Development Bank of Kazakhstan NHFO-SOE
Environmental and Social Review Summary
KazAvtoZhol Road Rehabilitation
This Environmental and Social Review Summary (ESRS) is prepared by MIGA staff and disclosed prior to the date on which MIGA’s Board of Directors considers the proposed issuance of a Contract of Guarantee. Its purpose is to enhance the transparency of MIGA’s activities. This document should not be construed as presuming the outcome of the decision by MIGA’s Board of Directors. Board dates are estimates only.
Any documentation that is attached to this ESRS has been prepared by the project sponsor, and authorization has been given for public release. MIGA has reviewed the attached documentation as provided by the applicant, and considers it of adequate quality to be released to the public, but does not endorse the content.
The Joint Stock National Company “KazAvtoZhol” (KAZh) is a 100% state-owned enterprise under the Government of Kazakhstan (GoK), operating through the Roads Committee of the Ministry of Transport. KAZh is responsible for the planning, construction, operation, and maintenance of the national public road network.
MIGA has been requested to provide a Non-Honoring of Financial Obligations by a State-Owned Enterprise guarantee covering a non-shareholder loan by Standard Chartered Bank and JPMorgan Chase Bank to the Development Bank of Kazakhstan for a period of up to 10 years. The loan will be on-lent by the Development Bank of Kazakhstan to KAZh to finance maintenance and repair works under the National Road Rehabilitation and Repair Program (“the Program”).
The total road length covered under the Program is approximately 7,700 km of public republican roads. While the Program is already active and many segments are under implementation, the MIGA guaranteed loan proceeds will be used to finance part of the medium repair activities and will not finance new road construction or expansion. For the purposes of this document, the term “Project” refers specifically to the maintenance and repair works financed by the MIGA-guaranteed loan under the Program and excluding road operations.
Medium repair includes activities such as eliminating frost heave, milling or recycling deteriorated pavement with ruts, bumps, and other deformations, and installing or replacing road signs. Each segment is typically completed in a timeframe of 3-5 months.
The objective of the Program includes contributing to improving the condition of public roads, reducing accident rates, reducing travel time, and increasing international transit traffic. KAZh engages contractor companies to implement the repair works under the Program.
The Project is categorized as Category B according to MIGA’s Policy on Environmental and Social Sustainability (2013). Key potential environmental and social (E&S) risks and impacts related to the Project include the capacity to implement an E&S management system, contractor management, occupational and community health and safety, gender-based violence, stakeholder engagement, traffic safety, air and noise pollution, and waste and pollution prevention.
C. Applicable Standards
While all Performance Standards (PSs) are applicable to this investment, based on our current information, the investment will have impacts which must be managed in a manner consistent with the following PSs:
PS1: Assessment and Management of Environmental and Social Risks and Impacts
PS2: Labor and Working Conditions
PS3: Resource Efficiency and Pollution Prevention
PS4: Community Health, Safety and Security
Project activities do not involve any new construction. Medium repairs of roads will only be implemented within the existing right of way. Therefore PS5: Land acquisition and Involuntary Resettlement; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous Peoples, and PS8: Cultural Heritage are not triggered for this Project.
In addition, the World Bank Group Environmental, Health, and Safety (WBG EHS) General Guidelines (2007) apply to the Project.
The following documents were reviewed by MIGA:
KAZh Sustainable Development Policy (2019)
KAZh Code of Business Ethics (2022)
KAZh Corporate Conflict Resolution Policy (2017)
Development Strategy of Development Bank of Kazakhstan 2024–2033
Feasibility Study of Investment Project "Repair of Public Roads (Sections) of National Importance" Joint Stock Company "National Company KazAvtoZhol", 2024
Model contracts for the purchase of works
In addition to reviewing the above documents, MIGA carried out an E&S due diligence visit in May 2025, which included meetings with key E&S staff and management, contractor representatives, and a visit to a representative site undergoing medium repair works under the Program.
MIGA’s due diligence review considered the environmental and social management planning process and documentation for the Project, and identified gaps (if any) between these and MIGA’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable time period, are summarized in the paragraphs that follow and in the Environmental and Social Action Plan (ESAP) attached to this ESRS. Through the implementation of these measures, the Project is expected to be designed and operated in accordance with the PSs.
Key E&S issues associated with the Project business activities are summarized in the paragraphs that follow.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
Environmental and Social Assessment and Management System:
KAZh has a corporate-level E&S management system (ESMS) that defines objectives, roles and responsibilities, training, and provisions for integrating sustainable development into its operations. KAZh will amend the ESMS to include procedures specific to medium repair works under the program. These procedures will align with the requirements of PS1 and cover risk identification, mitigation measures, monitoring, and reporting (ESAP #1).
Policy:
KAZh has a corporate-level sustainability policy that sets out goals, principles, and institutional responsibilities related to road operation, maintenance, and repair work.
Identification of Risks and Impacts:
Under the Kazakhstan Environmental Code (January 2021), medium repair works fall under Category III or IV, which includes activities with potentially minor environmental impacts. Therefore, an environmental impact assessment or environmental permit is not required under local regulations. A risk assessment procedure aligned with PS1 will be developed as part of the Project’s ESMS (ESAP #1).
