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Ethiopia

Ethiopia Turaco FMCG Project

$34.1 million
Agribusiness
Manufacturing and Services
Environmental and Social Review Summary
Proposed

Environmental and Social Review Summary

Ethiopia Turaco Fast Moving Consumer Goods

This Environmental and Social Review Summary (ESRS) is prepared by MIGA staff and disclosed prior to the date on which MIGA’s Board of Directors considers the proposed issuance of a Contract of Guarantee. Its purpose is to enhance the transparency of MIGA’s activities. This document should not be construed as presuming the outcome of the decision by MIGA’s Board of Directors. Board dates are estimates only.

Any documentation that is attached to this ESRS has been prepared by the project sponsor, and authorization has been given for public release. MIGA has reviewed the attached documentation as provided by the applicant, and considers it of adequate quality to be released to the public, but does not endorse the content.

MIGA has been requested to provide investment guarantees of up to US$ 34.1 million to Turaco, a holding company incorporated in Mauritius, to cover its existing and new equity investments and shareholder loans provided to it by its shareholder, Blue Bird Holding Limited (BBHL) which is a holding company of a portfolio of Fast-Moving Consumer Goods (FMCG) manufacturer’s that distribute locally branded products, focusing on the Ethiopian market .  BBHL holds a portfolio of companies that includes manufacturing of edible oil, soap and detergent, food products and beverages. The MIGA-guaranteed investments are specifically for investments in two companies in the BBHL portfolio: Health Care Foods Manufacturers (HCFM) and Zak Ethiopia Manufacturing and Trading Plc (Zak) (together referred to as ‘the Project’).

HCFM produces edible oils by refining crude soya and sunflower oil. HCFM has three facilities (HCFM1, HCFM2 and HCFM 3) in the Akaki Kality (HCFM1 and HCFM2) and Dukem (HCFM3) neigbourhoods of Addis Ababa. Akaki Kality is approximately 10 kilometers (km) south of the Central Business District (CBD) of Addis Ababa, while Dukem is approximately 25 km.  HCFM1 was established as a 5 tonnes per day (t/d) refinery in 2001 and was operational until 2017. The site is now fully decommissioned and used as a bulk storage facility for HCFM2, which was established in 2017 and is a 75 t/d soya and sunflower oil refinery. HFCM2 site includes production buildings for neutralization, bleaching, dewaxing (sunflower oil) and deodorization; two 500 cubic meter (m3) aboveground crude oil storage tanks; three 100 m3 finished product aboveground storage tanks; packaging plant; storage areas and administration buildings. HCFM 3, which started operations in April 2021, is a replica of HCFM 2, but has a capacity of 100 t/d refining.  HCFM1, HCFM2 and HCFM 3, are all located in an urban, industrial area where surrounding land use is primarily commercial. HCFM currently relies on imported crude oils purchased on international markets where crude is produced from oilseeds sourced from Ukraine. From 2022, however, HCFM intends to start producing crude oils by sourcing soya, sunflower and sesame seeds locally (refer to the description of the solvent extraction plant below).  

ZAK manufactures laundry soap and detergent at the ZAK soap factory, which was newly commissioned in early 2020 at which time operations moved from an old factory called Gullele soap factory.  Zak acquired the soap assets from Gullele and expanded its capacity from 16,000 mt per annum to 64,000 mt per annum with an ability to increase its range of products from laundry to household cleaning and personal care products. The Gullele soap factory site is currently being decommissioned. Main buildings at the ZAK soap factory include melting area, sodium hydroxide (NaOH) mixing plant and cooling towers; production plant building; and administration buildings. The ZAK soap factory is also in the Akaki Kality neighborhood of Addis Ababa, approximately 10 km south of the CBD in a predominantly commercial zone in an urban area. The ZAK soap factory includes a 52 m3 per day effluent treatment plant. ZAK relies on imported soap noodles purchased through an international trading house.

Turaco’s investment includes the financing of expansion projects at HCFM2 and HCFM 3 and ZAK, including (i) the construction of 300 t/d additional refining capacity for HCFM at HCFM3 (ii) construction of a 200 t/d solvent extraction plant, which will process locally sourced oilseeds for HCFM2 and 3; and (iii) capacity expansion and machinery for additional product lines for the soap business at the ZAK site.

