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Transportation Volumes Grow
In 2006 the foreign trade turnover of Russia amounted to USD 749 bln, including USD 217 bln of import and USD 532 bln of export. The total volume of goods turnover (net weight) increased to 2.1 bln tons during the period. Meanwhile, the total cargo volume, transported as transit via the territory of the Russian Federation, was 14.2 mln tons for the total sum of USD 60 bln. The country’s customs bodies registered 3.7 mln of freight customs declarations, including 2.3 mln declarations for import, and 1.4 mln – for export.

Such results became possible due to the proper and well coordinated work of the service and active development of the transport network. According to experts’ estimations, the length of different means of communication of the Russian transport system at the beginning of 2006 was: 85 thousand kilometers of public railways, 55 thousand kilometers of railways belonging to industrial transport enterprises, 581 thousand kilometers of public motorways (including 531 thousand kilometers of hard-surface ones), 101.6 thousand kilometers of inner waterways, and 600 thousand kilometers of airlines, serviced by a single system of air communication organization. 
In 2006, over 73.5 mln passengers and 32.4 mln tons of freight was transported by the transport modes daily. The commercial cargo turnover of all the transport modes (including industrial railway transport, but excluding the pipeline network) amounted to 2,162.9 bln t/km (3.9% up year-on-year), while the volume of commercial freight transportation was 4,043.2 mln tons (+8.6%). According to the data of the Federal Statistics Service, in 2006 the turnover of transport organizations grew by 22.1% year-on-year to RUR 1,946 bln.

By 2010 the volume of export and import cargo transportation is expected to increase by 30-35% to 645-655 mln tons, including 550-555 mln tons of export freight. Transit cargo transportation is also to grow (approximately threefold) to 58-60 mln tons. As a result, the revenue of Russia from the increase of transport services export may grow by over RUR 150 bln. 
Meanwhile, achievement of the difficult targets the transport sector faces is impossible without close and efficient cooperation with customs and other controlling bodies, responsible for border crossing. 

Your Passport, Please 
Nowadays the efforts made by different state bodies to improve the quality and increase the efficiency of border crossings’ work have started to bear fruits. For example, in April 2007, the RF Federal Customs Service made a decision on setting two mobile inspecting and checking complexes in the Russian-Latvia sector of the state border. They were located on the many-sided border crossings of Burachki (Sebezhskaya customs, North-Western Customs Department) and Ubylinka (Pskovskaya customs, North-Western Customs Department). Such a decision was a reaction of the RF Federal Customs Service top management to the queues that emerged at some road border crossings on the RF-EU border, and the X-ray equipment enables customers to inspect any vehicle without opening its freight section.

Transporters also do their best. According to Oleg Belozerov, Head of the Federal Road Agency (Rosavtodor), the RF Ministry of Transport, Rosavtodor holds large-scaled works to solve the problems at border crossings. To do it, the Agency has developed a plan – schedule of the reconstruction of roads leading to the most crowded border crossings in 2007-2008. «The document envisages reconstruction of the roads, construction of additional traffic lanes, car parks, road surface repair, setting of additional highway markings», said O.Belozerov.

Last year the road bypassing Vyborg (Leningrad region) was put into operation; the construction of a motorway bypassing Sovetsk town (Kaliningrad region) was started. Besides, in the Kaliningrad region, the construction of a motorway bypassing Chernyshevskoye settlement is being completed. This year, it is planned to introduce demarcation strips with the length of 800 m on the Kaliningrad-Mamonovo II motorway near the border crossing. The capital repair of the motoway (5-6 km) will be held on the approach to the Rudnya border crossing. There it is planned to enlarge the road by one traffic lane from each side and transfer the weighing equipment from the main lane to an additional one.

Meanwhile, the most systemic and scaled measure taken by the state bodies was the passportization of border crossing, carried out in 2006 in accordance with Decree № 312 of the RF Government «On Passports of Border Crossings on the State Border of the Russian Federation» from May 27, 2006. In accordance with the decisions of the State Border Committee, the RF Ministry of Transport coordinated passportization of the border crossings. It attracted the RF Federal Agency of River and Sea Transport, the Federal Agency of Air Transport, the Federal Agency of Railway Transport, Federal Inspectorate in the Transport Sector, Federal Fishing Agency, Federal Customs Service, Federal Safety Service and Federal Migration Service, as well as the state inspectorate bodies in the sectors of agriculture, consumer products and communication. 

The prepared by the RF Ministry of Transport list of objects to be passportized included 446 border check points, wherein 190 road ones, 97 sea ones, 76 air ones, 59 railway ones and 24 river ones. Only 384 of them were approved (168 car border crossings, 75 sea ones, 66 air ones, 59 railway ones and 16 river ones). The remaining 62 border crossings were not passportized because no international freight or passenger transportation is provided via them.

«Due to the measures taken, we have managed to obtain reliable data, enabling us to define the state of border crossings; presence of private property on their territory; the intensity of freight and passenger flows there, and other useful information», said Evgeny Moskvichev, Deputy Head of RF Transport Ministry.

Old and Worn 
Due to the analysis of the data received during the passportization, the specialists obtained useful information and revealed a number of problems.

Firstly, most border crossings are in bad need of reconstruction. For example, the approaches to many Russian border crossings do not enable to separate the flows of vehicles to provide a green corridor for empty trucks, buses and cars; there is a lack of car parks for the transport undergoing customs procedures…

The RF Ministry of Transport believes that the reconstruction of border crossings must be financed from the federal budget in the framework of the Federal Target Programme «State Border of the Russian Federation (2003-2010)», and it is necessary to put amendments to it in 2007. However, it is impossible to do it without the Russian Federal Customs Service, which is one of the main customers of the programme. 

In their turn, the top-management of the Russian customs bodies insists that the issues of the state border arrangement should be realized together with the construction of modern warehousing customs and logistic terminals, as well as development of border and transport infrastructure. «Whatever the capacity of customs border crossings is, the lack of any of the mentioned components may cause queues and misbalance of the measures taken by customs bodies and the Ministry of Transport», Deputy Head of the Russian Federal Customs Service Vladimir Malinin is certain. 

On the other hand, the arrangement of border crossings and the territories near them has often little normative and organizational basis. The formation of the system of existing border crossings took a large period of time; it was based on different conceptual approaches, and so it was based on out-of-date normative and legislative acts. For example, over 70% of operating border crossings, located in Russian sea ports and airports, were put into operation long before 1993, when the Law «On the State Border of the Russian Federation» was approved. «The border crossing in the commercial sea port of Novorossiysk works in accordance with the Decree of the Council of Ministers of the USSR from 06.11.1951, and the one in Sheremetyevo airport – with the Decree from 02.03.1960», E.Moskvichev comments on the situation. 

The system of railway and road border crossings was recommenced when the new borders of the Russian Federation were formed (i.e. after the collapse of the Soviet Union), but there was no common order of launching, opening and functioning of border crossings at that time. It was set only in 1998. Meanwhile, neither the Law «On the State Border of the Russian Federation», nor the Decree on Border Crossings via the State Border (Decree № 60 of the RF Government) envisaged that the legislative and normative base was put in accordance with the acting legislation, and that is why the proper legislation was applied to new border crossings and the ones opened after 1998.

The problem of non-functioning or non-required border crossings is especially important today. Based on the results of the passportization, the Federal Customs Service was offered to close 73 road border crossings. Meanwhile, the customs bodies have no right to close them because the road border crossings were set by international agreements between Russia and its neighbouring states. Consequently, to decide the further fate of the border crossings, respective consultations with the states are to be held and amendments are to be put into the agreements. The same thing goes for railway border crossings.

Nowadays many experts are sure that the Government should make the decision in the near future to close the excessive border crossings. However, the Government understands the situation pretty well. «Nowaday there are too many border crossings. We must define which of them we require», stated First Deputy Chairman of the RF Government Sergey Ivanov at one of the meetings. «The most profitable and legally justified border crossings are to be chosen», he stressed.

Officials Have Not Come to an Agreement
On the whole, the RF Government is to make over 100 decisions to open, close or to remove customs check points. However, there are some obstacles to that.

At the end of 2006, a Federal Law on putting amendments to legislation concerning improvement of state control at the state border crossings was approved (№ 266-ФЗ). Its fulfillment envisages adopting some decrees of the RF Government, which are to be prepared by six federal bodies of executive power.

In particular, the RF Ministry of Transport was entrusted to develop some decrees setting the order of defining the limits of border crossings, the list of special check-points and requirements to construction, as well as elaboration of the new edition of the Decree on Border Crossings. However, it turned out that the federal bodies of executive power have different standpoints on the functioning of border crossings, and the officials themselves admit that. 

«The meaning of the limits of a border crossing, and the activities that can be held there do not coincide in the developed by the Transport Ministry project of the Decree «On the Rules of Defining the Limits of Border Crossings», in the developed by the Federal Customs Service project «On the Activities Provided at Border Crossings», and in the project of the Federal Safety Service «On the Order of Setting Rules at Border Crossings», said Evgeny Moskvichev.

In the words of the Deputy Transport Minister, to provide timely introduction of the bills to the RF Government, it is necessary that the work of all the federal bodies of the executive power was coordinated in the frames of specially organized interdepartmental working groups.

Perhaps, it would be reasonable that the Government made a decision on creation of a special federal structure to be in charge of border crossings. The Ministry of Transport maintains that the approval of such a structure launch may be complicated because of many different opinions.

Partly, it is proved by the fact that many of the bills of the RF Government have not been completely approved yet. For example, the Ministry of Finance and the Ministry of Economic Development and Trade approve the documents on setting border crossings grudgingly if there is no detailed calculation of expenses and financial and economic bases, and the financial resources for the border crossings, which are not included into the Federal Target Programme «State Border of the Russian Federation (2003-2010)», are not mentioned. Thus, there arises a paradox: the demanded calculations of expenses can be made only on the basis of the project documentation, and the basis for project financing is the decision of the RF Government on border crossing setting approved by all the bodies in charge. 

Moreover, the federal bodies of the executive power providing different control at border crossings refuse to adjust the bills of the RF Government, if there is no proper financial provision for staff increase. And it is understandable. «Will you work without accommodation and wages?» – such a rhetorical question was asked in one of the structures.

At Any Price?
Still the problem is to be solved, because the issue is very important. As for the railway transport, even the three-day period for giving permission for transit, envisaged by the Russian legislation (Clause 3, Article 9 of the Customs Code of the RF), and a day spent to complete delivery (Clause 1, Article 92) take 20% of the total time of freight transportation along the Transsib. The situation in the road transport sector is the same. 

«Our analysis has revealed that in 2006 Russian road hauliers’ losses from idling while waiting for entering the check-up zone at the 14 main border crossings increased twofold year-on-year to over RUR 3 bln. And if we calculate the similar losses of foreign road hauliers, the economic damage is about RUR 7-7.5 bln», says Alexander Shershnev, Director of the Department of State Policy in the Sector of Road Facilities, Road and Public Passenger Transport, Geodesy and Cartography, the RF Ministry of Transport.

Transporters believe that the figure should be compared with the sum required to construct a modern check-up system. Then the latter will hardly be considered too large. 

Still, it is obvious that modernization and arrangement of border crossings is not the only problem of the Russian border. «Transporters should not pay for the control provided by the state. I mean the so-called «pseudo -customs» services, provided by some commercial organizations for the «comfort» at freight forwarding and passing border crossings. Customs must stay away from any commerce», claimed First Vice Prime Minister of the RF Government Sergey Ivanov. 

«Yes, there are many problems and we are to solve them. But if the situation were as negative as they say, we would have hardly gather the means we have gathered and transferred to the Budget», contradicts Head of the Federal Customs Service Andrey Belyaninov.

Summing up such different opinions, it is still possible to state that, in spite of all the contradictions, customs and transport hold out hands to each other. Will they shake hands?
 
 


Viewpoint
Sergey Ivanov,
First Deputy Chairman of the RF Government:
– I understand that the arrangement of state border crossings requires significant investments, and - which is more important – time. Still, there is no other way out, and we will have to do it anyway.





Evgeny Moskvichev,
Deputy Minister of Transport of the Russian Federation:
– Nowadays, when multimodal transportation develops actively, when logistic technologies are widely used to unite many participants of common international transport chain, we should not pretend that only consignors, consignees and transporters participate in the transportation.
    [~DETAIL_TEXT] => 
Transportation Volumes Grow
In 2006 the foreign trade turnover of Russia amounted to USD 749 bln, including USD 217 bln of import and USD 532 bln of export. The total volume of goods turnover (net weight) increased to 2.1 bln tons during the period. Meanwhile, the total cargo volume, transported as transit via the territory of the Russian Federation, was 14.2 mln tons for the total sum of USD 60 bln. The country’s customs bodies registered 3.7 mln of freight customs declarations, including 2.3 mln declarations for import, and 1.4 mln – for export.

Such results became possible due to the proper and well coordinated work of the service and active development of the transport network. According to experts’ estimations, the length of different means of communication of the Russian transport system at the beginning of 2006 was: 85 thousand kilometers of public railways, 55 thousand kilometers of railways belonging to industrial transport enterprises, 581 thousand kilometers of public motorways (including 531 thousand kilometers of hard-surface ones), 101.6 thousand kilometers of inner waterways, and 600 thousand kilometers of airlines, serviced by a single system of air communication organization. 
In 2006, over 73.5 mln passengers and 32.4 mln tons of freight was transported by the transport modes daily. The commercial cargo turnover of all the transport modes (including industrial railway transport, but excluding the pipeline network) amounted to 2,162.9 bln t/km (3.9% up year-on-year), while the volume of commercial freight transportation was 4,043.2 mln tons (+8.6%). According to the data of the Federal Statistics Service, in 2006 the turnover of transport organizations grew by 22.1% year-on-year to RUR 1,946 bln.

By 2010 the volume of export and import cargo transportation is expected to increase by 30-35% to 645-655 mln tons, including 550-555 mln tons of export freight. Transit cargo transportation is also to grow (approximately threefold) to 58-60 mln tons. As a result, the revenue of Russia from the increase of transport services export may grow by over RUR 150 bln. 
Meanwhile, achievement of the difficult targets the transport sector faces is impossible without close and efficient cooperation with customs and other controlling bodies, responsible for border crossing. 

Your Passport, Please 
Nowadays the efforts made by different state bodies to improve the quality and increase the efficiency of border crossings’ work have started to bear fruits. For example, in April 2007, the RF Federal Customs Service made a decision on setting two mobile inspecting and checking complexes in the Russian-Latvia sector of the state border. They were located on the many-sided border crossings of Burachki (Sebezhskaya customs, North-Western Customs Department) and Ubylinka (Pskovskaya customs, North-Western Customs Department). Such a decision was a reaction of the RF Federal Customs Service top management to the queues that emerged at some road border crossings on the RF-EU border, and the X-ray equipment enables customers to inspect any vehicle without opening its freight section.

Transporters also do their best. According to Oleg Belozerov, Head of the Federal Road Agency (Rosavtodor), the RF Ministry of Transport, Rosavtodor holds large-scaled works to solve the problems at border crossings. To do it, the Agency has developed a plan – schedule of the reconstruction of roads leading to the most crowded border crossings in 2007-2008. «The document envisages reconstruction of the roads, construction of additional traffic lanes, car parks, road surface repair, setting of additional highway markings», said O.Belozerov.

Last year the road bypassing Vyborg (Leningrad region) was put into operation; the construction of a motorway bypassing Sovetsk town (Kaliningrad region) was started. Besides, in the Kaliningrad region, the construction of a motorway bypassing Chernyshevskoye settlement is being completed. This year, it is planned to introduce demarcation strips with the length of 800 m on the Kaliningrad-Mamonovo II motorway near the border crossing. The capital repair of the motoway (5-6 km) will be held on the approach to the Rudnya border crossing. There it is planned to enlarge the road by one traffic lane from each side and transfer the weighing equipment from the main lane to an additional one.

Meanwhile, the most systemic and scaled measure taken by the state bodies was the passportization of border crossing, carried out in 2006 in accordance with Decree № 312 of the RF Government «On Passports of Border Crossings on the State Border of the Russian Federation» from May 27, 2006. In accordance with the decisions of the State Border Committee, the RF Ministry of Transport coordinated passportization of the border crossings. It attracted the RF Federal Agency of River and Sea Transport, the Federal Agency of Air Transport, the Federal Agency of Railway Transport, Federal Inspectorate in the Transport Sector, Federal Fishing Agency, Federal Customs Service, Federal Safety Service and Federal Migration Service, as well as the state inspectorate bodies in the sectors of agriculture, consumer products and communication. 

The prepared by the RF Ministry of Transport list of objects to be passportized included 446 border check points, wherein 190 road ones, 97 sea ones, 76 air ones, 59 railway ones and 24 river ones. Only 384 of them were approved (168 car border crossings, 75 sea ones, 66 air ones, 59 railway ones and 16 river ones). The remaining 62 border crossings were not passportized because no international freight or passenger transportation is provided via them.

«Due to the measures taken, we have managed to obtain reliable data, enabling us to define the state of border crossings; presence of private property on their territory; the intensity of freight and passenger flows there, and other useful information», said Evgeny Moskvichev, Deputy Head of RF Transport Ministry.

Old and Worn 
Due to the analysis of the data received during the passportization, the specialists obtained useful information and revealed a number of problems.

Firstly, most border crossings are in bad need of reconstruction. For example, the approaches to many Russian border crossings do not enable to separate the flows of vehicles to provide a green corridor for empty trucks, buses and cars; there is a lack of car parks for the transport undergoing customs procedures…

The RF Ministry of Transport believes that the reconstruction of border crossings must be financed from the federal budget in the framework of the Federal Target Programme «State Border of the Russian Federation (2003-2010)», and it is necessary to put amendments to it in 2007. However, it is impossible to do it without the Russian Federal Customs Service, which is one of the main customers of the programme. 

In their turn, the top-management of the Russian customs bodies insists that the issues of the state border arrangement should be realized together with the construction of modern warehousing customs and logistic terminals, as well as development of border and transport infrastructure. «Whatever the capacity of customs border crossings is, the lack of any of the mentioned components may cause queues and misbalance of the measures taken by customs bodies and the Ministry of Transport», Deputy Head of the Russian Federal Customs Service Vladimir Malinin is certain. 

On the other hand, the arrangement of border crossings and the territories near them has often little normative and organizational basis. The formation of the system of existing border crossings took a large period of time; it was based on different conceptual approaches, and so it was based on out-of-date normative and legislative acts. For example, over 70% of operating border crossings, located in Russian sea ports and airports, were put into operation long before 1993, when the Law «On the State Border of the Russian Federation» was approved. «The border crossing in the commercial sea port of Novorossiysk works in accordance with the Decree of the Council of Ministers of the USSR from 06.11.1951, and the one in Sheremetyevo airport – with the Decree from 02.03.1960», E.Moskvichev comments on the situation. 

The system of railway and road border crossings was recommenced when the new borders of the Russian Federation were formed (i.e. after the collapse of the Soviet Union), but there was no common order of launching, opening and functioning of border crossings at that time. It was set only in 1998. Meanwhile, neither the Law «On the State Border of the Russian Federation», nor the Decree on Border Crossings via the State Border (Decree № 60 of the RF Government) envisaged that the legislative and normative base was put in accordance with the acting legislation, and that is why the proper legislation was applied to new border crossings and the ones opened after 1998.

The problem of non-functioning or non-required border crossings is especially important today. Based on the results of the passportization, the Federal Customs Service was offered to close 73 road border crossings. Meanwhile, the customs bodies have no right to close them because the road border crossings were set by international agreements between Russia and its neighbouring states. Consequently, to decide the further fate of the border crossings, respective consultations with the states are to be held and amendments are to be put into the agreements. The same thing goes for railway border crossings.

Nowadays many experts are sure that the Government should make the decision in the near future to close the excessive border crossings. However, the Government understands the situation pretty well. «Nowaday there are too many border crossings. We must define which of them we require», stated First Deputy Chairman of the RF Government Sergey Ivanov at one of the meetings. «The most profitable and legally justified border crossings are to be chosen», he stressed.

Officials Have Not Come to an Agreement
On the whole, the RF Government is to make over 100 decisions to open, close or to remove customs check points. However, there are some obstacles to that.

At the end of 2006, a Federal Law on putting amendments to legislation concerning improvement of state control at the state border crossings was approved (№ 266-ФЗ). Its fulfillment envisages adopting some decrees of the RF Government, which are to be prepared by six federal bodies of executive power.

In particular, the RF Ministry of Transport was entrusted to develop some decrees setting the order of defining the limits of border crossings, the list of special check-points and requirements to construction, as well as elaboration of the new edition of the Decree on Border Crossings. However, it turned out that the federal bodies of executive power have different standpoints on the functioning of border crossings, and the officials themselves admit that. 

«The meaning of the limits of a border crossing, and the activities that can be held there do not coincide in the developed by the Transport Ministry project of the Decree «On the Rules of Defining the Limits of Border Crossings», in the developed by the Federal Customs Service project «On the Activities Provided at Border Crossings», and in the project of the Federal Safety Service «On the Order of Setting Rules at Border Crossings», said Evgeny Moskvichev.

In the words of the Deputy Transport Minister, to provide timely introduction of the bills to the RF Government, it is necessary that the work of all the federal bodies of the executive power was coordinated in the frames of specially organized interdepartmental working groups.

Perhaps, it would be reasonable that the Government made a decision on creation of a special federal structure to be in charge of border crossings. The Ministry of Transport maintains that the approval of such a structure launch may be complicated because of many different opinions.

Partly, it is proved by the fact that many of the bills of the RF Government have not been completely approved yet. For example, the Ministry of Finance and the Ministry of Economic Development and Trade approve the documents on setting border crossings grudgingly if there is no detailed calculation of expenses and financial and economic bases, and the financial resources for the border crossings, which are not included into the Federal Target Programme «State Border of the Russian Federation (2003-2010)», are not mentioned. Thus, there arises a paradox: the demanded calculations of expenses can be made only on the basis of the project documentation, and the basis for project financing is the decision of the RF Government on border crossing setting approved by all the bodies in charge. 

Moreover, the federal bodies of the executive power providing different control at border crossings refuse to adjust the bills of the RF Government, if there is no proper financial provision for staff increase. And it is understandable. «Will you work without accommodation and wages?» – such a rhetorical question was asked in one of the structures.

At Any Price?
Still the problem is to be solved, because the issue is very important. As for the railway transport, even the three-day period for giving permission for transit, envisaged by the Russian legislation (Clause 3, Article 9 of the Customs Code of the RF), and a day spent to complete delivery (Clause 1, Article 92) take 20% of the total time of freight transportation along the Transsib. The situation in the road transport sector is the same. 

«Our analysis has revealed that in 2006 Russian road hauliers’ losses from idling while waiting for entering the check-up zone at the 14 main border crossings increased twofold year-on-year to over RUR 3 bln. And if we calculate the similar losses of foreign road hauliers, the economic damage is about RUR 7-7.5 bln», says Alexander Shershnev, Director of the Department of State Policy in the Sector of Road Facilities, Road and Public Passenger Transport, Geodesy and Cartography, the RF Ministry of Transport.

Transporters believe that the figure should be compared with the sum required to construct a modern check-up system. Then the latter will hardly be considered too large. 

Still, it is obvious that modernization and arrangement of border crossings is not the only problem of the Russian border. «Transporters should not pay for the control provided by the state. I mean the so-called «pseudo -customs» services, provided by some commercial organizations for the «comfort» at freight forwarding and passing border crossings. Customs must stay away from any commerce», claimed First Vice Prime Minister of the RF Government Sergey Ivanov. 

«Yes, there are many problems and we are to solve them. But if the situation were as negative as they say, we would have hardly gather the means we have gathered and transferred to the Budget», contradicts Head of the Federal Customs Service Andrey Belyaninov.

Summing up such different opinions, it is still possible to state that, in spite of all the contradictions, customs and transport hold out hands to each other. Will they shake hands?
 
 


Viewpoint
Sergey Ivanov,
First Deputy Chairman of the RF Government:
– I understand that the arrangement of state border crossings requires significant investments, and - which is more important – time. Still, there is no other way out, and we will have to do it anyway.





Evgeny Moskvichev,
Deputy Minister of Transport of the Russian Federation:
– Nowadays, when multimodal transportation develops actively, when logistic technologies are widely used to unite many participants of common international transport chain, we should not pretend that only consignors, consignees and transporters participate in the transportation.
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    [~PREVIEW_TEXT] => Development of transport infrastructure and borders with neighbouring states are most important things for any country. Nevertheless, nowadays  many questions concerning the functioning of the border crossings, for which the RF Federal Customs Service and the Ministry of Transport are responsible, have not been solved yet. Will the two state bodies manage to come to an agreement?
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Transportation Volumes Grow
In 2006 the foreign trade turnover of Russia amounted to USD 749 bln, including USD 217 bln of import and USD 532 bln of export. The total volume of goods turnover (net weight) increased to 2.1 bln tons during the period. Meanwhile, the total cargo volume, transported as transit via the territory of the Russian Federation, was 14.2 mln tons for the total sum of USD 60 bln. The country’s customs bodies registered 3.7 mln of freight customs declarations, including 2.3 mln declarations for import, and 1.4 mln – for export.

Such results became possible due to the proper and well coordinated work of the service and active development of the transport network. According to experts’ estimations, the length of different means of communication of the Russian transport system at the beginning of 2006 was: 85 thousand kilometers of public railways, 55 thousand kilometers of railways belonging to industrial transport enterprises, 581 thousand kilometers of public motorways (including 531 thousand kilometers of hard-surface ones), 101.6 thousand kilometers of inner waterways, and 600 thousand kilometers of airlines, serviced by a single system of air communication organization. 
In 2006, over 73.5 mln passengers and 32.4 mln tons of freight was transported by the transport modes daily. The commercial cargo turnover of all the transport modes (including industrial railway transport, but excluding the pipeline network) amounted to 2,162.9 bln t/km (3.9% up year-on-year), while the volume of commercial freight transportation was 4,043.2 mln tons (+8.6%). According to the data of the Federal Statistics Service, in 2006 the turnover of transport organizations grew by 22.1% year-on-year to RUR 1,946 bln.

By 2010 the volume of export and import cargo transportation is expected to increase by 30-35% to 645-655 mln tons, including 550-555 mln tons of export freight. Transit cargo transportation is also to grow (approximately threefold) to 58-60 mln tons. As a result, the revenue of Russia from the increase of transport services export may grow by over RUR 150 bln. 
Meanwhile, achievement of the difficult targets the transport sector faces is impossible without close and efficient cooperation with customs and other controlling bodies, responsible for border crossing. 

Your Passport, Please 
Nowadays the efforts made by different state bodies to improve the quality and increase the efficiency of border crossings’ work have started to bear fruits. For example, in April 2007, the RF Federal Customs Service made a decision on setting two mobile inspecting and checking complexes in the Russian-Latvia sector of the state border. They were located on the many-sided border crossings of Burachki (Sebezhskaya customs, North-Western Customs Department) and Ubylinka (Pskovskaya customs, North-Western Customs Department). Such a decision was a reaction of the RF Federal Customs Service top management to the queues that emerged at some road border crossings on the RF-EU border, and the X-ray equipment enables customers to inspect any vehicle without opening its freight section.

Transporters also do their best. According to Oleg Belozerov, Head of the Federal Road Agency (Rosavtodor), the RF Ministry of Transport, Rosavtodor holds large-scaled works to solve the problems at border crossings. To do it, the Agency has developed a plan – schedule of the reconstruction of roads leading to the most crowded border crossings in 2007-2008. «The document envisages reconstruction of the roads, construction of additional traffic lanes, car parks, road surface repair, setting of additional highway markings», said O.Belozerov.

Last year the road bypassing Vyborg (Leningrad region) was put into operation; the construction of a motorway bypassing Sovetsk town (Kaliningrad region) was started. Besides, in the Kaliningrad region, the construction of a motorway bypassing Chernyshevskoye settlement is being completed. This year, it is planned to introduce demarcation strips with the length of 800 m on the Kaliningrad-Mamonovo II motorway near the border crossing. The capital repair of the motoway (5-6 km) will be held on the approach to the Rudnya border crossing. There it is planned to enlarge the road by one traffic lane from each side and transfer the weighing equipment from the main lane to an additional one.

Meanwhile, the most systemic and scaled measure taken by the state bodies was the passportization of border crossing, carried out in 2006 in accordance with Decree № 312 of the RF Government «On Passports of Border Crossings on the State Border of the Russian Federation» from May 27, 2006. In accordance with the decisions of the State Border Committee, the RF Ministry of Transport coordinated passportization of the border crossings. It attracted the RF Federal Agency of River and Sea Transport, the Federal Agency of Air Transport, the Federal Agency of Railway Transport, Federal Inspectorate in the Transport Sector, Federal Fishing Agency, Federal Customs Service, Federal Safety Service and Federal Migration Service, as well as the state inspectorate bodies in the sectors of agriculture, consumer products and communication. 

The prepared by the RF Ministry of Transport list of objects to be passportized included 446 border check points, wherein 190 road ones, 97 sea ones, 76 air ones, 59 railway ones and 24 river ones. Only 384 of them were approved (168 car border crossings, 75 sea ones, 66 air ones, 59 railway ones and 16 river ones). The remaining 62 border crossings were not passportized because no international freight or passenger transportation is provided via them.

«Due to the measures taken, we have managed to obtain reliable data, enabling us to define the state of border crossings; presence of private property on their territory; the intensity of freight and passenger flows there, and other useful information», said Evgeny Moskvichev, Deputy Head of RF Transport Ministry.

Old and Worn 
Due to the analysis of the data received during the passportization, the specialists obtained useful information and revealed a number of problems.

Firstly, most border crossings are in bad need of reconstruction. For example, the approaches to many Russian border crossings do not enable to separate the flows of vehicles to provide a green corridor for empty trucks, buses and cars; there is a lack of car parks for the transport undergoing customs procedures…

The RF Ministry of Transport believes that the reconstruction of border crossings must be financed from the federal budget in the framework of the Federal Target Programme «State Border of the Russian Federation (2003-2010)», and it is necessary to put amendments to it in 2007. However, it is impossible to do it without the Russian Federal Customs Service, which is one of the main customers of the programme. 

In their turn, the top-management of the Russian customs bodies insists that the issues of the state border arrangement should be realized together with the construction of modern warehousing customs and logistic terminals, as well as development of border and transport infrastructure. «Whatever the capacity of customs border crossings is, the lack of any of the mentioned components may cause queues and misbalance of the measures taken by customs bodies and the Ministry of Transport», Deputy Head of the Russian Federal Customs Service Vladimir Malinin is certain. 

On the other hand, the arrangement of border crossings and the territories near them has often little normative and organizational basis. The formation of the system of existing border crossings took a large period of time; it was based on different conceptual approaches, and so it was based on out-of-date normative and legislative acts. For example, over 70% of operating border crossings, located in Russian sea ports and airports, were put into operation long before 1993, when the Law «On the State Border of the Russian Federation» was approved. «The border crossing in the commercial sea port of Novorossiysk works in accordance with the Decree of the Council of Ministers of the USSR from 06.11.1951, and the one in Sheremetyevo airport – with the Decree from 02.03.1960», E.Moskvichev comments on the situation. 

The system of railway and road border crossings was recommenced when the new borders of the Russian Federation were formed (i.e. after the collapse of the Soviet Union), but there was no common order of launching, opening and functioning of border crossings at that time. It was set only in 1998. Meanwhile, neither the Law «On the State Border of the Russian Federation», nor the Decree on Border Crossings via the State Border (Decree № 60 of the RF Government) envisaged that the legislative and normative base was put in accordance with the acting legislation, and that is why the proper legislation was applied to new border crossings and the ones opened after 1998.

