ACCESS BANK PLC
|Adoption Date:||4 June 2009|
|Country of Headquarters:||Nigeria|
|Region of Headquarters:||Africa|
|Institutional Reporting Hyperlink:||https://www.accessbankplc.com/sustainable-banking/sustainability-report|
|Current EPFI Reporting Year/Period:||2014|
|EPFI Reporting in Compliance:||Yes|
Please read the important notes and disclaimer for further information on 'EPFI Reporting', compliance and publication on the Equator Principles Association website.
Further information on this EPFI may be obtained through the Institutional Reporting Hyperlink above.
PROJECT FINANCE ADVISORY SERVICES
Total number mandated in the reporting period: 0
PROJECT FINANCE TRANSACTIONS
Total number that reached financial close in the reporting period: 0
PROJECT-RELATED CORPORATE LOANS
Total number that reached financial close in the reporting period: 1
|Oil & Gas|
|Europe, Middle East & Africa||1|
1Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. For the list of Designated Countries, go to: http://www.equator-principles.com/index.php/ep3/designated-countries
IMPLEMENTATION OF THE EQUATOR PRINCIPLES
Access Bank PLC (‘Access Bank” or “the Bank”) participated in the US$800 million syndicated facility with respect to the provision of debt financing of US$10 million for a 1.4m MTPA Nitrogenous Fertilizer Complex comprising a 2,300 tonnes per day (TPD) Ammonia Plant and a 4,000 TPD Urea and Granulation Plant (the Project).
In line with the Bank’s Environmental & Social Management System (ESMS), we conducted an environmental & social review of the project to confirm the adequacy of the Project against the bank’s ESMS, Equator Principles and other local and international laws for which we are a signatory.
The objectives of this detailed review are to:
- Comment on the adequacy of the environmental and social (E&S) assessment process for the Project;
- Identify environmental & social issues and their potential impact
- Agree with the sponsor on a management plan on addressing the identified environmental & social risk issues ;
- Agree on affirmative covenants to address the identified issue and for the purpose of monitoring
1.3. PROJECT DESCRIPTION
The Project is defined as:
- Construction and operation of a 1.4M MTPA Nitrogenous Fertilizer Complex comprising a 2,300 TPD Ammonia Plant, 4,000 TPD Urea and Granulation Plant including support infrastructure and utilities (the Plant);
- Construction of a 84km pipeline from the Gas Suppliers processing facilities to the plant (the Pipeline) for supply of the feedstock gas that will run adjacent to two existing pipelines within an existing right of way; and
- Construction of a multipurpose jetty inclusive of material handling facility (jetty)
Construction of the Fertilizer Plant which commenced in 2013 was completed within the estimated constuction period (i.e. 27 months). The construction of the Jetty and Pipeline was also undertaken during this period. The projected period for the start up of operations for the entire Project slated for early 2016 was fully achieved. The plant is expected to commenced full operation before the end of the first quarter in the year 2016.
2.0. ENVIRONMENTAL & SOCIAL RISK MANAGEMENT OF THE PROJECT
In line with the bank’s ESMS system, our assessment of the project was based on five distinct processes as enumerated below:
- E&S Screening;
- E&S Risk Assessment;
- Decision and Documentation;
- Monitoring; and
2.1. ENVIRONMENTAL & SOCIAL SCREENING
In line with our procedure, an initial screening exercise was conducted on the project by our Account Officer using the bank’s sustainable finance toolkit. The toolkit was used to check the project with the exclusion list as contained in our ESMS. The project was cleared as it did not fall within projects that cannot be undertaken by the bank. Given the nature of the project, we reviewed licenses and consent obtained by the client for the project vis – a vis the local and international laws. The essence of this is to ensure that the project is in compliance with regulation. Permits and Consents obtained from the IEFCL include Factories Act, Federal Ministry of Environment Permit, Rivers State Environmental Protection Agency permit, National Environment Standards and Regulation Enforcement Agency (NESREA) report, National Drug Law Enforcement Agency (NDLEA) report on products of IEFCL, Standard Organisation of Nigeria (SON) Permits, Environmental Impact Assessment (EIA) Report. All the aforementioned documents were reviewed by the Account Officers with certification obtained from the client.
