Kazakh exporters worried as KTZ plans another fee hike
Kazakh Railways (KTZ) wants to raise its fees for rail freight. The rail operator and infrastructure manager points to its outstanding debt as the culprit for a potential price hike. KTZ earlier received criticism for frequently raising its fees. Kazakh exporters are worried about their competitiveness.
KTZ applied to the Kazakh Ministry of National Economy for an increase in its price limits. The rail operator wants to raise the price limits for exporters by 3,89 times in 2024 and 4,42 times if they want to make use of its mainline railway network.
Kazakh publication Kursiv explains that the price limits are used to calculate the fees. In practice, KTZ plans to increase its rail freight fees by 40 per cent in 2024. In 2023, the rail operator raised fees by three times. Infrastructure fees increased by 33 per cent, and fees on locomotive traction increased by 11,4 per cent. In total, rail freight fees doubled between 2016 and 2024.
Broad criticism
Kazakh Railways has faced criticism for its frequent price increases. Earlier, Kazakh parliamentarians called for extensive reforms in the company, which include removing infrastructure management from its competencies. Kazakh exporters have expressed concerns about their competitiveness when confronted with growing transportation costs. They are also concerned about possible loss of sales markets and lower production volumes.
Kazakh parliamentarians came out in support of the exporters. “The logic of such frequent fee increases looks quite strange in light of recent announcements by the management of KTZ about the fourfold growth in revenue in the past year,” say parliamentarians. They also point out that Kazakhstan has given discounts to foreign companies on the Kazakh rail network.
Outstanding debt
KTZ refers to its debt situation as the primary reason for additional price increases. The company has an outstanding debt of 2,9 trillion tenge, nearly 6 billion euros. The price hikes are supposed to raise the company’s income to 535 billion Kazakh tenge, up from 137 billion. This amounts to approximately one billion euros. KTZ plans to spend a third of that income on paying off its debt.
With the support of the newly installed prime minister Olzhas Bektenov, it looks like the government will approve KTZ’s request for an increase in price limits. “Kazakh fees are the lowest in comparison to the countries of the Eurasian Economic Union and Commonwealth of Independent States, which makes it profitable for exporters of neighbouring countries, as well as those importing raw materials at low rail prices. That has led to a loss of 329 billion tenge (675 million euros) for KTZ in 2023.”
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