25554 - BHSIL

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Environmental & Social Review Summary

Project Number

25554

Company Name

Bajaj Hindusthan Sugar Limited

Date ESRS Disclosed

Jan 16, 2007

Country

India

Region

South Asia

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Feb 28, 2007
Signed : Mar 7, 2007
Invested : Apr 16, 2007

Sector

Sugar and Confectionery

Industry

Agribusiness and Forestry

Department

Regional Industry - MAS Asia & Pac

Project Description

Bajaj Hindusthan Sugar & Industries Limited (the company) is a publicly listed company that produces and sells sugar and industrial alcohol/ethanol. BHSIL is undertaking to:

- expand a brown-field sugar plant from 3,200 to 6,000 tons crushed per day (TCD);
- construct three green-field sugar plants with combined capacity of 34,000 TCD; and
- build a distillery of 160 kiloliters per day (the project).

The project is located in the eastern Uttar Pradesh, specifically in:

- Pratappur, Deoria District (brown-field);
- Kunderki, Gonda District (green-field sugar plant);
- Utraula, Balrampur District (green-field sugar plant); and
- Rudauli, Basti District (green-field sugar plant and distillery).

The nearest community habitations are 0.5 to 1.5 km from the proposed project sites, the plants are located in predominantly agricultural area and there are no environmentally sensitive areas in the vicinity the proposed plant sites and the existing plant. The proposed IFC investment includes a debt and equity package for IFC’s own account and B loan from participating banks.

Overview of IFC's Scope of Review

The review of this project consisted of appraising technical, environmental and social information submitted by the project company including a review of:

- company’s business plan;
- completed Appraisal Information Sheet submitted by the company;
- Environment Impact Assessment reports;
- relevant consents/permits;
- recent annual environment statement;
- recent monitoring reports for stack emissions, treated effluent, ambient air quality, ambient noise, workplace air quality, workplace noise and drinking water quality;
- Environmental Clearance from Ministry of Environment and Forests;
- Project reports of each of the proposed plants;
- record notes of public hearing; and
- Human Resource Manual.

The appraisal team interviewed the corporate and site operations managers, and corporate and site EHS managers:

Further, the appraisal included sites visits to the company’s existing plants at Pratappur and one project site at Rudauli in the state of Uttar Pradesh, India. The following potential environment, health and safety and social aspect of the project were analyzed:

- Social and Environment assessment and environmental, social, and health and safety management systems;
- Labor and working conditions;
- Pollution prevention and abatement;
- Community health, safety and security; and
- Land acquisition and compensation.

E & S Project Categorization and Applicable Standard

The company is required to comply with all of IFC Performance Standards as and when they become applicable. However, at this stage, the following performance standards are applicable to the project:

- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health, Safety and Security; and
- PS5: Land Acquisition and Involuntary Resettlement.

The project involves:

- capacity expansion of an existing sugar plant;
- setting up of green-field plants at three locations; and
- a distillery at one location.

The key social and environmental aspects associated with the project include:

- land acquisition and compensation but not involuntary resettlement;
- land-use change;
- emissions to soil, air and water;
- ambient air quality; and
- employee and community environment, health and safety.

While the impacts are diverse and some impacts are irreversible, these are not unprecedented, are not large scale, are largely limited to the project site, and are not likely to impact environmentally sensitive areas. Further, it is possible to readily design and implement engineering and management measures to mitigate adverse impact due to:

- emissions to soil, air and water;
- management of hazardous materials and wastes;
- employee and community health and safety during construction and operations;
- as also to minimize the adverse impact associated with land acquisition.

In view of the above, the project has been classified as a Category B project.

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 - the host country laws and regulations and the IFC Performance Standards and the World Bank/IFC 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.

- PS1: Social and Environmental Assessment And Management Systems:

The sponsors are sensitive to environment, social, occupational health and safety (EHS) aspects associated with the operations of the company. However, EHS aspects have not been managed under a structured system in the past. The company will, within a timeframe agreed with IFC, put in place an EHS management system (EHSMS) with IFC Performance Standards appropriately incorporated, which will be certified to ISO 14001 and OHSAS 18001 standards. The company will undertake an EHS audit at its existing plant at Pratappur and develop an Environment and Social Action Plan (ESAP), to upgrade the EHS status at this plant.

The company has:

- carried out an Environmental Impact Assessment (EIA) for the distillery proposed at Rudauli and for the Sugar plants at Rudauli and Kunderki (including for co-gen facilities); and
- delineated mitigation measures in an Environment Management Plan (EMP).

