KTZ submitted a new tariff application for 2026-2030 for the service of using the main railway network (MZhS) and organizing traffic on it. Accompanying documentation for the draft new tariffs "for growth" for the next five years was uploaded to the public database "Monopolist", inbusiness.kz reports.
The previous tariff estimate of KTZ for MZhS was approved in 2020 for 2021-2025, it is ending soon. With the permission of the Committee for the Regulation of Natural Monopolies (KREM), changes were made to it in April of this year. Inbusiness.kz wrote in the spring about the hearings on the recent change.
"During the period from 2021 to the present, there have been inflationary processes, a corresponding increase in prices for the main material resources and services consumed by the industry. The main factors in the need to revise and increase tariffs for regulated services of the main railway network in accordance with the concept of development of railway transport and the transport and logistics industry of the Republic of Kazakhstan and with the instructions of the head of state and the government of the Republic of Kazakhstan are the implementation of projects for the development of the trans-Kazakhstan railway corridor, the separation of the organizational functions of the carrier and the infrastructure operator by transferring employees from the staff of KTZ - Freight Transportation LLC to the staff of JSC NC KTZ in the amount of 20,852 people and the creation of a branch of JSC NC KTZ "Directorate of the Transportation Process", - is argued in the justification of the tariff application.
The draft differentiated tariffs for MZhS propose coefficients for the rates of the calculation tables, which are the same for five years with a division into electric and thermal traction. At the same time, a large fee will naturally be applied to the transportation oil, whose volumes, however, are small, the tariff rate will be lower for non-ferrous, then ferrous metals and scrap. More average tariffs are supposed to be used for oil products, liquefied gas, coal, grain, ores, chemical products and other goods, and very low for socially significant products.
So, for food inflation, an increase in tariffs for the network may not be critical, but it is obvious that the transportation of coal, whose volumes by rail generally reach 35-40%, will become more expensive, which will automatically increase the prices for heat and electricity in the north, center and east of Kazakhstan, where coal generation dominates. In Almaty, we recall, the transition of local thermal power plants to gas is expected in the next five years, but this year wholesale gas prices have increased by 33%.
Scale of the service
If you look at the main economic parameters of the current tariff estimate in 2024, the actual costs for the regulated MZhS service for the past year amounted to 602.5 billion tenge, and the revenues from it reached 543.8 billion tenge, taking into account the so-called temporary balancing fee, that is, in fact, a subsidy for rail passenger transportation in the amount of 9.1 billion tenge. At the same time, freight turnover in regulated communications within the country, for export and import in 2024 reached 206.9 billion ton-km.
It is interesting that for 2026-2030, the national railway company predicted smaller volumes of regulated traffic than before - in the corridor of 196.6-198 million ton-km.
The costs of regulated services in the MZhS in the base estimate for 2026 of KTZ are planned in the amount of 1.1 trillion tenge, taking into account their planned growth in this and next years. This volume of expenses is included from production costs of 720 billion tenge, which more than the 2024 level by 44%, and expenses for the period by 389 billion tenge, more than the previous year's level by 381%.
At the same time, revenues from regulated services of the Ministry of Housing and Utilities in the tariff estimate for 2026-2030 are planned in the amount of 1.4-1.9 trillion tenge. Of this money, approximately 9.4-9.6 billion tenge will be allocated annually in the next five years for the so-called balancing fee to subsidize passenger transportation, and investments of 339.9-393.7 billion tenge per year are expected for the investment program over the next five years.
An important element of the KTZ tariff strategy in 2026-2030 for paying off growing debts is the renewal of the so-called price caps, increasing the network fee for export transportation up to three times. At the same time, the minimum coefficient for tariff indexation is proposed at 0.84.
Before this, price caps were actively used by KTZ from March 7 to June 7 to rate exporters' shipments, mainly large mining and metallurgical companies, which account for the bulk of regulated freight turnover. The increase in prices caused their fierce resistance, since they do not want to share their margin with the railway, although, in fact, they have been subsidized for decades by its cheap transportation. As a result, the mining "big guys" achieved the suspension of the price caps, and now there is another dilemma - to save KTZ from credit overload or once again bend to lobbyists of the mining and metallurgical complex, where the industry leaders themselves are not particularly effective from an economic point of view. At the same time, mining and metallurgical companies sell their products for foreign currency, and KTZ mainly earns in the constantly falling tenge.
Growing costs
Meanwhile, the railway's costs are steadily growing. In May, by decision of the management of the railway monopoly, branches were created - "Directorate of the transportation process" - "Road departments" (NOD), "Altynkol station", "Dostyk station". As a result, their staffing schedules were approved, where employees involved in the management of the transportation process were transferred from the subsidiary "KTZ - Freight Transportation" in the amount of 20,852 people, which increased the expenses of the parent structure.
