KTZ Railway Project
National Company Kazakhstan Temir Zholy JSC (“KTZ”) is embarking on a capital expenditure program (“CAPEX program”) during the period 2023-2027 to rehabilitate and repair its existing railway tracks network, as well as to modernize, upgrade and expand its fleet of electric locomotives, and passenger cars to improve its freight and passenger transport safety, speed and capacity. In addition, this CAPEX program will contribute to the realization of KTZ’s low-carbon pathway strategy.
The proposed MIGA non-honoring of a state-owned Enterprise obligations (NHSOE) cover is to guarantee the financial obligation of KTZ on EUR 500 million (or the equivalent in CHF) ten-year loan from Citibank N.A., the United States of America, Banco Santander SA, Spain, and other financial institution yet to be identified to finance its green qualifying CAPEX Program needs for the period of 2023-24. MIGA Gross Guarantee Amount will be up to EUR 735.3 million (or the equivalent in CHF), covering the loan principal amount, future interest and other related transaction costs.
KTZ is a vertically integrated group and is 100% state-owned enterprise (via Samruk-Kazyna JSC, Kazakhstan’s Sovereign Wealth Fund). The group owns and operates all the state railway network and is the country’s largest owner of rolling stock. KTZ plays a key role in the national and regional transport system, providing economic connectivity with 17 regions of Kazakhstan, and with five neighboring countries, rendering KTZ as one of the 15 largest railway companies in the world in terms of freight turnover.
The Project is a Category B under MIGA’s Policy on Environmental and Social Sustainability (2013). Click here to view the Environmental and Social Review Summary.
KTZ plays a critical role in the national freight and passenger transport in Kazakhstan. In addition, KTZ is a leading provider of cross-border/transit railway freight services in the region. By supporting the KTZ’s CAPEX program, the Project is expected to increase the reliability and the quality of its railway tracks infrastructure that has been subject to important physical deterioration. In addition, the acquisition of electric locomotives will allow KTZ to accommodate the growing domestic and transit freight volumes and enhance the travel speed. Moreover, the purchase of electric passenger cars to replace the depreciated existing cars is expected to improve the reliability, speed, and safety of passengers’ transport services. The Project will also contribute towards enhancing domestic supply chains through regional connectivity within Kazakhstan by providing better quality and reliability of freight and passenger services across the country, as well as facilitating integration into global value chains.
The Project aligns with the WBG priorities in Kazakhstan as detailed in the Country Partnership Framework (CPF) FY2020-2025. The Project is strongly aligned with the CPF’s objective of “Strengthening connectivity infrastructure and regional service delivery for better local and regional integration. The Project is also contributing to the Systematic Country Diagnostics pillar of Integration and connectivity by focusing on the maintenance of transport infrastructure.