The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) @#&OPS~Doctype~OPS^blank@pidaprcoverpage#doctemplate Project Information Document (PID) Appraisal Stage | Date Prepared/Updated: 26-Jul-2024 | Report No: PIDIA00472 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) @#&OPS~Doctype~OPS^dynamics@pidaprbasicinformation#doctemplate BASIC INFORMATION A. Basic Project Data Project Beneficiary(ies) Region Operation ID Operation Name Transport Resilience and EUROPE AND CENTRAL Kazakhstan P500565 Connectivity Enhancement ASIA Project Financing Instrument Estimated Appraisal Date Estimated Approval Date Practice Area (Lead) Investment Project 15-Jul-2024 15-Nov-2024 Transport Financing (IPF) Borrower(s) Implementing Agency National Company National Company KazAvtoZhol JSC KazAvtoZhol JSC Proposed Development Objective(s) To strengthen the resilience of transport systems in Kazakhstan and improve climate-adapted road connectivity along the Jezkazgan - Karagandy section of the Middle Corridor. Components Resilient and Safe Road Connectivity Transport Systems Development Project Management @#&OPS~Doctype~OPS^dynamics@pidprojectfinancing#doctemplate PROJECT FINANCING DATA (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? Yes Is this project Private Capital Enabling (PCE)? Yes SUMMARY Total Operation Cost 1,531.04 Total Financing 1,531.04 of which IBRD/IDA 650.00 Financing Gap 0.00 Page 1 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) DETAILS World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 650.00 Non-World Bank Group Financing Counterpart Funding 231.03 National Government 231.03 Other Sources 650.00 Asian Infrastructure Investment Bank 650.00 @#&OPS~Doctype~OPS^dynamics@envsocriskdecision#doctemplate Environmental And Social Risk Classification Substantial Decision The review did authorize the team to appraise and negotiate Other Decision (as needed) B. Introduction and Context Country Context 1. The Republic of Kazakhstan, a large landlocked country strategically situated in Central Asia, shares borders with key geopolitical players such as the Russian Federation and China, along with the Kyrgyz Republic, Uzbekistan, and Turkmenistan. It also borders a significant portion of the Caspian Sea. Kazakhstan is the world’s ninth-largest country by area, encompassing 2.7 million square kilometers. Despite its vast size, the country has a relatively small population of around 20 million, resulting in one of the lowest population densities globally. The country benefits from substantial natural resources, being one of the world’s most mineral-rich nations and among the top fifteen countries in terms of oil reserves. Exports of crude oil and crude oil products amounted to more than 70 million tons in 2023. 2. Over the past two decades, Kazakhstan has demonstrated rapid economic progress despite facing significant challenges, including economic and financial crises in 2008 and between 2014 and 2016. More recently, the economy has rebounded from downturns in 2020 amid the COVID-19 pandemic and in 2022 following the Russian invasion of Ukraine to achieve GDP growth of 5.1 percent in 2023, supported by fiscal expansion, rising oil production, and an influx of Russian migrants. Kazakhstan’s economic outlook for the next two years is for steady growth, driven partly by its continued reliance on hydrocarbons and robust consumer spending, with real GDP forecast to grow by 4.5-5 percent in Page 2 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) 2025.1 However, given its dependence on oil-related revenues, there is a pressing need for further economic diversification and to continue the transition from the dominance of state-owned enterprises. Future growth may be constrained as the country approaches the limits of what an oil and mineral export-oriented economy can deliver.2 3. Significant interregional and urban-rural disparities in living standards and per capita income remain due to the economy's commodity-driven nature and the country’s physical and human geography. The benefits of economic growth trickle down unequally to various segments of society.3 With 62 percent of the population living in urban areas, the rural areas are sparsely populated and generally poorly interconnected.4 The rural-urban disparity is stark, with poverty rates in rural areas averaging nearly double those in urban areas. In 2022, 7.3 percent of the rural population lived below the National Poverty Line.5 In addition to income differentials, significant disparities persist across regions and between urban and rural areas in employment opportunities, educational attainment, healthcare access, and basic service provision.6 4. Kazakhstan's resources and strategic location at the crossroads of Eurasian connectivity make it a central hub for trade and investment opportunities. The Government of Kazakhstan (GoK) has achieved considerable progress in enhancing and expanding corridor connectivity to facilitate trade and transit. Substantial investments have been made in the national road and rail networks, with considerable support from International Financial Institutions (IFIs), including the World Bank. These investments have led to improvements in infrastructure and the development of key transit routes. However, despite progress, significant gaps persist along the country’s transport corridors. These gaps impede connectivity between Kazakhstan’s diverse regions, limit exports to neighboring countries and European markets, and affect the country’s potential as a crucial east-west transit corridor.7 Existing international trade heavily relies on Russia and the "Northern Corridor" Asia-Europe trade route, which passes through the country.8 This reliance underscores the need for diversified trade routes to strengthen Kazakhstan's transport resilience and connectivity. 