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  KAZAKHSTAN International Business Magazine №2, 2004
 Competitive Transit Capacity for Eurasia
Competitive Transit Capacity for Eurasia
Kazhmurat Nagmanov, Minister of Transport and Communications of Kazakhstan
The Eurasian countries now understand the importance of efforts to create transcontinental and internal transport corridors in the region. These efforts are warranted by the need for more efficient transport links between Europe and South-East Asia; the fact that the Suez Canal and Bosporus have reached peak capacity and that most south-eastern ports, including Hong Kong and Singapore, are overloaded; the rapidly developing trade contacts between Central and South-East Asian countries and Europe; and, finally, the growing interest by the investment community in the rich raw material reserves and markets of the countries lying in the heart of Eurasia.
Kazakhstan’s location in the middle of the continent, its immense mineral deposits, sound export and import potential, well-developed air, rail and water transport systems and consistent investor-friendly policy all provide excellent conditions for the development of a powerful domestic transport infrastructure and its integration with transcontinental corridors.
Kazakhstan has a great opportunity to take a key position in the international transit transport market. The expected annual revenue from these operations is estimated at $2 billion. As importantly, the development of transport in Kazakhstan will promote production and employment in the regions where the transport corridors will be laid. As a result, the industries related to transport infrastructure and the social sector will receive an impetus for development.
If Kazakhstan and its partners can agree mutually beneficial terms of transit, this will allow a number of economic problems to be addressed efficiently. Therefore, our key tasks are to utilize the existing potential fully, to enhance the competitiveness of the domestic transport and communications sector (TCS) in an international context, and to assist the growth of commercial traffic through the country’s territory. At the same time we have to seek reasonable compromises between our national interests and the goals of setting up international systems for smooth freight transport. The nations that can cope with these tasks successfully will enjoy advantages in creating international transport corridors.
As for the situation in Kazakhstan, I have to mention the remarkable progress achieved in the construction and commissioning of new road and rail links which we are planning to integrate into the European and Asian systems.
Rail Transport
Kazakhstan was the first country in the CIS to embark on restructuring and reforming the rail sector, and it now intends to transform this large natural monopoly into a market-driven industry. While retaining control over the main lines, the Government is pursuing a policy aimed at creating a fully-fledged market in freight and passenger transport and a competitive environment for all businesses operating in the sector.
During recent years a number of sizable investment projects have been implemented in the country, including the construction of the 184-km Aksu-Degelen section (the first railway line built since independence), rehabilitation of the 130-km Zhanasemei-Degelen section, and the construction of Dostyk station, among others. In 2003 alone, investments in the rail sector totalled $335 million.
The main centre for international transit in Kazakhstan is the cross-border Dostyk-Alashngkou section. The throughput capacity of this section was about 7.5 million tonnes last year and is expected to exceed 9 million tonnes in 2004. In the next two years, $52 million will be allocated for expanding Dostyk station.
In September 2003 a high-speed Astana-Almaty-Astana passenger train was introduced based on vehicles manufactured by Talgo of Spain. This was preceded by much preparatory effort, and more than 1,000 km of railway was rehabilitated.
In this year, construction of the 402-km Khromtau-Alyunsarino line will be completed. This largest project is the final step in creating an internally linked rail system in Kazakhstan with a view to developing new latitudinal transport corridors and enhancing the transit capacity of Aktau sea port.
The annual increase in transit rail transport is 9-10%. Last year, the best performance over the last six years was achieved. The increasing transit flow through the territory of Kazakhstan suggests that the country is proving attractive as a transit corridor, which is the product of well-coordinated efforts by the key players in developing a common tariff policy and marketing.
Currently a project to construct a Trans-Kazakhstan railway is being considered. The new railway will be to the European gauge and is expected to boost the throughput capacity of the transcontinental corridors by connecting Asian and Pacific countries with the main markets of Europe, Russia and the Middle East. Our proposal, with its estimated cost of $3.5 billion, has already been approved by the transport ministries of China, Iran and Turkey.
In 2004-2006, investment in the rail sector will total $1.1 billion, including $900 million from our own sources and $201 million to be borrowed. It should be stressed that domestic companies are readily allocating large sums for the development of rail transport. Today we have competitive private forwarding agents with a fleet totalling over 20,000 rail cars.
