The overarching objective of the Ameriabank facility, comprising P001134 and P001239, is to strengthen Armenia’s economic resilience by: (i) supporting business continuity during a period of heightened regional uncertainty; and (ii) financing investments that improve energy security and mitigate greenhouse gas emissions.
P001239 is expected to provide liquidity to eligible private sub-borrowers whose business continuity has been affected by regional trade and supply-chain disruptions.
P001134 complements this objective by financing renewable energy and energy-efficiency investments that strengthen the country’s energy security and contribute to climate change mitigation.
The proposed financing is a USD100 million senior unsecured loan to Ameriabank CJSC (“Ameriabank”), a leading Armenian bank whose significant experience in SME, corporate and sustainable finance makes it well-positioned to channel funding to eligible sub-projects.
The loan consists of: (i) up to USD50 million to provide liquidity support to eligible private sub-borrowers whose business continuity has been adversely affected by ongoing regional turbulence; and (ii) up to USD50 million to finance eligible renewable energy and energy-efficiency sub-projects. It is expected to be denominated in USD and have a maturity of up to five years.
Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP), including Environmental and Social Standards (ESSs) and the Environmental and Social Exclusion List (ESEL), applies to the Facility. The Facility is classified as Category FI because AIIB financing will be provided to Ameriabank for on-lending to eligible private-sector sub-borrowers and sub-projects in Armenia. AIIB will rely on the FI to undertake the screening, assessment, approval, and monitoring of AIIB-supported activities in accordance with an Environmental and Social Management System (ESMS) that is acceptable to AIIB and commensurate with the nature and scale of the underlying Environmental and Social (ES) risks and impacts. AIIB financing will not support activities included in the ESEL or hydropower projects. Higher-risk activities, including category A activities or sub-projects, will be excluded from financing under the Facility.
Environmental and Social Instruments. The ES instrument for the Facility is Ameriabank’s ESMS. The ESMS is governed by a Board-approved ES Risk Management Policy and supported by screening tools, implementation procedures and monitoring arrangements integrated into Ameriabank’s lending process. AIIB conducted Environmental and Social Due Diligence (ESDD) of Ameriabank, including review of the ESMS, organizational arrangements, monitoring practices, sample transactions and implementation capacity. The ESDD confirmed that Ameriabank has maintained an operational ESMS since 2011 and has experience implementing ES requirements associated with financing provided by international financial institutions and development finance institutions. AIIB determined that the ESMS provides an adequate basis for managing the anticipated ES risks associated with the Facility.
Environmental and Social Aspects. The principal ES risks are expected to arise through renewable energy and energy-efficiency sub-projects financed under the Facility. Potential environmental risks may include biodiversity and habitat impacts, waste management, construction-related environmental impacts and resource-efficiency considerations. Potential social risks may include labor and working conditions, occupational and community health and safety, stakeholder engagement, land acquisition and associated livelihood impacts, and labor and working conditions risks associated with solar photovoltaic supply chains. Such risks are expected to be addressed through implementation of the ESMS and sub-project-specific mitigation measures, where required. The ESDD also confirmed that the ESMS is supported by documented procedures and implementation guidance covering stakeholder engagement, grievance management, land acquisition and resettlement, environmental monitoring, occupational health and safety, incident management and emergency preparedness. ES requirements are incorporated into financing documentation and monitored throughout the life of the underlying financing.
Stakeholder Engagement, Consultation and Information Disclosure. The ESDD confirmed that the ESMS is supported by procedures covering stakeholder engagement, consultation, information disclosure and grievance management. For sub-projects with elevated ES risks, the ESMS requires sub-borrowers to implement stakeholder engagement measures commensurate with the nature and scale of identified risks and impacts. Ameriabank is expected to maintain public disclosure of an overview of its ESMS, ES complaint-handling arrangements and information regarding AIIB’s Project-affected People’s Mechanism (PPM), in English and Armenian, through appropriate public communication channels.
Project Grievance Redress Mechanism (GRM). Ameriabank maintains established communication and complaint-handling channels through which clients and external stakeholders may submit inquiries, feedback, complaints and claims regarding its operations and services. The ESDD confirmed that Ameriabank maintains internal procedures supporting project-level GRM and whistleblowing arrangements. The ESMS includes guidance on grievance registration, investigation, response and monitoring. For sub-projects with elevated ES risks, sub-borrowers are expected to establish and maintain grievance mechanisms appropriate to the nature and scale of identified risks and impacts. AIIB’s Project-affected People’s Mechanism (PPM) applies to the Facility. Information regarding the PPM will be made available through Ameriabank’s disclosure and communication arrangements.
Monitoring and Reporting Arrangements. Ameriabank will implement and maintain the ESMS throughout Facility implementation and retain ES records for AIIB-financed activities. The Borrower is expected to provide periodic ES monitoring information to AIIB in an agreed format. Annual portfolio-level ES performance reporting is also expected to be provided to AIIB. AIIB will supervise implementation of the Facility through review of ES reports and site visits, as appropriate. As part of its supervision approach, AIIB may review selected transactions financed under the Facility to support implementation of the ESMS and application of the Facility’s ES requirements.
Asian Infrastructure Investment Bank
Yulia Rusanova
Senior Investment Officer