5. Aware of the need to adapt to a volatile geopolitical context by diversifying trade routes and building economic resilience, the GoK has recognized the potential of the Trans-Caspian International Transport Route (the “Middle Corridor�) as a multimodal regional and intercontinental trade route linking Kazakhstan to China, Azerbaijan, Georgia, Türkiye, and Europe. Two parallel branches of the Middle Corridor run east-west through Kazakhstan: a southern branch via Almaty and a more northerly branch across central regions from Dostyk (near the China border) through Balkhash, Jezkazgan, and Shalkar, reaching the Caspian Sea port of Aktau. The Jezkazgan to Karagandy road forms a substantial portion of this route and serves as a feeder and last-mile connectivity infrastructure to the parallel Dostyk-Aktau Middle Corridor railway line. In addition to enhancing east-west connectivity, the Jezkazgan-Karagandy section serves as a critical north-south route, significantly contributing to national transport resilience. 1 World Bank. Kazakhstan Economic Update - Shaping Tomorrow: Reforms For Lasting Prosperity, Winter 2023-24. 2 World Bank. 2018 Kazakhstan Systematic Country Diagnostic. 2018, and the Country Economic Memorandum. 2019. 3 World Bank. Kazakhstan Economic Update - Shaping Tomorrow: Reforms For Lasting Prosperity, Winter 2023-24. 4 Kazakhstan Bureau of National Statistics of the Agency for Strategic Planning and Reforms. January 2024 data. 5 Asian Development Bank. Key Indicator Database for year 2022. https://kidb.adb.org/economies/kazakhstan 6 World Bank. Country Partnership Framework for the Republic of Kazakhstan 2020-2025. 2019 7 World Bank. Connecting to Compete 2023 Trade Logistics in an Uncertain Global Economy. 2023. Kazakhstan’s overall ranking was 79th out of 139 countries and 80th for trade and transport related infrastructure. 8 World Bank. Middle Trade and Transport Corridor. 2023. Average percentage between 2017 and 2021. Page 3 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) 6. Bottlenecks currently limit the attractiveness of the corridor, but with operational improvements and investment in ports, highways, and railway infrastructure, trade volumes on the Middle Corridor are forecast to triple by 2030, thereby enhancing resilience to economic shocks and vulnerabilities of established trade routes.9 For landlocked Kazakhstan, improving the Middle Corridor is expected to generate significant benefits. It will diversify economic linkages, which continue to focus closely on Russia, yield economic benefits from the transit of goods between China and Europe, and, most importantly, realize the potential for exports to other countries in the region. As Kazakhstan is a major exporter in the region, these improvements will be particularly impactful. Further details of the Middle Corridor are in Annex 5. 7. In 2022, the central Karagandy Oblast was divided into two distinct entities, with its western part becoming the Ulytau Oblast, with Jezkazgan as its administrative center, and Karagandy remaining the administrative center of a now smaller Karagandy Oblast. While both oblasts are rich in critical minerals, including green transition metals such as copper and rare earth elements, they face many development issues, notably environmental degradation and outdated water, waste management, and transportation infrastructure. Urban areas face insufficient capacity to manage solid waste disposal, while rural regions often entirely lack such facilities. In Ulytau, the inward investment is low, and livelihoods depend on the copper mining industry, dominated by a single copper-producing company that employs around one-third of the oblast’s residents. The oblast also faces significant social challenges, with poor roads compounding already limited access to quality healthcare, education, and social services. 8. Lack of connectivity and high logistics costs (exceeding 20 percent of the final product cost) are key constraints inhibiting the development of the newly established Ulytau Oblast. This affects exports and the competitiveness of local industries, increases the cost of socially significant food and household products for residents, and constrains economic diversification. The proposed project will facilitate access of the Ulytau Oblast to Middle Corridor and improve the logistics of supplying agricultural products, fertilizers, machinery, etc. ultimately strengthening the socio-economic conditions of the oblast. B. Sectoral and Institutional Context Sectoral and Institutional Context 9. Kazakhstan faces unique connectivity challenges because of climate change, a sparse population spread over a vast land area, and the fact that it has one of the world’s lowest road densities.10 The existing 95,000 km road network includes 25,000 km of national highway and carries about 160,000 million ton-km of transit goods annually.11 Kazakhstan has three classes of road network, with the primary Republican Road Network, including international transit roads, being the responsibility of the Ministry of Transport (MoT) and managed by the National Company KazAvtoZhol JSC (KAZh).12 Responsibility for local and urban roads lies with oblasts, local districts, and municipalities. Much of the road network was constructed during the Soviet era, and sections that have not been rehabilitated have significantly deteriorated, impacting 9 World Bank. Middle Trade and Transport Corridor: Policies and Investments to Triple Freight Volumes and Halve Travel Time by 2030. 2023 10 Central Intelligence Agency. The World Factbook. 2024. 3.5 km per 100 square km and 492 km of road per 100,000 persons. https://www.cia.gov/the-world-factbook/countries/kazakhstan 11 Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, 2021 12 QazAvtoJol was adopted as the Latin spelling of the Borrower and Implementing Agency in 2024. Previously KazAvtoZhol was commonly used. Page 4 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) safety and efficiency. The road transport network is complemented by a 20,000 km railway system, two major ports on the Caspian Sea, and the Khorgos dry port at the border with China. Logistic centers and free-trade zones further support these infrastructural assets. 