Nigeria: Eleme Fertilizer II-01/Port Harcourt
Labor, violation of PS2, low wages, discrimination, safety
Includes two A loans (resp. US$150 M & US$120 M)
In 2013 and 2018, IFC provided loans to Indorama Eleme Fertilizer and Chemicals Ltd. (IEFCL, the company) to construct and expand a nitrogenous fertilizer facility in Port Harcourt, Nigeria. The facility was constructed next to Indorama Corporation’s petrochemical facility.
In April 2018 a complaint was filed with CAO by 134 IEFCL employees raising a series of concerns regarding the company’s labor and working conditions and use of security forces. Specifically, these concerns pertain to: (a) salaries/welfare; (b) discrimination; (c) unionization; (d) tax calculation and union dues withholdings; (e) discipline and treatment of employees who complained to CAO and/or who criticize management; (f) workplace safety, hazards, and hazard allowance; (g) healthcare coverage; and, (h) impacts associated with a July 2017 protest.
CAO found the complaint eligible for further assessment in May 2018. The CAO team conducted an assessment trip in September 2018. During CAO’s assessment, there was a lack of consensus amongst the parties to engage in a CAO facilitated dispute resolution process. In accordance with CAO’s Operational Guidelines, the complaint has been referred to CAO’s compliance function. An assessment report is available at the below link.
In December 2019, CAO completed a compliance appraisal of the case. While the range of issues raised by the complainants are potentially serious, enhanced supervision by IFC subsequent to the July 2017 protest has considered the company’s approach to labor issues and security. Where gaps against Performance Standard requirements were identified, IFC documented implementation of corrective actions. However, while IFC supervision provides general assurance of the company’s PS2 performance, questions remain as to IFC’s response to allegations that the company has taken a retaliatory approach to workers who have raised grievances with the company. CAO concludes that this issue raises substantial concern regarding the application of PS2 to IFC’s investments and requires further investigation by CAO. CAO’s investigation will be limited in scope to IFC’s review and supervision of the company’s disciplinary procedures and approach to grievance handling, including its response to the specific grievances raised in the complaint.
In June 2021, CAO finalized the compliance investigation in relation to the case, making two non-compliance findings in relation to IFC’s supervision of the environmental and social (E&S) risks and impacts of the project. The investigation report was sent to IFC for formal response.
CAO’s investigation concluded that, while IFC enhanced its supervision of the Company’s WGM since 2018 and documented improvements, IFC supervision activities do not provide sufficient evidence of the effectiveness of the Company’s WGM regarding PS2 requirements. Particularly, IFC lacks assurance that the Company is implementing a WGM which provides workers with a channel to address their concerns in a manner that is perceived as safe and fair.
The investigation also concluded that IFC’s response to the complainant's allegations of Company retaliation against workers was insufficient and represents a non-compliance with the Performance Standard 2 requirement to ensure the right of workers to organize and raise grievances without fear of reprisal. An appropriate IFC response would have included actions aimed at further understanding and assessing the situation, such as: engaging with workers alleging instances of reprisals to review their claims and concerns, and/or a more in-depth review of whether the company’s WGM was effective and whether disciplinary procedures had been properly applied. CAO concluded that the lack of guidance at the IFC and client level on handling allegations of retaliation at the time was an underlying cause of this non-compliance finding.
Finally, CAO also concluded that available evidence, in this case, is insufficient to make findings of adverse outcomes in relation to the complainants’ allegations of retaliation.
CAO’s investigation report and IFC’s response, which included a Management Action Plan (MAP), were cleared for publication by the IFC Board of Directors on September 16, 2021. The first Management Progress Report on the Implementation of the Management Action Plan was published on October 26, 2022.
On May 9, 2023, CAO completed a monitoring exercise in relation to this case. CAO monitored the implementation of one project-level action committed by IFC. Additional IFC actions are ongoing at the time of the publication of the report, including those related to hiring a third-party consultant to review the company’s implementation of Performance Standard 2. The case remains open under the monitoring phase.
An omnibus monitoring report is available in the “Case Document” section below, detailing more information about the project-level actions taken by IFC.
CAO continues to monitor the effective implementation of the actions set out in IFC’s Management Action Plan, based on CAO Policy.
Status as of May 25, 2023.