Almaty, Kazakhstan, is one of the most polluted cities in Central Asia. An estimated 65% of emissions can be traced to the use of internal combustion engine (ICE) vehicles for private and public transportation. An increase in private cars and a decrease in zero-emission public transit options have recently exacerbated the problem. However, Almaty has an existing network of public electric trolleybuses, accounting only for 10% of the city's total transportation. The Almaty Electric Public Transport project would upgrade the trolleybuses and trolleybus infrastructure throughout the city, aiming to reduce greenhouse gas (GHG) emissions. The project is known as the "trigger" project to initiate Almaty's participation in European Bank for Reconstruction and Development (EBRD) Green Cities, a multi-country, multi-project undertaking to support green energy transition across Europe and Central Asia.
BIC has been monitoring this project in collaboration with CEE Bankwatch Network and Green Salvation, a local civil society organization. While investing in zero-emission public transportation is urgently needed, there are serious concerns about the client, Almatyelectrotrans LLP (AET), a public company wholly owned by the municipal government, the City Akimat.
The EBRD has a long history of lending to AET, despite its poor track record of adhering to the city and national laws, respecting the local community's rights, and providing redress. For example, in 2010, EBRD approved a $34.8 million loan to AET to purchase new compressed natural gas (CNG) public buses, followed by another $39.3 million loan in 2012 to complete the project. However, in addition to these projects, AET separately engaged in the illegal construction of a new bus depot in the Kairat micro-district in Almaty, located within 300 meters of residential buildings, in violation of local Almaty law. Many of the buses parked in the depot run on diesel, contributing to significant air pollution in the community. Further, every day at 5:30 am, the bus engines are ignited, creating an intolerable level of noise. These issues and a large traffic increase have led to significant public safety risks.
AET has repeatedly promised Kairat residents that it will relocate the bus depot. However, this has not happened. Further, the City Akimat, which owns AET, has not offered any redress for the impacted communities. As a result, residents and civil society are concerned that the Almaty Electric Public Transport project will suffer from similar implementation problems, and the local community will not access project benefits. While we commend the EBRD on launching the ambitious Green Cities framework, we encourage the bank to recognize the risks posed by the current client for the electric trolleybus "trigger project." By approving a loan to AET even after it fails to comply with local laws or provide redress to residents impacted by the construction of the bus depot, the EBRD is complicit in the environmental and social harms caused by this client. There is a substantial risk that the failure of the Almaty Electric Public Transport project would derail all other plans for green energy transition in the city due to a lack of client confidence in project success.
We recommend that the EBRD enhance its due diligence within the company's private sector lending, recognizing that private companies are state-owned in some contexts. This is particularly true in Kazakhstan and other Central Asian countries. For instance, because of AET's connection with the government, it has a record of failing to comply with local laws and facing no repercussions, demonstrated through the construction of the bus depot. The EBRD should only work with clients that adhere to local laws and conduct robust oversight and due diligence when a client is considered high-risk. In addition, the EBRD should take an active role in overseeing the implementation of the Almaty Electric Public Transport project, monitoring how AET conducts stakeholder engagement, publicizes the existence of a grievance redress mechanism (GRM), and informs residents on how to file a complaint and access redress.