10. The GoK has undertaken significant road sector reforms to strengthen capacity and separate regulatory and operational functions. In 2013, the Committee for Roads (CR) and KAZH were established, operating under the Ministry of Transport. CR plays a crucial role in setting strategic direction, while KAZH, a state-owned enterprise (SOE), is the national operator for the (primary) roads.13 KAZH also manages and collects toll revenue for the rapidly growing toll road network of over 3,000 km through its KazToll portal. Despite these positive steps, there remains considerable scope to modernize the governance of the sector’s institutions as many management and operational approaches are outdated. Key sector modernization priorities include making investments and maintenance decisions using road asset management systems, corporatization of road sector SOEs, developing financing mechanisms based on road user charges, promoting public-private partnerships and new contracting modalities, and establishing systematic management processes to address the challenges of climate change. 11. The World Bank Group has maintained a longstanding partnership with the GoK in the transport sector since the 1990s. Currently, two substantial road sector projects funded by the Bank, the South West Roads Project (SWRP) and the East West Roads Project (EWRP), are being implemented. These projects focus on enhancing road corridors, particularly in the country's southern, southeastern, and southwestern regions, including sections of the southerly branch of the Middle Corridor. In September 2023, the Multilateral Investment Guarantee Agency (MIGA) issued a CHF 554.7 million (the equivalent of US$ 621.2 million) ten-year guarantee covering the principal and interest on loans to the national railway company, Kazakhstan Temir Zholy JSC. The loans guaranteed will facilitate track renovation and rehabilitation, as well as the purchase of 105 freight and passenger locomotives. Additionally, the Government collaborates with other development partners, including the EBRD, the ADB, and the Islamic Development Bank (IsDB), to develop various sections of the national road network. 12. As Kazakhstan’s economy continues to develop, the motorization rate is expected to grow. Currently, there are 226 vehicles per 1,000 inhabitants, around the global average, and an aging vehicle fleet.14 While heightened motorization promises improved access to goods and services for more people, it necessitates careful strategic planning and management across several fronts. These include ensuring adequate infrastructure capacity, addressing safety as traffic increases, and balancing economic growth with environmental sustainability and climate commitments. 13. Road safety persists as a pressing concern in Kazakhstan, imposing a substantial economic and social toll. In 2022, road accidents caused 2,425 fatalities and over 19,000 injuries, costing approximately six percent of the country’s GDP.15 Despite its moderate motorization rate and substantial improvement over the past decade, Kazakhstan’s per capita fatality rates remain high, with a road traffic mortality rate of approximately 13 deaths per 100,000 population.16 This 13 The Ministry of Transport was formed in 2023. Previously transport was under the Ministry of Industry and Infrastructure Development. 14 International Organization of Motor Vehicle Manufacturers: Total World vehicles in use by 2020. https://www.oica.net/wp- content/uploads/Total-World-vehicles-in-use-2020.pdf. 15 Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, 2022 16 World Bank, Data: Mortality caused by road traffic injury (per 100,000 population) – Kazakhstan. 2019. https://data.worldbank.org/indicator/SH.STA.TRAF.P5?locations=KZ Page 5 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) highlights significant challenges in road safety that the country urgently needs to address, considering that three-quarters of deaths were people of working age, leading to a loss of productivity and increased social costs.17 14. Gender inequalities remain despite notable progress in areas of education and health, with disparities evident in employment rates (60.5 percent for women compared to 71.0 percent for men), earned incomes, and representation in high-level political posts.18 Kazakhstan's 62nd position out of 146 countries in the 2023 Global Gender Gap Index, which scores countries across Economic, Participation and Opportunity, Educational Attainment, Health and Survival, and Political Participation, underscores the persistence of such inequalities.19 Gender-based occupational segregation in the country is high, likely due in large part to Kazakhstan having barred women from entering 287 occupations until Labor Code reforms in 2022. The road construction sector exemplifies this gender divide. It remains predominantly male- dominated, with women occupying less than six percent of highly skilled technical roles such as road engineers, laboratory engineers, and surveyors, according to a 2024 sample of twelve road construction companies operating in Kazakhstan. The challenges construction companies face in recruiting women are multifaceted and include working conditions, distance from homes, and prevailing social norms that discourage women from pursuing careers in construction. These need to be overcome before the sector can attract women. The labor market figures mirror education statistics, which exhibit gender segregation by fields of study. For example, according to the data collected from three technical universities located in the Project area and Almaty that teach courses relevant to the road construction sector, the share of female students graduating from undergraduate and graduate studies in the 2023-24 academic year varied from 8 percent to 26 percent depending on the institution.20 15. The Ulytau and Karagandy oblasts are characterized by a continental climate featuring hot, dry summers and cold, severe winters accompanied by high winds and snowstorms. This harsh climatic environment poses significant challenges to the region's infrastructure. A comprehensive risk assessment in this area identified flooding, extreme temperatures, and other extreme weather events as the primary hazards to road infrastructure.21 The study also proposed a series of recommendations