Quick Facts

Countries:
Where the impacts of the investment may be experienced.
  • Bangladesh
Banks:
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
  • International Finance Corporation (IFC)
Status: Active
Bank Risk Rating: A
Risk rating varies among banks and may refer only to the particular investment and not to the risk for the project as a whole. Projects marked 'U' have an 'Unknown' risk rating at the time of disclosure.
Board Decision Date: 2016-08-04
The estimate day the bank will vote on a proposed investment. The decision dates may change, so review updated project documents or contact the EWS team.
Borrower or Client: POWER INTERNATIONAL PTE LTD
The holder of the loan, grant, or other investment.
Sectors:
The service or industry focus of the investment. A project can have several sectors.
  • Energy
Investment Type(s): Loan
The categories of the bank investment: loan, grant, etc.
Investment Amount (USD): $ 65.00 million
Value listed on project documents at time of disclosure. If necessary, converted to USD$. Please review updated project documents for more information.

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Primary Source

Original disclosure @ IFC website
Updated in EWS: 2017-08-04
Disclosure Date: 2016-05-27
Summit Mezzanine
IFC-37593

Project Description
PROJECT DESCRIPTION Summit Corporation Limited (SCL, formerly Summit Industrial & Mercantile Corporation (Pvt.) Limited), established in 1985 in Bangladesh, is the core holding company of Summit Group's power sector assets. SCL currently produces around 1,460MW of power, which is around 13% of the total power generation capacity of Bangladesh, making it the largest independent power producer in Bangladesh. As per the private sector power generation policy of Bangladesh, Summit sells electricity to the Bangladesh Power Development Board (BPDB) and Bangladesh Rural Electrification Board (BREB) only.SCL operates both gas based - reciprocating type and combined cycle and Heavy Fuel Oil (HFO) based power plants through its subsidiaries - turbine division and Summit Power Limited (SPL). The turbine division of SCL currently comprises two subsidiary companies namely i) Summit Bibiyana II Power Company Ltd. (SBIICL); and (iii) Summit Meghnaghat Power Company Ltd. (SMPCL). SMPCL has one dual fuel based 335 MW power plant operational since 2014 at Meghnaghat and SBIIPCL has commissioned a 341 MW gas based plant in 2015 at Hobibganj, Bibiyana.SPL which is a subsidiary of SCL is a holding company and comprises of five subsidiary companies including: (i) Summit Narayanganj Power Ltd. (SNPL), (ii) Summit Purbanchal Power Company Ltd. (SPPCL), (iii) Summit Uttaranchal Power Company Ltd. (SUPCL), (iv) Summit Narayanganj Power Unit II Ltd. (SNPUIIL); and (v) Summit Barisal Power Ltd. (SBPL). SPL also holds 17.64% of the ownership of Khulna Power Company Limited (KPCL) which has three HFO based power plants: (i) 110 MW (operational since 1998) at Goalpara, Khulna (ii) 115 MW (operational since 2011) at Goalpara, Khulna and (iii) 40 MW (operational since 2011) at Noapara, Jessore. SPL along with its subsidiaries owns and operates 08 (eight) power plants at different locations in Bangladesh having a total generation capacity of 317 MW and the current assets include: (i) three gas based power projects having capacity of 45 MW at Ashulia, 35 MW at Narsingdi and 25 MW at Comilla and operational since 2001, 2006 and 2007 respectively under SPL; (ii) gas based projects of 11 MW at Ullapara and 33 MW at Maona operational since 2009 under SUPCL, (iii) two gas based projects of 33 MW capacity each at Jangalia and Rupganj operational since 2009 under SPPCL; and (iv) 102 MW HFO based power plant at Madanganj operational since 2011under SNPL. Two new power plants are under construction with a total generation capacity of 165 MW: (i) 110 MW HFO based plant at Barisal for SBPL and (ii) 55 MW HFO based plant at Narayanganj by SNPUIIL. There are four proposed projects in the pipeline to be developed which include a 200 MW HFO plant at Chittagong, a 165 MW HFO plant at Gazipur, a 350 MW dual fuel (LNG/HFO plant) at Meghnaghat and a 660 MW LNG based plant at Anwara Chittagong.IFC is considering a convertible loan investment of up to US$170 million, from its own account, IFC's Asset Management Company, and certain other potential co-investors, to a Singapore holding company to be established by the Khan Family, to help SCL meet its equity funding requirements for its future power projects in Bangladesh. OVERVIEW OF IFC'S SCOPE OF REVIEW IFC's review included interviews with SPL's and turbine divisions' key corporate staff responsible for business development, construction and operations, environment, health and safety (EHS), social responsibility and human resources; and review of internal documents and records related to the company's environmental and social (E&S) programs, procedures, and standards. Among others, the review focused on: corporate Integrated Management System (IMS); corporate EHS management plans; corporate EHS staffing; and corporate Human Resource (HR) policy & procedures. A sample of projects, both under implementation and in operation phase, were reviewed to: assess the company's capacity to implement the projects in accordance with