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
The fuel retail stations will be constructed in long-established industrial sites or have been developed on land acquired from local government or business owners. No involuntary physical or economical resettlement was caused by the land acquisition process. Land for retail stations is purchased on a willing buyer / willing seller basis. Since the proposed fuel retail stations will be built on industrial sites or other developed sites, there should be no environmental protected area or critical habitat at or near GNG’s retail stations or terminals. Indigenous Peoples and Cultural Heritages are unlikely to be identified in the project area.

GNG currently operates 350 gas retail stations, of which 319 are its OKKO brand stations. The remaining stations will also be refurbished to OKKO brand gradually. All the new retail stations in this project are OKKO brand stations. The OKKO brand stations are refurbished or built according to European Union (EU) standards, in which the underground fuel tanks have double steel layers and leak detection devices. Fuel tanks in main terminals have vapor recovery installation. The land acquisition for the new gas stations will be strictly on a willing buyer / willing seller basis. GNG has established EHS procedures for operations. Mitigation measures for the potential E&S impacts have been identified and are incorporated into an attached Environmental and Social Action Plan (ESAP).

The potential adverse E&S impacts of this project are therefore few in number and limited to project sites, and may be readily mitigated. This is therefore an E&S Category B project.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. The main E&S risks/impacts of this project include the following:

- Prevention of groundwater/soil contamination
- Control of emission of volatile organic compounds (VOCs)
- Operational hazards and emergency response
- Occupational health and safety
- Road transportation
- Community engagement and development

GNG will continue its commitments to renovate all the fuel storage terminals to minimize potential environmental, health, and safety (EHS) risks. GNG will build the new OKKO brand stations in the east region with EU standards to minimize risk of groundwater and soil contamination. GNG has presented plans to address the potential E&S impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations, the IFC Environment and Social Performance Standards and the relevant World Bank Group (WBG) environmental, health and safety guideline requirements. The information about how these potential impacts will be addressed by GNG is summarized in the paragraphs that follow. Further information is provided in the attached ESAP, which has been agreed upon by IFC and GNG and which addresses the compliance gaps with IFC’s requirements.

Corporate Environmental and Social Policy:
GNG has a corporate E&S policy to maintain high E&S standards and ensure that its operations have no negative impact to the environment and communities. GNG is also committed to being a good corporate citizen and contributing to the well-being of the region. New employees are trained about the corporate E&S policy during new employee orientation.

Identification of Risks and Impacts: GNG screens the environmental and social risks for purchased or new fuel retail stations, and the assessment is registered according to local regulations. For potential contaminated sites, GNG does site investigation before purchasing lands or existing fuel retail stations. If soil/groundwater contamination is identified, GNG will do further analysis to confirm if the contamination can be remediated. GNG only purchases lands or existing fuel retail stations where the soil/groundwater contamination can be remediated. GNG has contracted external experts to audit the EHS management system according to ISO 14000 requirement.

Corporate Environmental and Social Management and Organization: GNG has corporate environment and occupational health/safety (OHS) departments, respectively, which directly or indirectly report to the corporate general manager. Each operation region has respective EHS coordinator. Besides, there is an EHS manager for fuel storage terminals. The retail station manager is in charge of EHS issues at the station.

Emergency Preparedness and Response: GNG has fire prevention rules and emergency response plan. There is a fire truck with high pressure water pump available for 24 hours at each major storage terminal. There is firefighting equipment, including water cooling and the foam fire extinguishing systems, at GNG sites. If needed, the fire trucks from fire departments could reach various GNG sites in five to 10 minutes. There is an internal fire safety training once a year for all GNG employees. At both fuel terminals and retail stations, there are fire drills twice a year; the firefighting equipment is tested every three months; and the employees have to pass the firefighting and emergency response refresher training and exam every year. GNG also holds annual joint fire drills with local fire department at fuel storage terminals.

Monitoring and Review: Upon IFC requirements in the previous projects, GNG established various monitoring programs for its environmental, health and safety performances. GNG keeps its environmental and social performance records through its internal reporting structure. The management also reviews its E&S performance periodically and proposes corrective action if necessary.

Working Conditions and Management of Worker Relationship: GNG has a well developed Human Resources Policy and associated procedures, which specifies the terms of employment and working conditions. These include procedures for hiring and recruiting, probation, training, performance review, promotion, insurance, salary and compensation, resignation, lay-off and dismissal, leave and vacation, and retirement. The new employees are provided with the full set of HR policies and procedures before signing the employee contracts. The human resources function is a corporate function for all its terminals and gas stations. HR also works as a grievance channel for employee’s concerns.

Workers’ Organization: There is one independent union at GNG, and the management allows collective bargaining, initiated either from the union or other employees. Besides the HR’s grievance works, the labor union is also a grievance channel for employees’ concerns.

Non-Discrimination and Equal Opportunity: GNG has policies to hire employees locally. According to the Ukrainian laws, GNG also hires disabled people, who account for 4% of GNG’s labor force. Hiring and promotion are merit-based only. No evidence of discrimination or suppression of equal opportunity was identified during the supervision for the existing projects or this appraisal.

Retrenchment: Currently, GNG has approximately 6,801 employees, including approximately 1,400 under partnership program. 1,200 new employees will be added to the workforce due to the expansion in the east Ukraine. No retrenchment is expected to be associated with this expansion project.

Protecting the Work Force: GNG complies with national law and does not hire workers below the age of 18. Additional compensation will be paid for nightshift and overtime. The employee income levels are higher than other similar companies in Ukraine. Since the suppliers of GNG are large refining companies, who do not rely on low labor costs for competitiveness, child or forced labor are not expected to be encountered among GNG suppliers.

