To enhance regional and global trade connectivity by increasing the capacity, efficiency and sustainability of terminals operated by International Container Terminal Services, Inc. (ICTSI or the Borrower, a Philippines-headquartered container port operator) through infrastructure upgrades and strategic expansion.
The proposed Project is a non-sovereign-backed financing of up to USD300 million senior unsecured corporate loan to ICTSI, a leading global port operator with 34 terminals located in 20 economies. The USD300 million corporate loan will support capital expenditure (CapEx) plan for ICTSI terminals located in the Philippines.
Applicable Policy and Categorization. AIIB’s Environmental and Social Framework (ESF), including the Environmental and Social Standard (ESS) 1 (Environmental and Social Assessment and Management) and ESS 2 (Involuntary Resettlement), and Environmental and Social Exclusion List (ESEL) apply to the Project. The Project is assigned Category A, mainly due to the significant risks associated with the resettlement and the environmental and social (E&S) risks inherent to the nature of port expansion activities.
Environmental and Social Instruments. ICTSI has existing Global Environmental, Social, and Governance (ESG) Policy to manage E&S risks and impacts of its operations in all terminals and subsidiaries across the jurisdictions in which it operates. It was further strengthened and updated after a series of discussions with the Project Team during the due diligence stage. Apart from the ESG Policy, site-specific environmental and social impact assessment (ESIA) that includes an Environmental and Social Management Plan (ESMP) each for the CapEx facility supporting upgrades/expansions of BIPI and MICP has been prepared to meet national regulations and AIIB’s ESF requirements. A Resettlement Plan (RP) addressing the resettlement impacts of BIPI redevelopment was developed and is now being implemented jointly by the Borrower and local government authorities. For the crane equipment financing for MICT, the Crane-focused Environmental and Social Management System (ESMS) will apply as the E&S instrument, which includes procedures for screening, identifying and managing E&S risks related to procurement, installation and operations and maintenance (O&M) of the equipment. It has been developed in a manner that reflects the application of existing corporate principles at an asset- and terminal-specific level and to align with AIIB’s ESF. The ESMS relies on documented procedures, organizational arrangements, and controls that are already in place at MICT and applied to crane-related activities. The draft E&S instruments are disclosed on both ICTSI’s and on AIIB’s websites to meet the early disclosure requirement of AIIB ESF. In addition, the Environmental and Social Action Plan (ESAP) is being finalized with the Borrower to be part of the Finance Documents which will consist of important commitment to fulfill the recommendations embedded in the E&S instruments. The Project Team has assessed these instruments and found them materially consistent with AIIB’s ESF requirements.
Environmental Aspects. While BIPI and MICP, both of which are brownfield terminals, are located in long-established industrialized areas and modified habitats, the expansion and redevelopment activities may impact ecologically significant maritime areas. Marine and coastal works including dredging and backfilling have been carefully considered and assessed in the ESIA. Potential impacts include changes to coastal processes, sedimentation, hydrology, water quality, marine biodiversity, along with other project impacts related to waste, air quality, noise, and health and safety concerns during construction and operations. These risks will be mitigated through the ESMP. All marine civil works-related mitigation measures—covering sediment containment, dewatering controls, waste classification, spill prevention, and navigational safety—are integrated into the ESMP. Responsibilities are assigned to the Proponent and Contractors, with monitoring parameters and frequencies defined to ensure compliance throughout dredging and marine construction activities. For MICT’s equipment financing, impacts are limited to health and safety related to crane operations, which will be managed through the Crane-focused ESMS. The Project also includes green transition measures, such as replacing diesel-powered cranes with hybrid models and introducing energy-efficient technologies to reduce carbon emissions and enhance resource efficiency.
Social and Gender Aspects. The key social risks and impacts of BIPI revolve around the physical and economic displacement of households since the planned expansion required a repossession of BIPI’s lands. The Borrower, in partnership with the local government, has developed and is now implementing the RP. The RP included analysis of alternatives and application of the principle of avoidance which saw the reduction of affected families. Both the planning and implementation of the RP are done in a socially acceptable manner and comply with AIIB’s ESF and ESS2 requirements. Other social risks and impacts such as health & safety, labor and working conditions and gender are addressed in the ESIAs/ESMPs for both BIPI and MICP. In addition, a gender analysis that includes assessment of gender-related risks of the planned expansion as well as during operation, including gender-based discrimination in recruitment and employment, and gender-based violence (GBV) and sexual exploitation and harassment (SEAH) in the workplace, and gender risks related to the influx of workers has been undertaken and gender-responsive mitigation measures have been incorporated in the E&S instruments.
Occupational Health and Safety (OHS), Labor and Working Conditions. OHS and labor risks associated with port facilities include exposure to physical hazards from cargo handling and the operation of heavy equipment, as well as chemical hazards resulting from direct contact with fuels and other substances. Additionally, port operations and construction entail risks related to labor influx and management challenges, traffic and road safety issues, marine safety risks and potential risks related to port security and behavior of security personnel. These potential impacts were assessed in the ESIA. In line with the Borrower’s Health and Safety (H&S) Management Framework and Global H&S Policy outlining the company’s H&S commitments and procedures, management measures have been enumerated in the ESMPs and ESMS. The Project Team has assessed during the due diligence stage the effectiveness of these measures in addressing the risks and impacts and found it generally compliant with the ESF and international practice.
Stakeholder Engagement, Consultations, and Information Disclosure. The ESIA includes a comprehensive analysis of project stakeholders including project-affected persons and vulnerable groups such as women workers, informal settlers, and an engagement plan with a differentiated approach has been developed in consideration of each stakeholder group’s particular situation and interests. Stakeholder engagement has been undertaken in a manner consistent with AIIB’s ESF and ESSs. Specifically, the Project Team will work with the Borrower to monitor the stakeholder engagement process as part of the E&S implementation, with particular attention to the timely disclosure of information related to the Project’s E&S risks and impacts, as well as through meaningful consultation. Disclosure of E&S documents follows Category A’s 60-day timeline requirements outlined in AIIB’s ESF, ensuring publication prior to Project Approval.
Project Grievance Redress Mechanism (GRM) and Monitoring Arrangement. The Borrower maintains grievance and communication systems at both corporate and project levels. Corporate mechanisms include a 24/7 hotline and a Global Corporate Public Relations team for reputational issues, while port-level systems involve community relations officers, Terminal Support Teams, and worker grievance procedures. These existing mechanisms have been reviewed and enhanced as part of the ESIA, RP, and ESMS preparation process to ensure comprehensive coverage and functionality before the project starts. The information of established GRMs and AIIB’s Project-affected People’s Mechanism (PPM) will be timely disclosed in an appropriate manner. Project monitoring and reporting arrangements in detail will be discussed and determined with the Borrower prior to the approval of the Project.
International Container Terminal Services, Inc.
Arnie D. Tablante
Vice President, Treasurer