While the company has carried out stand alone EIAs for the Sugar Plant and the Distillery at Rudauli, it will also carry out an assessment of the cumulative impacts of both the facilities taken together. The company has carried out an environmental assessment/examination for Pratappur and Utraula plants, and will implement appropriate mitigation measures for all identified impacts. The company is in the process of putting in place a robust EHS organization. The company has recently appointed a Corporate EHS head (VP-EHS) and has appointed qualified EHS personnel at each of the plants and the project sites. The company has in place an EHS Code of Practice for contractors and their sub-contractors, which will be further strengthened under the EHSMS.

- PS2: Labor and Working Conditions:

The company has a documented Human Resource (HR) Policy and Manual. Further, conditions of work/employment for workmen/labor are stipulated in detail under the standing orders, which the company adheres to.

The Standing orders detail:

- classification of various categories of workmen;
- communication of terms of employment including hours of work, leaves, pay days, shifts, wages, grade;
- eligible leaves, holidays and leave records;
- procedures for temporary lay-off;
- termination of employment; and
- disciplinary procedures.

The HR manual describes the Employee Code of Conduct, SHE Policy, HR mission and procedures for:

- manpower planning, recruitment and selection, induction and placement;
- employee welfare;
- emoluments and benefits;
- performance appraisal, increment, promotions, recognition and career development;
- training and development;
- leave rules;
- disciplinary procedure and other items.

Conditions of employment as well as wages and benefits are communicated to employees through notices, service book and engagement memo. The company will display the Standing Orders (conditions of work), in the local language at each of its plant and project locations. The company''s existing plant at Pratappur has a labor union. While non-discrimination and equal opportunity are embedded in the BHSIL’s HR practices and procedures, the company will articulate an equal opportunity and non-discrimination policy encompassing all employees. Further, the company will implement a grievance redress procedure consistent with IFC’s Performance Standard 2 requirements. The company will upgrade the occupational health and safety status at its existing plant at Pratappur and at the construction sites. While BHSIL will manage occupational health and safety through the OHSAS 18001 certified EHSMS, the company will, within a timeframe agreed with IFC, put in place departmental, plant level and corporate safety committees, comprised of both worker and management representatives. Further, the company will formalize procedures to ensure that the labor contractors meet national laws with regard to age, insurance and wages. The company sells subsidized pesticides to farmers within their command area. The company will, within a timeframe agreed with IFC, implement a program to enhance farmer awareness on safe pesticide handling practices.

- PS3: Pollution prevention and abatement:

BHSIL has identified key environmental aspects and potential significant impacts of the project and addressed these in design. Going forward, the company will manage environmental impacts under the ISO 14001 certified EHSMS. The project design includes various energy efficiency and water conservation/recycling/reuse measures. While the source of energy at all locations will be bagasse-based cogeneration plants, groundwater is the primary water source. The company will, for each location, map the groundwater drawdown profile on account of groundwater extraction. Principal air emission is particulate matter from boilers, and fugitive emissions. The EMP details adequate mitigation measures and the company proposes to install high efficiency wet scrubbers of 99.9% efficiency to meet host country and IFC limits. The company will monitor air emissions to demonstrate compliance with IFC requirements and if required, within the first year of operation, implement appropriate corrective measures to meet IFC requirements. The company will ensure that the refrigerant used in chillers/air conditioning system and fire extinguishers comply with the Ozone Depleting Substances Rules set by the GOI under Montreal Protocol requirements. The Sugar plants are designed to achieve an effluent rate of 0.1 m3/tcd, which is within IFC norms. The effluent treatment plant (ETP) proposed at each of the sugar plant is designed to meet host country and IFC norms. The distillery is being designed as a zero discharge plant, with an integrated multi-effect evaporation and bio-composting plant. However, bio-composting will be carried out for two years only, after which the concentrated spent wash will be incinerated to recover heat. Hazardous materials and wastes will be managed in accordance with good industry practices and IFC guidelines on hazardous materials management. All hazardous material will be appropriately segregated and stored under secondary containment. Other wastes generated will be fly ash, ETP sludge and filter mud. Fly ash generation rate is less than 5.5 Kg/tcd (meets IFC norms) and will be disposed in land fills. ETP sludge and filter mud, will be disposed to farmers as bio-fertilizers. In the distillery, fermenter sludge will also be generated, which will be used in bio-compost production. The company encourages pragmatic use of pesticides. The company has a Pesticide Management Guideline, which the company will update, to make it consistent with IFC Performance Standards. The company has reviewed and will meet IFC’s Performance Standard requirements on Pest Management, in its cane development operations. Towards this end, the company will implement a program to encourage farmers to adopt Integrated Pest Management (IPM) and Integrated vector Management (IVM) and reduce reliance on synthetic pesticides. The critical ambient considerations in the context of each of the proposed plants are suspended particulate matter, noise and impact on account of ground water extraction. Material impact on ambient SPM, noise and groundwater levels is not predicted. Ambient noise levels at plant boundary will be within host country and IFC norms. In view of the fact that the principal fuel for energy generation is bagasse, net nil GHG emission is expected from the sugar facilities and the distillery.

