KTZ Track Maintenance and Commercialisation Project

Location:

Kazakhstan

Project number:

2920

Business sector:

Transport

Notice type:

Public

Environmental category:

B

Target board date:

30 Nov 1999

Status:

Complete

PSD disclosed:

08 Jan 1999

Project Description

Introduction of improved track maintenance on the Almaty-Astana line, and assistance in a pilot staff retrenchment and retraining programme. The EBRD will finance track maintenance equipment and severance payment/retraining expenses, while technical cooperation funding will assist in project implementation and the improvement of KTZ’s institutional framework and management instruments.

The project aims to introduce improved track maintenance methods, and improve labour productivity through workforce downsizing. Proceeds will be used to finance several contracts for track maintenance equipment and material, and severance payment/retraining expenses for redundant staff.

Transition Impact

The project is expected to have positive impacts on the transition by:

  • Introducing improved, more efficient track maintenance technologies;
  • Introducing open tendering practices to KTZ;
  • Enhancing financial sustainability due to reduced operating expenditures;
  • Strengthening KTZ’s marketing, accounting and control skills through the implementation of the business plan; and
  • Developing a modern legal framework for the railways.

The Client

Kazakhstan Temir Zholy (KTZ) is Kazakhstan’s national railway company. The company had a turnover of US$ 960 million in 1998, mainly derived from its freight activity (88 percent) and employs 148,405people (1998). KTZ incurred losses in 1998 due to the adverse market conditions post the Russian crisis.

EBRD Finance

Sovereign-guaranteed loan of up to US$ 65 million (EUR 61.3 million) and grant funding for technical cooperation of EUR 2.0 million equivalent.

Project Cost

US$ 92 million (EUR 86.8 million)

Environmental Impact

The project was screened B/0, requiring an Environmental Analysis, which will be performed as part of the grant-financed technical cooperation projects. The investment project was preceded by a pre-investment study, which has identified potential environmental issues that may be associated with the investments and need to be assessed during project preparation. These issues include construction-related impact, such as pollution of soil and water resources, changes in local hydrology, noise and dust disturbance and disposal of spoil and other waste materials. The project will be accompanied by three technical assistance projects.

 

The terms of reference for these technical assistance projects provide for an environmental analysis of the proposed investments and for assistance to KTZ in developing an Environmental Management Plan. During the operation and maintenance phase adequate provision will be made for disposal of hazardous and non-hazardous solid wastes, water run-offs and possible increased noise along the railway corridors. As a condition of the Bank’s involvement in the financing of the investments, KTZ will need to develop in-house capacity for environmental management and to develop an Environmental Management Plan. The safety in rail cargo transport is expected to increase through the introduction of improved track maintenance methods.

Technical Cooperation

Technical cooperation consists of:

  • US$ 56,000 from US Trade and Development Agency (USTDA) for project appraisal;
  • EUR 195,000 from EU TACIS to draft railway law;
  • US$ 135,000 from USTDA for tender preparation;
  • Additional TC totalling approximately EUR 1.5 million from EU TACIS for supervision of the project implementation, management information systems, tariff study, and restructuring of ancillary businesses.
 

Business opportunities

For business opportunities or procurement, contact the client company.

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