The proposed project consists of a non-shareholder loan of up to EUR 200.00 million (or equivalent in USD) from KfW to the Development Bank of Kazakhstan JSC (DBK) for on-lending to qualifying renewable energy project(s) (the Project), supported by a MIGA Non-Honoring of Financial Obligations by a State-Owned Enterprise (NHFO-SOE) guarantee. The loan has a tenor of up to 20 years and is structured as an open credit facility, under which eligible sub-project(s) will be identified and financed over time. 

DBK will use the proceeds of the KfW loan to on-lend to qualifying renewable energy projects in Kazakhstan, with the objective of supporting public and private sector investment in renewable electricity generation. Eligible projects are expected to include wind and other renewable energy installations, contributing to the diversification of Kazakhstan’s energy mix and the reduction of greenhouse gas emissions. The specific underlying sub-projects financed under the facility will be confirmed prior to disbursement, in accordance with an agreed eligibility criteria. 

DBK is Kazakhstan’s flagship development finance institution, wholly owned by the Government of Kazakhstan through Baiterek National Investment Holding JSC, and operates under a dedicated legal framework. Its mandate is to promote the diversification and sustainable development of the national economy by providing long term financing to priority sectors, including renewable energy. The Project leverages DBK’s institutional role, sector knowledge, and pipeline of eligible investments to channel funding efficiently to public and private renewable energy developers. 

Environmental Categorization 

The Project will support a specific pool of renewable energy projects in Kazakhstan. Renewable energy projects typically have moderate to significant adverse environmental and social (E&S) risks and impacts such as large-scale resettlement, significant impacts on biodiversity as well as significant impacts on  community health and safety. As such, the Project has been categorized as FI-1 in accordance with MIGA’s Policy on Environmental and Social Sustainability (2013).  

The applicable E&S requirements for the Project to be supported by the guarantee are: (i) the MIGA Exclusion List; (ii) applicable E&S laws and regulations in Kazakhstan and (iii) the MIGA/IFC Performance Standards (PSs). 

KfW Group is a bilateral financial institution with a robust process for assessing and managing E&S risks and impacts documented under the KfW Sustainability Guidelines (SGs).   KfW has an exclusion list  and also applies international E&S standards such as the World Bank’s Environmental and Social Standards, MIGA/IFC PSs and the Equator Principles. KfW has also developed Sector Guidelines for selected emission-intensive sectors to meet Paris Agreement targets. In addition, KfW has a Complaints Mechanism for receiving and addressing E&S complaints associated with the projects financed by KfW.  In relation to labor standards, KfW’s labor policies and procedures are consistent with European Union labor regulations. Under the SGs, for transactions with a financial intermediary such as DBK, the intermediary is required to implement an Environmental and Social Management System (ESMS) to manage the E&S risks and impacts associated with its lending activities, consistent with Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts (PS1). The intermediary is also required to implement labor policies that are consistent with Performance Standard 2: Labor and Working Conditions (PS2).  

For the MIGA guarantee, KfW, through DBK, will be responsible for managing the E&S risks and impacts associated with renewable energy projects supported by the guarantee. KfW will provide oversight and support to DBK in the effective implementation of DBK’s ESMS and provide capacity building support as required to DBK’s E&S team. All projects will be screened against MIGA requirements: (i) the MIGA Exclusion List; (ii) applicable E&S laws and regulations in Kazakhstan and (iii) the MIGA Performance Standards. Gaps identified in the E&S assessment of projects will be documented in time-bound E&S action plans and all projects will be monitored in accordance with MIGA requirements. DBK will implement an E&S complaints mechanism and underlying projects will also implement grievance mechanisms for affected communities. 

For the proposed guarantee, KfW will be required to report annually to MIGA on the E&S performance of the renewable energy projects covered by the guarantee. 

Development Impact 

The Project will support the expansion of renewable energy generation in Kazakhstan, contributing to a more diversified and sustainable energy mix. Investment in renewable energy projects are critical to accelerate Kazakhstan’s transition toward a low-carbon economy, supporting the resilience and security of power supply and competitiveness of energy-intensive industries. By enabling investments in renewable energy projects, the Project will increase the availability of low-carbon electricity, reduce reliance on fossil fuel-based generation, and support the reduction of greenhouse gas emissions. The Project will also help to diversify Kazakhstan’s electricity generation mix, which is currently dominated by coal and gas. This diversification is critical for enhancing the resilience and security of the power system, as heavy reliance on aging coal infrastructure exposes the country to supply risks and price volatility. These investments have the potential to catalyze further market development, attract additional private capital, and support sustainable economic growth. 

The Project is aligned with the World Bank Group’s Country Partnership Framework (CPF) for Kazakhstan for the period FY2020–FY2025, in particular with the third priority Focus Area “Securing Sustainable, Resilient, and Low Carbon Growth”, and Objective 6 “Support Climate Resilience and Enhance Energy Efficiency”.