Kazakhstan : CAREC Transport Corridor 1 (Zhambyl Oblast Section) Investment Program - Tranche 3

Transport / Road transport (non-urban)

Roads are a key element of Kazakhstan's transport system. They play an important role in providing access to rural areas, and facilitating transit traffic and in-country transport movement. However, much of the road network is in poor condition--about 60% of the national roads require major rehabilitation and proper maintenance. Moreover, the feeder road network serving the rural population is not fully developed; and is characterized by poor conditions and a low service level, especially during wintertime. This results in high transport costs.

The road sector has long-standing bottlenecks: (i) the network is incomplete, and in some sections in bad condition; (ii) truck overloading is frequent, cutting into the economic life of road assets; (iii) revenues from transit are low, affecting cost recovery and reinvestment capabilities; (iv) inefficient cross-border procedures increase the burden on trade and traders, and raise the cost of doing business; (v) weak road sector planning affects sound investment sequencing; and (vi) project development and project management shortcomings create inefficiencies, high costs, and bad governance. These gaps translate into higher-than-average transport costs. They also hamper regional cooperation and integration opportunities, and ultimately the country's competitiveness.

The Government of Kazakhstan's Western Europe-Western PRC Corridor (the Corridor) Development Program intends to remove these constraints to improve the road sections in the Kazakhstan territory of CAREC Transport Corridor I, which total 2,715 km running from Khorgos through Almaty and Shymkent to the Russian Federation's western border. The Corridor Development Program will improve the existing road and construct bypasses and new alignments to make the Corridor suitable for international traffic.

The Government sought assistance from the international financial institutions to finance sections along the Corridor. ADB, with the Japan International Cooperation Agency (JICA) and the Islamic Development Bank (IDB) finance 470 km in Zhambyl Oblast. The European Bank for Reconstruction and Development, and the World Bank finance 102 km and 1,062 km, respectively.

Teaming up with IDB and JICA, ADB committed to improve 470 km in Zhambyl Oblast through the multitranche financing facility (MFF). On 13 January 2009, the Government and ADB entered into a framework financing agreement (FFA) for the MFF, with an aggregate principal amount not exceeding the equivalent of $700 million. ADB approved the MFF on 12 November 2008. ADB approved the first tranche for $340 million on 30 December 2008, which was reduced to $225 million, the second tranche of $187 million on 7 October 2009, and the third tranche of $173 million in 15 November 2010.

Each contractor prepared site-specific environmental management plans (EMPs) following the original EMP since the project covers three separate sections. The construcition supervision consultant monitored the EMP implementation. Bi-annual environmental monitoring reports were prepared and disclosed at ADB website.

The EA and ADB closely monitored and assessed any environment issue along the project roads during project implementation, through review missions, consultations and meetings, progress reports and bi-annual environment monitoring reports.

The Project involved land acquisition and resettlement (LAR) along the project roads. The land acquisition and resettlement plan (LARP) was prepared and disclosed in 2010. Most of the LAR-related activities were completed and verified by an external monitor. The external monitoring report was also disclosed in 2012.

A supplemental LARP was prepared for the Kainar cloverleaf interchange. The works at this interchange were suspended until the supplemental LARP was implemented.

The EA and ADB closely monitored and assessed any LAR issue along the project roads during project implementation, through review missions, consultations and meetings, progress reports and bi-annual LAR monitoring reports.

Public consultations were held during implementation.

Grievance redress mechanism was set up in 2010. The establishment of Coordination Liaison Group (CLG) strengthened the grievance mechanism. A CLG Coordinator was engaged to monitor and report complaints, and facilitate resolution.

Procurement of civil works financed by both ADB and JICA loans followed ADB's Procurement Guidelines. Three civil works contracts over $3 million were procured through international competitive bidding (ICB) procedure without pre-qualification of bidders. ADB's prior review procedures were followed. The safeguards requirements under ADB's Safeguards Policy Statement (2009) and relevant sections of the ADB's Anticorruption Policy were included in the bidding document and contracts.

The ADB Management has approved advance action for procuring civil works to be financed by ADB under the Investment Program, including this Project. MOTC has been informed that approval of advance contracting does not commit ADB to finance the Investment Program or any project.