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

All the Nadezhda owned fuel storage terminals were upgraded between 2004 and 2010 according to current Ukrainian regulations. All the liquid fuel storage tanks in both terminals and filling stations have secondary containment. Nadezhda assesses the potential for soil/groundwater contamination prior to acquisition to ensure this is limited / may be remediated if need be. Nadezhda has established environmental, health and safety (EHS) procedures for operations and mitigation measures for the potential E&S impacts and risks have been identified and are incorporated into the project Environmental and Social Action Plan (ESAP).

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

Nadezhda currently operates fuel storage terminals and filling stations; therefore, PS1 through PS4 are applicable to the Project. New filling stations or land acquired for greenfield developments is done so on a willing buyer willing seller basis and thus PS5: Land Acquisition and Involuntary Resettlement does not apply to the Project.

All new filling stations to be established will be located adjacent to major roads and it is thus unlikely that there would be impacts on biodiversity. Further, such issues would be addressed in the mandatory environmental impact assessment that is required for such developments. Thus PS6: Biodiversity Conservation and Sustainable Management of Natural Resources does not apply to the Project. There are no Indigenous Peoples in the Ukraine thus PS7: Indigenous Peoples does not apply. Issues related to cultural heritage would be assessed during the EIA though given the location thereof are considered unlikely and PS8: Cultural Heritage does not therefore apply to the 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.

Corporate Environmental and Social Policy:

Nadezhda has a corporate E&S policy to maintain Ukrainian standards or EU standards where possible and ensure that its operations have no negative impact on the environment and communities. The policy also clearly states the company’s commitment to protect staff health and safety and eliminate potential harm to employees and the environment alike. New employees are trained on the corporate E&S policy during new employee orientation and refresher courses are conducted for the existing employees.



Identification of Risks and Impacts: In accordance with the company E&S procedure, Nadezhda screens the environmental and social risks for filling stations purchased or newly built to minimize E&S liabilities. For sites that may be contaminated, Nadezhda conducts a site investigation prior to purchase. If soil/groundwater contamination is identified, Nadezhda undertakes more detailed analysis to confirm if the contamination can be remediated or not. In the event of the latter, the company does not purchase the site.



For all the new developments including construction of new or renovation of existing filling stations for LPG, the company undertakes a detailed E&S impact assessment and the assessment is registered according to Ukrainian Law as part of the Environmental Impact Assessment procedures. The due diligence and examination are undertaken by an organization certified by the Ministry. The company also undergoes annual inspections by the Government regulatory agencies of Ukraine, including; The State Service of Ukraine for Emergencies (fire-fighting service) and The State Service of Mining Supervision and Industrial Safety of Ukraine. Nadezhda’s operations meet all the regulatory requirements of these authorities.



Nadezhda has contracted external experts to audit their environment, health, and safety (EHS) management system to ensure that they are compliant with the local regulation and Ukrainian law.



Corporate Environmental and Social Management and Organization: Nadezhda has a corporate environmental and occupational health and safety (OHS) department at the head office in Poltava. The Environmental and OHS Manager, the Chief Engineer, and Manger for Community Engagement report directly to the company Director. Each of the fuel terminals has an EHS engineer in charge of environmental and OHS issues who reports directly to the Environmental Manager, while the manager for each filling station is in charge of the EHS issues at the station and reports to the Environmental and OHS Manager. Nadezhda has well established environmental and OHS management programs and operation procedures which are generally aligned with ISO 14001 and OHSAS 18001. The implementation of these programs/procedures are supervised and enforced by the EHS Department.



