International Logistics Centres/Nodes Network Central Asia at

This project is funded by the European Union

INTERNATIONAL LOGISTICS CENTRES/NODES NETWORK IN CENTRAL ASIA

EuropeAid/125727/C/SER/MULTI

Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan

An EU Funded Project under the Consortium Management of the following companies:

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International Logistics Centres/Nodes Network Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan

EuropeAid/125727/C/SER/Multi

Inception Report

This project is funded by A project implemented by the Consortium the European Union SAFEGE, RINA Industry, IRD Engineering and Italferr

The European Union’s TRACECA Programme for “Partner Country”





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Logistics Centres Inception Report – January 2009

Entity/Project Partner Russian

Copy English

Copy Signature/Receipt

1. Ministry of Transport and Communication of Republic of Kazakhstan

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2. Ministry of Transport and Communication of Republic of Tajikistan

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3. Ministry of Transport and Communication of Republic of Kyrgyzstan

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4. Turkmen Maritime and River Lines

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5. Ministry of Foreign Economic Relations Investment and Trade, Uzbekistan

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6. TRACECA National Secretary in Kazakhstan

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7. TRACECA National Secretary in Tajikistan

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8. TRACECA National Secretary in Uzbekistan

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9. TRACECA National Secretary in Kyrgyzstan

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10. IGS TRACECA Baku Permanent Secretariat, Azerbajan

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Project Title : Project Number : Beneficiary Country : Project Partner EC Contractor Name : ___________________ ___________________ Address : ___________________ ___________________ Tel. number : ___________________ ___________________ Fax number : ___________________ ___________________ Telex number : ___________________ ___________________ Contact person : ___________________ ___________________ Signatures : ___________________ ___________________ Date of report : Reporting period : Author of report : EC M & E team _________________ _________________ _____________ [name] [signature] [date] Poject Manager _________________ _________________ _____________ [name] [signature] [date]





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Project Title: International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan: Project Number : EUROPEAID/125727/C/SER/Multi Country : All Project Designated Countries Project Client EC Contractor Name : EC Delegation Safege, Rina, IRD, Italferr Address : 20A Kazibek Bi Almaty 15-27 rue du Port – Parc de l’île Kazakhstan 050010 92022 Nanterre, France Tel. number : + 7 (327) 291 7676 0343 + 33 1 46 14 71 52 Fax number : +7 (327) 291 0749 + 33 1 47 24 72 02 E-Mail Address: [email protected] [email protected] Contact person: Ms Gulnara Dusupova Ian Grant Project Manager Senior Project Director Signatures : ___________________ _________________ Start Date of the Project: 15th January 2009 Project Duration January 2009 to 31

December 2010 Date of report: 15 April 2009 Reporting period: 15 January 2009 – 15 April 2009 Author of report: SAFEGE Consulting Engineers

Name Signature Date EC M&E Team …………….………………………………………………………………….. EC Delegation ………………………………………………………………….…………….. EC Project Manager …………………………………………………………………………………





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PROJECT SYNOPSIS

Project Title: International Logistics Centres/Nodes Network in Central Asia at the

Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan

Project Number: EUROPEAID/125727/C/SER/Multi Country All Project Designated Countries Project objective Support international trade and facilitate the movements of goods

along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport.

Planned outputs i) Analysis of TRACECA logistic network and the related operation of

transport and logistics within the network; ii) Identification, ranking and promotion of logistics centres’ projects; iii) Feasibility studies of the selected projects Project activities a) Evaluate traffic flows and assess the effectiveness of the transport

and logistics network in the beneficiary countries; b) Identify needed improvements to the logistics network through the

improvement/new construction of logistics centres, with emphasis on generating strong support from the private sector,

c) Using multi-criteria analysis, develop a list of potentially viable candidate projects, undertaking economic, technical and financial feasibility studies

Project starting date Contract was signed on 23 December 2008, and the official start

date was 15 January 2009 Project duration Project duration will be 24 months, terminating on 31 December

2010.





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Glossary

ABBAT Association of Road Transporters (Tajikistan) ADB Asian Development Bank EBRD European Bank for Reconstruction and Development EC European Commission CAREC Central Asia Regional Economic Cooperation IFI International Financial Institution JICA Japan International Cooperation Agency Logistics Centres Infrastructure and facilities necessary for the efficient movement of

goods between transport modes, or during redistribution, including, at a minimum, warehousing, customs, handling equipment

MOT Ministry of Transport NIS Newly Independent States TENS Trans European Networks TOR Terms of Reference TRACECA Trans Caucasus Europe Central Asia UNDP United Nations Development Program UTY Uzbekiston Temir Yullari





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TABLE OF CONTENTS

EXECUTIVE SUMMARY

1 IMPLEMENTATION FRAMEWORK 5

1.1 Contract Information 5

1.2 Counterpart Structures 5

1.3 Project Steering Arrangements 6

1.4 Project Team Organization 6

1.5 Reporting Requirements 7

2 KEY ACTIVITIES AND FINDINGS FROM INCEPTION PHASE 7

2.1 Description of mobilization 7

2.2 Activities linked to Project Management 7

2.3 Activities linked to Implementation 8

2.4 Review of project design and relevancy 13

2.5 Review of Objectives and Results 14

2.6 Assumptions and Risks 15

2.7 Components/Proposed Activities in light of findings from Inception Phase 17

2.8 Addendum or Administrative Order Issues 18

3 OVERALL WORK PLAN 19

3.1 Relation/coordination with other projects 19

3.2 Project approach 20

3.3 Project components and sub components 20

3.3.2.1 Disaggregated cargo flows 21

3.4 Intended results or outputs 33

3.5 Planning for the whole duration of the project 33

4 DETAILED PLANNING FOR NEXT REPORTING PERIOD 34

4.1 Project Management and Resource Allocation 35

5 SUSTAINABILITY 35

6 CONCLUSIONS 39

7 ANNEXES (SHOWN IN SEPARATE VOLUME TO THIS REPORT) 40

Annex 1: Project Revised Logical Framework 40

Annex 2: Meetings held during Inception Phase 40

Annex 3: Minutes of Pre Kick – Off Meeting 40

Annex 4: Administrative Orders 40

Annex 5: Documents Consulted 40

Annex 6: Terms of Reference (please insert original ToR) 40





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Annex 7: Draft Selection Criteria 40

Annex 8:Draft Candidate Logistics Centres 40






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EXECUTIVE SUMMARY Relevance of the Project The economies of the countries of Central Asia are not self – sufficient and are dependent upon the stability of relationships with neighbouring states. Security of transport routes is therefore a critical issue. Economic development is dependent on mutual cooperation in the region and stronger integration with the global economic system is essential for sustained growth and development. One of the impediments to expansion of trade between Europe and Central Asia is the inefficiency of many elements of the existing transport system in the region; transport costs are high, efficiency is low and delays are frequent. Rail transport, while most efficient over long distances, often cannot provide reliable door – to – door services required by users; road transport, while more flexible than rail, is quite expensive over long distances. It is the extensive reliance on long – distance road transport and inefficient rail services that contribute to the high cost and low reliability of transport in Central Asia. Implementation of multi – modal transport systems is the logical approach in Central Asia and the development of a network of well – designed and operated logistics centres will contribute towards an effective multi – modal network for the region. This will enable transport operators to offer convenient door – to – door services, thus reducing transport costs and increasing the cost effectiveness of regional transport. The prospect of establishing modern logistics centres in the region has been greeted with enthusiasm by transport operators and forwarders, as well as by government officials in each beneficiary country. Logistics centres are needed for the more efficient process of consolidating shipments, distribution of goods within large metropolitan areas; fast and efficient customs inspection is also a benefit of establishing these facilities. While there are other transport issues, being addressed by other projects (infrastructure improvement, establishing more efficient cross – border procedures, etc.), the establishment of modern logistics centres will make a significant contribution to improving transport efficiency and effectiveness in the region. Project Start - up The project Technical Assistance Team has mobilized, established the primary office in Almaty and made field visits to each beneficiary country, holding discussions with government officials, private sector transport organizations and other International Financial Institutions. The technical assistance will comprise 3,100 person days that include 1,000 person – days of key experts, 1,750 person – days of long term non – key experts and 350 person – days of short term non – key experts. National coordinators have been appointed for each country from the long – term non – key experts; candidates for short term non – key experts have been identified from each country and the





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process of developing Terms of Reference for these individuals is now in progress. Contact has been made and liaison will be continued with other TRACECA transport and logistics projects. Approach to the Work The approach to this project involves firstly, the identification of traffic flows in the territory of the five beneficiary countries, highlighting the major corridors through which import, export and transit traffic is moving. These flows will include both road and rail freight traffic. Secondly, these existing traffic flows will be projected over a 20 year period, using existing, historical and likely future growth rates of the economies of the nations in Central Asia. Partly on the basis of these projected traffic flows, future logistics centres projects will be evaluated. Concurrently, selection criteria for candidate logistics centre projects will be developed; these criteria are already under consideration by the technical assistance team. Applying the selection criteria to candidate projects, we will begin the process to develop a strong short list of potential projects in each beneficiary country. While we are identifying this short list, we will intensify our contacts with potential financing organizations, in order to assess the likelihood of financial support and if necessary, to modify our project presentation to obtain the strongest support. During meetings in some beneficiary countries, as well as during coordination meetings with other EC projects in the region, the issue of the credibility of our work has been questioned, in the sense of “this is just another consultant producing another study”. There have been many similar studies in the past in this region; many of these previous studies did not result in project implementation or improvements. We need to stress during discussions with stakeholders that our work is to include interested financing partners and that when we prepare our evaluations, we include these future financing partners in our work process. If presented properly, we can distinguish ourselves as preparing projects that are implementable, with strong likelihood of finance. Next Steps The immediate challenge to the project is to develop the region – wide transport data base. Sources of information were identified in each country during trips to the region, national coordinators have been hired and additional local experts in each country are currently being identified. The information gathering phase is under way now and will continue through the next reporting period (to 15 October 2009). We are coordinating these transport data needs with other EC projects but to date we have not been able to obtain a significant amount of useful data. We will continue to use our regional expert staff to find the appropriate sources of such data, as well as our liaison efforts with other ongoing projects in the region. We also are developing evaluation criteria to use in the selecting of most likely candidate logistic centre project. We will also liaise with the other Logistics Centresoject covering the Western NIS and Caucasus regarding establishing of common selection criteria.





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The following bar chart indicates planned progress of our project.






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Tasks

Deliverables J F M A M J J A S O N D J F M A M J J A S O N D

Mobilization and project management

Inception Report

A1: Traffic flow analysis and infrastructure conditionA1.1: Disaggregated cargo flowsA1.2: Main logistics nodesA1.3: Main transport linksProgress Reports

A2: Main issues encountered by operatorsA2.1: Identify missing linksA2.2: Border crossing issuesA2.3: Existence of private operatorsA2.4: Barriers to efficient flow of goodsA2.5: Barriers to efficient logistics centres

B: Identify rank and promote logistics centre projectsB.1: Identify priority projectsB.2: Rank projects using multi-criteriaB.3: Visit logistics centres in Europe

C: Feasibility studies of selected projects

Draft Final ReportFinal Report

INTERNATIONAL LOGISTICS CENTRES - WORK PLAN

2009 2010

Nov 15

Apr 15

July 15 Jan 15 July 15

Dec 31






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IMPLEMENTATION FRAMEWORK

1.1 Contract Information The Contract for this project was signed, by the EC Contractor, in December 2008 and implementation was officially started on 15 January 2009. The Team Leader mobilised on 16 January and the Economist/Business Plan Specialist arrived on 17 February 2009. Endorsement Letters have been received from each of the five beneficiary countries.

1.2 Counterpart Structures Project management is within the EC Delegation to Kazakhstan in Almaty. Beneficiary organizations in each country include the Ministry of Transport and Communications in Kazakhstan, Kyrgyz Republic and Tajikistan. In Uzbekistan the beneficiary is the Ministry of Foreign Economic Relations, Investments and Trade; and in Turkmenistan the Turkmen Maritime and River Lines. In addition, private sector individuals and organizations involved with transport, freight forwarding, importing and exporting will be involved in the development of the Project, as they represent customers of the logistics centres. There are several Target Groups for our project:

• Government Entities, primarily Ministries of Transport and Railway organizations; • Other government entities, including Ministry of Trade and Industry; • Private transport carriers and freight forwarders; • Private sector investors in transport facilities; • International financing agencies/investors in transport facilities

Government Entities – The beneficiary is the Ministry of Transport in Kazakhstan, Tajikistan and Kyrgyzstan; in Uzbekistan the project beneficiary is the Ministry of Foreign Economic Relations Investments and Trade and in Turkmenistan the Turkmen Maritime and River Lines in Turkmenbashi. Railway organizations are either government entities or joint stock companies with the government holding the majority of shares. As a major focus of the project is to generate interest of private sector investors, another government entity that should be directly involved is the Ministry of Trade and Industry1 in each country Private Transport Carriers and Forwarders – In most countries, the road freight transporters and freight forwarders are privately owned. These organizations are particularly useful in determining the major transport problem areas and how these problems could be minimized by properly designed Logistics Centres. Private Sector Investors – There are some locations where the private sector has already invested in transport facilities; these organizations have been contacted by team members in order to ascertain the extent of potential interest in financing future Logistics Centres

1 The name of the government entity may be different for each country but it should be that entity responsible for generating interest in foreign investment in each respective country.





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that will be identified later in the project. It is important to “bring these potential investors along” as we develop a prioritized list of potential projects. International Financing Agencies – Some of these organizations have already been contacted; in particular, the EBRD has stated its interest in participating in the funding of future Logistics Centres.

1.3 Project Steering Arrangements The Project Steering Committee has been identified. It will comprise the TRACECA National Secretary as well as one representative from the beneficiary organization in each beneficiary country. It will be co-chaired by the Ministry of the host country and Team Leader/Project Director The project team will provide logistic support to the Steering Committee. The first meeting coincides with the holding of the Opening Conference; thereafter Steering Committee meetings will be held semi – annually, in different beneficiary countries.

1.4 Project Team Organization The project office has been established in Almaty with the Team Leader and Economist/Business Plan Specialist, with an office assistant. The Architect/Logistics Centre Designer is planned for mobilization later in the project, probably close to the end of the current year. Technical assistance will comprise a total of 3,100 person days that include 1,000 person – days of key experts, 1,750 person – days of long term non – key experts and 350 person – days of short term non – key experts. National coordinators have been appointed for each country from the long – term non – key experts; candidates for short term non – key experts have been identified from each country and the process of developing Terms of Reference for these individuals is now in progress. Contact has been made and liaison will be continued with other TRACECA transport and logistics projects. The 250 person – days of short term non – key experts can be composed of experts found in the beneficiary countries as well as from consortium partners. After interviewing many potential candidates for these positions during visits to the beneficiary countries, we consider that the majority of these positions should be filled using experts from Central Asia. Experts in the region are highly qualified and experienced and bring with them intimate knowledge and understanding of regional transport and logistics issues, and how to solve them. 1.4.1 Backstopping arrangements and Consortium Management

Operational backstopping During this Inception phase of the Project, the Senior Project Director visited Almaty and held discussions with the Project Manager and Team Leader to ensure common understanding of the goals and objectives of the Project and made arrangements for temporary accommodation of the project team while permanent office space was being located. All necessary office equipment and staff were made available to the project team.





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Technical backstopping The Senior Project Director and the Project Coordinators from each member of the Consortium are prepared to assist the Team Leader in the resolution of any technical issues that arise during the course of the project. During the Inception Phase, there has not yet been the need to employ these resources. Financial backstopping It was found not necessary to open a project bank account in Almaty; instead, the Team Leader has been issued a company credit card from which cash is withdrawn to cover necessary project costs as well as to purchase air tickets for regional travel by team members as well as for stakeholders. Financial resources and administrative arrangements have been completed to ensure prompt payment of local and international experts.

1.5 Reporting Requirements Following this Inception Report, there will be three Progress Reports, the first on 15 July 2009, the second on 15 January 2010 and the third on 15 June 2010. The Draft Final Report will be submitted by 15 November 2010, and the Final Report on 15 January 2011. In addition, a monthly report will be submitted to the Project Manager within the EC Delegation. By agreement at the Kick – Off Meeting, these monthly reports may be submitted in English only, in electronic format.

2 KEY ACTIVITIES AND FINDINGS FROM INCEPTION PHASE

2.1 Description of mobilization The Team Leader, Thomas Kennedy, arrived in Almaty on 17 January; temporary office space was found within the existing EC project Development of Equipment Certification Centres for the Transportation of Perishable Goods. The official start date for the Project was 15 January 2009. On the 21st of January, a Project start – up meeting was held in the offices of the European Commission in Almaty with the Project Manager, the Team Leader and members of Safege. Matters of project administration were discussed, in particular confirming that the Kick – Off Meeting for the Project will be held in mid – April in Almaty, coinciding with the issuing of the Inception Report. The Economist/Business Plan Specialist arrived in Almaty on the 17th February. New office space has been acquired and the project team moved to the new premises during the second week of March. The budget for Incidental Expenses was submitted and approved by the Project Manager. Junior long term non – key experts, who will act as national coordinators have been recruited and approved by the Project Manager, shown in the Administrative Orders Annexs.

2.2 Activities linked to Project Management

Upon approval of the Incidental Expenses for the project a financial reporting procedure was established between the Team Leader and the Senior Project Director and financial





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division of Safege. A set of account numbers was developed to readily distinguish expenditure purpose and category and to monitor project expenditure against budget. Contact details and reporting procedures were established between the Team Leader and National Coordinators; preliminary discussions have taken place regarding information requests and assistance with project matters within each beneficiary country.

2.3 Activities linked to Implementation During the Inception Phase of the project, meetings were held with stakeholders in each participating country (see Annex 2) and an initial list of logistics centres identified (see Annex 8). Sites of some possible locations of logistics centres were visited by the Technical Assistance Team during visits to beneficiary countries, including an existing rail container depot near Tashkent, the proposed Techno-park at Turkmenbashi and the existing logistics centre near Almaty Astana Contract. These stakeholders included both government officials and private sector organizations and individuals involved with transport and freight forwarding. In addition, representatives of other international lending institutions (ADB, EBRD, JICA) as well as potential investors for our projects were contacted. Project documentation has been reviewed, not only for EC projects, but also studies performed by other organizations including ADB, UNDP, and others. The list of documents consulted is shown in Annex 5. The Team Leader attended the TRACECA Infrastructure Working Group meeting in Bucharest where discussions were held with representatives of beneficiary countries as well as team members of other TRACECA transport projects currently in progress in the region. We have also prepared a list of draft project selection criteria; these criteria will be used to determine the most likely candidate projects for which feasibility studies will be prepared later in the Project. These draft selection criteria are shown in the Annex to this report. The following is a summary of discussions with stakeholders in each beneficiary country during the Inception Phase. Kazakhstan The priority transport projects in Kazakhstan for the Ministry of Transport, as well as the site of future logistics centres in the country are focussed on the China – Russia transit corridor; there are a total of 12 proposed logistics centres included in the MOT’s strategy. Discussions with private sector transporters and freight forwarders indicated that the port of Aktau would be the most promising site for a new logistics centre in the country. It is at the location of a duty – free zone, several modes of transport (rail, road, water, air) and already is an important transport link in the TRACECA corridor. The Project team visited logistics centre currently operating in the Almaty area; indications are that the world economic crisis has affected traffic moving through this facility; 2008 traffic was about 40% less than anticipated. With the downturn in the economic prospects for the country and the fact that already there are several logistics centres already in the Almaty area, this region is likely not in need of new facilities for the foreseeable future.

