Sitall

complete

As the first sub-project within the Saint Gobain Packaging Regional Facility, the Project consists of supporting the modernisation programme of Sitall’s glass packaging plant in the period 2005-09 by providing funds for: (i) the upgrade of the existing facilities (ii) capacity expansion, and (iii) environmental upgrading. The outline of the transition impact is described under the PSD for the Regional Facility, which was released on 18/03. In this specific case, the Bank will continue to assist in creating successful examples of enterprise restructuring on the basis of the transfer of technology and business, governance and environmental standards from one of the world leaders in the glass packaging industry. OAO Sitall (the company), a glass packaging manufacturer located in Roslav (Smolensk region) in the Russian Federation. Up to USD 2.2 million equity subscription alongside Saint Gobain Desjonqueres (“SGD”) in OAO Saint Gobain Sitall (“SGS”), a newly-to-be-established holding company which will own the majority of Sitall. SGS will invest the Bank’s funds into Sitall in accordance with the Company’s investment programme. USD 30.8 million. Environmental classification and rational The project was screened B/1 requiring an environmental audit and an environmental analysis. The EBRD’s regional venture fund, the Eagle Venture Fund (“EVF”) investment in the Company in 1995 was preceded by an independent environmental audit of the Company. EVF’s annual environmental reporting has shown that the Company has achieved compliance with national requirements for environmental health and safety and that a number of actions to improve environmental performance were carried out during the period 1995 to 2005. An update of the environmental audit and an environmental analysis were undertaken by independent environmental consultants in March 2005. Key environmental issues and mitigation The Company is currently undertaking additional investment in upgrading its current wastewater treatment. The environmental investigations showed that the project will have no significant impacts on the environment. The general conclusion of the investigations was that environmental, health and safety issues have been managed by the Company. Some items related to air emissions, wastewater discharges, environmental management, materials storage and handling and energy conservation were noted. As part of the investment programme, water consumption and wastewater discharges will be minimised with water circulation system. Waste and hazardous waste management will be organised in accordance with the principles of sorting, recycling and appropriate disposal. The Company will implement ISO 14001 Environmental Management System for its operations. These measures will ensure that the environmental issues will be professionally managed with a view to prevent or minimise impacts on staff and local population as well as on the environment. If new furnaces are constructed, SGD will design and construct these new additional furnaces in compliance with Russian laws and regulations and take into consideration EU environmental standards, notably Best Available Techniques (BAT) under EU Integrated Pollution Prevention and Control (IPPC) Directive. Summary of Environmental Action Plan An environmental action plan (“EAP”) has been agreed between SGD and the Bank to address the findings of the environmental due diligence, aiming at bringing the Company into compliance with Saint Gobain internal environmental standards and in line with international practice. A number of investments in air abatement equipment are planned to improve workers’ health & safety. An IPPC BAT assessment is to be undertaken by the company by 2010 and all new investments post 2008 will be designed to take into consideration IPPC requirements. IPPC implementation is seen as a long term goal, not covered fully by the EAP at this stage. Monitoring and reporting The Company will monitor the environmental impact of its operations in accordance with Russian law and regulations. The Bank will evaluate the Company's compliance with the applicable environmental and social requirements during the lifetime of the Project by reviewing annual environmental reports prepared for the Project covering: (i) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes, and (ii) the status of implementation of environmental mitigation and improvement measures. The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate. None. Email: information.packaging@saint-gobain.com