KTZ track maintenance and commercialisation project,
Kazakhstan

 Introduction of improved track maintenance on the Almaty-Astana line. The EBRD will finance track maintenance
 equipment, and technical cooperation funding will assist in project implementation and the improvement of
 KTZ's institutional framework and management instruments.

 Operation status: Passed Final Review
                                   Board review date: 25 May 1999
 Business sector: Railways
                                   Portfolio classification: State sector

 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 per cent) and employs 137,000 people (1998). KTZ generated a profit in 1997 but suffers from liquidity problems.

Proposed EBRD finance
Sovereign-guaranteed loan of up to US$ 60 million (EUR 50 million) and grant funding for technical cooperation of EUR 1.9 million.

 Total project cost
                                   US$ 85 million (EUR 71 million).
 Project objectives
The project aims to introduce improved track maintenance methods. Proceeds will be used to finance several contracts for track maintenance equipment and material.

Expected transition impact
The project is expected to have a positive impact on the transition by:
introducing open tendering practices to KTZ  strengthening KTZ's accounting and control skills introducing a Railway Law.

Environmental impact
A summary environmental analysis of this project is annexed to this document.

Technical cooperation funding
Technical cooperation consists of:

EUR 49,130 from US Trade and Development Agency
(USTDA) for project appraisal
 EUR 195,000 from EU TACIS to draft railway law
EUR 120,000 from USTDA for tender preparation
EUR 555,000 from EU TACIS for management instruments and the establishment of a track maintenance company
EUR 1 million from EU TACIS to strengthen information  systems and the project implementation unit.

More information
Project enquiries: Tel: +44 171 338 6282; Fax: +44 171 338 6102

KTZ track maintenance and commercialisation project, Kazakhstan
Environmental summary

     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.

   This project is still evolving and details may change before it is signed.
   Project summary documents may contain information relating to projects that have not been approved by the
   Board and therefore cannot be considered to represent official EBRD policy.
File name: 283ktz
Date PSD first issued: 8 January 1999
Date of last update: 23 April 1999
April 2003
September 2006