to mitigate material risks from climate hazards, such as using more durable construction materials, improving drainage systems to manage floodwaters, and implementing regular maintenance schedules to address wear and tear from extreme temperatures. Additionally, the assessment suggested enhancing monitoring systems to provide early warning of extreme weather events, thus allowing for proactive measures to protect infrastructure and ensure the safety and reliability of transport routes.22 16. The national highway designated A17 runs through the heart of the country, from the southwest to the northeast. It connects the cities of Kyzylorda, Jezkazgan, Karagandy, and Pavlodar and, over much of its length, provides a critical road component for the Middle Corridor.23 As the only east-west route across Karagandy and Ulytau oblasts, the road is also vital for the population’s access to the rest of the country and economic development, with its main freight being metals, manufactured goods, industrial equipment, and food. The sections of the highway linking Karagandy, 17 Bauyrzhan Zheksenbekov et al. Road Safety Inspection and Road Safety Audit for A17 Inception Report, May 2023. 18 The Bureau of National Statistics of the Republic of Kazakhstan 2023. Ages 15 and above. https://stat.gov.kz/en/ 19 World Economic Forum, 2023. Global Gender Gap Report. https://www3.weforum.org/docs/WEF_GGGR_2023.pdf 20 ALT University in Almaty, named after Mukhametzhan Tynyshpayev, NJSC "Karaganda Technical University, named after Abylkas Saginov" and JSC "Zhezkazgan University, named after O.A. Baikonurov." 21 Oleg Li. Climate Resilience and Risk Assessment of Road Infrastructure, Final Report. 2023. 22 Oleg Li. Climate Resilience and Risk Assessment of Road Infrastructure, Final Report. 2023. 23 Roads classified as A class are National Highways with strategic importance between the main administrative, cultural, and economic centers of Kazakhstan and neighboring countries. Page 6 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) Jezkazgan, and Kyzylorda are particularly important as they provide transport resilience and improved connectivity to the road network, serving as a second strategic link between Kazakhstan’s southern commercial zone, centered around Shymkent and Almaty and the nation's capital, Astana. This redundancy is essential in mitigating the impacts of climate change and natural disasters, ensuring continuous connectivity and economic stability. 17. The existing two-lane Karagandy - Jezkazgan road has deteriorated significantly in recent years due to the changing climate despite repeated rehabilitation works and routine maintenance, presenting a major obstacle to connectivity and the region’s development. It exhibits multiple defects and is beyond its serviceable life. As a result, the considerable distances between urban centers translate to extended travel times and high vehicle operating costs. The road is also dangerous, with a substandard average iRAP rating of 2.8 stars (1-star is the least safe and 5-star is the safest) and multiple sections rated 1-star. The sections with the 1-star rating have a twentyfold higher likelihood of an accident with serious injury or death compared to the safest roads.24,25 18. Due to the lack of redundancy necessary for network resilience and the effects of changing climate, the Government has committed to upgrading the entire Karagandy - Jezkazgan - Kyzylorda corridor to climate-resilient standards as a way to unlock regional development.26 With financing from the EBRD, construction has already commenced on a 219 km section in Kyzylorda Oblast. Additionally, work on an adjacent 208 km road section in Ulytau Oblast is expected to begin this year with support from the ADB. The modernization of the corridor will be completed with the reconstruction and conversion of the selected sections between Karagandy and Jezkazgan into a dual carriageway as part of the proposed Transport Resilience and Connectivity Enhancement Project (TRACE) project. C. Proposed Development Objective(s) Development Objective(s) (From PAD) To strengthen the resilience of transport systems in Kazakhstan and improve climate-adapted road connectivity along the Jezkazgan - Karagandy section of the Middle Corridor. Key Results (a) Reduced travel times along the Jezkazgan and Karagandy corridor (minutes). (b) Climate resilience measures incorporated in the Project roads. (a) Additional flow capacity addressing flooding risk (percent). (b) Project Road with elevated vertical alignment (kilometers). (c) Road design standards improved to enhance resilience and safety (yes/no). (d) Roads under performance-based maintenance by private sector companies, non-rural (kilometers). 24 The International Road Assessment Programme (iRAP) – further details are provided in Section II, B. Project Components 25 World Bank supported study. Road Safety Inspection and Road Safety Audit for A17 Zhezkazgan- Qaragandy road. B. Zheksenbekov et al. 2023. 26 Climate-resilient standards address current and projected extreme temperatures, extreme snowstorms and flood episodes as well as changing rainfall patterns, while promoting energy efficiency and renewable energy solutions (where possible), including the use of NBS, soft measures, and innovative technology for (i) systems planning; (ii) engineering and design; (iii) operations and maintenance; (iv) contingency programming; and (v) institutional capacity and cooperation. Page 7 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) D. Project Description Component 1: Resilient and Safe Road Connectivity (US$1,518.91 million) 19. Subcomponent 1.1 Corridor Connectivity will support the upgrading of selected sections of the strategically important Jezkazgan - Karagandy corridor to climate-resilient standards and pioneer the use of integrated design, build and maintenance contracts to optimize value for money and foster private sector participation. Selected sections of the Project corridor will be reconstructed and upgraded to a first category dual-carriageway highway according to the national road classification. Upgrading