Report of the

OVERSEAS PRIVATE INVESTMENT CORPORATION

ANNUAL POLICY REPORT

FISCAL YEAR 2010

Submitted Pursuant to

Section 240A of the

Foreign Assistance Act of 1961,

As Amended

November 2011
OPIC Annual Policy Report 2010 2

Table of Contents

Executive Summary ...................................................................................................... 3

I. OPIC IN FISCAL YEAR 2010 ..................................................................................... 4

Fiscal Year Overview ................................................................................................. 4

OPIC Initiatives in Fiscal Year 2010........................................................................... 6

II. U.S. ECONOMIC & HOST COUNTRY DEVELOPMENT IMPACTS ....................... 10

U.S. Economic Effects ............................................................................................. 10

Host Country Development Effects.......................................................................... 11

III: ENVIRONMENTAL, HEALTH, SAFETY & SOCIAL IMPACTS .............................. 15

Fiscal Year 2010 New Initiatives Summary.............................................................. 15

Project Screening and Assessment ......................................................................... 15

OPIC continues focus on renewable energy and clean technology projects............ 17

Climate Change Mitigation....................................................................................... 18

Fiscal Year 2010 Reporting ..................................................................................... 19

IV. LABOR AND HUMAN RIGHTS.............................................................................. 21

Project Screening and Assessment ......................................................................... 21

Human Rights .......................................................................................................... 22

V. MONITORING OF ACTIVE PROJECTS ................................................................. 23

Overview.................................................................................................................. 23

Compliance with OPIC Conditions and Covenants.................................................. 23

Self-Monitoring......................................................................................................... 24

Site Monitoring......................................................................................................... 26

VI. EXHIBITS ............................................................................................................... 32

Exhibit 1: U.S. Employment and Associated Effects of OPIC-Supported Projects... 33

Exhibit 2: Breakout of Final Destination of OPIC Supported Project Output to NonUS or Host Country Markets ............................................................................. 34

Exhibit 3: U.S. Employment Effects and Host Country Location of OPIC-Supported

Projects ............................................................................................................. 37

Exhibit 4: Methodology for Calculating U.S. Employment Effects ........................... 41

................................................... 42

t Matrix Explained ..................... 43

........................... 44

Exhibit 8: OPIC Site Monitoring Methodology ......................................................... 47
OPIC Annual Policy Report 2010 3

OPIC ANNUAL POLICY REPORT Fiscal Year 2010

Executive Summary

iscal Year 2010

OPIC catalyzes U.S. investment and jobs and makes money for the budget. In Fiscal Year

2010, OPIC supported 97 new projects in 52 countries or regions for a total of $3.7 billion in

investment. These projects are expected to generate more than $624 million in U.S. exports

and support over 940 U.S. jobs.

OPIC supports U.S. small business. In FY2010, 80 of the 97 projects that OPIC supported

involved U.S. small businesses. In addition, these projects are expected to procure

$15 million from U.S. small businesses located in 15 states and the District of Columbia.

OPIC supports growth in developing countries. In FY2010, 70% of OPIC-supported projects

were located in low- and middle-income developing countries. These projects are expected

to generate over $3.2 billion in local spending, which will stimulate job creation and spur

further economic activity and employment.

OPIC supports growing sectors of the economy. Seventy-four percent of FY2010 projects

target the services sector, including, for example financial services, social services,

communications, and tourism. The high proportion of projects in this sector reflects the

increasing importance to the global economy and the desire of U.S. services

companies to expand their operations internationally.

Strategic support: OPIC collaborates closely with other U.S. agencies in promoting

sustainable economic development in key regions of the world, including the Middle East and

North Africa. With a growing portfolio in the Middle East and North Africa, OPIC has committed

to provide up to $2 billion to catalyze new investment in the region over the next three years

plus an additional $1 billion in investment specifically to Egypt.

Entrepreneurship, infrastructure, and energy: In FY2010, OPIC strengthened its efforts to

support the development of sustainable technologies, entrepreneurship, and infrastructure. For

FY is for over $460 million of support for new renewable energy projects.

Environmental and Social Policy: In FY2010, OPIC published a new Environmental and

,

Performance Standards on Social and Environmental Sustainability. The ESPS also makes

project prohibitions and country eligibility on labor-related grounds.

Transparency: In FY2010, OPIC expanded its longstanding commitment to transparency.

OPIC expanded the volume and breadth of information disclosed to the public about the

projects the agency supports, and provided enhanced opportunities for public comment on

environmentally or socially sensitive projects.





OPIC Annual Policy Report 2010 9

the Caribbean. nt, MIGROF has received $31.25 million in initial

commitments from a combination of multilateral development institutions, banks, and microfinance firms.

U.S. investors in MIGROF include Accion International Gateway Fund, Citibank, and Grey Ghost

Ventures Microfinance Holdings. Other investors include the Inter-American Development Bank, the

Andean Development Corporation, and the Norwegian Microfinance Initiative. MIGROF has a significant

development impact in its provision of medium and long term capital to MFIs located in both urban

centers and rural areas in Latin America and the Caribbean. MIGROF anticipates lending to 40-50 MFIs.

MIGROF is administered by Blue Orchard Finance S.A..

OPIC supports entrepreneurship in markets with limited growth opportunities.

Africa Regional ECP Africa Fund III PCC

In FY2010

Guinea, and Mauritania. Established in 1988, FBC specializes in both consumer and corporate banking,

spanning four currency zones and more than 23 branches with a total of approximately 39,000 clients.

With significant regional footprint and potential for growth, FBC will have a long-term developmental

impact in the region. As a majority shareholder in FBC, ECP III will guide the transition of the company

from a single individual-owned and managed firm into a strong institution with a diversified shareholder

base and a robust team of experienced international and local executives. ECP III will also work closely

procedures through the creation of bank audit, credit, and ethics committees.

FBC will expand its corporate banking operations and develop new lines of business, including trade

finance, money transfers, and remittance services. It

efficiency by rolling- w management

information systems to better coordinate in-person and internet banking transactions.

OPIC committed $60 million to ECP III in 2009 and an additional $40 million in 2010 as a part of a $630

million target fund capitalization. ECP III is mana

D.C.-based private equity firm with investments throughout Africa.

OPIC Annual Policy Report 2010 11

supported projects in FY2010, and what the U.S. procurement amount both initial and operational is

projected to be by sector. The U.S. employment impact is generated using projected procurement data

provided by investors.

Exhibit 2 shows in detail the revenues generated by third-country sales from all OPIC-supported projects

in FY2010, classified by sector. Projects are classified according to their impact on U.S. employment

one group includes projects having a positive U.S. employment impact, and the second group includes

projects with a neutral U.S. impact.

OPIC-supported projects are carefully screened for their U.S. employment effects. OPIC does not invest

in projects that would harm the U.S. economy or result in the loss of U.S. jobs. A team of OPIC experts

collects and analyzes, both geographically and sectorally, the projected U.S. employment and associated

economic effects of the projects that it supports. Consistent with previous years, none of the FY2010

projects are expected to result in the loss of U.S. jobs. For a detailed description of the methodology

used to calculate the U.S. employment effects of OPIC-supported projects due to initial and operational

procurement, please refer to Exhibit 4.

