Packages Limited is the sponsor of the proposed project and is Pakistan’s premier integrated pulp and paper mill and packaging materials manufacturer. It is listed on all three stock exchanges of Pakistan. It was originally established in 1956 as a joint venture between the Ali Family of Pakistan and Akerlund & Rausing of Sweden. The original sponsors (i.e. the Ali family) continue to be closely associated with the company. The shareholding structure of Packages as of September 30, 2004 was: the Ali family (18.6%); Packages Group of companies (25.4%), StoraEnso, Tetra Laval Holdings and Finance, and Holgar Crafoord family (12.0%); local financial institutions (18%); IFC (0.8%); and the general public (25%).

The total cost of the proposed project is estimated at $332 million including: $209 million for fixed assets at Kasur, $33 million for capital expenditures for the converting lines and the tissues lines, $32 million for interest during construction, $20 million for contingencies, and $38 for additional permanent working capital requirement and other indirect costs. The proposed IFC investment consists of: - a partial guarantee of local currency loans, - A loan for $5 million and - equity investment of up to $5 million. The IFC guarantee amount is $25 million for a guarantee of a local currency loan of up to 13 years.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	25.0
Loan
Equity	5.0

* These investment figures are indicative

Packages acquired a flat piece of land of about 42 hectares at Kasur, which is about 70 km from the existing plant in Lahore, for the project. The project site is in a rural area and the distance for the straw transportation is shorter than the current site in Lahore. There is a good underground water resource, and about 30,000 m3/day of fresh water consumption will be supplied from four deep well pumps. A public drainage canal is running next to the plant site. The site is close to the public grid and the public substation. The natural gas main supply line is 12 km away from the site. The site is accessible from the main road network.

The project will relocate a major part of the company’s pulp and paper operations to a rural site approximately 70 km away from the city of Lahore. The company’s first paper mill was installed in 1968 on the outskirts of Lahore. With the passage of time, the city of Lahore has encroached upon the company’s existing facilities and there is no longer any room for further expansion. The present processing facility of Packages Ltd. in Lahore has become a limiting factor for future expansions, especially as a considerable amount of wheat straw has to be stored at site to secure a continuous production of straw pulp. Moreover, the prevailing method of collecting and transporting the straw in loose form through truck/tractor loads makes the straw transport very voluminous and hazardous, particularly during the daytime. The project will result in benefits to the neighboring residential areas in terms of reduction in traffic congestion, noise associated with regular industrial activity, and odor form straw storage and pulping. The project will improve operational efficiencies, and specific consumption of heat, power and water will be reduced. It will substantially improve the overall environmental performance of the company through an improved pulping process, which reduces water pollution at source, and improved effluent treatment. Packages is developing an improved system for collection of clean straw. They will pay farmers for straw which is currently burnt at cost to the farmer and the environment. Higher utilization of waste paper in the fiber mix in substitution of chemical pulp will also bring cost efficiencies to the company. These measures will strengthen Packages’ competitive position and help strengthen the longer term sustainability of the company’s operations. The project will help increase the company’s market share in the growing Pakistan paper market. Packages cannot finance the project wholly out of its cash generation. By using IFC for part of its external financing, Packages will realize the benefits of the project within a short time frame. IFC participation will meet the company’s need for long-term funding. IFC’s technical expertise in the paper and pulp sector will support the company to achieve higher operational efficiencies and compliance with local and WBG environmental guidelines, which may not otherwise be the case.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social 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/social information submitted by the project sponsor, and visiting the Lahore mill and the site of the future Kasur mill.
Location of environmental documents in locally affected community
The Environmental Review Summary (ERS) will be available at the Company’s headquarters (see the company’s address below) at the factory gates in Lahore. At the project site in Kasur the ERS will be available for viewing at the factory gates and at Kasur city municipal office at the following addresses: - Address of Packages Limited Kasur site: Packages Limited Packages Kasur Factory 11 km Kasur – Kot Radha Kishan Road Kasur - Address of Kasur City Municipal Office: Mr. Malik Rashid Ahmed Khan Tehsil Nazim Tehsil Counsil Kasur