Notice

Category A project supported: Cairo monorails, Egypt

Published 22 January 2021

1. Project description

UK Export Finance has agreed to provide support to the National Authority for Tunnels (NAT), part of the Egyptian Ministry of Transport, to facilitate the design, construction, operation and maintenance of two monorail lines (the ‘New Capital City’ line and ‘6th October’ line) in Cairo, Egypt. NAT will be responsible for the development of the Project and a consortium of Bombardier Transportation, Orascom Construction and Arab Contractors will provide design, construction, operation and maintenance services for the Project.

The Government of Egypt through its New Urban Communities Authority (NUCA) has planned for a decentralised urban structure for Greater Cairo. Mass transit solutions are required to link these new communities and improve public mobility through the expansion of the public transport network, which will also help to avoid exacerbating the air pollution and traffic congestion challenges faced by Cairo. NAT intends to develop two monorail lines with a total length of 96 km.

The first alignment being from the 6th October city to central Cairo of approximately 42km length (the ‘6th October line’) and the second alignment connecting east Cairo to the New Capital City (NCC) area of approximately 54km length (the ‘NCC line’). The two monorail lines intend to provide connectivity between existing transport systems (the metro, the Cairo/Alexandria Desert Road, three ring roads and established microbus and bus routes), and future transportation systems which are understood to include a High-Speed Railway (HSR) to the east, and a Light Rail Train (LRT).

To facilitate the construction and operation of the monorail, existing utilities will need to be moved where they cross the Project’s footprint, or where they are located in an identified ‘conflict area.’ These modifications will not be made by the Project or its contractors, nor will the modifications be funded by the Project and are considered associated facilities^{[footnote 1]}. Utilities that will be affected could include: low voltage (e.g. 11kV) electrical cables, high voltage (e.g. 220kV) overhead transmission lines, telephone lines, lighting lines, water pipes, small gas lines, sewage pipes, and irrigation pipes.

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by the National Authority for Tunnels (NAT), part of the Egyptian Ministry of Transport. A consortium of Bombardier Transportation, Orascom Construction and Arab Contractors will provide construction, operation and maintenance services for the Project.

4. UK exporters

Bombardier Transportation UK

5. Export credit agent bank

JP Morgan

6. Amount of UK Export Finance Support

The principal value of the support is approximately 1.9 billion euros.

7. OECD Common Approaches and Equator Principles

UKEF categorised the Project as a Category A (having potentially significant environmental, social and human rights (ESHR) impacts) in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”).

As required by the OECD Common Approaches, UKEF disclosed its potential involvement in the Project. A notification was posted on the UKEF website on 14 April 2020, which provided a description of the Project, a contact point to signpost interested parties to environmental and social information, and links to the environmental impact assessment. No enquiries were received by UKEF or the contact point as a result of this notification.

8. Environmental, Social and Human Rights (ESHR) Standards

Project related ESHR documentation was reviewed for alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines. The applicable IFC PS and World Bank Group EHS Guidelines were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts
• PS2: Labour and Working Conditions
• PS3: Resource Efficiency and Pollution Prevention
• PS4: Community Health, Safety and Security
• PS5: Land Acquisition and Involuntary Resettlement
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
• PS8: Cultural Heritage
• World Bank Group General EHS Guidelines
• World Bank Group EHS Guidelines for Railways

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• air emissions
• noise and vibration
• soil quality
• waste, including hazardous waste
• wastewater
• terrestrial and avifaunal biodiversity
• livelihood impacts
• management of third-party contractors and suppliers
• grievance mechanisms
• occupational and community health and safety
• emergency planning and response
• cumulative impacts
• worker welfare
• cultural heritage
• visual impacts
• community engagement

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

The review included:

• desk-based review of project-related documentation by an Independent Environmental and Social Consultant (IESC): Environmental and Social Impact Assessment, Environmental and Social Management System and associated Plans, Stakeholder Engagement Plan, and Livelihood Restoration Plan
• IESC site visit to the Project area, including interviews and meetings with relevant personnel of the Project Sponsor and Consortium
• follow-up meetings and interviews with relevant Project representatives

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

11. Climate change considerations

UKEF considered the potential direct and indirect emissions of the Project and effects of climate change factors on the Project as part of our ESHR review of this Category A Project. The Project comprises the provision of a mass transit solution to link new communities in Greater Cairo to central Cairo without exacerbating current urban problems such as air pollution and road traffic congestion.

The Project facilitates a modal shift to low-carbon public transport and is anticipated to have a positive impact through avoided GHG emissions as members of the public in Cairo change from more carbon intensive modes of transport based on the internal combustion engine, (car, bus, train) to the monorail which will be powered by grid electricity.

The physical risks of climate change relevant to the Project were identified and it was confirmed in the review that relevant adaptation measures are integrated into the Project design process. This will specifically include measures to account for future climatic temperature extremes and drainage will be designed to account for potential increases in higher magnitude storm events.

12. Decision

Various actions have been agreed between the Project developers, operators, and parties involved in the financing, which are necessary to ensure the project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the project should meet the relevant international standards over the project cycle and UKEF therefore decided to provide its support in respect of the supply of capital goods and services by UK exporters to the Project.

A condition of support is that the Project will be subject to assurance monitoring by an IESC, in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

12.1 UK Export Finance

January 2021

1. OECD Common Approaches defines “Associated Facilities” as: those facilities that are not a component of the project, but that would not be constructed or expanded if the project did not exist and on whose existence the viability of the project depends; such facilities may be funded, owned, managed, constructed and operated by the buyer and/or project sponsor or separately from the project. ↩