the IFC PSs; identify any areas in the company's E&S management procedures that need to be strengthened; and develop an action plan to address the areas of improvement. IFC staff also conducted visits to i) HFO based power plants at Madanganj, Narayanganj of SNPL (Unit I - 102 MW operational since 2011 and Unit II- 55MW presently under testing phase and soon to be commissioned); and ii) HFO based power plants of KPCL (Unit I - 110 MW barge mounted and Unit II - 115 MW at Khulna and 40 MW unit at Noapara, Jessore). Meetings at these selected sites were completed with members and leaders of the local community.IFC's scope of review also included review of Environmental and Social Due Diligence (ESDD) reports commissioned for Lenders by independent consultant AECOM India Pvt. Ltd. in May 2016 for SCL's operating, under construction and proposed projects (covering projects of both turbine division and those under SPL). As part of this exercise, dispersion modeling was carried out for all operating assets and IFC's review included comparison of the emission levels with applicable WBG guideline values at the time of respective project commissioning and estimation of contribution to the ambient air quality due to incremental increase in ground level concentration (GLC) owing to operation of the facility. IDENTIFIED APPLICABLE PERFORMANCE STANDARDS** While all Performance Standards are applicable to this investment, IFC's environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards.PS 1 - Assessment and Management of Environmental and Social Risks and ImpactsPS 2 - Labor and working conditionsIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE The proposed investment is an equity investment in a holding company and not targeted at any of SCL's specific assets. While the existing operational assets of SCL (details as included in the project description section) have limited impacts, this investment is considered as a Category A as per IFC's Environment and Social Review Procedure as the sector in which company operates is a high risk sector and as several under- construction and proposed pipeline projects could have significant adverse E&S risks and impacts. Key E&S risks and issues include: land acquisition for power plants; the number and large geographical spread of projects, including associated facilities such as gas pipelines and transmission lines; potential impacts on ambient air quality and noise affecting neighboring communities; wastewater discharges (including thermal discharge); hazardous waste handling and storage (including potential risks to surrounding communities from storage of flammable HFO and; possible cumulative impacts from the proposed construction of power plants in the vicinity of existing power plants and other projects. **Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability ENVIRONMENTAL AND SOCIAL MITIGATION MEASURES IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFC's requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives. PS 1: ASSESSMENT AND MANAGEMENT OF ENVIRONMENTAL AND SOCIAL RISKS AND IMPACTS Click here PS 2: LABOR AND WORKING CONDITIONS Human Resources Policies and ProceduresAs of early May 2016, SCL along with all its all subsidiaries has about 384 employees, 49 hired work force and 91daily wage workers engaged through contractors (contract workers, primarily for housekeeping and other administrative roles).SCL has in place an Employment Policy which is applicable to all its probationary and full time employees. The policy covers general terms and conditions of services including appointment procedure, probation period, confirmation of service, promotion, retirement, employee's code of conduct, pay scale, other financial benefits, transfer and change of designation. SCL has also developed documents pertaining to job categorization, leave policy, bonus policy, office timings, policy on non-employment of adolescent & child at work, anti-discrimination policy, anti- harassment & abuse at work policy, performance appraisal policy, anti-bribery & corruption policy, whistle blower policy. This HR policy is adopted by all subsidiaries formulated under the turbine division, namely, SMPCL and SBIIPCL.SPL has established its own separate HR policies and procedures and these are adopted by all subsidiaries of SPL. These procedures have been integrated as part of IMS and cover human resource planning and management measures for recruitment, induction, HR management, and retrenchment of permanent, temporary and contractual staff engaged by SPL. HR procedures established by SPL also include employee training requirements, performance evaluation, and grievance management amongst other HR requirements. The HR hand book is provided to all the direct employees at the time of their joining while the contractors and vendors are managed through their respective HR policies.As indicated in ESAP action #7, SCL and SPL (as part of its existing IMS) will develop and implement additional policies and procedures on equal opportunity and non-discrimination, prevention of forced labor and prevention of sexual harassment. Additionally, the company will ensure that its Engineering, Procurement and Construction (EPC) and Operation and Maintenance (O&M) contractors have HR policies