M10 Industrial Park Ukraine

Project Description

This summary covers equity and shareholder loan investments of up to USD 10.0 million by Ukrainian Industrial Property Holding Limited of Cyprus (UIPH) into Limited Liability Company “Industrial Park M10” in Lviv, Ukraine. The investor has applied for a MIGA guarantee for a period of up to 10 years against the risk of War and Civil Disturbance.

The project consists of the development of M10 Lviv Industrial Park, a modern multi-tenant industrial park located at the borders of the city of Lviv, west of Ukraine. The proposed project would provide new industrial and logistics warehouse space that will help the country expand access to vital services and products both during the war and post-war reconstruction period.

Environmental  Categorization

The Environmental and Social Information Summary for Small Investment Program (SIP) provided in this section was prepared by MIGA staff and disclosed prior to the date on which MIGA’s SIP Review Committee (SRC) reviewed it. The project is located in an industrial zone, which is situated in the western part of Lviv, 9 km away from the city center, and on the facade of the M10 highway. The dry warehouse complex is currently under construction and is expected to be completed in the coming months. There are no residents adjacent to the project site.

The project is a category B under MIGA’s Policy on Environmental and Social Sustainability because the potential E&S risks and impacts are limited and readily addressed by standard mitigation measures. The key E&S risks related to the project include the capacity to implement an E&S management system, stakeholder engagement, emergency preparedness and response, labor and working conditions, and contractor management.

Although the project was not required by the national law to develop an E&S impact assessment, the project covered potential E&S impacts its feasibility assessment and design. The project has developed an E&S Action Plan (ESAP), which has been agreed with its lenders, to address the key E&S risks identified (link to ESAP). Actions in the ESAP include the development and implementation of a life and fire safety management plan; improvement of contractor management; enhancement of labor practices; and management of occupational health and safety. The project is expected to adopt the E&S policy and management system of the Guarantee Holder, which is in line with the requirements of Performance Standard 1. Through the implementation of E&S management system and the actions in the ESAP, the Project is expected to be designed and operated in accordance with the Performance Standards.

Development Impact

The Project is expected to support Ukraine’s efforts to sustain economic activity and industrial advancement by providing state of the art industrial space with adequate infrastructure. The Project will provide an alternative for displaced firms to continue their operations amidst the active conflict with Russia, supporting employment and government revenue generation. The Project will be aligned to the government strategy for the development of industrial parks which aims support the country's economic growth by providing a favorable environment for firms. At the same time, the Project will send a strong signal to potential investors interested in investing in Ukraine through demonstration effects.

The World Bank Group is committed to support Ukraine through the different stages of the conflict. In April 2022, the WBG launched an Approach Paper for Relief, Recovery and Resilient Reconstruction of Ukraine, in which it highlights that the priority during the Relief stage is to preserve as much of the economic capability as possible. By allowing firms to maintain the basic functioning supporting economic activity during the active phase of the conflict the project will be aligned to WBG approach strategy. Additionally, the Project is aligned WBG’s Fragility, Conflict and Violence Strategy – specifically under Pillar 2 (“Remaining Engaged During Conflicts and Crisis Situations”).

The Project is also expected to be aligned with MIGA’s FY21-23 Strategic Business Outlook under its strategic directions of deepening impact in FCS countries and continuing to complement market creation through the Cascade approach by mobilizing foreign private capital into Ukraine.