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 with respect to the management of environmental, health and safety performance of the GTI as a whole. PS2: Labor and Working Conditions with regard to fair, safe and healthy working conditions. PS3: Pollution Prevention and Abatement with regard to management of the hazardous materials in transport; and emissions to air and wastewater management at Ivanovo depot. The following Performance Standards were screened for but not found relevant for the Project as described below: PS5: Land Acquisition and Involuntary Resettlement as the Project will not require land acquisition. PS4: Community Health, Safety and Security; PS6: Biodiversity Conservation; PS7: Indigenous People: The Project provides for acquisition of gondola (open top) cars which are not intended for the haulage of hazardous materials and, hence, will not have adverse impacts on local communities, ecosystems or natural resource-based livelihoods of Indigenous People. The GTI as a whole may be indirectly exposed to the risk of adverse impacts arising from spillage of environmentally sensitive materials as the result of accident. However, under Russian law, liability for such accidents or derailments is attributed to the owner/carrier of the cargo being transported and/or Russian Railways as the operator of the railway infrastructure. PS8: Cultural Heritage. No impacts on cultural heritage are expected from the Project.

This is a Category B according to IFC's Environmental and Social Review Procedure, because potential adverse social and environmental impacts are limited and readily mitigable, as described in the following sections.

PS1: Social and Environmental Assessment and Management Systems:The project does not need E&S assessment as it provides for acquisition of new gondola (open top) cars only, which are not intended for transport of environmentally sensitive cargoes. The increased rolling stock fleet will not require construction or acquisition of new depots/maintenance stations. Instead, the company will continue to rely on the third-party services. However, the GTI has in the past, and may in the future, expand its operations through acquisitions. The pursuit of an acquisition strategy entails certain risks, including the failure to conduct appropriate environmental due diligence on the target’s operations and the discovery of larger than anticipated or previously undisclosed environmental liabilities. To minimize these risks in future the company will adopt operational procedure ensuring environmental, health and safety screening of business opportunities and future projects. Environmental and safety issues associated with rail transportation of hazardous goods are heavily regulated by Russian legislation as described below: Environmental certification of rolling stock: the Railway Transport Law requires the certification or declaration of rolling stock, which must comply with safety requirements, including health and labour safety, fire safety and environmental protection rules. The Railway Transport Certification Rules specify particular types of rolling stock which must be certified. During the term of a certificate, the rolling stock must be inspected at least once a year to ensure the compliance of certified rolling stock with the applicable legal requirements. Inspection control findings are documented in an official act of inspection. If a breach of certification rules or legal requirements is determined to have occurred, the certificate will be suspended until the certificate holder is able to cure the problem. If the problem is not cured in due course, the certificate may be revoked. Tank cars and wagons are designed to meet local standards for petroleum products – steel is of appropriate thickness and is coated with an oil-solvent resistant lining. In addition, cars are equipped with additional safety inlet valves, automatic coupler restraining arms and reliable elastomer absorbers mounted on the frames, shelf couplers (to prevent separation in an accident) and end shields, and appropriate top hatch seals and bottom valve controls. All tank cars display labels describing the dangerous properties of the goods being carried (Russian hazardous index and UN hazardous class) to allow proper handling by transport personnel or emergency services in the event of an accident. Moreover, Russian regulations require tank cars to undergo regular, frequent maintenance and repair in which the entire wagon is disassembled and worn components are replaced or brought to standard. Repair and maintenance of rolling stock: the GTI’s maintenance and repair work falls into two main categories: (i) scheduled repairs which are carried out according to the standards and regulations set by Russian Railways and the Ministry of Transport of the Russian Federation; and (ii) unscheduled repairs which are carried out according to the condition of the railcars, which are inspected on a continuous basis at loading and unloading or at the sorting stations. Currently, the GTI had maintenance and repair services contracts with more than 170 rolling stock repair depots, which are technical facilities that provide scheduled maintenance and emergency and capital repair, and rolling stock repair shops, which are smaller units providing routine inspection and minor repair. The GTI primarily uses repair facilities owned by Russian Railways, but it also has more than 20 contracts with privately-owned depots. Environmental permits and certifications of depots, issued by the local regulatory authorities, are an obligatory part of the contracting documentation. The determining factor for choosing a repair facility is its availability on the route operated by the Company. However, when possible the preference is given to modernized privately-owned depots employing higher level of technical competence. This also includes more sophisticated wastewater management systems, including zero-discharge one, and modernized painting workshops. Transportation of environmentally sensitive cargoes: the company transports crude, heavy and refined oil products defined by Russian authorities as hazardous. Considered hazardous or dangerous primarily because of their flammability, these include crude