The problem of non-functioning or non-required border crossings is especially important today. Based on the results of the passportization, the Federal Customs Service was offered to close 73 road border crossings. Meanwhile, the customs bodies have no right to close them because the road border crossings were set by international agreements between Russia and its neighbouring states. Consequently, to decide the further fate of the border crossings, respective consultations with the states are to be held and amendments are to be put into the agreements. The same thing goes for railway border crossings.

Nowadays many experts are sure that the Government should make the decision in the near future to close the excessive border crossings. However, the Government understands the situation pretty well. «Nowaday there are too many border crossings. We must define which of them we require», stated First Deputy Chairman of the RF Government Sergey Ivanov at one of the meetings. «The most profitable and legally justified border crossings are to be chosen», he stressed.

Officials Have Not Come to an Agreement
On the whole, the RF Government is to make over 100 decisions to open, close or to remove customs check points. However, there are some obstacles to that.

At the end of 2006, a Federal Law on putting amendments to legislation concerning improvement of state control at the state border crossings was approved (№ 266-ФЗ). Its fulfillment envisages adopting some decrees of the RF Government, which are to be prepared by six federal bodies of executive power.

In particular, the RF Ministry of Transport was entrusted to develop some decrees setting the order of defining the limits of border crossings, the list of special check-points and requirements to construction, as well as elaboration of the new edition of the Decree on Border Crossings. However, it turned out that the federal bodies of executive power have different standpoints on the functioning of border crossings, and the officials themselves admit that. 

«The meaning of the limits of a border crossing, and the activities that can be held there do not coincide in the developed by the Transport Ministry project of the Decree «On the Rules of Defining the Limits of Border Crossings», in the developed by the Federal Customs Service project «On the Activities Provided at Border Crossings», and in the project of the Federal Safety Service «On the Order of Setting Rules at Border Crossings», said Evgeny Moskvichev.

In the words of the Deputy Transport Minister, to provide timely introduction of the bills to the RF Government, it is necessary that the work of all the federal bodies of the executive power was coordinated in the frames of specially organized interdepartmental working groups.

Perhaps, it would be reasonable that the Government made a decision on creation of a special federal structure to be in charge of border crossings. The Ministry of Transport maintains that the approval of such a structure launch may be complicated because of many different opinions.

Partly, it is proved by the fact that many of the bills of the RF Government have not been completely approved yet. For example, the Ministry of Finance and the Ministry of Economic Development and Trade approve the documents on setting border crossings grudgingly if there is no detailed calculation of expenses and financial and economic bases, and the financial resources for the border crossings, which are not included into the Federal Target Programme «State Border of the Russian Federation (2003-2010)», are not mentioned. Thus, there arises a paradox: the demanded calculations of expenses can be made only on the basis of the project documentation, and the basis for project financing is the decision of the RF Government on border crossing setting approved by all the bodies in charge. 

Moreover, the federal bodies of the executive power providing different control at border crossings refuse to adjust the bills of the RF Government, if there is no proper financial provision for staff increase. And it is understandable. «Will you work without accommodation and wages?» – such a rhetorical question was asked in one of the structures.

At Any Price?
Still the problem is to be solved, because the issue is very important. As for the railway transport, even the three-day period for giving permission for transit, envisaged by the Russian legislation (Clause 3, Article 9 of the Customs Code of the RF), and a day spent to complete delivery (Clause 1, Article 92) take 20% of the total time of freight transportation along the Transsib. The situation in the road transport sector is the same. 

«Our analysis has revealed that in 2006 Russian road hauliers’ losses from idling while waiting for entering the check-up zone at the 14 main border crossings increased twofold year-on-year to over RUR 3 bln. And if we calculate the similar losses of foreign road hauliers, the economic damage is about RUR 7-7.5 bln», says Alexander Shershnev, Director of the Department of State Policy in the Sector of Road Facilities, Road and Public Passenger Transport, Geodesy and Cartography, the RF Ministry of Transport.

Transporters believe that the figure should be compared with the sum required to construct a modern check-up system. Then the latter will hardly be considered too large. 

Still, it is obvious that modernization and arrangement of border crossings is not the only problem of the Russian border. «Transporters should not pay for the control provided by the state. I mean the so-called «pseudo -customs» services, provided by some commercial organizations for the «comfort» at freight forwarding and passing border crossings. Customs must stay away from any commerce», claimed First Vice Prime Minister of the RF Government Sergey Ivanov. 

«Yes, there are many problems and we are to solve them. But if the situation were as negative as they say, we would have hardly gather the means we have gathered and transferred to the Budget», contradicts Head of the Federal Customs Service Andrey Belyaninov.

Summing up such different opinions, it is still possible to state that, in spite of all the contradictions, customs and transport hold out hands to each other. Will they shake hands?
 
 


Viewpoint
Sergey Ivanov,
First Deputy Chairman of the RF Government:
– I understand that the arrangement of state border crossings requires significant investments, and - which is more important – time. Still, there is no other way out, and we will have to do it anyway.





Evgeny Moskvichev,
Deputy Minister of Transport of the Russian Federation:
– Nowadays, when multimodal transportation develops actively, when logistic technologies are widely used to unite many participants of common international transport chain, we should not pretend that only consignors, consignees and transporters participate in the transportation.
    [~DETAIL_TEXT] => 
Transportation Volumes Grow
In 2006 the foreign trade turnover of Russia amounted to USD 749 bln, including USD 217 bln of import and USD 532 bln of export. The total volume of goods turnover (net weight) increased to 2.1 bln tons during the period. Meanwhile, the total cargo volume, transported as transit via the territory of the Russian Federation, was 14.2 mln tons for the total sum of USD 60 bln. The country’s customs bodies registered 3.7 mln of freight customs declarations, including 2.3 mln declarations for import, and 1.4 mln – for export.

Such results became possible due to the proper and well coordinated work of the service and active development of the transport network. According to experts’ estimations, the length of different means of communication of the Russian transport system at the beginning of 2006 was: 85 thousand kilometers of public railways, 55 thousand kilometers of railways belonging to industrial transport enterprises, 581 thousand kilometers of public motorways (including 531 thousand kilometers of hard-surface ones), 101.6 thousand kilometers of inner waterways, and 600 thousand kilometers of airlines, serviced by a single system of air communication organization. 
In 2006, over 73.5 mln passengers and 32.4 mln tons of freight was transported by the transport modes daily. The commercial cargo turnover of all the transport modes (including industrial railway transport, but excluding the pipeline network) amounted to 2,162.9 bln t/km (3.9% up year-on-year), while the volume of commercial freight transportation was 4,043.2 mln tons (+8.6%). According to the data of the Federal Statistics Service, in 2006 the turnover of transport organizations grew by 22.1% year-on-year to RUR 1,946 bln.

By 2010 the volume of export and import cargo transportation is expected to increase by 30-35% to 645-655 mln tons, including 550-555 mln tons of export freight. Transit cargo transportation is also to grow (approximately threefold) to 58-60 mln tons. As a result, the revenue of Russia from the increase of transport services export may grow by over RUR 150 bln. 
Meanwhile, achievement of the difficult targets the transport sector faces is impossible without close and efficient cooperation with customs and other controlling bodies, responsible for border crossing. 

Your Passport, Please 
Nowadays the efforts made by different state bodies to improve the quality and increase the efficiency of border crossings’ work have started to bear fruits. For example, in April 2007, the RF Federal Customs Service made a decision on setting two mobile inspecting and checking complexes in the Russian-Latvia sector of the state border. They were located on the many-sided border crossings of Burachki (Sebezhskaya customs, North-Western Customs Department) and Ubylinka (Pskovskaya customs, North-Western Customs Department). Such a decision was a reaction of the RF Federal Customs Service top management to the queues that emerged at some road border crossings on the RF-EU border, and the X-ray equipment enables customers to inspect any vehicle without opening its freight section.

Transporters also do their best. According to Oleg Belozerov, Head of the Federal Road Agency (Rosavtodor), the RF Ministry of Transport, Rosavtodor holds large-scaled works to solve the problems at border crossings. To do it, the Agency has developed a plan – schedule of the reconstruction of roads leading to the most crowded border crossings in 2007-2008. «The document envisages reconstruction of the roads, construction of additional traffic lanes, car parks, road surface repair, setting of additional highway markings», said O.Belozerov.

Last year the road bypassing Vyborg (Leningrad region) was put into operation; the construction of a motorway bypassing Sovetsk town (Kaliningrad region) was started. Besides, in the Kaliningrad region, the construction of a motorway bypassing Chernyshevskoye settlement is being completed. This year, it is planned to introduce demarcation strips with the length of 800 m on the Kaliningrad-Mamonovo II motorway near the border crossing. The capital repair of the motoway (5-6 km) will be held on the approach to the Rudnya border crossing. There it is planned to enlarge the road by one traffic lane from each side and transfer the weighing equipment from the main lane to an additional one.

Meanwhile, the most systemic and scaled measure taken by the state bodies was the passportization of border crossing, carried out in 2006 in accordance with Decree № 312 of the RF Government «On Passports of Border Crossings on the State Border of the Russian Federation» from May 27, 2006. In accordance with the decisions of the State Border Committee, the RF Ministry of Transport coordinated passportization of the border crossings. It attracted the RF Federal Agency of River and Sea Transport, the Federal Agency of Air Transport, the Federal Agency of Railway Transport, Federal Inspectorate in the Transport Sector, Federal Fishing Agency, Federal Customs Service, Federal Safety Service and Federal Migration Service, as well as the state inspectorate bodies in the sectors of agriculture, consumer products and communication. 

The prepared by the RF Ministry of Transport list of objects to be passportized included 446 border check points, wherein 190 road ones, 97 sea ones, 76 air ones, 59 railway ones and 24 river ones. Only 384 of them were approved (168 car border crossings, 75 sea ones, 66 air ones, 59 railway ones and 16 river ones). The remaining 62 border crossings were not passportized because no international freight or passenger transportation is provided via them.

«Due to the measures taken, we have managed to obtain reliable data, enabling us to define the state of border crossings; presence of private property on their territory; the intensity of freight and passenger flows there, and other useful information», said Evgeny Moskvichev, Deputy Head of RF Transport Ministry.

Old and Worn 
Due to the analysis of the data received during the passportization, the specialists obtained useful information and revealed a number of problems.

Firstly, most border crossings are in bad need of reconstruction. For example, the approaches to many Russian border crossings do not enable to separate the flows of vehicles to provide a green corridor for empty trucks, buses and cars; there is a lack of car parks for the transport undergoing customs procedures…

The RF Ministry of Transport believes that the reconstruction of border crossings must be financed from the federal budget in the framework of the Federal Target Programme «State Border of the Russian Federation (2003-2010)», and it is necessary to put amendments to it in 2007. However, it is impossible to do it without the Russian Federal Customs Service, which is one of the main customers of the programme. 

In their turn, the top-management of the Russian customs bodies insists that the issues of the state border arrangement should be realized together with the construction of modern warehousing customs and logistic terminals, as well as development of border and transport infrastructure. «Whatever the capacity of customs border crossings is, the lack of any of the mentioned components may cause queues and misbalance of the measures taken by customs bodies and the Ministry of Transport», Deputy Head of the Russian Federal Customs Service Vladimir Malinin is certain. 

On the other hand, the arrangement of border crossings and the territories near them has often little normative and organizational basis. The formation of the system of existing border crossings took a large period of time; it was based on different conceptual approaches, and so it was based on out-of-date normative and legislative acts. For example, over 70% of operating border crossings, located in Russian sea ports and airports, were put into operation long before 1993, when the Law «On the State Border of the Russian Federation» was approved. «The border crossing in the commercial sea port of Novorossiysk works in accordance with the Decree of the Council of Ministers of the USSR from 06.11.1951, and the one in Sheremetyevo airport – with the Decree from 02.03.1960», E.Moskvichev comments on the situation. 

The system of railway and road border crossings was recommenced when the new borders of the Russian Federation were formed (i.e. after the collapse of the Soviet Union), but there was no common order of launching, opening and functioning of border crossings at that time. It was set only in 1998. Meanwhile, neither the Law «On the State Border of the Russian Federation», nor the Decree on Border Crossings via the State Border (Decree № 60 of the RF Government) envisaged that the legislative and normative base was put in accordance with the acting legislation, and that is why the proper legislation was applied to new border crossings and the ones opened after 1998.

The problem of non-functioning or non-required border crossings is especially important today. Based on the results of the passportization, the Federal Customs Service was offered to close 73 road border crossings. Meanwhile, the customs bodies have no right to close them because the road border crossings were set by international agreements between Russia and its neighbouring states. Consequently, to decide the further fate of the border crossings, respective consultations with the states are to be held and amendments are to be put into the agreements. The same thing goes for railway border crossings.

Nowadays many experts are sure that the Government should make the decision in the near future to close the excessive border crossings. However, the Government understands the situation pretty well. «Nowaday there are too many border crossings. We must define which of them we require», stated First Deputy Chairman of the RF Government Sergey Ivanov at one of the meetings. «The most profitable and legally justified border crossings are to be chosen», he stressed.

Officials Have Not Come to an Agreement
On the whole, the RF Government is to make over 100 decisions to open, close or to remove customs check points. However, there are some obstacles to that.

At the end of 2006, a Federal Law on putting amendments to legislation concerning improvement of state control at the state border crossings was approved (№ 266-ФЗ). Its fulfillment envisages adopting some decrees of the RF Government, which are to be prepared by six federal bodies of executive power.

In particular, the RF Ministry of Transport was entrusted to develop some decrees setting the order of defining the limits of border crossings, the list of special check-points and requirements to construction, as well as elaboration of the new edition of the Decree on Border Crossings. However, it turned out that the federal bodies of executive power have different standpoints on the functioning of border crossings, and the officials themselves admit that. 

«The meaning of the limits of a border crossing, and the activities that can be held there do not coincide in the developed by the Transport Ministry project of the Decree «On the Rules of Defining the Limits of Border Crossings», in the developed by the Federal Customs Service project «On the Activities Provided at Border Crossings», and in the project of the Federal Safety Service «On the Order of Setting Rules at Border Crossings», said Evgeny Moskvichev.

In the words of the Deputy Transport Minister, to provide timely introduction of the bills to the RF Government, it is necessary that the work of all the federal bodies of the executive power was coordinated in the frames of specially organized interdepartmental working groups.

Perhaps, it would be reasonable that the Government made a decision on creation of a special federal structure to be in charge of border crossings. The Ministry of Transport maintains that the approval of such a structure launch may be complicated because of many different opinions.

Partly, it is proved by the fact that many of the bills of the RF Government have not been completely approved yet. For example, the Ministry of Finance and the Ministry of Economic Development and Trade approve the documents on setting border crossings grudgingly if there is no detailed calculation of expenses and financial and economic bases, and the financial resources for the border crossings, which are not included into the Federal Target Programme «State Border of the Russian Federation (2003-2010)», are not mentioned. Thus, there arises a paradox: the demanded calculations of expenses can be made only on the basis of the project documentation, and the basis for project financing is the decision of the RF Government on border crossing setting approved by all the bodies in charge. 

Moreover, the federal bodies of the executive power providing different control at border crossings refuse to adjust the bills of the RF Government, if there is no proper financial provision for staff increase. And it is understandable. «Will you work without accommodation and wages?» – such a rhetorical question was asked in one of the structures.

At Any Price?
Still the problem is to be solved, because the issue is very important. As for the railway transport, even the three-day period for giving permission for transit, envisaged by the Russian legislation (Clause 3, Article 9 of the Customs Code of the RF), and a day spent to complete delivery (Clause 1, Article 92) take 20% of the total time of freight transportation along the Transsib. The situation in the road transport sector is the same. 

«Our analysis has revealed that in 2006 Russian road hauliers’ losses from idling while waiting for entering the check-up zone at the 14 main border crossings increased twofold year-on-year to over RUR 3 bln. And if we calculate the similar losses of foreign road hauliers, the economic damage is about RUR 7-7.5 bln», says Alexander Shershnev, Director of the Department of State Policy in the Sector of Road Facilities, Road and Public Passenger Transport, Geodesy and Cartography, the RF Ministry of Transport.

Transporters believe that the figure should be compared with the sum required to construct a modern check-up system. Then the latter will hardly be considered too large. 

Still, it is obvious that modernization and arrangement of border crossings is not the only problem of the Russian border. «Transporters should not pay for the control provided by the state. I mean the so-called «pseudo -customs» services, provided by some commercial organizations for the «comfort» at freight forwarding and passing border crossings. Customs must stay away from any commerce», claimed First Vice Prime Minister of the RF Government Sergey Ivanov. 

«Yes, there are many problems and we are to solve them. But if the situation were as negative as they say, we would have hardly gather the means we have gathered and transferred to the Budget», contradicts Head of the Federal Customs Service Andrey Belyaninov.

Summing up such different opinions, it is still possible to state that, in spite of all the contradictions, customs and transport hold out hands to each other. Will they shake hands?
 
 


Viewpoint
Sergey Ivanov,
First Deputy Chairman of the RF Government:
– I understand that the arrangement of state border crossings requires significant investments, and - which is more important – time. Still, there is no other way out, and we will have to do it anyway.





Evgeny Moskvichev,
Deputy Minister of Transport of the Russian Federation:
– Nowadays, when multimodal transportation develops actively, when logistic technologies are widely used to unite many participants of common international transport chain, we should not pretend that only consignors, consignees and transporters participate in the transportation.
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Step Aside
However, the share of locomotives owned by transportation companies is forecasted to amount to 10% of the total locomotive park by 2010. This is a very optimistic forecast. In 10 years that have passed since the purchase of the first mainline locomotive by a transport company (it was Transoil), the dynamics of private locomotive park has not been outstanding. Work with own locomotives fundamentally differs from  own wagons operating. That is why there are a few companies that were brave enough to put their budget at stake. The largest locomotive owners are OOO BaltTransService (BTS) (49 units) and OOO Transoil (37 diesel locomotives). The share of other companies is small: OOO Firma Transgarant owns 9 locomotives, OAO Far Eastern Transport Group (DVTG) has 7 units, OAO Independent Transportation Company (NPK) – 4 etc.

Meanwhile, the problems, specifics of maintenance and exploitation of a locomotive park do not depend on its size, so they are the same for every locomotive owner.

The first obstacle that both companies-operators who wanted to provide a full pack of services faced was the lack of normative and legislative base to get permission for mainline locomotives to enter the Russian railways public network. «There is no state normative base», agreed Deputy Chief of the Technical Department Alexander Gerasimov. «But railways have a special order to allow access to private locomotives, and we registered all the documents in accordance with the order. As a rule, it takes only a week to «legalize» one diesel locomotive». However, such a situation is an exception. A representative of OOO Transgarant Alexander Metelkin specified that on the routes where private locomotives have operated for a long time, there are no problems, although company has to ask for a permission of the Head of the railway to adjust the technology of work. However, it will take over a year to launch a locomotive to serve a new route.

A representative of DVTG noted that OAO RZD does its best to keep the monopoly for provision of locomotive services, including signing relevant decrees. 

Since the status of a carrier, whose functions include freight reception and delivery, responsibility for it during transportation, and planning of transportation, is not defined, it turns out that all the companies mentioned above act as a consignor in their relations with the infrastructure owner. And this prevents them from developing their own business and becoming a really independent carrier. Besides, currently Tariff regulation № 10-01 contains no part devoted to the fee for infrastructure usage by carriers.

Repair Is a Problem
The technical maintenance and repair are very important for locomotive owners. All the companies agree that the locomotive service market has not been formed yet. «Market means competition», said V.Obernikhin. «And nowadays all the technical maintenance and current repair are provided by locomotive depots incorporated into OAO RZD. There is an alternative repair base only in the capital repair sector». 

However, a representative of DVTG reported that there are many companies specializing in providing technical services and technical repair of locomotives to industrial and railway transport enterprises, private companies and OAO RZD. Besides, the companies have licenses for such work (licensing of the activity was abolished from the beginning of 2006), and have their own or rented from OAO RZD areas and necessary equipment. Such companies offer the services of mobile teams which repair and maintain locomotives where they are located, while the repair enterprises of OAO RZD do not provide such a service. On the whole, the locomotives of DVTG are serviced by the enterprises of the Dalnevostochnaya (Far Eastern) railway and the railways of Yakutia.

Almost all the polled companies are dissatisfied with the system of private locomotives repair acting at the enterprises of the railway monopoly. The situation with locomotives is similar to the one with private wagons: repair according to leftover principle, idling time exceeds the norm, and the quality leaves much to be desired. Managers of Transoil company have noticed that the depots seem to be financially not interested in the increase of private locomotives repair volumes.

Irina Chiganashkina also agreed that the staff providing private locomotives repair is really not financially motivated. As a result, it is the rolling stock owner who suffers from it. For example, the coefficient of OAO BaltTransService’s diesel locomotive output to the line amounts to only 60% (i.e. out of 49 units, sometimes only 30-31 are used on the rail network). «After repair, many joints and units of locomotives break down during transportation», claims A. Gerasimov. «And our company suffers losses. If a unit has broken down, it must be transported to a depot, so we pay for the infrastructure, brigade and fuel. For example, the running of a diesel locomotive along the infrastructure from Novaya Yaroslavskaya station to Dno station costs RUR 80 thousand. All in all, the company spends on the reserve running of locomotives about RUR 2 mln monthly», he summed up.

«An own locomotive base would be a good solution to the problem», Anatoly Ivanov, Head of the Wagon Service of OOO Transoil, asserts. The situation could be improved by investments into the existing base to increase the producing capacities, and enlarge repair positions. But for many companies this is the issue of distant future. «RZD does not want to give us its workshops for usual wagons repair. We would like to try our powers in this segment at first», said A. Metelkin.

The exclusion is Transoil and BTS only. Last year, the latter developed a business plan of investments into Dno locomotive depot. It was planned to make an additional pit to provide technical services, and modernize the depot. By now, only the capital repair of pits has been held. RUR 109 mln is not spent yet. «All the documents required have been developed onle recently for the railway to have the right to spend the money. The documents were being adjusted for two years. And they do not let us rent or purchase a depot anywhere else. If we had an opportunity, we would purchase a depot,» A. Gerasimov shared his opinion. Transoil is also examining the possibility of investing into the depot Saint-Petersburg – Sortirovochny – Moskovsky.

Head of Oktyabrskaya railway Viktor Stepov doubts the economic justification of such projects. «Is it worth separating operators and their switching to self-sufficiency? Even if the company owns a depot, the maintenance of its locomotive will hardly be cheaper than the park service network of OAO RZD», he is certain. 

The question is a debatable one. It may be unreasonable from the economical standpoint to launch a repair base for your own company only. Perhaps, private locomotive owners should cooperate to succeed in the sector.

The repair aspect is also urgent because the primary locomotive market is practically closed for private owners. A lot of time will pass before the operator business starts to invest into Russian locomotive building. New freight mainline locomotives have been developed, but they are exploited and tested, what takes time. Companies-operators believe that the Kolomna locomotives may be good, but the tests have not been completed yet, and the units are very expensive, so nobody knows how long the payback period will take. «For example, there are only test samples of the latest locomotives of 2TЭ25 and 2ТЭ70 types, and we will not purchase them in the near future, because there will be problems servicing them in locomotive depots», specified V.Obernikhin.

«Up to now serial production of no freight locomotives has started», tells I. Chiganashkina. «That is why, on the mainline locomotives market, there are offers to sell locomotives used earlier in the Republics of the USSR, which underwent capital repair and their life-time was prolonged, and some of them were modernized using the latest achievements of VNIKTI, VNIIZhT and PKBCT. The locomotives are reliable and meet all the standards». However, there also may be wagons in poor condition on the secondhand market. «All good locomotives are in use, and all the units being sold are junk. We purchased a locomotive for RUR 24 mln, and then had to spend 4 mln more on repair», said A. Metelkin.

BaltTransService and Transoil chose diesel locomotives of 2ТЭ116 type produced by Lugansk plant. However, they underwent capital repair as well. 

Let’s Agree on Price 
Another obstacle to the use of own locomotives (and consequently, development of private carriers institute) is unregulated tariff issues. Since OAO RZD has not yet given to the Russian Federal Tariff Service separate facilities record keepings, the latter cannot define the locomotive constituent and determine the fee for the infrastructure that its owner is to get. OAO RZD is against the separation of the locomotive constituent, because from the revenues standpoint, the company suffers losses for such transportation. Consequently, offer of different tariff preferences to owners will hardly be forced. 

One of the main problems when it comes to working with private trains is the change of the type of locomotives: from electric locomotive to a diesel one and vice versa. The acting tariff system prevents the economically efficient work of operators at such transportation. «The section of the Tariff Regulation that relates to the tariffs on locomotives has a lot of drawbacks», believes A. Metelkin. «The problem is that it is impossible to use one’s own trains, if the amount of wagons dispatch is smaller than the average network figure». He also said that the break-even point of own locomotives usage is about 55 wagons. Most companies’ trains consist of 44 wagons only, because of the small length of railway stations. «We would be interested to transport 60 or even 70 wagons on a route. But such destinations exist on the Transsib only and only in those places where coal is carried for export. So, it turns out that the use of one’s own locomotive is not always profitable».

Transgarant company has transported cargo in its own trains from OAO Holding company Yakutugol to Neryungrinskaya hydroelectric power plant for a long time. The route is 29 km long, and only 7 km of it consists of OAO RZD’s tracks . Besides, the company discusses the opportunity of brimstone transportation in its own rolling stock, but the station can not receive trains consisting of more than 44 wagons. «We are trying to reach a compromise, to persuade the management of the railway to prolong the dispatching route to 60 wagons. Unfortunately, no results have been achieved so far. But we do not want to work and suffer losses. Now our locomotives are efficiently used on the approach tracks, they deliver wagons and take them away,» said A. Metelkin.
 
Future is Vague 
In spite of all the difficulties mentioned above, no company believes that the purchase of locomotives was a mistake. «Own trains proved their effectiveness in practice», said V. Obernikhin. «Using them we reduce the wagon turnover, which enables us to reduce the wagon park at some directions». Irina Chiganashkina also stated that exploitation of own mainline locomotive enables to improve the figures of rolling stock usage, including the reduction of full wagon turnover time, and the increase of the sectoral speed. However, she said that the non-productive idling of a locomotive may increase, while it is waiting for its own route in the places of loading and unloading. Since the loading volume is relatively small, and the routes of the own locomotives service may be long, it is rather difficult to join locomotives to the direct and reverse trains in the train schedule considering the locomotive brigades. There is some difference in the management of private locomotives and OAO RZD’s inventory park. The specialists of NPK noticed that OAO RZD’s locomotives have a different principle of work: they may be transferred to any route. «Our rolling stock units service one and the same route which is why we (together with consignors and consignees) do our best for the idling of a locomotive at the stations where freight is loaded/unloaded to be minimal», said V. Obernikhin.

Evaluating the efficiency of private locomotive’s work, the routes serviced by it play a significant role. It is better to service some definite sector, instead of running all over the network.

Many companies’ budgets envisage rolling stock park enlargement. For example, OAO Independent Transportation Company is going to enlarge its locomotive park to 40 units. There appear other potential owners of locomotives. In particular, MMK-Trans discusses investment of USD 10 mln into its own locomotive park. If the average price is USD 2 mln per locomotive, the company may purchase 5 units. However, the managers of the company refused to comment on details.

«If it was profitable, all companies would use their own locomotives, because companies-operators have enough money for that», Alexander Metelkin argues. In any case, one’s own locomotive is the next step to the market of transportation services. And it is possible to speak about competition only when normal transportation companies providing the full pack of relevant services, and first of all, locomotive services, work in the sector.
Viewpoint
Tigran Saakyan,
Expert and analyst of the Railway Transport Researches Department, Institute of Natural Monopolies’ Problems:
– The purchase and exploitation of private locomotives have some specific features. Firstly, there is no sufficient normative base, or technologies of non-discriminating cooperation between infrastructure and private locomotives. It is one of the most significant obstacles for the development of a private locomotive park. While there are no clear defined procedures and orders, private owners of locomotives can hardly function efficiently. 

Secondly, the area where private locomotives run is limited, and there is a necessity of constant technical servicing in depots. Speaking of private owners of locomotives, many market players appeal to the fact that nowadays there are owners of freight wagons, who can use the accumulated experience to work with their own locomotives; however, it is not quite correct. Work with private locomotives is a fundamentally different business, which is defined by the specific nature of locomotives. The distance that can be serviced by a locomotive is limited, so providing the service of a long-distance transportation is impossible without locomotive replacement on the way. Besides, specially equipped depots are necessary to service locomotives; most of them are owned by OAO RZD as the largest locomotive owner in Russia.

Thirdly, it is impossible to forecast the «economy» of the locomotive business. And the cost of locomotives is very high. According to the estimations of economic efficiency of locomotives purchase, on the one hand, a private company benefits due to the lack of rent fee; on the other hand, its locomotive is to meet all the requirements to rolling stock acting at the Russian railway network. And this means the necessity of timely and high-quality maintenance; thus there appear additional financial expenses. Locomotive servicing is the price that a private rolling stock owner is to pay for the right to use his park. The private system of locomotives technical servicing becomes economically profitable after the amount of locomotives exceeds some definite level (according to estimations, it makes 70-80 locomotives).

Besides the locomotive repair enterprises, another serious problem that may be faced by private locomotive owners is the difficult situation with locomotive brigades. The staff turnover in the sector is very high, which leads to the worsening of the quality of services they provide. The difference between own and rented locomotive brigades is the necessity to train one’s own professionals, which is a very expensive process for private locomotive owners. It makes them rent locomotive brigades of OAO RZD;  thus, they create problems for the railway monopoly, because OAO Russian Railways lacks brigades as well. Meanwhile, OAO RZD, which spends money on staff training, pays them a smaller fee compared to private companies. As a result, there is such a situation that OAO RZD goes in for staff training for private locomotive owners. 

An important issue concerning the specific economic characteristics of private locomotive exploitation is tariffs. Nowadays, private locomotive owners strive to get the right to calculate the locomotive constituent, based on the level of their expenses on locomotive maintenance which are higher than the ones of OAO RZD because of a smaller park volume. Such situation will lead either to the tariff increase, or to the reduction of the infrastructure constituent. The first may provoke the reduction of the demand for transportation, and the second could lead to insufficient financing of the infrastructure maintenance.
    [~DETAIL_TEXT] => 
Step Aside
However, the share of locomotives owned by transportation companies is forecasted to amount to 10% of the total locomotive park by 2010. This is a very optimistic forecast. In 10 years that have passed since the purchase of the first mainline locomotive by a transport company (it was Transoil), the dynamics of private locomotive park has not been outstanding. Work with own locomotives fundamentally differs from  own wagons operating. That is why there are a few companies that were brave enough to put their budget at stake. The largest locomotive owners are OOO BaltTransService (BTS) (49 units) and OOO Transoil (37 diesel locomotives). The share of other companies is small: OOO Firma Transgarant owns 9 locomotives, OAO Far Eastern Transport Group (DVTG) has 7 units, OAO Independent Transportation Company (NPK) – 4 etc.

Meanwhile, the problems, specifics of maintenance and exploitation of a locomotive park do not depend on its size, so they are the same for every locomotive owner.

The first obstacle that both companies-operators who wanted to provide a full pack of services faced was the lack of normative and legislative base to get permission for mainline locomotives to enter the Russian railways public network. «There is no state normative base», agreed Deputy Chief of the Technical Department Alexander Gerasimov. «But railways have a special order to allow access to private locomotives, and we registered all the documents in accordance with the order. As a rule, it takes only a week to «legalize» one diesel locomotive». However, such a situation is an exception. A representative of OOO Transgarant Alexander Metelkin specified that on the routes where private locomotives have operated for a long time, there are no problems, although company has to ask for a permission of the Head of the railway to adjust the technology of work. However, it will take over a year to launch a locomotive to serve a new route.

A representative of DVTG noted that OAO RZD does its best to keep the monopoly for provision of locomotive services, including signing relevant decrees. 

