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Nafith Logistics Services PSC
Environmental & Social Review Summary
This Environmental and Social Review Summary(ESRS) 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 ESRS 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.
Middle East and North Africa
E-BD - Other Support Activities for Transportation (Grain Terminals, Cargo Terminals, Airport Operations)
Nafith International Limited
Date ESRS disclosed
May 29, 2013
Invested: December 22, 2014
Signed: April 16, 2014
Approved: November 11, 2013
View Summary of Investment Information (SII),
E & S ProjectCategorizationand ApplicableStandards
E&S Risks /Impacts andMitigation
E & S ActionPlans
Nafith Logistics Services (Nafith, or the Company), is a Jordanian private joint stock company providing freight transportation logistics services to Aqaba, Jordan’s sole seaport. Nafith implements and operates a Truck Control System (TCS) that controls the entry and flow of trucks to and from the port. It maintains countrywide freight transportation information that tracks and manages the data and documentation required for international trade and transportation.
In August 2011 Nafith was also competitively awarded a contract to build and operate a TCS in Iraq’s Basra governorate for the Ministry of Transport to control all trucks entering Umm Qasr Port, 2 smaller ports (Khor Zubair & Abu Floos), the Safwan border crossing with Kuwait and the movement of imported grains from ship to state-owned silos and warehouses. As part of the agreement Nafith is required to construct a major marshalling yard near Umm Qasr and two smaller yards; implement a customized TCS; and monitor trucks through a Radio Frequency Identification (“RFID”) system to be designed by Nafith. Total investment cost is estimated at around US$8.0 million.
Nafith has invited IFC to invest up to US$3.5 million in quasi-equity/equity to support the Company in three main areas, (i) development and commissioning of Iraq project; (ii) widening the scope of service offerings to diversify revenue sources beyond TCS; and, (iii) entering new markets across the MENA region, such as Morocco and Saudi Arabia.
Overview of IFC's Scope of Review
IFC’s review of this investment consisted of appraising technical, environmental and social information made available by the Sponsor and undertaking visits to Nafith’s offices in Amman and logistics operations in Aqaba, Jordan, from March 18-20 2013. During these visits, discussions were held with key management, Human Resources (HR) and operational staff in order to understand Environmental, Health & Safety and Social (EHS) aspects of Nafith’s existing and planned operations.
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 Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
If 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 corporate investment according to IFC’s Environmental & Social Review Procedure because the operations of this logistics company are likely to result in a limited number of specific EHS impacts, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. It is expected that once the Nafith truck control systems are fully operational they will lead to improved fuel efficiency and road safety at the facilities in which they are deployed; in addition, their use is expected to lead to significantly reduced driver wait times, improvements in driver working conditions and services, reduced fuel usage and reduced traffic congestion.
**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
Currently Nafith has a very limited EHS footprint due to the fact that it provides only logistical services in Jordan, does not construct or own the booths or truck yards at which its staff members operate, does not provide its own security services and is not involved in operating or maintaining trucks. As the company expands into Iraq and possibly other countries, its EHS footprint is likely to increase somewhat due to construction and operation of marshalling yards and associated infrastructure, i.e. a rest area(s) for truckers, restrooms, a prayer area, back-up power supply, water (via package desalination plant) and sanitation services and domestic waste disposal. Nafith will establish an EHS Policy and procedures commensurate with the scale of these potential impacts.
Identification of Risk & Impacts & Management Program
Given the nature of Nafith’s operations, i.e. in Brownfield, Government-controlled areas and with a limited EHS footprint, the company is not required to undertake Environmental Impact Assessments (EIAs) for its current or planned activities. As the company’s project in Iraq proceeds, EHS procedures will be developed to deal with the following main EHS aspects: ensuring adequate health & safety measures are implemented during yard and associated infrastructure construction; establishing and maintaining safe drinking water and power supplies and ensuring proper disposal of sanitary and domestic waste.
Land for the planned marshalling yard in Iraq has been identified by the Government of that country and is located in a security-controlled port zone. Port security is a Government responsibility and no communities are located within the perimeter/project area, hence no community health, safety or security risks have been identified. This is a brownfield site with no houses or economic activities such as cropping or grazing and as such no economic displacement is anticipated. The site is disturbed and contains no biodiversity value, is home to no Indigenous Peoples and contains no known cultural heritage. Therefore Performance Standards 4, 5, 6, 7 and 8 are not directly applicable to Nafith’s current or planned activities.
