Russian Federation: Upgrade of the Electric Rail Fleet Project

OBJECTIVE

To support the development of the electric rail transport and improve rail service in terms of fleet availability, operational efficiencies, and reliability by upgrading to new electric locomotives.

DESCRIPTION

The Project includes extending a long-term loan to JSC “Russian Railways” (“RZD”) to finance the procurement of freight and passenger electric locomotives. The new locomotives will provide more comfort for crew personnel, higher operating performance, modern automated systems and superior maintenance characteristics. The locomotives will be used on the general-purpose rail network in the country. It will contribute to the recovery of passenger transportation after the Covid-19 pandemic, and support cargo operations including the rapidly growing transit transportation.

ENVIRONMENTAL AND SOCIAL INFORMATION

The Bank’s Environmental and Social Policy (ESP), including the Environmental and Social Exclusion List (ESEL) and Environmental and Social Standard (ESS) 1 apply to this Project. The Project has been identified as Category B, on the basis that any anticipated E&S risks and impacts will be localized and temporary and can be mitigated through effective management. Electric freight locomotives dedicated to carry coal, including operating on coal-dedicated routes (e.g., from coal mines to seaport, coal-fired power stations, etc.) will be excluded from the financing.

To address E&S risks and impacts induced by its activities, RZD has established an Environmental and Social Management System (ESMS) to maintain emission standards and reduce GHG emissions, implement proper waste management, carry out fire prevention measures, enforce measures on both employees and passengers to be safe during COVID pandemic, and others. RZD has also established its locomotive decommissioning guidelines. Locomotives are decommissioned at the end of its specified service life, made obsolete or physically deteriorated or when the production of spare parts is discontinued. The dismantling takes place at service depots whereby (i) all hazardous materials are collected in specialized containers and transferred to external certified service providers for processing, (ii) reusable equipment is repaired and installed on other locomotives and (iii) remaining unusable parts are to be sold as scrap metal.

The provision of long-haul rail services is determined as having lower GHG emissions coefficient amongst available means of long-haul transportation, private and shared vehicles, or airlines. The acquisition of electric locomotives will contribute further to a low-carbon transition. 71% of the Project’s investment will qualify for climate finance according to the joint MDB approach.

RZD discloses its environmental policy and programs and its social matters regarding employment and gender related policies, in both English and Russian on its corporate website. Every year, RZD issues a Sustainability Report in accordance with the International Global Reporting Initiative (GRI) standards, disclosing substantial information about its E&S programs and performance. RZD maintains a contact website where it can be reached for inquiries or complaints, as well as an Anti-Corruption Hotline that can also be used for filing any complaint on RZD.