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Restructuring on course for 2006

01 Aug 2004

Kazakhstan Temir Zholy has undergone significant changes in the past two years, as part of a restructuring that will see all train operations and ancilliary activities privatised by 2006.

Under legislation approved in July 2001, KTZ was restructured as a joint stock company in March 2002, with all shares held by the government. The group's business was split into two main divisions. Ancilliary activities such as locomotive and rolling stock maintenance, telecommunications and international transport & logistics services were set up as subsidiary companies within one group, whilst infrastructure management, freight and passenger train operations, and rolling stock leasing became stand-alone business units within the core railway division.

At the end of 2003, 'ownership' of the passenger and freight operating units and the rolling stock leasing company, plus companies for management of major stations and carriage servicing was transferred to the Ministry of Transport & Communications, leaving JSC KTZ as the infrastructure manager.

A second restructuring law was passed on February 6 2004 setting out rules for open access to the trunk rail network, the contracting out of infrastructure maintenance work, and the creation of a competitive market for the tendering of contracts to run passenger services. These will be contracted out on a route-by-route basis, with private operators able to compete against JSC Passenger Transport for the lowest subsidy whilst meeting specified service and quality standards. The creation of a separate rolling stock company is intended to ensure that suitable vehicles will be available for use by both public and private operators.

Two large independent freight operators have started running on the Kazakh network within the last 18 months, together with several smaller companies. These firms now handle almost 50% of the annual freight tonnage on the national network.

TransKom operates mainly in the coal basin around Ekibastuz, handling coal flows to power stations with a fleet of 7 000 wagons; it also runs iron ore traffic to the processing plants at Magnitogorsk in the southern Urals.

Bogatiltrans is slightly smaller with a fleet of 5 000 wagons; it also concentrates on coal traffic around Ekibastuz and ferrous minerals business for the Ispat steelworks group. None of the other operators has more than 1 000 wagons. The private operators have acquired some of their rolling stock from KTZ, but have also invested in new equipment.

Track access charges are split into three elements, related to locomotive, vehicle and infrastructure specifications. The infrastructure element is fixed by the state, but the other two are based on market pricing.

TABLE: KTZ in figures

2002 2003 change %

Freight traffic, million tonne-km 133088 148370 11·5

Domestic 60648 69406 14·4

Export 55242 59503 7·7

Import 7854 9477 20·7

Transit 9345 9984 6·8

Freight traffic, 000 tonnes 163335 184355 12·9

Coal 71978 81251 12·9

Oil 18639 19237 3·7

Iron ore 20563 22609 9·9

Non-ferrous metals 10908 12150 11·4

Ferrous metals 5046 5326 5·5

Chemicals & fertilisers 1759 1973 12·2

Grain products 6570 8301 26·3

Other freight 27872 33418 19·9

Transit freight, 000 tonnes 6200 6700 8·1

Freight revenues bn tenge 165·4 187·3 13.2

Passenger traffic, million pass-km 10449 10686 2·3

Network length, route-km

Central/northern region 5719

Eastern region 2460

Southern/western region 2264