Introduction

On 1 May 2002 Czech Export Bank introduced the obligation of the applicants for officially supported export financing to provide the bank with information that will allow it to assess the environmental impact of the potential export in the final destination country. This obligation arises from the international commitments of the Czech Republic accepted at the OECD in November 2001 and applies to all export projects with export credit repayment terms of two years or more. Other OECD member states are obliged to proceed in a similar manner when providing officially supported export credits.

Why is it necessary to assess the environmental impact of an export transaction?

The impact of export projects on the environment has now been one of the sensitive subjects discussed at the OECD for a number of years. These discussions, together with ever increasing requirements for the assessment of officially supported export projects from non-governmental ecological organisations and other interest groups, culminated in political decision by OECD ministers in May 1999. Member states were called to strengthen common procedures relating to the impact of export credits on the environment. At their meeting in 2001 OECD ministers further recognized that the policy of providing officially supported export credits can contribute positively to sustainable development and should be coherent with its objective.

In November 2001, after over 15 months of negotiations, the majority of the members of the OECD Working Party on Export Credits and Credit Guarantees (ECG) adopted the ‘Common Approaches on Officially Supported Export Credits and the Environment'. Both Czech Export Bank and EGAP use this document when formulating their requirements for exporters and stipulating procedures for assessing the environmental impact of exports.

CEB will of course only use this approach in the event the provision of officially supported export financing is not insured through EGAP. In all other cases EGAP will provide similar assessment according to its internal procedures and the applicant will be obligated to provide CEB with the results of this assessment. It is not in CEB interests to prolong the processing of an application for export finance in this way. The doubling up of the same procedures by EGAP for a single business case is discounted in advance.

Procedure for assessing the environmental impact of an export transaction

What are the new obligations for exporters when applying for supported export financing?

For the purposes of primary assessment of the environmental impact of an export at its final destination the exporter must submit to CEB a completed questionnaire, the requisites of which are given in this document, together with the application for export financing. In the event that the exporter is not the applicant for export financing (in the case of a refinancing credit), the exporter's bank must supply this information (the exporter or the exporter's bank hereinafter called only the "Applicant").

If a completed questionnaire does not contain all the stipulated requisites, CEB will return it to be completed by the Applicant and will stipulate a deadline for the submission of a properly completed questionnaire (taking into account the conditions of the business case in question).

What is the primary assessment comprised of?

On the basis of the information supplied in the questionnaire, CEB places the export transaction in question into one of the following categories:

1. Category A: a project that has the potential to have significant adverse environmental impacts and these impacts may affect an area broader then the sites or facilities subject to physical works, in particular projects in sensitive sectors or located in or near sensitive areas; the guideline to be used is the list of sensitive sectors and sensitive areas given here ,
2. Category B: a project whose environmental impacts are less advers than those in category A, whose impacts are site-specific and few if any of them are irreversible. Category B will include all exports that do not fall into categories A or C,
3. Category C: a project that is likely to have minimal or no adverse environmental impacts.

CEB will notify the applicant in writing of the placement of the selected export transaction in one of the above categories.

What is the purpose of placing export transactions in categories?

Placing export transactions in categories allows decisions to be made regarding subsequent environmental review.

If the project is placed in category A or B, the applicant must submit to CEB an Environmental Impact Assessment (EIA), or a "recognised assessment" (see below). A condition for the provision of export financing is the submission of an assessment and compliance of the project's parameters with it.

Assessments are carried out at the cost of the exporter, always by a person authorised for this purpose by the Ministry of the Environment of the Czech Republic and according to international rules (the World Bank Pollution Prevention and Abatement Handbook). CEB will provide the Applicant with a list of authorised persons, including their contacts.

In the case of category B, the assessment will not include all the information about the environmental impacts of the project required for category A, but only information on the extent of the potential specific adverse environmental impacts of the export. The actual content and scope of the assessment for a project placed in category B is stipulated by the authorised person taking into account the international rules.

