KAZAKH IT TO ME

Kazakhstan 2015 | TRANSPORT | REVIEW: TRANSPORT

As vast as it is sparsely populated, with industry concentrated in cities, Kazakhstan's potential as a regional transportation hub faces significant challenges. Private investment and government foresight are teaming up to fill the infrastructure gap.

Actively pursuing the country's goals to this end through various Silk Road-revival projects, the Kazakh government has implemented a state transportation safety mandate, and is turning to businesses and entrepreneurs in the region to invest in its ailing transportation infrastructure.

Elvis Roberts, Managing Partner of Cruz Logistics, stresses that the need for regulations is just as necessary as adding infrastructure for the success of Kazakhstan's transportation sector. “For example a highway, internationally, should allow 6-meter high traffic to pass, but the maximum allowed in Kazakhstan is 4.5 meters. These deficiencies must be addressed, the bridges are old, and some of them need to be reconstructed, which leads to costly detour," he told TBY.

Despite infrastructure challenges, evidenced by the fact that less than 1% of transit cargo between China and Europe passes through the country, industry leaders are optimistic about the country's potential. As development on the New Silk Road progresses, transit volumes will greatly increase, adding revenue and employment to the sector.

In President Nazarbayev's November 2014 state-of-the-nation address, he announced a five-year economic policy, at the center of which was the $33.1 billion infrastructure development plan, drawing 85% of funding from private investors. Major road projects, particularly Western China – Western Europe; Almaty – Ust-Kamenogorsk and Karaganda; Zhezkazgan – Kyzylorda; and Atyrau – Astrakhan are the centerpieces of the planned nationwide network.

ROADS

Kazakhstan's sprawling geography provides unique challenges to each transportation subsector, the most apparent of which is arguably its road network. “There are only approximately six people per sqkm in Kazakhstan, meaning that there is a huge demand for long-distance vehicles," informs Alexander Tsesar, Managing Director of MAN Truck & Bus Kazakhstan. “The low density of the population means that when people drive from one regional center to another, they often will not pass a single village on the way." According to the Ministry of Transport and Communication, the country has 97,418 km of road, 87,140 of them paved, stretching across its 2.7 million sqm territory. Pending the completion of various roads projects connecting the country with China, Russia, and Europe, Kazakhstan's long-haul transportation will continue to grow, and Volvo's long-term plans in the country depend on the parallel expansion of roads with the construction and mining industries. Volvo also plans to open its own Volvo Truck center in Almaty in 2015.

A major project was presented in December 2014 to investors in London, for the Big Almaty Ring Road (BAKAD), to address urban traffic congestion by constructing a four and six technical category highway with asphalt concrete, eight interchanges, and an intelligent transport payment system, according to the Astana Times. The highway's capacity is planned to hold 38,000 vehicles per day and stretch 66 km through the Karasai, Ile, and Talgar districts in the Almaty region.

In January 2015, new traffic laws regarding requirements for headlines, children's seats, mandatory technical inspections, and speed limits went into effect. As of 2013, there were 3.6 million cars on Kazakhstani roads, 100,983 buses, and 450,178 trucks according to the Ministry of Internal Affairs of the Republic of Kazakhstan, and 2.9 billion tons of goods were transported by road.

The Western Europe – Western China corridor, the total length of which will be 8,445 km, will add 2,787 km of road inside Kazakhstan and reduce the freight delivery time from China to Europe to a record-low of 10 days. According to the Astana Times, the road will reduce the time it takes to transport goods from China to Europe by almost 3.5 times compared to the sea route, and nearly double the volume of cargo transported through the country in the next 10 years.

RAILWAY

In December 2014, the final section of the Kazakhstan-Turkmenistan-Iran railway was launched. The new line, stretching 928 km, is one of the main transit projects in Central Asia to resurrect the overland connections between China and Europe on the ancient Silk Road. The railway now provides the shortest route for delivery between the countries, and holds major future potential for passenger transport, which would then stimulate economic growth; for Kazakhstan, the establishment of the railway is particularly important, as the country does not have direct access to the ocean.

