31182 - Galaxy Egypt 2

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Environmental & Social Review Summary

Project Number

31182

Company Name

GALAXY CHEMICALS EGYPT SAE

Date ESRS Disclosed

Oct 14, 2011

Country

Egypt, Arab Republic of

Region

Africa

Last Updated Date

Sep 30, 2022

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jan 31, 2012
Signed : Feb 29, 2012
Invested : Mar 21, 2012

Sector

All Other Chemical Product

Industry

Manufacturing

Department

Regional Industry - MAS Africa

Project Description

Galaxy Surfactants Limited (“Galaxy” or the “Company”) is an established supplier in India of performance and specialty chemicals used by manufacturers of home & personal care (“H&PC”) products including shampoos, toothpastes, liquid soaps etc. The proposed Galaxy project is an expansion of a newly-established factory, located in the Suez Public Free Zone in Egypt to produce chemicals primarily for export to large, international H&PC companies in Middle East and North Africa (MENA), Europe and the Americas. Many of these multinational clients are currently supplied from Galaxy’s operations in India.

The company has almost completed the construction of its new production facility in Egypt, which was supported by IFC, and this project will increase the sulfonation capacity by additional 32,000 metric tons per annum (MTPA). This capacity increase is in parallel with completion of the final stages of the existing project.

Overview of IFC's Scope of Review

The review of this project consisted of a desk review of the environmental and social information available from ongoing supervision of the existing IFC investment with Galaxy (project # 29246). This includes a review of the current status of the Environmental and Social Action Plan agreed with Galaxy for project #29246. The previous Environmental and Social Review Summary for Galaxy is available on IFC’s Disclosure Portal:
HYPERLINK "http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS29246"http://www.ifc.org/ifcext/spiwebsite1.nsf/ProjectDisplay/ESRS29246

Galaxy provided a written update of the current performance of the existing project through its annual monitoring report and through a written update of the Environmental and Social Action Plan. In the appraisal review of the first project, conducted in January 2010, IFC’s team undertook a site visit and held meetings with technical and environmental representatives of Galaxy Chemicals Egypt. Additional information reviewed, as part of the new transaction, included the expansion plans; in particular changes regarding use of raw materials, fuel/energy, and increase in the capacity of the wastewater treatment plant.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social review 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

Galaxy leases the land from Suez Public Free Zone (SPFZ), an industrial park set up by local government in the desert area near Red Sea. IFC’s previous review identified that there is no agricultural land at or near the SPFZ, and the nearest community is approximately 1.5 km from the project site. It was therefore concluded that the establishment of the industrial park did not cause economic or physical displacement and that it did not have adverse impacts on biodiversity or cultural heritage. Indigenous peoples were not identified in the project area. The expansion project will be undertaken within the land area previously provided for Galaxy.

This is a Category B project according to IFC’s Environmental and Social Review procedures because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

The project is located in a desert area inside the Suez Public Free Zone (SPFZ), which was established a few years ago by the local government. The key environmental and social issues for this project include: (i) water saving, wastewater treatment, and water reuse; (ii) operational safety and emergency response; (iii) Management of occupational health and safety during construction; and (iv) energy saving and energy efficiency.

Environmental and Social Mitigation Measures

Galaxy has presented plans to address the identified impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the Egyptian laws and regulations and the IFC Environment and Social Performance Standards and the World Bank Group (WBG) environmental, health and safety guidelines. Mitigation measures for the potential environmental and social impacts have been identified and are incorporated into an attached Environmental and Social Action Plan (ESAP), which is an update of the previously agreed ESAP.

1. Social and Environmental Assessment and Management Systems
Environmental and Social Assessment: Galaxy commissioned an Environmental and Social Impact Assessment (ESIA) for the original development of the Greenfield project. This study confirmed that the proposed project would meet both local regulatory requirements and IFC Performance Standards/ and WBG EHS guidelines. The initial production line is scheduled to start production by November 2011 and the mitigation measures described in the original ESIA have been implemented as planned. Galaxy has in place a chance finding procedure for the project construction or operation as agreed on the previous transaction. The local authorities have granted the expansion permit. Galaxy will incorporate effluent treatment and air emissions controls in the new units to be in compliance with local and WBG requirements.

Environmental, health, and safety (EHS) management and organization: Galaxy has an EHS corporate management system in India and is planning to expand it to its new production plant in Egypt. An EHS manager has been hired to oversee the Egyptian operations. The company reported that is in the process of documenting the EHS programs and procedures for its operations, which will be ready prior to the trial production. Galaxy will set up an effective EHS management system for the Egyptian operations one year after the trial production starts.

Training, monitoring, and reporting: For the proposed project in Egypt, Galaxy will set up the EHS training, monitoring, and reporting programs as part of its preparation of overall EHS programs and procedures prior to the trial production.

2. Labor and Working Conditions
Human Resources Policy and Management: Galaxy is in the process of completing the Human Resources (HR) policy and procedures for its Egyptian operations. This policy will be aligned with the corporate HR policy which specifies the terms of employment and working conditions, which are aligned with the requirements of IFC’s Performance Standard 2. These include procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and firing, leave and vacation, and retiring. Galaxy will communicate the policies and procedures to all the employees.

Galaxy’s policies and hiring plans and conditions have not changed since appraisal of the previous transaction. The company follows Egyptian labor law. Galaxy does not hire workers below the age of 18, the company has no objection to collective bargaining and hiring and promotion is solely merit-based. The company has currently hired the basic personnel to start up operations in Egypt and has provided operational training to those workers in India for over a month.

