Railway Efficiency Improvement Project (RRP UZB 51052)

Project Number: 51052-002 Loan Number: 3785 20 May 2019

Republic of Uzbekistan: Railway Efficiency Improvement Project

Project Administration Manual

ABBREVIATIONS ADB – Asian Development Bank AFS – audited financial statement APFS – audited project financial statement CAREC – Central Asia Regional Economic Cooperation DMF – design and monitoring framework EA – executing agency EARF – environmental assessment and review framework EMP – environmental management plan EMR – environmental monitoring report IED – independent evaluation department IEE – initial environmental examination IPSA – initial poverty and social assessment km – kilometer LARP – land acquisition and resettlement plan MIFT – Ministry of Investments and Foreign Trade MOF – Ministry of Finance OCB – open competitive bidding PA – project agreement PAM – project administration manual PCR – project completion report PDS – project disclosure system PIU-ET – project implementation unit for electrification and renewal of rolling

stock PPRA – project procurement risk assessment PPMS – project performance management system PPR – project performance reporting RRP – report and recommendation of the president QCBS – quality and cost-based selection SCI – State Committee for Investment SDDR – social due diligence report SPS – Safeguard Policy Statement of 2009 SUM – Uzbekistan Sum TA – technical assistance TRTA – transaction technical assistance US – United States UTY – Joint Stock Company O’zbekiston Temir Yo’llari

CONTENTS

I. PROJECT DESCRIPTION .................................................................................................. 1

II. IMPLEMENTATION PLANS ................................................................................................ 2

A. Project Readiness Activities 2 B. Overall Project Implementation Plan 3

III. PROJECT MANAGEMENT ARRANGEMENTS .................................................................. 4

A. Project Implementation Organizations: Roles and Responsibilities 4 B. Key Persons Involved in Implementation 5 C. Project Organization Structure 5

IV. COSTS AND FINANCING ................................................................................................... 8

A. Cost Estimates Preparation and Revisions 8 B. Key Assumptions 8 C. Detailed Cost Estimates by Expenditure Category 9 D. Allocation and Withdrawal of Loan Proceeds 10 E. Detailed Cost Estimates by Financier 11 F. Detailed Cost Estimates by Outputs 12 G. Detailed Cost Estimates by Year 13 H. Contract and Disbursement S-Curve 14 I. Fund Flow Diagram 15

V. FINANCIAL MANAGEMENT ............................................................................................. 16

A. Financial Management Assessment 16 B. Disbursement 18 C. Accounting 19 D. Auditing and Public Disclosure 19

VI. PROCUREMENT AND CONSULTING SERVICES ........................................................... 20

A. Project Procurement Risk Assessment 20 B. Advance Contracting and Retroactive Financing 21 C. Procurement of Goods, Works, and Consulting Services 21 D. Procurement Plan 22

VII. SAFEGUARDS ................................................................................................................. 25

A. Environment 25 B. Resettlement 25 C. Indigenous Peoples 25

VIII. GENDER AND SOCIAL DIMENSIONS ............................................................................. 25

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION ...................................................................................................................................... 27

A. Project Design and Monitoring Framework 27 B. Monitoring 28 C. Evaluation 29 D. Reporting 29 E. Stakeholder Communication Strategy 29

X. ANTICORRUPTION POLICY ............................................................................................ 31

XI. ACCOUNTABILITY MECHANISM ..................................................................................... 32

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL .................... 33

APPENDIX 1: ENVIRONMENTAL ASSESSMENT AND REVIEW FRAMEWORK .................... 34

Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and

management requirements to implement the project on time, within budget, and in accordance with the policies and procedures of the government and Asian Development Bank (ADB). The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The O’zbekiston Temir Yo’llari (UTY) is wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the borrower and ADB, and in accordance with the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation including compliance by UTY of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

3. At loan negotiations, the borrower and ADB shall agree to the PAM and ensure consistency with the loan agreement. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the PAM and the loan agreement, the provisions of the loan agreement shall prevail.

4. After ADB Board approval of the project's report and recommendations of the President (RRP),

changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in the PAM.

I. PROJECT DESCRIPTION

1. The Government and UTY have requested ADB assistance for a project to improve the efficiency of railway operations in Uzbekistan. The project is expected to finance the procurement of 24 electric locomotives, which will relieve the critical shortage of locomotives in the Uzbekistan railway network, and equip UTY to make full use of its growing electrified network.1 2. The project will result in the following outcome: travel costs and environmental impacts reduced for passenger and freight transport throughout Uzbekistan’s railway network. The project will be aligned with the following impact: Implementation of targeted programs to build affordable housing, development and modernization of road and rail transport, engineering, communications and social infrastructure achieved.2 3. The project will produce three outputs. First, the project will deliver 24 electric locomotives, 16 of which will be used for freight trains, and 8 of which will be for passenger trains. Second, to effectively cater to the maintenance needs of these new electric locomotives, UTY will upgrade the locomotive depot in Tashkent, named “O’zbekiston”. Third, the project will help implementation of a long-term development strategy for UTY, to improve its operational efficiency, including in the areas of locomotive and rolling stock utilization, operational practices, timely adjustment of tariffs and optimization of operating expenses.

1 The Asian Development Bank (ADB) provided transaction technical assistance for Railway Efficiency Improvement

Project (TA 9351-UZB). 2 Based on Government of Uzbekistan. 2017. Uzbekistan’s Development Strategy for 2017–2021. Tashkent.

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Table 1: Project Readiness Activities 2018 2019

Indicative Activities

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Responsibility

Government budget inclusion

X

Government

Advance contracting actions

X X X X X X X X X X X X

UTY/UTY PIU-ET

Establish project implementation arrangements

X

UTY/UTY PIU-ET

Loan negotiations X ADB, government and UTY

ADB Board consideration

X

ADB

Government’s feasibility study approved

X3

UTY/UTY PIU-ET and government

Loan signing x ADB and government

Government legal opinion provided

X Government

Loan effectiveness X ADB and government

ADB = Asian Development Bank, PIU-ET = project implementation unit for electrification and renewal of rolling stock, UTY = Joint Stock Company O’zbekiston Temir Yo’llari. Source: Asian Development Bank.

3 Feasibility study approved by Ministry of Finance and State Committee for Investment (now Ministry of Investments and Foreign Trade), under procedures set

under Presidential Resolution 3857 On Measures to Increase the Effectiveness of Preparation and Implementation of Projects with Participation of International Financial Institutions and Foreign Governmental Financial Organizations Issued on 16 July 2018.

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B. Overall Project Implementation Plan

4. The overall project implementation plan records outputs with key implementation activities. This is updated annually and submitted to ADB with contract and disbursement projections for the following year.

Table 2: Project Implementation Plan

Q = quarter. Source: Asian Development Bank.

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations: Roles and Responsibilities

Table 3: Project implementation organizations Project Implementation Organizations Management Roles and Responsibilities

UTY (executing agency) and its Project implementation unit for electrification and renewal of rolling stock

• Coordinate project implementation with concerned government agencies as necessary

• Hire additional staff for PIU-ET with the required expertise if required

• Enhance procurement capacity, especially in relation to international competitive bidding

• Recruit consultants if required

• Procure works and goods

• Update procurement plan annually and as needed to reflect changes agreed with ADB (implement only after ADB approval)

• Monitor procurement activities and key milestones and submit the status to ADB with the quarterly progress report

• Manage contracts

• Ensure timely provision of agreed counterpart funds for project activities

• Submit withdrawal applications to ADB

• Maintain project financial statements

• Ensure project financial audits are conducted and recommendations are implemented within the agreed timeframe

• Disclose project documents

• Involve beneficiaries and civil society representatives in all stages of project design and implementation

• Monitoring and evaluate project activities and outputs, and prepare review reports reflecting issues and time-bound actions taken or to be taken

• Prepare quarterly progress reports and a project completion report, and ensure timely submission of reports to ADB

• Ensure compliance with all loan covenants

• Implement the project’s Gender Action Plan

• Ensure project’s sustainability during post implementation stage and report to ADB on the assessed development impacts

ADB • Assist UTY in providing timely guidance at each stage of the project for smooth implementation in accordance the agreed implementation arrangements

• Review all documents that require ADB approval

• Conduct periodic loan review, mid-term review, and completion review missions

• Supervise compliance with all loan covenants

• Timely process withdrawal applications and release eligible funds

• Supervise the compliance with financial audit recommendations

• Regularly update the project performance review reports with the assistance of UTY

• Regularly post on ADB web the updated project data sheet and updated project documents including the PAM, procurement plan, APFS, and safeguards documents

Ministry of Finance • Timely and efficiently review and endorse the government feasibility study

• Sign the loan agreement

• Monitor project implementation and provide respective coordination and facilitation

• Allocate and release counterpart funds

• Endorse to ADB the authorized staff with approved signatures for processing of withdrawal applications

• Process and submit to ADB any request, when required, for reallocating loan proceeds

Ministry of Investments and Foreign Trade (formerly SCI)

• Serve as the focal point for the government for ADB

• Timely and efficiently review and endorse the government feasibility study

• Register contracts for imported goods

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Project Implementation Organizations Management Roles and Responsibilities

Ministry of Investments and Foreign Trade and National Agency for Project Management

• Monitor project implementation and facilitate the resolution of implementation challenges if they arise

ADB = Asian Development Bank, APFS = audited project financial statement, MOF = Ministry of Finance, PAM = project administration manual, PIU-ET = project implementation unit for electrification and renewal of rolling stock, SCI = State Committee on Investments, UTY = O’zbekiston Temir Yo’llari. Source: Asian Development Bank.

B. Key Persons Involved in Implementation

Executing Agency O’zbekiston Temir Yo’llari Khusnutdin Khasilov

Acting Chairman Telephone: +998 71 238 8003 7, T. Shevchenko str., 100060 Tashkent Republic of Uzbekistan

Project implementation unit for electrification and renewal of rolling stock

Alisher Djuraev Head, Project implementation unit for electrification and renewal of rolling stock, UTY Telephone: +998 71 237 9195 Fax: +998 71 238 8449 Email address: utypiu@gmail.com Room 340, 7, T. Shevchenko St., 100060 Tashkent Republic of Uzbekistan

Asian Development Bank Transport and Communications Division, Central and West Asia Department

Dong-Soo Pyo Director Telephone No.: +63 2 632 6765 Email address: dspyo@adb.org 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila Philippines

Project Officer Ko Sakamoto Senior Transport Specialist Telephone No.: +63 2 683 1664 Email address: ksakamoto@adb.org 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila Philippines

C. Project Organization Structure

5. UTY, the executing agency (EA), is adequately staffed and uses acceptable financial management, has good management practices and a sound track record with project implementation. Implementation arrangements build on ADB’s successful railway project experiences in the country.

6. The procurement of locomotives will be undertaken by UTY’s project implementation unit for electrification and renewal of rolling stock (PIU-ET). PIU-ET was established on 6 December

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2018, based on the order of the First Deputy Chairman of the Board of UTY No. 2188-N, and as a result of a merger between the previous project implementation units for electrification and locomotives respectively. The PIU-ET carries out its activities during preparation and implementation of investment projects, ensuring timely and effective implementation of investment projects, including development of bidding documents for purchase of freight and passenger electric locomotives with assistance of specialists from associated related departments of UTY. PIU-ET reports directly to the Chief Manager – the Chief Engineer of UTY’s Board, the Directorate for Capital Construction, the Office of Investment Promotion and Implementation of Investment Projects. It performs its activities in accordance with agreements concluded with International Financial Institutions (IFIs) and bilateral financial organizations through international agreements, contracts, conventions and acts binding on the Republic of Uzbekistan, as well as recommendations and operational guidelines of IFIs and bilateral financial organizations.

7. The PIU-ET comprises 20 staff including the head, two deputy heads, senior legal counsel, administrator, head of technical department, three signaling and telecommunications specialists, three power supply specialists, one locomotive specialist, one environmental protection specialist, head of financial department, one accountant, one economist, one head of monitoring and procurement department, and two procurement specialists. PIU-ET staff have experience of undertaking projects financed by international financial institutions, including those financed by ADB. During the bidding process, PIU-ET staff will be assisted by an international consultant financed under ADB’s Transaction Technical Assistance. Technical and administrative departments of UTY also assist PIU-ET during project implementation.

8. PIU-ET will also liaise with departments in charge of the locomotive depot for its upgradation.

9. For the implementation of the long-term development strategy, a working group, under the supervision of UTY management will be maintained.

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Figure 1: Project Organization Structure

ADB = Asian Development Bank, PIU-ET = project implementation unit for electrification and renewal of rolling stock, UTY = O’zbekiston Temir Yo’llari. Sources: Asian Development Bank and O’zbekiston Temir Yo’llari.

ADB Ministry of Finance

UTY (Executing Agency)

Project Implementation Unit for Electrification and Renewal of Rolling Stock

Coordinate with other units in UTY on

upgradation of depots

Procurement and commissioning of

locomotives

Project Agreement

PIU-ET Team

• Head (1)

• Deputy heads (2)

• Senior legal counsel (1)

• Administrator (1)

• Head of Technical Department (1)

• Signalling and telecommunications specialists (3)

• Power supply specialists (3)

• Locomotive specialist (1)

• Environmental protection specialist (1)

• Head of financial department (1)

• Accountant (1)

• Economist (1)

• Head of monitoring and procurement department (1)

• Procurement specialists (2)

Loan Agreement

Subsidiary Loan Agreement

Working Group on Long-term development

strategy

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IV. COSTS AND FINANCING

10. The project is estimated to cost $218.3 million. It is proposed that ADB provide a loan of $170 million from its ordinary capital resources to finance the procurement of 24 locomotives. This includes $15 million of contingency. Counterpart financing from UTY and the Government of $48.3 million will be used for the upgrade of a locomotive depot, cost of design and survey works, implementation of the long-term development strategy, exemption of taxes and duties, and financial charges during implementation. Climate mitigation is estimated to cost [This information was deemed confidential according to paragraph 2 (v) of ADB’s Access to Information Policy (2018).], which is the amount expected for the procurement of electric locomotives, net of contingency. ADB will finance 100% of mitigation costs.

A. Cost Estimates Preparation and Revisions

11. Costs have been estimated by UTY and ADB staff, based on information acquired from UTY’s feasibility study, and benchmarking against recently procured packages. Revisions and updates to the cost estimates during implementation are the responsibility of UTY.

B. Key Assumptions

12. The following key assumptions underpin the cost estimates and financing plan:

(i) Exchange rate: SUM8,392.96 = $1.00 (as of 9 March 2019).

(ii) Price contingencies based on expected cumulative inflation over the implementation period are as follows:

Table 4: Escalation Rates for Price Contingency Calculation

Item 2019 2020 2021 2022 2023 Cumulative

Foreign rate of price inflation

1.5% 1.5% 1.6% 1.6% 1.6% 7.8%

Domestic rate of price inflation

14.9% 12.6% 10.0% 8.3% 7.6% 53.4%

Sources: World Bank Manufacture’s Unit Value index for foreign rate of price inflation, IMF World Economic Outlook (October 2018) estimates for 2019–2023 for domestic rate of price inflation.

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C. Detailed Cost Estimates by Expenditure Category

Table 5: Detailed Cost Estimates by Expenditure Category

Item

Foreign Exchange

($ million)

Local Currency

($ million)

Total Cost

($ million)

% of Total Base Cost

A. Investment Costs

1. Procurement of electric locomotives

[This information was deemed confidential according to paragraph 2 (v) of ADB’s Access to

Information Policy (2018).]

a. Freight electric locomotives

b. Passenger electric locomotives

2. Upgrade of locomotive depot

3. Long-term development strategy implemented

Total Base Cost (A) 155.00 1.70 156.70 100.00%

B. Taxes and Duties 0.00 21.91 21.91 13.98%

C. Contingencies

1. Physical 8.00 0.13 8.13 5.19%

2. Price 7.00 0.20 7.20 4.59%

Subtotal (C) 15.00 0.33 15.33 9.78%

D. Financial Charges During Implementation 24.36 0.00 24.36 15.55%

Total Project Cost (A+B+C+D) 194.36 23.94 218.30 139.31% Notes: Numbers may not sum precisely because of rounding. The government will finance taxes and duties of approximately $24.56 million through exemption. Sources: Asian Development Bank and O’zbekiston Temir Yo’llari staff estimates.

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D. Allocation and Withdrawal of Loan Proceeds

Number Item

Total Amount Allocated for ADB Financing ($)

Category Basis for Withdrawal from

the Loan Account

1 Goods for electric locomotives 170,000,000 100% of total expenditure claimed*

Total 170,000,000

* Exclusive of taxes and duties imposed within the territory of the Borrower. Inclusive of contingencies.

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E. Detailed Cost Estimates by Financier

Table 6: Detailed Cost Estimates by Financier

Item

ADB % of Cost Category

UTY/Gov't % of Cost Category

Total Cost

($ million) ($ million) ($ million)

A. Investment Costs

1. Procurement of electric locomotives

[This information was deemed confidential according to paragraph 2 (v) of ADB’s Access to Information Policy (2018).]

a. Freight electric locomotives

b. Passenger electric locomotives

2. Upgrade of locomotive depots

3. Long-term development strategy implemented

Total Base Cost (A) 155.00 98.92% 1.70 1.08% 156.70

B. Taxes and Duties 0.00 0.00% 21.91 100.00% 21.91

C. Contingencies

1. Physical 8.00 98.40% 0.13 1.60% 8.13

2. Price 7.00 97.22% 0.20 2.78% 7.20

Subtotal (C) 15.00 97.85% 0.33 2.15% 15.33

D. Financial Charges During Implementation 0.00 0.00% 24.36 100.00% 24.36

Total Project Cost (A+B+C+D) 170.00 77.87% 48.30 22.13% 218.30 Notes: Numbers may not sum precisely because of rounding. The government will finance taxes and duties of approximately $24.56 million through exemption.

Sources: Asian Development Bank and O’zbekiston Temir Yo’llari staff estimates. * ADB’s financing percentage on specific sub-items (to be covered by ADB) under each category will be 100% net of tax.

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F. Detailed Cost Estimates by Outputs

Table 7: Detailed Cost Estimates by Outputs ($ million)

Item Total Cost ($ million)

Output 1 ($ million)

Output 2 ($ million)

Output 3 ($ million)

Amount

% of Cost

Category Amount % of Cost Category Amount

% of Cost Category

A. Investment Costs

1. Procurement of electric locomotives

[This information was deemed confidential according to paragraph 2 (v) of ADB’s Access to Information Policy (2018).]

a. Freight electric locomotives

b. Passenger electric locomotives

2. Upgrade of locomotive depots

3. Long-term development strategy implemented

Total Base Cost (A) 156.70 155.00 98.9% 0.50 0.3% 1.20 0.8% B. Taxes and Duties 21.91 21.91 100.0% 0.00 0.0% 0.00 0.0% C. Contingencies

1. Physical 8.13 8.00 98.4% 0.13 1.6% 0.00 0.0%

2. Price 7.20 7.00 97.2% 0.20 2.8% 0.00 0.0%

Subtotal (C) 15.33 15.00 97.8% 0.33 2.2% 0.00 0.0% D. Financial Charges During Implementation 24.36 24.10 98.9% 0.08 0.3% 0.19 0.8% Total Project Cost (A+B+C+D) 218.30 216.01 98.9% 0.91 0.4% 1.39 0.6%

Notes: Numbers may not sum precisely because of rounding. The government will finance taxes and duties of approximately $24.56 million through exemption. Sources: Asian Development Bank and O’zbekiston Temir Yo’llari staff estimates.

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G. Detailed Cost Estimates by Year

Table 8: Detailed Cost Estimates by Year ($ million)

Item

Total Cost 2019 2020 2021 2022 2023 2024 2025

($ million)

A. Investment Costs

1. Procurement of electric locomotives

[This information was deemed confidential according to paragraph 2 (v) of ADB’s Access to Information Policy (2018).]

a. Freight electric locomotives

b. Passenger electric locomotives

2. Upgrade of locomotive depots

3. Long-term development strategy implemented

Total Base Cost (A) 156.70 0.27 23.62 84.07 40.47 7.92 0.17 0.17

B. Taxes and Duties 21.91 3.13 3.13 3.13 3.13 3.13 3.13 3.13

C. Contingencies

1. Physical 8.13 0.01 1.23 4.36 2.10 0.41 0.01 0.01

2. Price 7.20 0.01 1.09 3.86 1.86 0.36 0.01 0.01

Subtotal (C) 15.33 0.03 2.31 8.22 3.96 0.77 0.02 0.02

D. Financial Charges During Implementation 24.36 0.26 0.65 2.47 4.57 5.39 5.52 5.52

Total Project Cost (A+B+C+D) 218.30 3.68 29.71 97.89 52.13 17.21 8.84 8.84 Notes: Numbers may not sum precisely because of rounding. The government will finance taxes and duties of approximately $24.56 million through exemption. Sources: Asian Development Bank and O’zbekiston Temir Yo’llari staff estimates.

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H. Contract and Disbursement S-Curve

13. The S-curve is only for ADB financing, which will be recorded in ADB’s systems and reported through e-Ops. The projection for contract awards includes contingencies and unallocated amounts, but excludes front-end fees, service charges, and interest during construction. The cumulative disbursements at project completion is equal to the full loan amount, with project completion defined as up to 4 months after loan closing.

Contract Awards Disbursement

Year Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2019 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2020 170.00 0.00 0.00 0.00 170.00 25.50 0.00 0.00 0.00 25.50

2021 0.00 0.00 0.00 0.00 0.00 0.00 0.00 25.17 66.63 91.80

2022 0.00 0.00 0.00 0.00 0.00 44.20 0.00 0.00 0.00 44.20

2023 0.00 0.00 0.00 0.00 0.00 8.50 0.00 0.00 0.00 8.50

2024 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2025 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0

20

40

60

80

100

120

140

160

180

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2019 2020 2021 2022 2023 2024 2025

$ m

illio

n

Disbursement Contract Award

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I. Fund Flow Diagram

ADB MOF

Loan Agreement

UTY (EA)

Relending Agreement Repayment

Goods Suppliers

Direct Payment

Claims

Withdrawal Applications

Financial Agreements

Actual Fund Flow

Claims and Withdrawal Applications

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

14. The financial management assessment (FMA) was conducted in December 2017 in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The FMA updated the assessment for the CAREC Corridor 2 (Pap–Namangan–Andijan) Railway Electrification Project, conducted in October 2016 and updated from time to time.

15. The FMA considered the capacity of the UTY, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. The assessment concluded that UTY’s current project financial management practices, policies and procedures are sufficient for implementing the project in compliance with ADB requirements. This is backed by UTY’s ongoing track record of successfully managing projects financed by ADB and other international financial institutions.

16. Executing agency. UTY is a joint stock company, with a long and successful history of implementing capital projects and managing the railway network of Uzbekistan. The PIU-ET was created in December 2018 out of a merger between the former PIU for electrification (PIU-E) and PIU for locomotives (PIU-T), is situated within the UTY structure and its staff have a successful record of implementing projects financed by international financial institutions such as the European Bank for Reconstruction and Development. Staff of PIU-ET are also familiar with ADB’s financial management procedures and requirements. 17. Fund flow arrangements. UTY and the PIU-ET have enough capacity and capability to work under the proposed fund flow arrangements acceptable to ADB. The fund flow arrangements are the same as which was successfully applied in ongoing ADB-financed projects. 18. Staffing. The PIU-ET comprises 20 staff including 1 accountant. In addition, there are more than 20 staff in the central accounting group in Tashkent including two Deputy Heads. UTY accounting personnel are assigned to PIUs to oversee project accounting activities and ensure that UTY accounting staff complete the project accounting requirements accurately and timely. Accounting staff receive training regularly at the UTY Institute and externally from the Association of Accountants and Auditors and the Academy for State and Public Construction. The World Bank is conducting training of UTY staff on financial management. 19. Accounting policies and procedures. UTY accounts for its operations in accordance with International Financial Reporting Standards (IFRS). Policies and procedures are documented in an accounting manual. UTY’s Finance and Accounting Department is capable of providing all necessary data for the project (in both local and foreign currencies). Segregation of duties is specified including budgeting system, payments, policies and procedures, cash and bank, safeguard over assets, other offices, and implementing agencies.

20. Internal and external audit. UTY’s financial statements are audited annually by an internal audit function and an external auditor. The latest external audit, covering the financial year ending 31 December 2017 was conducted by Odil audit Auditing Company and delivered on 27 November 2018. Audit findings are a subject of consideration by the Supervisory board of UTY.

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21. Reporting and Monitoring. The PIU-ET reports to UTY’s Investments Department, Directorate on Capital Construction, Ministry of Transport, MOF, MIFT and UTY’s accounting department monthly and weekly as required. 22. Information systems. The PIU-ET uses its own system which is capable of monitoring and reporting all key elements necessary for effective project management. The UTY Finance and Accounting Department’s accounting system is structured for the National Accounting Standards of Uzbekistan. The PIU-ET system and the finance and accounting department system are not integrated and UTY accounting staff is required to manually enter data produced by the PIU-ET system into UTY’s central accounting system.

Financial Risk Assessment and Mitigation Measures Risk

Assessment* Mitigation Measures

Inherent Risk 1. Country-specific risks S Continue to work with the government to minimize delays to

contract registration and counterpart fund availability 2. Entity-specific risks M UTY has sufficient and proven capacity to manage ADB-

financed projects. Retain and further improve capacity of PIU-ET staff on financial management.

