Galnaftogaz is an existing IFC client and based in western Ukraine. It operates mainly in the retail segment, through 307 gas filling stations, of which 281 are operated under the proprietary “OKKO” brand. OKKO branded stations have a modern layout and up-to-date technical, safety and environmental specifications. The stations offer high-quality petroleum products and various related products and services (shops, fast food, auto repair). Consistent quality of products helps to attract and retain loyal customers to OKKO stations because Ukraine does not yet have a strict minimum quality of fuels (e.g. EURO-4 or above) and often other distributors sell fuels of low standards and lack proper quality controls. The Company is the third largest petroleum distribution company in Ukraine by number of stations and the second largest by volume. In 2010 the Company achieved revenues of $1,092 million and retail sales of 787 thousand tons. For the same period, the Company generated $82 million EBITDA and $39 million Net Income on assets of $714 million. GNG Retail Public Limited is the holding company of GNG and owns about 64% of shares of the Company. Mr. Vitaliy Antonov, a reputable Ukrainian businessman, is the founder and the ultimate beneficiary of the group. European Bank for Reconstruction and Development (“EBRD”) owns about 10.3% and its stake will increase to about 19% after upcoming equity subscription which is the part of the financing required for the Project.

The total project cost is estimated at about $210 million, while IFC’s proposed investment is a financing package of $80 million, consisting of an A loan of up to $15 million and a C loan of up to $20 million both for IFC’s own account, and a syndicated B loan of up to $45 million for the account of participant banks. EBRD is considering matching IFC investment in identical amounts.

35.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	35.0
Equity

* These investment figures are indicative

The Company is headquartered in Lviv, Ukraine. Its network of stations is nationwide, and expansions for this project will be concentrated mostly on central Ukraine, with an emphasis on fuel stations in urban areas and near highways.

- Development of Ukraine's infrastructure based on modern and safe standards. - Access to high-quality petroleum products and services - Employment creation/preservation. GNG employs 4,700 people (only 2,000 in 2004). The proposed investment is expected to create about 900 permanent jobs and 250 thousand man hours of construction jobs - Development of local suppliers. Convenience stores, automotive services and fast-food help local economies because such services at stations are primarily locally supplied.

- Long-term financing and risk capital. - Mobilization of a significant amount of long-term debt. - Due to a long term partnership between IFC and GNG, IFC is uniquely positioned to advise the company on their business strategy (technical expertise) as well as on their E&S improvement efforts.

This is a Category B project according to IFC’s Environmental and Social Review procedures. The potential adverse E&S impacts of this project are therefore few in number and limited to project sites and may be readily mitigated. The key E&S issues include prevention of groundwater/soil contamination, control of emission of volatile organic compounds (VOCs), operational hazards and emergency response, occupational health and safety, road transportation, and community engagement and development. The mitigation actions have been identified. Please refer to the Environmental and Social Review Summary (ESRS) and the Environmental and Social Action Plan (ESAP) for details.