Document of 
                                     The World Bank 
             
                                FOR OFFICIAL USE ONLY 
     Public Disclosure AuthorizedPublic Disclosure Authorized 
                                                             Report No: 44068-KZ 
                                            
                                            
                                            
                                            
                                            
                               PROJECT APPRAISAL DOCUMENT 
                                            
                                         ON A 
                                            
                                     PROPOSED LOAN 
     Public Disclosure AuthorizedPublic Disclosure Authorized 
                             IN THE AMOUNT OF US$2.125 BILLION  
                                            
                                        TO THE 
                                            
                               THE REPUBLIC OF KAZAKHSTAN 
                                            
                                         FOR A 
                                            
                               SOUTH WEST ROADS PROJECT:  
              WESTERN EUROPE – WESTERN CHINA INTERNATIONAL TRANSIT CORRIDOR 
                                     (CAREC-1b & 6b)  
     Public Disclosure AuthorizedPublic Disclosure Authorized 
                                            
                                            
                                       April 7, 2009 
                                            
                                            
                                            
            Sustainable Development Department 
            Central Asia Country Unit 
            Europe and Central Asia Region 
             
                                            
            This document has a restricted distribution and may be used by recipients only in the 
     Public Disclosure AuthorizedPublic Disclosure Authorizedperformance of their official duties. Its contents may not otherwise be disclosed without World 
            Bank authorization. 
                   
                                                       CURRENCY EQUIVALENTS 
                                                (Exchange Rate Effective: January 30, 2009) 
                                                      Currency Unit  =  Kazakhstan Tenge (KZT) 
                                                       KZT 120.00  =  US$1.00 
                                                           US$1.00 = KZT 0.0083 
                                                                       
                                                              FISCAL YEAR 
                                                         January 1    –   December 31 
                                                                       
                                                  ABBREVIATIONS AND ACRONYMS 
                    ADB      Asian Development Bank                      IMF       International Monetary Fund 
                    APL      Adaptable Programmatic Loan                 IPSAS     International Public Sector Accounting 
                    BEEPS  Business Environment and Enterprise                     Standards 
                             Performance Survey                          ISA       International Standards on Auditing  
                    BP Bank Procedure                                    JERP      Joint Economic Research Program 
                    CAREC  Central Asia Regional Economic                JICA      Japan International Cooperation Agency 
                             Cooperation                                 MoF       Ministry of Finance 
                    CIS      Commonwealth of Independent States          MoTC      Ministry of Transport and Communications
                    CPS      Country Partnership Strategy                MOU       Memorandum of Understanding 
                    CPI      Corruption Perception Index                 NCB       National Competitive Bidding 
                    DPL      Development Policy Loan                     NFRK      National Fund of the Republic of 
                    EARF     Environmental Assessment Review                       Kazakhstan 
                             Framework                                   NPV Net Present Value 
                    EBRD     European Bank for Reconstruction and        OP        Operation Policy (of the World Bank) 
                             Development                                 PCR       Physical Cultural Resources 
                    EIA      Environmental Impact Assessment             PMC Project Management Consultants 
                    EMP      Environment Management Plan                 POM Project Operations Manual 
                    ERR      Economic Rate of Return                     PPP       Public Private Partnership  
                    ESIA     Environmental and Social Impact             RAP       Resettlement Action Plan 
                             Assessment                                  RMS       Road Management System 
                    FSU      Former Soviet Union                         ROSC      Reports on Observance of Standards & 
                    GAC Governance and Anti-Corruption                             Codes  
                    GDP      Gross Domestic Product                      RPF       Resettlement Policy Framework 
                    GPN      General Procurement Notice                  RSDP      Road Sector Development Program  
                    GRSF     Global Road Safety Facility                 RTRP      Road Transport Restructuring Project 
                    HDM4  Highway Development and Management             SBD       Standard Bidding Document 
                             Model (fourth version)                      SIL       Specific Investment Loans 
                    IBRD     International Bank for Reconstruction and   SNIP      Technical Standards and Regulations of the 
                             Development                                           Former Soviet Union 
                    ICB International Competitive Bidding                SOE       Statement of Expenditure 
                    IDB      Islamic Development Bank                    TOR       Terms of Reference  
                    IDF Institutional Development Fund                   TSDS      Transport Sector Development Strategy 
                    IFIs     International Financial Institutions        UNDB  United Nations Development Business 
                    IFR      Interim Financial Report                    WBI       World Bank Institute 
                    IFRS     International Financial Reporting           WE-WC  Western Europe – Western China  
                             Standards  
                     