OPIC directly and indirectly supports U.S. small businesses.

OPIC is dedicated to assisting U.S. small businesses expand into developing markets. Since 1997, OPIC

has provided approximately $4 billion in direct loans to U.S. small businesses. OPIC recognizes the

importance of small businesses as a key driver of U.S. economic growth and actively seeks to partner

with these firms to enable their expansion overseas.

have yielded positive results in FY2010. OPIC supported 80 new projects that involved small businesses,

representing 82 percent of all new projects supported by OPIC in FY2010:

38 small businesses received OPIC investment guarantees;4

32 small businesses received $933 million in direct loans from OPIC;

10 small businesses received OPIC political risk insurance coverage.

In addition, of the 97 OPIC insurance and finance projects OPIC supported in FY2010, eight were in

support of women- and/or minority-owned businesses.5

OPIC collects data on the specific U.S. companies that will provide goods and services to OPICsupported projects. Investors are encouraged to provide as much detail as possible regarding their

procurement of U.S. goods and services so that the positive impacts on the U.S. economy of OPICsupported projects can be recorded fully and accurately. During their first five years of operations, the

projects OPIC supported in Fiscal Year 2010 are expected to procure $15 million from U.S. small

businesses located in 15 states and the District of Columbia.

Using the data collected for the Fiscal Years 1994 through 2010, OPIC has identified the specific U.S.

suppliers for over $15.8 billion in expected procurement for OPIC-supported projects. Approximately 56

percent of the identified suppliers have been U.S. small businesses.

Host Country Development Effects

As a development agency,

projects that are

4Includes 27 investment fund subprojects.

5 This data is not collected for OPIC investment fund and framework subprojects.

OPIC Annual Policy Report 2010 13

OPIC-supported projects in Fiscal Year 2010 performed well on both development impact

matrices.

In FY2010, 41 projects were scored on the standard developmental matrix and 47 projects were scored

on the financial services developmental matrix.6 The average developmental score was 85 and 82,

respectively, on a scale of 1 to 160. The overall average developmental score of these projects was 84,

which is within one percentage point of the average score over the last four years. -term goal

is to achieve an average development rating of 100 across all business lines.

Standard Developmental Matrix: Pakistan - TowerShare (Pvt.) Ltd.

One of the highest scoring projects on the standard developmental matrix was a $9.8 million OPIC

commitment to Tow -formed

mobile telecommunications company partially-owned by a U.S. citizen. TowerShare plans to acquire,

construct, maintain, and lease wireless communications towers throughout the Middle East and North

capital to develop the initial phase of its growth strategy in Pakistan.

TowerShare will be the first independent wireless tower operator in Pakistan and will construct new

towers, acquire existing towers and lease its towers to multiple local wireless carriers. By sharing tower

capacity across multiple carriers, TowerShare will help reduce costs and duplication, and promote the

new product offerings and reach

Financial Services Developmental Matrix: Global - Root Capital Inc.

In FY2010, the highest scoring financial services-related project was a $10 million OPIC commitment to

-profit social investment firm that provides capital and financial

advisory services to small and growing businesses primarily located in rural areas throughout Central

America, South America, and Africa. Established in 1999, RCI aims to address the interdependent

challenges of rural poverty and environmental degradation by working with locally based agricultural and

$118.4 million capital raising exercise to expand its lending activities, particularly to Fair Trade-certified

coffee farmers.

As a result of this capital raise, RCI anticipates that it will provide approximately 690 new loans by 2013.

RCI intends to allocate approximately 75 percent of its loan portfolio to the agricultural sector and the

remaining 25 percent to the trade and retail, manufacturing, and tourism sectors. With an average loan

size of $289,000, RCI will have a strong development impact as its financing will provide affordable credit

to rural small and growing businesses, which are too large for micro-loans but remain under-served by

commercial banks located in the targeted geographies.

As a part of its loan portfolio expansion, RCI will also continue to strengthen its financial education

program in which it trains borrowers to prepare financial statements, manage credit collateral, reinforce

financial planning skills, develop internal credit controls, and implement financial policies and procedures.

In Fiscal Year 2010, OPIC focused its activities in low and middle-income developing countries,

providing an important source of employment and tax revenue for these economies.

The projects supported by OPIC in FY2010 will provide significant local economic and social benefits.

The projects are expected to directly generate 7,249 jobs in developing countries over the first five years

6 Nine projects were not scored on either developmental matrix because they involved the provision of insurance on existing assets

or involved the provision of insurance on U.S. exports and therefore did not have additional developmental effects.

OPIC Annual Policy Report 2010 15

III: ENVIRONMENTAL, HEALTH, SAFETY & SOCIAL IMPACTS

This section reports information related to environmental, health, safety, and social screening and

assessment, annual greenhouse gas reporting, as well as introduces and summarizes other initiatives

related to environment and social policy undertaken by OPIC during the previous fiscal year.

Fiscal Year 2010 New Initiatives Summary

In FY2010, OPIC revised and strengthened its environmental and social policies. With the issuance of its

Environmental and Social Policy Statement, OPIC continues to be a leader among development finance

institutions in developing and applying environmental and social policies that advance long-term

sustainable economic development. The policy revision involved a year-long process which included

Performance Standards on Social and Environmental Sustainability thus coordinating its efforts with the

e investment policy. The

climate change, and is consistent with our development mandate to promote sustainable development.

Project Screening and Assessment

OPIC screens all applications to identify the risk of potential adverse environmental and social impacts of

a project and to identify project impacts that could preclude OPIC support on categorical grounds. If a

project is determined to be categorically ineligible, OPIC immediately informs the applicant so as to avoid

unnecessary effort or expense. If the project is categorically eligible, OPIC classifies the project to

determine the requirements for documentation, disclosure, consultation, reporting and post-commitment

monitoring. Projects may be categorized as A, B or C depending on potential risks and impacts of a

particular project. Category A represents the greatest potential for adverse environmental and/or social

impacts.

OPIC uses a rigorous methodology for assessing and calculating potential environmental and

social impacts.

Environmental and social assessment is the process used by OPIC to evaluate the potential

means to improve the

project by preventing, minimizing, remediating or compensating for potential adverse impacts as a

condition of OPIC support. The process includes the following:

Identification of potential adverse environmental and social impacts;

Di

and comment (if the project has been screened as Category A);

-accepted standards and

alternative approaches;

Evaluation or design of mitigation measures;

Evaluation or design of associated management and monitoring measures.

Three of the 97 projects that OPIC provided a commitment to in FY2010 were screened as Category A, or

projects with the potential to have significant adverse environmental and/or social impacts that are

sensitive, diverse or unprecedented in the absence of adequate mitigation measures. Two of the three

Category A projects involve construction and operation of hydroelectric facilities in Mexico; the third

Category A project involves construction and operation of a bio-ethanol plant in Hungary. The three

projects required the preparation of full ESIAs, which were subsequently disclosed to the public for

comment.




