Fordon Logistics

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	26065
Company name	Fordon Logistics Company LLC
Country	Ukraine
Sector	Transportation and Warehousing
Environmental category	B
Department	Infrastructure
Status	Pending Approval

Date SPI disclosed	February 27, 2008
Projected board date	March 31, 2008

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed project involves a construction and operation of a logistics complex including a container yard with capacity of 10,000 TEU and a warehouse of 50,000 sq. m. located in the Odesa region in the Ukraine, as well as an acquisition and operation of a fleet of trucks by Fordon group of companies, including Fordon Logistic Company LLC and Terminal Fordon LLC (collectively Fordon or the Group). The project’s goal is to set up a local logistics center that would provide logistics solutions and services including container handling, warehousing and transportation.

Anticipated development impact of the project

The project addresses the issue of vast undersupply of quality warehouse space and logistics services in the Ukraine, which constrains domestic and international trade development. In particular, this applies to the Odesa region, which is a home for to the country’s major ports and the principal trans-shipping point in the country’s seaborne trade. The project will be one of the first in the region that will contribute to infrastructure development in the region. IFC's support for this project will alleviate the local supply chain constrains improving Ukrainian economy competitiveness, facilitating the goods flows and ultimately benefiting the final consumers through lower consumer prices. The project is expected to improve warehousing services and container handling efficiencies for the Black Sea cargo coming into and out of the country.

By offering an integrated logistics solutions including container handling, warehousing and transportation the project will enable the customers to benefit from packaged competitive transportation and handling solutions. The benefits of the project will be shared amongst the government (through receipt of taxes), shipping companies and cargo owners (through high quality services) and local residents (through new jobs created by the project).

IFC's expected development contribution

IFC’s role and additionality in this project includes:

- provision of financing adequate to the needs of the client, otherwise unavailable on comparable terms including a project finance structure and long tenors of the proposed loan facilities;
- assistance to the project in enhancing its environmental and social standards;
- introduction of the project to a broader universe of foreign investors by marketing and mobilizing the proposed B loan;
- provision of a “stamp of approval” for the project and the sponsor.

Environmental and social issues - Category B

This is a category B Project according to IFC’s environmental and social review procedure. The following potential environmental and social impacts of the project were analyzed:

- Site Acquisition and Planning Process;
- Social and Environmental Assessment and Management;
- Labor and Working Conditions;
- Environmental Pollution Abatement.

The company has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements – Ukrainian laws and regulations and IFC’s Performance Standards. The information about how these potential impacts will be addressed by the Sponsor is summarized in the Environmental and Social Review Summary (ESRS) and Environmental and Social Action Plan (ESAP).

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