The solvent extraction plant is designed to produce crude oil from soya bean, sunflower, sesame, groundnut and cotton seeds; however, at this stage, it is planned that only soya bean, sunflower and sesame seeds will be processed. The proposed solvent extraction plant is located on a 3 hectare plot in Aletu, approximately 60 km north east of Addis Ababa in the Oromia Region. The site was formerly used for a dairy processing plant, which ceased operations in June 2020. The decommissioned dairy plant building and wastewater infrastructure (i.e. four settling ponds and a half-constructed effluent treatment plant), which are still present on the site, will be refurbished for the solvent extraction plant. In addition to the plant, additional infrastructure to be constructed includes oil seed storage, seed pre-cleaning area, an oil mill and oil storage tanks. The area surrounding the site is primarily dairy farms with processing and storage facilities attached and a few scattered farm dwellings. Construction of the solvent extraction plant is anticipated to start in the second half of 2021 and be completed by end 2022.

The Project is categorized as Category B according to MIGA’s Policy on Environmental and Social Sustainability (2013) because business activities have limited adverse environmental and social risks and impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures. The key risks and impacts are related to occupational health and safety risks; water use and effluent discharge; storage, handling and disposal of hazardous materials and general solid waste, and labor and biodiversity risks related to the primary supply chain.

While all Performance Standards are applicable to this investment, based on our current information, the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

  • PS1:  Assessment and Management of Environmental and Social Risks and Impacts
  • PS2:  Labor and Working Conditions
  • PS3:  Resource Efficiency and Pollution Prevention
  • PS4:  Community Health, Safety and Security

HCFM and Zak facilities are located on industrial sites, which were acquired by HCFM and Zak through willing buyer / willing seller transactions. No additional land acquisition will be required for the planned expansions and no physical or economic displacement will result from the Project; therefore, PS 5 Land Acquisition and Involuntary Resettlement does not apply. The Project will take place entirely within existing industrial land and no impacts on biodiversity are anticipated (except in relation to the primary supply chain addressed in PS 1), therefore PS 6 Biodiversity Conservation and Sustainable Management of Living Natural Resources. No indigenous peoples or cultural heritage are expected to be affected, and therefore PS 7 Indigenous Peoples and PS 8 Cultural Heritage do not apply.

In addition, the following World Bank Group (WBG) Environmental, Health, and Safety (EHS) Guidelines are applicable to the Project:

  • General WBG EHS Guidelines (2007)
  • WBG EHS Guidelines for Vegetable Oil Production and Processing (2015)

The following documents were reviewed by MIGA:

  • The Environmental and Social Impact Assessment Report for the proposed Etete Solvent Extraction Plan, Ethiopia. Hamen Consultancy Service Plc. May 2021.
  • Turaco Environmental, Health and Safety Management System Implementation Plan, February 2021.
  • Turaco Supply Chain and Project Overview. December 2020.
  • Blue Bird Holding Ltd. Integrated Management System Manual. December 2020
  • Environmental and Social Verification Report #1 – Turaco, Ethiopia. Prepared by SLR for Turaco, Ethos Private Equity & Proparco, October 2020.
  • Decommissioning & Decontamination Plan for BBHL Gullele Soap Factory. Final Report. IBIS, April 2020.
  • Environmental and Social Due Diligence of Blue Bird Holdings Ltd (BBHL), Ethiopia for Ethos and Proparco, IBIS, September 2019.

In addition to reviewing the above documents, MIGA carried out a virtual environmental and social (E&S) due diligence due to COVID-19 WBG travel restriction, including calls with Ethos Private Equity (Ethos) and Proparco (Lenders)  and relevant representatives of BBHL / Turaco from January – March 2021. Ethos and Proparco had engaged an Independent Environmental and Social Consultant (IESC) to support their due diligence in 2019, and two site visits, which included meeting with key E&S staff and management at BBHL / Turaco, HCFM and Gullele, were undertaken in May and November 2019 as part of the due diligence review. A separate IESC was engaged to monitor implementation of the Environmental and Social Action Plan (ESAP), and the first monitoring was a desktop review of ESAP deliverables, which was undertaken in October 2020. An IESC monitoring site visit is planned for 2021 once COVID-19 travel restrictions are lifted.