OPIC Annual Policy Report 2010 20

On a transactional basis, OPIC considers reduction and control alternatives for all projects, including

opportunities to enhance energy and operational efficiency; protect and enhance sinks and reservoirs of

greenhouse gases, such as natural forests; and the application of emerging technologies for capture,

storage, and recovery of greenhouse gases.
OPIC Annual Policy Report 2010 21

IV. LABOR AND HUMAN RIGHTS

labor and

human rights policies. As noted in Section III (Environmental and Social Impacts), OPIC has adopted the

International F ,

-robust labor requirements. A significant new policy that emerged as

-

labor rights. The Special Consideration designation imposes specific requirements on post-commitment

monitoring, which are additional measures to ensure that such projects operate to the appropriate

standards throughout the life of the OPIC support. The new Environmental and Social Policy Statement

also clearly articulates labor and human rights policies related to project screening and categorization,

reviews, disclosure, conditions and compliance, and country eligibility.

Project Screening and Assessment

OPIC screens all project applications to identify labor-related risks and to identify project activities that

could preclude OPIC support on categorical grounds. If a project is categorically eligible, the project

undergoes a full labor review. In FY2010, no projects were designated

because the new labor policies in the Environmental and Social Policy Statement went into effect in FY

2011.

OPIC uses a rigorous methodology for assessing potential labor-related risks.

The labor assessment is the process used by OPIC to evaluate the potential risks to workers at the

ject by preventing and minimizing such

risks as a condition of OPIC support. The process includes the following:

Identification of potential

internationally recognized worker rights;

expected performance in relation to internationally-accepted

standards and practices;

Evaluation or design of project requirements necessary to enable OPIC support;

Evaluation or design of associated management and monitoring measures.

-supported projects of 2010 were subject to a full worker rights review, and OPIC

support was conditioned upon contractual adherence to internationally recognized worker rights

standards. Supplemental contract conditions addressing one or more of these rights were included in an

overwhelming majority of the project contracts and agreements.

eligibility based on labor-related statutory obligations. For consistency of worker rights country-level

determinations across the U.S. Government, OPIC accepts the determinations made by the President for

the purpose of the Generalized System of Preferences (GSP) program, a trade benefits program

overseen by the Office of the U.S. Trade Representative (USTR).

-and-review process for country eligibility on worker rights grounds,

-accepted

reviews. For countries that are ineligible for the GSP program on grounds other than worker rights, OPIC

utilizes a similar petition-and-review process for country eligibility on worker rights grounds. During 2010,

no countries regained their GSP benefits on worker rights grounds, and hence their eligibility for OPIC
OPIC Annual Policy Report 2010 22

programs. Similarly, no countries became ineligible for GSP benefits or OPIC programs on worker rights

grounds. For its 2010 GSP Annual Review, the USTR continues to formally review the GSP eligibility of

the following countries on worker rights grounds: Bangladesh, Niger, Uzbekistan, the Philippines, and Sri

countries.

Human Rights

Respect for human rights is essential to the success of OPIC-supported projects, and OPIC recognizes

the importance of human rights in its programs and project evaluation process. The OPIC project review

process is designed to ensure that OPIC-supported projects meet their statutory requirements, as

required by the Foreign Assistance Act. For all potential projects, OPIC works in close consultation with

a final commitment.

In FY2010, OPIC continued to collaborate with DRL on the human rights consultation process by utilizing

a mutually-agreed monthly and quarterly system of updates to ensure consistency between OPIC and

DRL on relevant human rights matters in OPIC eligible countries. Every project considered for OPIC

financing, insurance or for investment by an OPIC-supported investment fund in 2010 was subject to the

human rights consultative review process; OPIC did not decline support for any projects in 2010 as a

result of the consultative human rights review process.
OPIC Annual Policy Report 2010 23

V. MONITORING OF ACTIVE PROJECTS

am and outlines Fiscal

Year 2010 : compliance, self-monitoring, and

site monitoring.

Overview

OPIC considers project monitoring a vital part of the project oversight process, and employs two types of

project monitoring: self-monitoring and site monitoring.

All OPIC-supported projects are required - .

The SMQ gathers annual operational information14 on active projects, including such critical data points

as the number of employees, and U.S. and local procurement. OPIC also uses the SMQ to gather data

that allows us to track the development performance of the investments over time. A new, more userfriendly web-based questionnaire was launched in 2008. The new questionnaire is easier for investors to

use and provides OPIC with higher quality data.

Site monitoring helps ensure the integrity of information gathered through self-monitoring. Site monitoring

involves field visits to OPIC-supported projects to ensure compliance with relevant covenants in OPIC

agreements. The projects that are site-monitored are a combination of: 1) projects randomly selected

2) projects

disciplines (U.S. economic impact, host country developmental impact, labor, environment, and social

impact).

The value of site monitoring extends beyond ensuring compliance and understanding why a project

succeeded or struggled. The process of gathering, analyzing and verifying information about projects

helps OPIC continually improve its investment strategy, which means better outcomes for U.S. investors

and host country development.

In late 2007, OPIC initiated an integrated site monitoring approach, using one policy monitoring visit to

comprehensively assess of the statutory disciplines as well as its actual

developmental impacts. Fiscal Year 2010 was the third complete fiscal year of integrated site monitoring,

and it has been a more efficient and effective use of staff and budget resources.

In FY2010, approximately 364 projects were self-monitored and 35 projects were site-monitored.

Compliance with OPIC Conditions and Covenants

Each discipline within the Office of Investment Policy monitors projects to ensure compliance with OPIC

conditions and covenants. The results of the site monitoring this year are:

U.S. economic effects and host country development: U.S. economic and host country

developmental impact site monitoring found that no projects were out of compliance with OPIC

conditions and covenants.

Environment and social impact: In FY2010 environmental and social impact monitoring

focused on those projects with the potential for greatest environmental and social risk. In FY2010,

74 percent of the site visits involved Category A and B projects. During site monitoring,

approximately 65 percent of projects were found to be fully in compliance with all OPIC covenants

and conditions pertaining to environmental and social considerations. The vast majority of

14 The SMQ monitors data used to support The financial performance of loans and

guaranties is monitored separately within OPIC.
OPIC Annual Policy Report 2010 24

instances in which a deficiency was found involved issues that were readily rectifiable, such as

the need to enhance secondary containment for fuel storage, improving placement of fire

extinguishers at the project site. Other cases involved a failure to submit required information

such as annual reports - in a timely manner. In all cases in which deficiencies were noted,

social impact group informed the project investor of the deficiency and

required the implementation of corrective actions.

Labor and human rights: No projects that were site-monitored

rights compliance in FY2010 were out of compliance with those requirements. The monitored

projects generally demonstrated a strong commitment to the OPIC worker rights requirements,

and often extended their commitments to support workers and their local communities above and

beyond the OPIC requirements. OPIC determined that one site-monitored project in FY2009

required the additional follow-up of a third-party labor assessment, which took place in FY2010.

(The delay was

the project site.) The audit found that the identified labor deficiencies were readily rectifiable.

The issue became moot, however, because the project was halted when the borrowers defaulted

on the OPIC loan due to severe financial difficulties.