Occupational health and safety (OHS): Operational safety procedures has been developed for the first production line and hired employees has been trained on safety during the operations based on their positions. Procedures have been developed for handling of hazardous materials, safe operation of the processes and emergency response among others. The initial training will be reinforced once the plant starts operations and during start up operations and through routine OHS training and refreshers. Galaxy will also develop workplace air quality/noise monitoring programs, and track the statistical trends of near-miss and accidents, as part of its EHS management system programs/procedures.

OHS aspects during construction of the new line will be supervised by Galaxy. Galaxy will implement a mechanism to confirm that contractors have identified the existing hazards and that employees hired by the contractor companies have the proper training, have been informed about the risks, and are provided with adequate protective equipment.

3. Pollution Prevention and Abatement
Raw materials and resource consumption: The expansion will increase the consumption of raw materials, bringing the total consumption of the major raw material to: ethoxylated fatty alcohol (33,500 t/y), caustic lye (12,500 t/y), sulfur (3,000 t/y), water (870 t/d), and natural gas (1.5×106 m3/y). The water is supplied by the industrial zone. The industrial zone also supplies Galaxy with approximately 10,400 MWh electricity from the national grid.

Air Emissions and Liquid Effluents: The existing ESIA confirms that the plant will be in compliance with both local regulatory requirements and World Bank Group (WBG) EHS guideline limits upon successful implementation of the proposed mitigation measures.

Air emissions involve combustion gases generated from Natural Gas burning from the boiler, thermal oil heater, pre-heater at the gas converting section, and the emergency power generator. The expected emissions for NOx are expected to be below WBG and local requirements; SO2 and particular matter are not expected, provided that the fuel to be used is natural gas. Additional sources of air emissions will the stacks connected to the gas treatment units, at the sulphonation units. The gas treatment units will consists of a cyclone, a wet electrostatic precipitator and a wet gas scrubber.

Galaxy will generate approximately 240 m3/d wastewater. The proposed treatment include equalization and neutralization; biological treatment through a Membrane Bio Reactor (MBR); clarification and flocculation; aeration; filtration; and sludge collection and drying. As agreed on the previous transaction, Galaxy is currently installing membrane bio-reactor (MBR) technology to further treat the wastewater in order to meet the WBG EHS guideline limits for effluents. Monitoring results are not yet available because the plant has not started production. Galaxy plans to recycle the effluent after MBR treatment.

Galaxy will monitor and report to IFC the air emission levels and liquid effluents parameters to ensure compliance with local and WBG limits when operating at normal conditions. As indicated in the ESAP, Galaxy will start auditing environmental and social performances of its main raw material suppliers.

Solid and Hazardous Wastes, Hazardous Materials and Operation Hazard: The used catalyst will be sent back to manufacturers for re-generation. Other solid and hazardous wastes will be sent to different registered contractors for recycle or disposal. Galaxy’s raw materials, intermediate products, and byproducts comprise significant amount of hazardous materials. The manufacturing, storage, handling, and transportation of these materials pose dangers to the employees and nearby communities. Galaxy has commissioned and completed a comprehensive hazard operability (HAZOP) study, and will implement the recommendations of the study. Galaxy will install adequate firefighting equipment at the production plant and will perform periodic drills.

Greenhouse Gases (GHG): Galaxy has incorporated energy efficiency measures in the Egyptian operations. Energy efficiency features include the installation of a condensate recovery system; use of high efficiency split-case pumps in cooling water applications; reduction of batch cycle times; use of high efficiency inline vertical pumps for process application; and use of diffused aeration instead of surface aeration in effluent treatment, among others. Besides, all the heat from sulfur combustion unit will be used for steam generation. As a result, the annual GHG generation of the Egyptian operations will be around 8,500 tonnes CO2 equivalent mainly from natural gas boilers and electricity purchase.

4. Community Health, Safety, and Security
Community health, safety and security: Raw materials and products will be transported between the site and the special chemical jetty, located approximately 200 km of the site, along the coastal highway. The expansion project will not add additional significant impacts to the local communities, others that the ones identified in the original ESIA and for which mitigation measures has been identified, given that the increase in the materials transported is minor.
Emergency preparedness and response: Galaxy have defined emergency response plans, and will conduct routine drills for fire fighting and potential chemical explosion/releases. Galaxy will coordinate with neighboring companies and involve the local hospital, fire brigade, and representatives from the nearby community in the emergency response drills. In accordance with the ESAP, Galaxy will only contract with transportation companies that have defensive driving programs, acceptable safe driving records, and sufficient emergency response methods. Galaxy will also monitor the hazardous material transportation and require the transportation company to report the accident rates quarterly.

Security personnel: Galaxy will hire an external agency for plant site security, which conducts routine ID checks at the gate and security monitoring. The security personnel will not have any weapons. For serious security issues, Galaxy will report directly to the local police station.

Stakeholder Engagement

Galaxy has an established community engagement program and grievance mechanism in its Indian operations. Galaxy will implement similar community engagement program at its Egyptian operation. Galaxy has identified the vulnerable communities in the project area and is in the process of developing a community development plan with a focus on education, vocational training, and healthcare. Galaxy will do local disclosure of this ESRS and ESAP outside its plant gate. Galaxy had a public hearing during ESIA preparation. Galaxy will hold an additional public consultation with local community prior to the trial production.

Galaxy will disclose the Arabic version of this document and attached ESAP at Galaxy Chemicals (Egypt) S.A.E, Plot No. 9, Block M, the Public Free Zone, Attaka – Suez, Egypt.

Please contact the following for inquiries or concerns about the environmental and social impacts of this project.

Vaijanath Kulkarni
Managing Director
Phone : +20 1202020458
e-mail : vaijanath.kulkarni@galaxysurfactants.com

Client Documentation

File Name	Actions
Environmental and Social Action Plan Galaxy 2.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/
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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.
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