of the road is driven by the deterioration resulting from changing climate events (e.g., floods from snow melting during spring) and will include, inter alia, new embankments with raised vertical alignment, construction of pavement layers, intersections, bridges, and culverts, and installing side barriers, bus stops, road signs, and markings. The two carriageways will typically be offset by 50 - 70 meters, with this separation improving the resilience of the route by introducing redundancy so mitigating the impacts of climate change induced events. The corridor will also have enhanced climate resilience elements, including improved road pavement materials, snow barriers, and flood prevention measures. Flood prevention measures feature permeable rockfill embankment layers raising the vertical alignment of the road, doubling the number of culverts, and tripling the number of bridges, all with enhanced flow capacity. The subcomponent will also provide for experienced consulting firms to supervise the works, monitor progress, certify payments, and ensure quality. 20. Fully serviced rest areas and maintenance facilities will function as refuges from extreme weather conditions . The rest areas will provide centralized locations for early-warning information on hazardous road conditions and include recharging points for low-emission vehicles. For the comfort and safety of road users, the rest areas will also include heated facilities with separated toilets and baby change rooms. Dedicated road maintenance depots will be constructed and fitted out to support routine, winter, and emergency maintenance operations. 21. Subcomponent 1.1 supports sustainable maintenance operations on the Jezkazgan - Karagandy corridor through extended maintenance periods with payments linked to performance. The civil works for highway upgrading will pilot Output and Performance-Based Road Contracts (OPBRC) based on standard World Bank bidding documents. These contracts will address the Borrower’s concerns about cost fluctuations and quality by combining design and construction with an extended seven-year maintenance period during which the same contractor will be responsible for emergency, routine, and winter maintenance. This arrangement creates a single point of responsibility for construction and maintenance and transfers risk to the private sector, where it can be better managed. It also provides the KAZH with a robust framework for sustainable, performance-based maintenance practices, ensuring long-term infrastructure resilience and offering a model suitable for broader future applications. Given the innovative nature of this approach in Kazakhstan, the KAZH will receive support from an international consultant specializing in performance-based contract management throughout the implementation of this component. 22. Subcomponent 1.2 Last Mile Connectivity focuses on delivering resilient year-round last mile connectivity for rural inhabitants and agricultural producers along and adjacent to the Jezkazgan - Karagandy corridor while also improving road-railways connections. The activity will encompass upgrading or reconstructing around 40 km of local roads and bridges that interlink communities within the Jezkazgan - Karagandy corridor, including improving links to railway stations. Emphasis will be placed on accommodating pedestrians and cyclists, especially between communities and bus stops along the highway, to make public transport more accessible. At least 30 km of paths and tracks for non- motorized road users are expected to be installed. Page 8 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) 23. Subcomponent 1.3 Road Sustainability will enhance the upgraded road sections by implementing modern electronic tolling facilities, rapid electric charging stations, and axle load management systems. Introducing tolling aligns with the Ministry of Transport’s plans to expand the toll road network and will use advanced automatic number plate recognition technology for accurate and automated toll collection. This will involve an active policy dialogue between the Bank and government counterparts on implementation of more efficient toll collection systems to improve the financial sustainability of the road network operator. The Project also promotes the adoption of environmentally sustainable vehicles by installing charging stations at selected locations, usually rest areas, along the corridor. Such charging stations will make it feasible to use electric vehicles to travel the long distances found between the region's conurbations. The sustainability of the road infrastructure will also be enhanced by supporting QazAvtoJol in addressing the overloading of vehicles using the corridor. The Project will incorporate weigh-in-motion (WIM) technology along the road, increasing efficiency by minimizing pavement damage and improving safety. 24. Subcomponent 1.4 Safety Audit seeks to improve and quantify road safety of the new infrastructure. This activity will use the International Road Assessment Programme (iRAP) star rating system to benchmark Project road sections before and after improvement works.27 iRAP Star Ratings reflect the risk to individual road users and are an objective measure of the level of safety that is ‘built-in’ to a road through more than 50 road characteristics. Recommendations for expanding the use of iRAP auditing shall be drawn from its use on the Jezkazgan - Karagandy highway and disseminated to promote the practice. This will assist KAZH in systematically managing road infrastructure safety and prioritizing future investments. Component 2: Transport Systems Development (US$4.5 million) 25. Component 2 activities seek to develop transport systems to make the country’s roads more climate-resilient and safer, address motorization challenges, and improve the multimodality of the Middle Corridor. The tools required to address current vulnerabilities and meet upcoming challenges will be delivered through targeted technical assistance. 