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Southern Sudan Beverage Limited
Environmental & Social Review Summary
This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
SOUTHERN SUDAN BEVERAGE LIMITED
Date ESRS disclosed
October 20, 2009
Local Disclosure Date
October 20, 2009
View Summary of Proposed Investment (SPI),
Category & Applicable Standards
Key Issues& Mitigation
Overview of IFC's scope of review
The review of this project consisted of appraising technical, environmental, social and safety information submitted by SSBL, including:
1. Review of SABMiller’s Sustainable Development Policy, Performance-based Priorities and Standard Operating Procedures (SOP) related to Environmental and Social Management and Occupational Health and Safety (OHS) as well as SSBL's Human Resources Policy; Beverage Quality Manual, issued by SABMiller, specifying the design criteria for the SSBL’s plant;
2. Assessment of supplemental information submitted by SSBL on key environmental and social assessment issues (Preliminary Environmental and Social Screening Study, March 2008; Memorandum of Understanding (MoU) on land lease agreement between Rejaf Payam of Central Equatoria State, the Tokiman Community of the Bari People and SSBL);
3. Meetings with GOSS’ Ministry of Water Resources and Irrigation, General Directorate of Environmental Affairs, and water and agriculture specialists of World Bank in Juba. Review of GOSS’s Acts and Regulations applicable to this transaction (e.g. Environmental Protection Bill, Investment Promotion Act);
4. Field visit to SSBL’s plant to assess existing production processes; EHS practices; water pumping station; power supply and fuel storage; and, liquid and solid waste management;
5. Meeting with SSBL’s management team to discuss IFC’s Performance Standards (PSs), Environmental, Health and Safety (EHS) general and sector guidelines for breweries and food and beverage processing (April 30, 2007) and other requirements.
Southern Sudan Beverages Limited (“SSBL” or the “Company”) is a newly established company that is majority owned by SAB Miller. The Company is in the final phase of completing its brewery in Southern Sudan.
The proceed of the loan to be provided by IFC shall be used to finance SSBL’s expansion program that includes: (i) construction, equipping and placing into operation of a soft drink facility, to be located within the existing premises of SSBL; (ii) a wastewater effluent treatment facility to be established within the existing premises of SSBL; (iii) the funding of the working capital requirements; and, (iv) debt refinancing (hereafter referred as the “Project”).
The main purpose of the Project is to meet the demand in the Southern Sudanese beverage sector, which is currently being met by imports from the neighboring countries, thereby resulting in significant foreign exchange savings, reduced retail prices due to local presence, and the development of local brands.
SAB Miller Plc is one of the largest beverage companies in the world. From an environmental and social standpoint, it has adopted, as part of its Sustainable Development Strategy, 10 performance-based priorities that relate to water use and efficiency, energy efficiency and carbon mitigation, waste reduction and recycling, reduction of HIV/AIDS, enterprise development in its value chain, communities development, human rights and transparency and ethics (www.sabmiller.com). For the past three years, SAB Miller has been using an internal management system, the Sustainability Assessment Matrix (SAM), to measure its operational performance which is being reported yearly through a scorecard system at Group and operations level. It is worthwhile to underline that SAB Miller has undertaken, in cooperation with WWF, an analysis of its water footprint for its beer production units and supply chains in South Africa and Czech Republic.
Identified applicable performance standards
While all Performance Standards (PS) are applicable to this expansion program, IFC's environmental and social due diligence indicates that the investment will have impacts that must be managed in a manner consistent with the following Performance Standards:
- PS 1: Social and Environmental Assessment and Management Systems
- PS 2: Labor & Working Conditions
- PS 3: Pollution Prevention and Abatement
- PS 4: Community Health, Safety and Security
The appraisal team also assessed the applicability of PS 5: Land Acquisition and Involuntary Resettlement, PS 6: Biodiversity Conservation and Sustainable Natural Resources Management, PS 7: Indigenous Peoples and PS 8: Cultural Heritage. The expansion of the soft drink and water component will take place within the existing boundaries of the SSBL’s 12 ha brewery plant fenced plot on the outskirts of Juba (approx. 7km from Juba) and within an industrial area with a buffer zone of 40 meters with closest neighborhood. As a result, no displacement and involuntary resettlement is expected from the proposed expansion.
