This investment will improve operations efficiency and EHS performance of existing operations and add new services at the existing fuel storage depots and retail filling stations. Any new lands needed for new storage depots and other assets will only be purchased/leased on a “willing buyer willing seller” basis through market transaction and will be located in well-developed urban/industrial areas and for some retail filling stations along well-developed highways. Therefore, PS5: Land Acquisition and Involuntary Resettlement, PS6: Conservation and Sustainable Management of Living Resources, PS: 7 Indigenous Peoples, and PS8: Cultural Heritage are not considered to be applicable to the project.                                                

  The key E&S risks and issues include: Occupational health and safety (OHS), fugitive emissions and fuel vapor recovery, operational hazards, fire prevention, and emergency response, road transportation of fuel and community safety, public consultation and stakeholder engagement. The potential adverse E&S impacts of the project are considered few in number, of limited significance and can be readily mitigated through the company’s existing robust systems and procedures. This is therefore a Category B project according to IFC’s Policy on Environmental and Social Sustainability.                                                 

 Environmental and Social Assessment and Management System

GNG conducts E&S assessments for both gas station and fuel storage depot projects according to Ukrainian laws/regulations and its own technical standards aligned with applicable European Union requirements. The company also has an established and robust corporate E&S management system that applies to all operations. As an existing IFC client, GNG also adopts IFC Performance Standards and applicable WBG EHS Guidelines in the E&S risk assessments and operational management.

Policy

GNG has a corporate E&S policy covering main E&S risks and impacts of its operations to maintain high standards and ensures that its operations have no negative impacts on the environment and communities. GNG’s E&S policy is implemented through its EHS and project development procedures, which include well-designed key performance indicators (KPI) to evaluate and improve E&S performance. New employees are trained on the corporate E&S policy during new employee orientation.

Identification of Risks and Impacts

GNG screens the E&S risks for purchased or new fuel storage depots and filling stations; and seeks necessary permits as per local regulations. For potentially contaminated sites, GNG conducts a site check before purchasing land or existing filling stations to understand any legacy contamination issues and potential liabilities. If soil or groundwater contamination is identified, GNG conducts further analysis to confirm if the contamination can be remedied. GNG only purchases industry lands, brownfield land,  or all other land plots with future required change of purpose into the industrial lands according to Ukrainian legislation,  where the soil and groundwater contamination can be remedied.

Farmer-Supply Program (FSP): FSP is a long-standing popular farmer support and service program in Ukraine. Under this program, one party provides farm supplies to farms as in-kind microfinance package. The participating farms pay back the supplier after harvest in cash or with farm products. GNG’s FSP program started a few years ago at a very small scale. GNG supplies a package of only fuel and fertilizers to farmers as per the service agreements signed on seasonal basis. To meet the demand of farms for more farm supplies package, GNG has partnered with a reputable pesticides and chemical products supplier, so participating farms will be receiving fuel and fertilizers from GNG and pesticides/chemicals product from the GNG’s partner under the same service agreement. GNG’s partner supplier will not supply any pesticides/chemicals that are banned by local laws or any international treaties. Currently, GNG has seasonal contracts with less than 100 farms for the period during fall of 2019 to spring of 2020. As described under PS3, GNG provides the farmers with product specifications and instructions on the good use of fertilizer.

Management Programs 

EHS teams at each region are responsible for educating, training and motivating employees to understand and comply with EHS performance procedures and the EHS management systems have been set up to monitor and support the works throughout GNG. GNG’s EHS management system is well developed and includes detailed technical standards, internal regulations and instructions for EHS performance, and an extensive inspection/audit program. Systematic monitoring of environmental performance is in place including workplace air quality and noise levels, recordable accidents, emissions, and wastewater. Non-conformities to the internal requirements are monitored and followed up by the management on an on-going basis.

GNG has developed a database of all GNG’s portfolio or pipeline assets located close to residential areas (either to be built by a contractor or GNG themselves).

