The provision of a loan of up to €8 million to the State Enterprise National Rail Company Kyrgyz Temir Jolu. The Bank's first railway infrastructure project in the Kyrgyz Republic will finance: (i) the renewal of Kyrgyz Temir Jolu rolling stock and (ii) the rehabilitation of the Company's critical railway infrastructure in Boom Gorge, including an avalanche protective gallery construction and railway track rehabilitation.
The Project contributes to strengthening countrywide and regional cross-border connectivity by increasing resilience of the Kyrgyz Republic's rail infrastructure. The Project will also promote the commercialisation and corporatisation of KTJ and facilitate integration of climate risks management approaches into their operations in line with international best practice.
The proposed strategic engagement is in line with the Bank's Strategy for the Kyrgyz Republic (BDS/KY/19-01(Final)), the Transport Sector Strategy (BDS19-172(Final)), and the Green Economy Transition Approach 2021-2025 (BDS20-082(Final)).
ETI score: null
ETI score: 69
- Well-governed (primary): The Project will support corporate governance improvement via corporate governance action plan adoption, supporting company's corporatisation through changing its organisational structure to JSC, institutional separation of powers of the state bodies fulfilling the shareholders' functions, increasing the efficiency of the decision-making and internal control processes under the Company's holding structure. Additionally, the project will support the introduction of specific climate change governance measures aiming to improve the Company's strategic planning, risk assessment and reporting on climate-related risks and opportunities.
- Green (secondary): The Project will facilitate enhanced climate resilience of the rail infrastructure and introducing climate adaptation solutions and reporting.
KYRGYZ TEMIR JOLU
KTJ is an independent legal entity in the form of a state unitary enterprise, which is fully owned by the Kyrgyz Government via the State Property Fund. The Ministry of Transport of the Kyrgyz Republic supervises KTJ operations.
The Company manages railway infrastructure and provides freight and passenger transport services. In 2020 KTJ transported 7 million tons of cargo (of which 67 per cent was import) and 300 thousand passengers. KTJ operates based on self-financing and self-sufficiency principles, with no state subsidies as of year end 2020, the Company had € 74 million in assets, € 59 million in revenues and € 15.5 million of EBITDA (management accounts). It employs over 4,800 people, of which 30 per cent are females.
EBRD Finance Summary
A senior loan of up to € 8 million.
An investment grant of € 3 million is envisaged from the EBRD's Stakeholder Special Fund ("SSF")
Total Project Cost
Total Project Cost consists of: (1) up to US$ 4 million of rolling stock renewal, and (2) up to € 8 million of critical railway infrastructure rehabilitation. The Project is envisaged to be financed through a combination of loan, grant and Company's contribution.
The Bank will support achieving higher standards through its conditionalities (e.g. Corporate Governance Action Plaqn ("CGAP"), Corporate Climate Governance ("CCG") implementation support and the EBRD Procurement POlicies and Rules (PPRs) application). Gender additionality arises from the share of female employees (40 per cent) receiving trainings on climate risk assessment.
Environmental and Social Summary
With renewal of the rolling stock and rehabilitation of railway infrastructure were assessed through an independent Environmental and Social Due Diligence (ESDD) and are expected to be site-specific and mitigated via the implementation of control measures formulated in the Environmental and Social Action Plan (ESAP) agreed with the Client. The Project will have beneficial effects resulting from the improved reliability and safety of the rail infrastructure and improved climate resilience.
The environmental and social due diligence was undertaken in 2019 by an independent consultant and included an analysis of the proposed Project, review of the Company's current operational activities, regulatory compliance status and E&S management systems, social, labour and safety risks associated with rehabilitation works, contractor management, infrastructure and public safety.
It has been established that the company is compliant with national E&S regulations and has the institutional capacity to implement the Bank's Performance Requirements. Environmental and Social management systems are in place, with roles and responsibilities assigned, documentation and procedures in place and training & internal audits conducted. Some improvements will be required to bring the E&S management system into full conformance with Bank's PRs. The major risks will be associated with construction labour and Health and Safety management and will require contractor management that ensures EHSS requirements in line with the Banks PRs are addressed for the construction and operation phases of the Project. A Stakeholder Engagement Plan inclusive of a Grievance Redress Mechanism has been developed as well.
Due diligence also included a Climate resilience assessment to evaluate infrastructure vulnerability to climate change. The Bank will assist the Client though a TC on Climate Change Adaptation Support to support development and adoption of climate change adaptation management practices across the railway network.
An Environmental and Social Action Plan ("ESAP") has been developed for the Project and agreed with the Client. It includes further improvement of the E&S management system, supply chain management, management and monitoring of the contractors, strengthened health and safety requirements, implementation of the SEP and other corrective measures. PIU support will also be provided by the Bank to assist the Client, with, inter alia, implementation of the ESAP.
Technical Cooperation and Grant Financing
TC1: Due Diligence, € 74,500 funded by the EBRD Shareholder Special Fund (SSF);
TC2: Financial Due Diligence, € 62,178 funded by the SSF;
TC3: Climate Resilience Assessment, € 75,000 funded by the Czech Republic through the GET Policy Dialogue window;
TC4: Pre-corporatisation Economic Assessment, € 74,000 funded by the SSF;
TC5: Project Implementation Support, € 225,000, expected to be funded by the SSF;
TC6: Corporate Climate Governance Implementation, € 200,000, expected to be funded by the SSF;
TC7: Corporate Governance Action Plan Support, € 74,500, expected to be funded by the SSF.
Company Contact Information
+996 312 92 74 71
+996 312 92 69 32
83 Lva Tolstogo street, Bishkek 720009, Kyrgyz Republic
PSD last updated
22 Jun 2021
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