The World Bank’s Board of Executive Directors has approved a 846 million dollar funding guarantee by the International Bank for Reconstruction and Development (IBRD). This serves to mobilise a total of 1.41 billion dollars in long-term funding for the Middle Corridor and the Kazakh railway operator, KTZ.
To clarify, the project mobilises 1.41 billion dollars in private financing. This is supported by an IBRD guarantee of 846 million dollars and a co-guarantee from the Asian Infrastructure Investment Bank (AIIB) of 564 million dollars, explains the World Bank.
This funding will be allocated to two major project components: railway connectivity and institutional support.
“Beyond enabling critical infrastructure investments, this project supports important reforms that will strengthen Kazakhstan Temir Zholy’s financial sustainability and long-term competitiveness,” said Andrei Mikhnev, World Bank Country Manager for Kazakhstan and Turkmenistan.
“By combining phased investments, institutional reforms, and private capital mobilization, we are helping build a modern rail system that will deliver lasting economic and environmental benefits for Kazakhstan and the wider region.”
A new railway, tariffs and IPO support
The project will finance a new 322.3-kilometre railway line between Moyynty and Kyzylzhar in Kazakhstan. It will shorten the east-west corridor by 149 kilometres and enable double-stack container operations. The railway will be equipped with modern signalling and telecommunication systems, with the possibility of future expansion and electrification.
In terms of institutional support, the project will aid railway operator KTZ to implement tariff reforms, explore alternative financing mechanisms, improve financial and environmental management and prepare for the upcoming initial public offering (IPO).
The World Bank says that the project will contribute to a tripling of the freight volume on the Middle Corridor by 2030. It should also help to halve end-to-end transit times along the route. Additional benefits include a reduction in carbon emissions, improved market access, lower trade costs, job creation and local economic development.
A key feature of the project’s approach is the gradual reduction in reliance on sovereign guarantees. The initiative is a component of the joint plan for developing Kazakhstan’s Middle Corridor, which leverages the combined expertise and financial instruments of the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).
Support for Syria as well?
Several Middle Eastern media outlets also report World Bank support for Syria’s rail network. Reportedly, Syria will receive 50 million dollars in financing to develop rail transportation. This would include a purchase of 15 new locomotives and personnel training. However, this funding does not seem to be confirmed by the World Bank.