Indorama Eleme Fertilizer and Chemicals Limited

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 The Indorama Group (“Indorama” or the “sponsor”) a long-standing IFC client in several countries, is one of the world’s fastest growing groups in the petrochemical and fibers business, with global business presence in 35 countries in Asia, Africa, Europe and the Americas and more than 37,000 employees.  In August 2006, Indorama International Finance Plc, UK (“Indorama International”) purchased a 75% equity stake in what was formerly known as Eleme Petrochemicals Company Limited (now known as Indorama Eleme Petrochemicals Limited – “IEPL”) under the Nigerian federal government’s privatization plan, to which IFC had acted as advisor. IFC also invested in Indorama to implement a turnaround program for Eleme’s olefins, polyethylene and polypropylene plants (IFC Project # 24802).   In June 2016, Indorama successfully commissioned a 1.4 million metric tons per annum (MMtpa) urea fertilizer facility (including a captive ammonia facility) in Nigeria under its Indorama Eleme Fertilizer & Chemicals Limited (“IEFCL” or “the company”) subsidiary, with investment from IFC’s own account, IFC-mobilized parallel lenders and other commercial lenders (IFC Project #30967).  In March 2016 IFC made an additional investment in IEFCL to support construction of a jetty in the nearby Onne port for the export of fertilizer (IFC Project #38096).  Having successfully commissioned the Line I Ammonia Urea fertilizer facility, Indorama also approved the construction of Line II, the second ammonia / urea fertilizer line, to expand the current capacity to 2.8 MMtpa; IFC provided a loan to this project as well (Project # 40420). Line II is currently under construction and is expected to be operational by 3rd quarter of 2021.   The public disclosure documents for IFC’s previous investments in this facility are available at:- Project # 24802:  Eleme: https://disclosures.ifc.org/#/projectDetail/ESRS/24802 - Project # 30967: Eleme Fertilizers:  https://disclosures.ifc.org/#/projectDetail/ESRS/30967 - Project # 38096: Indorama Port: https://disclosures.ifc.org/#/projectDetail/ESRS/38096- Project # 40420: Eleme Fertilizer II: https://disclosures.ifc.org/#/projectDetail/ESRS/40420 IFC is considering a further investment in IEFCL of up to US$35 million (“MM”) for its own account and up to US$115MM in parallel loans to be mobilized from commercial banks and other DFIs, for construction of a feed conditioning unit (“FCU”). The FCU is an add-on gas processing facility, with capacity of 160 MM standard cubic feet per day (“SCFD”). The FCU will recover carbon dioxide in the gas and shall also separate heavier byproducts. This will ensure the supply of gas having consistent composition to Line 2 and the heavier byproduct will help increase polymer production in IEPL.  The Project will essentially replicate, at a larger size, the recently completed FCU unit, located next to the IFC-supported Eleme Fertilizer I urea plant (project #30967) and used for the recovery of heavier byproducts from feedstock supplied by a gas supplier. The first FCU, which was completed in 2018, was installed as part of the construction of Eleme Fertilizer Line I and is operating satisfactorily. The heavier byproducts produced will help in increasing polymer volume and plant reliability. This FCU processed over 23 million MMBtu of gas through September 2018.  FCU II will be located next to the existing FCU; the two units will share several facilities including the control room and flare systems. The project is expected to be started up in April 2022, about a year after expected Eleme II startup.  The Indorama manufacturing complex where the project will be located is at Eleme, about 15 kilometers northeast of Port Harcourt, the capital of Rivers State, Nigeria (https://goo.gl/maps/pY29GKjEmwN2).  Six communities are located within a 5-km radius of the project. The communities directly neighboring the project are Akpajo (12,700 inhabitants), Aleto (15,500 inhabitants), Agbonchia (18,000 inhabitants), Njuru (7,700 inhabitants), Okerewa (6,600 inhabitants), and Wakaohu family of Elelenewo (1,800 inhabitants) totaling about 62,000 inhabitants. The members of these communities are familiar with industrial installations as they are in a municipality where a number of petrochemical industries are located.The company has to date implemented the Environmental and Social Action Plans (ESAPs) associated with IFC’s previous investments, developed sound environmental and social (E&S) management systems for all its operations, and established the organizational capacity to manage and monitor its E&S performance. For the operation of Line I, construction and commissioning of Line II and associated facilities, and construction and operation of FCU II, the lenders commissioned a third-party independent monitoring agency, which has confirmed sound operation for Line I and overall successful implementation of the ESAP and E&S management systems for Line II. In April 2018, the Office of the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for projects supported by IFC and MIGA, received a complaint from a group of IEFCL employees alleging noncompliance with certain aspects of IFC’s Performance Standards. The details of these complaints along with the CAO assessment report are available at http://www.cao-ombudsman.org/cases/document-links/documents/CAOAssessmentReport_ElemeFertilizerIandII-01_Nigeria_Feb.2019.pdf.  The complaint has been transferred to CAO’s Compliance unit.  In the context of appraising and monitoring the previous investments noted above, IFC was already aware of the issues cited in the complaint and has been working with the client to address them; these efforts are described below in detail in the sections on PS2 and PS4 below. IFC engaged with CAO during the initial assessment phase of the complaint and will cooperate with CAO during the compliance process. Moreover, IFC continues to engage with IEFCL to monitor the E&S performance of the project, including those aspects of performance raised in the complaint.