End of an Era: Kazakhstan Opens Rail Freight Market After Years of Monopoly Rule

Kazakhstan is rewriting the rules of its rail freight game. Backed by presidential support, the country is pushing to break KTZ’s monopoly, open the market to private operators, and lay the groundwork for billions in private investment—all with one goal: turning Kazakhstan into a competitive transit hub between Europe, Asia, and beyond.

The Association of Rail Freight Carriers of Kazakhstan (ARFC) is advocating for greater transparency and market openness in the country’s rail freight sector. The organisation’s primary objective is to introduce competition by dismantling existing monopolies, which it argues will lead to higher service quality. This push has received support from the President of Kazakhstan.

As a strategic transit hub between Europe and Asia, and a potential link to the Indian Ocean, Kazakhstan already made initial attempts to establish a liberalised rail freight market in 2022. Under the government's current plan, private operators are expected to enter the national rail network from 2027.

The ARFC recently met with several government bodies, including the Antimonopoly Agency, the Ministry of Digital Development, and the Ministry of Transport, to discuss measures aimed at improving the rail freight sector. "The main goal is real competition in rail freight and sustainable, transparent market rules," ARFC stated.

State Monopoly and Regulatory Gaps Hamper Competition

According to ARFC, multiple problems plague Kazakhstan’s rail freight sector. Chief among them is the dominance of the national operator, Kazakhstan Railways (KTZ), whose monopoly position is seen as distorting market equilibrium. ARFC further criticises KTZ’s ambiguous status, as it simultaneously provides both commercial and government services without clear legal separation.

Additionally, the association points to a lack of long-term contracts and insufficient digitalisation across the sector. Although a new railway law has been adopted, many of its provisions remain unenforced due to the absence of necessary implementing regulations, ARFC notes. The meeting between ARFC and various government institutions was convened at the initiative of the Kazakh president, who plays a pivotal role in shaping the country's economic reforms. The association enjoys his backing in its reform agenda.

Clearer Infrastructure Access and Transparent Pricing Ahead

A key reform priority is to separate infrastructure management from train operations, while establishing clear regulations for network access. ARFC remains committed to ensuring equal access to Kazakhstan’s rail infrastructure and proposes a complete overhaul of tariff policies. "Losses and hidden subsidies have become chronic issues," the association explains. "ARFC advocates eliminating discounted tariffs without compensation, and shifting to a model where infrastructure is funded transparently and operators compete on market principles."

The proposed regulatory framework would include the establishment of an independent regulator tasked with monitoring competition conditions, infrastructure access, and particularly, tariff setting. Antimonopoly measures would help create a level playing field for all operators, ARFC argues, stressing that the regulator should operate independently of both KTZ and other government bodies.

Full Market Opening to Boost Private Investment

Kazakhstan’s Deputy Prime Minister Roman Sklyar revealed last year that KTZ had transported nearly three-quarters of all cargo below cost. As a result, tariff increases were deemed necessary as part of efforts to "improve tariff policies in the rail freight sector" and ensure its financial sustainability.

Ultimately, Kazakh freight operators aim to fully open the market and attract private capital. "Once access rules and institutional reforms are in place, the market should be opened to new operators, including on transit routes," ARFC states. "Competition is not a threat; it is the engine of efficiency, service quality, and Kazakhstan’s international transit potential."

Market liberalisation is viewed as a prerequisite for private capital participation in infrastructure investment. "Through public-private partnerships, concessions, and joint ventures. Private investment in terminals, locomotives, and rolling stock will not only accelerate development but also ease the strain on the state budget," the association concludes.

Sources: RAILTARGET; ARFC; RailFreight