Euroterminal Odessa Project

complete

The EBRD is considering to finance the construction of a logistics service centre on a 50-hectare land plot located north of Odessa in the city’s industrial zone. It will provide several logistic functions which will support an integrated extension of the existing container handling facilities in the Odessa Sea Port. The logistics centre will consist of four main facilities: (i) Customs Terminal; (ii) TIR Parking Lot; (iii) Internal Road; (iv) Container Depot. The Project represents much needed private sector involvement in developing the port infrastructure in Ukraine. It will be the first integrated logistics centre in Ukraine built specifically for the purpose of processing containers on shore, which will contribute to greater efficiency and competition in the market and set a benchmark for development of the similar facilities in other ports. The Project Company will prepare financial reporting based on IFRS and implement procurement procedures that will promote transparency and best commercial practice. In addition, the project introduces standards of operation, including environmental and safety matters in line with national and EU guidelines (see Environmental and Social Categorisation below). The Project is implemented by Euroterminal LLC, a company registered in Ukraine, which will be the Borrower of the loan funds. A senior loan of up to US$ 27 million (equivalent to EUR 19.1 million) to be co-financed with the European Investment Bank (EIB) on a parallel basis. US$ 38 million. The project was categorised as B (2008). The project involves the construction of a new dry port terminal at a brown field site within an industrial zone, where some development, the construction of a TIR Parking Lot, took place in 2007. The site was previously used for the filtration of waste waters. The new cargo terminal will assist in reducing past and existing adverse environmental impacts due to rehabilitation of the former waste water filtration site and redirecting heavy truck traffic away from congested city streets. Information reviewed Environmental and social due diligence (ESDD) by an independent consultancy included a site visit and a review of: the existing EIA (OVNS); the Project designs; Financial and economic models, City and port development plans, Construction HSE management plans; previous land reclamation works and other supporting information. The due diligence confirmed that the project has been structured and is being implemented in accordance with international good practice, EU standards and Ukrainian regulatory requirements. The EIA (OVNS) was also subject to Ukrainian public consultation requirements. The Project OVNS is available at the office of Euroterminal LLC on 14, Primorskyy bvd., Odessa, Ukraine and the following website: www.euroterminal.od.ua Key Environmental and Social Issues and due diligence results The due diligence confirmed that the dry cargo terminal is designed, and will be constructed and operated to comply with pertinent EU and national environmental standards and the required construction permits have been obtained or are in the process of being obtained. The construction work that has been completed so far is in full compliance with plans and permits. Due diligence raised concerns of potential contamination due to the past use of land as a waste water treatment residue sludge storage site and as a result the Project Sponsor has agreed to undertake further tests of the contaminated land. While potential traffic impacts to neighbouring residential areas were also identified as an area requiring further studies, the Project will assist with traffic flows through and around the City as it will provide access to roads around the City and away from the main streets of the City. Emergency response plans and contractor management also will need to be formalised. As a result of the due diligence an Environmental and Social Action Plan (ESAP) was prepared in line with the Bank’s Performance Requirements (PRs) to address both the construction and operational phases of the project. Environmental and social opportunities This project will result in significant environmental benefits as it provides an opportunity to remediate a previously contaminated brown field site within an industrial zone. The Project is to develop container storage facilities away from the City centre and redirect heavy truck traffic from the main streets of the City. This will provide environmental improvement by reducing emission, congestion, noise and vibration away from densely populated city districts. Through the implementation of the Environmental and Social Action Plan agreed between the Sponsor and EBRD and which meets fully EBRD’s environmental performance requirements, the Project will address, among others, environmental issues caused by the use of the territory as waste water filtration area. Summary of Environmental and Social Action Plan An Environmental and Social Action Plan (ESAP) has been agreed with the Sponsor to ensure that the Project will fully comply with EBRD’s Performance Requirements. The ESAP includes requirements for: the implementation of a Environmental and Social Management System; corrective measures to address identified risks associated with potential soil and groundwater contamination; a traffic and road safety management plan; and given that this project will rely substantially upon the work of contractors the ESAP includes control measures for monitoring the performance of contractors and addresses communication and information dissemination. The Sponsor will be required to provide an annual environmental and social report to the Lenders, including updates on the monitoring undertaken, implementation of the agreed ESAP, and notification on any material accidents or incidents. None. Ludmila Varavva (Mrs) Director Euroterminal LLC Tel: +380 482 32 54 24 E-mail: office@euroterminal.od.ua