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Kazakhstan Temir Zholy (KTZ), the nation's railway operator, is grappling with a staggering debt that has surpassed 3 trillion tenge. Senator Shakarim Buktygutov has issued a stern warning, highlighting that inaction on this mounting financial burden could lead to severe repercussions for both the company and Kazakhstan's crucial transit capabilities.

Rising Debt and Low Tariffs

During a parliamentary session, Senator Buktygutov pointed to the company's significant debt load, accumulated through new borrowings to finance various projects. He emphasized that delays in addressing this issue could negatively impact KTZ's operations and hinder the development of Kazakhstan's transit potential.

A primary contributing factor identified for this debt is the persistently low transportation tariffs. According to the senator, approximately 70 percent of freight traffic is being handled at rates below the actual cost of service.

Uncompetitive Tariffs Compared to Neighbors

Buktygutov further elaborated that KTZ's railway tariffs are among the lowest within the Eurasian Economic Union (EAEU) and Commonwealth of Independent States (CIS) countries. These rates are insufficient to cover transportation expenses, resulting in losses for the company. In contrast, export freight transportation in EAEU and CIS nations is reportedly two to four times more expensive than in Kazakhstan.

Debt Reaches 4.7 Trillion Tenge, IPO Planned

Later in the session, it was revealed that KTZ's debt had escalated to 4.7 trillion tenge, with all funds allocated for the company's development being secured through borrowing. To tackle this debt crisis, KTZ is slated to go public through an Initial Public Offering (IPO) by the end of 2026.

An IPO involves offering a portion of a company's shares for sale on a stock exchange, typically to raise capital for expansion, reduce debt, and enhance transparency and corporate standing.