Kazakhstan : Samruk Energy Restructuring and Transformation Project

Energy / Conventional energy generation - Energy utility services

The proposed project will include refinancing the borrower's US Dollar denominated debt with long term tenge financing, identifying renewable energy opportunities, and improving operational efficiency of the borrower's core businesses.

The project is expected to enhance the balance sheet flexibility of the borrower through reduction of foreign currency risk to free up resources for future development and to prepare for potential initial public offering. In addition, project enables the borrower to undertake long-payback period capital expenditures through efficiency measures and to initiate the identification of a renewable projects pipeline for expansion of renewable energy portfolio.

The project is consistent with the Midterm Review of Strategy 2020, which identifies a focus on environment and climate change, and infrastructure development. ADB's support for the project is also in line with its country partnership strategy for Kazakhstan, 2017-2021 that supports energy sector and private sector development. In addition, the project is consistent with the Energy Policy emphasizing investment in energy efficiency, renewable energy projects, private sector participation, wider access to energy, and enhancing the viability of the energy sector.

The company has an Environmental, Social, and Health and Safety (ESHS) system in place however, the company was required to strengthen, upgrade and implement its existing system satisfactory to ADBs requirements. This included: (i) strengthening the company's overall environmental and social risk management framework to align with regulatory requirements, ADB's SPS (2009) and good international industry practices; (ii) ensuring that stakeholder concerns are adequately identified and addressed; and (iii) ensuring that environmental and social requirements (consistent with ADB's SPS) are communicated and implemented by Samruk-Energy's contractors. Samruk Energy developed and approved a Corporate Governance System Policy in 2021 to streamline the company's strategic goals, and to capture the company's commitments to implement national regulatory requirements and international standards required by its lenders. To ensure effective implementation of the policy and procedural enhancements, Samruk Energy introduced environmental and social compliance officers in the organizational structure of its subsidiaries and affiliates. Samruk Energy also carried out annual capacity training programs for its relevant EHS staff at the corporate and subsidiary levels. These included training related to ISO management systems, health and safety, labor, and fire and emergency response.

The Company has in place grievance reporting and resolution procedures accessible to both workers and community members and other external stakeholders.

Effective and meaningful consultations and information sharing will be ensured throughout the project cycle.