One of our priority tasks is to develop a data base of traffic flows of freight traffic by road and rail within each country in the region. In Kazakhstan, the best source for this





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information is from the Research Institute for Transport and Communication in Almaty. We have made contact with this organization and arrangements are being made to put together an up – to –date description of traffic flows in the country by road and rail.

Possible sites of Logistics Centres: Aktau, Horgos, western border with Russia, Beinau

Tajikistan It is the policy of the Ministry of Transport and Communications in Dushanbe to establish 9 terminals, primarily for road transport. These terminals, in priority order, would be located in Dushanbe, which would be the primary logistics centre of the country; there already is a facility in the capital but in need of improvement and rehabilitation. Other possible locations of Logistics Centres are at Tursunzade on the Uzbekistan border (located approximately 60 km to the west of Dushanbe); south of Dushanbe near Kurgan Tyube (to serve the Afghanistan market); one near to the newly – opened border crossing with China at Kulma Pass; the remaining terminals would be at other border crossing points with Kyrgyzstan and Uzbekistan. The facility at Tursunzade is already under construction and includes also facilities for serving rail traffic. We also recommend that the possible logistics centre in Dushanbe be designed so as to accommodate rail and road transport. While rail container movements are not well – developed in Tajikistan, this has been a growing practice throughout the world and any new facility should incorporate a multi – modal concept in the design. While one of the stated goals from the MOT was to enhance the activities of Tajikistan as a transit country, we consider that this transit function should also be enhanced, where practicable, by adding value to third country’s traffic by further processing of transit goods within Tajikistan. This processing can be accomplished within a properly designed Logistics Centre. We will focus on this concept of adding value to transit goods as our study progresses. Based on discussions not only with MOT but with other organizations in Dushanbe (JICA; ADB) we consider that the Afghanistan border crossing will increase in importance as traffic increases across the newly – constructed bridge linking the two countries at Nizhni Pgani, constructed with USAID funds. This facility provides an improved road link between Tajikistan and Pakistan, with transit through Afghanistan. While the ongoing conflict within Afghanistan represents some difficulties to such transit traffic, the long term will likely include a peace accord and an increased role of Afghanistan as a transit country for Central Asia. Another possible location for a logistics centre is near to Dzhergital close to the Kyrgyz border along the road from Dushanbe. This road has been rehabilitated as part of several recent programs form the ADB and provides a short route to China via Sary Tash and Irkeshtam. Regarding the development of a traffic flow data base in Tajikistan for road and rail freight transport, the we are discussing this issue with the Association of Road Transporters (ABBAT) which undertakes such traffic flow studies, based on border crossing statistics. Some information has already been received and additional requests are being prepared. Possible sites of Logistics Centres: Dushanbe; Nizhni Pgani; Tursunzade; Dzhergital





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Uzbekistan In Uzbekistan, the possible locations for logistics centres, in priority order, are (1) in the Tashkent area, there are already 3 existing multi – modal container terminals; (2) Andijan, to serve the growing markets in China and (3) in Navoi, in central Uzbekistan. Regarding the Navoi facility, Korean Air Lines has been granted a 5 year concession to operate the airport (newly – upgraded with at 4,000 metre runway) and cargo terminal areas now under construction. The first phase of this cargo terminal will have a daily capacity of 350 tons; after the second phase of the facility development, capacity will increase five times. While this is a priority project for the Uzbekistan government, it appears that most of the needs for this facility have been incorporated in the agreement with the Korean company and there is not the need for TRACECA to consider this facility as part of its potential logistics centre program. The route to China via Kyrgyzstan is viewed by Uzbekistan road transporters as preferable to the transit route across Kazakhstan. This is primarily due to the shorter distance from the Uzbek border of Kyrgyzstan to the Kyrgyz border with China. The focus of the future freight flows for Uzbekistan includes to/from China, via Kazakhstan and Kyrgyzstan; and the second primary route is through Afghanistan to Iran and Pakistan. Recently Uzbekistan is now carrying containers to NATO forces (100 containers were moved to Hariton in Afghanistan during a recent week in February 2009). A new railway line is also under consideration between Hariton and Masar – E – Sharif in northern Afghanistan (feasibility study to be funded by ADB). Clearly, Uzbekistan is looking to its southern border to promote alternative routes not only to Afghanistan but to strategic ports in south – eastern Iran. One constraint to the future growth of Afghanistan traffic is the lack of rail terminal capacity at Hariton. Even now, with the increase in traffic for Afghanistan, freight wagons are being stored at UTY rail stations along the line to Termez as they cannot be accommodated at Hariton. One impediment to developing a strong multi – modal logistics centre in Uzbekistan is the existing lack of significant amounts of container traffic; containerized goods now amount to only about 1% of total UTY freight carried. In addition to developing a well – designed and operated logistics centre, there should also be initiated a more attractive tariff structure, which could include container “box rates”, incentive rates that would apply to traffic using the new logistics centre and well – coordinated block trains with neighbouring countries. During our field visit to the Chorqusay container depot (the largest in Tashkent) it was estimate that most inbound container imports originate in China and Iran, with only a small number of containers from Europe. We discussed with UTY management alternative strategies for increasing rail container business. The charging of value – based tariffs for container traffic is common among all CIS countries. Individual countries cannot make significant changes to the tariff structure, the team considers that a more flexible tariff policy could greatly assist railways in the region to compete more successfully with road transport and possibly divert some of the high – value goods to rail containers. While the railway management did not totally embrace our suggestion, we should continue to pursue this goal as part of this, and other transport improvement projects in the region.





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During discussions with road transporters, some of the benefits that could accrue to transport users from the establishment of a modern logistics centre were highlighted. These included more efficient consolidation of shipments. Now, a long time is required to consolidate cargo from many small shippers; with a modern logistics centre, with adequate warehousing space and handling equipment, this consolidation could be done quickly and efficiently. Possible sites of Logistics Centres: Tashkent; Termiz; Andijan Kyrgyzstan During discussions at the Ministry of Transport and Communications in Bishkek, the urgent need for a logistics centre in the Bishkek area was discussed. There is a similar project to our Logistics Centre study initiated by the Moscow – based Europe – Asia Economic Community. We will coordinate our information requests with this other project. Major transport routes in the Kyrgyz Republic provide links with China, through Irkeshtam and Tourgart, and Russia through Kazakhstan. The Osh – Sary Tash – Irkeshtam road is currently being rehabilitated under an ADB project and the road linking Bishkek and Taraz (in Kazakhstan) is being rehabilitated with the Kyrgyz government’s own funds. In addition, the road linking Osh and Batken is being rehabilitated using EBRD funding. Primary imports to Kyrgyz are consumer goods brought from China, all by road. These goods pass through either Tourgart or Irkeshtam borders and are brought all the way to destination (primarily Bishkek) by Chinese trucks. Chinese vehicles can travel freely within Kyrgyzstan but Kyrgyz trucks must offload at locations near to the border (approximately 100 km inside Chinese territory). Major exports are fruits and vegetables, moving in Kyrgyz vehicles to Russia. European markets are essentially closed to these products as there are no facilities for proper packaging as required by the European Union. Discussions were held with the heads of five major freight forwarders in Kyrgyzstan – major transport issues were (1) the need for Kyrgyz vehicles to participate in the China trade; and (2) to develop packaging facilities in the country so Kyrgyz fruits and vegetables can be sold in the European Union. These individuals were highly favourable to the prospect of a logistics centre developed in Kyrgyzstan; in fact, several of them stated their willingness to participate financially in the construction of such a facility. Possible sites of Logistics Centres: Several possible locations were discussed; the Ministry of Transport considers that Bishkek and the Osh area are priority locations; discussions with the freight forwarders revealed also that Bishkek would be a priority, but also facilities at Sary Tash and Naryn would be preferred. Sary Tash is on the crossroads of transport routes linking Tajikistan and China as well as the Fergana region of Kyrgyzstan. Naryn would be important as it could be developed into a major transhipment centre for Chinese goods imported to all regions of Kyrgyzstan. Turkmenistan Participation by the private sector in investment projects in Turkmenistan has been limited as the legal framework protecting private sector investment interests is lacking. There is,





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however, proposed to be developed a new techno park and free economic zone planned to be developed in Turkmenbashi, with the participation of Turkish business interests. While we could not confirm definitely the location of this techno park, we did identify some plans for expansion of the port as well as an new tourist zone in the vicinity of Turkmenbashi. Upon inspection of the port and discussion with port authorities in Turkmenbashi, there is a large expansion programme planned for the port – the master plan is now being prepared by a Korean firm. This expansion includes a large area of reclaimed land from the sea – total area is about 500 metres X 2,500 meters. The first stage in developing this area is for a ship repair facility, advertisement for tenders has already been made for this facility. However, an area of about 300 X 2,500 metres in the sea needs to be reclaimed from land. This is likely to be an expensive undertaking, one which will not likely be realized in the short term. Discussions with one of the four Korean firms undertaking this study2 indicate that their port plan and feasibility study will be complete by late August or early September. They are not including as part of their design or traffic forecast, any element of a techno park in the port area. In fact, the area of the planned expansion of the port is not considered to be sufficient to develop a techno park with all related industries. Another large development in Turkmenbasi is the “Avaza Tourism Zone”, located approximately 15 km from Turkmenbashi city. This is a government – led investment program of more than $1 billion, with an additional $300 million from private investors primarily from Turkey, Iran, and Russia. This will be a complex of 35 hotels and associated recreational facilities targeted for Turkmenistan public servants as well as overseas visitors. There are tax incentives and the land is initially provided by the government. However, there was no specific plan for a techno park in this new development zone; it is primarily a recreational and tourism project. One of the transport bottlenecks in the country is the border crossing with Iran of the railway line linking the two countries. This rail interchange involves a change of gauge from the wide gauge of Turkmenistan (1.520 metres) to the “standard” gauge operated in Iran of 1.432 metres. Based on discussions with forwarders in Ashgabat, there is insufficient handling equipment to transfer cargos and to change the wheel sets of wagons crossing the border, resulting is serious delays to border crossing cargo by rail. With the recent change in government and the relaxation of movement of foreign exchange in May 2008, EBRD has become more active in Turkmenistan. EBRD, the most active of IFI’s in the country, is very interested in participating in a future logistics centre project; we will maintain liaison with EBRD as we develop details of potential projects in this country. In the past, EBRD has financed the development of Turkmenbashi seaport and proposed to rehabilitate the Ashgabat – Mary road. The road project was cancelled, however, as the government was not willing to participate due to conditionalities imposed. Possible sites of Logistics Centres: Techno – park at Turkmenbashi port has been mentioned during meetings in Ashgabat, though the specific location of this facility could not be confirmed during our visit to the port; Mary at the crossroads of transport links with Uzbekistan and Iran, an important transport hub and is also a possible location for a

2 Hyein E&C Co. Ltd.





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logistics centre. During discussions with the Association of International Road Carriers, Ashgabat was mentioned as in need of such a facility. The rail interchange with Iran is currently one of the transport bottlenecks in Turkmenistan. A logistics centre may provide some solution to this issue, but we will have to undertake further investigations.

2.4 Review of project design and relevancy The economies of the countries of Central Asia are not self – sufficient and are dependent upon the stability of relationships with neighbouring states. The security of transport routes is therefore a critical issue. Economic development is dependent on mutual cooperation in the region and stronger integration with the global economic system is essential for sustained growth and development. One of the impediments to expansion of trade between Europe and Central Asia is the inefficiency of many elements of the existing transport system in the region; transport costs are high, efficiency is low and delays are frequent. Rail transport, while most efficient over long distances, often cannot provide reliable door – to – door services required by users; road transport, while more flexible than rail, road transport is quite expensive over long distances. It is the extensive reliance on long – distance road transport and inefficient rail services that contribute to the high cost and low reliability of transport in Central Asia. Implementation of multi – modal transport systems is the logical approach in Central Asia and the development of a network of well – designed and operated logistics centres will contribute towards an effective multi – modal network for the region. This will enable transport operators to offer convenient door – to – door services, thus reducing transport costs and increasing the cost effectiveness of regional transport. The prospect of establishing modern logistics centres in the region has been greeted with enthusiasm by transport operators and forwarders, as well as by government officials in each beneficiary country. Logistics centres are needed for the more efficient process of consolidating shipments, distribution of goods within large metropolitan areas; fast and efficient customs inspection is also a benefit of establishing these facilities. While there are other transport issues, being addressed by other projects (infrastructure improvement, establishing more efficient cross – border procedures, etc.), the establishment of modern logistics centres will make a significant contribution to improving transport efficiency and effectiveness in the region. The relevancy of the project is therefore considered to be high. The project design is adequate for the task, but it is considered that greater emphasis should be placed on making contacts and holding discussions with transporters and freight forwarders in the region. These are the potential customers of future logistics centres and the need, design and location of such facilities should be discussed to ensure the facility will be used after implementation. There are many examples world – wide where prestigious IFI’s have conducted feasibility studies of logistics centres, but due in part, to improperly prepared feasibility studies and failure to include potential users during the project development, completed logistics centres have been significantly underutilized. These mistakes will not be made for this project, as we have brought private sector transporters and forwarders in all of our discussions and taking into consideration their views and preferences regarding the design of future logistics centres.





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2.5 Review of Objectives and Results The project goal to “support international trade and facilitate the movement of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport” as shown in the TOR is unchanged and will continue to be our target as our project progresses. The following three specific objectives are shown in the Logistical Framework of our technical proposal

a) To develop the financial, technical, environmental and institutional conditions and studies for a network of Logistics Centres along the TRACECA corridor

b) To identify, rank and promote priority Logistics Centres projects c) To provide a set of feasibility or pre-feasibility studies for selected Logistic Centres

to be developed on the TRACECA corridor While the overall project goal and objectives remain unchanged, the current economic crisis affecting virtually every country may adversely impact the readiness of some governments, and particularly private sector entities, to invest in the development of Logistics Centres. The normal difficulties and uncertainties surrounding the forecasting of future traffic volumes, and consequently the magnitude of potential project benefits, will be magnified by the global downturn in business. While there has been as yet no indication that there will be a significant reduction in the amount of funds available for transport investment projects by either governments or international financial institutions, this may, in fact, occur, and the team should have contingency planning to meet this possibility. A possible element of this contingency planning is the scaling down of the size of candidate logistics centre projects, as well as the number of such projects to be proposed for each country. Another element of the contingency plan is to focus the team’s efforts more strongly on developing private sector interest in participating in the financing of candidate projects. This may entail more effort in contacting interested individuals and organizations, including the Ministries of Trade and Industry in each country, presenting concepts of our project proposals and details of the project costs and benefits. This additional effort may require some rearranging of the distribution of funds within the Incidentals budget, allowing provision for these contacts to be made and effective presentations to potential investors. In the project logical framework, results of the project have been shown for each of the three specific objectives. Results relating to specific objective 1

• A detailed assessment of the relevant traffic flows and infrastructure conditions of the main TRACECA transport links and nodes and the capabilities of the existing entities (ports, railways, private companies) to perform all the array of logistic operations needed in the network provided

• A short and medium-term Action Programme for the improvement of performance of logistic activities (adaptation of legal framework, customs related issues,





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technical standards, public policies, training and capacity building) provided and discussed with the beneficiary countries for further implementation

• Recommendations for optimizing the degree and nature of the most relevant public Grant Schemes, covering direct (infrastructure, equipments) and indirect investments (facilitation of land acquisition, provision of specialized staff of civil servants for customs, safety, sanitary services) provided

Results relating to specific objective 2

• A set of relevant logistics projects identified and evaluated through a multi-criteria analysis and approved by the beneficiary countries

• The identification of priority projects co-ordinated with stakeholders, investors and financing institutions

• A Study Tour aimed at visiting relevant transport Logistics Centres in European countries organised

Results relating to specific objective 3

• Pre-Feasibility or Feasibility Studies for every approved project developed • Environmental impact assessments for the identified projects and studies of their

impact on local labour markets provided • Commercial relevance of the selected options analysed, detailing the expected

benefits within the project’s lifetime, including the business plan of the investor/management company and a cost benefit analysis of each project, underlining the socio economic impact of the operations

• Recommendations for synergetic actions of the potential Logistic Centres in the TRACECA network in Central Asia provided and coordinated with parallel projects being implemented in the Caucasus and Black Sea region countries

One of the results shown for specific objective 2 is the arranging of study tours of logistics centres in Europe. The need for a properly designed and located logistics centre is well established by governments in each beneficiary country. It may become necessary to spend more Project resources on the task of “selling” our candidate projects to private sector organizations and other international financial institutions, leaving insufficient funding necessary to carry out extensive study tours. While it is too early now to take the decision regarding the rearranging of the project budget, it could become necessary later in the project. If this should prove to be the case, we will of course submit he necessary request for an Addendum to the Contract.

2.6 Assumptions and Risks 2.6.1 Assumptions

Incorporated in our Technical Proposal are the following assumptions:

• The Beneficiary Governments remain committed to the objectives and principles

stated in the TRACECA Long-term Strategy and the TRACECA Regional Action Plan 2007 – 2010 and are supportive of projects pursuant to these aims





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• The Beneficiary Governments continue to pursue policy of regional integration and establishing viable links with the Trans-European Transport Networks

• The Commission Services, the Member States and the IFIs continue to provide technical and financial assistance in support of the goals of environmentally sustainable socio-economic development through enhanced transportation and communications networks

• There are no major political or macro-economic shocks in the region which force the EU or the beneficiary Governments to suspend or review their transport policy

• The Beneficiary Governments are willing to introduce enabling legislation if necessary to establish a legal base for the development of Logistic Centres

• The beneficiaries and stakeholders allocate the necessary human and financial resources to ensure sustainability of the project result

• There are no changes in the policy, legal or institutional environment, which will affect the proper implementation and performance of this project

• The beneficiaries and stakeholders allocate the necessary human and financial resources to ensure sustainability of the project results

The only assumption described above that may not be valid during our project is the reference to “major…macro – economic shocks in the region”. The current economic crisis is world – wide and affects the region. So far, the only tangible evidence of this is reduction in traffic volumes at some existing logistics centres3; to date, there has been no indication that governments will curtail their spending plans or will be less hesitant to participate in financing logistics centres in the future. However, this issue may become more serious over the coming months. 2.6.2 Risks In our Technical Proposal, there are several potential risks associated with execution of our project. These include:

• Regional instability • Change of policy, priorities and personnel of beneficiaries • Lack of cooperation with other donor agencies, private sector organizations and

other EC – funded projects • Slow approval of reports, addenda or administrative orders • Insufficient support and cooperation by the governments and beneficiary institutions • Resistance to the proposed policy options/framework related to the selection of

logistics centres • Lack of coordination of decision – making responsibilities among several

institutions • Rules and regulations subject to variations in interpretations • Inconsistencies or lack of proper legal framework for establishing logistics centres • Inability of stakeholders to agree upon priorities, objectives and actions to be

included in the project pipeline

3 Traffic during 2008 at this logistics centre located near Almaty has fallen about 40% below forecasts, according to management of this facility, during discussions with team members





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• Lack of human resources at the local level to carry out environmental impact analyses, internal rate of return calculations and preparation of bankable documents

• Lack of quality technical documentation related to existing facilities • Failure to identify projects that are commercially attractive

Each government, as well as private sector entities interviewed in the beneficiary countries, were very enthusiastic in expressing their support of our project. In some countries, previous analyses have been performed on prospective sites of logistics centres, and information regarding the magnitude of transport flows was said to be available. We are now beginning the process of obtaining/requesting this information from the appropriate government entity. We have had excellent response from other donor agencies regarding information of their programs in the region; cooperation with other TRACECA projects has also been excellent; several coordination meetings and discussions have taken place already. So far, there has been no evidence during the Inception Phase, that any other of the risks identified above are likely to become problems. One issue that may affect our work, however, is the global economic crisis; this may be reflected in the necessity to downsize some of our project proposals, or may limit the financial resources available from both governments and the private sector. However, this has not been expressed as an issue so far. There is one possible constraint to readily obtaining transport data within the Ministries of Transport in each beneficiary country. In the Statements of Endorsement of the project, signed by each beneficiary country, it states that: “we undertake to put at the expert’s disposal, free of charges, our facilities and staff, as they may be necessary”, we have found that there will be instances where information, generated by government entities, is now the property of a separate entity within each respective government, and operating on a commercial basis. This may require us to “purchase” some of the information requested from government entities. It is too early to determine whether this will become a significant problem, but we will monitor this situation closely as our work progresses, and develop information collection procedures as effectively as possible. Our approach to effective execution of the project is to develop cordial relationships with government entities, retain the services of competent and informed experts in each country, with the knowledge and understanding of the transport situation and the most appropriate means of obtaining the information necessary for the us to accomplish its goals and objectives, within the constraints of our project budget. We will also cooperate fully with other TRACECA projects in the sharing of data and information common to the goals of each.