The following sections provide additional detail on the results of OPIC FY2010 monitoring.

Self-Monitoring

OPIC has required all active OPIC-supported investments to complete and submit a Self-Monitoring

Questionnaire (SMQ) since 1993. The integrated SMQ incorporates data and information relevant to

each of the policy areas that OPIC monitors including developmental impact, US effects, Labor and

Human Rights, and Environment and Social impact. The SMQ is divided into Section A (for all

Section B (for financial intermediaries). Financial intermediaries refer to

general lending banks, specialized lending institutions, mortgage facilities, microfinance institutions,

private equity funds, and other capital market transactions.

The analysis in this section is based on data obtained from approximately 364 SMQs, 219 of which are

Section A respondents and 145 of which are Section B respondents. Of the SMQs received in FY2010,

the table below shows the percentage of OPIC-supported projects reporting in the affirmative on various

developmental indicators. A more detailed description of the items measured follows this table.

Fiscal Year 2010 Self-Monitoring Results

Capacity

Measured

Qualitative Monitoring Percentage of

Self- Monitored

Projects Reporting

Affirmative

Capital Mobilization

Involve Other Federal/Regional/Multilateral Organizations 35%

Involve a Public-Private Partnership 18%

Human Capital

Development

Provide Overseas Training for Workers* 43%

Have Equal Employment Policy* 75%

Have Policies that Support Women in the Workplace * 89%

Provide Company Benefits 89%

Corporate Social

Responsibility

Provide Benefits to the Local Community 68%

Compliance with Environment, Health, & Safety

Conditions 96%
OPIC Annual Policy Report 2010 25

Capacity

Measured

Qualitative Monitoring Percentage of

Self- Monitored

Projects Reporting

Affirmative

Technology and

Knowledge Transfer

Introduce Innovative Management or Marketing

Techniques* 35%

Introduce New Technology or New Products* 29%

Lower Local Prices* 29%

Economic

Diversification

Include Local Ownership* 60%

Local Owner is a Small & Medium Enterprise* 21%

Help a Poor Region within the Host Country* 62%

Strengthen the physical, financial, or social infrastructure* 75%

*Indicators noted with an asterisk only contain information reported by bricks and mortar projects, as OPIC does not request this

information from financial services projects.

Capital Mobilization

development. The most obvious indicators to measure this are the involvement of non-OPIC project

financing and equity in a transaction, the involvement of other development institutions, and the creation

of Public-Private Partnerships (PPPs) through OPIC, local development banks, civil society, and nongovernmental organizations.

Of the FY2010 SMQs received by OPIC, approximately 35 percent reported the use of non-OPIC

investment sources such as USAID, IFC, ADB, and EBRD, or a host country government entity, civil

society or a non-governmental organization. In FY2010, 18 percent of OPIC supported projects involved

a PPP, which are characterized by local government support, such as technical assistance from a local

government agency or construction finance support from a state agency.

Human Capital Development

Employment generation is one of the key variables OPIC uses to evaluate the developmental impact of

projects it supports. In FY2010, SMQ data indicated that OPIC-supported projects employed

approximately 130,600 people in their host countries, or an average of about 400 local employees per

self-monitored project. These projects generated approximately $63,000 of revenue per employee in

FY2010, thus contributing to the growth of local economies.

OPIC-supported projects also help to increase the overall skill level of the workforce through training and

development. In FY2010, SMQ respondents reported that approximately 6,865 local employees received

formal training, and around 43 percent of those employees received training abroad. When employees

are trained outside of their home country, they help to spread new skills throughout the economy.

Company and employee benefits are another indication of a maturing employment market. In FY2010,

89 percent of the SMQ respondents offered various company benefits to employees such as

transportation or meal subsidies, pension plans, or medical coverage. Approximately 75 percent of SMQ

respondents had an equal employment policy. And, about 89 percent of OPIC-supported projects had

special policies and benefits in place specifically to benefit women in the workplace, such as child care,

maternity leave, and / or policies against sexual harassment.
OPIC Annual Policy Report 2010 26

Corporate Social Responsibility

Corporate Social Responsibility (CSR) identifies organizations taking responsibility for the impact of their

activities on customers, employees, shareholders, communities and the environment in all aspects of

their operations. OPIC evaluates CSR in its projects by identifying socially responsible and

environmentally conscious benefits that are offered to the greater community. CSR includes community

outreach programs whereby the enterprise facilitates public access to company-sponsored clinics and

schools, funds community centers, sponsors sports teams and cultural events, or provides financial

support for local foundations and organizations. In FY2010, 68 percent of the SMQ respondents were

involved in these types of community outreach programs.

Technology and Knowledge Transfer

Technology and knowledge transfer includes the dissemination of innovative management practices,

marketing and distribution expertise, and the adoption of new production technologies. Often they lead to

the development and introduction of new products or services. These transfers frequently have a

substantial effect on the host country by improving worker productivity and the quality of other factors of

production. Moreover, additional impacts may be created through the diffusion and adoption of new

technologies and ideas by other firms in the country as a result of the implementation of these ideas by

OPIC-supported investors.

In FY2010, 35 percent of SMQ respondents introduced innovative management techniques in the host

country while 33 percent introduced novel marketing methods. Furthermore, 29 percent of OPICsupported projects sought to introduce new technologies in the host country, while almost 30 percent of

projects introduced new products. Such practices assist OPIC-supported enterprises in gaining a

competitive edge in the global market, improve the domestic technology base, and can result in increased

operating efficiencies. This productivity enhancement can be reflected in lower local prices. In FY2010,

29 percent of OPIC-supported projects reported that they were able to offer lower prices in the local

market by introducing more efficient production and management processes.

Economic Diversification

OPIC encourages private sector ownership of projects in order to promote entrepreneurial growth and

sustainable development around the world. OPIC also encourages economic diversification since that

cycles, and helps promote overall macroeconomic stability.

OPIC measures the economic diversification impact of its investments through various indicators such as

local ownership or SME support, which encourages entrepreneurial activity. Approximately 60 percent of

OPIC supported projects have some local ownership and around 21 percent of these local owners are

SMEs.

Finally, OPIC recognizes the need for rural development in order to avoid creating or exacerbating

income and developmental disparities between thriving cities and rural communities. Approximately 62

percent of OPIC-supported projects reporting in FY2010 were located in poor or rural regions. Also,

infrastructure more accessible and affordable to all segments of the population.

Site Monitoring

In FY2010 OPIC site-monitored 35 projects located in various sectors around the globe. The figures

below provide a breakdown of the sectors, products, and locations of the projects site-monitored in

FY2010.


OPIC Annual Policy Report 2010 29

expansion, the project has increased oil extraction significantly above projected amounts. Although

smaller operators of oil fields are not an anomaly in Colombia, the company uses innovative technologies

innovative and efficient technologies can also be l impact

is its contribution to private sector development in Colombia, as well as the creation of 85 new jobs since

commencement of operations. The project company contributes six percent of its revenues to the

national hydrocarbons fund, ANH, a government entity that invests in hydrocarbon exploration, supports

energy companies, and manages energy contracts. The project supports regional suppliers, as over $3.5

million in annual local procurement is required to run the field. In addition, the project contributes over

$3.2 million in annual tax earnings, and pays six percent of its incremental production to the state oil

royalties program.

