27476 - Eurasia RED

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Environmental & Social Review Summary

Project Number

27476

Company Name

Home Mart LLP

Date ESRS Disclosed

Aug 29, 2008

Country

Kazakhstan

Region

Central Asia and Turkiye

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Mar 26, 2009
Signed : May 18, 2009
Invested : Jun 26, 2009

Sector

Construction and Real Estate

Industry

Tourism, Retail and Property

Department

Regional Industry MAS MCT

Project Description

The project is to develop: (i) the 55,000 m2 phase I of a 100,000 m2 city shopping center featuring cultural as well as entertainment services on Raimbek Avenue in Almaty; and (ii) a 100,000 m2 city shopping center also offering cultural as well as entertainment services on Kulja Avenue in Almaty (the “Project”). The Project will be implemented in a phased manner, i.e. the shopping centers will be constructed one after the other. ERED currently owns and operate an existing class B+ business center on Manas-Satpayev, Street, Almaty. Pipeline projects include: (i) the phase II of the shopping center on Raimbek Avenue for 45,000 m2, (ii) a second class B+ business center on Abay-Saina Street, Almaty; (iii) a shopping center opposite the central market in Astana; and (iv) other property projects (possibly business centers) on three sites at the exit of Almaty towards Kapchagai.

The proposed IFC investment consists of both equity and loans to support ERED in its commercial property development projects. These developments are to satisfy the demand for modern shopping center space in the commercial real estate market and bring in modern retail and entertainment operators to Almaty and at a much later stage to Astana and the regions of Kazakhstan.

ERED’s current development plans include the following individual sites, which are all open land and which have all been acquired with clean titles:

SAT-I business center: This 14,566 m2 business office center was completed in 2006 on Manas-Satpaev street in Almaty. The center has been highly successful with a 100% occupancy rate. The site measures 0.34 hectare and has 105 parking lots. Business center is located in one of Almaty business downtowns.

Raimbek Avenue city shopping center: This 100,000 m2 mall, of which 55,000 m2 (phase I) will be opened in February 2009 is located on a 19.4 hectare site (11.4 ha for phase I) along the Raimbek Avenue transport corridor in the western part of Almaty. The site is located approximately 15 minutes from downtown Almaty on the road leading to Bishkek in Kyrgystan. The shopping center will have a total of 2,675 parking lots when fully developed. A phase II extension of this shopping center is planned with the acquisition of additional land of 8 hectares and the addition of approximately 45,000m2 of constructed space, to be approved by IFC based on conditions and milestones to be met.

Kulja Avenue city shopping center: This 100,000 m2 shopping mall to be opened in late 2010 will be located on a 19-hectare site in the eastern part of Almaty along the road to China, approximately 15 minutes from downtown Almaty. The area around the center is rapidly developing with mainly residential areas. The shopping center will be located between the city center and the future new international airport along Almaty ring road.

SAT-II business center: This 28,050 m2 business office center will be located on a 0.53 hectare site in the western part of Almaty on Abay-Saina Street in front of a new subway station, approximately 10 minutes from downtown Almaty. The surrounding area is partly residential, partly small business / industrial.

Residential and shopping outlet center. ERED has acquired three sites of 21 hectares, 12.5 hectares, and 5 hectares respectively at the exit from Almaty towards Kapchagai, approximately 25 minutes from downtown Almaty. These areas are reserved for development as potential shopping outlet center and residential town houses, with a timing to be determined by the development of the city in this direction.

Astana city shopping center: ERED has acquired an 11 hectare site in front of the new central market in Astana. This area is reserved for the development of a shopping center, with the timing to be determined by the development in the city, including construction of Astana new central market in this direction, as well as the level of the demand for retail in Astana.

Overview of IFC's Scope of Review

The project sites for the operational business center, the shopping mall currently under construction, and the land pieces of the second shopping mall and second business center in Almaty have been visited by an IFC environmental and social specialist to ensure full understanding of the site specifics including infrastructure connections and services, and local area development specifics. Further the environmental and social specialist has had discussions and reviewed technical information with Eurasia Real Estate Development (“Eurasia RED”, www.eurasiared.com or “ERED” or the “Sponsor”) management, Taliger, construction project management and quality assurance company and Idil Aksu, a reputable Turkish construction firm and active in the design and construction management of the developments.

E & S Project Categorization and Applicable Standard

While all Performance Standards 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 Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement

Due to the projects all being in developed cities the project review did not identify impacts related to Biodiversity Conservation and Sustainable Natural Resource Management (PS6), Indigenous Peoples (PS7) or Cultural Heritage (PS8).

The proposed project is being developed in accordance with internationally well recognized standards by a Sponsor committed to good environmental and social management, implementing recognized life and fire safety management systems, following international labor standards, and avoiding any significant pollution. The proposed shopping malls and business centers will avoid resettlement as all sites were bought as vacant lots and the land was obtained through willing buyer/seller situations. With no indication of impacts related to Performance Standards 6, 7 and 8, and only readily mitigated environmental issues under Performance Standards 1 through 5, the project is being processed as a Category B project.

Environmental and Social Mitigation Measures

The Sponsor has presented plans to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with host country environmental and social requirements as well as IFC’s Environmental and Social Performance Standards and industry guidelines. The information about how these potential impacts are being/will be addressed by the project is summarized in the paragraphs that follow.

PS1: Social and Environmental Assessment and Management Systems: IFC’s assessment considered the Sponsor’s commitment to establish sound environmental, health and safety management systems, including life and fire safety master plans and management systems.