In addition, KTZ spends large amounts of money on upgrading the railway network and increasing the throughput and processing capacity of stations and sections, as well as on the construction of the Dostyk-Moiynty, Darbaza-Maktaaral and Kazybek-Bek-Zhetygen railway lines bypassing Almaty, Kyzylzhar-Moiynty, Bakhty-Ayagoz, automatic block systems, upgrading the Altynkol-Zhetygen section, constructing receiving and dispatching tracks on the Beineu-Mangistau section and reconstructing railway stations.
Meanwhile, one of the largest expenditure items for KTZ in the next five years will be the payment of debts accumulated over many years.
"The draft tariff estimate for 2026-2030, in accordance with the concluded contracts for the construction and modernization of new projects, provides for the repayment of the principal debt in 2026 in the amount of 40,492 million tenge, in 2027 - 196,546 million tenge, in 2028 - 364,186 million tenge, in 2029 - 393,812 million tenge, in 2030 - 488,846 million tenge," the justification note states.
Here we can recall that, according to the head of the KTZ tariff policy department, Dias Tusupbekov, in May the nominal debt of the railway group was 3.8 trillion tenge. According to him, the amount of borrowing will continue to grow, taking into account the construction of new railway lines Dostyk - Moiynty, Darbaza - Maktaaral bypassing the Almaty hub for a total of up to 1 trillion tenge. In addition, the construction of other new railways and the expansion of bottlenecks on the country's railway lines was expected, which will also require up to 1 trillion tenge.
Incidentally, only recently KTZ reported attracting a syndicated loan from Abu Dhabi Commercial Bank and Deutsche Bank for three years in the amount of up to 480 million Swiss francs for the implementation of trans-Kazakhstan railway corridor projects.
Due to the increase in borrowing from the railway monopoly, interest payments are also growing. Thus, under the item "expenses for payment of remuneration", actual costs for 2024 amounted to 44,850 million tenge, for 2026 it is envisaged that it will be necessary to pay 270,820 million tenge, an increase of 225,970 million tenge will be required due to the conclusion of new loan agreements.
"The draft tariff estimate for 2026-2030, in accordance with the concluded contracts for the construction and modernization of new projects, provides for expenses for the payment of remuneration, repayment of the principal debt in 2026 in the amount of 270,820 million tenge, in 2027 - 270,820 million tenge, in 2028 - 243,373 million tenge, in 2029 - 187,649 million tenge, in 2030 - 126,740 million tenge," the explanatory note specifies.
In addition to the debt, KTZ's largest expense item in the MZhS direction concerns the wages of production workers. For 2026, the draft tariff estimate provides for 398.3 billion tenge for the wages of production personnel in the amount of 61.5 thousand employees. Here, the excess over the 2024 level is 211% and is mainly due not only to an increase in wages, but also to the creation of new branches for 20.3 thousand people. At the same time, due to the latter, KTZ will reduce its costs for payment of works and services. In 2026, it is planned to spend 65.5 billion on them, 48% less, or 71.2 billion tenge than the actual 2024.
In general, for 2026-2030, the railway has planned an investment program at the expense of a regulated tariff of 3.1 trillion tenge, of which 1.8 trillion will be its own funds, and 1.3 trillion tenge borrowed.
The main investment expenditures will be directed towards the overhaul of the track superstructure – 850 billion tenge, the purchase of 4.1 thousand turnout complexes with reinforced concrete beams – 159.7 billion tenge, the introduction of equalizing joints in the amount of 950 sets for 13.7 billion tenge, the overhaul of artificial structures – 20.6 billion tenge and the development of separation points – 193 billion tenge, the overhaul of special rolling stock in the amount of 990 units – 76.9 billion tenge, the purchase of track equipment in the amount of 194 units – 52.8 billion tenge, the construction, modernization and overhaul of power supply devices – 60 billion tenge, the purchase of 526 units of electrical equipment for 18.7 billion tenge, the modernization of railway automation, telemechanics and communication devices – for 63.3 billion tenge excluding VAT, the purchase 1.1 thousand devices of railway automation, telemechanics and communication - 42.5 billion tenge, as well as equipment for recovery and fire trains - for 46.5 billion tenge.
