III КВАРТАЛ 2022Г. - 55 баллов
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[NAME] => Toll Roads in Russia: Good Investment Idea for European Companies
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[DETAIL_TEXT] => Transport Armageddon
The length of the public road network in Russia is 545 thousand km. According to specialists, the demand for motorways is twice higher. The acting roads are overloaded two- or even threefold. Needless to mention the consequences, any citizen of the Russian capital knows what a many-hour traffic jam is.
Meanwhile, according to the Federal Road Agency (Rosautodor), the traffic on the main Russian motorways will increase by 1.5 times before 2010. Obviously, the existing road network is not able to cope with this flow. «In spite of the Government’s special attention to the road problems and the significant increase of budget investments into the road construction, we can hardly believe that the situation may improve», believes Advisor of the CEO of ZAO Sovtransauto Anatoly Pinson. «The correct decision is to try to solve the problem of traffic on the most loaded directions using public-private partnership», he says. Toll roads should be financed by the Russian federal and regional bodies, as well as by private investors. The latter could be given a right to take the road into concession. Nowadays there are no toll roads in Russia. The only exception is the short «experimental» sectors in the Lipetsk and Khabarovsk regions.
In the near future it is planned to start the construction of several toll roads. For example, the motorways M-4 «Don», «Krasnodar – Abinsk – Kabardinka», a new exit to the Moscow ring road (MKAD), the federal road M-1 «Belarus» Moscow – Minsk, a passby of the Odintsovo town in the Moscow region, and the Orlovsky tunnel under the Neva (St. Petersburg).
The More Rings – the Better
Perhaps, the largest and most important projects are the central ring road (CKAD) in the Moscow region, the speeded-up motorway Moscow – St. Petersburg and the Western High-Speed Diameter in St. Petersburg. «Transit freight transport will run along CKAD far away from Moscow, thus a part of transit load will be taken from MKAD and the sectors of federal roads near the Russian capital», tell the Transport Minister of the Moscow region, Petr Katsyv.
CKAD will be connected with 18 Moscow regional motorways and the smaller and the larger Moscow ring roads. It is planned to construct road interchanges with all large motorways and to build roads by-passing Noginsk, Electrostal, Bronnitsa, Zvenigorod and Golitsyno. In the future there will be freight terminals, hotels, hypermarkets and road service objects on both sides on the road. Thus, there will be about 300,000 additional jobs on the near-by territories. There are to be a few slip roads on CKAD. The planned speed of vehicles on the road is about 110-140 km/h.
This project has been widely discussed for a long time. According to the Ministry of Transport of the Moscow region, in 2008-2010 it is planned to carry out feasibility research, followed by engineering surveys and land development etc., so the preliminary terms of construction are 2011-2015. The preliminary cost of the project (the prices of 2005) RUR 332.8 bln. The Federal budget finances 55% of the expenses on the road construction, the Moscow regional budget pays 10%, and the private investor who will have won the tender will pay the remaining 35%.
New Roads and New Speeds
Nowadays, between the two Russian largest cities up to 40 thousand cars and lorries run daily, and the flow increases every year. The high-speed motorway Moscow – St. Petersburg will be 650 km long, which is 62 km shorter than the old road. The new road will not run through any settlements, which will increase the allowed speed up to 180 km/h.
There will be from 6 to 10 lanes on the motorways. It is envisaged to construct 6 bridges, 14 ramps, 3 overbridges and crossunders at the road interchanges, 9 overpasses, 1 tunnel, 7 transport interchanges and 9 posts where the fees will be collected.
In the words of the Deputy Transport Minister Evgeny Moskvichev, the feasibility of investments for the project of the road Moscow – St. Petersburg is already ready, the engineering project will soon be completed, and the tender will soon be announced and held. Director General of FGU Roads of Russia Oleg Shakhov is sure that the construction of several sectors will start next spring. The announced volume of investments is RUR 54.9 bln. The share of private investors in the project is 53% or RUR 29.1 bln.
Another ambitious project is the construction of the Western High-Speed Diameter (ZSD) in St. Petersburg. The eight-lane high-speed road with the length of 46 km will run from the Southern to the Northern part of the city. Its Southern sector (11 km) will be running through the territory of the sea port. Unfortunately, this transport «panacea» will hardly be constructed in the near future.The construction of the road envisages building of 2 tunnels and 72 engineering objects, including bridges, overpasses and road junctions.
The total cost of ZSD construction exceeds RUR 80 bln, wherein 50% will be private funds, about 34% will be given from the RF Investment Fund, and the remaining sum will be provided from the budget of St. Petersburg.
