27379 - Megalogix Novosibirsk

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Environmental & Social Review Summary

Project Number

27379

Company Name

LOGOPARK OB, OOO

Date ESRS Disclosed

Jul 15, 2008

Country

Russian Federation

Region

Europe

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Aug 21, 2008
Signed : Aug 26, 2008
Invested : Oct 9, 2008

Sector

Construction and Real Estate

Industry

Tourism, Retail and Property

Department

Regional Industry MAS LAC & EUR

Project Description

Megalogix Ltd (the company) is a 50:50 joint venture between Raven Russia Limited and Avalon Equity (Overseas) Ltd, who has extensive and long standing businesses in Russia. The objective of the Megalogix joint venture is to develop Grade A logistics warehouses in major regional cities across Russia and the CIS, creating an integrated distribution network.

The proposed investment (Logopark Ob or the project) is part of the above mentioned large scale initiative of Megalogix and involves the construction of a class A warehouse facility of approximately 103,000 square meters in the city of Novosibirsk designed for storage of consumer goods at ambient temperature and delivery to the shopping malls. The site (about 18 ha) is located south of Novosibirsk close to M51 highway, which connects the city with Moscow, and less than 3km from the trading and commercial zone, which includes Ikea and Mega shopping malls. The property has a direct access from the Petukhova street that will be widened from 2 to 4 lanes. An access to the existing railway network will be attained by the construction of a 900 m-branch railway, 600 m of which is located on the warehouse territory.

Overview of IFC's Scope of Review

The project is a greenfield undertaking at an early stage of its development. The environmental and social review of this project included interviews with the company’s managers and experts; review of information provided by the company in response to social and environmental questions; and follow up discussions. The information available at the time of appraisal and reviewed by the consultant on behalf of IFC included the ESIA and design documentation; information on land acquisition and compensation paid to the affected owners of potato storages; occupational health and safety and living conditions of construction workers; and a layout plan of the site and surroundings.

E & S Project Categorization and Applicable Standard

While all Performance Standards (PS) 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 Performance Standards:

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

No impacts related to biodiversity and natural resources (PS6), indigenous peoples (PS7) or cultural heritage (PS8) are expected

This is a category B project according to IFC’s environmental and social review procedure. Such category was assigned due to limited potential environmental and social adverse impacts, which can be duly minimized or eliminated. The key environmental and social issue associated with the Logopark Ob facility is the capacity of the company to manage environmental and social performance of third parties, including construction contractors and future tenants of the logistic centre. Issues likely to arise include:

- construction impacts;
- increased traffic;
- air emissions from boiler and back-up diesel generator;
- solid waste management and disposal;
- hazardous materials management;
- occupational health and safety.

Environmental and Social Mitigation Measures

The company has presented its plans to mitigate the project’s environmental and social impacts and risks. IFC has reviewed those plans and concludes that, upon implementation of the specific agreed actions described below, the project will comply with IFC’s Policy and Performance Standards on Social and Environmental Sustainability (PS or Performance Standard). The findings of the IFC’s review and conclusions are summarized for each applicable PS in the paragraphs below.

- PS1: Social and Environmental Assessment and Management Systems:

- Social and Environmental Assessment

A process of social and environmental assessment (SEA) is conducted in compliance with the national legislative and regulatory requirements. The main steps of this process include environmental and social baseline data gathering, environmental impact assessment (EIA) study, and identification of specific measures for preventing and/or mitigation of identified negative impacts and compensation for environmental disturbance and damage where risks and impacts can not be avoided. Outcomes of environmental and social baseline and EIA studies serve as prerequisite for design works. Environmental Protection Section of design documentation is an integral part of the project design package and encompasses analysis of environmental impacts for construction and operation phases and description of specific mitigation measures. The project design documentation is a subject to the State Expert Review (SER) for its compliance with Russian laws and regulations followed by issuing construction and ultimately operating permits.

The company has completed SEA for construction and operation of warehouses and has obtained a positive SER.

The company is committed to conduct SEA for access railroad and widening of Petukhova street and undertake all actions to avoid and/or mitigate identified negative environmental and social impacts and risks associated with construction and operation phases.

- Social and Environmental Management System; organisational structure; monitoring

The company has developed the management system and organizational structure appropriate for effective project control. Moscow office is responsible for coordination and development of logistics warehouses across Russia and the CIS. Logopark Ob is responsible for the project implementation. Environmental and social responsibilities are assigned to Logopark Ob deputy director reporting to Megalogix management.

Management of environmental and social (hereinafter E&S) issues associated with the construction is the responsibility of the construction contractors. The company has outsourced construction operations to reputable contracting companies who have well developed E&S management systems; some of them have certified quality management system, namely Palmira. These companies undertake their own assessment of E&S risks and allocate necessary resources to manage environmental and social risks during construction.

The company has the site based staff in charge of regular inspections to confirm that planned measures to manage environmental, social and safety issues associated with the construction are implemented.

To ensure proper management of environmental, health and safety (hereinafter EHS) issues during the operation of the warehouse facilities the Company will designate a suitably qualified environmental and safety manager or contractually oblige a management company of warehouse through a Management Service Agreements to recruit one.

-PS2: Labor and Working Conditions:

Logopark Ob project will create about 1000 new job places for local population.

The company has a Human Resources policy which is designed to ensure compliance with corporate and national labour regulation and is consistent with PS2. The policy defines rights and responsibilities of the employee and employer, including terms of employment and working conditions, grievance mechanisms, and promotion of non-discrimination and equal opportunity. The company requires its construction contracting companies to use similar conditions in its projects.

