24644 - Delta-Wilmar CIS

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Environmental & Social Review Summary

Project Number

24644

Company Name

DELTA WILMAR CIS LIMITED

Date ESRS Disclosed

May 26, 2006

Country

Ukraine

Region

Europe

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 27, 2006
Signed : Jul 5, 2006
Invested : Oct 18, 2006

Sector

Palm Vegetable Oil

Industry

Agribusiness and Forestry

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

The proposed IFC investment entails establishment of a greenfield 1,500 metric ton per day crude palm oil refinery and shortening manufacturing facility situated close to Yuzhny Port in southern Ukraine. The installation is situated ~38 km from Odessa Port. The refinery operation will import crude palm oil (CPO) from Malaysia and Indonesia and produce refined oil and shortening to serve the CIS, Ukrainian and Russian markets. Phase 1 of the project, which entails construction of the storage facilities, is currently underway. This phase of the work will be completed by June 2006. The second phase, which includes the refinery for margarine and shortening production, is projected to be operational by September 2006.

Overview of IFC's Scope of Review

Environmental and social review of this project consisted of an evaluation of technical and environmental/social information provided by the IFC client for representative Wilmar supply chain installations in Indonesia and for the refinery in Ukraine. Additionally, physical visits to representative plantations and CPO mills in Indonesia as well as the refinery site in Ukraine were made. The following potential environment, health and safety (EHS), and social impacts of the projects were analyzed:

For the supply chain the following potential issues were reviewed.

- Plantation operations,
- Management of emissions to the environment;
- Social and occupational health and safety performance,
- Corporate relations with the community, government, plasma cooperatives, and other stakeholders; and
- Environmental management system.

For the refinery in Ukraine, the following potential issues were reviewed.

- Plant location;
- Land acquisition and resettlement;
- Plant design and permitting;
- Permitting for plant construction and operation;
- Management of emissions to the environment;
- Hazardous materials management;
- Occupational health and safety and emergency response;
- Existing and planned management systems;
- Community health, safety and security;
- Public disclosure and community relations; and
- Community development activities.

E & S Project Categorization and Applicable Standard

This is a Category B project with limited specific environmental and social impacts. All potential impacts emanating from refinery operations may be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Potential environment, health and safety and social impacts in the supply chain and at the site of the proposed refinery and terminal listed above were analyzed as part of environmental and social review. Although Wilmar-owned and operated plantations and CPO mills are not included in this IFC investment and will supply a varying, small fraction of CPO needs of the refinery, IFC deemed that adequate appraisal of this investment mandated a representative review of Wilmar’s supply chain operations.

Wilmar’s Indonesian plantation operations and crude palm oil (CPO) mills that were physically evaluated as part of project appraisal appear to be managed appropriately and are in line with best international practice. Wilmar Group’s CPO mills are generally well maintained and operated. Air and water emissions meet local and national requirements, but are generally higher than IFC guidelines. Overall, social and occupational health and safety performance meets applicable IFC guidelines, and follows the approach of the Roundtable on Sustainable Palm Oil (RSPO) Principles and Criteria. Corporate labor policies and practices follow, and in many areas exceed, national legal requirements. Corporate relations with the community, government, plasma cooperatives, and other stakeholders are strong.

The refinery is situated in an existing industrial zone adjacent to an existing fertilizer plant in Yuzhny Port. Facility design follows internationally recognized good practices and incorporates the technology required to avoid, minimize or mitigate possible negative impacts. Facility design and associated technical supporting documents were submitted to local regulatory authorities for review and to obtain the authorization to construct. Authorization to operate the facility from the designated Ukrainian government regulatory entity has been requested. Operation authorization will be granted from the Kharkiv Institute when facility standard operating procedures, which have been translated and submitted for review, are deemed adequate and complete.

Environmental and Social Mitigation Measures

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, Ukrainian laws and regulations, and World Bank/IFC environment and social safeguard policies and environmental, health and safety guidelines. Information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow. Supplemental information is provided in the attached Corrective Action Plan (CAP).

Supply Chain - The Wilmar Group has extensive oil palm holdings in Indonesia (Sumatra and Kalimantan), and is planning further development. The Group’s plantations and processing operations are well managed through the development, promulgation and local implementation of detailed Standard Operating Procedures which are generally consistent with the requirements of IFC’s safeguard policies and guidelines. Wilmar’s approach to dealing with the social and environmental issues inherent in this sector reflects international best practice. Wilmar is also an active member of the Roundtable for Sustainable Palm Oil (RSPO), and is committed to applying the RSPO Principles and Criteria for Sustainable Palm Oil Production. Consistent with these Principles and Criteria, Wilmar is planning to address supply chain issues for CPO sources that it does not control through development and promulgation of a Code of Conduct, and to create awareness among suppliers of the need for sustainable production of palm oil through education and training. IFC has recommended that Wilmar further strengthen its environmental and social management systems to support these initiatives.

