Kazakhstan aims to turn into railway transit hub, locomotive workshop

By bne IntelliNews June 2, 2015

Naubet Bisenov in Astana -


As a landlocked country sandwiched between China, Russia and the Middle East, Kazakhstan attaches great importance to developing land transport routes and making use of its transit potential. It has also nurtured its own locomotive making industry to run on the rail networks.

Since obtaining independence in 1991, Kazakhstan has embarked on a massive railway and road building programme connecting up this Central Asian country’s disjointed transport networks. Built in Tsarist and Soviet times, Kazakhstan's railway networks were designed to link the periphery with central parts of Russia, because Moscow saw those distant parts of the union as a raw materials appendage that fed the industrial heartlands in European Russia. After Kazakhstan obtained independence in 1991 it realised that transiting via Russia to move goods from northern parts of the country to western or eastern parts was too costly and time consuming.

Another important factor that pushed the Kazakh government to develop railway networks is that with a small population of 17mn in a vast country the size of Western Europe, the railways are often the only reliable and relatively cheap mode of transport. Unlike air travel, in which flights are often disrupted due to snow and icy weather conditions in Kazakhstan's severe winters, they provide links to remoter places year-round. This means that the railways serve an important social and economic function, so the government tries to keep fares low compared with air travel, which connects only major urban centres and even then mostly through Astana and Almaty. As a result, by 2008 the country had built railway lines to link its west with the north, north with east and east with south, cutting travel times significantly.

In 2014, the national rail company Kazakhstan Temir Zholy (KTZ) commissioned new railway lines stretching around 1,000 kilometres that linked the Caspian Sea region with central Kazakhstan. The new lines, together with the 1,000km-long Kazakhstan-Turkmenistan-Iran line that was completed in December, have turned Kazakhstan into a transit hub between China and the Middle East. The Kazakh government boasts that the country’s railways have now cut the travelling time between the Chinese eastern seaboard and the EU's eastern borders to just 10-11 days, versus up to 44 days by sea and 14 days along the Trans-Siberian railway.

President Nursultan Nazarbayev has suggested work should start on making its railways and other transport modes into a “high-speed Eurasian trans-continental corridor” by cutting bureaucracy and other hurdles to speed up the passage of trains. “When I say high-speed I don’t mean 350 km/h speeds like in China and Japan,” Nazarbayev said on May 6. “High speed I mean in the sense of removing barriers of which we have thousands: transport gets stopped everywhere, and it does not get through [quickly] not because of actual speed but because we impede it everywhere ourselves,” Nazarbayev was quoted as saying by the KazTAG news agency.

Diesel locomotives

While KTZ is busy expanding its railway network – which now exceeds 16,000km with about 5,000km electrified – it has also been solving the problem of replacing its rapidly ageing rolling stock: according to the company’s development strategy, it will need to replace 68% of locomotives and 82% of shunters.

When the Soviet Union broke up there was no plant that built locomotives in Kazakhstan – all production was located elsewhere either in Russia, Ukraine or the Baltic republics. But Murat Tleubayev, president of KTZ subsidiary Astana Locomotive Plant, tells bne IntelliNews that it would have been “wrong” to buy hundreds of foreign-made locomotives. “That’s why it was decided to set up a plant to build diesel locomotives with the world’s leading producer and General Electric was chosen as a partner,” he says.

In 2006, KTZ signed a deal with General Electric Transportation Company over the transfer of its Evolution series locomotive production technology, and in the summer of 2009 the Astana Locomotive Plant was opened as a fully owned subsidiary by KTZ in a newly-created industrial zone in the wind-swept steppes on the outskirts of the capital. By the end of 2009, the first locally built ES44Ci Evolution locomotive rolled off the assembly line. During phase one of the project that ran until 2012 the plant produced 300 freight locomotives that meet the climatic conditions of the country and technical requirements of the domestic rail network. While most of the plant’s output was delivered to KTZ, the enterprise has also managed to export 12 locomotives to railway companies in neighbouring countries: one to Ukraine, one to Turkmenistan, six to Tajikistan and four to Kyrgyzstan. This is a very good result for a “young enterprise”, Tleubayev believes, because “many consumers have not yet heard of us but we are working on expanding our export markets”.

Turkmenistan plans to use its Kazakh-made locomotive on the new Kazakhstan-Iran line. And after Russia’s Transmashholding (TMH) company acquired a 50% stake in Astana Locomotive Plant in 2013, there is the tempting possibility of entering the enormous Russian market for locomotives.