and procedures that meet the requirements of relevant national laws and IFC PS2.Working Conditions and Terms of EmploymentThe employment policy of SCL defines employee pay scales and the gross salary which includes house rent allowances, conveyance allowances, medical allowance, special allowance, and festival bonus. Employees are entitled to paid sick leave, casual leave and annual leave. Female employees are entitled to a maternity leave of maximum 90 days.The HR procedures established by SPL, outline requirements for house rent, conveyance, and medical allowance. The HR department reviews these allowances once a year to check adequacy and suitability and adjusts/ implements review updates accordingly. The direct employees are provided with appointment letter describing the terms of employment. It wasreported by the management that the plant level staff work eight hour shifts (three shifts in a day) and are generally not required to do overtime and that they are paid as per applicable national labor rules for additional number of hours worked. The staff members have been provided insurance coverage as part of their employment agreement.While SPL executes its projects directly through job contractors such as civil contactors, electrical contractors, etc., the turbine division hires EPC contractors for its projects. Going forward, SCL and all its subsidiaries will ensure that all its contractors provide accommodation, transportation, and basic services including water, cooking fuel, sanitation, and medical care for the workers working at site, in accordance with PS 2 requirements. These requirements will be included in the contractual agreements. The company will further ensure that it has procedures and capacity in place to regularly review and monitor the performance of its contractors especially with respect to working conditions, workers' accommodation, OHS and protection of work force.Workers' OrganizationThere is no restriction to form unions and collective bargaining system within the operations. However, there is no existing workers' union at any of the assets of SPL or at SMPCL and SBIICL. The site management has at plant level, neither formally nor informally, restricted formation of labor unions.Non-discrimination and Equal OpportunitySCL has developed an anti-discrimination policy as the part of their HR policy which clearly states the company's commitment against discrimination based on sex, gender, parental status, age, race, religion etc. SCL has also adopted a policy on anti-harassment and abuse at work which states that any reports of unfair discrimination or harassment will be treated seriously and appropriate actions will be taken.The HR policy of SPL clearly outlines management's commitment on behalf of the Group and the Company towards non-discrimination. SPL has also established anti-harassment policy under the same document which outlines the disciplinary actions to be taken in case such incidents are brought to the notice of the management.RetrenchmentThe company does not currently anticipate any retrenchment. The company will, however, develop and implement a retrenchment policy and procedure that meets PS2 provision in the event of any significant retrenchment (i.e. involving greater than 20 workers at a time).Grievance MechanismSCL has developed a three tier grievance redress mechanism (GRM) to address employee grievances. Employees are required to report their grievances verbally or in writing to their immediate managers, which is the first level where action is required to be taken within five working days of receiving the complaint. In case of unresolved grievances, the employee can escalate the issue to the next two levels i.e. Departmental Head and Managing Director/ Executive Director. The two turbine division projects have adopted the corporate grievance mechanism.SPL has established its own employee grievance mechanism as part of its IMS. The grievance procedures of SPL require employees to register their complaints in writing and disclose personal information to be considered for addressal. SPL has a strict policy requirement against acknowledging anonymous grievances. Workers/ employees are required to follow hierarchy structure for submission of their grievances. The current procedures require all grievances to be attended within thirty days of their receipt. The key elements of the GRM and contact details of grievance redressal committee (GRC) members have been displayed at the main gate of most plants and at strategic locations within the plants. A suggestion/ complaints register book and grievance box is kept at the security gate, which is accessible for employees for registering their grievances.As indicated in ESAP action #8, SPL will develop, communicate and establish formal worker grievance mechanisms in line with PS2 provisions which will be accessible to all workers. The existing grievance process for employees will be modified to allow employees to raise anonymous complaints and will have provisions for protection of confidentiality and non- retribution. The company will maintain grievance records and will monitor redress of grievances. With respect to its EPC and other contractors, the company will ensure that a formal grievance mechanism is accessible to