Specific EIA are not required in Kazakhstan for non industrial developments that are already defined in the local land use plans. This is based on the understanding that the social issues shall be covered during the land use plan development while technical issues are managed under item specific approval procedures. Both the business centers and the shopping malls are thus not requiring specific EIAs. As a direct consequence the technical EHS impacts from the Raimbek Avenue shopping mall, which is developed in accordance with the land use plans, are covered by more than 100 specific approval procedures, covering among others water usage and discharge, electricity connections and usage, waste management, traffic connections and planning, ecology, life and fire safety protection. Most of these approvals require both pre approvals ahead of construction and verification of adherence before the center is opened. Specifically for the SAT-II business center a public consultation and consent approval was performed on the design of the building, as the neighbors for this development include residents of apartment buildings.

The Sponsor is committed to work towards ISO 14001 certifications of all developments. It has been agreed that ISO 14001 certification has to be achieved within three years of opening of the malls.

The shopping centers will be constructed by Idil Aksu, a reputable Turkish firm, under project management and quality assurance from Taliger, a reputable Kazakhstan firm, in cooperation with the Company’s construction team, which has in turn arranged for several key, fixed term subcontractors. The property management will be carried out by a professional property management companies with international shopping center experience.

PS2: Labor and Working Conditions: IFC’s assessment considered the projects commitment with regard to fair, safe and healthy working conditions.

During the construction phase Idil Aksu, a reputable Turkish construction firm, will be responsible for ensuring their own as well as sub contractor’s employee are managed with full respect for local labor laws and Occupational, Health & Safety (OHS) regulations as well as compliance with the ILO core labor standards. On top of that, Taliger, a construction project management and quality assurance company, hired by Eurasia RED oversees and assures OHS regulations are observed.

During the operational phase for the shopping malls and business centers ERED will have a minimal number of staff, the broader impact will be based on how the tenants behave. For tenant selection ERED is targeting internationally recognized retailers and entertainment operators committed to fair practices. ERED will further request the professional property management company, which will run the malls to contractually ensure that tenants adhere to local labor laws and OHS regulations as well as comply with the ILO core labor principles, hereby ensuring compliance with PS2. The compliance requirements also apply to ERED and the management company it self.

PS3: Pollution Prevention and Abatement: The shopping mall and business center operations are relatively simple in respect to pollution prevention and control. The initial mall will take water from own wells, have own heating and air conditioning systems, while electricity will be sourced from the municipal utilities. Wastewater and storm water will be discharged to the Almaty waste water treatment system and storm water systems respectively, after appropriate application of fat and grease traps in all food preparation areas. ERED has hired experienced and recognized design and construction adviser to ensure energy and water efficiencies of the developments. The shopping malls are being designed to allow maximum amounts of daylight to enter the buildings; this is to create a “better feel” in the buildings and to minimize the electricity use for lighting. The heating and cooling system will be operated on diesel oil for the heating season, and by air chillers and water loops for cooling during the summer. No refrigerant will be used in the cooling circle. There are also no current plans for accepting dry-cleaner operation in the centers.

PS4: Community Health, Safety and Security: IFC’s assessment considered the Company’s operations with regard to the impacts of the construction and operations of the shopping malls and business centers. Both the malls will be developed in direct connection with the main road infrastructures to source its customers from these. The construction of these shopping malls will therefore not entail new traffic loads in the affected areas, while ERED finances road improvements in the project areas. The current and future business centers are normal business structures, located where businesses need office areas, and does not entail new traffic loads in the affected areas.

Specific Food safety systems are also checked for all food serving tenants and Eurasia RED is strongly encouraging its tenants to prepare HACCP based food safety systems.

A Life & Fire Safety (L&FS) Master Plan based not just on local, but also internationally recognized L&FS-code will be developed for each of the developments. These plans will be designed to fulfill both the local and an internationally recognized L&FS-code. In accordance with the attached Environmental and Social Action Plan (ESAP) a L&FS expert will be nominated early in the initial design phase to ensure the individual L&FS Master Plans are developed and systematic implementation. Before the opening of the individual developments the adequacy and adherence to the master plan will be verified by an expert acceptable to IFC.

For the first shopping center the L&FS requirements include own fire water reservoir of 1,500 cubic meters, sprinkler installation in all areas, total concrete firewall division of the shopping mall into two sections and further division of all areas by firewater curtains into sections of not more than 3,000 m2, double fire water connection and pumping capacity (diesel driven pumps and jockey pump to keep continuous pressure), dual egress assurance from all areas, and emergency response plans.

PS5: Land Acquisition and Involuntary Resettlement: The proposed new shopping malls and business centers will avoid resettlement as ERED has specifically targeted vacant lots where the land could be obtained through willing buyer/seller situations.

Stakeholder Engagement

The project’s community engagement has been targeted to the actual situations around the project sites and their development stages. The actual construction projects have been disclosed ahead of construction start, typically by attaching big descriptive posters on the site fencing (site fencing is typically used in Kazakhstan, even for unused plots to show land ownership). To start the local dialog and ensure appropriate local disclosure for this project, in accordance with IFC’s project review procedures, this ESRS will be translated into Russian and Kazakh languages and posted at all the currently planned development sites.

In order to manage community relations, community engagement plans are developed for each development including both the shopping malls and the business centers to ensure effective relationships with the nearby community. This includes requirements to hire people from the local community when qualified candidates are available, and for the current developments it also includes support to an art museum, an orphanage, and other local activities.

Dmitry A. Revin
Director for Finance and Business Development, Eurasia RED
32A Manas street, 3rd floor
Almaty, Kazakhstan, 050008
Tel.:+7 (727) 237 83 78 / 237 83 79
Fax: +7 (727) 237 83 00
Mobile.: +7 (701) 714 66 03
email: dmitry@eurasiared.com
web site : www.eurasiared.com

Client Documentation

File Name	Actions
Eurasia RED 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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