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EBRD to finance Kazakh freight wagon operator

5 December 2014 14:10 (UTC+04:00)
EBRD to finance Kazakh freight wagon operator

By Aynur Jafarova

The European Bank for Reconstruction and Development (EBRD) is planning to allocate a secured loan to Olzha Joint Stock Company, a private operator of freight wagons in Kazakhstan.

The loan worth $11 million will be used for acquisition of new freight railcars, EBRD said on December 4.

The first loan with Olzha was signed in July 2013 with the key transition objectives: private sector expansion in a market which is dominated by the state sector; development of the leasing market which remains underdeveloped; and setting standards through formal introduction of OHSAS 18001 (safety process and management), which is a key issue for LPG railcars.

The loan extension of $9 million was signed on March 27, 2014 to further support the development of the private owner and operator of freight wagons. This additional financing was used for the acquisition of freight wagons and a locomotive.

Built on the achievements made during the first loan (and its extension), the proposed Phase III loan will further facilitate implementation of the original transition objectives and promote enhancing corporate governance standards via setting up the Audit and Risk Committees at the Board level with independent board directors.

The state-owned railway company still plays a major role in rail transportation sector. The key objective of the transaction is to support a private ownership and operations in line with the larger railway reform plan.

y supporting Olzha in the acquisition of additional railcars, the project will contribute towards increasing the share of wagons owned and operated by private companies in Kazakhstan.

New wagons will be leased to medium-sized companies and used for transportation of different types of commodities such as consumer goods, hard commodities, construction materials, etc.

These companies generally require not more than 100-150 wagons and maintaining their own fleet is often not commercially justified.

By supporting the acquisition of additional wagons the project would indirectly support small and medium-sized companies whose business involve transportation of commodities and thereby improve trade interactions with their customers.

Since the beginning of its operations in Kazakhstan, the EBRD has invested close to $6.75 billion in the country’s economy, with more than half of the total supporting projects in the private sector.

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