MIGA’s due diligence review considered the development and implementation of the E&S management system and E&S documentation for the Project and identified gaps (if any) between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable time period, are summarized in the paragraphs that follow and in the ESAP attached to this ESRS.  Through the implementation of these measures, the Project is expected to be designed and operated in accordance with the Performance Standards.

Key E&S issues associated with the Project business activities are summarized in the paragraphs that follow.

PS1:  Assessment and Management of Environmental and Social Risks and Impacts

Environmental and Social Assessment and Management System:

BBHL / Turaco has developed an Environment, Health and Safety (EHS) Integrated Management Systems (IMS) at the group level with the support of a consultant setting the standards for its underlying businesses and sites (including HCFM and ZAK). The IMS is in line with requirements of PS 1, as well as International Standards Organization (ISO) 14001:2015 Environmental Management Systems and ISO 45001:2018 Occupational Health and Safety Management Systems.

Policy:

A BBHL/ Turaco group-level EHS Policy has been developed and rolled out across all underlying businesses and sites, including HCFM and ZAK. The Policy sets out the overarching EHS and social commitments of the group and provides the basis for the development of the management system and the application of the system at all group companies. The EHS Policy is posted at HCFM and ZAK sites and will be publicly disclosed on BBHL’s website (ESAP).

Identification of Risks and Impacts:

HCFM1  facility,  did not require the preparation of an Environmental and Social Impact Assessment (ESIA).. ESIAs were prepared for the ZAK, HCFM 2 and HCFM3 facilities, which were approved by the Addis Ababa City Government in August 2019, June 2020 and October 2020, respectively. Additionally, all three sites have permits for water abstraction. HCFM2 and HFCM3 have a permit for wastewater / effluent discharge, while the ZAK permit is pending the completion of construction of the effluent treatment plant (ESAP). An ESIA was required for the construction and operation of the new solvent extraction facility for HCFM, which has been prepared and submitted to the Government in May 2021 and is pending approval. The ESIA was developed in line with Ethiopian requirements and the requirements of the Performance Standards.

The IMS also includes a framework for identifying and assessing hazards and risks, and both BBHL and site level hazard identification and risk assessments are planned to be completed by the end of 2021 (ESAP). The purpose of the risk assessment process is to identify and evaluate the EHS and social/community risks and impacts associated with the company, its operations, including all activities, and products over which it has control or influence (e.g. contractors, suppliers and other external parties). The hazard identification and risk assessments undertaken for HCFM2, HCFM3 and ZAK are consistent with the requirements of PS 1.

During their due diligence in 2019, Lenders, engaged an IESC to undertake a detailed E&S due diligence against the PS. This due diligence identified key E&S risks and impacts and existing gaps with the PS, and an ESAP was developed to address the identified gaps. BBHL/Turaco has been implementing the actions in the ESAP since early 2020 and has made significant progress in closing the identified gaps.

BBHL/Turaco are committed to applying sustainable sourcing policies, and both HCFM and ZAK are planning to complete mapping of their primary supply chain to identify potential E&S risks by the end of 2021 (ESAP).

While HCFM currently imports crude oil from international suppliers in Ukraine. A Global Map of Environmental and Social Risks in Agro-Commodity Production (GMAP) toolkit assessment of oil seeds in Ukraine did not identify any significant E&S risks. Once the solvent extraction plant is operational, HCFM intends to procure oil seeds locally. The main components of HCFM’s primary supply chain are soy, sesame and sunflower oil seeds. In 2020, HCFM engaged a consultant to prepare a detailed supply analysis and sourcing strategy to identify the availability of seeds locally to meet the HCFM demand of 35,000 t/year of sesame, 35,000 t/year of soy and 50,000 t/year of sunflower seeds. Supply mapping indicated local sources were likely available to meet all sesame and soy demand; but only some of the sunflower seed demand. The study also found that approximately 90% of oil seeds are produced by smallholder farms and primarily sold through aggregators and the Ethiopian Commodity Exchange (ECX) platform. A GMAP toolkit assessment of oil seeds in Ethiopia identified a risk of child labor and potential impact on natural areas, protected areas and terrestrial biodiversity in the sesame supply chain. These risks are largely contextual (e.g. child labor is a risk in Ethiopia in general and sesame cultivation occurs in areas of Ethiopia where there remain intact natural habitat and protected areas); however, sesame has not specifically been identified as a commodity where child labor is used and there is only one specific example of a large-scale sesame cultivation operation expanding into natural habitats. No significant risks were highlighted related to soy and sunflower seeds; but given the contextual nature of the risks identified for sesame, risks related to potential for child labor and impact on natural and protected areas will also need to be considered in the procurement of soy and sunflower seeds.   

