The operation will enable Italkyr to refurbish the Hotel Kyrgyzstan, an existing hotel located in the centre of Bishkek, converting it into a four-star international standard hotel.
The proceeds of the senior loan will be used to reconstruct the Hotel Kyrgyzstan, providing the country with a vital accommodation facility for international business travellers, and thereby supporting private sector development and foreign investment. The hotel will also support the development of the nascent Kyrgyz tourism sector.
The project will support the Kyrgyz Government's privatisation of Hotel Kyrgyzstan, which until now has been owned and operated by the state. The project represents the first limited-recourse financing of a sizeable hotel development in Central Asia not to benefit from any sovereign or export credit guarantees. As such, the project will have a strong demonstration impact, providing a "best practice" model for financing other hotel developments and refurbishments in the region.
The project will facilitate technology transfer in the construction industry. In addition, the employees of the hotel will benefit from know-how transfer in customer service, marketing, and hospitality and catering management.
Italkyr is a Kyrgyz closed joint-stock special purpose company to be established by Hyatt International Corporation (a privately owned high-quality international hotel operator which, together with Hyatt Hotels Corporation, operates over 190 hotels and resorts worldwide) and C.A.V. Ital, a consortium of 55 Italian companies.
The EBRD will provide a senior loan of US$ 8.0 million (ECU 7.3 million) to Italkyr.
US$ 19.0 million (ECU 17.4 million).
The project involves the provision of a US$ 8 million loan for the refurbishment and operation of the Hotel Kyrgyzstan, located in the centre of Bishkek. The project was screened B/0, requiring an Environmental Analysis of the environmental impact associated with the renovation and subsequent operation of the hotel. The analysis highlighted the following issues:
- The hotel has obtained all the relevant approvals and environmental permits for building and land use, construction, water supply, waste-water disposal, solid waste disposal, electricity and occupational health and safety. The local health and fire authorities will conduct inspections and testing as necessary once the renovation of the hotel is complete.
- The hotel design will not include any harmful materials detrimental to the environment and health, such as asbestos, urea or formaldehyde, nor any equipment containing substances such as PCBs. The design includes environmentally beneficial elements, such as the insulation of walls and pipes to reduce heating loss and so save energy.
- The renovation activities have been and continue to be conducted in accordance with the requirements of the local Sanitary Inspection Unit of the Department of Health, which has visited the site to ensure that there are no outstanding hazards. All applicable requirements for health, safety and fire protection during construction have been followed.
- All stripping and demolition work carried out so far has not had a significant impact on the local environment.
- The environmental impact of the hotel during operation will be minimal. The involvement of an environmentally proactive operator, such as Hyatt, will bring environmental benefits to the project. For example, as many waste materials as possible, such as paper, will be sent for recycling. Hyatt will ensure that the hotel is operated in accordance with best international practice.
- The renovation of the hotel has been well publicised through local media, and no negative comments have been received from the public.
The sponsor will provide the Bank with an Annual Environmental Report documenting, among other things, any environmental issues, such as incidences of non-compliance, and updating the Bank on environmental initiatives taken by the hotel.
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