Tleubayev explains the success of his company's locomotive by its efficiency and technical characteristics. The GEVO diesel engine used in the locomotives is about 9% more fuel efficient than the Soviet-designed locomotives that KTZ still operates, saving up to $150,000 a year. The Kazakh locomotive can run for 92 days between routine maintenance compared with 18-30 days for the Soviet-era locomotives. Astana Locomotive Plant has also local localised production for about 70% of items used in the production of its locomotives and 32% in terms of value. KTZ has now tasked Astana Locomotive Plant with bringing the local content to 50% in terms of value in the near future. “For this we are now building a plant to produce diesel engines for our locomotives,” Tleubayev says.

Having reached a design capacity of 100 locomotives a year (the plant could produce more if it receives extra orders), Astana Locomotive Plant is now implementing the second phase of the project, which envisages producing 110 passenger locomotives a year for KTZ by 2020. “At the end of last year we produced two passenger locomotives and handed them over to KTZ,” Tleubayev noted. The passenger locomotive is undergoing tests at the moment, and the plant will start commercial production in 2016 when it will turn out 108 units for the national rail company.

The switch to producing passenger locomotives means that Astana Locomotive Plant, which employs 700 people, of whom 500 are involved in production, needs to retrain its specialists. This means it will be able to produce only about 20 locomotives in 2015. That number could reach more than 30 if the plant confirms its export orders. “Regional countries are going through an economic crisis, which means there is lower demand for our output,” Tleubayev notes.

KTZ’s locomotive fleet consists of 40% freight locomotives, 31% electric locomotives and 29% shunters, which requires Astana Locomotive Plant to master the production of shunters too. “We are now working on a project to produce 260 shunters, which will be launched in 2017,” he says. After completing orders for passenger locomotives and shunters, the plant will produce a further 50 freight locomotives from 2019 after a three-year hiatus during which it will master the production of passenger and shunters.

Having completed the current orders for KTZ and other customers, a decade after the opening the plant will start dealing with maintenance of the locomotives it will have produced and stand ready for new orders, Tleubayev says.

Electric dreams

In 2010, KTZ, Russia’s TMH and France’s Alstom signed an agreement to set up a plant in Astana to produce electric locomotives for freight and passenger trains. The Electric Locomotive Plant (EKZ), located next to Astana Locomotive Plant in the industrial zone, a joint venture held by KTZ (50%), Alstom and TMH (25%), was opened in 2012 and has since assembled 25 electric locomotives for freight trains using parts brought over from France. “The first locomotive produced for 100%... will be delivered in July or August this year,” Pierre-Albert Bou Hanich, industrial director of EKZ, tells bne IntelliNews. “We delivered the first locomotive assembled here from parts supplied from France last December.”

The venture involves a transfer of technology from Alstom’s facilities in Belfort in France to the plant in Astana. “Under a contract with KTZ we will produce 150 electric locomotives for freight trains until 2020-2021 depending on the demand from the customer,” Bou Hanich says. The 25-year contract also envisages conducting maintenance of the locomotives for KTZ.

Unlike Astana Locomotive Plant, EKZ will embark on a project to build electric locomotives for passenger trains in parallel with the production of freight locomotives. “We have three projects – one to produce freight locomotives which is already running; we will start the second project to produce passenger locomotives this October; and at that time we will start our first export contract to supply freight locomotives to Azerbaijan Railways,” the Frenchman tells bne IntelliNews.

In total, EKZ will build 150 electric freight locomotives and 50 passenger locomotives for KTZ and 50 freight locomotives for Azerbaijan. “We will supply our locomotives to Azerbaijan in late 2016, early 2017,” he notes.

EKZ already employs around 400 people, including 100 involved in production. With the launch of the passenger locomotive and Azerbaijani projects, the number of technical specialists will rise to 170. The technical specialists undergo theoretical training in France under an “extensive” exchange programme with Belfort, because they should “know how the locomotive is made, and learn about quality and safety requirements,” Bou Hanich says. “Safety is the number one priority for us and it is a key element at our plant.”

EKZ’s current level of localisation is 20%, but the director says it will rise to 30-40% in time. Like Astana Locomotive Plant, EKZ plans to set up a facility to build transformers for its locomotives in 2016. “We are now in the process of building a production line, recruiting specialists and buying equipment,” he notes.

In addition to building electric locomotives, the plant has a contract with KTZ to carry out the maintenance of Chinese-built locomotives and locomotives built by Alstom. Under the maintenance contract, EKZ will maintain up to four locomotives a day. “In order to do this we are going to set up maintenance centres across the country because it is a big country and this could not be done in a centralised manner,” Bou Hanich explains. “We need to be close to our customers.”

Should President Nazarbayev succeed in reducing the bureaucracy that hobbles rail transit through Kazakhstan, the railways could well help the Central Asian nation become not only a transit hub between China, Europe and the Middle East, but also a workshop for the region’s railway networks.


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