A Memorandum of Understanding (MoU) has been signed between the Rejaf Payam of Central Equatoria State, the Tokiman Community of the Bari People and SSBL dated August 9, 2007 which outlined the lease’s terms and conditions for the economic compensation of land occupation. This MoU stipulates that payment for the land will be apportioned into the two following distinct elements: (1) a monthly payment in arrears payable to the Tokiman community, calculated on a per litre basis of product sold. This amount could vary from a maximum amount payable per month of 20,000 Sudanese pounds and a minimum amount of 5,000. An addition, a monthly rent payment payable to the Tokiman community is to be agreed in accordance with the Southern Sudan’s applicable laws. The term of the lease expiration shall be a minimum of 99 years. The lease also outlines that the Tokiman community shall not permit anything to be built on community land within a 2km radius of the SSBL plot which could negatively impact the quality of SSBL’s inputs (water), products and working conditions (e.g. dust, aromas, noise).
There are no national parks and/or areas of high biodiversity value in its immediate surroundings (more than 40km), nor are there indigenous peoples or cultural heritage resources. PS 5 to 8 were not, therefore, appropriate to the scope of this review.
Environmental and social categorization and rationale
The International Finance Corporation’s (IFC) review of this investment on a existing production plant has identified the following potential environmental, social, health & safety (EHS) issues, which have been examined during the appraisal phase: SABMiller’s corporate environmental and social sustainability strategy, performance-based priorities and management system; implementation status of the SABMiller Group’s EHS performance-based priorities at the SSBL’s facility, including ISO 9000 and 14000 certification; food safety and HACPP certification; labor and working conditions; occupational health and safety issues, including OHSAS certification; HIV/AIDS; atmospheric emissions, access to water resources, treatment and volume use, power supply and fuel storage, liquid and solid waste management; existing land use agreement with the local communities; and, community support. The nature of the proposed expansion of an existing beverage production line is such that it will be possible to easily and readily implement engineering and management measures to mitigate any adverse impacts.
In light of the fact that most of the mitigation measures are already designed and implemented into the newly established beer production’s operations, adverse impacts are not expected to be diverse or irreversible and will be limited to the existing project site, the project has been classified as a Category B.
Key environmental and social issues and mitigation
SSBL management has presented SABMiller’s on-going corporate sustainability policies, performance-based priorities, management and reporting practices on sustainability assessment, standards operating procedures and specific mitigation measures which have been already implemented at its existing SSBL’s plant. The proposed expansion of soft drink and water production and bottling capacity falls within the scope of this existing beverage production line, and, as such, upon implementation of the specific agreed measures, will comply with the environmental and social requirements of GOSS and World Bank Group/IFC’s environment and social policies and standards, including EHS guidelines. The information about how these potential impacts will be addressed by SSBL is summarized in the paragraphs that follow:
PS 1: Social and Environmental Assessment and Management Systems
Management Systems. SABMiller has adopted, as part of its 2007 Sustainable Development Strategy, 10 performance-based priorities that directly relate to the risks and opportunities of its operations and an internal management system and practices to measure, monitor and report on its sustainability performance. This performance is being reflected in a scorecard at SABMiller aggregate Group-level and in each of its subsidiaries and is available on its website. On the basis of this SABMiller’s commitment, SSBL’s managing director has provided details on how this corporate strategy, performance-based priorities and benchmarks as well as the SOP have so far been operationally translated at the SSBL plant. As such, SSBL has already adopted some elements of an Environmental and Social Management System (ESMS). SSBL will further develop an Integrated Management System (IMS), which will cover quality-assurance, environmental management and occupational health and safety (OHS) management within a period of one year of first IFC’s disbursement as outlined in the Environmental and Social Action Plan (ESAP). The baseline performance of this system will encompass (1) SABMiller’s corporate priorities; (2) GOSS’s legal and regulatory requirements; and (3) IFC policies, performance standards and EHS guidelines. In the meantime, SSBL will provide copies of all applicable permissions for its facility, as set forth in the ESAP.
Social and Environmental Assessment. There has been no environmental and social assessment impact assessment (ESIA) study prepared prior to the construction of the brewery plant, nor for the proposed expansion as there is not yet any specific EIA’s legal and regulatory framework adopted by the GOSS. As a result, SSBL will undertake an environmental and social audit. The scope of this audit will encompass existing SSBL’s operations, complete an impact assessment review of the proposed expansion (soft drink and water production and bottling as well as the wastewater treatment plant), and further develop the technical and operational guidance on the establishment of the IMS and related training staff program. This audit will be completed prior to first disbursement, as outlined in the ESAP.