all workers and subcontractors. The implementation and effectiveness of the grievance mechanism will be monitored by the company through periodic sample labor audits at its construction sites.Protecting the Work ForceWhile both SCL and SPL have a policy on prevention of child labor, a policy on forced labor will be developed and implemented. Going forward, the company and all its subsidiaries will ensure that its various contractors develop and implement a policy on protecting the work force at construction sites. Although the ESDD report did not identify any use of forced or child labor however going forward the company will monitor these aspects via regular labor audits and strengthen procedures based on the audit findings to protect the workforce.Occupational Health and SafetyBoth SCL and SPL have established an OHS policy committing to ensure a healthy and safe work environment to employees. Each individual asset has outlined objectives to achieve zero occurrences of the accidents, lost time, and ill health due to occupation related activities. Almost all assets have been able to successfully meet its "zero accident" objective and have had no instances of accidents or fatalities at the work place since its commencement. Potential hazards at the individual assets are presently being identified and maintained under Facility Risk Assessment Form and Job Risk Assessment Form. Hazard scenarios are addressed with frequency, severity and likelihood of the occurrence. Workplace inspection is regularly carried out on a monthly basis to assess OHS aspects related to training, work processes, machine guarding, tools and machinery, confined spaces, housekeeping, elevating devices, sound/ noise level, first aid facilities, PPE, materials handling and storage amongst other aspects.Each individual asset has installed a fire hydrant system along with heat/smoke detectors, and a fire alarm system. Provisions for manual fire-fighting equipment such as fire extinguishers have been provided at accessible locations in most plants and a separate fire extinguisher checklist is maintained to check validity. The site management undertakes monitoring of OHS aspects as per procedures outlined in the OHS Manual, which includes general inspection of safe work practices in the plant premises, use of PPE, housekeeping, electrical safety, fire protection, tools and machinery, and first aid.The plant monitors noise at different locations in the project vicinity including engine hall to assess working conditions on a fortnightly basis. Additionally, ambient noise levels are separately monitored within two meters of the site boundary in all four directions on a weekly basis. The noise levels monitored inside the engine hall are one time arbitrary monitoring levels and these range between 103 and 106 dB (A). The site management initiates annual medical checks for all staff engaged in plant operations in addition to initial health check-up conducted during induction. SPL also undertakes a qualitative hearing test in order to assess occupational ills associated with working in a noisy environment such as the engine hall.Workers Engaged by Third PartiesSPL hires job contractors during construction while during the operations phase it directly operates its' plants but maintain original equipment manufacturers (OEM) maintenance agreements. With respect to contractor management, the company requires its contractors to submit regular reports on work progress and any site related challenges. In addition to the existing process, the company will put in place a formal contractor management procedure to qualify and audit its contractors as well as their subcontractors. The procedure will include: (i) a compliance checklist against the applicable legal requirements and PS; (ii) HSE performance criteria as part of contractor qualification and selection; and (iii) OHS monitoring and audit procedures. The company will ensure that its monitoring and audit procedures will cover among other aspects, the following: compliance of the contractor and its subcontractors with applicable statutory requirements and IFC PS2; consistency of worker accommodation with IFC guidance; implementation of grievance mechanism; protection of the work force, including engagement of migrant workers, if any, on substantially equivalent terms as non-migrant workers performing same work.
Investment Description
The Sponsor, the Khan Family, owns one of the largest business groups in Bangladesh with interests across power, energy, trading, port operations, telecommunications and real estate (the Summit Group). The Summit Group was founded in 1972 by its current Chairman, Mr. Muhammed Aziz Khan, and the power business that now forms SCL was set up in 1985. IFC had previously financed SCL’s Khulna Power Plant in 1999 and Bibiyana II Project in 2015.
Contact Information
ACCOUNTABILITY MECHANISM OF IFC The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/ CONTACTS Mr. Shamsuddin Haider Dalim Head of Public Relations & Media Summit Corporation Limited SUMMIT CENTRE 18, Kawran Bazar Commercial Area Dhaka 1215 Bangladesh Telephone: +880 2 9130845 Fax: +880-2-9130853-54 mailto:sh.dalim@summit-centre.com http://www.summitgroupbd.com
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