As part of IFC’s investment, GNG will:

1. maintain the database (mentioned above) and update it regularly; and develop a project screening and reporting process (ESAP #1) for acquisition of filling stations, fuel storage depots new assets or other types of fixed assets related to fuel infrastructure and logistics. The screening process will assess the nature of project, type of development and expected construction or operation date, developer, public consultation and information disclosure plan to achieve Informed Consultation and Participation (ICP) as well as Quantitative Risk Assessment (QRA) and key findings, with any corrective actions if necessary. Such information will be submitted to IFC on quarterly basis at least 20 days after end of each quarter of asset acquisition;
2. For assets that will be developed through a JV or a contractor, GNG will develop and include the provision of E&S requirements in legal documents and shall reserve the rights to oversee the developments near a residential area (ESAP#2). The E&S requirements should be in line with IFC’s PSs requirements; and,
3. GNG will designate a senior risk manager to manage the implementation of stakeholder engagement activities (include logging and addressing grievances) for all the assets and development projects (ESAP#3).

Organizational Capacity and Competency

GNG has a corporate EHS department with staff at both corporate office and each region, which is trained and has the capacity to manage all E&S risks and impacts at company operations. Each fuel storage depot has its own EHS manager and each filling station has its own part-time EHS coordinator. The EHS department manager reports to Corporate Operations Director directly, and regional EHS streams report to the fuel storage depot director indirectly. There are environmental engineers, OHS engineers, and fire safety engineers in each operational region. The fuel storage depot and filling station manager are in charge of EHS issues at the individual depot/station.

Emergency Preparedness and Response

GNG has fire prevention rules and an emergency response (ER) plan. Fire trucks with high pressure water pump are available for 24 hours to reach each fuel storage depot in 5-10 minutes. Adequate firefighting equipment, including water cooling and the foam fire extinguishing systems is provided at GNG sites as well. The firefighting equipment is tested every three months and the employees must pass the firefighting and emergency response refresher training/exam every year. If needed, the fire trucks from local fire departments can reach the various GNG sites within five to 10 minutes. There is an internal fire safety training once a year for all GNG employees. ER/fire drills are conducted monthly at the fuel storage depots and quarterly at the filling stations. GNG also conducts annual fire drills jointly with the local fire department at the respective depots.

Monitoring and Review

As per IFC requirements in the previous investments, GNG established various monitoring programs for EHS performance. GNG retains its E&S performance records through its internal reporting structure. The management also reviews E&S performance periodically and proposes corrective action if necessary.

GNG has developed and implemented an EHS auditing program against local regulations, the applicable requirements of IFC’s Performance Standards and the World Bank Group (WBG) EHS Guidelines, and other good international industry practices (GIIP). The program includes both internal and external EHS audits.                                                  

  Working Conditions and Management of Worker Relationship

GNG has an established 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 contracts. The human resources function is a corporate function for all depots and filling stations.

Employees can raise their grievances through the HR department, as per the common practice in Ukraine. Typically, this can be done by directly speaking with the concerned HR staff. In addition to HR, employees can raise their grievances through the workers’ union as well. While there is a functional grievance mechanism in place; the company does not have a documented grievance handling procedure; nor a channel for the employees to submit the grievances anonymously. The company will therefore develop a documented grievance handling procedure, articulating the channels for submitting the grievances, including anonymously; roles and responsibilities for handling and resolving the grievances and responding to the complainant within a set timeframe. The grievance mechanism will be accessible by the company employees as well as the contractors. The company will include this procedure as part of the company’s HR procedures and shall widely disseminate information about the availability of this procedure to all its employees (ESAP #4).

GNG currently has a total of 9,000 direct employees, of which about 800 new staff were recruited after 2018. Eighty percent (80%) of staff are operational and twenty percent (20%) work in administration. Operational staff include employees in more than 400 gas stations and truck drivers (650). Three type of contracts are in place: 1) open-end (98%); 2) term (1%); and 3) short-term with defined time for specific works (1%).

