Presentation by David Toft

1. MARKET STUDY: JUSTIFYING THE
NEED FOR PUBLIC INVESTMENTS IN
THE TRANSPORT SECTOR
David Toft
SST-CONSULT /Kommunalkredit Public Consulting
Promoting Clean Urban Public Transport in Kazakhstan:
Designing a Green Investment Programme
13 December 2016, Astana

2. • Purpose:
– Justify the need for public support in the transport
sector
– Identify main areas of risk to programme
implementation
– Provide basis to respond to the questions: who? what?
where? how much?
Market study – purpose and content

3. • Content:
– Legal and regulatory overview for the transport sector
– Current air pollution in cities of Kazakhstan
– Current state of public transport in larger urban areas
– number and age of buses, availability of clean fuels
and clean technologies
– Domestic bus production
– Basis for estimating financing package for investment
programme and optimal subsidy to potential
beneficiaries
Market study – purpose and content

4. Legal and regulatory overview
Legislation Comments
Law on automobile
transport
• Regular transportation of passengers provided by carriers using buses,
minibuses, and trolleybuses according to agreed routes and schedules
• Buses and minibuses must comply with the requirements of national
standards
• Establishes bus categories
Rules of
transportation of
passengers and
baggage by
automobile transport
• What entities may organise a tender for providing services on
transportation routes
• Successful tenderer is selected based on a point system comprising the
bid price and maintenance of service quality and passenger safety. The
final score also depends on the age of the buses and microbuses
provided. In the event of tie scores, preference is given to providers using
vehicles produced domestically
• Fares may be set at a lower level than the bid prepared according to the
tariff methodology. If the tariffs established by local authorities do not
cover the cost of transport, the provider is reimbursed the difference
from the corresponding budget
• Establish the standard contract for service provision.
Standard contract
for organisation of
regular automobile
transportation of
passengers and
baggage
• Transport providers obliged to upgrade (replace) buses, minibuses, and
trolleybuses used in the route not later than two years from the limits
imposed in accordance with a standard schedule

5. Schedule for bus replacement
Age of buses,
minibuses,
trolleybuses
Quantity of buses,
minibuses, trolleybuses
2-3 4-6 7-10 11-15 16-25 26-50 51 and
more
up to 7 years + + + + + + +
from 7 to 12
years
50
%
25
%
20
%
20 % 20 % 20 % 20 %
from 12 to 15
years
- 25
%
25
%
25 % 24 % 22 % 21 %
more than 15
years
- - - 4 % 6 % 10 % 15 %

6. • State programme for infrastructure development
“Nurly Zhol” for 2015 – 2019
• Share of worn out buses on regular passenger
routes should be reduced by 50% by
State programmes
Indicators 2016 2017 2018 2019
Reduction in share of worn
out buses on regular
passenger routes
65% 60% 55% 50%

7. Emission requirements
Emission
class
Limit values of emissions
CO
g/kWh
NMHC
g/kWh
CH4
g/kWh
NOX
g/kWh
PM
g/kWh
4 4.0 0.55 1.11) 3.5 0.032)
5 4.0 0.55 1.11) 2.0 0.0322)
Source: TR OF CU 018/2011, Appendix 4.
Notes:
1) Only for engines operating on compressed natural gas (CNG)
2) Only for engines operating on diesel fuel
• EURO V standards for buses with gas or diesel
engines will come into force from 1 January
2018

8. • Technical requirements of buses – domestic and
imported
• Customs taxes on buses: 0 to 15%. A zero percent
tariff is set for EURO IV and V vehicles of special
size and capacity
• Energy efficiency in transport
Other regulated issues

9. • Framework and opportunity exist to replace old,
depreciated bus fleets with modern buses
powered by cleaner fuels
• For the majority of transport vehicles directly
depending on oil for fuel, consumption and СО2
emissions are positively correlated
• Actions aimed at increasing fuel efficiency will
also positively impact urban air quality
• Targeted programme can be used to increase
incentives to invest in new bus fleets and take
advantage of operating cost savings
Conclusions

10. • API index scale: 14 cities with low levels of pollution,
three cities with an increased level of pollution and
five cities with high level of pollution, namely, Ust-
Kamenogorsk, Almaty, Zhezkazgan, Shymkent,
Karaganda and Temirtau
• Replacement of outdated buses with natural gas-
powered or modern diesel-powered buses will help
reduce pollution of particular matter, as well as NOx
and SO2
Air pollution

11. Public transport
Fleet by
age
<5 years 5-10
years
10-15
years
>15 years Total
Number
of buses
4 458
(36% of
total)
3 965
(32%)
1 640
(13%)
2 251
(18%)
12 314
Fleet by
fuel type
Diesel Gasoline CNG LPG Total
Number
of buses
9 407
(76%)
1 203
(10%)
1 190
(10%)
514 (4%) 12 314

