The EBRD is considering providing a $50 million senior corporate loan to finance acquisition of freight wagons by Kaztemirtrans JSC (KTT), a subsidiary of Kazakhstan Temir Zholy – Kazakhstan’s National Railways Company (KTZ).
The project is KTT’s first step of a grander scale plan for renewing its largely depreciated fleet. The purpose of the project is to meet the immediate needs for fleet replacement. The operation will also contribute to further commercialisation of KTT and enhancement its operational independence from KTZ.
The sources of transition impact for the proposed Project would include:
(1) Support for implementation of the railway sector reform programme;
(2) Commercialisation of operations; and
(3) Corporate governance improvements. These steps will build the essential foundation for the creation of a commercially viable freight carrier.
KTT is a 100% subsidiary of KTZ and is the holder of the entire freight wagon fleet of KTZ. KTT leases its fleet to KTZ and provides freight forwarding services on a commercial basis via subsidiaries.
$50 million senior corporate loan to KTT for the acquisition of freight wagons.
Screened B (2008). The impacts associated with the Project can be identified, addressed and mitigated through a corporate environmental, health and safety and, social review, which is currently on-going.
Environmental, health and safety issues are mainly associated with accidents involving derailment and collisions of cargo trains and spills of fuel and oil. Social issues are mainly associated with the potential retrenchment of personnel. These impacts should be mitigated by the improved enforcement of the corporate occupational health and safety management procedures and, compliance with the collective agreement.
PR1: Environmental and Social Appraisal and Management: the holding company KazakhstanTemirZholy has in place ISO 14001 Environmental Management System; OHSAS 14001 Occupational Health and Safety Management System and also ISO 9O01 Quality Management System applicable to all structural units and subsidiaries.
PR2: Labour and Working Conditions: The Company has adequate provisions for providing employees with safe systems of work and working conditions; adequate compensation, etc. embedded in the Collective Agreement; Human Resources Policy and other documents. The Collective Agreement specifies that grievances by employees are handled by trade unions.
PR3: Pollution Prevention and Abatement: the Company has agreements with specialised contractors for collection and disposal of waste
PR4: Community Health, Safety and Security: The Company has in place a comprehensive set of instructions and schedules for repairs, maintenance and decommissioning of its fleet. Compliance with such requirements should reduce risks for the community.
- PR10: Information Disclosure and Stakeholder Engagement: information related to the activity of the company is regularly posted on the Company’s website.
An Environmental and Social Action Plan will be developed and agreed with the Client prior to the Final Review of the Project. Main activities will include measures aimed at conducting regular risk assessments and revising them in each case of accidents and incidents; appropriate follow-up activities to ensure that the root cases of the health and safety accidents are eliminated; developing a retrenchment plan for any future redundancies in line with requirements of the Bank; developing grievance mechanism for employees and developing a system for on-going communication with public and interested parties.
The following TCs are envisaged for the project:
- Implementation of an anti-corruption programme on the level of KTZ. The TC would help implement procedures and control functions in the areas of procurement, cash management, expenditure approvals as well as establish an internal audit function.
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