2.7 Components/Proposed Activities in light of findings from Inception Phase We have attempted to use results from other EC funded projects in the region to develop our transport flow data base for each beneficiary country. However, results from these other studies have limited usefulness and need to be supplemented by additional data





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collection from our resources. We have identified several strong qualified specialists in each country that we will propose as short term non – key experts to assist in this task. Considerable work has been done within each country and we feel that results will be useful to our work through our regional specialists. While it was anticipated that antennae offices would be established in each beneficiary country, we have determined that this will not be necessary. There may be the need to establish possibly one additional regional office for information collection and processing convenience; this will be evaluated as our project progresses.

2.8 Addendum or Administrative Order Issues There have been five Administrative Orders, summarized below; copies of these orders are shown in the Annex to this report.

Table 2: Administrative Orders Number 1 Project start – up 15 January 2009 Number 2 Approval of Incidental Expenditure budget Number 3 Approval of rental of office space - Almaty Number 4 Approval of junior long term non – key

experts (national coordinators) Number 5 Approval of Opening Conference Budget Number 6 Approval of two additional air tickets for

participants to Opening Conference Addendum number one provided for modifications to the TOR (i) establishing steering committee meetings to be held on a semi – annual basis; and (ii) confirming the project start date of 15 January 2009.






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3 OVERALL WORK PLAN The overall plan of operations is shown in Table 2.

3.1 Relation/coordination with other projects The project team has established contacts with individuals from several other related projects in the region that are involved with transport system improvements, EC funded as well as those supported by other international financial institutions. This coordination is important for two primary reasons: (1) information generated by one project can often be used by other projects so as to avoid wasteful duplication of efforts, particularly with regard to developing a transport flow data base for the region; and (2) the improvement in the transport network and the location of future logistics centres are interrelated if the desired impacts of these projects are expected to be realized. Contacts have already been established with representative of the following projects: EC – funded projects:

• Motorways of the Sea Project, covering the Black and Caspian Seas; • Analysis of Traffic Flows in TRACECA countries and Interregional Dialogue

between the EU and NIS; • Improvement of Maritime Links between TRACECA and TENs Corridors • Logistics Centres Projects – Western NIS and the Caucasus • Land Safety and Security Project • Strengthening of Transport Training Capacities in NIS countries

Other organizations:

• Asian Development Bank (ADB), CAREC program • European Bank for Reconstruction and Development (EBRD) • Japan International Cooperation Agency (JICA)

We will continue to pursue coordination with these and other organizations currently involved with transport improvement projects in the region. We will also continue to liaise closely with the EC – funded Logistics Centres Projects – Western NIS and Caucasus project, particularly with regard to the identification of appropriate selection criteria for potential projects. On March 18th we met with staff of the Motorways of the Sea Project in Almaty exchanging valuable information and insights regarding available regional transport data, sharing of information regarding individuals in each country that would be helpful to both projects and identified several critical issues that face both projects and discussed suggested approaches for resolution. Communication with the Logistics Centres Project – Western NIS and Caucasus has been primarily through exchange of e-mail messages; future meetings are being discussed as well as sharing of ideas regarding the selection criteria to be used by both projects.





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3.2 Project approach The approach to this project involves firstly, the identification of traffic flows in the territory of the five beneficiary countries, highlighting the major corridors through which import, export and transit traffic is moving. These flows will include both road and rail freight traffic. Secondly, these existing traffic flows will be projected over a 20 year period, using existing, historical and likely future growth rates of the economies of the nations in Central Asia. Partly on the basis of these projected traffic flows, future logistics centres projects will be evaluated. Concurrently, selection criteria for candidate logistics centre projects will be developed; this criteria is already under consideration. Applying the selection criteria to candidate projects, we will begin the process to develop a strong short list of potential projects in each beneficiary country. While we are identifying this short list, we will intensify our contacts with potential financing organizations, in order to assess the likelihood of financial support and if necessary, to modify our project presentation to obtain the strongest support.

3.3 Project components and sub components In accordance with the TOR the project has four tasks, including several sub tasks. In this section, details of our approach to the fulfilling of each of these tasks and sub tasks are presented, followed by a summary in tabular form, indicating person – days and outputs. In addition to the four primary tasks, we have added a mobilization task, essentially encompassing the inception phase of the project. These tasks are summarized in the following:

Mobilization and project management

A1: Traffic flow analysis and infrastructure evaluation A2: Main issues encountered by operators B: Identification, ranking and promotion of logistics centres projects

C: Feasibility studies of the selected projects In terms of our technical proposal, Component 1 includes diagnostic studies and development of a road map for the establishment of logistics centres along the TRACECA corridor; these elements cover tasks A1 and A2. Component 2 incorporates the selection of logistics centres projects, preparation of feasibility studies/business plans, strengthening our efforts to promote the logistics centre development throughout the region. This second component incorporates the tasks included in TOR tasks B and C. 3.3.1 Mobilization and project management Mobilization is essentially complete, with the main project office established in Almaty, national coordinators approved and hired. The next step with regard to staffing is the hiring of short term non – key experts; we expect that most of these individuals will come from the beneficiary countries; some CV’s have been received and we are reviewing the





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qualifications of candidates. To date, we have not found it necessary to establish regional offices in the beneficiary countries; as our work progresses, we will continue to review this policy in the case where we find that establishing one or more regional offices will provide significant benefits to the project. We expect that at least one short term expert will be hired from each beneficiary country within the next two months, primarily to assist with data gathering of transport flows. The need for other experts will be identified as the study progresses. 3.3.1.1 Report submissions Following the Inception Report submission, we will submit the first Progress Report by 15 July 2009, the second by 15 January 2010 and the third by 15 July 2010. Our Draft Final Report will be submitted by 15 November 2010 and the Final Report on 31 December 2010, incorporating comments from beneficiary countries. In addition, Monthly Reports will continue to be submitted by the Team Leader to the Project Manager. 3.3.1.2 Steering Committee The project steering committee has been established, composed of representatives of the beneficiary in each country and the TRACECA national coordinators, with the first meeting to coincide with the Opening Conference in April 2009; thereafter meetings of the steering committee will be held semi – annually. 3.3.2 Traffic flow analysis and infrastructure evaluation

3.3.2.1 Disaggregated cargo flows We have already received some cargo information for Turkmenbashi port, by twelve commodity groups, country of origin and destination, separately for imports, exports and transit. For each country, we have either submitted letters requesting traffic flow information or discussed with the beneficiary our specific needs. Cargo flow data by rail is typically easier to obtain than by road; railway data bases typically can provide statistics by major commodity group by import, export, transit and local traffic types; these are the categories of traffic we will request from each railway organization. Data for road traffic flows can be obtained from border crossing points, showing commodity group, origin/destination. While information from the railways should not be difficult to obtain, once required permissions are received, we will likely need our local experts to follow up with the government organization responsible for road transportation and customs authorities. This will be the first priority for our national coordinators (instructions have already been communicated) as well as for the short term experts that will be hired during the coming months. We will also examine other reports that contain some traffic flow data, such as the ADB CAREC reports prepared during the past 2 years as well as country economic statistics published by the World Bank and ADB. Some limited trade flow information has been obtained from the EC Traffic Flows Project; we will continue to liaise with that project and share any further information of common interest.





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Using this cargo flow data, we can assess the likely future traffic that may be attracted to a proposed location for a logistics centre. This information will be obtained jointly by the Team Leader and Economist, with assistance from the national coordinators and short term experts. 3.3.2.2 Identify main logistics nodes During our initial visits to the beneficiary countries, we have identified major locations where cargo is now handled, transshipped and consolidated; in addition, we have identified some of these locations that now are considered bottlenecks that constrain smooth flow of goods. We will focus on transshipment points, primarily between road and rail, between land based transport and sea transport, locations where goods are consolidated or accumulated. Already discussions with freight forwarders revealed that existing facilities offering multi-modal services do not provide sufficient warehousing and other ancillary services. The Economist/Business Plan Specialist will take the lead in undertaking this task. 3.3.2.3 Describe main transport links Using the transport flow data as a basis, we will identify major transport routes in each country. With regard to highlighting strengths and weaknesses in the network, we will also rely on the discussions with transport users. Condition of the transport and logistics infrastructure will be based primarily on discussions with government officials and users as well as from published reports. These discussions have already highlighted bottlenecks in some countries and we will continue to use this technique to identify problem locations that could be potential sites for future logistics centres. The Team Leader and Economist will jointly undertake this assessment of transport links. 3.3.3 Main issues encountered by operators

3.3.3.1 Identify missing links in infrastructure development The structure of rail and road links in Central Asia is a product of the time of the Soviet Union; with independence, some of these historic links are no longer relevant to current trade patterns. This problem is most apparent for border crossing links. Some countries have constructed new domestic routes that avoid border crossings. It is recognized that there may be “missing links” in the existing transport infrastructure, though these may be only from the perspective of the country’s transport system. Our evaluation of missing links will be from the perspective of the region – are there transport links that, if constructed, would facilitate the flow of goods in the region or improve the potential benefits of a logistics centre? The Team Leader and Economist will jointly make this assessment. 3.3.3.2 Border crossing issues Crossing international borders continues to be a problem in the region; this issue has been stressed during every meeting with transporters. Problems include complex





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documentation, the need for expensive visas for drivers, delays during customs inspection, etc. It may be possible to transfer some of these documentation issues to the logistics centres where they could be executed more efficiently. However, the most effective solution is for improved bi-lateral relations between countries in the region and the establishment of “one stop” border crossings. Kazakhstan and Russia are already considering implementing this concept at one of their border crossings. For those candidate logistics centres close to international borders, we will try to include the streamlining of customs clearance and to minimize documentation, consistent with government regulations. Our country experts, both short and long term, will assist in interviewing transporters and government officials to assess the critical border crossing issues. 3.3.3.3. Existence of private operators In each beneficiary country, the private sector has the greatest market share of road transport market. There are private sector and public sector freight forwarders; many freight forwarders are affiliated with the national railway system. This situation may be different in each country; we will request from our local experts to identify the specific situation regarding participation of the private sector in transport. Private operators so far, exist only in road transport in most beneficiary countries. The exception in Kazakhstan, where there are private rail operators, as well as private companies engaged in new railway line construction. However as private operators are already in the road transport and forwarding business in most countries there should not be a significant problem with the lack of private sector capability. 3.3.3.4 Barriers to the efficient flow of goods and logistics centres With the help of our local experts, we will investigate the legal framework of transport in each country to determine if there are any impediments to either the efficient flow of goods or the development of logistics centres. We will hold discussions with transporters and freight forwarders in each country to determine the nature and extent of these barriers, whether they are legal, administrative, technical or other. Resolution to these barriers may not be an easy task, though we will approach the decision – makers in government who may be able to assist in developing an alternative approach to follow the intent of the law but at the same time facilitate the efficient flow of goods and permit the development of logistics centres.

3.3.4 Identification, ranking and promotion of logistics centres projects 3.3.4.1 Identify priority projects During our initial trips to the region, on the basis of discussions with government officials, private sector transport organizations and other IFI’s, we have already identified a preliminary list of candidate logistics centre projects. However, more complete transport flow information is needed before we can take our evaluation further. In addition, for some of these candidate projects, there have been previous feasibility studies undertaken; we





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need to review these previous studies so as not to duplicate work already done. There may be a problem in obtaining these previous studies, as they may have been performed for a third party. We will approach our beneficiary organization to use their influence to have the results of these previous studies released and available to the Technical Assistance Team. 3.3.4.2 Rank candidate projects We will develop a multi – criteria matrix for the ranking of candidate logistics centre projects. The Economist/Business Plan Specialist has already developed a draft list of such criteria; we will coordinate this task with the Western NIS and Caucasus Logistics Centres Project. Our draft list of criteria has been sent to this “sister” project and it is our goal to develop similar criteria for evaluating candidate projects for both Projects. Projects we will evaluate include completely new facilities and the expansion or modernization of existing facilities. The Economist/Business Plan Specialist will continue to refine these evaluation criteria and take the lead in making this ranking of projects. We will consider the most appropriate method to apply this criteria – it could be quantitative by assigning numerical weights to each criteria and calculating a “score” for each candidate project, or the evaluation could be qualitative, with ranking such as “high”, “medium” or “low”. 3.3.4.3 Visit logistics centres in Europe During our initial field visits, many beneficiary organizations expressed the wish to undertake a trip to a logistics centre in Europe. This could be a useful exercise, though, as expressed elsewhere in this report, we anticipate having to spent additional efforts in attracting finance to candidate projects due to the world wide economic crisis, which will likely cause investors to become less eager to invest in large infrastructure projects. We will continue to review this issue as our project progresses.

3.3.5 Feasibility studies of the selected projects 3.3.5.1 Description of objectives and functions of logistics centres The Economist/Business Plan Specialist and the Logistics Centre Designer will be jointly responsible for the description of objectives and functions of each logistics centre evaluated. The primary basis for socio – economic benefits of the project will be largely dependent upon the traffic volumes forecasted to use the facility. The Economist will prepare these forecasts, based on the base year traffic levels (most likely to be 2008) and using economic indicators for the countries involved, and, ideally, as well as for each sector of the economy, subject to the availability of this information. 3.3.5.2 Identify major stakeholders We have already begun the identification of major stakeholders in each country as discussions were held with freight forwarders, transporters, government officials and potential financing organizations. The Economist/Business Plan specialist will take the lead





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in the identification of major stakeholders, though the national coordinators will assist in identifying organizations in each country. 3.3.5.3 Identify possible site location While in our TOR it is stated that “the main purpose of the project is to facilitate long distance transport of containerised merchandises…”, we consider that the range of potential commodities that would benefit from a logistics centre include a wide range of other commodities, including some bulk commodities as well as non – containerized goods. For example, a freight forwarder in Uzbekistan described how a logistics centre would help his company perform the distribution function from a larger shipment in the vicinity of a large city. While making intermodal transport more efficient, we do not want to limit the potential market of a logistics centre to that of containerised traffic. The Economist/Business Plan Specialist will take the lead in identifying the site location of each logistics centre. 3.3.5.4 Preliminary design of the site This sub – task will consist of identification of the land acquisition process with related authorizations; site preparation: planned activities for soil preparation; design of entrance and exit roads, building safety requirements. In addition, we will prepare, at the level of preliminary design, identify connections to water, energy and telecommunication networks and waste treatment equipment; mapping of the areas identifying the different location of activities and equipment to be installed. We will also prepare a preliminary circulation plan, parking and service areas, warehousing, industrial and other ancillary activities. This task will be primarily the task of the Architect/Logistics Centre Designer, though the Economist will be involved with the preparation of the business plan, which will impact the conceptual design of the facility. 3.3.5.5 Preliminary design of the logistics area This sub – task will entail the cost estimation for the facility, either modernization of an existing facility or new construction. The primary responsibility for this task will be that of the Architect/Logistics Centre Designer, in consultation with the Economist as well as local government officials and representatives of transporters and forwarders. We consider it important that the future “customers” of this facility be involved in its conceptual design. 3.3.5.6 Business plan of the site The Economist/Business Plan Specialist will prepare a 10 – year business plan for the project, including all capital investment required, estimated annual operating costs and revenues from projected traffic flows through the facility. This business plan will include a pro – forma income statement and a financial rate of return calculated to indicate its attraction as a private sector venture. We will evaluate the need for any investment subsidy, depending on the rate of return. It may be, for example, that some of the construction cost must be invested by the government or IFI in order to make the operation of the facility attractive to a private sector operator.





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3.3.5.7 Environmental impact The environmental impact of constructing and operating each facility will be performed in accordance with local environmental protection regulations. We will likely retain the services of a local environmental specialist to undertake this task in each country. 3.3.5.8 Assessment of key qualifications Our Economist, jointly with local experts from the country, will ascertain the labour requirements for the facility and determine the best manner to staff the positions from labour available locally. Availability of appropriate personnel with the needed skill levels will, of course be necessary, but drawing labour from the immediate vicinity of the project will result in economic benefits to the region as well as the multiplier effect of their spending in the local economy. 3.3.5.9 Cost benefit analysis The Economist, jointly with the Team Leader, will prepare a financial and economic evaluation of the project. This evaluation will be in accordance with the EC guide for cost benefit analysis of investment projects. There will likely be an issue of subsidization of part of construction costs to consider, in order for the project to be attractive to the private sector. Depending on the level of benefits, the project could be attractive to a private operator, with the obligation to make investments for improving the facility, or possibly participate in the initial investment. For example, benefits may be relatively low; in this case, the construction would be done primarily from government or other investment sources; the private operator would manage and operate the facility, making some improvements during the time of the operating contract (typically 5 years). Alternatively, if benefits are shown to be substantial, bidders for the project can be asked themselves to make investments in the facility. While it is not within our scope to prepare terms of reference for bidders or to prepare final design, we are prepared to assist the governments in advising on the needed procedures of the selection process for prospective operators of the facility. 3.3.5.10 Recommendations for public support This task is closely linked to the previous task, in structuring the project in such a way so as to attract the maximum interest from the private sector. However the interests of the public sector can be maintained even with a private operator by incorporating in the operating/concession agreement with the future operator, certain responsibilities. These responsibilities can include, for example, a specified level of service provided, maximum tariffs charged for services at the facility, as well as other service elements that may be sensitive to the government to protect the public interest. 3.3.5.11 Communications and synergy within the logistics centres network in

TRACECA corridor Member of our project team have already made contact with team members of the EC projects: International Logistical Centres for Western NIS and the Caucasus and





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Motorways of the Sea. Areas of mutual interest include determination of selection criteria for candidate logistics centre projects, the development of a realistic cargo traffic data base for the region and the techniques used to perform the economic and financial analyses. This data base is critical to make traffic forecasts and to estimate potential benefits for candidate projects. The Team Leader and Economist will jointly perform this task, which will be undertaken for the full duration of our project.