Since the status of a carrier, whose functions include freight reception and delivery, responsibility for it during transportation, and planning of transportation, is not defined, it turns out that all the companies mentioned above act as a consignor in their relations with the infrastructure owner. And this prevents them from developing their own business and becoming a really independent carrier. Besides, currently Tariff regulation № 10-01 contains no part devoted to the fee for infrastructure usage by carriers.

Repair Is a Problem
The technical maintenance and repair are very important for locomotive owners. All the companies agree that the locomotive service market has not been formed yet. «Market means competition», said V.Obernikhin. «And nowadays all the technical maintenance and current repair are provided by locomotive depots incorporated into OAO RZD. There is an alternative repair base only in the capital repair sector». 

However, a representative of DVTG reported that there are many companies specializing in providing technical services and technical repair of locomotives to industrial and railway transport enterprises, private companies and OAO RZD. Besides, the companies have licenses for such work (licensing of the activity was abolished from the beginning of 2006), and have their own or rented from OAO RZD areas and necessary equipment. Such companies offer the services of mobile teams which repair and maintain locomotives where they are located, while the repair enterprises of OAO RZD do not provide such a service. On the whole, the locomotives of DVTG are serviced by the enterprises of the Dalnevostochnaya (Far Eastern) railway and the railways of Yakutia.

Almost all the polled companies are dissatisfied with the system of private locomotives repair acting at the enterprises of the railway monopoly. The situation with locomotives is similar to the one with private wagons: repair according to leftover principle, idling time exceeds the norm, and the quality leaves much to be desired. Managers of Transoil company have noticed that the depots seem to be financially not interested in the increase of private locomotives repair volumes.

Irina Chiganashkina also agreed that the staff providing private locomotives repair is really not financially motivated. As a result, it is the rolling stock owner who suffers from it. For example, the coefficient of OAO BaltTransService’s diesel locomotive output to the line amounts to only 60% (i.e. out of 49 units, sometimes only 30-31 are used on the rail network). «After repair, many joints and units of locomotives break down during transportation», claims A. Gerasimov. «And our company suffers losses. If a unit has broken down, it must be transported to a depot, so we pay for the infrastructure, brigade and fuel. For example, the running of a diesel locomotive along the infrastructure from Novaya Yaroslavskaya station to Dno station costs RUR 80 thousand. All in all, the company spends on the reserve running of locomotives about RUR 2 mln monthly», he summed up.

«An own locomotive base would be a good solution to the problem», Anatoly Ivanov, Head of the Wagon Service of OOO Transoil, asserts. The situation could be improved by investments into the existing base to increase the producing capacities, and enlarge repair positions. But for many companies this is the issue of distant future. «RZD does not want to give us its workshops for usual wagons repair. We would like to try our powers in this segment at first», said A. Metelkin.

The exclusion is Transoil and BTS only. Last year, the latter developed a business plan of investments into Dno locomotive depot. It was planned to make an additional pit to provide technical services, and modernize the depot. By now, only the capital repair of pits has been held. RUR 109 mln is not spent yet. «All the documents required have been developed onle recently for the railway to have the right to spend the money. The documents were being adjusted for two years. And they do not let us rent or purchase a depot anywhere else. If we had an opportunity, we would purchase a depot,» A. Gerasimov shared his opinion. Transoil is also examining the possibility of investing into the depot Saint-Petersburg – Sortirovochny – Moskovsky.

Head of Oktyabrskaya railway Viktor Stepov doubts the economic justification of such projects. «Is it worth separating operators and their switching to self-sufficiency? Even if the company owns a depot, the maintenance of its locomotive will hardly be cheaper than the park service network of OAO RZD», he is certain. 

The question is a debatable one. It may be unreasonable from the economical standpoint to launch a repair base for your own company only. Perhaps, private locomotive owners should cooperate to succeed in the sector.

The repair aspect is also urgent because the primary locomotive market is practically closed for private owners. A lot of time will pass before the operator business starts to invest into Russian locomotive building. New freight mainline locomotives have been developed, but they are exploited and tested, what takes time. Companies-operators believe that the Kolomna locomotives may be good, but the tests have not been completed yet, and the units are very expensive, so nobody knows how long the payback period will take. «For example, there are only test samples of the latest locomotives of 2TЭ25 and 2ТЭ70 types, and we will not purchase them in the near future, because there will be problems servicing them in locomotive depots», specified V.Obernikhin.

«Up to now serial production of no freight locomotives has started», tells I. Chiganashkina. «That is why, on the mainline locomotives market, there are offers to sell locomotives used earlier in the Republics of the USSR, which underwent capital repair and their life-time was prolonged, and some of them were modernized using the latest achievements of VNIKTI, VNIIZhT and PKBCT. The locomotives are reliable and meet all the standards». However, there also may be wagons in poor condition on the secondhand market. «All good locomotives are in use, and all the units being sold are junk. We purchased a locomotive for RUR 24 mln, and then had to spend 4 mln more on repair», said A. Metelkin.

BaltTransService and Transoil chose diesel locomotives of 2ТЭ116 type produced by Lugansk plant. However, they underwent capital repair as well. 

Let’s Agree on Price 
Another obstacle to the use of own locomotives (and consequently, development of private carriers institute) is unregulated tariff issues. Since OAO RZD has not yet given to the Russian Federal Tariff Service separate facilities record keepings, the latter cannot define the locomotive constituent and determine the fee for the infrastructure that its owner is to get. OAO RZD is against the separation of the locomotive constituent, because from the revenues standpoint, the company suffers losses for such transportation. Consequently, offer of different tariff preferences to owners will hardly be forced. 

One of the main problems when it comes to working with private trains is the change of the type of locomotives: from electric locomotive to a diesel one and vice versa. The acting tariff system prevents the economically efficient work of operators at such transportation. «The section of the Tariff Regulation that relates to the tariffs on locomotives has a lot of drawbacks», believes A. Metelkin. «The problem is that it is impossible to use one’s own trains, if the amount of wagons dispatch is smaller than the average network figure». He also said that the break-even point of own locomotives usage is about 55 wagons. Most companies’ trains consist of 44 wagons only, because of the small length of railway stations. «We would be interested to transport 60 or even 70 wagons on a route. But such destinations exist on the Transsib only and only in those places where coal is carried for export. So, it turns out that the use of one’s own locomotive is not always profitable».

Transgarant company has transported cargo in its own trains from OAO Holding company Yakutugol to Neryungrinskaya hydroelectric power plant for a long time. The route is 29 km long, and only 7 km of it consists of OAO RZD’s tracks . Besides, the company discusses the opportunity of brimstone transportation in its own rolling stock, but the station can not receive trains consisting of more than 44 wagons. «We are trying to reach a compromise, to persuade the management of the railway to prolong the dispatching route to 60 wagons. Unfortunately, no results have been achieved so far. But we do not want to work and suffer losses. Now our locomotives are efficiently used on the approach tracks, they deliver wagons and take them away,» said A. Metelkin.
 
Future is Vague 
In spite of all the difficulties mentioned above, no company believes that the purchase of locomotives was a mistake. «Own trains proved their effectiveness in practice», said V. Obernikhin. «Using them we reduce the wagon turnover, which enables us to reduce the wagon park at some directions». Irina Chiganashkina also stated that exploitation of own mainline locomotive enables to improve the figures of rolling stock usage, including the reduction of full wagon turnover time, and the increase of the sectoral speed. However, she said that the non-productive idling of a locomotive may increase, while it is waiting for its own route in the places of loading and unloading. Since the loading volume is relatively small, and the routes of the own locomotives service may be long, it is rather difficult to join locomotives to the direct and reverse trains in the train schedule considering the locomotive brigades. There is some difference in the management of private locomotives and OAO RZD’s inventory park. The specialists of NPK noticed that OAO RZD’s locomotives have a different principle of work: they may be transferred to any route. «Our rolling stock units service one and the same route which is why we (together with consignors and consignees) do our best for the idling of a locomotive at the stations where freight is loaded/unloaded to be minimal», said V. Obernikhin.

Evaluating the efficiency of private locomotive’s work, the routes serviced by it play a significant role. It is better to service some definite sector, instead of running all over the network.

Many companies’ budgets envisage rolling stock park enlargement. For example, OAO Independent Transportation Company is going to enlarge its locomotive park to 40 units. There appear other potential owners of locomotives. In particular, MMK-Trans discusses investment of USD 10 mln into its own locomotive park. If the average price is USD 2 mln per locomotive, the company may purchase 5 units. However, the managers of the company refused to comment on details.

«If it was profitable, all companies would use their own locomotives, because companies-operators have enough money for that», Alexander Metelkin argues. In any case, one’s own locomotive is the next step to the market of transportation services. And it is possible to speak about competition only when normal transportation companies providing the full pack of relevant services, and first of all, locomotive services, work in the sector.
Viewpoint
Tigran Saakyan,
Expert and analyst of the Railway Transport Researches Department, Institute of Natural Monopolies’ Problems:
– The purchase and exploitation of private locomotives have some specific features. Firstly, there is no sufficient normative base, or technologies of non-discriminating cooperation between infrastructure and private locomotives. It is one of the most significant obstacles for the development of a private locomotive park. While there are no clear defined procedures and orders, private owners of locomotives can hardly function efficiently. 

Secondly, the area where private locomotives run is limited, and there is a necessity of constant technical servicing in depots. Speaking of private owners of locomotives, many market players appeal to the fact that nowadays there are owners of freight wagons, who can use the accumulated experience to work with their own locomotives; however, it is not quite correct. Work with private locomotives is a fundamentally different business, which is defined by the specific nature of locomotives. The distance that can be serviced by a locomotive is limited, so providing the service of a long-distance transportation is impossible without locomotive replacement on the way. Besides, specially equipped depots are necessary to service locomotives; most of them are owned by OAO RZD as the largest locomotive owner in Russia.

Thirdly, it is impossible to forecast the «economy» of the locomotive business. And the cost of locomotives is very high. According to the estimations of economic efficiency of locomotives purchase, on the one hand, a private company benefits due to the lack of rent fee; on the other hand, its locomotive is to meet all the requirements to rolling stock acting at the Russian railway network. And this means the necessity of timely and high-quality maintenance; thus there appear additional financial expenses. Locomotive servicing is the price that a private rolling stock owner is to pay for the right to use his park. The private system of locomotives technical servicing becomes economically profitable after the amount of locomotives exceeds some definite level (according to estimations, it makes 70-80 locomotives).

Besides the locomotive repair enterprises, another serious problem that may be faced by private locomotive owners is the difficult situation with locomotive brigades. The staff turnover in the sector is very high, which leads to the worsening of the quality of services they provide. The difference between own and rented locomotive brigades is the necessity to train one’s own professionals, which is a very expensive process for private locomotive owners. It makes them rent locomotive brigades of OAO RZD;  thus, they create problems for the railway monopoly, because OAO Russian Railways lacks brigades as well. Meanwhile, OAO RZD, which spends money on staff training, pays them a smaller fee compared to private companies. As a result, there is such a situation that OAO RZD goes in for staff training for private locomotive owners. 

An important issue concerning the specific economic characteristics of private locomotive exploitation is tariffs. Nowadays, private locomotive owners strive to get the right to calculate the locomotive constituent, based on the level of their expenses on locomotive maintenance which are higher than the ones of OAO RZD because of a smaller park volume. Such situation will lead either to the tariff increase, or to the reduction of the infrastructure constituent. The first may provoke the reduction of the demand for transportation, and the second could lead to insufficient financing of the infrastructure maintenance.
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    [~PREVIEW_TEXT] => The inventory park of locomotives of OAO Russian Railways (RZD) consists of 20,000 units. Exterior organizations have over 170 mainline diesel locomotives that have a right to run along OAO RZD network, i.e. less than 1% of the total amount of locomotives used on the railway network.
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Step Aside
However, the share of locomotives owned by transportation companies is forecasted to amount to 10% of the total locomotive park by 2010. This is a very optimistic forecast. In 10 years that have passed since the purchase of the first mainline locomotive by a transport company (it was Transoil), the dynamics of private locomotive park has not been outstanding. Work with own locomotives fundamentally differs from  own wagons operating. That is why there are a few companies that were brave enough to put their budget at stake. The largest locomotive owners are OOO BaltTransService (BTS) (49 units) and OOO Transoil (37 diesel locomotives). The share of other companies is small: OOO Firma Transgarant owns 9 locomotives, OAO Far Eastern Transport Group (DVTG) has 7 units, OAO Independent Transportation Company (NPK) – 4 etc.

Meanwhile, the problems, specifics of maintenance and exploitation of a locomotive park do not depend on its size, so they are the same for every locomotive owner.

The first obstacle that both companies-operators who wanted to provide a full pack of services faced was the lack of normative and legislative base to get permission for mainline locomotives to enter the Russian railways public network. «There is no state normative base», agreed Deputy Chief of the Technical Department Alexander Gerasimov. «But railways have a special order to allow access to private locomotives, and we registered all the documents in accordance with the order. As a rule, it takes only a week to «legalize» one diesel locomotive». However, such a situation is an exception. A representative of OOO Transgarant Alexander Metelkin specified that on the routes where private locomotives have operated for a long time, there are no problems, although company has to ask for a permission of the Head of the railway to adjust the technology of work. However, it will take over a year to launch a locomotive to serve a new route.

A representative of DVTG noted that OAO RZD does its best to keep the monopoly for provision of locomotive services, including signing relevant decrees. 

Since the status of a carrier, whose functions include freight reception and delivery, responsibility for it during transportation, and planning of transportation, is not defined, it turns out that all the companies mentioned above act as a consignor in their relations with the infrastructure owner. And this prevents them from developing their own business and becoming a really independent carrier. Besides, currently Tariff regulation № 10-01 contains no part devoted to the fee for infrastructure usage by carriers.

Repair Is a Problem
The technical maintenance and repair are very important for locomotive owners. All the companies agree that the locomotive service market has not been formed yet. «Market means competition», said V.Obernikhin. «And nowadays all the technical maintenance and current repair are provided by locomotive depots incorporated into OAO RZD. There is an alternative repair base only in the capital repair sector». 

However, a representative of DVTG reported that there are many companies specializing in providing technical services and technical repair of locomotives to industrial and railway transport enterprises, private companies and OAO RZD. Besides, the companies have licenses for such work (licensing of the activity was abolished from the beginning of 2006), and have their own or rented from OAO RZD areas and necessary equipment. Such companies offer the services of mobile teams which repair and maintain locomotives where they are located, while the repair enterprises of OAO RZD do not provide such a service. On the whole, the locomotives of DVTG are serviced by the enterprises of the Dalnevostochnaya (Far Eastern) railway and the railways of Yakutia.

Almost all the polled companies are dissatisfied with the system of private locomotives repair acting at the enterprises of the railway monopoly. The situation with locomotives is similar to the one with private wagons: repair according to leftover principle, idling time exceeds the norm, and the quality leaves much to be desired. Managers of Transoil company have noticed that the depots seem to be financially not interested in the increase of private locomotives repair volumes.

Irina Chiganashkina also agreed that the staff providing private locomotives repair is really not financially motivated. As a result, it is the rolling stock owner who suffers from it. For example, the coefficient of OAO BaltTransService’s diesel locomotive output to the line amounts to only 60% (i.e. out of 49 units, sometimes only 30-31 are used on the rail network). «After repair, many joints and units of locomotives break down during transportation», claims A. Gerasimov. «And our company suffers losses. If a unit has broken down, it must be transported to a depot, so we pay for the infrastructure, brigade and fuel. For example, the running of a diesel locomotive along the infrastructure from Novaya Yaroslavskaya station to Dno station costs RUR 80 thousand. All in all, the company spends on the reserve running of locomotives about RUR 2 mln monthly», he summed up.

«An own locomotive base would be a good solution to the problem», Anatoly Ivanov, Head of the Wagon Service of OOO Transoil, asserts. The situation could be improved by investments into the existing base to increase the producing capacities, and enlarge repair positions. But for many companies this is the issue of distant future. «RZD does not want to give us its workshops for usual wagons repair. We would like to try our powers in this segment at first», said A. Metelkin.

The exclusion is Transoil and BTS only. Last year, the latter developed a business plan of investments into Dno locomotive depot. It was planned to make an additional pit to provide technical services, and modernize the depot. By now, only the capital repair of pits has been held. RUR 109 mln is not spent yet. «All the documents required have been developed onle recently for the railway to have the right to spend the money. The documents were being adjusted for two years. And they do not let us rent or purchase a depot anywhere else. If we had an opportunity, we would purchase a depot,» A. Gerasimov shared his opinion. Transoil is also examining the possibility of investing into the depot Saint-Petersburg – Sortirovochny – Moskovsky.

Head of Oktyabrskaya railway Viktor Stepov doubts the economic justification of such projects. «Is it worth separating operators and their switching to self-sufficiency? Even if the company owns a depot, the maintenance of its locomotive will hardly be cheaper than the park service network of OAO RZD», he is certain. 

The question is a debatable one. It may be unreasonable from the economical standpoint to launch a repair base for your own company only. Perhaps, private locomotive owners should cooperate to succeed in the sector.

The repair aspect is also urgent because the primary locomotive market is practically closed for private owners. A lot of time will pass before the operator business starts to invest into Russian locomotive building. New freight mainline locomotives have been developed, but they are exploited and tested, what takes time. Companies-operators believe that the Kolomna locomotives may be good, but the tests have not been completed yet, and the units are very expensive, so nobody knows how long the payback period will take. «For example, there are only test samples of the latest locomotives of 2TЭ25 and 2ТЭ70 types, and we will not purchase them in the near future, because there will be problems servicing them in locomotive depots», specified V.Obernikhin.

«Up to now serial production of no freight locomotives has started», tells I. Chiganashkina. «That is why, on the mainline locomotives market, there are offers to sell locomotives used earlier in the Republics of the USSR, which underwent capital repair and their life-time was prolonged, and some of them were modernized using the latest achievements of VNIKTI, VNIIZhT and PKBCT. The locomotives are reliable and meet all the standards». However, there also may be wagons in poor condition on the secondhand market. «All good locomotives are in use, and all the units being sold are junk. We purchased a locomotive for RUR 24 mln, and then had to spend 4 mln more on repair», said A. Metelkin.

BaltTransService and Transoil chose diesel locomotives of 2ТЭ116 type produced by Lugansk plant. However, they underwent capital repair as well. 

Let’s Agree on Price 
Another obstacle to the use of own locomotives (and consequently, development of private carriers institute) is unregulated tariff issues. Since OAO RZD has not yet given to the Russian Federal Tariff Service separate facilities record keepings, the latter cannot define the locomotive constituent and determine the fee for the infrastructure that its owner is to get. OAO RZD is against the separation of the locomotive constituent, because from the revenues standpoint, the company suffers losses for such transportation. Consequently, offer of different tariff preferences to owners will hardly be forced. 

One of the main problems when it comes to working with private trains is the change of the type of locomotives: from electric locomotive to a diesel one and vice versa. The acting tariff system prevents the economically efficient work of operators at such transportation. «The section of the Tariff Regulation that relates to the tariffs on locomotives has a lot of drawbacks», believes A. Metelkin. «The problem is that it is impossible to use one’s own trains, if the amount of wagons dispatch is smaller than the average network figure». He also said that the break-even point of own locomotives usage is about 55 wagons. Most companies’ trains consist of 44 wagons only, because of the small length of railway stations. «We would be interested to transport 60 or even 70 wagons on a route. But such destinations exist on the Transsib only and only in those places where coal is carried for export. So, it turns out that the use of one’s own locomotive is not always profitable».

Transgarant company has transported cargo in its own trains from OAO Holding company Yakutugol to Neryungrinskaya hydroelectric power plant for a long time. The route is 29 km long, and only 7 km of it consists of OAO RZD’s tracks . Besides, the company discusses the opportunity of brimstone transportation in its own rolling stock, but the station can not receive trains consisting of more than 44 wagons. «We are trying to reach a compromise, to persuade the management of the railway to prolong the dispatching route to 60 wagons. Unfortunately, no results have been achieved so far. But we do not want to work and suffer losses. Now our locomotives are efficiently used on the approach tracks, they deliver wagons and take them away,» said A. Metelkin.
 
Future is Vague 
In spite of all the difficulties mentioned above, no company believes that the purchase of locomotives was a mistake. «Own trains proved their effectiveness in practice», said V. Obernikhin. «Using them we reduce the wagon turnover, which enables us to reduce the wagon park at some directions». Irina Chiganashkina also stated that exploitation of own mainline locomotive enables to improve the figures of rolling stock usage, including the reduction of full wagon turnover time, and the increase of the sectoral speed. However, she said that the non-productive idling of a locomotive may increase, while it is waiting for its own route in the places of loading and unloading. Since the loading volume is relatively small, and the routes of the own locomotives service may be long, it is rather difficult to join locomotives to the direct and reverse trains in the train schedule considering the locomotive brigades. There is some difference in the management of private locomotives and OAO RZD’s inventory park. The specialists of NPK noticed that OAO RZD’s locomotives have a different principle of work: they may be transferred to any route. «Our rolling stock units service one and the same route which is why we (together with consignors and consignees) do our best for the idling of a locomotive at the stations where freight is loaded/unloaded to be minimal», said V. Obernikhin.

Evaluating the efficiency of private locomotive’s work, the routes serviced by it play a significant role. It is better to service some definite sector, instead of running all over the network.

Many companies’ budgets envisage rolling stock park enlargement. For example, OAO Independent Transportation Company is going to enlarge its locomotive park to 40 units. There appear other potential owners of locomotives. In particular, MMK-Trans discusses investment of USD 10 mln into its own locomotive park. If the average price is USD 2 mln per locomotive, the company may purchase 5 units. However, the managers of the company refused to comment on details.

«If it was profitable, all companies would use their own locomotives, because companies-operators have enough money for that», Alexander Metelkin argues. In any case, one’s own locomotive is the next step to the market of transportation services. And it is possible to speak about competition only when normal transportation companies providing the full pack of relevant services, and first of all, locomotive services, work in the sector.
Viewpoint
Tigran Saakyan,
Expert and analyst of the Railway Transport Researches Department, Institute of Natural Monopolies’ Problems:
– The purchase and exploitation of private locomotives have some specific features. Firstly, there is no sufficient normative base, or technologies of non-discriminating cooperation between infrastructure and private locomotives. It is one of the most significant obstacles for the development of a private locomotive park. While there are no clear defined procedures and orders, private owners of locomotives can hardly function efficiently. 

Secondly, the area where private locomotives run is limited, and there is a necessity of constant technical servicing in depots. Speaking of private owners of locomotives, many market players appeal to the fact that nowadays there are owners of freight wagons, who can use the accumulated experience to work with their own locomotives; however, it is not quite correct. Work with private locomotives is a fundamentally different business, which is defined by the specific nature of locomotives. The distance that can be serviced by a locomotive is limited, so providing the service of a long-distance transportation is impossible without locomotive replacement on the way. Besides, specially equipped depots are necessary to service locomotives; most of them are owned by OAO RZD as the largest locomotive owner in Russia.

Thirdly, it is impossible to forecast the «economy» of the locomotive business. And the cost of locomotives is very high. According to the estimations of economic efficiency of locomotives purchase, on the one hand, a private company benefits due to the lack of rent fee; on the other hand, its locomotive is to meet all the requirements to rolling stock acting at the Russian railway network. And this means the necessity of timely and high-quality maintenance; thus there appear additional financial expenses. Locomotive servicing is the price that a private rolling stock owner is to pay for the right to use his park. The private system of locomotives technical servicing becomes economically profitable after the amount of locomotives exceeds some definite level (according to estimations, it makes 70-80 locomotives).

Besides the locomotive repair enterprises, another serious problem that may be faced by private locomotive owners is the difficult situation with locomotive brigades. The staff turnover in the sector is very high, which leads to the worsening of the quality of services they provide. The difference between own and rented locomotive brigades is the necessity to train one’s own professionals, which is a very expensive process for private locomotive owners. It makes them rent locomotive brigades of OAO RZD;  thus, they create problems for the railway monopoly, because OAO Russian Railways lacks brigades as well. Meanwhile, OAO RZD, which spends money on staff training, pays them a smaller fee compared to private companies. As a result, there is such a situation that OAO RZD goes in for staff training for private locomotive owners. 

An important issue concerning the specific economic characteristics of private locomotive exploitation is tariffs. Nowadays, private locomotive owners strive to get the right to calculate the locomotive constituent, based on the level of their expenses on locomotive maintenance which are higher than the ones of OAO RZD because of a smaller park volume. Such situation will lead either to the tariff increase, or to the reduction of the infrastructure constituent. The first may provoke the reduction of the demand for transportation, and the second could lead to insufficient financing of the infrastructure maintenance.
    [~DETAIL_TEXT] => 
Step Aside
However, the share of locomotives owned by transportation companies is forecasted to amount to 10% of the total locomotive park by 2010. This is a very optimistic forecast. In 10 years that have passed since the purchase of the first mainline locomotive by a transport company (it was Transoil), the dynamics of private locomotive park has not been outstanding. Work with own locomotives fundamentally differs from  own wagons operating. That is why there are a few companies that were brave enough to put their budget at stake. The largest locomotive owners are OOO BaltTransService (BTS) (49 units) and OOO Transoil (37 diesel locomotives). The share of other companies is small: OOO Firma Transgarant owns 9 locomotives, OAO Far Eastern Transport Group (DVTG) has 7 units, OAO Independent Transportation Company (NPK) – 4 etc.

Meanwhile, the problems, specifics of maintenance and exploitation of a locomotive park do not depend on its size, so they are the same for every locomotive owner.

The first obstacle that both companies-operators who wanted to provide a full pack of services faced was the lack of normative and legislative base to get permission for mainline locomotives to enter the Russian railways public network. «There is no state normative base», agreed Deputy Chief of the Technical Department Alexander Gerasimov. «But railways have a special order to allow access to private locomotives, and we registered all the documents in accordance with the order. As a rule, it takes only a week to «legalize» one diesel locomotive». However, such a situation is an exception. A representative of OOO Transgarant Alexander Metelkin specified that on the routes where private locomotives have operated for a long time, there are no problems, although company has to ask for a permission of the Head of the railway to adjust the technology of work. However, it will take over a year to launch a locomotive to serve a new route.

A representative of DVTG noted that OAO RZD does its best to keep the monopoly for provision of locomotive services, including signing relevant decrees. 

Since the status of a carrier, whose functions include freight reception and delivery, responsibility for it during transportation, and planning of transportation, is not defined, it turns out that all the companies mentioned above act as a consignor in their relations with the infrastructure owner. And this prevents them from developing their own business and becoming a really independent carrier. Besides, currently Tariff regulation № 10-01 contains no part devoted to the fee for infrastructure usage by carriers.

Repair Is a Problem
The technical maintenance and repair are very important for locomotive owners. All the companies agree that the locomotive service market has not been formed yet. «Market means competition», said V.Obernikhin. «And nowadays all the technical maintenance and current repair are provided by locomotive depots incorporated into OAO RZD. There is an alternative repair base only in the capital repair sector». 

However, a representative of DVTG reported that there are many companies specializing in providing technical services and technical repair of locomotives to industrial and railway transport enterprises, private companies and OAO RZD. Besides, the companies have licenses for such work (licensing of the activity was abolished from the beginning of 2006), and have their own or rented from OAO RZD areas and necessary equipment. Such companies offer the services of mobile teams which repair and maintain locomotives where they are located, while the repair enterprises of OAO RZD do not provide such a service. On the whole, the locomotives of DVTG are serviced by the enterprises of the Dalnevostochnaya (Far Eastern) railway and the railways of Yakutia.

Almost all the polled companies are dissatisfied with the system of private locomotives repair acting at the enterprises of the railway monopoly. The situation with locomotives is similar to the one with private wagons: repair according to leftover principle, idling time exceeds the norm, and the quality leaves much to be desired. Managers of Transoil company have noticed that the depots seem to be financially not interested in the increase of private locomotives repair volumes.

Irina Chiganashkina also agreed that the staff providing private locomotives repair is really not financially motivated. As a result, it is the rolling stock owner who suffers from it. For example, the coefficient of OAO BaltTransService’s diesel locomotive output to the line amounts to only 60% (i.e. out of 49 units, sometimes only 30-31 are used on the rail network). «After repair, many joints and units of locomotives break down during transportation», claims A. Gerasimov. «And our company suffers losses. If a unit has broken down, it must be transported to a depot, so we pay for the infrastructure, brigade and fuel. For example, the running of a diesel locomotive along the infrastructure from Novaya Yaroslavskaya station to Dno station costs RUR 80 thousand. All in all, the company spends on the reserve running of locomotives about RUR 2 mln monthly», he summed up.

«An own locomotive base would be a good solution to the problem», Anatoly Ivanov, Head of the Wagon Service of OOO Transoil, asserts. The situation could be improved by investments into the existing base to increase the producing capacities, and enlarge repair positions. But for many companies this is the issue of distant future. «RZD does not want to give us its workshops for usual wagons repair. We would like to try our powers in this segment at first», said A. Metelkin.

The exclusion is Transoil and BTS only. Last year, the latter developed a business plan of investments into Dno locomotive depot. It was planned to make an additional pit to provide technical services, and modernize the depot. By now, only the capital repair of pits has been held. RUR 109 mln is not spent yet. «All the documents required have been developed onle recently for the railway to have the right to spend the money. The documents were being adjusted for two years. And they do not let us rent or purchase a depot anywhere else. If we had an opportunity, we would purchase a depot,» A. Gerasimov shared his opinion. Transoil is also examining the possibility of investing into the depot Saint-Petersburg – Sortirovochny – Moskovsky.

Head of Oktyabrskaya railway Viktor Stepov doubts the economic justification of such projects. «Is it worth separating operators and their switching to self-sufficiency? Even if the company owns a depot, the maintenance of its locomotive will hardly be cheaper than the park service network of OAO RZD», he is certain. 

The question is a debatable one. It may be unreasonable from the economical standpoint to launch a repair base for your own company only. Perhaps, private locomotive owners should cooperate to succeed in the sector.

The repair aspect is also urgent because the primary locomotive market is practically closed for private owners. A lot of time will pass before the operator business starts to invest into Russian locomotive building. New freight mainline locomotives have been developed, but they are exploited and tested, what takes time. Companies-operators believe that the Kolomna locomotives may be good, but the tests have not been completed yet, and the units are very expensive, so nobody knows how long the payback period will take. «For example, there are only test samples of the latest locomotives of 2TЭ25 and 2ТЭ70 types, and we will not purchase them in the near future, because there will be problems servicing them in locomotive depots», specified V.Obernikhin.

«Up to now serial production of no freight locomotives has started», tells I. Chiganashkina. «That is why, on the mainline locomotives market, there are offers to sell locomotives used earlier in the Republics of the USSR, which underwent capital repair and their life-time was prolonged, and some of them were modernized using the latest achievements of VNIKTI, VNIIZhT and PKBCT. The locomotives are reliable and meet all the standards». However, there also may be wagons in poor condition on the secondhand market. «All good locomotives are in use, and all the units being sold are junk. We purchased a locomotive for RUR 24 mln, and then had to spend 4 mln more on repair», said A. Metelkin.

BaltTransService and Transoil chose diesel locomotives of 2ТЭ116 type produced by Lugansk plant. However, they underwent capital repair as well. 

Let’s Agree on Price 
Another obstacle to the use of own locomotives (and consequently, development of private carriers institute) is unregulated tariff issues. Since OAO RZD has not yet given to the Russian Federal Tariff Service separate facilities record keepings, the latter cannot define the locomotive constituent and determine the fee for the infrastructure that its owner is to get. OAO RZD is against the separation of the locomotive constituent, because from the revenues standpoint, the company suffers losses for such transportation. Consequently, offer of different tariff preferences to owners will hardly be forced. 