The contractors develop the project specific plans to ensure safety in construction, and following their internal procedures undertake regular checking to ensure compliance. This is supported by regular inspections undertaken by company’s staff as described above.

Management of construction occupational health and safety hazards is addressed through training of construction contracting companies’ personnel in safety procedures, together with provision of appropriate tools and equipment. Some minor accidents like injuries of a finger, hands, etc. were reported so far. However, the mentioned events were not associated with work time losses; first aid was provided by the site doctor and workers came back to work the same day. No serious accidents have been registered on site. The company has been receiving regular reports on EHS performance of construction contractors including the following key EHS performance indicators: safety incidents with Logopark Ob employees, contractors and visitors; medical services in place; availability and use of personal protective equipment; fire safety preparedness and equipment, etc.

On-site living conditions and medical services for construction contractors’ personnel are provided under recognised international standards.

- PS3: Pollution Prevention and Abatement:

- Pollution prevention, resource conservation and energy efficiency

Common impacts of the construction operations include noise and vibration caused by the operation of earth moving and excavation equipment, and materials transport and delivery; dust emissions generated by a combination of on-site excavation and movement of earth materials; emissions from exhaust of diesel engines; and waste handling, including oil spills associated with heavy equipment operation.

As mentioned above, the company has been assigning construction operations to reputable contracting companies who have well developed management systems; these companies undertake their own risk assessment and develop the project specific plans to address EHS issues associated with the construction. This is supported by regular inspections undertaken by company’s staff as described above. Measures for mitigation of the EHS impacts of construction operations correspond to recommendations included in the IFC’s Environmental, Health, and Safety Guidelines.

The standard operations of warehouses do not result in significant operational environmental impacts upon implementation of national regulations and standards and the requirements and measures defined in the design documentation. Moreover, future management company will be contractually obliged to appoint a specialist with the responsibility for management of EHS issues as it was mentioned above in the PS1 section of this review.

- Air emissions

Warehouses are designed for storage and delivering of consumer goods/merchandise that do not release any harmful pollutants to environment and public health and do not have any other physical impacts. Air emissions generated at the project operational phase will be local and limited. Designed gas-fired boiler house will provide premises heating and hot water supplying. Flame control system will maintain standard balance of pollutants in exhaust gases and high energy efficiency. Automated temperature control system will provide fuel economy from 10% to 20%.

The construction contractors implement mitigation measures through proper equipment maintenance and following procedures defined in the specific chapters of design documentation.

- Water supply and wastewater management

Water for domestic and process needs will be supplied to warehouse facilities from the municipal mains; wastewaters will be discharged to the municipal waste water sewerage system for treatment. Storm waters will be treated from suspended solid particles and oil products at the internal wastewater treatment plant and discharged to the municipal water system for final treatment. To reduce the water usage, installation of up-to-date fittings and automatically governed pumping equipment is anticipated.

- Waste management

Types and hazardous classes of wastes generated at the construction and operation of warehouse facilities are identified and assessed in SEA. Appropriate waste management at construction phase is provided by contracting companies. To ensure that on-site waste management is in place, the company has the site based staff in charge of regular checking of the construction contractors’ EHS performance as it was mentioned above in PS1 section of this report.

Waste management to be implemented at operation of warehouses includes segregation of different types of wastes; its temporary storage in defined and equipped storage areas; regular removal wastes from the site and its removal by specialized organizations for recovering and reuse (if feasible) or to the municipal landfills.

- Hazardous materials

Two metal underground storage tanks (UST) of 75m3 each will be installed for fuel oil to be used as reserve fuel. To prevent pollution of soil and underground water from potential fuel leakage specific measures are designed including installation of USTs’ solid pans and bordered concrete bed for the fuel-servicing area. UST is filled up by a lorry pump. Non ozone-depleting refrigerants are used in heating and air conditioning systems.

- PS4: Community Health, Safety and Security:

Community health and safety impacts associated with the construction of warehouses will include noise and vibration caused by the heavy equipment operation, and dust emissions. The company confirmed that noise impacts do not exceed the applicable noise level at the boundary of residential area during warehouses construction. None of residence is located within a regulatory 50m-wide buffer zone established for warehouses. Some potential EHS issues associated with the increased traffic might arise, which will be addressed by the widening of the access road (Petukhova street) and implementing preventive and/or mitigation measures identified for the reconstruction and operation of this road.

- PS5: Land Acquisition and Involuntary Resettlement:

The project development involved an acquisition of 18 hectares of municipal land through a long term lease agreement. The project will not cause the physical displacement of people. The land was previously leased from the municipality by a small car parking business and used by individual owners of potato stores who did not have legal rights to this land. The contract with owners of car parking business was cancelled by the municipality on the conditions pre-agreed in the lease agreement and in full compliance with national legal requirements. The company has through a mutually agreed negotiation process compensated local residents in cash at replacement value for the loss of the potato stores. The client has provided legal documents certifying value of compensation and signed by the affected individuals. IFC concludes that the objective of Performance Standard 5 was met through this process.

Stakeholder Engagement

Public consultations in the form of public hearings were held in Novosibirsk at the phase of the land plot allocation for the construction and were arranged by the local authorities. The company issued and distributed booklets describing the nature and scale of the project and proposed project activities. Public hearings were held in the framework of city planning process, and consultations were not focused on E&S aspects of the project. To disclose E&S aspects of the project the company will provide:

- summary of E&S aspects of Logopark Ob project at the company web-site, including notification that the environmental and social documents are located in the Logopark Ob office and
- contacts of Logopark Ob deputy director responsible for E&S issues.

For further projects, Megalogix will include ‘the project E&S aspects’ page in the booklets for further projects.

Client Documentation

File Name	Actions
Megalogix EAP.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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