BOR GLASS FACTORY

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The project seeks to form a consortium of shareholders to acquire 75 per cent of the equity of Borsky Stekolny Zavod ("Bor"), Russia' s leading flat glass manufacturer, located in Bor near Nizhny Novgorod. The modernisation of Bor through a multi-year CAPEX programme. This is designed to secure Bor's position as a leading high quality flat glass supplier, able to meet the increasing quality and specification demands of the automotive and construction industries. Glaverbel will be the first international flat glass producer to invest in Russia. Its success will have a strong demonstration effect and will encourage its competitors to develop further Russia's flat glass production capacity. Glaverbel will also bring to Bor its experience in management as well as in production and marketing. Bor is Russia's leading flat glass producer, serving mainly the automotive and construction industries. The sponsor, Glaverbel S.A., a Belgian flat glass producer, will invest in the consortium and provide corporate governance as well as technical support to Bor in order to implement an investment programme in excess of US$ 120 million (ECU 106 million). In a first phase, the EBRD's financing will comprise a US$ 15 million (ECU 13 million) equity investment in Bor. Debt financing will be considered at a later stage. The International Finance Corporation is to participate in the consortium on equal terms and for the same amount. US$ 61 million (ECU 47 million). The Project was screened as B/1 by the Bank's Environmental Appraisal Unit requiring an environmental analysis and an environmental audit. Bor is in compliance with local regulations for air emissions, water discharge and waste disposal. Emission limits have been compared to industry standards applicable to similar glass furnaces in Western European countries. Current NOx emission levels of 3,000 mg/Nm3 at Bor are below the German TA Luft standard of 3,500 mg/Nm3 for regenerative gas fired furnaces. An Environmental Action Plan ("EAP") for Bor Glass Works was prepared based on the results of the environmental analysis and audit. The EAP includes the following actions for Glaverbel and Bor: Most of the actions are planned to be completed by the end of 1998. The efficiency improvements can be achieved only after cold repairs of the furnaces which will be done in 2000 (float line 1) and 2002 (float line 2). Cold repairs will result in significant energy efficiency gains (current specific energy consumption of the furnaces is 2,000 kcal/kg melted glass which is 30% more than in similar furnaces in Western European plants) which will have environmental benefits. The commercial evaluation of the project was partly supported by a study financed by the UK Know-how Fund. None