One of the main problems when it comes to working with private trains is the change of the type of locomotives: from electric locomotive to a diesel one and vice versa. The acting tariff system prevents the economically efficient work of operators at such transportation. «The section of the Tariff Regulation that relates to the tariffs on locomotives has a lot of drawbacks», believes A. Metelkin. «The problem is that it is impossible to use one’s own trains, if the amount of wagons dispatch is smaller than the average network figure». He also said that the break-even point of own locomotives usage is about 55 wagons. Most companies’ trains consist of 44 wagons only, because of the small length of railway stations. «We would be interested to transport 60 or even 70 wagons on a route. But such destinations exist on the Transsib only and only in those places where coal is carried for export. So, it turns out that the use of one’s own locomotive is not always profitable».

Transgarant company has transported cargo in its own trains from OAO Holding company Yakutugol to Neryungrinskaya hydroelectric power plant for a long time. The route is 29 km long, and only 7 km of it consists of OAO RZD’s tracks . Besides, the company discusses the opportunity of brimstone transportation in its own rolling stock, but the station can not receive trains consisting of more than 44 wagons. «We are trying to reach a compromise, to persuade the management of the railway to prolong the dispatching route to 60 wagons. Unfortunately, no results have been achieved so far. But we do not want to work and suffer losses. Now our locomotives are efficiently used on the approach tracks, they deliver wagons and take them away,» said A. Metelkin.
 
Future is Vague 
In spite of all the difficulties mentioned above, no company believes that the purchase of locomotives was a mistake. «Own trains proved their effectiveness in practice», said V. Obernikhin. «Using them we reduce the wagon turnover, which enables us to reduce the wagon park at some directions». Irina Chiganashkina also stated that exploitation of own mainline locomotive enables to improve the figures of rolling stock usage, including the reduction of full wagon turnover time, and the increase of the sectoral speed. However, she said that the non-productive idling of a locomotive may increase, while it is waiting for its own route in the places of loading and unloading. Since the loading volume is relatively small, and the routes of the own locomotives service may be long, it is rather difficult to join locomotives to the direct and reverse trains in the train schedule considering the locomotive brigades. There is some difference in the management of private locomotives and OAO RZD’s inventory park. The specialists of NPK noticed that OAO RZD’s locomotives have a different principle of work: they may be transferred to any route. «Our rolling stock units service one and the same route which is why we (together with consignors and consignees) do our best for the idling of a locomotive at the stations where freight is loaded/unloaded to be minimal», said V. Obernikhin.

Evaluating the efficiency of private locomotive’s work, the routes serviced by it play a significant role. It is better to service some definite sector, instead of running all over the network.

Many companies’ budgets envisage rolling stock park enlargement. For example, OAO Independent Transportation Company is going to enlarge its locomotive park to 40 units. There appear other potential owners of locomotives. In particular, MMK-Trans discusses investment of USD 10 mln into its own locomotive park. If the average price is USD 2 mln per locomotive, the company may purchase 5 units. However, the managers of the company refused to comment on details.

«If it was profitable, all companies would use their own locomotives, because companies-operators have enough money for that», Alexander Metelkin argues. In any case, one’s own locomotive is the next step to the market of transportation services. And it is possible to speak about competition only when normal transportation companies providing the full pack of relevant services, and first of all, locomotive services, work in the sector.
Viewpoint
Tigran Saakyan,
Expert and analyst of the Railway Transport Researches Department, Institute of Natural Monopolies’ Problems:
– The purchase and exploitation of private locomotives have some specific features. Firstly, there is no sufficient normative base, or technologies of non-discriminating cooperation between infrastructure and private locomotives. It is one of the most significant obstacles for the development of a private locomotive park. While there are no clear defined procedures and orders, private owners of locomotives can hardly function efficiently. 

Secondly, the area where private locomotives run is limited, and there is a necessity of constant technical servicing in depots. Speaking of private owners of locomotives, many market players appeal to the fact that nowadays there are owners of freight wagons, who can use the accumulated experience to work with their own locomotives; however, it is not quite correct. Work with private locomotives is a fundamentally different business, which is defined by the specific nature of locomotives. The distance that can be serviced by a locomotive is limited, so providing the service of a long-distance transportation is impossible without locomotive replacement on the way. Besides, specially equipped depots are necessary to service locomotives; most of them are owned by OAO RZD as the largest locomotive owner in Russia.

Thirdly, it is impossible to forecast the «economy» of the locomotive business. And the cost of locomotives is very high. According to the estimations of economic efficiency of locomotives purchase, on the one hand, a private company benefits due to the lack of rent fee; on the other hand, its locomotive is to meet all the requirements to rolling stock acting at the Russian railway network. And this means the necessity of timely and high-quality maintenance; thus there appear additional financial expenses. Locomotive servicing is the price that a private rolling stock owner is to pay for the right to use his park. The private system of locomotives technical servicing becomes economically profitable after the amount of locomotives exceeds some definite level (according to estimations, it makes 70-80 locomotives).

Besides the locomotive repair enterprises, another serious problem that may be faced by private locomotive owners is the difficult situation with locomotive brigades. The staff turnover in the sector is very high, which leads to the worsening of the quality of services they provide. The difference between own and rented locomotive brigades is the necessity to train one’s own professionals, which is a very expensive process for private locomotive owners. It makes them rent locomotive brigades of OAO RZD;  thus, they create problems for the railway monopoly, because OAO Russian Railways lacks brigades as well. Meanwhile, OAO RZD, which spends money on staff training, pays them a smaller fee compared to private companies. As a result, there is such a situation that OAO RZD goes in for staff training for private locomotive owners. 

An important issue concerning the specific economic characteristics of private locomotive exploitation is tariffs. Nowadays, private locomotive owners strive to get the right to calculate the locomotive constituent, based on the level of their expenses on locomotive maintenance which are higher than the ones of OAO RZD because of a smaller park volume. Such situation will lead either to the tariff increase, or to the reduction of the infrastructure constituent. The first may provoke the reduction of the demand for transportation, and the second could lead to insufficient financing of the infrastructure maintenance.
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    [DETAIL_TEXT] => No Time to Lose 
It is not a secret that for a long time the economy of Russia was based on the exploitation of the natural resources, and, first of all, of gas and oil. However, after the decrease of prices for oil on the world market, the priority targets changed. The discussion about on where to spend the means obtained from oil export has been replaced by debates about the possible new resources for industrial growth to avoid stagnation and for the country not to fall behind other world leaders from the economic standpoint. That is why the attention of legislative and executive powers has turned to the problems of the railway and transport machine-building sectors. 

«Taking into account the important role of railway transport in the country’s economy, and it is about 80% of all freight transportation, providing it with modern rolling stock of high quality is the key target of the industry. Any failure, any unstable work of the transport mode may negatively influence the economic situation in the state», Petr Rubezhansky, Deputy of the RF State Duma, a member of the Duma Committee for energy, transport and communication, is certain.

And it is really so. No other state in the world has the public railways of over 86.7 thousand km long, and electrified lines of 42 thousand km long. The Russian Federation is the top third in the world according to its railway throughput. The railway is also important for passenger communication. 

In spite of the constantly growing demand for railway transport services (in 2000-2006 the throughput increased by 55%), the inventory parks of OAO RZD and other railway companies are hardly renewed, which is caused by the lack of capacities and the technological gap. «Nowadays, the demand of the 1990-s is fulfilled», claimed Andrey Dementyev, the RF Deputy Minister of Industry and Energy. Besides, after the collapse of the USSR, the production capacities of some machinery important for railway transportation was left beyond the border of the RF. Thus, in future the situation with rolling stock ageing and lack will only get worse, because, according to the RF Transport Strategy till 2020, the demand for railway transport services will continue to grow. «If no efficient measures are taken to modernize the infrastructure and renew the rolling stock by 2011, the railway transport can start to restrain the economic growth, instead of speeding it up», agrees with the unpromising forecast Vladimir Yakunin, Head of OAO RZD.

What Has Been Offered
The RF Ministry of Industry and Energy was the main developer of the «Strategy of RF Transport Machine-Building Sector Development in 2007-2010 and till 2015». What is the concept of the document? On the whole, the complex of measures developed by the Ministry can be divided into three categories. The first of them includes measures aimed at the sectoral market development. In particular, it is offered to practice long-term contracts for production delivery, introduce a system of state support for export and leasing, and the regulations for foreign capital participation.

The second category includes measures to stimulate the innovative process and increase the competitiveness of the sectoral enterprises’ production. First of all, it is holding research and experimental design works, based on public-private partnership to renew the models of rolling stock, to implement the advanced technologies, to develop the necessary technical regulations, to stimulate modernization and re-equip enterprises, as well as to create the scheme to partly compensate the producers for their expenses on the interest for credits taken to produce the new machinery. The third category includes the measures to solve the HR problem.

The realization of the complex of measures envisaged by the strategy is to bring the following target results: by 2015 the transport machine-building production volume is to increase by 90%; the share of the Russian transport machine-building sector on the world market is to grow up to 15% by 2010, and to 18% by 2015; export volume is to rise by 75% by 2010.

Simultaneously, the characteristics of the produced machinery are to be improved. For example, the average power consumption is to reduce by 7%, and the average consumption of equivalent fuel is to decrease by 7.7%.

Can Demand Be Fulfilled? 
The discussion of the draft document for transport machine-building has attracted the attention of all the interested market players and even governmental officials. In the words of the First Deputy Chairman of the Russian Government Sergey Ivanov, «the state is ready to make for realization of the Russian transport machine building potential». Highlighting the meaning of the RF Government’s protectionism policy, the First Vice Prime Minister stated, «We should not be afraid of the word. We should take into account the practice, pragmatics and realities of today: the countries that consider themselves setting standards for the market actively support, subside and provide grants to many industrial sectors, including transport». «It is important, however, that the support took in account the requirement of the sector and the possibilities of the state, as well as the existing market mechanisms», he added.

By the way, the theme of requirements and possibilities turned out to be a key one. According to the data reported by an official representative of the Ministry of Industry and Energy, in 2006, the volume of the domestic market of transport machine-building production amounted to RUR 150 bln, and the total volume of railway machinery purchased by all Russian transport companies was RUR 110 bln (including RUR 63 bln. spent by OAO RZD). The average loading of the producing capacities of machine-building enterprises was about 80%. However, it is impossible to use the capacities of the producing plants to the full, because of the significant deterioration of the sector’s basic funds, which amounts to 67%, according to some evaluations. 

«The statistics show that the producing capacities of most plants of the sector are underloaded», says P. Rubezhansky, Deputy of the RF State Duma. «However, a qualified analysis shows that the standards for using the producing capacities of the enterprises were approved before the collapse of the USSR. And now many enterprises, for example, the Tver Wagon Building Plant, work at their full capacity.

Many top-managers believe that issues of taxation are an important aspect for the renewal of the basic assets of Russian transport machine building enterprises. «Our plant and the whole transport machine building sector could develop more intensively, if the profit, which is spent on the renewal of basic assets and development, was excluded from the taxable earnings» claims CEO of ZAO Bryansk Machine Building Plant managing company Anatoly Zadorozhny.

The low level of technical equipment prevents further development of machinery producers and representatives of the adjacent sectors. «On the whole, in the Russian industry the share of enterprises with insufficient capacities amounted to 16% at the beginning of 2007. It is a record since 1993», says Sergey Tsukhlo, Head of the Market Situation Polls Laboratory, Institute of Transitional Period Economy. The expert believes that a small volume of production is accumulated in warehouses, which makes the further technological chain very unstable, because such warehouses are no longer a buffer between production and goods consumption. Many machine building companies note that they depend on the adjacent sectors. «Transport machine building is an assembling sector. Each electric locomotive produced by our company is 1,500 suppliers, and a diesel locomotive – 620. That is why good and efficient relations with producers of adjacent sectors are very important to us», says Chairman of the Board of Directors of ZAO Transmashholding Dmitry Komissarov.

Still, the necessary result is not always achieved. For example, in 2006 and at the beginning of 2007, OAO RZD had to take 14,000 gondola cars produced by FGUP Uralvagonzavod out of exploitation to hold a non-planned revision of main nodes. It happened because of the low quality of metallurgical components. Besides, in 2006, some long-base gondola cars were given back to their producers, because there were cracks in the load-bearing parts of wagon frames.

Even if the production is of proper quality, the Russian market cannot always provide the consumer with the necessary machinery. Some types of transport machine building production are only started to be produced in Russia: passenger diesel locomotives, freight mainline diesel locomotives, wagons made of aluminium and aluminium alloys. However, the rolling stock for high speed railway communication will be purchased abroad. Both officials and businessmen understand that there is no other way out. «Change market for technologies» is the new motto of the Russian machine building sector and the new slogan of the RF state policy.

«The technological gap will be hardly compensated by the increase of the share of import. There will be a synchronization between the transportation process and transport machine building sector development», they believe in the Ministry of Industry and Energy. That is why they offer to use public-private partnership in research and experimental design works. The producers support the idea. «If we want to re-orient the state from export of raw materials to export of finished commodities, it is necessary to stimulate investments into scientific projects», believes acting CEO of OAO Kolomensky Plant Anatoly Andreev. Experts think that the position of the Russian machine building sector will become stronger after the practice of long-term contracts is put into operation and the HR problem is solved. 

Still, in the near future the main target of the Russian machine building sector is to become the leader among all the former Republics of the USSR. «It is a prospect, but not a long-term one. Railways with the gauge of 1520 mm wide is a single technological and infrastructural unit, and we are to become the main player in the field», Sergey Ivanov commented on the geopolitical constituent of the strategy.

Plans Need Proper Financing
In spite of the fact that the participants of the discussion agreed on many statements of the strategy offered by the RF Ministry of Industry and Energy, one of the most important problems remained unsolved: where to obtain the money to realize it? OAO RZD is the largest consumer of the production of transport machine building sector; still the railway corporation does not have enough means for a breakthrough. And if it had, there might have been a shortage of the necessary production.

A number of experts believe that the way out is for the state to share the expenses for maintenance and development of the infrastructure managed by OAO RZD. «Such practice is widely used in other states. Why don’t we use it?» asks Deputy CEO of Transmashholding Anatoly Mescheryakov. He believes that in this case OAO RZD could invest the released means into the purchase of new rolling stock.

Director of the Management Technologies Agency Sergey Loparev shares the viewpoint, «Development of transport machine building envisages not only the construction of new rolling stock, but investments into the infrastructure as well. If there is no infrastructure, neither wagons nor locomotives are required».

It is still not clear how the government will react to this viewpoint. However, at the recent meeting chaired by RF President Vladimir Putin, the Head of OAO RZD presented the project that, in his words, can be the basis for the development of the state strategy of railway transport development till 2030. In its turn, the RF Government has sent the project presented by the Ministry of Industry and Energy for further adjustment. Thus, it is possible that not only «transportation process and the process of transport machine building», but the two offered strategies are to be synchronized.

Adoption of the two most important for the railmen and transport machine builders documents may become a logical end of the period of discussions and adjustments, and a beginning of a more active shift of the two sectors towards innovation.

Viewpoint
German Gref,
RF Minister of Economic Development and Trade: 
– Russian economy is at the turning point of its development. The factors, which stimulated the annual growth to 6-7%, are hardly efficient any longer. The key question is if the new growth factors created by us in recent years will be used, or there will be stagnation. I woud like to give one example: in 2004-2006 the average annual rate of growth of export physical volume amounted to 7%, and it provided the growth of GDP by 2%. In 2008-2010, the average rate of export growth will reduce to 2-2.5%. And this will provide just 0.5% growth of GDP. Thus, if all the other conditions remain the same, the dynamics of GDP will reduce to 5.5% per annum on average with the prospect of further decrease to 3-4%. And if we take into consideration the increasing limitations in transport infrastructure, electric-power industry, gas supply, and HR resources... well, you may draw you own conclusions.

Petr Rubezhansky, 
Deputy of the RF State Duma, 
Member of the Duma Committee for Energy, Transport and Communication:
– One of the main problems is that Russia lacks an advanced technological element base necessary to develop and produce modern rolling stock. I believe, it is a consequence of refusal to hold research and design works for a long time. For example, now we have no technologies for production of advanced converters and wagons with a firm aluminium body. Some time ago scientific research was held in the sector. But it was not completed because of the lack of financing.

Vadim Morozov,
First Vice-President, OAO RZD:
– Being the largest consumer of transport machine building production in Russia, OAO RZD is objectively interested in a fast development of the sector. In three years of joint work with producers, the company used the innovational type of development, stimulating development of Russian transport machine building sector. During the structural reform, OAO RZD has increased the volume of rolling stock purchase fourfold, and started to make guaranteed long-term orders of machinery from Russian producers.
In 2006-2007, OAO RZD actively participated in the preliminary discussion of the strategy, and made over 20 offers to improve it. Most of them were taken into consideration. However, some parameters of the strategy are to be corrected.
Thus, the general development scheme of OAO RZD envisages purchase of machinery meeting international standards for output capacity and technical and economic parameters. The term of development of complicated railway machinery is up to 10 years, and the term of its use is up to 40 years. That is why we believe that the strategy of transport machine building development is to be based on the ability of Russian producers to fulfill the demands of the railway transport in the next 25-30 years under the conditions of strong competition with foreign companies.
However, in the presented project of the strategy there is no answer to the following questions: will transport machine builders provide the quality and the output of their production that will meet the requirements of OAO RZD? Will the problem of the sector’s falling behind and structural producing capacities disproportions be solved?
Moreover, according to the company’s General scheme of development, by 2015, OAO RZD needs 12,000 passenger wagons and about 450,000 freight cars to be delivered to it, which exceeds the parameters of the discussed strategy. And according to locomotives production, the parameters of the strategy meet only 50% of our requirements. To fulfill the forecasted transportation volume, it is necessary that 7.8 thousand sections were delivered before 2015, which is 2 thousand units more than the strategy envisages. Besides, the project does not touch on the problem of motorwagon rolling stock, and the questions of high speed railway communication have not been discussed properly. That is why I believe it necessary to make decisions on the problems, and introduce respective amendments to the strategy.

Stanislav Naumov,
Director of Department of Economic Analysis and Prospect Planning, RF Ministry of Industry and Energy:
– Discussing the «eventual» industries, we defined the segments where there is a technological «gap». These are engine- and machine-tool building, instrument construction, electric engineering etc. We understand that the problems of these sectors are difficult to solve from the business viewpoint. And here appears a «window» to carry out the state industrial policy. That is why the strategy of the transport machine building sector development leads to creating strategies for new units, nodes and components production.
The strategy is developed for the period of 2007-2010 and prospectively till 2015. We think that the first three years are the most important – measures must be taken to develop the sector without no more delays. We understand that the three-year period is the very transfer zone for the technological and production breakthrough, otherwise we will have to turn to import as the basis for the transport system development.
The Strategy is a complex of solutions, and all of them are to be carried out. By 2010 we must equalize competition conditions for Russian transport machine builders and their foreign competitors.

    [~DETAIL_TEXT] => No Time to Lose 
It is not a secret that for a long time the economy of Russia was based on the exploitation of the natural resources, and, first of all, of gas and oil. However, after the decrease of prices for oil on the world market, the priority targets changed. The discussion about on where to spend the means obtained from oil export has been replaced by debates about the possible new resources for industrial growth to avoid stagnation and for the country not to fall behind other world leaders from the economic standpoint. That is why the attention of legislative and executive powers has turned to the problems of the railway and transport machine-building sectors. 

«Taking into account the important role of railway transport in the country’s economy, and it is about 80% of all freight transportation, providing it with modern rolling stock of high quality is the key target of the industry. Any failure, any unstable work of the transport mode may negatively influence the economic situation in the state», Petr Rubezhansky, Deputy of the RF State Duma, a member of the Duma Committee for energy, transport and communication, is certain.

And it is really so. No other state in the world has the public railways of over 86.7 thousand km long, and electrified lines of 42 thousand km long. The Russian Federation is the top third in the world according to its railway throughput. The railway is also important for passenger communication. 

In spite of the constantly growing demand for railway transport services (in 2000-2006 the throughput increased by 55%), the inventory parks of OAO RZD and other railway companies are hardly renewed, which is caused by the lack of capacities and the technological gap. «Nowadays, the demand of the 1990-s is fulfilled», claimed Andrey Dementyev, the RF Deputy Minister of Industry and Energy. Besides, after the collapse of the USSR, the production capacities of some machinery important for railway transportation was left beyond the border of the RF. Thus, in future the situation with rolling stock ageing and lack will only get worse, because, according to the RF Transport Strategy till 2020, the demand for railway transport services will continue to grow. «If no efficient measures are taken to modernize the infrastructure and renew the rolling stock by 2011, the railway transport can start to restrain the economic growth, instead of speeding it up», agrees with the unpromising forecast Vladimir Yakunin, Head of OAO RZD.

What Has Been Offered
The RF Ministry of Industry and Energy was the main developer of the «Strategy of RF Transport Machine-Building Sector Development in 2007-2010 and till 2015». What is the concept of the document? On the whole, the complex of measures developed by the Ministry can be divided into three categories. The first of them includes measures aimed at the sectoral market development. In particular, it is offered to practice long-term contracts for production delivery, introduce a system of state support for export and leasing, and the regulations for foreign capital participation.

The second category includes measures to stimulate the innovative process and increase the competitiveness of the sectoral enterprises’ production. First of all, it is holding research and experimental design works, based on public-private partnership to renew the models of rolling stock, to implement the advanced technologies, to develop the necessary technical regulations, to stimulate modernization and re-equip enterprises, as well as to create the scheme to partly compensate the producers for their expenses on the interest for credits taken to produce the new machinery. The third category includes the measures to solve the HR problem.

The realization of the complex of measures envisaged by the strategy is to bring the following target results: by 2015 the transport machine-building production volume is to increase by 90%; the share of the Russian transport machine-building sector on the world market is to grow up to 15% by 2010, and to 18% by 2015; export volume is to rise by 75% by 2010.

Simultaneously, the characteristics of the produced machinery are to be improved. For example, the average power consumption is to reduce by 7%, and the average consumption of equivalent fuel is to decrease by 7.7%.

Can Demand Be Fulfilled? 
The discussion of the draft document for transport machine-building has attracted the attention of all the interested market players and even governmental officials. In the words of the First Deputy Chairman of the Russian Government Sergey Ivanov, «the state is ready to make for realization of the Russian transport machine building potential». Highlighting the meaning of the RF Government’s protectionism policy, the First Vice Prime Minister stated, «We should not be afraid of the word. We should take into account the practice, pragmatics and realities of today: the countries that consider themselves setting standards for the market actively support, subside and provide grants to many industrial sectors, including transport». «It is important, however, that the support took in account the requirement of the sector and the possibilities of the state, as well as the existing market mechanisms», he added.

By the way, the theme of requirements and possibilities turned out to be a key one. According to the data reported by an official representative of the Ministry of Industry and Energy, in 2006, the volume of the domestic market of transport machine-building production amounted to RUR 150 bln, and the total volume of railway machinery purchased by all Russian transport companies was RUR 110 bln (including RUR 63 bln. spent by OAO RZD). The average loading of the producing capacities of machine-building enterprises was about 80%. However, it is impossible to use the capacities of the producing plants to the full, because of the significant deterioration of the sector’s basic funds, which amounts to 67%, according to some evaluations. 

«The statistics show that the producing capacities of most plants of the sector are underloaded», says P. Rubezhansky, Deputy of the RF State Duma. «However, a qualified analysis shows that the standards for using the producing capacities of the enterprises were approved before the collapse of the USSR. And now many enterprises, for example, the Tver Wagon Building Plant, work at their full capacity.

Many top-managers believe that issues of taxation are an important aspect for the renewal of the basic assets of Russian transport machine building enterprises. «Our plant and the whole transport machine building sector could develop more intensively, if the profit, which is spent on the renewal of basic assets and development, was excluded from the taxable earnings» claims CEO of ZAO Bryansk Machine Building Plant managing company Anatoly Zadorozhny.

The low level of technical equipment prevents further development of machinery producers and representatives of the adjacent sectors. «On the whole, in the Russian industry the share of enterprises with insufficient capacities amounted to 16% at the beginning of 2007. It is a record since 1993», says Sergey Tsukhlo, Head of the Market Situation Polls Laboratory, Institute of Transitional Period Economy. The expert believes that a small volume of production is accumulated in warehouses, which makes the further technological chain very unstable, because such warehouses are no longer a buffer between production and goods consumption. Many machine building companies note that they depend on the adjacent sectors. «Transport machine building is an assembling sector. Each electric locomotive produced by our company is 1,500 suppliers, and a diesel locomotive – 620. That is why good and efficient relations with producers of adjacent sectors are very important to us», says Chairman of the Board of Directors of ZAO Transmashholding Dmitry Komissarov.

Still, the necessary result is not always achieved. For example, in 2006 and at the beginning of 2007, OAO RZD had to take 14,000 gondola cars produced by FGUP Uralvagonzavod out of exploitation to hold a non-planned revision of main nodes. It happened because of the low quality of metallurgical components. Besides, in 2006, some long-base gondola cars were given back to their producers, because there were cracks in the load-bearing parts of wagon frames.

Even if the production is of proper quality, the Russian market cannot always provide the consumer with the necessary machinery. Some types of transport machine building production are only started to be produced in Russia: passenger diesel locomotives, freight mainline diesel locomotives, wagons made of aluminium and aluminium alloys. However, the rolling stock for high speed railway communication will be purchased abroad. Both officials and businessmen understand that there is no other way out. «Change market for technologies» is the new motto of the Russian machine building sector and the new slogan of the RF state policy.

«The technological gap will be hardly compensated by the increase of the share of import. There will be a synchronization between the transportation process and transport machine building sector development», they believe in the Ministry of Industry and Energy. That is why they offer to use public-private partnership in research and experimental design works. The producers support the idea. «If we want to re-orient the state from export of raw materials to export of finished commodities, it is necessary to stimulate investments into scientific projects», believes acting CEO of OAO Kolomensky Plant Anatoly Andreev. Experts think that the position of the Russian machine building sector will become stronger after the practice of long-term contracts is put into operation and the HR problem is solved. 

Still, in the near future the main target of the Russian machine building sector is to become the leader among all the former Republics of the USSR. «It is a prospect, but not a long-term one. Railways with the gauge of 1520 mm wide is a single technological and infrastructural unit, and we are to become the main player in the field», Sergey Ivanov commented on the geopolitical constituent of the strategy.

Plans Need Proper Financing
In spite of the fact that the participants of the discussion agreed on many statements of the strategy offered by the RF Ministry of Industry and Energy, one of the most important problems remained unsolved: where to obtain the money to realize it? OAO RZD is the largest consumer of the production of transport machine building sector; still the railway corporation does not have enough means for a breakthrough. And if it had, there might have been a shortage of the necessary production.

A number of experts believe that the way out is for the state to share the expenses for maintenance and development of the infrastructure managed by OAO RZD. «Such practice is widely used in other states. Why don’t we use it?» asks Deputy CEO of Transmashholding Anatoly Mescheryakov. He believes that in this case OAO RZD could invest the released means into the purchase of new rolling stock.

Director of the Management Technologies Agency Sergey Loparev shares the viewpoint, «Development of transport machine building envisages not only the construction of new rolling stock, but investments into the infrastructure as well. If there is no infrastructure, neither wagons nor locomotives are required».

It is still not clear how the government will react to this viewpoint. However, at the recent meeting chaired by RF President Vladimir Putin, the Head of OAO RZD presented the project that, in his words, can be the basis for the development of the state strategy of railway transport development till 2030. In its turn, the RF Government has sent the project presented by the Ministry of Industry and Energy for further adjustment. Thus, it is possible that not only «transportation process and the process of transport machine building», but the two offered strategies are to be synchronized.

Adoption of the two most important for the railmen and transport machine builders documents may become a logical end of the period of discussions and adjustments, and a beginning of a more active shift of the two sectors towards innovation.

Viewpoint
German Gref,
RF Minister of Economic Development and Trade: 
– Russian economy is at the turning point of its development. The factors, which stimulated the annual growth to 6-7%, are hardly efficient any longer. The key question is if the new growth factors created by us in recent years will be used, or there will be stagnation. I woud like to give one example: in 2004-2006 the average annual rate of growth of export physical volume amounted to 7%, and it provided the growth of GDP by 2%. In 2008-2010, the average rate of export growth will reduce to 2-2.5%. And this will provide just 0.5% growth of GDP. Thus, if all the other conditions remain the same, the dynamics of GDP will reduce to 5.5% per annum on average with the prospect of further decrease to 3-4%. And if we take into consideration the increasing limitations in transport infrastructure, electric-power industry, gas supply, and HR resources... well, you may draw you own conclusions.

Petr Rubezhansky, 
Deputy of the RF State Duma, 
Member of the Duma Committee for Energy, Transport and Communication:
– One of the main problems is that Russia lacks an advanced technological element base necessary to develop and produce modern rolling stock. I believe, it is a consequence of refusal to hold research and design works for a long time. For example, now we have no technologies for production of advanced converters and wagons with a firm aluminium body. Some time ago scientific research was held in the sector. But it was not completed because of the lack of financing.

Vadim Morozov,
First Vice-President, OAO RZD:
– Being the largest consumer of transport machine building production in Russia, OAO RZD is objectively interested in a fast development of the sector. In three years of joint work with producers, the company used the innovational type of development, stimulating development of Russian transport machine building sector. During the structural reform, OAO RZD has increased the volume of rolling stock purchase fourfold, and started to make guaranteed long-term orders of machinery from Russian producers.
In 2006-2007, OAO RZD actively participated in the preliminary discussion of the strategy, and made over 20 offers to improve it. Most of them were taken into consideration. However, some parameters of the strategy are to be corrected.
Thus, the general development scheme of OAO RZD envisages purchase of machinery meeting international standards for output capacity and technical and economic parameters. The term of development of complicated railway machinery is up to 10 years, and the term of its use is up to 40 years. That is why we believe that the strategy of transport machine building development is to be based on the ability of Russian producers to fulfill the demands of the railway transport in the next 25-30 years under the conditions of strong competition with foreign companies.
However, in the presented project of the strategy there is no answer to the following questions: will transport machine builders provide the quality and the output of their production that will meet the requirements of OAO RZD? Will the problem of the sector’s falling behind and structural producing capacities disproportions be solved?
Moreover, according to the company’s General scheme of development, by 2015, OAO RZD needs 12,000 passenger wagons and about 450,000 freight cars to be delivered to it, which exceeds the parameters of the discussed strategy. And according to locomotives production, the parameters of the strategy meet only 50% of our requirements. To fulfill the forecasted transportation volume, it is necessary that 7.8 thousand sections were delivered before 2015, which is 2 thousand units more than the strategy envisages. Besides, the project does not touch on the problem of motorwagon rolling stock, and the questions of high speed railway communication have not been discussed properly. That is why I believe it necessary to make decisions on the problems, and introduce respective amendments to the strategy.

Stanislav Naumov,
Director of Department of Economic Analysis and Prospect Planning, RF Ministry of Industry and Energy:
– Discussing the «eventual» industries, we defined the segments where there is a technological «gap». These are engine- and machine-tool building, instrument construction, electric engineering etc. We understand that the problems of these sectors are difficult to solve from the business viewpoint. And here appears a «window» to carry out the state industrial policy. That is why the strategy of the transport machine building sector development leads to creating strategies for new units, nodes and components production.
The strategy is developed for the period of 2007-2010 and prospectively till 2015. We think that the first three years are the most important – measures must be taken to develop the sector without no more delays. We understand that the three-year period is the very transfer zone for the technological and production breakthrough, otherwise we will have to turn to import as the basis for the transport system development.
The Strategy is a complex of solutions, and all of them are to be carried out. By 2010 we must equalize competition conditions for Russian transport machine builders and their foreign competitors.