                                                   Vice President:       Shigeo Katsu, ECAVP 
                                     Country Director / Manager:         Motoo Konishi / Sergei I. Shatalov, ECCU8 
                                                  Sector Director:       Peter D. Thomson, ECSSD 
                                        (Acting) Sector Manager:         Henry G. R. Kerali, ECSSD 
                                               Task Team Leader:         Henry G. R. Kerali / Jacques Buré, ECSSD 
                                                                       
                     
                                                            KAZAKHSTAN 
                                                  SOUTH WEST ROADS PROJECT 
                                                                       
                                                              CONTENTS 
                                                                                                                  Page 
                    A.   STRATEGIC CONTEXT AND RATIONALE..................................................................1 
                      1.   Country issues......................................................................................................................1 
                      2.   Trade and transport sector issues.........................................................................................3 
                      3.   Rationale for Bank involvement..........................................................................................5 
                      4.   Higher level objectives to which the Project contributes ....................................................6 
                    B.   PROJECT DESCRIPTION..................................................................................................7 
                      1.   Lending instrument..............................................................................................................7 
                      2.   Program objective and phases .............................................................................................7 
                      3.   Project development objective and key indicators ..............................................................8 
                      4.   Project components..............................................................................................................9 
                      5.   Lessons learned and reflected in the project design ..........................................................11 
                      6.   Alternatives considered and reasons for rejection.............................................................12 
                    C.   IMPLEMENTATION.........................................................................................................13 
                      1.   Partnership arrangements...................................................................................................13 
                      2.   Institutional and implementation arrangements.................................................................14 
                      3.   Monitoring and evaluation of outcomes/results ................................................................15 
                      4.   Sustainability.....................................................................................................................16 
                      5.   Critical risks and possible controversial aspects ...............................................................16 
                      6.   Loan/credit conditions and covenants ...............................................................................20 
                    D.   APPRAISAL SUMMARY..................................................................................................22 
                      1.   Economic and financial analyses.......................................................................................22 
                      2.   Technical............................................................................................................................23 
                      3.   Governance and anti-corruption action plan......................................................................24 
                      4.   Fiduciary............................................................................................................................25 
                      5.   Social.................................................................................................................................26 
                      6.   Environment......................................................................................................................29 
                      7.   Safeguard policies..............................................................................................................30 
                      8.   Policy Exceptions and Readiness......................................................................................33 
                                                                     i 
        Annex 1. Country and Sector or Program Background..........................................................34 
        Annex 2. Major Related Projects Financed by the Bank and/or other Agencies..................43 
        Annex 3. Results Framework and Monitoring..........................................................................44 
        Annex 4. Detailed Project Description.......................................................................................47 
        Annex 5. Project Costs ................................................................................................................56 
        Annex 6. Implementation Arrangements..................................................................................57 
        Annex 7. Financial Management and Disbursement Arrangements......................................66 
        Annex 8. Procurement Arrangements.......................................................................................76 
        Annex 9. Economic and Financial Analysis..............................................................................83 
        Annex 10. Safeguard Policy Issues.............................................................................................91 
        Annex 11. Governance and Anti-Corruption Action Plan.....................................................102 
        Annex 12. Project Preparation and Supervision ....................................................................108 
        Annex 13. Documents in the Project File.................................................................................109 
        Annex 14. Statement of Loans and Credits.............................................................................110 
        Annex 15. Country at a Glance ................................................................................................111 
        Annex 16. Maps - IBRD 36239 and 36538...............................................................................113 
         
                           ii