Notice

Category B project support: Hitech Construction Sokode-Benin Road, Togo

Published 27 June 2023

1. Project description

UK Export Finance (UKEF) has agreed to provide support to the Government of Togo represented by the Ministry of Economy and Finance (the “Borrower”), to faciliate the rehabilitation and construction of an existing national road in the centre and eastern regions of Togo. The Government of Togo, represented by the Ministry of Infrastructure and Transport (MIT), will be responsible for the operation and maintenance of the road and Hitech Construction Company (“the Exporter”) will provide construction services.

A key aim of the Project is to reinforce the role of the transport sector in its function of supporting the Togolese economy through a modern intra-urban service network and the opening up of rural areas and sub-regional integration.

The Project comprises the rehabilitation of the existing national road NR14 Sokode-Tchamba-Kambole-Benin border. The road is sited towards the centre of Togo in the Centrale Region, stretching east and south towards the border with Benin. The total length to be renovated is approximately 86 km and incorporates ‘rural’ sections of road, and internal roads within cities/towns as part of the Project scope. The Project will consist of the renovation by upgrading, concreting and asphalting of approximately 86 km of roadway and construction of one roundabout, one four-leg junction and three T-junctions. Ten existing bridges will be rehabilitated and widened to allow for pedestrian-safe crossings. One of the bridges will be extended and another will be dismantled and rebuilt. Aggregate materials will be sourced from one new quarry and one new borrow pit.

The Project does not include any Associated Facilities.

Mitsubishi UFJ Financial Group is the lending bank.

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by MIT and will be delivered through the Ministry of Public Works (MPW) Togo (collectively “the Buyer”).

4. UK exporters

Hitech Construction Company.

5. Export Credit Agenct Bank

Mitsubishi UFJ Financial Group.

6. Amount of UK Export Finance support

The principal value of the support is approximately EUR 88,700,000 million.

7. OECD common approaches and equator principles

UK Export Finance categorised the Project as Category B i.e. having environmental, social and human rights (ESHR) impacts that are few in number, site-specific, few (if any) of which are irreversible, and for which mitigation measures are more readily available 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).

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;
• PS5: Land Acquisition and Involuntary Resettlement;
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; and
• PS8: Cultural Heritage. 10. The applicable World Bank Group EHS Guidelines were:
• General EHS Guidelines (2007);
• EHS Guidelines for Toll Roads (2007); and
• EHS Guidelines for Construction Material Extractions (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:

• emergency planning and response;
• occupational health and safety;
• management of third-party contractors and suppliers;
• worker welfare;
• air, noise and vibration emissions;
• climate change;
• water resources;
• waste and hazardous material management;
• community engagement;
• community health and safety;
• grievance mechanisms;
• temporary economic displacement and livelihood restoration;
• biodiversity; and
• cultural heritage.

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.

Ramboll, an Independent Environment and Social Consultant (IESC), was commissioned by Hitech to undertake an environmental and social due diligence review on behalf of the Lender group/ECA.

The review included: - Site visit; - Desk-based review of project-related documentation: Environmental and Social Impact Assessment, Environmental and Social Management Plans, Stakeholder Engagement Plan and Livelihood Restoration Plan; 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.

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.

11. 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 comprises rehabilitation of an existing road, which is not considered to be a carbon intensive undertaking (such as fossil fuels or petrochemical), and so “high” Scope 1 and 2 GHG emissions in excess of relevant thresholds for quantification and reporting set by international standards were reasonably not envisaged. The Project’s largest source of emissions will be from vehicles using the road (i.e. its Scope 3 emissions). Whilst the Project will create some additional traffic, much of the expected traffic growth that will be accommodated on the Project roads is expected to occur irrespective of the Project, i.e. due to broader economic activity in the country.

The associated increases in GHG emissions are considered in line with the Project’s positive development impacts. The ESHR review revealed that the Project design has considered potential physical impacts of climate change such as changes to rainfall and weather patterns.

12. 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

June 2023