Kazakhstan: Almaty Railway Bypass Project

OBJECTIVE

To increase capacity, speed and safety of freight rail transportation in Southeast Kazakhstan by constructing a railway section bypassing Almaty city.

DESCRIPTION

The Project involves a 10-year Senior Unsecured Corporate Loan of up to USD150 million (in CHF) to Joint Stock Company “National Company “Kazakhstan Temir Zholy” (KTZ) for constructing and operating a single-track electrified railway bypassing Almaty city in Southeast Kazakhstan. The line will connect Zhetygen station to Kazybek Bek station in the west, featuring a 75 km single-track electrified railway, 3 new stations, 13 bridges, 5 railway overpasses and one road overpass, and the reconstruction of Zhetygen and Kazybek Bek stations.

KTZ is a 100 percent state-owned railway company, holding almost all rail infrastructure (the third-longest rail network among the Commonwealth Independent States) and is the largest owner and operator of locomotives, freight, and passenger rail cars in Kazakhstan. KTZ is an integrated group of companies that provide infrastructure access, locomotive traction, passenger, cargo transportation, and logistics services.

ENVIRONMENTAL AND SOCIAL INFORMATION

Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP) including the Environmental and Social Exclusion List (ESEL) and relevant Environmental and Social Standards (ESSs) apply to this Project. The Project has been categorized as Category A in accordance with ESP because large-scale land acquisition leading to economic displacement. To facilitate a harmonized application of AIIB's and International Finance Corporation’s (IFC) ES policies under the Project, the project’s environmental and social (ES) risks and impacts have been assessed in accordance with the requirements of AIIB's ESP (as well as IFC's ES policies).

Environmental and Social Instruments. The primary assessment instrument is a Supplementary Environmental and Social Impact Assessment (SESIA) including an integrated Environmental and Social Management Plan (ESMP), a Rapid Cumulative Impact Assessment (RCIA) and a Non-Technical Summary (NTS). Key management instruments are Stakeholder Engagement Plan (SEP); Biodiversity Management Plan (BMP); Construction Environmental and Social Management System (CESMS) including risk-specific procedures; Livelihood Restoration Plan (LRP); and Resettlement Framework (RF).

Environmental Aspects. The propagation of noise from the operational railway and its impacts on residents living close by is the primary issue of concern identified. The SESIA concluded that approximately 22 properties in total, located around Zhetygen and Kazybek Bek stations could be subject to operational noise changes above acceptable limits. An effective suite of mitigations is being agreed with KTZ and will be finalized before the financial close. The Project crosses a Key Biodiversity Area (KBA) for around 5 km. A biodiversity impact assessment including critical habitat assessment (CHA) was completed for the SESIA. These concluded that no critical habitat will be impacted. A BMP that sets out mitigation to achieve no net loss for natural habitats and an associated program of monitoring has been prepared. In addition, KTZ has appointed a biodiversity specialist for the management, implementation and reporting of activities undertaken within the scope of the BMP. Other potential environmental risks and impacts during construction of the Project are standard and include dust, groundwater use and hazardous materials and waste management. Risks are managed through a Construction Environmental and Social Management System (CESMS). Operations phase aspects include water consumption and disposal and managing hazardous materials and wastes. The Borrower will address operations phase aspects through a corporate ESMS.

Social Aspects. The Project through the local district governments (Akimats), initiated a land acquisition process to acquire approximately 1,066.43 ha of land in İliy, Karasay, Talgar and Zhambyl districts and Alatau city for the Project as per national laws and regulations in 2023. During the preparation of SESIA, 70 plots (24.6%) have already been acquired, while 111 plots (39.1%) are still pending acquisition. Additionally, 103 plots (36.3%) do not require acquisition, mainly because they fall under existing KTZ-owned land or other state-owned land. Also, there are 22 structures identified for acquisition in Alatau City, including 13 residential houses and 9 barns or small shops, which were unoccupied at the time of SESIA in January 2025. KTZ completed two studies: (i) Report on Gap Analysis Between Land Acquisition and Resettlement Policy and Procedures of the Government of Kazakhstan and IFC PS5 Requirements, in September 2024, to assess the gaps between the procedures and processes used for acquisition of land and IFC’s PS5; and ii) Livelihood Restoration Plan (LRP) including Resettlement Framework (RF) in February 2025 within the scope of SESIA. KTZ will also complete a Resettlement Action Plan (RAP) consistent with the RF to manage the physical relocation of the 13 households in Alatau city in compliance with AIIB ESS 2 and IFC PS5 requirements.

