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 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 information submitted by the project sponsor. The following potential environment, health and safety impacts of the projects were analyzed: - Hazardous materials management; - Emergency preparedness and response; - Maintenance-related effluents, emissions, and waste management; - Employee health and safety; and - Environmental management systems.

Under its current status as a railway operator, Russky Mir has presented plans to address these issues to ensure that they comply with applicable Russian laws and regulations, including the technical standards of the Ministry of Railways (MPS) and the All Russia Railway Research Institute (VNIIZHT), environmental and health and safety laws and rules and World Bank requirements. When Russky Mir expands its activities, the Company will be required to assume additional environmental responsibilities. Specifically, upon becoming an independent railway carrier and oil terminal operator, Russky Mir will develop and implement appropriate environment, health and safety management systems (including hazardous materials management programs and plans) consistent with IFC environmental, health and safety guidelines and necessary to manage the additional legal and environmental liabilities that might arise from its new activities. The detail about how these issues are addressed by the Company and other responsible parties is summarized in the paragraphs that follow. Hazardous Materials Management The company transports crude, heavy and refined oil products defined by MPS rules as hazardous, and as flammable dangerous goods by the UN. Considered hazardous or dangerous primarily because of their flammability, these include crude oil, diesel, fuel oil, petrol (gasoline), and other petroleum-derived products. Transportation of flammable liquids such as these present risks during loading and loading activities, where overfilling and spillage are the largest hazards. Hazards also arise from the risk of accidents during transport. Transportation procedures are generally consistent with the UN Model Regulations. Tank cars and wagons are designed to meet MPS standards for petroleum products – steel is of appropriate thickness and is coated with an oil-solvent resistant lining. In addition, cars are equipped with additional safety inlet valves, automatic coupler restraining arms and reliable elastomer absorbers mounted on the frames, shelf couplers (to prevent separation in an accident) and end shields, and appropriate top hatch seals and bottom valve controls. All tank cars display labels describing the dangerous properties of the goods being carried ( MPS hazardous index and UN hazardous class) to allow proper handling by transport personnel or emergency services in the event of an accident. Moreover, Russian regulations require tank cars to undergo regular, frequent maintenance and repair in which the entire wagon is disassembled and worn components are replaced or brought to standard. As a freight forwarder and operator, Russky Mir currently has limited responsibility for managing the hazardous materials in transport. Instead, this responsibility lies with the owner/shipper of the petroleum products from loading through transportation to unloading. The shipper is responsible for monitoring the material during transport, such as inspecting for leaking valves in transit. Notwithstanding, Russky Mir ensures that the wagons it operates -- both older and newer models -- are well-maintained and meet equipment operating standards. Prior to operating the Tamansky oil terminal, Russky Mir will develop and implement a hazardous materials management program consistent with IFC guidelines. To manage the risks associated with the storage of oil and liquefied natural gas, the program will include a series of management actions, preventive measures, and emergency preparedness and response activities integrated into a coherent management system. Preventive measures will aim to prevent accidents – leaks, spills, explosions – through a combination of engineering controls and operating procedures. Emergency Preparedness and Response Again, owing to its limited responsibility as a freight forwarder and operator, Russky Mir currently depends on government authorities for accident planning and response. In this capacity, the authorities provides emergency planning and response coordination, emergency response equipment, and appropriate training of its employees. In the event of an accident, Russky Mir personnel or on-the-scene MPS staff immediately notify MPS emergency management who in turn inform the impacted community in coordination with the Ministry of Emergency Situations (MChS). At the same time, MPS and MChS damage assessment and response teams quickly mobilize and respond to the damage and to eliminate risks posed within a matter of hours. MPS’ procedures also include extensive incident investigation protocols that establish the cause of the accident, impose penalties, if applicable, and identify the steps needed to prevent reoccurrence. To date, Russky Mir has not been associated with any train derailments or accidents. In addition, there have been no leaks or spills associated with failures of tank car components while in service. Prior to operating the Tamansky oil terminal and as part of its hazardous materials management program, Russky Mir will develop procedures and practices, in the form of an Emergency Preparedness and Response Plan, that will allow for quick and efficient response to accidents. The Plan will cover procedures for taking emergency response actions and related coordination with the local community and government authorities, emergency response equipment, and training of employees in responding to an emergency. Maintenance-Related Effluents, Emissions and Wastes Management When commodities are changed or inspection reveals accumulation of sludges on tank bottoms, cars are washed at Russky Mir’s maintenance and repair centers or at selected MPS workshops. The insides of the cars are steam cleaned with an aqueous-based cleaning solutions. Russky Mir’s tank car washing facilities use sophisticated wastewater management systems with zero-discharge technology, where both oils and wastewaters are recycled. Treated washwaters are reused in the cleaning process, and recovered oils are used to fuel the heating plant. All maintenance and repair centers to be developed in the future by the Company will rely exclusively on these types cleaner production practices and realize more efficient use of water and cleaning chemicals while at the same time reducing pollution loads to the environment. At MPS cleaning stations, washwaters are collected and treated in oil/water separators, where petroleum products are captured and recycled by use as a substitute fuel for local boilers or selling to oil reclaimers. Effluents are further treated in holding lagoons prior to surface water discharge in compliance with national and local environmental requirements. Air emissions generated during sandblasting and painting of railcars are controlled using best available practices, and regularly monitored to ensure they comply with applicable Russian limits. Wastes generated during other maintenance and repair activities – sandblasting, painting, mechanical overhauls – are collected and periodically disposed in landfills licensed to accept these types of wastes. Employee Health and Safety Russky Mir has an active occupational health and safety program designed to comply with stringent Russian workplace regulations. The program includes a set of specific safety and health procedures for the range of job descriptions covered by their maintenance and repair center activities. Maintenance facilities are designed and operated to protect the health and safety of employees, and accident prevention procedures are in place. Personnel are provided with appropriate protective equipment, and participate in extensive health and safety training programs. The Company conducts regular quarterly inspections of the maintenance facility workplace to ensure all requirements and procedures are being properly followed. Non-compliances are identified and corrected. Environmental Management Systems Russky Mir is developing and implementing ISO 14001 certified environmental management systems (EMS) at is maintenance and repair centers and oil terminals. All facilities will be independently certified to this international environmental management system standard.

This ERS contains 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 above described 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 mitigation measures 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.