Almaty Region Gasification

Location:

Kazakhstan

Project number:

51086

Business sector:

Energy

Notice type:

Private

Environmental category:

B

Status:

Concept Reviewed

PSD disclosed:

04 Jun 2019

Translated version of this PSD: Russian

Project Description

The provision of a senior loan of up to KZT 10 billion to APL Construction LLP (the Company), a domestic gas distribution network operator, for the construction of gas distribution networks in the Alamty oblast. APL Construction LLP primarily serves coprporate clients but planning to expand into the residential market segment and is currently building new distribution networks in the Panfilov and Enbekshikazakh districts of the Almaty oblast, where no pipeline gas previously existed.

Project Objectives

The construction of gas distribution networks in the Almaty oblast to connect residents and local businesses to pipeline gas.

Transition Impact

Transition impact is expected to derive from Inclusive and Green Transition Qualities. The Project will focus on, among other things, improving employment and training opportunities for women and youth in the remote districts of Almaty oblasts as well as other areas, where the Company operates.

The Project also contributes to greater availability of natural gas in areas, where coal has been a dominant source of fuel historically.

Client Information

APL CONSTRUCTION LLP

The Company was founded in 2016 as a gas division of Inform System LLP, the Sponsor. It supplies corporate and residential customers with pipeline gas.

EBRD Finance Summary

KZT 10,000,000,000.00

Total Project Cost

KZT 16,000,000,000.00

Environmental and Social Summary

Categorised B (2014 ESP). Environmental and social issues related to the Project are generic to the development of inner gas distribution networks and appear to be well understood by the Company. The gasification projects being implemented by the Company have been through environmental impact assessments (EIAs) and State Examinations and the Company is planning to develop and implement management systems to the standards required by ISO 9001, ISO 45001, and ISO 14001. In order to apply EBRD PR's across all operations related to this Project, the Company will need to increase its Environmental, Health & Safety and Social (EHSS) resources and expertise. The environmental and social benefits of the project include improved air quality as coal is replaced by gas as primary energy source, as well as related cost savings for the beneficiaries.

An independent consultant was engaged to undertake a site visit to audit the company operations and risk management capabilities, and assess project risks and impacts.  The audit covered the completed construction of core/branch pipelines to the Project settlements, which were commissioned and financed with the Company's own funds, and the E&S assessment pertaining to the development of inner distribution networks for four settlements in the Almaty region. The results of this due diligence indicate that the Company has a number of management procedures and processes in place, but is lacking a comprehensive EHSS management system to ensure consistent implementation of applicable standards. The overall risks and impacts associated with the Project are, however, relatively minor and readily managed provided adequate resources are made available.  The construction of the low-pressure pipeline networks will take place in an already built-up environment and will make use of existing rights of way such that impacts on the natural environment and land owners or users are largely avoided, including through a combination of aboveground and underground pipelines. Where permanent land areas are required for aboveground facilities (gas valve units or block valves), land is either provided by local government or acquired from private land owners. There is no recourse to land expropriation. Construction periods on these linear features are short and nuisance as well as health and safety risks are limited in time and scope. The Company was established three years ago and currently does not have the appropriate EHSS management systems and implementation capacity in place, though it is planning to develop and implement the relevant EHSS ISO standards. There will be a need to increase EHSS capacity and expertise. APL Construction does not have a formalized mechanism of information disclosure, though regular information meetings with the beneficiary population concerned consistently take place.

An Environmental and Social Action Plan (ESAP) is under development and will addresses all items identified during the EHSS appraisal of the project. It will include development and roll out of EHSS management systems, EHSS capacity building, including contractor management and monitoring, in particular of workers' health and safety, worker and community grievance mechanisms and community engagement.

Technical Cooperation

TC technical due diligence and project preparation is being carried out on a cost sharing basis with the client. This assignment was partly funded by the Government of Spain through the "Spain - EBRD Sustainable Energy Cooperation Fund".

Company Contact Information

Zhannat Koishybayev
koishybayev@aplc.kz
+7 7172 55 41 22
+7 7172 55 41 23
www.aplc.kz
APL Construction LLP, 46 Baitursynov street Almaty, Kazakhstan 050000

Business opportunities

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