As part of its sourcing strategy and sustainable sourcing policies, BBHL / Turaco will develop a risk-based procurement policy defining its commitment to comply with specific E&S requirements related to PS 2 and PS 6 for sourcing raw materials from third-party suppliers, and HCFM shall develop a procurement procedure that defines i) process for evaluating E&S risks within the primary supply chain based on production material; (ii) evaluation of suppliers and source of raw material inputs; (iii) assessment of suppliers E&S systems and capacity to manage risks; and (iv) process for annual reviews of suppliers/source of product based on material production input supply risk assessments (ESAP).

The ZAK supply chain includes the import of soap noodles from an international trading house based in Singapore; and the soap noodles are primarily comprised of palm oil, which is sourced from Indonesia and Malaysia. ZAK’s supplier does not currently offer soap noodles made with Roundtable on Sustainable Palm Oil (RSPO)-certified palm oil or other similar certification. The GMAP toolkit assessment of palm oil in Malaysia and Indonesia identified significant risks related to labor and working conditions, including a high risk of child and forced labor, gender-based violence and significant occupational health and safety risks; and potential impacts on biodiversity including impacts on natural habitats, protected areas and species of conservation significance. Given that BBHL / Turaco are far removed from the oil palm plantations, they have no control or leverage over the sourcing of palm oil or the activities of the plantations. Their primary leverage is over which soap noodles they procure; and therefore, BBHL / Turaco has committed to source soap noodles that are produced with RSPO-certified (or similar certification for gaining assurances of sustainability) of the palm oil used to produce the soap noodles (ESAP). BBHL / Turaco is currently working with their supplier to determine the feasibility of procuring soap noodles made with RSPO-certified palm oil, and they have agreed to transition to sustainably sourced soap noodles within three years of receiving MIGA’s Contract of Guarantee (ESAP).   

Management Programs:

The IMS provides a framework to enable EHS and social risks to be understood, and mitigation measures developed, implemented and appropriately managed. The IMS includes a group-level EHS Policy, an assessment of EHS hazards and risks, legal register and supporting EHS plans and procedures. Supporting environmental plans include those relating to energy and water consumption, stormwater management, effluent management, solid waste management, air emissions, and chemical management. Occupational health and safety plans and procedures include lock out tag out, electrical safety, working at height, hot work, machine safety, chemical safety, asbestos management, etc. Implementation of the IMS is further supported by the development of site-specific procedures at each site. The Project intends to seek ISO 14001 and 45001 certifications by the end of March 2022 (ESAP).

Organizational Capacity and Competency:

BBHL / Turaco has a suitably qualified and experienced EHS Manager who is supported by EHS Officers at HCFM and ZAK. BBHL / Turaco also has a Director responsible for Supply Chain and a ‘Chief People Officer’ responsible for human resources. BBHL / Turaco has also established a corporate EHS sub-committee, which is chaired by a BBHL Board member and consists of members representing various internal departments. The EHS sub-committee meets on a monthly basis.

At site level, EHS and social accountability is also assigned to the Factory Manager and Technical Manager, who works in conjunction with the EHS officers to ensure the IMS is implemented, and necessary resources are made available. Roles and responsibilities for all EHS positions are provided in the IMS Manual. The IMS Manual also includes a training, capacity building and awareness management plan to ensure that all personnel and contractors are competent to perform their jobs in a safe and responsible manner.

Emergency Preparedness and Response:

Emergency Response Plans (ERPs) and Fire Safety Plans have been prepared for the HCFM and ZAK sites. Evacuation plans, including designated emergency assembly areas, have been designed and posted at both HCFM2 and ZAK sites and regular drills are undertaken. Further, new fire detection and alarm systems were installed at HCFM2 and ZAK soap factory in September 2020 and December 2020, respectively. The ERP for the solvent extraction plant will be developed as part of the ESIA (ESAP).

