If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.
PROJECT DESCRIPTION
Mersin Port is one of Turkey's largest and oldest existing container and general cargo ports, located in Mersin in the south eastern part of Mediterranean coast of Turkey. The port has been in operation for over 50 years and its operations were taken over by Mersin International Port (MIP or the Client) in 2007. MIP is owned by a consortium of PSA International (the largest global container terminal operator by equity TEUs) and Akfen Holding, a large Turkish infrastructure investment company, and was awarded the right to operate the port for a 36 year period on behalf of the Turkish Government. All areas of the port come under the responsibility of MIP (as port operator) Current port capacity has reached 1.8 million Twenty Foot Equivalent Units (TEUs) and the annual container throughput in 2012 was 1,263 million TEUs. The port currently also handles about 7.1 million tons of general cargo per annum. MIP serves all trading regimes including import, export, transit, transshipment and cabotage and is the main industrial and agricultural port for the eastern Mediterranean Region. The port has existing rail and highway access.The consortium is looking to expand its terminal cargo handling capacity to 2.2 million TEUs to respond to changing market needs and is currently considering issuing a Eurobond to finance the associated $126 million capital expenditure program. IFC is considering providing up to US$75 million for its own account in the event the Company issues a Eurobond. The expansion is planned to cater for growth and to accommodate larger container vessels of up to 13,500 TEUs. It will involve an additional berth, to be operational by early 2015, comprising a 479 m berth of 15.5 m depth, four 23-row quay cranes, 8 ERTGs (Electrified, Rubber-Tired Gantry cranes), 3 empty container handlers and 15 container trucks.The current port has an area of 110 ha; the upgrade requires an extension of an existing berth, with a width of 140 m, as well as a berth depth increase from 11 m to 15.5 m (involving dredging). The widening will involve introduction of fill material to extend the berth seawards within the existing harbor breakwater. The port has a number of tenants, including a vegetable oil company, grain storage company, soda ash facility and a petrol station.
OVERVIEW OF IFC'S SCOPE OF REVIEW
Due to the nature of this project, a proposed bond issue, environmental and social (E&S) review has been based upon an E&S due diligence report undertaken in 2013 by international E&S consultancy Environ together with local associate Encon. Commissioned on behalf of existing and prospective bond purchasers, this report presents E&S risks, issues and gaps associated with both the existing port operations and the planned expansion in relation to IFC Performance Standards, relevant World Bank Group (WBG) Environmental, Health & Safety (EHS) Guidelines and the Equator Principles. The report was based on a review of the project EIA (Turkish, 2009), a site visit held in April 2013 focusing on existing E&S performance and systems, and proposed expansion-related E&S plans. The site visit involved interviews with relevant personnel.
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 conditionsPS 3 - Resource Efficiency and Pollution PreventionIf IFC's investment proceeds, IFC will periodically review the the project's ongoing compliance with the Performance Standards
ENVIRONMENTAL AND SOCIAL CATEGORIZATION AND RATIONALE
This is a Category B project according to IFC's Environmental & Social Review Procedure, as the project is a Brownfield expansion involving limited E&S risks which can be mitigated using standard engineering and E&S practices. The port is located away from protected and sensitive areas and forms part of an established industrial area. The main Performance Standards (PSs) applicable to this project are PS 1-3. Key E&S issues associated with the project include Occupational Health & Safety (OHS) management, labor and working conditions, dredging, waste management, hazardous materials management and oil spill response. MIP has an established E&S and OHS Management System and capacity which will be expanded to cater for the planned expansion. As the expansion will occur within an existing, secure industrial area with no public access, no incremental community health, safety or security risks; low risk of biodiversity impacts; no physical or economic displacement; no impacts on Indigenous Peoples and not impacts on cultural heritage will occur, hence PS 4, 5, 6, 7 and 8 are not deemed applicable at this time. The applicability of PS 6 is to be confirmed by further studies.
**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
An Environmental Impact Assessment (EIA) was undertaken for the port expansion in 2009 to satisfy Turkish regulations, and regulatory approval was subsequently granted, despite minor changes to the design involving more piling and less fill. The EIA was reviewed and supplemented by Environ (April 2013) who undertook an E&S due diligence audit of the terminal and review of the E&S impacts of the expansion project against IFC and WBG requirements. Environ produced a gap analysis and a set of proposed mitigation measures designed to address identified gaps, which form the basis of the attached supplemental E&S Action Plan.MIP has an existing ISO 14001-type Environmental Management System (EMS), which is likely to be certified in 2014. This is built around a MIP HSE Policy which is displayed around the port and available on the company website and presented to staff at induction. The EMS has a procedure for identification of E&S risks that applies to all port activities. The EMS will be expanded to cater for the proposed expansion. In addition, MIP has an OHSAS 18801-type Occupational Health & Safety (OHS) Management System which it intends to certify in 2014. It also has International Ship and Port Security (ISPS) certification.As per the supplemental E&S Action Plan contained in this ESRS, MIP will develop a Construction E&S Management Plan covering the construction phase of the expansion, which will be implemented by the contractor(s) with MIP oversight.MIP currently has 22 Health, Safety and Environment (HSE) staff within its HSE Department, which is headed by an HSE Manager. Construction HSE management will be the responsibility of the contractor, under the guidance of MIP's HSE staff. The HSE team is responsible for MIP's own terminal operations as well as oversight of the operations of other port tenants.The port has a dedicated emergency response specialist in its HSE team. There are fire engines and a fire fighting team on site, as well as an ambulance and medical center. The three-volume MIP Emergency Action Plan has been authorized by the relevant regulatory body and incorporates environmental controls pertaining to accidents and incidents involving the port and vessels using it. This includes measures and plans (and equipment) to contain and clean up oil spills within the harbor area. These existing measures will cater for the proposed expansion.MIP's HSE team undertakes regular audits as part of its EMS implementation and staff inspect the port site daily, focusing both on MIP operations and those of tenants (all tenants are required to comply with site rules and Turkish requirements). Non-compliances are recorded and reported to the port authorities, who are able to impose fines and penalties on vessels. Groundwater monitoring is conducted on a regular basis, together with air quality emissions and waste collection/disposal monitoring. MIP is also audited on a regular basis by the port authorities and Ministry of Environment & Urbanization officers. No significant environmental incidents have been reported at MIP within the past three years, although one tenant had a vegetable oil leak that MIP assisted in the clean-up of. As per the E&S Action Plan incorporated into this ESRS, MIP will develop and implement an Environmental Monitoring Program for the construction phase and will implement construction contractor oversight and OHS monitoring measures during this period.
