Sviloza Pulp Mill

complete

The proposed project will enable the Client, local pulp mill Svilosa, to increase its production capacity, and to comply with the forthcoming EU environmental standards. The Project will also optimise the production process and bring essential energy efficiency benefits. The project will have a significant Transition impact, which mainly derives from the demonstration impact, increased competition in the region and backward linkages to the forestry sector, corresponding to Market-based skills, conduct and Innovation and Structure and Extent of Markets categories. The Bank will provide financing to the local exporting company, operating in pulp and paper sector – a traditional sector in Bulgaria, which for years has been experiencing a decline. It will support its revival, facilitate the development of regional trade, implement EU environmental standards, generate energy efficiency improvements, and also secure employment of the well qualified local labour. The proposed project will have a significant demonstration impact, making a show case of Bank’s financing accessibility for local companies, who are willing to establish streamlined corporate structure and operate in accordance to sound corporate governance principles. The Bank will also finance environmental investments to the extent of compliance with the EU standards and to implement and adapt best available technologies supporting the company, respected in the country for its dedication in the area of environment. The Bank has also carried out an energy efficiency study to identity areas to further increase the energy efficiency., Finally, the project will have backward linkages by facilitating the development the forestry sector. Svilosa is an important consumer of local wood, operating in accordance to the Bulgarian legislation. Its growing share in the wood market will increase pressures for spreading the best practice in wood harvesting in Bulgaria. Svilosa – Bulgarian pulp mill, located in the town of Svishtov, on the Danube river. EUR 18 million senior debt. Around EUR 50 million. Screening categories and rationale for classification An Initial Environmental Examination conducted by the Bank’s environmental specialist showed that the mill location and operations are not associated with sensitive environmental, health and safety issues and that the environmental impacts of the project can be readily identified, assessed and mitigated. The introduction of BAT will reduce the emissions and discharges to the environment from the present level despite the planned production increase. The operation involves existing facilities and operations, which may be associated with significant EHS issues. For the above mentioned reasons, the EBRD has classified the project B/1, requiring an Environmental Analysis and an Environmental Audit. Information reviewed during the environmental appraisal The environmental appraisal has been based on the review of the Environmental Analysis and Audit undertaken by international environmental consultant in accordance with the EBRD's requirements in May 2005. The investigations included an environmental site assessment, a field survey of the project area and its surroundings, a BAT assessment and an assessment of the environmental impacts of the project. The EBRD environmental specialist visited the site and reviewed also other supportive technical and environmental documentation. Key environmental issues and mitigation Following the transposition of EU Integrated Pollution Prevention and Control (IPPC) Directive into Bulgarian law, Svilosa has been issued an IPPC permit requiring it to meet environmental standards achievable with the use of Best Available Techniques (BAT) for Pulp and Paper Manufacturing by October 2007. The project is largely oriented at financing the investments required for meeting the EU BAT environmental standards. The investigations showed that although the production will be approximately doubled, the introduction of BAT will reduce the emissions and discharges to the environment from the present levels. Air emissions of sulphur dust and malodorous gases will be reduced by upgrading of the evaporation plant, installing electrostatic precipitators for the recovery boiler and the lime kiln, and installing a collection and recovery system for high concentration malodorous gases from the pulp line. The process modernisations and upgrades will improve resource and energy efficiency as well as reduce water consumption and wastewater discharges. Also external environmental protection measures will be implemented, including a mechanical wastewater treatment plant and measures to improve waste management. The key indirect environmental impact of the plant will arise from the consumption of a considerable amount, up to 460,000 m3/a, of round wood. The Company uses mainly small diameter hardwood (oak, beech and acacia), which has little or no other use in Bulgaria. In addition, saw dust and sawmill residues can be used to substitute some of the round wood. To mitigate the adverse impact of the wood procurement and to ensure the wood is of legal origin, the Company will adopt and implement wood procurement procedures that are based on principles of sustainable forestry, ensuring that: Summary of Environmental Action Plan An Environmental Action Plan has been developed as part of the environmental due diligence to ensure the mill will reach full BAT-level environmental performance within acceptable timeframe. The EAP includes measures for further improving the wastewater treatment (biological treatment), malodorous gas collection (low concentration) and dust emission control as well as for improving waste management. The EAP also includes a programme for setting up a wood procurement control system ensuring sustainable use of forest resources. Disclosure of information and consultation In accordance with the Bulgarian environmental permitting procedure information of the project and the present activities of the mill has been disclosed to public on the local level for the purpose of getting possible comments from the potentially affected individuals and groups. Local newspapers have reported on the mill’s activities. In the context of EBRD’s potential participation in the project, a summary describing the relevant environmental issues associated with the project and the mitigation measures has been disclosed locally. Monitoring The Company will systematically monitor and report its environmental and health and safety impacts in accordance with BAT guidelines to ensure it complies with Bulgarian/EU environmental standards. The EBRD will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports prepared by the Company, describing ongoing of project-specific environmental, health and safety performance, and by conducting periodic monitoring visits. An energy efficiency audit has been undertaken. This has been financed under an existing framework contract funded by the Central European Initiative Mr. Atanas Papazov, Project Manager Tel.: + 359 631/272 26 24 Fax: + 359 631/3 11 41 E-mail: apapazov@svilosa.bg