2. This is a category B project according to IFC''s environmental and social review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Key environmental, occupational health and safety issues which are of potential concern in this type of project and which were addressed during appraisal include:

· potential contamination of the site from past uses;
· pesticide residues in purchased fruit and other supplies;
· labor practices during fruit harvesting by suppliers;
· sustainability and purity of water supply;
· liquid effluent treatment and disposal;
· solid waste disposal, including organic process waste and effluent treatment sludge;
· fuel storage and maintenance practices at company vehicle and repair shops;
· air emissions from backup power units and steam boilers;
· use of CFCs in refrigeration systems;
· fire prevention and emergency response; and
· general workplace health and safety, including training.

Appraisal of this project consisted of review of material provided by the sponsor as well as IFC technical reports. Information provided about how these issues and potential impacts have been addressed in the development of the project are summarized in the paragraphs that follow.

3. Potential contamination of the site from past uses: The project is located in an industrial area and prior use of the site was for a bakery. Following acquisition of the site, the company undertook a comprehensive review of land and equipment and obsolete materials (including boilers and furnace insulation) were dismantled and disposed of in accordance with Bulgarian requirements. The sponsor has confirmed that there is no risk of prior contamination and the development of the site complies with all local and national planning controls and requirements.

4. Pesticide residues in purchased fruit and other supplies: Field laboratory equipment is set up at each of the purchase stations and levels of residual pesticides are determined. The sponsor has confirmed that this system - which has been in place for a number of years- is effective and will ensure compliance with WBG requirements for pesticides on fruit.

5. Labor practices during fruit harvesting by suppliers: Labor practices conform to Bulgarian standards and the company will develop contracts that specify details of pesticide use and management.

6. Sustainability and purity of water supply: Water supply is drawn from municipal supplies and also a deep well (127m). The sponsor monitors the quality of both supplies and has demonstrated that they meet local and World Bank Group (WBG) requirements. The use of water from these sources will not have an adverse effect on others and the sponsor has all necessary permissions and permits from Bulgarian authorities.

7. Liquid effluent treatment and disposal: Process and septic waste effluents receive pre-treatment in an on-site waste water treatment plant prior to discharge to the municipal sewer. Permission to discharge to the municipal sewer has been obtained and the sewer has adequate volume and capacity to treat waste effluents to Bulgarian standards.

8. Solid waste disposal: Solid waste is segregated on site to facilitate re-use/recycling and disposal options. Solid waste comprises packing waste, waste fruit and organic materials, office wastes and sewage sludge. Packing and office wastes are collected on a daily basis and recycled where possible (carton wastes), the remainder is disposed of in a local municipal landfill. Organic material comprises fruit skins and nuts. The skins are sold to others for animal feed and nuts are either sold for human consumption (apricots) or disposed of in landfill or used as fuel for greenhouse heating (peach stones). Sewage sludge will either be disposed of in municipal landfills or disposed of by third parties that are authorized to undertake the removal and disposal of sewage sludges.

9. Fuel storage and maintenance practices at company vehicle and repair shops: Boiler fuel (diesel) is stored on-site in underground containers. These have been surveyed for leaks and certified as sound. Company vehicles are not fueled on site and all maintenance of company vehicles is undertaken in accordance with national requirements. Used motor oil is collected and sold to third parties.

10. Air emissions from backup power units and steam boilers: Electricity is supplied by the national electricity utility and there are two small diesel fueled steam boilers. These are operated in compliance with Government environmental requirements and subject to monthly emission monitoring. Emissions from these sources will conform with WBG requirements.

11. Use of CFCs in refrigeration systems: The refrigeration warehouse and other installations use new compressors and Freon 22 as a refrigerant. Weekly monitoring of refrigeration systems is undertaken and the plant will operate in compliance with national and WBG requirements.

12. General workplace health and safety, including training: The site has a health unit and on site medical facilities and staff. Only a limited range of hazardous materials are stored on site (fuel, nitric acid, caustic soda and peroxide). All of these are stored and managed in accordance with Bulgarian and WBG requirements. Additionally, the company is developing an Emergency Response Plan and a fire safety and evacuation plan has been introduced as per Bulgarian legal requirements.

13. IFC will monitor ongoing compliance with World Bank Group environmental, health and safety policies and guidelines during the lifetime of the project by evaluating reports submitted annually to IFC by the sponsor and by conducting periodic supervision. In particular, IFC will require annual reporting on the disposal of sewage sludge.

14. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that the proposed project will meet World Bank Group environmental, health and safety policies and guidelines and host country requirements.