Financed ProjectsTogliatti Azot

Identification Code:

OP/00/0127

Total Operation Cost:

55.000.000

Maturity:

42 months

Operation Status:

Description and Purpose of the Operation:

The Loan will be used for the Company's working capital purposes, namely for the payment for: - Transportation charges - Purchase of raw materials, gas supply, and energy - Operating and maintenance costs - On-going working capital requirements The Company's own funds, freed up by BSTDB proposed working capital facility, will be used to complete an export port facility at Taman peninsula. That would allow Company to increase exports and, thus, production volume.

Countries of Operation:

Russia (100,00 %)

Financial Product:

Loans

Sector:

Materials

Domain:

Private

Borrower/Client:

OAO "TogliattiAzot

Co-Financiers/Participants:

Guarantors/Sponsors:

Developmental and Regional Cooperation Impact:

Although the Project is not directly undertaken in the regions of Southern Russia, it contributes to the development of this area: the Company's own funds, freed up by BSTDB (and EBRD) proposed Working Capital Facility, will be used to complete an export port facility at Taman peninsula. That would allow Company to increase exports and, thus, production volume. The Project would enhance economic activity in the regions of Rostov and Krasnodar by boosting financing and creating over 300 new jobs. Furthermore, the indirect impact through employment in the railway, port operations and maritime operations will also be achieved.

Environmental Classification and Impact (summary):

The results of the environmental consultant's (commissioned by EBRD and BSTDB) assessment, along with additional information provided by the project sponsor was used to determine the key environmental issues and required mitigation measures. These are summarised below: - ToAz has an active department covering environmental and occupational health and safety issues, and also emergency services. The company has appropriate permits for operation, including some temporary conditions, and reports no incidents or disputes. The emphasis is on compliance with local regulations but ToAz is considering the possibility of ISO 14 000 certification, suggesting a possibility of a more proactive approach. - The Chief Inspector of the State Environmental Protection Inspectorate, Togliatti, gave a favourable opinion of ToAz to the environmental consultant and commented that the plant had improved substantially since the 1980s. He identified no major issues of concern. - Although Russian legislation continues to evolve, no substantial shift requiring major action by ToAz was identified. - There are some areas of non-compliance with European Union regulations, compliance with which is required by the EBRD and BSTDB. These include issues relate primarily to air emissions and wastewater discharges. Measures to ensure future compliance and general environmental improvement have been incorporated into an Environmental Action Plan (EAP) by the project sponsor. - Implementation of the EAP has been agreed between the project sponsor, EBRD and BSTDB. As parallel financiers, a consistent approach to the environmental conditions of the loan will simplify project implementation for both the project sponsor and lenders involved. The Analysis determined that the overall environmental impact of the project should be positive. Environmental benefits will result from this project associated with the provisions of the Environmental Action Plan (EAP); if financing through the working capital frees up funds for these actions, then there will be significant environmental benefit from the project. For example, some of the proposed technology to be included in the EAP will result in greater energy efficiency thus lowering energy consumption and atmospheric emissions. Changes in the wastewater treatment system that will remove the need for chlorine use will result in both environmental and health benefits.

Operation Leader:

General Industries, Transport, Tourism 2

E-mail:

gitt2@bstdb.org