Biodiversity risks to protected areas or other sensitive biodiversity values are not expected under the Program. Physical or economic displacement is also not expected, as the medium repair works are limited to the existing road footprint. However, if material biodiversity risks or land acquisition requirements are identified during the screening of a segment, mitigation measures (such as Biodiversity Management Plan (BMP) or Livelihood Restoration Plan (LRP)) will be developed in line with applicable PS requirements (ESAP #7).
Management Programs:
Under KAZh’s current ESMS, contractors develop E&S management plans (ESMPs) for environmental protection, labor, and health and safety for larger repair projects. KAZh will revise the ESMS to require that ESMPs are also developed for medium repair works, scaled to the level of risk in each contract (ESAP #2). KAZh will also develop a Contractor Management Plan (CMP), with procedures for KAZh oversight and monitoring during implementation, and contractor’s obligations for Environment, Health and Safety (EHS) and labor conditions. The CMP will include standard EHS clauses to be used in new contracts in the Program.
Organizational Capacity and Competency:
KAZh contracts a supervision engineer for each road segment in the program. The engineer is responsible for monitoring the contractor’s EHS performance. KAZh will appoint an EHS officer with relevant experience to support the implementation of the ESMS under the program. Contractors will also appoint an EHS point of contact for each segment (ESAP #3).
Emergency Preparedness and Response:
Emergency preparedness and response is based on coordination with relevant authorities, including fire protection services, local hospitals, police, and the Ministry of Emergency Situations. As part of the ESMS amendment, KAZh will establish emergency preparedness and response measures and procedures. These will include identification of emergency scenarios, response measures, equipment needs, training, and incident investigation and reporting (ESAP #4). Due to the remote location of some sites, access to health and emergency services may be limited. Workers’ accommodation will be equipped with on-site first aid equipment. Contractors will establish collaboration with local hospitals during mobilization.
Monitoring and Review:
Under current procedures, EHS monitoring and review is conducted by supervision engineers appointed for each segment. As part of its ESMS, KAZh will revise monitoring requirements to support more consistent and structured oversight, aligned with the requirements of the PSs (ESAP #1). In addition, the ESMS will incorporate a close-out inspection process for each road segment upon completion of repair works. Once completed, these segments will be maintained under KAZh’s standard operations and maintenance procedures.
Stakeholder Engagement:
Contractors conduct stakeholder engagement during mobilization for each segment. This includes engagement with local authorities, community representatives, and emergency services. KAZh will formalize stakeholder engagement procedures to ensure that all relevant stakeholders are identified and consulted, in line with the requirements of the PSs (ESAP #5). The EHS officer will provide oversight and support to contractors on local stakeholder engagement activities.
External Communication and Grievance Mechanisms:
KAZh implements a community grievance mechanism that allows complaints to be submitted through a hotline, email, or social media. Complaints can also be submitted directly to the contractor or through local authorities. KAZh will establish a written grievance redress procedure for the program to support consistent implementation, accessibility, and follow-up of complaints by contractors and KAZh, as appropriate (ESAP #6).
PS2: Labor and Working Conditions
The medium repair program is implemented through third-party contractors. On average, each site employs 30–40 workers over a 3–5 months period. Contractors are responsible for recruitment, onboarding, and site-level labor management. While some are hired locally, many workers have regular contracts with contractors and travel from other regions, staying in temporary workers’ accommodations during their shifts.
Working Conditions and Management of Worker Relationship:
KAZh has HR policies aligned with national labor laws, covering non-discrimination, business ethics, collective employment, and fair employment. KAZh requires the contractors to comply with national regulations through contract clauses. However, these clauses do not specify detailed actions and do not reference PSs. As a result, there is no requirement for contractors to develop or implement labor management plans or procedures aligned with PS2.
To address this gap, KAZh will revise its ESMS to include labor and working conditions requirements for medium repair works, including contractor oversight, grievance mechanism, and Occupational Health and Safety (OHS) procedures (ESAP #1). In addition, KAZh will require contractors to develop and implement labor management plans proportionate to the level of risk associated with each contract, in compliance with PS2 requirements (ESAP #8). The labor management plans will include a Code of Conduct for workers, and adherence to the IFC Guidance Note on Workers’ Accommodation, in case workers’ accommodation is provided.
Workers’ grievance mechanisms exist at the contractor level. However, there is no separate grievance mechanism within KAZh for contracted workers to raise concerns directly with KAZh. KAZh will update the grievance redress mechanism to comply with PS2 and ensure accessibility for all workers engaged on the project (ESAP #6).
KAZh is in the process of establishing a Gender-Based Violence and Harassment (GBVH) policy. The policy will be aligned with good international industry practice and PS2 and define roles and responsibilities for responding to GBVH incidents, outline procedures for incident reporting and survivor support, and be integrated into the broader grievance redress mechanism. In addition, the policy will include GBVH training requirements for relevant staff and contractors to raise awareness of GBVH risks. (ESAP #9).
