Project Name Hungary-ERU Hungaria Kft

Region Europe

Sector Food

Project No. 007578

1. This project involves expansion of a processed cheese manufacturing plant in Budapest, Hungary. Processed cheese is manufactured based on hard and semi-hard cheeses, which are mixed, homogenized and sterilized together with additives like melting salts and cream. ERU is a well established processed cheese manufacturer in Hungary and will based on the expansion be able to serve both local markets and export markets, through its Dutch parent company, with a high range of quality processed cheeses.

2. This is a category B project according to IFC’s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s Technical and Environment Department staff. The following potential environmental, health and safety impacts of the project were analyzed:

· standard of existing production facilities;
· site location and infrastructure;
· air emissions;
· effluent management;
· solid waste management;
· product hygiene; and
· occupational health and safety standard.

The sponsor has presented plans to address these issues and demonstrated that the proposed project will comply with applicable governmental and World Bank requirements. The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.

3. The existing ERU manufacturing plant in Budapest has been continuously upgraded since it was taken over by ERU in a privatization. The hygienic standard is up to international standard, and international occupational health and safety standards have been met.

4. ERU’s manufacturing facility is located in an industrial site inside the city boundary. The entrance is from a major access road, and the local infrastructure is well developed to serve the operation. To enable the plant expansion ERU does not necessarily need to acquire extra land but in order to enable the building of the optimum factory negotiations are under way for take over of an adjacent site within the existing industrial area.

5. The processing of cheese does not in it self create air emissions, but needs heating for the processing and sterilization. Heating at ERU’s facility is currently provided by steam received from a nearby winery. As part of the expansion ERU is considering construction of their own steam boiler. A potential new steam boiler will be operated on natural gas and will be equipped with low-NOx burners.

6. The processes used at ERU does not result in wastewater, except for cleaning of the plant. Wastewater from the facility is treated by the municipal sewage treatment plant.

7. Solid waste is limited as the production is based on fresh, non-packed, mainly hard or semi-hard cheeses supplied from 10-12 local cheese factories. ERU is also able to re-process pre-processed cheese which does not meet the initial specs. Solid waste is handled by a public contractor.

8. The production processes used involve heat treatment and pasteurization. Only spores can survive this treatment and the hygienic standard of the processed cheese can only be jeopardized if it is stored at temperatures above 20o Celsius after leaving the factory. ERU’s product are therefore of a high hygienic standard compared to other milk based products.

9. All ERU’s operating, quality and safety standards are based on Dutch experience, which again is based on ISO 9002 norms. ERU’s social facilities have been upgraded since the privatization and a six person safety group has been established.

10. Based on its review of available information regarding potential environmental impacts IFC concludes that the proposed project is being designed to meet Government of Hungary requirements, and World Bank policies, and environmental, health and safety guidelines.

11. IFC will monitor ERU’s ongoing compliance with World Bank policies and guidelines during the life of the project by evaluating the environmental performance reports submitted annually to IFC by the sponsor and by conducting periodic site reviews during project supervision.

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December 4, 1996 1:29 PM