PS 2: LABOR AND WORKING CONDITIONS
As of April 2013 there were 1426 staff working at the port, on a fulltime (45 hour week), three shift basis. The port operates 24 hours a day, 365 days a year. In addition, there are 145 sub-contracted security staff working at the port for a private security company with appropriate licenses to fulfill port security requirements in line with international security requirements. MIP has a dedicated Human Resources (HR) Policy and an HR Department. The HR Policy covers issues such as hiring, compensation, working conditions and employment conditions; all staff are issued with hard copy employment contracts and job descriptions. The company's HR requirements are aligned with those of Turkish labor laws and regulations.All MIP workers below management level are members of the Maritime Union. There is a collective bargaining agreement in place between the union and MIP which is reviewed every three years. MIP has a formal employee grievance mechanism that is managed by the HR Department. Employees file grievances with their supervisor, unless the grievance involves the supervisor, in which case they are filed directly with the HR Administrator. The company has established a 15-day response time for employee grievances. If unhappy with the outcome of this step, employees are able to elevate their grievance to the Executive Manager for deliberation and will receive a written response within 15 days.MIP does not employ child or forced labor, does not make employment decisions on the basis of personal characteristics and is publically committed to diversity and equal opportunity.As mentioned above, MIP has an HSE Policy displayed across site and on its website and an OHS Management System in place which will also govern the construction and operation of the proposed expansion. Employees undergo regular safety training and are expected to complete 26 HSE modules as part of their standard training. Environ's 2013 E&S due diligence audit of MIP identified both good OHS practices and some gaps and made recommendations as to how gaps should be addressed; these have been incorporated into the supplemental action plan presented in this ESRS. The company has an OHS emergency plan for the port and the site has major accident and incident response equipment. Accident and incident records are maintained via the OHS Management System. Port workers and users are required to wear appropriate Personal Protective Equipment (PPE) on site. Contractors working on site are required to operate with an OHS permit to work system based on a risk assessment undertaken in relation to their work activities. Contractor and sub-contractor agreements include employment conditions and requirements to meet MIP HSE requirements.As per the E&S Action Plan, MIP will ensure that HR matters are dealt with in accordance with Turkish labor and working conditions requirements as well as those of IFC PS 2, with particular reference to a contractor worker grievance mechanism, worker accommodation quality (if required) and OHS requirements for both contractors and MIP employees.
PS 3: RESOURCE EFFICIENCY AND POLLUTION PREVENTION
Construction piling, dredging and filling works required for port expansion will have a temporary negative impact on water quality and sediment conditions within the port and some (lesser) impacts outside of the breakwater, according to the EIA. It is proposed that dredged material will be disposed of in an identified area outside of the breakwater, though this is subject to additional studies to ensure that marine ecological impacts will be limited (as predicted in the EIA). MIP will prepare these supplementary studies for the Turkish Government and Lenders aimed at fully assessing the environmental impacts associated with infilling, dredging and dredge spoil disposal; if necessary, a biodiversity management plan will be developed to mitigate any significant ecological impacts (though this is not envisaged, based on previous studies). Fill material will be obtained from local quarries, creating a temporary increase in traffic and dust levels on existing roads linking these quarries to the port. In general, the increase in noise and air emissions during construction is expected to be small and will be monitored by MIP.Electric power is the main source of power for the port. As part of a resource efficiency drive, Rubber Tired Gantry cranes are being converted from diesel fuel to electric power. MIP's engineering team collects data on power consumption across the port site from meters fitted to equipment; MIP tracks CO2 equivalent emissions on a monthly basis via a corporate reporting system; these emissions do not exceed 25,000 tons per annum.The bulk of the wastes dealt with by MIP as port operator are those generated by ships, which it port is licensed to collect, i.e. bilge water, sludge, sewage and domestic waste. If other types of waste need to be removed, MIP applies for permission to do so from the relevant authorities. The company has a license to store wastes on site on a temporary basis, after which it is removed by licensed waste management contractors. Sewage from ships using the port is discharged direct to sewers by MIP. Hazardous materials are stored in the port's maintenance yard and typically include oils, diesel fuel and degreasing agents used in maintenance activities. As per the supplemental E&S Action Plan contained in this ESRS, MIP or its contractors will develop and implement a waste management plan and a hazardous materials management plan catering for the construction phase of the expansion.