Female employees make up to about 58% of the workforce, working in service shops and as cashiers at gas filling stations; however they are not involved in the gas filling function (due to health concerns). About fifty-five percent (55%) women are in managerial positions and thirty-three (33%) of the top management team are women. As part of formalizing GNG’s position on gender-based violence and harassment, GNG will develop policy provisions and procedures on addressing gender-based violence and harassment, articulate these requirements in the HR policy (ESAP #5) and publicize the requirements to all its employees. Human resources department staff will be trained to log and address GBV grievances.

Due to the nature of the gas station business, the annual staff turnover is about 50% (4-5% monthly) due to voluntary job changes. Human resources department is overall responsible to keep clear documentation on hiring and end of employment. 

Labor audits were conducted by governmental authorities, and in 2018 GNG received 7 audits from authorities (some scheduled and some unannounced). All results confirmed that GNG is in compliance with applicable national labor law and regulations.

Workers’ Organization:

There is one independent union at GNG, which represents approximately 98% of all employees. Management allows collective bargaining, initiated either from the union or other employees, and the latest collective bargaining agreement was signed in March 24, 2017. Besides the HR’s grievance procedure, the labor union also affords a grievance channel for employee concerns.

Non-Discrimination and Equal Opportunity:

GNG has policies for non-discrimination and equal opportunities and promotes local hiring. According to 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.

Protecting the Work Force:

GNG complies with national law and does not hire workers below the age of 18 years. Additional compensation is paid for nightshift and overtime. The employee remuneration levels are higher than other similar companies in Ukraine. Since the suppliers to GNG are large refining companies, child or forced labor are not expected in the company’s supply chain.

Occupational Health and Safety (OHS):

Corporate EHS department and EHS teams in each region lead OHS management. There is one EHS manager at each depot, and EHS coordinator at each filling station. As part of previous IFC investment, GNG contracted external experts to conduct job hazard analysis (JHA) and implemented an enhanced OHS training and improved OHS procedures based on JHA results.

GNG has continuously developed and enforced 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. 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 before joining, and there is an annual physical check for all employees aligned with Ukraine regulation. Pre-screening and additional medical exams are provided to those working in hazardous operations, such as pumping operators, and, depot workers, to monitor health indicators and take action if needed.

 Resource Efficiency and Efficiency Projects

There is no manufacturing process at GNG. The main resource consumption is electricity for various pumping purposes at storage depots and filling stations. The electricity is supplied from the national grid. This investment will further improve energy efficiency for both filling stations and storage depots, by replacing the exiting pumps with new more efficient pumps.

Greenhouse gases (GHG):

Currently GNG generates approximately 27,000 ton CO2 equivalent per year, mainly from electricity consumption and diesel for road tankers. With new fuel storage depot(s) and filling stations in this project, the GHG emission is expected to reach 31,000 CO2 equivalent per annum (taking into account the energy efficiency measures offsetting a part of the emissions).

Wastewater and Storm Water:

The contaminated oily stormwater at fuel storage depots is pre-treated on-site before discharging to municipal sewers. The discharged wastewater quality meets both local regulatory requirements and the WBG EHS Guideline limits. The car washing wastewater at the filling stations is treated through filtration on-site and recycled for reuse in car washing. The used filters are disposed by the government approved companies.  Each car washing facility generates approximately 10 – 20 m3 of wastewater per month, which is transferred to licensed industrial waste management facilities for further treatment and disposal.

Emissions to Air:

As part of previous IFC investments, GNG has installed gasoline vapor recovery system for the loading processes at all fuel storage depots. The vapor recovery systems significantly reduce fugitive emissions and minimize the impacts to the environments and communities. The LPG storages also have vapor recovery installed. To meet GIIP, all OKKO filling stations have vapor recovery system for the fuel filling process. As a result, the monitored parameters of ambient air quality at both fuel storage depots and filling stations meet both local regulatory requirements and GIIP.

Fuel Management:

Majority of GNG’s filling stations are OKKO branded that adopt GIIP. The underground storage tanks of these filling stations have double steel layers and leak monitoring devices; therefore, the potential for contamination of groundwater and soil is limited. GNG has an on-going program to modernize their stations and this program includes upgrades to the environmental protection standards described.

