26683 - Butec

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Environmental & Social Review Summary

Project Number

26683

Company Name

BUTEC GROUP S.A.L. (HOLDING)

Date ESRS Disclosed

May 5, 2008

Country

Lebanon

Region

Middle East

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Active

Previous Events

Approved : Jun 23, 2008
Signed : Jun 25, 2008
Invested : Dec 23, 2008

Sector

Construction and Real Estate

Industry

Tourism, Retail and Property

Department

Gbl Ind, Manufact, Agribus & Services

Project Description

BUTEC Group Holding S.A.L. (BUTEC or the company), founded in 1964, is a mid-size family owned Engineering Procurement and Construction (EPC) company based in Beirut, Lebanon, with expanding operations in Lebanon, Algeria, Qatar and Abu Dhabi. BUTEC focuses primarily on oil & gas, utilities, waste-water management and infrastructure projects, which account for around 90% of its revenues. In many of its projects, BUTEC partners with international contractors, such as Vinci, Suez, Chiyoda-Technip where BUTEC provides general contracting services. The company executes to some extent public sector projects where multilateral institutions such as EIB are principal funding entities.

In order to support its expansion plans, BUTEC has requested up to $20 million in IFC quasi-equity financing.

Overview of IFC's Scope of Review

IFC’s review of this investment comprised appraisal of technical, environmental and social information submitted by BUTEC; local regulations, corporate management system manuals, policies, certain procedures, working instructions and records. Interviews were held with the corporate and project management teams as well as professionals on environment, health, safety and human resources.

In addition, the appraisal included visits to the following project sites where the construction works were continuing:

- Sewerage and underground drainage systems for the District of Ouargla in Algeria where the scope of the work consists of structural design and construction of hydraulic, mechanical and electrical equipment for pumping stations and installation of pipeline with related civil works;
- Wastewater treatment plants for the cities of Tripoli and Jbeil in Lebanon where BUTEC is involved as a construction contractor;
- Temporary electrical power supply network for the construction camp and site of the Gas To Liquid Project located at Ras Laffan Industrial City in Qatar where the scope of the work consists engineering, procurement, manufacturing, construction and commissioning of power stations and substations and their respective cable network;
- Construction of a tank park for the Qatar Gas 374 On Shore Project located at Ras Laffan Industrial City in Qatar where the scope of the work comprises design, procurement, construction, testing and commissioning of 25 storage tanks for various chemicals.

E & S Project Categorization and Applicable Standard

The EPC activities undertaken by the company have potential impacts which must be managed in accordance with the following Performance Standards (PSs):

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

It is possible that certain projects which will be undertaken by the company have potential impacts which must be managed in accordance with the following PSs:

- PS5: Land Acquisition and Involuntary Resettlement;
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management;
- PS7: Indigenous Peoples;
- PS8: Cultural Heritage.

The key issue in relation to this investment is the establishment of a strong corporate governance and standardization on assessment, design and execution of projects. The social issues include the management of labor relations, occupational health and safety provisions; protection of community health, safety and security. Conservation of resources, energy efficiency, hazardous materials handling and minimization as well as waste management are among the principal environmental issues.

This investment is a Category B project, because there are a limited number of impacts during the construction and operational phases of the projects which can be readily avoided or minimized by adhering generally recognized standards, operational guidelines, design and control criteria. The Company will manage its environmental and social performance in accordance with applicable laws and regulations and international standards, including IFC’s requirements.

Environmental and Social Mitigation Measures

The information about how these potential impacts will be addressed by the company is summarized in the following paragraphs and in the attached documentation.

1. Social and Environmental Assessment and Management System

BUTEC has established internal and external control mechanisms to ensure compliance with applicable laws and regulations of the countries of the activity and international standards as per contractual requirements applicable to its EPC activities. BUTEC works as a preferred contracting company to the private institutions adhered to the Global Compact which is a United Nations initiative, covering a range of requirements about human rights, labor standards and environmental protection. BUTEC achieved certifications to ISO 9001 in 2003 and to ISO 14001 in 2007, the internationally recognized management system standards for quality assurance and environment, respectively. In addition, the company will develop an occupational health and safety management system to be certified compliant with OHSAS 18001Occupational Health and Safety Management System Standard. The department coordinating management systems’ implementation reports directly to the General Manager.