When preparing the assessment the authorised person will take account of the state of the environment at the export's final destination at the time the application for export financing is submitted, will assess the environmental impacts relating to the preparation, implementation and operation of the selected export as well as its termination, and will assess the regular operation and the possibilities of accidents. The assessment must include the requisites stipulated by international rules.

If a project is placed in category C, CEB will not require further assessment of the environmental impacts of the respective export transaction as a condition for the provision of supported export financing.

What is a recognised assessment?

If the Czech exporter is not the main project contractor, for the purposes of assessing the environmental impacts of the respective project the submission of an already existing assessment prepared abroad is sufficient. The assessment can thus be substituted by a so-called "recognised assessment", which may be:

1. An assessment in English prepared by an entity in the final destination country for the respective project according to that country's legislation, on condition that the assessment complies with international rules. The Applicant will ensure that the assessment complies with international rules via the authorised person;
2. An assessment in English recognised by an international financial institution if the respective export transaction is part of a project financed by that institution;
3. An assessment in English recognised by the export credit agency of an OECD country if the respective export transaction is part of a project for which this agency is providing insurance or financing.

Are there any possible exceptions from these rules?

Yes; although all export projects are subject to a primary assessment (questionnaire), the Common Approaches give CEB a certain amount of freedom when making a decision about the processing of a detailed assessment, namely in cases when:

• The export financing is provided in connection with an export transaction that makes up less than 5% of the value of the whole project; in this case CEB may decide that the assessment will be prepared in accordance with the limits given in special legislation ^[1].
• It is clear from the submitted documents that the value of the export transaction does not exceed CZK 500,000,000 and it is also clear that the project will not have a significant adverse environmental impacts; in such a case CEB may decide to release the respective export transaction from the requirement for a detailed Environmental Impact Assessment.

CEB will inform the Applicant of its decision regarding an exception in writing without delay.

Will somebody monitor compliance with the environmental requirements stipulated in the assessment?

During the entire life of a credit CEB is entitled to require the exporter to provide written monitoring reports that include the requisites stipulated in the assessment. The reason for such a request may be any information or suspicion that during the execution of the project there has been environmental damage. The obligation of the exporter to comply with the conditions in the assessment will be one of the conditions for the provision of the export financing.

The Applicant will submit the monitoring reports to CEB; the exporter will ensure their preparation by an authorised person at its own cost.

What will happen if an export does not comply with the parameters stipulated in the assessment?

If a monitoring report demonstrates serious non-compliance with the conditions of an assessment by the exporter, CEB will be entitled to suspend financing until the situation is brought into compliance with the assessment. CEB will inform the Applicant in writing of the suspension of financing and the conditions for its renewal.

CEB will renew financing only on the basis of a new monitoring report submitted by the Applicant that demonstrates that the conditions of the assessment stipulated for the environmental impacts of the respective export transaction have been fulfilled.

• Questionnaire for the assessment of the impact of an export project on the environment (DOC format)

(for the purposes of assessing the environmental impacts of a project)

This list is not exhaustive and applies to greenfield projects and larger expansions, for example the modernisation of existing plants (if production will increase by 25 or more percent).

