(bne) – Vision Transportation Systems has designed an ultra-modern transport system for Kazakhstan’s capital Astana. The international project management company’s CEO and chairman, Richard Courey, lays out the plans and tells bne why infrastructure projects will help lift Kazakhstan out of the economic crisis.
By Clare Nuttall (business new europe)
The system that Vision has designed is an elevated railway, with stations within walking distance of 78% of Astana’s population. Trains will travel at 44.2 kilometres per hour, twice the average speed of Astana buses today, and more than three times their forecast speed – just 15.4 km/h – in 2040.
Vision started developing the New Transport System of Astana – known as NTSA – in 2006, drew up detailed plans and got the backing from the Ministry of Transport in December. Approval for its revised feasibility study based on Kazakhstan’s new concessions law – which must be endorsed by the agency in charge of public-private partnership (PPP) projects as well as the ministries of transport and environment – is expected in the near future.
Compared to over-crowded, polluted Almaty, Astana seems at first glance to be in less need of a new transport system. However, the increases in population and private car ownership in recent years are already putting pressure on parts of the city, and this is set to increase. “When the Dubai metro system was being planned, the city didn’t have a traffic problem, but today it is gridlocked in many places,” points out Courey. “Astana had a population of 574,000 in 2007, which is forecast to increase to 1.2m by 2040, as more people emigrate to the capital. The current population generates more than 515m passenger trips a year; this will increase to 970m, causing a dramatic fall in average travel speed.”
A study carried out by Vision found that 80% of the population would pay up to double current public transport fees – KZT60 per journey – for a system that was fast, reliable, comfortable. A majority of public transport users said they were dissatisfied with the lack of reliability, long waiting times and discomfort on Astana’s buses and trolleybuses.
Kick-starting the economy
In October 2008, Vision calculated that the total project cost would be $1.43bn, of which $519m would be equity and the remainder debt. That price may be revised downwards somewhat, given the lower cost of construction materials since the second wave of the crisis hit. “It’s a doable project,” says Courey. “A good chunk of the equity is already secured. Raising the rest of the equity and leveraging debt will be a challenge, but we are confident we can do it. We will find creative ways.”
“This project will create 12,490 jobs, result in technology and knowledge transfer to Kazakhstan, and save one hour a day for transport users in Astana. Returns – just in fare payments over the 30-year concession period – will be almost $3bn.”
Courey describes how, when the British left Quebec – where Vision is headquartered – taking much of the capital in the region with them, the government in Quebec decided to build what were then the largest hydroelectric power plants in the world. “This created jobs, attracted capital and got the economy going again,” he said. “Another example is the Golden Gate Bridge in San Francisco, which was started in the depths of the Great Depression. It put people back to work, built trust in the economy and created an asset that would last for generations to come. I believe in kick-starting economies this way.”
He also believes in Kazakhstan. “This country has been through much worse than it is experiencing today. There was the break-up of the Soviet Union, then the Asian crisis in the late 1990s. It was in the midst of the Asian crisis that the government decided to move the capital to Astana. 10 years ago, no one could have imagined what this city would look like today.”
According to Courey, Vision makes strategic moves into new countries based on their leadership and geographic position. “Kazakhstan’s geography is ideal, and it has strong and benevolent leadership. Its infrastructure market is already mature, although in terms of finance and the use of PPP it’s an emerging market,” he says. “Completing the Astana NATS project is intended to create a showcase for future work in Kazakhstan and the rest of the CIS region.”