At the opening ceremony of the railway, Nazarbayev said that the trade turnover in 2014 had already increased by 38%. The launch had achieved the three countries' main goals of creating jobs, enhancing trade cooperation, and developing transit potential, according to the Astana Times. Construction of the project began in 2009, with the assistance of the Asian Development Bank and Islamic Development Bank. Kazakhstan's segment was the first to be completed, in 2012, spanning 146 km. Preliminary estimates show that annually three to five million metric tons of cargo will be transported annually, expected to increase to 10 to 12 million metric tons for the long-term, said Azer News. Advancements to Kazakhstan's grain industry is expected to be one of the main advantages of the railway to the country's economy, as Iran is already the biggest buyer of Kazakhstani grain. According to the Astana Times, in the first eight months of 2014, export of wheat and barley to Iran almost tripled, from 280,000 tons to 786,000 tons.

IFC COLOS' project to build a railway terminal at the Khorgos/Altynkol border entry point with China is now in the planning stages, and construction is expected to begin April 2015, according to its CEO Kamill Gafurov. “This terminal will lead us to the realization of postal and ecommerce services provision plan by using transit potential of Kazakhstan," Gafurov told TBY.

AIR

In a country as large as Kazakhstan with disproportionately underserved public transport infrastructure, air travel is a vital component of domestic travel. Modernization and a transition to European standards is chief among the civil aviation authority's goals. Last year, the EU lifted restrictions on Air Astana. The airline had been on the union's safety list since 2009, prohibiting flights to Europe. Air Astana, Kazakhstan's national carrier, plans to launch direct flights from Astana to Paris and Prague this year. They are also expanding their fleet, having recently received three Boeing 767 aircrafts and expecting a future delivery of Boeing 787 Dreamliners.

For the business aviation industry in Kazakhstan, the most popular route is between the country's business capital in Almaty and Astana, where government agencies are located; “Sometimes our clients request to fly to a destination in 2 hours after their call, have a 3-hour stopover, and fly back," Andrey Padalko, Director Kaz Air Jet, explains. Jet Airlines is launching several projects to meet the expected demand from Expo 2017 in Astana. One project, known as the “Air Taxi," is set to initiate service in 2016 for four-passenger basic aircraft, predominately for domestic use, and possibly to CIS countries as well.

According to the Kazakhstani Ministry of Investment and Development, there are 21 airports in the country, 17 with international status. The country's five-year economic development plan includes a $160.2 million expansion of the Astana airport, for a new terminal and reconstruction of the airstrip, as the airport is already at its maximum capacity of a 3.5 million-passenger flow. In 2013, the airport served 2.6 million passengers and handled 8,329 tons of cargo, operating an average of 80 flights daily to CIS and non-CIS regions. The Almaty Airport serves 4 million passengers and handles 50,000 flights annually.

SEA

Kazakhstan's major seaport on the Caspian is in Aktau, with the international TRACECA route passing through it. Aktau's seaport capacity has been increased from 12.5 million to 16 million tons according to the Astana Times, and by 2020 it will be increased to 22 million tons of cargo per year. Since the beginning of 2014, over 7.7 million tons of dry and oil cargo and over 1,200 ships have been processed through the port, according to the Investment and Development Ministry. In 2015-2017, 14 new projects are to be launched to further develop the Special Economic Zone of the seaport, with a total cost of about $2.07 billion, expected to create more than 7,000 jobs.

Stanislav Zyukov
STANISLAV ZYUKOV
Country Manager, Interdean Central Asia
Kazakhstan has three capitals: the oil and gas capital is in Atyrau; the financial capital is Almaty; and of course, the diplomatic capital is Astana. We have many shipments from Atrau to Europe, the US, and Asia for oil and gas industry employees, and many diplomatic shipments from Astana. We handle equipment shipments for the mining sector, and the zinc and gold industries in East Kazakhstan. In fact, approximately 50% of our business is with oil and gas industry companies and about 30% to 35% is with embassies. The rest is simply personal shipments.