Gas Network Modernisation

Location:

Kazakhstan

Project number:

48047

Business sector:

Energy

Notice type:

State

Environmental category:

B

Approval date:

25 May 2016

Status:

Repaying

PSD disclosed:

18 Mar 2016

Project Description

The EBRD agreed to provide a senior loan in the amount of up to EUR KZT 20 bln to KazTransGas-Aimak JSC, a natural gas distribution company of Kazakhstan.

The debt finance is used to support the regional gasification and modernisation of natural gas pipeline network in Kazakhstan to be implemented over the next three years (the "Project"). In particular, the loan will finance (i) the extension of the gas network to several key regional administrative centres; and (ii) reconstruction and modernisation of the existing distribution networks in western provinces of Kazakhstan, which will include, the upgrade of existing, and construction of additional, pressure reduction and metering stations (AGRS) and replacement of an aged carbon steel piping with new polyethylene pipelines.

Project Objectives

One of the key objectives of the Project is to increase penetration of pipeline gas, particularly in remote areas of Kazakhstan, which will in turn promote a fuel switching from carbon-intensive fuels such as coal to a much cleaner fuel, natural gas.

Transition Impact

ETI score: 60

The transition impact potential of the project is based on:

(i) Framework for Markets: Institutions, laws and policies that promote market functioning and efficiency: The Project provides an excellent opportunity for the Bank to engage with the client, KTG and the government on best practice tariff methodology for the domestic gas distribution market;

(ii) Market Expansion: Gasification of new households and enterprises is expected to stimulate the development of technologies that were previously not feasible in the region due to unavailability of gas; and

(iii) Setting Standards of Corporate Governance and Business Conduct: The Project is expected to support the effort to reduce the carbon footprint of the country, by promoting fuel switching away from coal and preventing leaks of greenhouse gases from the network.

Client Information

KAZTRANSGAS-AIMAK JSC

KazTransGas-Aimak JSC is a natural gas distribution monopoly and a 100% subsidiary of KazTransGas JSC, Kazakhstan's national gas pipelines operator.

Overall, KazTransGas group operates over 17,000 km of transmission gas pipelines, 40 000 km of distribution lines, 31 compressor stations, 3 underground gas storage facilities. The group employs over 10,000 staff.

EBRD Finance Summary

KZT 17,185,323,008.00

EBRD Loan for up to KZT 20,000,000,000

Total Project Cost

KZT 22,185,324,544.00

Environmental and Social Summary

(Updated April 2020)  The gasification of rural areas in Kazakhstan will pose certain environmental and social risks which can be addressed through the application of standard management and mitigation measures. These risks and management response measures were assessed as part of the project appraisal process, and this PSD has been updated with results of the process including risk management actions to be implemented.

Issues related to risks associated from this project were assessed through site visits to observe some of the areas where upgrades are being installed and to observe the status of infrastructure handling the gas.  These visits were led by operators of the system and allowed EBRD to understand procedures and resources available for managing the distribution system.    The company has a comprehensive system of international management certificates (including ISO 14001, 50001, 9001 and OSHAS 18001) covering health and safety and environmental issues, and has the resources required to apply EBRD PR's across all operations related to this project.  The results of this visit indicate that the company has a systematic approach for identifying and managing risks in operations, including the independent group involved in the oversight and monitoring of all construction work and monitoring environmental and health and safety conditions for all operations in accordance with an annual monitoring plan developed as part of their overall management systems.  This monitoring includes the collection and analysis of environmental samples as well as physical sampling of assets, such as the monitoring of welds and pipeline wall thickness as well as monitoring fugitive emissions from pipeline systems (including pumping stations).  It was also determined that there are no significant issues related to biodiversity or resettlement as a part of this project, two of the typical issues that can pose significant challenges for this type of operation.  While construction of new pipelines can have a relatively large footprint, such impacts are limited to the short construction period and there is no permanent land use for most of the facilities.  When permanent land areas are required for above ground facilities, such land plots are obtained from local government rather than from private land owners or users.  Several such facilities were observed during project review and all were either in industrial zones or far removed from any residential or agricultural use.  Further, in the rare case where there may be a sensitive area for cultural heritage or environmental issues, HDD drilling is used to avoid near surface impacts.  Benefits of the project include the replacement of older infrastructure that will result in an increased factor of safety and reduced fugitive emissions.

An Environmental and Social Action Plan (ESAP) has been developed and agreed for this project.  This ESAP addresses all items identified during the EHS appraisal of the project, and includes development and roll out of a grievance mechanism, a pro-active way of informing local population of upcoming construction works, ensuring that the corporate management systems cover all aspects of this project, contractor management and some additions to the existing transportation management.  The client has been providing regular updates on ESAP implementation, and has been providing Annual Environmental and Social Reports as required for the project.

Technical Cooperation and Grant Financing

TC package includes support in development of the methodology for calculation of gas sector tariffs.

Company Contact Information

Nurzhan Duisembinov
info@ktga.kz
+7 7172 55-89-60
+7 7172 554245
www.ktga.kz
Bolashak Business Center, 6th floor, #11 Block, 36th street Astana, Kazakhstan

PSD last updated

23 Apr 2020

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.

 

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