INPASA

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Project Number: 
PR3980A-01
Expected Consideration Date by the Board: 
12/04/2012
Date Posted: 
11/02/2012
Company: 
Industria Paraguaya de Alcoholes S.A. (“INPASA”)
Sponsoring Entity: 
Not applicable
Financing Requested: 
Up to US$5 million
Sector: 
Agricultural Products
Location: 
Nueva Esperanza, Canindeyú.
Country: 
Scope Objective: 

INPASA’s operations encompass: (i) the production of ethanol from corn (90%), sorghum and wheat (10%), as well as dried distillers grains with solubles (DDGS) and corn oil as by-products; (ii) the production of crystal white sugar from sugarcane; and (iii) the production of sugarcane on leased land. INPASA’s ethanol plant is capable of producing 144 million liters of ethanol per year. The company’s sugar mill has a nominal production capacity of 750,000 kilos per day.

The purpose of the project is to provide a source of financing to: (i) improve the company’s debt profile by refinancing a portion of its short-term financial liabilities incurred to finance investments in its sugar refinery; and (ii) fund part of the investment aimed at treating vinasse.

Environmental Review: 

Environmental and Labor Issues:

This is a category III project according to the IIC’s environmental and labor review procedure because it could produce certain effects that may be avoided or mitigated by following generally recognized performance standards, guidelines, or design criteria. The main environmental and labor considerations related to the project are: water supply, liquid effluent management, atmospheric emissions, solid waste and hazardous materials management, personal safety, fire safety, and emergency response.

The environmental impact assessment (EIA) conducted on the ethanol plant was approved by Paraguay’s Ministry of the Environment (SEAM), which issued the pertinent environmental license. The company subsequently filed to expand the scope of the original EIA to include the sugar mill. As a result, an environmental license was issued covering both plants through August 2013. The environmental licenses covering INPASA’s plantations and those of the related company, Agrícola Entre Ríos S.A. (Agriesa), are up to date. In addition, both companies are licensed by Paraguay’s National Institute for Food and Nutrition (INAN) and the National Counterdrug Secretariat (SENAD), which regulate chemical inputs used by the industry (e.g., sulfuric acid, sodium carbonate, and sodium hydroxide).

Principal Environmental Impacts:

Water Supply: Water is supplied from two sources: well water used to wash the sugarcane before the sugar is extracted; and water from the Itambey River used in plant steam boilers and to boil corn slurry in the ethanol plant. In addition, the water extracted from the sugarcane is reused in the milling process. The company has secured the relevant permits for the water extraction process. INPASA and Agriesa employ dry-farming techniques, which do not require crop irrigation.

Liquid Effluent Management: The main effluent associated with ethanol production is vinasse. Rich in nutrients, vinasse can be used as a fertilizer. The vinasse is stored in tanks near the plant and subsequently sprayed on the plantations via gun sprinklers during the seed germination stage, taking care to avoid contact with cane leaves. The company is currently studying a project whereby it would dry the vinasse and recover its nutrients to produce animal feeds with significant value added.

In accordance with local regulations, sewage from the plant’s restrooms is routed to septic tanks and soakaway systems.

Any hazardous liquid waste is treated by a licensed firm.

Air emissions: The main sources of air emissions are the steam boilers and heavy commercial vehicles operating on unpaved roads. The steam boilers run on firewood. All firewood supplied for this use has the corresponding clearance issued by the National Forestry Service, an agency of the Ministry of Agriculture and Livestock. In addition to being a renewable energy source, the combustion of firewood emits fewer sulfur oxides than fossil fuels. The company is currently in the process of switching the fuel used for its steam boilers from wood to bagasse. This transition is expected to be complete within two years, as its sugarcane production increases. In this way, the company will replace one renewable fuel with another that is also a by-product of its processing operations, helping to further reduce greenhouse gas emissions.

Solid waste management: Bagasse is the primary solid waste generated from cane milling and sugar extraction. The bagasse is subsequently used to fire the steam boilers, resulting in significant energy savings. For the most part, the company’s hazardous waste consists of empty chemical, lubricant, and solvent containers, and contaminated rags. This waste is treated by a licensed firm. Any recyclable waste generated is managed by market operators. The company has a domestic waste collection contract with the municipality of Santa Rita, located some 160 km away. The municipality removes and deposits this waste in its landfill facility, which is authorized by SEAM.

Handling of Hazardous Products: The company’s restricted-access chemical warehouses are used solely for storing industrial inputs. These are equipped with spill containment systems and have fire suppression measures in place. Hazardous materials are handled by trained personnel equipped with the appropriate protective gear. Hazardous materials for industrial use are authorized by SENAD.

All agrochemical products used in crop cultivation are registered with the Ministry of Agriculture and Livestock’s National Service for Plant and Seed Quality and Health (SENAVE). Registration involves following specific procedures under current regulations, based on the guidelines contained in the regional phytosanitary protection standard issued by the Southern Cone Plant Health Committee (COSAVE).

Occupational Safety and Health: The company has an environmental risk prevention program (PPRA) in place to identify and prevent occupational hazards. The PPRA covers: anticipating and identifying risks; establishing the priorities and objectives of evaluation and control; evaluating risks and worker exposure; implementing measures to control and evaluate the program’s efficiency; monitoring of exposure to risk; and the recording and reporting of data. The PPRA applies to workers as well as contractors. Each year, the PPRA is reviewed and an action plan is prepared with a view to carrying out any necessary adjustments and establishing new goals and priorities. The company employs a safety engineer to advise it on occupational and fire safety issues. The company also has an internal accident prevention committee in place, comprised of four worker and six company representatives. The committee is tasked with presenting management and supervisors with recommendations on occupational safety. In addition, contractors are required to comply with specific regulations.

The company has a permanent emergency brigade comprised of no less than six members, tasked with taking the appropriate action in the event of spills, fires, explosions, accidents, or evacuations. Whenever an accident occurs, and investigation is carried out to identify any corrective actions or improvements that might prevent the same accident from occurring in the future.

Labor Practices: INPASA complies with domestic labor laws and International Labour Organization (ILO) standards. Mandatory core labor standards include: social security benefits, freedom of association, organization of workers’ unions, prohibition of forced labor and exploitative and abusive child labor, and nondiscrimination in the workplace. INPASA workers do not belong to a labor union. Workers and their immediate families receive health care coverage through the Social Security Institute (Instituto de Previsión Social).

Monitoring and Reporting: INPASA shall prepare an environmental and social action plan (ESAP) satisfactory to the IIC to ensure compliance with domestic regulations and the IIC’s environmental and workplace safety and health guidelines. As part of the ESAP, an annual report shall be prepared to monitor changes in environmental, health, and safety guidelines.