EMSS Energy Efficiency and Modernization Programme

complete

The EBRD is considering providing a senior loan in the amount up to USD 79 mln to OJSC EnergoMashSpetsStal to finance the completion of its extensive investment programme. The EBRD financing will allow OJSC EnergoMashSpetsStal to improve production processes and to increase its competitive position in the European market. The transition impact of the Project is expected to be achieved through the following: OJSC EnergoMashSpetsStal is a full cycle Ukrainian producer of rough and mechanically treated castings and forgings for energy, steelmaking and machine building sectors located in Kramatorsk, eastern Ukraine. Senior loan in the amount up to USD 79 million. Up to USD 273 million. Screening category and justification The project was categorized as B (2008), requiring an Environmental and Social Due Diligence (ESDD), consisting of an environmental analysis of the proposed investment programme and an environmental audit of the existing production facilities. Due diligence undertaken and outcomes The ESDD was undertaken by independent consultant and site visits by ESD. The ESDD has confirmed that the Company has a good environmental and social management system and has the capacity to fully implement the Bank’s Performance Requirements (PRs) of Environmental & Social Policy. EMSS current and planned operations are in general compliance with national legislation and the planned investment programme is structured to meet both national and EU environmental standards. The Company has an Environmental, Health and Safety Management systems, although this will need to be further strengthened and certification sought to attain an international standards such as ISO 14001 and OHSAS 18001. The new investments, notably energy efficiency measures and the replacement of the old Electrics Arc Furnaces (EAF) with a state of the art new EAF will have significant environmental benefits, through reduced emissions and lower energy use. The new EAF is to be equipped with a dust abatement equipment in line with EU Best Available Techniques (BAT) requirements. The Company will also install continuous emission monitoring equipment. In terms of social aspects, the Company has good Human Resource management system and is addressing social and labour issues in line with national requirements as well as corporate standards that meet the Bank’s PRs of Environmental & Social Policy. This is still being further reviewed as part of the ESDD. An Environmental and Social Action Plan (ESAP) is being developed as part of the ESDD and will be agreed prior to the Bank’s final management review. This will require among others, further strengthening of existing management systems, notably in terms of developing and implementing ISO 14001 and OHSAS 18001 complaint management systems. The ESAP will also include specific performance standards for the new investments in compliance with EU IPPC BREF Note BAT guidance, notably in terms of energy efficiency measure and emission abatement on the new EAF. A stakeholder Engagement Plan (SEP) is being developed by the Company in line with PR10 and will be agreed with the Company as part of the due diligence. The PSD will be updated once the ESDD is complete and the ESAP has been fully agreed. Implementation requirements An energy audit under EBRD Energy Audits Programme has been commissioned to assist the Company in identifying and analysing energy saving project opportunities. OJSC Energomashspetsstal 2-B, Ordzhonikidze St., Kramatorsk Donetsk region, 84306, Ukraine Tel. 38 06264 8 55 71 Fax. 38 06264 6 55 84 Maxim Efimov, General Director