The motorway that will significantly reroute the transport flows in the North-West of the country (because it will connect the Big Sea Port of St. Petersburg and the basic transport complexes of the city with the by-passing road and the junctions with the federal and international highways) is to be constructed by 2010 – 2011. The average speed is 120 km/h. Nowadays, four consortiums strive for concluding the contract on concession – the Austrian MLA Lieferasphalt GmbH (incorporates FCC Construction, Alpina and Deutsche Bank); the registered in St. Petersburg OOO Nevsky Meridian (its founders are the St. Petersburg company Mostotryad-11, the Austrian companies Strabag and Hochtief, as well as the French Bouygues and Egis); a Spanish group, the shareholder of which is OHL Group; and the Saint-Petersburg High Speed Road company registered in Holland, the founders of which are the Dutch Bektel, Intertoll from the Republic of South Africa, and the Turkish company Enka.
The potential concessionaires are to make their offers before November 23, 2007. The results of the tender are to be announced at the end of December.
The Game Is Legal
Till recently, construction of toll roads was in fact impossible because of the lack of normative and legislative base, and the rules regulating the construction and exploitation of such motorways. So, it was hardly possible to find a private investor for such projects. The situation changed last year, when the Federal Law «On Concessions» came into force. «This law enables the state and the business to cooperate to finance the construction of new roads as well as to maintain them and exploit», claims the RF Transport Minister Igor Levitin.Meanwhile, businessmen were not very enthusiastic about the much awaited federal law, because many of them consider it too vague.
Some time later, the Ministry of Transport developed and sent to the State Duma the bill on toll roads. According to it, such roads may be owned by the state or a region. Concession agreements can be concluded with private companies. The key point is as follows: if there is a toll road in the district, there must be an alternative free motorway. By now the bill passed its first reading in the RF State Duma.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Nevertheless, such companies as VINCI S.A. and Boygues (France), Macquare (Austria), OHL and Autostrada (Spain), Lotto (Korea) as well as Russian System and Vneshtorgbank, showed their interest in the project of Moscow – St. Petersburg road. However, none of the companies mentioned above confirmed their interest officially. Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Investor Needs Protection
«The terms of the tender have not been announced for most projects yet, that is why it is too early to speak about official applications for participation», believes A. Pinson. «As far as I know, the planned profitability of the toll roads exploitation regarding the compensation for the construction expenses is 7 - 12%, and it can be compared with profitability of other business projects. So, there must be an interest», he says.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.In particular, the Moscow region makes the first steps towards it. Recently, the Governor of the region Boris Gromov made a decision to guarantee a concessionaire payment of the so-called «operational grant» for the lack of traffic. That is if the amount of vehicles using the toll road is smaller than it was planned, and the concessionaire suffers losses, the regional government will compensate for them.
«Now we are preparing a joint-stock company High-Speed Motorways. This joint-stock company will go in for development of all the sectoral projects, maintenance of toll roads and purchase of area», says Deputy Transport Minister E. Moskvichev. «It is well known that today, after the City Planning Code was put into operation, there have emerged many issues connected with land purchase. And we launched such a state organization to help the investor», he explained.
The Federal Law being prepared also touches upon certain guarantees for investors. For example, the one-stop principle for development and fulfillment of investment projects, or a unified list of transport that can use toll roads for free.
Most experts think it is hardly possible that the Government will overdo with tariff rates regulation. They believe that the Government will protect the interests of the future customers of the roads.
Other urgent issues are the price for using a toll road and people’s attitude to such motorways. Incidentally, the Russians are not very rich.
«In every case special calculations will be made, because the rate is to be the optimal one: it must compensate for the investor’s expenses during the concession period, but it should not be too high, otherwise few customers will use it. The prices depend on the terms of concession contract as well», believes A. Pinson.
By Konstantin Alferov
[~DETAIL_TEXT] => Transport Armageddon
The length of the public road network in Russia is 545 thousand km. According to specialists, the demand for motorways is twice higher. The acting roads are overloaded two- or even threefold. Needless to mention the consequences, any citizen of the Russian capital knows what a many-hour traffic jam is.
Meanwhile, according to the Federal Road Agency (Rosautodor), the traffic on the main Russian motorways will increase by 1.5 times before 2010. Obviously, the existing road network is not able to cope with this flow. «In spite of the Government’s special attention to the road problems and the significant increase of budget investments into the road construction, we can hardly believe that the situation may improve», believes Advisor of the CEO of ZAO Sovtransauto Anatoly Pinson. «The correct decision is to try to solve the problem of traffic on the most loaded directions using public-private partnership», he says. Toll roads should be financed by the Russian federal and regional bodies, as well as by private investors. The latter could be given a right to take the road into concession. Nowadays there are no toll roads in Russia. The only exception is the short «experimental» sectors in the Lipetsk and Khabarovsk regions.
