PROJECT

Projects

Environmental & Social Review Summary

Project Number

39112

Company Name

JSC INDORAMA KOKAND FERTILIZERS AND CHEMICALS

Date ESRS Disclosed

Oct 24, 2019

Country

Uzbekistan

Region

Central Asia and Turkiye

Last Updated Date

Jun 12, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Mar 31, 2020
Signed : Jun 26, 2020
Invested : Aug 10, 2020

Sector

Phosphatic Fertilizer

Industry

Manufacturing

Department

Regional Industry MAS MCT

Project Description

The proposed project consists of a ‘A’ Loan for the revamp of an outdated phosphate fertilizer plant built in 1935 with a number of subsequent phases of commissioning and decommissioning, in Uzbekistan (the “Project”). Being commissioned in 1935, Kokand Superphosphate Plant (“KSPP”) is one of the oldest plants in the Republic of Uzbekistan and is specialized on production of mineral fertilizers, in particular the ammoniated single superphosphate. The plant is located  within Kokand City, Fergana Region of Uzbekistan, (https://goo.gl/maps/CMJk4vvHx1uXVZ978) and has a total area of 30.2 ha including 6.2 ha of built-up area occupied by buildings and structures including for both production and administrative use.

KSPP was reconstructed several times since its commissioning, but, despite that, the existing process flow scheme became outdated. The plant has a design capacity of 250,000 tons of ammoniated single superphosphate per year, however, due to outdated and inefficient equipment which has been poorly maintained over the years, the current production capacity is around 100,000 tons per year (“TPA”) and the health, safety and environmental (“HSE”) performance not consistent with World Bank Group (“WBG”) guidelines.

In late 2015, the Government of Uzbekistan (“GoU”) announced its plan to privatize KSPP. In June 2016, Indorama Corporation, Pte. Ltd, Singapore (“Indorama Corporation” or the “sponsor”) signed a memorandum of understanding with the GoU to engage in the privatization.

The Indorama Group (‘Indorama”), a long-standing IFC client in several countries, is one of the world’s fastest growing industrial conglomerates in petrochemical and fibers business having global manufacturing activities across 124 sites in 35 countries in Asia, Africa, Europe and Americas having over 40,000 employees, total production capacity of above 21 million tons a year.

Ongoing supervision of the existing active investments indicates the Group’s environmental and social performance is generally satisfactory. Environmental and Social Review Summaries (“ESRS”) for some of the most recent projects, can be reviewed from the following links:

- Project# 36098: Indorama Kokand Textile : https://disclosures.ifc.org/#/projectDetail/ESRS/36098

- Project # 38096: Indorama Port: https://disclosures.ifc.org/#/projectDetail/ESRS/38096

- Project # 40420: Eleme Fertilizer II: https://disclosures.ifc.org/#/projectDetail/ESRS/40420

- Project # 42187: Indorama Eleme Fertilizer and Chemicals Limited: https://disclosures.ifc.org/#/projectDetail/ESRS/42187

In June 2016, the Office of the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for projects supported by IFC and MIGA received a complaint related to several IFC projects in Uzbekistan, including Indorama Kokand Textile. The complaint was filed by a coalition of non-governmental organizations (NGOs) on behalf of Uzbek human rights monitors and alleged victims of forced labor in the cotton fields and the complaint raised concerns about the existence of forced labor in IKT’s supply chain. The details of these complaints along with the CAO assessment report are available at http://www.cao-ombudsman.org/cases/documents/UzbekistanCAOAssessmentReport_ENG_rev.pdf. Similarly, In April 2018, CAO, received a complaint from a group of IEFCL employees alleging noncompliance with certain aspects of IFC’s Performance Standards for Eleme Fertilizer II project. The details of these complaints along with the CAO assessment report are available at http://www.cao-ombudsman.org/cases/document-links/documents/CAOAssessmentReport_ElemeFertilizerIandII-01_Nigeria_Feb.2019.pdf.

In the context of appraising and monitoring the previous investments noted above, IFC was already aware of the issues cited in the complaint and has been working with the client to address them.