Occupational Health and Safety (OHS): Corporate OHS department and OHS coordinators in each region lead the OHS management. There is one OHS manager at each terminal, and one OHS coordinator at each retail station. GNG has continuously developed and enforces safety procedures, and all employees are required to pass the safety training before starting work. The employees are also required to take annual safety refresher courses. GNG monitors the recordable accidents and statistical trend for OHS performance, which meet the benchmark of the comparable good international industry practice. The workplace gasoline levels and monitoring frequency meet both local regulatory requirements and good international industry practice. There are physical examinations for all new employees, and there is an annual physical check for all field employees.

Wastewater and Storm Water: There is no manufacturing process at GNG and the expansion in the east Ukraine. The contaminated oily stormwater at fuel storage terminals is pre-treated onsite before discharge to municipal sewers. The effluents meet both local regulatory requirements and WBG guideline limits. The car washing wastewater is treated through filtration onsite and recycled for car washing. The used filters are disposed by the government approved companies. Each car washing facility generates approximately 10 – 20 m3 wastewater per month, which is transferred to licensed industrial waste management facilities for further treatment and disposal.

Emissions to Air: GNG has started to install gasoline vapor recovery system for the loading process at fuel storage terminals. Seven major terminals are now equipped with vapor recovery system. As indicated in the ESAP, GNG will finish the installation of vapor recovery system for the remaining terminals. The monitored parameters of the ambient air qualities at both terminals and fuel retail stations meet both local regulatory requirements and World Bank Group (WBG) EHS guideline limits.

Fuel Management: Most of GNG’s fuel retail stations are the OKKO brand ones that adopt EU standards. The underground storage tanks of the OKKO brand have double steel layers and leak monitoring devices; therefore, the potential for contamination of the groundwater and soil is limited. GNG has an on-going program to renovate the remaining non-OKKO stations to OKKO brand stations, and this program includes upgrades to the environmental standards described.

The tank farms at the fuel storage terminals were initially built 30 years ago. During previous projects with IFC, GNG has contracted external experts to inspect all the tank safety and integrity, and conduct renovation works if needed. According to GNG’s internal tank farm management programs, these tanks are cleaned and inspected for integrity once every two years. Seven larger fuel storage terminals have installed automatic filling controls. In accordance with ESAP, GNG will finish installation of automatic filling controls for the other small terminals. The tank farm bottoms and secondary containment walls are built on regular soils, and covered by vegetation during the summer. GNG contracted an engineering firm in 2012 to design the renovation works for the tank farm bottom and secondary containment walls. In accordance with ESAP, GNG will start renovate the tank farm bottoms and walls according to the standards of American Petroleum Institute (API).

Wastes and Historical Contamination: GNG has internal policies/procedures to handle solid and hazardous wastes. The municipal contractors collect the sanitary solid wastes generated from terminals and gas stations periodically. Certified companies collect various hazardous wastes, mainly used petroleum products, from GNG sites and transports the hazardous wastes back to the company for treatment, recycle, and disposal.

For the fuel retail station expansion in the east Ukraine, GNG will conduct limited scale of investigation for potentially historical contamination when purchasing existing fuel retails stations. If historical contamination confirmed, GNG will only purchase the existing fuel retails stations if GNG could remediate the contamination. GNG will renovate the purchased fuel stations to OKKO brand fuel stations.

Greenhouse gases (GHG): In the previous IFC investment project, GNG improved energy efficiency in the terminals and retail stations, including LED lightings, high performance windows, new insulations, new energy efficiency road tankers, etc. If all the proposed energy efficiency methods are implemented, the GHG generation rate will be reduced to 24,400 ton CO2 equivalent GHG per year, mainly from electricity consumption and diesel for transportation.

Community Health, Safety and Security: The fuel storage terminals are either located inside the industrial zone or in the rural areas with no community nearby. The operations of the terminals have limited impacts to distant communities. The fuel retail stations are located along the highways and urban roads, and some are adjacent to the communities. GNG monitors the ambient air quality and has adequate fire safety methods to protect the adjacent communities.

The fuel is transported to the storage terminals through railroad. GNG delivers the fuel from terminals to fuel retail stations through its road tankers. Most of the road tankers are newly purchased models of European brands. GNG is committed to providing defensive driving classes to all drivers, and include defensive driving in the annual OHS refresher courses.

Emergency Preparedness and Response: GNG has an emergency response (ER) plan, which includes the ER for fuel transportation. GNG will involve the communities near the fuel retail stations in the fire drills, if the communities could be affected by the potential fires.

Security Personnel: GNG hires external agency for its terminal and gas station security. For serious security issues, GNG reports directly to the local police stations.

GNG has established programs with specified budget for community engagement and development. GNG has a fund to support orphanages and low income families. It set up three orphan centers to provide family settings for orphans, and involves the local communities in the orphan center program. GNG also support local communities for sport activities and special Ukrainian cultural events. GNG publishes its hotline number at each fuel retail station for nearby communities to express their concerns related to GNG operations.

Before land purchase and construction of new gas stations, GNG publishes project information with geological data at the local newspaper, and holds consultation meeting with local communities if needed. GNG signed up United Nations Compact on enterprise social responsibility in January 2007. After signing the Compact, GNG started to publish annual corporate social sustainability report at its website in both Ukrainian and English, which includes the general environmental and social performances. GNG can release the environmental records to the nearby communities upon requests.

GNG will disclose this document in Ukrainian at the company’s office at 13 Shekspira Street in Donetsk, Ukraine. Please contact the following for inquiries or concerns about the environmental and social impacts of this project.

Oles Pohranychnyi
Galnaftogaz
72 Heroyiv UPA Str
Lviv, Ukraine, 79015
+38(032) 298 96 30

Broad Community Support is not applicable for this project