Plant location - The site, which was purchased by LLC Delta Wilmar from Odessa Port Plant in a willing buyer and willing seller transaction, is situated on a 8.16 ha plot adjacent to the Yuzhny Port, a subset of Odessa Port Plant (OPP) operation and within the Odessa Port Plant industrial Zone, which was created in 1997. The plot on which the refinery is situated previously hosted a defunct cement plant that was dismantled prior to the start of refinery materials storage tank construction. The site has an irregular, elongated form and is bounded on the south by OPZ Ammonia Production plant (OPZ); on the east by a vacant lot currently used for vehicle parking and slated in the offing for construction of a petroleum refinery and further on Pier No. 4 and the offshore jetty described blow; on the north by Yuzhnaya Street leading to Novye Belyary community and a closed cemetery; on the west by a former motor transport area of Joint-stock Company Chernomorgidrostroy that is currently employed for storage and repair of building equipment, and storage buildings, mechanical and repair workshops belonging to BU-17 and OBU-532 construction companies. Raw materials for refinery operations and finished goods are transferred to and from tankers in the Black Sea by an offshore jetty situated on Pier N. 4 of the Yuzhny Port installation. From the jetty all materials are transported through a ~2 Km pipeline to the refinery site.

Land acquisition and resettlement - The refinery is located in an industrial zone created by the Ukrainian state in 1997 that hosts several industrial enterprises. At the time of the creation of the zone, compensation was provided by the state to the original inhabitants of the property. Initially and for a subsequent period of 12 months, lease payments were paid to former inhabitants. Additionally, replacement housing was provided for the people in Yuzhny City in a housing complex developed for the purpose of relocating former inhabitants.

Plant design and permitting - In order to obtain authorization to construct the elements of phase one and two, Wilmar conducted an environmental assessment and submitted the documentation to state authorities for review and approval. Based upon submitted design and EA documentation a variety of locally and nationally mandated reviews were completed and specific permits have been granted including the following: (i) Complex Expert Conclusion; (ii) Economic and technical evaluation of tropical oils transportation and processing plant in the district of village Novye Belyary, Uzhnyy, Industrialnaya St 6, May 2005, (iii) State Sanitary and epidemiologic experts report, January 2005; (iv) Conclusion N° 353 on construction project Delta Wilmar CIS Ltd, April 2005; (v) Conclusion of state ecological examination under technical and economical settlement of the complex of trans shipment, processing of tropical oil, Yuzhnyy, Industrialna St 6, May 2005. Wilmar is currently in the process of requesting permission to operate phase one of the facility as described above.

Management of emissions to the environment – The refinery boiler, which is the sole source of air emissions from the refinery, is to be fired by natural gas provided to the facility through an existing state-owned pipeline from the Port Industrial Zone. Sweet gas quality is high and air emissions from the boiler will comply with Ukrainian regulatory and IFC guidelines limits for point source air emissions. Solid wastes from refinery operations, which will consist primarily of waste filtrate consisting of diatomaceous earth, activated carbon and bentonite clay (~9.5 tons/day), will be stored in an onsite warehouse awaiting transport to one of two cement plants in Nikolayev situated ~100 Km from the refinery. At the cement plants, collected refinery solid wastes will be blended with other raw materials and processed in high temperature cement kilns. Liquid effluents from refinery operations include sanitary wastewater, industrial process wastewater and storm water. Each stream will be treated as follows. Sanitary wastewater will be treated initially in local septic tanks and subsurface leach fields. At the completion of phase two, a small extended aeration package plant will be utilized for sanitary wastewater treatment. Treated effluent will be used for landscape irrigation. Excess effluent will flow to the on-site trunk sewer and then to the OPZ wastewater treatment plant. Industrial process wastewater including reverse osmosis brine reject from boiler water treatment will flow to the refinery’s on-site wastewater treatment plant consisting of dissolved air flotation and other unit processes adequate to meet pretreatment requirements for the OPZ wastewater treatment facility. Collected storm water from the site as well as the tank farm will be passed through gravity oil water separators and to the on-site wastewater treatment facility. Pre-treated wastewater will then be reprocessed at the OPZ plant wastewater treatment facility. Prior to discharge to the Black Sea by means of a 450 mm diameter and 7.5 km long discharge to deeper water of the Black Sea, treated wastewater is quarantined. Prior to discharge collected samples of collected wastewater are sampled and analyzed by Yuzhny Port and Black Sea Sanitation teams for acceptability of accumulated, treated effluent discharge through the outfall into the Black Sea.