Organization. From an organizational standpoint, SSBL does not have any specific officer responsible for the implementation of EHS measures in its facility. In line with SABMiller’s corporate strategy, the Company believes it is more efficient to mainstream E&S sustainability priorities throughout its operational departments. Overall responsibility and accountability rests with the Managing Director but all line managers in SSBL are assigned specific roles and responsibilities for the implementation of applicable SABMiller’s performance-based priorities, to track progress and to report, on a monthly basis, within the framework of the plant’s Sustainability Assessment Matrix (SAM). Planned training of local employees is scheduled to take place within 12 months of first disbursement for full implementation of SAM in SSBL. This commitment is outlined in the ESAP.
SSBL will develop a comprehensive environmental monitoring program (e.g., air, noise, temperature, water supply, wastewater, solid and hazardous waste) prior to IFC’s first disbursement and will report on its implementation on a yearly basis, as part of the Annual Monitoring Report (AMR), especially as it relates to compliance of these parameters with IFC’s general and sector-specific EHS Guidelines.
PS2: Labor and Working Conditions
SSBL has an existing total workforce of 189 employees at its Juba plant whom are working on a three 8-hours shift rotation. SABMiller, and its subsidiaries, is a non-discriminatory and equal opportunity company. The majority of its employees in its existing beer production plant operations in Juba are men, while women represent around 30% of its workforce, throughout its operations. SSBL is committed to encouraging women to apply for all managerial positions. The SSBL’s Human Resources (HR) Division manager is a woman. This HR division manages all HR related activities, in line with SABMiller stated policies and procedures. SSBL has shared with IFC’s appraisal team its Human Resource Policy. SSBL promotes staff recruitment based on merit without regard to gender or ethnicity. Recruitment gives preference to people from the local community. SSBL’s HR Policy encompasses mission, vision and company values, personal code of conduct, employee’s right of freedom of association and collective bargaining, terms of employment for different categories of appointments, employee’s working conditions (working hours, training, salary scale, etc.) and benefits (medical care and pension), OHS policy and procedures, and, finally, disciplinary and grievance mechanism and procedures. This framework was established before SSBL undertook its recruitment campaign during the period of October 2008 till May 2009. The company assesses and reports on individual employee performance annually.
There is presently no elected union at the SSBL’s facility, nor is there a labor welfare committee However, as mentioned above, there is no restriction on freedom of association at the plant and there is a dispute settlement procedure as it applies to union/management interactions in an Annex of the HR Policy. The recent entry into operation of the SSBL plant (May 2009) may explains the absence of a labor union. The Company established its salary scale as a result of a wide-ranging salary survey (e.g., of government, NGOs) carried out in September 2008. Employee contracts are in line with provisions defined by the Southern Sudan’s Public Services and Labor Ministry. Subsidized meals are provided to SSBL’s workers. There is no staff transportation. However, SSBL provides financial support towards this.
SABMiller has procedures to ensure that child labor is not employed in any its facilities as well as in its contractors and sub-contractors. This provision is explicitly spelt out in its corporate values and is in compliance with South Africa and Southern Sudan’s legal and regulatory requirements.
SABMiller implements in all of its facilities, including the Juba’s plant, its comprehensive procedures for ensuring that both workplace hygiene and occupational health and safety (OHS) conditions meet recognized international standards. Hygiene and occupational health & safety aspects are mainstreamed into its operational departments’ action plan, into the employee induction training program, and the responsible department managers establish and report on yearly goals and targets on these issues.
The general housekeeping of SSBL’s facility in Juba was found to be of excellent standard. Workplace OHS is operationalized by the provision of personnel protective equipment (PPE) based on hazard assessment at each working station (e.g. cleaning and sterilization operations), including overalls, helmets, hard boots, gloves and hearing plugs. However, owing to the climatic conditions and low level living standards, the employees either shy away from using PPE or used them outside of his/her working environment. As a result, specific disciplinary procedures are increasingly being applied to ensure that PPE are used solely in the working environment. Changing rooms, lockers and showers facilities are available for workers and respect gender sensitivities.
Since starting its operations in May 2009, SSBL has reported two minor workplace accidents (canteen, construction phase). At present, SSBL does not intend to achieve OHSAS (occupational health and safety) certification. Existing SABMiller OHS practices is to follow South Africa’s National Occupational Association (NOSA) Five Stars System. The Company considers that this framework is judged the most comprehensive and stringent one in Africa.
SSBL has an established fire system with a dedicated water storage tank, fire extinguishers and hose reels strategically located around the plant. SSBL also has SOPs for fire safety. A fire safety committee has not yet been established to ensure the SOP implementation but one will be formed within the next two months. It will conduct fire drills every month. Southern Sudan’s Public Services and Labor Ministry’s inspectors are scheduled to review and verify fire safety arrangements. However, limited staff and logistical capacities presently restrict this review. There are fire sensors in sensitive plant areas and 24 hour monitoring by security staff.
