Kazakhstan has approved a 35 per cent increase for rail tariffs in the country. Kazakh Railways’ (KTZ) initial request for the hike a few weeks ago was remarkable and could not count on much sympathy. That is because the company had just got a tariff hike the previous month. Nevertheless, Kazakhstan sees good reason to approve of the increase.
And “good reason” has to do with the fact that KTZ is not doing well financially. As of last summer, the rail operator was reportedly on the verge of bankruptcy. It needs more money to cover its losses, and has often looked to higher tariffs as a solution.
The company has cited various reasons for the need for higher rail fees. Those include growing costs when it comes to labour, energy, fuels and lubricants, maintenance, debt payments and rolling stock investment.
Rolling stock renewal
When it comes to the latter, KTZ’s locomotive fleet has an average wear-and-tear rate of 58 per cent, corresponding to an average age of 24 years. As part of an investment programme (for which it needs money), it is looking to renew its locomotives.
The 35 per cent increase may not be as bad as it could’ve been. Earlier reports suggested that the KTZ was seeking an average tariff increase of 48 per cent, with higher fees in particular segments. Those would have included empty wagons (an increase of 95 per cent) and bulk freight, such as coal, grain and ores (66 per cent). That does not seem to be the case now.