|Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature.|
This summary covers a shareholder loan by Karo Dis Ticaret ve Sanayi Ltd. of Turkey in the Sebeel Al Safa Manufacturing Petrochemicals and Water Filling Company in Iraq. The investor has applied for a MIGA guarantee of $5.03 million for a period of five years against the risks of transfer restriction, expropriation, and war and civil disturbance.
The project involves the establishment of a manufacturing plant in the Baghdad area to produce polyethylene terephthalate (PET) preforms. PET preforms are small bottles which are sold to beverage manufacturers who then blow the small bottles to make the PET water and drink bottles found in the consumer market. The first machine will produce preforms for half-liter water bottles. The general demand in Iraq for preforms is estimated to be more than six billion annually for different bottle sizes. Currently, nearly all of PET preforms are imported from neighboring countries.
The project is a Category B under MIGA’s environmental and social review procedures. The establishment of the PET preform production factory consists of the installation and operation of two injection molding machines, one small-scale trial thermo-forming machine, and auxiliary equipment for the production of PET preforms and glasses. The main environmental and social issues identified in the environmental impact assessment were air and noise emissions, energy and water consumption, labor, health, safety, and security. An environmental management and monitoring plan has been developed to address the potential impacts during installation and operations. Occupational, health, and safety procedures include regular training for all employees as well as environmental reporting requirements. The environmental impact assessment and the environmental management plan are available in-country at the project facility as well as with the related Iraqi authorities.
This project will have a positive and significant development impact for Iraq. The economy is currently heavily dependent on the oil and gas extractive sectors and the government is making efforts to diversify, including through attracting foreign direct investment into other sectors. This South-South investment can provide an important signal to other potential investors into Iraq and into Baghdad specifically. The project will demonstrate the available returns from supplying the large and growing domestic market in Iraq, and help aid the continued progress towards stability and economic growth. The factory will provide employment for 46 staff, almost all of whom will be recruited locally.
The proposed project is aligned with the World Bank Group’s Interim Strategy Note for Iraq, which includes supporting policies and institutions that promote broad-based, private-sector-led growth with the goal of revitalizing the private sector and facilitating job creation. It is also aligned with MIGA’s commitment to supporting South-South investments as well as investments in conflict-affected countries. The proposed project would be underwritten through MIGA’s small investment program.