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    [~PREVIEW_TEXT] => In spite of a number of positive results achieved by the transport machine-building sector in recent years, there is still a crisis in it. The developed by the RF Ministry of Industry and Energy programme «Strategy of Russian transport machine-building sector development in 2007-2010 and till 2015» is to become the most important step to overcome the crisis.
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    [DETAIL_TEXT] => No Time to Lose 
It is not a secret that for a long time the economy of Russia was based on the exploitation of the natural resources, and, first of all, of gas and oil. However, after the decrease of prices for oil on the world market, the priority targets changed. The discussion about on where to spend the means obtained from oil export has been replaced by debates about the possible new resources for industrial growth to avoid stagnation and for the country not to fall behind other world leaders from the economic standpoint. That is why the attention of legislative and executive powers has turned to the problems of the railway and transport machine-building sectors. 

«Taking into account the important role of railway transport in the country’s economy, and it is about 80% of all freight transportation, providing it with modern rolling stock of high quality is the key target of the industry. Any failure, any unstable work of the transport mode may negatively influence the economic situation in the state», Petr Rubezhansky, Deputy of the RF State Duma, a member of the Duma Committee for energy, transport and communication, is certain.

And it is really so. No other state in the world has the public railways of over 86.7 thousand km long, and electrified lines of 42 thousand km long. The Russian Federation is the top third in the world according to its railway throughput. The railway is also important for passenger communication. 

In spite of the constantly growing demand for railway transport services (in 2000-2006 the throughput increased by 55%), the inventory parks of OAO RZD and other railway companies are hardly renewed, which is caused by the lack of capacities and the technological gap. «Nowadays, the demand of the 1990-s is fulfilled», claimed Andrey Dementyev, the RF Deputy Minister of Industry and Energy. Besides, after the collapse of the USSR, the production capacities of some machinery important for railway transportation was left beyond the border of the RF. Thus, in future the situation with rolling stock ageing and lack will only get worse, because, according to the RF Transport Strategy till 2020, the demand for railway transport services will continue to grow. «If no efficient measures are taken to modernize the infrastructure and renew the rolling stock by 2011, the railway transport can start to restrain the economic growth, instead of speeding it up», agrees with the unpromising forecast Vladimir Yakunin, Head of OAO RZD.

What Has Been Offered
The RF Ministry of Industry and Energy was the main developer of the «Strategy of RF Transport Machine-Building Sector Development in 2007-2010 and till 2015». What is the concept of the document? On the whole, the complex of measures developed by the Ministry can be divided into three categories. The first of them includes measures aimed at the sectoral market development. In particular, it is offered to practice long-term contracts for production delivery, introduce a system of state support for export and leasing, and the regulations for foreign capital participation.

The second category includes measures to stimulate the innovative process and increase the competitiveness of the sectoral enterprises’ production. First of all, it is holding research and experimental design works, based on public-private partnership to renew the models of rolling stock, to implement the advanced technologies, to develop the necessary technical regulations, to stimulate modernization and re-equip enterprises, as well as to create the scheme to partly compensate the producers for their expenses on the interest for credits taken to produce the new machinery. The third category includes the measures to solve the HR problem.

The realization of the complex of measures envisaged by the strategy is to bring the following target results: by 2015 the transport machine-building production volume is to increase by 90%; the share of the Russian transport machine-building sector on the world market is to grow up to 15% by 2010, and to 18% by 2015; export volume is to rise by 75% by 2010.

Simultaneously, the characteristics of the produced machinery are to be improved. For example, the average power consumption is to reduce by 7%, and the average consumption of equivalent fuel is to decrease by 7.7%.

Can Demand Be Fulfilled? 
The discussion of the draft document for transport machine-building has attracted the attention of all the interested market players and even governmental officials. In the words of the First Deputy Chairman of the Russian Government Sergey Ivanov, «the state is ready to make for realization of the Russian transport machine building potential». Highlighting the meaning of the RF Government’s protectionism policy, the First Vice Prime Minister stated, «We should not be afraid of the word. We should take into account the practice, pragmatics and realities of today: the countries that consider themselves setting standards for the market actively support, subside and provide grants to many industrial sectors, including transport». «It is important, however, that the support took in account the requirement of the sector and the possibilities of the state, as well as the existing market mechanisms», he added.

By the way, the theme of requirements and possibilities turned out to be a key one. According to the data reported by an official representative of the Ministry of Industry and Energy, in 2006, the volume of the domestic market of transport machine-building production amounted to RUR 150 bln, and the total volume of railway machinery purchased by all Russian transport companies was RUR 110 bln (including RUR 63 bln. spent by OAO RZD). The average loading of the producing capacities of machine-building enterprises was about 80%. However, it is impossible to use the capacities of the producing plants to the full, because of the significant deterioration of the sector’s basic funds, which amounts to 67%, according to some evaluations. 

«The statistics show that the producing capacities of most plants of the sector are underloaded», says P. Rubezhansky, Deputy of the RF State Duma. «However, a qualified analysis shows that the standards for using the producing capacities of the enterprises were approved before the collapse of the USSR. And now many enterprises, for example, the Tver Wagon Building Plant, work at their full capacity.

Many top-managers believe that issues of taxation are an important aspect for the renewal of the basic assets of Russian transport machine building enterprises. «Our plant and the whole transport machine building sector could develop more intensively, if the profit, which is spent on the renewal of basic assets and development, was excluded from the taxable earnings» claims CEO of ZAO Bryansk Machine Building Plant managing company Anatoly Zadorozhny.

The low level of technical equipment prevents further development of machinery producers and representatives of the adjacent sectors. «On the whole, in the Russian industry the share of enterprises with insufficient capacities amounted to 16% at the beginning of 2007. It is a record since 1993», says Sergey Tsukhlo, Head of the Market Situation Polls Laboratory, Institute of Transitional Period Economy. The expert believes that a small volume of production is accumulated in warehouses, which makes the further technological chain very unstable, because such warehouses are no longer a buffer between production and goods consumption. Many machine building companies note that they depend on the adjacent sectors. «Transport machine building is an assembling sector. Each electric locomotive produced by our company is 1,500 suppliers, and a diesel locomotive – 620. That is why good and efficient relations with producers of adjacent sectors are very important to us», says Chairman of the Board of Directors of ZAO Transmashholding Dmitry Komissarov.

Still, the necessary result is not always achieved. For example, in 2006 and at the beginning of 2007, OAO RZD had to take 14,000 gondola cars produced by FGUP Uralvagonzavod out of exploitation to hold a non-planned revision of main nodes. It happened because of the low quality of metallurgical components. Besides, in 2006, some long-base gondola cars were given back to their producers, because there were cracks in the load-bearing parts of wagon frames.

Even if the production is of proper quality, the Russian market cannot always provide the consumer with the necessary machinery. Some types of transport machine building production are only started to be produced in Russia: passenger diesel locomotives, freight mainline diesel locomotives, wagons made of aluminium and aluminium alloys. However, the rolling stock for high speed railway communication will be purchased abroad. Both officials and businessmen understand that there is no other way out. «Change market for technologies» is the new motto of the Russian machine building sector and the new slogan of the RF state policy.

«The technological gap will be hardly compensated by the increase of the share of import. There will be a synchronization between the transportation process and transport machine building sector development», they believe in the Ministry of Industry and Energy. That is why they offer to use public-private partnership in research and experimental design works. The producers support the idea. «If we want to re-orient the state from export of raw materials to export of finished commodities, it is necessary to stimulate investments into scientific projects», believes acting CEO of OAO Kolomensky Plant Anatoly Andreev. Experts think that the position of the Russian machine building sector will become stronger after the practice of long-term contracts is put into operation and the HR problem is solved. 

Still, in the near future the main target of the Russian machine building sector is to become the leader among all the former Republics of the USSR. «It is a prospect, but not a long-term one. Railways with the gauge of 1520 mm wide is a single technological and infrastructural unit, and we are to become the main player in the field», Sergey Ivanov commented on the geopolitical constituent of the strategy.

Plans Need Proper Financing
In spite of the fact that the participants of the discussion agreed on many statements of the strategy offered by the RF Ministry of Industry and Energy, one of the most important problems remained unsolved: where to obtain the money to realize it? OAO RZD is the largest consumer of the production of transport machine building sector; still the railway corporation does not have enough means for a breakthrough. And if it had, there might have been a shortage of the necessary production.

A number of experts believe that the way out is for the state to share the expenses for maintenance and development of the infrastructure managed by OAO RZD. «Such practice is widely used in other states. Why don’t we use it?» asks Deputy CEO of Transmashholding Anatoly Mescheryakov. He believes that in this case OAO RZD could invest the released means into the purchase of new rolling stock.

Director of the Management Technologies Agency Sergey Loparev shares the viewpoint, «Development of transport machine building envisages not only the construction of new rolling stock, but investments into the infrastructure as well. If there is no infrastructure, neither wagons nor locomotives are required».

It is still not clear how the government will react to this viewpoint. However, at the recent meeting chaired by RF President Vladimir Putin, the Head of OAO RZD presented the project that, in his words, can be the basis for the development of the state strategy of railway transport development till 2030. In its turn, the RF Government has sent the project presented by the Ministry of Industry and Energy for further adjustment. Thus, it is possible that not only «transportation process and the process of transport machine building», but the two offered strategies are to be synchronized.

Adoption of the two most important for the railmen and transport machine builders documents may become a logical end of the period of discussions and adjustments, and a beginning of a more active shift of the two sectors towards innovation.

Viewpoint
German Gref,
RF Minister of Economic Development and Trade: 
– Russian economy is at the turning point of its development. The factors, which stimulated the annual growth to 6-7%, are hardly efficient any longer. The key question is if the new growth factors created by us in recent years will be used, or there will be stagnation. I woud like to give one example: in 2004-2006 the average annual rate of growth of export physical volume amounted to 7%, and it provided the growth of GDP by 2%. In 2008-2010, the average rate of export growth will reduce to 2-2.5%. And this will provide just 0.5% growth of GDP. Thus, if all the other conditions remain the same, the dynamics of GDP will reduce to 5.5% per annum on average with the prospect of further decrease to 3-4%. And if we take into consideration the increasing limitations in transport infrastructure, electric-power industry, gas supply, and HR resources... well, you may draw you own conclusions.

Petr Rubezhansky, 
Deputy of the RF State Duma, 
Member of the Duma Committee for Energy, Transport and Communication:
– One of the main problems is that Russia lacks an advanced technological element base necessary to develop and produce modern rolling stock. I believe, it is a consequence of refusal to hold research and design works for a long time. For example, now we have no technologies for production of advanced converters and wagons with a firm aluminium body. Some time ago scientific research was held in the sector. But it was not completed because of the lack of financing.

Vadim Morozov,
First Vice-President, OAO RZD:
– Being the largest consumer of transport machine building production in Russia, OAO RZD is objectively interested in a fast development of the sector. In three years of joint work with producers, the company used the innovational type of development, stimulating development of Russian transport machine building sector. During the structural reform, OAO RZD has increased the volume of rolling stock purchase fourfold, and started to make guaranteed long-term orders of machinery from Russian producers.
In 2006-2007, OAO RZD actively participated in the preliminary discussion of the strategy, and made over 20 offers to improve it. Most of them were taken into consideration. However, some parameters of the strategy are to be corrected.
Thus, the general development scheme of OAO RZD envisages purchase of machinery meeting international standards for output capacity and technical and economic parameters. The term of development of complicated railway machinery is up to 10 years, and the term of its use is up to 40 years. That is why we believe that the strategy of transport machine building development is to be based on the ability of Russian producers to fulfill the demands of the railway transport in the next 25-30 years under the conditions of strong competition with foreign companies.
However, in the presented project of the strategy there is no answer to the following questions: will transport machine builders provide the quality and the output of their production that will meet the requirements of OAO RZD? Will the problem of the sector’s falling behind and structural producing capacities disproportions be solved?
Moreover, according to the company’s General scheme of development, by 2015, OAO RZD needs 12,000 passenger wagons and about 450,000 freight cars to be delivered to it, which exceeds the parameters of the discussed strategy. And according to locomotives production, the parameters of the strategy meet only 50% of our requirements. To fulfill the forecasted transportation volume, it is necessary that 7.8 thousand sections were delivered before 2015, which is 2 thousand units more than the strategy envisages. Besides, the project does not touch on the problem of motorwagon rolling stock, and the questions of high speed railway communication have not been discussed properly. That is why I believe it necessary to make decisions on the problems, and introduce respective amendments to the strategy.

Stanislav Naumov,
Director of Department of Economic Analysis and Prospect Planning, RF Ministry of Industry and Energy:
– Discussing the «eventual» industries, we defined the segments where there is a technological «gap». These are engine- and machine-tool building, instrument construction, electric engineering etc. We understand that the problems of these sectors are difficult to solve from the business viewpoint. And here appears a «window» to carry out the state industrial policy. That is why the strategy of the transport machine building sector development leads to creating strategies for new units, nodes and components production.
The strategy is developed for the period of 2007-2010 and prospectively till 2015. We think that the first three years are the most important – measures must be taken to develop the sector without no more delays. We understand that the three-year period is the very transfer zone for the technological and production breakthrough, otherwise we will have to turn to import as the basis for the transport system development.
The Strategy is a complex of solutions, and all of them are to be carried out. By 2010 we must equalize competition conditions for Russian transport machine builders and their foreign competitors.

    [~DETAIL_TEXT] => No Time to Lose 
It is not a secret that for a long time the economy of Russia was based on the exploitation of the natural resources, and, first of all, of gas and oil. However, after the decrease of prices for oil on the world market, the priority targets changed. The discussion about on where to spend the means obtained from oil export has been replaced by debates about the possible new resources for industrial growth to avoid stagnation and for the country not to fall behind other world leaders from the economic standpoint. That is why the attention of legislative and executive powers has turned to the problems of the railway and transport machine-building sectors. 

«Taking into account the important role of railway transport in the country’s economy, and it is about 80% of all freight transportation, providing it with modern rolling stock of high quality is the key target of the industry. Any failure, any unstable work of the transport mode may negatively influence the economic situation in the state», Petr Rubezhansky, Deputy of the RF State Duma, a member of the Duma Committee for energy, transport and communication, is certain.

And it is really so. No other state in the world has the public railways of over 86.7 thousand km long, and electrified lines of 42 thousand km long. The Russian Federation is the top third in the world according to its railway throughput. The railway is also important for passenger communication. 

In spite of the constantly growing demand for railway transport services (in 2000-2006 the throughput increased by 55%), the inventory parks of OAO RZD and other railway companies are hardly renewed, which is caused by the lack of capacities and the technological gap. «Nowadays, the demand of the 1990-s is fulfilled», claimed Andrey Dementyev, the RF Deputy Minister of Industry and Energy. Besides, after the collapse of the USSR, the production capacities of some machinery important for railway transportation was left beyond the border of the RF. Thus, in future the situation with rolling stock ageing and lack will only get worse, because, according to the RF Transport Strategy till 2020, the demand for railway transport services will continue to grow. «If no efficient measures are taken to modernize the infrastructure and renew the rolling stock by 2011, the railway transport can start to restrain the economic growth, instead of speeding it up», agrees with the unpromising forecast Vladimir Yakunin, Head of OAO RZD.

What Has Been Offered
The RF Ministry of Industry and Energy was the main developer of the «Strategy of RF Transport Machine-Building Sector Development in 2007-2010 and till 2015». What is the concept of the document? On the whole, the complex of measures developed by the Ministry can be divided into three categories. The first of them includes measures aimed at the sectoral market development. In particular, it is offered to practice long-term contracts for production delivery, introduce a system of state support for export and leasing, and the regulations for foreign capital participation.

The second category includes measures to stimulate the innovative process and increase the competitiveness of the sectoral enterprises’ production. First of all, it is holding research and experimental design works, based on public-private partnership to renew the models of rolling stock, to implement the advanced technologies, to develop the necessary technical regulations, to stimulate modernization and re-equip enterprises, as well as to create the scheme to partly compensate the producers for their expenses on the interest for credits taken to produce the new machinery. The third category includes the measures to solve the HR problem.

The realization of the complex of measures envisaged by the strategy is to bring the following target results: by 2015 the transport machine-building production volume is to increase by 90%; the share of the Russian transport machine-building sector on the world market is to grow up to 15% by 2010, and to 18% by 2015; export volume is to rise by 75% by 2010.

Simultaneously, the characteristics of the produced machinery are to be improved. For example, the average power consumption is to reduce by 7%, and the average consumption of equivalent fuel is to decrease by 7.7%.

Can Demand Be Fulfilled? 
The discussion of the draft document for transport machine-building has attracted the attention of all the interested market players and even governmental officials. In the words of the First Deputy Chairman of the Russian Government Sergey Ivanov, «the state is ready to make for realization of the Russian transport machine building potential». Highlighting the meaning of the RF Government’s protectionism policy, the First Vice Prime Minister stated, «We should not be afraid of the word. We should take into account the practice, pragmatics and realities of today: the countries that consider themselves setting standards for the market actively support, subside and provide grants to many industrial sectors, including transport». «It is important, however, that the support took in account the requirement of the sector and the possibilities of the state, as well as the existing market mechanisms», he added.

By the way, the theme of requirements and possibilities turned out to be a key one. According to the data reported by an official representative of the Ministry of Industry and Energy, in 2006, the volume of the domestic market of transport machine-building production amounted to RUR 150 bln, and the total volume of railway machinery purchased by all Russian transport companies was RUR 110 bln (including RUR 63 bln. spent by OAO RZD). The average loading of the producing capacities of machine-building enterprises was about 80%. However, it is impossible to use the capacities of the producing plants to the full, because of the significant deterioration of the sector’s basic funds, which amounts to 67%, according to some evaluations. 

«The statistics show that the producing capacities of most plants of the sector are underloaded», says P. Rubezhansky, Deputy of the RF State Duma. «However, a qualified analysis shows that the standards for using the producing capacities of the enterprises were approved before the collapse of the USSR. And now many enterprises, for example, the Tver Wagon Building Plant, work at their full capacity.

Many top-managers believe that issues of taxation are an important aspect for the renewal of the basic assets of Russian transport machine building enterprises. «Our plant and the whole transport machine building sector could develop more intensively, if the profit, which is spent on the renewal of basic assets and development, was excluded from the taxable earnings» claims CEO of ZAO Bryansk Machine Building Plant managing company Anatoly Zadorozhny.

The low level of technical equipment prevents further development of machinery producers and representatives of the adjacent sectors. «On the whole, in the Russian industry the share of enterprises with insufficient capacities amounted to 16% at the beginning of 2007. It is a record since 1993», says Sergey Tsukhlo, Head of the Market Situation Polls Laboratory, Institute of Transitional Period Economy. The expert believes that a small volume of production is accumulated in warehouses, which makes the further technological chain very unstable, because such warehouses are no longer a buffer between production and goods consumption. Many machine building companies note that they depend on the adjacent sectors. «Transport machine building is an assembling sector. Each electric locomotive produced by our company is 1,500 suppliers, and a diesel locomotive – 620. That is why good and efficient relations with producers of adjacent sectors are very important to us», says Chairman of the Board of Directors of ZAO Transmashholding Dmitry Komissarov.

Still, the necessary result is not always achieved. For example, in 2006 and at the beginning of 2007, OAO RZD had to take 14,000 gondola cars produced by FGUP Uralvagonzavod out of exploitation to hold a non-planned revision of main nodes. It happened because of the low quality of metallurgical components. Besides, in 2006, some long-base gondola cars were given back to their producers, because there were cracks in the load-bearing parts of wagon frames.

Even if the production is of proper quality, the Russian market cannot always provide the consumer with the necessary machinery. Some types of transport machine building production are only started to be produced in Russia: passenger diesel locomotives, freight mainline diesel locomotives, wagons made of aluminium and aluminium alloys. However, the rolling stock for high speed railway communication will be purchased abroad. Both officials and businessmen understand that there is no other way out. «Change market for technologies» is the new motto of the Russian machine building sector and the new slogan of the RF state policy.

«The technological gap will be hardly compensated by the increase of the share of import. There will be a synchronization between the transportation process and transport machine building sector development», they believe in the Ministry of Industry and Energy. That is why they offer to use public-private partnership in research and experimental design works. The producers support the idea. «If we want to re-orient the state from export of raw materials to export of finished commodities, it is necessary to stimulate investments into scientific projects», believes acting CEO of OAO Kolomensky Plant Anatoly Andreev. Experts think that the position of the Russian machine building sector will become stronger after the practice of long-term contracts is put into operation and the HR problem is solved. 

Still, in the near future the main target of the Russian machine building sector is to become the leader among all the former Republics of the USSR. «It is a prospect, but not a long-term one. Railways with the gauge of 1520 mm wide is a single technological and infrastructural unit, and we are to become the main player in the field», Sergey Ivanov commented on the geopolitical constituent of the strategy.

Plans Need Proper Financing
In spite of the fact that the participants of the discussion agreed on many statements of the strategy offered by the RF Ministry of Industry and Energy, one of the most important problems remained unsolved: where to obtain the money to realize it? OAO RZD is the largest consumer of the production of transport machine building sector; still the railway corporation does not have enough means for a breakthrough. And if it had, there might have been a shortage of the necessary production.

A number of experts believe that the way out is for the state to share the expenses for maintenance and development of the infrastructure managed by OAO RZD. «Such practice is widely used in other states. Why don’t we use it?» asks Deputy CEO of Transmashholding Anatoly Mescheryakov. He believes that in this case OAO RZD could invest the released means into the purchase of new rolling stock.

Director of the Management Technologies Agency Sergey Loparev shares the viewpoint, «Development of transport machine building envisages not only the construction of new rolling stock, but investments into the infrastructure as well. If there is no infrastructure, neither wagons nor locomotives are required».

It is still not clear how the government will react to this viewpoint. However, at the recent meeting chaired by RF President Vladimir Putin, the Head of OAO RZD presented the project that, in his words, can be the basis for the development of the state strategy of railway transport development till 2030. In its turn, the RF Government has sent the project presented by the Ministry of Industry and Energy for further adjustment. Thus, it is possible that not only «transportation process and the process of transport machine building», but the two offered strategies are to be synchronized.

Adoption of the two most important for the railmen and transport machine builders documents may become a logical end of the period of discussions and adjustments, and a beginning of a more active shift of the two sectors towards innovation.

Viewpoint
German Gref,
RF Minister of Economic Development and Trade: 
– Russian economy is at the turning point of its development. The factors, which stimulated the annual growth to 6-7%, are hardly efficient any longer. The key question is if the new growth factors created by us in recent years will be used, or there will be stagnation. I woud like to give one example: in 2004-2006 the average annual rate of growth of export physical volume amounted to 7%, and it provided the growth of GDP by 2%. In 2008-2010, the average rate of export growth will reduce to 2-2.5%. And this will provide just 0.5% growth of GDP. Thus, if all the other conditions remain the same, the dynamics of GDP will reduce to 5.5% per annum on average with the prospect of further decrease to 3-4%. And if we take into consideration the increasing limitations in transport infrastructure, electric-power industry, gas supply, and HR resources... well, you may draw you own conclusions.

Petr Rubezhansky, 
Deputy of the RF State Duma, 
Member of the Duma Committee for Energy, Transport and Communication:
– One of the main problems is that Russia lacks an advanced technological element base necessary to develop and produce modern rolling stock. I believe, it is a consequence of refusal to hold research and design works for a long time. For example, now we have no technologies for production of advanced converters and wagons with a firm aluminium body. Some time ago scientific research was held in the sector. But it was not completed because of the lack of financing.

Vadim Morozov,
First Vice-President, OAO RZD:
– Being the largest consumer of transport machine building production in Russia, OAO RZD is objectively interested in a fast development of the sector. In three years of joint work with producers, the company used the innovational type of development, stimulating development of Russian transport machine building sector. During the structural reform, OAO RZD has increased the volume of rolling stock purchase fourfold, and started to make guaranteed long-term orders of machinery from Russian producers.
In 2006-2007, OAO RZD actively participated in the preliminary discussion of the strategy, and made over 20 offers to improve it. Most of them were taken into consideration. However, some parameters of the strategy are to be corrected.
Thus, the general development scheme of OAO RZD envisages purchase of machinery meeting international standards for output capacity and technical and economic parameters. The term of development of complicated railway machinery is up to 10 years, and the term of its use is up to 40 years. That is why we believe that the strategy of transport machine building development is to be based on the ability of Russian producers to fulfill the demands of the railway transport in the next 25-30 years under the conditions of strong competition with foreign companies.
However, in the presented project of the strategy there is no answer to the following questions: will transport machine builders provide the quality and the output of their production that will meet the requirements of OAO RZD? Will the problem of the sector’s falling behind and structural producing capacities disproportions be solved?
Moreover, according to the company’s General scheme of development, by 2015, OAO RZD needs 12,000 passenger wagons and about 450,000 freight cars to be delivered to it, which exceeds the parameters of the discussed strategy. And according to locomotives production, the parameters of the strategy meet only 50% of our requirements. To fulfill the forecasted transportation volume, it is necessary that 7.8 thousand sections were delivered before 2015, which is 2 thousand units more than the strategy envisages. Besides, the project does not touch on the problem of motorwagon rolling stock, and the questions of high speed railway communication have not been discussed properly. That is why I believe it necessary to make decisions on the problems, and introduce respective amendments to the strategy.

Stanislav Naumov,
Director of Department of Economic Analysis and Prospect Planning, RF Ministry of Industry and Energy:
– Discussing the «eventual» industries, we defined the segments where there is a technological «gap». These are engine- and machine-tool building, instrument construction, electric engineering etc. We understand that the problems of these sectors are difficult to solve from the business viewpoint. And here appears a «window» to carry out the state industrial policy. That is why the strategy of the transport machine building sector development leads to creating strategies for new units, nodes and components production.
The strategy is developed for the period of 2007-2010 and prospectively till 2015. We think that the first three years are the most important – measures must be taken to develop the sector without no more delays. We understand that the three-year period is the very transfer zone for the technological and production breakthrough, otherwise we will have to turn to import as the basis for the transport system development.
The Strategy is a complex of solutions, and all of them are to be carried out. By 2010 we must equalize competition conditions for Russian transport machine builders and their foreign competitors.

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– Mr. Mosolf, what aspects of rail services should be improved to attract customers who prefer using auto transport today?

– In order to attract customers, there are several aspects of rail services which have to be improved - especially when it comes to transportation between Germany and Eastern Europe or Russia. First of all, the costs for rail transportation between Germany and Russia have to align with costs for auto transportation. It would even be better if transportation rates were fixed at a lower price level than those for auto transportation. The transit time for rail transportation has to be comparable to auto transport as well. 

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– Mr. Mosolf, what aspects of rail services should be improved to attract customers who prefer using auto transport today?

– In order to attract customers, there are several aspects of rail services which have to be improved - especially when it comes to transportation between Germany and Eastern Europe or Russia. First of all, the costs for rail transportation between Germany and Russia have to align with costs for auto transportation. It would even be better if transportation rates were fixed at a lower price level than those for auto transportation. The transit time for rail transportation has to be comparable to auto transport as well. 

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Furthermore, security and reliability of rail services have to be improved. The aspect of reliability is also interrelated with the duration of transports. Smooth handling and operations as well as transition from normal to broad gauge and vice versa without any delays are the basic requirements for Mosolf to use such a service. If terms and conditions are competitive, all kinds of freight are appropriate with the services of this new company.

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If all aspects mentioned above were fixes and also guaranteed to be maintained, the rail corridor Germany-Russia has quite good prospects in the future.

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All together
Shares in ERL are distributed between the stakeholders in the following way. Railion Deutschland AG, a subsidiary of Deutsche Bahn AG, acquired 34.9%, OAO RZD owns 40.1%, the  Belorussian railways – 10%, the Polish railways – 15%. Two largest economies in Europe, Russia and Germany, generate great volumes of cargo. A rather short axis Berlin-St.Petersburg-Moscow links three of the four largest cities in the continent with the joint population of more than 20 million people. Nowadays freight owners prefer using roads and sea ways of the Baltic to deliver goods between the destinations. Of the total about 100 mln tons of cargo transported between the European Union and the CIS-countries in only 1.3 mln is being served by rail, with 5.2 mln by road and the rest by sea. 

The general aim of establishing the subsidiary is an attempt to attract freight owners to the corridor. Its co-founders are to be the first clients of the new company. Managers of OAO RZD see that ERL will focus on the optimization of transport processes aimed to increase the  quality level of services and transported volumes. This optimization is to include such actions as introducing unified documents, information exchange between both railway companies and customs offices, and reducing constant delays at the borders. Not least important is working out a competitive rate of tariff that’d be able to beat those of shipping companies and road trucks.

Obviously, the company will act as a forwarder whose task is to create a competitive service which will attract clients to its co-founders, national rail carriers. 

Great work already done 
Cooperation among the railways of these countries has a rather long history running through several stages. In 2003, OAO RZD and Deutsche Bahn AG signed a Memorandum of Understanding and Cooperation on passenger and cargo transport. It was not a document to contain only wishes  not obliging to actions. Later, in 2004, more concrete actions were taken to develop the cooperation. In 2005, OAO RZD and Railion AG established a new joint venture that offered additional services relating to convoy, customs and cargo clearance. In 2006, Poland and Belorussia that are transit states with their own freight base joined this alliance to enable providing a through service and rate. Thus, all the preparatory procedures have been accomplished. 

All these years the companies have been working hard on resolving main problems linked with the different width of gauge and different transport legislation systems. Today it’s possible for trains to adjust to a different gauge when moving. To a large extent unification has been achieved. This work is supposed to be finalized by ERL. 

The main obstacle on the transit way is, of course, the transshipment in Brest, at the Poland-Belorussian border. The difference in the gauges width leads to a time waste which in its turn makes the transportation too expensive. While a truck needs only five days to cover the distance of 2.3 thousand kilometers from Germany to Russia, a train takes up to ten days to cover its 2.2 thousand kilometers. According to representatives of OAO RZD, by introducing unified documents, as well as sending invoices before a train arrives at the border crossing, it‘s possible to reduce journey time to three days. 

Good chances! 
In the market research made by the Ministry of transport and communications of Finland in 2005, it’s noted that the route constitutes the shortest connection by land between Russia and the core areas of the EU. So, if all the mail problems are resolved, the improved route would be a very competitive connection for valuable goods, such as, telephones, radio, TV equipment and the list can go on. CEO of Transa Hans Loeffert maintans that today ports, for example, in the Baltic are in constant congestion. So is the road traffic. Thus rail gets its chance in the fight for consumers.

As if to prove the words of Mr. Loeffert, in March 2007 one Russian freight forwarding company «Modul» opened a new route from Germany to Russia – by rail instead of by sea. The reason is precisely port congestion. 
    [~DETAIL_TEXT] => 
All together
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The general aim of establishing the subsidiary is an attempt to attract freight owners to the corridor. Its co-founders are to be the first clients of the new company. Managers of OAO RZD see that ERL will focus on the optimization of transport processes aimed to increase the  quality level of services and transported volumes. This optimization is to include such actions as introducing unified documents, information exchange between both railway companies and customs offices, and reducing constant delays at the borders. Not least important is working out a competitive rate of tariff that’d be able to beat those of shipping companies and road trucks.

Obviously, the company will act as a forwarder whose task is to create a competitive service which will attract clients to its co-founders, national rail carriers. 

Great work already done 
Cooperation among the railways of these countries has a rather long history running through several stages. In 2003, OAO RZD and Deutsche Bahn AG signed a Memorandum of Understanding and Cooperation on passenger and cargo transport. It was not a document to contain only wishes  not obliging to actions. Later, in 2004, more concrete actions were taken to develop the cooperation. In 2005, OAO RZD and Railion AG established a new joint venture that offered additional services relating to convoy, customs and cargo clearance. In 2006, Poland and Belorussia that are transit states with their own freight base joined this alliance to enable providing a through service and rate. Thus, all the preparatory procedures have been accomplished. 

All these years the companies have been working hard on resolving main problems linked with the different width of gauge and different transport legislation systems. Today it’s possible for trains to adjust to a different gauge when moving. To a large extent unification has been achieved. This work is supposed to be finalized by ERL. 

