While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with Performance Standards 1, 2 and 3.
PS1: Social and Environmental Assessment and Management Systems.
PS2: Labor and Working Conditions.
PS3: Pollution Prevention and Abatement.
The five remaining Performance Standards are not applicable for purposes of this review. Because this investment activity does not involve the establishment of site-based assets, there is no associated community exposure to health and safety risks (PS4) or land acquisition impacts (PS5). Nor do railcar leasing/rent activities involve major threats to biodiversity or habitat destruction (PS6). Moreover, there are no indigenous people or cultural heritage impacts associated with these activities.

This is a category B project because the Company’s railcar lease and rental activities do not involve actual operations or maintenance of the wagons, which are designed and maintained according to local and international standards as appropriate for their operational usage, and therefore the company''s activities will not result in any material environmental and social risks and impacts.

Key issues for this investment are environmental and social organization and management of leased/rented railcars, including relationships with manufacturers and lessees/renters; employee working conditions, including health, safety and training programs. The rail cars are receiving maintenance either by the lessees or in state run railcar maintenance centers spread over key locations in the rail network of Kazakhstan. IFC’s appraisal of Eastcomtrans'' activities indicates that this investment will not result in any material change in the management of environmental & social impacts and risks associated with the Company''s current well run operations.

PS1: Social and Environmental Assessment and Management Systems.
As a railcar leasing renting company, Eastcomtrans’s process of assessment and management of risks and impacts is confined to ensuring the cars and wagons it acquires and leases/rents are designed and constructed to meet appropriate and relevant safety and environmental standards. These include those of the Republic of Kazakhstan Railways regulations, and the certification system of the Federal Railway Transportation of Russia (SCFRT), the latter because most of long distance freight is crossing into Russia. Eastcomtrans’s railcar designs are also consistent with the requirements for railcars used in the part of Europe serviced by the wide-wheel-track (1,520 mm) system used in former Soviet countries. Through its internal quality control procedures, the Company’s engineering staff and quality inspectors ensure that wagons are constructed by various licensed manufacturers in accordance with these requirements.

Each car will be fabricated by one of the major licensed manufacturers in Russian or Ukrainian, and will have a passport, or vehicle registration certificate, confirming that the car meets all required design specifications, such as material of construction, thickness, coatings and linings, etc. In addition, cars will be equipped with appropriate safety features, such as additional safety valves, automatic coupler restraining arms, shelf couplers (to prevent separation in an accident) and end shields, and appropriate top hatch seals and bottom valve controls. As appropriate, railcars will display labels describing the dangerous properties of the goods being carried (MPS hazardous index and UN hazardous class) to allow proper handling by transport personnel or emergency services in the event of an accident. Moreover, Kazakh regulations require railcars to undergo regular, frequent maintenance and repair at licensed maintenance depots where the entire wagon, according to the service interval reached is checked and, for specific ages/mileage limits, disassembled and worn components replaced or brought up to standard.

As a railcar leasing and renting company, Eastcomtrans currently has, and will continue to have, limited or no responsibility for managing the hazardous materials in transport. Instead, this responsibility lies with the actual carrier or operator of the railcar, from loading through transportation to unloading. The carrier will be responsible for monitoring the material during transport, such as inspecting for leaking valves in transit. Prior to executing leases with railcar operators, Eastcomtrans will use reasonable efforts to ensure lessees have the necessary capacity and procedures in place to operate the railcars in compliance with relevant environmental requirements.

Again, owing to its limited responsibility, Eastcomtrans will depend on its customers and government authorities for accident planning and response. In this capacity, the authorities will provide emergency planning and response coordination, emergency response equipment, and appropriate training of its employees. In the event of an accident, customer personnel or on-the-scene railroad staff will immediately notify the national emergency management who in turn inform the impacted community in coordination with the local authorities. At the same time, the authorities response teams will mobilize and respond to the damage and to eliminate risks posed.

PS2: Labor and Working Conditions.
Eastcomtrans operates in a country where the legislations requirement with respect to labor conditions are largely similar to Performance Standard 2. Further, Eastcomtrans ensures the human resources policy for its around 150 employees is transparent and fair by letting all hiring be carried out through a head hunting company. This company ensures transparent conditions of employment, as well as wages and benefits, are appropriately communicated to employees. Based on local regulations on equal opportunities, its procedures are designed to encourage equal opportunity and non-discrimination. The Company has a grievance system based on an open doors principle where all employees have the right to, and are encouraged to, go directly to the General Director. The grievance system has been used in practice and no one has ever left the company as a result of using the system.

Employees are located in commercial office space; and only personnel providing organizational services to the oil and gas companies by the Caspian Sea are in need of attending workplaces where occupational health and safety pose risks or concerns. The employees providing these services to the oil and gas companies operate under an OHSAS18001 certified health and safety system managed by said companies.

PS3: Pollution Prevention and Abatement.
The key pollution-related risk associated with Eastcomtrans'' rail car leasing and renting activities surrounds wagon maintenance-related effluents and wastes management. Here again, all applicable railcar maintenance activities are outsourced to selected government run workshops or licensed facilities owned and operated by private contractors. At these facilities, the insides of the cars are typically steam cleaned with aqueous-based cleaning solutions. Wash waters are then collected and treated in holding lagoons prior to surface water discharge in compliance with national and local environmental requirements.

Owing to the nature of Eastcomtrans'' railcar leasing and renting activities, no local communities are directly affected by the business activity. Instead, any community-related risks and impacts associated with railcar operation are the responsibility of the operator and/or the relevant government authority as described above. As a result no formal information dissemination activities have been undertaken. Notwithstanding, Eastcomtrans has a web-portal (http://www.ect.kz) and will be establishing methods for communication of environmental and social aspects of its activities to external interested stakeholders. In addition, the Company will establish and maintain procedures for receiving, documenting, and responding to concerns from any external interested parties, as appropriate.

Eastcomtrans LLP
Att: Adilzhan KOZHABERGENOV,
CFO,
5, Al-Farabi Ave,
Business Center «Nurly Tau»
2A Building, 902 Office
Almaty, Kazakhstan, 050059

Email: mailto:kozhabergenov@ect.kz
Tel.: + 7 727 2777878 (ext. 726)
Fax: + 7 727 2777879
Mob.: + 7 701 221 9051