- PS4: Community health, safety and security:

The company will ensure that there is minimal impact on community environment, health and safety, during both construction and operation. The company has, as part of the EIA, identified likely community health and safety impacts and will implement mitigation measures for the identified impacts. Infrastructure and equipment meet good industry practice requirements at the proposed plants. The company will, as part of the EHSMS, put in place procedures to mitigate risk of uncontrolled release of hazardous materials, including risk to communities from hazardous material transport. Further, the company will prepare and implement an onsite and offsite Disaster and Emergency Management Plan, and link it to the district emergency response plan. The project is not expected to exacerbate community exposure to disease either due to changes in land/hydrologic or other terrestrial/air quality/hydrologic regimes or due to influx of large pool of migrant laborers. The company has outsourced security services and the security personnel are armed. While the company has a security personnel procedure, this will be, within a timeframe agreed with IFC, updated to make it consistent with IFC performance standards.

- PS5: Land acquisition and Involuntary Resettlement:

The capacity expansion at Pratappur plant is proposed within the existing plant premises and no land acquisition is proposed. For the proposed green-field plants, the company has acquired 137.42 acres of agricultural land at Rudauli, 135.15 acres at Kunderki and 153.96 acres at Utraula. All land acquisition was undertaken on a willing buyer - willing seller basis and did not involve any involuntary resettlement. The land acquisition involved 48, 157 and 447 number of purchase agreements with farmers at Rudauli, Kunderki and Utraula sites respectively. The average price paid was higher than the circle rates fixed by the Government for industrial land in the respective areas. Price paid for the acquired land was at least 25% above the average price of non project related sale/purchase of land in the vicinity of the proposed plant sites. The prices were arrived at based on negotiated settlement after consultations with the farmers. The company, in addition to price for the land will also provide employment (commensurate with qualification and experience), to one ward from each account/family from whom land has been acquired. Moreover, farmers/inhabitants of the area will be given preference in award of small contractual work and supply orders. The company will put in place a grievance redress mechanism to receive and respond to grievances pertaining to land acquisition.

Stakeholder Engagement

The company conducted a public hearing for the distillery project, in pursuance of host country regulatory requirements, on September 11, 2006. The company has addressed the key concerns raised by members of the public in the hearing. The company will relocate a nearby college to an appropriate location, in response to concerns expressed in the public hearing. The nature of sugar manufacturing business is such that affected communities are also often either suppliers of cane or work in a cane field in a sugar plant''s command area. Cane development work, requires extensive engagement with farmers and other stakeholders in the plant''s command area. To that extent, there is an overlap in the community engagement for cane development and on account of Project/Plant impacts. The company will leverage the cane development work and under the EHSMS, implement procedures for engaging with community on EHS aspects. The company has a grievance redress process in place to address grievances of cane growers. There is also an enquiry office at the factory gate at Pratappur to receive and respond to farmer’s grievances. Further, at Pratappur, the company has constructed a Kisan Bhawan (farmer''s Building), which is used for conducting meetings and seminars, including for farmers. The company''s cane development program includes provision of technical and financial support to farmers. The various initiatives include:

- provision of high yield seeds;
- provision of fertilizers, pesticides and bio-fertilizers at subsidized rates;
- method and result demonstration tours (to other high yield locations) for farmers;
- provision of subsidized pumping sets;
- technical assistance on introduction of drip irrigation techniques to save electricity and water;
- fortnightly meetings with farmers are conducted where techniques to improve yield per hectare are discussed and training program conducted; and
- corporate social responsibility initiatives like repair of public infrastructure and support to educational institutions are being implemented.

Further, the company, in accordance with regulatory requirements has publicized the award of Ministry of Environment and Forests (MoEF), Government of India (GoI) clearance (for the distillery) in local newspapers. The company will also publicize the award (and public availability on MoEF website) of MoEF clearance to Rudauli and Kunderki sugar plants, as and when the clearance is accorded by MoEF.

Client Documentation

File Name	Actions
Final BHSIL ESAP January 13 2007.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/
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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.
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