The main obstacle on the transit way is, of course, the transshipment in Brest, at the Poland-Belorussian border. The difference in the gauges width leads to a time waste which in its turn makes the transportation too expensive. While a truck needs only five days to cover the distance of 2.3 thousand kilometers from Germany to Russia, a train takes up to ten days to cover its 2.2 thousand kilometers. According to representatives of OAO RZD, by introducing unified documents, as well as sending invoices before a train arrives at the border crossing, it‘s possible to reduce journey time to three days. 

Good chances! 
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All together
Shares in ERL are distributed between the stakeholders in the following way. Railion Deutschland AG, a subsidiary of Deutsche Bahn AG, acquired 34.9%, OAO RZD owns 40.1%, the  Belorussian railways – 10%, the Polish railways – 15%. Two largest economies in Europe, Russia and Germany, generate great volumes of cargo. A rather short axis Berlin-St.Petersburg-Moscow links three of the four largest cities in the continent with the joint population of more than 20 million people. Nowadays freight owners prefer using roads and sea ways of the Baltic to deliver goods between the destinations. Of the total about 100 mln tons of cargo transported between the European Union and the CIS-countries in only 1.3 mln is being served by rail, with 5.2 mln by road and the rest by sea. 

The general aim of establishing the subsidiary is an attempt to attract freight owners to the corridor. Its co-founders are to be the first clients of the new company. Managers of OAO RZD see that ERL will focus on the optimization of transport processes aimed to increase the  quality level of services and transported volumes. This optimization is to include such actions as introducing unified documents, information exchange between both railway companies and customs offices, and reducing constant delays at the borders. Not least important is working out a competitive rate of tariff that’d be able to beat those of shipping companies and road trucks.

Obviously, the company will act as a forwarder whose task is to create a competitive service which will attract clients to its co-founders, national rail carriers. 

Great work already done 
Cooperation among the railways of these countries has a rather long history running through several stages. In 2003, OAO RZD and Deutsche Bahn AG signed a Memorandum of Understanding and Cooperation on passenger and cargo transport. It was not a document to contain only wishes  not obliging to actions. Later, in 2004, more concrete actions were taken to develop the cooperation. In 2005, OAO RZD and Railion AG established a new joint venture that offered additional services relating to convoy, customs and cargo clearance. In 2006, Poland and Belorussia that are transit states with their own freight base joined this alliance to enable providing a through service and rate. Thus, all the preparatory procedures have been accomplished. 

All these years the companies have been working hard on resolving main problems linked with the different width of gauge and different transport legislation systems. Today it’s possible for trains to adjust to a different gauge when moving. To a large extent unification has been achieved. This work is supposed to be finalized by ERL. 

The main obstacle on the transit way is, of course, the transshipment in Brest, at the Poland-Belorussian border. The difference in the gauges width leads to a time waste which in its turn makes the transportation too expensive. While a truck needs only five days to cover the distance of 2.3 thousand kilometers from Germany to Russia, a train takes up to ten days to cover its 2.2 thousand kilometers. According to representatives of OAO RZD, by introducing unified documents, as well as sending invoices before a train arrives at the border crossing, it‘s possible to reduce journey time to three days. 

Good chances! 
In the market research made by the Ministry of transport and communications of Finland in 2005, it’s noted that the route constitutes the shortest connection by land between Russia and the core areas of the EU. So, if all the mail problems are resolved, the improved route would be a very competitive connection for valuable goods, such as, telephones, radio, TV equipment and the list can go on. CEO of Transa Hans Loeffert maintans that today ports, for example, in the Baltic are in constant congestion. So is the road traffic. Thus rail gets its chance in the fight for consumers.

As if to prove the words of Mr. Loeffert, in March 2007 one Russian freight forwarding company «Modul» opened a new route from Germany to Russia – by rail instead of by sea. The reason is precisely port congestion. 
    [~DETAIL_TEXT] => 
All together
Shares in ERL are distributed between the stakeholders in the following way. Railion Deutschland AG, a subsidiary of Deutsche Bahn AG, acquired 34.9%, OAO RZD owns 40.1%, the  Belorussian railways – 10%, the Polish railways – 15%. Two largest economies in Europe, Russia and Germany, generate great volumes of cargo. A rather short axis Berlin-St.Petersburg-Moscow links three of the four largest cities in the continent with the joint population of more than 20 million people. Nowadays freight owners prefer using roads and sea ways of the Baltic to deliver goods between the destinations. Of the total about 100 mln tons of cargo transported between the European Union and the CIS-countries in only 1.3 mln is being served by rail, with 5.2 mln by road and the rest by sea. 

The general aim of establishing the subsidiary is an attempt to attract freight owners to the corridor. Its co-founders are to be the first clients of the new company. Managers of OAO RZD see that ERL will focus on the optimization of transport processes aimed to increase the  quality level of services and transported volumes. This optimization is to include such actions as introducing unified documents, information exchange between both railway companies and customs offices, and reducing constant delays at the borders. Not least important is working out a competitive rate of tariff that’d be able to beat those of shipping companies and road trucks.

Obviously, the company will act as a forwarder whose task is to create a competitive service which will attract clients to its co-founders, national rail carriers. 

Great work already done 
Cooperation among the railways of these countries has a rather long history running through several stages. In 2003, OAO RZD and Deutsche Bahn AG signed a Memorandum of Understanding and Cooperation on passenger and cargo transport. It was not a document to contain only wishes  not obliging to actions. Later, in 2004, more concrete actions were taken to develop the cooperation. In 2005, OAO RZD and Railion AG established a new joint venture that offered additional services relating to convoy, customs and cargo clearance. In 2006, Poland and Belorussia that are transit states with their own freight base joined this alliance to enable providing a through service and rate. Thus, all the preparatory procedures have been accomplished. 

All these years the companies have been working hard on resolving main problems linked with the different width of gauge and different transport legislation systems. Today it’s possible for trains to adjust to a different gauge when moving. To a large extent unification has been achieved. This work is supposed to be finalized by ERL. 

The main obstacle on the transit way is, of course, the transshipment in Brest, at the Poland-Belorussian border. The difference in the gauges width leads to a time waste which in its turn makes the transportation too expensive. While a truck needs only five days to cover the distance of 2.3 thousand kilometers from Germany to Russia, a train takes up to ten days to cover its 2.2 thousand kilometers. According to representatives of OAO RZD, by introducing unified documents, as well as sending invoices before a train arrives at the border crossing, it‘s possible to reduce journey time to three days. 

Good chances! 
In the market research made by the Ministry of transport and communications of Finland in 2005, it’s noted that the route constitutes the shortest connection by land between Russia and the core areas of the EU. So, if all the mail problems are resolved, the improved route would be a very competitive connection for valuable goods, such as, telephones, radio, TV equipment and the list can go on. CEO of Transa Hans Loeffert maintans that today ports, for example, in the Baltic are in constant congestion. So is the road traffic. Thus rail gets its chance in the fight for consumers.

As if to prove the words of Mr. Loeffert, in March 2007 one Russian freight forwarding company «Modul» opened a new route from Germany to Russia – by rail instead of by sea. The reason is precisely port congestion. 
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Ust-Luga – Baltiysk – Ports of Germany ferry bridge launched in March promises to be successful. Harm Sievers, Managing Director of German port of Sassnitz and Dr. Otto Ebnet, Minister for Traffic, Construction and State Development of Mecklenburg-Western Pomerania asserted that.   

– Transport business community was quite skeptical regarding the bridge profitability. What is your view judging the results achieved during first months of the bridge functioning? 

Otto Ebnet: 
– No doubts the bridge will be profitable. We need extra capacities to transport cargo between Russia and Europe since the acting are practically exhausted. That is the reason why the Baltic Sea is as very promising route. And in its turn, Sassnitz is the only port of Western Europe which is capable to handle cargo received from the Russian gauge. 
 
Harm Sievers:
– The structure of the cargo flow we intend to service contains large dimensions cargo, containers and motor vehicles. The ferry bridge linking Sweden and Sassnitz has been servicing these very types of cargo for almost one hundred years. Compared to railways this way is much more potential for heavy cargo transportation. 

Since we receive inquiries about the line from Russian and Kazakhstan forwarders we can assert they have faced the problem of exhausted capacities and need extra routes to transport cargo. The present day schedule looks as follows: cargo is to be dispatched from Germany on Thursday and arrive to Baltiysk on Friday. The tariffs have already been set and available at Deutsche Banh and DFDS.

– Do you believe plans for cargo volumes transportation developed for 2007 will be fulfilled? In particular, volume of 4 mln tons was mentioned…  

Harm Sievers
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The bridge linking us with Klaipeda has been functioning for already 20 years. Joining the old and new bridge between Ust-Luga and Baltiysk we develop our business this way. We are sure, that the offered service is out of competition with truck haulage. 

Otto Ebnet 
– Infrastructure has always been the bottleneck for cargo transportation. However, it is developed now and due to Ust-Luga and Baltyisk all the bottlenecks were eliminated. The second problem we face is vessels. They are to be constructed. We can easily start with the acting fleet, however, we need to acquire more ferries in future. Thus, we plan to build more vessels for more cargo since we link not only Pomerania with Kaliningrad and Saint-Petersburg. Our bridge also links Kazakhstan, Russian Far East and Western countries. This corridor has already been formed what we needed was extra capacities and infrastructure
 
By  Ivan  Stupachenko 
 
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– Transport business community was quite skeptical regarding the bridge profitability. What is your view judging the results achieved during first months of the bridge functioning? 

Otto Ebnet: 
– No doubts the bridge will be profitable. We need extra capacities to transport cargo between Russia and Europe since the acting are practically exhausted. That is the reason why the Baltic Sea is as very promising route. And in its turn, Sassnitz is the only port of Western Europe which is capable to handle cargo received from the Russian gauge. 
 
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By  Ivan  Stupachenko 
 
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Ust-Luga – Baltiysk – Ports of Germany ferry bridge launched in March promises to be successful. Harm Sievers, Managing Director of German port of Sassnitz and Dr. Otto Ebnet, Minister for Traffic, Construction and State Development of Mecklenburg-Western Pomerania asserted that.   

– Transport business community was quite skeptical regarding the bridge profitability. What is your view judging the results achieved during first months of the bridge functioning? 

Otto Ebnet: 
– No doubts the bridge will be profitable. We need extra capacities to transport cargo between Russia and Europe since the acting are practically exhausted. That is the reason why the Baltic Sea is as very promising route. And in its turn, Sassnitz is the only port of Western Europe which is capable to handle cargo received from the Russian gauge. 
 
Harm Sievers:
– The structure of the cargo flow we intend to service contains large dimensions cargo, containers and motor vehicles. The ferry bridge linking Sweden and Sassnitz has been servicing these very types of cargo for almost one hundred years. Compared to railways this way is much more potential for heavy cargo transportation. 

Since we receive inquiries about the line from Russian and Kazakhstan forwarders we can assert they have faced the problem of exhausted capacities and need extra routes to transport cargo. The present day schedule looks as follows: cargo is to be dispatched from Germany on Thursday and arrive to Baltiysk on Friday. The tariffs have already been set and available at Deutsche Banh and DFDS.

– Do you believe plans for cargo volumes transportation developed for 2007 will be fulfilled? In particular, volume of 4 mln tons was mentioned…  

Harm Sievers
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The bridge linking us with Klaipeda has been functioning for already 20 years. Joining the old and new bridge between Ust-Luga and Baltiysk we develop our business this way. We are sure, that the offered service is out of competition with truck haulage. 

Otto Ebnet 
– Infrastructure has always been the bottleneck for cargo transportation. However, it is developed now and due to Ust-Luga and Baltyisk all the bottlenecks were eliminated. The second problem we face is vessels. They are to be constructed. We can easily start with the acting fleet, however, we need to acquire more ferries in future. Thus, we plan to build more vessels for more cargo since we link not only Pomerania with Kaliningrad and Saint-Petersburg. Our bridge also links Kazakhstan, Russian Far East and Western countries. This corridor has already been formed what we needed was extra capacities and infrastructure
 
By  Ivan  Stupachenko 
 
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Ust-Luga – Baltiysk – Ports of Germany ferry bridge launched in March promises to be successful. Harm Sievers, Managing Director of German port of Sassnitz and Dr. Otto Ebnet, Minister for Traffic, Construction and State Development of Mecklenburg-Western Pomerania asserted that.   

– Transport business community was quite skeptical regarding the bridge profitability. What is your view judging the results achieved during first months of the bridge functioning? 

Otto Ebnet: 
– No doubts the bridge will be profitable. We need extra capacities to transport cargo between Russia and Europe since the acting are practically exhausted. That is the reason why the Baltic Sea is as very promising route. And in its turn, Sassnitz is the only port of Western Europe which is capable to handle cargo received from the Russian gauge. 
 
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– Do you believe plans for cargo volumes transportation developed for 2007 will be fulfilled? In particular, volume of 4 mln tons was mentioned…  

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By  Ivan  Stupachenko 
 
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    [DETAIL_TEXT] => 
It Took a Lot of Time
When in December 2004, OAO RZD President Gennady Fadeyev announced that Siemens company would be the general partner of the Russian railway corporation to carry out the high-speed communication project, the only surprising thing for the transport market specialists was the declared amount of trains. It was not clear where the top-management of the railway company would exploit 50 modern trains designed to run at the speed of 250 km/h. However, nobody was surprised at the choice of OAO RZD, because Siemens had already worked with Russian rail companies for a long time. 

The German company offered its potential in different sectors of railway equipment: signalling and safety systems, catenary systems and electric centralization for stations. For the Saint-Petersburg – Moscow line Siemens delivered the equipment for the catenary system of 2.5 km long in 1998, and installed it in cooperation with Oktyabrskaya (October) railway. The equipment is corrosion-resistant requires no maintenance, and provides good current-collection for the electric trains running at a speed of up to 200 km/h. The inspection held in 2001 showed that the life-time of the contact line was threefold higher.

There were conflicts as well. The first Russian wagon for locomotive-hauled high-speed trains of Nevsky Express type, produced by Tver Wagon Building Plant, was equipped with an under-wagon electric energy conductor produced by Siemens. The conductors caused a lot of problems. Saransk Mechanical Plant obtained the license to produce the conductors, but their quality was not high enough. The machinery was out of work, and the railmen blamed Siemens. Later the drawbacks of the equipment were eliminated, and the experience was used when designing the under-wagon part of Velaro RUS train, which will be exploited under Russian winter conditions. 

In 2003-2004, a 42 km long sector of the catenary system on the line Zyukai – Mendeleevo (Sverdlovskaya railway) was reconstructed in accordance with a project by Siemens. In 2005 the German company participated in the launch of the «Sputnik» electric train at the rail line Ramenskoe – Moscow. Now such trains service Moscow – Domodedovo and Moscow – Mytischi lines. To fulfill OAO RZD’s demand for electric trains, owned by the company producer of rolling stock ZAO Transmashholding and Siemens launched a joint venture in 2005. The new company, Transconverter JSC, specializes in development and production of high-voltage static converters for passenger wagons, electric locomotives and electric trains. In the near future the joint venture plans to develop and produce a pulling asynchronous motor drive – the equipment of a new generation, which Russian railmen badly need. Siemens passed to Transconverter its rights for the converter production technologies; however, it is Transmashholding that has the majority shareholding in the joint venture. In cooperation with Foratek group, a new generation of micro-processor centralization is being developed in Russia. In fact, the contract for production of eight high-speed trains Velaro RUS became the peak of the long-term cooperation.

Train for Russia
According to Director General of the project «High-speed and speeded-up trains, Russia» Marion Protze, OAO RZD ordered eight high-speed trains from Siemens. It took about two years to adjust and approve the project.

In May 2006, the technical enquiry for the trains as well as the graphic design in July were approved. It was the basis for the technical project, which is being developed now. In July 2007, the production of the first train will start Thus, Siemens guarantees that the train will be delivered to Russia at the end of 2008. After the delivery is completed, the train will undergo a test for certification, which will take another year. In 2009, the train is to be put into operation on the Moscow – Saint-Petersburg line. By way of reminder, the train is intended to service the Saint-Petersburg – Moscow line, which is now being modernized to provide the speed of 250 km/h. The train consists of 10 wagons. Its length is 250 meters and the carrying capacity is 604 passengers. Depending on the modification, the trains either use direct current or can work on both – the direct and alternating current.

In the words of President of Siemens in Russia Dietrich Moeller, RUS 250/330 is a modification of the best high-speed train produced by Siemens – Velaro that can run at a speed of up to 350 km/h. However, in his opinion, a special high-speed railway is to be built in Russia to exploit the train at such speed. 

In the words of OAO RZD Vice-President Valentin Gapanovich, the Saint-Petersburg – Moscow railway line will be serviced by trains with power equipment for direct current. And four double-current trains, which will be delivered to Russia later, are intended to work on the Moscow – Nizhny Novgorod line, where the maximum speed is 160 km/h now, although it may be increased to 250 km/h in future. 

Speaking at the scientific and practical conference «Basic directions of scientific and technical progress at the railway transport», held in Moscow in February 2007, Valentin Gapanovich announced that one of Velaro RUS trains will be constructed to be exploited at 350 km/h speed; and a 25 km long railway sector Maikop – Belorechensk (North-Caucasus railway) will be modernized to test high-speed trains. It is connected with the fact that by the time the last of the ordered trains is delivered, Russian first high-speed railway Moscow – Saint-Petersburg will be constructed. So not only rolling stock, but also the experience of its usage will be required then.
Marion Protze believes that the importance of cooperation in the sector of high railway construction and exploitation was the main reason for concluding the four-sided «Agreement of Understanding» between the RF Ministry of Transport, OAO RZD, Deutsche Bahn and Siemens. The Agreement signed in July 2006 envisages information exchange on the projects concerning high-speed railway construction on the basis of advanced technologies. 

When the high-speed railway is constructed, an open tender on rolling stock purchase will be held. However, representatives of Siemens have faith in their company. To illustrate the strong position of Siemens, Marion Protze mentioned the latest contracts in Spain and China. «After some modernization, the trains ordered by OAO RZD can be used on a high-speed railway», she says. And Tomas Gerhard, Director of Business-Direction Group Technology, Siemens Transportation Systems, believes that his company has all chances to win the tender.» A contract for eight trains construction is the first step to putting into operation the high-speed technologies of Siemens in Russia», he said answering a question of The RZD-Partner International. In his opinion, having developed ICE 3 train with distributed traction, Siemens left its main competitor Alstom far behind, since the latter is only starting to master the technologies in AGV train.

To service the modern trains, a special depot Metallostroy (October railway) was created. The producer is satisfied with the level of its equipment and the staff skills. Now, the depot services suburban electric trains and Russian two high-speed train R-200. After some additional equipping and reconstruction, the depot will specialize in high-speed trains only.

30 Years Together 
On April 20 in Moscow, OAO RZD President Vladimir Yakunin and President of Transport Machinery Department, Siemens, Hans M. Shabert signed a contract for servicing high-speed trains Velaro RUS during 30 years. The cost of the contract is €300 mln. As a reminder, the sum of the contract for trains was €276 mln.

«Such a long-term project will make for the strengthening of German and Russian economic relations. We are glad to cooperate with Russian Railways», declared President of Transport Machinery Department, Siemens, Hans M. Shabert after signing the contract. In his words, contractor organizations came to Russia together with Siemens. They launched joint ventures with Russian companies, which is why part of the components will be produced in Russia.
OAO RZD President Vladimir Yakunin believes that the development of high-speed railway communication in Russia is one of the key targets for OAO RZD. «We have made one more important step forward. The company will continue this work», he said.

The serial production of trains for Russia is to start on July 20, 2007, in Krefeld (Germany). The top-management of OAO RZD and Siemens will be present at the event.

Children Are Our Future
In a good family they always have children. It turned out that the specialists of Siemens have thought about it as well. Three agreements have been concluded with Russian transport universities: Moscow State University of Railway (MIIT), Saint-Petersburg State University of Railways (PGUPS) and Rostov State University of Railways (RGUPS). According to Tomas Gerhard, the company’s interest in high schools is a principle. This way the company solves the problem of joint research and examinations and finds new employees as well. For example, 20 thousand people work in the Transport Machinery Department and they fulfill works for the sum of €4.5 bln per annum.

Siemens is ready to give grants to talented students, attract them to its enterprises for apprenticeship and invite them to study in the company’s railway academy Rolling Stock. Besides, Siemens specialists may deliver lectures at the universities.

On the basis of MIIT, the Certification Center for teachers and employees of OAO RZD was launched to attract certified specialists as experts to accept the electric rolling stock and other equipment delivered by Siemens.

Siemens cooperates with many Russian high schools: Lomonosov Moscow State University, Bonch-Bruevich Saint-Petersburg University of Telecommunications, Moscow Technical University of Communication and Information Technologies etc. In future, the company plans to launch its own scientific fund in Russia and hold competitions for best scientific research or technical achievement among students.
 
Alexey  Lebedev 
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It Took a Lot of Time
When in December 2004, OAO RZD President Gennady Fadeyev announced that Siemens company would be the general partner of the Russian railway corporation to carry out the high-speed communication project, the only surprising thing for the transport market specialists was the declared amount of trains. It was not clear where the top-management of the railway company would exploit 50 modern trains designed to run at the speed of 250 km/h. However, nobody was surprised at the choice of OAO RZD, because Siemens had already worked with Russian rail companies for a long time. 

The German company offered its potential in different sectors of railway equipment: signalling and safety systems, catenary systems and electric centralization for stations. For the Saint-Petersburg – Moscow line Siemens delivered the equipment for the catenary system of 2.5 km long in 1998, and installed it in cooperation with Oktyabrskaya (October) railway. The equipment is corrosion-resistant requires no maintenance, and provides good current-collection for the electric trains running at a speed of up to 200 km/h. The inspection held in 2001 showed that the life-time of the contact line was threefold higher.

There were conflicts as well. The first Russian wagon for locomotive-hauled high-speed trains of Nevsky Express type, produced by Tver Wagon Building Plant, was equipped with an under-wagon electric energy conductor produced by Siemens. The conductors caused a lot of problems. Saransk Mechanical Plant obtained the license to produce the conductors, but their quality was not high enough. The machinery was out of work, and the railmen blamed Siemens. Later the drawbacks of the equipment were eliminated, and the experience was used when designing the under-wagon part of Velaro RUS train, which will be exploited under Russian winter conditions. 

In 2003-2004, a 42 km long sector of the catenary system on the line Zyukai – Mendeleevo (Sverdlovskaya railway) was reconstructed in accordance with a project by Siemens. In 2005 the German company participated in the launch of the «Sputnik» electric train at the rail line Ramenskoe – Moscow. Now such trains service Moscow – Domodedovo and Moscow – Mytischi lines. To fulfill OAO RZD’s demand for electric trains, owned by the company producer of rolling stock ZAO Transmashholding and Siemens launched a joint venture in 2005. The new company, Transconverter JSC, specializes in development and production of high-voltage static converters for passenger wagons, electric locomotives and electric trains. In the near future the joint venture plans to develop and produce a pulling asynchronous motor drive – the equipment of a new generation, which Russian railmen badly need. Siemens passed to Transconverter its rights for the converter production technologies; however, it is Transmashholding that has the majority shareholding in the joint venture. In cooperation with Foratek group, a new generation of micro-processor centralization is being developed in Russia. In fact, the contract for production of eight high-speed trains Velaro RUS became the peak of the long-term cooperation.

Train for Russia
According to Director General of the project «High-speed and speeded-up trains, Russia» Marion Protze, OAO RZD ordered eight high-speed trains from Siemens. It took about two years to adjust and approve the project.

In May 2006, the technical enquiry for the trains as well as the graphic design in July were approved. It was the basis for the technical project, which is being developed now. In July 2007, the production of the first train will start Thus, Siemens guarantees that the train will be delivered to Russia at the end of 2008. After the delivery is completed, the train will undergo a test for certification, which will take another year. In 2009, the train is to be put into operation on the Moscow – Saint-Petersburg line. By way of reminder, the train is intended to service the Saint-Petersburg – Moscow line, which is now being modernized to provide the speed of 250 km/h. The train consists of 10 wagons. Its length is 250 meters and the carrying capacity is 604 passengers. Depending on the modification, the trains either use direct current or can work on both – the direct and alternating current.

In the words of President of Siemens in Russia Dietrich Moeller, RUS 250/330 is a modification of the best high-speed train produced by Siemens – Velaro that can run at a speed of up to 350 km/h. However, in his opinion, a special high-speed railway is to be built in Russia to exploit the train at such speed. 

In the words of OAO RZD Vice-President Valentin Gapanovich, the Saint-Petersburg – Moscow railway line will be serviced by trains with power equipment for direct current. And four double-current trains, which will be delivered to Russia later, are intended to work on the Moscow – Nizhny Novgorod line, where the maximum speed is 160 km/h now, although it may be increased to 250 km/h in future. 

Speaking at the scientific and practical conference «Basic directions of scientific and technical progress at the railway transport», held in Moscow in February 2007, Valentin Gapanovich announced that one of Velaro RUS trains will be constructed to be exploited at 350 km/h speed; and a 25 km long railway sector Maikop – Belorechensk (North-Caucasus railway) will be modernized to test high-speed trains. It is connected with the fact that by the time the last of the ordered trains is delivered, Russian first high-speed railway Moscow – Saint-Petersburg will be constructed. So not only rolling stock, but also the experience of its usage will be required then.
Marion Protze believes that the importance of cooperation in the sector of high railway construction and exploitation was the main reason for concluding the four-sided «Agreement of Understanding» between the RF Ministry of Transport, OAO RZD, Deutsche Bahn and Siemens. The Agreement signed in July 2006 envisages information exchange on the projects concerning high-speed railway construction on the basis of advanced technologies. 

When the high-speed railway is constructed, an open tender on rolling stock purchase will be held. However, representatives of Siemens have faith in their company. To illustrate the strong position of Siemens, Marion Protze mentioned the latest contracts in Spain and China. «After some modernization, the trains ordered by OAO RZD can be used on a high-speed railway», she says. And Tomas Gerhard, Director of Business-Direction Group Technology, Siemens Transportation Systems, believes that his company has all chances to win the tender.» A contract for eight trains construction is the first step to putting into operation the high-speed technologies of Siemens in Russia», he said answering a question of The RZD-Partner International. In his opinion, having developed ICE 3 train with distributed traction, Siemens left its main competitor Alstom far behind, since the latter is only starting to master the technologies in AGV train.

To service the modern trains, a special depot Metallostroy (October railway) was created. The producer is satisfied with the level of its equipment and the staff skills. Now, the depot services suburban electric trains and Russian two high-speed train R-200. After some additional equipping and reconstruction, the depot will specialize in high-speed trains only.

30 Years Together 
On April 20 in Moscow, OAO RZD President Vladimir Yakunin and President of Transport Machinery Department, Siemens, Hans M. Shabert signed a contract for servicing high-speed trains Velaro RUS during 30 years. The cost of the contract is €300 mln. As a reminder, the sum of the contract for trains was €276 mln.

«Such a long-term project will make for the strengthening of German and Russian economic relations. We are glad to cooperate with Russian Railways», declared President of Transport Machinery Department, Siemens, Hans M. Shabert after signing the contract. In his words, contractor organizations came to Russia together with Siemens. They launched joint ventures with Russian companies, which is why part of the components will be produced in Russia.
OAO RZD President Vladimir Yakunin believes that the development of high-speed railway communication in Russia is one of the key targets for OAO RZD. «We have made one more important step forward. The company will continue this work», he said.

The serial production of trains for Russia is to start on July 20, 2007, in Krefeld (Germany). The top-management of OAO RZD and Siemens will be present at the event.

Children Are Our Future
In a good family they always have children. It turned out that the specialists of Siemens have thought about it as well. Three agreements have been concluded with Russian transport universities: Moscow State University of Railway (MIIT), Saint-Petersburg State University of Railways (PGUPS) and Rostov State University of Railways (RGUPS). According to Tomas Gerhard, the company’s interest in high schools is a principle. This way the company solves the problem of joint research and examinations and finds new employees as well. For example, 20 thousand people work in the Transport Machinery Department and they fulfill works for the sum of €4.5 bln per annum.

Siemens is ready to give grants to talented students, attract them to its enterprises for apprenticeship and invite them to study in the company’s railway academy Rolling Stock. Besides, Siemens specialists may deliver lectures at the universities.

On the basis of MIIT, the Certification Center for teachers and employees of OAO RZD was launched to attract certified specialists as experts to accept the electric rolling stock and other equipment delivered by Siemens.

Siemens cooperates with many Russian high schools: Lomonosov Moscow State University, Bonch-Bruevich Saint-Petersburg University of Telecommunications, Moscow Technical University of Communication and Information Technologies etc. In future, the company plans to launch its own scientific fund in Russia and hold competitions for best scientific research or technical achievement among students.
 
Alexey  Lebedev 
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It Took a Lot of Time
When in December 2004, OAO RZD President Gennady Fadeyev announced that Siemens company would be the general partner of the Russian railway corporation to carry out the high-speed communication project, the only surprising thing for the transport market specialists was the declared amount of trains. It was not clear where the top-management of the railway company would exploit 50 modern trains designed to run at the speed of 250 km/h. However, nobody was surprised at the choice of OAO RZD, because Siemens had already worked with Russian rail companies for a long time. 

The German company offered its potential in different sectors of railway equipment: signalling and safety systems, catenary systems and electric centralization for stations. For the Saint-Petersburg – Moscow line Siemens delivered the equipment for the catenary system of 2.5 km long in 1998, and installed it in cooperation with Oktyabrskaya (October) railway. The equipment is corrosion-resistant requires no maintenance, and provides good current-collection for the electric trains running at a speed of up to 200 km/h. The inspection held in 2001 showed that the life-time of the contact line was threefold higher.

There were conflicts as well. The first Russian wagon for locomotive-hauled high-speed trains of Nevsky Express type, produced by Tver Wagon Building Plant, was equipped with an under-wagon electric energy conductor produced by Siemens. The conductors caused a lot of problems. Saransk Mechanical Plant obtained the license to produce the conductors, but their quality was not high enough. The machinery was out of work, and the railmen blamed Siemens. Later the drawbacks of the equipment were eliminated, and the experience was used when designing the under-wagon part of Velaro RUS train, which will be exploited under Russian winter conditions. 

In 2003-2004, a 42 km long sector of the catenary system on the line Zyukai – Mendeleevo (Sverdlovskaya railway) was reconstructed in accordance with a project by Siemens. In 2005 the German company participated in the launch of the «Sputnik» electric train at the rail line Ramenskoe – Moscow. Now such trains service Moscow – Domodedovo and Moscow – Mytischi lines. To fulfill OAO RZD’s demand for electric trains, owned by the company producer of rolling stock ZAO Transmashholding and Siemens launched a joint venture in 2005. The new company, Transconverter JSC, specializes in development and production of high-voltage static converters for passenger wagons, electric locomotives and electric trains. In the near future the joint venture plans to develop and produce a pulling asynchronous motor drive – the equipment of a new generation, which Russian railmen badly need. Siemens passed to Transconverter its rights for the converter production technologies; however, it is Transmashholding that has the majority shareholding in the joint venture. In cooperation with Foratek group, a new generation of micro-processor centralization is being developed in Russia. In fact, the contract for production of eight high-speed trains Velaro RUS became the peak of the long-term cooperation.

Train for Russia
According to Director General of the project «High-speed and speeded-up trains, Russia» Marion Protze, OAO RZD ordered eight high-speed trains from Siemens. It took about two years to adjust and approve the project.

In May 2006, the technical enquiry for the trains as well as the graphic design in July were approved. It was the basis for the technical project, which is being developed now. In July 2007, the production of the first train will start Thus, Siemens guarantees that the train will be delivered to Russia at the end of 2008. After the delivery is completed, the train will undergo a test for certification, which will take another year. In 2009, the train is to be put into operation on the Moscow – Saint-Petersburg line. By way of reminder, the train is intended to service the Saint-Petersburg – Moscow line, which is now being modernized to provide the speed of 250 km/h. The train consists of 10 wagons. Its length is 250 meters and the carrying capacity is 604 passengers. Depending on the modification, the trains either use direct current or can work on both – the direct and alternating current.

In the words of President of Siemens in Russia Dietrich Moeller, RUS 250/330 is a modification of the best high-speed train produced by Siemens – Velaro that can run at a speed of up to 350 km/h. However, in his opinion, a special high-speed railway is to be built in Russia to exploit the train at such speed. 

In the words of OAO RZD Vice-President Valentin Gapanovich, the Saint-Petersburg – Moscow railway line will be serviced by trains with power equipment for direct current. And four double-current trains, which will be delivered to Russia later, are intended to work on the Moscow – Nizhny Novgorod line, where the maximum speed is 160 km/h now, although it may be increased to 250 km/h in future. 

Speaking at the scientific and practical conference «Basic directions of scientific and technical progress at the railway transport», held in Moscow in February 2007, Valentin Gapanovich announced that one of Velaro RUS trains will be constructed to be exploited at 350 km/h speed; and a 25 km long railway sector Maikop – Belorechensk (North-Caucasus railway) will be modernized to test high-speed trains. It is connected with the fact that by the time the last of the ordered trains is delivered, Russian first high-speed railway Moscow – Saint-Petersburg will be constructed. So not only rolling stock, but also the experience of its usage will be required then.
Marion Protze believes that the importance of cooperation in the sector of high railway construction and exploitation was the main reason for concluding the four-sided «Agreement of Understanding» between the RF Ministry of Transport, OAO RZD, Deutsche Bahn and Siemens. The Agreement signed in July 2006 envisages information exchange on the projects concerning high-speed railway construction on the basis of advanced technologies. 

When the high-speed railway is constructed, an open tender on rolling stock purchase will be held. However, representatives of Siemens have faith in their company. To illustrate the strong position of Siemens, Marion Protze mentioned the latest contracts in Spain and China. «After some modernization, the trains ordered by OAO RZD can be used on a high-speed railway», she says. And Tomas Gerhard, Director of Business-Direction Group Technology, Siemens Transportation Systems, believes that his company has all chances to win the tender.» A contract for eight trains construction is the first step to putting into operation the high-speed technologies of Siemens in Russia», he said answering a question of The RZD-Partner International. In his opinion, having developed ICE 3 train with distributed traction, Siemens left its main competitor Alstom far behind, since the latter is only starting to master the technologies in AGV train.

To service the modern trains, a special depot Metallostroy (October railway) was created. The producer is satisfied with the level of its equipment and the staff skills. Now, the depot services suburban electric trains and Russian two high-speed train R-200. After some additional equipping and reconstruction, the depot will specialize in high-speed trains only.

30 Years Together 
On April 20 in Moscow, OAO RZD President Vladimir Yakunin and President of Transport Machinery Department, Siemens, Hans M. Shabert signed a contract for servicing high-speed trains Velaro RUS during 30 years. The cost of the contract is €300 mln. As a reminder, the sum of the contract for trains was €276 mln.

«Such a long-term project will make for the strengthening of German and Russian economic relations. We are glad to cooperate with Russian Railways», declared President of Transport Machinery Department, Siemens, Hans M. Shabert after signing the contract. In his words, contractor organizations came to Russia together with Siemens. They launched joint ventures with Russian companies, which is why part of the components will be produced in Russia.
OAO RZD President Vladimir Yakunin believes that the development of high-speed railway communication in Russia is one of the key targets for OAO RZD. «We have made one more important step forward. The company will continue this work», he said.

The serial production of trains for Russia is to start on July 20, 2007, in Krefeld (Germany). The top-management of OAO RZD and Siemens will be present at the event.

Children Are Our Future
In a good family they always have children. It turned out that the specialists of Siemens have thought about it as well. Three agreements have been concluded with Russian transport universities: Moscow State University of Railway (MIIT), Saint-Petersburg State University of Railways (PGUPS) and Rostov State University of Railways (RGUPS). According to Tomas Gerhard, the company’s interest in high schools is a principle. This way the company solves the problem of joint research and examinations and finds new employees as well. For example, 20 thousand people work in the Transport Machinery Department and they fulfill works for the sum of €4.5 bln per annum.

Siemens is ready to give grants to talented students, attract them to its enterprises for apprenticeship and invite them to study in the company’s railway academy Rolling Stock. Besides, Siemens specialists may deliver lectures at the universities.

On the basis of MIIT, the Certification Center for teachers and employees of OAO RZD was launched to attract certified specialists as experts to accept the electric rolling stock and other equipment delivered by Siemens.

Siemens cooperates with many Russian high schools: Lomonosov Moscow State University, Bonch-Bruevich Saint-Petersburg University of Telecommunications, Moscow Technical University of Communication and Information Technologies etc. In future, the company plans to launch its own scientific fund in Russia and hold competitions for best scientific research or technical achievement among students.
 
Alexey  Lebedev 
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It Took a Lot of Time
When in December 2004, OAO RZD President Gennady Fadeyev announced that Siemens company would be the general partner of the Russian railway corporation to carry out the high-speed communication project, the only surprising thing for the transport market specialists was the declared amount of trains. It was not clear where the top-management of the railway company would exploit 50 modern trains designed to run at the speed of 250 km/h. However, nobody was surprised at the choice of OAO RZD, because Siemens had already worked with Russian rail companies for a long time. 

The German company offered its potential in different sectors of railway equipment: signalling and safety systems, catenary systems and electric centralization for stations. For the Saint-Petersburg – Moscow line Siemens delivered the equipment for the catenary system of 2.5 km long in 1998, and installed it in cooperation with Oktyabrskaya (October) railway. The equipment is corrosion-resistant requires no maintenance, and provides good current-collection for the electric trains running at a speed of up to 200 km/h. The inspection held in 2001 showed that the life-time of the contact line was threefold higher.

There were conflicts as well. The first Russian wagon for locomotive-hauled high-speed trains of Nevsky Express type, produced by Tver Wagon Building Plant, was equipped with an under-wagon electric energy conductor produced by Siemens. The conductors caused a lot of problems. Saransk Mechanical Plant obtained the license to produce the conductors, but their quality was not high enough. The machinery was out of work, and the railmen blamed Siemens. Later the drawbacks of the equipment were eliminated, and the experience was used when designing the under-wagon part of Velaro RUS train, which will be exploited under Russian winter conditions. 

In 2003-2004, a 42 km long sector of the catenary system on the line Zyukai – Mendeleevo (Sverdlovskaya railway) was reconstructed in accordance with a project by Siemens. In 2005 the German company participated in the launch of the «Sputnik» electric train at the rail line Ramenskoe – Moscow. Now such trains service Moscow – Domodedovo and Moscow – Mytischi lines. To fulfill OAO RZD’s demand for electric trains, owned by the company producer of rolling stock ZAO Transmashholding and Siemens launched a joint venture in 2005. The new company, Transconverter JSC, specializes in development and production of high-voltage static converters for passenger wagons, electric locomotives and electric trains. In the near future the joint venture plans to develop and produce a pulling asynchronous motor drive – the equipment of a new generation, which Russian railmen badly need. Siemens passed to Transconverter its rights for the converter production technologies; however, it is Transmashholding that has the majority shareholding in the joint venture. In cooperation with Foratek group, a new generation of micro-processor centralization is being developed in Russia. In fact, the contract for production of eight high-speed trains Velaro RUS became the peak of the long-term cooperation.

Train for Russia
According to Director General of the project «High-speed and speeded-up trains, Russia» Marion Protze, OAO RZD ordered eight high-speed trains from Siemens. It took about two years to adjust and approve the project.

In May 2006, the technical enquiry for the trains as well as the graphic design in July were approved. It was the basis for the technical project, which is being developed now. In July 2007, the production of the first train will start Thus, Siemens guarantees that the train will be delivered to Russia at the end of 2008. After the delivery is completed, the train will undergo a test for certification, which will take another year. In 2009, the train is to be put into operation on the Moscow – Saint-Petersburg line. By way of reminder, the train is intended to service the Saint-Petersburg – Moscow line, which is now being modernized to provide the speed of 250 km/h. The train consists of 10 wagons. Its length is 250 meters and the carrying capacity is 604 passengers. Depending on the modification, the trains either use direct current or can work on both – the direct and alternating current.

In the words of President of Siemens in Russia Dietrich Moeller, RUS 250/330 is a modification of the best high-speed train produced by Siemens – Velaro that can run at a speed of up to 350 km/h. However, in his opinion, a special high-speed railway is to be built in Russia to exploit the train at such speed. 

In the words of OAO RZD Vice-President Valentin Gapanovich, the Saint-Petersburg – Moscow railway line will be serviced by trains with power equipment for direct current. And four double-current trains, which will be delivered to Russia later, are intended to work on the Moscow – Nizhny Novgorod line, where the maximum speed is 160 km/h now, although it may be increased to 250 km/h in future. 

Speaking at the scientific and practical conference «Basic directions of scientific and technical progress at the railway transport», held in Moscow in February 2007, Valentin Gapanovich announced that one of Velaro RUS trains will be constructed to be exploited at 350 km/h speed; and a 25 km long railway sector Maikop – Belorechensk (North-Caucasus railway) will be modernized to test high-speed trains. It is connected with the fact that by the time the last of the ordered trains is delivered, Russian first high-speed railway Moscow – Saint-Petersburg will be constructed. So not only rolling stock, but also the experience of its usage will be required then.
Marion Protze believes that the importance of cooperation in the sector of high railway construction and exploitation was the main reason for concluding the four-sided «Agreement of Understanding» between the RF Ministry of Transport, OAO RZD, Deutsche Bahn and Siemens. The Agreement signed in July 2006 envisages information exchange on the projects concerning high-speed railway construction on the basis of advanced technologies. 

When the high-speed railway is constructed, an open tender on rolling stock purchase will be held. However, representatives of Siemens have faith in their company. To illustrate the strong position of Siemens, Marion Protze mentioned the latest contracts in Spain and China. «After some modernization, the trains ordered by OAO RZD can be used on a high-speed railway», she says. And Tomas Gerhard, Director of Business-Direction Group Technology, Siemens Transportation Systems, believes that his company has all chances to win the tender.» A contract for eight trains construction is the first step to putting into operation the high-speed technologies of Siemens in Russia», he said answering a question of The RZD-Partner International. In his opinion, having developed ICE 3 train with distributed traction, Siemens left its main competitor Alstom far behind, since the latter is only starting to master the technologies in AGV train.

To service the modern trains, a special depot Metallostroy (October railway) was created. The producer is satisfied with the level of its equipment and the staff skills. Now, the depot services suburban electric trains and Russian two high-speed train R-200. After some additional equipping and reconstruction, the depot will specialize in high-speed trains only.

30 Years Together 
On April 20 in Moscow, OAO RZD President Vladimir Yakunin and President of Transport Machinery Department, Siemens, Hans M. Shabert signed a contract for servicing high-speed trains Velaro RUS during 30 years. The cost of the contract is €300 mln. As a reminder, the sum of the contract for trains was €276 mln.

«Such a long-term project will make for the strengthening of German and Russian economic relations. We are glad to cooperate with Russian Railways», declared President of Transport Machinery Department, Siemens, Hans M. Shabert after signing the contract. In his words, contractor organizations came to Russia together with Siemens. They launched joint ventures with Russian companies, which is why part of the components will be produced in Russia.
OAO RZD President Vladimir Yakunin believes that the development of high-speed railway communication in Russia is one of the key targets for OAO RZD. «We have made one more important step forward. The company will continue this work», he said.

The serial production of trains for Russia is to start on July 20, 2007, in Krefeld (Germany). The top-management of OAO RZD and Siemens will be present at the event.

Children Are Our Future
In a good family they always have children. It turned out that the specialists of Siemens have thought about it as well. Three agreements have been concluded with Russian transport universities: Moscow State University of Railway (MIIT), Saint-Petersburg State University of Railways (PGUPS) and Rostov State University of Railways (RGUPS). According to Tomas Gerhard, the company’s interest in high schools is a principle. This way the company solves the problem of joint research and examinations and finds new employees as well. For example, 20 thousand people work in the Transport Machinery Department and they fulfill works for the sum of €4.5 bln per annum.

Siemens is ready to give grants to talented students, attract them to its enterprises for apprenticeship and invite them to study in the company’s railway academy Rolling Stock. Besides, Siemens specialists may deliver lectures at the universities.

On the basis of MIIT, the Certification Center for teachers and employees of OAO RZD was launched to attract certified specialists as experts to accept the electric rolling stock and other equipment delivered by Siemens.

Siemens cooperates with many Russian high schools: Lomonosov Moscow State University, Bonch-Bruevich Saint-Petersburg University of Telecommunications, Moscow Technical University of Communication and Information Technologies etc. In future, the company plans to launch its own scientific fund in Russia and hold competitions for best scientific research or technical achievement among students.
 
Alexey  Lebedev 
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– ОАО RZD is actually a very young company that arrived at the market in 2003.  What place does cooperation with the German railways take in its history? 

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Present-day goals set by ОАО RZD envisage deep integration of the company into Eurasian transport system and improvement of global competition on the global transport market. At the same time, the ultimate goal is speeding up the cargo flow via neighboring countries and, thus, increasing the trade turnover on the Eurasian continent. 

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Russian Railways experts are interested in having consultations given by the German colleagues on rolling stock destined for high-speed transportation. 

As a result of globalization of the transport market, ОАО RZD and Deutsche Bahn take steps to strengthen cooperation within most promising directions. Now there are favourable conditions to increase cargo flows from Asia to Europe and back. Thus, the work on launching a ferry bridge between the port of Mukran in Germany and the port of Baltiysk in Kaliningrad region is under way. A joint enterprise EurasiaRailLogistic was launched by ОАО RZD and Deutsche Bahn.

– What are the prospects of partnership in transit cargo transportation within International Transport corridor № 2, the very reason the joint enterprise was launched?

– On April 23, 2007, OAO RZD Board approved EurasiaRailLogistic JSC launch. Thus, bilateral efforts taken for many years became a success. Railion Deutschland AG, ОАО RZD, Polish and Belarus Railways are the participants of the enterprise. This joint company will be registered in Moscow. At the initial stage, the major clients of the company will become its founders. 
EurasiaRailLogistic JSC will coordinate its partcipants’ activities on transportation process optimization aimed at services quality improvement and increase of cargo volumes transported within International Transport corridor № 2. 
Biography
Alexey Averin
Was born in 1962. Graduated from Moscow State University of International Relations in 1984 with a degree in international economic relations. 
From 1984 to 1989 worked in Consulate General of the USSR in Czechoslovakia.
From 1993 to 1997 was the Second Secretary and after the First Secretary of Embassy of Russia in South African Republic. From 1997 to 2005 worked in consular department of the RF Ministry of Foreign Affairs. On August 3, 2005 works for OAO RZD as Head of International Relations Department. 
Married with two children.
 
Interviewed  by  Alexey  Lebedev  
    [~DETAIL_TEXT] => 
– ОАО RZD is actually a very young company that arrived at the market in 2003.  What place does cooperation with the German railways take in its history? 

– The two companies have been cooperating for a long time and in a quite constructive way. 
Present-day goals set by ОАО RZD envisage deep integration of the company into Eurasian transport system and improvement of global competition on the global transport market. At the same time, the ultimate goal is speeding up the cargo flow via neighboring countries and, thus, increasing the trade turnover on the Eurasian continent. 

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On March 5, 2007, ОАО RZD and Deutsche Bahn signed an agreement on cooperation that envisages engineering and technical services provided by the German company in respect of purchase, putting into operation and technical servicing new traction rolling stock. The agreement was signed by OAO RZD First Vice-President Vadim Morozov and Head of Deutsche Bahn Systemtechnik H.-P.Lang.

Russian Railways experts are interested in having consultations given by the German colleagues on rolling stock destined for high-speed transportation. 

As a result of globalization of the transport market, ОАО RZD and Deutsche Bahn take steps to strengthen cooperation within most promising directions. Now there are favourable conditions to increase cargo flows from Asia to Europe and back. Thus, the work on launching a ferry bridge between the port of Mukran in Germany and the port of Baltiysk in Kaliningrad region is under way. A joint enterprise EurasiaRailLogistic was launched by ОАО RZD and Deutsche Bahn.

– What are the prospects of partnership in transit cargo transportation within International Transport corridor № 2, the very reason the joint enterprise was launched?

– On April 23, 2007, OAO RZD Board approved EurasiaRailLogistic JSC launch. Thus, bilateral efforts taken for many years became a success. Railion Deutschland AG, ОАО RZD, Polish and Belarus Railways are the participants of the enterprise. This joint company will be registered in Moscow. At the initial stage, the major clients of the company will become its founders. 
EurasiaRailLogistic JSC will coordinate its partcipants’ activities on transportation process optimization aimed at services quality improvement and increase of cargo volumes transported within International Transport corridor № 2. 
Biography
Alexey Averin
Was born in 1962. Graduated from Moscow State University of International Relations in 1984 with a degree in international economic relations. 
From 1984 to 1989 worked in Consulate General of the USSR in Czechoslovakia.
From 1993 to 1997 was the Second Secretary and after the First Secretary of Embassy of Russia in South African Republic. From 1997 to 2005 worked in consular department of the RF Ministry of Foreign Affairs. On August 3, 2005 works for OAO RZD as Head of International Relations Department. 
Married with two children.
 
Interviewed  by  Alexey  Lebedev  
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– ОАО RZD is actually a very young company that arrived at the market in 2003.  What place does cooperation with the German railways take in its history? 

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Present-day goals set by ОАО RZD envisage deep integration of the company into Eurasian transport system and improvement of global competition on the global transport market. At the same time, the ultimate goal is speeding up the cargo flow via neighboring countries and, thus, increasing the trade turnover on the Eurasian continent. 

The biggest European railway company and the biggest Russian railway company have a lot of reasons to cooperate. The first result was achieved in 2003, when, in the presence of two presidents of Russia and Germany, Deutsche Bahn AG and OAO RZD signed a Memorandum on understanding and cooperation within cargo and passenger transportation between the two countries. Furthermore, the Heads of the two companies signed a joint declaration of cooperation on September 17, 2004.

On March 5, 2007, ОАО RZD and Deutsche Bahn signed an agreement on cooperation that envisages engineering and technical services provided by the German company in respect of purchase, putting into operation and technical servicing new traction rolling stock. The agreement was signed by OAO RZD First Vice-President Vadim Morozov and Head of Deutsche Bahn Systemtechnik H.-P.Lang.

Russian Railways experts are interested in having consultations given by the German colleagues on rolling stock destined for high-speed transportation. 

As a result of globalization of the transport market, ОАО RZD and Deutsche Bahn take steps to strengthen cooperation within most promising directions. Now there are favourable conditions to increase cargo flows from Asia to Europe and back. Thus, the work on launching a ferry bridge between the port of Mukran in Germany and the port of Baltiysk in Kaliningrad region is under way. A joint enterprise EurasiaRailLogistic was launched by ОАО RZD and Deutsche Bahn.

– What are the prospects of partnership in transit cargo transportation within International Transport corridor № 2, the very reason the joint enterprise was launched?

– On April 23, 2007, OAO RZD Board approved EurasiaRailLogistic JSC launch. Thus, bilateral efforts taken for many years became a success. Railion Deutschland AG, ОАО RZD, Polish and Belarus Railways are the participants of the enterprise. This joint company will be registered in Moscow. At the initial stage, the major clients of the company will become its founders. 
EurasiaRailLogistic JSC will coordinate its partcipants’ activities on transportation process optimization aimed at services quality improvement and increase of cargo volumes transported within International Transport corridor № 2. 
Biography
Alexey Averin
Was born in 1962. Graduated from Moscow State University of International Relations in 1984 with a degree in international economic relations. 
From 1984 to 1989 worked in Consulate General of the USSR in Czechoslovakia.
From 1993 to 1997 was the Second Secretary and after the First Secretary of Embassy of Russia in South African Republic. From 1997 to 2005 worked in consular department of the RF Ministry of Foreign Affairs. On August 3, 2005 works for OAO RZD as Head of International Relations Department. 
Married with two children.
 
Interviewed  by  Alexey  Lebedev  
    [~DETAIL_TEXT] => 
– ОАО RZD is actually a very young company that arrived at the market in 2003.  What place does cooperation with the German railways take in its history? 

– The two companies have been cooperating for a long time and in a quite constructive way. 
Present-day goals set by ОАО RZD envisage deep integration of the company into Eurasian transport system and improvement of global competition on the global transport market. At the same time, the ultimate goal is speeding up the cargo flow via neighboring countries and, thus, increasing the trade turnover on the Eurasian continent. 

The biggest European railway company and the biggest Russian railway company have a lot of reasons to cooperate. The first result was achieved in 2003, when, in the presence of two presidents of Russia and Germany, Deutsche Bahn AG and OAO RZD signed a Memorandum on understanding and cooperation within cargo and passenger transportation between the two countries. Furthermore, the Heads of the two companies signed a joint declaration of cooperation on September 17, 2004.

On March 5, 2007, ОАО RZD and Deutsche Bahn signed an agreement on cooperation that envisages engineering and technical services provided by the German company in respect of purchase, putting into operation and technical servicing new traction rolling stock. The agreement was signed by OAO RZD First Vice-President Vadim Morozov and Head of Deutsche Bahn Systemtechnik H.-P.Lang.

Russian Railways experts are interested in having consultations given by the German colleagues on rolling stock destined for high-speed transportation. 

As a result of globalization of the transport market, ОАО RZD and Deutsche Bahn take steps to strengthen cooperation within most promising directions. Now there are favourable conditions to increase cargo flows from Asia to Europe and back. Thus, the work on launching a ferry bridge between the port of Mukran in Germany and the port of Baltiysk in Kaliningrad region is under way. A joint enterprise EurasiaRailLogistic was launched by ОАО RZD and Deutsche Bahn.

– What are the prospects of partnership in transit cargo transportation within International Transport corridor № 2, the very reason the joint enterprise was launched?

– On April 23, 2007, OAO RZD Board approved EurasiaRailLogistic JSC launch. Thus, bilateral efforts taken for many years became a success. Railion Deutschland AG, ОАО RZD, Polish and Belarus Railways are the participants of the enterprise. This joint company will be registered in Moscow. At the initial stage, the major clients of the company will become its founders. 
EurasiaRailLogistic JSC will coordinate its partcipants’ activities on transportation process optimization aimed at services quality improvement and increase of cargo volumes transported within International Transport corridor № 2. 
Biography
Alexey Averin
Was born in 1962. Graduated from Moscow State University of International Relations in 1984 with a degree in international economic relations. 
From 1984 to 1989 worked in Consulate General of the USSR in Czechoslovakia.
From 1993 to 1997 was the Second Secretary and after the First Secretary of Embassy of Russia in South African Republic. From 1997 to 2005 worked in consular department of the RF Ministry of Foreign Affairs. On August 3, 2005 works for OAO RZD as Head of International Relations Department. 
Married with two children.
 
Interviewed  by  Alexey  Lebedev  
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    [DETAIL_TEXT] => – Mr. Mehdorn, how do you evaluate the current level of cooperation between OAO RZD and Deutsche Bahn AG?

– The cooperation between German and Russian railway companies has a strategic potential. Trade and traveling between the two countries have been growing stably. And the land bridge linking the European Union and Asia through the Transsib gives good chances for rail transportation. At the moment the share of rail in freight transportation is still modest. But over the last few years Deutsche Bahn AG and OAO RZD have proved through many joint projects that we focus on a strong growth. The first success can already be seen. In 2006, volumes of freight served by rail on the Germany – CIS route increased by 40%. 

– Which directions of the cooperation do you consider the most prospective?

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Alexey Lebedev
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Alexey Lebedev
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is very pleased with a 40% growth in the freight traffic between Germany and the CIS. In the near future a growth rate must jump even more, but to get there railway companies must work hard  on resolving common problems. To discuss the development of relations between OAO RZD and Deutshce Bahn AG, Hartmut Medorn exclusively spoke to The RZD-Partner International magazine.
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    [DETAIL_TEXT] => – Mr. Mehdorn, how do you evaluate the current level of cooperation between OAO RZD and Deutsche Bahn AG?

– The cooperation between German and Russian railway companies has a strategic potential. Trade and traveling between the two countries have been growing stably. And the land bridge linking the European Union and Asia through the Transsib gives good chances for rail transportation. At the moment the share of rail in freight transportation is still modest. But over the last few years Deutsche Bahn AG and OAO RZD have proved through many joint projects that we focus on a strong growth. The first success can already be seen. In 2006, volumes of freight served by rail on the Germany – CIS route increased by 40%. 

– Which directions of the cooperation do you consider the most prospective?

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Alexey Lebedev
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Alexey Lebedev
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Simple and Safe

– Mr. Belykh, for 70 years Ulan-Ude Aircraft Plant produced different civil and military aircrafts. In production of what kind of machinery does the plant specialize now? 

– Nowadays, the main activity of  Ulan-Ude Aircraft Plant is the production of Mi-171 helicopters for transport, passenger, search and rescue, fire fight, medical and other needs. Besides, we produce passenger helicopters Mi-171 A, military transport helicopters Mi-171 III with controlled and non-controlled rocket armament, and airplanes of Su-25 UB, Su-25 UBK, Su-25 UTG, and Su-39 types. Moreover, the plant supplies spares and land equipment, repairs and modernizes aircraft, organizes training for buyers’ flight teams.

The quality of Ulan-Ude Aircraft Plant’s production is confirmed by the Aircraft register of the International Aircraft Committee and the Department of Quality Systems Certification (the Institute of Testing and Certification of Armaments and Military Equipment).

– Speaking of quality, do you think that the production of Russian enterprises meets the world standards and is on the advanced technological level?

– Due to the country’s geographical position, the Russian aircraft construction school has always paid much attention to such qualities as simplicity and safety. It has enabled us to create a unique aircraft – simple to use, reliable in complicated conditions, and not expensive. I believe that Mi-8 helicopter and its modifications are the most genius elaboration in the history of world helicopter construction. About 13,000 helicopters of the type were produced in Russia, and they are successfully used all over the world. According to experts’ evaluations, nowadays there is a demands for several thousands more of Mi-8/Mi-171 helicopters in the world market. Often they are used in the regions, where no other machinery can be used because of complicated climatic conditions. 

On the other hand, we are to catch up with the Western school of aircraft building in the avionics sector. Nowadays, we believe the way out is cooperation with foreign producers of aircraft instrumentation and radio equipment for helicopters. For example, now we offer the installation of a whole complex of equipment produced by foreigners for Mi-171 and Mi-171 III. At the same time, some customers prefer Russian equipment, since it is simpler, they are familiar with it, and they will not depend on Western suppliers.

Nobody Will Cope with «Mi» Alone

– Recently mass-media claimed  that Ulan-Ude Aircraft Plant JSC gives up the production of Mi-8/Mi-171 helicopter, and this type of aircraft will be produced in Kazan. Has the issue been solved?

– The best answer to it is the deed, not words. Ulan-Ude Aircraft Plant continues to fulfill the orders for Mi-171 helicopter. Moreover, we hope that our colleagues – suppliers of components will cope with the work that is to be done by two plants. Nowadays, it is obvious that no separate enterprise is able to fulfill the market demand for the aircraft and increase sales volume to the level planned by the state. Earlier there was no economic or technical basis for such suggestions either. They were not discussing the transfer of the Mi-8 production to the Kazan Helicopter Plant, but the loading of the Plant’s capacities, and coordination of orders for Mi-8/Mi-171 distribution. I am sure it is much easier to solve the questions now, after the procedure of Kazan Helicopter Plant incorporation into the helicopter building holding company managed by OAO OPK Oboronprom is completed.

– At which stage is the launch of the new helicopter Ka-60/Ka-62 production by Ulan-Ude Aircraft Plant now?

– Production of any new product starts with the regulated by the government standards procedure. This implies obtaining design documentation from the development contractor; then the plant can start technological preparation for serial production. Nowadays, the Ka-60/Ka-62 helicopter testing and design works are being completed, although they still depend on investments.

– As far as we know, to carry out the project the plant is cooperating with Kamov experimental-design bureau. Is Ulan-Ude Aircraft Plant’s cooperation with other experimental-design organizations fruitful?

– Ulan-Ude Aircraft Plant and Kamov experimental-design bureau are members of the helicopter building holding company, in the framework of which we cooperate because of the prospect of Ka-60/Ka-62 helicopter serial production. Usually, the relations of a producing plant and an experimental-design bureau are based on the developers’ control for the serially produced aircraft. All the changes, additions, improvements are to be agreed with them. Nowadays, Ulan-Ude Aircraft Plant cooperates with Mil MVZ JSC and Sukhoi experimental-design bureau.

– Is the plant developing any new production?

– In accordance with the demands of the time, the plant constantly modernizes and certificates Mi-171 helicopter. Plane components are also developed: in the framework of cooperation with Irkutsk Aircraft Plant, Ulan-Ude Aircraft Plant plans to create design-electronic prototypes, and later produce mounting and technological units of the Yak-130 plane empennage. 

President Likes VIP-Version

– Where is the production of your enterprise used?

– The aircrafts produced by Ulan-Ude Aircraft Plant are successfully used in practically all regions of the world. Among our clients there are the states of Central and South-East Asia, Equatorial, Northern and Southern Africa, Central and Eastern Europe, Latin America, Middle East, and the CIS. Every year the number of countries who purchase our production grows. For example, in 2006 Croatia joined them. It is not the first time when we work with the state oriented at NATO standards; earlier our production was delivered to the Czech Republic and Slovakia. Our production is certified in many countries.   

– What is the share of export supplies in the total volume of production sold? Is the plant’s production popular among Russian and the CIS air companies?

– The share of export contracts is about 90% of the production we sell. However, lately there is a tendency for supplies structure to change: the amount of Russian and the CIS orders increases. The reason for it is the growth of the RF economy, which stimulates air transportation volume growth, and renewal of the existing but ageing helicopter park.

The VIP version of Mi-171 becomes more and more popular. It has the largest cabin among all the helicopters of the class. It is possible to stand in such a cabin; there are comfortable conditions for work and rest during the flight. The advantages of the helicopter have been noted by officials of many countries (including the President of one of Middle Eastern states), businessmen, and bankers. Now our enterprise is producing several such helicopters: there is a significant amount of orders for 2007-2008.

Stock of Orders Will Be Large

– How have the economic figures of the enterprise changed? Does the plant have enough orders for the present time and for the near future?

– The economic figures of the last year will be defined when the annual accounting report is ready. Still, now I can say that there has been a 10-15% reduction of production volume. The profitability of the contracts decreased in 2006, because the cost of the purchased components rises, while the market price of a helicopter remains practically the same. The plant has a lot export contracts, so the collapse of the US dollar influenced the situation negatively. Besides, there were few orders in the first half of the year, and the payment for the orders fulfilled in July-December 2006 was partly completed in 2007.

The main achievement of the company in 2006 was the creation of a stock of orders for middle-term prospect. Nowadays we are sure about future. The amount and quality of the concluded contracts enables us to plan the increase of production volume by 50% in 2007.

– What problems are urgent for the plant’s work? How are they solved?

– Among the problem aspects of the company’s work, there is a lack of stable and long-term state orders. It negatively influences the regularity of production, and as a result, the profitability. That is why we suffer from the lack of our own floating funds to renew the producing and the technical base of the plant. Another problem of Ulan-Ude Aircraft Plant is training of high-qualified engineering and technical staff. We are looking for a way out of the difficult situation by ourselves and in the frames of the holding company, as well as trying to attract state structures’ attention to the problems we cannot solve by ourselves. 

Higher and higher

– Specialists believe that the world market of aircrafts is oversaturated. How do you manage to compete with Russian and foreign aircraft building companies?