28

TABLE 3 OVERALL PLAN OF OPERATIONS Project title: International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan:

Project number: EuropeAid/125727/C/SER/Multi

Country: Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan

Page: 1/1

Planning period: 15-01-2009 to 15-01-2011

Prepared on: 15 April 2009 Consultant ЕU: SAFEGE Consulting Engineers, RINA Industries, IRD Engineering, Italferr

№ MAIN ACTIVITIES TIME FRAME INPUTS OUTPUTS

2009

2010

PERSONNEL (days) Incidental Expenditures

Reports Milestones

1 2 3 4 1 2 3 4 Key experts Non – key experts

1 Mobilization and project management: Initial mobilization and establishing office, hiring local support staff

x

x

40

Travel to beneficiary countries; translation costs; office expenses; opening conference

Inception Report Opening Conference/Steering Committee

2 Task A1: Traffic flow analysis and identify condition of infrastructures and facilities within the network

x x

150 300

Identify basic cargo flows in each country; condition of infrastructure

3 Subtask: A1:1Disaggregated cargo flows

x x

70 140

4 Subtask A1.2: Identify main logistics nodes

x

30 80

5 Subtask A1.3: Describe main transport links

x

50 80





29

6 Task A2: Description of main issues encountered by operators

x x

150 250

Translation costs Progress Report #1 Highlight infrastructure and/or institutional problems

Subtask A2.1: Identify missing links x x 10 20

Subtask A2.2: Border crossing issues

x 40 80

Subtask A2.3: Existence of private operators

x x 30 45

Subtask A2.4: Barriers to efficient flow of goods

x x 50 60

Subtask A2.5: Barriers to efficient logistics centres

x x 20 45

4 Task B: Identification, ranking and promotion of logistics centre projects

x

x x x

160 100

Translation costs Progress Report #2 Finalize selection criteria and apply to candidate projects

Subtask B.1: Identify priority projects x x60 30

Subtask B.2: Rank projects using multi-criteria

x80 70

Subtask B.3: Visit logistics centres in Europe

x20

Study tour costs

Task C: Feasibility studies of the selected projects

x

x x

500 1450

Translation costs Progress Report #3 Economic, Financial feasibility studies; business plans

Subtask C.1: Description of objectives and functions of logistics centres

x

50 145





30

Subtask C.2: Identify major stakeholders

x50 145

Subtask C.3: Identify site location x x50 145

Subtask C.4: Preliminary design of the site

x50 145

Subtask C.5: Preliminary design of the logistics area

x50 145

Subtask C.6: Business plan of the site

x50 145

Subtask C.7: Environmental impact assessment

x

- 190

Retain local environmental specialist

Subtask C.8: Assessment of key qualifications required

x50 145

Subtask C.9: Cost/benefit analysis x x50 145

Translation costs Draft Final Report

Subtask C.10: Recommendation for public support

x70 100

Subtask C.11: Cooperation and liaison with similar projects in the TRACECA corridors

x x x x x x x x

30 -

Final Report (January 2011)

Cooperation is ongoing throughout the project

Total 1,000 2,100





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Table 4: OVERALL OUTPUT PERFORMANCE PLAN Project title : Project title: International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan:

Project number : EuropeAid/125727/C/SER/Multi

Country : Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan

Page :

Planning period : 15-01-2009 to 15-01-2011

Prepared on : 15 April 2009

EC Consultan SAFEGE Consulting Engineers, RINA Industries, IRD Engineering, Italferr t :

Outputs (to be described and target dates indicated

Agreed Objective Verifiable Indicators

Constrains and Assumptions

C/A





32

1. A detailed assessment of the relevant traffic flows and infrastructure conditions of the main TRACECA transport links and nodes perform all the array of logistic operations needed in the network

A short and medium-term Action Programme for the improvement of performance of logistic activities (adaptation of legal framework, customs related issues, technical standards, public policies, training and capacity building) provided and discussed with the beneficiary countries for further implementation

2. A set of relevant logistics projects identified and evaluated through a multi-criteria analysis and approved by the beneficiary countries

The identification of priority projects co-ordinated with stakeholders, investors and financing institutions

A Study Tour aimed at visiting relevant transport Logistics Centres in European countries organised

3. Pre-Feasibility or Feasibility Studies for every approved project developed

Environmental impact assessments for the identified projects and studies of their impact on local labour markets provided Commercial relevance of the selected options analysed, detailing the expected benefits within the project’s lifetime, including the business plan of the investor/management company and a cost benefit analysis of each project, underlining the socio economic impact of the operations

Assessment Report presented and approved by the Beneficiaries, including a short and medium term action programme and recommended investment strategy.

Nº. of pilot logistical projects identified and evaluated

Nº. of priority projects approved

Study Tour organised and implemented

Pre-feasibility & Feasibility Studies carried out and accepted by beneficiaries and EC

A social and environmental impact assessment for each project evaluated. t Cost/benefit analysis in economic and financial terms, and a business plan, provided for each pilot project and accepted by beneficiaries and EC. Value of funds made available by states, IFIs, donors and private sector in support of pilot projects

Recommendations for synergetic actions integrated into TRACECA interventions

Ministries of Transport of beneficiary countries and other relevant authorities are committed in project implementation and provide the required support

The Beneficiary Governments remain committed to the objectives and principles stated in the TRACECA Long-term Strategy and the TRACECA Regional Action Plan 2007 – 2010 and are supportive of projects pursuant to these aims

The Beneficiary Governments continue to pursue policy of regional integration and establishing viable links with the Trans-European Transport Networks

The Commission Services, the Member States and the IFIs continue to provide technical and financial assistance in support of the goals of environmentally sustainable socio-economic development through enhanced transportation and communications networks

There are no major political or macro-economic shocks in the region which force the EU or the beneficiary Governments to suspend or review their transport policy

We must re-evaluate the need for these study tours. After discussions with the beneficiaries and the Project Manager, evaluate the necessity of undertaking the study tours. These tours, if undertaken, should have a direct and positive impact on the successful meeting of the project’s objectives, commensurate with the cost of such tours.






33

Once the short list of “bankable” projects is identified, we will prepare the feasibility studies in sufficient detail to evaluate their probable stream of costs and benefits. This process will include significant input from our short term consultants, both from the region and from Europe. We will also maintain close liaison with beneficiary governments during the project identification and evaluation phase to ensure government support.

3.4 Intended results or outputs As described in the TOR, there are three primary results expected of our project:

A. Analysis of TRACECA logistics network and of the related operation of transport and logistics within the existing network;

B. Identification, ranking and promotion of logistics centres projects; and C. Feasibility studies of the selected projects

We will conduct opening and closing conferences, as well as semi – annual steering committee meetings. We will discuss our project with all stakeholders in each beneficiary country and will consider holding workshops in each country where critical elements of our project will be discussed.

3.5 Planning for the whole duration of the project In order to achieve these results, the following are specific tasks that will be undertaken: Task A: Analysis of TRACECA logistics network and of the related operation of transport and logistics within the existing network. Task A1: Traffic flow analyses and characterization of the nature and the condition of operating infrastructures and facilities within the network;

• Disaggregated approach of merchandise flows • Identification and description of main logistics nodes relevant for the project. An

extensive review of facilities and all type of equipment and of operators at each of these areas should be provided

• Identification and description of main existing transport links, by mode of transport.

Task A2: Description of main issues encountered by operators; • Missing infrastructure links • Existence of private operators • Legislative, administrative and technical barriers to efficient flow of goods • Legislative, administrative and technical barriers to development of efficient

logistics centers

Task B: Identification, ranking and promotion of logistics centers’ projects • Identify and characterize priority projects of logistics centers





34

• Rank logistics centers projects using multi-criteria matrix (i.e. position on TRACECA corridors; completion of key logistics activities; condition of infrastructure; traffic flow levels; potential funding and public/private involvement.

• Visit to relevant logistics centers in European countries

Task C: Feasibility studies of the selected projects • Global description of objectives and functions of proposed logistics centers • Identify major stakeholders • Identify site location • Preliminary design of the site • Preliminary design of the logistics areas • Business plan of the site • Environmental impact assessment • Assessment of key qualifications required • Cost/benefit analysis • Recommendation for public support • Cooperation and liaison with similar projects along the TRACECA corridor

During this Inception Phase, the technical assistance team has visited each beneficiary country, discussed existing transport problems and prepared tentative list of logistics centres locations in each country. Work on developing a regional transport flow data base has begun, with review of previous documents and reports, submission of formal requests for data to governments and transport organizations and liaison with other related TRACECA projects, including sharing of transport flow data. National coordinators have been hired and have started their work; we have identified sources of qualified short – term non – key experts from each country in the region who will assist the team in obtaining information from each country and with undertaking of evaluations and analyses. It is anticipated that by October, we will have completed Task A, the description of the TRACECA network (including traffic flows in each country) and the operation of the logistics function within each country. Also by October, we will have begun Task B, the identification and preliminary ranking of potential logistics centres projects. We will discuss this preliminary project list with potential financing organizations, as well as application of our selection criteria to begin the determination of the final list of projects that will be the subject of economic and financial analyses. Task C, the performing of feasibility studies and business plans, will begin during the first quarter of 2010.

4 DETAILED PLANNING FOR NEXT REPORTING PERIOD . During the next reporting period (to 15 October 2009) we plan to complete Task A and begin the work of Task B; Table 4 summarizes the distribution of manpower among the tasks and specific timing. Specifically, we will:





35

• Develop necessary statistics in each country that will form the basis of a transport data base of flows over major routes; requests will be made to each beneficiary, national coordinators will be asked to coordinate these requests and responses;

• Collect any existing information/evaluations that may have been performed on each of the prospective logistics centres in each country

• Locate experienced short term staff in each beneficiary country to assist with information collection and evaluation of logistics centres options. Candidates have been identified and reviewed during the Inception Phase; formal application for approval from the Project Manager will be submitted during April/May 2009. National Coordinators, already under contract, will assist in this data collection and evaluation process;

• Make return trips to each beneficiary country to review and clarify transport flow information and to investigate in greater detail the sites and projected traffic for candidate logistics centres.

• Follow – up meetings with potential financing institutions will be made, details of proposed logistics centres and the likelihood of financing will be discussed.

• Liaison will continue with other TRACECA projects, in particular the Motorways of the Sea Project; the project involved with Analysis of Traffic Flows in TRACECA countries and Interregional Dialogue between the EU and NIS; and the Logistics Centres Projects – Western NIS and the Caucasus

4.1 Project Management and Resource Allocation Included in the Project Proposal is the outline of our proposed strategy for executing the project and the projected number of man – days for each element of this strategy for the categories of Project Management, Strategic Planning and Preparing a pipeline of logistics centres projects. However, for this Inception Report we have shown the total man – months by principle project task, as described in the TOR. We feel this will be a more useful tool to managing the remaining time and manpower for the execution of the work. .

5 SUSTAINABILITY Based on the work plan developed during the Inception Phase of this project, and the positive reaction from both government officials and private sector organizations, we consider that the chances of successful completion of the tasks of the project are high. The major challenge facing the project at this point is the need to generate a realistic data base of existing traffic flows, primarily by road and rail, throughout the region, within each beneficiary country. A limited data base is available from other EC studies but we will have to obtain a significant amount of additional information in order to develop a realistic traffic base from which to forecast future flows and will form the basis for our feasibility studies for selected projects. There is a small risk that a realistic traffic data base cannot be developed using existing studies and that we may have to supplement existing information





36

with additional data gathering. This may create some doubt whether the project’s results will be sustainable, but we consider the risk of this occurrence to be small.






37

TABLE 5 PLAN OF OPERATION FOR THE NEXT PERIOD (WORK PROGRAMME)

Project title: International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan

Project number: EuropeAid/125727/C/SER/Multi Country: Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan

Page: 1/1

Planning period: 15-04-2009 to 30-06-2009 Prepared on: 15 April 2009 Consultant ЕU: SAFEGE Consulting Engineers, RINA Industries, IRD Engineering, Italferr

Project objectives: [NB: use bullet points here]

TIME FRAME INPUTS OUTPUTS

2009 (months and week numbers)

PERSONNEL

Incidental Expernse Milestones

April May June Key experts

Non – key

experts

№ ACTIVITIES 16 17 18 19 20 21 22 23 24 25 26 27

1 Initial mobilization and establishing office, hiring local support staff x x x x x x x

35

Translation costs; office expenses; conference expenses; regional travel

Inception Report

2 Task A1: Traffic flow analysis and identify condition of infrastructures and facilities within the network

x x x x x x x x x x x x 50 200

Hiring local experts; regional travel

Request/obtain cargo flow data by country

3 Task A2: Description of main issues encountered by operators x x x x x x x x

15 100

Regional travel; translation costs

Progress Report #1

4 Task B: Identification, ranking and promotion of logistics centre projects

5 Task C: Feasibility studies of the selected projects





38

TOTAL 100 300






39

6 CONCLUSIONS We have, however, made numerous contacts with governmental and private sector organizations in each of the five countries and found great enthusiasm for the project and an eagerness to assist in its execution; in fact, some forwarders expressed the willingness to participate financially in the development of logistics centres in the region. Initially, we had thought that the world economic financial crisis would constrain the enthusiasm for developing a network of logistics centres in the region but there was only optimism and eagerness during our discussions in the Inception Phase. The immediate challenge to the project is to develop the region – wide transport data base. Sources of information were identified in each country during trips to the region, national coordinators have been hired and additional local experts in each country are currently being identified. The information gathering phase is under way now and will continue through the next reporting period (to 15 October 2009). We are coordinating these transport data needs with other EC projects but to date we have not been able to obtain a significant amount of useful data. We will continue to use our regional expert staff to find the appropriate sources of such data, as well as our liaison efforts with other ongoing projects in the region.

An EU Funded Project

International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic

of Uzbekistan and the Republic of Turkmenistan EuropeAid/125727/C/Ser/Multi


40

7 Annexes (shown in separate volume to this report)

Annex 1: Project Revised Logical Framework

Annex 2: Meetings held during Inception Phase

Annex 3: Minutes of Pre Kick – Off Meeting

Annex 4: Administrative Orders

Annex 5: Documents Consulted

Annex 6: Terms of Reference (please insert original ToR)

Annex 7: Draft Selection Criteria

Annex 8:Draft Candidate Logistics Centres






International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan

EuropeAid/125727/C/SER/Multi

Annexes (Issued with Inception Report)

This project is funded by A project implemented by the Consortium the European Union SAFEGE, RINA Industry, IRD Engineering and Italferr

The European Union’s TRACECA Programme for “Partner Country”





1 Annexes

Annex 1: Project Revised Logical Framework

Annex 2: Meetings held during Inception Phase

Annex 3: Minutes of Pre Kick – Off Meeting

Annex 4: Administrative Orders

Annex 5: Documents Consulted

Annex 6:Terms of Reference (please insert original TOR)

Annex 7: Draft Selection Criteria

Annex 8: Draft Candidate Logistics Centres





ANNEX 1 Revised Logical Framework

Most of the Logistical Framework as appeared in the Project Proposal is still relevant, there have been some minor modifications. For example, added to the assumptions is the need for the beneficiary governments to provide in a timely basis, relevant information required by the team that is in possession of the beneficiary. The level of detail that will be included in our evaluations will be consistent with the TOR: “prefeasibility or feasibility studies’ Prior to implementation, there will still need to be a final design undertaken. If, for example, interested parties would like to undertake this final design, we will cooperate fully, providing the benefit of our previous research. Also, the issue of study tours; these tours must have a significantly positive benefit to the achievement of the project’s objectives. The modified Logical Framework is shown on the following pages.

Another aspect of the Logistical Framework that should be modified is the stressing of the need to coordinate with other TRACECA projects, in particular the Caucasus and Black Sea region Logistics Centre project. This is important from an internal project management perspective of the TRACECA program; we will cooperate and liaise with this project. However, from the perspective of the beneficiaries in each country, it will be more important to demonstrate that our project will be complementary and not repetitive to other completed projects in the region. An example is the ADB’s recent CAREC programme studies that recommended the establishment of logistics centres in each country in the region. We need to demonstrate that we are not duplicating this previous work and that our efforts are in concert with these previous projects, helping to implement and support the concepts already studied and presented. Several comments in this regard have been received by the team during regional trips.






Logical Framework

Project title: : International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Uzbekistan and the Republic of Turkmenistan

Countries: Central Asia – Region (CA)

Estimated project period: 24 months

January 2009 to January 2011

Revised & Prepared: 15/104/2009

Sheet no. 1 of 3

Intervention logic Objectively verifiable indicators Sources of verification Assumptions

Overall Objectives:

To support international trade and facilitate the movement of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport.

To be supportive and complimentary to other similar projects that have been recently completed by other IFI’s in the region.

% increase in regional trade measured in terms of volume and value of goods achieved

Enhanced economic efficiency and environmental sustainability of the transport system measured in terms of reduction in C02 emissions/fuel consumption per ton carried

Reduction in handling costs of goods

% reduction in road congestion through modal shift

EC Regular Reports

IFI reports

Annual Reports of the Ministries of Transport

Annual Reports of Transport Associations in the beneficiary countries

Specific Project Objectives:





1. To develop the financial, technical, environmental and institutional conditions and studies for a network of Logistics Centres along the TRACECA corridor

2. To identify, rank and promote priority Logistics Centres projects

3. To provide a set of feasibility or pre-feasibility studies for selected Logistic Centres to be developed on the TRACECA corridor

% increase in volume and value of freight carried

Quality of infrastructure and services at Logistics Centres measured in terms of throughput, speed of turnaround and value

Good intermodal connections established, measured in terms of average speeds/turnaround/ safety statistics

Nº. of feasibility or pre-feasibility studies provided

Nº. of pilot projects identified, selected and receiving finance

EC Regular Reports

IFI reports

Annual Reports of the Ministries of Transport

Annual Reports of Transport Associations in the beneficiary countries

Project Reports

Monitoring and Evaluation of this Project

The Beneficiary Governments remain committed to the objectives and principles stated in the TRACECA Long-term Strategy and the TRACECA Regional Action Plan 2007 – 2010 and are supportive of projects pursuant to these aims

The Beneficiary Governments continue to pursue policy of regional integration and establishing viable links with the Trans-European Transport Networks

The Commission Services, the Member States and the IFIs continue to provide technical and financial assistance in support of the goals of environmentally sustainable socio-economic development through enhanced transportation and communications networks

There are no major political or macro-economic shocks in the region which force the EU or the beneficiary Governments to suspend or review their transport policy






Results:

1. A detailed assessment of the relevant traffic flows and infrastructure conditions of the main TRACECA transport links and nodes perform all the array of logistic operations needed in the network provided

A short and medium-term Action Programme for the improvement of performance of logistic activities (adaptation of legal framework, customs related issues, technical standards, public policies, training and capacity building) provided and discussed with the beneficiary countries for further implementation

Recommendations for optimizing the degree and nature of the most relevant public Grant Schemes, covering direct (infrastructure, equipments) and indirect investments (facilitation of land acquisition, provision of specialized staff of civil servants for customs, safety, sanitary services) provided

Assessment Report presented and approved by the Beneficiaries

Short and medium-term Action Programme presented and approved by the Beneficiaries

Grant Scheme recommendations / investment strategy adopted

Project documentation

Monitoring reports





2. A set of relevant logistics projects identified and evaluated through a multi-criteria analysis and approved by the beneficiary countries

The identification of priority projects co-ordinated with stakeholders, investors and financing institutions

A Study Tour aimed at visiting relevant transport Logistics Centres in European countries organised

Nº. of pilot logistical projects identified and evaluated

Nº. of priority projects approved

Study Tour organised and implemented

Project documentation

Monitoring reports Government official documents

Training and Study Tour reports / documentation

Russian and English are the official working languages of TRACECA and are accepted in all participating beneficiary countries

Ministries of Transport of beneficiary countries and other relevant authorities are committed in project implementation and provide the required support

After discussions with the beneficiaries and the Project Manager, evaluate the necessity of undertaking the study tours. These tours, if undertaken, should have a direct and positive impact on the successful meeting of the project’s objectives, commensurate with the cost of such tours.





