KTZ Buys Stadler-Built Coaches

On 14 December 2022, KTZ and Stadler signed three contracts of a total worth 2.3 billion EUR: one for the supply of 537 sleeper and couchette coaches, second for their 20-year full-service maintenance and third for the acquisition of a factory in Astana from KTZ with around 100 employees and for the transfer of Stadler’s technology.

These contracts follow an agreement for a strategic partnership, signed in November 2021 in the presence of the President of Kazakhstan Kassym-Jomart Tokayev and the then President of the Swiss Confederation Guy Parmelin, during an investment roundtable in Geneva, where a number of trade agreements were signed in various sectors, including a strategic cooperation agreement between KTZ and Stadler.

The delivery contract includes the 160 km/h 1,520 mm gauge coaches of four different types:
- 234 sleeping cars with 40 beds each, 
- 233 „platzkartny“ cars with 58 places each,
- 35 „shtabny“ cars, each with 18 places for passengers, and a space for train staff and for people with reduced mobility,
- 35 generator cars to enable working of rakes on non-electrified lines.

The new stock, when complete, will enable to form 35 rakes of 15 carriages (a standard composition), with a reserve, to operate day and night services on the Kazakh domestic as well as international lines, and will be designed to work in the temperature range of -50 to +45°C. The delivery of all sleeping and couchette coaches is scheduled to take place by 2030 and there is an option of additional orders to continue the rejuvenation of the KTZ passenger fleet.

The gradual transfer of technology, the training of local personnel at other Stadler works, as well as the cooperation with local suppliers and technical universities provide the foundation of this international collaboration. Peter Spuhler, Executive Chairman of the Board of Directors of Stadler, commented: “We are looking forward to this long-term cooperation with KTZ and delivering our state-of-the-art technologies and competences to the Kazakhstan railway. This project will see Stadler enter a new market and expand our geographical presence in the CIS states. Thanks to our innovative products and expertise, we believe that we can help take public transport in Kazakhstan to the next level”.

History Of The Project

But this recent contract with KTZ has been in the pipeline for longer than 2021. As early as April 2019, Stadler brought four cars from one of the two sleeper rakes that were delivered to ADY for operation on 1,435 and 1,520 mm gauges (but which are still not in service due to obstacles at the operator’s side) to Astana for a demonstration.  This was related to KTZ's then-plan to renew its rolling stock and move away from the less-than-optimal Talgo technology, so negotiations were held with two manufacturers in particular: TMH and Stadler.

The former signed an agreement at InnoTrans 2018 to take over KTZ’s 99.99 % stake in the Tulpar-Talgo works. As a result of this activity, among other things, KTZ started buying classic passenger cars from TMH and TVZ respectively in 2019, and these have already been partially assembled in Astana. In addition, TMH presented its other production at the Tulpar-Talgo site in March 2020, so that in addition to passenger cars, locomotives and electric and diesel multiple units were also on display.

At that time, KTZ had a plan to purchase a total of 1,200 cars of the following types by 2028: „platzkartny“, compartment cars, service („shtabny“) compartment cars with seats for people with disabilities, and dining cars. In 2019, KTZ fleet totalled 2,229 passenger cars, of which 670 were of the Tulpar-Talgo type. The remaining cars were of Russian or Chinese origin and had an age of 10 to 15 years out of a planned lifespan of 30 years. It was therefore planned to scrap them and replace them with new ones within about 10 years.

Thereafter, this Russian activity subsided and at the end of March 2022, KTZ and the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan (MIIR RK) announced that, based on the recommendation of DB Engineering & Consulting, Stadler Bussnang had been selected as KTZ’s partner in an international tender for the supply of new passenger cars.

Among the decisive criteria were that Stadler's cars have a 40-year service life, European quality standards, modern design, a production localisation level of 35 % and the transfer of the latest technologies. The advantages also include the fuel tank capacity of the new cars, which will allow the train to run without power from the overhead line for a much longer period of time than rakes assembled from cars from a competing manufacturer. And in general, the design features of the Stadler cars allow for greater distance between repair stages. 

The sleeper cars for KTZ are a new development by Stadler, but in coordination with the customer, they are drawing on experience from previous projects, including the one for ADY. Kazakh employees of the (former) Tulpar-Talgo plant, which has since been transferred to KTZ ownership, will be trained at Stadler's facilities to produce the new cars in Astana.

Financing The Project

KTZ is also addressing the issue of financing the entire project, as Stadler requires a financing guarantee for at least 10 years. However, KTZ itself is unable to provide this, as the money for new passenger cars is only ever received from the state budget for one year. In addition, the fact that, although the KTZ have good prospects and improving productivity, there are still many unresolved problems.

The company is heavily indebted: although the proportion of hard currency liabilities has fallen from 57 % to 36 %, the consolidated debt as at 1 May 2022 was 1.9 billion Tenge (about 4 billion EUR). KTZ also has difficulties in depreciating its assets: its infrastructure is 57 % obsolete and its fleet is 54 % obsolete, with 60 % of its locomotives over 30 years old. In addition, KTZ is struggling with material prices, which have almost doubled since last year for rails and sleepers, for example. Fuel and electricity prices have also increased, so operating costs are significantly higher than in 2021. 

Therefore, KTZ and the government are preparing project financing for new cars from Stadler with the participation of Samruk-Kazyna, which should also lead to minimising currency risks. The Samruk-Kazyna joint stock company was established in 2008 by a decree of the President of the Republic of Kazakhstan. Samruk is a bird similar to a giant eagle, which in Kazakh mythology connects two worlds - our world and the afterlife, because according to legend, even if Samruk is dead, he can be resurrected. The word Kazyna means "treasure" in Kazakh.

The only shareholder of the Samruk-Kazyna Fund is the Kazakh government. The fund is a commercial entity, an investment holding, whose mission is to increase the national wealth of the Republic of Kazakhstan and ensure long-term sustainability for future generations. In addition to KTZ, Samruk-Kazyna's portfolio includes companies such as Air Astana, Kazakhtelecom and Kazpochta (Kazakh Post). 

The Astana site therefore has new development opportunities ahead of it, as Peter Spuhler, in a meeting with President Tokayev on 14 December 2022, said that the plan is not only to modernise the facility and introduce a production cycle with a localisation level of 35% by 2030 (the intention is also to use Kazakh aluminium), but also to export the Kazakh-built cars.