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    [DETAIL_TEXT] => 
RZD: no losses

– Mr Levitin, what are the financial results of RZD’s work in 2009? And what are the plans for the next three years?

– The largest decline in the transportation sector took place at the end of 2008 and the beginning of 2009. During last year as a whole the situation in the transport sector was stable enough. Due to railway tariff indexation, funding from the federal budget, and measures to reduce expenditure, the company managed to avoid financial losses in 2009. 
Its loading volume decreased by 15% instead of 19%, as had been expected.
To forecast the financial figures over the next three-year period, the Scenario Conditions of Economy Functioning and the Basic Parametres of the RF Social and Economic Development Forecast in 2010 and the planned period of 2011 and 2012, developed by the Ministry of Economic Development, were taken into account. In 2010, the average daily loading will grow by 3.7% year-on-year, and cargo throughput will increase. Also, passenger throughput is expected to become stable.
This year, more than RUR 130 billion will be given from the budget, particularly to compensate for revenue losses suffered because of the state regulation of freight and passenger tariffs on goods to construct facilities to hold the Olympic Games in Sochi, etc.
The parameters of the financial plan and the investment programme were developed considering the launch of RZD’s subsidiary Passenger Company in the long-distance passenger transportation sphere. Thus, the purchase of passenger rolling stock was excluded from RZD’s investment expenditures.
In accordance with the financial plan, it was planned to invest RUR 118 billion into the capital repair of basic assets, and to repair 8,500 kilometres of track. Later, it was decided to increase the investment to RUR 126.6 billion through redistribution of the plan’s other expenditures and to repair 10,000 kilometres of track. To carry out the projects, RZD will invest RUR 210.5 billion of its own money, which is 94.5% of the volume it invested in 2009 (taking into account the Olympic projects carried out at the company’s own expense).
The parameters of RZD’s investment budget in 2011-2012 envisage a growth in comparison with 2010, and take into consideration only the investment projects started earlier. The total volume of investments into railway infrastructure renewal and development in 2010-2012 will amount to RUR 855.4 billion.
An important aspect of the financial plan is the sale of shareholdings in the company’s subsidiaries, although the sale dates for some of them have been postponed because of the economic recession. In 2010, revenue from the shareholding sale is expected to reach RUR 12 billion, and for the period to 2012 – RUR 92 billion, with RUR 23 billion of profit.
Also, this year they will continue the work to optimise the company’s borrowed funds structure, i.e. instruments, currencies, and time period. The company is going to give up short-term and expensive loans taken out with Russian banks. As for new instruments to attract loans, the company is putting its faith in the rouble bonds market, which is nowadays the best choice from a time-period standpoint (from three to seven years). Besides, the passive rate is lower than the cost of the bank loans. Also, the company is going to make use of active bonds, which are a new instrument on the internal market. To reduce the risks of the currency exchange rate impact on the financial results, RZD is going to decrease the share of currency loans to 14% by the end of 2010. The total forecasted financial result of the holding company in 2010 is RUR 21.9 billion. Of that, RUR 4.8 billion is the profit of RZD’s subsidiaries.
The planned investment budget of the holding company amounts to RUR 334.7 billion, and that of its subsidiaries is RUR 64 billion. 

– How many projects received support from the Investment fund in 2009?

– Last year, financing of a total of RUR18.5 billion was provided to five projects in the sphere of rail transport and five projects in the road economy sector. To attract private investment to railroad infrastructure, RZD issued infrastructural bonds. In order to renew the basic assets of road building and maintenance enterprises, a large specialised leasing company was formed on the basis of the State Transport Leasing Company. In 2009, RUR 10 billion was given from the Federal Budget to the company’s authorised capital.

– What is the Ministry’s vision for updating tariff policies?

– Since 2002, the growth of tariffs on transport services fell behind the rates of increasing wholesale prices for industrial output. But transport expenditures are now quite significant and their impact on the economic result of serviced branches is rather high.
The share of transport services costs in industrial and agricultural production price is reaching 15-20%. Meanwhile, the share of expenditure on material resources (combustive-lubricating materials, energy etc.) in the transportation cost amounts to 30-55%. Intense usage and a significant deterioration of basic assets impact on the transportation net cost too (the deterioration of different transport modes is 45% to 70%). 
In this social and economic situation the role of tariff policy as a state regulation instrument becomes especially important. In our opinion, the mechanisms of free pricing must combine with regulating and controlling functions to protect consumers’ and market players’ interests. The state’s interference in the market sectors where there is developed competition should be minimal. 
Tariffs on freight transportation are formed on the basis of expenditure on services, the market situation, and the demand. In these segments, unfair competition must be stopped, and we should force out the transporters who use price dumping, avoid taxes and the responsibility for service quality, cargo and passengers safety.
We count on cooperation with the associations of transporters and the authorities of the RF subjects to solve this problem. One of the basic principles of the tariff policy, in our opinion, is the compensation of all losses of revenue which appear as a result of state tariff regulation to all the subjects of natural monopolies.
We think that the principles of regulating tariffs for cargo-luggage transportation should be revised. Nowadays, this activity is not profitable for Russian Railways. Meanwhile, it is a high-quality service, because the cargo is carried at the same speed as passengers. 

Motorways: to be repaired in a new way
– What qualitative changes are expected to appear with the launch of the Russian Motorways State Company?

– We hope that Russian Motorways will become the basis for implementing innovations in the road sector. The norms of road design will be revised, progressive technologies of construction, repair and maintenance of a road network will be brought in, which will allow the building of high-quality motorways. The transfer to principally different contractual relations with subcontractors will be very important – we will conclude long-tern contracts envisaging the construction and exploitation of the motorways. 
The activity programme of the state company in 2010-2015 has already been developed. During this period, 537 kilometres of motorways are to be built and 934 kilometres are to be reconstructed. The total length of the company’s roads at the end of 2015 is to amount to 3,044 kilometres. Of that, the length of toll roads is to be 1,412 kilometres. The share of motorways of the 1st technical category is to amount to at least 67% of the company’s total road network. The total volume of capital investment over the period of the programme’s realisation will be RUR 1.487 trillion. Of that, RUR 515 billion must come from non-budget sources.

–  How will the non-budget sources be attracted?

– The major mechanisms to attract non-budget means to build and reconstruct motorways are concessions (the first ones were concluded in July 2009) and bond loans floatation. Also, a fee will be taken for using the motorways (tariff rates for all vehicles have already been set for the period of 2010-2015), for the sub-lease of the land, placing adverts plcement and road service facilities. These additional revenues will be spent on maintenance of the road network and realisation of new projects as well. These measures will reduce the volume of subsides given to Russian Motorways from the federal budget, so the funds will be invested into maintenance of other federal roads. 

The five constituents of civil aviation
– What measures is the Ministry of Transport taking to develop air transport?

– Our plans for civil aviation development has five basic constituents.
The first one is aerodrome infrastructure development. In 2009, state capital investments into aerodrome infrastructure building and reconstruction made in the framework of the Federal target investment programme amounted to RUR 22 billion. The Federal target programme “Russian Transport System Development (2010-2015)” envisages investment of RUR 300 billion into reconstruction of different infrastructure facilities in 116 airports. And 103 runways are to be upgraded to make them always available.
The second constituent is realisation of the programme “Modernisation of the Single System of Air Traffic Organisation in the Russian Federation (2009-2015)”, which envisages the development of aeronavigation, meteorological support and a single system of air search and rescue. The total finance for the programme’s realisation is to amount to RUR 82.1 billion. Of that, RUR 59.8 billion is to be invested from the federal budget.
The third point is the renewal of the aircraft park, without which air transportation development in Russia is impossible. According to our estimates, 550 modern airplanes are to be put into operation up to 2015 to keep the air transportation market competitive. A shining example of the systematic state approach to the national innovation support is the development of the Sukhoi Superjet 100 regional planes. 
The fourth constituent is civil aviation staff training and material support for the training process. 
The fifth point is anti-recession measures in the air transport sector. Since August 2008, the RF Government has been supporting Russian air companies. These measures concern credit conditions, target subsidies, and leasing payment refunds. 
Also, in 2009, we took steps to optimise the management structure in the sector. Thus, Rosaeronavigation was abolished last September. Its functions were given to Rosaviation and Rostransnadzor (Federal Service for Supervision in the Transport Sector). Strengthening Rosaviation means the stage-by-stage creation of a single federal body regulating civil aviation. Nowadays, the structure of aviation authorities is optimal and it meets the requirements of the International Civil Aviation Organisation (ICAO).

Ports rushing forward
– The major measures for sea and river transport infrastructure development were taken lately in the framework of the federal target programme “Modernisation of Russian Transport System (2002-2010)”. What are the achievements? What is to be done in the future?