3. Project-specific risks N Ensure strict adherence to ADB’s procurement policy. Overall Inherent Risk M

Control Risk 1. Executing Agency M PIU-ET has sufficient and proven capacity to manage IFI- and

bilaterally financed projects. 2. Fund Flow Arrangements M PIU-ET is experienced in direct payment procedure as applied

to the previous IFI/bilaterally-financed projects. 3. Staffing M Current staffing is sufficient. However, staff of PIU-ET would

benefit from receiving ADB financial management training. 4. Accounting Policies and

Procedures M Accounting policies adhere to International Accounting

Standards (IAS) and International Financial Reporting Standards (IFRS).

5. Internal and External Audit

N Periodic internal audits conducted by UTY. External audits being conducted annually with recent satisfactory results.

6. Reporting and Monitoring M UTY has adhered to reporting and monitoring requirements of ADB, albeit with delay to submission of APFSs.

7. Information Systems M EA is currently implementing a fully integrated financial management software.

Overall control risk M

* H = High, S = Substantial, M = Moderate, N = Negligible or Low. ADB = Asian Development Bank, EA = executing agency, IAS = international accounting standards, IFI = international financial institution, IFRS = international Financial Reporting Standards, PIU-ET = project implementation unit for electrification and renewal of rolling stock, UTY = O’zbekiston Temir Yo’llari. Source: ADB staff and consultants.

23. It is considered that the overall premitigation financial management risk of the project is moderate. The borrower and UTY have agreed to implement an action plan as key measures to address the deficiencies. The financial management action plan is provided in the table below.

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Financial Management Action Plan Key Risk Action Plan Responsibility Timing

Staff of PIU-ET less familiar with ADB procedures for financial management

ADB to conduct and PIU-ET finance and accounting staff to attend training on ADB financial management procedures

PIU-ET Before and during project implementation, as necessary

Limited integration of information systems/ software packages used by UTY/PIU-ET

UTY/PIU-ET to fully roll out integrated financial management software that can generate customized reports

UTY, PIU-ET Ongoing

B. Disbursement

1. Disbursement Arrangements for ADB Funds

24. The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time), and detailed arrangements agreed upon between the government and ADB. No withdrawals shall be made from the Loan Account until the Subsidiary Loan Agreement shall have been signed between the government and UTY, and become effective in accordance with its terms. Online training for project staff on disbursement policies and procedures is available.4 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control.

25. Direct payment procedures will be used for the goods contracts for the procurement of electric locomotives. No advance account will be established for this project.

26. UTY will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB. Before the submission of the first withdrawal application, Government/UTY should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is set in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time). UTY is to consolidate claims to meet this limit. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members (unless otherwise endorsed by ADB’s Board), and are eligible for ADB financing.

27. Notwithstanding any other provision of the Loan Agreement, no withdrawals shall be made from the Loan Account until the Subsidiary Loan Agreement shall have been signed between the Borrower and UTY.

2. Disbursement Arrangements for Counterpart Fund

28. All disbursements under government financing will be carried out in accordance with regulations of Uzbekistan relevant to co-financing of the projects financed by Multilateral Financing Organizations. UTY is using own funds as counterpart funds for this project. In case of any shortfall in UTY’s funding, the Borrower will seek and identify alternative sources of funding to ensure the successful completion of the project. A written guarantee is required at MOF and

4 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning.

19

UTY level to ensure the timely disbursement of counterpart funding.

C. Accounting

29. UTY will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following accrual-based accounting following the Uzbekistan National Accounting Standards. UTY will prepare consolidated project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. D. Auditing and Public Disclosure

30. UTY will cause the detailed consolidated project financial statements to be audited in accordance with International Standards on Auditing by an independent auditor acceptable to ADB. The audited project financial statements together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by the UTY. 31. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting standards; (ii) whether the proceeds of the loan were used only for the purpose(s) of the project; and (iii) whether the borrower or executing agency was in compliance with the financial covenants contained in the legal agreements (where applicable). 32. In addition to annual audited project financial statements, UTY shall (i) provide its annual financial statements prepared in accordance with financing reporting standards acceptable to ADB; (ii) have its financial statements audited annually by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB, in accordance with auditing standards acceptable to ADB; (iii) as part of each such audit, have the auditors prepare the auditors’ opinion(s) on the financial statements and compliance with the financial covenants of the Loan Agreement; and (iv) furnish to ADB, no later than 1 month after approval by the relevant authority, copies of such audited financial statements and auditors’ opinion(s), all in the English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonably request. 33. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. 34. The government and UTY have been made aware of ADB’s approach to delayed submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements.5 ADB reserves the right to require a change in the auditor (in a manner

5 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

(i) When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of imprest accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

(ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of imprest accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (a)

20

consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. 35. Public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Access to Information Policy 2018.6 After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.7

VI. PROCUREMENT AND CONSULTING SERVICES

A. Project Procurement Risk Assessment

36. The design of the procurement packaging is informed by a project procurement risk assessment (PPRA) which was conducted by ADB staff and transaction technical assistance consultants. The PPRA confirmed the overall procurement risk as Moderate, with mitigation. Three major risk areas were identified, as well as mitigation measures. These are summarized in the table below.

Project Procurement Risk Assessment and Mitigation Measures

Risk Description Risk

Assessment* Mitigation Measures or Risk Management Plan

1. Delays in preparation and approval of the bidding documents and conducting of the bidding process, caused by unfamiliarity with ADB procurement policy and regulations and complex procedures prescribed by the national legislation.

M

UTY has gained substantial experience with procurement under ADB procurement policy and regulations. They will be assisted by TRTA consultants in managing international procurements including the process of procurement planning and monitoring; preparation of bidding documents, bid evaluation and contract awards; contract management and administration. In addition, PIU-ET procurement staff will receive on-the-job training by procurement consultants and formal training by Uzbekistan Resident Mission. All procurement-related decisions will be subject to prior review by ADB.

2. Multiple changes to procurement review and approving authorities cause procurement and implementation delay.

S ADB will continue dialogue with the government to ensure a consistent procurement approval procedure. ADB and the government are conducting regular meetings to discuss all pending issues and follow up actions.

Overall procurement risk S (M with mitigation measures)

* H = High, S = Substantial, M = Moderate, N = Negligible or Low. ADB = Asian Development Bank, EA = executing agency, PIU-ET = project implementation unit for electrification and renewal of rolling stock, TRTA = transaction technical assistance, UTY = O’zbekiston Temir Yo’llari. Source: ADB staff and consultants.

inform the executing agency of ADB’s actions; and (b) advise that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan.

6 Access to Information Policy: https://www.adb.org/documents/access-information-policy. 7 This type of information would generally fall under access to information policy exceptions to disclosure. ADB. 2018.

Access to Information Policy. Paragraph 2 (iv) and/or 2 (v).

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B. Advance Contracting and Retroactive Financing

37. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower and UTY have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. 38. Advance contracting. To expedite project implementation, advance contracting will be conducted for procurement of locomotives (goods). Advance contracting allows the government to commence procurement activities, at its own risk, prior to signing of the loan agreement but does not allow for the award of contract until after the loan has become effective. 39. Retroactive financing. The maximum amount of eligible expenditures up to $34 million, the equivalent of 20% of the total ADB loan, incurred before loan effectiveness, but not more than 12 months before the signing of the loan agreement. This is envisaged for the procurement of electric locomotives.

C. Procurement of Goods, Works, and Consulting Services

40. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). 41. Procurement will consist of one package, namely a goods package to cover the procurement of electric locomotives. The package will consist of two lots;

• Lot 1: 16 freight electric locomotives

• Lot 2: 8 passenger electric locomotives. 42. Open competitive bidding will apply. ADB’s standard bidding documents (latest edition) will be used. As a result of open competitive bidding, it would be possible for multiple contracts to be awarded to one company or joint venture of companies. 43. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C.

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D. Procurement Plan

Basic Data Project Name: Railway Efficiency Improvement Project

Project Number: 51052-002 Approval Number:

Country: Uzbekistan Executing Agency: O'zbekiston Temir Yo'llari

Project Procurement Classification: Category A Implementing Agency: N/A Project Procurement Risk: Moderate

Project Financing Amount: US$218,300,000 ADB Financing: US$170,000,000 Cofinancing (ADB Administered): Non-ADB Financing: US$48,300,000

Project Closing Date: 31 December 2025

Date of First Procurement Plan: 7 November 2017 Date of this Procurement Plan: 28 March 2019

A. Methods, Thresholds, Review and 18-Month Procurement Plan

1. Procurement and Consulting Methods and Thresholds Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works

Method Threshold Comments

Open Competitive Bidding for Goods

US$2,000,000 and Above

Consulting Services

Method Comments

Quality and Cost Based Selection (QCBS) None foreseen

2. Goods and Works Contracts Estimated to Cost $1 Million or More The following table lists goods and works contracts for which the procurement activity is either ongoing or expected to commence within the next 18 months.

Package Number

General Description

Estimated Value

Procurement Method

Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

PIU-05 Procurement of 16 Freight Electric Locomotives and 8 Passenger Electric Locomotives

[This information was

deemed confidential according to

paragraph 2 (v) of ADB’s Access to

Information Policy (2018).]

OCB Prior 1S1E 31 January 2019

Prequalification of Bidders: N Domestic Preference Applicable: N Bidding Document: Goods

Lot 1: 16 Freight Electric Locomotives

Lot 2: 8 Passenger Electric Locomotives

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3. Consulting Services Contracts Estimated to Cost $100,000 or More The following table lists consulting services contracts for which the recruitment activity is either ongoing or expected to commence within the next 18 months.

Package Number

General Description

Estimated Value

Recruitment Method

Review (Prior / Post)

Advertisement Date

(quarter/year)

Type of Proposal

Comments

None

4. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting

Services Contracts Less than $100,000 (Smaller Value Contracts) The following table groups smaller-value goods, works and consulting services contracts for which the activity is either ongoing or expected to commence within the next 18 months.

Goods and Works

Package Number

General Description

Estimated Value

Number of Contracts

Procurement Method

Review [Prior / Post/Post

(Sampling)]

Bidding Procedure

Advertisement Date (quarter/

year)

Comments

Consulting Services

Package Number

General Description

Estimated Value

Number of Contracts

Recruitment Method

Review (Prior / Post)

Advertisement Date (quarter/

year)

Type of Proposal

Comments

B. Indicative List of Packages Required Under the Project The following table provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e., those expected beyond the current period).

Goods and Works

Package Number

General Description

Estimated Value (cumulative)

Estimated Number of Contracts

Procurement Method

Review [Prior / Post/Post (Sampling)]

Bidding Procedure

Comments

Consulting Services

Package Number

General Description

Estimated Value (cumulative)

Estimated Number of Contracts

Recruitment Method

Review (Prior / Post)

Type of Proposal

Comments

C. List of Awarded and On-going, and Completed Contracts The following tables list the awarded and on-going contracts, and completed contracts. 1. Awarded and On-going Contracts

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Goods and Works

Package Number

General Description

Estimated Value

Awarded Contract Value

Procurement Method

Advertisement Date (quarter/year)

Date of ADB Approval of

Contract Award Comments

Consulting Services

Package Number

General Description

Estimated Value

Awarded Contract

Value

Recruitment Method

Advertisement Date (quarter/year)

Date of ADB Approval of

Contract Award Comments

2. Completed Contracts

Goods and Works

Package Number

General Description

Estimated Value

Contract Value

Procurement Method

Advertisement Date (quarter/year)

Date of ADB Approval of

Contract Award

Date of Completion

Comments

Consulting Services

Package Number

General Description

Estimated Value

Contract Value

Recruitment Method

Advertisement Date (quarter/year)

Date of ADB Approval of

Contract Award

Date of Completion

Comments

D. Non-ADB Financing The following table lists goods, works and consulting services contracts over the life of the project, financed by Non-ADB sources.

Goods and Works

General Description Estimated Value

(cumulative) Estimated Number

of Contracts Procurement

Method Comments

Associated civil works, installation

$0.50 million Several Government procedures

Financed 100% by UTY and government

Consulting Services

General Description Estimated Value

(cumulative) Estimated Number

of Contracts Recruitment

Method Comments

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VII. SAFEGUARDS

44. The UTY through the PIU-ET will ensure that all safeguard requirements of ADB are implemented. The Project, in accordance to ADB SPS 2009, is categorized as “C” category for Environment and “C” category for Involuntary Resettlement. Therefore, the following safeguard documents were prepared during the project preparation:

(i) An Environmental Assessment and Review Framework (EARF) for environment, which forms part of the PAM, and

(ii) A Social Due Diligence Report for involuntary resettlement.

45. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the Safeguard Policy Statement (2009). A. Environment

46. The project is categorized as C for environment, as it is likely to have minimal or no adverse environmental impacts. Overall, the project supports the development of an environmentally friendly mode of transport. With trains operating on electric traction, local air pollution and greenhouse gases are expected to be reduced. Possible negative environmental impacts would include change in the level of noise and vibration due to the increased speed and frequency of train movement. To account for any unanticipated environmental impacts, an Environmental Assessment and Review Framework (EARF) has been prepared (Attachment 1). PIU-ET will be responsible for monitoring against the agreed EARF thereafter. B. Resettlement

47. The project is categorized as C for resettlement, as the project will not require any land acquisition and resettlement. ADB has completed a Social Due Diligence of the project, including for those project components which will not be financed by ADB (i.e. the depot); this has been posted on the ADB website for public disclosure. The Social Due Diligence Report outlines necessary procedure and institutional arrangement required by ADB SPS 2009. This will ensure that all necessary procedure dealing with resettlement are in place and in compliance with ADB SPS 2009 in case of economic or physical impact on land and assets. In case any land acquisition and resettlement impacts occur during implementation, UTY shall prepare a land acquisition and resettlement plan (LARP) to be submitted to ADB for approval prior to awarding a civil works contract. The LARP will be implemented in accordance with ADB SPS 2009 and national legislation and regulations. C. Indigenous Peoples

48. The country does not have indigenous people’s communities as defined in the ADB SPS 2009 for operational purposes. As such, the project is classified as C for indigenous peoples safeguard and no further action is required.

VIII. GENDER AND SOCIAL DIMENSIONS 49. The project is categorized as some gender elements. The lack of access to safe and affordable transport significantly hinders the social and economic development of rural

26

households as well as industrial and agricultural sectors. Currently, women face challenges in fulfillment of their transport needs, through:

• Lack of sufficient public transport in some areas of the country;

• Women’s opinions as transport users not fully being considered when preparing transport plans, strategies and policies; and

• Lack of financial capacity of some transport service providers to arrange the comfortable conditions for women and social vulnerable groups;

50. A social and poverty assessment ascertained the project will have a positive impact on women and social vulnerable groups, as railway is considered one of the most reliable, comfortable and safest mode of land transportation. Women are important users of the rail services. Increasingly in major stations, one can find female-segregated toilets, child care room etc. Although out of the scope of this project, new passenger carriages being introduced will add to these conveniences by providing more frequent, reliable and comfortable train services. Moreover, wheelchair access will be included to at least one carriage per train. The project will support measures to mitigate any potential negative social impacts that may arise. 51. The project offers opportunities to improve the participation of women in the railway sector, which has globally and traditionally been dominated by male workers due to various factors, including general attitudes, educational segregation towards female and male jobs, etc. Measures will be taken by UTY to identify opportunities to maximize the participation of female staff in locomotive operation and maintenance. The locomotive depot will be upgraded with gender-inclusive features. Female employees of UTY will take part in the preparation and implementation of the long-term development strategy, which will feature specific ways to make the railway system in Uzbekistan more friendly toward women. Specific activities and targets are listed in the gender action plan.8

8 Gender Action Plan (accessible from the list of linked documents in Appendix 2).

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Project Design and Monitoring Framework

Impact the Project is Aligned with Implementation of targeted programs to build affordable housing; development and modernization of road and rail transport, engineering, communication, and social infrastructure achieved (Uzbekistan's Development Strategy for 2017–2021)a

Results Chain Performance Indicators with Targets and

Baselinesb Data Sources and

Reporting Risks

Outcome By 2026: Efficiency of passenger and freight transport throughout Uzbekistan’s railway network improved

a. Average speed of train operations increased by at least 4% for both freight and passenger trains (2018 baseline: 30 kph for freight and 62.5 kph for passengers)

a. UTY annual report Competition from road transport reduces uptake of railway services.

b. Carbon dioxide emissions mitigated by 900,000 tons per year (2018 baseline: none)

b. UTY annual report

Outputs By 2025: 1. Electric

locomotives commissioned

1a. 16 new electric locomotives for freight trains put into operation (2018 baseline: none)

1b. Eight new electric locomotives for passenger trains put into operation (2018 baseline: none)

1a–1b. UTY’s project progress reports and project completion report

Multiple layers of review and approving authorities may delay procurement and implementation

2. Locomotive depot upgraded

2a. Locomotive depot in Tashkent upgraded to handle electric locomotives, with separate sanitary facilities for women and men employees (2018 baseline: not applicable)

2b. At least 20 locomotive depot staff, including two out of eight women engineers employed at the depot, trained on the maintenance of electric locomotives (2018 baseline: none)

2a–2b. UTY’s project progress reports and project completion report

3. Long-term development strategy implemented

3a. Gender-responsive b long-term development strategy is developed by 2019 and implemented by 2024 based on agreed milestones (2018 baseline: none)

3a. UTY’s project progress reports and project completion report

Key Activities with Milestones

1. Electric locomotives put into operation 1.2 Contracts for electric locomotives signed by Q1 2020. 1.3 Have 24 electric locomotives delivered by Q1 2023. 1.4 Complete testing of procured locomotives by Q3 2023.

2. Locomotive depot upgraded 2.1 Complete civil works contracts for upgrading one locomotive depot on UTY’s network by Q2 2021. 2.2 Conduct training of locomotive depot staff, including women, by Q3 2021.

3. Long-term development strategy implemented 3.1 Prepare an implementation action plan by Q3 2019. 3.2 Complete actions specified in the action plan by Q1 2024.

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Project Management Activities Bid out major procurement packages by Q1 2019 and award contracts by Q1 2020.

Inputs Asian Development Bank: $170 million (regular ordinary capital resources loan) Government and UTY: $48.3 million

Assumptions for Partner Financing Not applicable

kph = kilometers per hour, Q = quarter, UTY = O’zbekiston Temir Yo’llari. a Government of Uzbekistan. 2017. Uzbekistan’s Development Strategy for 2017–2021. Tashkent. b The long-term development strategy shall strengthen human resource policies with regard to gender following

international best practices, including incentives to recruit, retain, and promote women; provision of in-service training; and zero tolerance for any form of discrimination, including sexual harassment in the workplace.

Source: Asian Development Bank

B. Monitoring

52. Project performance monitoring. UTY and ADB will monitor the overall performance of the project through the project performance monitoring system (PPMS) and project performance reporting (PPR) system,9 respectively. UTY will establish PPMS, within 6 months from project commencement, and collect and update baseline data for performance monitoring. The key indicators and targets, assumptions, and risks outlined at the impact, outcome, and output levels in the project’s design and monitoring framework (DMF) will be the primary data required for analysis. For this purpose, ADB’s inception mission will provide UTY a checklist of the above data in a word file, which will be updated (in track changes) and reported quarterly through UTY’s quarterly progress reports and after each ADB review mission. These quarterly reports will provide information to regularly update ADB’s PPR system. UTY will involve the beneficiaries in the collection of data on impacts and outcomes. During each review mission, the updated project performance will be shared with the interested representatives of project beneficiaries 53. Compliance monitoring. Compliance to the covenants will be jointly monitored by UTY and ADB through monthly and semi-annual updates provided by UTY. UTY will submit to ADB a status report on the covenants with the explanation and time-bound actions on partly or non-complied covenants. ADB’s resident mission in Tashkent will hold semi-annual review meetings with UTY to ensure the full compliance of the covenants. 54. Safeguards monitoring

• Environment. Monitoring on EARF implementation will be undertaken by UTY. PIU-ET will be responsible for preparation of environmental monitoring reports for submission to ADB in a format and frequency to be indicated in the EARF, should this be required as a result of changes in the project scope.

• Resettlement. ADB SPS 2009, requires monitoring activities to correspond with the project’s risks and impact. The project is proposed as category C with regards to involuntary resettlement. As such, the project may require some internal monitoring during implementation. UTY will monitor and measure the progress of implementation of the project. If unanticipated involuntary resettlement impacts are found during project implementation, UTY will prepare a land acquisition and

9 ADB's project performance reporting system is available at http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool

29

resettlement plan (LARP) which will cover all applicable monitoring and reporting requirements specified in ADB SPS 2009.

55. Gender and social dimensions monitoring. The government and UTY will ensure that the principles of gender equality aimed at increasing project benefits and impact on women in the project area are followed during implementation of the project, based on the Gender Action Plan. These include (a) identification of opportunities for the improved involvement of female employees, (ii) gender-friendly features to be applied on the upgraded locomotive depot, (iii) participation of female employees in the process of development and implementation of the long-term development strategy, (iv) as part of the long-term development strategy, continuation of roll-out of gender-friendly design of the train system in Uzbekistan. PIU-ET will be responsible for the monitoring of actions against the Gender Action Plan, supported by ADB consultants. C. Evaluation

56. A project inception mission will be fielded soon after the loan agreement for the project is declared effective. Thereafter, regular reviews will follow at least annually. As necessary, special loan administration missions and a midterm review mission will be fielded, under which any changes in scope or implementation arrangement may be required to ensure achievement of project objectives. The PIU-ET will monitor project implementation in accordance with the schedule and time-bound milestones, and keep ADB informed of any significant deviations that may result in the milestones not being met. A project completion report will be submitted by PIU-ET within 3 months of physical completion of the project, providing detailed evaluation of the progress of implementation, costs, consultant performance, social and economic impact, and other details as requested by ADB.10 D. Reporting

57. The UTY will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months; and (iii) a project completion report within 3 months of physical completion of the project. In January and July every year, UTY will submit semi-annual environmental monitoring reports to ADB and relevant government authorities, and these reports will be disclosed to the public on the UTY’s (in Uzbek or Russian) and ADB (in English) websites. To ensure that projects will continue to be both viable and sustainable, project accounts and the executing agency audited financial statement together with the associated auditor's report should be adequately reviewed. E. Stakeholder Communication Strategy

Project Documents Means of

Communication Responsible

Party Audience Frequency

PDS ADB’s website ADB General Public Initial PDS upon approval of the concept paper; subsequent PDS at least bi-annually or as necessary

IPSA ADB’s website ADB General Public, project-affected people in particular

Upon approval of the concept paper

10 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar

30

Project Documents Means of

Communication Responsible

Party Audience Frequency

EARF ADB’s website ADB General Public Upon receipt by ADB

SDDR ADB’s website ADB General Public, project-affected people in particular

Upon receipt by ADB

Documents Produced under TRTA

ADB’s website ADB General Public Upon completion

RRP and linked documents

ADB’s website ADB General Public Upon approval by the Board

DMF ADB’s website ADB General Public Upon approval of the RRP by the Board

PAM ADB’s website ADB General Public Upon approval of the RRP by the Board; Upon updates as necessary

LA and PA ADB’s website ADB General Public Upon signing

Amendments to the LA and PA

ADB’s website ADB General Public Within 2 weeks of effectiveness

Social and Environmental Monitoring Reports

ADB’s and UTY’s website

ADB and UTY

General Public, project-affected people in particular

Semi-annually, to be disclosed upon receipt by ADB, if required

Major Change in Scope

ADB’s website ADB General Public Upon approval of the change by the Board

APFS and Auditor’s Opinion on the Financial Statements

ADB’s website ADB General Public As indicated in the loan agreement

PCR ADB’s website ADB General Public Upon circulation to the Board for information

Independent Evaluation Reports

ADB’s website ADB General Public Upon circulation to Management and the Board, except for IED annual evaluation reports that will be posted on the ADB website upon discussion by the Board’s Development Effectiveness Committee

Performance of the project with clearly defined information requirements and indicators, business opportunities, bidding process and guidelines, results of bidding process, and summary progress report of the project

UTY website UTY General Public Per project progress, no less than monthly

ADB = Asian Development Bank, APFS = audited project financial statement, DMF = design and monitoring framework, EARF = environmental assessment and review framework, IED = independent evaluation department, IPSA = initial poverty and social assessment, LA = loan agreement, PA = project agreement, PAM = project administration instructions, PCR = project completion report, PDS = project disclosure system, RRP = report and recommendation of the president, SDDR = social due diligence report, UTY = O’zbekiston Temir Yo’llari.

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X. ANTICORRUPTION POLICY

58. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.11 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants, and other service providers. Individuals and/or entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.12 59. To support these efforts, relevant provisions are included in the loan and project agreements as well as the bidding documents for the project. All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of UTY and PIU-ET, and all contractors, suppliers, consultants, and other service providers as they relate to the project. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contract under the Project. 60. ADB's Anticorruption Policy designates the Office of Anticorruption and Integrity as the point of contact to report allegations of fraud or corruption among ADB-financed projects or its staff. Office of Anticorruption and Integrity is responsible for all matters related to allegations of fraud and corruption. For a more detailed explanation refer to the Anticorruption Policy and Procedures. Anyone coming across evidence of corruption associated with the Project may contact the Anticorruption Unit by telephone, facsimile, mail, or email at the following numbers/addresses:

• by email at integrity@adb.org or anticorruption@adb.org

• by phone at +63 2 632 5004

• by fax to+6326362152

• by mail at the following address (Please mark correspondence Strictly Confidential):

Office of Anticorruption and Integrity Asian Development Bank 6 ADB Avenue Mandaluyong City 1550 Metro Manila, Philippines

11 Anticorruption Policy: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 12 ADB's Integrity Office web site: http://www.adb.org/integrity/unit.asp

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XI. ACCOUNTABILITY MECHANISM

61. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.13

13 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

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XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

62. All revisions and/or updates during the course of implementation should be retained in this section to provide a chronological history of changes to implemented arrangements recorded in the PAM, including revision to contract awards and disbursement s-curves.

