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
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards
IFC’s review indicates that the proposed investment will have impacts which must be managed in a manner consistent with the following Performance Standards:
PS1: Assessment and Management of Environmental and Social Risks and Impacts;
PS2: Labor and Working Conditions; and
PS3: Resource Efficiency and Pollution Prevention

Activities being undertaken by Metito resulting in impacts pertaining to one or all of the remaining Performance Standards (PS4: Community Health, Safety and Security; PS5: Land Acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resource; PS7: Indigenous Peoples and PS8: Cultural Heritage) may be encountered under specific circumstances.

IFC''s review indicates that the Metito operations have potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, and readily addressed through mitigation measures. It is therefore concluded that this is an Environmental Category B project according to IFC’s Environmental and Social Review Procedures. This is consistent with categorization for Metito II, disclosed in 2010 and Metito, disclosed in 2007.

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. Key E&S issues reviewed included Metito’s E&S Management System, labor and working conditions including occupational health & safety, emissions to the environment; waste management; occupational health and safety; energy use and efficiency; land acquisition and stakeholder engagement.

Metito has an integrated ISO 9001/14001/18001 management system (IMS). The company’s UAE, Egypt, Qatar, India and China operations are IMS-certified; Indonesia operations are ISO 9001 certified and Metito plans to achieve IMS certification by December 2012. IFC E&S requirements were incorporated into the IMS as a condition of IFC’s first investment. Metito has a corporate Quality, Health, Safety & Environment (QHSE) Manager and has either an IMS Coordinators or QHSE representative at each subsidiary. The QHSE Manager ensures oversight of E&S matters at the company and its subsidiaries and reports to Metito’s management on a regular basis. Metito has an overarching QHSE Policy which lays out its E&S objectives and guides efforts to achieve satisfactory E&S performance.

Potential impacts of proposed projects are identified during the planning stage, and are used to prepare specific environmental control plans containing identified mitigation measures. For Greenfield projects, Metito either commissions an Environmental & Social Impact Assessment (ESIA) or receives an ESIA from the project proponent. Where project risks arise from third party roles and actions, for example local government-led land acquisition in China, Metito and its subsidiaries assess and address the resultant impacts in a manner commensurate with their level of control and influence over the third party. In China, provincial governments select sites for locating water and wastewater treatment plants, and obtain documented approval from the impacted communities for location of the facility. Consistent with People’s Republic of China (PRC) regulatory requirements, ESIAs are prepared by the government for all concession projects. Metito’s contractual obligation in the concessions through BCH is to comply with the requirements set forth in the concession documents. Metito’s E&S team has overall responsibility for obtaining appropriate permits and approvals from various government agencies, and ensuring all operations are consistent with the terms of the concession agreement.

Training of staff is done on regular basis in compliance with local workplace regulations. Metito''s QHSE manager is responsible to ensure that employees are adequately trained and equipped to perform their work safely. Manpower providers are strictly selected based on having adequately trained labor force and in full compliance with Metito''s QHSE standards. Internal audits are conducted periodically and overseen by senior management. Routine monitoring and supervision activities are undertaken by operational staff according to established procedures, including periodic reporting on key environmental and safety control factors, such as effluent quality and employee-related incidents. The company’s QHSE management team periodically inspects facilities to verify performance of compliance with applicable requirements.

Public consultation forms part of most of the ESIA’s undertaken for projects that Metito develops or operates, though the degree of community interaction varies by country. The company has developed a community consultation procedure for its UAE operations but this has not been replicated elsewhere. As part of the proposed investment, Metito will establish and implement a formal IMS procedure for communicating environmental and social aspects to stakeholders in all of the countries in which it operates, in accordance with PS 1, and maintain procedures for receiving, documenting and responding to stakeholder concerns relating to the project, in collaboration with local authorities.

