La Universal, S.A.

completed

October 21, 1998Environmental Review Summary (ERS)Project Name ECUADOR: La UniversalRegion Latin America and CaribbeanSector General ManufacturingProject No. 009132 1. La Universal is one of Ecuador’s leading confectionery and food manufacturers. Its main products are chocolate and consumer cocoas, hard and soft candy, crackers, wafers and pasta. This project involves the restructuring and expansion of its existing operations by: (i) upgrading existing equipment and eliminating bottlenecks (mainly in wrapping); (ii) the reorganization and re-engineering of the company’s production layout to improve efficiencies; (iii) a new warehouse facility; (iv) reducing its permanent labor force; and (v) retailoring of short-term debt. The restructuring and expansion is expected to be completed by December 31, 1999.2. This is a category B project according to IFC’s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental information submitted by the project sponsor, and the technical appraisal and site review completed by IFC’s Technical and Environment Department staff. The following potential environmental, health and safety impacts of the project were analyzed:· current and past land use;· social impacts from workforce reductions;· liquid effluents;· solid waste disposal;· air emissions;· power and water supply;· use of appropriate refrigerants;· hygiene and housekeeping;· workers safety and training;· emergency response; and· fire protection.The sponsor has presented plans to address these issues and demonstrate that the proposed project will comply with applicable governmental and World Bank requirements. The information provided about how these potential impacts are addressed in the development of the project is summarized in the paragraphs that follow.3. La Universal’s existing factory is located in the south section of the City of Guayaquil and is surrounded by the Guayas river. The proposed expansion will be developed in an existing three level building with an area of 5000 m2. The new warehouse facility will be located in an unhabited lot one mile away from the existing factory in an area of 7000 m2.4. La Universal’s Management discharged all union employees and paid all required separation and other wages due, for a total cost of US$7.4 million. The management decision was precipitated by prohibitive work rules developed by the union over many years, excessive benefits demanded beyond industry standards, and high wages. The discharged of union employees reduced La Universal’s workforce by 210 people from 560 to 350 today.5. Liquid waste generated during the cleaning of the manufacturing areas, and sanitary uses will be discharged to the municipal sewer system for its treatment. La Universal’s Biochemical Oxygen Demand (BOD) parameter is not in compliance with World Bank guidelines. La Universal has agreed to prepare a Corrective Action Plan (CAP) to address this issue, which will be resolved by December 31, 1999.6. The solid waste generated include: wrapping and packaging materials (2,500 kg/yr.); cacao by-products (980 tons/yr.); chocolate waste (4,250 kg/yr.); candy waste (1100 kg/yr.); and pasta waste (6,500 kg/yr.). The by-products are sold for fat extraction purposes, the candy, pasta and chocolate waste are sold to industries for the manufacturing of animal feed, and the wrapping and packaging materials are recycled. The domestic waste is collected and disposed of according to local regulations.7. Air emissions from the cocoa roasting area will be recirculated and discharged through a dust collection system. Personal protective equipment such as dust masks will be provided to employees in areas susceptible to air borne non-toxic food dust. 8. Potable water is brought in tanks to the company on a daily basis. The company has planned the installation of a 400 m3/day water treatment plant to filter water from the adjoining river. This plant will include a reverse osmosis system. The electrical power is supplied by the municipal utility, however, the company will install a substation with a capacity between 69,000 to 13,800 volts.9. La Universal will develop an emergency and preparedness program for its facility. The training programs will include fire protection, use of fire fighting equipment, housekeeping and hygiene, and general health and safety procedures. A fire brigade will be formed. The factory is equipped with fire extinguishers and smoke detectors. Additionally, the improvement plans for fire safety includes the installation of a complete water system with an electric pump and a gasoline stand-by pump, which will cover the entire factory.10. A medical first aid department is available on the premises and the company uses a local medical clinic for minor injuries or illnesses. 11. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that the proposed project is being designed to meet Government of Ecuador requirements, and World Bank policies, and environmental, health and safety guidelines.12. IFC will monitor ongoing compliance with World Bank policies and guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC by the sponsor and by conducting periodic site reviews during project supervision.\\StreetTalk\Shared Data@CTENET@IFC\wpeu\Mainstream Projects\Ecuador\La Universal-9132\ERS.docOctober 21, 1998 3:46 PM