2.2 ENVIRONMENTAL & SOCIAL RISK ASSESSMENT
Under this process, the Account Officer conducted a risk assessment of the project to identify potential environmental & social risk issues in the project.
Given that this is a Project-Related Corporate Loan transaction, we used the Equator Principles requirements and our findings are as shown below:
Review and Categorisation:
Based on our review, the project was classified as Category B. The categorisation was based on the due diligence and independent assessment of the project.
Social and Environmental Assessment:
The Environmental & Social Impact Assessment for the project was prepared and duly approved by the regulatory agency / parastatal in charge of the environment. The E&S issues inherent in the project were identified and corrective action plans were put in place to mitigate all the identified issues. The sponsor demonstrated strong commitment and support by adhering to the covenants and conditions recommended to address the identified E&S risks. The Access Bank Project & Structured Finance team as well as Access Bank's Environmental & Social Review team effectively supervised this project which has now been duly completed.
Applicable Environmental and Social Standards:
In line with our review and independent check as well as verifications on the permits and consents applicable, the project is in compliance with local laws and international standards. The organisation has an adequately designed Environmental and Social Management System tailored to identify and promptly manage inherent E&S issues on the business and the project affected community.
Management System. The ESIA for the Fertilizer Plant contains the framework for mitigation and a monitoring plan which we have reviewed and commented on.
To cater for implementation of the action plan, we have incorporated this into the facility documentation for the purpose of monitoring and compliance by the Lenders.
Consultation and Disclosure:
We reviewed the documents and approval obtained by IEFCL and we found out that appropriate consultation and disclosure has been made with the various stakeholders. The impact of the project on all the stakeholders were well articulated and discussed with all the stakeholders. Requisite agreements were also made to ensure that positive activities including job opportunities, educational activities/infrastructures and other CSR activities are packaged for the benefits of the local communities. This has resulted in peaceful collaboration between the project sponsor, consultants, contractors and locals. All these resulted into completion of the project within the slated timeline.
Based on our field assessment, engagements with both the obligor and notable key stakeholders in the project community and review of independent report, IEFCL has established mechanisms for addressing stakeholders or labour concerns for the fertilizer plant. This is considered adequate.
Expert assessment were carried out throughout the project construction phase where due diligence exercise was carried out by the lenders consultant. The focal objective was to provide independent opinion on the project. The reports were periodically reviewed and recommendations thereof were incorporated into periodically revised the action plan and adequately monitored.
Adequate affirmative covenants and negative covenants are contained in the facility documentation, this is to ensure monitoring and compliance with agreed action plans.
In line with our assessment, the project consists of the following environmental & social risk issues detailed below:
- Air pollution arising from pollutants from the chemical plant
- Noise level
- Water and waste management issues
- Health and Safety Issue
- Hazardous/flammable chemicals coming from the plant
- Community Displacement and Resettlement issues
- Community Health and Safety
- Protection and Conservation of Biodiversity
- Discrimination in the workplace
- Labour and working condition.
To address the issues identified, an environmental & social action plan as shown in Annex 1 was agreed and incorporated in the facility documentation.
2.3. DECISION & DOCUMENTATION
In line with our review and the extent of compliance with environmental & social issues on the project, we incorporated in our documentation process certain requirements, representations and warranties, conditions precedent and subsequent to disbursement as well as affirmative and negative covenants for this project. This was conveyed to the Facility Agent for the purpose of having common terms and conditions given that this is a syndicated facility.
Some of the terms include:
Conditions Precedent to Disbursement:
- Certification that the Borrower is in compliance with the Action Plan
- Receipt of the ESIAs for the fertilizer plant, gas pipeline and jetty respectively.