The ERPs include identification of potential emergency events; defined procedures for each potential event identified (including procedures for external stakeholders, when necessary); list emergency equipment required to be on site (e.g. fire-fighting equipment, first aid kits, spill kits); indicate emergency Personal Protective Equipment (PPE); maps of assembly points and evacuation routes; contact information for key emergency-related staff and external stakeholders; and training and drill requirements.  

Monitoring and Review:

The IMS includes an EHS monitoring and reporting framework to assess the effectiveness of the IMS at managing and mitigating risks and enhancing EHS and social performance, including the assessment of the level of compliance with legal and other requirements and determining the extent to which objectives are being achieved. As the IMS’ EHS monitoring framework includes all relevant EHS and social monitoring requirements for HCFM and ZAK, this framework is applied at the HCFM and ZAK sites. The monitoring programs include parameters to be monitored; sampling locations; limits / targets; monitoring frequency; equipment calibration requirements (including frequency) and responsibilities for monitoring. A site-specific monitoring program will be developed for the solvent extraction plant as part of the ESIA process (ESAP).

Each site is required to provide an EHS and Social report to the BBHL / Turaco EHS Manager on a monthly basis, and the EHS Manager also undertakes monthly audits of the sites. The monthly site reports are compiled on a quarterly basis to report to BBHL / Turaco management on EHS and Social performance. In addition, the IESC will continue to monitor implementation of the ESAP until all ESAP items have been satisfactorily delivered. Turaco will also be required to provide MIGA with an annual environmental and social monitoring report.

Stakeholder Engagement and Grievance Mechanisms:

At the group level, BBHL/ Turaco has adopted a practical and systematic approach to stakeholder engagement to manage the relationship between BBHL/ Turaco and its stakeholders. Stakeholder Engagement Plans (SEPs) are currently being developed for the HCFM and ZAK sites (ESAP), which will include identification and mapping of relevant stakeholders; key performance indicators to assess the performance of the SEPs; and processes and mechanisms for engagement with internal and external stakeholders (ESAP). The SEPs will include measures to ensure that women are effectively engaged through HCFM and ZAK’s stakeholder engagement activities (ESAP).

BBHL/ Turaco have developed a complaint/grievance mechanism to enable any stakeholder to make a complaint or a suggestion about EHS and social issues. The grievance mechanism is incorporated into the site-level SEPs and applies to both internal and external stakeholders. The grievance process has been designed to ensure that all grievances that are received are acknowledged, logged into a grievance register and a response provided in an agreed timeframe in accordance with section. With the update of the SEP, the grievance mechanism will be updated to incorporate gender considerations (ESAP).

External Communication and Ongoing Reporting to Affected Communities:

An External Communication Plan has been prepared as part of the SEPs at the site level. BBHL / Turaco are committed to maintaining an open dialogue with all relevant stakeholders with particular attention to customers, neighboring communities, neighboring businesses, suppliers, funders and Government entities. Information agreed, and approved by the Chief Executive Officer (CEO), will be made available to the public on the BBHL website.

PS2:  Labor and Working Conditions

HCFM currently has 184 permanent employees and 126 outsourced workers at the HCFM2 site. HCFM 3 currently has 55 permanent employees and 23 outsourced employees. During operations, it is anticipated that the Solvent Extraction Plant will require 100 staff, of which approximately 60 are likely to be permanent employees and 40 are likely to be temporary contractors.  ZAK has approximately 291 permanent  employees and 81 outsourced workers

Working Conditions and Management of Worker Relationship:

BBHL/ Turaco have developed a Human Resources Management System (HRMS), which includes a recruitment policy; disciplinary and sanctions policy and procedures; retrenchment policy and procedure; contract types and durations; equality and non-discrimination policy; leave entitlement (including maternity leave); and a code of conduct. The HRMS was reviewed by site level human resource managers, agreed with union representatives and communicated to staff. IESC review indicated that working hours and wages are in line with relevant Ethiopian laws. The HRMS includes an internal grievance management policy and procedure, which is implemented at the site level through grievance process in the SEP. The internal grievance mechanism allows for anonymous complaints; allows all third-party employees to report grievances; has whistle-blower protections and includes timelines for resolution and an appeals process.