In June 2019, Indorama Holdings B.V. Netherland purchased a 95.54% equity stake of ordinary issued shares, in erstwhile JSC Kokand Superphosphate now known as JSC Indorama Kokand Fertilizers and Chemicals (“Indorama Kokand” or the “company”) under the government’s privatization plan. The remaining shares are held by general public largely comprising of current and ex-employees.

KSPP has several assets on site; including raw phosphorus warehouse, single superphosphate production workshop, ordinary superphosphate warehouse, ammoniated single superphosphate workshop, sulfuric acid storage tanks, ammonia storage tanks and other auxiliary services (heat and gas supply, cooling towers, mechanical-repair workshop, motor and railway transport facility, fire tender, fuel and lubricants storage, administrative and workers welfare related buildings etc.). Indorama Kokand’s modernization plan included replacement of single superphosphate (“SSP”) and ammoniated single superphosphate (“ASSP”) production equipment upgrade with more energy efficient footprints, simplification of the process, storage and finished good warehouse upgrades, utilities improvements to support the new capacity of capacity 2 X 175,000 TPA SSP and 2 X145,000 TPA ASSP. The project has a specific HSE improvement plan, including (but not limited to) installation of ammonia gas detectors, de-dusting systems, scrubbers, new effluent pits, installation of monitoring devices waste drying and storage sites improvement, improvement of workers related facilities, revamping of fire tenders, railway rolling stock and locomotives, general improvement and upkeep of overall site with focus on improved technology, energy efficiency, occupational, health, safety and environment, and plant and product reliability (all together will be referred as the “project”)

Thyssenkrupp India (“TKIS”), a well-known global engineering and procurement consultant (“EPC”) in the fertilizer industry, has completed the feasibility study, basic engineering , detailed engineering of critical equipment and cost estimation of project while Projects & Development India Ltd (“PDIL”, https://www.pdilin.com/introduction.php) has been hired as  the engineering, procurement, construction management (“EPCM”) contractor of the project, responsible for  further detailed engineering based on work done by TKIS, procurement services, erection and construction supervision, pre-commissioning and commissioning. AV Technology India will act as project management consultant (“PMC”). Tata Project Limited (https://www.tataprojects.com/)  will act as third-party quality inspector of supply items. ICONS Engineering Hyderabad India, (http://iconsengg.com) will act as project controller with specific services in review of critical drawings and design prepared by PDIL. Uz Engineering (https://uzeng.uz/en/) and/or any other authorized government approved agency shall be engaged as a local design and  engineering consultant, responsible for environmental impact assessment study, preparation and submissions of permitting documents, follow up and review. Adaptation of the basic and detailed design in line with local engineering, environmental, life and fire safety, occupational health and safety requirements.

Indorama Kokand has a plan to start the site works in Q4 2019 and complete the civil works till May 2020. The targeted commissioning is the end of August 2020 with the production re-start by end of September 2020.

The reaction process in Indorama Kokand is different from the common phosphorus fertilizer reaction explained in the WBG’s EHS Guideline for Phosphate Fertilizer Manufacturing (2007). Instead of concentrated sulfuric acid, the phosphate rocks are soaked in less concentrated sulfuric acid. Therefore, instead of non-soluble gypsum, it generates soluble calcium bisulphate. The main final product is a mixed solution of soluble calcium bisulphate and ASSP, which provides nutrients of phosphorus, nitrogen, sulphur, and calcium. Per the process, no gypsum waste generation is expected.

Overview of IFC's Scope of Review

IFC’s scope of review relied on documents and reports made available by Indorama Kokand, and observations and interviews during the site visit made during July 22nd – 24th, 2019. IFC’s team visited the KSPP, Indorama Kokand Textile (an operational Indorama Group’s plant in Kokand) and Indorama Kokand’s head quarter. Meetings and interviews were held with management and key staff (project management, human resources, technical, environmental, occupational health and safety, security, UZ engineering)

E & S Project Categorization and Applicable Standard

Environmental and Social Mitigation Measures

Stakeholder Engagement

Broad Community Support

Environmental & Social Action Plan