South Asia

OPIC monitored five projects in South Asia in FY2010.

Sub-Saharan Africa

OPIC monitored six projects in Sub-Saharan Africa in FY2010.

AfricaTel (Namibia): In November 2009, OPIC visited MTC Namibia, one of its most successful African

telecom projects. OPIC has provided an investment guaranty to Helios, a private equity fund that

includes US investors and focuses on investments in sub-Saharan African companies. Helios is a

shareholder in AfricaTel, an investment vehicle started by Portugal Telecom to make investments in the

sub-Saharan telecommunications market. AfricaTel in turn made an investment into MTC, the largest

Namibian mobile telecom company. MTC has driven a large increase in mobile penetration in the

country, investing in the infrastructure to bring mobile coverage to rural parts of the country, and

increasing coverage from 35 percent in 2007 to 81 percent in 2009. Since 2007, MTC has offered

internet access to Namibian customers and as of September 2009, MTC had 1.3 million customers with a

penetration rate of 76 percent, and 79 percent of the mobile telecom market. MTC has become an

efficient, profitable, and highly advanced company that provides Namibian consumers with the latest in

mobile handsets, services, and network.

Merodent (Zimbabwe): OPIC monitored the only active project in its portfolio in Zimbabwe: a small

toothpaste production facility that has taken out OPIC political risk insurance

only domestic toothpaste manufacturer, assembling toothpaste raw materials, packaging the toothpaste

into tubes, and packing the tubes into boxes for delivery. The company is 80 percent owned by the U.S.

investors and 20 percent owned by the local managers. Merodent produces toothpaste under a license

with Sheffield Labs, a toothpaste producer located in New London, Connecticut. Merodent produces only

for the Zimbabwean market, primarily the greater Harare area, and does not export. Merodent was

forced to stop production in 2008 due to the hyperinflation that ravaged Zimbabwe in recent years. It

*

 * Information has been Redacted in accordance with the two principled exceptions of the Foreign Aid Transparency and 

Accountability Act (FATAA) of 2016; including the health and security of implementing partners, as well as national interest 

of the United States.
OPIC Annual Policy Report 2010 30

company, which employed five people at the time of monitoring. At full operating capacity, the company

employs 30 people, but the economic recession in the country has reduced staffing levels. This project

has had a significant developmental impact primarily in the areas of technology and knowledge transfer,

developm

project has helped to lower prices for toothpaste in Zimbabwe s

others on the local market, which has made toothpaste more affordable to lower income consumers.

Middle East and North Africa (MENA)

OPIC monitored three projects in the Middle East and North Africa in FY2010.

Ameen s.a.l. (Lebanon): In July 2010, OPIC monitored one of its microfinance projects in Lebanon.

OPIC is supporting a risk-sharing agreement between Silver Spring, Maryland-based Cooperative

Housing Foundation International (CHF) and Access to Microfinance Enhanced Enterprises Niches

(Ameen), a regulated Lebanese MFI. OPIC has guaranteed loans made by Ameen with capital from its

local banking partners, Jammal Trust Bank, Fransabank, and Credit Libanais. Ameen has had a positive

developmental impact on Lebanon by offering micro-loans both through direct lending and in partnership

with local banks. Through this arrangement, Ameen investigates potential borrowers, manages the loans,

and ensures repayment, while the partner institutions provide the financing. With no need for a physical

branch network, the agreement enables Ameen to hire enough staff to maintain its portfolio of

microfinance lending, and only charge a 20 percent interest rate on its loans. Ameen reaches its clients

through more than 70 bank branches all over Lebanon. Ameen promotes strong corporate governance

standards, offers loans to microfinance borrowers in Lebanon, employs a significant level of local staff,

uses a partnership structure with local banks that is unique in Lebanon, and focuses lending on those

impacted by the 2006 war with Israel.

Byblos Bank (Lebanon): In July 2010, OPIC monitored Byblos bank in Lebanon. OPIC provided

investment guarantees for two Citibank loans made under the Citibank Lebanon Framework Agreements

to Byblos bank. The proceeds of these loans have been used to expand Byblos

mortgage and consumer lending portfolio. The long-term financing made possible by OPIC support

assisted the bank in a time of uncertainty following the 2006 war with Israel, and helped as Byblos

targeted lending to those impacted. With the confidence fostered by OPIC-supported funds, Byblos

Bank s customer deposits have continued to rise following a moderate drop at the outbreak of war. The

bank was able to maintain its lending relationships with its business clients and maintain steady earnings

-sized

long-term economic stability. Byblos Bank also promotes strong

corporate governance standards and employs a local staff of 2,250, who all receive training and benefits.

Eastern Europe and Central Asia

In FY2010, ten projects were monitored in Eastern Europe and Central Asia.

Sante GMT (Georgia): In June 2010, OPIC visited one of the few dairies it has financed in the emerging

markets. The project involved an expansion of the operations of Sante GMT Products, LLC the largest

dairy and juice manufacturer in Georgia. The U.S. sponsors of this project are a Washington state-based

group of investors led by Edward and Kay Sturdivant. The company produces milk, juice, matsoni (a

Georgian fermented milk product), cottage cheese, yogurt, sour cream, butter, juices and mayonnaise.

Project sales continued to grow in 2009, despite the global financial crisis and the blockage of a major

thoroughfare by Russian forces in 2008 that disrupted company sales in certain regions in Georgia.

Although the company continues to face challenges with the lack of credit in the marketplace and the

potential for further disputes with Russia, management is optimistic

With the OPIC-supported expansion, Sante has added 106 jobs, the majority of which are professional or

technical in nature. The project has improved the livelihoods of thousands of farmers located in the

impoverished rural regions,
OPIC Annual Policy Report 2010 31

impact the project has had on local farmers, the project has benefitted local consumers by providing highquality, nutritional dairy products. Through significant capital investment, Sante has improved the milk

collection, production, and distribution infrastructure in Georgia, which has improved the quality of milk

and other dairy products sold in the market.