In the near future it is planned to start the construction of several toll roads. For example, the motorways M-4 «Don», «Krasnodar – Abinsk – Kabardinka», a new exit to the Moscow ring road (MKAD), the federal road M-1 «Belarus» Moscow – Minsk, a passby of the Odintsovo town in the Moscow region, and the Orlovsky tunnel under the Neva (St. Petersburg).
The More Rings – the Better
Perhaps, the largest and most important projects are the central ring road (CKAD) in the Moscow region, the speeded-up motorway Moscow – St. Petersburg and the Western High-Speed Diameter in St. Petersburg. «Transit freight transport will run along CKAD far away from Moscow, thus a part of transit load will be taken from MKAD and the sectors of federal roads near the Russian capital», tell the Transport Minister of the Moscow region, Petr Katsyv.
CKAD will be connected with 18 Moscow regional motorways and the smaller and the larger Moscow ring roads. It is planned to construct road interchanges with all large motorways and to build roads by-passing Noginsk, Electrostal, Bronnitsa, Zvenigorod and Golitsyno. In the future there will be freight terminals, hotels, hypermarkets and road service objects on both sides on the road. Thus, there will be about 300,000 additional jobs on the near-by territories. There are to be a few slip roads on CKAD. The planned speed of vehicles on the road is about 110-140 km/h.
This project has been widely discussed for a long time. According to the Ministry of Transport of the Moscow region, in 2008-2010 it is planned to carry out feasibility research, followed by engineering surveys and land development etc., so the preliminary terms of construction are 2011-2015. The preliminary cost of the project (the prices of 2005) RUR 332.8 bln. The Federal budget finances 55% of the expenses on the road construction, the Moscow regional budget pays 10%, and the private investor who will have won the tender will pay the remaining 35%.
New Roads and New Speeds
Nowadays, between the two Russian largest cities up to 40 thousand cars and lorries run daily, and the flow increases every year. The high-speed motorway Moscow – St. Petersburg will be 650 km long, which is 62 km shorter than the old road. The new road will not run through any settlements, which will increase the allowed speed up to 180 km/h.
There will be from 6 to 10 lanes on the motorways. It is envisaged to construct 6 bridges, 14 ramps, 3 overbridges and crossunders at the road interchanges, 9 overpasses, 1 tunnel, 7 transport interchanges and 9 posts where the fees will be collected.
In the words of the Deputy Transport Minister Evgeny Moskvichev, the feasibility of investments for the project of the road Moscow – St. Petersburg is already ready, the engineering project will soon be completed, and the tender will soon be announced and held. Director General of FGU Roads of Russia Oleg Shakhov is sure that the construction of several sectors will start next spring. The announced volume of investments is RUR 54.9 bln. The share of private investors in the project is 53% or RUR 29.1 bln.
Another ambitious project is the construction of the Western High-Speed Diameter (ZSD) in St. Petersburg. The eight-lane high-speed road with the length of 46 km will run from the Southern to the Northern part of the city. Its Southern sector (11 km) will be running through the territory of the sea port. Unfortunately, this transport «panacea» will hardly be constructed in the near future.The construction of the road envisages building of 2 tunnels and 72 engineering objects, including bridges, overpasses and road junctions.
The total cost of ZSD construction exceeds RUR 80 bln, wherein 50% will be private funds, about 34% will be given from the RF Investment Fund, and the remaining sum will be provided from the budget of St. Petersburg.
The motorway that will significantly reroute the transport flows in the North-West of the country (because it will connect the Big Sea Port of St. Petersburg and the basic transport complexes of the city with the by-passing road and the junctions with the federal and international highways) is to be constructed by 2010 – 2011. The average speed is 120 km/h. Nowadays, four consortiums strive for concluding the contract on concession – the Austrian MLA Lieferasphalt GmbH (incorporates FCC Construction, Alpina and Deutsche Bank); the registered in St. Petersburg OOO Nevsky Meridian (its founders are the St. Petersburg company Mostotryad-11, the Austrian companies Strabag and Hochtief, as well as the French Bouygues and Egis); a Spanish group, the shareholder of which is OHL Group; and the Saint-Petersburg High Speed Road company registered in Holland, the founders of which are the Dutch Bektel, Intertoll from the Republic of South Africa, and the Turkish company Enka.
The potential concessionaires are to make their offers before November 23, 2007. The results of the tender are to be announced at the end of December.
The Game Is Legal
Till recently, construction of toll roads was in fact impossible because of the lack of normative and legislative base, and the rules regulating the construction and exploitation of such motorways. So, it was hardly possible to find a private investor for such projects. The situation changed last year, when the Federal Law «On Concessions» came into force. «This law enables the state and the business to cooperate to finance the construction of new roads as well as to maintain them and exploit», claims the RF Transport Minister Igor Levitin.Meanwhile, businessmen were not very enthusiastic about the much awaited federal law, because many of them consider it too vague.
