Notice

Category A project supported: Bolgantanga Road, Ghana

Published 24 May 2022

1. Project Description

UK Export Finance has agreed to provide support to the Ministry of Finance in Ghana in respect of the supply of goods and services by QGMI Construction UK Ltd (QGMI) to the Ministry of Roads and Highways for the construction, rehabilitation and operation of 109 km of the Bolgatanga-Bawku-Pulmakom Road (the Project).

A key aim of the Project is to upgrade the road conditions in the Northern corridor of Ghana. The rehabilitation of the road is designed to increase road safety, trade and stimulate economic and social development, and to further integrate the Upper East and the Northern regions of Ghana; potentially also benefiting neighbouring countries.

The Project includes:

• Rehabilitation/construction of the parts of the Bolgatanga-Bawku-Pulmakom road that have not previously been built

• Paving the route with surface dressing, with the exception of the first 2 km of the road in Bolgatanga which will be paved with asphalt layers

• Building two lanes in the first 2 km of the road in Bolgatanga to convert the road to a dual carriageway

• Construction of a 15.7 km bypass at Bawku

• Construction of three new bridges at the existing bridge locations at Zuarungu, Tilli and Zebilla. The new bridges are expected to be located parallel to the existing ones, with revised alignments of the accesses to the new bridges.

2. Project Sector

The Project is in the transport sector.

3. Project Sponsors

The Project is being developed by the Ministry of Roads and Highways.

4. UK Exporters

QGMI Construction UK Ltd

5. Export credit agent bank

HSBC

6. Amount of UK Export Finance support

The principal value of the support is approximately US$30.5 million.

7. OECD Common Approaches and Equator Principles

UK Export Finance categorised the Project as Category A i.e. having potentially significant environmental, social and human rights (ESHR) impacts in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

As required by the OECD Common Approaches, UK Export Finance disclosed its possible involvement in the Project. A notification was posted on the UK Export Finance web site on 21 April 2021, which directed interested parties to the contact from where published ESHR information can be sourced. UK Export Finance did not receive any comments from interested parties.

Ramboll was commissioned by QGMI to undertake an independent environmental and social due diligence review on behalf of the Lender group.

8. Environmental, Social and Human Rights Standards

Project-related ESHR documentation was reviewed for their alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines.

The applicable IFC PS were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts

• PS2: Labour and Working Conditions

• PS3: Resource Efficiency and Pollution Prevention

• PS4: Community Health, Safety and Security

• PS5: Land Acquisition and Involuntary Resettlement

• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

• PS8: Cultural Heritage.

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007)

• EHS Guidelines for Construction Materials Extraction

• EHS Guidelines for Toll Roads.

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• worker and community health and safety

• physical and economic displacement

• emissions to the atmosphere (including land, air and water, and climate change)

• traffic management and road safety

• wastewater treatment

• waste and hazardous material management

• emergency planning and response

• grievance mechanisms

• community engagement.

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

A review of project-related documentation by an Independent Environmental and Social Consultant (IESC), Ramboll, was also undertaken.

The review included:

• a site visit by the IESC

• desk-based review of project-related documentation, including (but not limited to): Environmental and Social Impact Assessment, Environmental and Social Management Plans, and Stakeholder Engagement Plan, Resettlement Action Plan, Climate Change Risk Assessment, Biodiversity Management Plans

• follow-up meetings and interviews with relevant Project representatives.

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

Taking account of the review, the Project was deemed to have potential to cause a number of adverse environmental and social impacts both during construction and operation. However, a proposed suite of controls as part of the Project’s environmental and social management systems should facilitate the management of these impacts.

11. Climate change considerations

UKEF considered the potential direct and indirect green house gas (GHG) emissions of the Project and effects of climate change factors on the Project as part of its ESHR review.

A climate change risk assessment including consideration of physical risks and a quantification of Scope 1, 2 and 3 emissions during construction and operation of the Project was undertaken. The assessment included identification of relevant climate change trends, their potential impacts and existing design and mitigation measures.

The total estimated annual construction phase Scope 1, 2 and 3 emissions equal 15,990tCO2e per annum. As this is below the 25,000tCO2e per annum IFC reporting threshold, these are not considered significant.

During operation, emissions sources will include maintenance activities (Scope 1), grid electricity usage from planned lighting (Scope 2) and emissions associated with future road use and embodied carbon of operational maintenance materials (Scope 3). Overall, the estimated operational emissions for the Bolgatanga Road for year 20 from traffic are expected at 362.4tCO2e per annum, which is substantially below the 25,000tCO2e per annum IFC reporting threshold.

The review revealed that the Project design has considered potential physical impacts of climate change such as changes to rainfall and weather patterns.

12. Decision

Various actions have been agreed between the Project developer, operator, and parties involved in the financing, which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle. UKEF has therefore decided to provide its support in respect of the supply of goods and services by UK exporters to the Project.

A condition of support is that Project will be subject to monitoring and reporting in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

UK Export Finance

25 March 2022