DFF

The provision of a senior secured 2-year working capital loan of up to US$ 10 million to Tashkent Pipe Plant for financing the procurement of raw materials for the production of spiral submerged arc welded pipes (SSAW) - commonly used in water infrastructure, construction and transport industries.

The Project aims to enhance operational efficiency of Tashkent Pipe Plant and increase the share of import substitution products in the market.

ETI score: 64

Competitiveness: The Project will provide working capital that will allow the company to start in-house production of hot rolled coils to manufacture spiral submerged arc-welded pipes at a cheaper cost-base, thus supporting operational changes leading to competitiveness improvements and enabling the operational performance of the company to go beyond prevailing standards in the country. Inclusive: The Project will introduce equal opportunity policies and practices and increase the Company's female workforce by 5-10 percentage points.

JV TASHKENT PIPE PLANT LLC

JV LLC "Tashkent Pipe Plant", registered under the laws of Uzbekistan, is one of the largest local producers of fabricated steel products and the leading private producer of steel pipes in the country.

USD 10,000,000.00

Senior secured working capital loan of up to US$10 million

USD 10,000,000.00

The EBRD's additionality stems from (i) providing financing that is not available in the local market on comparable terms and conditions (e.g. a bullet repayment structure with a longer tenor); (ii) providing comfort by mitigating non-financial risks such as country or political risks; and (iii) helping the Company achieve higher financial standards via IFRS restatement and audit.

Categorised B (2019 ESP). The E&S risks and impacts associated with the Project include health & safety, air emissions, fugitive emissions, water management, energy efficiency and noise. These impacts can be readily addressed through mitigation measures and existing E&S management provisions. The E&S due diligence (ESDD) carried by an independent consultant, identified some areas that the Company needs to focus on and an ESAP has been developed and will be agreed with the Company before signing of the loan agreement with reporting performed annually via the AESR. Key actions include review and revision of the existing HSE Policies and Environmental and Social Mitigation and Management Plan (ESMMP) in order to include the commitments for the Client to comply with the EBRD requirements as well as enhancing the air quality, noise and wastewater monitoring program and development of an internal and external grievance mechanism.

The Company operates certified management systems to manage EHS risks. Labour provisions are generally aligned with PR2 and covered within various HR policies and procedures. This includes provisions on harassment in the work place, equal opportunities and non-discrimination, employee code of conduct, employee training and a grievance mechanism. No retrenchment of employees was required due to COVID-19. The Company operates two production lines: Long products (Electric arc furnace, Induction furnace, continuous caster, reheat furnace) and flat products (Reheat furnace, narrow strip mill & coil units) that are permitted by the Uzbekistan authorities and in process to achieve compliance with the BAT/BREF documents for the Iron and Steel and Ferrous Metals Processing Industry. The Company is presently carrying an energy efficiency audit in order to identify opportunities for energy demand reduction. The Company's facility is located in an industrial area of Tashkent, distant to any communities. No land acquisition is required for the Project. It is also worth noting that the area of the Project implementation is not currently subject to flooding and there are no nearby water streams with potential for flooding at present or in the near future.

Occupational health and safety provisions and performance are in line with the EBRD's requirements. Such provisions extend to the transport of its products by road. The Company has put in place appropriate controls to manage risks associated with COVID-19. The Project is not associated with any impacts to biodiversity or cultural heritage. The Company has in place a stakeholder engagement plan and associated grievance mechanism.

The project is considered Paris aligned for climate mitigation as it features is joint MDB "aligned list" and due diligence has confirmed that its economic feasibility is not materially dependent on fossil fuel exploitation, processing and transport. The project is consider Paris aligned for climate adaptation as the initially screened flood risk was determined to not be material to the project location following site specific review as part of due diligence. The PC risk score is 2. Meaning that the CART is not considered to be materially exposed to physical climate risk. There is no GET component associated with this project.

Legal due diligence: €11,135 mobilised to cover an overall assignment of €22,270. Funding source: Japan-EBRD Cooperation Fund (JECF).

Viktoriya [email protected]+998712074110www.ttz.uz4 Furkat Street, Tashkent, 100021, Uzbekistan

02 Aug 2022

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