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| Rain CDG |
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| 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 | 26609 |
| Company name | Rain CII Carbon (India) Limited |
| Country | India |
| Sector | Chemicals |
| Environmental category | B |
| Department | Oil, Gas, Mining And Chemicals |
| Status | Active |
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| Date SPI disclosed | November 7, 2007 |
| Projected board date | December 7, 2007 |
| Previous Events | Invested: July 10, 2009
Signed: December 18, 2007
Approved: December 13, 2007 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The proposed transaction involves providing an IFC Carbon Delivery Guarantee (CDG) for Certified Emissions Reduction Credits (CERs) generated by Rain Calcining Limited (Rain or the company). Rain is based in Vishakhapatnam in Andhra Pradesh, India with an installed CPC capacity of 600,000 tons per annum (tpa). Rain has been an IFC client since the company’s inception in 1993-94. In 2004, IFC financed Rain’s expansion, which involved establishing a new 300,000 tpa kiln and associated facilities, doubling the Company’s CPC capacity. A significant added benefit from this project was that waste heat from the new kiln could be used to eliminate Rain’s dependence on fossil fuel for power generation, leading to CERs. In 2007, Rain's CER project was registered with the Clean Development Mechanism Executive Board with an annual baseline GHG emissions reduction estimated at about 164,000 tonnes of carbon dioxide equivalent. |
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| Project sponsor and major shareholders of project company |
| Mr. Jagan Mohan Reddy is the main sponsor and the main shareholder. Together with family and associates, he holds about 46.9% of Rain’s equity, the balance held by financial institutions, general public and other corporates. IFC has a 5% shareholding in Rain. |
| Total project cost and amount and nature of IFC's investment |
| In the proposed transaction, IFC would purchase and on-sell CERs. There is no investment or project financing involved in this transaction. |
| Location of project and description of site |
| The Rain facility is located on a 42.5-acre site, in the Visakhapatnam Port Area. The site is approximately three kilometers from the deep water dock where green petroleum coke, the main feedstock, is discharged and export shipments of calcined petroleum coke are loaded. |
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| Anticipated development impact of the project |
- Development Impact:
This transaction complements the development outcomes achieved out of IFC’s previous project with Rain, which eliminated the primary use of fossil fuels by the Company’s operations. The single largest development impact of the transaction is that over the five year transaction horizon, the generation of an estimated 825,000 tonnes of carbon dioxide equivalent will be eliminated, while a total of 2.5 million tonnes of carbon dioxide will be eliminated assuming an estimated 15 year life of the project. Through supporting an Indian company gain access to carbon finance in the way this transaction is structured, the project could encourage similar deals with local companies.
- World Bank Group Strategy:
The project is compatible with the overall WBG and IFC strategy to support the development of competitive local industry in India. In particular, the proposed transaction is consistent with IFC’s approach to Climate Change by helping reduce greenhouse gases and expanding the market for carbon finance.
The World Bank Group Country Assistance Strategy (CAS) for India aims to strengthen the enabling environment for sustainable private–sector-led growth and support critical interventions of special benefit to the poor and disadvantaged. To support these objectives, the World Bank Group will concentrate its assistance on improving government effectiveness and on promoting private sector-led growth by:
- Facilitating greater competitiveness through:
improvements in the investment climate;
improved financial intermediation to the private sector; and
direct support to firms to promote sustainable growth and competitiveness;
- Improving the quality and quantity of infrastructure through greater private sector participation;
- Promoting the provision of private health services; and
- Improving rural productivity and growth through greater private sector investment. |
| IFC's expected development contribution |
Under the Kyoto Protocol, the carbon credit mechanism has led to the development of an important trading market between the developed and the developing nations. IFC’s key role is that of an intermediary supporting the efforts of developing nation companies to access the international market in a transparent manner.
- Role in Improved Market Access:
By credit enhancing Rain’s CER sales through its guarantee, IFC would facilitate the company’s access to the best global CER markets and customers, leading to better prices.
- IFC’s Principal Additionalities:
Providing a fully transparent approach:
- IFC is offering Rain a pre-determined spread with a transparent price, which would allow Rain to benefit from increases in the market price of CERs.
- Customized Risk Structuring:
IFC’s long relationship with Rain gives us significant comfort and familiarity with the company’s operations. As a result, IFC has been able to develop a tailor-made structure for Rain. The escrow structure proposed by IFC allows Rain to use its CERs as first loss takers for under-delivery, thereby containing the risks within the transaction structure. |
| Environmental and social issues - Category B |
IFC has been monitoring the performance of the company’s operations as part of the IFC previous investment. Key environmental, social, health and safety issues relevant to the operations include:
- emissions to the environment (e.g. air and water, solid waste and toxic/hazardous materials management);
- environmental management system (EMS);
- industrial hygiene and occupational safety and health (training, personal protective equipment, and collection/monitoring of accident statistics.)
The company has demonstrated an overall sound performance.
Performance standards that are applicable for this investment, therefore, include the following:
- PS1: Social and Environmental Assessment and Management System
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
Based on this review, this project will require thirty (30) days disclosure by IFC prior to Board and has been categorized as a category B. |
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| For inquiries about the project, contact: |
N. Jagan Mohan Reddy, Managing Director
Rain Calcining Limited
Srinagar Colony; "Rain Center" 34
Hyderabad,
Andhra Pradesh 500073
India
Telephone: +91 40 40 40 1244
Fax: +91 40 40 40 1214
The Environmental documents will be placed at two locations.
- The company’s plant: Scindia Road, Naval Base (P.O.); Visakhapatnam – 530 014 A.P. India;
- District Library; Marritatnam; Visakhapatnam, A.P. India. |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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