Indorama Eleme Petrochemicals Limited- Efficiency project

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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 (“IEPL” or the “company”) 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.) IEPL is an integrated petrochemical company comprised of petrochemical processing plants and utilities for the production of low- and high-density resins (“petrochemical complex”) for the plastics industries. It is the largest of its kind in Nigeria, and one of the largest petrochemical companies in Sub Saharan Africa. IEPL has a Natural Gas liquids (NGL) cracker and downstream polyethylene (PE) and polypropylene (PP) production and as it generates all the power used in the petrochemical complex, it also has a 165-megawatt (MW) open cycle power generating plant (“the power plant.”) The power plant also serves the fertilizer plants and utilities, also located within the same project site, as well as neighboring communities. IEPL’s 9 km2 area is located in the Eleme Local Government of Rivers State Eleme, about 15 kilometers northeast of Port Harcourt, the capital of Rivers State, Nigeria (https://goo.gl/maps/pY29GKjEmwN2).   In June 2016, Indorama successfully commissioned a 1.4 million metric tons per annum (MMtpa) urea fertilizer facility (including a captive ammonia facility) Line I, in the same site where IEPL is located under its Indorama Eleme Fertilizer & Chemicals Limited (“IEFCL”) 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 (IFC Project # 40420). Line II is currently under construction and is expected to be operational by 3rd quarter of 2021.   In 2020, IFC made an additional IEFCL investment for the construction of a 160 MM standard cubic feet per day feed conditioning unit (“FCU”) in IEFCL Line II to recover carbon dioxide in the gas and separate heavier byproducts thus ensuring consisting supply of gas composition and helping increase polymer production in IEPL. The project is expected to be started up in April 2022. (IFC Project 42187.) 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- Project# 42187: Eleme FCU II:  https://disclosures.ifc.org/#/projectDetail/ESRS/42187 IFC is considering a further investment to IEPL of up to US$64 million (“m”) IFC A Loan and up to US$9 million concessional senior loan from IFC as implementing entity of the IDA PSW Blended Finance Facility (BFF) to finance the installation of: (i)                 two heat recovery steam generators (HRSG) to produce steam using heat recovered from the hot exhaust gas of Gas Turbines, thereby reducing greenhouse emissions (GHG); (ii)               an additional furnace in its cracker with 52,000 metric tons per annum (TPA) capacity to increase olefins production using natural gas liquids as additional raw material; and(iii)            additional quench water heat exchangers and two additional cooling water cells and one additional cooling water circulation pump to add more flexibility in cooling water system (the “project.”)The total project cost is estimated at US$80m. It is expected to be commissioned in 27 months from contract signing.  IEPL complex, where the project will be implemented, has the state-of-the-art olefins, polyethylene (PE)/ butene and polypropylene (PP) plants. In addition to the captive power plant, the operations are supported by utilities, an effluent treatment plant, storage tanks, bagging, a warehouse and other supporting facilities. Using the higher inbuilt capacity available, the proposed minor brownfield expansion can be easily executed with minimum changes to the existing plant. 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 IEFCL Line I, construction and commissioning of IEFCL 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 IEFCL Line I and overall successful implementation of the ESAP and E&S management systems for IEFCL Line II and FCU 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/CAOComplianceAppraisal-IEFCLNigeria.pdf. CAO’s Compliance unit has completed its investigation and is in the process of developing its report.