Organizational Capacity and Competency
It is anticipated that Nafith’s senior technical staff will maintain responsibility for ensuring that the EHS procedures mentioned above are development, implemented and, where appropriate, incorporated into contracts with service providers.
Emergency Preparedness and Response
Due to the strategic location of Nafith’s operations, i.e. within Government-run, security-controlled strategic transport hubs, its emergency preparedness and response plans are closely tied to those of the relevant port and/or border authorities. This will remain the case in future.
PS 2: Labor and Working Conditions
Nafith currently employs about 250 people in Jordan and plans to employ around 125 in Iraq, most of whom are/will be hired locally.
HR Policies and Procedures
Nafith has developed an online HR portal to which all staff members have access. This incorporates 18 employee instructions/procedures. New employees are educated on HR and labor law during their first week of orientation; hard copies of employment contracts are provided to staff members and electronic versions are available via the HR portal.
Working Conditions & Terms of Employment (including worker accommodation)
Nafith follows national labor regulations in each country that it works. In Jordan, workers are employed either on an annual (fixed) contract basis or on open-ended contracts. The Company offers an inflation-linked salary structure in Jordan which is well above national minimum wage stipulations and a good benefits package, including healthcare coverage that covers extended family members. Nafith will conduct a salary survey in Iraq in order to benchmark future salary levels in that country. Employees in Jordan are provided with company transport to their workplaces. Nafith provides scholarships for school and university graduates in Jordan and is considering extending similar schemes in future spheres of operation. No retrenchment is foreseen, but should it be unavoidable in future, Nafith will follow Jordanian labor law which includes paying several months’ worth of additional salary/benefits, consulting with the worker union and contacting the Ministry of Labor for legal clarification beforehand.
Most of Nafith’s workers in Jordan operate out of toll booths at strategic locations. There are three work shifts in Jordan: from 8 am – 3 pm; 3 pm – 12 am and 12 am – 8 am. Nafith has an agreement with the Ministry of Labor that shift workers can work up to a maximum of 56 hours per week (above the regulated 48 hours), on the understanding that they are take a greater number of days off in between. Booths are lit at night and have air-conditioning units to deal with summer heat. No cash is exchanged, due to the use of RFID technology, lowering any security risks for workers. Security in Jordan is managed by the Aquaba Development Corporation; Nafith will hire its own private unarmed security personnel in Iraq, though overall security will be maintained by army personnel who maintain checkpoints near the proposed marshalling yards and border crossings. The new marshalling yards in Iraq will be surrounded by security fencing with watchtowers and located in an access-controlled area near Umm Qasr Port.
Many Jordanian workers joined the Ports Union in September 2012 and signed a collective agreement. In fact, as Nafith is a logistics company, the designated union per Jordanian labor law is reportedly the Services Union. This was followed by a worker strike in October 2012. The strike involved some violence and intimidation of non-striking workers,
who were afforded protection from the national police force. Around 100 workers held a further strike in December 2012 in relation to annual contracts: Ministry of Labor intervention led to dismissal of 6 employees for violence and/or slander; of the remainder, 50 returned to work and 50 refused to. Alternative jobs for the latter have reportedly been identified by the Aquaba Development Corporation.
The Ministry of Labor subsequently approved a change of union so that Nafith employees are represented by the (legally correct) Services Union. Nafith has signed a new collective agreement with its workers and has improved working conditions across a number of areas in response to issues raised. The company has also undertaken an exercise to educate all employees on the pros and cons of fixed vs open-ended contracts and subsequently undertook a survey to understand the proportion in favor of each. Due to the enhanced benefits of being on a fixed contract, the vast majority of staff surveyed gave this (fixed contract) as their final employment preference.
Non-Discrimination and Equal Opportunity
Nafith will not make employment decisions on the basis of personal characteristics that are unrelated to inherent job requirements, such as language, race, sex, political opinion, philosophical belief, religion, sect, nationality, ethnic origin, disability, age or sexual orientation. In practice, Nafith’s booth workers are almost exclusively male, given their role in interacting directly with male truck drivers on a continuous basis, including during night shifts. The gender split amongst office workers is more evenly split.
