Notice

Category B project supported: Bohicon-Parakou Road, Benin

Published 15 January 2021

1. Project description

UK Export Finance has agreed to provide a direct loan to the Government of Benin, represented by the Ministry of Economy and Finance, to facilitate the rehabilitation and upgrade of a 210km section of the road between Bohicon and Parakou via Dassa. The Benin Ministry of Infrastructre and Transport will be responsible for the operation and maintenance of the road and Sogea Satom UK Ltd (‘the Exporter’) will provide construction services for the Project.

The Bohicon and Parakou road is second interstate highway that forms part of the main arterial route running north-south in the Republic of Benin. The road has been restored once previously; however, due to extensive use by heavy vehicles over the years, there are a number of potholes that have developed and the road requires repair. The Project comprises the restoration and operation of the 210km portion of the road between Dassa and Parakou.

Specifically, the Project comprises the following key components:

• road infrastructure, including reconstruction of the sub-base and road surface as well as the existing verge and the roadside drainage;
• cleaning and / or repairing existing drainage channels adjacent to the road as well as measures to improve road safety;
• sourcing of granite for the sub-base from an existing and a new quarry; and
• construction of water boreholes and fencing around schools.

The Project does not include any Associated Facilities^{[footnote 1]}.

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by the Benin Ministry of Infrastructure and Transport. Sogea Satom UK Ltd will provide construction services for the Project.

4. UK exporters

Sogea Satom UK Ltd

5. Export credit agent bank

Natixis

6. Amount of UK Export Finance support

The Direct Lending facility amount is £100 million.

7. OECD Common Approaches and Equator Principles

UKEF categorised the Project as a Category B (having 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”).

The Project does not fall under the scope of the Equator Principles (June 2013).

Public disclosure of Category B projects on UKEF’s website is not required by the OECD Common Approaches. However, UKEF has pledged to disclose support for all new Category B cases for which we have provided support from 1 April 2020 ^{[footnote 2]}.

8. Environmental, Social and Human Rights (ESHR) 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 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.

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007),
• EHS Guidelines for Construction Materials Extraction (2007), and
• EHS Guidelines for Toll Roads (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:

• noise and vibrations,
• hazardous materials management,
• waste management,
• drainage management,
• air emissions,
• water and energy resources,
• worker welfare,
• management of third-party contractors and suppliers,
• grievance mechanisms,
• occupational health and safety,
• emergency planning and response,
• traffic management,
• land acquisition for the quarry and borrow pits,
• cultural heritage,
• community engagement,
• community health, safety and security, and
• decommissioning and restoration.

10. Assessment of ESHR impacts

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

• desk-based review of project-related documentation: Environmental and Social Impact Assessment, Environmental and Social Management Plan, and Stakeholder Engagement Plan;
• a site visit to the Project area, including interviews with relevant personnel, and meetings with Ministry of Infrastructure and Transport representatives, local authorities and community representatives; 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 potential direct and indirect emissions of the Project and effects of climate change factors on the Project as part of our ESHR review of this Category B Project. The Project comprises the rehabilitation of an existing road, which is not considered to be a carbon intensive undertaking (such as fossil fuels, petrochemical or cement manufacturing) and so “high” GHG emissions in excess of relevant thresholds for quantification and reporting set by international standards were reasonably not envisaged. Furthermore, a material increase in road traffic is not anticipated as there is no widening or extension of the current footprint road. The review revealed that the Project design has included potential physical impacts of climate change such as changes to rainfall and weather patterns.

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 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 and UKEF 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 environmental and social monitoring by an IESC, in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

12.1 UK Export Finance

October 2020

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. ↩

2. Parliament. House of Commons. Environmental Audit Committee (2019) UK Export Finance: Government Response to the Committee’s Nineteenth Report of Session 2017-2019 (HC (243), p.4 ↩