Emergency Preparedness and Response: Nadezhda has a fire prevention and emergency response (ER) plan which applies to all facilities, including the ter
minal that is rented. External inspections are conducted periodically for all facilities to prevent fire and other risks. There is firefighting equipment, including fire water storage tanks, water cooling and the foam fire extinguishing systems at all the Nadezhda sites. The company only has one fire truck in close proximity to one of its fuel terminals in Poltava. All the other terminals depend on the local fire departments in case of any emergencies. The fire trucks from local fire departments can reach the respective Nadezhda sites within five to 10 minutes. There is also internal fire safety training held monthly for all Nadezhda employees. At the four company owned fuel storage terminals and all filling stations there are fire drills once a year undertaken jointly with the special units from the Ministry of Emergencies, ambulance service, gas service, and the police. The company also periodically conducts technical inspections of equipment, inspection and cleaning of tanks, and testing of measurement tools to ensure they are effective. The fuel terminals are equipped with an automatic fire alarm system, and equipped with systems for early emergency detection and alarms when they occur, which are maintained monthly. In addition, the facilities are equipped with video surveillance systems for monitoring. In the event of an emergency at current terminal operations employees need to connect the pipes with pumps to the water storage tanks if a fire were to occur which limits the reaction time in such an event. Thus as indicated in the ESAP, Nadezhda will complete installation of permanent fire water pipes and pumps to the storage tanks within the four company owned fuel storage terminals.



Monitoring and Review: Nadezhda has established various monitoring programs for EHS performance. The company conducts regular monitoring of EHS performance and its operational activity, including workplace and ambient air quality, operational safety procedures, routine inspection, etc. The results of the monitoring are documented and analyzed. Nadezhda retains its environmental and social performance records through its internal reporting structure. The management also reviews E&S performance periodically and proposes corrective action if necessary.

Working Conditions and Management of Worker Relationship: Nadezhda has a well-developed Human Resources (HR) Policy and associated procedures which specify 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. New employees are provided with the full set of HR policies and procedures before signing the employee contract. The human resources function is a corporate function for all terminals and filling stations.



Workers’ Organization: There is no independent union which represents the employees. In accordance to Ukraine law, all employees at Nadezhda have signed and agreed to a Collective Labor Agreement. Management does not oppose employees joining unions should they so wish and allows collective bargaining.



Non-Discrimination and Equal Opportunity: Nadezhda has documented policies for non-discrimination and equal opportunities in accordance with Ukrainian law. The company employs staff of different nationalities who are qualified and fit for the job. Both male and female staff enjoy equal rights with males and females consisting of 60% and 40 % of the total workforce respectively. The company also employs 54 handicapped people. Hiring and promotion are merit-based only. No evidence of discrimination or suppression of equal opportunity was identified during the appraisal.



Retrenchment: Currently Nadezhda has 916 employees with no contract employees. No retrenchment is expected to be associated with this project. The company may hire up to 280 new employees as part of the Project.



Grievance Mechanism: The grievance mechanism is introduced during employee induction and is documented. The employees can report their grievances to their manager or the HR manager. All the grievances and the mitigation measures are recorded. The HR manager reports to the senior management if they are unable to solve a grievance. The management will then mediate the grievance and their decisions are documented. The HR email address and a suggestion box are available for anonymous grievances.



Protecting the Work Force: Nadezhda complies with national law and does not hire employees below 18 years of age. Currently there are no workers engaged by third parties. The employees are fairly compensated for the nightshift and overtime in accordance to the local laws. Child or forced labor is not expected in the company’s supply chain as all the suppliers are large petroleum refineries. Nadezhda has an established procedure to evaluate contractor’s procedures for their worker protection (e.g., construction labor). Nadezhda is committed to compliance with both local and IFC requirements for contractor labor management.





Occupational Health and Safety (OHS): Nadezhda management is committed to best practice in OHS and operational safety. Nadezhda ha
s develop effective OHS procedures for hazardous equipment operations, workplace air quality monitoring, personal protective equipment (PPE), OHS performance inspection and review, employee health monitoring, etc. There is adequate PPE for each position which includes hard hats, anti-static work clothes, masks, protection gloves, and clothing for exposure to low temperature. Nadezhda has continuously developed and enforces safety procedures, and all employees are required to pass the safety training before starting work. Employees are also required to take annual safety refresher courses.



