Kazakhstan aims to make its railway company more attractive to investors before it goes public

The government is set to boost competitiveness of the railway company by amending national legislation / Photo by Askar Akhmetullin, photo editor: Milosh Muratovskiy

Kazakhstan’s Ministry of Transport has proposed urgent amendments to the legislation to enhance the investment appeal of Kazakhstan Temir Zholy (KTZ), the national railway company, in anticipation of the initial public offering (IPO), as reported by the Association of Kazakhstan Freight Rail Carriers. The organization strongly opposes the move, calling it premature. Additionally, Kazakhstan’s Supreme Audit Chamber warned of financial risks affecting KTZ.

The association claimed that the proposal includes granting KTZ an exclusive right to transshipment across Kazakhstan, lifting the cap of no more than 10% minus one share for stock market placement and the deconsolidation of the company’s debts through establishing a joint venture with the state-owned fund Samruk-Kazyna. These measures aim to make the company more attractive to investors and stimulate the development of the country’s railway infrastructure.

The Ministry of Transport has submitted the proposal to Prime Minister Olzhas Bektenov, urging him to review the document as soon as possible within one of the draft legislations already under consideration in the Mazhilis, the lower house of Kazakhstan’s parliament.

Moreover, Kazakhstan’s Supreme Audit Chamber previously warned that KTZ was at risk of going bankrupt. According to the agency, as of early 2024, the company’s debt stood at approximately $5.7 billion, with 45% of it allocated to refinancing older debt obligations.

«Further asset status deteoration, as well as rising debt and an inability to service it without extensive management changes, will result in KTZ’s default,» said Alikhan Smailov, chairman of the Supreme Audit Chamber, in June 2024.

Another unresolved issue is fares. Samruk-Kazyna CEO Nurlan Zhakupov previously highlighted that KTZ would be able to go public only following a fare increase.

The deadline for KTZ’s IPO has been changed several times; it is now planned for 2025. Authorities expect that efforts to improve the company’s financial standing and remove regulatory barriers will be completed before KTZ goes public.