Table 9: Record of Changes to the Project Administration Manual Version Date Revisions

1. Pre fact-finding 15 November 2017 First draft of the PAM

2. Fact-finding 7 December 2017 Second draft of the PAM at fact-finding

3. First revision post fact-finding

5 June 2018 Third draft of the PAM with edits to reflect ADB comments

4. Negotiated draft 13 July 2018 Fourth draft of the PAM with edits to reflect discussions from loan negotiations

5. Negotiated draft with updates through to 28 March 2019

28 March 2019 Negotiated draft with updates through to 28 March 2019, including changes to PIU structure, cost estimates and project schedule.

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APPENDIX 1: ENVIRONMENTAL ASSESSMENT AND REVIEW FRAMEWORK

TABLE OF CONTENTS

GLOSSARY .............................................................................................................................. 35

A. INTRODUCTION ............................................................................................................... 36

(i) Legal Framework 37 (ii) Institutional Capacity 39

C. ENVIRONMENTAL ASSESSMENT FOR SUBPROJECTS AND/OR COMPONENTS ...... 43

(i) Screening and classification 43 (ii) Environmental assessment and environmental management plan 43

D. ANTICIPATED CLIMATE CHANGE IMPACT .................................................................... 47

E. CONSULTATION, INFORMATION DISCLOSURE, AND GRM ......................................... 47

F. INSTITUTIONAL ARRANGEMENT AND RESPONSIBILITIES ......................................... 48

G. MONITORING AND REPORTING .................................................................................... 50

ATTACHMENTS ....................................................................................................................... 51

Attachment 1. Calculation of GHGs emissions for electric and diesel locomotive 51 Attachment 2. REA checklist 53 Attachment 3. Terms of reference for noise and vibration modeling 55 Attachment 4. Proposing GRM 56 Attachment 5. Outline of Environmental Monitoring report 59

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LIST OF ABBREVIATIONS

ADB – Asian Development Bank

AM – Accountability Mechanism

CMR – Cabinet of Ministers

EA – Executing Agency

EARF – Environmental Assessment and Review Framework

EIA – Environmental Impact Assessment

EHS – Environmental, Health and Safety Guidelines

EMP – Environmental Management Plan

EMR – Environmental Monitoring Report

GHG – Greenhouses gases

GRM – Grievance redress mechanism

MAC – Maximum Allowed Concentration

PIU-ET – Project Implementation Unit for Locomotive project

RUz – Republic of Uzbekistan

SES – Sanitarian Epidemiological Station

SPS – Safeguard Policy Statement

UNFCC – United Nation Framework on Climate Change

UTY – O’zbekiston Temir Yo’llari

GLOSSARY

Glavgosexpertisa State Department responsible for Conducting Environmental Expertise Under SNPC

Khokim Governor of administrative unit

Khokimiyat Regional government authority

KMK National acronym for Construction norms and regulations

Makhalla A community of neighbors, which is based on full independence and self-governance.

SanR&N Sanitary - epidemiological norms and regulations

SNiP The same as SanR&N - set of basic regulatory requirements and regulations governing the design and construction in all sectors of national economy of Uzbekistan

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A. INTRODUCTION

1. With 31 million people, Uzbekistan is the most populous country in Central Asia. Being a double landlocked country requiring crossing at least two countries to reach seaports, transport plays an important role in sustaining its socioeconomic development. 2. Uzbekistan has continued to modernize its railway infrastructure. Since its founding in 1994, O'zbekiston Temir Yo'llari (UTY), the vertically integrated public railway company, has gradually implemented a holistic railway modernization program, including the completion of a unified rail network, electrification and modernization of existing lines, and improvement of rolling stock. The government accorded particular importance to electrification, with 2,446 km or 52% of the network now electrified. 3. Specifically, with regards to locomotives, the current locomotive fleet of UTY is 75% diesel (main line diesel locomotives are 28%, and shunting diesel locomotives are 47 %), and electric locomotives constitute only 25 % of the fleet. The latter includes 37 units of electric locomotives procured within the last 10 years. The fleet of locomotives, both diesel and electric, are of advanced age, with the majority having served more than 30 years. 4. Limitations in the absolute number of electric locomotives, as well as the ageing nature of the existing fleet, pose a major challenge to the further expansion of freight and passenger train services on a reliable basis. Currently, the existing fleet is utilized to its maximum potential, making it difficult for UTY to meet the growing demand. The slower acceleration and top speeds achievable by diesel locomotives, as well as the switching required between diesel and electric locomotives adds to transport times. Locomotive depots remain tailored toward the servicing of diesel locomotives, and require upgrading to suit an increasingly electrified fleet. 5. Institutionally, UTY remains a financially robust organization with the ability to carry all

operations and maintenance costs, and the majority ofcapital works. However, similar to other

railway organizations throughout the world, it faces heavy competition for both passenger and rail traffic from road transport, and in the case of transit traffic, from other countries. The ability of UTY to maintain its financial sustainability depends on its ability to improve the attractiveness of its services to end clients. This requires a combination of improved infrastructure and rolling stock, as well as refinements to its strategic business planning process. 6. In view of the abovementioned challenges, the Asian Development Bank (ADB) has been requested by the Government and UTY for financial assistance for a project to improve the efficiency of railway operations in Uzbekistan. The project is expected to finance the procurement of 24 electric locomotives, which will relieve the critical shortage of locomotives in the Uzbekistan railway network, and equip UTY to make full use of its growing electrified network. 7. The project will produce three outputs:

• deliver 24 electric locomotives, 16 of which will be used for freight trains, and 8 of which will be for passenger trains;

• to effectively cater to the maintenance needs of these new electric locomotives, UTY plans on upgrading a locomotive depot near Tashkent;

• help implementation of an improved business plan for UTY, to improve its operational efficiency, including in the areas of locomotive and rolling stock

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utilization, operational practices, timely adjustment of tariffs and optimization of operating expenses.

8. Bidding documents for purchase 24 electric locomotive include all necessary requirements related to environmental aspects: noise and vibration standards, oil for transformers and reference on relevant national environmental legislation. 9. Only one depot named “O’zbekiston” located in Tashkent province will be upgraded under the current project. The planned upgrades include installation of new equipment for maintenance of electric locomotives without replacement of old ones. Moreover, currently operating old electric locomotives type VL-60k will not be dismantled; they will be used as shunting electric locomotives. This project is categorized as category “C” for environment as defined by ADB’s Safeguards Policy Statement of 2009, which means minimal adverse impacts. However, there is an unlikely case of the category of the project changing to “B” depending on conditions as explained below. 10. In the unlikely case that other depots for maintenance of electric locomotives will be rehabilitated within the current project, a development of IEE may be required depending on their specific scope. The main task of the EARF is to ensure that possible subprojects or project components implemented under the framework comply with ADB safeguard objectives, principles and requirements. 11. The EARF for this project provides guidance on assessment of direct, indirect and induced impacts of the replacement of diesel locomotives, the operations of electric locomotives, and the conversion or upgrading of depots in case additional depot locations are identified in future and included in the project scope. In addition, the EARF includes an assessment of anticipated climate change. 12. The purpose of the EARF is also to guide the actions of UTY in improving its capacity for safeguards implementation under investment projects funded through international financial agencies in the future. 13. In general, the project will have significant positive environmental impacts: improvement of local environment through avoiding air pollutants from diesel locomotives and reduction of GHGs due to switching to fuel with less emissions of CO2. 14. The project implementation period is 2018–2022.

B. ASSESSMENT OF LEGAL FRAMEWORK AND INSTITUTIONAL CAPACITY

(i) Legal Framework

15. The Republic of Uzbekistan has passed over 100 laws and regulations, developed programs and action plans to address environmental issues and promoted sustainable use of natural resources. A national legal framework in the field of Nature Protection and Management established in Uzbekistan, provides to the citizens the rights and duties specified in the country’s Constitution. 16. The Environmental Impact Assessment (EIA) procedure is regulated by Law on Environmental Expertise and The Regulation on State Environmental Expertise (SEE) approved by Decree No.491 of the Cabinet of Ministers on 31 December 2001 and amended in 2005 and 2009. The regulation defines the legal requirements for EIA in Uzbekistan.

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17. In accordance with this law, construction of new depots is defined as category 2, having moderate impacts on environment. Such projects require conduction of national Environmental Assessment and receiving a clearance from Ecological expertise on national level.1 18. If any changes in emissions, waste water discharges or generation of solid wastes will occur due to the project works, the national legislation requires submission of updated Statement on Environmental Consequences (SEC)2. Updated SEC should replace previous documents which were active for situation before the project implementation. 19. If the project works will be limited by only installation of new equipment without changes in content and amount of emissions, discharges and wastes in upgrading depots, no any environmental approvals are needed. 20. Besides abovementioned regulations and laws, there are number national laws and acts applicable to the current project:

• Law “On Atmospheric Air Protection” (1996, amended on 10.10.2006);

• Law “On water and water use” (1993);

• Land Code of the Republic of Uzbekistan (1998);

• Law on Wastes (2002, as amended on 2011);

• Decree of the Cabinet of Ministers of the Republic of Uzbekistan on Approval of the collection and disposal of used mercury-containing lamps. No. 266 of 21.09.2011;

• Decree of Cabinet Ministries of RUz on the procedure of settlement usage of biological resources and procedure of issuing permits in the field of nature use, No. 290 of 20.10.2014.

• SanR&N RUz No.0179-04. Hygienic norms. List of Maximum Allowable Concentrations (MACs) of pollutants in ambient air of communities in the Republic of Uzbekistan including Annex 1;

• SanR&N No.0267-09. Admissible noise level into the living area, both inside and outside the buildings;

• SanR&N RUz No. 0300-11. Sanitarian Norms and Rules of organizing, inventory, classification, detoxification, storage and disposal of industrial wastes in Uzbekistan conditions;

• SanR&N RUz No 0146-04. Sanitarian Norms and Rules of living houses design in climatic conditions of Uzbekistan;

• SanR&N 0236-2007 “Sanitary norms and rules (SNR) on the effects of the electric field generated by overhead transmission lines of alternating currents of industrial frequency”;

• Sanitarian Rules and Norms #0172-06. Hygienic requirements for protection of surface water on the territory of the Republic of Uzbekistan;

• ShNK 4.02.33-04 Transmission lines;

• ShNK 4.02.67-07 Electric installation works. Repair and construction works;

• KMK 3.01.02-00 Safety measures in construction;

• KMK 2.01.08-96 Protection from noise;

• "Rules of organization and technical operation of the contact network of the electrified railways of SJSRC "O’zbekiston Temir Yo’llari" (2015);

1 Resolutions of Cabinet Ministries of RUz # 491 (2001) and # 152 (2009), Attachment # 1. 2 Resolution of Cabinet of Ministries of RUz # 14 (2014), para # 54.

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• RD (Guidance Document) 34.20.501-05. Operating Rules for the Power Plants and Electric Networks;

• RD (Guidance Document) 34.03.202.95. Safety Rules for the Electrical Equipment Operation

21. It is important that the project will meet international lending requirements. The following international guidelines are relevant to the project and will be considered during the environmental assessment process:

• ADB’s Safeguards Policy Statement (June 2009);

• ADB´s Operations Manual Bank Policies: Safeguard Policy Statement (March 2010);

• ADB`s Environmental Safeguards a Good Practice Sourcebook Draft Working Document (December 2012);

• IFC General Environmental, Health and Safety Guidelines (April 2007);

• EHS IFC Railway (2007)

22. Under international cooperation in the field of environment protection, Republic of Uzbekistan signed number of International Conventions, which should be undertaken by State Committee for Nature protection of the RUz. Among conventions relevant to the project the following two conventions will be applicable:

• UN Framework Convention on Climate Change (2007).