In addition, investments will be directed to cover the costs of building new railway lines: Bakhty-Ayagoz worth 512 billion tenge excluding VAT - in 2026-2027, 470 billion tenge will be required from the investment program for this, Moiynty - Kyzylzhar worth 644 billion tenge excluding VAT, Darbaza - the border of Uzbekistan worth 254 billion tenge excluding VAT - 105.7 billion tenge are planned to be allocated here in 2026 within the framework of the investment program project.
Investments will also be needed to modernize the Altynkol-Zhetigen section with a total cost of 102 billion tenge - 96.5 billion tenge will go there from the investment program next year. Investment costs in the next five-year period are also provided for the construction of automatic blockhouses on different sections of the railway in the amount of 233 billion tenge. Moreover, the investment program includes the construction of receiving and dispatching tracks on the Beineu-Mangistau section for 13 billion tenge.
Higher tariff, empty
A separate line in the KTZ justification certificate for increasing tariffs is the increase in tariff rates for empty wagon runs.
"One of the significant problems of the industry is the high wear and tear of infrastructure associated with empty runs of wagons of both Kazakhstani and foreign shippers/wagon owners. This problem reduces the efficiency of freight transportation, increases the load on the tracks and requires systemic solutions. Thus, empty runs of wagons are a problem of the existing tariff system of JSC NC KTZ. The low level of the regulated tariff for the transportation of a number of goods, including empty runs of own (leased) freight wagons, allows rolling stock owners to use empty runs as measures to save downtime. In particular, Kazakhstani wagon owners seek to maximize profits and move empty wagons throughout Kazakhstan in search of more expensive goods, ignoring the overall efficiency of the network. This leads to irrational use of infrastructure, empty wagons occupying tracks, slowing down the movement of freight trains, reducing their section speed and accumulating wear and tear on the main railway network," the explanatory note states.
Basically, the wagons of Russian operators are the ones that run empty on Kazakhstan's railways; in 2024, the share of unloaded wagons from abroad was 68%.
"Transportation costs of shippers in international export-import traffic are formed taking into account tariffs, rates of charges and other payments collected on all railways participating in transportation from the departure station to the destination station. And the low level of regulated tariffs of JSC NC KTZ, including for empty mileage of wagons, allows neighboring countries to earn (save) due to the capacity of the network of JSC NC KTZ," the explanatory note argues.
According to the railway monopoly, recently there have been more frequent cases of empty own or leased wagons arriving from the Russian Federation and Uzbekistan.
"A group of empty wagons (50-70 units) from unloading iron ore from Magnitogorsk station (Russian Federation) systematically arrives at Zhainak station (while there is no cargo for loading at Zhainak station). As a result, empty wagons are en route from Magnitogorsk station (RF) to Zhainak station (KZH) for 11 days (from 01/05/2025 to 01/16/2025), where upon arrival at Zhainak station, the empty wagons are rerouted to Magnitogorsk (RF) and remain en route for another 11 days. Therefore, today it is cheaper for a Russian shipper/owner of wagons to pay a tariff for empty mileage in import and export traffic through the territory of Kazakhstan instead of paying a fee to Russian Railways for 22 days of downtime of 70 empty wagons on the territory of the Russian Federation,” the justification provides an example.
Recall that the supply of iron raw materials to the Magnitogorsk Plant was terminated by ERG in 2022.
Sometimes Uzbek partners are also looking for a similar benefit due to the low tariff for empty wagons in Kazakhstan.
“A group of empty Uzbek wagons arrives at the Beineu station from the Karshi station (UTI - Uzbekistan Railways. - Ed.) (the distance across the territory of the Republic of Kazakhstan is 79 km) and without loading operations, the arrived wagons are sent back to Uzbekistan to the Kungrad station. In total, the wagons are on the territory of Kazakhstan for 13 days. Therefore, today it is cheaper for an Uzbek shipper/owner of wagons to pay a tariff for empty mileage in import and export traffic through the territory of Kazakhstan instead of paying a fee to UTI for 13 days of empty wagon downtime in Uzbekistan,” the information note says.
As a result, empty wagons from neighboring countries arrive in the country in order to avoid paying fines for abnormal downtime at home with the existing surplus of freight wagons, since it is cheaper for their owner or shipper to pay a tariff for empty mileage in Kazakhstan in import-export traffic. Because of this, KTZ has to regularly introduce conventional bans on the acceptance of empty wagons, which, however, are temporary, therefore they do not significantly reduce empty mileage. This problem can only be solved by raising tariffs, the national company believes.
KTZ's revenue for the first quarter amounted to 623.3 billion tenge, and the profit for this period was recorded at the level of 79.7 billion tenge. Judging by the tariff estimate for 2026-2030, the national company predicts a profit of 1.5 trillion tenge over the next five years.