3. Pre-Feasibility or Feasibility Studies for every approved project developed

Environmental impact assessments for the identified projects and studies of their impact on local labour markets provided

Commercial relevance of the selected options analysed, detailing the expected benefits within the project’s lifetime, including the business plan of the investor/management company and a cost benefit analysis of each project, underlining the socio economic impact of the operations

Recommendations for synergetic actions of the potential Logistic Centres in the TRACECA network in Central Asia provided and coordinated with parallel projects being implemented in the Caucasus and Black Sea region countries

Pre-feasibility & Feasibility Studies carried out and accepted by beneficiaries and EC

A social and environmental impact assessment will be made and a Rate of Return (cost/benefit) analysis provided for each pilot project and accepted by beneficiaries and EC

Value of funds made available by states, IFIs, donors and private sector in support of pilot projects

Recommendations for synergetic actions integrated into TRACECA interventions

Project documentation Monitoring reports Government official documents Press releases

The beneficiaries and stakeholders allocate the necessary human and financial resources, and make available to the team all relevant information in their possession, on a timely basis, to ensure sustainability of the project results






ANNEX 2: Meetings Held during Inception Phase – January to April 2009 Date Name Title and Organization

28‐Jan‐09 Zeinolla Kalymbetov Advisor to Managing Chairman, TSESNA Corporation; Astana03‐Feb‐09 Ekaterina Miroshnik EBRD; Principal Banker, Municipal and Environmental Infrastructure; Almaty05‐Feb‐09 Wang Hong ADB, Senior CAREC Coordinator, Almaty05‐Feb‐09 Maksat Kystaubayev ADB, Regional Cooperation Specialist, Almaty06‐Feb‐09 Murat Bekmagambetov TRACECA, National Secretary; Kazakhstan (Almaty)06‐Feb‐09 Gulnara Bekmagambetova Research Institute for Transport and Communications; Head Complex Transport Problems Department06‐Feb‐09 Roman Andrutskiy Research Institute for Transport and Communications; Chief Project Economist12‐Feb‐09 Alexey Nikolayevich Lavrentyev Joint Stock Company Astana Contract; Logistics Manager, Almaty12‐Feb‐09 Temur Memishishi Vice‐President; Central Asian Logistics Management12‐Feb‐09 Joachim Hanssen MAXX Intermodal Systems; Director, Almaty13‐Feb‐09 Gennady Shestakov Kazakhstan Association of Customs Brokers; General Director14‐Feb‐09 Alexandr Denissenko Union of International Road Carriers Kazakhstan; Deputy Secretary General, Almaty16‐Feb‐09 Ulf Hindstrom EBRD; Senior Banker, Infrastructure; Astana16‐Feb‐09 Saltanat Rakhimbekova Kazakhstan Ministry of Transport; Department Director; Dept of Strategic Planning and Int'l Cooperation 16‐Feb‐09 Kulov Ruslan Kazakhstan Ministry of Transport; Head of Transport Policy Division;16‐Feb‐09 Olga Formenko Kazakhstan Ministry of Transport; Chief Expert; Dept of Strategic Planning and Int'l Cooperation 16‐Feb‐09 Janat Kurmankulov Chief expert of the Railway Transport Administration of the Transport and Railway Committee of MTC16‐Feb‐09 Danlyar Mukataev Expert of Transit Policy Administration MOT16‐Feb‐09 Aijan Abildina Expert of Transit Policy Administration MOT16‐Feb‐09 Gulsim Asankulova Expert of the Airspace Management of Civil Aviation Planning16‐Feb‐09 Zauresh Tokpanova Expert of Transport and Communication Development Department of MOT17‐Feb‐09 Buranov Olimjon Uzbekistan Cabinet of Ministers, TRACECA National Secretary17‐Feb‐09 Jenalinov Rustan Zhanatovich TRACECA, Secretary General, Baku17‐Feb‐09 Ingrid Angela Gossinger TRACECA Liason Officer, Baku17‐Feb‐09 Lothar M Hahn TRACECA Secretariat, Lot 2 Manager, Baku17‐Feb‐09 Ralf Behrens Dornier Consulting; Director Freight Transport/Logistics; Berlin17‐Feb‐09 Andreas Shon Dornier Consulting; Senior Consultant; Berlin (Team Leader Western NIS Logistics Project)17‐Feb‐09 Yulia Usatova Dornier Consulting; Representative in the Russian Federation18‐Feb‐09 Marc Abeille EGIS BCEOM; Team Leader; Black and Caspian Sea MoS Project18‐Feb‐09 Daniel Giblin EC Harris Built Asset Consultancy; Executive Consultant18‐Feb‐09 Dr Norbert Wagener Wagener & Herbst; Managing Director19‐Feb‐09 Leonardo Dongiovanni EIM, Political Advisor (European Infrastructure Managers; Brussels)19‐Feb‐09 Radoslav Valchev TRACECA, Manager, Group of Experts; Baku19‐Feb‐09 Rudolf Kamphausen Team Leader, Transport Safety Project (Brussels)





03‐Mar‐09 Solikh Muminov TRACECA National Secretary, Tajikistan03‐Mar‐09 Makhmadali Shokirov ABBAT President (Association of International Automobile Carriers of Tajikistan)03‐Mar‐09 Boymurod Eshonov ABBAT First Vice President04‐Mar‐09 Nargis Khamidova ABBAT; Head of TIR Department04‐Mar‐09 Yuri Gennadevich Volchok; Moscow04‐Mar‐09 Chukoyorov Hudoyor MOT, Vice Minister04‐Mar‐09 Makoto Ojiro ADB, Country Director, Tajikistan Resident Mission04‐Mar‐09 Joji Tokeshi ADB, Senior Portfolio Management Specialist04‐Mar‐09 Bahirddin Azamatov ADB; Regional Cooperation Officer04‐Mar‐09 Seiji Kaiho JICA Resident Representative; Dushanbe09‐Mar‐09 Vladimir Yakovlevich Bakholdin UTY; Deputy Chairman09‐Mar‐09 Mirpulat Sh. Mirkhamidov UTY; Head of Marketing09‐Mar‐09 Ahat Akhmadjanovich Yusupov Uztemiryulkonteyner; Chairman of the Board09‐Mar‐09 Abdulla Khashimov Ministry of Foreign Economic Relations; Director of Department09‐Mar‐09 Alimatov Otabek Cabinet of Minsters, Department of External Resations and Foreign Investments; Leading Expert09‐Mar‐09 Shukhrat Azimov Cabinet of Minsters, Department of External Resations and Foreign Investments; Senior Expert09‐Mar‐09 Khamidulla Rahmatullaev Cabinet of Minsters, Department of External Resations and Foreign Investments; Senior Officer ‐ Transport09‐Mar‐09 Aliyev Abduvahid Cabinet of Minsters, Department of External Resations and Foreign Investments; Deputy Director10‐Mar‐09 Shaalim Shavakhobov Uzbek Agency for Automobile and River Transport; Deputy Head10‐Mar‐09 Takhir Aliev Ministry of Foreign Economic Relations; Deputy Head10‐Mar‐09 Shavkat Radzhabolvich Bunyod Transport and Logistics; General Director10‐Mar‐09 Kakhramon Sidoknazarov Tashkent Road Transport Insititute, President10‐Mar‐09 Dr. Nikolay Kuznetzov Association of International Road Carriers of Uzbekistan; Head of Analytical and TIR Department11‐Mar‐09 Egambergen Palvanov Uzbekistan Airways; First Deputy Director General11‐Mar‐09 F Giyasov Uzbekistan Airways; Commercial Director11‐Mar‐09 R Kadirov Uzbekistan Airways; Director of Department of Ground Equipment Facilities and Airports Management11‐Mar‐09 Adilov Khokim Latifovich Uzbekistan Railways; Chorqosay Container Depot; Deputy Chief11‐Mar‐09 Kurbanov Babur Akhmadovich Uzbekistan Railways; Chorqosay Container Depot; Chief of Department11‐Mar‐09 Khairullaev Customs Committee of Uzbekistan12‐Mar‐09 Davronbek Khamraev Uzbek International Forwarders Association; General Director12‐Mar‐09 Farruh Zargarov Uzvneshtrans; Chairman12‐Mar‐09 Abdujabarov Abduljalil Abdugaparaovich Central Asia Trans; Chairman of the Board13‐Mar‐09 Anvar Urunov Business Logistics Development Association; Director13‐Mar‐09 Akram Mukhidov Business Logistics Development Association; Chairman17‐Mar‐09 Abdyrahiman Mamataliev Ministry of Transport and Communications, Kyrgyzstan; Deputy Minister17‐Mar‐09 Bolot Abdubaliev Ministry of Transport and Communications, Kyrgyzstan; Department of International Vehicle Transp; Director17‐Mar‐09 Gusakov Aleksandr Victorivich Turbion Company (Kyrgyz Forwarder)17‐Mar‐09 Shamyraniev Ascar Tukaevich Azatika (Kyrgyz Forwarder)17‐Mar‐09 Aliev Merali Amrulovich Davraa ‐ Trans (Kyrgyz)17‐Mar‐09 Dursunov Atamsha Latifovich Asministrans; Director (Kyrgyz)

17‐Mar‐09 James Ford Motorways of the Sea Project; Port Infrastructure Expert17‐Mar‐09 Fabrice Le Gall Motorways of the Sea Project; Logistics and Shipping Specialist19‐Mar‐09 Michael Wilson TACIS, Advisor in Ashgabat20‐Mar‐09 Batyr Hudaynazarov EBRD; Principal Banker, Ashgabat23‐Mar‐09 Yazgeldy Nazarov Turkmen Maritime and River Lines; Head of Foreign Economic Relations Department23‐Mar‐09 Ashir Babayev Turkmen Maritime and River Lines; Specialist, Foreign Economic Relations Department23‐Mar‐09 Mutkikov Meilis Nyzievich Turkmen Maritime and River Lines; Head 23‐Mar‐09 Amanmurat Gordov Turkmen Maritime and River Lines; Deputy Head 23‐Mar‐09 Babaev Begly Deputy Chief, Turkmenbashi port23‐Mar‐09 Retunskaya Lydia Deputy Chief, Turkmenbashi Development Department24‐Mar‐09 Cheol‐Hwan Choi HYEIN E&C Co. Ltd.; Korea; General Manager24‐Mar‐09 Byoung‐Wook Shin HYEIN E&C Co. Ltd.; Korea; Manager24‐Mar‐09 Satly Bayjanovic Satlykov Deputy Chairman, AVAZA National Tourism Zone Committee24‐Mar‐09 Ataev Oraz Chairman, AVAZA National Tourism Zone Committee24‐Mar‐09 Orazmuhamedav Chary Ministry of Motor Transport, Turkmenistan; Head of Foreign Economic Relations24‐Mar‐09 Talyiev Durdymurad Turkmen Association of International Road Carriers; General Secretary24‐Mar‐09 Muradov Hemra Turkmen Association of International Road Carriers; Deputy General Secretary24‐Mar‐09 Theo Hensels Europa House; Coordinator, Ashgabat24‐Mar‐09 Valeria Danilchenko Europa House; Deputy Coordinator, Ashgabat27‐Mar‐09 Riad Khasanov Transsystem, Deputy General Director, Almaty

ANNEX 3: Minutes of Pre Kick – Off Meeting


INTERNATIONAL LOGISTICS CENTRES/NODES NETWORK IN CENTRAL ASIA EuropeAid/125727/C/SER/MULTI



2

2 Unit (N° and Name) : International Department

3 Project N°: 08IEB015

4 Project Title : INTERNATIONAL LOGISTICS CENTRES / NODES NETWORKS IN CENTRAL ASIA

5 Client European Commission

6 Date of Meeting 21 and 22 January 2009

7 Project Manager Tom KENNEDY

8 Reviewing Expert / 9 Project Director

Patrick VAUGHAN(PVn)

10 Présent Tom KENNEDY (TKy) Didier WYNROCX (DWx) Gulnara DUSAPOVA (GDa) Client, European Delegation Ruggero MALOSSI (RMi) Patrick VAUGHAN(PVn)

11 Distribution As per "Present" These Minutes cover : the pre-kickoff meeting with the Client on 21st ; a follow-up meeting with the accounts section of the Client (Ms Bayan) on 22nd; plus internal meetings with the Project Manager (TKy) of the Logistics Nodes Project and the Project Manager of the parallel Perishable Goods Project (QM012) to profit from possible transfer of knowledge, sharing of logistics etc. between the projects. 1. REMARKS ON PROJECT

GDa emphasises that this is considered to be a very important and strategic project by Delegation and by the beneficiaries. 2. BENEFICIARIES

GDa informs that it has now been confirmed that Turkmenistan wishes to be a beneficiary of the Project, along with the previously-confirmed beneficiary countries.: Kazakhstan, Kyrgyzstan; .Uzbekistan and Tajikistan. GDa will send to TKy the list of beneficiary contacts for each country. .3. OFFICE ACCOMMODATION

Under the ToR, office accommodation should be provided by the beneficiaries and is only chargeable to Incidentals if the Beneficiaries confirm in writing that they are unable to provide such office space. Usual practice is to request in writing to each beneficiary and await written refusal. However, for main office in Almaty, GDa will be prepared to give go-ahead to office rental without waiting for negative reply from beneficiary. GDa will e-mail to TKy the list of beneficiary contacts for each country. ACTION (TKy) : send standard letter, based on similar letter of Perishable Goods Project (QM012), requesting provision of office space. 4. VISIBILITY





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GDa : "follow what was done for Perishable Goods Project".

ACTION (TKy) : first moves are to prepare Business Card on RMi model (existing address – new cards to be issued later, when permanent 08IEB015 office will be established) and prepare letterheads etc. Include systematically in e-mail signature : job title; Project title; Consortium name. 5. VISAS

GDa is OK to issue request letters for all European staff to have one-year multi-entry visas to Kazakhstan. (cost = zero in Paris).

GDa will assist to obtain visas for other beneficiary countries - but we can expect difficulties.

Visa costs : EC's current position is that visa costs for all beneficiary countries are covered under fee rates. SAFEGE disagrees : only (possible) visa costs for main operations base (Almaty, Kazakhstan) should be covered under fee rates – all other stans should be reimbursed under Incidentals

ACTION (DWx) : prepare e-mail explaining SAFEGE's position and send to Bayan (EU accountant Almaty) who will forward to EC Bruxelles for ruling and then inform.SAFEGE of decision. 6. BASE DOCUMENTS FOR PROJECT

Many previous relevant project reports (notably ADB) are available in electronic form with Gulnara. CAREC should also be consulted as they will have further information / reports. 7. PROJECT MONITORING

GDa informs that we can expect EC Project monitors to be particularly interested in the sustainability of the present Project. Amongst others, this will imply the necessity for contacts with IFIs financing in the sector. 8. PROJECT KICK-OFF MEETING

GDa : this should be planned for in the third month of the Project, when we have formulated ideas on Project planning and content and prior to remittal of the Inception Report (end of Month 3). Before kick-off meeting we should prepare short – half-page - press release document, explaining Project aims and programme. 9. INCIDENTALS

GDa : requires from TKy asap initial ESTIMATE of budget breakdown as per the six categories of the TOR. This estimate will be revised by TKy from time to time to reflect real expenditure levels.

ACTION TKy : send estimate to GDa





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GDa : for the 6th item of Incidentals, as per ToR, we can arrange geotechnical surveys, topographical surveys, etc…to be paid for under this item (with prior GDa agreement to cost). 10 MONTHLY REPORTING

In addition to reporting requirements of ToR, GDa would like succinct Monthly "what is going on" Report from TL – maximum one page (via e-mail). 11. PROJECT WEBSITE

GDa : not obligatory but up to SAFEGE to propose depending on degree of necessity (refer to what was done on Perishable Goods Project). 12. WORKING DAYS APPROVAL

GDa : approval (e-mail to be attached to end-of-month Timesheet) required for working Saturday and / or Sunday. Approval required for travel on Saturday or Sunday to be available for attendance at meetings on Monday in beneficiary countries. Prior approval (if relevant) of travel day as Working Day also required.

ACTION (TKy) : ensure that relevant e-mail requests to GDa and reply received before undertaking travel.

13. BUDGET / ACCOUNTS Model of accounts follow-up documents based on QM012, reviewed together with RMi, TKy and PVn. Budget for local expenses reviewed PVn / TKn. Separate , more detailed, note on above to follow (Action PVn)





5

ANNEX 4: Administrative Orders





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8





9





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11





12





13

ANNEX 5: Documents Consulted

• United Nations Economic Commission for Europe; Euro – Asian Transport Links; Ministerial Meeting

• UNESCAP Project Working Group on Transport and Border Crossing, Time Cost

Distance Methodology, March 2008; also papers for Transport and Trade Facilitation; Regional Action Program for Transport and Development in Asia and Pacific (2007 – 2011)

• Asian Development Bank, CAREC (Central Asia Regional Economic Cooperation),

Transport Trade Facilitation Strategy, Action Plan and various country – specific documentation, reports and presentations.

• Aktau International Multi – Modal Transportation and Logistics Center

(presentation by Tsesna Corporation, Kazakhstan.

• Aktau Port Development, Masterplan and Feasibility Study, Scott Wilson, October 2007

• TRACECA, Pre-Screening of Existing Logistics Centres & Cargo Terminals and

Future Needs Assessment, Trademco, July 2008

• Port Information – Turkmenbashi Port; information brochure provided by Globalink, Ashgabat

• Port of Turkmenbashi tonnage statistical report 2004 – 2008





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ANNEX 6: Project Terms of Reference

Tacis Action Programme 2006

International Logistical Centres/Nodes for Central Asian


TERMS OF REFERENCE





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1. BACKGROUND INFORMATION ............................................................................................... 1

1.1. Beneficiary country .............................................................................................................. 1 1.2. Contracting Authority ........................................................................................................... 1 1.3. Relevant country background ............................................................................................. 1 1.4. Current state of affairs in the relevant sector ...................................................................... 2 1.4.1. Kazakhstan 2 1.4.2. Kyrgyz Republic 5 1.4.3. Tajikistan 5 1.4.4. Turkmenistan 7 1.4.5. Uzbekistan 7 1.4.6. General context of existing mono-modal approach 8 1.4.7. Pre-identification of logistic sites

1.5. Related programmes and other donor activities: ................................................................ 9 2. OBJECTIVE, PURPOSE & EXPECTED RESULTS ............................................................... 10

2.1. Overall objective ................................................................................................................ 10 2.2. Purpose ............................................................................................................................. 10 2.3. Results to be achieved by the Consultant ......................................................................... 10

3. ASSUMPTIONS & RISKS ....................................................................................................... 11 3.1. Assumptions underlying the project intervention .............................................................. 11 3.2. Risks .................................................................................................................................. 12

4. SCOPE OF THE WORK .......................................................................................................... 12 4.1. General ............................................................................................................................. 12 4.1.1. Project description 12 4.1.2. Geographical area to be covered 13 4.1.3. Target groups 14

4.2. Specific activities ............................................................................................................... 14 4.3. Project management ......................................................................................................... 20 4.3.1. Responsible body 20 4.3.2. Management structure 4.3.3. Facilities to be provided by the Beneficiary Authorities 20

5. LOGISTICS AND TIMING ....................................................................................................... 21 5.1. Location ............................................................................................................................. 21 5.2. Commencement date & Period of execution .................................................................... 21

6. REQUIREMENTS .................................................................................................................... 21 6.1. Personnel .......................................................................................................................... 21 6.1.1. Key experts 21 6.1.2. Other experts 23 6.1.3. Support staff & backstopping 24

6.2. Office accommodation ...................................................................................................... 24





16

6.3. Facilities to be provided by the Consultant ....................................................................... 24 6.4. Equipment ......................................................................................................................... 24 6.5. Incidental expenditure ....................................................................................................... 25 6.6. Expenditure verification ..................................................................................................... 26

7. REPORTS ............................................................................................................................... 26 7.1. Reporting requirements..................................................................................................... 26 7.2. Submission & approval of progress reports ...................................................................... 27

8. MONITORING AND EVALUATION ......................................................................................... 28 8.1. Definition of indicators ....................................................................................................... 28 8.2. Special requirements ........................................................................................................ 28

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12 1. BACKGROUND INFORMATION

12.1 1.1. Beneficiary country The beneficiary countries are the five Central Asia countries: Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan.

