26999 - Creative Energy Resources

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Environmental & Social Review Summary

Project Number

26999

Company Name

CREATIVE ENERGY RESOURCES

Date ESRS Disclosed

Aug 21, 2008

Country

Middle East, Pakistan, and Afg Region

Region

Middle East

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Oct 30, 2008
Signed : May 19, 2009
Invested : Jul 23, 2009

Sector

Electric Power Other (Including Holding Companies)

Industry

Infrastructure

Department

Regional Industry INF MCT

Project Description

CER intends to build a diversified portfolio of greenfield and existing power assets, including renewable energy assets. CER has already closed its first transaction, an equity stake in Uch Power Limited, which owns and operates a 586 MW combined cycle, gas-fired power plant in Baluchistan, Pakistan. A possible expansion of the plant by about 400 MW to utilize available gas in the Uch gas field is under consideration. The project sponsor is Swicorp Joussour, a MENA focused private equity vehicle, which is managed by the Swicorp group. Swicorp is a leading independent corporate finance advisory, private equity and principal investment firm with a specific regional focus on the MENA region.

Overview of IFC's Scope of Review

IFC is considering an equity investment in Creative Energy Resources (CER or the company), a newly formed investment holding company that will acquire, develop, build, own and operate power sector projects (i.e., generation, transmission and distribution), primarily in the Middle East and North Africa (MENA) region, with a secondary focus on opportunities in South Asia and Turkey.

IFC reviewed information related to CER’s business plan, and documentation for CER’s investment in the Uch Power project in Pakistan, including technical due diligence conducted for CER by O&M Services and its March 2008 Investment Recommendation Report. IFC’s social and environmental requirements were discussed with the project sponsors in meetings in June and July 2008.

E & S Project Categorization and Applicable Standard

While all Performance Standards (PS) are applicable to this investment, IFC’s funding will, except for Uch Power, support future, but as yet, uncommitted projects. The principal PSs applied to this investment at appraisal are PS1: Social and Environmental Assessment and Management Systems; and PS2: Labor and Working Conditions. A condition of IFC’s investment will be that all projects undertaken shall consider all relevant social and environmental risks and impacts, including the issues identified in PS1 through PS8.

This is a category B project. Projects developed by CER are expected to have environmental and social impacts that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Existing projects that CER considers for investment are unlikely to have environmental and social impacts that are potentially significant (category A), even if they were category A at the time of development (i.e., Uch Power). In the event that CER considers for investment a greenfield project that meets criteria for category A, its due diligence procedures will include a screening step for potentially significant adverse impacts, and if CER determines that a potential investment will be category A, IFC will review and clear the assessment and related mitigation/action plans of such project(s) prior to CER’s commitment of funds.

Environmental and Social Mitigation Measures

- PS1: Social and Environmental Assessment and Management Systems

CER will manage its environmental and social performance in accordance with applicable local laws and regulations and IFC’s Performance Standards on Social and Environmental Sustainability. Environmental and social compliance will be an integral part of the company’s due diligence and for review of each potential investment by CER’s Board of Directors. The types of projects targeted by CER for investment are likely to pose some environmental and social risks, and thus will require robust internal processes to manage such risks. Because CER will be investing in a portfolio of projects, including some yet undefined, the key issue for IFC going forward is the effectiveness of CER’s corporate environmental and social management system (ESMS) and the ability of the organization to ensure compliance with appropriate host country regulatory requirements and IFC PSs in the various assets it acquires or develops. CER will put in place a company-wide management system that integrates environment, social, health and safety, and quality performance as a condition of IFC’s investment.

CER has developed and implemented due diligence procedures for prospective projects. As appropriate, impact assessments, audits, and other studies are prepared to evaluate projects; this process culminates in an Investment Recommendation Report for consideration by CER’s Board. Once invested, IFC’s disbursements will not be directly linked to CER’s due diligence/investment on specific projects. As a condition of IFC’s investment, CER will expand the scope of the reports to more fully identify environmental and social risks and impacts of each prospective acquisition or development project before the decision to invest is made.

CER will incorporate, for each project, the results and findings into a project-specific program of mitigation and improvement measures, including operational procedures and practices. An Action Plan will be prepared for each project, describing activities necessary for compliance as well as the organizational structure and assigned responsibilities for execution.

- PS2: Labor and Working Conditions

CER plans to take an active management role in many of the projects in which it invests. As such, CER will need to develop its own human resources policy and procedures as well as an occupational health and safety policy and procedures with respect to the requirements of national laws, and lenders’ and other requirements, including IFC’s PS 2. The company will, through its contracts, require its contractors to apply the same standards. CER will submit its Human Resource Policy and procedures for review and approval by IFC before IFC’s first disbursement.

- Environmental and Social Review of Current Deal Pipeline

CER has a pipeline of acquisitions and greenfield projects, including projects at various stages of development. To date, CER has closed one transaction (Uch Power). IFC has reviewed environmental and social information from CER and public sources on pipeline projects to the extent available.

CER has closed on its investment in the Uch Power project, which is a former IFC investment (project #4962; investment period 1996-2008). CER provided copies of the technical due diligence conducted for CER by O&M Services and its March 2008 Investment Recommendation Report. The technical due diligence report is thorough, and includes sections on environmental compliance, the health and safety program, and Uch’s community and welfare program. The ESMS at the plant is adequate, and the plant is working towards obtaining ISO 14001 certification for its environmental management system and OSHAS 18001 certification for its health and safety program. The plant’s primary fuel is low BTU gas from an adjacent gas field, and stack emissions meet WBG guidelines. The plant is a zero liquid discharge facility, so liquid effluents are not an issue. Uch has had difficulty in disposing some of its hazardous wastes, due to its remote location, but is working on a solution. Uch has proactive community engagement and development programs. Overall, CER’s consultants found environmental and social conditions at the plant to be acceptable.

Stakeholder Engagement

CER will include procedures within its ESMS that address engagement with affected communities; communication with external parties, including the handling of complaints; and reporting and monitoring of project performance to its senior management as well as to government agencies and lenders.

Public consultation and disclosure for each project considered for investment by CER will be determined by such factors as whether the project is existing or greenfield, and whether CER’s investment will include an Action Plan of technical, environmental, and social improvements. Country procedures for consultation and disclosure will be followed in all cases. Environmental and social impact studies are made available to the affected communities by the relevant government authorities, and these same authorities ensure appropriate consultation also takes place. In the event that CER develops a project that meets criteria for category A, it will conduct community engagement consistent with IFC’s PS1.

This ESRS, and for each CER invested project, environmental and social documentation prepared by CER to meet Country requirements, and the project-specific Action Plan will be available to the public at CER’s headquarters and at each project location. Project related information will be available at additional locations as discussed above.

For further information about CER or specific projects, please contact:

Shahzad Qasim
Creative Energy Resources
2411 Grosvenor House Tower
Sheikh Zayed Road
PO Box 125448
Dubai, UAE

Website: www.cer-c.com

**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

Project Description

Overview of IFC's Scope of Review

E & S Project Categorization and Applicable Standard

Identified Applicable Performance Standards

Environmental and Social Categorization and Rationale

Environmental and Social Mitigation Measures

Environmental and Social Mitigation Measures

Stakeholder Engagement

Stakeholder Engagement

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