At present, the company does not monitor workplace noise, temperature, nor air quality as there is no regulatory requirements by the GOSS to do this. However, it has assessed these hazards at different working places and taken necessary mitigation measures to ensure that employee health and safety conditions are safe. Hygiene in the production and bottling area is ensured through rigorous hygiene sterilization and quality control/quality assurance (QC/QA) protocols. The SSBL plant is equipped with an in-house laboratory to analyze water quality (and eventually wastewater) and product quality.
As part of its overall sustainability performance-based priorities, SABMiller, and by default at SSBL, has a program in place to address HIV/AIDS. Key elements of this plan include increasing: (i) participation of employees and their spouses in annual Voluntary Counseling and Testing (VCT); (ii) the percentage of HIV-positive employees, spouses and dependants on managed healthcare programs; and (iii) the number of peer educators in SABMiller facilities.
PS3: Pollution Prevention and Abatement
The Company sources its water in the Bahr al Jabal river (White Nile) through a pumping station, 2 km away from the existing plant. Areas surrounding the pumping station are protected under the Land Lease Agreement with the Tokiman community. The water abstraction right has been reviewed and approved by GOSS’s Ministry of Water Resources and Irrigation and the Central Equatoria State. Recognizing that these administrative authorities do not yet have the authority to officially and directly request water extraction rights from the Nile Basin Initiative (NBI) Secretariat and that there is not yet a clear application mechanism in place for GOSS’s specific water requirements under this regional framework, IFC’s appraisal team considers that the Company has demonstrated, at this stage, significant commitment and efforts to comply with this authorization process. However, to minimize the long-run project risk that the Company may be without such rights in the future, IFC expects the Company to continue to pursue these efforts and, when the GOSS becomes an official member of the Nile Basin Initiative (NBI), to ensure that the SSBL’s plant is identified as a priority projects for Southern Sudan, and, as such, officially request the Ministry of Water Resources and Irrigation to apply to the NBI Secretariat for SSBL’s water extraction right. This will be reviewed, on a continuous basis, as part of the Annual Monitoring Report, as outlined in the ESAP.
Impacts on other downstream river users are judged minimal considering the small volume of water abstracted. As stipulated in the Southern Sudan’s Water Policy, there is no fee that applies to water use. The raw water treatment includes alkalinity reduction, coagulation, chlorination, sand filtration, activated carbon filtration and a polishing filter. Two water tanks of 500 cubic meters each are found on the SSBL premises. The efficiency and performance standards of the treatments systems are checked on an hourly, daily and weekly basis (depending on parameters) by automatic systems and SSBL’s in-house laboratory. Filters are backwashed on a daily basis and tanks and piping are sterilized daily. These provisions ensure compliance with WHO drinking water standards. As an overall SABMiller’s sustainability priorities, there is a commitment to a 25% target reduction of 4.6 hectoliter of water per hectoliter of beer produced (hl/hl) to 3.5 hl/hl planned by 2015. SSBL’s management is confident in being able to achieve this target.
There is no electric grid that reaches the plant. As such, the electricity is obtained from two diesel generators of 1MW each. Four above-ground diesel tanks are provided with secondary containment structures (cement floor and walls) to ensure that spills or leaks do not migrate to soils, surface waters or underground waters. The air emissions from the diesel generators are not presently monitored. Considering the small-capacity of these gensets and the location of SSBL’s plant within an industrial area, potential air pollution and noise impacts on the neighborhood are judged insignificant. SSBL has agreed to monitor and complete ambient testing within 12 months of first disbursement to ensure emissions are in compliance with IFC/WBG Guidelines (see ESAP). In addition, in accordance with SABMiller’s corporate strategy, there is a target to reduce fossil fuels emissions from energy use at its sites by 50% per hectoliter of beer produced by 2020. Thus, SSBL is fully committed to optimize its energy efficiency at its plant. As renewable energy opportunities (hydropower, organic wastes, such as spent grains) emerge in Southern Sudan, SSBL will make a cost-benefit assessment for fuel switching. It should be noted that SSBL’s air conditioning and refrigeration system do not use CFCs–based equipment.
Based on the above assessment, the current level of water resource use and energy consumption per unit of product indicates that SSBL is optimizing water and power consumption in its Juba’s operations in line with industry benchmarks. It is worth indicating as well that the Juba plant is equipped with two CO2 recovery plants, one at its fermentation unit and another one at the steam boiler stack. This latter measure significantly reduces the brewery’s carbon footprint.