12.2 1.2. Contracting Authority The European Community, represented by the Commission of the European Communities, for and on behalf of the governments of the Republic of Kazakhstan, the Republic of Tajikistan, Republic of Turkmenistan, the Republic of Uzbekistan and the Kyrgyz Republic.

12.3 1.3. Relevant country background Central Asia has no access to the great oceans and its communication with the world markets relate to inland transport and energy routes. This makes the countries of the region dependent upon the stability of their relationship with adjacent states as well as on the security of communications. Due to unfavourable conditions, the economy of the region is not self-sufficient and its development depends on their ability to work more closely with neighbours and to integrate into the global economy system. Lack of modern logistic centres/nodes and common legal ground for their cooperation and development, as well as technological connexion between them directly affects the development of trade and international transport (import, export and transit0 in the Central Asian states. An important objective of regional cooperation development is the implementation of a Trans-EurAsian transport network that includes the combined use of railways, roads, inland waterways, maritime and aviation. TRACECA (Transport Corridor Europe-Caucasus-Asia) Programme is responding to that objective. The TRACECA Programme was launched in 1993 at conference organised by the European Commission in Brussels, which brought together trade and transport ministers of eight country originally, five Central Asian republics (Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan) three Caucasian republics (Armenia, Azerbaijan and Georgia). In meantime the number of participating countries increased with the extension to the five Black Sea Region countries (Bulgaria, Moldova, Romania, Turkey and Ukraine). Bulgarian and Romanian are now members of the EU. The transport corridor TRACECA is the renaissance of the Great Silk Road, one of the most ancient routes in the world. Taking into consideration the geopolitical situation of TRACECA countries and trade relations development between Europe, across the Black Sea, through Caucasus and the Caspian Sea to Asia, the rise of freight flows on the one hand and logical reverse freight flows on the other hand, it is necessary to emphasize the growing importance of transport links in East-West direction. The TRACECA programme corresponds to the global EU strategy towards these countries and retains the following objectives:

• Promoting optimal connection of the international transport TRACECA corridor into Pan European Corridors and Trans-European Networks (TEN-T), with the objective of merchandises’ flows facilitation Stimulating the co-operation among the participating states for trade development in the region;

• Identifying factors hindering the development of trade and transport systems;




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• Promoting TRACECA projects as a means to attract loans from IFIs and private investors;

TRACECA is by definition a multi-modal corridor and TRACECA countries are committed in the optimal development of the sound and reliable transportation chains. In the TRACECA Long-Term Strategy up to 2010, an emphasis is given to ensuring the smooth and uninterrupted flow of freight in the region, across the different modes of transport and across the different countries.

In order to facilitate trade and transport in the region and to integrate the Central Asian countries in the world’s economy, it is necessary to organise the movement of non-oil cargo from Central Asia via the Caucasus to Europe in a more efficient manner. The recognition of priority links (rail, road, sea) and strategic intermodal logistic nodes, organised as a consistent network will serve as an important precondition for the optimisation of cargo flows (import, export, transit) and will contribute to the integration process of the local transport network and its connection to the Pan European Transport Corridors.

12.4 1.4. Current state of affairs in the relevant sector

1.1.1 1.4.1. Kazakhstan In 1995-1997, the Government programme of economic reform and privatisation quickened, resulting in a substantial shifting of assets into the private sector. Kazakhstan enjoyed double-digit growth in 2000-2001 - and more than 9% per year in 2002-2006 - due largely to its booming energy sector, but also to economic reform, good wheat harvests, and foreign direct investments.

From the EU’s perspective, Kazakhstan represents a reliable partner for promoting its objective of regional stability through regional cooperation in Central Asia. Indeed, it must form the cornerstone of any such initiative, given its relative economic strength (Kazakhstan accounts for two-thirds of the GDP for the whole central Asian region), and its leading position within the region.

The Ministry of Transport & Communication in Astana has overall responsibility for the transport sector, covering road, rail, inland waterway, maritime and aviation. The main task for Kazakhstan's transport strategy is its integration with the Eurasian transport system taking the advantages of the country geo-strategic location bridging Europe with Asia.

A particular dynamic is observed in the development of transport sector in Kazakhstan. The transport strategy envisages the construction of 50.000 km of new roads, around 20.000 km of new railways lines, the development of main maritime ports in Aktau and Kuryk and to build up a potential air fleet. The amount of investments required for construction of respective infrastructure within the next 10 years is about € 22 billion.

There are four main transport corridors crossing the country, which are subject for further infrastructure upgrading within the large investment programme. The corridors are identified as follows:

TRACECA: Europe – Central Asia via the Black Sea, Caucasus and the Caspian Sea (section seaport of Aktau - Almaty – Dostyk border with China).

Northern Corridor of Trans-Asian Railway Network (TARN): Western Europe – China, Korean Peninsula and Japan via Russia and Kazakhstan (section Dostyk – Aktogai – Sayak




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–Mointy–Astana–Petropavlovsk). Southern Corridor of TARN: South-Eastern Europe – China and South-Eastern Asia via Turkey, Iran, Central Asian states and Kazakhstan (section Dostyk – Aktogai – Almaty – Shu–Arys–Saryagash). North-South Corridor: Northern Europe – via Russia to Iran through Kazakhstan considering the following sections: seaport Aktau – Ural regions of Russia and Aktau – Atyrau. The transportation capacities of railway and road transport are used by 50%. However, the technical condition of basic transport infrastructure facilities requires substantial rehabilitation, quality improvement, and development to provide competitiveness of all transport modes.

The Kazakhstan railways is managed by National Joint Stock Company “Kazakstan Temir Zholy” The railway represents more than 72% of the total freight volume transported over the country. The Kazakhstan’s railway lines stretch for more than 14.200 km including 4.800 km (34%) double and multiple tracks and 4.100 km (30%) electrified lines.

The dynamic development of the economy in the country has affected the growth of road traffic and truck haulage volumes. At present, for the major part of the national road network the traffic volume is estimated at average level of 3000 vehicles per day and continues to increase by 7-8% every year. About 500 million tons of cargo merchandise was transported by road in 2006. The length of main paved road network is 23.000 km. However the roads are in poor condition. To improve this situation, the Government has adopted a multi-annual programme on road transport sector development for 2006-2012 with priority objective of construction and rehabilitation of main international transit corridors in Kazakhstan.

For maritime transport a Sea port network was developed on Caspian sea. The Aktau port situated at the east coast of the Caspian Sea has become increasingly important port for Kazakhstan being designed for overseas transport of dry cargo, crude oil, and oils stock. Within the Transport strategy the Government has also planned the future development of Kuryk and Bautino ports. Regarding the identification of feasible project, the size of the country and its relative low limited population implicate that specific issues as regards further distribution networks and infrastructure development needs to be addressed characterized by high investment and maintenance cost, and a rather low intensity in traffic flows. Concentrated European models of logistics seem not to be relevant except around the most densely populated area of Almaty. For these reasons, opportunities should be sought at first instance by the Consultant in supporting the Government in funding projects in the creation of rail, road and intermodal logistic services in Almaty and of port and rail/road terminals development to support efficiently the transfer from one mode of transport to the other in the main crossroad of the country.

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1.1.2 1.4.2. Kyrgyz Republic

With a GDP of just € 1,8 billion, the Kyrgyz Republic is the second smallest economy in the Central Asian region (after neighbouring Tajikistan). It is a relatively poor, mountainous country with a predominantly agricultural economy. In 2005, agriculture accounted for 36.8% of the country’s GDP. Cotton, wool and meat represent its main agricultural products and exports, whilst industrial exports include gold, mercury, uranium, and electricity. The high cost of transporting goods between the north and the south of the country is a major problem for the Kyrgyz Republic. Trains between the two zones should cross three other countries and five borders.

The rehabilitation of the highway between Bishkek and Osh has substantially improved the situation. However for bulk cargo the railway still is the only economic transport mode for long distance. It is therefore understandable that the Kyrgyz government is envisaging the construction of a new line in national territory in spite of the very high cost of crossing mountainous areas.

The independent freight forwarding industry is very young in Central Asia region. The regulatory framework of the freight forwarding and transport industry within the region is not uniform and it is not always clear which laws and decrees are applicable. In the Kyrgyz Republic freight forwarders association is under the responsibility of one Union grouping two associations: the Association of Freight Forwarders of Kyrgyz Republic (AEK) and the Association of Transport Operators of the Kyrgyz Republic (KTA).

Regarding the identification of feasible project, the country has limited logistic opportunities for distribution due to the low level of economy.

A relevant project could be sought in the creation of rail, road and intermodal logistic services in Bishkek and in rail/road terminals development in major crossroad at border points such Uzgen. Logistic activity can be associated with a little a wider project of trade activity zone that could attract new activities.

As logistical activities are supposed to be limited, the Consultant will attempt to locate these activities in areas where industrial activities or commercial activities are supposed to develop in order to favour business partnerships between logistic providers and the other companies. This could lead, with the development of these areas, to more ambitious models of logistic centres from models starting with zone to perform handling activities for containers and developing the concept to a widely developed zone of activities, associating several modes of transport, a large quantity of private companies, and generating a important added value in term of services.

1.1.3 1.4.3. Tajikistan The Republic of Tajikistan is located in the central part of the Eurasian continent. It is a land-locked highland country with the total territory of 143,100 sq m. Tajikistan borders Afghanistan, China, Kyrgyzstan and Uzbekistan. The mountainous ridges divide the country into the northern and southern parts. The capital city is Dushanbe. The population is 7.0 million people with rural population accounting for 73.5% and urban population for 26.5%. There are 3 administrative oblasts and rayons under republic jurisdiction.





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The country possesses huge water power resources. Such factors as a favourable warm climate together with long farming season and abundant water resources for irrigation needs determine the basic economic structure of the country. In terms of production, besides aluminium production facilities the country has necessary infrastructure for producing chemicals, fertilisers, cement, vegetable oil, textiles and other products. The country is very rich in minerals, namely oil, mercury, coal, tin, zinc, antimony, marble, wolfram, gold, silver, precious and semiprecious stones and other kinds of mineral wealth. The total length of automobile roads of Tajikistan equals 30,563 km out of which 13,747 km are managed by the Ministry of Transport and Communications Republic of Tajikistan including 4,782 km of the republic level roads and 8,965 of local level roads. Most of the roads run in highland areas along mountain rivers, thus being permanently exposed to devastating effects of landslides, mudslides, rock falls, debris flows, floods and other natural calamities. The country's railway network amounts to 950.7 km which includes 679.9 km of main running lines, 80.8 km of approach lines and 210 km of station tracks. The railway network is under the jurisdiction of "Rokhi Okhani Tochikiston" State Unitary Enterprise. There are also 310.2 km of approach lines registered under other organisations and enterprises. The Republic of Tajikistan is a member of Organisation for Cooperation of Railways and has no problems in terms of railway transportation between the contiguous states. As for air transport, there are four major airports in the country, three of which are equipped with facilities to handle international flights, viz.: Dushanbe, Khudjand and Kulyab. Automobile roads are one of the major branches of the country's economy. Due to its geographic location Tajikistan enjoys enormous transport and transit potential. The specific feature of the country's transport system is that Tajikistan has no direct access to sea ports. Therefore, ensuring efficient integration of the Tajik transport infrastructure into the regional transportation system and organisation of corridors with neighbouring regions and sea ports are the crucial factor in creation of favourable development conditions in the country. Thus, one of the Government's major objectives is to renovate and improve the condition of the roads included in the list of international corridors, in particular, TRACECA. Another important factor is strengthening and improvement of the border infrastructure which is in line with the EU priorities in the field of border management. The fact that the border with Uzbekistan is almost closed bears potential obstacles for the cargo automobile transportation routes along the western parts of the TRACECA corridor. With a view to ensuring efficiency and safety of the transit shipment system in the developing (and land-locked) countries, it is necessary to promote transit of administrative and legal macroeconomic conditions and create mechanisms for cooperation between the developing land-locked countries with the neighbouring transit states. There are concrete commitments in place on the level of transport ministers, freight forwarders' associations and TRACECA secretariats to provide support to any activities aimed at improvement of the land-locked countries' transportation system. In terms of identification of viable projects, the country has limited possibilities in terms of provision of logistics services. In this connection there is a real need for developing a project to ensure transport logistics services, including railway, automobile and air transport in Dushanbe, Khudjand and Kulyab. In this connection it is suggested that the consultants examine the Government's strategy on creation of logistics centres and border terminals with a view to improve and modernise all types of transportation system.





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The practically closed border with Uzbekistan is a potential obstacle for transit of goods on the TRACECA transport Western sections; therefore the volume of transported products is limited. The EU-Tajikistan trade relations are extremely limited.

There is a clear commitment at the level of the Transport Minister, Freight Forwarding Association and TRACECA Secretary to support any action of to improve transport network in the landlocked country. However, regarding the identification of feasible projects, due to the difficulties in border crossing and the low level of the economy, the authorities could support in Dushanbe only some logistics activities in connection with the airport activities. This supposes a situation characterised as “basic” in an area equipped for the transfer from one mode of transport to the other: road/air, rail/air.

1.1.4 1.4.4. Turkmenistan

Following severe transition and economic decline during the 1990-es, Turkmenistan’s economy started to grow around the millennium change and during the past few years GDP growth rates were even in two digits. Oil and gas are the main drivers of economic growth. Economic growth is reflected in transportation developments in all segments: oil and gas (products) and general cargo.

Transport developments, related to the Port of Turkmenbashi are closely linked to economic growth, not only in Turkmenistan, but also in a much wider region. Particularly oil and gas (products) will be a main generator of transportation flows. At the same time, the growing Gross Domestic Product in the region will boost the demand for general cargo transportation in the region. Turkmenbashi port is a potential transport hub within the TRACECA Corridor and is playing a key role for the functioning of the entire transport system in the region. Regarding the identification of feasible projects, there is no available indication of the policy led by the Government of Turkmenistan in the logistic sector but this country still represent a relevant operational link from Caspian Sea to Central Asia core rail and road network. It is recommended to identify an opportunity in Turkmenbashi port development and to identify the potential need of rail /road terminals along the communication network. Before any proposal for development of logistic centres the Consultant will perform a careful analysis to identify the existing transport logistic network in order to consider their possible extension. This could lead to investigations towards ports, rail, roads and airport operators, freight forwarders and transport companies associations and shippers.

1.1.5 1.4.5. Uzbekistan

There is no Ministry of Transport and the Uzbek Agency of Road and River Transport together with the Uzbek International Forwarders Association (UIFA) are considered as advisory body to the Government for all transport related questions. The UIFA is well staffed by high level transport experts and scientist. The transport strategy for Uzbekistan has been drafted with direct support from UIFA and endorsed by the Government.

The country is a major crossroad in central Asia logistic network The TRACECA rail corridor passing along the Amudarya River from Termez (border with Afghanistan) through Turkmenistan, Uzbekistan and Kazakhstan to reach Caspian Sea is of key importance for transport of goods on





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long distance. An alternative rail route is connecting Uzbekistan with the Caspian Sea port of Turmenbashi in Turkmenistan.

A Joint Stock Company “Uzbekistan railways” covering 3986 km of railway network (of which 619 km are electrified) is responsible for Uzbekistan railways. The turnover of cargoes by railway represents than 66 % of a cargo's turnover considering all other modes of transports. The main cargoes merchandise transported by the railway are: petroleum (29,9 %), building materials (26,1 %), coal (7,3 %) and chemical fertilizers (6,3 %).

Uzbekistan plans to upgrade the TRACECA roads on its territory, which will be about 1500 km long ("Uzbek Corridor"). It will include rehabilitation of the existing national roads as well as some new construction. The Uzbek Corridor will connect Uzbekistan to Europe via Kazakhstan in the northwest and Turkmenistan in the southwest and to China and Far East via Kyrgyz Republic in the east. The border with Tajikistan is not very operational due to political reasons.

The road network in Uzbekistan comprises about 43,500 km of roads, of which 96 per cent are paved. However, the condition of the roads is far from satisfactory and is deteriorating rapidly.

Due to the key strategic position of Uzbekistan considering that important part of TRACECA corridor is crossing the country there is no doubt that the implementation of logistic node network will facilitate internal and international trade, and will therefore facilitate economic growth in Uzbekistan. Tashkent area is the backbone of the transport network, and the most heavily trafficked interurban trunk route in the region. It carries large volumes of international freight and plays a key role in regional integration efforts. Moreover the rail route connecting Uzbekistan with the Caspian Sea port of Turmenbashi in Turkmenistan is of key importance for TRACECA development. Regarding the identification of feasible project, the economic organisation of the country being mostly directed by State activities, the Consultant should identify the direction led by the Governmental strategy for the development of logistic activities. There are projects supported by the Government for the creation of rail, road and intermodal logistic services in Tashkent. It is also possible to take in consideration the rail/road terminals development in major crossroad and border points such as Termez or Bukhara.

1.1.6 1.4.6. General context of existing mono-modal approach The expansion of trade between Europe and Central Asia is seriously being affected by the low cost-effectiveness of existing transport system. Given the land-locked position of several TRACECA countries and their remoteness from European market, current mono-modal approaches fail to meet important customer’s needs such as low cost, high quality (quickness, short delays, etc).

The dominant alternative, “pure” rail transport is not qualified to provide good quality “home to home” transport services (short delivery time, reliability, safety). Also “pure” road transports over distances up to 10.000 km are not economically justified. As for the existing TRACECA, the shortest link to Europe, this alternative is seriously handicapped by the partial approach used by the operators involved (rail, road and maritime). The lack of cooperation between the operators does not encourage customers and forwarders to use this corridor. Eventually, there is a clear transport problem that calls for an upgraded transport system. In this context, the creation of intermodal logistic centres within a single intermodal chain through TRACECA corridor must be seen as a logical transport choice for Central Asia.





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From the customer’s point of view, the proposed intermodal organization will enable the operators to offer easier “door to door” services in the most economical form.

12.5 1.5. Related programmes and other donor activities The EU is the key actor in the transport sector in the region, thanks to its continuous support to the regional transport programme in the last years (€160 million since 1993). The technical assistance provided mainly through the programme TRACECA has helped attract large investments from the IFIs, that include the European Bank for Reconstruction and Development (EBRD) which have made a number of commitments for capital projects on ports, railways and roads along the TRACECA corridor totalling over €700 million, the World Bank (WB) which have made commitments for new capital projects on roads in the Caucasus totalling over USD 80 million, and the Asian Development Bank (ADB) which have committed substantial funds to road and railway improvements. In addition, EU private investors are engaging in joint ventures with transport companies in the TRACECA region. The EU is supporting the programme with other EC projects to further enhance regional co-operation and economic sustainability in the region.

This project will ensure the leading role of the EU in the development of the transport and logistic network in Central Asia region.

Particular attention will be paid to precise design of the present project in ensuring the best possible complementary with previous, on-going and approved new projects of the TRACECA programme such as:

a. Harmonization of Border Crossing Procedures b. Unified Policy on Transit Fees and Tariffs c. Freight Forwarders Training Courses (incl. Introductory courses in modern logistic

schemes) d. Improvement of Maritime Links between TRACECA corridors and TENs Corridors

(incl. setting-up Black Sea ports as intermodal nodes / logistic centres) e. Aktau Port Development, Master planning and Feasibility Study for the Port of

Aktau, Kazakhstan f. Analysis and forecasting of traffic flows for the TRACECA countries and

interregional transport integration g. Motorways of the Sea project foreseen in the Action Programme 2006. h. Transport of dangerous goods in TRACECA countries (under implementation)

There are various other donors and initiatives active in the field of trade and transport facilitation in the region, which promote complementary projects. The present project will be particularly attentive to complementary actions, collaboration, exchange of information and cross-referencing in reports, with the other donors' and IFIs' initiatives.