Protecting the Work Force:
Kazakhstan’s labor legislation and KAZh policies prohibits child labor and forced labor. Contractors are required to comply with national labor laws.
Occupational Health and Safety:
OHS responsibilities are delegated to contractors and monitored by supervision engineers following local regulatory requirements. To enhance the oversight framework and align with PS requirements, KAZh will revise its ESMS to strengthen OHS requirements for medium repair works. This will include standards for health & safety practices, PPE, training, risk identification, traffic control, and night work procedures.
Contractors will be required to appoint OHS focal points at each site, and KAZh will designate an EHS officer to oversee implementation across all segments (ESAP #3). The Contractor Management Plan (ESAP #2) will also define OHS requirements, including monitoring and reporting, for contractors.
Workers Engaged by Third Parties:
All site labor is engaged through third-party contractors. KAZh will revise its ESMS to ensure that contractor management includes OHS and grievance redress requirements consistent with PS2 (ESAP #2).
PS3: Resource Efficiency and Pollution Prevention
The Project activities are expected to generate noise and vibration, wastewater, solid and hazardous waste, and air emissions and dust.
Resource Efficiency:
Although the project does not involve energy-intensive operations or new infrastructure, there are opportunities to improve resource efficiency. Energy use is primarily limited to construction machinery. To enhance efficiency, contractors will be required to adopt good practices such as using fuel-efficient or well-maintained equipment, minimizing idling time, and optimizing machinery mobilization routes to reduce fuel consumption. Water use is expected to be minimal and will mainly support dust suppression and equipment cleaning, and contractors will adopt water-saving practices as part of the ESMPs (ESAP #2).
Pollution Prevention:
To prevent pollution, dust suppression measures such as water spraying will be implemented, and all equipment must comply with national emission standards. Noise and vibration will be managed by restricting work to daytime hours. Construction waste, including asphalt and concrete debris, will be reused or disposed of in accordance with national regulations.
Hazardous waste that may be generated during the rehabilitation work includes accidental spills of diesel and diesel byproducts and used oils and lubricants. These materials will be removed and disposed of safely in accordance with EHS Guidelines, described in the Waste Management Plans that contractors will be required to develop and implement. (ESAP #10). Wastewater generated at workers’ accommodations will be removed by licensed third-party contractors.
Contractors are responsible for implementing health, safety, and environmental (HSE) measures, including pollution control and waste management. The supervision engineers assigned to each site oversee contractor compliance and submit monthly reports that include safety and environmental updates.
PS4: Community Health, Safety and Security
Community Health and Safety:
Community members and road users are exposed to health and safety risks during road rehabilitation activities due to traffic diversions, limited traffic flow and movement of heavy construction vehicles. KAZh is implementing the Vision Zero initiative, a road safety strategy aimed at eliminating all traffic fatalities and severe injuries.
For the medium repair program, contractors are responsible for ensuring the safety and flow of traffic maintenance works, by installing signage and protective barriers, speed control at sites, and potential diversion of routes. KAZh will establish traffic safety procedures as part of the ESMS to ensure consistent implementation, including criteria and instructions for work zone and pedestrian safety, and impacts on sensitive receptors or vulnerable groups, in line with the PSs, EHS Guidelines and local regulation (ESAP #11).
The workers Code of Conduct to be established as part of the Labor Management Plan (ESAP #8) will include provisions to manage community risks related to workers influx and GBVH.
Security Personnel:
Security personnel will not be engaged as part of the Program.
The documentation listed below is available electronically as PDF attachments to this ESRS at www.miga.org.
For additional information, please contact:
Contact Name: Anna Zagoskina
Institution: Development Bank of Kazakhstan
Address: Z05T3E2, Astana, Mangilik Yel, 55A
E-mail:AnnaZg@kdb.kz
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MIGA supports its clients (as defined in MIGA Policy on Environmental and Social Sustainability) in addressing environmental and social issues arising from their business activities by requiring them to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities.
In addition, Affected Communities have unrestricted access to the Compliance Advisor/Ombudsman (CAO), the independent accountability mechanism for MIGA. The CAO is mandated to address complaints from people affected by MIGA-guaranteed business activities in a manner that is fair, objective, and constructive, with the goal of improving environmental and social project outcomes and fostering greater public accountability of MIGA.
Independent of MIGA management and reporting directly to the World Bank Group President, the CAO works to resolve complaints using a flexible, problem-solving approach through its dispute resolution arm and oversees project-level audits of MIGA’s environmental and social performance through its compliance arm.
Complaints may relate to any aspect of MIGA-guaranteed business activities that is within the mandate of the CAO. They can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of a MIGA-guaranteed business activity. Complaints can be submitted to the CAO in writing to the address below:
Compliance Advisor/Ombudsman
International Finance Corporation
2121 Pennsylvania Avenue NW
Room F11K-232
Washington, DC 20433 USA
Tel: 1 202 458 1973
Fax: 1 202 522 7400
E-mail: cao-compliance@ifc.org