Notice

Category A project supported: Expansion and upgrade of Pemba Airport, Zanzibar

Published 9 October 2024

1. Project description

UK Export Finance (UKEF) has agreed to provide support to the Government of the United Republic of Tanzania acting by and through the Ministry of Finance and Planning and the Ministry of Infrastructure, Communications and Transportation (MoICT) of the Revolutionary Government of Zanzibar for the expansion and upgrade of Pemba airport in Zanzibar.

Pemba Airport Construction Consortium Limited (the Exporter) will supply design and construction services. Zanzibar Airport Authority, an agency of MoICT, will be responsible for the operation and maintenance of the airport.

Pemba Airport is a regional airport with flights serving internal destinations to Zanzibar City, Tanga, and Dar es Salaam. Most flights are carried out via small code B aircraft. The Project will involve the extension and widening of the runway to 2,510m long x 45m wide to accommodate larger aircraft (Code 4C), including runway end taxiway loops and an expanded apron. The existing passenger terminal will be demolished and replaced with a new modern terminal, and there will be a new aircraft rescue and firefighting facility, electrical and airfield lighting substations and air traffic control tower, ancillary buildings (sewage treatment plant and utilities buildings), as well as upgraded parking, access road and landscaping.

The Project aims to improve mobility and connectivity to and from Pemba Island, stimulating employment, boosting tourism potential, and facilitating exports and economic growth.

The Project does not include any Associated Facilities[1].

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by the Ministry of Infrastructure, Communication and Transport of the Revolutionary Government of Zanzibar.

4. UK exporters

Propav Airport Construction Consortium Limited.

5. Export Credit Agent Bank

Citibank Europe PLC, UK branch.

6. Amount of UK Export Finance support

The principal value of UKEF support is approximately €180 million.

7. OECD Common Approaches and Equator Principles

UKEF categorised the Project as a Category A (having potentially significant environmental, social and human rights (ESHR) impacts) in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

As required by the OECD Common Approaches, UKEF disclosed its potential involvement in the Project. A notification was posted on the UKEF website on 10 May 2023, which provided a description of the Project, a contact point to signpost interested parties to environmental and social information, and links to the environmental and social impact assessment. No enquiries were received by UKEF or the contact point as a result of this notification.

8. Environmental, Social and Human Rights Standards

Project-related ESHR documentation was reviewed for alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines. The applicable IFC PS and World Bank Group EHS Guidelines were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts;
• PS2: Labour and Working Conditions;
• PS3: Resource Efficiency and Pollution Prevention;
• PS4: Community Health, Safety and Security;
• PS5: Land Acquisition and Involuntary Resettlement;
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources;
• PS8: Cultural Heritage;
• World Bank Group General EHS Guidelines (2007);
• World Bank Group EHS Guidelines for Airports (2007); and
• World Bank Group EHS Guidelines for Construction Materials Extraction (2007).

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• Air and noise impacts;
• Soil quality;
• Waste, including hazardous waste;
• Wastewater;
• Biodiversity;
• Land acquisition and livelihood impacts;
• Management of third-party contractors and suppliers;
• Grievance mechanisms;
• Occupational and community health and safety;
• Emergency planning and response;
• Worker welfare;
• Cultural heritage; and
• Community engagement.

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

An Independent Environmental and Social Consultant (IESC) with a duty of care to the Lenders was appointed and commissioned to undertake an environmental and social due diligence of the Project. Their report formed the basis for UKEF’s evaluation of the Project’s alignment with the relevant standards and recommendations for compliance and monitoring.

The review included:

• Desk-based review of project-related documentation including  environmental and social impact assessment and environmental and social management plans;
• IESC and lender site visit to the Project area, including meetings with key stakeholders; and
• Follow-up meetings and interviews with relevant Project representatives.

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

11. Climate change considerations

UKEF considered the Project’s potential direct (Scope 1 and 2) and indirect (Scope 3) greenhouse gas (GHG) emissions and effects of climate change factors on the Project. The construction and operation of the Project are not considered to be carbon-intensive undertakings and estimates for Scope 1 and 2 emissions are reasonably considered to be significantly less than relevant thresholds for quantification and reporting (e.g. 25,000 tonnes CO2 equivalent per annum) set by international standards. The Project’s largest source of emissions will be associated with flights to and from the airport (i.e. its Scope 3 emissions). Estimates indicate these emissions will be lower than 25,000 tonnes of CO2 equivalent per annum. As the function of the Project is to facilitate mobility and broader economic development, the specific role of the Project to potentially manage and reduce scope 3 emissions is indirect. These additional emissions are considered in line with Zanzibar’s economic development. The ESHR review revealed that the Project design has considered potential physical impacts of climate change.

12. Decision

Various actions have been agreed between the Project developers, operators, and parties involved in the financing, which are necessary to ensure the Project’s ongoing alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle. UKEF has therefore decided to provide its support in respect of the supply of capital goods and services by UK exporters to the Project.

A condition of support is that the Project will be subject to ESHR monitoring by an IESC to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

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[1] OECD Common Approaches defines “Associated Facilities” as: those facilities that are not a component of the project, but that would not be constructed or expanded if the project did not exist and on whose existence the viability of the project depends; such facilities may be funded, owned, managed, constructed and operated by the buyer and/or project sponsor or separately from the project.