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TENDERS ARE to be called later this year for a build-operate-transfer concession to build a standard-gauge railway across Kazakhstan. Due to be operational within five years, it forms an intrinsic part of President Nazarbayev's vision to make the Republic of Kazakhstan a hub for trade between Europe and Asia.
Thanks to its strategic location and economic potential, Kazakhstan is an active supporter of international integration. Since independence in 1991, the country has become more and more active in global trade.
For example, China's booming economy is seen as a model for Kazakhstan's rapid modernisation, and the strengthening of political dialogue has helped to boost co-operation in various spheres. Our President made an official visit to Beijing on May 18, during which Kazakh Transport Minister Kazhmurat Nagmanov and Chinese Minister of Railways Liu Zhijin signed a co-operation agreement to develop cross-border rail operations.
According to estimates by the International Monetary Fund, trade between Europe and Asia is around US$600bn a year. The figure is growing every year, and is expected to increase by 50% between now and 2010. However, freight movement between Europe and the Pacific Rim countries is experiencing capacity constraints, particularly through the Suez Canal. The time is right for development of further land corridors.
As well as the established Trans-Siberian and Baikal-Amur routes in Russia, planning is underway for a link between Uzbekistan and China through Kyrgyzstan (RG 7.03 p449). All the participants are aware of the potential prospects for this growing market.
Located astride many of the historic trade routes between Europe, Eastern and South-Eastern Asia, Kazakhstan depends heavily on its transit potential to boost its own economy. Several international rail corridors pass through Kazakh territory, including both the Northern and Central corridors of the TransAsian main line - the southern loop of Russia's Trans-Siberian route runs through Petropavlovsk in Kazakhstan on its route from Kurgan to Omsk. In the southwest, the putative Traceca corridor will link Europe and Central Asia, and the North-South corridor from the Baltic to the Gulf is being inaugurated this year. To the east, KTZ's north-south main line connects Astana to the Uzbek capital at Toshkent, connecting Russia with the other Central Asian states.
Alatau pass expansionOur most significant border crossing is the fabled Dzungarian Gate at Dostyk (formerly Druzhba), in the Alatau Pass, where KTZ connects with the Chinese Railways' route to Urumqi and the Pacific. KTZ's branch from Aktogai to Dostyk was opened in the 1960s, but the Chinese connection to Alashankou was not completed until July 1991. Since then annual cross-border traffic has risen steadily to reach 7·5 million tonnes in 2003. We expect to handle 9·2 million tonnes during 2004, and business is forecast to grow by around 2 million tonnes a year for the next decade.
Of the 9·2 million tonnes moving this year, around 1 million tonnes is transit traffic and the remainder is exports of primary materials from Kazakhstan to China. The development of more east-west transit business will help to balance the traffic flows, reducing the current high levels of empty mileage.
Our efforts to boost the capacity of the corridor have been hampered by the need to change gauge at the border. CIS railways, including Russia and Kazakhstan, are 1520mm gauge, but Europe, Iran and China adopted 1435mm.
Considerable investment has been made at Dostyk and Alashankou, including wheelset and bogie changing installations and high-capacity cranes for rapid transfer of containers between broad and standard gauge wagons. However, the interchange is located on a cramped and windy site in the Dzungarian gorge. So we have agreed with the Chinese to move the facilities to a larger site at Aktogai, which is growing in importance as a hub where flows from the north, south and west can be consolidated for cross-border movement.
Work has already started on a 320 km standard-gauge line from Dostyk to Aktogai, parallel to the existing branch. This will be completed by the end of 2005, together with two new transshipment interchanges. KTZ is in dicussions with Siemens for the supply of train control equipment and other technology for the project. Once the line is open, the broad-gauge route will be reconstructed to create a double-track standard gauge corridor.
Chinese Railways has also agreed to double-track the final 800 km of its route from Urumqi to Alashankou. Within the next few years, border formalities will also be transferred, enabling international freight trains to shuttle back and forth over the 1100 km between the hubs at Aktogai and Urumqi without changing locos or crews.
Standard-gauge corridorIn order to avoid the transhipment issues completely, President Nazarbayev decided last year to launch an ambitious project for a standard-gauge transcontinental route, enabling 1435mm gauge wagons to run straight through between China and Europe (RG 5.04 p250). We believe that this will offer a significant saving in journey time and a much-needed increase in rail capacity.
The shortest option for the 'missing link' between Dostyk and Gorgan in Iran is just under 4000 km. Of this, around 3070 km lies on Kazakh territory, 770 km in Turkmenistan and 90 km in Iran.
The Trans-Kazakhstan corridor will parallel the existing railway along the side of Lake Balkhash from Aktogai to Mointy on the north-south main line. From here new standard and broad gauge tracks will head west on a new alignment to Kyzylzhar, after which the standard-gauge will again parallel the existing KTZ branch to Zhekazgan.
