Kazakhstan has cancelled Kazakh Railways’ freight price hikes. Earlier, the planned price increases led to dismay among Kazakh businesses due to worries about their competitiveness.
Roman Sklyar, deputy Prime Minister of Kazakhstan, cancelled the increase of so-called price limits for Kazakh Railways (KTZ). The price limits are used to calculate fees for transporting freight on the Kazakh rail network. KTZ wanted to raise the price limits more than fourfold, leading to a potential price growth of over 40 per cent. The cancelled rise in prices was supposed to apply to coal, iron, non-ferrous ore as well as non-ferrous and ferrous scrap metals.
KTZ has regularly faced criticism for its frequent price hikes. Its fees have doubled since 2016. After KTZ submitted another application for a price limit increase, Kazakh exporters reacted with criticism and expressed concerns about their competitiveness.
Political reactions
Kazakh exporters could count on the support of parliamentarians, who say that “the logic of such frequent fee increases looks quite strange in light of recent announcements by the management of KTZ about the fourfold growth in revenue in the past year.” Earlier, Kazakh MPs went so far as to call for extensive reforms and a break up of KTZ due to its frequent hikes.
On the other hand, the Kazakh Prime Minister Olzhas Bektenov spoke out in support of KTZ. “Kazakh fees are the lowest in comparison to the countries of the Eurasian Economic Union and Commonwealth of Independent States, which makes it profitable for exporters of neighbouring countries, as well as those importing raw materials at low rail prices. That has led to a loss of 329 billion tenge (675 million euros) for KTZ in 2023,” he said.
Debt situation
KTZ refers to its debt situation as the primary reason for why price increases are necessary. The company has an outstanding debt of 2,9 trillion tenge, nearly 6 billion euros. The price desired price hikes were supposed to raise the company’s income to 535 billion Kazakh tenge, up from 137 billion. This amounts to approximately one billion euros. KTZ planned to spend a third of that income on paying off its debt.
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