12. Public transport
City
Pop.(‘000)
No. of
providers
Buses
Total
Ownership Size Age Fuel
Private
Public
Owned
Leased
Minibuses
Largebuses
>15years
10-15years
5-10years
<5years
Diesel
Petrol
CNG
LPG
Kostanay 231.9 9 0 427 296 131 8 419
421
(98.5%)
0 0 6 (1.4%)
427
(100%)
0 0 0
Shymkent 885.7 29 0 1,685 552 1133 492 1,193 61 (3.6%)
117
(6.9%)
880
(52.2%)
627
(37.2%)
1385
(82.1%)
0
200
(11.8%)
100
(5.9%)

13. • Buses with CNG, LPG or modern diesel-powered
engines provide a suitable replacement for outdated
and fully-depreciated diesel models currently in
operation
• Reduced pollution and operating cost savings
• CNG may require additional infrastructure in some
cities
• Modern diesel buses are equipped with filters to
ensure emission reductions are met. This equipment
increases operating costs, leading some operators to
dismantle the equipment. It is important that this
practice be discouraged and avoided
Overview of clean technologies

14. • In 2015, the production of natural gas in gaseous and
liquid forms reached 45 506.5 million m3, including:
• natural gas in gaseous form – 21 493.7 million m3,
of which 12 008 million m3 is marketable gas
• liquefied natural gas – 251 million m3
• associated petroleum gas, except petroleum
gases obtained during distillation of crude oil – 23
761.8 million m3
• Almost 90% of natural gas in gaseous state was
produced in the West Kazakhstan region, 6% in the
Mangistau region, 1.8% in the East Kazakhstan
region, and 1.4% in the Zhambyl region
Gas production

15. Gas pipelines

16. • Using CNG or LPG for buses will bring operating cost savings
due to the lower costs of these fuels compared to diesel
• Improved diesel fuel, however, such as EURO V and VI can
also be viable alternatives where CNG and LPG are not
available
Fuel retail prices
Fuel type
Unit 2013 2014 2015 2016 Source*
Gasoline
Gasoline AI-80 KZT/liter 88 89 88 89 1
Gasoline AI-92 KZT/liter 111 119 111 124 1
Gasoline AI-95,96 KZT/liter 141 149 138 139 1
Gasoline AI-98 KZT/liter 161 165 155 155 1
Diesel Fuel
Diesel fuel KZT/liter 105 - - - 1
Winter Diesel fuel KZT/liter - 155 149 152 1
Summer Diesel fuel KZT/liter - 110 97 98 1
Natural Gas
Gas (natural)** KZT/m3 11 13 14 15 1
CNG KZT/m3 50 53 56 58 2
Liquefied Gas
Gas, (liquefied)** KZT/kg 131 142 132 133 1
Gas liquefied** (in
balloons)
KZT/balloon (=50 l) 2602 2607 2172 2096 1
LPG KZT/kg 116 110 89 85 3
LPG on filling
stations (estimate)
KZT/liter 51 4
Sources: 1.Statistics Committee of the Ministry of National Economy of RK; 2.KasTransGaz Onimderi LTD; 3.Information-analytical centre for oil and
gas of the Ministry of Energy of RK; 4.Estimate based on retail prices of dominant enterprises in the retail sale of LPG for motor vehicles (from website
of the Committee for Regulation of Natural Monopolies and Protection of Competition).
**Gas transported through distribution networks

17. • Kostanai oblast: IVECO buses by SaryarkaAvtoProm, LLP
• East Kazakhstan oblast: Daewoo buses by Daewoo Bus Kazakhstan, LLP
• Almaty: Hyundai buses by Hyundai Auto Truck & Bus, LLP
• 295 vehicles for transportation of 10 or more people were produced in
2015 (Committee on Statistics of the Ministry of National Economy)
• 225 passenger buses produced, of which 7 produced by Daewoo with
CNG engine (Ministry of Investments and Development)
• Daewoo: in 2016 produced 35 CNG-powered buses
• VanHool Engineering is planning to establish a bus production facility in
the Kyzylorda region
Bus production

18. • Bus imports: in 2015 a total of 1 630 passenger buses
were imported, 1 419 of which were new and 204 used
• By engine type: 331 buses were diesel, 1 292 were
spark ignition engines (petrol or gas), and 7 other types
of engines
Bus imports

19. • CNG bus: KZT 46 million; discounted for large orders:
KZT 30 million
• CNG bus (imported): KZT 33-62 million; discounted for
large orders: KZT 23-30 million
• LPG bus: KZT 42 million; discounted for large orders:
KZT 30 million
• Diesel bus (EURO V or VI): KZT 38 million; discounted
for large orders: KZT 20 million
Bus prices for the Programme

20. • Three project pipelines. Replacement of the old bus fleet
in urban centers with modern buses equipped with
engines that run on:
• Compressed Natural Gas (CNG)
• Liquefied Petroleum Gas (LPG)
• Diesel, but considering the import of EURO V fuel
• The proposed pipelines are intended to support the
purchase of new buses and not just the modernisation of
engines
• Side investments to improve the transport system in urban
centers (e.g. the creation of bus lanes and smart traffic
control)
• Cities of Shymkent and Kostanay serve as pilot cities for
CNG and LPG/diesel, respectively
Justification for the Programme