Compliance Appraisal: Summary of Results – Complaint re. IFC Financing of Alexandria Portland Cement Company Egypt

July 18, 2016

In April 2015, [the Office of the Compliance Advisor Ombudsman (“CAO”)] received a complaint related to [the International Finance Corporation’s (“IFC”)] financing of [the Titan Group’s Egyptian cement plants] from people living in Wadi al-Qamar in close proximity to the [Alexandria Portland Cement Company (“APCC”)] cement plant, and former employees of the project operator. The complaint alleges that IFC financing of the project is incompatible with IFC’s environmental and social requirements. In particular the complaint raises concerns in relation to: (a) [APCC’s] compliance with national environmental licensing requirements; (b) the extent of stakeholder engagement in relation to the client’s operations; (c) workers’ rights and working conditions; and (d) community health and safety, especially pollution effects of the cement plant, including the company’s transition from natural gas to coal as a fuel...

The issues raised by the complainants are substantial in nature. Regarding stakeholder engagement and pollution, CAO notes that the APCC cement plant is located in close proximity to a residential area. IFC acknowledged during its pre-investment review of the investment that dust, particulate matter, and NOx emissions from the plant were high. As a result, IFC and the client agreed on an action plan to reduce air emissions and monitor air quality. However, the complainants contest the adequacy and effectiveness of these measures. APCC’s conversion from natural gas to coal as a fuel raises questions in relation to the application of IFC’s E&S standards which were not considered in the pre-investment phase. The complaint also alleges a range of issues relating to labor and working conditions, including violations of national labor laws impacting workers, past and present…

Resolution of the compliance issues raised by the complaint requires detailed consideration with involvement of relevant technical expertise. As a result, CAO has determined that a compliance investigation is warranted.