25233 - Lao Brewery Company, Ltd.

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Environmental & Social Review Summary

Project Number

25233

Company Name

LAO BREWERY CO., LTD.

Date ESRS Disclosed

Sep 29, 2006

Country

Lao People's Democratic Republic

Region

East Asia and the Pacific

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Nov 14, 2006
Signed : Jun 25, 2007
Invested : Oct 22, 2007

Sector

Breweries

Industry

Agribusiness and Forestry

Department

Regional Industry - MAS Asia & Pac

Project Description

Lao Brewery Company Limited (LB or the company) produces beer and drinking water in Laos. The company plans to increase its beer production capacity by expanding existing facility in Vientiane and building a new facility in southern Laos. The current LB facility is located in the southwest suburban area of Vientiane, Laos. For the aforementioned project, LB proposed to build a new plant in the southern suburb of Pakse, Champasak Province, Laos.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental, health, safety and social information submitted by the project sponsor, and a field visit in August 2006. The environmental and social (E&S) appraisal team visited the existing plant site in Vientiane and the proposed new plant site in Pakse, Champasak Province. The E&S team held meetings with the management of Lao Brewery (LB) and the potential ESIA consultants. The E&S appraisal team also met the local residents from the nearby village of the proposed new plant site in Pakse.

E & S Project Categorization and Applicable Standard

IFC’s Policy on Disclosure of Information, dated April 2006;
IFC’s Policy on Social and Environmental Sustainability, dated April 2006, in which the following performance standards (PS) apply to this project:

PS1: Social and Environmental Assessment and Management Systems
PS2: Labor and Working Conditions
PS3: Pollution Prevention and Abatement
PS4: Community Health, Safety and Security
PS5: Land Acquisition and Involuntary Resettlement
PS6: Biodiversity Conservation and Sustainable Natural Resource Management

There are no indigenous people at or near both Vientiane and Pakse sites. Both sites are located in the plain along Mekong River. The majority of the local residents are Lao. The Hmong and other hill tribes live on the plateau or in the mountains. There are no impacts to the culture heritages.

This is a Category B project according to IFC’s Environmental and Social Review procedures 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 project involves expansion within the exiting Vientiane plant and construction/operation of a new plant in Pakse, Champasak Province. The new site is located inside a designated industrial zone with some rice paddies for approximately 10 families from nearby villages. LB will preserve nearly 90% of the land to protect the groundwater source. Mitigation measures for the potential environmental and social impacts are identified and incorporated into the attached Environmental and Social Action Plan (ESAP).

Environmental and Social Mitigation Measures

LB 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 LB is summarized in the paragraphs that follow. Further information is provided in the attached ESAP, which has been agreed upon by IFC and LB.

- Social and Environmental Assessment and Management Systems

Land and natural environment: LB’s current operational site is 15.7 ha, which is located 12 km southwest of Vientiane. The site surroundings are mixed farming and industrial area. There are scattered farmer’s houses to the east of the plant. The proposed new plant is located 19 km south of Pakse, Champasak Province. This site is along No. 13 national highway within an industrial zone, designated by provincial government in 1999. LB has 66 ha land usage right, which includes 12 ha plant site and 54 ha around the plant as preservation land to protect the groundwater. The groundwater is drawn upon for beer production. The site is largely modified habitat, including scrub vegetation, degraded secondary forest, and ponds. There is no agricultural land in the 66 ha land. There is a village about 500 meters south of the site. There have been no protected areas or protected species identified at or near both Vientiane and Pakse sites. More investigations will be conducted on biodiversity conservation during the environmental and social impact assessment.

E&S assessment: LB has conducted a primary E&S assessment for the project at both sites. There have been no significant E&S impacts identified during the assessment. In accordance with the ESAP, LB will contract independent consultants to further assess E&S impacts for the Pakse site, including the socio-economic baseline at the project site. This assessment will include mitigation measures to be implemented by the company. LB commits to meet all the applicable IFC policies, and guidelines for the new plant.

Environmental and social management and organization: Environmental, health, and safety (EHS) issues are managed by various divisions in LB’s production department. There is a community liaison officer in the administration department to handle the community engagement. LB has established program to provide necessary EHS training for its employees. LB conducts routine EHS monitoring for its operations and keeps its environmental and social performance records through its internal reporting structure. As indicated in the ESAP, LB will consolidate its EHS management in the production department and establish/implement an effective E&S management system with necessary components and functions.

- Labor and Working Conditions

Labor issues: LB has a human resource (HR) policy which includes employees’ rights related to compensations and benefits. In addition, LB has HR procedures which address working relationship/conditions and terms of employment. LB also has policies to promote non-discrimination and provide equal opportunity for its labor force. The HR department also leads the grievance mechanism that addresses employee complaints for both full time employees and part-time contractors. LB management commits to work cooperatively with employees and contractors in bargaining company benefits.