Some time later, the Ministry of Transport developed and sent to the State Duma the bill on toll roads. According to it, such roads may be owned by the state or a region. Concession agreements can be concluded with private companies. The key point is as follows: if there is a toll road in the district, there must be an alternative free motorway. By now the bill passed its first reading in the RF State Duma.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Nevertheless, such companies as VINCI S.A. and Boygues (France), Macquare (Austria), OHL and Autostrada (Spain), Lotto (Korea) as well as Russian System and Vneshtorgbank, showed their interest in the project of Moscow – St. Petersburg road. However, none of the companies mentioned above confirmed their interest officially. Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Investor Needs Protection
«The terms of the tender have not been announced for most projects yet, that is why it is too early to speak about official applications for participation», believes A. Pinson. «As far as I know, the planned profitability of the toll roads exploitation regarding the compensation for the construction expenses is 7 - 12%, and it can be compared with profitability of other business projects. So, there must be an interest», he says.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.In particular, the Moscow region makes the first steps towards it. Recently, the Governor of the region Boris Gromov made a decision to guarantee a concessionaire payment of the so-called «operational grant» for the lack of traffic. That is if the amount of vehicles using the toll road is smaller than it was planned, and the concessionaire suffers losses, the regional government will compensate for them.
«Now we are preparing a joint-stock company High-Speed Motorways. This joint-stock company will go in for development of all the sectoral projects, maintenance of toll roads and purchase of area», says Deputy Transport Minister E. Moskvichev. «It is well known that today, after the City Planning Code was put into operation, there have emerged many issues connected with land purchase. And we launched such a state organization to help the investor», he explained.
The Federal Law being prepared also touches upon certain guarantees for investors. For example, the one-stop principle for development and fulfillment of investment projects, or a unified list of transport that can use toll roads for free.
Most experts think it is hardly possible that the Government will overdo with tariff rates regulation. They believe that the Government will protect the interests of the future customers of the roads.
Other urgent issues are the price for using a toll road and people’s attitude to such motorways. Incidentally, the Russians are not very rich.
«In every case special calculations will be made, because the rate is to be the optimal one: it must compensate for the investor’s expenses during the concession period, but it should not be too high, otherwise few customers will use it. The prices depend on the terms of concession contract as well», believes A. Pinson.
By Konstantin Alferov
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[SECTION_META_TITLE] => Toll Roads in Russia: Good Investment Idea for European Companies
[SECTION_META_KEYWORDS] => toll roads in russia: good investment idea for european companies
[SECTION_META_DESCRIPTION] => The first toll roads are to be put into operation in Russia by 2010. For several projects feasibility studies have been made; money is given from the Federal budget to design new roads, and foreign investors, constructors and developers discuss the possibility of participating in the promising projects.
[ELEMENT_META_TITLE] => Toll Roads in Russia: Good Investment Idea for European Companies
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[ELEMENT_META_DESCRIPTION] => The first toll roads are to be put into operation in Russia by 2010. For several projects feasibility studies have been made; money is given from the Federal budget to design new roads, and foreign investors, constructors and developers discuss the possibility of participating in the promising projects.
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[DETAIL_TEXT] => Transport Armageddon
The length of the public road network in Russia is 545 thousand km. According to specialists, the demand for motorways is twice higher. The acting roads are overloaded two- or even threefold. Needless to mention the consequences, any citizen of the Russian capital knows what a many-hour traffic jam is.
Meanwhile, according to the Federal Road Agency (Rosautodor), the traffic on the main Russian motorways will increase by 1.5 times before 2010. Obviously, the existing road network is not able to cope with this flow. «In spite of the Government’s special attention to the road problems and the significant increase of budget investments into the road construction, we can hardly believe that the situation may improve», believes Advisor of the CEO of ZAO Sovtransauto Anatoly Pinson. «The correct decision is to try to solve the problem of traffic on the most loaded directions using public-private partnership», he says. Toll roads should be financed by the Russian federal and regional bodies, as well as by private investors. The latter could be given a right to take the road into concession. Nowadays there are no toll roads in Russia. The only exception is the short «experimental» sectors in the Lipetsk and Khabarovsk regions.
In the near future it is planned to start the construction of several toll roads. For example, the motorways M-4 «Don», «Krasnodar – Abinsk – Kabardinka», a new exit to the Moscow ring road (MKAD), the federal road M-1 «Belarus» Moscow – Minsk, a passby of the Odintsovo town in the Moscow region, and the Orlovsky tunnel under the Neva (St. Petersburg).