The workplace gasoline levels are monitored quarterly for critical positions and the results 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. There have been no fatal or serious accidents in the company’s history. As indicated in the ESAP, the corporate EHS department will develop a program to monitor all recordable and lost time accidents.

Raw Material and Resource Efficiency: The company activities focus on LPG filling stations and fuel storage terminals and there are no manufacturing processes and thus resource consumption is limited. The main resource consumption is related to water (2,500 t/y) primarily for sanitary use and electricity (2,100 MWh/y) for pumping, heating, air conditioning, and lighting. Water at sites is supplied by onsite wells or municipal supply. Electricity is supplied from the national grid. Nadezhda has plans to install high efficiency pumps and improve pump maintenance to reduce electricity consumption.



Wastewater and Storm Water: Each filling station has a septic tank into which all sewerage is discharged and there is no car washing at any filling stations. Stormwater is separated at all sites into that potentially contaminated and uncontaminated and all areas that may be subject to contamination are paved and covered to prevent rainwater contamination. The potentially contaminated water from the paved/covered areas is collected for offsite disposal.



Emissions to Air: The four fuel terminals are equipped with vapor recovery systems to recover all fuel vapor during filling. The ambient air quality monitored biannually at both fuel storage terminals and filling stations alike and the monitored results meet meets both local regulatory requirements and the World Bank Group (WBG) EHS Guideline limits.



Fuel Management: Nadezhda filling stations are constructed and managed according to the Ukrainian Law. At rural filing stations the underground liquid fuel storage tanks have a single steel layer and an additional concrete chamber with leak monitoring devices as secondary containment; at urban filling stations, the underground storage tanks have double steel layers with leak monitoring devices. The underground pipes for liquid fuels are also double walled and thus the potential for contamination of groundwater and soil is limited.



All large above-ground tanks for the storage of petroleum products have secondary containment and were renovated in the past few years to meet current Ukrainian standards. External experts are contracted for tank integrity checks every four years for liquid fuels, and every two years for LPG.



According to the Ukraine Guidelines for the design and the safe operation of pressure vessels, all above-ground pressure vessels for the storage of liquefied petroleum gases undergo periodic technical inspection - an internal examination (once every 4 years) and a hydraulic test (once every 8 years). These practices meet the WBG EHS Guidelines in general. Repairs and technical inspection of above-ground storage tanks are carried out with a contractor that has permits from the Ukraine State Service of Mining Supervision and Industrial Safety for such work. All underground pressure vessels for the storage of LPG undergo periodic technical inspection - an internal examination (once every 4 years) and a hydraulic test (once every
10 years).



In accordance with the ESAP, Nadezhda will construct secondary containment walls for small above-ground tanks in all of the four terminals and repair the secondary containment walls for large tanks according to American Petroleum Institutes (API) standards. As indicated in the ESAP, Nadezhda will also install auto-measuring systems for liquid fuel tank filling and automatic road tanker loading systems at all four terminals.



Wastes and Historical Contamination: Nadezhda has internal policies/procedures to manage solid and hazardous wastes. The municipal contractors collect the sanitary solid wastes generated from storage terminals and filling stations periodically for disposal at licensed facilities.



Nadezhda investigates and identify land contamination before purchasing existing filling stations. If historical contamination is confirmed, Nadezhda only purchases the existing filling stations if the contamination can be remediated. Nadezhda is committed not to purchase any contaminated land for any of its new planned filling stations and terminals.



Greenhouse gases (GHG): Nadezhda’s improved energy efficiency at the fuel storage terminals and filling stations, including installation of LED lightings, high performance windows, insulation, new energy efficiency road tankers, etc. Currently Nadezhda generates approximately 4,100 ton CO2 equivalent per year, mainly from electricity/natural gas consumption and diesel for transportation.

