Bank makes new investments worth €350 million in Kazakhstan
The European Bank for Reconstruction and Development (EBRD) is signing projects worth over €350 million in Kazakhstan this week with investments that improve the quality of public services for the population, raise food quality standards and help combat climate change.
Speaking in the Kazakh capital of Astana on 26 May, EBRD President Sir Suma Chakrabarti spoke of the Bank’s strong partnership with Kazakhstan that combines vigorous support for policy reform with a high level of investment.
At a ceremony with regional political leaders and senior business executives, he said the EBRD expected this year to at least match the Bank’s 2015 investment level of €700 million.
“Our total investment in Kazakhstan is now well over US$ 7 billion. It is the fourth largest market of our 36 countries, and one of our top reformers over the last couple of years,” he said. Reforms developed under the EBRD’s innovative Enhanced Partnership Framework Agreement with the Kazakh authorities have paved the way for this week’s investments.
Two of the projects signed on 26 May with KazTransGas and its Intergas subsidiary – worth €294 million – will support the switch from coal to gas in Kazakhstan, rapidly reducing harmful carbon emissions and helping to fight climate change.
The financing will help modernise an underground storage facility in Bozoi, providing a stable supply of gas from the west of the country to the densely populated south-eastern regions and cutting the reliance on coal-generated electricity.
Funding to modernise the natural gas distribution network in two Kazakh regions will allow many private households and industrial customers to tap into supplies of gas rather than coal.
The EBRD is also continuing its cooperation with the government on the modernisation of the country’s water and district heating systems.
Three loans totalling around €21 million will support an upgrade of municipal infrastructure in the cities of Kostanay and Ust-Kamenogorsk, and also fund the modernisation of the water and district heating companies.
Separately, over 500,000 residents in north-eastern Kazakhstan will benefit from new projects with CAEPCO, the largest private sector energy corporation in the country, to modernise district heating in the cities of Petropavlovsk, Pavlodar and Ekibastuz through loans worth around €23 million.
Also on 26 May, the EBRD President signed a project with the dairy products company FoodMaster, an affiliate of Groupe Lactalis, the world’s largest dairy products group, that will support an upgrade in dairy processing plants, the construction of new stalls and an increase in the company’s fleet of trucks.
The €15 million investment will boost the supply of high value-added dairy products to Kazakh consumers.
On Friday, the President was due to sign an agreement with the authority developing the Astana International Financial Centre (AIFC) on the promotion of a green financial system in Kazakhstan. As a result of this accord, the demand for green investments in the country will be assessed.
The study will also identify gaps in current regulations, and make recommendations for the introduction of green financing standards and for the development of the green bonds market and carbon market services.
The AIFC signing will take place on the sidelines of a plenary session of Kazakhstan’s Foreign Investors Council, where Sir Suma will make a separate speech on the future of the forthcoming Financial Centre.
In that speech the EBRD President will outline his own vision of the AIFC, which he believes should serve as an anchor for reform and the development of the domestic financial sector.
In this context, Sir Suma will look ahead to what steps must be taken to allow the EBRD to issue local currency bonds on the domestic market after its successful experience with international issues in the local currency, the tenge.
Half of the EBRD’s financing in Kazakhstan is already in tenge, part of the Bank’s global drive to strengthen the economies where it works by reducing their dependence on foreign currency borrowing.