– I believe that the oversaturation of the world aircraft market is an exaggeration. It is much more reasonable to speak of an increase in demand for helicopters. It has not reached the level of 1985-1987; nevertheless, it has increased in comparison with 1992-1994. It is connected with the rearmament of the NATO states’ armies, and with the constant growth of the light helicopters commercial market. The market is potentially large in Russia, but it will open when the procedure of giving permissions for flights is optimized. The demand for the helicopters of medium class changes less – nowadays it is about 100(?)-120 units annually. Russian enterprises receive large orders – more than 20 units – only now. For example, our plant is now fulfilling the contract for delivery of 24 units to China.

According to the forecast of the largest companies specializing in marketing and aircraft market research, in the next decade about 14.5 thousand helicopters will be sold. And the forecasts become more and more optimistic. That is why we hope to continue to compete successfully on the world market due to the optimum ratio of price and quality, and the possibility to use our production in poor climatic conditions. Naturally, we are going to move further. Nowadays, Ulan-Ude Aircraft Plant in cooperation with Mil MVZ is developing a complex programme of Mi-171 and Mi-171 III helicopters modernization, the realization of which will enlarge the capacities of the helicopters and improve their characteristics. In particular, it envisages improvement of the propulsion unit of the redactor, transmission, load-carrying system, aircraft instrumentation and radio equipment and other systems. The programme was developed as based on the wishes of helicopter users, and we believe that its realization will increase the competitiveness of our production. I am sure that the modernized Mi-171 and Mi-171 III will be popular on the market for the next 20 years.  

– What other news does the fate have in store for Ulan-Ude Aircraft Plant in the near future?

– Besides, the projects I have mentioned – modernization of Mi-171, cooperation with Irkutsk Aircraft Plant to create design-electronic prototypes and produce mounting and technological units of the Yak-130 plane empennage, we plan to relaunch production and modernization of the existing park of Su-25 and produce Su-39 (the take-off weight of the helicopter is planned to be up to 6 tons).

On top of that, nowadays Russian helicopter building industry changes the policy of after-sale servicing aircraft. Having organized such a system, foreign companies profit from it. Nowadays OAO OPK Oboronprom controls the creation of service centres abroad. The holding company plans to open such centres in different regions of the world. Russian helicopter companies unite efforts to increase the quality of servicing all the Russian helicopters used abroad. I believe that by joining our efforts we will increase and strengthen the image of Russian aircraft building on the world market.

Olga Gorbunova
    [~DETAIL_TEXT] => 
Simple and Safe

– Mr. Belykh, for 70 years Ulan-Ude Aircraft Plant produced different civil and military aircrafts. In production of what kind of machinery does the plant specialize now? 

– Nowadays, the main activity of  Ulan-Ude Aircraft Plant is the production of Mi-171 helicopters for transport, passenger, search and rescue, fire fight, medical and other needs. Besides, we produce passenger helicopters Mi-171 A, military transport helicopters Mi-171 III with controlled and non-controlled rocket armament, and airplanes of Su-25 UB, Su-25 UBK, Su-25 UTG, and Su-39 types. Moreover, the plant supplies spares and land equipment, repairs and modernizes aircraft, organizes training for buyers’ flight teams.

The quality of Ulan-Ude Aircraft Plant’s production is confirmed by the Aircraft register of the International Aircraft Committee and the Department of Quality Systems Certification (the Institute of Testing and Certification of Armaments and Military Equipment).

– Speaking of quality, do you think that the production of Russian enterprises meets the world standards and is on the advanced technological level?

– Due to the country’s geographical position, the Russian aircraft construction school has always paid much attention to such qualities as simplicity and safety. It has enabled us to create a unique aircraft – simple to use, reliable in complicated conditions, and not expensive. I believe that Mi-8 helicopter and its modifications are the most genius elaboration in the history of world helicopter construction. About 13,000 helicopters of the type were produced in Russia, and they are successfully used all over the world. According to experts’ evaluations, nowadays there is a demands for several thousands more of Mi-8/Mi-171 helicopters in the world market. Often they are used in the regions, where no other machinery can be used because of complicated climatic conditions. 

On the other hand, we are to catch up with the Western school of aircraft building in the avionics sector. Nowadays, we believe the way out is cooperation with foreign producers of aircraft instrumentation and radio equipment for helicopters. For example, now we offer the installation of a whole complex of equipment produced by foreigners for Mi-171 and Mi-171 III. At the same time, some customers prefer Russian equipment, since it is simpler, they are familiar with it, and they will not depend on Western suppliers.

Nobody Will Cope with «Mi» Alone

– Recently mass-media claimed  that Ulan-Ude Aircraft Plant JSC gives up the production of Mi-8/Mi-171 helicopter, and this type of aircraft will be produced in Kazan. Has the issue been solved?

– The best answer to it is the deed, not words. Ulan-Ude Aircraft Plant continues to fulfill the orders for Mi-171 helicopter. Moreover, we hope that our colleagues – suppliers of components will cope with the work that is to be done by two plants. Nowadays, it is obvious that no separate enterprise is able to fulfill the market demand for the aircraft and increase sales volume to the level planned by the state. Earlier there was no economic or technical basis for such suggestions either. They were not discussing the transfer of the Mi-8 production to the Kazan Helicopter Plant, but the loading of the Plant’s capacities, and coordination of orders for Mi-8/Mi-171 distribution. I am sure it is much easier to solve the questions now, after the procedure of Kazan Helicopter Plant incorporation into the helicopter building holding company managed by OAO OPK Oboronprom is completed.

– At which stage is the launch of the new helicopter Ka-60/Ka-62 production by Ulan-Ude Aircraft Plant now?

– Production of any new product starts with the regulated by the government standards procedure. This implies obtaining design documentation from the development contractor; then the plant can start technological preparation for serial production. Nowadays, the Ka-60/Ka-62 helicopter testing and design works are being completed, although they still depend on investments.

– As far as we know, to carry out the project the plant is cooperating with Kamov experimental-design bureau. Is Ulan-Ude Aircraft Plant’s cooperation with other experimental-design organizations fruitful?

– Ulan-Ude Aircraft Plant and Kamov experimental-design bureau are members of the helicopter building holding company, in the framework of which we cooperate because of the prospect of Ka-60/Ka-62 helicopter serial production. Usually, the relations of a producing plant and an experimental-design bureau are based on the developers’ control for the serially produced aircraft. All the changes, additions, improvements are to be agreed with them. Nowadays, Ulan-Ude Aircraft Plant cooperates with Mil MVZ JSC and Sukhoi experimental-design bureau.

– Is the plant developing any new production?

– In accordance with the demands of the time, the plant constantly modernizes and certificates Mi-171 helicopter. Plane components are also developed: in the framework of cooperation with Irkutsk Aircraft Plant, Ulan-Ude Aircraft Plant plans to create design-electronic prototypes, and later produce mounting and technological units of the Yak-130 plane empennage. 

President Likes VIP-Version

– Where is the production of your enterprise used?

– The aircrafts produced by Ulan-Ude Aircraft Plant are successfully used in practically all regions of the world. Among our clients there are the states of Central and South-East Asia, Equatorial, Northern and Southern Africa, Central and Eastern Europe, Latin America, Middle East, and the CIS. Every year the number of countries who purchase our production grows. For example, in 2006 Croatia joined them. It is not the first time when we work with the state oriented at NATO standards; earlier our production was delivered to the Czech Republic and Slovakia. Our production is certified in many countries.   

– What is the share of export supplies in the total volume of production sold? Is the plant’s production popular among Russian and the CIS air companies?

– The share of export contracts is about 90% of the production we sell. However, lately there is a tendency for supplies structure to change: the amount of Russian and the CIS orders increases. The reason for it is the growth of the RF economy, which stimulates air transportation volume growth, and renewal of the existing but ageing helicopter park.

The VIP version of Mi-171 becomes more and more popular. It has the largest cabin among all the helicopters of the class. It is possible to stand in such a cabin; there are comfortable conditions for work and rest during the flight. The advantages of the helicopter have been noted by officials of many countries (including the President of one of Middle Eastern states), businessmen, and bankers. Now our enterprise is producing several such helicopters: there is a significant amount of orders for 2007-2008.

Stock of Orders Will Be Large

– How have the economic figures of the enterprise changed? Does the plant have enough orders for the present time and for the near future?

– The economic figures of the last year will be defined when the annual accounting report is ready. Still, now I can say that there has been a 10-15% reduction of production volume. The profitability of the contracts decreased in 2006, because the cost of the purchased components rises, while the market price of a helicopter remains practically the same. The plant has a lot export contracts, so the collapse of the US dollar influenced the situation negatively. Besides, there were few orders in the first half of the year, and the payment for the orders fulfilled in July-December 2006 was partly completed in 2007.

The main achievement of the company in 2006 was the creation of a stock of orders for middle-term prospect. Nowadays we are sure about future. The amount and quality of the concluded contracts enables us to plan the increase of production volume by 50% in 2007.

– What problems are urgent for the plant’s work? How are they solved?

– Among the problem aspects of the company’s work, there is a lack of stable and long-term state orders. It negatively influences the regularity of production, and as a result, the profitability. That is why we suffer from the lack of our own floating funds to renew the producing and the technical base of the plant. Another problem of Ulan-Ude Aircraft Plant is training of high-qualified engineering and technical staff. We are looking for a way out of the difficult situation by ourselves and in the frames of the holding company, as well as trying to attract state structures’ attention to the problems we cannot solve by ourselves. 

Higher and higher

– Specialists believe that the world market of aircrafts is oversaturated. How do you manage to compete with Russian and foreign aircraft building companies?

– I believe that the oversaturation of the world aircraft market is an exaggeration. It is much more reasonable to speak of an increase in demand for helicopters. It has not reached the level of 1985-1987; nevertheless, it has increased in comparison with 1992-1994. It is connected with the rearmament of the NATO states’ armies, and with the constant growth of the light helicopters commercial market. The market is potentially large in Russia, but it will open when the procedure of giving permissions for flights is optimized. The demand for the helicopters of medium class changes less – nowadays it is about 100(?)-120 units annually. Russian enterprises receive large orders – more than 20 units – only now. For example, our plant is now fulfilling the contract for delivery of 24 units to China.

According to the forecast of the largest companies specializing in marketing and aircraft market research, in the next decade about 14.5 thousand helicopters will be sold. And the forecasts become more and more optimistic. That is why we hope to continue to compete successfully on the world market due to the optimum ratio of price and quality, and the possibility to use our production in poor climatic conditions. Naturally, we are going to move further. Nowadays, Ulan-Ude Aircraft Plant in cooperation with Mil MVZ is developing a complex programme of Mi-171 and Mi-171 III helicopters modernization, the realization of which will enlarge the capacities of the helicopters and improve their characteristics. In particular, it envisages improvement of the propulsion unit of the redactor, transmission, load-carrying system, aircraft instrumentation and radio equipment and other systems. The programme was developed as based on the wishes of helicopter users, and we believe that its realization will increase the competitiveness of our production. I am sure that the modernized Mi-171 and Mi-171 III will be popular on the market for the next 20 years.  

– What other news does the fate have in store for Ulan-Ude Aircraft Plant in the near future?

– Besides, the projects I have mentioned – modernization of Mi-171, cooperation with Irkutsk Aircraft Plant to create design-electronic prototypes and produce mounting and technological units of the Yak-130 plane empennage, we plan to relaunch production and modernization of the existing park of Su-25 and produce Su-39 (the take-off weight of the helicopter is planned to be up to 6 tons).

On top of that, nowadays Russian helicopter building industry changes the policy of after-sale servicing aircraft. Having organized such a system, foreign companies profit from it. Nowadays OAO OPK Oboronprom controls the creation of service centres abroad. The holding company plans to open such centres in different regions of the world. Russian helicopter companies unite efforts to increase the quality of servicing all the Russian helicopters used abroad. I believe that by joining our efforts we will increase and strengthen the image of Russian aircraft building on the world market.

Olga Gorbunova
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    [~PREVIEW_TEXT] => According to the forecast of international experts, in the next decade the world market’s demand for helicopters will make about 14.5 thousand units. Leonid Belykh, CEO of the only Russian enterprise producing both airplanes and helicopters – Ulan-Ude Aircraft Plant JSC, comments on how competitive the aircraft is.
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Simple and Safe

– Mr. Belykh, for 70 years Ulan-Ude Aircraft Plant produced different civil and military aircrafts. In production of what kind of machinery does the plant specialize now? 

– Nowadays, the main activity of  Ulan-Ude Aircraft Plant is the production of Mi-171 helicopters for transport, passenger, search and rescue, fire fight, medical and other needs. Besides, we produce passenger helicopters Mi-171 A, military transport helicopters Mi-171 III with controlled and non-controlled rocket armament, and airplanes of Su-25 UB, Su-25 UBK, Su-25 UTG, and Su-39 types. Moreover, the plant supplies spares and land equipment, repairs and modernizes aircraft, organizes training for buyers’ flight teams.

The quality of Ulan-Ude Aircraft Plant’s production is confirmed by the Aircraft register of the International Aircraft Committee and the Department of Quality Systems Certification (the Institute of Testing and Certification of Armaments and Military Equipment).

– Speaking of quality, do you think that the production of Russian enterprises meets the world standards and is on the advanced technological level?

– Due to the country’s geographical position, the Russian aircraft construction school has always paid much attention to such qualities as simplicity and safety. It has enabled us to create a unique aircraft – simple to use, reliable in complicated conditions, and not expensive. I believe that Mi-8 helicopter and its modifications are the most genius elaboration in the history of world helicopter construction. About 13,000 helicopters of the type were produced in Russia, and they are successfully used all over the world. According to experts’ evaluations, nowadays there is a demands for several thousands more of Mi-8/Mi-171 helicopters in the world market. Often they are used in the regions, where no other machinery can be used because of complicated climatic conditions. 

On the other hand, we are to catch up with the Western school of aircraft building in the avionics sector. Nowadays, we believe the way out is cooperation with foreign producers of aircraft instrumentation and radio equipment for helicopters. For example, now we offer the installation of a whole complex of equipment produced by foreigners for Mi-171 and Mi-171 III. At the same time, some customers prefer Russian equipment, since it is simpler, they are familiar with it, and they will not depend on Western suppliers.

Nobody Will Cope with «Mi» Alone

– Recently mass-media claimed  that Ulan-Ude Aircraft Plant JSC gives up the production of Mi-8/Mi-171 helicopter, and this type of aircraft will be produced in Kazan. Has the issue been solved?

– The best answer to it is the deed, not words. Ulan-Ude Aircraft Plant continues to fulfill the orders for Mi-171 helicopter. Moreover, we hope that our colleagues – suppliers of components will cope with the work that is to be done by two plants. Nowadays, it is obvious that no separate enterprise is able to fulfill the market demand for the aircraft and increase sales volume to the level planned by the state. Earlier there was no economic or technical basis for such suggestions either. They were not discussing the transfer of the Mi-8 production to the Kazan Helicopter Plant, but the loading of the Plant’s capacities, and coordination of orders for Mi-8/Mi-171 distribution. I am sure it is much easier to solve the questions now, after the procedure of Kazan Helicopter Plant incorporation into the helicopter building holding company managed by OAO OPK Oboronprom is completed.

– At which stage is the launch of the new helicopter Ka-60/Ka-62 production by Ulan-Ude Aircraft Plant now?

– Production of any new product starts with the regulated by the government standards procedure. This implies obtaining design documentation from the development contractor; then the plant can start technological preparation for serial production. Nowadays, the Ka-60/Ka-62 helicopter testing and design works are being completed, although they still depend on investments.

– As far as we know, to carry out the project the plant is cooperating with Kamov experimental-design bureau. Is Ulan-Ude Aircraft Plant’s cooperation with other experimental-design organizations fruitful?

– Ulan-Ude Aircraft Plant and Kamov experimental-design bureau are members of the helicopter building holding company, in the framework of which we cooperate because of the prospect of Ka-60/Ka-62 helicopter serial production. Usually, the relations of a producing plant and an experimental-design bureau are based on the developers’ control for the serially produced aircraft. All the changes, additions, improvements are to be agreed with them. Nowadays, Ulan-Ude Aircraft Plant cooperates with Mil MVZ JSC and Sukhoi experimental-design bureau.

– Is the plant developing any new production?

– In accordance with the demands of the time, the plant constantly modernizes and certificates Mi-171 helicopter. Plane components are also developed: in the framework of cooperation with Irkutsk Aircraft Plant, Ulan-Ude Aircraft Plant plans to create design-electronic prototypes, and later produce mounting and technological units of the Yak-130 plane empennage. 

President Likes VIP-Version

– Where is the production of your enterprise used?

– The aircrafts produced by Ulan-Ude Aircraft Plant are successfully used in practically all regions of the world. Among our clients there are the states of Central and South-East Asia, Equatorial, Northern and Southern Africa, Central and Eastern Europe, Latin America, Middle East, and the CIS. Every year the number of countries who purchase our production grows. For example, in 2006 Croatia joined them. It is not the first time when we work with the state oriented at NATO standards; earlier our production was delivered to the Czech Republic and Slovakia. Our production is certified in many countries.   

– What is the share of export supplies in the total volume of production sold? Is the plant’s production popular among Russian and the CIS air companies?

– The share of export contracts is about 90% of the production we sell. However, lately there is a tendency for supplies structure to change: the amount of Russian and the CIS orders increases. The reason for it is the growth of the RF economy, which stimulates air transportation volume growth, and renewal of the existing but ageing helicopter park.

The VIP version of Mi-171 becomes more and more popular. It has the largest cabin among all the helicopters of the class. It is possible to stand in such a cabin; there are comfortable conditions for work and rest during the flight. The advantages of the helicopter have been noted by officials of many countries (including the President of one of Middle Eastern states), businessmen, and bankers. Now our enterprise is producing several such helicopters: there is a significant amount of orders for 2007-2008.

Stock of Orders Will Be Large

– How have the economic figures of the enterprise changed? Does the plant have enough orders for the present time and for the near future?

– The economic figures of the last year will be defined when the annual accounting report is ready. Still, now I can say that there has been a 10-15% reduction of production volume. The profitability of the contracts decreased in 2006, because the cost of the purchased components rises, while the market price of a helicopter remains practically the same. The plant has a lot export contracts, so the collapse of the US dollar influenced the situation negatively. Besides, there were few orders in the first half of the year, and the payment for the orders fulfilled in July-December 2006 was partly completed in 2007.

The main achievement of the company in 2006 was the creation of a stock of orders for middle-term prospect. Nowadays we are sure about future. The amount and quality of the concluded contracts enables us to plan the increase of production volume by 50% in 2007.

– What problems are urgent for the plant’s work? How are they solved?

– Among the problem aspects of the company’s work, there is a lack of stable and long-term state orders. It negatively influences the regularity of production, and as a result, the profitability. That is why we suffer from the lack of our own floating funds to renew the producing and the technical base of the plant. Another problem of Ulan-Ude Aircraft Plant is training of high-qualified engineering and technical staff. We are looking for a way out of the difficult situation by ourselves and in the frames of the holding company, as well as trying to attract state structures’ attention to the problems we cannot solve by ourselves. 

Higher and higher

– Specialists believe that the world market of aircrafts is oversaturated. How do you manage to compete with Russian and foreign aircraft building companies?

– I believe that the oversaturation of the world aircraft market is an exaggeration. It is much more reasonable to speak of an increase in demand for helicopters. It has not reached the level of 1985-1987; nevertheless, it has increased in comparison with 1992-1994. It is connected with the rearmament of the NATO states’ armies, and with the constant growth of the light helicopters commercial market. The market is potentially large in Russia, but it will open when the procedure of giving permissions for flights is optimized. The demand for the helicopters of medium class changes less – nowadays it is about 100(?)-120 units annually. Russian enterprises receive large orders – more than 20 units – only now. For example, our plant is now fulfilling the contract for delivery of 24 units to China.

According to the forecast of the largest companies specializing in marketing and aircraft market research, in the next decade about 14.5 thousand helicopters will be sold. And the forecasts become more and more optimistic. That is why we hope to continue to compete successfully on the world market due to the optimum ratio of price and quality, and the possibility to use our production in poor climatic conditions. Naturally, we are going to move further. Nowadays, Ulan-Ude Aircraft Plant in cooperation with Mil MVZ is developing a complex programme of Mi-171 and Mi-171 III helicopters modernization, the realization of which will enlarge the capacities of the helicopters and improve their characteristics. In particular, it envisages improvement of the propulsion unit of the redactor, transmission, load-carrying system, aircraft instrumentation and radio equipment and other systems. The programme was developed as based on the wishes of helicopter users, and we believe that its realization will increase the competitiveness of our production. I am sure that the modernized Mi-171 and Mi-171 III will be popular on the market for the next 20 years.  

– What other news does the fate have in store for Ulan-Ude Aircraft Plant in the near future?

– Besides, the projects I have mentioned – modernization of Mi-171, cooperation with Irkutsk Aircraft Plant to create design-electronic prototypes and produce mounting and technological units of the Yak-130 plane empennage, we plan to relaunch production and modernization of the existing park of Su-25 and produce Su-39 (the take-off weight of the helicopter is planned to be up to 6 tons).

On top of that, nowadays Russian helicopter building industry changes the policy of after-sale servicing aircraft. Having organized such a system, foreign companies profit from it. Nowadays OAO OPK Oboronprom controls the creation of service centres abroad. The holding company plans to open such centres in different regions of the world. Russian helicopter companies unite efforts to increase the quality of servicing all the Russian helicopters used abroad. I believe that by joining our efforts we will increase and strengthen the image of Russian aircraft building on the world market.

Olga Gorbunova
    [~DETAIL_TEXT] => 
Simple and Safe

– Mr. Belykh, for 70 years Ulan-Ude Aircraft Plant produced different civil and military aircrafts. In production of what kind of machinery does the plant specialize now? 

– Nowadays, the main activity of  Ulan-Ude Aircraft Plant is the production of Mi-171 helicopters for transport, passenger, search and rescue, fire fight, medical and other needs. Besides, we produce passenger helicopters Mi-171 A, military transport helicopters Mi-171 III with controlled and non-controlled rocket armament, and airplanes of Su-25 UB, Su-25 UBK, Su-25 UTG, and Su-39 types. Moreover, the plant supplies spares and land equipment, repairs and modernizes aircraft, organizes training for buyers’ flight teams.

The quality of Ulan-Ude Aircraft Plant’s production is confirmed by the Aircraft register of the International Aircraft Committee and the Department of Quality Systems Certification (the Institute of Testing and Certification of Armaments and Military Equipment).

– Speaking of quality, do you think that the production of Russian enterprises meets the world standards and is on the advanced technological level?

– Due to the country’s geographical position, the Russian aircraft construction school has always paid much attention to such qualities as simplicity and safety. It has enabled us to create a unique aircraft – simple to use, reliable in complicated conditions, and not expensive. I believe that Mi-8 helicopter and its modifications are the most genius elaboration in the history of world helicopter construction. About 13,000 helicopters of the type were produced in Russia, and they are successfully used all over the world. According to experts’ evaluations, nowadays there is a demands for several thousands more of Mi-8/Mi-171 helicopters in the world market. Often they are used in the regions, where no other machinery can be used because of complicated climatic conditions. 

On the other hand, we are to catch up with the Western school of aircraft building in the avionics sector. Nowadays, we believe the way out is cooperation with foreign producers of aircraft instrumentation and radio equipment for helicopters. For example, now we offer the installation of a whole complex of equipment produced by foreigners for Mi-171 and Mi-171 III. At the same time, some customers prefer Russian equipment, since it is simpler, they are familiar with it, and they will not depend on Western suppliers.

Nobody Will Cope with «Mi» Alone

– Recently mass-media claimed  that Ulan-Ude Aircraft Plant JSC gives up the production of Mi-8/Mi-171 helicopter, and this type of aircraft will be produced in Kazan. Has the issue been solved?

– The best answer to it is the deed, not words. Ulan-Ude Aircraft Plant continues to fulfill the orders for Mi-171 helicopter. Moreover, we hope that our colleagues – suppliers of components will cope with the work that is to be done by two plants. Nowadays, it is obvious that no separate enterprise is able to fulfill the market demand for the aircraft and increase sales volume to the level planned by the state. Earlier there was no economic or technical basis for such suggestions either. They were not discussing the transfer of the Mi-8 production to the Kazan Helicopter Plant, but the loading of the Plant’s capacities, and coordination of orders for Mi-8/Mi-171 distribution. I am sure it is much easier to solve the questions now, after the procedure of Kazan Helicopter Plant incorporation into the helicopter building holding company managed by OAO OPK Oboronprom is completed.

– At which stage is the launch of the new helicopter Ka-60/Ka-62 production by Ulan-Ude Aircraft Plant now?

– Production of any new product starts with the regulated by the government standards procedure. This implies obtaining design documentation from the development contractor; then the plant can start technological preparation for serial production. Nowadays, the Ka-60/Ka-62 helicopter testing and design works are being completed, although they still depend on investments.

– As far as we know, to carry out the project the plant is cooperating with Kamov experimental-design bureau. Is Ulan-Ude Aircraft Plant’s cooperation with other experimental-design organizations fruitful?

– Ulan-Ude Aircraft Plant and Kamov experimental-design bureau are members of the helicopter building holding company, in the framework of which we cooperate because of the prospect of Ka-60/Ka-62 helicopter serial production. Usually, the relations of a producing plant and an experimental-design bureau are based on the developers’ control for the serially produced aircraft. All the changes, additions, improvements are to be agreed with them. Nowadays, Ulan-Ude Aircraft Plant cooperates with Mil MVZ JSC and Sukhoi experimental-design bureau.

– Is the plant developing any new production?

– In accordance with the demands of the time, the plant constantly modernizes and certificates Mi-171 helicopter. Plane components are also developed: in the framework of cooperation with Irkutsk Aircraft Plant, Ulan-Ude Aircraft Plant plans to create design-electronic prototypes, and later produce mounting and technological units of the Yak-130 plane empennage. 

President Likes VIP-Version

– Where is the production of your enterprise used?

– The aircrafts produced by Ulan-Ude Aircraft Plant are successfully used in practically all regions of the world. Among our clients there are the states of Central and South-East Asia, Equatorial, Northern and Southern Africa, Central and Eastern Europe, Latin America, Middle East, and the CIS. Every year the number of countries who purchase our production grows. For example, in 2006 Croatia joined them. It is not the first time when we work with the state oriented at NATO standards; earlier our production was delivered to the Czech Republic and Slovakia. Our production is certified in many countries.   

– What is the share of export supplies in the total volume of production sold? Is the plant’s production popular among Russian and the CIS air companies?

– The share of export contracts is about 90% of the production we sell. However, lately there is a tendency for supplies structure to change: the amount of Russian and the CIS orders increases. The reason for it is the growth of the RF economy, which stimulates air transportation volume growth, and renewal of the existing but ageing helicopter park.

The VIP version of Mi-171 becomes more and more popular. It has the largest cabin among all the helicopters of the class. It is possible to stand in such a cabin; there are comfortable conditions for work and rest during the flight. The advantages of the helicopter have been noted by officials of many countries (including the President of one of Middle Eastern states), businessmen, and bankers. Now our enterprise is producing several such helicopters: there is a significant amount of orders for 2007-2008.

Stock of Orders Will Be Large

– How have the economic figures of the enterprise changed? Does the plant have enough orders for the present time and for the near future?

– The economic figures of the last year will be defined when the annual accounting report is ready. Still, now I can say that there has been a 10-15% reduction of production volume. The profitability of the contracts decreased in 2006, because the cost of the purchased components rises, while the market price of a helicopter remains practically the same. The plant has a lot export contracts, so the collapse of the US dollar influenced the situation negatively. Besides, there were few orders in the first half of the year, and the payment for the orders fulfilled in July-December 2006 was partly completed in 2007.

The main achievement of the company in 2006 was the creation of a stock of orders for middle-term prospect. Nowadays we are sure about future. The amount and quality of the concluded contracts enables us to plan the increase of production volume by 50% in 2007.

– What problems are urgent for the plant’s work? How are they solved?

– Among the problem aspects of the company’s work, there is a lack of stable and long-term state orders. It negatively influences the regularity of production, and as a result, the profitability. That is why we suffer from the lack of our own floating funds to renew the producing and the technical base of the plant. Another problem of Ulan-Ude Aircraft Plant is training of high-qualified engineering and technical staff. We are looking for a way out of the difficult situation by ourselves and in the frames of the holding company, as well as trying to attract state structures’ attention to the problems we cannot solve by ourselves. 

Higher and higher

– Specialists believe that the world market of aircrafts is oversaturated. How do you manage to compete with Russian and foreign aircraft building companies?

– I believe that the oversaturation of the world aircraft market is an exaggeration. It is much more reasonable to speak of an increase in demand for helicopters. It has not reached the level of 1985-1987; nevertheless, it has increased in comparison with 1992-1994. It is connected with the rearmament of the NATO states’ armies, and with the constant growth of the light helicopters commercial market. The market is potentially large in Russia, but it will open when the procedure of giving permissions for flights is optimized. The demand for the helicopters of medium class changes less – nowadays it is about 100(?)-120 units annually. Russian enterprises receive large orders – more than 20 units – only now. For example, our plant is now fulfilling the contract for delivery of 24 units to China.

According to the forecast of the largest companies specializing in marketing and aircraft market research, in the next decade about 14.5 thousand helicopters will be sold. And the forecasts become more and more optimistic. That is why we hope to continue to compete successfully on the world market due to the optimum ratio of price and quality, and the possibility to use our production in poor climatic conditions. Naturally, we are going to move further. Nowadays, Ulan-Ude Aircraft Plant in cooperation with Mil MVZ is developing a complex programme of Mi-171 and Mi-171 III helicopters modernization, the realization of which will enlarge the capacities of the helicopters and improve their characteristics. In particular, it envisages improvement of the propulsion unit of the redactor, transmission, load-carrying system, aircraft instrumentation and radio equipment and other systems. The programme was developed as based on the wishes of helicopter users, and we believe that its realization will increase the competitiveness of our production. I am sure that the modernized Mi-171 and Mi-171 III will be popular on the market for the next 20 years.  

– What other news does the fate have in store for Ulan-Ude Aircraft Plant in the near future?

– Besides, the projects I have mentioned – modernization of Mi-171, cooperation with Irkutsk Aircraft Plant to create design-electronic prototypes and produce mounting and technological units of the Yak-130 plane empennage, we plan to relaunch production and modernization of the existing park of Su-25 and produce Su-39 (the take-off weight of the helicopter is planned to be up to 6 tons).

On top of that, nowadays Russian helicopter building industry changes the policy of after-sale servicing aircraft. Having organized such a system, foreign companies profit from it. Nowadays OAO OPK Oboronprom controls the creation of service centres abroad. The holding company plans to open such centres in different regions of the world. Russian helicopter companies unite efforts to increase the quality of servicing all the Russian helicopters used abroad. I believe that by joining our efforts we will increase and strengthen the image of Russian aircraft building on the world market.

Olga Gorbunova
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2007/2/belykh.jpg" border="1" alt="Leonid Belykh" title="Leonid Belykh" hspace="3" vspace="3" width="187" height="190" align="left" />According to the forecast of international experts, in the next decade the world market’s demand for helicopters will make about 14.5 thousand units. Leonid Belykh, CEO of the only Russian enterprise producing both airplanes and helicopters – Ulan-Ude Aircraft Plant JSC, comments on how competitive the aircraft is.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2007/2/belykh.jpg" border="1" alt="Leonid Belykh" title="Leonid Belykh" hspace="3" vspace="3" width="187" height="190" align="left" />According to the forecast of international experts, in the next decade the world market’s demand for helicopters will make about 14.5 thousand units. Leonid Belykh, CEO of the only Russian enterprise producing both airplanes and helicopters – Ulan-Ude Aircraft Plant JSC, comments on how competitive the aircraft is.
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            [SECTION_PICTURE_FILE_TITLE] => Helicopters Most Important
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