• The Stockholm Convention on Persistent Organic Pollutants (2004)

(ii) Institutional Capacity

23. Joint-stock company O'zbekiston Temir Yo'llari (UTY) will be the Executive Agency (EA). It has a sound track record with execution of similar projects, as well as operations and maintenance of electrified and non-electrified lines. 24. The simplified institutional structure of UTY is presented in Figure 1. Environmental performance of UTY is undertaken by an environmental specialist working in Department of Labor Protection, Technical and Industry Safety and Ecology. The specialist’s duties include the followings:

• Coordinate development of annual environmental protection plans of UTY’s sub-entities, and submission as UTY’s unified environmental plan to State Nature Protection Committee (Goskomecologiya);

• Undertake visits to sub-entities to monitor proper implementation of environmental plans, submission of environmental reports to relevant government agencies (State Statistic Committee and) and compensation payments;

• Communication with external stakeholders, participation in development state environmental programs, strategies;

• Conduction training, awareness program for UTY entities’ environmental staff;

25. UTY’s environmental specialist participated in development of Third National Communication on Climate Change under UNFCCC. 26. There are environmental specialists under the depot “O’zbekiston” whose duties include:

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• Preparation of reports on emissions to atmosphere, water and wastes for submission to State Statistical Committee;

• Calculation of compensation payments for emissions from depots and water consumption;

• Participation in development of annual environmental protection plans of depots and monitor their implementation;

• Participation in development of discharges/emissions limits (in air, water and wastes) for depots and monitor their validity. For development such limits the depot hires private companies;

• Conclude agreements with laboratory of Goskomekologia on monitoring water quality from depots’ waste water treatment plan;

• Participate in the environmental training organized by UTY.

27. Other depots also have environmental specialists with similar responsibilities. In most of the cases these environmental specialists have a dual role as a safety engineer. 28. There are several project implementation units in UTY, implementing investment projects funded under various International Financial Institutions, including: (i) PIU-E in charge of electrification of Karshi–Termez (JICA), CAREC Corridor 6 (Marakand–Karshi) Railway Electrification Project (ADB) and CAREC Corridor 2 (Pap–Namangan–Andijan) Railway Electrification Project (ADB), and (iii) PIU-ET for Railway Efficiency Improvement Project (ADB). PIU-E have environmental specialists who are in charge for ensuring the projects compliance with national and donor agencies’ environmental and social requirements. The specialists’ duties include conduction of environmental monitoring, submission environmental monitoring reports to JICA and ADB. Information on institutional structure of PIU-ET is provided in Chapter G. 29. There are several design institutes preparing feasibility studies for new projects in railway sector. These institutes conduct a national Environmental Assessment (EA) as part of feasibility study (ZVOS). They are responsible for submission EA to Center of State Environmental Expertise and receiving Environmental Appraisal (Positive environmental conclusion).

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Figure 1: Institutional Structure of UTY

Source: O’zbekiston Temir Yo’llari

Central Staff

Departments without the status

of a legal entity

Departments with the status of a

legal entity

Chairman of the Board

First Deputy

Chairman of the

Board

Chief Manager-

Chief Engineer

Deputy of

Chairman of the

Board

Deputy of

Chairman of the

Board – Head of

UE “Toshketn

Metropoliteni”

Deputy of

Chairman of the

Board

Deputy of

Chairman of the

Board

Advisor of

Chairman

1.

1.

1.

1.

1.

Department of

Economy

Analysis and

Forecasting

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Department of

Labor Protection,

Technical and

Industry Safety

and Ecology

1.Department of

Organization and

Control of Industry

Activity

2.

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11. Locomotive depot

“Uzbekistan”

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Transportation

Management

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1.Department of

agriculture

2. Capital

Construction

Management

3. Specialized

Management

4. Specialized

track Mechanized

Station

Department of

investment

attraction and

implementation of

investment

project

1.

2.

3.

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5.

1.PIU - T

Special Service

1.

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pp

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C. ANTICIPATED ENVIRONMENTAL IMPACTS

30. During the project implementations impacts may occur during depots upgrading and operation phases. The impacts could be direct or indirect and induced impacts. The below table provides summary on anticipated impacts during project construction and operating phases.

Table 1: Key anticipated environmental impacts during the rehabilitation of depots

Project activities Potential impacts Level of impacts and duration

Construction/upgrading stage

Rehabilitation works (re-innovation)

• Solid and hazardous wastes e.g.:

▪ Scrap metals, old batteries, circus boards;

▪ Used boxes, used packaging;

• Noise pollution

• Moderate, short-term

• Moderate, short-term

• Insignificant, short-term

Demolishing of obsolete equipment

• Solid and hazardous wastes e.g.:

▪ Scrap metals, old batteries, circus boards;

▪ Used oil;

• Noise pollution

• Moderate, short-term

• Moderate, short-term

• Insignificant, short-term

Installation of new equipment • Solid wastes: Used boxes, used packaging;

• Noise pollution

• Insignificant, short-term

• Insignificant, short-term

Operation phase

Electric locomotive operation • Noise and vibration from trains movement

• Train safety and electrocution issues

• Waste generation

• Moderate, long-term

• High, long-term

• Insignificant, long-term

Disposal of old locomotive • Solid and hazardous wastes e.g.:

▪ Scrap metals, old batteries, circus boards;

▪ Used oil

• Moderate, medium-term

• Moderate, short-term

31. As shown in the table, during the project construction/upgrading phase most of the impacts will be of moderate and short-term nature, because most of the works will be implemented inside buildings on the territory of existing depots. These impacts could be mitigated by good site management practice. 32. During operation phase noise and vibration may adversely impact on population due to increasing frequency, speed and loading weights of trains movements. However, investigations conducted within the previous project “CAREC Corridor 2 (Pap–Namangan–Andijan) Railway Electrification Project” showed, that replacement of diesel locomotives with electric ones will not lead to increasing of equivalent noise level (Lecq). However, significant increasing of train frequency may lead to increasing noise level and possible vibration as well. For such situations modelling of noise and vibration propagation need to be undertaken. Based on results of modelling, appropriate mitigation measures need to be applied in order to comply with national standards on noise and vibration level, namely SanR&N No.0267-09 for noise, and SanR&N RUz No 0146-04 for vibration.

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33. Besides above mentioned direct and indirect adverse impacts, the project will have significant positive impact - operation of electric locomotives will allow to avoid increasing of GHG emissions in conditions of growing demand in passengers and freight transportation. Draft calculation of CO2 emissions for the same amount of transported freight and passengers was made for two scenarios: (i) transportation with electric locomotives, and (ii) transportation with diesel locomotives (Attachment 1). Based on this calculation, transportation with electric locomotives will allow to avoid 914,064.5 tons of CO2 emissions annually. 34. Moreover, replacement of the diesel locomotive with electric ones will contribute improvement of local environment due to decreasing emissions of other pollutants (SO2, NOx) into the atmosphere discharged from diesel locomotives. D. ENVIRONMENTAL ASSESSMENT FOR SUBPROJECTS AND/OR COMPONENTS

(i) Screening and classification

35. Environmental assessment shall be started from the sub-project categorization. ADB’s Rapid Environmental Assessment (REA) checklist for railway projects shall be used for determining the environmental category. A format of REA checklist is presented in Attachment 2. Considering the type of possible project works and the fact that works will be implemented on the territory of existing depots, sub-projects would be categorized as B or C:

• Category B. A proposed sub-project is classified as category B and an Initial Environmental Examination (IEE) is required if environmental impacts from such projects are site-specific, few if any of them are irreversible, and in most cases mitigation measures can be designed more readily than for category A projects.

• Category C. A proposed sub-project is classified as category C if it is likely to have minimal or no adverse environmental impacts. No environmental assessment is required although environmental implications need to be reviewed.

36. Therefore, no actions need to be undertaken if the sub-project was categorized as C. If the sub-project is classified Category B, an (IEE) needs to be undertaken.

(ii) Environmental assessment and environmental management planning

37. If a sub-project is classified as category B, a report on IEE should be prepared in accordance with the ADB SPS 2009, Appendix 1. 38. After presenting general information on the sub-project description and its components, implementation schedule, the IEE will provide information on baseline environmental and social data. The environmental assessment will consider all potential impacts and risks of the project on physical, biological, socio-economic and physical cultural resources in an integrated way. 39. As shown in the Table 1, the main impacts during sub-projects construction and operation phases will be waste generation and noise pollution. Waste generation may have more impact during construction phase, noise and vibration – during operation phase. 40. The IEE should provide assessment of types of waste and their quantitative analysis. The assessment shall cover the whole process, including depot rehabilitation works, demolition of obsolete equipment and installation of new ones.

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41. Depending on the type of waste, their disposal options need to be defined. It is recommended that first, waste need to be separated between hazardous and non-hazardous. Hazardous waste (used oil, accumulators, fluorescent lumps) need to be disposed into special designated entities such as: oil refining base, “Vtorcvetmet” (used batteries and accumulators), and enterprises specializing in demercurization. The project shall not include within its scope the replacement of old transformers, which excludes risk of contamination with polychlorinated biphenyl. 42. Non-hazardous waste needs to be separated on recyclable (scrap metal, paper, cardboard, cellophane or plastic packing) and non-recyclable (broken bricks, pieces of concrete). Recyclable waste should be sent on relevant waste treatment facilities. Non-recyclable waste will be disposed of in municipal landfill. For this, the management of the locomotive depot “O’zbekiston” shall conclude an agreement with authorized entities responsible for wastes collection and disposal. During operation phase, mostly domestic wastes and used oil will be generated which could be utilized in the same way as described above. 43. The IEE shall also include an assessment of noise impact during the construction phase. Calculation of noise levels shall be undertaken in accordance with the guideline “Construction noise impact assessment”1 or other available noise calculation methodology. Depending on the type of receptors (residential, industrial/commercial areas, hospitals, schools etc.), different limits will be applied for assessment. Since national standards for noise levels (SanR&N No.0267-09: Admissible noise level into the living area, both inside and outside the buildings) are the same as international (IFC General Environmental, Health and Safety Guidelines (April 2007)), the national standards may be used as limits. 44. In case of exceeding limits, the IEE has to provide mitigation measures in order to bring noise to acceptable levels. The following could be used as mitigation measures:

• Construct noise barriers, such as temporary walls or piles of excavated material, between noisy activities and noise-sensitive receivers;

• Re-route truck traffic away from residential streets, if possible. Select streets with fewest homes, if no alternatives are available;

• Place site equipment on construction lot as far away from noise sensitive site as possible;

• Construct walled enclosures especially around noisy activities, clusters of noisy equipment etc.

45. The “Transportation and Construction Vibration Guidance Manual”2 could be used for vibration assessment during the construction phase. However, it is very unlikely that vibration impact will be significant at that stage. Usually, such impact occurs during blasting works or drilling piles. However, if depot rehabilitation will require conduction of drilling piles, or rehabilitating depots will be located close to historical or fragile buildings, vibration assessment needs to be undertaken and mitigation measures will have to be developed.

1 Chapter 7. Construction noise impact assessment, Biological Assessment Preparation “Advanced Training Manual

Version 02-2012”. 2 Chapter 7.2 Transportation and Construction Vibration Guidance Manual, California Department of Transportation,

2013.

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46. For the operation phase, assessment of noise and vibration level is essential. Noise and vibration modelling need to be undertaken to ensure that due to increasing frequency, speed and loading weights of trains movements noise level will not exceed limits3. It should be noted that these standards will apply when an ambient noise level before project commencement does not exceed limits (45 dB night time and 55 dB for night time for residential area etc.). If baseline survey shows exceeding limits, then in accordance with IFC guidelines, “noise impact should result in a

maximum increase in background levels of 3 dB at the nearest receptor location off-site.”4 47. To evaluate noise impact, such factors as expecting number of trains per day, distribution of train frequency during the whole day (day time and night), trains types (passenger, freight and shunting), number of wagons, technical specifications of trains, speed need to be considered. 48. The model needs reflect specific features of site as well – relief, elevation and height of structures etc. Noise propagation has to be considered for both day time and night time. To conduct modeling, the latest models available in the market that most accurately calculate noise values for line sources of noise in urban environments shall be used. Detailed terms of reference for noise and vibration modeling is presented in Attachment 3. The same model could be used for noise and vibration level assessment during construction phase. 49. Based on the above studies, the IEE will propose various mitigation scenarios that would ensure that the national and WHO standards contained in the WB EHS Guidelines are met for the sub-project area. 50. The following mitigation measures could be used for decreasing noise level from train movements:

• Greening of area adjusted to railway alignment;

• Installation of acoustic screens;

• Grinding wheels and rails;

• Improve noise protection of receptors through installing double glazing windows and etc.

51. The IEE report should include a fully costed Environmental Management Plan (EMP) for rehabilitated depots. The EMP will be part of an environmental management planning chapter of the IEE which will describe environmental mitigation measures, an environmental monitoring program, capacity building measures and institutional arrangements for EMP implementation, based on an assessment of the capacity of the Government and UTY in addressing environmental problems. A detail description of institutional arrangements for the current project is provided in section F of this EARF. 52. The EMP will address the potential impacts and risks identified during environmental assessment. The EMP will put together in one table all identified impacts, proposed mitigation measures for each impact, responsible organization, and cost of measures implementation. As stated in ADB SPS 2009, “Key consideration include mitigation of potential adverse impacts to the level of “no significant harm to third parties”, the polluter pays principle, the precautionary approach, and adaptive management”. A typical EMP is presented in Table 2, filled in with examples of actions for illustrative purposes. The identified sub-project impacts will be separated into three stages: pre-construction, construction and operation.

