Carriers and manufacturers: everyone has their own truth

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JSC "NC" KTZH" asks to raise the tariff for cargo transportation

The national company sent a relevant notification to the Committee on Regulation of Natural Monopolies and Protection of Competition of Kazakhstan.

On this occasion, at the National Chamber of Entrepreneurs "Atameken" was held a discussion with the participation of major shippers of Kazakhstan and leadership of "Kazakhstan Temir Zholy".

The meeting was opened by Deputy Chairman of NCE "Atameken" Yuliya Yakupbaeva. She noted that the growth rates concerns all consumers of JSC "KTZH-Transport", as it directly affects the level of competitiveness of production of the enterprises both in domestic and foreign markets, and could have negative consequences for the economy as a whole.

However, in the current crisis conditions, the level of tariffs will also affect the economic condition of JSC "KTZH-Freight" as the basis for the increase in tariffs is a repayment of principal on the loan agreements and payment of interest on loans, as well as increased cost of diesel fuel.

In general, it is clear that the task of finding balanced solutions to ensure compliance with the interests of both service providers and consumers today is the most important.

President of KTZH Kanat Alpysbayev outlined that we are talking about raising prices for the services in part of the locomotive traction on average by 10.2%.

"Taking into account the previously approved coefficients to tariffs for services of the main rail network for the period 2016-2020 years, which implied an annual average increase of 4%, however, the increase in the overall rail fare in 2017 will amount to 6-8%", - said Kanat Alpysbayev.

As for prices for the provision of wagons, the existing conditions of acute shortage of rolling stock, and devaluation processes in the CIS, they also tend to increase.

“It should be noted that the railcar component is derived from state regulation since the New Year. KTZH started talks with many major producers of goods and products on how we can support the load associated with the deficiency of the park. We, as the railway administration are ready to negotiate on attraction of the park, if necessary, but it is clear that we can’t work at a loss. If we do not reach a certain tariff level, the attraction of the additional park is out of question", - said the President of Kazakhstan Temir Zholy.

As an example, he cited the neighboring Russia, where the tariff for wagons are two times higher than in Kazakhstan. A tender on the electronic trading platform RaiCommerce on 23^rd of December with participation of JSC "Kaztemirtrans", private operators of wagons, has established a new price of 6360 tenge per wagon per day. According to Kanat Alpysbaev, KTZH today covers only 40% of the traffic, for example, the lack of half wagons for the next year will amount to 6000-7000 units.

"The question of raising tariffs for rail freight rises over the past two years. But today, in an environment where the state does not regulate the price of petroleum products, the company can’t keep the rate at the same level as it has to buy fuel at market prices", - said the President of KTZH.

Yuliya Yakupbaeva stressed that the middle ground in the issue of tariff formation can be found only through open dialogue of both sides - KTZH and shippers.

"We call on business to provide a clear rationale and show the share of the transport component in the cost of their products in order to understand how it will change, if the increase of the tariff for freight services will be approved. These data is necessary to ensure that the National Chamber could convincingly present your interests in the consideration of this issue at the Government", - said Yuliya Yakupbaeva.

Executive Director of the Republican Association of Mining and Metallurgical Enterprises, president of the Union of Producers and Exporters of Kazakhstan Nikolai Radostovets said that, for example, the cost of railway component in the price of Shubarkul coal is 35%. He noted the tariff increase for locomotive traction services by more than 7% will have a negative impact on the competitiveness of products of Kazakhstani mining and metallurgical complex

Nikolai Radostovets urged KTZH to consider carefully the issue of the reduction factor for the transport of such socially important goods, such as coal and ore. And in conditions of acute shortage of rolling stock to apply a systematic approach for its more effective use.

"We break the contractual obligations, we can’t supply coal to Kyrgyzstan, to Russia, a big problem with the supply of ore. There are not enough wagons. And we are concerned about it", - said Nikolai Radostovets.

He urged his colleagues, shippers, clearly define with KTZH the volume of cargo transportation, which the national company can ensure. To transport the rest volume, by the example of previous years, to think about buying own rolling stock fleet.

"Given that several factors influenced the rise in the cost of transport and, in particular, the fact that virtually no inventory of the park will now be available, the park will be private this year. And this is quite a serious rise in yields. We would like to see other components of the tariff to be kept at the same level, perhaps even artificially this year, so that we might live through one-off spike in prices", - said the vice-president of the Eurasian Industrial Association Elena Papadopoulo.

She also considers it possible to increase the tariff for the services of locomotive traction to no more than 7%.

The President of the Association "Kazakhstani Union of Oil and Fat" Turlan Koishybayev noted that today the price of products that produce local companies - members of the Union, is on the verge of purchasing power, and this can’t be overlooked.

"We produce food products, designed for the mass market. This is not an elite product, it is the products that consumes 95% of the population. If the cost price increases, and it will grow by no less than 5%, this will have a negative impact on the Kazakhstani producers, not just oil and fat products. Of course, Kazakhstanicounters will not go without the product, other manufacturers will replace them", - said Turlan Koishybayev.

In general, the participants expressed the view that it is necessary to carefully consider the issue of increasing tariffs for railway transportation, including components on locomotive and wagon traction to avoid a sharp increase in prices of goods and products.

Summarizing all speeches, Yuliya Yakupbaeva noted that all business proposals will be taken into account, and calculations were submitted to the Committee on Regulation of Natural Monopolies and Protection of Competition.

"Based on our discussions, we came to the conclusion that the allowable rate increase of locomotive traction can’t exceed the planned level of inflation. In January, it is planned to hold a large meeting to discuss ways to solve the situation with wagons, taking into account all approaches, including those produced in the framework of the work of the Subcommittee of transport logistics of NCE RK "Atameken". All of this will be reported on the meeting in the Government ", - summarized Yuliya Yakupbaeva.