Occupational health and safety (OHS): There are effective OHS procedures like safe operational procedure and personal protection equipment requirement for positions with potential hazards. LB will implement these procedures strictly in the future. There are routine OHS trainings for its employees. Noise levels are considered high in the packing workshop. In accordance with the ESAP, LB will monitor the workplace noise levels and take practical approaches to abate the noise.

- Pollution Prevention and Abatement

Raw materials and resource consumption: Malt and rice, the major raw materials for the brewery, are imported from Europe and supplied by the local farmers, respectively. The water sources are from both groundwater and municipal water supply. LB consumes approximately 1,800 m3 water per day at the Vientiane site. LB consumes approximately 13,000 kwhr electricity per year. The power source is from the grid, which comes predominately from a hydropower plant. As indicated in the ESAP, LB will explore more opportunities for energy and water saving.

Effluent and Emission Compliances: LB built a new wastewater treatment plant at its Vientiane site in March 2006, which comprises both anaerobic and aerobic processes and has the capacity to treat the wastewater generated after the expansion. The effluents are discharged to a small river by the plant, which flows to the Mekong River. The monitored parameters for the effluents meet all local regulatory requirements and the World Bank/IFC guideline limits. As required in the ESAP, LB will start monitoring total nitrogen and phosphorus in the liquid effluents and the air emissions from the onsite boilers, which use heavy oil as fuel, and ensure their compliance. LB also commits that its effluents and emissions from the proposed plant in Pakse meet both local regulatory requirements and World Bank/IFC guideline limits.

Solid wastes: The major solid wastes onsite include used grains, yeast, wastewater treatment sludge, packing materials, and household waste. The used grain is sold as animal feed. The other wastes are collected by contractors for disposal in the government permitted landfill. LB will explore the potential usage of the yeast instead of landfilling it in accordance with the ESAP.

Hazardous material, fire prevention and emergency response: The major hazardous materials stored onsite include heavy oil, caustic soda, and hydrogen chloride (HCl) solutions. The heavy oil is stored properly with secondary containment and warning signs. As indicated in the ESAP, LB will store caustic soda and HCl solutions in a proper way. There is adequate fire fighting equipment onsite which are checked and maintained regularly. LB conducts routine drills for fire fighting and other potential emergency cases.

Greenhouse gases (GHG): LB purchases power from the hydropower plant; therefore, there is no indirect generation of GHG for its electricity consumption. LB consumes approximately 8 tons heavy oil for its boilers. At the present time, the methane generated from anaerobic digestion of wastewater is burned at a flare. Construction is under way to collect the organic vapor generated from the brewing process and methane from wastewater treatment as the fuel for boilers, which will reduce approximately half of the heavy oil consumption. LB is applying for carbon credits for this fuel reduction.

Community Health, Safety and Security
Community health and safety: There are two villages approximately 300 meters from the Vientiane site. Due to the characteristics of the brewery, the operation has limited impacts on the communities. All malt/rice and the products are shipped in and out of the site through No. 13 national highway. The road conditions are fair. However, there are communities along the road. In the future, LB will prefer to contract the transportation companies with defensive driving programs and safe driving records.

Land Acquisition and Involuntary Resettlement
Land acquisition: The 66 ha of land, which LB purchased from Champasak provincial government, is located in a designated industrial zone. The land is not used for economic purposes. In case farming lands are affected in the future, LB would pay the farmers replacement value for land and assets, and meet the IFC policy requirements for the land acquisition.

Biodiversity Conservation and Sustainable Natural Resource Management
Protection and conservation of biodiversity: There is no protected habitat or endangered species at or near both Vientiane and Pakse sites from the preliminary survey. The Vientiane site is located in a mixed farming and industrial area. The major vegetation is the rice paddy. Although the Pakse site is located in a designated industrial zone, there is no industry in the area. The landscapes of the area are mixed rice paddies, palm plantation, ponds, and bushes. Initial desktop search does not reveal any protected area or endangered species. The ESIA will examine the biodiversity and its preservation at Pakse site in detail.

Stakeholder Engagement

There are two villages near the LB Vientiane plant. The community liaison officer leads the community engagement. LB provides some traditional philanthropic supports for education, public health, sports, etc. LB also hosts an annual Lao new year festival together with the communities. The communities are invited to visit the plant for some special events to understand the operation, such as the completion of the last expansion. In accordance with the ESAP, LB will set up a formal community grievance mechanism and prepare a community development program to improve the community engagement. LB will hold a public consultation for the Pakse site to actively engage the communities near the site.

Client Documentation

File Name	Actions
ESAP - LB.pdf

**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).

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