Land acquisition for development of new sites, especially in BOT projects, is generally undertaken by the Government on behalf of the concessionaire. This is particularly relevant in PRC (China), where land acquisition processes undertaken by local authorities can involve social and reputational risks to private sector developers. For PRC concessions, Metito-Berlinwasser is assigned sites by respective local governments for the construction and operation of wastewater treatment plants. Site selection and subsequent acquisition of land by local governments is conducted in documented consultation with potentially affected communities and in compliance with procedures in accordance with the Land Administration Law of the PRC and relevant laws, regulations and procedures of the local municipalities. Metito currently collects information pertaining to compensation paid to affected households by local authorities. As a result of this proposed transaction, Metito will develop and roll out a corporate procedure to screen for social and reputational risks associated with government-led land acquisition at its new sites and, where necessary, work with local officials to address any residual risks.

Metito employs 2232 people directly, including 230 in China at Berlinwasser China Holdings (BCH), 193 in Metito Utilities (MUL) and 1809 in Metito Overseas (MOL) operations. The number of sub-contracted employees varies depending on construction activities from a dozen to hundreds. Metito has a Human Resources policy that complies with local regulatory requirements and is applied consistently to all direct employees. The policy is consistent with PS2 and includes an explicit commitment to meet all ILO core labor standards. The policy is included in employment contracts, and addresses working conditions, terms of employment and wages and benefits. This information is provided in the form of an employee handbook. As is common practice in China, though not explicitly stated, employment relationships recognize the principles of non-discrimination and equal opportunity. Employees have the right to freedom of association and have the opportunity to collectively represent to management any issues/grievances they may have. Human resources are managed effectively at MHL level, which oversees all Metito operations globally. Staff in China and Egypt is hired directly by the subsidiary companies, whose HR policies are consistent with Metito''s Group HR policy (employee handbook and specific HR policies tailored for each region).

The minimum employment age at Metito is 18 years. Metito ensures that child labor and forced labor is not employed directly or by subcontractors through verification of relevant documents. Construction activity is largely subcontracted, for which unskilled labor is often procured from nearby towns and villages. Occupational health and safety (OHS) of employees at Metito is managed by the Human Resources and Administration department. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo an OHS training program at induction and subsequently regarding worker health and safety relevant to their job activity. Facilities are audited yearly by regulatory agencies to monitor compliance with labor regulations. The Company has been in compliance with regulatory requirements and has recorded no significant lost time incidents or fatalities in its operational history. Metito experienced a total of only 6 lost time injuries across its operations in UAE, Qatar, Egypt, India and China in 2011. As a result of this proposed investment, Metito will update its contractor management procedures to ensure that its contractors avoid child and forced labor, provide suitable accommodation for their workers, implement satisfactory OHS standards and establish a grievance mechanism, in keeping with IFC PS 2 requirements.

Treated potable water produced by Metito facilities in UAE, Egypt and elsewhere complies with WHO standards for drinking water. Effluents discharged from wastewater treatment facilities operated by Metito under concession agreements comply with local regulatory requirements. Discharge standards are established by the host country government and vary by project location and receiving water quality standards, and are consistent with IFC guidelines for the discharge of treated municipal wastewater to surface water (the IFC guideline defaults to local regulatory standards unless an ESIA recommends otherwise). Treatment plant designs are typically developed by the client for EPC contracts, or specified in concession agreements. The technology used is fairly simple (screening, primary sedimentation, secondary biological treatment with nutrient removal and secondary sedimentation, optional UV disinfection) and robust to provide reasonable assurance of meeting discharge standards when operated with adequate training.

Air emissions from Metito wastewater treatment facilities may include nuisance odors, localized emission of VOCs and other aerosols. The Hefei facility in China has historically been the subject of some public complaints related to odors due to its proximity to neighboring inhabited areas. Metito has followed up on these complaints as a condition of IFC’s second (Metito II) financing. There are currently actions underway at Hefei to reduce odours, in collaboration with the local authorities and with input from affected parties. Implementation began in February 2012. High noise levels are also typical in some operational areas of wastewater treatment facilities. Subsequent to the commissioning of the wastewater treatment plants at both Nanchang and Hefei, residential areas have been developed in close proximity to the treatment plants, and complaints have been reported from excessive noise at the Hefei facility. As per a condition of IFC’s second (Metito II) financing, Metito has provided IFC with updates on progress in addressing these concerns and has worked with the local authorities to communicate developments to the affected communities. At Hefei, a project is under implementation to reduce noise levels.

