e to success in the CIS


initial order to build 420 new coaches for KTZ in 2010 as well as a maintenance contract worth nearly ƒ1bn in 2010, while in December a joint venture of GE Transportation, the Remlokomotiv subsidiary of KTZ and Transmashdiesel announced a plan to build a new ƒ90m diesel engine plant in Astana.


Nazarbayev believes that railways are “at the centre of a thriving economy,” which is reflected in the government’s commitment to revitalising its network through a $US 30bn investment up to 2020. This includes building the new 293km line from Korgas to Zhetgen which is budgeted at $US 1.02bn and will aid transit from China to Europe, along with network-wide infrastructure improvements including signalling and telecommunications upgrades. However, a great proportion of this investment is on new rolling stock. KTZ purchased 15,000 wagons last year alone and it is estimated that 87% of its 1500 strong locomotive fleet are at life expiry. Elsewhere in the CIS, substantial demand also exists for new modern rolling stock to replace life- expired former Soviet equipment, although not on the same scale.


Big impact


It is this potential across the 1520mm-gauge central Asian region that is driving Alstom’s efforts to make a big impact in this market.


In October the company completed the first freight locomotive for KTZ at its Belfort plant in France, which was on display during the inauguration. A further nine freight and 20 passenger locomotives are being built at Belfort, while another 15 freight locomotives will be built as kits to be assembled in Astana. Alstom estimates this will take it up to 2014-15 at which point full manufacturing will shift to the 27,500m2


IRJ January 2013


President Nursultan Nazarbayev (left) next to KTZ president Askar Mamin at the inaguration of Kazakhstan’s latest railway manufacturing facility in Astana.


facility, thus fulfilling the localisation commitment. The company hopes to complete its initial order for 295 locomotives, of which 200 are freight and 95 passenger, by 2020 and is optimistic that additional orders will follow. Mr Patrick Kron, Alstom’s CEO, confirmed to IRJ that the company believes that a 50-70% localisation target is economically sustainable for its operations in Kazakhstan. He said the company aims to reach 30% localisation by 2016 and 72% by 2020. However, unlike the Kazakhstan government, localisation to Kron does not encompass only Kazakhstan, but the entire CIS region. Alstom’s existing plants in Russia are included as potential suppliers to this market, and it’s at its new Novosibirsk facility where Railcomp, a 50:50 joint venture with TMH, will produce traction equipment for the locomotives. Alstom will also produce bogies in the CIS. Of course Alstom is reliant


on third party suppliers - up to 60% of the locomotives’ content according to Kron - and it is working to encourage partners to make similar investments in localised manufacturing facilities to establish a supply chain in Kazakhstan.


Already Knorr-Bremse has committed to supplying braking equipment, while ABB is also set to produce transformers for the locomotives in the region. Attracting further local


production investments from its traditional suppliers, despite obvious demand, however, remains a challenge. French ambassador to Kazakhstan Mr Jean-Charles Berthonnet says that a great deal of effort has been placed on presenting the country as a place for investment to numerous French businesses. Take-up though remains slow. Nevertheless Kron remains steadfast in his encouragement. “If they choose to come here we will aim to make them as visible as possible,” he says. “As we are trying to make ourselves as visible as we can.” A further localisation challenge is building the workforce required to manufacture and engineer what is a complicated piece of equipment. Berthonnet says that the standard of the Kazakh education system is not producing the level of engineers required, and this is likely to remain a significant difficulty in the years to come. Yet the willingness to


overcome these obstacles is a sign of Alstom’s long-term


strategy for the region. The rewards will not come easily or overnight, but by working with its joint venture partners they remain attainable and economically attractive. For example Alstom appears poised to secure the contract to build Astana’s proposed light rail network. Discussions are continuing with the local administration, with three design options under consideration for three lines, the first of which will link the city directly with the airport. Rolling stock would be supplied from Alstom’s St Petersburg plant.


The aim is to start work in 2014 and complete at least the first line by 2017, in time for the World Expo, which will showcase Astana and Kazakhstan’s progress to the world.


Indeed progress in the rail sector is unlikely to cease anytime soon, particularly with the expected growth in railfreight traffic from China to Europe via Kazakhstan following the aforementioned improvements to infrastructure. And with Alstom as well as Talgo and GE, and their respective supply chains likely to be well established by this point, these are opportunities they will be primed to embrace. IRJ


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