BAKU, Azerbaijan, November 28. The European Bank for Reconstruction and Development (EBRD) is set to play a pivotal role in supporting Kazakhstan’s ambitious economic reforms, with plans to invest at least 2 billion euros over the next five years in sustainable infrastructure projects, said Huseyin Ozhan, EBRD Managing Director for Central Asia, in an exclusive interview with Trend.
This announcement follows a recent meeting between the EBRD President, Odile Renaud-Basso, and Kazakh officials, where the government’s vision to double GDP by 2029 and improve the investment climate received positive feedback.
"The implementation of such ambitious plans will require financing from public and private sources, international development banks, and the use of the public-private partnership (PPP) model," he said.
A significant portion of the EBRD’s investment will focus on water security and the sustainability of water supplies. "We aim to support better water sector management and irrigation, ensuring long-term sustainability in this critical area," Ozhan emphasized.
EBRD's focus on strengthening the transport sector
The EBRD is also committed to advancing Kazakhstan’s transport sector, which is integral to the country’s strategic development. "Funds will be channeled towards the construction, rehabilitation, maintenance, and expansion of key road, rail, and other networks," Ozhan noted. This includes support for the Trans-Caspian International Transport Route (TITR), a vital route for regional connectivity.
Additionally, the bank plans to assist in modernizing Kazakhstan’s logistics sector, aligning with broader efforts to enhance the nation’s economic competitiveness.
"These investments are not only about improving infrastructure but also about fostering a sustainable, modern economy that can achieve its ambitious goals," said Ozhan.
As trade volumes between Asia and Europe continue to grow and because geopolitics is disrupting existing trade corridors, Kazakhstan’s role as a trade and cargo transit partner is set to increase, said Huseyin Ozhan.
"The EBRD has been working for years with public- and private-sector companies in Kazakhstan to optimize transportation and improve operational efficiency," he said.
In late October, during a visit by EBRD President Odile Renaud-Basso to Astana, the Bank reached a strategic cooperation agreement with Kazakhstan Temir Zholy (KTZ - Kazakhstan Railways). "This partnership aims to modernize the railway carrier's infrastructure, improve corporate governance, and align operations with ESG standards," Ozhan explained.
The EBRD plans to allocate up to 750 million euros for several infrastructure projects under this agreement in the coming years, further solidifying Kazakhstan’s role in regional and global trade.
"Our Bank operates in Kazakhstan based on its five-year country strategy, approved by the Board of Directors in 2022. It is built on three pillars: fostering private sector competitiveness and connectivity, supporting the green transition to carbon neutrality, and promoting economic inclusion and gender equality," he said.
Aligned with the Enhanced Partnership Framework Arrangement (EPFA) signed with Kazakhstan, the strategy also emphasizes advancing digitalization and building a green and inclusive economy.
Transforming public transportation
Further speaking, the managing director added that the EBRD has allocated 10 million euros to support the tram management company in Kazakhstan's Pavlodar, a major investment aimed at enhancing the city’s public transportation infrastructure.
The decision to focus on Pavlodar, located in the northeast of Kazakhstan, comes as part of the EBRD’s ongoing commitment to sustainable urban development and the improvement of transport systems across the country.
"The Pavlodar tram management company has been our client since 2015," he said. "This company plays a crucial role in the city, handling almost 40 percent of passenger traffic in Pavlodar, which has a population of over 360,000. Our investment will significantly support the city's efforts to modernize its public transport".
The funding will be used to acquire new battery-powered trams, a key component in improving the city’s transport infrastructure. These modern trams will have an autonomous driving range of up to 20 kilometers, which is especially beneficial during electricity outages. "These trams will continue to operate even when the power goes out, helping to keep traffic congestion to a minimum," Ozhan explained.
The introduction of these battery-powered trams is expected to have a dual impact. Not only will they reduce the reliance on traditional catenary lines, but they will also enable the expansion of the tram network without the need for additional overhead infrastructure. This approach aligns with the EBRD’s goal of promoting environmentally friendly and efficient transportation solutions.
"We at the EBRD have a strong preference for trams, which offer ecologically friendly and fast means of transportation," Ozhan added. The introduction of these modern, battery-powered trams is seen as an important step in improving the city’s public transport while minimizing its environmental footprint.
Active participation in the Foreign Investors Council
"We have enjoyed excellent cooperation with both the central and regional authorities, as well as the business community, which has allowed us to become the largest continuous banking operation for the EBRD in Central Asia," said Ozhan. Over the years, this partnership has led to transformative projects that have contributed to Kazakhstan's growth and modernization.
A key element of the EBRD’s involvement in Kazakhstan has been its active participation in the Foreign Investors Council (FIC). For 26 years, the bank has co-chaired the FIC, which has been instrumental in creating a better investment climate and attracting much-needed foreign direct investment. Ozhan emphasized the importance of this role, noting, "The FIC is a driving force for facilitating foreign investments and provides a vital platform for dialogue between foreign investors and the authorities of Kazakhstan".
The FIC has become a crucial forum for addressing important economic and policy issues, with working groups that focus on a wide range of topics. "These working groups serve as an important platform for discussing global trends such as climate change, decarbonization, regional connectivity, and digitalization," Ozhan explained. "The FIC allows us to elevate key issues to the highest level and resolve them efficiently, contributing to Kazakhstan's continued development".
Long-term green transition goals
Moreover, the EBRD and Kazakhstan have agreed to develop a comprehensive long-term cooperation strategy aimed at achieving carbon neutrality in the country’s power sector by 2060. "We are working closely with Kazakhstan to achieve the carbon neutrality of the power sector by 2060," he said. "As part of this, the EBRD is the largest investor in Kazakhstan’s renewable energy sector, and we are focusing on integrating new renewable energy capacity into the national grid".
The EBRD’s involvement extends beyond investments in green energy. The Bank is collaborating with Kazakhstan Electricity Grid Operating Company (KEGOC) to improve the country’s electricity grid infrastructure, making it more adaptable to renewable energy sources. This collaboration is critical to the successful integration of renewable energy into the grid and to maintaining a stable energy supply as Kazakhstan moves toward its carbon-neutral goal.
In addition to its work with KEGOC, the EBRD is actively involved in several green initiatives throughout the country. "We are particularly proud of the EBRD Green Cities program, which is being implemented across Kazakhstan," Ozhan noted. "Additionally, the $150 million Kazakhstan Green Economy Financing Facility II, launched last year, is already helping hundreds of companies and thousands of households modernize production, increase energy efficiency, and improve climate resilience".
The EBRD’s commitment to sustainable development aligns with its broader global strategy. "All of our operations are Paris-aligned as of the end of 2022," Ozhan added. "Several years ago, we adopted a Green Economy Transition (GET) approach, under which we pledged to scale up climate and environmental finance to more than 50% of our annual investment by 2025".
The EBRD has made significant strides in green finance, with every project it finances in Kazakhstan incorporating a strong green element. "We can safely say that all projects we finance in Kazakhstan have a significant green component," Ozhan concluded, reaffirming the Bank’s dedication to promoting environmental sustainability in the region.