OceanSparkle III

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	27021
Company name	Ocean Sparkle Limited
Country	India
Sector	Transportation and Warehousing
Environmental category	B
Department	Infrastructure
Status	Active

Date SPI disclosed	June 30, 2008
Projected board date	July 30, 2008
Previous Events	Invested: July 20, 2009 Signed: June 29, 2009 Approved: June 24, 2009

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Ocean Sparkle Ltd. (OSL or the company) is the leading Indian provider of comprehensive port management services such as harbor towage, mooring, pilotage, ship-to-ship transfer of cargo, and control tower operations. It currently owns and/or manages one of India’s largest fleets of harbor vessels (including 42 tugs and 19 other vessels such as dredgers, pilot tugs, mooring boats, etc.) and provides port services to fifteen ports across India. Over the next two years, OSL expects to invest in several additional new/second-hand vessels to expand its operations at ports, energy and offshore terminals in the country. This project involves an IFC loan to support these investments.

Anticipated development impact of the project

OSL is one of the very few private companies providing comprehensive port management services in India. The Indian port sector is still largely government-owned and operated, although there are presently new efforts and plans to privatize both major and minor ports, and to tender port services contracts to outside service companies. The project will support the continued expansion of a well-managed, low-cost provider of port management services. As such, it will provide benefits to port owners and port authorities, who can focus on core activities rather than the allied services that can be more efficiently provided by Ocean Sparkle. The higher standards of port services offered by OSL as a private competitive provider would also help increase the efficiency of ship turnaround operations in privatized ports, as well as improve the environment and safety levels. The company hires Indian mariners and other crew for all of its operations. Hence, the project will also provide employment opportunities to local skilled labor.

IFC's expected development contribution

- Long-term fixed-rate funding:

Given the nature of the industry, bids for port services management contracts are generally for a long duration involving fixed payments in local currency and minimal escalation for variable costs. IFC will provide the company with long-term, fixed rate rupee funding, which is not readily available in the Indian market. IFC has thus been directly supporting the expansion of a competitive, well-run private sector provider of essential infrastructure services.

- Mobilization/diversification of funding sources:

IFC proposes to syndicate long-term loans for OSL from new banks located overseas. This would represent the first overseas borrowing for the company (apart from IFC), and significantly expand its access to long-term finance

Environmental and social issues - Category B

This is a Category B project because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Mitigation measures can be readily designed and any adverse impacts:

- are not likely to be diverse;
- are not likely to be irreversible; and
- most likely will be limited to project site.

The key social, environmental, health and safety impacts associated with the project will include:

- Environmental, Health and Safety Management Systems;
- Labor working conditions, including occupational health and safety;
- Vessel safety and pollution control; and
- Oil/chemical spill containment and recovery.

Ocean Sparkle has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with applicable environmental, health and safety and social requirements, including:

- international maritime standards under MARPOL, SOLAS, and IMO;
- Indian Merchant Shipping Rules and environmental, health and safety laws; and
- the IFC Social and Environmental Performance Standards.

A discussion on the company’s plans to mitigate/minimize identified environmental and social impacts has been provided in the Environmental and Social Review Summary (ESRS) and an Environmental and Social Action Plan (ESAP). The company has publicly disclosed the ESRS and the ESAP in a manner and at locations specified later in this document.

IFC PROJECTS

RECENTLY DISCLOSED