Cairo Metro Line II Purchase of trains

Location:

Egypt

Project number:

46875

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

25 Nov 2015

Status:

Signed

PSD disclosed:

23 Sep 2015

Translated version of this PSD: Arabic

Project Description

The EBRD is providing an 18 years sovereign loan to finance (i) the purchase of a total of 13 air-conditioned train sets (8 wagons per train) to be operated on Cairo Metros Line II; and (ii) a portion of the long-term outsourced maintenance contract for Line II's entire fleet covering mainly the spare parts and equipment ("Project").

Project Objectives

The Bank is developing an integrated approach ("IA")  to support Egypt's efforts in addressing the current urban mobility challenges in Cairo in a concerted and sustainable manner. The IA , will focus on (i) improving the quality and financial sustainability of services, (ii) facilitating adequate asset maintenance; and (iii) reforming the institutional relationship between operational (operators) and regulatory functions (public authorities).

Cairo Metro is the first transaction presented under the IA and is designed to address some of Cairo's stifling traffic problems by alleviating congestion and improving regulation. Specifically, the Project will increase the capacity of Cairo Metro Line II as more trains will become available for passengertransport and the fleet availability will improve from 79 percent to 88 per cent, ultimately increasing daily ridership capacity by around 23 per cent. This increase will be sustained through a modal shift towards the metro system which to date remains largely underutilised.

Transition Impact

Transition impact of the project is expected to focus on introducing new frameworks for the urban transport market, increasing private sector participation, corporate restructuring, institutional strengthening and youth inclusion.

1. Framework for markets

The Project contributes to the Bank's efforts to introduce and promote Public Service Contracts ("PSC"), a new proposition for the urban transport sector in Egypt. PSCs have been successfully implemented in many of EBRD’s countries of operation and resulted in much improved quality of services due to higher accountability to customers, increased efficiencies and more long-lasting benefits for both users and service providers. The adoption of the PSC will improve the service orientation of the operator, target efficiency gains, increase accountability for cost controls on the part of management, and help achieve an improved fare box recovery ratio over time.

2. Increased private sector participation

The Project will support the introduction of supply and long term maintenance contract, whereby the rolling stock acquired from EBRD financing will be also maintained by the private sector. The maintenance requirement will be tendered out along with the rolling stock supply contract with payments to be focused on output-based rolling stock availability rather than input-based measures.

This approach is intended to extend the asset life and demonstrate the benefits of private sector involvement.

3. Corporate restructuring

The Bank will provide technical assistance financing for implementation of a Financial and Operational Performance Improvement Programme ("FOPIP") that is expected to assist the operator in improving financial sustainability.

4. Institutional

The Project will foster the development of institutions, laws and policies that promote market functioning and efficiency. This will be achieved through a twinning agreement between the Greater Cairo Transport Regulatory Authority ("GCTRA") and an experienced transport regulator focusing on operational and management improvements achieved by similar regulatory bodies from which the GCTRA can benefit.

5. Youth inclusion and gender

Economic inclusion impact will be achieved through introduction of the best corporate standards and practices to the public procurement process which in turn will encourage private sector contractors to open up on-site training programme opportunities for unemployed young people to enhance their skills and overall employability. As part of the tender process, the National Authority for Tunnels will encourage bidders to provide training to young people who will be selected based on their education and previous experience through participating vocational schools and local job brokerage agencies.

The expected transition impact rating is ‘strong to good’.

Client Information

EGYPT

National Authority for Tunnels ("NAT")

In 1983, NAT was established by a special law 113 which authorised this newly created government agency to plan and execute tunnels and metro projects in Egypt, including management of the full process of tendering and procurement of rolling stock under the jurisdiction of the Ministry of Transport. NAT is highly competent and has successfully implemented the construction of 75 kilometres of metro lines, worth over EGP 23 billion(EUR 2.7 billion).

EBRD Finance Summary

EUR 175,000,000.00

EBRD sovereign loan of €100 million to be lent to the Arab Republic of Egypt and co-financed with another IFI. This amount might be increased to a maximum of € 175 million if no co-financing can be obtained.

Total Project Cost

EUR 341,000,000.00

EUR 341 million.

Environmental and Social Summary

The Project has been categorised B by EBRD in accordance with the Bank's E&S Policy and environmental and social due diligence ("ESDD") was carried out by independent consultants during project appraisal.

An Environmental and Social Action Plan ("ESAP") and Stakeholder Engagement Plan ("SEP") were developed based on the findings of the ESDD. The ESDD showed that the project is not associated with significant risks and that the project can be structured to meet the Bank's Performance Requirements.

Key corrective and improvement measures in the Environmental and Social Action Plan ("ESAP") include among others:

Appointment of an Environment Manager and review of roles and responsibilities to monitor and report on the Environmental, Health, Social and Safety ("EHSS") performance of Egyptian Metro Company ("ECM", the operator of Cairo Metro) operations management systems.

Development and implementation of an environmental management system and health and safety management system (in line with ISO 14001 and OHSAS 18001 or equivalent).

Development and communication of HR policies with staff and contractors.

As part of the tender / bidding documents, incorporating environmental and social policies to be enforced during construction work as part of the contractors' obligations towards ECM and subsequently ECM to monitor their proper implementation.

Development and implementation of both external and internal grievance mechanism as part of the Stakeholder Engagement Plan.

Identification of contaminated land and subsequently implementing relevant remediation measures.

The implementation of the ESAP and SEP will allow ECM to achieve full compliance with the Bank's Performance Requirements. However, it is recognised that support will be required by the company from the Bank in order to build capacity to implement the ESAP and works in this regard have commenced. The project will be closely monitored by EBRD and the consultants that will be appointed to provide support to the client.

Technical Cooperation

Pre-signing:

  • Environmental and Social and Technical Due Diligence. EUR 70,000, financed by the SEMED Multi Donor Account· Advance Procurement Implementation Support and Training. EUR 270,000, financed by the SEMED Fast Track Project Preparation Framework (funded by the European Union's Neighbourhood Investment Facility (EU NIF). Feasibility Study to assess the follow-on project for Line V of Cairo Metro. EUR 2 million, proposed to be financed by the SEMED Fast Track Project Preparation Framework or an international donor.

Post-signing:

  • Twinning Partnership with the Greater Cairo Transport Authority. EUR 350,000, to be financed by an international donor or the EBRD Shareholder Special Fund (SSF).
     
  • Financial and Operational Performance Improvement Programme (FOPIP) for ECM. EUR 250,000, to be financed by an international donor or the SSF.
     
  • Development of a PSC between the ECM and the NAT. EUR 60,000, to be funded from the already approved regional Framework TC for PSC Development financed by the SSF.
     
  • Gender Study to ensure that gender issues and perspectives are incorporated into the implementation and operation of the services, and that the communication needed to improve safety can be designed and carried out in an effective way to both male and female users. EUR 60,000, to be financed by an international donor or the SSF.
     
  • Policy Paper on Tariff Increase for Ministry of Transport. EUR 100,000 to be financed by an international donor or the SSF.
     
  • Youth inclusion. EUR 56,000 (as part of an overall IA budget of EUR 280,000, to be financed by an international donor or the SSF).

Nationally Appropriate Mitigating Actions ("NAMA") climate finance strategy scoping study. EUR 80,000, to be financed by SEMED Energy Efficiency Policy Dialogue Framework.

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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