Notice

Category A project supported: Gemlik Gübre Sanayii A.Ş., Urea production plant project, Turkey

Published 4 October 2022

1. Project description

UK Export Finance has agreed the provision of buyer credit support in relation to the design, and construction of the Gemlik Gübre Sanayii A.Ş Urea Production Plant, in Turkey (the “Project”).

The Project comprises the construction and operation of a Urea Production Plant located in the Gemlik District of Bursa, Turkey. The new Urea Production Plant will have a capacity of 1,640 Metric Tonnes Per Day (MTPD) of granular urea. Once operational, the Project will use carbon dioxide (CO2) currently produced and emitted at an existing adjacent Ammonia Plant as a feedstock.

The Project includes:

• Construction; and
• Operation and maintenance service.

SACE gruppo cdp (the Italian export credit agency), and ING Group as a commercial bank are also involved in the financing – together referred to as the ‘Lender Group’.

2. Project sector

The Project is in the agricultural fertiliser sector.

3. Project sponsors

The Project is being developed by Gemlik Gübre Sanayii A.Ş

4. UK exporters

Various

5. Export Credit Agent Bank

ING Group

6. Amount of UK Export Finance support

The principal value of the support is approximately EUR 21,400,000.

7. OECD common approaches and equator principles

UK Export Finance categorised the Project as Category A i.e. 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, UK Export Finance disclosed its possible involvement in the Project. A notification was posted on the UK Export Finance web site on 15th November 2021, which directed interested parties to the contact from where published ESHR information can be sourced. UK Export Finance didn’t receive any comments from interested parties.

Ramboll was commissioned to undertake an independent environmental and social due diligence review on behalf of the Lender Group.

8. Environmental, social and human rights standards

Project related ESHR documentation was reviewed for their 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 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
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
• PS8: Cultural Heritage

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007)
• EHS General Guidelines (2007)
• Industry Sector Guidelines for Nitrogenous Fertilizer Production (2007)
• IFC / EBRD Guidance Note on Workers’ accommodation: processes and standards (2009)

10. 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:

• health and safety (worker and community)
• climate change
• waste and hazardous material management
• emergency planning and response
• construction camp conditions
• grievance mechanisms
• worker conditions of contract
• community engagement

11. 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.

Ramboll was appointed as the IESC with a duty of care to the Lender Group and were commissioned to undertake an ESDD assessment of the Project. The 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:

• Ramboll undertook visits to the Project site on 8 July 2021 and 1-4 August 2022
• Desk-based review of project-related documentation include but is not limited to: National Environmental Impact Assessment (EIA), March 2018; Environmental and Social Management Plans, August 2020; Supplementary Environmental and Social Impact Assessment (ESIA), May 2021; and Stakeholder Engagement Plan
• 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.

Taking account of the review, the Project was deemed to have potential to cause a number of adverse environmental and social impacts both during construction and operation. However, a proposed suite of controls as part of the Project’s environmental and social management systems should facilitate the management of these impacts in line with good international industry practice.

12. Climate change considerations

UKEF considered the potential direct and indirect green house gas (GHG) emissions of the Project and effects of climate change factors on the Project as part of its ESHR review.

The Project is considered to be a carbon intensive undertaking so “high” GHG emissions in excess of relevant thresholds for quantification and reporting set by international standards were envisaged.

The review revealed that the Project design has considered potential physical impacts of climate change such as changes to rainfall and weather patterns.

13. Decision

Various actions have been agreed between the Project developer, operator, and parties involved in the financing, which are necessary to ensure the Project’s on-going 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 goods and services by UK exporters to the Project.

A condition of support is that Project will be subject to monitoring and reporting in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

UK Export Finance

3 October 2022