The experts discussed the issues concerning the changes in the mechanism of passenger transportation subsidies on the platform of the Atameken NCE RK.

Earlier, the National Chamber of Entrepreneurs raised the issue of the need to develop competition in the freight transportation market as the key measure to reduce the transport costs of business. The National Company "KTZ" JSC raised the issue of revising the approach of subsidizing passenger transportation, which is the backbone of the future draft law.

According to the Member of the Board of the National Chamber Evgeniy Bolgert, the tariff regulation is always sensitive for business and demand detailed discussion with all interested parties.

"At the beginning of the summer, the National Chamber of Commerce and Industry initiated a review of the regulation of the railway transport market to increase competition and revise the tariff policy by an inter-ministerial working group chaired by Deputy Prime Minister Zhenis Kasymbek. But, unfortunately, the Ministry independently developed a block of amendments, which were not discussed with the business. And we, as the National Chamber, are forced to initiate a broad discussion of the proposed reform,”  Yevgeniy Bolgert said.

Askar Maksutov, Deputy Director-General for Finance of KTZ Freight Transportation JSC, informed the participants about the key moments of the project of changes. He noted that the submitted amendments are temporary in nature and will not affect the entrepreneurs.

 "Today's tariff for locomotive traction is 3 times lower than the established ones. The annual amount of cross-subsidization, which KTZ carries on itself, including at the expense of all shippers, 136 billion tenge, from the state budget passenger traffic receives about 30 billion tenge annually. We propose to create Passenger locomotives JCS. It was decided to withdraw this company in connection with the constant appeals of large consignors of cargo about the lack of transparency of KTZ tariffs. The concept is designed for one year. The load on shippers will not change, cross-subsidization remains, but we want to formalize what we are doing now secretly," Askar Maksutov said.

 However, the businessmen do not agree with this statement, they believe that in fact the changes proposed by the state to reset the services on the backbone railway networks and locomotive traction services for passenger traffic in return for consolidation of all subsidies in these areas at KTZ will lead to an increase in the burden on shippers and limit competition among freight carriers.

"The developed document does not provide norms in terms of providing access to private carriers. There is no mechanism for how private freight carriers should contribute to subsidizing passenger carriers. But it is clearly stated that to access the backbone railway networks, the carrier should bear a social burden in terms of subsidies. Thus, the undeveloped mechanism will stop the work of private carriers," Timur Karabaev, a member of the Supervisory Board of TTT Service LLP, said. 

Subsoil users also agree on the risks associated with the proposed novelties. According to Maxim Kononov, Deputy Executive Director of the Republican Association of Mining and Metallurgical Enterprises, the scheme is transparent, but not market-oriented.

"We do not see any steps aimed at competition and its development. The concept should be comprehensive in spite of the first step and contain the intentions on the admission of private carriers. KTZ proposes to create a legal entity, which will not have any restrictions. That is, the costs will not be controlled, even if such a legal entity will work inefficiently or at a loss,"  Maxim Kononov said.

Yelena Papadopoulos, Vice President of the Eurasian Industrial Association, noted that the zeroing of the rate of backbone railway networks in all directions will lead to the legitimization of cross-subsidization, as well as to its deepening, which will have an impact on the tariffs of shippers.

"We agree that freight traffic is now subsidized by passenger traffic. But it should be admitted that passenger carriers also bear certain expenses for the main railway networks within the framework of the current legislation. Maybe they do not cover all the costs of KTZ, but some part of it is covered. Therefore, when it is proposed to nullify the services of the backbone railway networks to passenger carriers, including those in commercial areas, KTZ is proposed to give up even the part of the income that the company received. So now we will not only support all passenger traffic but also pay more than the zero tariff. At the same time, the passenger obligations are not included in the concept; there are no guarantees that the fare for tickets will be lower. We need tools that can influence passenger transportation," Yelena Papadopoulos suggested.

Following the results of the meeting, the experts supported the proposal of Yevgeniy Bolgert, Member of the Board of the National Chamber of Commerce, to finalize the comments made by the business.