The Chairman of Kazakhstan’s Supreme Audit Office, Alihan Smailov, reported on the audit findings regarding the use of budgetary funds allocated for the development of the transportation sector, this is reported by the railway transport news portal Railway Supply.

the possibility of bankruptcy for the Kazakhstan Railways

According to Kazinform, Alihan Smailov asserts that tariffs imposed by private railway freight carriers are inflated.

“In some cases, by 32%, including by incorporating costs that are not actually incurred. This significantly affects the cost of transporting goods for the end consumer. Weak regulatory oversight is also evident here. Tariff approaches must be fair. Therefore, the feasibility of continued operations by private railway carriers needs to be assessed.”

“73% of Kazakhstan Temir Zholy’s (KTZ) total freight turnover from 2020 to 2023 was transported at tariffs below cost. Losses from regulated tariffs amounted to 907 billion tenge, with over half attributable to exports.”

“Moreover, the level of certain regulated export tariffs is lower than tariffs for transporting socially important foodstuffs within the republic.”

“All losses are primarily covered by KTZ’s transit revenues. This lacks economic rationale. No entrepreneur is interested in conducting business on a charitable basis.”

“This is a direct path to bankruptcy. Today, KTZ is unable to meet its obligations. The company is in the ‘red’ zone of credit risk. As of early 2024, its debt amounted to 2.9 trillion tenge and continues to grow. 45%, or 1.3 trillion tenge of the total debt, is allocated to refinancing previously accepted debt obligations,” Alihan Smailov added.

“The existing corporate governance methods and the development strategy of JSC ‘Samruk-Kazyna’ are incapable of preventing a crisis at the National Railway Company. Further deterioration of asset conditions, increasing debts, and the inability to service them without fundamental management changes will lead to KTZ’s default.”

Source: Kazinform

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