oil, mazut, diesel fuel, benzene, and other petroleum-derived products. Transportation of flammable liquids such as these present risks during loading and loading activities, where overfilling and spillage are the largest hazards. Hazards also arise from the risk of accidents during transport. Although certain private rolling stock operators, including the GTI’s subsidiary, New Forwarding Company, and BalTransServis, have obtained freight rail carrier licenses, they do not yet operate as carriers because the tariff regulation and private operating procedures for locomotive facilities have yet to be amended, and access to the railway infrastructure has not been simplified. As such, the GTI does not have responsibility for losses and liabilities associated with freight shipments. Under Russian law, liability for such accidents or derailments is likely to be attributed to the owner/carrier of the cargo being transported and/or Russian Railways as the operator of the railway infrastructure. If current environmental liability regime is changed and operators of cars and locomotives are treated equally with Russian Railways, the GTI may then be exposed to potential environmental liabilities. In this case, the GTI will develop and implement appropriate environment, health and safety management systems, including hazardous materials management programs and transportation plans. Changes in environmental liability regime are not likely to happen in a short-term perspective. PS2: Labor and Working Conditions:The GTI employs 835 people. Russia fully endorses the ILO core labor standards and they are incorporated in the national labor laws. In addition to the requirements of the national legislation, terms of employment and dismissal, working conditions, wages and social benefits for GTI’s employees are addressed in internal labor regulations and policies. The GTI exceeds legislated standards of workers’ benefits. Although the HR policy recognizes workers’ freedom of association, employees of the GTI’s companies are not organized in industrial trade unions. Grievance procedure for employees includes “open door” policies from HR department and managers, suggestion boxes and/or intranet-based “hot-line” for employees, where they can submit their work-related questions or concerns. Globaltrans employees, except for the workers of the depot in Ivanovo, 100% subsidiary of recently acquired BaltTransServis, are office workers. However, each company has a designated Occupational Health and Safety Engineer responsible for providing safe a nd health working conditions, training for employees and regular medical checks. Reportedly, the GTI had no occupational incidents for the last three years. PS3: Pollution Prevention and Abatement:Although company's railcars or locomotives operated by its subsidiaries may sometimes transport environmentally sensitive materials, any spillage or leakage of such materials is the responsibility of Russian Railways as it is the only entity recognized as a railway carrier in Russia and bears the risk of environmental liabilities. Owing to its limited responsibility as a freight forwarder and operator, Globaltrans currently depends on government authorities for accident planning and response. In this capacity, the authorities provide emergency planning and response coordination, emergency response equipment, and appropriate training of its employees. In the event of an accident, Globaltrans personnel or on-the-scene Russian Railways staff immediately notify the Ministry of Transport of the Russian Federation emergency management who in turn inform the impacted community in coordination with the Ministry of Emergency Situations (MChS). At the same time, Ministry of Transport and MChS damage assessment and response teams quickly mobilize and respond to the damage and to eliminate risks posed within a matter of hours. Ministry of Transport procedures also include extensive incident investigation protocols that establish the cause of the accident, impose penalties, if applicable, and identify the steps needed to prevent reoccurrence. To date, Globaltrans has not been associated with any significant train derailments or accidents. In addition, there have been no leaks or spills associated with failures of tank car components while in service. Currently Globaltrans is directly exposed only to environmental and social risks associated with the repair depot in Ivanovo. However, these risks are limited as the depot does not have a car washing station and painting shop. Water and heat are supplied by Russian Railways. Sanitary wastewater is discharged to the sewer system operated by Russian Railways. Local stations for washing of dissembled components and parts are equipped with closed water loops. When contaminated with sand, oil and grease water is discharged to the storage tanks for further removal and cleaning by licensed company. The depot does not have significant sources of air emissions and there are no residential areas within its buffer zone. Most of generated waste is non-hazardous and is landfilled. Mercury lamps and lead-acid batteries are removed for further treatment by the specialized companies. Direct GHG emissions of 119,500 tonnes of CO2 per year are mainly associated with the operation of diesel locomotives. They are used only on spur tracks, which are not electrified by the Russian Railways. Otherwise, the GTI is using locomotives with electric traction only. IFC’s project will not lead to the increase of the annual GHG emissions.

As part of its public relations management, Globaltrans will document and respond to concerns relating to the Project, including environmental and social, from any external interested party.

The Project does not involve any new construction and, therefore, no environmental impact assessment was carried out for this Project. Local disclosure of environmental and social information related to the Project, will include publishing of the Environmental and Social Review of Globaltrans’ operation in Russian, largely based upon this ESRS, on the web-site of New Forwarding Company: http://www.npktrans.ru starting from March 15, 2010. Inquires about the Project may be sent at the following e-mail address: bogomolov@globaltrans.com