In the Central Asia region there are mainly the initiatives on trade facilitation, customs cooperation, transit development to be mentioned as a donor focus. In framework of the UN, within the Special Programme for the Economies of Central Asia (SPECA), a Working Group on Transport Infrastructure and Border Crossing Facilitation is established with participation of four Central Asian Countries. ADB created the Central Asian Regional Economic Cooperation (CAREC) with participation of the Central Asian States, including Azerbaijan and China. US Agency for International Development (USAID) implements regional projects on trade facilitation and Customs modernization in Central Asia. Shanghai Cooperation Organization (SCO), including Central Asia, China and Russia is involved as well in the trade and transport development. The UN elaborated





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the Global Action Programme for landlocked and Transit Developing countries (“Almaty Programme of Action”).

The above actions do not constitute a comprehensive list of activities but gives a better understanding on scope and focus of donor assistance in Central Asia region related directly or indirectly to logistic systems. All the above-referred donors are relating their activities to transport and trade issues in terms of multilateral common approach, institution building, and harmonisation of legal framework and preparation of bankable projects.

Besides the above-mentioned initiatives, donor organisations active in the regions with relevant transport and trade facilitation projects are the EBRD, the WB, the ADB, UN Economic Commission for Europe (UNECE) and for Asia (UNESCAP), the Kuwait Development Fund (KDF), Japan International Co-operation Agency (JICA), Islamic Development Bank and USAID. Other bilateral donors are only marginally relevant as they concentrate mainly on other sectors and on national approaches.

All those initiatives pull in the same direction and pave the way for the successful functioning of the logistic nodes network still to be established, which constitutes presently the missing link on the spot.

13 2. OBJECTIVE, PURPOSE & EXPECTED RESULTS

13.1 2.1 Overall objective The overall objective of the project is to support international trade and facilitate the movements of goods along the TRACECA corridor through improving logistics capabilities, interoperability and multimodal transport.

13.2 2.2 Purpose The specific objective of this project is to develop a financial, technical, environmental and institutional conditions and studies for a network of logistical centres along the TRACECA corridor. The Consultant will provide a set of feasibility or pre-feasibility studies for selected logistic centres to be developed on the TRACECA corridor, with a focus on public private partnerships and efficient customs services. The studies will include needs assessment and surveys of the current logistical capacities, the preliminary design for different categories of required services, equipments and investments, business and organisation plans, financial and economic analyses in order to promote realistic and sustainable projects for further investment.

13.3 2.3 Results to be achieved by the Consultant The results to be achieved by the Consultant of this assignment are to determine the technical feasibility and economic viability of the projects. The expected results are the following: Results A: Analysis of TRACECA logistic network and of the related operation of transport and logistic within the existing network - In view of identifying priority projects, a detailed assessment will be provided on the relevant traffic flows and infrastructure condition of the main TRACECA transport links and nodes (see map) and the capabilities of the existing entities (Ports, Railways, Private companies) to perform all the array of logistic operations needed in the network;





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- A short and medium-term action programme for the improvement of condition of performance of logistic activities (legal framework adaptation, customs related issues, technical standards, public policies, training and capacity building) is provided and discussed with the beneficiary countries for further implementation; - Recommendations are provided for optimizing the degree and nature of the most relevant public granting scheme, covering direct (in infrastructure, equipments) and indirect investments (facilitation of land acquisition, provision of specialized staff of civil servants for customs, safety, sanitary services). Results B: Identification, ranking and promotion of logistics centres' projects - A set of relevant logistical projects is identified, evaluated through a multicriteria analysis and approved by the beneficiary countries; - The identification of priority projects is leading to strong coordination process with the sector's stakeholders, investors and with financing institutions; - A study tour is organised to visit relevant transport logistic centres in European countries. Results C: Feasibility studies of the selected projects - Feasibility studies are developed for every approved project according to its development phase. Preliminary design for modern infrastructure areas, description of the associated administrative support needed staff including efficient customs clearance services, information system network for the organisation and optimisation of carriage and transport forwarding (export, import and transit goods), cargo handling facilities, landscaping for the creation warehousing facilities, and if necessary processing of goods transported on special conditions (perishable, dangerous, heavy, large dimension, etc.). These logistic zones should be designed to guarantee an efficient business environment and attract multimodal transport operators. - If relevant, environmental impact assessments and studies of their impact on local labour markets are provided for the identified projects. - Commercial relevance of the selected options is analysed, detailing the expected benefits within the project’s lifetime, including the business plan of the investor/management company and a cost benefit analysis of each project, underlining the socio economic impact of the operations. Coordination with private investors and IFIs is requested. - Recommendations are provided for synergetic actions of the potential logistic centres in the TRACECA network in Central Asia, to be coordinated with the parallel project implemented in the Caucasus and Black Sea region countries.

14 3. ASSUMPTIONS & RISKS

14.1 3.1. Assumptions underlying the project intervention The following assumptions are considered to be basic prerequisites for the project implementation.

• Political continuity and stability in the beneficiary countries;





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• Governments continue to pursue policy of regional integration and establishing viable links with the Trans-European Transport Networks;

• Commitment of national authorities to establish a legal basis for the development of transport logistic centres;

• Free access to necessary information and data;

14.2 3.2 Risks • Promotion and identification of logistical projects which would lack commercial

attractiveness for further investment; • Political instability in some countries of the region; • Contradicting interests between the transport legal entities of the countries; • Lack of common goals and priorities in the transport sector of the countries; • Inappropriate legal framework.

The risks linked to regional cooperation are to be minimised by the use of some already functioning coordination mechanisms between TRACECA countries.

15 4. SCOPE OF THE WORK

15.1 4.1. General

1.1.7 4.1.1. Project description Lack of modern transport and logistic infrastructure and common legal background for Caucasus and Black Sea integration and development, as well as technological connexion between countries, directly affects the development of trade and international transport (import, export and transit) in the region. With the introduction of new and modern ways of attracting investments using the concept of Public Private Partnership (PPP), one of the main components of the transport sector potential development is the establishment of transport logistic centres. Although developing transport logistic centres should be primarily a business-related activity, public authorities have a clear role to play in creating the appropriate framework conditions and promoting the development of logistic infrastructures on the political agenda. In particular, their financial participation is essential for the creation and the development of large scaled investment such as Ports (maritime or for inland waterways) or Airports. In parallel, in order to face pressure of the land speculation around large cities (where real estate speculation is intensive) public authorities promote land acquisition operations and prepare the areas for future private logistic operators. In parallel, a continuous relationship should be kept with all the transport sector representative bodies (such as Freight forwarder associations, transport companies associations, international normative and regulatory associations) in order to solve administrative issues faced by the operators and to modernize the legal framework under which transport and logistic activities are performed. In TRACECA countries as in all other part of the world, the establishment of Logistic Centres has become a necessity so as to build freight centres in which all freight transport services are performed to an optimum level; all regulatory, technical, social needs of the customers are met and the quality of transport services increased.





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This project should target the identification of relevant opportunities for the development of logistic activities, drafting feasibility studies, specifications and preliminary design of potential international logistic centres with internationally acceptable standards to be implemented on TRACECA corridor in the five beneficiary countries. Potential projects and priority activities have already been discussed with the beneficiary authorities during the project's preliminary phase. However, the experts will be in charge of consolidating proposals in a relevant action plan to be approved by the beneficiaries and the relevant investors.

To perform the pre-feasibility and feasibility studies, a multidisciplinary team is required, involving expertise in the design of international logistic centres, intermodal operations specialists, experts in transport management and marketing, engineering, legal aspects, international conventions and operations.

The results of this project should consist in the development of the relevant conditions and studies for a network of reference logistic centres in the region and new added-value activities in the distribution sector of each country. It should strengthen logistic activities in TRACECA countries in order to answer in the future to the demand of shippers operating and to support the development of traffic flows along the corridor.

1.1.8 4.1.2. Geographical area to be covered The project should cover Kazakhstan, the Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan with a focus on links with the TRACECA corridor.

Without anticipating about the result of the project's assessment and identification phase, the experts will consider for careful analysis the following list of sites identified during a preliminary phase: Kazakhstan

• Dostyk/Drushba – road/rail (Eastern border with China), • Almaty - road/rail/aviation (logistic centres with high concentration of economic

activities main hub of trade-financial centre), • Ksylorda - road/rail/inland waterway (important node with road connexion to Astana

and rail perspective extension from Zhezkazgan), • Atyrau/Makat – multimodal transport hub rail/road/aviation/maritime, • Beuneu - rod/rail (important node with rail/road connexion to Uzbekistan), • Aktau port - multimodal transport hub rail/road/aviation/maritime.

Kyrgyz Republic • Bishkek - rail/road/aviation, • Uzgen at the border with Uzbekistan rail/road with the perspective of future

construction of railway line from Uzgen to Turugard (border crossing with China),

Tajikistan • Dushanbe – small logistic centres combining road/rail/aviation, considering

practically closed border with Uzbekistan

Uzbekistan





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• Tashkent - rail/road/aviation (logistic centres with high concentration of economic activities main hub of trade-financial centre),

• Termez - rail/road/ inland waterway (important node, border with Turkmenistan and Afghanistan)

• Bukhara –rai/road (south connexion to Turkmenistan and further to Turkmenbashi port)

The final list of priority sites and projects to be considered for further analysis and studies should be approved by the beneficiary countries and the Contracting authority.

1.1.9 4.1.3. Target groups The project's main stakeholders will be the Ministries of Transport, responsible for the sustainable development of the transport policy and the transport infrastructure, and the investors involved in the selected logistical projects. The overall beneficiaries of the project are the business community and the consumers of transported goods profiting of cheaper and faster production to market relations in the relevant areas.

Transport operators in the region, e.g. the railways, truckers etc. of beneficiary countries will obtain “know-how” transfer in the area of modernized transport operation in the logistics sector, as well as good performance outputs derived from the upgrading infrastructure. Further important stakeholders will be the International Financing Institutions and the intermediary institutions between state and private sector such as forwarder associations.

The Customs Authorities of beneficiary countries would also benefit from the project by increasing the efficiency of related services and revenues from bonded warehouses.

In addition directly at the logistic nodes locations additional employment opportunities will exist.

15.2 4.2. Specific activities The Consultant will perform the following tasks:

Task A: Analysis of TRACECA logistic network and of the related operation of transport and logistic within the existing network

Task A 1: Traffic flows analyses and characterisation of the nature and the condition of operating infrastructures and facilities within the network Within the group of TRACECA Member States, the experts will provide for the main traffic axes (see map): a) A disaggregated approach of merchandise flows, according to their specific logistic management

• Raw materials • Heavy industrial produces • Light industry, automotive • Flows of commodities • High tech produces





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or any other category of merchandises requiring, according to their nature, specific equipments and a specific support from transport and logistic providers. For general cargo, flows of containers will also be characterised separately and the number of containers (maritime, intermodal) will be assessed at main transit point and destination points. b) Identification and description of main logistics nodes (ports, large cities, crossroads) relevant for the project. An extensive review of facilities and all type of equipment and of operators at each of these areas should be provided. The experts will especially focus on area enabling a switch of transport modes: rail /road, sea/rail terminals maps, Ro Ro equipments, putting emphasis on the present capacity of the equipment, the organization of the maintenance, the infrastructure owner's projects of development and/or projects of closure of the terminals. c) Identification and description of main existing transport links, by mode of transport (waterways, maritime, rail and roads itineraries). The experts will focus only on operating links and sites, materialised by exiting and regular commercial flows. They will perform a Survey of the current situation in Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan, regarding the transport logistics sector and international transport routes. The Consultant will perform a detailed survey of the situation regarding existing intermodal platforms relevant for the project in the countries, including localisation and equipment of key installation, existing services, traffic volume, tariffs and present organisation. The strengths and weaknesses of the existing situation will be highlighted in perspective of the local environment and aspiration. Condition of rail and road links will be measured on the basis of homogenous standards in order to allow comparisons of infrastructure conditions from one part of the network to the other. Task A 2: Description of main issues encountered by operators

After having led a relevant investigation towards main stakeholders in each of the beneficiary countries, the Consultant will update the available information for the TRACECA corridor, especially in terms of:

• Missing links in infrastructure development • Border crossing issues • Presence or lack of private operators • Legislative, administrative constraints and technical barriers to efficient circulation

of merchandises flows • Legislative, administrative constraints and technical barriers towards the

development of efficient logistical centres and any others noticeable constraints hampering the development of the network and the smooth management of merchandises flow. Relevant recommendations and possibly training will be provided in accordance with the findings in this field.





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Task B: Identification, ranking and promotion of logistics centres' projects a) The Consultant will assist the beneficiary countries in identifying and characterising priority projects of logistic centres, initiated by private or public interest. This could lead to investigations towards ports, rail, roads and airport operators, freight forwarders and transport companies associations, shippers, etc. b) The Consultant will rank the existing projects of logistic centres at a regional level using a multicriteria matrix. The criteria should be selected in order to reflect the general objective of the project, which intends to concentrate on private or public financial support including from IFI’s, to strategic projects for smooth, secure and environmentally safe management of merchandises flows along the corridor, and their integrated manipulation. Criteria should comprise objectives such as:

• Position of the centre on main TRACECA corridors • Completion of key logistic activities • Condition of infrastructure around the area • Existence of regular traffic flows to be operated • Possible funding to be obtained • Involvement of private and public stakeholders

At the end of the selection process, the Consultant will propose a group of projects to be approved by the beneficiary countries and the EC contracting authority and which will be considered as priority projects for the creation of a network of logistics centre. The identification process should be led in strong coordination with the sector's stakeholders and with financing institutions. It should be clearly underlined that the project intends to favour the development of regional logistic activities through identification and support to any type of relevant projects with well identified chances of success, rather than to ambitious but non realistic large seized logistic platforms. Adopting this point of view, very different types of projects could be identified, such as the renewal and modernisation of a strategic rail/road terminal, the improvement of port/airport handling area capacities, or the conception of a new logistic area on a selected location. c) A visit of relevant logistic centres in European countries could be organised in order to familiarise the stakeholders with investment appraisal and techniques of similar European logistics projects. The detailed programme and list of participants have to be approved by the EU Project Manager during the implementation.

Task C: Feasibility studies of the selected projects

For each selected project, the Consultant will realise a complete feasibility study with the following components:





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• Task C 1: Global description of the objectives and functions of the logistics centre

A functional description of the centre will be delivered, based on the main purposes of the creation of the centre (final delivery site, centre manipulation of containers, palletised, break bulk, liquid produces, freight forwarding activities, distribution centres)

Socio-economic impacts of the project should be underlined, at local level and at the level of the whole network. For this purpose, the experts will add to each technical study a cost benefit analysis together with the business plan of the site (see Task C6) and an environmental impact analysis (see task C7). • Task C 2: Identification of major stakeholders For each selected project, the Consultant will lead a stakeholder analysis (government representatives, local administration, banks and financing institutions, freight forwarder associations, main potential shippers and users of the logistic centre, transport companies, logistics provider, potential investors) with the purpose to promote the project and measure the degree of involvement of each potential partner and the nature of services expected from the logistic centre.

This analysis should confirm the interest of the project and facilitate the completion of the further steps of the study. • Task C 3: Possible site location In parallel to the stakeholder analysis, the Consultant will propose a location or a choice of location for the logistic centre. Discussion and arbitration should lead to synergy among stakeholders and concentration of funding upon a leading project.

Although the main purpose of the project is to facilitate long distance transport of containerised merchandises, the Consultant will favour locations concentrating large array of associated activities such as warehousing, final delivery operations, light industrial activities and commercial activities. All logistics centres should be promoted with the objective to develop intermodal operations and enable operators to take benefit from operating connections to the rail network.

• Task C 4: Preliminary design of the site

The experts should provide a preliminary design of the economic centres in which the logistic activities will be operated. The study will prepare:

• The land acquisition operation (with prior identification of the owners of the lands) and the related authorizations to be obtained

• The determination of the nature and of the operation of preparation of the soils, according to the planned activities

• The design of entrance / exit with emphasis on road safety issues and safety civil works to be built on road network if necessary

• The connexion to water, energy and telecommunication networks and waste treatment equipment

• The mapping of the areas, establishing the different location of activities and of all equipments to be installed:





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A circulation plan Areas for parking and manoeuvres (rail, road, waterways) Services areas of the zone (energy supply, waste and water treatment,

offices and storage facilities of the management and the maintenance of the zone)

Areas for warehouses, industrial and service activities Handling facilities location Areas for future development

• The regulation of the area, according to the hypothesis of management made in stakeholder analysis and business plan.

In the case of projects improving an already existing activity zone, the Consultant will follow the above mentioned list of studies and suggest if necessary any type of improvement of the area. • Task C 5: Preliminary design of the logistic areas

On the basis of the development hypothesis as established in the business plans, the experts will focus on the core activity of the areas and deliver:

• An evaluation of the nature and the budget necessary to make the acquisition or modernize existing equipment for containers and all types of merchandises handling and safe storage

• The design study of the areas for manipulation • The design study of a lot for warehousing activities.

• Task C 6: Business plan of the site a) The experts will prepare a set of hypothesis concerning the business model of the area, distinguishing clearly between the functions of:

o the managing body, owner of the lands and /or of the authorisation of use of land, administrated by private and/or public partners in its board of administrator, in charge of the physical development of the area and beneficiary of real estates revenues

o the operating body, typically with private ownership, in charge of providing on a commercial basis services to the operators of the area (transport companies, logistics providers, other companies) such as administration, security services, maintenance fees.

All hypotheses should be based on a market free environment level of prices, in order to make the areas and its services as competitive as possible. b) On the basis of the selected model, the Consultant will establish a 10-years business plan, which should intend to maximize commercial revenues of the area.





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c) Establish country by country an implementation programme, in agreement with the national authorities (legal basis, propose amendments to laws, documents to be scrapped, publishing procedures for informing users on new rules).

• Task C7: Environmental impact assessment Where needed by the national legal framework, the Consultant will provide the environmental impact assessment of the creation of the centres. The consultant will especially but emphasis of the impact in term of externalities of the expected increase in term of traffic on an enlarged area around the activities, and will suggest mitigation measures to minimize the impact of each project. • Task C8: Assessment of key qualifications required An assessment of key qualifications required for the implementation of each project, calculating minimum staffing for all key activities of the centres and underlining discrepancies that could exist with the labour market in the area.

• Task C 9: Cost benefit analyses The consultant will provide a cost benefit analysis of each accepted project. Using the results of the tasks C1 to C6, the consultant will provide the financial and economic analyses of the projects (using as a reference for methodology the EC guide for cost benefit analysis of investment project). Having obtained the main financial indicators the consultant will evaluate the socio-economic impact the projects (using as a reference for methodology the EC guide for cost benefit analysis of investment project). The consultant may introduce at the occasion different hypothesis of granting schemes (comprising the non direct benefits given by the support of the public authorities in obtaining land at controlled prices, public investment in the infrastructure) in order to assess and optimize the global socio-economic benefit of the operation for public authorities. • Task C 10: Recommendation for the adapted public support The experts will issue a set of recommendations in order to promote investments and to support organise private – public partnership for each project. For this purpose, he will distinguish the different levels of responsibilities and operations, the different roles of each private and public stakeholder in the conception, the implementation and the daily operations of the logistic centre in an organised and consistent manner. • Task C 11: Communication and the synergy within the networks of logistical

Centres along the TRACECA corridor. The experts will work in close cooperation with the Team Leader of the parallel project (logistic centres) implemented in the Western NIS and the Caucasus with the objective to insure consistency and interoperability between all centres.