The tank farms at the fuel storage depots were initially built some 50 years ago. During previous projects with IFC, GNG has contracted external experts to inspect tank safety and integrity, and conducted renovation works where needed. According to GNG’s internal tank farm management program, these tanks are cleaned and inspected for integrity once every two years. All the fuel storage depots are equipped with automatic filling controls.

The original tank farm bottoms and secondary containment walls were built on regular soils, and covered by vegetation during the summer. GNG contracted external engineering firms to design the renovation works for the tank farm bottoms, secondary containment walls, and pipe layouts according to applicable American Petroleum Institute (API) requirements. The renovated tank farm bottoms consist of packed clay/gravel and top concrete pavements where necessary. The secondary containment dykes are constructed with bricks or concrete. An auto-closure rainwater drainage system is added in the tank farm, which can be automatically closed during tank leakage.

Among 11 fuel storage depots, GNG has decided to (i) phase out two depots due to logistics and efficiency, (ii) build or renovate seven depots according to API requirements, and (iii) hold the renovation of two depots for further decision. As indicated in ESAP #6, GNG will finish the renovation of tank farm bottoms and secondary containment walls at Uzghorod and Stryy fuel storage depots according to the API standards. In line with ESAP #7, GNG will decide to phase out or renovate Chernyakhiv and Brody fuel storage depots. The new LPG tanks at Brovary depot will be built underground with the tops above the ground surface, with double layers and leak detection devices. The river/railroad depots in Kherson will be renovated following applicable GIIP, including floating roofs for gasoline tanks or vapor recovery, automatic filling, auto-fire detection, auto sprinkler/foam fire-fighting system, clay/gravel tank farm grounds, brick/concrete secondary containment walls, etc. In line with ESAP #8, GNG will conduct spill modelling for river fuel storage depot in Kherson to ensure all accidental spills shall not flow into the adjacent river. 

Fertilizer Management

As mentioned in the Farmer-Supply Program section under the PS1, GNG only supplies nitrous urea, phosphate/potassium, and NPK fertilizers to the contracted famers. In parallel, pesticides or other chemicals for farms will be supplied directly by GNG’s partner under the same program service agreement. The current practices of fertilizer handlings meet both local regulatory and IFC PS requirements.  GNG will work with fertilizer manufacturers to provide necessary guidance for efficient fertilizer application. GNG is committed to ensure that no internationally and locally banned pesticides or chemicals will be included in the farmer’s program by its partner (in the tri-party agreement).

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 storage depots and filling stations periodically. Certified companies collect various hazardous wastes, mainly used petroleum products, from GNG sites and transport the hazardous wastes back to the respective premises for treatment, recycling and disposal.

GNG conducts assessment to identify historical contamination when acquiring existing filling stations or industry assets for storage depot construction. In case, the historical contamination is confirmed, GNG only purchases the assets if the contamination can be remedied. GNG has a program to upgrade the acquired filling stations to the EU standards, associated with the OKKO branded filling stations.                                                  

  Community Health, Safety and Security:

The existing fuel storage depots are either located inside an industrial zone or in rural areas with no community nearby. With vapor recovery at each depot, operations of the depots have limited impacts on distant communities. There are communities near the newly purchased railroad fuel storage depot in Kherson. As indicated in ESAP #9, GNG will conduct quantitative risk assessment for fuel storage tanks at the railroad fuel depot in Kherson before the formal operation starts and ensure the exclusion zones under credible worst-case scenarios will not include any residential communities. 

The filling stations are located along the highways and urban roads, and some are adjacent to communities. To protect community health and safety, GNG will conduct community health/safety impact assessments as part of its ESIA process for all proposed new gas stations with community nearby. As indicated in ESAP #10, GNG will submit the modified ESIA process to include the community health/safety assessment requirements, including fugitive gasoline emission modelling, soil/groundwater contamination, fire/explosion impact modelling, and traffic safety etc. For gas stations and storage depot with community nearby, GNG will continue its monitoring of the ambient air quality and implementation of fire safety methods to protect adjacent communities.