I. SENSITIVE INDUSTRIES:

1. Crude oil refineries (excluding undertakings manufacturing only lubricants from crude oil) and installations for the gasification and liquefaction of 500 tonnes or more of coal or bituminous shale per day.
2. Thermal power stations and other combustion installations with a heat output of 300 megawatts or more and nuclear power stations nuclear reactors (except research installations for the production and conversion of fissionable and furtile materials, whose maximum power does not exceed 1 kilowatt of continuous thermal load).
3. Installations designed for the production or enrichment of nuclear fuels, the reprocessing, storage or final disposal of irradiated nuclear or for the storage, disposal or processing of radioactive waste.
4. Integrated works for the initial smelting of cast-iron and steel and for the production of non-ferrous crude metals.
5. Installations for the extraction of asbestos and for the processing and transformation of asbestos and products containing asbestos: for asbestos-cement products with an annual production of over 20,000 tonnes of finished product; for friction material with an annual production of over 50 tonnes of finished product; and for other asbestos utilisation of over 200 tonnes annually.
6. Integrated chemical insstallations, including the production and transport of pesticides and dangerous/toxic materials.
7. Construction of motorways, express roads and lines for long distance railway traffic and of airports with a basic runway of 2100 m or more.
8. Pipelines, terminals and associated facilities for the large scale (800 mm and more) transport of gas, oil and chemicals.
9. Sea portsand also inland waterways and ports for inland waterway traffic which permits the passage of vessels of over 1350 tonnes.
10. Waste-processing and disposal installations for the incineration,ical treatment or landfill of hazardous, toxic or dangerous waste.
11. Large dams and other impoundments designed for the holding back or permanent storage of water.
12. Groundwater abstraction activities or artificial groundwater recharge schemes in cases where the annual volume of water to be abstracted or recharged amounts to 10 million cubic metres or more.
13. Industrial plants for the (a) production of pulp from timber or similar fibrous materials, (b) production of paper and board with a production capacity of over 200 air-dried metric tonnes per day.
14. Peat extraction, quarries and open cast mining and processing of metal ores or coal.
15. Extraction of petroleum and natural gas for commercial purposes.
16. Installations for storage of petroleum, petrochemicals or chemical products with a capacity of over 200,000 tonnes).
17. Large-scale logging (clearing over 25 ha).
18. Municipal waste water treatment plants with a capacity of over 150,000 population equivalent.
19. Municipal solid waste processing and disposal facilities (over 30,000 tonnes annually).
20. Large-scale tourism and retail development.
21. Construction of overhead electrical power liners (over 110 kV).
22. Large-scale land reclamation.
23. Large-scale primary agriculture/silviculture involving intensification or conversion of natural habitats.
24. Plants for the tanning of hides and skins where the treatment capacity exceeds 12 tons of finished products per day.
25. Installations for the intensive rearing of poultry of pigs with more than 40 000 places for poultry, 2 000 places for production pigs (over 30 kg) or 750 places for sows.

II. SENSITIVE AREAS:

1. Semi-desert areas and the borders of deserts.
2. Areas susceptible to erosion or desertification.
3. Locations on the World Heritage List.
4. Areas of archaeological significance.
5. Tropical or subtropical forests (rainforests).
6. Rivers, lakes, coasts, coastal shelves, coral reefs and swamps (wetlands).
7. National parks, natural reservations, protected areas (including water accumulation) and other reservations of national or regional importance.
8. Areas of occurrence (the natural environment) of endangered types of flora or fauna or areas of great biological diversity.
9. Natural environments providing important resources for endangered groups of inhabitants (the original inhabitants or tribal communities).
10. Areas unaffected by human activity (wildernesses).
11. Areas with a high concentration of inhabitants or industrial activity, if the further development connected with the project would represent a significant additional burden on the environment or relocation of population.

List of people
authorised by the Ministry of the Environment for assessing the environmental impacts of a project

Contact persons at CEB

Export and project financing II.

Ing. Martin Frelich, MBA
ředitel odboru
Tel.: +420 222 843 264
Fax: +420 222 843 382
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International Relations & Fund Raising

Ing. Miloslav Dudek
tel: +420 222 843 256
fax: +420 224 228 593
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¹ For example Act No. 309/1991 Coll., on the protection of the air against pollutants, as amended, Act No. 86/1995 Coll. on the protection of the ozone layer, Act No. 254/2001 Coll. on water and the amendment of certain Acts (the Water Act), Act ČNR No. 114/1992 Coll. on nature and landscape protection, as amended, Act No. 289/1995 Coll. on forests and the amendment of certain Acts (the Forest Act), as amended