The More Rings – the Better
Perhaps, the largest and most important projects are the central ring road (CKAD) in the Moscow region, the speeded-up motorway Moscow – St. Petersburg and the Western High-Speed Diameter in St. Petersburg. «Transit freight transport will run along CKAD far away from Moscow, thus a part of transit load will be taken from MKAD and the sectors of federal roads near the Russian capital», tell the Transport Minister of the Moscow region, Petr Katsyv.
CKAD will be connected with 18 Moscow regional motorways and the smaller and the larger Moscow ring roads. It is planned to construct road interchanges with all large motorways and to build roads by-passing Noginsk, Electrostal, Bronnitsa, Zvenigorod and Golitsyno. In the future there will be freight terminals, hotels, hypermarkets and road service objects on both sides on the road. Thus, there will be about 300,000 additional jobs on the near-by territories. There are to be a few slip roads on CKAD. The planned speed of vehicles on the road is about 110-140 km/h.
This project has been widely discussed for a long time. According to the Ministry of Transport of the Moscow region, in 2008-2010 it is planned to carry out feasibility research, followed by engineering surveys and land development etc., so the preliminary terms of construction are 2011-2015. The preliminary cost of the project (the prices of 2005) RUR 332.8 bln. The Federal budget finances 55% of the expenses on the road construction, the Moscow regional budget pays 10%, and the private investor who will have won the tender will pay the remaining 35%.
New Roads and New Speeds
Nowadays, between the two Russian largest cities up to 40 thousand cars and lorries run daily, and the flow increases every year. The high-speed motorway Moscow – St. Petersburg will be 650 km long, which is 62 km shorter than the old road. The new road will not run through any settlements, which will increase the allowed speed up to 180 km/h.
There will be from 6 to 10 lanes on the motorways. It is envisaged to construct 6 bridges, 14 ramps, 3 overbridges and crossunders at the road interchanges, 9 overpasses, 1 tunnel, 7 transport interchanges and 9 posts where the fees will be collected.
In the words of the Deputy Transport Minister Evgeny Moskvichev, the feasibility of investments for the project of the road Moscow – St. Petersburg is already ready, the engineering project will soon be completed, and the tender will soon be announced and held. Director General of FGU Roads of Russia Oleg Shakhov is sure that the construction of several sectors will start next spring. The announced volume of investments is RUR 54.9 bln. The share of private investors in the project is 53% or RUR 29.1 bln.
Another ambitious project is the construction of the Western High-Speed Diameter (ZSD) in St. Petersburg. The eight-lane high-speed road with the length of 46 km will run from the Southern to the Northern part of the city. Its Southern sector (11 km) will be running through the territory of the sea port. Unfortunately, this transport «panacea» will hardly be constructed in the near future.The construction of the road envisages building of 2 tunnels and 72 engineering objects, including bridges, overpasses and road junctions.
The total cost of ZSD construction exceeds RUR 80 bln, wherein 50% will be private funds, about 34% will be given from the RF Investment Fund, and the remaining sum will be provided from the budget of St. Petersburg.
The motorway that will significantly reroute the transport flows in the North-West of the country (because it will connect the Big Sea Port of St. Petersburg and the basic transport complexes of the city with the by-passing road and the junctions with the federal and international highways) is to be constructed by 2010 – 2011. The average speed is 120 km/h. Nowadays, four consortiums strive for concluding the contract on concession – the Austrian MLA Lieferasphalt GmbH (incorporates FCC Construction, Alpina and Deutsche Bank); the registered in St. Petersburg OOO Nevsky Meridian (its founders are the St. Petersburg company Mostotryad-11, the Austrian companies Strabag and Hochtief, as well as the French Bouygues and Egis); a Spanish group, the shareholder of which is OHL Group; and the Saint-Petersburg High Speed Road company registered in Holland, the founders of which are the Dutch Bektel, Intertoll from the Republic of South Africa, and the Turkish company Enka.
The potential concessionaires are to make their offers before November 23, 2007. The results of the tender are to be announced at the end of December.
The Game Is Legal
Till recently, construction of toll roads was in fact impossible because of the lack of normative and legislative base, and the rules regulating the construction and exploitation of such motorways. So, it was hardly possible to find a private investor for such projects. The situation changed last year, when the Federal Law «On Concessions» came into force. «This law enables the state and the business to cooperate to finance the construction of new roads as well as to maintain them and exploit», claims the RF Transport Minister Igor Levitin.Meanwhile, businessmen were not very enthusiastic about the much awaited federal law, because many of them consider it too vague.
Some time later, the Ministry of Transport developed and sent to the State Duma the bill on toll roads. According to it, such roads may be owned by the state or a region. Concession agreements can be concluded with private companies. The key point is as follows: if there is a toll road in the district, there must be an alternative free motorway. By now the bill passed its first reading in the RF State Duma.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Nevertheless, such companies as VINCI S.A. and Boygues (France), Macquare (Austria), OHL and Autostrada (Spain), Lotto (Korea) as well as Russian System and Vneshtorgbank, showed their interest in the project of Moscow – St. Petersburg road. However, none of the companies mentioned above confirmed their interest officially. Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Investor Needs Protection
«The terms of the tender have not been announced for most projects yet, that is why it is too early to speak about official applications for participation», believes A. Pinson. «As far as I know, the planned profitability of the toll roads exploitation regarding the compensation for the construction expenses is 7 - 12%, and it can be compared with profitability of other business projects. So, there must be an interest», he says.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.In particular, the Moscow region makes the first steps towards it. Recently, the Governor of the region Boris Gromov made a decision to guarantee a concessionaire payment of the so-called «operational grant» for the lack of traffic. That is if the amount of vehicles using the toll road is smaller than it was planned, and the concessionaire suffers losses, the regional government will compensate for them.
«Now we are preparing a joint-stock company High-Speed Motorways. This joint-stock company will go in for development of all the sectoral projects, maintenance of toll roads and purchase of area», says Deputy Transport Minister E. Moskvichev. «It is well known that today, after the City Planning Code was put into operation, there have emerged many issues connected with land purchase. And we launched such a state organization to help the investor», he explained.
The Federal Law being prepared also touches upon certain guarantees for investors. For example, the one-stop principle for development and fulfillment of investment projects, or a unified list of transport that can use toll roads for free.
Most experts think it is hardly possible that the Government will overdo with tariff rates regulation. They believe that the Government will protect the interests of the future customers of the roads.
Other urgent issues are the price for using a toll road and people’s attitude to such motorways. Incidentally, the Russians are not very rich.
«In every case special calculations will be made, because the rate is to be the optimal one: it must compensate for the investor’s expenses during the concession period, but it should not be too high, otherwise few customers will use it. The prices depend on the terms of concession contract as well», believes A. Pinson.
By Konstantin Alferov
[~DETAIL_TEXT] => Transport Armageddon
The length of the public road network in Russia is 545 thousand km. According to specialists, the demand for motorways is twice higher. The acting roads are overloaded two- or even threefold. Needless to mention the consequences, any citizen of the Russian capital knows what a many-hour traffic jam is.
Meanwhile, according to the Federal Road Agency (Rosautodor), the traffic on the main Russian motorways will increase by 1.5 times before 2010. Obviously, the existing road network is not able to cope with this flow. «In spite of the Government’s special attention to the road problems and the significant increase of budget investments into the road construction, we can hardly believe that the situation may improve», believes Advisor of the CEO of ZAO Sovtransauto Anatoly Pinson. «The correct decision is to try to solve the problem of traffic on the most loaded directions using public-private partnership», he says. Toll roads should be financed by the Russian federal and regional bodies, as well as by private investors. The latter could be given a right to take the road into concession. Nowadays there are no toll roads in Russia. The only exception is the short «experimental» sectors in the Lipetsk and Khabarovsk regions.
In the near future it is planned to start the construction of several toll roads. For example, the motorways M-4 «Don», «Krasnodar – Abinsk – Kabardinka», a new exit to the Moscow ring road (MKAD), the federal road M-1 «Belarus» Moscow – Minsk, a passby of the Odintsovo town in the Moscow region, and the Orlovsky tunnel under the Neva (St. Petersburg).
The More Rings – the Better
Perhaps, the largest and most important projects are the central ring road (CKAD) in the Moscow region, the speeded-up motorway Moscow – St. Petersburg and the Western High-Speed Diameter in St. Petersburg. «Transit freight transport will run along CKAD far away from Moscow, thus a part of transit load will be taken from MKAD and the sectors of federal roads near the Russian capital», tell the Transport Minister of the Moscow region, Petr Katsyv.
CKAD will be connected with 18 Moscow regional motorways and the smaller and the larger Moscow ring roads. It is planned to construct road interchanges with all large motorways and to build roads by-passing Noginsk, Electrostal, Bronnitsa, Zvenigorod and Golitsyno. In the future there will be freight terminals, hotels, hypermarkets and road service objects on both sides on the road. Thus, there will be about 300,000 additional jobs on the near-by territories. There are to be a few slip roads on CKAD. The planned speed of vehicles on the road is about 110-140 km/h.
This project has been widely discussed for a long time. According to the Ministry of Transport of the Moscow region, in 2008-2010 it is planned to carry out feasibility research, followed by engineering surveys and land development etc., so the preliminary terms of construction are 2011-2015. The preliminary cost of the project (the prices of 2005) RUR 332.8 bln. The Federal budget finances 55% of the expenses on the road construction, the Moscow regional budget pays 10%, and the private investor who will have won the tender will pay the remaining 35%.
