Oleoproductos de Honduras S.A. de C.V.

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public 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 decision. Board dates are estimates only.

Project number	27924
Company name	Oleoproductos de Honduras S.A. de C.V.
Country	Honduras
Sector	Food & Beverages
Environmental category	B
Department	Agribusiness
Status	Pending Signing

Date SPI disclosed	March 31, 2009
Projected board date	May 1, 2009
Previous Events	Approved: June 22, 2009

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The Project will consist of a loan to Palmas de San Alejo S.A. (PALSA), Oleoproductos de Honduras S.A. de C.V. (OLEPSA), Industria Aceitera S.A. de C.V. (INDASA), and Búfalo Industrial S.A. de C.V. (BUFINSA). These companies are part of Grupo Jaremar (the “Group”), a vertically-integrated palm oil and food group in Honduras. The funds will assist the Group to:

- increase production capacity in its edible oils divisions;
- expand its plantations of oil palm;
- build a biogas facility to co-generate electricity for its own consumption; and
- refinance short-term debt.

Anticipated development impact of the project

Honduras seeks to expand economic opportunities for the poor, particularly in rural areas. The agriculture sector is one of the main sources of employment in these areas. The palm oil industry in Honduras directly and indirectly benefits almost 5,000 families along the country’s Atlantic coast. Grupo Jaremar employs approximately 1,000 permanent and 2,000 temporary workers, 20% of which are women.

Local palm oil companies like Grupo Jaremar have helped develop infrastructure in remote rural regions and have provided an outlet to industrialize smallholders’ palm fruit. Approximately 2000 small palm fruit producers supply the Group.

IFC's expected development contribution

IFC uniquely contributes extensive regional and sector experience, environmental, health and safety best practices, and contributes financing that matches the Group’s need for long tenor.

Environmental and social issues - Category B

This is a Category B project under IFC’s Policy on Social and Environmental Sustainability because a limited number of specific environmental and social impacts may result that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, design criteria, local regulations and industry certification schemes. Oil palm plantation development is occurring on already cleared agricultural land, and there is thus no destruction of or impact on critical habitat involved. Land acquisition is on a willing buyer-willing seller basis, and there is no involuntary displacement of any people. There are no indigenous peoples’ ancestral lands in the area, and Pech and Garifuna communities are not located near the Group’s operations and are thus not expected to be adversely affected by the project. The Group is working to actively upgrade its environmental protection capabilities and will ensure that its operations meet international standards for the sector. Eventually, independent, third-party certification for oil palm cultivation and processing will also help ensure that this project meets international standards for environmental and social management. As a result, the Category B designation is appropriate.

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