3 SanR&N No.0267-09. Admissible noise level into the living area, both inside and outside the buildings. 4 IFC General EHS Guideline, Noise Management, 1.7 Noise, Noise level guideline.

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Table 2: Illustrative Environmental Management Plan Impact Mitigation measures Responsible Cost

Waste generation (Non-hazardous)

• Segregate wastes on recyclable and non-recyclable;

• Conclude agreement with relevant agencies (Khokimiyat, Vodokanal etc.) on solid and liquid wastes disposal;

• Sell recyclable wastes to relevant organizations and ensure timely disposal of non-recyclable wastes;

Contractor implements PIU monitors

Costs for implementation and monitoring are included in the Contractor’s and PIU’s budget

Noise pollution Install acoustic screen Contractor Cost of acoustic screen is $5,000 in Contractor’s budget

53. To monitor compliance with EMP during sub-projects implementation and operation phases an environmental monitoring plan will be developed within IEE. The environmental monitoring plan should include information on parameters which need to be measured, location of monitoring points, frequency, standards (limits) and responsible party. The typical environmental monitoring plan is presented in Table 3. Monitoring Plan also has to clear indicate activities during construction and operation phases.

Table 3: Illustrative Environmental Monitoring Plan

Parameter to be monitored Location Frequency Responsibility Standards Cost

Noise level Houses located next to depot (P1 and P2)

On weekly basis and per receiving complaints from population

Contractor SanR&N No.026709 Sanitarian Rules and Norms on providing allowed noise level into the living building, public building and territory of living areas

Cost of one device is $200 Cost is included in Contractor’s budget

54. If the existing facilities will be rehabilitated or reconstructed as part of the Project, environmental audit needs to be undertaken to check whether the existing facilities, including the alignment and associated facilities, are in compliance with the Government environmental requirements, and with ADB's environmental safeguards requirement. 55. If discrepancies or incompliance will be identified, corrective actions should be proposed for each area of concern, including costs and schedule before and during the project implementation. The Environmental Compliance Audit Report could be attached as an appendix of the IEE.

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E. ANTICIPATED CLIMATE CHANGE IMPACT

56. Anticipated climate change impacts in Uzbekistan is provided Third National Statement on Climate Change under UNFCCC in 2016.5 Among all climate change consequences, the following may impact on railway operation: (i) increasing of temperature of air with increasing amplitude of temperature fluctuation during the year, (ii) changes in distribution of precipitations during the year, (iii) increasing risk mudflows in mountain and foothills areas, and (iv) intensification of desertification process in plains. According to model, avalanche risk will decrease due to climate change. 57. In accordance with results of Preliminary Climate Risk Screening conducted by ADB specialist, this project was categorized as medium risk project. Locomotives purchased under this project will be used on existing rail network, areas of which may be exposed to climate change related hazards. The project may also upgrade existing depots located away from climatic and geophysical hazards. 58. Due to increasing temperature, extremes will change - maximum temperature during the day time and night time will rise, which may impact on equipment performance. The locomotives will be selected and designed to withstand use in harsh climatic conditions, including extreme temperature events and mountainous terrain. General technical specifications for the electric locomotives included in the bidding document define ambient temperature regime at relative

humidity 90% as between -40 and +50 C. Therefore, these locomotive will sustain operations even under expected rises in temperature. Depot upgrades will be non-structural and are within well-tested parameters. 59. Fluctuations in climate parameters will affect the level of maintenance required for the electric locomotives. The project will help the EA to procure spare parts to ensure good maintenance. Climatic events may impact rail operations in general. The aforementioned design recommendations will help reduce such risks. 60. As it mentioned in Introduction part to this EARF, the project will have significant positive impacts: improvement of local environment through avoiding air pollutants from diesel locomotives and reduction of GHGs due to switching to electric traction with less emissions of CO2. F. CONSULTATION, INFORMATION DISCLOSURE, AND GRM

61. Should any sub-projects be classified as Category “B”, it is important that aspects relating to consultation, information disclosure and grievance redress mechanisms also be thoroughly considered and reflected in the IEE. UTY as the Executive Agency will be responsible for conducting meaningful public consultations among the key stakeholders and all affected people. Such consultations should be conducted during all stages of the project cycle – starting from the pre-construction phase and continue during construction and operation phases. Residents of houses located next to the depots will be considered as affected people. Representatives of local communities, regional branches of nature protection committee need to be consulted as well. 62. At least one round of consultation shall be conducted for each settlement located next to the depot to be upgraded. Public Consultations have to be conducted at the stage of IEE preparation. Announcements about planning consultation could be placed in local media or public

5 Uzbekistan’s Third National Statement on Climate Change under UNFCCC, Uzhydromet, 2016.

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place to make sure that all interested parties, affected people are aware about planning event. During the consultation a brief information about the planned works in the depot, anticipated impacts on environment and population if any, and proposed mitigation measures have to be disclosed. Also a Grievance Redress Mechanism (GRM) has to be discussed with stakeholders and affected people. Minutes of public consultations shall include information on date and place of such consultations, number of participants, questions and concerns raised during consultations, and given answers. 63. All concerns raised by participants during public consultations have to be considered in the IEE. Further consultations must be carried out if there are any changes in subproject details and context to ensure that all environment related concerns of the affected persons are addressed. 64. The final version of the IEE needs to be disclosed on ADB website and on the UTY website in the local language prior to the start of construction/upgrading works. Semi-annual environmental monitoring reports also need to be disclosed on ADB and UTY websites during the project implementation. If category of the project remains as C, only the EARF will need to be disclosed on ADB and UTY websites. 65. The purpose of GRM is to receive and facilitate resolution of affected people’s concerns and grievance about the UTY’s social and environmental performance at the project level. After signing the loan agreement between UTY and ADB, UTY will institutionalize and maintain GRM by an administrative order or decision. A new GRM will be established for this project. The GRM for the current project was discussed and agreed with PIU-ET, as presented in Attachment 4. The grievance mechanism should be scaled to the risks and adverse impacts of the project. Therefore, if the project is later reclassified as “B”, the GRM will also need to be reviewed and modified if deemed necessary. G. INSTITUTIONAL ARRANGEMENT AND RESPONSIBILITIES

(i) For implementation of this EARF

66. The project implementation unit for electrification and renewal of rolling stock (PIU-ET) established by UTY, with experience of international financing institutions’ procedures and policies, will be responsible for overall implementation of the project, including adherence to ADB SPS 2009. The technical and administrative departments of UTY will also assist the PIU-ET during the project implementation. For the implementation of the updated business plan, a working group, under the supervision of UTY management will be maintained. 67. The PIU-ET carries out its activities during preparation and implementation of investment projects, including development of bidding documents for purchase of freight and passenger electric locomotives with assistance of specialists from associated related departments of the UTY. 68. The PIU-ET comprises 3 core staff including head, chief procurement specialist/accountant, and locomotive specialist. Technical and administrative departments of UTY also assist PIU-ET during project implementation. PIU-ET will also liaise with departments in charge of locomotive depots for their upgrading.

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69. PIU-ET will be responsible for the implementation of this EARF, including facilitation of GRM, and assessing the environmental categorization of additional sub-projects in the unlikely case that they may be identified and added as part of the project scope.

(ii) For IEE preparation and EMP implementation in the case of the sub-projects

being categorized as “B” for environment

70. If additional sub-projects are categorized as “B” for environment for purposes of ADB SPS 2009, PIU-ET will be ultimately responsible for the conduction of environmental assessment, information disclosure procedure, conduction public consultations etc. for such sub-projects, based on this EARF, and recorded in an IEE. 71. For development of IEE(s), the PIU-ET will mobilize qualified environmental specialist(s). The PIU-ET environmental specialist will be responsible for timely preparation of the IEE(s) for the depots in a manner satisfactory to ADB. 72. The environmental department of UTY will be responsible for preparation of national environmental assessment and receiving all required permissions. 73. During the project implementation, a depot’s construction brigade will be responsible for the EMP implementation. PIU-ET’s environmental specialist will be responsible for monitoring of EMP implementation and she/he will be assisted by environmental specialists of rehabilitated/upgraded depots who can conduct monitoring on a daily basis. During the project operation phase, the depots’ environmental specialists will be in charge for compliance with EMP and national environmental requirements. 74. If any instrumental measurements of air, water quality or noise level are needed to be conducted during project construction or operation phases, UTY’s sanitarian epidemiological station (SES) could be involved. 75. The estimated cost for IEE(s) development and EMP implementation is presented below, in the eventuality that additional sub-projects of “B” category are identified and added as part of the project scope.

Table 2: Cost estimates for IEE preparation and EMP implementation Item Unit Quantity Unit cost ($) Total cost ($)

PUI-T’s Environmental Specialist: Remuneration

Person-month

6 1,200 7,200

Per-diem and transportation Lump-sum 1 2,000 2,000

Data collection, noise and vibration modelling

Lump-sum 1 10,000 10,000

Report preparation, communication, consultation

Lump-Sum 1 2,000 2,000

Total 21,200

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H. MONITORING AND REPORTING

76. These monitoring and reporting requirements will arise if additional sub-projects are categorized as “B” for environment for purposes of ADB SPS 2009. 77. The PIU-ET’s environmental specialist will be responsible for monitoring of EMP implementation. 78. If any instrumental measurements of air, water quality or noise level are needed to be conducted during project construction or operation phases, UTY’s sanitarian epidemiological station (SES) could be involved. 79. PIU-ET will be responsible for timely submission of EMRs to ADB on semi-annual base. The format of environmental monitoring report is provided in Attachment 5.

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ATTACHMENTS Attachment 1. Calculation of GHGs emissions for electric and diesel locomotive Greenhouses gases (GHG) calculations were done in collaboration with TRTA’s Consultant on locomotives and in consultations with experts from UTY’s and Tashkent Institute of Railway Engineers. The calculation was done with following assumptions:

(i) the same maximum load for electric and diesel locomotives (t-km); (ii) similar mountain plan and profile (difficult relief) of alignment.

Technical parameters of diesel locomotives which are currently operated on the Uzbekistan railway, technical specifications of electric locomotives procuring under the current project and static characteristics of railroad were used as basic parameters. Calculation were done based on the Guideline for GHG Emissions (GGHGE) of Asian Development Bank Projects (Addition guidance for transport sector). GHGs emissions were calculated only for operation phase (Table 3, GGHGE), since during depots upgrading works CO2 emissions will be negligible in comparison with emissions during operation phase. Emissions factors for diesel, gas and coal were used in accordance with data of UK Department for Business Enterprise & Regulatory Reform (2007, Table 5C: Estimated carbon dioxide emissions from power stations in 2006). Diesel emission factor was used for calculation CO2 emissions from diesel locomotives. A conversion factor to convert kg of used diesel in liter was accepted equal 0.83. For Uzbekistan conditions this factor during summer season is 0.82 and for winter season is 0.85. Taking in account long hot season, an average annual conversion factor was accepted equivalent 0.83. Amount of energy which would be consumed by electric locomotives was calculated based on distribution of source of fuel for energy production in Uzbekistan. In accordance with official data,1 94,1% of energy in Uzbekistan is producing from natural gas and 4.9 % - from coal. The same ratio with relevant emission factors (for gas and coal) was used for calculation CO2 emissions from electric locomotives. In addition, it should be noted that, a theoretically 14.5 kg of air is required for the combustion of 1 kg of diesel during nominal operation of diesel locomotive. During operation on idle the air flow rate increases by 5–6 times. The current calculations were done for scenario with nominal operation regime of diesel locomotive (minimal air consumption). In reality, due idle, CO2 emission will be even higher. Summary of CO2 calculations from electric and diesel locomotives is presented in below table.