Gender Aspects. The SESIA has carried out culturally appropriate and meaningful consultations with women and including vulnerable groups. Also, the consultation sessions captured and reflected the concerns and aspirations of women to inform the resettlement process. The Project will continuously engage and consult with various categories of stakeholders, including women, throughout the Project cycle by the implementation of a Stakeholder Engagement Plan and CESMS. KTZ will also revise its HR policies and procedures to align with IFC PS2 requirements to better address and define gender-based violence and sexual harassment and provide a comprehensive and safe procedure for reporting grievances and the Code of Ethics and Conduct to include disciplinary measures and definitions of prohibited behaviors.

Occupational & Community Health and Safety, Labor and Employment Conditions. KTZ has an Occupational Health and Safety (OHS) management system in place certified to the ISO45001 standard, and a corporate Environmental and Social Management System (ESMS) that covers its core operations. Construction OHS risks are managed through a contractor OHS management plan. KTZ and the EPC contractor will appoint additional OHS managers and personnel for implementation and oversight of the OHS management plan. KTZ’s Human Resources (HR) policies align with national legislation and are generally consistent with International Standards. The HR Policy and Human Rights Policy cover working conditions, freedom of association, non-discrimination, occupational health and safety, internal grievance mechanisms, and third-party supplier labor standards. In addition, due to the project's proximity to settlements and villages, particularly at Kazybek Bek and Zhetygen stations, community health and safety risks may arise during both the construction and operational phases. KTZs systems for managing operational rail safety will be checked for compliance with good international industry practice (GIIP) and updated if required prior to operations commencing.

Stakeholder Engagement, Consultation and Information Disclosure. The stakeholder engagement activities as part of the SESIA studies (gender-sensitive), included interviews with government officials; focus group discussions with farmers, representatives of small businesses and vulnerable groups; a socio-economic baseline survey conducted with 298 respondents among the Project-affected people between October 28, 2024, and January 26, 2025. The four District Akimats of Talgar, Iliy, Karasay and Zhambyl were engaged extensively throughout these consultations. SEP was developed within the scope of SESIA, which will be disclosed together with the NTS, SESIA, BMP, and LRP 60 days before project approval. The SEP identifies general public, individual and community and project level information disclosure, communication and consultation strategies for the construction and operation phases of the Project.

Project Grievance Redress Mechanism (GRM). A three levels of grievance resolution will be established at the site level for small matters that may be raised to the Community Liaison Level, and the Grievance Redress Committees (GRC) at district level and the GRC at the Project and Headquarter level. In addition, the KTZ website presents several ways for communicating grievances including a hotline phone number, mobile application, and third-party provider’s website that contain a complaint form. The Ombudsman of NC KTZ JSC is also reachable for any complaint or resolution of community conflicts through ombudsman@railways.kz. The information of project-level GRM and Bank’s Project-affected People’s Mechanism (PPM) will be timely disclosed to local communities in an appropriate manner.

Monitoring and Supervision Arrangements. KTZ will monitor the key ES parameters and performance indicators during construction as identified in the CESMS framework and associated management plans. An ES monitoring plan for the operations phase will be developed within the scope of corporate ESMS update that will cover relevant parameters and indicators, consistent with operations phase ES management plans. KTZ will submit annual reports to AIIB and IFC in the agreed format for review. The Bank’s ES Specialists will conduct semi-annual missions to monitor the implementation of the ES instruments and assess the Borrower’s ES performance, with the frequency of missions to be adjusted based on performance and associated risks.