Vostochniy

Location:

Kazakhstan

Project number:

47996

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

IESE

Status:

Cancelled

PSD disclosed:

15 Dec 2016

Translated version of this PSD: Russian

Project Description

A senior loan of up to KZT 4.6 billion (ca EUR13 million equivalent) to TOO "Zhetysu-OblGas" (the "Company" or the "ZG"), a municipal gas distribution company wholly owned by the Oblast Akimat.

The proposed Project will finance natural gas supply infrastructure construction and connection for the population of the city of Taldykorgan, Almaty Oblast.

Project Objectives

The proposed investment programme in Taldykorgan will connect 17.9 thousand households or around 40 per cent of the City's total population to gas networks.

The longer-term plan includes construction of submain gas networks in all remaining districts of Taldykorgan to provide 100 per cent of customers with gas supply services.

Transition Impact

Moderate Good

Transition Impact for this Project is expected to derive from:

  • Tariffs and metering: The Project will include an analysis of the specific methodology on the establishment of cost reflective tariffs for user groups. While respecting any affordability constraints, the goal will be to reach cost recovery levels. The Bank will work closely with the regulatory authorities. Full metering and introduction of meter-based billing will be introduced;
     
  • Corporate Development: The Project will benefit from a Financial and Operational Performance Improvement Programme ("FOPIP")/Corporate Development Programme ("CDP") effort supported by TC with the objective of raising managerial, financial and operational performance at the Company level; and
     
  • Green Economy Transition: The Project will bring significan environmental improvements as it would untap potential for more efficient technology usage and reduction of GHG emission via switch to more environmentally friendly natural gas in comparison to coal currently used as a fuel for heating and power generation.

Client Information

ZHETYSU OBLGAZ LLP

The Company is a recently-established special-purpose component of the Oblast Akimat - "Zhetysu-OblGas", tasked to construct and operate submain gas networks in the settlements of Almaty Oblast in Kazakhstan.

EBRD Finance Summary

KZT 4,600,000,000.00

Long-term financing in the form of senior loan of KZT4.6 billion.

Total Project Cost

KZT 11,800,000,000.00

The Project is to be co-financed by the contribution of Almaty Oblast Akimat.

Environmental and Social Summary

Categorised IESE (2014). The gasification of residential areas in Taldykorgan will need to be reviewed closely as under certain scenarios this could trigger requirements for a comprehensive Environmental and Social Impact Assessment. Therefore, the Initial Environmental and Social Examination will be performed to allow proper categorization of this project. The final determination will be based on length and diameter of new pipeline to be installed, the overall gasification Project including links to the high pressure mains, and the environmental and social setting of the areas for construction of the pipelines.

ESD will review construction plans for the project, both for new installation and upgrade/renovation of existing systems. This review will address not only the areas for construction and the environmental and social settings, but the construction methods to be used, and their ability to cause disruption to the local community. Safety of the community and contractors will be of paramount importance on this project. A key issue for the project will be land allocation and possible compensation framework for land use. Due diligence shall assess engineering and safety standards to be adopted for the project (covering construction and operation). ESD will need to work closely with the team and the client to complete the IESE, and based on this, a detailed due diligence plan can be prepared outlining tasks required to complete the environmental/social appraisal.

Technical Cooperation

Pre-Signing

  • TC 1: Feasibility Study of the Project, including technical and environmental and social and financial due diligence of the Project. The study will include an in-depth analysis of the current district heating system and options to convert it to gas under the least cost solution approach. The cost of the assignment is EUR 198,300, financed by the government of Kazakhstan under the terms of Enhanced Partnership Framework Arrangement ("EPFA").

Post Signing

  • TC 2: Project Engineer for the PIP implementation support to facilitate the timely and effective implementation of the project by rendering assistance to the Company in areas such as procurement, contract administration, supervision, financial control and project management/reporting, as well as the provision of initial training and assistance with the initial set-up of the Company's "Project Implementation Unit". The estimated cost of the assignment is up to EUR 600,000, donor to be determined.
     
  • TC 3: Corporate Development Programme to support institutional strengthening of the Company, introduction of the IFRS reporting, preparation of medium-term business plan, optimising the organisation structure, operational and management efficiency. The estimated cost of the assignment is up to EUR 200,000, donor to be determined.

Company Contact Information

Mr Vladimir Tokhtasunov, Director
jetisuoblgas@mail.ru
+7 727 224 66 65
+7 727 224 66 65
office 204, Zheltoksan street 112, Almaty 050000
 

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Text of the PIP

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