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Transport and Logistics Railway

Kazakhstan’s National Railway Carrier Under Threat of Default

The Chairman of the Supreme Audit Chamber (SAC), Alikhan Smailov, has discussed the possible default of national rail carrier, Kazakhstan Temir Zholy (KTZ). According to Smailov, the company cannot currently fulfill its obligations. "The company is in the ‘red’ zone of credit risk. At the beginning of 2024, its debt amounted to 2.9 trillion tenge ($6 billion) and continues to grow; 45%, or 1.3 trillion tenge ($2 billion), of the total debt is aimed at refinancing previously assumed debt obligations,” said Smailov, answering questions from deputies. According to Smailov, Samruk-Kazyna JSC's existing corporate governance methods and development strategy, which include KTZ, are not able to prevent the crisis the country's national railway company is facing. “Further deterioration of assets, the build-up of debts, and the inability to service them without fundamental management changes will lead to the default of KTZh,” Smailov stated. A large amount of budget funds has been spent on developing the railway industry over the past four years, but it has not been enough. The money invested has yet to meet the nation's needs for freight and passenger transportation, Smailov emphasized.

Transport and Logistics EU Cooperation Trans-Caspian Corridor

EU and Kazakhstan Launch Coordination Platform of Trans-Caspian Transport Corridor

On 12 June, the European Commission and Kazakhstan launched the Coordination Platform for the Trans-Caspian Transport Corridor, also known as the Trans-Caspian International Transport Route (TITR) or the Middle Corridor, in Astana. According to Kazakhstan’s Ministry of Transport, the newly established Coordination Platform will improve the safety and sustainability of the Trans-Caspian Transport Corridor and turn it into a multimodal and competitive route linking Europe and Asia in 15 days or less. The event was attended by representatives of Central Asian countries and other states sited along the corridor, as well as international financial institutions and non-EU G7 countries. Emphasizing the critical development of transport infrastructure and strengthening transport links for the regions’ economic growth and prosperity, Marat Karabayev, Minister of Transport of Kazakhstan, stated: “The establishment of the Coordination Platform provides us with a unique opportunity to join forces, exchange experience and perspectives to reach common goals. I would like to note that our partners from Armenia, Azerbaijan, Georgia, as well as Turkey have been invited to join this effort, which plays an important role in terms of achieving major and sustainable goals for the development of the Trans-Caspian International Transport Route.” The Minister of Transport expressed gratitude to the European Union for its invaluable support and efforts towards the development of Central Asian countries. Speaking at the event, Henrik Hololei, Hors-Classe Adviser at the Directorate-General for International Partnerships in the European Commission, stated: "The Coordination Platform created for the Trans-Caspian Transport Corridor marks a significant step forward in our cooperation to bring Central Asia and Europe closer together. Sustainable transport connections are crucial for consolidating the region’s economic growth and connectivity with Europe." Ms. Maja Bakran, Deputy Director General for Mobility and Transport at the European Commission, then added: “The Coordination Platform will be instrumental in making the Trans-Caspian Transport Corridor a multimodal, modern, competitive, sustainable, predictable, smart and fast route linking Europe, the Caucasus and Central Asia. The coordination efforts among the various stakeholders will drive forward deeper connections and contribute to sustainable economic development of the region.” The Platform’s key objectives are to promote the corridor and coordinate efforts on the implementation of priority hard and soft infrastructure projects in Central Asia. It will also boost and coordinate investments in rail, road, and port infrastructure.

Transport and Logistics

China, Kyrgyzstan, Uzbekistan Railway Project to Begin

On 6 June, an intergovernmental agreement on the China-Kyrgyzstan-Uzbekistan railway project was signed in Beijing. The China-Kyrgyzstan-Uzbekistan railway is a strategic infrastructure project designed to create a new land transport corridor between Central and East Asia. The agreement, which marks an important step in progressing the project, lists principles and mechanisms for cooperation between the three countries concerning financing, construction, operation, and maintenance of the railway. In accordance with the agreement, the railway will run through Kashgar (China) – Torugart – Makmal – Jalalabad (Kyrgyzstan) – Andijan (Uzbekistan), with a modern transit and logistics infrastructure, warehouses and terminals created along the route. Once completed, the railway will transport an annual cargo of 15 million tons, and reduce time taken for delivery to consumers by 7 days. Chinese President Xi Jinping, Kyrgyzstan President Sadyr Japarov, and Uzbekistan President Shavkat Mirziyoyev attended the event via a video link. Kyrgyz President Japarov described the agreement as “a historical event marking the long-awaited start of the China-Kyrgyzstan-Uzbekistan railway construction project - which will - open new transportation routes to European countries and the Persian Gulf." Uzbek President Mirziyoyev likewise remarked on the historical significance of the signing, and stated, “This railway will become the shortest land link connecting China with our region. In the future, it will allow access through the promising Trans-Afghan corridor to the capacious markets of the countries of South Asia and the Middle East.” Chinese President Xi emphasized that the railway is a strategic project of connectivity between China and Central Asia and a landmark in the three countries' cooperation under the Belt and Road Initiative. According to the Chinese leader, China is ready to work with Kyrgyzstan and Uzbekistan on the launch of the project as early as possible, to boost the regions’ economic and social development .

