Almaty Bus Sector Reform Phase 2

Translated version of this PSD: Russian

Project Description

The EBRD is considering providing a senior loan of up to USD 39.3 million (€30.2 million) with a 10 year tenor to Almatyelectrotrans (“AET”), a municipally-owned company in Almaty. The buses, depot and the natural gas filling station will be leased out to private operators on a competitive basis as soon as an automated fare collection system is introduced in the City. . These assets will remain in the municipal company’s ownership and will be regularly monitored and inspected by the owner.

As a result of the project the City of Almaty seeks to establish a concept to strengthen the organisation of public transport services. This model should be easily replicable and rolled out to reshape the whole sector in a timeframe of 7-8 years.

The Loan proceeds will be used to procure up to 200 new compressed natural gas (“CNG”) buses. The City of Almaty will contribute to the Project by financing the preparation of detailed design and procurement of the bus depot, gas filling station, as well as the development of contractual structure necessary for inclusion of private operators.

The Project is a complementary follow-on transaction to the existing Almaty Bus Sector Reform project which was signed with AET in 2010.
Project’s success will be monitored through the following:

• Implementation of the operational plan (i.e. delivery of the vehicle kilometres ordered by the City under the Public Service Contract) on annual basis by at least 95 per cent; and
• Reduction of CO2 emissions by 60 tonnes p.a. in public transport sector.

Transition Impact

The Project is part of the Bank’s Integrated Approach to urban transport in Almaty. The specific transition impact of the proposed project will derive from the following:

• Private Sector Participation – Enhanced Private Sector Participation. The Project will require
  
  (i) developing a new public service contract (PSC) between the Akimat and private operators; and
  
  (ii) tendering and signing the PSC with private operators when e-ticketing becomes operational.
  
  This will improve commercial conditions for private operators, particularly, offering transparent long term business conditions. Despite a relatively wide roll out of a standardised PSC for bus services with private operators, the sector has not seen significant investments into fleet renewal. The Project will establish a new model of providing private operators with an access to much needed bus fleet upgrades and modern depot facilities.
• Demonstration Effect – Energy Efficiency: The project will introduce new CNG buses which should significantly contribute to the reduction of GHG emissions in comparison to out-dated diesel units currently in operation. Ninety per cent of all existing buses in the city are classified at EURO-0 or EURO-1, whereas the new CNG units will be EURO-4 or better. During project preparation, the consultants have estimated the following reductions of emissions of harmful substances due to the introduction of additional 200 CNG buses;
• Setting Standard/ Demonstration Effects – Inclusion Impact: The current participation levels of women in the workforce of AET is limited to (lower paid) administrative functions and there are no female bus drivers at present. This is due to local perceptions regarding the suitability of women for this type of employment but also due to HR policies and a lack of adequate training opportunities that reflect these attitudes. Following initial engagement with the Bank, the company has agreed to hire external expertise (through TC) to assess its HR policies and related training programmes in relation to their gender impact and issue specific recommendations as to how to improve the number of successful female applicants and trainees, with the aim of employing at least 45 female bus drivers within the company until the end of 2015. The resulting best practice and lessons learned will be promoted in order to enhance the chances of replication effect in the sector and wider region. It will also establish a set of best practice to be applied to similar projects developed by the Bank in the future.

The Client

Almatyelectrotrans, a municipal urban transport company currently operating trams, trolleybuses and CNG buses in Almaty.

EBRD Finance

Senior loan of up to USD 39.3 million (€30.2 million) with a 10 year tenor.

Project Cost

KZT 8.5 billion (€43.3 million).

Environmental Impact

The Project has been categorised B in accordance with the Bank’s Environmental and Social Policy 2008. Environmental and social due diligence (ESDD) has been undertaken by the Bank’s Environment and Sustainability Department based on a review of the Company’s corporate management systems; relevant information provided by the Company; and a site visit and discussions with the Company’s personnel to evaluate the current operational performance and the risk management plans for the planned investment programme.

The investigation showed that the potential future adverse impacts of the project will be site specific and addressed through appropriate mitigation measures. The transaction will enable Almaty municipality to continue implementation of a city bus transport rehabilitation programme and, hence, improve quality of public transport services. The project implementation is limited to urban area within the boundaries of the City and no sensitive ecological receptors or protected zones are affected. It is confirmed that the project will not have adverse social impacts to local communities or other project affected parties, while a number of very tangible environmental and social benefits are likely to arise.

The due diligence confirmed that the Company has efficient public communication, consultation and disclosure policy that in general meets the EBRD's requirements. In order to avoid, minimise and mitigate the potential adverse E&S impacts of the project and ensure full compliance with national regulations and EBRD's PRs an Environmental and Social Action Plan (ESAP) has been developed to address the necessary improvements in the Company's E&S management systems.

The project will be monitored in terms of its environmental and social performance and implementation of the ESAP through annual E&S reports and site visits when deemed necessary.

Technical Cooperation

Pre-Signing

• Technical and economic due diligence (€ 230,000)
• Procurement Support and Contract Supervision (EUR 36,450)
• Procurement Technical Support (EUR 25,000)

Post-Signing

• Independent pre-shipment inspection of CNG buses (€195,000).
• Promotion of equal opportunities in the work place (EUR 200,000)

 

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