26. Subcomponent 2.1 Framework for Transport Resilience, Decarbonization, and Safer Roads will (i) improve the climate resilience and safety of roads in Kazakhstan by modernizing design practices and (ii) introduce a systematic approach to motorization management, contributing to emission reduction. The Project will support a review of the current national road design standards and practices and identify obsolete methodologies not aligned with current best practices for addressing climate change and road safety. Following this review, recommendations for reforming standards will be prepared and stakeholder consultations conducted. Recommendations for climate resilience will also introduce the concept of sustainable management of vulnerable road sections through appropriate tree and grass planting/forest belts in the roadway reserve. Resilience and safety focused road design standards will then be developed to update the current national regulatory framework. 27. The Project will support the GoK in adapting the road sector to climate change through managing motorization to reduce emissions. The Project will focus on bringing a systematic approach to the process. Technical assistance will review motorization management practices in Kazakhstan, including data on vehicle type, use, and emissions, vehicle and fuel standards, and alternative modes of transport. Based on the review, policy goals and priorities will be recommended to the GoK. As a key enabling action for establishing motorization management and reducing emissions, the Project will 27 The International Road Assessment Programme (iRAP) is a registered charity dedicated to saving lives by eliminating high risk roads throughout the world. iRAP works in partnership with governments, road authorities, mobility clubs, development banks, NGOs, and research organizations. https://irap.org Page 9 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) identify opportunities for differentiated road user charging on the road network. Tolling based on carbon dioxide vehicle emissions will then be piloted on selected road sections with a view to its application to the wider road network. 28. Subcomponent 2.2 Multimodal Middle Corridor Development will identify actions to enhance the corridor’s efficiency and functionality while reducing the carbon footprint. Technical assistance will explore opportunities to better integrate road, railway, ports, and logistics networks and identify missing transport links constraining the corridor’s development. Obstacles to multimodality will be pinpointed, and strategies will be devised to increase the attractiveness of the Middle Corridor in ways that prioritize lower-carbon transport options and support the decarbonization of freight transportation. 29. The Project will develop a roadmap for a multimodal transport hub in the Jezkazgan - Satpayev industrial agglomeration leveraging Jezkazgan's strategic location in the center of the country and at the crossroads of the north- south and east-west transport corridors. The technical assistance supported by this subcomponent will explore potential locations, demand and growth potential, and feasibility for multimodal logistics facilities, including a container terminal linked to the region's road and railway corridors. Component 3. Project Management (US$6.0 million) 30. This component will support Project implementation by establishing and operating a Project Implementation Unit (PIU) within KAZH and utilizing specialist consulting services. The PIU will employ staff with appropriate skills covering project management, financial management, procurement, and environmental and social risk management. Experienced project management consultants will offer direct guidance and support to KAZH. Additionally, the component will facilitate the implementation of contracting reforms by providing specialists with international experience in performance-based contracting, facilitating training of KAZH staff, and preparatory studies for further transport sector projects. The component will also support external financial audits and conduct result measurements and impact assessments of the Project. Table 1. Summary of Project Components and Costs28 Project Cost Project Components (incl. VAT) (All amounts in US$ million) Component 1: Resilient and Safe Road Connectivity 1,518.91 Component 2: Transport Systems Development 4.50 Component 3. Project Management 6.00 Total 1,529.41 Percentage of Project Cost 100.0% @#&OPS~Doctype~OPS^dynamics@pidaprlegalpolicy#doctemplate 28 Total Operation Cost including an IBRD Front-end fee of about US$1.63 million is US$1,531.04 million. Page 10 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts 31. The environmental and social risk classification for this project is substantial, with both environment and social ratings assessed as substantial at the appraisal stage. The World Bank’s Environment and Social Standards (ESSs) 1, 2, 3, 4, 5, 6, 8 and 10 are considered relevant for the project. The substantial environmental risk rating considers the project’s potential environmental and Occupational Health and Safety (OHS) risks and impacts associated with infrastructure activities (i.e., highway upgrading and supporting infrastructure) and potential capacity constraints within KAZH in terms of ensuring environmental and social compliance due to the large geographic scope of the proposed operations. Although the project could potentially affect a small part of Saiga’s winter migration range, the biodiversity assessment indicates that the A17 highway will have no impact on the main habitat of Saiga, and the project will not affect natural and/or critical habitats and species of ecological and conservation significance as the A17 corridor does not pass through known legally protected areas, Ramsar sites, or Key Biodiversity Areas (KBAs) of high value and sensitivity in the region. Saiga Tatarica which although previously classified as a critically endangered species, now categorized as “near threatened� category under the International Union for Conservation of Nature (IUCN). Other potential risks typical to road upgrading works include i) increased pollution due to construction waste; ii) generation of dust, noise, and vibration due to the movement of construction vehicles and machinery; iii) operational or accidental spills of fuel and lubricants from the construction machinery; v) traffic and road safety risks to workers, affected communities and road users as well as OHS issues; and vi) improper reinstatement of construction sites upon completion of works. 