NBD Bank (Russia): In May 2010, OPIC visited NBD Bank, a regional bank headquartered in Nizhny

Novgorod, Russia that specializes in SME lending. OPIC has provided an investment guarantee on a

loan from WorldBusiness Capital, a commercial finance company based out of Hartford, Connecticut, to

NBD Bank. The pr

offers micro, small, and medium-sized loans, as well as letters of credit, guarantees, lease finance, and

trade finance. The OPIC facility has catalyzed other sources of international long-term capital for the

bank; NBD management said that its experience with OPIC contributed significantly to its ability to obtain

credit approvals for the rest of its international financing. This funding has allowed NBD to make longerterm loans of up to ten years to its customers and serve a wider array of clients. The OPIC-backed

portfolio includes SMEs involved in wholesale trade, transportation, communication, and services, the

majority of which have been used for equipment purchase. Collectively, the SME borrowers have an

average of 113 employees and average assets of $4.15 million.
OPIC Annual Policy Report 2010 32

VI. EXHIBITS

1. U.S. EMPLOYMENT & ASSOC. EFFECTS, FY2010 .33

2. BREAKOUT OF FINAL DESTINATION OF OPIC-SUPPORTED PROJECT OUTPUT

TO NON-US OR HOST .....34

3. U.S. EMPLOYMENT EFFECTS AND HOST-COUNTRY LOCATION OF OPICSUPPORTED PROJECTS, Fiscal Year 2010 (Projections) ... 35

4. METHODOLOGY FOR CALCULATING U.S. EMPLOYMENT EFFECTS .41

42

43

7. GREENHOUSE GAS POLICY AND CURRENT INVENTORY

8. OPIC SITE MONITORING METHODOLOGY 47

OPIC Annual Policy Report 2010 34

Exhibit 2: Breakout of Final Destination of OPIC Supported Project Output to

Non-US or Host Country Markets

Fiscal Year 2010 (Projections)

PROJECTS WITH POSITIVE EFFECTS ON U.S. EMPLOYMENT 1/

Agribusiness

Sector Total $0

Minerals and Energy

Italy $9,527,350

Saudi Arabia $4,083,150

Turkey $4,899,780

Turkmenistan $5,444,200

Sector Total $23,954,480

Manufacturing

Dominican Republic $1,310,400

Europe Regional $144,611,800

Russia $2,000,000

Turkey $13,000,000

Ukraine $5,000,000

Sector Total $165,922,200

Services

Sector Total $0

TOTAL POSITIVE

EFFECTS $189,876,680

1/ There were no projects with positive U.S. employment effects that had sales to third countries.

There were no projects supported in fiscal 2010 that resulted in the loss of any U.S. employment.

Continued on next page
OPIC Annual Policy Report 2010 35

Exhibit 2 (continued): Breakout of Final Destination of OPIC Supported Project

Output to Non-US or Host Country Markets, Fiscal Year 2010 (Projections)

PROJECTS WITH NEUTRAL EFFECTS ON U.S. EMPLOYMENT 3/

Agribusiness & Manufacturing

Belgium $153,000

Canada $93,000

Chile $776,000

China $5,000

Europe Regional $3,490,000

France $19,643,000

Germany $453,045

Guadeloupe $14,000

Ireland $613,045

Japan $254,000

Latin America Regional $4,011,196

Lebanon $250,000

Mexico $3,910,500

Netherlands $861,000

New Zealand $18,000

Portugal $47,000

South Africa $2,171,000

Spain $111,000

Sri Lanka $453,045

United Kingdom $1,326,045

Sector Total $38,652,876

Minerals & Energy

Sector Total $0 2/

Continued on next page
OPIC Annual Policy Report 2010 36

Exhibit 2 (continued): Breakout of Final Destination of OPIC Supported Project

Output to Non-US or Host Country Markets, Fiscal Year 2010 (Projections)

Services

Africa Regional $48,400,000

All OPIC Countries $570,800

Benin $15,650,000

Chad $9,090,000

Gabon $23,040,000

Germany $79,300

Ghana $254,300

Guinea $6,840,000

Mauritania $6,840,000

Senegal $10,560,000

South Africa $1,189,500

United Arab Emirates $475,800

United Kingdom $158,600

Sector Total $123,148,300 2/

TOTAL NEUTRAL

EFFECTS $161,801,176

Fiscal Year TOTAL $351,677,856

2/ Totals may differ slightly from the sum of individual countries due to rounding.

3/ Represents projects with a U.S. employment effect of plus or minus two jobs (plus/minus 10 person years of

employment during the first five years of project operation). There were no projects supported in Fiscal

Year 2010 that resulted in the loss of any U.S. employment.




OPIC Annual Policy Report 2010 41

Exhibit 4: Methodology for Calculating U.S. Employment Effects

Each project seeking OPIC support is reviewed on a case-by-case basis to estimate its U.S.

employment effects. OPIC uses the project application to estimate expected initial and

operational procurement from the United States by value and specific type of good or service.

The U.S. employment generated by a projec -year operational procurement of

goods and services is then estimated by considering the direct and indirect employment

necessary to produce those goods and services. That is, the employment effects incorporate the

direct employment necessary to produce the procured goods and services, as well as the indirect

employment required for the production of the associated intermediate inputs. This methodology

is used by other federal agencies as well.

OPIC details each type of U.S. good or service procured for each project and calculates the

employment effect in that industrial sector as well as in the sectors that supply necessary

components or inputs. By using this methodology, OPIC is able to ascertain

employment-generation levels with greater precision than if it used an across-the-board average

for all U.S. exports. By including indirect effects, OPIC's employment figures present a more

accurate picture of the benefits accruing to U.S. workers from the procurement of goods and

services. Finally, to confirm its estimates, OPIC monitors actual economic effects after project

startdescribed in further detail in the Monitoring section.
OPIC Annual Policy Report 2010 42

Exhibit 5:

OPIC supports projects that are likely to serve as foundations for long-term economic growth,

necessities of shelter, food, water and health care these types of projects are assessed on

evaluates and scores every proposed project in 26 key areas across three broad categories that

objectively quantify its expected contribution to host-country development.

Category I covers job creation, training, local procurement, corporate social responsibility,

and equal employment opportunity five highly-weighted impacts that should be

demonstrated by any project, regardless of sector or the level of economic development

within the host country.

Category II covers 20 additional development indicators within such broad areas as

human capacity building (degree of training), private sector development, resource

leveraging, social effects, infrastructure improvements, macroeconomic and institutional

effects, and technology/knowledge transfer. The degree to which projects demonstrate

these additional developmental benefits depends significantly on the features of a given

project.

Category III adjusts fo

to steer investment into the poorest countries and the reality that nations most in need

often lack the capacity to support more developmentally sophisticated investments.

A project must score at least 50 out of 160 possible points on the matrix to be considered

developmental and clearly eligible for OPIC support. A score of 100 to 160 qualifies a project as

highly developmental.
OPIC Annual Policy Report 2010 43

Exhibit inancial Services Development Matrix Explained

accurately the developmental impact of these projects. A new model was developed tailored to

assessing the development impacts of financial services projects. The general structure of the

financial services matrix is similar to the standard development matrix, but includes core

indicators that are specific to financial services-related projects. These core indicators result in a

development matrix that is a more comprehensive and accurate measurement of the

developmental impact of financial services projects. The types of projects that are scored on the

financial services matrix include framework agreements, investment funds, mortgage finance and

securitization projects, microfinance facilities, and general bank lending.

To support its developmental mission, OPIC evaluates and scores every proposed project in 11

key areas across three broad categories that objectively quantify its expected contribution to hostcountry development.

Category I covers financial instrument innovation or augmentation, multiplier/spillover

effects, corporate governance, and capital mobilization and complementarity four

highly-weighted impacts that should be demonstrated by any project, regardless of sector

or the level of economic development within the host country.

