Olzha phase 3 loan

Location:

Kazakhstan

Project number:

47150

Business sector:

Transport

Notice type:

Private

Environmental category:

B

Target board date:

14 Jan 2015

Status:

Repaying

PSD disclosed:

04 Dec 2014

Translated version of this PSD: Russian

Project description and objectives

The EBRD is considering providing a secured loan to JSC Olzha, a private operator of freight wagons in Kazakhstan. Proceeds of the loan will be used for acquisition of new freight railcars.

Transition impact

The first loan with Olzha was signed in July 2013 with the key transition objectives:

(i) private sector expansion in a market which is dominated by the state sector;

(ii) development of the leasing market which remains underdeveloped (in particular the railcar leasing segment); and

(iii) setting standards through formal introduction of OHSAS 18001 (safety process and management), which is a key issue for LPG railcars. The loan extension of USD 9 million was signed on 27 March 2014 to further support the development of the private owner and operator of freight wagons.  This additional financing was used for the acquisition of freight wagons and a locomotive. 

Built on the achievements made during the first loan (and its extension), the proposed Phase III loan will further facilitate implementation of the original transition objectives and promote enhancing corporate governance standards via setting up the Audit and Risk Committees at the Board level with independent board directors.

The state-owned railway company still plays a major role in rail transportation sector. The key objective of the transaction is to support a private ownership and operations in line with the larger railway reform plan. By supporting Olzha in the acquisition of additional railcars, the Project will contribute towards increasing the share of wagons owned and operated by private companies in Kazakhstan.

New wagons will be leased to medium-sized companies and used for transportation of different types of commodities such as consumer goods, hard commodities, construction materials, etc. These companies generally require not more than 100-150 wagons and maintaining their own fleet is often not commercially justified. By supporting the acquisition of additional wagons the Project would indirectly support small and medium-sized companies whose business involve transportation of commodities and thereby improve trade interactions with their customers.

The client

The company’s activities include: lease of railcars, transportation and sales of liquefied petroleum gas (LPG) and oil products (mainly diesel and gasoline).
The company operates about 1,600 wagons, mostly LPG and oil tanks.

EBRD finance

A senior secured loan in the amount of USD 11.0 million.

The EBRD is considering extending final maturity of the loan.

Total project cost

USD 11.0 million.

Environmental Impact

The proposed project has been categorised B (2014).  The ESDD undertaken by ESD for the previous projects identified that the expansion of the Company's rolling stock fleet will not result in significant environmental or social impacts.  The Company's leased railcars are involved in transportation of hazardous materials. 

It is a responsibility of shippers to obtain accident and incident insurance cover for transportation of goods, while the railway carrier (KTZ) bears the operational risk and is responsible for emergency planning and response.  To date the Company has developed an employee and community grievance procedure, developed a procedure for logging accidents and incidents and also provided the Bank with a satisfactory annual environmental and social report for 2013.

The ESAP requires, among others, the Company to develop an integrated EHS management systems. The Team will conduct a monitoring visit to discuss the implementation arrangements for the newly-developed  management systems, and also visit the depot in Kulsary.. The Bank will also continue environmental and social monitoring of the Project through review of AESR and ESAP implementation reports.

Technical cooperation

None.

Company contact

Mr Arman Beissekov,
Deputy CEO on Economy and Finance
arman.beissekov@olzha.com

 

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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Text of the PIP

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Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.