Representations and Warranties:
The facility agreement contained standard representation and warranties which include compliance with environmental laws,
We have affirmative covenants like implementation of the agreed Environmental Management Action Plan (EMAP), Submission of annual environmental report while negative covenants include not doing activities within the prohibited or exclusion list.
The consultant appointed by the lenders has conducted periodic monitoring and reported appropriately to the lenders. . The monitoring report submitted the Facility Agent for prompt review of the respective Environmental & Social Risk team of the lenders' bank. Although the project is at the verge of completion and commencement of activities due in Q1, 2016. Ongoing monitoring shall continue during the operation phase whilst periodic E&S monitoring reports shall be required from the obligor.
Based on the fact that this is a Project-Related Corporate Loan transaction coupled with the fact that the bank is an Equator Principles Financial Institution, we have reported the project in our Equator Principles report. Furthermore, we intend to publish the activities of the project in our future sustainability report.
The Bank’s E&S Unit conduct independent project monitoring visit to the plant in order to ascertain the level of work being done as well as implementation of the agreed action plan.
Based on our review of the Project documentation and discussion with the sponsor, we consider that the Project impacts are minor and adequate mitigation measures were applied accordingly. Our review concludes that the level of assessment undertaken is appropriate to the nature and scale of the development and broadly along the line of what would be expected for such a project. We are of the opinion that IEFCL is committed to ensuring compliance with environmental laws and standard given their track record in projects of this nature.
Based on the foregoing, we consider the project and the project sponsor to have the capacity to comply with the ESAP and thus recommend that the project is in conformity with our ESMS.
ANNEX 1: ENVIRONMENTAL & SOCIAL ACTION PLAN
S/N Corrective Action Plan Responsibility Deliverable Timeline
- Submit report to the Bank on environmental, social, health and safety performance, including status of each ESAP element and current status of Environmental Health and Safety issues. IEFCL Submission of report as agreed in loan agreement Semi-annually
- Gain National Approval (EIS) for all Project components IEFCL .
- As part of EPC reporting programme, produce monthly reports on compliance with their EHS system, ESMS commitments, health and safety aspects and identification of incidents and correction actions. EPC Contractor Report to facility agent During construction
- Develop and implement a Project Specific Environmental and Social Management System (ESMS) detailing EPC contractor duties and responsibilities (Project Management) should they intend to enbark on any other project. EPC Contractor HSE terms should form part of any contractual documentation for submission to the lenders. Approval of the EPC Contractor EHS management plans for implementation during construction. IEFCL Report to Facility Agent Prior and during construction 5 Ensure the EPC-Contractor has principles of non discrimination and equal opportunities in place when hiring local workforce. IEFCL Communicated at the point of engagement of employees Prior to construction
- Undertake a dedicated Noise Impact Study for the proposed Fertilizer Plant taking into consideration all new potential sensitive receptors IEFCL by appointing consultant Noise levels report and must be in compliance with international standards Before financial close
- Integrate mitigation measures identified in the Project ESIA / ESAP into the EPC-Contractor policies, plans and method statements. EPC Contractor greed mitigation plan in place Before construction
- Confirm the capacity and design of the water treatment plant to incorporate wastewater from the new fertilizer plant IEFCL Confirm by technical consultant Before financial close
- Strengthen the current Waste management system to account for new material handling from the new Plant. IEFCL Revised waste management guidelines Before construction
- Ensure pipeline project includes a plan of how to manage sensitive Receptors, an appropriate traffic management plan and a procedures to minimize safety and health impacts on the community, e.g. from noise and dust etc (as applicable). IEFCL Procedures in compliance with international standards Prior to construction
- Involve the community in the emergency response plans. It is also recommended that a community warning system be developed. IEFCL Emergency Plan with consideration of the community in place Prior to construction