Clare Nuttall in Astana -
Astana is becoming the centre of a brand new manufacturing industry as the Kazakh government's lavish spending on the country's railways draws in international firms Alstom, GE and Talgo.
National rail operator Kazakhstan Temir Zholy (KTZ) plans to spend around $37bn to build a modern rail network and slash travelling times in this vast country. Part of this money has already been allocated to buying new locomotives and rolling stock, which will increasingly be assembled within Kazakhstan itself.
In the last three years, KTZ has signed joint venture agreements with several international companies. The agreement with GE Transportation has already seen the opening of a locomotive assembly plant in Astana. By end of 2010, the plant had produced 30 GE Evolution series locomotives adapted for the Kazakhstan market.
According to Rene de la Pena, plant leader at GE Transportation Kazakhstan, the factory is expected to produce 78 locomotives in 2011, of which 69 will be for the domestic market and the rest to be sold to other CIS countries, which operate on the same wide gauge as Kazakhstan. "Future production will depend on demand. We expect to produce 94 units in 2012. Total capacity is 150 units a year," de la Pena tells bne. "We have had a lot of interest from Mongolia, and companies from Russia, Estonia and Latvia - all in the 1520 gauge area - are interested."
However, the factory's main role will be to supply domestic demand as Kazakhstan seeks to increase freight traffic on its railways - the GE locomotives have around twice the power as the engines currently used in Kazakhstan, and emissions are considerably lower. "Kazakhstan is on the old silk road between Europe and Asia. The GE plant is part of a big programme to modernise Kazakhstan's transport infrastructure, including the railways," says de la Pena.
In addition to the joint venture with GE, KTZ is working with a number of other companies to build factories to produce locomotives, freight and passenger cars, rails, large car casting, crossing pieces and wheelsets. "These projects are being carried out on the basis of technology transfer from the world's leading manufacturers of railway equipment and machinery, but also organizing production of a significant proportion of components within Kazakhstan," KTZ vice president Yermek Kizatov tells bne .
Tulpar Talgo, a joint venture between KTZ and Spain's Talgo started building a plant to produce railway carriages in Astana earlier this year. The Madrid-based company already supplies high-speed trains for the Almaty-Astana route, which KTZ plans to introduce on other key lines. In November 2010, Talgo and KTZ signed an agreement under which Talgo will gradually replace the 3,000 passenger coaches in Kazakhstan with modern intercity coaches. The initial batch of 420 coaches, to be delivered over a three-year period, will cost over €300m.
A third agreement, with France's Alstom and Russia's Transhmashholding, will see the construction of another factory to produce electric locomotives, with annual capacity of 50 units, some of which may be exported. This is expected to create 650 new jobs in the capital. Alstom said in a statement that the locomotives will include components from the French-Russian consortium and from Alstom's factory in Belfort, but that "production of components will gradually be delocalised to Kazakhstan."
More recently, Alstom has been awarded a lucrative contract to build a 40 kilometre long tram network in Astana. Alstom announced at the groundbreaking ceremony in July 2011 that the first phase of the project would be completed by 2014 at a cost of €300m.
While these big contracts have gone to the international players, local companies are also feeling the benefits of KTZ's investment plans. According to Kizatov, a carriage plant is being set up in Ekibastuz, which, when it reaches full capacity in 2012, will produce 3000 units a year. A car casting production line is also being set up in Karaganda. Other projects include plans to produce wheels and axles at Prommashkomplekt in Ekibastuz, and rails at KSP Steel in Pavlodar.
According to de la Pena, GE also plans to rely increasingly on locally sourced inputs, provided the quality is high enough. "We will soon enter the second phase of our work, which will see more tech transfer and increased use of local content," he says. "At present we import the GE kit for engines, bogies and some other components, but we buy other things from GE approved local suppliers. It is more economical to buy from local suppliers, but they must be up to our standards."
Naubet Bisenov in Almaty - A free-floating exchange regime for Kazakhstan’s currency, the tenge, is taking its toll on retail trade as the cost of imports rise. While prices have not changed ... more
Henry Kirby in London - Ukraine and Russia’s latest “Despair Index” scores suggest that the two struggling economies could finally be turning the corner, following nearly two years of steady ... more
bne IntelliNews - The National Bank of Kazakhstan, the central bank, has re-adopted a free-floating exchange regime under the new governor, Daniyar Akishev, who has ... more