Kurty-Buribaytal Road Project

Location:

Kazakhstan

Project number:

47229

Business sector:

Transport

Notice type:

Public

Environmental category:

A

Approval date:

09 Dec 2015

Status:

Repaying

PSD disclosed:

29 Jul 2015

Project Description

A sovereign-guaranteed loan of up to USD 158 million to JSC NC Kazautozhol for the reconstruction and widening of two adjucent sections (81km and 62km) of the Kurty-Burybaital road ("the Project"), a part of the Centre-South road corridor connecting the country's two major cities: Almaty and Nur-Sultan. Total length of the Kurty-Burybaital road is 228 km and reconstruction of the remaining section (85 km) is financed by the World Bank.

Project Objectives

Full reconstruction of roads within the transport corridor connecting Nur-Sultan and Almaty ('Center-South Corridor') is part of the Kazakhstan Strategic Plan 2020. The Kazakh Government is very close to completing the implementation of this strategic plan, with the major part or roads within the Center-South Corridor already having been rehabilitated. The remaining 228 km long section between the villages Kurty and Buribaytal (the 'Road'), which remains in poor condition, restrains the transit of goods and passengers between the two main cities of Kazakhstan.

Transition Impact

The Project will target the following transition impact objectives:

Framework for markets. The Project will focus on

(i) making road sector financing in Kazakhstan more sustainable by exploring new ways of road sector financing on the basis of international experience,

(ii) introduction of heavy vehicles charges in line with the user/polluter-pay-principle and

(iii) rolling out the roads tolling system in Kazakhstan.

Client Information

KAZAVTOZHOL JSC
The loan will be provided to the Republic of Kazakhstan.

EBRD Finance Summary

A sovereign-guarnateed loan of up to USD 88 million for the 81km section. The scope of the Project was later extended to cover another 62km section of the Kurty-Burybaital road and the EBRD finanicng was increased by USD 70.1 million (a separate loan agreement)

Total Project Cost

USD  353,500,000

Additionality

EBRD financing is additional, especially in terms of providing longer tenor which is not available from local commercial sources at reasonable terms. By providing a long-term financing, the EBRD effectively helps to lengthen average tenor of the client's non-parent funding.

Environmental and Social Summary

Categorised A (ESP 2014). The project involves reconstruction and widening of the existing 228 km long road (from two lanes to four lanes),which is under A category projects and requires an Environmental and Social Impact Assessment (ESIA) to be performed in line with Category A requirements.

Due diligence undertaken and outcomes

Under the Kazakhstan regulatory regime, a feasibility study and detailed design has been completed, accepted and approved by the State Expertise within the Ministry of National Economy. A national Environmental Impact Assessment (EIA) has previously been developed in accordance with the rules, regulations and standards of the Republic of Kazakhstan for design and construction of roads. The current ESIA has been developed in order to also meet the EBRD Environmental and Social Policy requirements. An independent gap analysis review of the ESIA and other key documentation has been undertaken against EBRDis Performance Requirements, EU standards and best practice.

The gaps identified have been used to develop an Environmental and Social Action Plan (ESAP) for implementation and a disclosure pack comprising a Non-technical summary (NTS) and a Stakeholder Engagement Plan (SEP) in English, Kazakh and Russian. The SEP provides a framework for consultation activities and project disclosure information including the identification of potential stakeholders, methods used for consultation activities and the records to be kept. The EIA has considered an alternative (iwithout project" and "with the project") concluding that the selected widening of the present carriageway to 4 lanes with a dividing strip offers the best environmental approach to solve the problems with the traffic increase and will improve road safety. Potential environmental and social (including community and occupational health and safety) impacts have been identified and mitigation measures have been developed that are presented in an Environmental and Social Action Plan (ESAP) within the ESIA. The ESAP has been developed and agreed with the Kazakh Government to address the necessary mitigation measures and improvements.

The Bank will monitor environmental and social performance and implementation of the ESAP through annual E&S reports.

An Environmental and Social Impact Assessment can be found on the EBRD web site.

Implementation summary

Following approval of the project by the EBRD's Board of Directors in December 2015, the loan agreement was signed in February 2016 to finance reconstruction of 81 km section (km 2214 to km 2295). In October 2016, at the Borrower's request the scope of the Project was extended to include reconstruction of an adjacent 62 km section (km 2152 to km 2214) of the Kurty-Burylbaital road. Accordingly, the EBRD financing was increased by USD 86 million, totalling USD 189 million for both sections. The two sections had separate procurement processes and two different contractors have been selected in accordance with EBRD's Procurement Policy and Rules. After the works contracts have been awarded, the project cost was revised downward by some USD 15 million for each section. As a result, the combined EBRD financing for both sections was reduced by USD 30.8 million (i.e. by 16.3 per cent) to USD 158 million.

The road reconstruction works started in Q4 2017 and currently ongoing. Civil works for both sections have been delayed due to unforeseen legislative issues that prevented the contractors to obtain the required earthwork permits on time and delayed commencement of construction works. Additional delays were caused by the travel/movement restrictions imposed by the government in the first half of 2020 in response to Covid-19 pandemic.

Implementation of the Project's TI objectives is on track. The tolling system have been successfully rolled out on additional 5,800 km of republican roads in the 1st quarter of 2021. The Borrower plans to cover additional 11,000 km by 2025. The toll revenues will be collected and used by Kazautozhol for road maintenance purposes. In June 2019, the Borrower approved an action plan for the introduction of heavy vehicle charges.

An external consultant had been engaged to assist the Borrower to achieve its strategic objectives through implementation of new methods of road sector financing and corporate governance improvements. Key recommendations developed under this assignment have been presented to the Company and Government and are currently in the process of implementation.

The Company is committed to comply with the Bank's E&S Performance Requirements. The Bank regularly monitors the Project's compliance with the Bank's Environmental and Social Policy as well as implementation of the Environmental and Social Action Plan and confirms satisfactory implementation and performance.

Technical Cooperation and Grant Financing

Pre-signing

  • Transition impact review and development of Transition Impact components. Financed by the Bank.
  • Technical review of the project, including the calculation of Economic IRR. Financed by the Bank.
  • Environmental and Social due diligence, including the Environmental and Social Impact Assessment (ESIA) and Road Safety Audit. Funded by the Bank.

Post-signing

  • Study of new ways of financing in the road sector. A review of international examples of road sector financing and identification of options that would contribute to making road sector financing in Kazakhstan more sustainable. Financed from the loan.
  • KazAvtoZhol capacity building: Transform Kazavtozhol into a modern road agency, which would be semi-independent from the government and have good governance structure.

Company Contact Information

Garyshzhan Nagmanov,
Road Committee,
Ministry of Investments and Development of RK

E-mail: garyshzgan.nagmanov@qaj.kz

PSD last updated

25 Oct 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

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.

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

Public Information Policy (PIP)

The PIP 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. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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