KAZAKHSTAN
A giant at the heart of the Central Asia

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Strategically important
transport infrastructure

"All the Republic of Kazakhstan depends upon the development of transport sector. You should take into account that we have vast territory, long distances to cover," Minister of transport and communications, Mr. Nagmanov said during the interview.
Kazakhstan's transport and communications include pipelines, railways, motor, air, and waterway transport, roads, conventional mail and telecommunications.

In 2001, the general use transport network in Kazakhstan comprised 14,200 km of railroads, more than 85,000 km of roads and 4,400 km of inland waterways. There are about 2000 transport companies. The major proportions of large and medium companies (80% and 94%, respectively) belong to the private sector.
At the current stage, Kazakhstan has stated major priorities for public transportation policy among them to form and develop a modern national transport infrastructure, to develop the transport infrastructure in the west region as a strategic region in Kazakh economy. As well as to accelerate the integration of the Kazakh transportation sector into the international transportation system and develop the country's transport potential. The next major goal is to improve state regulation and the setting up of a competitive environment.



Railway transportation in Kazakhstan plays the leading role in long-distance cargo and passenger traffic, accounting for more than 50% of the total national traffic flow in general. "The priority of developing transport sector is railway. We have more than 15 thousands kilometers of rail lines. All the regions of Kazakhstan are connected through the railway lines. Everyday trunk lines make more than 500 thousands tons of cargo. We even transport oil by the railroads," Mr. Nagmanov said.
Under the laws, the main railway network is controlled by the government and may not be privatised. This network is available for general use throughout the country. Other railways may be subjected to private use and private ownership. "We have a program on the reforming railway sector. It foresees liberalization, establishing of private sector. In this respect we take as an example the North America and the European models of railway companies development. The program includes accumulation of the main trunk lines in the government fund, at least partially. The reform will give us an opportunity to create private companies with their own rolling stock," Mr. Nagmanov said.

The National Railway Company of Kazakhstan was founded to operate and own the main railway network. According to the law, certain activities related to railway transportation are subject to licensing, with the compulsory certification of products and services. Certificates issued by foreign states may be valid in Kazakhstan, provided that they are recognised by the state certification system. It is expected in the nearest 2-3 years our to attract around $1 mln. investments to this branch.
For the private companies the railway sector as well as the reconstruction of new sea properties and objects will be interesting. Kazakhstan has several projects to construct new railway lines. Now it is negotiating with some western companies about the system "BOARD" (financing of processes from constructing up to commissioning of dig places). By the end of this year it is expected the Law on Concessions to be approved by the Kazakhstani government and in this respect the investors might come to Republic and commission their projects. The legislation allows transit of private automobiles into the country. It is a very prospective field of investments.

The development of international trade and tourism has urged the establishment of efficient transportation corridors in Eurasia. In this context, an important role is being assumed by the Western Europe-Poland-Belarus-Russia-Kazakhstan-China transport route. At present, railway routes are running along the Northern and Southern Branches of the Trans-Asian Railway. The Central Transport Corridor Europe-Caucasus-Asia (TRACECA) has started to take shape.

Taken into account the vastness of territory of Kazakhstan, long distances, the next priority in transport development of Kazakhstan is highways sector. Within the last years the government has increased drastically investments in the road reconstruction and rehabilitation. Only in this year $275 mln. spent on reconstruction and refurbishment of roads; it is 40% more than in the last year.
In Kazakhstan, all roads are classified as either national or local. Their lengths total, respectively, 18,800 km and 166,300 km, and internationally significant roads total 12,400 km. The major portion of international motor transportation is carried out by shipping companies, using vehicles that comply with all international standards.

The economy's need for the development of international motor transport dictates the need for both the preservation of the quality of roads and their upgrading to international standards. "Kazakhstan has a favorable market, which is open. At the moment we are trying to explain this to our foreign partners," General director of Universal Motors, Mr. Badulin said. There are several competitors in automobile market among which Universal Motors, Toyota, Mercury, and many others.

"Toyota Tsusho in Japan had good forecasts for Kazakhstan. At that time we had already invested in Russia and Ukraine. We expected good business in Kazakhstan too. Now we are satisfied with our activities here. Economy of Kazakhstan is increasing, becoming more and more liberal economy," the Chairman of the Board of Toyota Tsusho, Mr. Cherednikov considers.

Many companies on consulting and services in transportation began to appear in Kazakhstan. One company is specializing in terminal services in station "Druzhba." Another company is the first railway operator company called "Transcom". The most perspective company in this market is Transsystem company. The company can provide transportation services from Europe to Central Asia, from Central Asia to China, from Russia to Iran. It collaborates very actively with different ports such as ones on the Caspian Sea, Black Sea Port, Baltic Sea Ports, Chinese and Iranian Sea Port.
"We would like to become a global transport logistics provider. We want to have infrastructure and railway trucks. We want to be not only the freight forwarding company but transportation company as well. We have already started this process," Mr. Kaplan, Managing director of Transsystem said about perspectives.
The network of roads is much wider and more efficient than the railway network. Based on the republic's national network, the regional networks developed are thus providing the regional centres with access to the most remote areas.