Category II covers six additional development indicators within such broad areas as

sustainability, economic diversification, human capacity building (job creation and

training), social effects, macroeconomic and institutional effects, and

technology/knowledge transfer. The degree to which projects demonstrate these

additional developmental benefits depends significantly on the features of a given project.

to steer investment into the poorest countries and the reality that nations most in need

often lack the capacity to support more developmentally sophisticated investments.

A project must score at least 50 out of 160 possible points on the matrix to be considered

developmental and clearly eligible for OPIC support. A score of 100 to 160 qualifies a project as

highly developmental.
OPIC Annual Policy Report 2010 44

Greenhouse Gas Policy and Current Inventory

In Fiscal Year 2010 environmental auditor, Pace Global Energy Services LLC

(Pace), with input from OPIC, identified 14 projects that had the potential to emit carbon dioxide

Out of these 14 projects, four projects (Powersource, Kidwell, Zeta Gas, and Palco) are no

longer active and have therefore been deleted from the list. Of the remaining 10 projects, the

sponsors of four projects (Israeli Electric, Kalahari Gas, NAPOCOR, and Coeur) have provided

information showing that these projects do not emit significant GHG emissions. Of the remaining

six projects, GHG emissions from three projects are not expected to be greater than 25,000 tons

because of their fuel consumption levels. Of the remaining three projects, Lukoil is included in

the Tier B list because its GHG emissions are greater than 100,000 tons per year; the remaining

two projects (Joshi/Parko and Jose Lindley) are included in the list of Tier C projects.

olio that have less than

25,000 tonnes of CO2eq, OPIC adds an extra 4.6 percent[1] emissions to the aggregate emissions

number. The addition of 4.6 percent to account for such sources is consistent with the GHG

accounting methodology of the Climate Registry.[2]

OPIC believes this additional 4.6 percent is conservative because a significant percentage of the

significant direct emissions (e.g. financial services, telecommunications, home construction).

metric tonnes is available at www.opic.gov.

OPIC calculates GHG emissions from projects in its active portfolio using methodologies and

algorithms that rely on activity data such as fuel consumption or gas/oil throughput. In most

cases, OPIC uses methodologies approved by the Climate Registry. For emissions from sources

without Registry-approved methodologies, OPIC uses emission estimates provided by the U.S.

Environmental Protection Agency.

Following the completion of the independent audit by Pace, OPIC provided investors the

The following table contains the final auditor estimates after consideration of investor input.

[1] Prior to 2010, OPIC added an extra 5% emissions to the aggregate emissions number to account for GHG emissions

from active p 2eq.

However, because OPIC now estimates emissions for projects emitting less than 100,000 short tons CO2eq but greater

than 25,000 tonnes CO2eq., and these emissions account for 0.4% of total emissions, OPIC now adds 4.6% to estimate

the total emissions from those projects that individually emit less than 25,000 tonnes CO2eq.

[2] THE CLIMATE REGISTRY is a nonprofit collaboration among North American states, provinces, territories and Native

Sovereign Nations that sets consistent and transparent standards to calculate, verify and publicly report greenhouse gas

emissions into a single registry. The Registry supports both voluntary and mandatory reporting programs and provides

comprehensive, accurate data to reduce greenhouse gas emissions.

General Reporting Protocol, Version 1.1, May 2008, p. 58. Available online at

http://www.theclimateregistry.org/downloads/GRP.pdf.
OPIC Annual Policy Report 2010 45

OPIC GHG Emissions Inventory Estimate by Project

Tier1Project Name Location Description Capacity /

Throughput

Fuel Type 2007

(Baseline)

Emissions

(short tons

CO2)

2,3

2008 Final

Emissions

(short tons

CO2)

3

2009 Final

Emissions

(short tons

CO2)

3

A Adapazari

Elektrik Uretim Turkey Combined Cycle 777 MW Natural Gas 2,106,754 2,106,754 2,441,657

A

AES Jordan Jordan Combined Cycle 10,103,603

MMBtu/yr Natural Gas --b

590,940 1,318,1304

A

AES Nigeria

Barge Nigeria

Engine-Based

Power

Generation

270 MW Natural Gas 1,166,398 1,341,157 988,271

A Doga Enerji Turkey Combined Cycle 180 MW Natural Gas 740,756 740,756 653,417

A Gaza Private

Generating

PLC

Gaza Combined Cycle 136.4 MW Natural Gas 293,804 303,535 291,800

A Gebze Elektrik

Uretim Turkey Combined Cycle 1554 MW Natural Gas 4,121,923 4,121,923 4,794,979

A Grenada

Electricity

Services

(WRB)

Grenada

Engine-Based

Power

Generation

18 MW Diesel

(Fuel Oil) 114,571 121,156 141,127

A Habibullah

Coastal Power Pakistan Combined Cycle 140 MW Natural Gas 447,880 447,880 --a

A Isagen SA Colombia Combined Cycle 300 MW Natural Gas 203,010 --c

300,706

A Izmir Elektrik

Uretim Turkey Combined Cycle 1554 MW Natural Gas 4,694,380 4,694,380 4,300,376

A Jorf Lasfar

Energy Morocco Steam Boiler 1356 MW Coal 14,268,496 -- a

--

a

A NEPC

Consortium

Power

Bangladesh

Engine-Based

Power

Generation

363,184

MMBtu/yr Natural Gas 245,795 343,581 255,734

A Paiton Energy Indonesia Steam Boiler 1200 MW Coal 9,553,044 9,553,044 9,624,125

A Pakistan Water

& Power

Authority

Pakistan Combined Cycle 150 MW Natural Gas 522,490 522,490 283,9375

A

Termovalle

SCA Colombia Combined Cycle 199 MW Natural Gas -- c

--

c 223,9836

A Trakya Elektrik

Uretim ve

Ticaret

Turkey Combined Cycle 478 MW Natural Gas 1,747,956 -- a--

a

B Accroven SRL Venezuela NGL Facility 800 MMscfd Natural Gas 998,677 445,832 -- a

B Baku-TblisiCeyhan

Pipeline

Azerbaijan Crude Oil

Pipeline 247 million bbl Natural Gas& Diesel 707,672 707,672 787,577

B

E.P. Interoil Papua New

Guinea

Crude Oil

Refinery

358,798

MMBtu/yr Crude Oil 392,296 103,247 Tier C

B Equate

Petrochemical Kuwait PetrochemicalFacility

1540

MMBtu/hr Natural Gas 720,573 680,311 -- a

B Foxtrot

International

Cote

d'Ivoire

Gas Extraction &

Pipeline 1736 MMscf/yr Natural Gas 104,484 104,484 104,484

B Natural Gas

Liquids II

Financing

Nigeria NGL Facility 19.5 MMscfd Natural Gas 244,048 244,048 -- a
OPIC Annual Policy Report 2010 46

OPIC GHG Emissions Inventory Estimate by Project

Tier1Project Name Location Description Capacity /

Throughput

Fuel Type 2007

(Baseline)

Emissions

(short tons

CO2)

2,3

2008 Final

Emissions

(short tons

CO2)

3

2009 Final

Emissions

(short tons

CO2)