The fuel is transported to the storage depots by rail.  GNG delivers fuel from depots to retail filling stations and wholesale customers through its road tankers. Most of the road tankers are purchased models of European brands and GNG applies the EU standards for these new tankers. All tankers are equipped with GPS devices and only allowed to drive along the designated transportation routes. The corporate logistics department monitors all tankers’ movements and speed in real time. As part of this project, GNG will also follow the applicable requirements of European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR). GNG is committed to providing defensive driving training to all drivers and include defensive driving in the annual OHS refresher training calendar.

As indicated in ESAP #11, for the railroad fuel depot in Kherson GNG recently purchased, GNG will finish the following tasks before the formal operations starts:

• develop and disseminate non-technical summary information regarding storage depot in Kherson, covering its history, key findings from QRAs, community health/safety impact assessment, ambient air quality and fire safety preventive measures;
• conduct two-way public consultation, so comments, concerns from local communities could be received by GNG and considered in its operation of the existing depot.

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 filling stations in the fire drills, if the communities could be affected by the potential fires.

Security Personnel:

GNG hires specialized external agency for its depots and filling station security. The security team is not armed. For serious security issues, GNG reports directly to the local police stations.

  Since its establishment in 2001, GNG has grown into a leading retail distributor of transportation fuels with a total of 11 fuel storage depots and 402 retail gas filling stations across Ukraine. GNG’s stakeholder engagement has been focusing on engaging stakeholders in the process of gas station site selection, permitting, land purchasing and construction and operation. Following the requirements of Ukraine laws and regulations, the process involves disclosing project information in local newspapers, government led mandatory public consultations, and GNG establishing a hotline number at each filling retail station for nearby communities to grievances.  

As part of stakeholder engagement activity, GNG will undertake at each new asset that close to residential areas or potentially pose risks to local community a process to achieve ICP. Results of the ICP process will be taken into consideration for asset design, development and operation. 

In addition, GNG is implementing Corporate Social Responsibility Programs since 2007 to support vulnerable groups (such as orphanages and low-income families), as well as sports and cultural events. GNG plans to construct the orphan centers that will be designed with family settings and local communities will be invited to participate in the program and its operations.

With business growing needs, GNG has entered into different partnerships for the establishment of its gas filling stations, such as the gas filling station in Revutskoho street in Kyiv. Following GNG’s commitment not to develop a station where the neighboring residents are opposed; and to avoid future incidents for gas stations currently located in residential areas and for future greenfield gas station development, as a part of IFC’s investment, GNG will develop a Stakeholder Engagement Plan (SEP) based on the IFC Good Practice Handbook on Stakeholder Engagement published in 2007 and that meets Ukraine mandatory requirements on Stakeholder Engagement (ESAP #12). The SEP will include at least: i) GNG’s policy on stakeholder engagement, including its Corporate Social Responsibility policy, anti-retaliation policy articulating GNG’s zero tolerance on retaliation against complainants; ii) GNG’s existing measurers to meet national requirements on stakeholder engagement, public consultation (inclusive of all levels, local, regional and national) during the project life cycle (including in the permitting process); iii) identification of key stakeholders (include local communities, local leaders, NGOs national and international, responsible governmental agencies), particularly influential stakeholders (both supportive or opposite) and their views and position; iv)  screening criteria and indicators for the selection of new project and development; and v) a grievance mechanism. GNG will designate a senior risk manager to manage the implementation of this SEP. The risk manager will monitor the effectiveness of the SEP throughout the life of the project and update the GNG as necessary (ESAP#3).

    GNG will disclose this document in Ukrainian at its website (https://www.okko.ua/inshi-proekti). For inquiries or concerns about the E&S impacts of this project please contact:

Contact Person:  Yuliya Lukovska

Company Name: JSC “Concern Galnaftogaz”

Address:     72, Geroiv UPA str., Lviv, Ukraine, 79018

Email:    office@gng.com.ua

Phone:    +38 (032) 298 96 01 (03)