27118 - Otecel S.A.

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Environmental & Social Review Summary

Project Number

27118

Company Name

Otecel S.A.

Date ESRS Disclosed

Dec 24, 2015

Country

Ecuador

Region

Latin America and the Caribbean

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Feb 5, 2016
Signed : Feb 10, 2016
Invested : Feb 12, 2016

Sector

Mobile Telephony

Industry

Telecommunications and Technology

Department

Gbl Infrastructure & Natural Resources

Project Description

This project involves a proposed loan by IFC of up to $75 million to Otecel S.A. (“Otecel” or the “Company”), wholly owned by Telefonica S.A. through Ecuador Cellular Holdings. The total project cost is $150 million, which will pay for license fees and new infrastructure in the next 5 years, when Otecel will work to expand 4G capacity in Ecuador. New infrastructure in this project will include mainly new and improved telecommunications equipment to be installed on many of the approximately 1600 existing Otecel base stations/telecommunications towers, with only a relatively small, yet-unknown number of new base stations/telecommunications towers to be constructed.

Overview of IFC's Scope of Review

The review of this proposed investment consisted of appraisal of environmental and social (“E&S”) and technical information submitted by Otecel, including documentation of Otecel’s national environmental plan for base stations, Otecel’s waste management policy, technical and operational specifications, contract terms, a human resources manual, and the latest (2014) annual sustainability report published by the company.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
PS5, PS6, PS7 and PS8 are not considered applicable given that most sites will be leased, and any purchased ones are expected to involve a willing seller; no operations are expected to affect biodiversity conservation or any substantial management of living natural resources; no Indigenous Peoples are expected to be affected; and no important cultural heritage is expected to be impacted (as Otecel’s network is mainly complete, and if an unexpected find does occur during the relatively small amount of construction with limited footprint expected by Otecel, the company has procedures in place to manage the risks).

The key E&S issues associated with the project are in the potential impacts of a relatively small amount of tower construction; labor and working conditions (including employees’ and contractor workers’ occupational health and safety); and pollution prevention and abatement.

As E&S risks and impacts are expected to be limited, site-specific, and relatively few in number, and it is possible to avoid or mitigate any limited adverse impacts that might result, the proposed investment has been classified as a Category B project according to IFC’s Policy on Social and Environmental Sustainability.

Environmental and Social Mitigation Measures

Otecel has developed and implemented a sophisticated E&S management system, including an E&S management plan and a full set of E&S policies and procedures made available in Spanish to the company’s workers, with all of the elements required under IFC Performance Standard 1. Otecel has a qualified officer overseeing the management of E&S risks and impacts of its operations.

Most Otecel sites are leased rather than owned. The company will not develop any proposed new site if it cannot be expected to comply with IFC Performance Standards.

Otecel’s E&S management plan provides for training of company workers (including contractors) on occupational health and safety matters. It also provides technical and operations specifications, and policies and procedures notably on the following: permitting sites, engaging with local community members, managing the visual impacts of Otecel’s towers, renovating sites and decommissioning sites, managing waste, emergency preparedness, supply chain management, and monitoring and reporting.

Otecel will screen for risks if new towers and access roads will be built. The company will initially map potential sites according to transmission needs, and consider the best potential sites in each searched area. The company will then perform E&S review of those potential sites according to its E&S policies and procedures, as part of the company’s overall due diligence. Such E&S review will be commensurate with the level of social and environmental risks and impacts in the relevant operations. Otecel’s E&S review will ensure that the project and the company’s operations comply not only with applicable social and environmental laws and regulations of Ecuador, but also with IFC’s Performance Standards.

Otecel is committed to use best practices in the management of its supply chain. In the terms of agreements with core contractors and suppliers, Otecel requires compliance with the company’s own E&S policies and procedures, which are incorporated by reference. Those terms specify that Otecel will periodically perform inspections to enforce compliance, and will take action to ensure that any required corrective actions are fulfilled. Those terms also provide for the exclusion of harmful child labor among core contractors and suppliers.

The company’s E&S management system includes provisions for continuous improvement. The company has achieved ISO14001 and OHSAS 18000 certifications and has successfully met the requirements of the Global Reporting Initiative since 2006. Otecel supervises, monitors, and reports on the E&S risks and impacts of all operations for the duration of the company’s involvement. The company will report to IFC on compliance with the Performance Standards.

Stakeholder Engagement

Otecel recognizes the importance of stakeholder engagement, and is committed to comply with the requirements of IFC Performance Standard 1 on disclosure and stakeholder engagement.

Otecel has developed and implemented procedures for prior disclosure of any new Otecel site to local communities. Otecel is committed to disclose information regarding new sites by scheduling information sessions; to address any grievances expressed by local community members; and to produce a report on each instance of local community engagement, including minutes of meetings, relevant photographs, and contact information of participants. Notices are posted at sites at least five days prior to the start of construction.

Otecel is committed to implement the procedures needed to avoid or reduce any complaints or concerns from local community members regarding noise, security, illumination, housekeeping, and access roads, and is committed to arrange meetings with such communities as necessary to discuss complaints and proposed mitigation measures. These procedures will be consistently implemented for each project site.

Broad Community Support

**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

Environmental and Social Mitigation Measures

Stakeholder Engagement

Broad Community Support

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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

PS 1: Assessment and Management of Environmental and Social Risks and Impacts

PS 2: Labor and Working Conditions

PS 3: Resource Efficiency and Pollution Prevention

PS 4: Community Health, Safety and Security

Stakeholder Engagement

Stakeholder Engagement

Local Access of Project Documentation

Broad Community Support

IFC's Determination of BCS

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