In 2020, the closing of the Gullele soap factory resulted in all temporary and permanent employees being moved to ZAK, no employees were retrenched. Retrenchment Plan was prepared, which included a Retrenchment Compensation Policy; Retrenchment Policy and Procedure; communication plan was prepared. The Retrenchment Plan was aligned with national law and relevant International Labor Organization (ILO) conventions.

BBHL/ Turaco Human Resource policies and procedures allow for worker organizations and collective bargaining.

Protecting the Work Force:

The code of conduct in the HRMS includes policy commitments to prohibit sexual harassment, child and forced labor in all BBHL/ Turaco operations.

Occupational Health and Safety:

As indicated under PS1, BBHL/ Turaco have developed an IMS, which is aligned with the requirements of ISO 45001 Occupational Health and Safety (OHS) Management Systems, and BBHL/ Turaco plans to achieve ISO45001 certification by the end of March 2022 (ESAP). Under the IMS, HCFM and Gullele have developed site-specific OHS plans and procedures. Occupational Exposure Surveys were undertaken at the HCFM2 site in January 2020 and at the ZAK site in January – February 2021, which resulted in corrective action plans. A validation survey will be undertaken at the HCFM2 site in the first half of 2021, which will review whether all actions in the corrective action plan had been achieved. Additionally, machine safety assessments were undertaken at both HCFM2 and ZAK sites in the 2020, and all issues identified have since been addressed and there are no outstanding actions related to the machine safety assessments. HCFM and Gullele will develop and implement legionella risk management plans to manage the risk associated with cooling towers at the sites. The management plans will include periodic bacterial treatment and identification of areas prone to bacterial development (ESAP). Procedures have been developed and implemented to manage risks associated with COVID-19, including hygiene and sanitation measures; and processes for isolation; quarantine and contact tracing if cases are identified.

Workers Engaged by Third Parties:

HCFM2 and ZAK both source contract workers from a labor broker. HCFM2 engages workers through the broker for packaging, loading and unloading jobs, which represents approximately 40% of its workforce. Approximately 15% of the ZAK workforce is outsourced primarily for loading and unloading jobs. All contract employees receive contracts that include the same working conditions and terms of employment as permanent staff.

Supply Chain:

As discussed under PS1, the supply chain assessment identified risk of child labor in the HCFM supply chain (related to sesame seeds) and both child labor and forced labor in the ZAK supply chain (related to palm oil in the soap noodle supply chain). These risks will be mitigated through sustainable sourcing and the development and implementation of a procurement policy and procedures (refer to PS1).

PS3:  Resource Efficiency and Pollution Prevention

Resource Efficiency:

All Project sites receive electricity from the grid, which is supplied by Ethiopian Electric Light and Power Authority (ELPA), and all sites also have back-up power in case there is disruption in grid electricity. HCFM2 and HCFM3 have 1250 kilovolt-ampere (kVA) diesel generators for back-up power supply. HCFM2 also operates a 3 t/hr diesel boiler and HCFM3 operates a 5 t/hr diesel boiler. Operations use about 2,500-3,000 kilowatt hours (kWh) per day. At HCFM 3 a 1250 kilovolt-ampere (kVA) diesel generator is used as back-up power supply. The site also operates a 5t/hour diesel Boiler. Site management indicated that the operations use about 2500-3000 kWh per day. At ZAK a 1250 kVA diesel generator is used as back-up power supply, and the site also operates a 4 t/hr Heavy Fuel Oil (HFO) Boiler. Operations use about 1000 kWh per day. The new solvent extraction plant will have two 1,500 kVa diesel fired generators for back-up power supply. Estimates of greenhouse gas emissions from all sites will be included in the Annual Monitoring Reports submitted to MIGA.

