PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: 63085 Project Name Turkmenbashi Port Improvement Project Region EUROPE AND CENTRAL ASIA Country Turkmenistan Sector Ports, waterways and shipping (100%) Project ID P123676 Borrower(s) Government of Turkmenistan Implementing Agency State Service of Maritime and River Transportation of Turkmenistan, Turkmenbashi, Turkmenistan Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 23, 2011 Estimated Date of October 30, 2011 Appraisal Authorization Estimated Date of Board January 31, 2012 Approval 1. Information and Context Located along the eastern shore of the Caspian Sea, Turkmenistan is bordered by Iran, Afghanistan, Uzbekistan, and Kazakhstan. It is a fairly large country (488,000 sq. km) but sparsely populated (est. pop. 5 million), with the Karakum desert covering over 80 percent of its land area. Less than half of its population lives in urban areas. The capital, Ashgabat (est. pop. 1 million) is situated in the south near the border with Iran, while Turkmenbashi, the country’s main port and trade link to the world, is located in the Caspian across from Baku, Azerbaijan. Since independence in 1991, Turkmenistan has adopted a gradual approach to the transition to a market economy, and the state continues to play a dominant role in most sectors of the economy. Agriculture accounts for about 12 percent of the country’s gross domestic product, but employs a large share of the labor force, while the industrial and the services sectors comprise about 54 and 34 percent of GDP respectively. In 2009, Turkmenistan’s gross national income per capita was estimated at US$3,420. Turkmenistan has the fourth largest gas reserves in the world, and prospects for future economic growth depend to a very large extent on its tremendous hydrocarbon endowment. Foreign trade has expanded rapidly in recent years, with exports reaching a peak of US$9.08 billion in 2008 (including oil and petroleum products) and US$4.7 billion in imports, resulting in a sizeable trade surplus. However, the undiversified economy remains vulnerable to commodity price fluctuations, with natural gas accounting for 52 percent, petroleum products for 24 percent and crude oil for 14 percent of total exports. As in many other natural-resource dependent countries, inflation and currency appreciation remain longer-term risks to competitiveness. To make the growth prospects more sustainable and to reduce dependence on commodity exports, the Government of Turkmenistan aims to diversify the economy’s production and export base, as well as to promote private sector development and increase its share of GDP. Major obstacles to economic development and diversification remain, including limited agricultural liberalization, barriers to private sector development, and infrastructure bottlenecks. Promoting sustainable development and modernizing selected transport infrastructure are key challenges that need to be addressed in order to support economic development and raise living standards. The last World Bank supported Country Assistance Strategy (CAS) for Turkmenistan expired in 2003. An Interim Strategy Note (ISN) is now being developed in parallel to the preparation of the proposed Project based on the ISN initially drafted in 2008. 2. Proposed Development Objective The proposed Project Development Objective (PDO) is to increase capacity of the rail ferry terminal to handle non-oil products, and improve environmental and safety practices at the Port of Turkmenbashi. This will be achieved through an investment project that aims at enhancing the competitiveness of the port of Turkmenbashi to meet current and future demand, improving safety and security of port operations and initiating port reform. In addition, the investment will help to bring the Port’s environmental and safety practices in line with international and regional standards. 3. Preliminary Description The proposed project components include the following: A: Environmental and Safety Compliance. This component aims at bringing the port safety, security and environmental practices in line with international and regional standards. The component includes the acquisition of oil spill response equipment, response vessel and waste water collection vessel as well as consultants’ services to achieve International Ship and Port Security (ISPS) certification. B: Port Modernization. This component aims at improving port infrastructure, expediting the loading and discharging of rail wagons, and supporting improvements in port planning and management. The component includes the reconstruction of the ferry terminal (left ramp and major access), consultants’ service for the design and supervision of the reconstruction, acquisition of shunting locomotives and consultants’ services to advice on port planning and port management model. C: Port implementation support. This component includes project implementation support, such as audits, consultants, training, etc. 4. Safeguard policies that might apply Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Physical Cultural Resources (OP/BP 4.11) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Project interventions will include civil works for reconstruction of the rail ferry terminal as well as acquisition of new tugboats and vessels needed to improve collection of waste water and solid waste from ships as well as the provision of oil-spill response equipment. The project design does not include investment in waste treatment facility. Ferry terminal reconstruction will carry moderate and manageable environmental risks typical for this type of civil works. Increased capacity for collecting wastewater, solid waste, and spilled oil will necessitate work on on-shore facilities needed manage such waste. OP 4.01, on Environmental Assessment, is triggered. An Environmental Assessment will be carried out; an Environmental Management Plan will be prepared before appraisal. Comprehensive upgrade of the Turkmenbashi Port is a broad task outlined in the existing long term plan for its development. The plan is of a general nature, though, without explicitly formulated priorities, implementation arrangements and financing sources. Therefore possibility of placing and analyzing the expected environmental risks of the proposed project in the context of cumulative impacts of the Port development is pretty restricted. This issue may be revisited at the later stages of the project preparation and during implementation as made possible upon refinement of the Port development plan. At stage of project design it is not clear if OP/BP4.04 will be triggered. The EIA will be examining whether or not the works will have any impact on the protected habitat, and if so, adequate mitigation measures will be proposed. The Project will make improvements to existing facilities and is classified as environmental Category B. No land acquisition or resettlement is anticipated because the project will take place within the confines of the port. However, in accordance with OP 4.01, the Environmental Assessment will identify any significant social impacts associated with the project (including any ancillary activities outside the port) and set out measures needed for their management or mitigation, if needed. The Project will be implemented in an international port on the Caspian Sea, which is surrounded by five riparian countries. Turkmenistan is a party to the MARPOL Convention for the Prevention of Pollution from Ships. Consultation is ongoing with respect to communicating information on the proposed project to the relevant parties. 5. Tentative financing Source: ($m.) Borrower TBD International Bank for Reconstruction and Development 62.00 Total 62.75 6. Contact point World Bank Contact: Cordula Rastogi Title: Transport. Economist Tel: (202) 473-2721 Email: crastogi@worldbank.org 7. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop