World Bank Backs $1.41bn Rail Upgrade in Kazakhstan

The Middle Corridor has emerged as a key alternative trade route connecting China and Central Asia to Europe via the Caspian Sea, the South Caucasus and Türkiye.

The World Bank’s Board of Executive Directors has approved an $846 million IBRD guarantee to unlock $1.41 billion in long-term commercial financing for a transformative rail infrastructure project along Kazakhstan’s section of the Trans-Caspian International Transport Route (Middle Corridor).

The Transforming Rail Connectivity in Kazakhstan (Middle Corridor Development) Project aims to modernize the country’s rail network, strengthen the financial sustainability of national railway operator Kazakhstan Temir Zholy (KTZ), and position Kazakhstan as a critical Eurasian transit hub linking Asia and Europe.

Strategic Boost to the Middle Corridor

The Middle Corridor has emerged as a key alternative trade route connecting China and Central Asia to Europe via the Caspian Sea, the South Caucasus and Türkiye. Freight volumes along the corridor have surged in recent years amid shifting global trade patterns and geopolitical realignments.

The new project is expected to:

• Triple freight volumes along Kazakhstan’s Middle Corridor segment by 2030

• Cut end-to-end transit times by half

• Reduce congestion across heavily trafficked sections

• Enhance network resilience and reliability

“Beyond enabling critical infrastructure investments, this project supports important reforms that will strengthen Kazakhstan Temir Zholy’s financial sustainability and long-term competitiveness,” said Andrei Mikhnev, World Bank Country Manager for Kazakhstan and Turkmenistan. “By combining phased investments, institutional reforms, and private capital mobilization, we are helping build a modern rail system that will deliver lasting economic and environmental benefits.”

322-Kilometer Greenfield Rail Link

At the core of the project is construction of a 322.3-kilometer greenfield railway line between Mointy and Kyzylzhar. The new link will eliminate a 149-kilometer network detour, easing congestion and enabling faster, more efficient freight transport.

Key features include:

• Double-stack container capability

• Modern signaling and telecommunications systems

• Climate-resilient infrastructure design

• Provisions for future electrification and expansion

By shifting freight traffic from road to rail, the project is expected to significantly reduce transport-related greenhouse gas emissions, supporting Kazakhstan’s climate commitments and sustainable development objectives.

Institutional Reform and Financial Sustainability

A second component focuses on institutional strengthening and reform within KTZ. Technical assistance will support:

• Tariff reform to enhance cost recovery and competitiveness

• Exploration of alternative financing mechanisms

• Strengthening of financial and environmental management systems

• Preparatory work toward a future initial public offering (IPO)

The reform agenda aims to improve KTZ’s commercial viability while reducing long-term dependence on sovereign guarantees.

Innovative Financing Structure

The project is structured under a Multi-Phase Programmatic Approach (MPA), allowing phased implementation and adaptive learning over time.

The financing package mobilizes $1.41 billion in private capital, backed by:

• An $846 million guarantee from the International Bank for Reconstruction and Development (IBRD)

• A $564 million co-guarantee from the Asian Infrastructure Investment Bank (AIIB)

It forms part of a broader joint implementation plan for Middle Corridor development, combining the expertise and financing instruments of IBRD, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).

Economic and Regional Impact

Beyond infrastructure improvements, the project is expected to:

• Lower trade and logistics costs

• Improve access to domestic and export markets

• Stimulate job creation along the corridor

• Strengthen regional economic integration

• Enhance climate resilience of transport systems

As global supply chains continue to diversify, Kazakhstan’s strategic geographic position between Asia and Europe is becoming increasingly significant. The World Bank-backed rail modernization aims to anchor the country’s role as a reliable, competitive and environmentally sustainable transit and logistics hub.