Water at HCFM and Zak sites is supplied by the municipal water supply; however, both sites also have on-site boreholes and permits for water abstraction to provide back-up water supply as needed. The HCFM2 site uses approximately 80 m3 of water per day primarily for boiler top-up, production process, cooling towers, plant cleaning and ablutions. The HCFM3 site uses approximately 100 m3 of water per day primarily for boiler top-up, production process, cooling towers, plant cleaning and ablutions. ZAK site uses approximately 100 m3 of water per day primarily for boiler top-up, production process, cooling towers, plant cleaning and ablutions

Water at the solvent extraction plant will be supplied by a borehole on the site, which was permitted for the previous dairy operation. The solvent extraction plant will require approximately 360 m3 of water per day, and the Project will apply for a new permit for this use (ESAP). Depending on the information available from the previous permitting process, the permit application may include pump testing to determine whether this volume can be abstracted without impact on surrounding boreholes. As part of the IMS, BBHL/ Turaco has developed an Energy Conservation and Monitoring Plan and a Water Conservation and Monitoring Plan with the objective of improving energy and water efficiency at all sites. These plans include key performance indicators (KPIs) and targets to improve energy and water efficiency. The change management plan in the IMS also includes consideration of how any proposed changes will affect energy, water and materials consumption.

Pollution Prevention:

Air emissions from HCFM2, HCFM 3 and ZAK are primarily associated with stack emissions from boilers and generators, and minor process fumes and fugitive dust from edible oil refining and soap manufacture. An Air Quality Management Procedure has been developed at each site as part of the IMS, and independent monitoring of stack emissions are planned for the first half of 2021 (ESAP). Air emissions from the solvent extraction plant are primarily associated with use of the back-up generators. It is anticipated that the generators will be run several times per week for a couple of hours during power outages. The Air Quality Management Procedure developed as part of the IMS will also be applied to the solvent extraction plant site, and monitoring will be undertaken as required depending on frequency and duration of generator use.

Wastewater sources at HCFM2 and ZAK include process effluent from the edible oil refinery and de-waxing process (HCFM2 only); process effluent from soap manufacture (ZAK only); effluents from equipment cleaning; boiler and compressor blowdown; gray water from ablutions, canteen and sinks; and stormwater run-off from roofs and external areas. Process effluent from HCFM2 is discharged via two separate four stage oil interceptor systems to the on-site wastewater treatment plant for pH adjustment (manual sulfuric acid addition), de-sludging, surface aeration and settling prior to batch discharge to an unlined stormwater drainage channel off-site to the east. Approximately 40 m3 of effluent is discharged per month. Monitoring of effluent discharge from HCFM2 undertaken in 2020 indicated elevated levels of phosphorous, total Coliform and Biological Oxygen Demand (BOD). Based on these results, improvements were made to the effluent treatment system in January 2021, including the addition of ferric chloride dosing to reduce phosphorous levels and BOD and sodium hypochlorite dosing to address coliform contamination. Monitoring is ongoing to determine whether the upgrades have sufficiently addressed the water quality issues. BBHL / Turaco have to committed additional upgrades, if needed, to bring the effluent in line with the requirements of the WBG EHS Guidelines (ESAP). A new effluent treatment plant was installed at the ZAK site in 2020, which is planned to be commissioned in May 2021. The new plant is designed to meet the discharge requirements of the WBG EHS Guidelines. A Wastewater Management Procedure has been developed as part of the IMS, and a site-specific wastewater management plans has been developed for HCFM2. A site-specific wastewater management plan will be developed for ZAK once the plant is commissioned.

The process at the solvent extraction plant includes solvent extraction using food grade hexane, and the main sources of effluent at the plant include wastewater from general washing and the hexane recovery process. Effluent will be transferred to an effluent treatment plant on site, where it will be treated through filters and biological activation before being released into settling ponds, and then ultimately discharged into the neighboring field, if quality is sufficient for discharge.  

Hazardous materials stored on sites include diesel fuel and reagents associated with effluent treatment (e.g. sulfuric acid, sodium hypochlorite, ferric chloride). Food grade hexane, which is highly flammable, is also used at the solvent extraction plant. All hazardous materials are appropriate stored in storage areas have adequate secondary containment and ventilation. A Hazardous Materials Management Plan has been developed as part of the IMS. Flammable perfumes and fragrances are also used and stored at the ZAK site. These flammable materials are appropriately stored with secondary containment; ventilation and fire rated walls designed to contain fire for at least 1 hour. Similarly, at the solvent extraction plant, hexane will be appropriately stored to minimize fire risk.

