Procedures in reviewing environmental impact of export and investment in country of final destination

A positive assessment of environmental acceptability of the export and investment in the country of final destination is one of the basic preconditions for conclusion of an insurance contract. Environmental review shall be made for all projects where the Exporter applied for insurance of a credit with state support with repayment exceeding 2 years as well as for all investment in foreign countries (hereinafter the "export").

Process of assessment of environmental impact of the export in the country of final destination is starting with submission of a filled-in Questionnaire for environmental review of the export project. The Questionnaire is to be filled-in by the Exporter also in case the insurance is requested by a bank extending, e.g. a buyer credit for the financing of the export. It is fundamental that the Exporter submits the filled-in Questionnaire as soon as possible, i.e. at the start of negotiations on financing and insurance of the export. Based on this Questionnaire, EGAP shall classify the export into one of three categories and shall decide whether it is necessary to prepare an expert opinion on the environmental impact.

In case of insurance of the export with value exceeding Czech crown equivalent of SDR10 million, calculated by the exchange rate of the Czech National Bank as at the day of submission of the application for insurance, or insurance of the export to sensitive area or with impact on human rights, the Exporter shall submit the Questionnaire including the statutory declaration to an Expert executor on environmental assessments mentioned in the list of enviromental Experts (hereinafter the "Expert") in order to classify the export into a relevant category. EGAP shall recognize Experts who had obtained an authorization in compliance with Act no. 100/2001 Coll. on Enviromental Impact Assessment and who are qualified for assessment of social enviroment and human rights in the project implementation countries.

In other cases, the Exporter shall submit the Questionnaire including the statutory declaration directly to EGAP together with application for insurance and EGAP may refrain from requirement for further reviewing of the environmental impact of the export.

1. Classification

Based on the filled-in Questionnaire and recommendation of the Expert, EGAP shall classify the export into one of the following categories:

• Those exports classified as category A, where significant adverse environmental impacts can be assumed which may effect an area broader than the sites or facilities subject to physical works, they are primarily exports to sensitive areas or sectors or exports with impact on human rights,
• Those export classified as category B, where the environmental impacts are less adverse than in the exports of category A, impacts are site-specific and can be mitigated; all selected export not classified as category A and category C shall be classified as category B,
• Those exports classified as category C, where the environment impact is minimal or none.

EGAP shall inform the Exporter and insured bank on classification of the export into the respective category without delay. Further procedures emerge from the classification into respective category.

Category A

When the export has been classified as category A, the Exporter is obligated to submit to EGAP an Expert opinion in Czech or in Czech and English with an unambiguous assessment of the degree of environmental impact of the export in the country of final destination.

The expert opinion (ESIA) is:

1. an assessment prepared by a person authorised according to legal regulations in the country of final destination of the export under condition the environmental impact of the export complies with environmental protection rules; the certificate of authorization of such person has to be enclosed to the assessment and EGAP is entitled to verify this authorization subsequently,
2. an assessment recognized by an international financial institution financing the export,
3. an assessment recognized by a foreign credit insurance company in case that the export is a part of a project, which is partially insured by this foreign credit insurance company,
4. an assessment prepared by an Expert.

In cases under 1) - 3) EGAP will require authorization by an Expert. The assessment has to be prepared in compliance with environment protection rules of the World Bank and/or other international financial institutions or European Community as well as with rules valid in the country of final destination of the export provided they are available (hereinafter "environment protection rules").

The result of the assessment has to be an unambiguous opinion whether the environmental impact of the export in the country of final destination complies with ecological limits and criteria in accordance with environment protection rules. As long as the reviewed export does not comply with these limits and criteria, EGAP will require amendments in technical parameters of the export in a way the limits and criteria for the respective sector are complied with.

In case the submitted assessment does not contain an unambiguous evaluation of the environmental impact of the selected export, EGAP may ask the Exporter to complement the assessment with further information or submit a new assessment.

EGAP shall conclude an insurance contract only if the assessment confirms that the environmental impact of the export does not exceed ecological limits for respective sector or branch.

The Exporter is obligated to observe ecological parameters of the export contained in the Expert assessment. In case of an adverse deviation, EGAP has the right to request remedy from the Exporter. If there is no remedy, the Exporter puts himself at risk of recourse in the event of a claim settlement in accordance with terms and conditions of the insurance contract.

When there are significant changes in comparison to original documentation to the export, the Exporter has to request from the Expert an evaluation of environmental impact of these changes.

If there are any subcontracts for an international project, the Exporter may submit to EGAP an assessment prepared for the main supplier or an assessment of Czech subcontracts only.

The Exporter is required to submit to EGAP an expert opinion in Czech or in Czech and English.

The Exporter is obligated to publish the assessment on their websites as soon as possible but not later than 30 days prior to concluding the insurance contract.

Category B

When the export has been classified as category B, procedures of EGAP are similar to those of category A (including ESIA). The environmental review, however, shall not contain complete information on environmental impact assessment but only information corresponding to a lesser degree of adverse environmental impact of the export. Unlike export classified into category A, the publication of the environmental review prior to conclusion of the insurance contract will not be required.

Category C

When the export has been classified as category C, EGAP will not request any environmental review.

2. Monitoring of compliance with ecological parameters

When the submitted assessment contains an obligation to present regular monitoring reports, EGAP shall include this obligation into the wording of the insurance contract. Monitoring is usually under way until the date of expiry of guarantee periods applied in relation to the delivered subject of the export, and by the end of insurance period at the latest.

3. Claims settlement

During the claim settlement, EGAP shall investigate whether the reason for the claim was a non-compliance with ecological limits contained in the assessment and eventually penalize the exporter accordingly in the form of reduction of indemnification payment or application of recourse.