas. APPM will be required to carry out a fire safety audit of these facilities prior to investment, and to ensure that remedial action plans are implemented. Overall, considerable investment will be needed to bring this plant to the high level achieved at the APPM mill, and management is committed to doing so. -- Wood Supply Wood supply is derived largely from small farmers’ culture of suitable pulping species (Casuarina, Leucania), and none is harvested from natural forests. APPM has an extensive network of nurseries to produce approximately 3.5 million seedlings per year, and provides an extension service to the farmers at no charge. APPM largely works with small farmers having 1 to 2 ha and has had significant success in promoting silviculture as a way to reclaim waste land and raise farmers income. APPM has won numerous awards from the state government and other organizations for their work on reforestation and agro-forestry. Current operations cover approximately 4500 ha. APPM has won various awards from the state government and other organizations for their work on reforestation and agroforestry.

This ERS and the attached Environmental Action Plan contain the full environmental and social documentation prepared for the project.

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