– In 2002-2009, the capacity of Russian ports grew by 305 million tons; and more than 10 linear kilometres of wharfs were built; 152 commercial vessels with a total deadweight of 8.1 million tons were put into operation; 40 units of the fleet for national purpose were delivered. The investments into it amounted to RUR 443 billion. Of this, RUR 50.7 billion was given from the federal budget. In this period of time, the throughput of Russian ports grew by almost 2.5 times (203.6 million tons in 2001, 496.4 million tons in 2009).
Since 2010, the sea transport sector is to be developed in accordance with the federal target programme “Development of Russian Transport System (2010-2015)” (sub-programmes “Sea transport” and “Development of Transport Services Export”). The total volume of investments will amount to RUR 1.088 trillion. Of that, RUR 368.2 billion is to be given from the federal budget.
The capacities of the Russian ports are to increase by 454 million tons.
Basic measures will be targeted at creation of port capacities to handle coal (the ports of Vanino, Vostochny, Taman, Murmansk, Ust-Luga), liquid bulk (the ports of Ust-Luga, Kozmino, Novorossiysk, Tuapse), containers (the ports of Vostochny, Novorossiysk, St Petersburg, Ust-Luga). As a result, in 2016, the handling capacity of the ports will rise to 770 million tons per annum. Also, a 15% reserve in the port capacity is to be created.
Special attention will be paid to new vessel construction. There must be a breakthrough in this sphere in the next five years. And the launch of the United Shipbuilding Corporation is to make this happen. 
In 2009, the reform of inner waterways management started. Its Concept had been in development for more than three years. The reform has two stages – 2009-2011 and 2012-2015, which will help adjustments be made efficiently.
Bilateral relations with foreign countries play an important role in the activity of our Ministry. Nowadays, there are approximately 60 such agreements in the sea transport sector. Also, about 30 conventional and legal acts on cooperation on search and rescue in the sea are in force. For example, one of such agreements was signed with Sweden in November 2009. The agreement envisages cooperation in sea and air search and rescue in the Baltic Sea. 

– What issues in the water transport sector are interesting for Russia and the EU?

– In December 2009, a meeting of the working group devoted to this theme took place in Brussels. In particular, we discussed cooperation in the information exchange sphere, the activity of such regional organisations as the United Nations Economic Commission for Europe, HELCOM, the Danube Commission; interaction in the Black Sea region; issues in the state port control sector; cooperation in the framework of the International Sea Organisation and International Labour Organisation; interactions in the river transport sector.
Nowadays, a pilot project on exchange of information about the Baltic Sea between the Regional System of Safe Navigation in the eastern part of the Finnish Gulf and SafeSeaNet system is being carried out.   
Special attention is being paid to the issues of state port control in the framework of the Paris and Black Sea Memorandums, particularly, to the implementation of the new inspection scheme, which may influence changes in the principles of which vessels to inspect, their characteristic features from a potential danger standpoint, the frequency of inspections, administrative measures, and statistical data registration.

Strengthening international relations
– What aspects of cooperation with the CIS member states are a priority now?

– In road transport, we are elaborating the issues concerning the implementation of a permission-free system for transit freight transportation by road haulage in the CIS, possible changes of the current axle load norm for international transportation, development of roads approaching the borders with neighbouring states. 
The practice of joint project realisation continues. 
A pilot vehicle run started successfully. Its target was to organise international transit road transportation on the route China – Central Asia – Europe (the Silk Road) via the transport network of the CIS member states. Then the real situation on the route was summed up, bottle-necks and existing barriers were revealed, and recommendations for the transit countries were formed.
At their meeting in Baku in April 2009, the Transport Ministers of the Caspian region countries shared their opinions on transport complexes development and the forms of further cooperation. A result of the active economic cooperation in that region is the work of many states aimed at commercial fleet renewal in the Caspian Sea.

– Could you name the most promising projects of Russia and the EU?

– Transport and economic links between Russia and the EU were becoming stronger and stronger until 2008. Thus, in 2000-2008 the total transportation volume between Russia and 27 EU member states grew 2.5 times to 520 million tons. In 2009, due to the recession, the decline in the cargo transportation volume was 12-15% compared with 2008.
Russia and the EU have a rich experience in finding joint strategies for transport communications development. Thus, the Road map for the Common Economic Space and the High-Level Group Report were approved. The latter contains the directions of the joint activities for the parties’ transport infrastructure development. The Road map defines five basic transport corridors between the European Union and neighbouring states, and four of them cross the territory of the Russian Federation, which proves the importance of cooperation between Russia and the EU in the sector of transport infrastructure development.
We highly appreciate the Memorandum signed by the participants of the international conference “The future of Trans-European Transport Networks: building bridges between Europe and its neighbours” held last October in Naples. The Memorandum regulates the activity of transport and logistics partnership Northern Dimension. Now, all its participants are responsible for the development of the Northern Transport Corridor and the “Motorways of the Sea” project. No doubt, the realisation of this project will make for the strengthening of Russia’s relations with all the Partnership member states and transport communication and logistical ties development in the region. 
The creation of the international transport corridor “Barents-Link” and its integration with the Belkomur project on the West-East line may be interesting for realisation in the partnership frameworks. In this case, the new corridor will cross the territory of the Scandinavian countries, the northern part of Russia, then reach the Transsib and expand further to China.
Among the measures envisaged by the Transport Strategy and targeted at road transport development, we should mention the “Western Europe – Western China” project. 
It will allow Europe and Asia to joing by a more economically profitable link than similar middle and southern routes. The development of the Transsiberian Railway remains an urgent issue as well as the large international project envisaging the extension of the 1520 mm tracks to Bratislava and Vienna, and the construction of an international logistics complex on the Danube.
The further development of the Trans-European networks should be based on the following principles: coordination of the transport policy in the framework of the Transport Dialogue; assistance to Eurasian transport communication development with an accent on the link China- EU via the RF territory; simplification of border crossing procedures; legislation and technical standards harmonisation; provision of safe transportation and transport safety.
At the same time, there are a number of problems in relations between the EU and Russia concerning transport. For example, in Finland there are discriminating conditions for Russian road hauliers using large capacity vehicles. Remember, in June 1998, Finland implemented different requirements for the weight and size norms applied to the vehicles of transporters from the European Economic Space member states and other countries. 
As a result, Russian road hauliers are suffering additional expense. Meanwhile, according to the Intergovernmental Agreement on International Road Communication concluded on October 27, 1995, the norms set on the territory of each country must be equal for all transporters. For example, the weight norms in Russia are the same for Russian and foreign carriers.

– What are the most important international agreements concluded by the RF Transport Ministry lately?

– In the middle of October 2009 in Beijing, the RF Transport Ministry, the Ministry of Railways of the People’s Republic of China, and RZD signed a Memorandum on Understanding in the Organisation and Development of fast and High-Speed Railway Communication on the Territory of Russia. This document gives an impulse to the Russian – Chinese partnership. 
“The Strategy of Railway Transport Development in the Russian Federation to 2030” envisages fast and high-speed railway communication on the following routes: Khabarovsk – Vladivostok, Moscow - Sochi, and Moscow – Nizhny Novgorod. Chinese investments and technologies may be used for construction of high-speed motorways in Russia, in particular, for creation of the international transport corridor Northern China – Northern Europe. 
The RF Transport Ministry and the Italian Ministry of Infrastructure and Transport signed a Memorandum on Understanding in Rome in December 2009. The targets of the document are assistance to transport enterprises of the two states, joint project realisation; development of the cooperation in the transport safety sector; exchange of experience, qualified specialists, and advanced technologies for transport sector development. 
We expect closer cooperation in the transport sphere between Russia and Peru. In particular, to recommence air communication between the states, Aeroflot and Sky Team could join an international alliance. This will allow flights to Latin American countries using the network of routes of other air companies – members of the alliance. Another possible way out is the conclusion of commercial agreements by other Russian air companies and their foreign partners who make flights from Europe to Peru.
We are ready to develop and strengthen relations with Greece. Particularly, bilateral cooperation in the energy sector plays an important role here. The largest joint projects are the Burgas-Alexandroupoli oil pipeline and the Southern Stream gas pipeline. Our interaction in the transport sector remains stable. And the potential of our relations is very great.
At the end of January 2010, in Rotterdam, the governments of the RF and the Netherlands signed the Agreement on International Road Communication. According to the document, permission is required for transportation. It is given by the competent organisations of the parties. However, it envisages some cases when permission is not needed. The statements of the international agreements, concluded by the two states, will be applied to customs, transport, border and sanitary controls. If issues appear that were not envisaged by the agreements, the parties will apply the legislation of the country on whose territory the control is organised.

– Is there any progress in railway transit development in cooperation with the Chinese?

– This work is constantly ongoing, particularly in the frameworks of the Russian – Chinese working group for transit. Both parties understand that active measures must be taken to make for the development of transit container transportation via the territories of Russia and China. To attract additional volumes, it was decided to keep railway tariffs on containerised cargo transit transportation from/to the north-eastern provinces of China via the Russian railway network at 2009 levels. 
Interview by elena ushkova 
    [~DETAIL_TEXT] => 
RZD: no losses

– Mr Levitin, what are the financial results of RZD’s work in 2009? And what are the plans for the next three years?

– The largest decline in the transportation sector took place at the end of 2008 and the beginning of 2009. During last year as a whole the situation in the transport sector was stable enough. Due to railway tariff indexation, funding from the federal budget, and measures to reduce expenditure, the company managed to avoid financial losses in 2009. 
Its loading volume decreased by 15% instead of 19%, as had been expected.
To forecast the financial figures over the next three-year period, the Scenario Conditions of Economy Functioning and the Basic Parametres of the RF Social and Economic Development Forecast in 2010 and the planned period of 2011 and 2012, developed by the Ministry of Economic Development, were taken into account. In 2010, the average daily loading will grow by 3.7% year-on-year, and cargo throughput will increase. Also, passenger throughput is expected to become stable.
This year, more than RUR 130 billion will be given from the budget, particularly to compensate for revenue losses suffered because of the state regulation of freight and passenger tariffs on goods to construct facilities to hold the Olympic Games in Sochi, etc.
The parameters of the financial plan and the investment programme were developed considering the launch of RZD’s subsidiary Passenger Company in the long-distance passenger transportation sphere. Thus, the purchase of passenger rolling stock was excluded from RZD’s investment expenditures.
In accordance with the financial plan, it was planned to invest RUR 118 billion into the capital repair of basic assets, and to repair 8,500 kilometres of track. Later, it was decided to increase the investment to RUR 126.6 billion through redistribution of the plan’s other expenditures and to repair 10,000 kilometres of track. To carry out the projects, RZD will invest RUR 210.5 billion of its own money, which is 94.5% of the volume it invested in 2009 (taking into account the Olympic projects carried out at the company’s own expense).
The parameters of RZD’s investment budget in 2011-2012 envisage a growth in comparison with 2010, and take into consideration only the investment projects started earlier. The total volume of investments into railway infrastructure renewal and development in 2010-2012 will amount to RUR 855.4 billion.
An important aspect of the financial plan is the sale of shareholdings in the company’s subsidiaries, although the sale dates for some of them have been postponed because of the economic recession. In 2010, revenue from the shareholding sale is expected to reach RUR 12 billion, and for the period to 2012 – RUR 92 billion, with RUR 23 billion of profit.
Also, this year they will continue the work to optimise the company’s borrowed funds structure, i.e. instruments, currencies, and time period. The company is going to give up short-term and expensive loans taken out with Russian banks. As for new instruments to attract loans, the company is putting its faith in the rouble bonds market, which is nowadays the best choice from a time-period standpoint (from three to seven years). Besides, the passive rate is lower than the cost of the bank loans. Also, the company is going to make use of active bonds, which are a new instrument on the internal market. To reduce the risks of the currency exchange rate impact on the financial results, RZD is going to decrease the share of currency loans to 14% by the end of 2010. The total forecasted financial result of the holding company in 2010 is RUR 21.9 billion. Of that, RUR 4.8 billion is the profit of RZD’s subsidiaries.
The planned investment budget of the holding company amounts to RUR 334.7 billion, and that of its subsidiaries is RUR 64 billion. 

– How many projects received support from the Investment fund in 2009?

– Last year, financing of a total of RUR18.5 billion was provided to five projects in the sphere of rail transport and five projects in the road economy sector. To attract private investment to railroad infrastructure, RZD issued infrastructural bonds. In order to renew the basic assets of road building and maintenance enterprises, a large specialised leasing company was formed on the basis of the State Transport Leasing Company. In 2009, RUR 10 billion was given from the Federal Budget to the company’s authorised capital.

– What is the Ministry’s vision for updating tariff policies?

– Since 2002, the growth of tariffs on transport services fell behind the rates of increasing wholesale prices for industrial output. But transport expenditures are now quite significant and their impact on the economic result of serviced branches is rather high.
The share of transport services costs in industrial and agricultural production price is reaching 15-20%. Meanwhile, the share of expenditure on material resources (combustive-lubricating materials, energy etc.) in the transportation cost amounts to 30-55%. Intense usage and a significant deterioration of basic assets impact on the transportation net cost too (the deterioration of different transport modes is 45% to 70%). 
In this social and economic situation the role of tariff policy as a state regulation instrument becomes especially important. In our opinion, the mechanisms of free pricing must combine with regulating and controlling functions to protect consumers’ and market players’ interests. The state’s interference in the market sectors where there is developed competition should be minimal. 
Tariffs on freight transportation are formed on the basis of expenditure on services, the market situation, and the demand. In these segments, unfair competition must be stopped, and we should force out the transporters who use price dumping, avoid taxes and the responsibility for service quality, cargo and passengers safety.
We count on cooperation with the associations of transporters and the authorities of the RF subjects to solve this problem. One of the basic principles of the tariff policy, in our opinion, is the compensation of all losses of revenue which appear as a result of state tariff regulation to all the subjects of natural monopolies.
We think that the principles of regulating tariffs for cargo-luggage transportation should be revised. Nowadays, this activity is not profitable for Russian Railways. Meanwhile, it is a high-quality service, because the cargo is carried at the same speed as passengers. 

Motorways: to be repaired in a new way
– What qualitative changes are expected to appear with the launch of the Russian Motorways State Company?

– We hope that Russian Motorways will become the basis for implementing innovations in the road sector. The norms of road design will be revised, progressive technologies of construction, repair and maintenance of a road network will be brought in, which will allow the building of high-quality motorways. The transfer to principally different contractual relations with subcontractors will be very important – we will conclude long-tern contracts envisaging the construction and exploitation of the motorways. 
The activity programme of the state company in 2010-2015 has already been developed. During this period, 537 kilometres of motorways are to be built and 934 kilometres are to be reconstructed. The total length of the company’s roads at the end of 2015 is to amount to 3,044 kilometres. Of that, the length of toll roads is to be 1,412 kilometres. The share of motorways of the 1st technical category is to amount to at least 67% of the company’s total road network. The total volume of capital investment over the period of the programme’s realisation will be RUR 1.487 trillion. Of that, RUR 515 billion must come from non-budget sources.

–  How will the non-budget sources be attracted?

– The major mechanisms to attract non-budget means to build and reconstruct motorways are concessions (the first ones were concluded in July 2009) and bond loans floatation. Also, a fee will be taken for using the motorways (tariff rates for all vehicles have already been set for the period of 2010-2015), for the sub-lease of the land, placing adverts plcement and road service facilities. These additional revenues will be spent on maintenance of the road network and realisation of new projects as well. These measures will reduce the volume of subsides given to Russian Motorways from the federal budget, so the funds will be invested into maintenance of other federal roads. 

The five constituents of civil aviation
– What measures is the Ministry of Transport taking to develop air transport?

– Our plans for civil aviation development has five basic constituents.
The first one is aerodrome infrastructure development. In 2009, state capital investments into aerodrome infrastructure building and reconstruction made in the framework of the Federal target investment programme amounted to RUR 22 billion. The Federal target programme “Russian Transport System Development (2010-2015)” envisages investment of RUR 300 billion into reconstruction of different infrastructure facilities in 116 airports. And 103 runways are to be upgraded to make them always available.
The second constituent is realisation of the programme “Modernisation of the Single System of Air Traffic Organisation in the Russian Federation (2009-2015)”, which envisages the development of aeronavigation, meteorological support and a single system of air search and rescue. The total finance for the programme’s realisation is to amount to RUR 82.1 billion. Of that, RUR 59.8 billion is to be invested from the federal budget.
The third point is the renewal of the aircraft park, without which air transportation development in Russia is impossible. According to our estimates, 550 modern airplanes are to be put into operation up to 2015 to keep the air transportation market competitive. A shining example of the systematic state approach to the national innovation support is the development of the Sukhoi Superjet 100 regional planes. 
The fourth constituent is civil aviation staff training and material support for the training process. 
The fifth point is anti-recession measures in the air transport sector. Since August 2008, the RF Government has been supporting Russian air companies. These measures concern credit conditions, target subsidies, and leasing payment refunds. 
Also, in 2009, we took steps to optimise the management structure in the sector. Thus, Rosaeronavigation was abolished last September. Its functions were given to Rosaviation and Rostransnadzor (Federal Service for Supervision in the Transport Sector). Strengthening Rosaviation means the stage-by-stage creation of a single federal body regulating civil aviation. Nowadays, the structure of aviation authorities is optimal and it meets the requirements of the International Civil Aviation Organisation (ICAO).

Ports rushing forward
– The major measures for sea and river transport infrastructure development were taken lately in the framework of the federal target programme “Modernisation of Russian Transport System (2002-2010)”. What are the achievements? What is to be done in the future?

– In 2002-2009, the capacity of Russian ports grew by 305 million tons; and more than 10 linear kilometres of wharfs were built; 152 commercial vessels with a total deadweight of 8.1 million tons were put into operation; 40 units of the fleet for national purpose were delivered. The investments into it amounted to RUR 443 billion. Of this, RUR 50.7 billion was given from the federal budget. In this period of time, the throughput of Russian ports grew by almost 2.5 times (203.6 million tons in 2001, 496.4 million tons in 2009).
Since 2010, the sea transport sector is to be developed in accordance with the federal target programme “Development of Russian Transport System (2010-2015)” (sub-programmes “Sea transport” and “Development of Transport Services Export”). The total volume of investments will amount to RUR 1.088 trillion. Of that, RUR 368.2 billion is to be given from the federal budget.
The capacities of the Russian ports are to increase by 454 million tons.
Basic measures will be targeted at creation of port capacities to handle coal (the ports of Vanino, Vostochny, Taman, Murmansk, Ust-Luga), liquid bulk (the ports of Ust-Luga, Kozmino, Novorossiysk, Tuapse), containers (the ports of Vostochny, Novorossiysk, St Petersburg, Ust-Luga). As a result, in 2016, the handling capacity of the ports will rise to 770 million tons per annum. Also, a 15% reserve in the port capacity is to be created.
Special attention will be paid to new vessel construction. There must be a breakthrough in this sphere in the next five years. And the launch of the United Shipbuilding Corporation is to make this happen. 
In 2009, the reform of inner waterways management started. Its Concept had been in development for more than three years. The reform has two stages – 2009-2011 and 2012-2015, which will help adjustments be made efficiently.
Bilateral relations with foreign countries play an important role in the activity of our Ministry. Nowadays, there are approximately 60 such agreements in the sea transport sector. Also, about 30 conventional and legal acts on cooperation on search and rescue in the sea are in force. For example, one of such agreements was signed with Sweden in November 2009. The agreement envisages cooperation in sea and air search and rescue in the Baltic Sea. 

– What issues in the water transport sector are interesting for Russia and the EU?

– In December 2009, a meeting of the working group devoted to this theme took place in Brussels. In particular, we discussed cooperation in the information exchange sphere, the activity of such regional organisations as the United Nations Economic Commission for Europe, HELCOM, the Danube Commission; interaction in the Black Sea region; issues in the state port control sector; cooperation in the framework of the International Sea Organisation and International Labour Organisation; interactions in the river transport sector.
Nowadays, a pilot project on exchange of information about the Baltic Sea between the Regional System of Safe Navigation in the eastern part of the Finnish Gulf and SafeSeaNet system is being carried out.   
Special attention is being paid to the issues of state port control in the framework of the Paris and Black Sea Memorandums, particularly, to the implementation of the new inspection scheme, which may influence changes in the principles of which vessels to inspect, their characteristic features from a potential danger standpoint, the frequency of inspections, administrative measures, and statistical data registration.

Strengthening international relations
– What aspects of cooperation with the CIS member states are a priority now?

– In road transport, we are elaborating the issues concerning the implementation of a permission-free system for transit freight transportation by road haulage in the CIS, possible changes of the current axle load norm for international transportation, development of roads approaching the borders with neighbouring states. 
The practice of joint project realisation continues. 
A pilot vehicle run started successfully. Its target was to organise international transit road transportation on the route China – Central Asia – Europe (the Silk Road) via the transport network of the CIS member states. Then the real situation on the route was summed up, bottle-necks and existing barriers were revealed, and recommendations for the transit countries were formed.
At their meeting in Baku in April 2009, the Transport Ministers of the Caspian region countries shared their opinions on transport complexes development and the forms of further cooperation. A result of the active economic cooperation in that region is the work of many states aimed at commercial fleet renewal in the Caspian Sea.

– Could you name the most promising projects of Russia and the EU?

– Transport and economic links between Russia and the EU were becoming stronger and stronger until 2008. Thus, in 2000-2008 the total transportation volume between Russia and 27 EU member states grew 2.5 times to 520 million tons. In 2009, due to the recession, the decline in the cargo transportation volume was 12-15% compared with 2008.
Russia and the EU have a rich experience in finding joint strategies for transport communications development. Thus, the Road map for the Common Economic Space and the High-Level Group Report were approved. The latter contains the directions of the joint activities for the parties’ transport infrastructure development. The Road map defines five basic transport corridors between the European Union and neighbouring states, and four of them cross the territory of the Russian Federation, which proves the importance of cooperation between Russia and the EU in the sector of transport infrastructure development.
We highly appreciate the Memorandum signed by the participants of the international conference “The future of Trans-European Transport Networks: building bridges between Europe and its neighbours” held last October in Naples. The Memorandum regulates the activity of transport and logistics partnership Northern Dimension. Now, all its participants are responsible for the development of the Northern Transport Corridor and the “Motorways of the Sea” project. No doubt, the realisation of this project will make for the strengthening of Russia’s relations with all the Partnership member states and transport communication and logistical ties development in the region. 
The creation of the international transport corridor “Barents-Link” and its integration with the Belkomur project on the West-East line may be interesting for realisation in the partnership frameworks. In this case, the new corridor will cross the territory of the Scandinavian countries, the northern part of Russia, then reach the Transsib and expand further to China.
Among the measures envisaged by the Transport Strategy and targeted at road transport development, we should mention the “Western Europe – Western China” project. 
It will allow Europe and Asia to joing by a more economically profitable link than similar middle and southern routes. The development of the Transsiberian Railway remains an urgent issue as well as the large international project envisaging the extension of the 1520 mm tracks to Bratislava and Vienna, and the construction of an international logistics complex on the Danube.
The further development of the Trans-European networks should be based on the following principles: coordination of the transport policy in the framework of the Transport Dialogue; assistance to Eurasian transport communication development with an accent on the link China- EU via the RF territory; simplification of border crossing procedures; legislation and technical standards harmonisation; provision of safe transportation and transport safety.
At the same time, there are a number of problems in relations between the EU and Russia concerning transport. For example, in Finland there are discriminating conditions for Russian road hauliers using large capacity vehicles. Remember, in June 1998, Finland implemented different requirements for the weight and size norms applied to the vehicles of transporters from the European Economic Space member states and other countries. 
As a result, Russian road hauliers are suffering additional expense. Meanwhile, according to the Intergovernmental Agreement on International Road Communication concluded on October 27, 1995, the norms set on the territory of each country must be equal for all transporters. For example, the weight norms in Russia are the same for Russian and foreign carriers.

– What are the most important international agreements concluded by the RF Transport Ministry lately?

– In the middle of October 2009 in Beijing, the RF Transport Ministry, the Ministry of Railways of the People’s Republic of China, and RZD signed a Memorandum on Understanding in the Organisation and Development of fast and High-Speed Railway Communication on the Territory of Russia. This document gives an impulse to the Russian – Chinese partnership. 
“The Strategy of Railway Transport Development in the Russian Federation to 2030” envisages fast and high-speed railway communication on the following routes: Khabarovsk – Vladivostok, Moscow - Sochi, and Moscow – Nizhny Novgorod. Chinese investments and technologies may be used for construction of high-speed motorways in Russia, in particular, for creation of the international transport corridor Northern China – Northern Europe. 
The RF Transport Ministry and the Italian Ministry of Infrastructure and Transport signed a Memorandum on Understanding in Rome in December 2009. The targets of the document are assistance to transport enterprises of the two states, joint project realisation; development of the cooperation in the transport safety sector; exchange of experience, qualified specialists, and advanced technologies for transport sector development. 
We expect closer cooperation in the transport sphere between Russia and Peru. In particular, to recommence air communication between the states, Aeroflot and Sky Team could join an international alliance. This will allow flights to Latin American countries using the network of routes of other air companies – members of the alliance. Another possible way out is the conclusion of commercial agreements by other Russian air companies and their foreign partners who make flights from Europe to Peru.
We are ready to develop and strengthen relations with Greece. Particularly, bilateral cooperation in the energy sector plays an important role here. The largest joint projects are the Burgas-Alexandroupoli oil pipeline and the Southern Stream gas pipeline. Our interaction in the transport sector remains stable. And the potential of our relations is very great.
At the end of January 2010, in Rotterdam, the governments of the RF and the Netherlands signed the Agreement on International Road Communication. According to the document, permission is required for transportation. It is given by the competent organisations of the parties. However, it envisages some cases when permission is not needed. The statements of the international agreements, concluded by the two states, will be applied to customs, transport, border and sanitary controls. If issues appear that were not envisaged by the agreements, the parties will apply the legislation of the country on whose territory the control is organised.

– Is there any progress in railway transit development in cooperation with the Chinese?

– This work is constantly ongoing, particularly in the frameworks of the Russian – Chinese working group for transit. Both parties understand that active measures must be taken to make for the development of transit container transportation via the territories of Russia and China. To attract additional volumes, it was decided to keep railway tariffs on containerised cargo transit transportation from/to the north-eastern provinces of China via the Russian railway network at 2009 levels. 
Interview by elena ushkova 
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RZD: no losses

– Mr Levitin, what are the financial results of RZD’s work in 2009? And what are the plans for the next three years?

– The largest decline in the transportation sector took place at the end of 2008 and the beginning of 2009. During last year as a whole the situation in the transport sector was stable enough. Due to railway tariff indexation, funding from the federal budget, and measures to reduce expenditure, the company managed to avoid financial losses in 2009. 
Its loading volume decreased by 15% instead of 19%, as had been expected.
To forecast the financial figures over the next three-year period, the Scenario Conditions of Economy Functioning and the Basic Parametres of the RF Social and Economic Development Forecast in 2010 and the planned period of 2011 and 2012, developed by the Ministry of Economic Development, were taken into account. In 2010, the average daily loading will grow by 3.7% year-on-year, and cargo throughput will increase. Also, passenger throughput is expected to become stable.
This year, more than RUR 130 billion will be given from the budget, particularly to compensate for revenue losses suffered because of the state regulation of freight and passenger tariffs on goods to construct facilities to hold the Olympic Games in Sochi, etc.
The parameters of the financial plan and the investment programme were developed considering the launch of RZD’s subsidiary Passenger Company in the long-distance passenger transportation sphere. Thus, the purchase of passenger rolling stock was excluded from RZD’s investment expenditures.
In accordance with the financial plan, it was planned to invest RUR 118 billion into the capital repair of basic assets, and to repair 8,500 kilometres of track. Later, it was decided to increase the investment to RUR 126.6 billion through redistribution of the plan’s other expenditures and to repair 10,000 kilometres of track. To carry out the projects, RZD will invest RUR 210.5 billion of its own money, which is 94.5% of the volume it invested in 2009 (taking into account the Olympic projects carried out at the company’s own expense).
The parameters of RZD’s investment budget in 2011-2012 envisage a growth in comparison with 2010, and take into consideration only the investment projects started earlier. The total volume of investments into railway infrastructure renewal and development in 2010-2012 will amount to RUR 855.4 billion.
An important aspect of the financial plan is the sale of shareholdings in the company’s subsidiaries, although the sale dates for some of them have been postponed because of the economic recession. In 2010, revenue from the shareholding sale is expected to reach RUR 12 billion, and for the period to 2012 – RUR 92 billion, with RUR 23 billion of profit.
Also, this year they will continue the work to optimise the company’s borrowed funds structure, i.e. instruments, currencies, and time period. The company is going to give up short-term and expensive loans taken out with Russian banks. As for new instruments to attract loans, the company is putting its faith in the rouble bonds market, which is nowadays the best choice from a time-period standpoint (from three to seven years). Besides, the passive rate is lower than the cost of the bank loans. Also, the company is going to make use of active bonds, which are a new instrument on the internal market. To reduce the risks of the currency exchange rate impact on the financial results, RZD is going to decrease the share of currency loans to 14% by the end of 2010. The total forecasted financial result of the holding company in 2010 is RUR 21.9 billion. Of that, RUR 4.8 billion is the profit of RZD’s subsidiaries.
The planned investment budget of the holding company amounts to RUR 334.7 billion, and that of its subsidiaries is RUR 64 billion. 

– How many projects received support from the Investment fund in 2009?

– Last year, financing of a total of RUR18.5 billion was provided to five projects in the sphere of rail transport and five projects in the road economy sector. To attract private investment to railroad infrastructure, RZD issued infrastructural bonds. In order to renew the basic assets of road building and maintenance enterprises, a large specialised leasing company was formed on the basis of the State Transport Leasing Company. In 2009, RUR 10 billion was given from the Federal Budget to the company’s authorised capital.

– What is the Ministry’s vision for updating tariff policies?

– Since 2002, the growth of tariffs on transport services fell behind the rates of increasing wholesale prices for industrial output. But transport expenditures are now quite significant and their impact on the economic result of serviced branches is rather high.
The share of transport services costs in industrial and agricultural production price is reaching 15-20%. Meanwhile, the share of expenditure on material resources (combustive-lubricating materials, energy etc.) in the transportation cost amounts to 30-55%. Intense usage and a significant deterioration of basic assets impact on the transportation net cost too (the deterioration of different transport modes is 45% to 70%). 
In this social and economic situation the role of tariff policy as a state regulation instrument becomes especially important. In our opinion, the mechanisms of free pricing must combine with regulating and controlling functions to protect consumers’ and market players’ interests. The state’s interference in the market sectors where there is developed competition should be minimal. 
Tariffs on freight transportation are formed on the basis of expenditure on services, the market situation, and the demand. In these segments, unfair competition must be stopped, and we should force out the transporters who use price dumping, avoid taxes and the responsibility for service quality, cargo and passengers safety.
We count on cooperation with the associations of transporters and the authorities of the RF subjects to solve this problem. One of the basic principles of the tariff policy, in our opinion, is the compensation of all losses of revenue which appear as a result of state tariff regulation to all the subjects of natural monopolies.
We think that the principles of regulating tariffs for cargo-luggage transportation should be revised. Nowadays, this activity is not profitable for Russian Railways. Meanwhile, it is a high-quality service, because the cargo is carried at the same speed as passengers. 

Motorways: to be repaired in a new way
– What qualitative changes are expected to appear with the launch of the Russian Motorways State Company?

– We hope that Russian Motorways will become the basis for implementing innovations in the road sector. The norms of road design will be revised, progressive technologies of construction, repair and maintenance of a road network will be brought in, which will allow the building of high-quality motorways. The transfer to principally different contractual relations with subcontractors will be very important – we will conclude long-tern contracts envisaging the construction and exploitation of the motorways. 
The activity programme of the state company in 2010-2015 has already been developed. During this period, 537 kilometres of motorways are to be built and 934 kilometres are to be reconstructed. The total length of the company’s roads at the end of 2015 is to amount to 3,044 kilometres. Of that, the length of toll roads is to be 1,412 kilometres. The share of motorways of the 1st technical category is to amount to at least 67% of the company’s total road network. The total volume of capital investment over the period of the programme’s realisation will be RUR 1.487 trillion. Of that, RUR 515 billion must come from non-budget sources.

–  How will the non-budget sources be attracted?

– The major mechanisms to attract non-budget means to build and reconstruct motorways are concessions (the first ones were concluded in July 2009) and bond loans floatation. Also, a fee will be taken for using the motorways (tariff rates for all vehicles have already been set for the period of 2010-2015), for the sub-lease of the land, placing adverts plcement and road service facilities. These additional revenues will be spent on maintenance of the road network and realisation of new projects as well. These measures will reduce the volume of subsides given to Russian Motorways from the federal budget, so the funds will be invested into maintenance of other federal roads. 

The five constituents of civil aviation
– What measures is the Ministry of Transport taking to develop air transport?

– Our plans for civil aviation development has five basic constituents.
The first one is aerodrome infrastructure development. In 2009, state capital investments into aerodrome infrastructure building and reconstruction made in the framework of the Federal target investment programme amounted to RUR 22 billion. The Federal target programme “Russian Transport System Development (2010-2015)” envisages investment of RUR 300 billion into reconstruction of different infrastructure facilities in 116 airports. And 103 runways are to be upgraded to make them always available.
The second constituent is realisation of the programme “Modernisation of the Single System of Air Traffic Organisation in the Russian Federation (2009-2015)”, which envisages the development of aeronavigation, meteorological support and a single system of air search and rescue. The total finance for the programme’s realisation is to amount to RUR 82.1 billion. Of that, RUR 59.8 billion is to be invested from the federal budget.
The third point is the renewal of the aircraft park, without which air transportation development in Russia is impossible. According to our estimates, 550 modern airplanes are to be put into operation up to 2015 to keep the air transportation market competitive. A shining example of the systematic state approach to the national innovation support is the development of the Sukhoi Superjet 100 regional planes. 
The fourth constituent is civil aviation staff training and material support for the training process. 
The fifth point is anti-recession measures in the air transport sector. Since August 2008, the RF Government has been supporting Russian air companies. These measures concern credit conditions, target subsidies, and leasing payment refunds. 
Also, in 2009, we took steps to optimise the management structure in the sector. Thus, Rosaeronavigation was abolished last September. Its functions were given to Rosaviation and Rostransnadzor (Federal Service for Supervision in the Transport Sector). Strengthening Rosaviation means the stage-by-stage creation of a single federal body regulating civil aviation. Nowadays, the structure of aviation authorities is optimal and it meets the requirements of the International Civil Aviation Organisation (ICAO).

Ports rushing forward
– The major measures for sea and river transport infrastructure development were taken lately in the framework of the federal target programme “Modernisation of Russian Transport System (2002-2010)”. What are the achievements? What is to be done in the future?

– In 2002-2009, the capacity of Russian ports grew by 305 million tons; and more than 10 linear kilometres of wharfs were built; 152 commercial vessels with a total deadweight of 8.1 million tons were put into operation; 40 units of the fleet for national purpose were delivered. The investments into it amounted to RUR 443 billion. Of this, RUR 50.7 billion was given from the federal budget. In this period of time, the throughput of Russian ports grew by almost 2.5 times (203.6 million tons in 2001, 496.4 million tons in 2009).
Since 2010, the sea transport sector is to be developed in accordance with the federal target programme “Development of Russian Transport System (2010-2015)” (sub-programmes “Sea transport” and “Development of Transport Services Export”). The total volume of investments will amount to RUR 1.088 trillion. Of that, RUR 368.2 billion is to be given from the federal budget.
The capacities of the Russian ports are to increase by 454 million tons.
Basic measures will be targeted at creation of port capacities to handle coal (the ports of Vanino, Vostochny, Taman, Murmansk, Ust-Luga), liquid bulk (the ports of Ust-Luga, Kozmino, Novorossiysk, Tuapse), containers (the ports of Vostochny, Novorossiysk, St Petersburg, Ust-Luga). As a result, in 2016, the handling capacity of the ports will rise to 770 million tons per annum. Also, a 15% reserve in the port capacity is to be created.
Special attention will be paid to new vessel construction. There must be a breakthrough in this sphere in the next five years. And the launch of the United Shipbuilding Corporation is to make this happen. 
In 2009, the reform of inner waterways management started. Its Concept had been in development for more than three years. The reform has two stages – 2009-2011 and 2012-2015, which will help adjustments be made efficiently.
Bilateral relations with foreign countries play an important role in the activity of our Ministry. Nowadays, there are approximately 60 such agreements in the sea transport sector. Also, about 30 conventional and legal acts on cooperation on search and rescue in the sea are in force. For example, one of such agreements was signed with Sweden in November 2009. The agreement envisages cooperation in sea and air search and rescue in the Baltic Sea. 

– What issues in the water transport sector are interesting for Russia and the EU?

– In December 2009, a meeting of the working group devoted to this theme took place in Brussels. In particular, we discussed cooperation in the information exchange sphere, the activity of such regional organisations as the United Nations Economic Commission for Europe, HELCOM, the Danube Commission; interaction in the Black Sea region; issues in the state port control sector; cooperation in the framework of the International Sea Organisation and International Labour Organisation; interactions in the river transport sector.
Nowadays, a pilot project on exchange of information about the Baltic Sea between the Regional System of Safe Navigation in the eastern part of the Finnish Gulf and SafeSeaNet system is being carried out.   
Special attention is being paid to the issues of state port control in the framework of the Paris and Black Sea Memorandums, particularly, to the implementation of the new inspection scheme, which may influence changes in the principles of which vessels to inspect, their characteristic features from a potential danger standpoint, the frequency of inspections, administrative measures, and statistical data registration.

Strengthening international relations
– What aspects of cooperation with the CIS member states are a priority now?

– In road transport, we are elaborating the issues concerning the implementation of a permission-free system for transit freight transportation by road haulage in the CIS, possible changes of the current axle load norm for international transportation, development of roads approaching the borders with neighbouring states. 
The practice of joint project realisation continues. 
A pilot vehicle run started successfully. Its target was to organise international transit road transportation on the route China – Central Asia – Europe (the Silk Road) via the transport network of the CIS member states. Then the real situation on the route was summed up, bottle-necks and existing barriers were revealed, and recommendations for the transit countries were formed.
At their meeting in Baku in April 2009, the Transport Ministers of the Caspian region countries shared their opinions on transport complexes development and the forms of further cooperation. A result of the active economic cooperation in that region is the work of many states aimed at commercial fleet renewal in the Caspian Sea.

– Could you name the most promising projects of Russia and the EU?

– Transport and economic links between Russia and the EU were becoming stronger and stronger until 2008. Thus, in 2000-2008 the total transportation volume between Russia and 27 EU member states grew 2.5 times to 520 million tons. In 2009, due to the recession, the decline in the cargo transportation volume was 12-15% compared with 2008.
Russia and the EU have a rich experience in finding joint strategies for transport communications development. Thus, the Road map for the Common Economic Space and the High-Level Group Report were approved. The latter contains the directions of the joint activities for the parties’ transport infrastructure development. The Road map defines five basic transport corridors between the European Union and neighbouring states, and four of them cross the territory of the Russian Federation, which proves the importance of cooperation between Russia and the EU in the sector of transport infrastructure development.
We highly appreciate the Memorandum signed by the participants of the international conference “The future of Trans-European Transport Networks: building bridges between Europe and its neighbours” held last October in Naples. The Memorandum regulates the activity of transport and logistics partnership Northern Dimension. Now, all its participants are responsible for the development of the Northern Transport Corridor and the “Motorways of the Sea” project. No doubt, the realisation of this project will make for the strengthening of Russia’s relations with all the Partnership member states and transport communication and logistical ties development in the region. 
The creation of the international transport corridor “Barents-Link” and its integration with the Belkomur project on the West-East line may be interesting for realisation in the partnership frameworks. In this case, the new corridor will cross the territory of the Scandinavian countries, the northern part of Russia, then reach the Transsib and expand further to China.
Among the measures envisaged by the Transport Strategy and targeted at road transport development, we should mention the “Western Europe – Western China” project. 
It will allow Europe and Asia to joing by a more economically profitable link than similar middle and southern routes. The development of the Transsiberian Railway remains an urgent issue as well as the large international project envisaging the extension of the 1520 mm tracks to Bratislava and Vienna, and the construction of an international logistics complex on the Danube.
The further development of the Trans-European networks should be based on the following principles: coordination of the transport policy in the framework of the Transport Dialogue; assistance to Eurasian transport communication development with an accent on the link China- EU via the RF territory; simplification of border crossing procedures; legislation and technical standards harmonisation; provision of safe transportation and transport safety.
At the same time, there are a number of problems in relations between the EU and Russia concerning transport. For example, in Finland there are discriminating conditions for Russian road hauliers using large capacity vehicles. Remember, in June 1998, Finland implemented different requirements for the weight and size norms applied to the vehicles of transporters from the European Economic Space member states and other countries. 
As a result, Russian road hauliers are suffering additional expense. Meanwhile, according to the Intergovernmental Agreement on International Road Communication concluded on October 27, 1995, the norms set on the territory of each country must be equal for all transporters. For example, the weight norms in Russia are the same for Russian and foreign carriers.

– What are the most important international agreements concluded by the RF Transport Ministry lately?

– In the middle of October 2009 in Beijing, the RF Transport Ministry, the Ministry of Railways of the People’s Republic of China, and RZD signed a Memorandum on Understanding in the Organisation and Development of fast and High-Speed Railway Communication on the Territory of Russia. This document gives an impulse to the Russian – Chinese partnership. 
“The Strategy of Railway Transport Development in the Russian Federation to 2030” envisages fast and high-speed railway communication on the following routes: Khabarovsk – Vladivostok, Moscow - Sochi, and Moscow – Nizhny Novgorod. Chinese investments and technologies may be used for construction of high-speed motorways in Russia, in particular, for creation of the international transport corridor Northern China – Northern Europe. 
The RF Transport Ministry and the Italian Ministry of Infrastructure and Transport signed a Memorandum on Understanding in Rome in December 2009. The targets of the document are assistance to transport enterprises of the two states, joint project realisation; development of the cooperation in the transport safety sector; exchange of experience, qualified specialists, and advanced technologies for transport sector development. 
We expect closer cooperation in the transport sphere between Russia and Peru. In particular, to recommence air communication between the states, Aeroflot and Sky Team could join an international alliance. This will allow flights to Latin American countries using the network of routes of other air companies – members of the alliance. Another possible way out is the conclusion of commercial agreements by other Russian air companies and their foreign partners who make flights from Europe to Peru.
We are ready to develop and strengthen relations with Greece. Particularly, bilateral cooperation in the energy sector plays an important role here. The largest joint projects are the Burgas-Alexandroupoli oil pipeline and the Southern Stream gas pipeline. Our interaction in the transport sector remains stable. And the potential of our relations is very great.
At the end of January 2010, in Rotterdam, the governments of the RF and the Netherlands signed the Agreement on International Road Communication. According to the document, permission is required for transportation. It is given by the competent organisations of the parties. However, it envisages some cases when permission is not needed. The statements of the international agreements, concluded by the two states, will be applied to customs, transport, border and sanitary controls. If issues appear that were not envisaged by the agreements, the parties will apply the legislation of the country on whose territory the control is organised.

– Is there any progress in railway transit development in cooperation with the Chinese?

– This work is constantly ongoing, particularly in the frameworks of the Russian – Chinese working group for transit. Both parties understand that active measures must be taken to make for the development of transit container transportation via the territories of Russia and China. To attract additional volumes, it was decided to keep railway tariffs on containerised cargo transit transportation from/to the north-eastern provinces of China via the Russian railway network at 2009 levels. 
Interview by elena ushkova 
    [~DETAIL_TEXT] => 
RZD: no losses

– Mr Levitin, what are the financial results of RZD’s work in 2009? And what are the plans for the next three years?

– The largest decline in the transportation sector took place at the end of 2008 and the beginning of 2009. During last year as a whole the situation in the transport sector was stable enough. Due to railway tariff indexation, funding from the federal budget, and measures to reduce expenditure, the company managed to avoid financial losses in 2009. 
Its loading volume decreased by 15% instead of 19%, as had been expected.
To forecast the financial figures over the next three-year period, the Scenario Conditions of Economy Functioning and the Basic Parametres of the RF Social and Economic Development Forecast in 2010 and the planned period of 2011 and 2012, developed by the Ministry of Economic Development, were taken into account. In 2010, the average daily loading will grow by 3.7% year-on-year, and cargo throughput will increase. Also, passenger throughput is expected to become stable.
This year, more than RUR 130 billion will be given from the budget, particularly to compensate for revenue losses suffered because of the state regulation of freight and passenger tariffs on goods to construct facilities to hold the Olympic Games in Sochi, etc.
The parameters of the financial plan and the investment programme were developed considering the launch of RZD’s subsidiary Passenger Company in the long-distance passenger transportation sphere. Thus, the purchase of passenger rolling stock was excluded from RZD’s investment expenditures.
In accordance with the financial plan, it was planned to invest RUR 118 billion into the capital repair of basic assets, and to repair 8,500 kilometres of track. Later, it was decided to increase the investment to RUR 126.6 billion through redistribution of the plan’s other expenditures and to repair 10,000 kilometres of track. To carry out the projects, RZD will invest RUR 210.5 billion of its own money, which is 94.5% of the volume it invested in 2009 (taking into account the Olympic projects carried out at the company’s own expense).
The parameters of RZD’s investment budget in 2011-2012 envisage a growth in comparison with 2010, and take into consideration only the investment projects started earlier. The total volume of investments into railway infrastructure renewal and development in 2010-2012 will amount to RUR 855.4 billion.
An important aspect of the financial plan is the sale of shareholdings in the company’s subsidiaries, although the sale dates for some of them have been postponed because of the economic recession. In 2010, revenue from the shareholding sale is expected to reach RUR 12 billion, and for the period to 2012 – RUR 92 billion, with RUR 23 billion of profit.
Also, this year they will continue the work to optimise the company’s borrowed funds structure, i.e. instruments, currencies, and time period. The company is going to give up short-term and expensive loans taken out with Russian banks. As for new instruments to attract loans, the company is putting its faith in the rouble bonds market, which is nowadays the best choice from a time-period standpoint (from three to seven years). Besides, the passive rate is lower than the cost of the bank loans. Also, the company is going to make use of active bonds, which are a new instrument on the internal market. To reduce the risks of the currency exchange rate impact on the financial results, RZD is going to decrease the share of currency loans to 14% by the end of 2010. The total forecasted financial result of the holding company in 2010 is RUR 21.9 billion. Of that, RUR 4.8 billion is the profit of RZD’s subsidiaries.
The planned investment budget of the holding company amounts to RUR 334.7 billion, and that of its subsidiaries is RUR 64 billion. 

– How many projects received support from the Investment fund in 2009?

– Last year, financing of a total of RUR18.5 billion was provided to five projects in the sphere of rail transport and five projects in the road economy sector. To attract private investment to railroad infrastructure, RZD issued infrastructural bonds. In order to renew the basic assets of road building and maintenance enterprises, a large specialised leasing company was formed on the basis of the State Transport Leasing Company. In 2009, RUR 10 billion was given from the Federal Budget to the company’s authorised capital.

– What is the Ministry’s vision for updating tariff policies?

– Since 2002, the growth of tariffs on transport services fell behind the rates of increasing wholesale prices for industrial output. But transport expenditures are now quite significant and their impact on the economic result of serviced branches is rather high.
The share of transport services costs in industrial and agricultural production price is reaching 15-20%. Meanwhile, the share of expenditure on material resources (combustive-lubricating materials, energy etc.) in the transportation cost amounts to 30-55%. Intense usage and a significant deterioration of basic assets impact on the transportation net cost too (the deterioration of different transport modes is 45% to 70%). 
In this social and economic situation the role of tariff policy as a state regulation instrument becomes especially important. In our opinion, the mechanisms of free pricing must combine with regulating and controlling functions to protect consumers’ and market players’ interests. The state’s interference in the market sectors where there is developed competition should be minimal. 
Tariffs on freight transportation are formed on the basis of expenditure on services, the market situation, and the demand. In these segments, unfair competition must be stopped, and we should force out the transporters who use price dumping, avoid taxes and the responsibility for service quality, cargo and passengers safety.
We count on cooperation with the associations of transporters and the authorities of the RF subjects to solve this problem. One of the basic principles of the tariff policy, in our opinion, is the compensation of all losses of revenue which appear as a result of state tariff regulation to all the subjects of natural monopolies.
We think that the principles of regulating tariffs for cargo-luggage transportation should be revised. Nowadays, this activity is not profitable for Russian Railways. Meanwhile, it is a high-quality service, because the cargo is carried at the same speed as passengers. 

Motorways: to be repaired in a new way
– What qualitative changes are expected to appear with the launch of the Russian Motorways State Company?

– We hope that Russian Motorways will become the basis for implementing innovations in the road sector. The norms of road design will be revised, progressive technologies of construction, repair and maintenance of a road network will be brought in, which will allow the building of high-quality motorways. The transfer to principally different contractual relations with subcontractors will be very important – we will conclude long-tern contracts envisaging the construction and exploitation of the motorways. 
The activity programme of the state company in 2010-2015 has already been developed. During this period, 537 kilometres of motorways are to be built and 934 kilometres are to be reconstructed. The total length of the company’s roads at the end of 2015 is to amount to 3,044 kilometres. Of that, the length of toll roads is to be 1,412 kilometres. The share of motorways of the 1st technical category is to amount to at least 67% of the company’s total road network. The total volume of capital investment over the period of the programme’s realisation will be RUR 1.487 trillion. Of that, RUR 515 billion must come from non-budget sources.

–  How will the non-budget sources be attracted?

– The major mechanisms to attract non-budget means to build and reconstruct motorways are concessions (the first ones were concluded in July 2009) and bond loans floatation. Also, a fee will be taken for using the motorways (tariff rates for all vehicles have already been set for the period of 2010-2015), for the sub-lease of the land, placing adverts plcement and road service facilities. These additional revenues will be spent on maintenance of the road network and realisation of new projects as well. These measures will reduce the volume of subsides given to Russian Motorways from the federal budget, so the funds will be invested into maintenance of other federal roads. 

The five constituents of civil aviation
– What measures is the Ministry of Transport taking to develop air transport?

– Our plans for civil aviation development has five basic constituents.
The first one is aerodrome infrastructure development. In 2009, state capital investments into aerodrome infrastructure building and reconstruction made in the framework of the Federal target investment programme amounted to RUR 22 billion. The Federal target programme “Russian Transport System Development (2010-2015)” envisages investment of RUR 300 billion into reconstruction of different infrastructure facilities in 116 airports. And 103 runways are to be upgraded to make them always available.
The second constituent is realisation of the programme “Modernisation of the Single System of Air Traffic Organisation in the Russian Federation (2009-2015)”, which envisages the development of aeronavigation, meteorological support and a single system of air search and rescue. The total finance for the programme’s realisation is to amount to RUR 82.1 billion. Of that, RUR 59.8 billion is to be invested from the federal budget.
The third point is the renewal of the aircraft park, without which air transportation development in Russia is impossible. According to our estimates, 550 modern airplanes are to be put into operation up to 2015 to keep the air transportation market competitive. A shining example of the systematic state approach to the national innovation support is the development of the Sukhoi Superjet 100 regional planes. 
The fourth constituent is civil aviation staff training and material support for the training process. 
The fifth point is anti-recession measures in the air transport sector. Since August 2008, the RF Government has been supporting Russian air companies. These measures concern credit conditions, target subsidies, and leasing payment refunds. 
Also, in 2009, we took steps to optimise the management structure in the sector. Thus, Rosaeronavigation was abolished last September. Its functions were given to Rosaviation and Rostransnadzor (Federal Service for Supervision in the Transport Sector). Strengthening Rosaviation means the stage-by-stage creation of a single federal body regulating civil aviation. Nowadays, the structure of aviation authorities is optimal and it meets the requirements of the International Civil Aviation Organisation (ICAO).

Ports rushing forward
– The major measures for sea and river transport infrastructure development were taken lately in the framework of the federal target programme “Modernisation of Russian Transport System (2002-2010)”. What are the achievements? What is to be done in the future?