Hazardous materials management – Hazardous materials stored on site for use in the refinery includes ~170 tons of phosphoric acid; ~50 tons caustic soda liquid; ~70 tons of citric acid; and, diatomaceous earth. Acid and alkali raw materials will be stored in the tank farm that is fully equipped with secondary containment for each storage vessel. Spillage from the tank farm can be contained and once re-contained, any resulting waste fluids may be routed through local oil-water separators then to the on-site wastewater treatment facility. Diatomaceous earth will be shipped to the site in storage bags of ~50 kilos and stored in the materials warehouse. Bag opening and material transport to filtration systems is closed and completely mechanical thus reducing potential exposure of employees to silica from the diatomaceous earth. All other remaining materials required for refinery operations will be stored in the on-site warehouse in accordance with Ukrainian regulatory and international good practice requirements.

Occupational health and safety and emergency response – The client has developed a number of standard operating procedures (SOPs) for operation of the refinery once construction is completed. These SOPs include direction for employee development and training as well fundamental safety training. During startup of the refinery experienced operations staff from other Wilmar refinery operations will be on site to train local hires and to ensure that they are conversant with specific operational and safety requirements. These SOPs will be expanded and strengthened in compliance with the CAP to ensure that the client’s occupational health and safety management program complies with the requirements IFC’s Occupational Health and Safety guideline. Refinery design incorporates an innovative emergency response system with diverse sensors throughout plant operational sites. Smoke and heat sensors are monitored centrally in the refinery control room. All alarms detected at the control room are investigated immediately. In the event of a significant alarm (level 3 or 4) power and gas supplies are disconnected to the affected sector of the refinery, emergency response personnel are alerted and sent to the sector and the local community, in the case of level 4 alarms, is advised of a potentially dangerous situation at the facility.

Existing and planned management systems – The client has developed a number of standard operating procedures (SOPs) for operation of the refinery once construction is completed. These SOPs have been translated into Russian and submitted to the Kharkiv Institute the entity responsible for issue of a permit to operate the facility. SOPs cover most essential areas of facility operations and will form the nucleus of operation direction for all staff. In accordance with the attached CAP the client will formalize these SOPs into a certifiable management system for the refinery and seek certification for the system.

Community health, safety and security – Documentation provided by the client demonstrates that no significant negative impacts on the surrounding communities during the construction and operation phases of the project are anticipated. Local communities will benefit from employment generation during site construction and operation. To mitigate the potential, unexpected impacts on the nearest communities (located ~500 meters from the refinery site boundary) due to unexpected process upsets, the sponsor has developed a multi-tiered emergency response plan that includes an immediate emergency notification of the community in the event of a level 4 (potentially dangerous) emergency situation. In accordance with the attached Corrective Action Plan (CAP) the client will strengthen relationships with local communities to ensure that the inhabitants and community leaders are informed and prepared for specific responses based upon situations at the refinery. Because Yuzhny Port provides no security for tenants, Wilmar has established an unarmed security force for the refinery site. The chief security officer, a former security manager at OPZ, is the sole armed individual licensed to carry a fire arm. The twenty-eight person security staff is subcontracted and provides coverage during three shifts. In compliance with the CAP the client will expand management system SOPs to ensure that security forces and their management operate responsibly and in proportion to security issues as well as in the interest of the client and the community.

Public disclosure and community relations - The client previously established a dialogue with the local community through the establishment a of consultative group that incorporate representatives of the community, local administration and the company. The purpose of this consultative group is to inform local communities of the company’s operation and to provide local residents with a forum to express and to obtain information related to their concerns about refinery operations during periodic meetings held by the group. In addition, local residents can register their grievances during the group’s meetings or with the local Yuzhny Administration at any time between regularly scheduled meetings.

Community development activities – To further benefit local communities Wilmar will contribute to their development beyond employment generation, and tax revenues by making direct investments in the community. The company will undertake such community development and social investment activities after and as a result of consultation with the communities and local administrations; and the client has signed a corresponding Memorandum of Understanding with the local Yuzhny Administration that will be renewed on a yearly basis.

Stakeholder Engagement

The client has developed a dialogue with the local community through the establishment of a consultative group that incorporate representatives of the community, local administration and the company. The purpose of these consultative groups is to inform local communities of the company’s operation and to provide local residents with a forum to express and to obtain information related to their concerns about refinery operations during periodic meetings held by the group. In addition, local residents can register their grievances during the group’s meetings or with the local Yuzhny Administration at any time between regularly scheduled meetings.

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

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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