We pursue an active policy, together with the other stakeholders, to promote sustained container transportation. In 2003, for example, 84 container trains circulated along the Nakhodka-Lokot-Almaty, Nakhodka-Lokot-Almaty-Tashkent, Almaty-Tashkent, Almaty-Iletsk-1 and Almaty-Dostyk routes.
In 2002 the railway administrations of Estonia, Lithuania, Latvia and Kazakhstan launched the Baltic Transit container train which now circulates between Baltic and Central Asian countries. The train is formed in the Baltic countries by combining rakes of container wagons from the ports of Kaliningrad, Tallinn, Draugiste, Klaipeda, Liepaya, Venspils and Riga.
In December 2001 a pilot container train was launched on the Urumchi-Alashangkou-Dostyk-Petropavlovsk-Orsha-Malasevici-Sedin(Berlin) line, which demonstrated the feasibility of container transport by this route.
In order to eliminate constraints and increase freight traffic on the cross-border Dostyk-Alashangkou section, the transport ministries of Kazakhstan and China have formed a joint working group to handle issues of freight and container transport. As a result, on 27 April 2004 a container train was launched on the Lyan’ungan-Almaty route with a mean speed of 810 km/day. To date, five such container trains have travelled from Lyan’ungan to Almaty.
Road Transport
In order to enhance the competitiveness of Kazakh transit corridors, the State Programme for Road Transport Development for 2001-2005 is being implemented. The Programme envisages reconstruction, rehabilitation and repairs to the country’s highways.
A total of $450 million has been received in loans from various international financial institutions for the development of the domestic highway system. In this year the sector received about $319 million including $72 million of external loans. The investments will total $414 million in 2005.
A number of highway projects have been implemented in Kazakhstan, including the rehabilitation of the Almaty-Astana road and reconstruction of the Astana-Burabai road which are part of the Almaty-Astana-Petropavlovsk transport corridor. The latter is connected to the European highway system. Bridges have been constructed across the Ural (near Uralsk) and the Syrdarya (near Kyzylorda) on the Samara-Shymkent international route, providing access to Russia and Uzbekistan. Repair work has been completed on the Almaty-Korgas road which follows the Great Silk Way.
The main projects scheduled to be completed in this year include the rehabilitation of the Almaty-Bishkek road (part of the Great Silk Way), construction of the Akzhigit-Uzbek border section of the Beineu-Akzhigit-Uzbek Border road, and rehabilitation of roads in West Kazakhstan (Atyrau-Uralsk, Aktobe-Karabutak-Kostanai Oblast Border). A project was commenced to reconstruct the Astana-Kostanai-Chelyabinsk road and construction of a Ridder-Russian Border road is under way; this will provide the shortest route from Kazakhstan to Mongolia.
Short-term plans for highway development in Kazakhstan include continuing the reconstruction of roads along the Samara-Shymkent transit corridor. At present work is under way on the Karabutak-Irgiz and Uralsk-Aktobe sections. Completion of the reconstruction of all roads along this transit corridor is scheduled for 2006.
In the Astrakhan-Atyrau-Aktau-Turkmenbashi international corridor, the Atyrau-Aktau section will be reconstructed along with a bridge across the Kigach, and the Astrakhan-Atyrau section will be repaired.
Finally, work will continue on the Korgas-Almaty-Tashkent section of the Great Silk Way which will improve transport links with China and Uzbekistan.
In parallel with all this, efforts are being made to harmonize and simplify vehicle transit procedures on the borders of Kazakhstan. The national permissible dimensions of vehicles were revised in accordance with the Minsk weight and dimensions agreement, and permissible loads on double and triple axles have been increased to European standards. Measures are being taken to improve control over road transport and eliminate multiple checks by controlling bodies. For example, entry and exit procedures have been simplified, and now only one vehicle stop for document checking is required.
In recent years, fees for transit of foreign vehicles in excess of the parity quotas were reduced by a factor of five. The permit system was abolished for transit between Kazakhstan, Russia and Kyrgyzstan, which is an important step towards increasing international transport. We are also ready to discuss mutual abolishment of the permit system for transits to and from other countries. 
Creating parity conditions includes eliminating problems with visas. Now is the time to adopt an international treaty to define the status of professional drivers employed in transit transport operations.