The Republic of Kazakhstan is one of the littoral states of the Caspian region, and has two seaports, Aktau and Bautino.

The port of Aktau is located on the Mangyshlak peninsula, on the east coast of the Caspian Sea. It operates all the year round, and is the only seaport in the country capable of handling international traffic of dry cargoes, crude oil and oil products to Iran, Baku, Astrakhan and Europe via the Volga-Don channel and the Danube system. In recognition of the strategic importance of Aktau, the Kazakh government has invested in the port's reconstruction $20 million from its own resources, and $54 million from a EBRD loan.

"Total amount of a rehabilitation project was 74 million Dollars, which was fulfilled in 1999. The President of the Republic, Mr. Nazarbaev, personally opened this Sea Port and gave the beginning to it. Today the Port has facilities for simultaneous service of three tanker two ferry boats three dry cargo vessels. It also has total 90000 sq km in storage space as well as 6000 sq km of Cabot area. It has also facilities for 8 million tons of cargos every year and 1.5 million for dry cargos," Director of Aktau commercial sea port, Mr. Abylgazin said.
In September 2001, new ferry lines were launched on the Caspian Sea, including Aktau-Noushahar (Iran), Aktau-Baku and Aktau-Olya. The use of ferries will make it possible to attract transit flows from Southeast Asia and the Middle East, which are potentially oriented towards Western Europe. With the commencement of ferry transportation, the northern route of TRACECA will take its final shape, and the port of Aktau will play a key role in this project. The second seaport, Bautino, has no railway access.

Kazakhstan's water transport is represented by nine inland water transport companies. The principal navigable river is the Irtysh, which handles the major share of inland water transportation.

Virtually the whole of the country is linked by air transport. A boom has been witnessed in the development of the airways which link the new capital with various regions, and in international flights.
The Kazakhstani government is developing a program, by the end of this year it will be accepted and approved by the government on development of civil aviation.
Kazakhstan is long ahead of the other countries in respect of liberalization process. It has more than 500 private companies in this area.
The flagman national airline Air Kazakhstan is undergoing restructure changes. Several private companies do exist alongside with the national in the air market of Kazakhstan. They are Air Astana, KLM airlines, Turkish airlines, the franchise of British airways, Lufthanza. KLM and Turkish airline are both planning to open a daily flight to Kazakhstan, as a prove of the developing air transport in the country. It should be mentioned that Air Astana company the first company with 50% share (Kazakhstan and Britain) using Boeings, which meets international safety standards.
"There have been many difficulties in the aviation sector since break up of the Soviet Union. Sometimes newly created airlines had only one airplane. In general, the reputation of the aviation was not of a high standard. Due to the poor standards, the decision to create an airline of European standards was made. This led to the creation of Air Astana," president of Air Astana, Mr. Paxton told.

Now the government trying to optimize the number of air private companies in order to make them fewer but so that they would meet the world standards and requirements, taken into account experience of the civil aviation in all the spheres.
The government of Kazakhstan has adopted the Programme for Civil Aviation Development in 2000-2003, which envisages the reconstruction of the landing strips at the airports of Atyrau and Astana.The major airports of the country are going to be reconstructed in the nearest 3-4 years. They will meet the western requirements to the construction. These are: airports in Atyrau, Aktau, Aktobe, Zhezkazgan and Chymkent. They are located on the way of transport corridors. And the government account that every year they will be able to make up to $70-80 mln. through these itineraries for transit services.
International flights can be served by the airports of Astana, Almaty, Atyrau, Aktobe, Karaganda, Kostanay, Petropavlovsk, Taraz, Uralsk, Ust Kamenogorsk, Shymkent and Pavlodar. Air cargo traffic totalled 14,400 tonnes in 2000.
Kazakhstan's air corridors are attractive to international airlines that have flights connecting Europe and Southeast Asia, since they permit a considerable reduction in the route length. Accordingly, there is high demand for the use of Kazakhstan's air space. Therefore, efforts are under way to provide air routes with up-to-date equipment for air traffic control, navigation and communications. The system of air traffic control is being revised and optimised, and a number of new transit routes are under consideration.

"We hope that our market will be promoted and it will be developing. I have said that such companies are coming to us. It means that we have our own market and that our market is already in place. The fact that they displayed their interest to us supports this claim. Not a single company will come if there is no an established market. These companies come here because they can make money and they do it here," Minister of transport and communications, Mr. Nagmanov, said.
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