In Kazakhstan, the local railway is on the verge of bankruptcy
The probable bankruptcy of the Kazakhstan Railways (KTZ) company poses a serious threat to the economy of Kazakhstan.
This statement was made by the Chairman of the Supreme Audit Chamber of Kazakhstan, Alikhan Smailov, who published the results of the audit, which indicate inflated tariffs of private railway carriers and significant losses for the company.
Against a backdrop of mounting debt and poor corporate governance, KTZ is on the brink of default, requiring urgent action to prevent a crisis.
The problem arose due to the low efficiency of private carriers – an audit revealed that the tariffs of private rail freight carriers were inflated, and in some cases, by up to 32%.
Private carriers also unreasonably inflate their costs, which significantly affects the cost of transporting goods for the end consumer. In this regard, it is necessary to consider the feasibility of further operation of private railway carriers.
The audit revealed that 73% of KTZ's total freight turnover from 2020 to 2023 was transported at rates below cost. Losses under regulated rates amounted to $2 billion, more than half of which was accounted for by exports.
At the same time, the level of individual regulated export tariffs turned out to be lower than tariffs for the transportation of socially important food products within the republic. All losses are covered mainly by KTZ transit income.
Today, KTZ is unable to meet its obligations. The company is in the "red" zone for credit risk. Its debt at the beginning of 2024 was $6,5 billion and continues to grow. 45%, or $2,9 billion, of the total debt is used to refinance previously incurred debt obligations.
Kazakhstan's local railway is on the brink of bankruptcy.