Unfortunately, because a system of exchanging transit permits is not in place and these permits are very expensive, Kazakh forwarding agents cannot afford to transit via Uzbekistan ($460) or Turkmenistan ($740). Transit via Belarus is also limited.
We are considering the use of ferry lines on the Baltic Sea as an alternative option for access to Europe. Some progress has been achieved in this, and in June 2004 a resolution was passed to open an Estonian consulate in Kazakhstan in order to simplify visa procedures.
Water Transport
Kazakhstan has three sea ports. These are the Aktau international commercial port, the Bautino coastal shipping port and the Kuryk export port. Undoubtedly, Aktau plays the key role, as it serves as a transit centre for maritime shipping between Kazakhstan and the littoral states of the Caspian, Black and Mediterranean Seas. After reconstruction in 1999, the port of Aktau became the most advanced logistics centre on the Caspian with an annual trans-shipment capacity of 8 million tonnes of oil, 1.5 million tonns of general and bulk cargo and 24,000 container units. A ferry terminal and a ferry route are now in place; these are capable of transporting road and rail vehicles.
In 2003 the port was made a special economic zone (SEZ). It is working to promote foreign trade in the region and is expected to make full use of the potential of the TRACECA and North-South transport corridors.
Another priority goal is to secure access of Kazakh vessels to remote destinations via the inland waterways of Russia (the Volga-Don and Volga-Baltic Canals, the Black Sea and the Sea of Azov). To this end, the Ministry is preparing a government level agreement on co-operation in sea transportation to be signed by Kazakhstan and Russia.
In order to develop sea transport, the national company Kazmortransflot was founded, laying the foundation of the Kazakh merchant fleet.
At the same time, efforts are being made to rehabilitate a river fleet in Kazakhstan. One of the urgent tasks is to launch navigation on the Irtysh. In this connection, the Ministry initiated construction of the Shulbinsky lock in 2003, which will be completed in the end of this year. With the commissioning of this lock transportation in the Irtysh basin will be increased to 2 million tonnes, which in turn will facilitate trade and economic relations between Kazakhstan, Russia and China. In the more distant future, a new China-Kazakhstan-Russia transport corridor would be set up. As a first step in this direction, an agreement should be signed with Russia on dredging the section of the Irtysh from the city of Omsk to Kazakh border.
Another vital task is to reconstruct the 43-km Ural-Caspian canal, and this work is scheduled for 2004-2005. This project will allow river/sea type vessels to enter the Atyrau estuary port and new transport routes to be opened between West Kazakhstan and foreign ports on the Caspian.
Air Transport
In addition to land and water transport, air transport is also being given an important role. We are continuing to work on expanding the transit network within the country’s airspace. For example, the modernization of radio and air navigation equipment at a number of airports has allowed the length of existing air routes to be increased by a factor of seven during the past seven years. As a result, the number of international air corridors in Kazakhstan has increased by a factor of twelve.
 Today, Boeing 747 aircraft owned by foreign airlines land at Almaty airport for refuelling, and Astana airport is open for transit landings by the high-capacity aircraft of Polar Air (USA). In order to enhance Astana’s capacity to service transit flights, a new terminal complex and a cargo terminal are being constructed. Runways will be built or reconstructed in Atyrau, Aktobe, Shymkent and Aktau in 2004-2005. These airports are located along main international air corridors and can serve as transit centres for Boeing 747 aircraft. This will undoubtedly bring benefits for both international forwarding agents and the airports.
In addition, efforts are being made to expand the three hub airports at Astana, Almaty and Atyrau, which will allow all the Kazakh cities to be connected to each other and with overseas destinations. Mention should be made of the activities of Air Astana, a Kazakh airline which is continually expanding the geographical range of its flights between the domestic hub airports and Frankfurt, London, Amsterdam, Moscow, Seoul, Peking, Dubai, Istanbul and other cities.
As for the aerospace industry, our priority task is to build and launch a national communications satellite. In parallel with that, a draft Kazakh-Russian agreement is being prepared for building the Baiterek rocket complex at the Baikonur launching site.
Transit Potential
The efficient use of transcontinental routes in Eurasia requires joint efforts by all the stakeholders, which should be effective both within their own national borders and at an international level.