Transport cooperation Transport and Logistics

Kazakhstan and Uzbekistan Boost Transport Cooperation

On May 11, Ministers of Transport of Kazakhstan and Uzbekistan, Marat Karabaev and Ilkhom Makhkamov signed a Road Map for strategic cooperation in transport and logistics for 2024-2025. During the meeting in Astana, the ministers discussed the development of international transport corridors, rail and road transportation, and joint projects relating to the construction of a transport infrastructure. High on the agenda, were the joint implementation of the construction of the Uzbekistan – Afghanistan – Pakistan railway and the collaborative development of the multimodal transport corridor Belarus – Russia – Kazakhstan – Uzbekistan – Afghanistan – Pakistan. With reference to accelerating transportation through the digitalization of cargo documentation, the parties lauded the introduction of the ‘E-permit’ system of electronic exchange of permit forms between the two countries. The Kazakh side welcomed Uzbekistan’s plans to build the Termez – Mazar-i-Sharif – Kabul - Peshawar railway and confirming his country’s readiness to participate in the project, Marat Karabaev stated, “The implementation of the project will contribute to the development of regional connectivity and trade for the countries of Central Asia, giving them access to the major sea ports of the South Asian region.” The parties also reported that work is now underway on a new railway line between Darbaza and Maktaaral, which will increase the throughput capacity between Kazakhstan and Uzbekistan by a further 10 million tons. The Kazakh minister noted that the volume of export-import transportation between the two countries by road increased by 6% over the past year and amounted to 1.8 million tons.

Transport and Logistics Belt and Road Initiative Caspian

Is the China–Kyrgyzstan–Uzbekistan Railway Project Losing Steam Again?

By Robert M. Cutler The China–Kyrgyzstan–Uzbekistan (CKU) railway was first proposed in 1997. There seemed finally to be a prospect for a start to the project after agreements at the Xi'an summit amongst China and the five Central Asian countries in May 2023. Construction on the 523-kilometre route was scheduled to begin several months after, but this has still not happened. Disagreements over the route and—still worse—over the funding risk relegating the project back to the drawing-boards where it has languished for over a quarter-century. After the initial agreement in 1997, it was these essentially unchanging disagreements over financing and the route within Kyrgyzstan that stalled negotiations, and over a final agreement of conditions for its construction in the early 2000s. These disagreements concern the geo-economic strategies of the respective parties, and they have not changed in over two decades. China favors a shorter route, while Kyrgyzstan pushes for a longer one to benefit its domestic infrastructure. Specifically, Kyrgyzstan wants to use the railway's construction to establish better connections between the northern and southern parts of the country, which are separated by a mountain range. Further difficulties in CKU implementation For Uzbekistan, a turning-point was its decision in 2017 to send railway experts to discuss the project with Kyrgyzstan. Then in 2019, Uzbekistan invited Turkey to co-finance the Kyrgyz section. The current cost of the whole project is estimated at $6 billion. A preliminary agreement has been reached on the division of this total, according to which each of the three parties will contribute 30 per cent (but at different stages of the project), with the source of the final 10 per cent including the cost of the feasibility study still to be determined. Despite this progress, public concerns in Kyrgyzstan over several critical practical issues remain unaddressed and continue to complicate a final agreement. These include the anticipated influx of Chinese workers, the professional development of local railway engineers, the allocation of investments for industrial projects along the railway corridor and the facilitation of increased exports of Kyrgyzstan's products to the Chinese market. These elements are essential for the long-term viability and success of the CKU railway initiative. Interestingly, these are very similar to the concerns of Kazakhstan that delayed the construction of the first (i.e., the Atasu–Alashankou) segment of the Kazakhstan–China oil export pipeline in the early 2000s. Moreover, China originally insisted on compensation from Bishkek for its contribution in the form of ownership of Kyrgyz mines, including the world’s second-largest iron-ore reserve at Zhetim Too, which Kyrgyz President Sadyr Japarov claims is worth at least $50 billion. It does not help matters that this site adjoins a large glacier, the water from which is crucial for irrigation of major Kyrgyz agricultural holdings. Other Uzbek initiatives for infrastructure connectivity On 1 November 2023, at a forum of the Shanghai Co-operation Organization (SCO) meeting in Tashkent, transportation officials from Uzbekistan, Kyrgyzstan and Russia signed a memorandum to establish a new Kyrgyzstan–Russia trade corridor through Turkmenistan (who, incidentally,...

EBRD Uzbekistan Transport and Logistics roads Kazakhstan

EBRD Funds Upgrade of Major Highway in Uzbekistan

On 2 May, the European Bank for Reconstruction and Development (EBRD) announced the allocation of a loan of up to $238 million (€224 million) towards the renovation of around 81 km of the 4R156 road, as well as the construction of a bridge across the Amu Darya River in the Khorezm region of western Uzbekistan. The road is a strategically important section of the Central Asia Regional Economic Cooperation Corridor 2a, linking the region’s administrative centre, Urgench, with the A380 road to Kazakhstan. The loan will transform the current single-carriageway category-II road into a dual-carriageway category-I road, and in addition, help upgrade supporting infrastructure along the 4R156 road. Once completed, the new road with its much-improved throughput capacity, will stimulate both trade and tourism in Khorezm. EBRD President Odile Renaud-Basso commented: “We are supporting this project because it meets our strategic objectives for Uzbekistan and Central Asia. It is also part of the global transport and logistics infrastructure solutions covered by the European Union’s (EU) Global Gateway initiative.” In January 2024, at the Investors Forum for EU-Central Asia Transport Connectivity in Brussels, the EBRD expressed its readiness to invest around €1.5 billion in Trans-Caspian Corridor-related infrastructure and associated transport solutions over the next 2-3 years.