After Zhezkazgan the standard-gauge line will strike out west across the Aral basin to meet the Moscow - Toshkent line at Saksaulskaya, a few kilometres north of Aralsk. A new route with both standard and broad gauge tracks will be built from here around the north side of the Aral Sea to Beineu, close to the border with Uzbekistan. This was to be built as a broad gauge line in any case, as part of a strategic plan to link up isolated sections of the KTZ network.
The standard-gauge line will then parallel the existing route from Beineu to the Caspian Sea port of Aktau. From here traffic will use a train ferry to reach the Iranian port of Bandar Turkman.
We are looking at two options to complete an all-rail route. One would diverge from the Aktau line at Saj-Utes and turn south to Novyi Uzen (Tenge). It would run north-south across Turkmenistan and cross the Iranian border at Gonbad-e-Kavus, about 90 km northeast of the RAI railhead at Gorgan. From here standard-gauge landbridge traffic to Europe would be routed via Tehran and Tabriz to the Turkish border at Reze.
Turkmenistan's Transport Minister visited Kazakhstan in mid-June to discuss the proposals, but although there was a statement of 'mutual understanding', as yet there is no commitment to participate in the project. Conversely, the Iranians and Turks are much more committed and have started work on some sections. Upgrading of the route across Turkey is in hand, with construction of the cross-Bosporus rail tunnel starting in May and TCDD completing engineering design for a railway along the northern side of Lake Van to replace the existing train ferry.
The other option would be to head northwest from Beineu around the top of the Caspian Sea through Russia and Ukraine. This option has not been assessed in detail because of Russian Railways' earlier reluctance to become involved. Once we explained that the corridor is intended to target traffic from the expanding economy in western China, and not to compete with the existing Trans-Siberian flows, RZD agreed to co-operate with our studies.
Apart from the gauge, the new line across Kazakhstan will be built to the current KTZ standards, with a line speed of 150 km/h and passing loops able to take 1500m trains of up to 60 wagons grossing 4500 tonnes. Electrification and upgrading for higher speeds may be considered in the future.
President Nazarbayev wants to see the route completed within five years. Total cost is put at US$3·5bn, of which US$2bn is needed for civil works and the remainder for locos and rolling stock. To raise the necessary investment, the project is to be offered to the private sector as a BOT concession including operating rights for 25 to 30 years.
We expect to form an international consortium with the winning bidders, in which KTZ will have a 25% to 50% stake. This consortium will be able to draw on a wide range of funding sources. KTZ currently has a BB+ credit rating, but has applied to Standard &Poors for uprating to investment grade later this summer, which would enable us to raise commercial funding. We will also contribute assets such as stations and train control installations along the existing routes in the corridor.
Long-term benefitsConstruction of a standard-gauge link has huge potential benefits. As well as raising capacity for movements between Europe and the Pacific Rim, it opens up the opportunity to attract new transit freight flows from Central and Southeast Asia to both Europe and the Near East.
Our initial estimates suggest that the Trans-Kazakhstan line will carry around 35 million tonnes of transit traffic each year, worth up to US$7bn. The Chinese government is very keen to develop its western regions, to relieve the pressure of commercial development on the east and south of the country, and plans to create a huge free-trade economic zone in the Urumqi-Alatau area.
In addition, there could be up to 20 million tonnes of exports from Kazakh industries headed either east or west. These include consumer goods, machinery and construction materials with an estimated value of US$2bn a year. Traffic from Russia to the countries of Central Asia and the Near East, notably metal products, construction materials, timber and fertilisers, would be worth a further US$1bn a year.
The route will shorten the rail distance between Europe and Southeast Asia, and open up access to new markets. It will reduce the number of operators in the transport chain. And in the longer term there is the potential to expand the standard gauge along the North-South Corridor to the Baltic and the northern parts of Central and Eastern Europe.
It is hard to underestimate the importance of this transcontinental railway for the development of international and economic relations across the whole Eurasian land mass. We are proud to be in the vanguard of the development, and look forward to the day when the first trains will start running.
EBRD funding accord signedDuring the Railway Reform & Restructuring seminar in London, organised by LVA (UK Ltd), the European Bank for Reconstruction & Development's Business Group Director, Infrastructure, Gavin Anderson announced on June 29 that EBRD had signed a funding agreement that will release US$65m for KTZ. The state-guaranteed money will partially fund a US$92m upgrading and restructuring programme which includes modernisation of the Almaty - Astana main line, purchase of track maintenance machinery, and management restructuring plus severance pay and retaining expenses for redundant staff.
This article first appeared on www.railwaygazette.com
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