AEF Hercules Tyres Limited

completed

SUMMARY OF PROJECT INFORMATION (SPI)Project Name NIGERIA: AEF-Hercules Tyres LimitedRegion Sub-Saharan AfricaProject No 009479Project Board Date June 24, 1999Company Name Hercules Tyres LimitedTechnical Partner and/or Major ShareholdersThere is no technical partner. Initial technical supervision and training will be provided by the machinery suppliers. The technical expertise and general labor requirements for production will be recruited locally. The project is sponsored by Mr. Ashok Kumar, an Indian national with extensive experience in tyre importation and sales, commodity trading and textiles. Mr. Kumar is the Managing Director of Hercules Tyres Limited and holds 55% of the outstanding shares. Other shareholders are Mr. Rohit Nandal, an Indian and Mr. Gbadebo Ayanwuyi, a Nigerian.Project Cost Including Proposed IFC InvestmentUS$3,222,000 equivalent including a proposed IFC A loan of US$1,300,000.Location of Project and Description of SiteProject Location: The project will located at Plot c-3, Amuwo Odofin Commercial Scheme in Lagos State, Nigeria. Description of Company and Purpose of Project(including IFC’s Role and Development Impact)The project is a diversification effort by the promoters of Hercules Tyres Limited who have been engaged in tire importation and sales since 1992. The proposed factory is for the retreading of used vehicle tyres. The factory will manufacture tyre treads and fit these treads to used commercial vehicle tyres. The factory will produce four tire sizes for lorries, trailers, tankers and heavy trucks. The installed annual capacity operating on two 8-hour shifts will be 50,000 truck tyres per annum. The main focus of the project is the retreading of trailer and truck tyres for fleet owners. The project is based on the cold process of retreading which produces very high quality tyres of comparable safety standards to new tyres. IFC will be providing a loan with longer maturities than presently available in Nigeria. The project will help to reduce transportation costs in Nigeria by producing safe and cheap tyres for road haulage transportation.Environmental Category and IssuesThis is a category B project according to IFC''s environmental and social review procedure. Key environmental, social, health and safety issues associated with this project include: site history and potential for contamination, air emissions; effluent treatment and discharge; solid and hazardous waste management; hazardous materials handling and storage; fire prevention and emergency response and workplace health and safety. The site for this project is located in an industrial area which has yet to be fully developed and has never been in productive use. The tyre retreading process uses only small quantities of water to be supplied by borehole sources. Small quantities required for the cooling lines will be recycled. No liquid effluents are generated. However, small quantities of dirty water will be discharged to the municipal sewer in accordance with IFC’s effluent discharge guidelines, and those of the Waste Management Authority. Necessary approvals for discharges will be obtained, and routine monitoring undertaken. No significant air emissions are produced except for dust generated in the buffing of old tyres and through the use of raw materials. This is not hazardous and will be recycled in the process. A dust collection system will also be installed. A small oil fired boiler needs to be constructed within a secure structure to achieve containment in the event of a spill or breach. Raw materials will be stored in a separate building and only small amounts kept on the factory floor. A regular training program will be implemented for staff with respect to health and safety including the proper handling of hazardous materials, and in particular, chemical solvents and adhesives. Plant and equipment have safety features already included in their design. No abnormal noise emissions are expected to be produced. The plant incorporates sprinkler system and chemical fire extinguishers. Regular fire drills will be carried out; the Local Fire Department will carry out an annual survey and issue a compliance certificate. The sponsor will ensure an emergency plan is prepared in liaison with local fire authorities and or services.The Environmental Review Summary is available from the Public Information Center.Host country location of Federal Environmental Protection Agency Environmental documents (FEPA)Date SPI sent to InfoShop May 24, 1999“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purposed of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unittelephone: (202) 473-7711Facsimile: (202) 974-4348Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).