32. The anticipated road upgrading works impacts are largely temporary, predictable, reversible and can be readily mitigated. The substantial social risk rating considers the potential impacts associated with land acquisition and restrictions on land use during construction, as well as community health and safety associated with potential labor influx. The project does not anticipate major livelihoods impacts associated with land acquisition. While the project expects to affect around 260 land plots along the proposed corridor, consisting of 139 plots owned by households, 68 plots owned by legal entities (i.e. enterprises) and 53 plots owned by state agencies. Two potential displacement impacts affecting local businesses (i.e., a kiosk and gas station) are currently envisaged. Other social risks are expected to be residual, due to poor construction practices which could result in restrictions on land uses, property damages, pollution, road safety risks and other disruptions. If not mitigated, such issues may generate grievances and adversely affect livelihoods, public safety and public health. Given the anticipated length of the corridor to be rehabilitated, the project will require a substantial workforce. Since the region may experience local labor shortages, inflows of labor from other regions and countries are anticipated. 33. Sexual Exploitation and Abuse/Sexual Harassment (SEA/SH) risks are assessed as moderate. While the national average of domestic violence prevalence in Kazakhstan is generally high, with 17 percent of ever-partnered women aged 18-75 having experienced physical or sexual partner violence (UN Women, 2017), a significant portion of the proposed Page 11 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) road corridor is sparsely populated, with the exception of major hubs such as Karagandy. Incoming construction workers will be accommodated on-site possibly at a distance from the existing towns and villages. Siting and designs of workers camps will consider potential SEA/SH risks to the host community and amongst peer workers and require approval from supervision engineers prior to any construction. As part o the ESMP, SEA/SH prevention measures will be required from the contractors. These include establishment of referral and case-management procedures in cooperation with local service providers and/or a third-party organization; and/or SEA/SH-sensitive grievance management based on good international practices. Every project worker will sign Codes of Conduct (CoCs) on respectful behavior and be required to participate in relevant training prior to mobilization. The PIU will be staffed by a social development specialist with experience in the prevention and management of Gender-based Violence (GBV) and SEA/SH in particular. 34. An Environmental and Social Impact Assessment (ESIA), along with an Environmental and Social Management Plan (ESMP), including a Biodiversity Management Plan (BMP) has been prepared based on the available designs. The ESIA and ESMP will be finalized as detailed designs are available during early project implementation. To inform the approach and resourcing for the management of potential environmental and social impacts during the project preparation, a scoping of risks, followed by preparation of a draft ESIA and ESMP were undertaken by KAZH in consultations with local stakeholders, including potentially affected communities. A draft Resettlement Action Plan (RAP) was prepared during the project preparation based on partial information on the preliminary road designs. Potentially affected and interested stakeholders were identified as part of the preparation of a Stakeholder Engagement Plan (SEP). This includes development of a project-level grievance redress mechanism, which consists of national and regional focal points. A Labor Management Procedure (LMP), which forms part of the ESMP was prepared based on the proposed road upgrading works and estimated workforce requirements based on past and on-going projects. The above instruments are expected to be publicly disclosed and consulted prior to the project appraisal. These management plans, including the ESMP and RAP, will reflect on and inform the final design options for each road section and are expected to be finalized prior to the launch of the bidding process during the project implementation. 35. Given the scale of the proposed road upgrades, stretching along 513 km corridor, the project will require substantial investments in the institutional capacity within the KAZH to enforce and oversee ESHS compliance. At the PIU level, the KAZH will hire one environmental specialist, one social development/gender specialist, and if needed one community liaison officer prior to the Effectiveness Date. While the volume of contract packages cannot be confirmed at this stage, additional ESHS personnel are expected to be hired during the project implementation and prior to the launch of civil works. Staffing for environmental and social management will be revisited during the project implementation. The ESMP will include a LMP to address risks involving and affecting the significant labor force who will be contracted for the project. The SEP will be an important tool in ensuring that parties affected by and/or interested in the project can be consulted and participate in the design and implementation of the project. These requirements will be reflected in an Environmental and Social Commitment Plan (ESCP) which will be prepared by the project appraisal. E. Citizen Engagement, Gender, Inclusion 36. Gender. Activities undertaken for Subcomponent 1.1 activities will be used to tackle gender disparity in the road construction sector. The Project will assist the Borrower in amending bidding documents for the civil works to