Through its expansion project, SSBL’s beverage plant will be equipped with a wastewater effluent treatment plant which will include primary and secondary treatment through an active sludge process. This treatment plant is presently in design phase. There are three streams of liquid waste from SSBL’s brewery: 1) Process effluent is pre-treated to meet the limits set by the GOSS and IFC’s effluents guidelines. SSBL’s laboratories will test its effluent on a weekly basis and the results of water analysis will be reported to the GOSS’s Ministry of Water Resources and Irrigation and IFC once a year. SSBL has agreed to provide the detailed technical specifications, the procurement details and the timetable for construction of this plant before first disbursement, to complete construction of the plant and ensure its operation within one year of first disbursement, and, finally, to report on plant’s performance and compliance with IFC/WBG’s effluent guidelines within the scope of the AMR; 2) Storm water is channeled in separate drains to prevent oil or other contamination prior to surface discharge; 3) Sanitary waste from offices and residential homes is directed into a domestic sewage effluent treatment plant (Lilliput technology). Contracted companies collect and dispose of sludge at an authorized site.
Solid wastes, such as plastic wastes (e.g., jerry cans, plastic crates, plastic drums) are sold to local recyclers. More than 66% of the wastes of a typical brewery plant, such as SSBL, consist of organic wastes (e.g., spent grains, waste yeast and trub) that will be used for producing cattle feed. As such, SSBL is in the process of establishing a cooperation agreement with Philling Environment Services on this issue. Small amounts of hazardous waste (e.g., waste oils) are stored in drums and burned in the boiler. The rest (light bulbs and batteries) is stored and returned to suppliers, if possible.
PS4: Community Health, Safety and Security
With regards to beverage safety, SABMiller is compliant with HACCP but does not yet have an accredited HACCP certification. This certification will be attained within a 3-year period. SSBL recognizes the need to have necessary beverage security protocols in place and, accordingly, has agreed to seek HACCP certification, as set forth in the ESAP.
The SSBL in Juba is situated within an industrial area. The nature of the company’s operations does not present significant safety and security risks to nearby communities. Due to the plant’s existing distance from the urban settlement of Juba, limited impacts are likely to occur in relation to the movement of vehicles on the access road to SSBL facility for delivery of finished products.
SSBL has its contracted security staff to provide security services at its plant. The security officers are armed. The company has instructed security guards to refer any inquiries to the SSBL’s Managing Director. The company enjoys good relations with its neighbors, especially in the context where SSBL is providing free potable water to the villages near the plant, around the pumping station site, and along the pipeline’s right-of-way.
Client's community engagement
SSBL engages in ongoing communications with the nearby Tokiman Community found in the vicinity of its plant. SSBL maintains harmonious relationship with its surrounding communities, especially through the strict application of the provisions of the MoU of 2007, including effective payment of the monthly royalty fee and the proposed land lease. In addition, more than 25 Tokiman Community members are employed in its packaging unit. As it is considered that the SSBL will provide development impacts to this community in the form of employment, road access, lighting, security, etc., the Tokiman community is fully empowered to decide on the use of the SSBL’s payments, as it sees fit in relation to fulfilling its basic services (e.g., health, education) and development projects (e.g., agriculture, livestock). SSBL has also agreed to provide potable water supply through pipe taps at six locations (pumping station, two villages along the water pipeline right-of-way, and three around the plant). This service covers the water needs of 2,000 villagers. A grievance mechanism has been outlined in the MoU in order to ensure long-term benefits for the Tokiman community. This mechanism provides an interim procedure as the Southern Sudan’s Investment and Land Acts are being actually drafted.
SABMiller has a strong commitment to community engagement and social development in the areas where its facilities are located. As revenues and profits increase, SSBL will seek to financially support health, education and provision of water supply of surrounding village communities. As part of this commitment, SSBL will provide yearly reports on its social and environmental performance to the local communities, particularly with respect to water abstraction and effluent discharge.
Local access of project documentation
This ESRS and ESAP have been made available in English at the SSBL’ entrance gate, at the IFC/World Bank office in Juba and at the Directorate General of Environmental Affairs in Juba. Availability of this document at these locations will be advertised in a local newspaper.
For further information, please contact:
Mr. Ian Alsworth-Elvey, Managing Director
Address: Southern Sudan Beverages Limited (SSBL)
Plot 1, Kololomro Site, Private Bag, Juba, Southern Sudan
Tel: +256 (0) 477 186 036; +249 (0) 918 447 044; +249 (0) 926 659 137; +249 (0) 959 100 000;
Availability of Full Documentation
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