Community Health, Safety and Security: The fuel storage terminals are either located inside an industrial zone or in the rural areas with no community nearby. Operation of the terminals may have limited impacts on distant communities and this would typically be associated with transportation. The filling stations are located along the highways and urban roads, and some are adjacent to farming land and communities. Nadezhda monitors the ambient air quality and has adequate fire safety methods to protect adjacent communities.



The fuel is transported to all storage terminals by rail. Nadezhda delivers fuel from terminals to fuel retail stations through its road tankers. All the long-haul tankers are built in Germany based on EU standards and the drivers have a license for hazardous fuel transportation. In accordance with ESAP, Nadezhda will provide annual defensive driving classes for all the drivers and ensure only drivers passing the exams can drive the company trucks.



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



Security Personnel: Nadezhda hires its own security personnel for its terminals and filling stations. In addition, the facilities are equipped with video surveillance systems for monitoring and for serious security issues, Nadezhda reports directly to the local police stations. All the security guards are unarmed.

Nadezhda has established programs with a specified budget for community engagement and development. Nadezhda developed and operates a Stakeholder Plan of Engagement under which the company carries out the identification, and engagement of stakeholders and this includes a grievance mechanism. Nadezhda engages with its external stakeholders actively and provides a notice of construction/reconstruction activities in accordance with current legislation of Ukraine. The list of stakeholders is reviewed on a regular basis in order to ensure that the company has an understanding of those who are interested or impacted by the company activities. A concerned stakeholder can contact Nadezhda staff through the phone numbers listed at all filling stations and outside notice board at terminals.

Nadezhda carries out ongoing reporting of potentially affected communities in accordance with the laws of Ukraine, namely: the company plans to cooperate with the affected communities at all stages of the project execution and the project itself and EIA documents are disclosed to the public at the initial stages of the project development.

Nadezhda also supports local communities with sport activities and special Ukrainian cultural events. Nadezhda publishes its hotline number at each filling retail station for nearby communities to express their concerns to Nadezhda management.

Nadezhda discloses all of its activities and programs for new construction/renovation activities to the public via the local newspapers and the central and regional television and radio channels. The public can access the EIA and project briefing documents and information through the company website. Nadezhda also publishes necessary documents in the print media for easy public access. Relevant documents are published 30 days prior to the public hearing and the stakeholders can comment on the documentation within 30 days after the consultation. In addition to the public hearings, the company encourages the public and concerned stakeholder to send comments to the Nadezhda headquarter in Poltava.

For this investment, Nadezhda will disclose this Environmental and Social Review Summary document in Ukrainina at its website (http://www.oil.pl.ua). For individual project under this investment, Nadezhda will also notice the local community about the web link of this document. For inquiries or concerns about the environmental and social impacts of this project please contact:

Valentyn Romanenko
Address: 1, Avtobazovskaya Str., Poltava, Ukraine, 36008
Phone: +380532611012
Fax: +380532611017
Email: mailto:Vvromanenko@mail.ru
Website: http://www.oil.pl.ua

Broad Community Support is not applicable for this project

Nadezhda LPG(33985) Supervision Disclosure Snapshot – Version 3
Description	Anticipated Completion Date	Status	Comments	Completion Date
Complete installation of fire-fighting water pipes and pumps within the four fuel storage terminals.	30-Jun-2014	Postponed	Changed project circumstances mandated a delay of this task
Develop and implement a system to monitor all recordable and lost time accidents in accordance with accepted industry practice. .	31-Dec-2014	Completed	Completed	3/31/2019
Construct secondary containment walls for small above-ground tanks in all owned terminals and repair the secondary containment walls for large tanks according to American Petroleum Institutes (API) standards.	30-Sep-2013	Postponed	Changed project circumstances mandated a delay of this task
Install auto-measuring systems for liquid fuel tank filling and automatic road tanker loading systems at all four terminals.	30-Oct-2014	Postponed	Changed project circumstances mandated a delay of this task
Provide annual defensive driving classes for all the drivers and ensure only drivers passing the exams drive company trucks.	31-Dec-2014	Completed	Completed	9/18/2016