require selected firms to develop and submit a Gender Action Plan to improve female representation within their workforces. Each plan will explain how the firms plan to recruit local women in mid and high skilled technical roles both as interns and as employees and list concrete actions that it will put in place to build a more inclusive workplace that supports greater Page 12 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) gender equality, including creating adequate working conditions, safe infrastructure, hygienic facilities, and confidential reporting mechanism to provide the interns and the employees with means to share their grievances free of retaliation in case of need. Importantly, the firms will be mandated to ensure women represent at least 11 percent of their workforce in highly skilled technical roles during the Project, from the current baseline of 6 percent. In addition, each major contractor will be required to recruit and mentor a few female interns for three to six months and cumulatively up to 30 interns. The Bank will support KAZH with the design of a paid internship program, which will outline the key parameters of the program, including the theoretical and practical work that the host road construction engaged in the Project must adhere to. 37. Citizen Engagement. The Project will ensure meaningful citizen engagement, committing to extensive consultations with all relevant stakeholders, including civil society organizations, community groups, and individual community members. This approach ensures that the Project's activities are tailored to address the actual needs and evolving circumstances encountered during implementation. Citizen engagement activities will encompass a variety of mechanisms to facilitate inclusive participation and feedback. First, the Project will establish comprehensive consultation processes to gather input and perspectives from stakeholders at every stage of the Project. These consultations will be designed to be inclusive, ensuring that diverse voices, especially those from marginalized or vulnerable groups, are heard and considered. Second, a robust grievance mechanism (GM) will be implemented to provide a structured and transparent process for stakeholders to raise concerns or complaints. The GM will include specific procedures to address complaints related to sexual exploitation, abuse, and harassment. It will ensure that these complaints are handled with sensitivity and confidentiality, following survivor-centered protocols. Additionally, the GM will facilitate referrals to Gender-Based Violence (GBV) service providers, ensuring that survivors receive the necessary support and services. Third, the Project will conduct satisfaction surveys at the midterm and the end of the Project. These surveys will be complemented by the above continuous consultations, to use road users´ feedback to improve project design and implementation. The results will be used to assess the effectiveness of the Project and identify areas for improvement. The feedback received from the road users will be pro-actively disseminated through public information sessions and individual communications. 38. Grievance Redress. Communities and individuals who believe that they are adversely affected by a project supported by the World Bank may submit complaints to existing project-level grievance mechanisms or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted to the AM at any time after concerns have been brought directly to the attention of Bank Management and after Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS), visit http://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, visit https://accountability.worldbank.org. E. Implementation Institutional and Implementation Arrangements Page 13 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) 39. KAZh will act as the project implementing agency responsible for delivering the Project outcomes. The Bank team has previously carried out a legal and fiduciary assessment of the capacity of KAZh, which confirmed that the SOE had adequate capacity for project implementation. KAZh s currently undertaking a similar role for the ongoing EWRP project financed by the Bank and projects funded by other IFIs, hence has gained experience and knowledge of the requirements, procedures, and guidelines for implementing Bank financed projects. 40. Monitoring and Evaluation (M&E) will be conducted by KAZh, the Project's implementing agency. KAZh will submit bi-annual reports to the Bank detailing implementation status and significant issues within one month following the end of each reporting period. These reports will utilize the Results Framework's indicators as the primary tool for project evaluation, monitoring fund disbursement, and providing updates on adherence to the Environmental and Social Framework (ESF), citizen engagement, and grievance redress mechanisms. Additionally, annual independent financial audits will be conducted. A midterm review of the Project will be carried out within forty-two months after project effectiveness, assessing the Project’s implementation against the performance indicators and presenting an opportunity to make adjustments where necessary. The Implementation Completion and Results Report (ICR) will be compiled within six months after the Project's closing date. @#&OPS~Doctype~OPS^dynamics@contactpoint#doctemplate CONTACT POINT World Bank Nijat Valiyev Senior Transport Economist Irina Li Transport Specialist Borrower/Client/Recipient National Company KazAvtoZhol JSC Raikhan Sagindykova Deputy Chairman Raikhan.sagindikova@qaj.kz Implementing Agencies National Company KazAvtoZhol JSC Raikhan Sagindykova Deputy Chairman raikhan.sagindikova@qaj.kz FOR MORE INFORMATION CONTACT Page 14 The World Bank Transport Resilience and Connectivity Enhancement Project (P500565) The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects @#&OPS~Doctype~OPS^dynamics@approval#doctemplate APPROVAL Task Team Leader(s): Nijat Valiyev, Irina Li Approved By Practice Manager/Manager: Shomik Raj Mehndiratta 08-Jul-2024 Country Director: Andrei Mikhnev 26-Jul-2024 Page 15