New Roads and New Speeds
Nowadays, between the two Russian largest cities up to 40 thousand cars and lorries run daily, and the flow increases every year. The high-speed motorway Moscow – St. Petersburg will be 650 km long, which is 62 km shorter than the old road. The new road will not run through any settlements, which will increase the allowed speed up to 180 km/h.
There will be from 6 to 10 lanes on the motorways. It is envisaged to construct 6 bridges, 14 ramps, 3 overbridges and crossunders at the road interchanges, 9 overpasses, 1 tunnel, 7 transport interchanges and 9 posts where the fees will be collected.
In the words of the Deputy Transport Minister Evgeny Moskvichev, the feasibility of investments for the project of the road Moscow – St. Petersburg is already ready, the engineering project will soon be completed, and the tender will soon be announced and held. Director General of FGU Roads of Russia Oleg Shakhov is sure that the construction of several sectors will start next spring. The announced volume of investments is RUR 54.9 bln. The share of private investors in the project is 53% or RUR 29.1 bln.
Another ambitious project is the construction of the Western High-Speed Diameter (ZSD) in St. Petersburg. The eight-lane high-speed road with the length of 46 km will run from the Southern to the Northern part of the city. Its Southern sector (11 km) will be running through the territory of the sea port. Unfortunately, this transport «panacea» will hardly be constructed in the near future.The construction of the road envisages building of 2 tunnels and 72 engineering objects, including bridges, overpasses and road junctions.
The total cost of ZSD construction exceeds RUR 80 bln, wherein 50% will be private funds, about 34% will be given from the RF Investment Fund, and the remaining sum will be provided from the budget of St. Petersburg.
The motorway that will significantly reroute the transport flows in the North-West of the country (because it will connect the Big Sea Port of St. Petersburg and the basic transport complexes of the city with the by-passing road and the junctions with the federal and international highways) is to be constructed by 2010 – 2011. The average speed is 120 km/h. Nowadays, four consortiums strive for concluding the contract on concession – the Austrian MLA Lieferasphalt GmbH (incorporates FCC Construction, Alpina and Deutsche Bank); the registered in St. Petersburg OOO Nevsky Meridian (its founders are the St. Petersburg company Mostotryad-11, the Austrian companies Strabag and Hochtief, as well as the French Bouygues and Egis); a Spanish group, the shareholder of which is OHL Group; and the Saint-Petersburg High Speed Road company registered in Holland, the founders of which are the Dutch Bektel, Intertoll from the Republic of South Africa, and the Turkish company Enka.
The potential concessionaires are to make their offers before November 23, 2007. The results of the tender are to be announced at the end of December.
The Game Is Legal
Till recently, construction of toll roads was in fact impossible because of the lack of normative and legislative base, and the rules regulating the construction and exploitation of such motorways. So, it was hardly possible to find a private investor for such projects. The situation changed last year, when the Federal Law «On Concessions» came into force. «This law enables the state and the business to cooperate to finance the construction of new roads as well as to maintain them and exploit», claims the RF Transport Minister Igor Levitin.Meanwhile, businessmen were not very enthusiastic about the much awaited federal law, because many of them consider it too vague.
Some time later, the Ministry of Transport developed and sent to the State Duma the bill on toll roads. According to it, such roads may be owned by the state or a region. Concession agreements can be concluded with private companies. The key point is as follows: if there is a toll road in the district, there must be an alternative free motorway. By now the bill passed its first reading in the RF State Duma.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Nevertheless, such companies as VINCI S.A. and Boygues (France), Macquare (Austria), OHL and Autostrada (Spain), Lotto (Korea) as well as Russian System and Vneshtorgbank, showed their interest in the project of Moscow – St. Petersburg road. However, none of the companies mentioned above confirmed their interest officially. Unfortunately, this transport «panacea» will hardly be constructed in the near future.
Investor Needs Protection
«The terms of the tender have not been announced for most projects yet, that is why it is too early to speak about official applications for participation», believes A. Pinson. «As far as I know, the planned profitability of the toll roads exploitation regarding the compensation for the construction expenses is 7 - 12%, and it can be compared with profitability of other business projects. So, there must be an interest», he says.
Unfortunately, this transport «panacea» will hardly be constructed in the near future.In particular, the Moscow region makes the first steps towards it. Recently, the Governor of the region Boris Gromov made a decision to guarantee a concessionaire payment of the so-called «operational grant» for the lack of traffic. That is if the amount of vehicles using the toll road is smaller than it was planned, and the concessionaire suffers losses, the regional government will compensate for them.
«Now we are preparing a joint-stock company High-Speed Motorways. This joint-stock company will go in for development of all the sectoral projects, maintenance of toll roads and purchase of area», says Deputy Transport Minister E. Moskvichev. «It is well known that today, after the City Planning Code was put into operation, there have emerged many issues connected with land purchase. And we launched such a state organization to help the investor», he explained.
