KAZAKHSTAN - STRATEGIC FRAMEWORK FACILITY

The project consists of a framework loan to support energy and transport infrastructure investments developed by public and private entities and financed by the Development Bank of Kazakhstan.

The operation consists of a framework loan to support sustainable infrastructure investments (schemes or sub-projects) in Kazakhstan. The framework loan is to be intermediated by the Development Bank of Kazakhstan (DBK) to support eligible promoters developing schemes in two sectors: * Energy sector: Renewable energy schemes, primarily wind energy and photovoltaic (PV). These schemes are developed by Independent Power Producers (IPP) obtaining concessions in public auctions. * Transport sector: Road rehabilitation and construction schemes under the "medium" programme for Rehabilitation of Public Highway

The proposed EUR 200m framework loan will provide policy-targeted funding to DBK for on-lending to be channelled to eligible private and public final beneficiaries active in the Kazakhstan sustainable transport, renewable energy and other relevant climate action markets. It is expected that the loan will support 50% energy and 50% transport infrastructure investments. The loan will be matched EUR 200m of own resources from DBK.

In addition to the long tenor and grace period of the EIB loan (up to 20 years and 5 years respectively), and compared to alternative financings available to Kazakhstan, the EIB is in a position to enforce specific priorities through its loan.

Thanks to the experience built with similar operations in other regions, the EIB as a trusted partner raises the standards and passes on best practices to Development Bank of Kazakhstan can also contribute in particular to strengthening the institution and promoting good governance in the transport and energy sectors (through passage of ad-hoc legislation), and improving living standards.

The schemes under the operation are expected to address multiple market failures and negative externalities. In the transport sector, the schemes are expected to address accessibility, safety and environment externalities. The RE sub-projects will generate electricity from low carbon sources addressing the market failure of negative environmental externalities, through the reduction of carbon and air pollution.

The operation is expected to advance several SDGs (7,8,9,10,11,13,17).

This facility will be the first EIB framework loan for energy and transport infrastructure investments in Kazakhstan. The operation received limited technical contribution from the EIB. The EIB will engage a service provider to provide support in assessing the national procedures and those of the identified promoters, including on procurement, environmental, climate and social aspects.

The operation is expected to have a crowed-in effect and to raise the client standards.

The promoter shall implement and operate the investments in conformity with national laws, as well as the EIB's environmental and social standards (E&S). The project is considered acceptable for EIB financing in environmental and social terms, with the following undertakings: * The project ESMF (or equivalent), referencing EIB E&S Standards, shall be established for the project and followed by the underlying promoter(s) for all the sub-projects * Commitment by the FI and the promoters, to establish and maintain a project implementation unit (PIU), or equivalent, for the project with resources for managing environmental, social and climate change issues. * When relevant, the FI shall deliver to EIB the Environmental Impact Assessment (EIA) EIA report and other relevant environmental documents. * For all schemes, the FI/promoter(s) shall provide, together with an allocation request. * A statement signed by the promoter that confirms environmental and social compliance with the EIB standards. * Environmental and Social Action Plan addressing identified gaps for the scheme and Environmental and Social Management Plan. * Resettlement action plan, where applicable * The FI/promoter(s) will be required to undertake reasonable efforts to ensure that the projects it finances are screened for any labour issues in the supply chain, and will endeavour where possible to cascade down similar requirements in its finance contracts with the promoters. In line with this, DBK, inter alia and on a best effort basis, will require the solar PV installation companies to obtain certificates from suppliers certifying no violations of labour rights for the production of panels * The Bank will require the FI/promoter(s) to store and maintain updated any E&S relevant documents (e.g. environmental studies, and Nature/Biodiversity Assessments, Environmental and Social Management Plans).

The Bank will require the Promoter to ensure that any procurement under the project will be done in accordance with the EIB's Guide to Procurement