Significant quantities of solid waste are generated as part of secondary wastewater treatment operations, mainly from primary and secondary clarifiers. Current annual production of sludge from the projects under consideration for financing by IFC is estimated to be 65,000 tons of sludge in China and 1300 tons of sludge in UAE and Bahrain. As per the terms of the concession agreements, Metito is required to deliver sludge at acceptable water content with no additional requirements on chemical or microbiological characteristics. All wastewater treatment plants operated by Metito are equipped with sludge dewatering facilities. Under the terms of some of its concessions agreements, Metito is responsible for the disposal of sludge at licensed sanitary landfills, on behalf of the municipal government. Under other concession agreements, including those for Chinese facilities, the municipal governments take responsibility for the dewatered sludge disposal. Although outside of its direct control, Metito’s practice is to work with all of its municipal clients to ensure that sludge is disposed of safely and in accordance with good industry practice.

At facilities operated by Metito in the Middle East and North Africa, discharged effluent complies with local regulatory requirements and is consistent with IFC requirements. Treated potable water complies with WHO standards for drinking water. Effluents from potable water treatment operations in the UAE are primarily reject brine from desalination processes which is discharged through reinjection wells under stringent regulatory oversight. A majority of wastewater treatment operations in the UAE and Egypt are for secondary treatment of domestic sewage using activated sludge processes. Newer facilities are being designed to use membrane bioreactors, which consistently produce better quality effluent. Treated effluent is reused for irrigation of parks and gardens, and for district cooling needs in the UAE. Management and disposal of sludge and other residue from water and wastewater operations is performed by licensed contractors and largely complies with local country regulations. Storage of chemicals, particularly chlorine, is subject to stringent standards because of the risks associated with accidental releases. Metito ensures that chlorine and other chemical stores provide for adequate containment and neutralizing systems to minimize the impact of accidental release.

Metito’s Principal energy usage includes electricity procured from the grid. Operations in Egypt utilize biogas for all energy needs. Metito’s annual Greenhouse Gas (GHG) emissions exceed 25,000 tons of carbon dioxide equivalents per year and therefore Metito will monitor and quantify GHG emissions from its sites and consider implementing technically and financially feasible and cost-effective options to reduce project-related GHG emissions.

Most of Metito’s operations are located away from residential areas and therefore have no directly affected communities. However there are cases in PRC where people have settled around BOT facilities after they have become operational, with resulting complaints about noise and odour (as mentioned above under Performance Standard 3). Metito has worked closely with the local authorities in such cases to resolve these issues and keep the affected community informed of mitigation measures to be implemented. Although public consultation activities are a standard requirement in project ESIAs, ongoing stakeholder engagement during construction and operations, including grievance redress, is not required by law. Metito has developed a stakeholder engagement procedure for its UAE operations, though this has not yet been rolled out to all countries and facilities. As discussed in the PS 1 section above, Metito will establish and implement a formal IMS procedure for communicating environmental and social aspects to stakeholders in all of the countries in which it operates, in accordance with PS 1, and maintain procedures for receiving, documenting and responding to stakeholder concerns relating to the project, in collaboration with local authorities.

For more information, see the company’s website: http://www.metito.com, or contact:

John Wheatley
Group Finance Director
Telephone Number: +971 4 810 3347
Fax Number: +971 4 810 3300
Address: P.O Box 262335, Dubai, United Arab Emirates

Local Access of Project Documentation
The Environmental and Social Review Summary (ESRS) will be made available at the corporate office.
Metito Headquarters
Address: P.O Box 262335, Dubai, United Arab Emirates
Telephone Number: +971 4 810 3347
Fax Number: +971 4 810 3300

For Inquiries and comments about IFC
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

Broad Community Support is not applicable for this project

Current client performance is aligned with applicable Performance Standards and EHS Guideline requirements. No ESAP is required.