KTJ climate resilient rail infra

Location:

Kyrgyz Republic

Project number:

50170

Business sector:

Transport

Notice type:

State

Environmental category:

B

Approval date:

27 Oct 2021

Status:

Concept Reviewed

PSD disclosed:

22 Jun 2021

Project Description

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.

Project Objectives

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)).

Transition Impact

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.

Client Information

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

EUR 8,000,000.00

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

EUR 12,100,000.00

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.

Additionality

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

Pre-signing:

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;

Post-signing

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

Akylbek Adranov
info@railway.aknet.kg
+996 312 92 74 71
+996 312 92 69 32
www.kjd.kg
83 Lva Tolstogo street, Bishkek 720009, Kyrgyz Republic

PSD last updated

22 Jun 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

Share this page: