KTZ wagons. Image source: Pixabay

EBRD lays eyes on rail investments in Kazakhstan and the Middle Corridor

KTZ wagons. Image source: Pixabay

The European Bank for Reconstruction and Development (EBRD) is planning to invest over 100 million euros in state-owned rail operator Kazakhstan Railways (KTZ).

“By investing in the Kazakhstan Railways, the EBRD is improving the sustainability of a major domestic company. It is also contributing to better regional and international connectivity and trade security, as the Middle Corridor offers one of the few realistic alternatives for China-Europe rail freight transportation”, said Huseyin Ozhan, EBRD Head of Kazakhstan.

Where is the money going?

The project aims at improving the financial resilience of KTZ and upgrading rail freight routes between Asia and Europe. In addition, the plan will implement crisis response measures to deal with the effects of the pandemic and the war.

The invested capital will be used by KTZ to modernise key rail freight infrastructure on the Middle Corridor, which does not require passing through Russia. The recent geopolitical developments significantly increased the demand for transport through the Middle Corridor, which goes connects Kazakhstan, Azerbaijan, Georgia, and Turkey.

Kazakhstan feared being put on the list of countries sanctioned after the start of the war in Ukraine because of its economic and political ties with Russia. However, throughout the last couple of months, Kazakhstan has seemed to distance itself from Russia. Because of this, the EU and the EBRD are strongly investing in the country to find alternative freight routes.

A long, solid relationship

Kazakhstan has been the beneficiary of the largest and longest-running EBRD investment plan, with over 9 billion euros invested over the past 30 years.

Last month, EBRD also approved a 5-year senior secured loan of over 18 million euros for Eastcomtrans LLP, a Kazakh private rolling stock operator. The funds will be used for major maintenance projects and reparations of the company’s railcar fleet.

Moreover, last week EBRD offered roughly 25 million euros to Kazakh microlending institution KMF, which has been EBRD’s partner for over 15 years. KMF will then assign the funds through smaller sub-loans to micro, small, and medium businesses across Kazakhstan. The plan is to channel these funds to women-led businesses as well as small businesses in rural areas. Applicants can receive up to 135,000 euros in loans.

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Author: Marco Raimondi

Marco Raimondi is an editor of RailFreight.com, the online magazine for rail freight professionals.

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