BUTEC will further develop its management systems in a number of ways to assure compliance with IFC’s requirements as defined in the Performance Standards. Butec will institute environmental and social assessment procedures at project tender stage, and will ensure that project-specific plans to mitigate possible environmental and social risk are incorporated into project design and tender and are therefore fully funded when work is won. This assessment will review projects not only against legal requirements in the country of operation but also against IFC’s Performance Standards which will be incorporated into the Company’s management system. If, as a result of this screening, Butec determines that the project for which it is bidding cannot reasonably be expected to comply with Performance Standards then it will decline to bid.

Social and environmental impacts of BUTEC’s ongoing operations are controlled by a comprehensive range of working rules on procurement, engineering design, process controls including inspection and testing, logistics, equipment maintenance, environment, health and safety, emergency preparedness and response. Since these cover Butec’s existing assessment framework the Company will extend its assessment, management systems and relevant corporate procedures to cover all IFC requirements on social and environmental sustainability as defined by the Performance Standards. This will include a requirement that all subcontractors to BUTEC are required to comply with the projects’ social and environmental risk management plans. BUTEC will institute procedures to manage subcontractors’ compliance with these plans and the agreements with the subcontractors will explicitly include these procedures and plans.

BUTEC will appoint a team to identify its best practices in construction management from all projects, and will replicate these throughout its operating teams in all countries in which it works.

2. Labor and Working Conditions

BUTEC’s human resources actually consist of approximately 300 engineering and administrative staff on permanent position and 1700 manual staff recruited on a temporary basis at the project sites.

2.1. Labor Relations

BUTEC’s labor relations are managed in accordance with the relevant laws and regulations of Lebanon and the country of activity. Non-discrimination and equal opportunity is the major principle. The minimum age of employment is 18.There is no unionized workforce within BUTEC’s operations, however, the Company does not discourage its employees to become a member of a union if made possible by the country conditions. There are significant gaps between laws and regulations of various countries of activity, for example, at certain locations employees coming from abroad can legally work without an official work permit for daily or seasonal tasks while they are not covered by any social security system. The Company will establish documented policy and procedures in compliance with the IFC’s PS2 requirements for each type and level of employment both for permanent and temporary staff as well as sub-contractors. The Company will assess labor conditions at all project locations and will develop a corporate management plan to take actions to minimize the gaps between labor practices. Beside, the Company will take into account certification on SA 8000 Social Accountability Standard to apply to all its operations.

2.2. Occupational Health and Safety (OHS)

The company has designated a health and safety officer assigned at each project area where external consultants or professional staff performs routine inspections and tracks records. BUTEC demonstrates ability to comply with strongest occupational health and safety procedures and practices as per requirements of the contractual agreements. These procedures and practices include among other areas; risk assessment studies, selection and use of appropriate personal protective equipment, construction equipment safety tests and checks, work permit systems, training and drills for emergency responses. The company acquired performance recognition certificates at its project sites in Qatar for extended work without lost time injury.

The company will extend these best practices throughout the countries and sites of activity, in addition to minimum contractual requirements.

In addition, BUTEC will conduct a generic safety risk assessment at all its construction sites which are operational or due to start.

3. Pollution Prevention and Abatement

BUTEC has established a set of environmental policy, procedures and working instructions with the principal objectives of resource conservation, extended use of renewable energy sources, reduction of hazardous chemicals and waste minimization.

The company conducts generic environmental impact assessments for its projects and operations and is in the process of extending the implementation of environmental management system requirements to all countries of activity. The company evaluates the project design and specifications by the client, advises and implements necessary upgrades. The examples of such improvements include substitution of asbestos-containing materials or rehabilitation of contaminated land as it was the case in certain projects in Algeria and Lebanon.