– In 2002-2009, the capacity of Russian ports grew by 305 million tons; and more than 10 linear kilometres of wharfs were built; 152 commercial vessels with a total deadweight of 8.1 million tons were put into operation; 40 units of the fleet for national purpose were delivered. The investments into it amounted to RUR 443 billion. Of this, RUR 50.7 billion was given from the federal budget. In this period of time, the throughput of Russian ports grew by almost 2.5 times (203.6 million tons in 2001, 496.4 million tons in 2009).
Since 2010, the sea transport sector is to be developed in accordance with the federal target programme “Development of Russian Transport System (2010-2015)” (sub-programmes “Sea transport” and “Development of Transport Services Export”). The total volume of investments will amount to RUR 1.088 trillion. Of that, RUR 368.2 billion is to be given from the federal budget.
The capacities of the Russian ports are to increase by 454 million tons.
Basic measures will be targeted at creation of port capacities to handle coal (the ports of Vanino, Vostochny, Taman, Murmansk, Ust-Luga), liquid bulk (the ports of Ust-Luga, Kozmino, Novorossiysk, Tuapse), containers (the ports of Vostochny, Novorossiysk, St Petersburg, Ust-Luga). As a result, in 2016, the handling capacity of the ports will rise to 770 million tons per annum. Also, a 15% reserve in the port capacity is to be created.
Special attention will be paid to new vessel construction. There must be a breakthrough in this sphere in the next five years. And the launch of the United Shipbuilding Corporation is to make this happen. 
In 2009, the reform of inner waterways management started. Its Concept had been in development for more than three years. The reform has two stages – 2009-2011 and 2012-2015, which will help adjustments be made efficiently.
Bilateral relations with foreign countries play an important role in the activity of our Ministry. Nowadays, there are approximately 60 such agreements in the sea transport sector. Also, about 30 conventional and legal acts on cooperation on search and rescue in the sea are in force. For example, one of such agreements was signed with Sweden in November 2009. The agreement envisages cooperation in sea and air search and rescue in the Baltic Sea. 

– What issues in the water transport sector are interesting for Russia and the EU?

– In December 2009, a meeting of the working group devoted to this theme took place in Brussels. In particular, we discussed cooperation in the information exchange sphere, the activity of such regional organisations as the United Nations Economic Commission for Europe, HELCOM, the Danube Commission; interaction in the Black Sea region; issues in the state port control sector; cooperation in the framework of the International Sea Organisation and International Labour Organisation; interactions in the river transport sector.
Nowadays, a pilot project on exchange of information about the Baltic Sea between the Regional System of Safe Navigation in the eastern part of the Finnish Gulf and SafeSeaNet system is being carried out.   
Special attention is being paid to the issues of state port control in the framework of the Paris and Black Sea Memorandums, particularly, to the implementation of the new inspection scheme, which may influence changes in the principles of which vessels to inspect, their characteristic features from a potential danger standpoint, the frequency of inspections, administrative measures, and statistical data registration.

Strengthening international relations
– What aspects of cooperation with the CIS member states are a priority now?

– In road transport, we are elaborating the issues concerning the implementation of a permission-free system for transit freight transportation by road haulage in the CIS, possible changes of the current axle load norm for international transportation, development of roads approaching the borders with neighbouring states. 
The practice of joint project realisation continues. 
A pilot vehicle run started successfully. Its target was to organise international transit road transportation on the route China – Central Asia – Europe (the Silk Road) via the transport network of the CIS member states. Then the real situation on the route was summed up, bottle-necks and existing barriers were revealed, and recommendations for the transit countries were formed.
At their meeting in Baku in April 2009, the Transport Ministers of the Caspian region countries shared their opinions on transport complexes development and the forms of further cooperation. A result of the active economic cooperation in that region is the work of many states aimed at commercial fleet renewal in the Caspian Sea.

– Could you name the most promising projects of Russia and the EU?

– Transport and economic links between Russia and the EU were becoming stronger and stronger until 2008. Thus, in 2000-2008 the total transportation volume between Russia and 27 EU member states grew 2.5 times to 520 million tons. In 2009, due to the recession, the decline in the cargo transportation volume was 12-15% compared with 2008.
Russia and the EU have a rich experience in finding joint strategies for transport communications development. Thus, the Road map for the Common Economic Space and the High-Level Group Report were approved. The latter contains the directions of the joint activities for the parties’ transport infrastructure development. The Road map defines five basic transport corridors between the European Union and neighbouring states, and four of them cross the territory of the Russian Federation, which proves the importance of cooperation between Russia and the EU in the sector of transport infrastructure development.
We highly appreciate the Memorandum signed by the participants of the international conference “The future of Trans-European Transport Networks: building bridges between Europe and its neighbours” held last October in Naples. The Memorandum regulates the activity of transport and logistics partnership Northern Dimension. Now, all its participants are responsible for the development of the Northern Transport Corridor and the “Motorways of the Sea” project. No doubt, the realisation of this project will make for the strengthening of Russia’s relations with all the Partnership member states and transport communication and logistical ties development in the region. 
The creation of the international transport corridor “Barents-Link” and its integration with the Belkomur project on the West-East line may be interesting for realisation in the partnership frameworks. In this case, the new corridor will cross the territory of the Scandinavian countries, the northern part of Russia, then reach the Transsib and expand further to China.
Among the measures envisaged by the Transport Strategy and targeted at road transport development, we should mention the “Western Europe – Western China” project. 
It will allow Europe and Asia to joing by a more economically profitable link than similar middle and southern routes. The development of the Transsiberian Railway remains an urgent issue as well as the large international project envisaging the extension of the 1520 mm tracks to Bratislava and Vienna, and the construction of an international logistics complex on the Danube.
The further development of the Trans-European networks should be based on the following principles: coordination of the transport policy in the framework of the Transport Dialogue; assistance to Eurasian transport communication development with an accent on the link China- EU via the RF territory; simplification of border crossing procedures; legislation and technical standards harmonisation; provision of safe transportation and transport safety.
At the same time, there are a number of problems in relations between the EU and Russia concerning transport. For example, in Finland there are discriminating conditions for Russian road hauliers using large capacity vehicles. Remember, in June 1998, Finland implemented different requirements for the weight and size norms applied to the vehicles of transporters from the European Economic Space member states and other countries. 
As a result, Russian road hauliers are suffering additional expense. Meanwhile, according to the Intergovernmental Agreement on International Road Communication concluded on October 27, 1995, the norms set on the territory of each country must be equal for all transporters. For example, the weight norms in Russia are the same for Russian and foreign carriers.

– What are the most important international agreements concluded by the RF Transport Ministry lately?

– In the middle of October 2009 in Beijing, the RF Transport Ministry, the Ministry of Railways of the People’s Republic of China, and RZD signed a Memorandum on Understanding in the Organisation and Development of fast and High-Speed Railway Communication on the Territory of Russia. This document gives an impulse to the Russian – Chinese partnership. 
“The Strategy of Railway Transport Development in the Russian Federation to 2030” envisages fast and high-speed railway communication on the following routes: Khabarovsk – Vladivostok, Moscow - Sochi, and Moscow – Nizhny Novgorod. Chinese investments and technologies may be used for construction of high-speed motorways in Russia, in particular, for creation of the international transport corridor Northern China – Northern Europe. 
The RF Transport Ministry and the Italian Ministry of Infrastructure and Transport signed a Memorandum on Understanding in Rome in December 2009. The targets of the document are assistance to transport enterprises of the two states, joint project realisation; development of the cooperation in the transport safety sector; exchange of experience, qualified specialists, and advanced technologies for transport sector development. 
We expect closer cooperation in the transport sphere between Russia and Peru. In particular, to recommence air communication between the states, Aeroflot and Sky Team could join an international alliance. This will allow flights to Latin American countries using the network of routes of other air companies – members of the alliance. Another possible way out is the conclusion of commercial agreements by other Russian air companies and their foreign partners who make flights from Europe to Peru.
We are ready to develop and strengthen relations with Greece. Particularly, bilateral cooperation in the energy sector plays an important role here. The largest joint projects are the Burgas-Alexandroupoli oil pipeline and the Southern Stream gas pipeline. Our interaction in the transport sector remains stable. And the potential of our relations is very great.
At the end of January 2010, in Rotterdam, the governments of the RF and the Netherlands signed the Agreement on International Road Communication. According to the document, permission is required for transportation. It is given by the competent organisations of the parties. However, it envisages some cases when permission is not needed. The statements of the international agreements, concluded by the two states, will be applied to customs, transport, border and sanitary controls. If issues appear that were not envisaged by the agreements, the parties will apply the legislation of the country on whose territory the control is organised.

– Is there any progress in railway transit development in cooperation with the Chinese?

– This work is constantly ongoing, particularly in the frameworks of the Russian – Chinese working group for transit. Both parties understand that active measures must be taken to make for the development of transit container transportation via the territories of Russia and China. To attract additional volumes, it was decided to keep railway tariffs on containerised cargo transit transportation from/to the north-eastern provinces of China via the Russian railway network at 2009 levels. 
Interview by elena ushkova 
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