The importance and urgency of cooperation in transit transportation is recognized by the international community, and in August 2003 the UN General Assembly held an international conference of transport ministers from developing landlocked countries in Kazakhstan. The Almaty Declaration and the Almaty Programme of Actions adopted by the conference were deemed to be of historic importance, as they are the first documents to incorporate comprehensive recommendations for enhancing cooperation in the field of transit transportation. These documents stress that any partnerships should be mutually beneficial.
International organizations and financial institutions have an important role to play in implementing the Almaty documents. We are co-operating actively with the ESCAP project for The Development of Land Transport Infrastructure in Asia, the EU TRACECA programme, EurAsEC and the Economic Cooperation Organization.
Special mention is due to the UN initiative to develop of a special programme for the Central Asian economies, and the development of the joint EEC and ESCAP project for Building Institutional Capacity for the Development of Inter-regional Land and Land-Water Transport Connections.
In March 2004 the expert group for Eurasian transport connections studied international transport systems and corridors connecting Europe and Asia, and examined Kazakhstan’s potential in this field.
The main transport corridors and transcontinental routes existing in Kazakhstan were highly regarded by leading experts and political figures, and I would like to elaborate on these.
The Trans-Asian railway. In the 1990s, in addition to the Trans-Siberian railway built in the early 20th century, two new transcontinental transport routes were laid through the territory of Kazakhstan, the Eurasian and Trans-Asian railways.
The Northern Corridor of the Trans-Asian railway, the Eurasian railway appeared when the Dostyk?Alashangkou section was built to connect the Kazakh and Chinese rail systems. The main advantage of this route compared to sea transport is that distance and shipment time are more than halved.
The Central Corridor of the Trans-Asian railway begins at the eastern Chinese ports, goes via Kazakhstan, Uzbekistan, Turkmenistan and Iran, reaches Istanbul and then continues into the 4th Crete corridor. This branch of the Trans-Asian railway provides the shortest way to the Iranian railway system (via the Serahs-Meshhed cross-border section), which ends at the port of Bender Abbas. However, the throughput capacity of this route is not yet fully utilized.
Europe-Caucasus-Asia corridor (TRACECA). This corridor enters Kazakhstan via the port of Aktau where a consignor can use the transit territory of a single state with a single legal framework and a single transport system. One shipment document is required, and affordable through rates apply. At the same time, shipment costs for certain types of cargo may be relatively high, which is the result of the need to cross the territories of several Caucasian states with different regulations and transport systems. In this connection, measures are being taken to coordinate the activities of the transport ministries of the member countries with the goal of eliminating physical and other barriers.
North-South international corridor, the continuation of the 9th Pan-European route, connects the Persian Gulf and Indian Ocean countries with Western European ports via the Caspian and Russian waterways. According to experts, cargo traffic on this route will increase by 10-15 million tonnes annually in the next decade. The inclusion of Kazakhstan in this corridor, via Aktau, will allow the road and rail transit potential of the country’s western regions to be used more efficiently to serve the Ural region of Russia and Central Asian countries.
Unfortunately, forwarding agents often encounter problems with corrupt officers in the Kazakh traffic police and customs (by this I mean bribery). We are working hard to eliminate these barriers and create a favourable environment for transit operations. Our participation in integration efforts by EurAsEC and the adoption of a national tariff system within the Common Economic Space play an important role in strengthening fair competition at an international level and enhancing non-discriminatory access to services.
The integration process and increasing transport volumes depend directly on the efficient use of transport infrastructure and the creation of acceptable conditions for all businesses involved in transportation. This in turn can only be achieved if common approaches and policy are developed by all the players in the transportation market, including the government bodies and transport ministries of all member countries. I believe that progress in this sector is only possible if a constructive dialogue and mutually beneficial co-operation are maintained.

Table of contents
Navigators of Our Skies  Sergei Kulnazarov 
Traceca, a Route to the Future  Thomas Lamnidis 
Ispat Karmet: The Reincarnation of A Giant  Nawal Kishore Choudhary 
We are United - and Not Only by Oil!  Morteza Saffari Natamzi 
Pipelines in Kazakhstan: the Legal Issues  Abai Shaikenov, Anthony Cioni 
Well-drilling by Professionals!  Serik Kudaikulov 
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