Hazardous materials minimization is an important part of the company’s environmental management system. Refrigerants R134a and R407c, which are non ozone-depleting fluids are the main refrigerants used in utilities. Certain types of R-500 series refrigerants which may contain CFCs are also actually in use in a number of areas. The company will review these types of refrigerants and ensure through its formal procedures that purchase of ozone depleting substances are systematically excluded together with other hazardous chemicals such as PCBs which can be present in transformer oils.

BUTEC has on-going programs on designing and constructing energy efficient buildings and use of renewable energy. The company is extending installation of automated heating and lighting control systems in its projects and will take into consideration to achieve where applicable LEED certification, an international control system for energy efficient buildings addressing also water conservation issues. The company is targeting 20% of its power supply projects to be consisted of renewable energy resources, namely solar and wind power. The company is actually in the process of conducting a wind survey in the North of Lebanon to identify future opportunities.

The company’s waste management in its operations is compliant with the regulations of the countries of activity, recycling is promoted where possible and non-recyclable wastes are disposed of to authorized landfills or other areas dedicated for discharge.

4. Community Health, Safety and Security

As per contractual requirements, compliance to the internationally accepted standards in the areas such as life and fire safety, earthquake safety, structural, mechanical, environmental, geotechnical, electrical codes are defined at design and engineering phase. Projects designed by BUTEC are submitted to an agreed control office to ensure compliance. The company will define minimum applicable standards and regulations compliant to the internationally agreed norms which will apply to all its projects, will review and extend accordingly its internal and external inspection and control mechanisms for design and construction processes to ensure compliance. In this manner, safety and quality will be systematically ensured at public projects where, at certain cases, BUTEC is directly involved by the governmental authorities or relevant institutions of certain countries in which local standards and regulations might be under development and therefore, currently be less stringent compared to the internationally recognized standards.

Throughout the construction operations of BUTEC, measures taken to address dust and noise, traffic and other safety issues are in general adequate. Nevertheless, the generic risk assessment which will be conducted by the Company will include safety issues related to surrounding communities and further protection measures will be established to mitigate identified risks.

The company’s management of security forces at the headquarters in Beirut, Lebanon as well as at construction sites is in compliance with the requirements of the PS 4.

5. Land Acquisition and Resettlement

BUTEC usually executes projects on land made available by the project owner which is in most cases local or national government or a relevant institution. When the resettlement of the occupants of the project land cannot be avoided, even though it is out of its formal responsibility, BUTEC facilitates and provides support to the occupants until they are compensated by the project owner as it was the case before the construction of Tripoli wastewater treatment plant where an approximate number of 30 occupants had to leave the project site and received a compensation payment by the government.

Even though it is highly unlikely that BUTEC will be asked to develop a project on land that has not been acquired in compliance with PS5 requirements, the possibility cannot be totally excluded. Therefore, the company will formally screen projects at tender stage for compliance. For this purpose, the company’s generic environmental impact assessment procedure will be extended to cover PS5 requirements.

6. Conservation of Natural Resources and Biodiversity, Protection of Indigenous People and Cultural Heritage

Equally, the company’s environmental impact assessment procedure will cover other PS issues related to the conservation of natural resources and biodiversity as well as protection of indigenous people and cultural heritage. In order to address protection of cultural heritage where a potential issue has not been identified at earlier stages of screening process, the company will develop a general formal ‘chance find’ procedure to apply all excavation operations, in compliance with PS8 requirements.

Stakeholder Engagement

BUTEC is in close cooperation with educational institutions and provides on-site training and internship to students from civil, mechanical and environmental engineering faculties. Beside, the company will strive to establish its engagement in promoting health programs for employees and their families where applicable, taking into account any specific concerns at the country and location of its activities.

The company has established a formal communication procedure to address public concerns about its activities. In addition to disclosure by IFC, this Environmental and Social Review Summary and the annexed Action Plan will be made on BUTEC’s website and at BUTEC’s headquarters office in Beirut. The contact details are indicated below.

Client Documentation

File Name	Actions
Butec 26683 ESAP.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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Environmental & Social Review Summary

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E & S Project Categorization and Applicable Standard

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Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

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