GNG Fuels and Fertilizers

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  IFC has been invited to lend US$70 million (m) in senior loans to Galnaftogaz (“GNG” or the “company”), a long-standing IFC client and a leading Ukrainian retail distributor of transportation fuels. GNG is also a wholesale distributor of commodities including fuels, fertilizers and grains. Proceeds will fund: (i) GNG’s capex program, which includes climate-focused investments in alternative fuels such as liquified petroleum gas (LPG) storage and retail services as well as electric car charging services; and (ii) permanent working capital to help GNG grow its Farmer-Supply Program (FSP) to supply up to 200 farmers with fuel and fertilizers (together the “project”). The investment will include new OKKO brand retail filling stations, a new LPG storage depot, and two new liquid fuel storage depots, and FSP expansion to cover small growing number of qualified farms. As of end-2019, GNG managed 11 fuel storage depots and 402 retail filling stations across Ukraine under the OKKO brand, which meet the environmental, health and safety (EHS) requirements of both Ukraine and European Union (EU). As part of the project about 100 stations will be modernized and refurbished to improve their environmental, safety and energy efficiency features. Fuel tanks in the main fuel storage depots have vapor recovery installations and all the fuel loading/filling activities are automatically controlled to mitigate operational risks. Besides these stations, GNG also uses services of other third-party fuel storage depots. As part of this project, GNG will further improve energy efficiency for filling stations (e.g. new more efficient pumps), complete fuel storage depot renovations, build new LPG depot in Brovary, and purchase/renovate two existing diesel/gasoline depots in Kherson. The new LPG depot in Brovary will be built in an existing industrial zone with no community nearby. Both river and railroad depots in Kherson are in industrial zones, but there are some residential communities near the railroad depot in Kherson. Besides, GNG will continue expansion of its OKKO branded filling stations.IFC has previous investments in GNG, with the latest Environmental and Social Review Summary published in September 2013 https://disclosures.ifc.org/#/projectDetail/ESRS/33721. IFC’s ongoing supervision of the existing investments in the company indicates general compliance with IFC’s environmental and social (E&S) requirements and the associated overall performance is considered satisfactory.In August 2018, the Office of the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for projects supported by IFC and MIGA received a complaint filed by twenty community members with the support of Ecoaction, a local NGO. The complainants raised concerns about environmental impacts and compliance with Ukrainian regulations related to a gas station being built in their neighborhood. Concerns about community consultation around the construction of the gas station and use of force against protesters are also cited. CAO has closed this case in April 2020. More details about the CAO case can be found on: http://www.cao-ombudsman.org/cases/case_detail.aspx?id=1277.