Nafith has an internal employee grievance mechanism in operation in Jordan and will extend this to its Iraqi and other future operations in future. The company has won an award in Jordan for this grievance mechanism, which is operated via online HR portal that all staff have access to. Nafith also undertakes an annual employee satisfaction survey.
Protecting the Work Force (child and forced labor)
Nafith does not, and will not in future, employ child or forced labor in any of its operations.
Occupational Health & Safety (OHS) risks faced by Nafith’s employees are limited due to their role as toll both operators. Staff are only required to wear reflective jackets for high visibility, and are provided with fire-fighting equipment and first aid kits. By law one trained safety liaison officer needs to be present on each shift worked. Road traffic risks are faced by supervisory staff making frequent road trips and Nafith now uses GPS technology to track speeds and locations of its eight cars. Construction of basic infrastructure in Iraq will be of a relatively short-duration and is not expected to entail any high OHS risk activities; nevertheless, Nafith will ensure that appropriate OHS clauses, including provision of appropriate personal protective equipment, oversight and incident monitoring, are i
ncluded in contracts for the these (and any future) construction works.
PS 3: Resource Efficiency and Pollution Prevention
Nafith’s Jordanian operations have a minimal environmental footprint and generate no emissions besides those from six company vehicles. Staff in Jordan make use of third party sanitation facilities run by the Port Authority and are transported in buses operated by a third party contractor. The company’s proposed marshalling yard in Umm Qasr Port, Iraq, will incorporate drinking water supply for truckers and staff, provision of back-up power, domestic waste disposal and sanitary waste disposal. Drinking water will be provided via a small desalination plant. Nafith will monitor drinking water supplies on a regular basis to ensure that water quality complies with WHO drinking water standards. The back-up generator(s) and small quantities of fuel required to run it will be installed/stored on a bunded, impermeable surface to prevent soil or groundwater pollution. It is anticipated that small volumes of domestic waste produced at the Umm Qasr facility will be collected by either the port authority or Umm Qasr Municipality for disposal at the local domestic waste dump. Sanitary waste will be dealt with via s septic tank system that will be emptied periodically by the local municipality.
Nafith’s greenhouse gas (GHG) emissions are negligible given the lack of emissions sources involved in their logistics business, which are limited to small back-up generators proposed for the Iraqi marshalling yard and fuel usage from a small number of company cars. The truck control system that Nafith has deployed in Jordan has led to significantly decreased truck queuing times and fewer trips, reducing trucking related emissions (though these emissions are not attributable to Nafith). It is anticipated that the same positive impact on third party emissions will be realized in Iraq.
Nafith does not interact with the general public due to the company’s location in strategic, security-restricted areas. The company maintains constant communication with its clients and with truck drivers via telephone and RFID system and responds to complaints or suggestions rapidly. Nafith will develop and maintain an external communications procedure to receive and, as appropriate, respond to, third party queries or complaints.
Local Access of Project Documentation
Nafith International PSC
158 Mecca Street, Office 401, Amman 11821, Jordan
Telephone: +962 6 5563629
Fax: +962 6 5563619
IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.
In addition, Affected Communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC. The CAO is mandated to address complaints from people affected by IFC-supported business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of IFC.
Independent of IFC management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of IFC’s environmental and social performance through its compliance arm.
Complaints may relate to any aspect of IFC-supported business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC-financed business activity. Complaints can be submitted to the CAO in writing to the address below:
Compliance Advisor Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
The CAO receives and addresses complaints in accordance with the criteria set out in its Operational Guidelines which are available at: www.cao-ombudsman.org
Broad Community Support is not applicable for this project
1. E&S Policy & Management:
Nafith will establish an Environmental & Social Policy and management procedures consistent with IFC Performance Standard 1 to ensure worker health & safety during construction, provide clean drinking water and ensure proper disposal of domestic and sanitary wastes. These procedures will be focused on the planned Iraqi operations and incorporated into construction contracts as appropriate.
Dec 31, 2013
2. Labor & Working Conditions:
Nafith will establish a formal Human Resources Policy consistent with IFC Performance Standard 2 provisions and the national labor laws of the countries in which it operates, including among others things a grievance redress requirement for third party contractors.
Dec 31, 2013
3. External Communications: Nafith will establish and maintain an external communications procedure/channel to receive and respond to, third party queries or complaints.
Dec 31, 2013
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