3

B Various Egypt

Subsidiaries

(Apache)3

Egypt

Oil/Gas

Extraction &

Processing

29,934,702

bbl/yr & 89,910

MMscf/yr

Oil & Natural

Gas

3,071,933 3,244,190 3,294,654

B West Africa

Gas Pipeline7 Ghana

Gas

Compression &

Transmission

190 MMscfd Natural Gas -- b--

b

244,728

B Wilpro Energy

Services (El

Furrial)

Venezuela Gas

Compression 60 MW Natural Gas 289,106 289,106 -- a

B Wilpro Energy

Services

(Pigap)

Venezuela Gas

Compression 100 MW Natural Gas 571,090 571,090 -- a

C

E.P. Interoil Papua New

Guinea Oil - - --

d

--

d

79,709

C Jose Lindley Peru Manufacturing - - --

d

--

d

25,000

C Lukoil Rpk

Vysotsk Russia Oil - - --

d

--

d

76,339

C

Parko/Joshi Colombia Oil 20,000,000

million m3/yr Natural Gas --d

--

d

30,398

Latin America

Power III8

Latin

America Fund N/A N/A 2,077,500 2,077,500 2,077,500

Sub-total: 49,404,636 33,355,076 32,338,631

5% for Additional Sources: 2,470,232 1,667,754 --

4% for Additional Sources9: -- -- 1,405,486

Total: 51,874,868 35,022,83610 33,744,117

1

Tier A projects are fossil fuel fired power generation projects that emitted more than 100,000 short tons CO2; Tier B projects are facilities

in the oil & gas, mining, transportation, manufacturing, or construction sectors with annual GHG emissions estimated to be above 100,000

short tons CO2; Tier C projects are those emitting less than 100,000 short tons CO2 and greater than 25,000 short tons CO2.

2 Baseline emissions are100 percent of onJune 30, 2008. Emissions presented as reported by project sponsors. For those projects for which sponsors have not reported

emissions, emissions are estimated based on project descriptions as well as publically available data and emissions factors.

3

Based on new information reported by the project sponsor, OPIC learned this project had reported emissions based on their equity

share (50%) rather than accounting for emissions for the entire project in years 2007 and 2008. Because OPIC accounts for 100% of

emissions from projects regardless of equity share, the 2007 and 2008 estimates were revised to reflect 100% of emissions from this

project.

Net energy generated increased from 10,103,603 in 2008 to 22,536,748 MMBtu in 2009. This generation increase was responsible for

the emissions increase.

5

2009 emissions are significantly lower due to fewer reported operating hours.

6

2009 emissions are significantly higher due to increased reported operating hours.

7

The West Africa Gas Pipeline was included in baseline but it was not yet operational in 2008. Therefore, no emissions were reported for

2007 or 2008.

8 Per agreem

such investment, the assets and operations of all Portfolio Companies then held by the Fund would emit (in the aggregate and on a

calendar year basis) in excess of 2,077,500 tons of CO2eq

9 Buffer included 4.35% plus Tier C equaling 5%. For an explanation of this difference, please see footnote [1] in Exhibit 7.

10 This total amount reflects the correction of a 6-ton error in reporting of emissions related to the Doga Enerji project in Turkey, based on

sponsor-reported emissions.

a

b

Emissi

c

Because emissions were less than 100,000 tons of CO2eq., emissions from this project were not included. For more detail, see

footnote [1] in Exhibit 7.

d

Tier C is a new category for FY2010 and therefore emissions for Tier C projects are not included in the baseline or 2008 estimates.
OPIC Annual Policy Report 2010 47

Exhibit 8: OPIC Site Monitoring Methodology

(Statutory Disciplines: Environment, U.S. Economic Impact, Labor and Human

Rights, Host Country Developmental Impact)

OPIC performs comprehensive and integrated monitoring to evaluate the U.S. and host-country economic

effects as well as the environmental, health and safety (EHS) and labor and human rights impacts of its

project

statutory and contractual requirements in these areas. Project monitoring consists of site visits to

projects, in addition to the analysis of information submitted annually by investors in the form of an online

, Self Monitoring Questionnaires are required of all investors

per the OPIC finance agreement or insurance contract.

Using a statistical sampling methodology combined with risk-based monitoring, OPIC identifies

investment projects that OIP staff across all disciplines will site monitor , drawing active projects that

exhibit specific characteristics within the portfolio. The sample of projects selected for site monitoring

includes: (1) a random sample of projects supported by the agency during a three-year period or

; (2) projects supported during this period that are sensitive with respect to U.S.

economic effects, labor and human rights or environment, health and safety issues; and (3) projects from

other years that have either not been site-monitored in the past or that fit in logistically with randomly

sampled project in similar regions or countries. sample ultimately provides a

conservative bias to the monitored results.

Labor and Human Rights

OPIC monitors projects for compliance with contractual worker rights requirements through a combination

of annual reporting by companies as well as site visits to both random and selected samples of projects.

OPIC targets its worker rights monitoring efforts toward countries and sectors with a higher potential for

possible worker rights violations.

Because certain areas of worker rights violations may be difficult to identify from a typical project site

monitoring visit, in instances when OPIC determines further investigation is warranted for a project, OPIC

may employ trained and certified labor rights auditors, usually recruited from the NGO community with

reputations for impartiality and credibility among both the labor and business communities, to perform a

full project audit. The auditors spend as much time as necessary to investigate thoroughly potential

violations. At a minimum, an audit would include independent and confidential interviews with employees

and management. Interviews may also include relevant entities such as government officials and

knowledgeable local NGOs and organized labor groups.

Environment, Health, and Safety (EHS)

With respect to EHS issues, projects selected for site monitoring in a given year are prioritized based on

an environmental and social risk rating. Environmental and social risk ratings are based on several

factors including project sensitivity, host country context, project-level environmental and social

management system, and investor experience in implementing projects of similar complexity. OPIC

assesses the EHS and social performance of a project against applicable benchmarks including contract

conditions, international standards and guidelines, and industry best practices. Factors included in the

systems, the effectiveness of mitigation, including pollution controls in risk reduction, and the efficiency of

the operations, including energy efficiency.

U.S. Economic Impact

All projects visited are evaluated for their actual impact on the United States and host country economies,

including the employment generation effects of the investments. OPIC ensures that projects do not

negatively impact the U.S. economy. This exercise includes verifying export levels to the U.S. (if any) or

to other countries, calculating the U.S. balance of payments impact, and verifying compliance with any
OPIC Annual Policy Report 2010 48

restrictions put forward in the OPIC loan agreement or insurance contract (e.g. restrictions on exporting to

the U.S. or significant U.S. export markets).

Developmental Impact

Regarding host country economic impact, projects are reviewed across the same criteria as used at the

time of project -toestimates and actual operations. For example, if a project originally expects to hire 100 local workers,

actual employment numbers are verified and compared to the forecast. Additionally, if a project is

expected, for example, to build a school for the children of its employees, this will be verified. Other

developmental impacts not identified or anticipated at the time of application also are evaluated and

quantified during site monitoring. Finally, the project is scored using actual findings against the initial

clearance.