KTZ restructuring bonds

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

A bond investment of KZT 45.8 billion in favour of the National Company "Kazakhstan Temir Zholy" JSC (KTZ - Kazakhstan Railways).

Project ID 53279

Status Complete

Location

Kazakhstan

Business Sector

Transport

Notice Type

State

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Ainagul Ysabekova
Ysabekova_A@Railways.kz
www.railways.kz
Kunayev Str 6D, Nur-Sultan, 010000, Kazakhstan

Project ID 53279

Status Complete

Location

Kazakhstan

Business Sector

Transport

Notice Type

State

Environmental Category

Approval Date

04 May 2022

Disclosure date

29 Jul 2022

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project description

A bond investment of KZT 45.8 billion in favour of the National Company "Kazakhstan Temir Zholy" JSC (KTZ - Kazakhstan Railways).

Project objectives

Issue of the local currency bond will allow KTZ to:

refinance its maturing hard currency and Russian rouble financial debt;
free up capital to finance the modernisation of the Middle Corridor infrastructure.

Transition impact

ETI Score:63

ject supports capacity improvement on the East-West corridor and to support the Middle Corridor development. It also promotes access to skills for young people in the transport and logistics industry by introducing two new National Occupational Skills Standards ("NOSS") and new or improved accredited learning programmes in partnership with the Academy of Logistics and Transport on the basis of the developed NOSS.

Client information

KAZAKHSTAN TEMIR ZHOLY NATIONAL COMPANY JSC

KTZ is a vertically-integrated holding company that manages railway infrastructure and operating freight and passenger train services in Kazakhstan. KTZ owns and operates the railway network of 16,000 km in total length, more than 1,720 locomotives, 47,300 freight and 2,300 passenger wagons. KTZ is fully state-owned through Sovereign Wealth Fund "Samruk-Kazyna" JSC (Samruk-Kazyna). In 2021 KTZ reported revenues of US$ 3.12 billion (€2.82 billion) and EBITDA of US$ 906 million (€ 820 million).

EBRD Finance Summary

KZT 45,798,006,200.00

Total project cost

KZT 164,752,212,400.00

Additionality

The EBRD offers financing structure, effectively bridges a financing gap due to adverse market conditions and risk mitigation. In the current market environment the EBRD's participation will be critical for KTZ to reach expected subscription level and support investors' confidence. This is EBRD's first investment in a local currency bond in Kazakhstan, and firts issuance of TONIA-linked bonds by a loacal company.

Environmental & Social Summary

Categorised B (ESP 2019) and this is a capital market transaction with due diligence being limited to publicly available information. The proceeds of the new bonds would be used to refinance the Client's existing bonds issued in 2014 for general corporate purposes, and are not envisaged to be directed at specific physical assets or any new CAPEX investments. Therefore, ESDD was focussed on assessing the risks and impacts associated with the KTZ's existing E&S management systems, practices and compliance record and review of the risks associated with the existing operations. This has been done through review of documentation and reporting which the client has produced on previous projects. Past annual E&S reporting from KTZ has been satisfactory. Overall, KTZ continues to have capacity and capability to implement the PRs.

The Company proactively focusses its efforts on enhancing its ESG performance and aligning it in line with good international practice, supporting the move towards a low-carbon competitive economy and wider use of the digitalisation. KTZ continuously works to improve their internal EHS capacity, enhance managerial leadership and overall management of industrial safety, occupational health and safety practice and environmental protection. The Company considers safety as one of its primary objectives and is committed to Vision Zero in both day-to-day operations and at the top management level to bring the number of accidents down. Further corrective measures required at the corporate level to meet the EBRD Performance Requirements (PRs) will be addressed through the Side Agreement.

The indicative anticipated KTZ's Capex investment programme for 2022-2026, that would be financed by KTZ's own resources mostly, includes predominantly new rolling stock for passenger and freight transportation, incl. electrical trains, modernisation of the existing infrastructure as well as the development and construction of the train station complex in Nur-Sultan. To ensure any risks and impacts associated with KTZ's current and future operations are adequately addressed, the Side Agreement with the client would need to clearly specify that (i) after subscription, the Bank will require the Client to comply with the PRs, and (ii) any high risk projects or projects categorised "A" in line with the EBRD's E&S Policy 2019 will not be financed through this bond refinancing. The Bank will monitor the project through review of annual E&S reports and site visits, as required.

Technical Cooperation and Grant Financing

None

Company Contact Information

Ainagul Ysabekova
Ysabekova_A@Railways.kz
www.railways.kz
Kunayev Str 6D, Nur-Sultan, 010000, Kazakhstan

PSD last updated

29 Jul 2022

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 the 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 its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) 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 also requires its clients to disclose information, as appropriate, about the risks and impacts of 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 of the Bank's activities 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 EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either 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. OCCO will follow-up all matters reported. It will review all matters reported. 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, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. 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 (for example, 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 the 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 and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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KTZ restructuring bonds

Overview

Project timeline

Company Contact Information

Project description

Project objectives

Transition impact

Client information

EBRD Finance Summary

Total project cost

Additionality

Environmental & Social Summary

Technical Cooperation and Grant Financing

Company Contact Information

PSD last updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)