26107 - Strominvest/Erilin

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Environmental & Social Review Summary

Project Number

26107

Company Name

ERILIN HOLDINGS LTD

Date ESRS Disclosed

Mar 21, 2008

Country

Belarus

Region

Europe

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 23, 2008
Signed : Jun 23, 2008
Invested : Dec 1, 2008

Sector

Construction and Real Estate

Industry

Tourism, Retail and Property

Department

Regional Industry MAS LAC & EUR

Project Description

JV Strominvest LLC (Strominvest or the sponsor) and Erilin Holdings Limited (Erilin or the borrower) have undertaken to develop a new 7-floor Class-A commercial real-estate building with 12,185 sqm usable space on the Myasnikova St., in Minsk, Belarus.

The building, currently under construction, is expected to be completed and made available for lease by November 2008. During the construction phase, Strominvest will act as the project administrator and main contractor at an arms-length basis, and Erilin will provide for the necessary financing. On completion of construction, the building’s ownership will be transferred to Erilin. Total project cost on completion is estimated to be around EUR16 million (approximately $24 million equivalent).

Once complete, the building will have a total area of 15,827 square meters (m²) and net leasable space of 12,185 m², including 7,948 sq meter office space 150 parking bays, a café and bar, central conference facilities, shops and showrooms. The building will be equipped to Class-A standards and will include central air conditioning, independent heating and fire & safety systems.

Overview of IFC's Scope of Review

IFC’s social and environmental appraisal of this project included review of project descriptions; written responses to questions asked by IFC on environmental, social, health and safety (ESHS) conditions; discussions with IFC staff who visited the site and telephone follow up to clarify issues which remained outstanding.

E & S Project Categorization and Applicable Standard

While all Performance Standards (PSs) are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following PSs:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security

Project land was transferred from a state-owned manufacturing company, so issues of land acquisition (PS5) did not arise. The building is located in established city area, and therefore no issues related to biodiversity conservation (PS6) have arisen. There are no populations of Indigenous Peoples, within the meaning of IFC’s Performance Standard, therefore PS7 will not arise. No items of cultural heritage were uncovered during early construction, and are most unlikely at this stage of the project (PS8).

This is a Category B project according to IFC’s Environmental and Social Review Procedures, because the project has limited potential adverse environmental and social impacts which are few in number, site specific and readily mitigated. The key environmental and social aspects of the project, which have been considered are the following:

- Social and Environmental management systems and structure;
- Labor and working conditions;
- Life and fire safety.

Environmental and Social Mitigation Measures

Mitigation measures for the key environmental and social issues are summarized in the paragraphs that follow and in the attached Environmental and Social Action Plan (ESAP), and have been agreed between IFC, the sponsor and the borrower. When implemented by the Sponsor and Borrower, these measures should ensure the project’s compliance with the environmental and social requirements: the host country’s laws and regulations and IFC’s environment and social Performance Standards.

- PS:1 Social and Environmental Assessment and Management System:

- Environmental Assessment and Planning Processes

The building is located in established neighborhoods and will be connected to all necessary utility suppliers and so very limited adverse environmental or social impacts may be anticipated.

Strominvest, the Project’s administrator and general contractor, has ISO 9001certified Quality Management System in place and is planning to integrate environmental (ISO 14001) and occupational health and safety (OHSAS 18001) management systems into the existing quality management system in the near future. Although the company does not have formal environmental, social, health and safety (ESHS) management systems in place yet, it has already established some key elements of such systems such as ESHS policy, procedures and practices applicable broadly across the company’s operations; in-house capacity to assess/manage ESHS impacts and risks; internal procedures to monitor compliance with Belarusian regulations; ESHS pre-qualification for contractors; contractual requirements; systems to monitor and evaluate ESHS performance of contractors; and incentives like preference for future contracts.

Strominvest has an adequate ESHS management capacity to ensure compliance with IFC PS during the construction phase of the Project.

- Social and Environmental Management

On completion of construction, the building’s ownership will be transferred to Erilin. All building operations and maintenance work will be done by a third-party Facilities Management company. However, Erilin will retain ESHS management responsibility. Presently, the Borrower does not have a formal environmental or occupational health and safety structure. To provide adequate environmental oversight, the Borrower will recruit an environmental and safety manager or establish a contract with a Facilities Management company to require such oversight and practice are included within the facilities management services. Key EHS issues associated with the operation of the building include life and fire safety, occupational health and safety and energy efficiency.

- PS 2: Labor and working conditions:

At the time of the appraisal, Strominvest had 573 permanent staff including 93 engineers and foremen, and 480 full-time construction workers.

Strominvest has employment policies in place consistent with Labour Code of Belarus and IFC Performance Standards. The company has written contracts with employees, which define the keys issues of the employee/employer relationship such as mutual obligations, working time, benefits and holidays, remuneration etc.

Strominvest has committed to establishing additional means for workers to express potential grievances and protect their rights regarding working conditions and terms of employment.

Strominvest will enable the conditions for workers to nominate representatives to establish a committee which can serve to represent the interests of workers with management. Once this committee is formed, management has committed to meet regularly with this committee and seek to address issues regarding terms of employment and working conditions as they arise.
In the framework of IFC’s financing, Strominvest will also establish a grievance mechanism for workers consistent with IFC PS requirements, through which workplace concerns and suggestions can be brought to management’s attention and relevant action.

For projects in Belarus Strominvest uses its own workforce as well as contracted short-term labor. At the time of the appraisal, 77 non-employee workers were contracted by the Client through 29 contractors. The contracted workers are generally employed for the life of the project and are paid hourly wages comparable to Strominvest’s own workers. The Client establishes contractual obligations on contractors who supply the non-employee workers to the Client to provide occupational health and safety (OHS) training and personal protection equipment (PPE); and report to Strominvest on all OHS accidents at the worksite. Additionally, Strominvest regularly supervises all those working at its clients’ work site, whether Strominvest employees or subcontractors.

As part of the discussed project, the company is planning to contract 20 migrant workers from China and Nepal to be supplied through an intermediary. To satisfy legal requirements, Strominvest has obtained a license from the state authorities to procure migrant workers and by contractual obligations will provide appropriate living and sanitary conditions to workers in line with Belarusian legislation.

All Strominvest’s employees have to undergo a full OHS training program at induction and subsequently a health and safety training relevant to their job activity. Stroimnvest’s OHS statistics report on 1 lost time accident in 2003 and 1 in September 2007. This is a good safety record in the construction industry.

Going forward, Strominvest will include labour and employment requirements in construction contracts for non-employees workers who fall into the scope of PS 2 as per IFC requirements.

The Borrower (Erilin) will include labour and employment requirements in Management Services Agreement (MSA) for employees or contractors of the management services contractor to require compliance with the relevant laws of Belarus and with IFC Performance Standard 2.

Erillin will monitor MSA contractor’s compliance with PS2 requirements through the commissioning of an independent labor assessment six months after entering into the MSA.

For further details on workplace and labor- related matters please see Environmental and Social Action Plan.

- PS 3: Pollution prevention and abatement:

- Construction impacts

To minimize adverse environmental impacts of construction, Strominvest is implementing the following mitigation measures: usage of temporary noise barriers; removal of 143 m3 of vegetative layer of the soil and re-vegetation of the site; planting of new trees; providing secondary containment for temporary fuel storage tanks; demolition and solid waste removal by an authorized waste management company.

- Resource efficiency
The design includes building shell conservation features, such as high standards of wall insulation and heat saving windows.
- Waste water disposal
Waste water will be discharged to the municipal sewage network. If required to comply with the sewage authority’s acceptance criteria, fat traps or other pre-treatment systems will be installed.
- Air emissions
The building will be equipped with gas-fired boiler house to provide independent heating. Air emissions are expected to meet IFC’s guidelines values.
- Solid waste management and disposal.
Solid wastes will be collected and disposed of by an authorized waste management company.

- PS 4: Community Health, Safety & Security:

- Life and Fire Safety (L&FS)

The key potential risk to the health and safety of the building occupants is the risk of fire occurrence. Since the building is likely to have apartments on its top floor, shops and cafes accessible to the public, the Sponsor will prepare a Life and Fire Safety Master Plan and commission a fire safety expert acceptable to IFC to review L&FS aspects and certify to IFC and to the Group that requirements of IFC guidelines are met. Master Plan will include drawings and specifications, applicable codes and standards, L&FS provisions; specific guidelines for emergency response, safety education, housekeeping, inspections and testing of fire protection systems, rules for tenants.

On the conclusion of fire safety expert IFC and the Borrower will agree on the scope of work for a Corrective Action Plan (CAP) if any and a time frame for CAP implementing to meet the requirements of IFC L&FS guidelines.

- Food Hygiene

Some of the building space will be leased for cafes and bars. As part of EHS management system, the Client will oversee food hygiene procedures to the extent possible.

- PS 5: Land Acquistion and Involuntary Resettlement:

- Site acquisition

In 2003 City authorities allocated a plot of city land to Strominvest for the construction of commercial building. Prior to this decision, the former user of the land, state scientific-production company “Dialek”, was relocated in accordance with the Master Plan of the City development. To allow construction, Strominvest had to demolish the unused building of Dialek. Depreciated cost of the building was fully compensated to Dialek by Strominvest.

Stakeholder Engagement

Publication of this ESRS and associated Environmental Action Plan constitutes the client’s first community engagement related to its project plans. Such engagement is not required by the Belarus authorities having regard for the limited potential for adverse social and environmental impacts arising from the project.

Going forward, the company will establish a formal system, the “Book of Suggestions and Complaints” to receive comments from members of the public. These comments will be studied and acted upon by the company’s senior management.

Client Documentation

File Name	Actions
Strominvest EAPv2.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).

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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