# Items Trains

Freight Passengers

Electric locomotives

1 Daily capacity of one locomotive, km-t (#2 x #3)

1440000 840000

2 Weight of train, ton 3000 1200

3 Daily running distance of one locomotive, km 480 700

1 http://www.uzbekenergo.uz/ru/activities/technical-and-economic-indicators/

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# Items Trains

Freight Passengers

4 Time of one locomotive operation with maximal loading, hours/day (#3 x #5)

6.9 10

5 Train speed, km/h 70 70

6 Daily energy consumption by one locomotives, MWh (#4 x #7)

99 96

7 Hourly energy consumption (MWh) of one locomotive, as per technical specification

14.4 9.6

8 Internal energy consumption (for ventilation, heating and etc.) by one locomotive, MWh ((1- #9) x #7 x #10)

49.68 21.6

9 Energy Efficiency 0.85 0.85

10 Working hours of one electric locomotive, hours 23 23

11 Calculation of recuperative energy, MWh (#6 + #8) x #12

37.1 29.4

12 Rate of returning energy in networks is up to 35%. Considering the worse case - option with 25% is calculated

25 25

13 Energy consumption by each type of locomotives during one year, MWh ((#6 + #8 - # 11) x #17 x 365)

650092 257544

14 Total energy consumption with losses in electricity, MWh/year (#13 x #15)

715101 283298.4

15 Losses in electricity network 1.1 1.1

16 Total CO2 emissions for locomotives, ton per year (#14 x #18 / 1000000 * 1000)

279672 110800

17 Number of procured locomotives 16 8

18 gramCO2 emission/(gas+coal) ton

391.09 391.09

19 Total CO2 for freight and passenger electric locomotives, t/year

390468

Diesel locomotives

20 Diesel fuel consumption by each type of locomotive, kg (#6 x # 21 x #22 x #23) x 1000

272471040 132451200

21 Coefficient for calculation the total fuel consumption with consideration losses on diesel and own needs

1.25 1.25

22 coefficient for fuel consumption during parking, maneuvering, diesel heating and other

1.8 1.8

23 the amount of diesel fuel in kilograms for the creation of one effective kWh of energy

0.21 0.21

24 Total diesel fuel consumption by each type of locomotive, liter/year (#20 / #25)

328278361 159579759

25 Conversion factor 0.83 0.83

26 Total CO2 emissions for locomotives, ton per year (#24 x #26)/1000000

877816 426716

27 gramCO2 emission/diesel liter 2674 2674

28 Total CO2 for freight and passenger diesel locomotives, t/year

1304533

29 Difference in CO2 emissions between electric and diesel locomotives (#29 - # 19)

914064.5

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Attachment 2. REA checklist

Instructions: (i) The project team completes this checklist to support the environmental classification of a project. It is

to be attached to the environmental categorization form and submitted to the Environment and Safeguards Division (SDES), for endorsement by Director, SDES and for approval by the Chief Compliance Officer.

(ii) This checklist focuses on environmental issues and concerns. To ensure that social dimensions are

adequately considered, refer also to ADB's (a) checklists on involuntary resettlement and Indigenous Peoples; (b) poverty reduction handbook; (c) staff guide to consultation and participation; and (d) gender checklists.

(iii) Answer the questions assuming the “without mitigation” case. The purpose is to identify potential

impacts. Use the “remarks” section to discuss any anticipated mitigation measures.

Country/Project Title: Sector Division:

Screening Questions Yes No Remarks

A. Project Siting Is the Project area adjacent to or within any of the following environmentally sensitive areas?

▪ Cultural heritage site

▪ Legally protected Area (core zone or buffer zone)

▪ Wetland

▪ Mangrove

▪ Estuarine

▪ Special area for protecting biodiversity

B. Potential Environmental Impacts Will the Project cause…

▪ impairment of historical/cultural areas; disfiguration of landscape or potential loss/damage to physical cultural resources?

▪ disturbance to precious ecology (e.g. sensitive or protected areas)?

▪ alteration of surface water hydrology of waterways resulting in increased sediment in streams affected by increased soil erosion at construction site?

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Screening Questions Yes No Remarks

▪ deterioration of surface water quality due to silt runoff and sanitary wastes from worker-based camps and chemicals used in construction?

▪ increased air pollution due to project construction and operation?

▪ noise and vibration due to project construction or operation?

▪ involuntary resettlement of people? (physical displacement and/or economic displacement)

▪ disproportionate impacts on the poor, women and children, Indigenous Peoples or other vulnerable groups?

▪ poor sanitation and solid waste disposal in construction camps and work sites, and possible transmission of communicable diseases (such as STI's and HIV/AIDS) from workers to local populations?

▪ creation of temporary breeding habitats for diseases such as those transmitted by mosquitoes and rodents?

▪ social conflicts if workers from other regions or countries are hired?

▪ large population influx during project construction and operation that causes increased burden on social infrastructure and services (such as water supply and sanitation systems)?

▪ risks and vulnerabilities related to occupational health and safety due to physical, chemical, biological, and radiological hazards during project construction and operation?

▪ risks to community health and safety due to the transport, storage, and use and/or disposal of materials such as explosives, fuel and other chemicals during construction and operation?

▪ community safety risks due to both accidental and natural causes, especially where the structural elements or components of the project are accessible to members of the affected community or where their failure could result in injury to the community throughout project construction, operation and decommissioning?

▪ generation of solid waste and/or hazardous waste?

▪ use of chemicals?

▪ generation of wastewater during construction or operation?

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Attachment 3. Terms of reference for noise and vibration modeling Noise and vibration modeling needs to be performed in order to assess how the project can meet the WHO standards contained in the World Bank Group’s Environmental, Health and Safety Guidelines (WB EHS Guidelines) for noise and Transportation and Construction Vibration Guidance Manual, California Department of Transportation (2013) for vibration. Results of modeling will provide data on baseline situation and after project implementation. Tasks and Scope of Work:

• Prepare a comprehensive noise and vibration baseline of the project area, near the identified sensitive receptors next to depots;

• Conduct noise and vibration modelling during construction and operation phases in the residential areas using the WHO standards as contained in the WB EHS guidelines (for noise) and in Transportation and Construction Vibration Guidance Manual, California Department of Transportation, 2013 (for vibration) using latest noise and vibration models available in the market that most accurately calculate noise and vibration values from railway operation in urban environments;

• Based on the above studies, propose various mitigation scenarios that would ensure that the WHO standards contained in the WB EHS guidelines are met for the project area for noise and standards, indicated in Transportation and Construction Vibration Guidance Manual, California Department of Transportation for vibration;

• Provide the cost for all mitigation scenarios;

• In order to perform the noise modeling accurately, additional surveys or baseline data on the topography and housing elevations in the area will need to be acquired, other supporting data and information if required will have to be acquired or measured.

• For vibration modelling additional surveys or baseline data on condition of structures located along the railway, presence of historical buildings and sensitive receptors (hospitals, schools, sensitive to vibration devices and etc.) if required will have to be acquired and measured.

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Attachment 4. Proposing GRM 1.1 Objectives In accordance with ADB SPS 2009, Grievance Redress Mechanism (GRM) will be established after the project effectivity, the main goals of GRM are ensuring the receipt and timely redress of grievances and concerns submitted by the aggrieved project affected persons, and resolve complaints at the project level and prevent escalation to the national courts or ADB Accountability Mechanism. A grievance mechanism will be established to allow affected persons appealing any disagreeable decision, practice or activity arising from land or other assets compensation. APs will be fully informed of their rights and of the procedures for addressing complaints whether verbally or in writing during consultation, survey, and time of compensation. The grievance mechanism shall not impede access to the country’s judicial or administrative remedies. Affected persons can approach a court of law at any time and independent of the project level grievance redress process. Along with the ADB requirements on development and approval of grievance redress mechanism by implementation of investment projects, grievance redress procedure in Uzbekistan is also regulated by the national legislation of Republic of Uzbekistan, in particular by the law “On Citizens’ Applications” and the “Law on the order of submission of appeals of physical and legal entities” ((#378, 03 December 2014). According to the “Law on the order of submission of appeals of physical and legal entities”, the application or complaint shall be considered within fifteen days from the date of receipt in the state authority, which is obliged to resolve the issue on the merits, as well as require additional study and (or) check, a request for additional documents - up to one month. The submission procedure for grievances and citizens’ applications has been discussed during the public consultations in the project districts. 1.2 Grievance Redress Mechanism The GRM for the current project takes into account the national legislation, the specificity of the project sites and results of public consultations. The APs will have the right to file complaints and queries on any aspect of environmental issue, land acquisition compensation and resettlement. PIU (UTY) will be responsible for establishment of GRM after the project effectivity and act as the GRM secretary to make sure that the GRM is operational to effectively handle environmental and social concerns of project affected persons. The proposing GRM was discussed PIU-ET manager and. PIU-ET will ensure that grievances and complaints on any aspect of the environmental aspects, land acquisition, compensation, and resettlement are addressed in a timely and satisfactory manner. All possible avenues are made available to the APs to resolve their grievances at the project level. Under the proposed project level grievance mechanism, affected households may appeal any decision, practice or activity connected with environmental aspects, the assessment or valuation of land or other assets, acquisition and compensation. APs will be made aware of the procedures they can follow to seek redress, including, if necessary resort to the courts through the Government’s grievance mechanism.

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Level/Steps Process Timeline

Level 1- O’zbekistan (or other rehabilitated) depot(s), or district khokimiyats

The aggrieved person submits a grievance at O’zbekistan depot (or other rehabilitated depots) or khokimiyats. A designated focal point from depot will receive, register grievance and forward it daily to the Chief Engineer at O’zbekistan depot (or other rehabilitated depots). The alternative grievance entry points will be khokimiyats due to their obligations defined by the national legislation. After receiving grievances, the designated focal point from depot will review and asses the nature/specificity of the grievance, inform the Chief Engineer and forward grievances to the relevant party for resolution. Depending on the nature of grievance, it may be forwarded to Contractor (depot construction brigade), Land Cadaster, Makhalla or district branch of Nature Protection Committee. For example, complaints related to resettlement issues may be forwarded to Land Cadaster, khokimiyat and makhallas. In case of environmental issue, compliant will be forwarded to Contractor (depot construction brigade) or District Nature Protection Committee. The Chief Engineer will deal with grievances related to impact caused by the locomotive depots only.

15 days

Level 2 - UTY’s secretariat in Tashkent

In case the grievance was not redressed at the first stage or the aggrieved person is not satisfied with the decision made, s/he can submit the grievance directly to UTY’s secretariat in Tashkent. In accordance with the established procedure, the secretariat will forward complaints to Department of locomotive Operation to redress it. In case the grievance is not related directly to the project, the aggrieved person will be directed to appropriate departments where s/he should apply for the decision making. If the grievance was not redressed at the level of Department of Locomotive Operation, the grievance will be submitted to UTY’s Сhief Engineer and he will appoint special commission for redressing grievance.

30 days

Level 3- Economic Court

If the issue was not solved or the applicant is dissatisfied with the decision/resolution, the aggrieved person may submit grievance to the Economic Court (Court of Law) where decision will be made in accordance with relevant national legislations. However, a complainant may approach the court of law at any time during the grievance redressal process.

1.3. GRM Records and Documentation Most of grievances on environmental aspects, land acquisition and resettlement issues are redressed at 1-2 levels. All grievances received from the population will be registered in a logbook which should be available at all levels: at the O’zbekiston depot (or other rehabilitated depots). Besides, there are also logbooks in the khokimiyats where the grievances from the population are usually registered. Even so, the information on received by depots grievances and applications from the aggregated persons and undertook measures should be submitted to the representatives of PIU-ET on the project site for the accounting all grievances. Thereafter the information on all received grievances will be collected at the PIU-ET. The aggrieved persons can also use the ADB Accountability Mechanism (AM) through the direct citizens’ application to the Head Quarter in Manila, particularly to Complaints Receiving Officer,

Accountability Mechanism Asian Development Bank Headquarters6 ADB Avenue,

Mandaluyong City 1550, Philippines Email: amcro@adb.org, Fax +63-2-636-2086. AM is the last resort and ADB has its availability as a recourse in case other mechanisms for dealing with harmful project effects are not successful. GRM is required by ADB SPS 2009 and the use of project level GRM should be encouraged first.

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Attachment 5. Outline of Environmental Monitoring report

Project Number: {XXXXX} {Reporting period: Month Year} {Full Country Name}: {Project Title} {(Financed by the <source of funding>)} Prepared by {author(s)} {Firm name} {City, country} For {Executing agency} {Implementing agency} Endorsed by: (staff name of IA/PIU) and signature, submission date

Semi-annual Environmental Monitoring Report

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Table of Contents

Part I Introduction

• Construction activities and project progress during the previous 6 months.

• Changes in project organization and environmental management team.

• Relationships with contractors, owner, lender, etc.

Part II Environmental Monitoring

Summarize the previous 6 months of environmental monitoring data, and provide explanations of any instances in which environmental standards or guidelines were exceeded. Typically, this will cover:

• noise and vibrations,

• water quality,

• air quality, and

• flora and fauna monitoring.

• Recommendations are required to show how any exceedances will be prevented in the future.

Graphs can be used in this section to show trends, but large tables of data or multiple graphs should be attached in an appendix.

Part III Environmental Management

• The environmental management system (EMS), site-specific environmental management plan (SEMP), and work plans – to report on delivery of documents, required amendments, etc.

• Site inspections and audits – to summarize the number and type of site visits.

• Noncompliance notices – to summarize the details, including the number of notices given out, the issues covered, and the ranking of issues.

• Corrective action plans – to report on timeliness of preparation and completion.

• Consultation and complaints – to report on any consultations undertaken and list any complaints received.

Annexes

• Monitoring data.

• Photographs.

• Implementation report on the environmental impact assessment (EIA)/initial environmental examination (IEE) mitigation requirements, using the following format:

Reference Requirement Action to date Action required/comment