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He will ensure that communication will be kept between the different leaders of the most advanced national projects in order to make possible some synergetic actions and propose to shippers an operational network of platforms in order to receive and distribute their merchandise in the TRACECA network. This consistency should include for instance the capabilities of tracking shipment from one side to the other of the network, the common safety standards, availability of documentation, capabilities of equipment to manipulate certain categories of goods, etc. During the whole period of project implementation, the experts will be in close liaison with representative of International Financing Institution’s (IFI), including the EBRD, the World Bank, the EIB, ADB and will report on a regular basis about the study progress. The consultant should support the integration of identified logistic areas in the transport planning studies of the financial institution and will check if their financing programmes could contribute to this objective. The Consultant is invited to observe the latest visibility guidelines concerning acknowledgement of EC financing of the project. The consultant should cooperate with Delegations and coordinate its work with beneficiaries of the project.

15.3 4.3. Project management

1.1.10 4.3.1. Responsible body The Delegation of the European Commission to the Republic of Kazakhstan, to the Kyrgyz Republic and the Republic of Tajikistan, represented by the EC Project Manager is responsible for managing this contract. 4.3.2. Management structure

The Consultant will appoint a Project Director who will report directly to the Project Manager of the EC Delegation in Almaty, and cooperate with regionalised EC Delegations in each beneficiary country.

The Consultant shall conduct official project opening/closure conferences at the beginning and at the end of implementation with the proper organised EU visibility, as well as project Steering Committee meetings (SC) on a quarterly basis; The objectives of the Steering Committee will be to monitor the performance and direction of the project and to make relevant observations. The composition of the SC should be identified during the project inception phase.

When relevant, the Consultant shall involve local experts from Beneficiary countries in the project team. They must be independent and shall not be on the payroll of the Project Partner.

1.1.11 4.3.3. Facilities to be provided by the Contracting Authority and/or other parties

The Project Partner will assist and facilitate the implementation of the project by providing (i) necessary contacts and liaison with local authorities, (ii) present available information and documentation required (if exists), and (iii) timely decision-making as required during





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project implementation. The Project Partner shall appoint a senior member of its staff to liaise with the Consultant and ensure that local staff of an appropriate level is made available to work alongside the staff of the Consultant. Staff of the Project Partner shall not be paid from project funds. Furthermore, the Project Partner will assist in obtaining customs clearances for the eventual Consultant’s imported equipment necessary for the implementation of the project.

The Project Partner should also provide all possible assistance to solve unforeseen problems, which the Consultant may face. The possible failure to solve some of the Consultant's problems encountered locally will not free the Consultant from meeting its contractual obligations vis-à-vis the Contracting Authority.

16 5. LOGISTICS AND TIMING

16.1 5.1. Location The project area covers Kazakhstan, Kyrgyz Republic, Tajikistan, Uzbekistan and Turkmenistan. The main project office will be located in Almaty (Kazakhstan). Secondary project offices can be possibly established in other beneficiary countries. Changes in the location of the offices could be considered during the inception phase in close coordination with the project stakeholders and the Contracting Authority. It has also to be noted that in the course of the project implementation, frequent travelling will be required to TRACECA countries and other locations as appropriate, based on the project needs and agreed with the EC Project Manager. The cost for this travelling will be provided from the incidental expenditure budget.

16.2 5.2. Commencement date & Period of execution The intended commencement date is September-October 2008 and the period of execution of the contract will be 24 months from the date of contract signature. Please refer to Articles 4 and 5 of the Special Conditions for the actual commencement date and period of execution.

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18 6. REQUIREMENTS 6.1. Personnel1

1.1.12 6.1.1. Key experts

1 For expert’s input, please refer TOR template published on EuropeAid website http://ec.europa.eu/europeaid/tender/practical_guide_august2006/documents/new_prag_en_final.pdf





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All experts who have a crucial role in implementing the contract are referred to as key experts. The Consultant’s staff should spend a maximum time (95% of the allocated man-days) in the beneficiary countries

The profiles of the key experts for this contract are as follows: Key Expert 1: Team Leader (minimum 400 w/days) Qualifications and skills • University degree in legal or economy • Proven skills in project management • Fluency in English; proficiency in Russian is highly desirable

General Professional experience • International experience in the field of transport legislation Specific professional experience • At least 3 years of experience in leading international project teams • Knowledge of PPP legislation and practice • Previous experience in customs projects and/or border management issues • Experience in the Central Asian region Key Expert 2: Economist / Business Plan Specialist (minimum 350 w/days) Qualifications and skills • University degree in economics • Proven experience in private sector business plan development • Fluency in English; proficiency in Russian would be considered an advantage General professional experience • International experience in the field of International Transport and/or logistics • Experience in carrying out feasibility studies and business plans for private sector Specific professional experience • Experience in carrying out financial, economic and cost-benefit analysis preferably in transport

sector • Experience in business plan preparation on large industrial projects, preferably related to logistic

centres, commercial warehouses… • Experience in NIS countries would be considered an advantage Key Expert 3: Architect/Logistic Centre Designer (minimum 250 w/days) Qualifications and skills • University degree in architecture • Knowledge of IT applications for logistic centre designing • Fluency in English; proficiency in Russian would be considered an advantage





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General professional experience • Experience in carrying out feasibility studies

Specific professional experience • Experience in the field of large warehouse/logistic centre designing • Experience in carrying out infrastructure planning (landscaping, laying out…) for logistic centres • Experience in infrastructure investment cost calculation for logistic centres • Experience in NIS countries would be considered an advantage

1.1.13 6.1.2. Other experts CVs for experts other than the key experts are not examined prior to the signature of the contract. They should not have been included in tenders. The input of all non-key experts should be at least of 1000 working days in this project. The Consultant is free to compose its team of specialists for short and medium term visits. However, although not exclusive, the following domains of expertise should be clearly visible in its proposed staff list:

• Traffic forecast • Intermodal transport • Transport Economics and planning • International Conventions - road, rail, sea and multimodal • Freight forwarding • Legal aspects and codes of practice, custom regulations, sanitary regulations • Documentary requirements including Single Administrative Document (SAD),

International • Insurance Law and Practice • Land evaluation, land acquisition • Air transport logistics • Marketing of transport and logistic services • Environmental impact studies • Labour market in transport sector • General Transport Legislation knowledge • Transport regulation issues (e.g. noise, exhaust, and axle loading) • Information Technologies with modern monitoring information system

The Consultant's proposal must fully describe the experts to be assigned to the project, their precise domain of expertise applicable to the project, their individual roles in the achievement of the project objectives, the timing, duration and location of their assignments. Time spent in the beneficiary states and at home office is to be clearly shown. The Consultant should pay attention to the need to ensure the active participation of local professional skills where available, and a suitable mix of international and local staff in the project teams. All experts must be independent and free from conflicts of interest in the responsibilities accorded to them.





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The selection procedures used by the Consultant to select these other experts shall be transparent, and shall be based on pre-defined criteria, including professional qualifications, language skills and work experience. The findings of the selection panel shall be recorded. The selection of experts shall be subject to approval by the Contracting Authority. The proposed time-cost element for such contributions should be clearly visible in the Consultant’s proposal. There should aim to be a reasonable balance between inputs from local experts in different TRACECA states in the CA region. Note that civil servants and other staff of the public administration of the beneficiary country cannot be recruited as experts.

1.1.14 6.1.3. Support staff & backstopping It is mandatory to have a backstopping available for this contract. Backstopping costs are considered to be included in the fee rates. The costs of support staff must also be included in the fee rates of the experts.

18.1 6.2. Office accommodation Office accommodation of a reasonable standard for each expert working on the contract is to be provided by the Consultant in Almaty and possibly in other beneficiary countries. The costs of the office accommodation are to be covered by the provision for incidental expenditure. The cost per square meter must be in line with the prevailing local market rate for office accommodation of a reasonable standard.

18.2 6.3. Facilities to be provided by the Consultant The Consultant shall ensure that experts are adequately supported and equipped. In particular it shall ensure that there is sufficient administrative, secretarial and interpreting provision to enable experts to concentrate on their primary responsibilities. It must also transfer funds as necessary to support its activities under the contract and to ensure that its employees are paid regularly and in a timely fashion.

If the Consultant is a consortium, the arrangements should allow for the maximum flexibility in project implementation. Arrangements offering each consortium member a fixed percentage of the work to be undertaken under the contract should be avoided.

18.3 6.4. Equipment No equipment is to be purchased on behalf of the Beneficiary Country as part of this service contract or transferred to the Beneficiary Country at the end of this contract.





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18.4 6.5. Incidental Expenditure2 The Provision for incidental expenditure covers the eligible incidental expenditure incurred under this contract. It cannot be used for costs, which should be covered by the Consultant as part of its fee rates, as defined above. Its use is governed by the provisions in the General Conditions and the notes in Annex V of the contract. It covers:

• 1) Travel costs and subsistence allowances for missions to be undertaken as part of this contract from the bases of operations in the beneficiary countries;

• 2) Office rental (in case not provided by beneficiaries); • 3) Workshops, training and seminars including travel costs and subsistence

allowances for counterparts' participants missions to be undertaken as part of this project;

• 4) Office running costs (excluding purchase of office equipment), interpretation/translation

• 5) Visibility actions' costs • 6) Specific costs related to technical design, data collection or legal authorizations

related to the project's activities The Provision for incidental expenditure for this contract is € 300.000. This amount must be included without modification in the Budget breakdown.

The Consultant will need prior written approval from the Contracting Authority before spending the funds related to following components 2, 3, 5, 6 of the Incidental Expenditure. No written approval from the Contracting Authority will be needed for spending funds related to the rest components 1 and 4, however all supporting documents must be kept by the Consultant as indicated in art.24 of the General Conditions for Service Contracts financed by the European Commission. Any subsistence allowances to be paid for missions undertaken as part of this project to and from the base of operations in the beneficiary countries must not exceed the per diem rates published on the Web site http://europa.eu.int/comm/europeaid/index_en.htm at the start of each such mission.

2 For estimation the Provision for Incidental Expenditures, please refer TOR template published on EuropeAid website http://ec.europa.eu/europeaid/tender/practical_guide_august2006/annexes_services_en.htm





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18.5 6.6. Expenditure verification The Provision for expenditure verification relates to the fees of the auditor who has been charged with the expenditure verification of this contract in order to proceed with the payment of pre-financing instalments if any and/or interim payments if any. The Provision for expenditure verification for this contract is € 20,000. This amount must be included without modification in the Budget breakdown. This provision cannot be decreased but can be increased during the execution of the contract.

19 7. REPORTS

19.1 7.1. Reporting requirements Please refer to Article 26 of the General Conditions. Interim reports must be prepared every six months during the period of execution of the contract. They must be provided along with the corresponding invoice, the financial report and an expenditure verification report defined in Article 28 of the General Conditions. There must be a final report, a final invoice and the financial report accompanied by an expenditure verification report at the end of the period of execution. The draft final report must be submitted two months before the end of the contract execution. Each report shall consist of a narrative section and a financial section. The financial section must contain details of the time inputs of the experts, of the incidental expenditure and of the provision for expenditure verification. The final report must be accompanied by the final invoice, the financial report and an expenditure verification report.

All reports must be submitted together with one CD ROM version of each report. The reports must be written in English and Russian.

Inception Report The Inception Report will be submitted 3 months after the beginning of the assignment. It will propose a detailed flow analysis as a result of task A1 and recommendation related to task A2. It will also propose a first stakeholder analysis in each beneficiary country and a preliminary listing of projects to be proposed for detailed studies. Finally, it will put emphasis on the methodology to be adopted for the completion of the project and the time schedule of involvement of experts. Progress Report 1 The draft progress report 1 will be produced 6 months after the beginning of the assignment. It will propose the result of task B of the assignment, the identification of projects of priority logistics centres and ranking of all proposed projects throughout multicriteria analyses. Progress Report 2 The second progress report will be delivered 12 months after the beginning of the assignment. Progress Report 3 The third progress report will be delivered 18 months after the beginning of the assignment.





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All progress reports will be commented by all beneficiary countries and transmitted as a unique set of consistent comments to the Consultant. Within 15 days after the reception and the integration of comments received from the beneficiary countries the Consultant will produce the final version of each progress report. Draft Final Report The draft final report will be proposed 22 months after the beginning of the assignment. It will release the provisional results of task C of the project. This report will be commented by all beneficiary countries and transmitted as a unique set of consistent comments to the Consultant within 30 days. Final Report The Final report will be delivered 24 months after the beginning of the assignment. This report will release the complete results of the task C and will summarize, in separated annexes, the prior investigation lead in task A and the methodology of selection of centres lead in task B.

19.2 A monthly information report (not exceeding 3 pages), the format of which is left to the Contractor's discretion should be provided in addition to the EC Delegation.

19.3 7.2. Submission & approval of progress reports All reports are to be delivered in the numbers, languages and locations as follows

To be delivered to Hard copy in English

Hard copy in Russian

CD English & Russian

By electronic Transmission

EC Delegation in Almaty 1 1 1 yes Copies for each MoT in five beneficiaries countries

1 1 1 yes

Permanent TRACECA Secretariat in Baku

1 1 1 yes

Copies for each National TRACECA Secretary of beneficiaries

1 1 1 yes

Copy for each following IFI’s: EBRD, WB, ADB

1 1 1 yes

The contractor is to provide reports directly to key beneficiaries, which may substitute for some of the reports to be distributed other than according to the table above. Lists of addressees for each issue of the reports are to be provided to the Project Manager.

Copies of the Delivery Notes to the recipient(s) are to be provided by fax or mail to the Project Manager.

Approval of Reports: The Project Manager is the only authorised person for the approval of all reports. All text must be composed with common and scannable fonts, including tables, maps,





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diagrammes, drawings, etc. In order to implement the reports on the TRACECA website and to allow further data processing, reports must be provided by the contractor under an electronic file “.doc” (Word) or “.pdf” (Adobe Acrobat).

All Reports must include an Executive Summary and be written in of high quality English and Russian, delivered on time. The reporting dates in these TOR are for the delivery of the Russian language text and the English language text to be provided at the same time. Reporting is to be in accordance with TACIS Guidelines.

The Consultant must observe the EU Visibility Guidelines for External Actions, inter alia available on the EC Delegation website http://www.delkaz.ec.europa.eu

20 8. MONITORING AND EVALUATION

20.1 8.1. Definition of indicators The contractor shall incorporate monitoring mechanisms for periodic assessment of the progress of the project components. These mechanisms shall be specified in the project plan and the observed performance shall be described in the periodic progress reports. The essential points to be monitored are: • deviations of milestones and deliverables from their planned dates • adherence to the work plan in terms of content of the activities actually carried out • deviations in effort needed to complete an activity, as compared to plan • introduction of work not initially planned • shifting of the common understanding of the objectives and priorities between

contractor and recipient • appearance of unexpected difficulties likely to require special measure or shift of

project resources

20.2 8.2. Special requirements Monitoring and evaluation functions will be closely associated with the timely preparation and submission by the Consultants of the reports specified in section 7 above.





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ANNEX 7: Draft Selection Criteria Selection of Logistics Centres / Nodes

Priority to private sector development Considering project’s target groups and its overall objective (support international trade and facilitate the movement of goods along the TRACECA corridors by improving logistics capabilities, interoperability and multimodal transport), the Central Asian private sector will get priority focus, in particular:

1. Private intermodal actors: national and international freight forwarders, Third/Fourth Party Logistics Providers (3PL, 4PL) and door-to-door freight integrators;

2. Major industries affecting the supply chain in the region.

Selection Criteria Throughout the project, international standards related to freight transport Intermodality and Distribution will prevail to support a coherent basis for objective decision making in the Logistics Centre selection process.

Considering actual and future market requirements, the following criteria will apply in full transparency for final selection of LCs:

A. Basic logistics requirements:

- Territorial Planning in coherence with the rationalization of the infrastructure;

- Transport Quality (efficiency of transport service integration)

- Intermodality (level of intermodal integration performance)

B. Logistics service efficiency and competition: LC services competitive sustainability will be benchmarked against other transport hubs operating along corridors beyond the borders of Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan.

C. Freight processing capacity: LC ability to meet quantitative/qualitative market demand.

D. Freight market potential: Analysis of actual and forecasted freight volumes for each transport corridor

(import, export, transit and internal volumes generated).

Analysis of the freight market structure, modal drivers, requirements for intermodal shift and macro economic variables and dynamics with particular reference to expected changes due to future market and technology trends which have an impact on the intermodal market functioning.

E. Capacity for ‘Integrated Freight Transport Management Logistic Systems’: Integration of ICT: availability IT system to control all points in the supply chain

(based on harmonised information availability and automated tracking & tracing features), including terminals and transhipment points.

Systems for repositioning of loading units;





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Cooperation amongst transport operators (service quality, reliability, cargo conditions of carriage, legal, competition and insurance issues, loss and damage issues);

Harmonisation of document handling and customs procedures, contracting, and permitting;

Level of commercial, technical and organisational constraints.

F. Institutional framework affecting the intermodal transport quality:

1. Role of local and regional authority in the LC development: Coordination amongst policy makers at central, regional and local levels

Coordination between different transport ministries within Central Asia

Bureaucratic barriers and conflicting political interests affecting LC development

National transport policy in favour of one single transport mode

Long-term investment in intermodal equipment affected by policy

Constraints from local and regional authorities impacting LC development

2. Public/private partnership (PPP): Quality of PPP legal framework

Consistency of financial support to PPP investment from national authorities

Transport policy supporting the growth of combined transport

3. Conditions for long term sustainability:

Homogeneity of transport regulations/procedures in Central Asia by transport mode

State funding of intermodal infrastructure

Environmental policy: sustainability of legal framework

4. Environmental and safety standards:

Environmental factors influencing the intermodal choice

Environmental benefits of intermodal transport not sufficient to justify its use

Implementation of ISO 14001 and BS 8800 standards

Environmental impact studies developed for existing LCs

Level of warehouse dispersal and consolidation

5. The role of TRACECA:

Planning: integration of a unified Central Asian railway network

Customs procedures: unified and operated as per international standards

Border crossing facilitation: one-stop shops in operation

Finance and Budgeting: allocation funds to create intermodal terminals

Services: market liberalisation to guarantee more competitive services





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6. Barriers affecting Intermodal transport development: Economic feasibility (low profitability for intermodal operations)

Lack of homogenous systems for different modes and different countries

Low flexibility in rail operations and lack of co-ordination between transport modes

Low frequency, and too high tariffs (compared to road transport)

Low reliability





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ANNEX 8: Draft List of Candidate Projects Based on initial meetings in each beneficiary country, the following represent the preliminary list of logistics centres in each country. This list is by no means complete; we will continue to discuss ideas and to subject candidate projects to our selection criteria:

• Kazakhstan: Aktau, Horgos, Beineu, several locations along the China – Russia transit corridor;

• Kyrgyz: Bishkek, Osh, Sary Tash, Naryn • • Tajikistan: Dushanbe; Nijniy Pyanj; Tursunzade; Dzhergital • Uzbekistan: Tashkent; Termiz; Andijan • Turkmenistan: Ashgabat, Turkmenbashi, Mary

An EU Funded Project

International Logistics Centres/Nodes Network in Central Asia at the Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic

of Uzbekistan and the Republic of Turkmenistan EuropeAid/125727/C/Ser/Multi


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21 Annexes (shown in

Published April 2009

This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of SAFEGE Consulting

Engineers and its Consortium Partners and can in no way be taken to reflect the views of the European Union.