Strengthening connectivity in Kazakhstan through competitive infrastructure development

Kazakhstan’s vast geography, landlocked position and infrastructure gaps have long constrained its domestic integration and international competitiveness. While the country plays a strategic role as a transit hub between Europe and Asia, its connectivity networks – including airports, roads, railways and logistics centres – have faced persistent challenges related to ageing assets, operational inefficiencies and limited private-sector participation, resulting in increased costs and safety challenges for users, as well as uneven regional development.

Infrastructure operators have struggled to effect change due to limitations on access to long-term financing, weak corporate governance and insufficient capacity to adopt modern technologies and international standards. National policy was also holding back progress – the enabling environment for private-public partnerships (PPPs) and private investment required strengthening, including road-sector reforms around tolls, safety frameworks, asset management practices and low carbon construction standards. Addressing all of these gaps was critical for improving connectivity, crowding in private capital and supporting more inclusive and sustainable growth.

To improve Kazakhstan’s national and international connectivity, the EBRD focused on raising the quality, reliability and sustainability of the country’s transport networks. Stronger institutional capacity, commercial practices and governance standards were needed to achieve this, and the EBRD delivered by combining investments with complementary advisory support and in-depth policy engagement across aviation, road and rail networks.

The Bank’s investments in 2022-25 prioritised the modernisation and expansion of critical infrastructure, and the resulting service improvements and enhanced regional connectivity are expected to benefit more than 2 million people across Kazakhstan.

In the road sector, EBRD financing focused on the rehabilitation of strategic national and regional corridors, improving travel times, safety and reliability along critical routes for domestic integration and international transit. Since the creation of national road operator KazAvtoZhol in 2013, the EBRD has supported the construction of more than 600 km of public roads from the company’s growing network of 25,000 km connecting the country. Providing sovereign loans, the EBRD helped to overcome challenges of under-budgeting by the state-owned enterprise, enabling it to fast-track road development. Leveraging a PPP model helped KazAvtoZhol to overcome foreign-exchange linked financial challenges, introducing a shift to a more competitive financing model for large-scale infrastructure projects.

Another flagship project was the 66 km Big Almaty Ring Road (BAKAD), a first-of-its-kind PPP in Kazakhstan that was completed in June 2023 and has strengthened road connectivity for an estimated 55,500 vehicles per day. The landmark project represented a transition from municipal-budget-funded roads to a user-pays PPP model, and its success in boosting operational efficiency and cost recovery in road management has provided a model for private-sector participation in long-term road asset management.

EBRD investments have also facilitated the introduction of digital technologies such as electronic tolling, weigh in motion and intelligent transport systems, helping strengthen traffic management, toll enforcement and cost recovery. This ultimately enables better operational performance of road management companies and lays the foundations for financially sustainable road operations.

A simultaneous programme of policy engagement has supported broader improvements in governance, competition and transparency for infrastructure development. The Bank’s assistance in drafting recent amendments to the PPP Law implemented in 2025 and updates to the Concessions Law in 2026 have helped provide clarification around competitive tendering rules, limits on direct negotiations, risk allocation and state obligation ceilings.

The Bank has also encouraged further private-sector participation in the aviation sector, including by supporting a reduction in the state’s previous majority stake in Air Astana. The firm’s first initial public offering reduced state ownership to 41 per cent from 51 per cent, helping to improve commercial discipline, accountability and board independence. It has also sent a strong demonstration signal about privatisation and capital‑market‑based reform in state‑dominated sectors.

Sustained EBRD engagement is supporting a structural shift in how large-scale infrastructure projects are financed, delivered and managed. Kazakhstan is moving away from heavy state ownership towards commercially disciplined, competitive approaches with reduced reliance on public funding, leading to improvements in efficiency, transparency and long-term sustainability.

Demonstrable results such as the BAKAD PPP, the operationalisation of electronic tolling and the adoption of tariff reform have helped evolve perceptions among public authorities, investors and operators about viable delivery models. These projects have proven that private operators can competitively design, finance, operate and maintain complex transport assets under clearly structured contracts with defined risk allocation and cost‑recovery mechanisms.

These successes have triggered wider market effects. The concession model has reduced perceived regulatory and execution risk for private investors and lenders, supporting increased interest in long-term infrastructure concessions and PPP based maintenance contracts beyond a single asset. As well as the projects mentioned above, the EBRD had supported a further three PPP infrastructure projects as of the end of 2025 , including a notable hospital development, providing evidence of continued public and private appetite for this model.

Performance based road maintenance contracts have also shifted the market, moving it from construction focused contracting towards service oriented outcomes, and incentivising lifecycle efficiency, innovation and accountability.
In aviation, the reduction of state ownership in Air Astana through a landmark IPO reinforced these dynamics by demonstrating that commercial discipline, independent governance and capital market participation are feasible even in traditionally state dominated sectors.

Overall, Kazakhstan’s infrastructure development is now increasingly supported by a pipeline of bankable projects, capable institutions and private operators, rather than relying solely on public funding and ownership. This represents the start of systemic change in market structure and behaviour, with long-term implications for the country’s capacity to deliver sustainable infrastructure at scale.

Kazakhstan’s strategic position as a bridge between Europe and Asia, combined with a strong government commitment to improve domestic and international connectivity, created a favourable environment for reform. Connectivity features prominently in national development priorities, including openness to new delivery models such as PPPs and digitalisation, enabling investment and reform to progress in parallel.

A key success factor was the EBRD’s integrated approach, combining long‑term investment with policy dialogue and targeted technical support across multiple transport subsectors. Rather than focusing on single transactions, the Bank supported a transition from traditional, state‑financed infrastructure delivery towards more performance‑oriented, commercially sustainable models.

Importantly, EBRD support extended beyond infrastructure delivery to improving governance, risk allocation and lifecycle asset management practices, helping to shift the sector from reactive, construction‑focused approaches to more strategic, data‑driven management of infrastructure assets.

Strategic partnerships

Close cooperation with the government, sector ministries and state‑owned infrastructure operators was essential for successful implementation. Strong client ownership allowed reforms to be embedded within national systems and supported continuity across multiple projects.Partnerships with private sponsors, lenders and co‑financiers were equally important, particularly in structuring PPPs and mobilising long‑term capital. Coordination with development partners and donors helped align financing, policy reforms and institutional capacity building, reinforcing reform credibility and reducing perceived risks for investors .

Lessons learned

• First‑of‑a‑kind PPP projects play a critical demonstration role in mobilising private participation in traditionally state‑dominated sectors. Localising private-sector participation helps to encourage PPP delivery. It also helps to keep projects moving forwards, reducing the potential for project fatigue.
  
  
• Clear risk allocation, transparent procurement and predictable revenue frameworks are essential to crowd in long‑term private capital.
  
  
• Pilot projects and phased implementation with a test-demonstrate-scale approach are effective for introducing new technologies and practices, particularly in sectors undergoing institutional transition.
  
  
• Digitalisation of infrastructure systems strengthens governance, transparency and financial sustainability and should be integrated early in project design.