A Waste Management Plan has been developed as part of the IMS, which is applied to all BBHL / Turaco sites. The plan describes the different types of wastes anticipated at the Project sites and provides an indication of how the different waste streams should be managed following the waste management hierarchy (i.e. reduction, reuse, recycling and composting, recovery, treatment and disposal). At HCFM and ZAK sites, the primary waste generated is general domestic waste and packaging material. Solid waste generated at the solvent extraction plant includes by-products of the process (i.e. husks and defatted seed cake) and general waste (e.g. packaging). By-products will be sold, and general waste will be separated for disposal, recycling and reuse as appropriate.

Pest management at HCFM 2, ZAK and the solvent extraction plant is outsourced to a specialist contractor, and a formal pest management program is in place, which includes provision of labelled rodent and insect bait stations and traps across the property, that are checked and inspected routinely. The pest management program is part of HCFM’s certified food safety management system (refer to PS4).

In 2020, the Gullele soap factory was closed and operations were shifted to the new ZAK site. The Gullele factory site is now in the process of being decommissioned. The Gullele factory was established as a soap and detergent manufacturing facility in the mid-1960’s. Key areas of concern related to the decommissioning include (i) removal and safe disposal of asbestos and asbestos containing material (ACM) from the old factory building; (ii) removal and safe disposal of chemically corroded concrete flooring and external paving; (iii) assessment, remediation and clean-up of potentially contaminated soil and groundwater from observed fuel / chemical spillages and areas of historical storage of waste sludges, chemical drums, process effluents; (iv) safe disposal of waste chemical drums and containers (containing process wastes /sludges) and other redundant process equipment; and (v) electrical safety and integrity of building structures once decommissioned. A Decommissioning and Decontamination Plan was developed to provide detailed guidance on how to approach these key concerns. An asbestos inventory has been prepared, and an ACM management procedure will be prepared in line with WBG EHS Guidelines (ESAP).

PS4:  Community Health, Safety and Security

Community Health and Safety  

As mentioned in the Project Description, HCFM2, HCFM3 and ZAK sites are in commercial / industrial areas with neighboring businesses and commercial activity. The solvent extraction plant is located in an agricultural area, with the surrounding land being used for dairy farms.  There are approximately 5 scattered farm dwellings within 200 m of the plant site. The IMS includes consideration of community / public health and safety, and each site will prepare a site-specific community health management plan (ESAP), which will consider the potential impact to the community, neighbors and the public arising from activities on or associated with the site operations. As indicated under PS1, coordination with external stakeholders during emergency situations is included in the ERPs.

HCFM2 and HCFM3 have certified ISO 22000:2005 Food Safety Management System (FSMS) for the production, packaging and sale of sunflower and soya bean oils. The FSMS includes a Food Safety Policy signed by company management in both English and Amharic. The system includes the following key components: (i) cleaning and sanitation; (ii) customer complaints; (iii) food safety audits; (iv) training and awareness; (v) laboratory analysis; (vi) personal hygiene; (vii) pest control; (viii) temperature recording and calibration; and (ix) traceability. The Ethiopian Food, Medicine and Healthcare Administration Control Authority (FMHACA) visit HCFM2 every 3 - 6 months with a specific focus on hygiene and sanitation requirements.

Security Personnel:

Both HCFM and Gullele employ security guards at their sites. A Security Survey was undertaken in January 2020 and a Security Risk Assessment was completed in February 2020. Based on these two studies, a Security Management Plan was prepared in May 2020. The Security Management Plan was prepared in line with the requirements of PS 4 and is commensurate to the risk. Provisions for deployment of security and support to public sector as set out in the Management Plan as appropriate.

A Broad Community Support determination is not required for the Project.

The documentation listed below is available electronically as PDF attachments to this ESRS at www.miga.org

The above documentation is also available for viewing at the following locations:

Turaco Head Office

10th Floor Noah Office Buidling

Airport Road

Addis Ababa, Ethiopia

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MIGA supports its clients (as defined in MIGA Policy on Environmental and Social Sustainability) in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.

In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for MIGA. The CAO is mandated to address complaints from people affected by MIGA-guaranteed business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of MIGA.

Independent of MIGA management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of MIGA’s environmental and social performance through its compliance arm.

Complaints may relate to any aspect of MIGA-guaranteed business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of a MIGA-guaranteed business activity. Complaints can be submitted to the CAO in writing to the address below:

 

Compliance Advisor/Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Room F11K-232
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
E-mail:
cao-compliance@ifc.org