Notice

Category B Project Supported: Hilla Sewage Project, Iraq

Published 26 January 2024

1. Project description

UK Export Finance (UKEF) has agreed to provide support to the Ministry of Finance, Iraq in respect of the supply of goods and services by GCITJ Babel Ltd ^{[footnote 1]}, for the improvement and upgrading of stormwater and wastewater management infrastructure and capacity in Hilla City, Iraq.

A key aim of Iraq’s Ministry of Construction, Housing, and Municipalities – General Director of Sewage together with the local Governorate of Babel is for the Project to improve the quality of the supplied drinking water and sanitation facilities for the surrounding community. The current system is sometimes overwhelmed which causes sewage to overflow, leading to health issues. The Project will also develop and improve Hillah’s drainage infrastructure.

This Project is part one of a three phase project, and comprises the construction of: i) five Sewage Pumping Stations (SPS), ii) four Rainwater Pumping Stations (RPS) and iii) three combined SPS and RPS pumping stations. The stations will be connected to an extensive local sewage and storm water transport (pipeline) network.

The Project does not include any Associated Facilities.

Standard Chartered Bank (SCB) is the lending bank.

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by GCITJ Babel Ltd.

4. UK exporters

James Cubitt and Partners, and related sub-contractors: Doncaster Cables, Power Link Machine, Bowers Electrical, Shield Fire, Safety, & Security Ltd, Panasonic Connect Ltd, EPS Water, FT Pipeline Systems Ltd, HUBER Technologies /Rotamat Ltd, Street Crane Co. Ltd, Grundfos Pumps Limited, Spirotech Group Ltd, and Cotswold Valves Ltd.

5. Export credit agent bank

SCB.

6. Amount of UK Export Finance support

The principal value of the support is approximately USD 297,500,000.

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 its 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); and
• EHS Guidelines for Water and Sanitation (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;
• health and safety and related worker training;
• worker conditions of contract and subcontractor management;
• grievance mechanisms for workers and community;
• emissions (including noise, air, water and green house gas (GHG));
• waste and hazardous material management;
• security management;
• community engagement;
• storm water management; and
• potential land acquisition and resettlement.

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. This was supported by a consultant, RSK, who was commissioned to undertake an independent environmental and social due diligence review on behalf of SCB and UKEF.

The review included:

• A three-day site visit by RSK;
• Desk-based review of Project-related documentation: Environmental and Social Impact Assessment, Environmental and Social Management Plans, and Stakeholder Engagement 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 GHG emissions of the Project and effects of climate change factors on the Project as part of its ESHR review.

The Project 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 design has considered potential physical impacts of climate change such as changes to weather patterns, including increases in temperature and rainfall.

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

January 2024

1. A Joint Venture of GAMA Industrial Plants Manufacturing and Erection, Inc., James Cubitt & Partners Limited, Al-Ehtifad General Contracting, Jazirah Al-Mansour Trading & Investment Co. Ltd, and Al-Tafweed Company for General Trading. ↩