The Federal Law being prepared also touches upon certain guarantees for investors. For example, the one-stop principle for development and fulfillment of investment projects, or a unified list of transport that can use toll roads for free.
Most experts think it is hardly possible that the Government will overdo with tariff rates regulation. They believe that the Government will protect the interests of the future customers of the roads.
Other urgent issues are the price for using a toll road and people’s attitude to such motorways. Incidentally, the Russians are not very rich.
«In every case special calculations will be made, because the rate is to be the optimal one: it must compensate for the investor’s expenses during the concession period, but it should not be too high, otherwise few customers will use it. The prices depend on the terms of concession contract as well», believes A. Pinson.
By Konstantin Alferov
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IPO of TransContainer will be the first contract in the frames of the third stage of the Russian railway transport reform. One of the targets of the reform is to make OAO RZD’s daughter companies listed. Thus, additional sources of investment into the federal railway infrastructure development are created.Array
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[DETAIL_TEXT] => Interesting Shareholdings
In December of 2005, the TransContainer’s stock sale was planned as two bonds of 25% of the company’s authorized capital each in 2007 and 2009. The shares were to be sold to a large circle of investors through an auction. However, after the analysis and examination of the issue in cooperation with the largest investment banks and companies, such as UBS, Morgan Stanley, Deutsche UFG, Credit Suisse, Rothschild and IC Troika Dialogue, it was decided to change the scheme, and it became as follows: in 2007 private placing of 10-15% share by holding a tender is to take place; in 2008 holding the IPO for 25-30% of shares on Moscow Intercurrency Exchange and the Russian Trading System (RTS) is planned; and in 2009 - an additional share issue of TransContainer and of Russian Railways will be made on the Moscow Intercurrency Exchange.
The end of this final stage will reduce the shareholding of Russian Railways to 50+1% of the shares and attract considerable funds for the future development of TransContainer to be used for the purchase of additional assets for the business. In order to maximize the cost during this final stage, an additional issue may be made simultaneously on the London Stock Exchange.
It took long to make the decision on the shareholding for private placing. The top-managers of OAO RZD made contradictive announcements. For example, last February, President of OAO RZD Vladimir Yakunin said that up to 49% of shares would be sold. In April the shareholding reduced to 10-15%. And in June the figures changed again. In particular, V. Yakunin told about the offer made to the company’s Board of Directors, containing the market analysis, and proving that it is unreasonable to sell more than 10% of shares. Still, by the end of the month, the «reasonable» figure grew to 15%. The Board of OAO RZD held the tender on the choice of the banks to consult selling of TransContainer’s shares. 12 banks participated in it. And the winners of the tender are USB bank and investment company Troika Dialogue. They will be the company’s joint financial consultants on the contract.
Nobody Knows the Price
The possible ways of selling are also widely discussed. President of the Russian Association of Transporters Georgy Davydov approved the expediency of fulfilling all the stock exchange procedures, because this way enables to increase the capitalization of the daughter company, and it will help OAO RZD to evaluate the strategic investors thoroughly. He also stressed that the sale of TransContainer shares to several companies will enable to create a favourable economic situation on the railway transit transportation market. However, CEO of Management Technologies Agency Sergey Loparev believes that the sale should be direct: «Placing TransContainer shares on the stock exchange, OAO RZD will for sure get more money, but it will not find partners there. And such partners are necessary for the company».
At the beginning of 2007, Vladimir Yakunin declared that OAO RZD would like a strategic investor, who will invest into specialized rolling stock purchase, to buy the shareholding. However, now, as a close to OAO RZD source said, the priority is given to a portfolio investor – some international financial group or a fund or a bank. The idea is clear: if at the initial stage a 10-15% shareholding is purchased by a world-famous investor, then OAO TransContainer will have a better credit history, and consequently, its price will be much higher. President of National Container Company group Alena Ashurkova highlights that the chosen scheme of shares sale may be interesting only to a speculative capital. Head of the Railway Transport Researches Department of the Natural Monopolies’ Problems Institute Vladimir Savchuk agrees with her. «These may be the companies having an administrative resource that enables them to participate in strategic and current management of the company, even if they do not own the blocking shareholding». Specialists of Brunswick Rail Leasing company believe that if the option for prevalent purchase of share is announced during the additional issue, such a shareholding may attract only a portfolio investor, who will buy the asset to sell it later.
It is worth noting that potential investors face shortage of information and the problems caused by it. Notwithstanding the agent network abroad, long-term contracts, company’s basic assets, which include over 23 fitting platforms and 48 thousand large-capacity containers, the price of TransContainer is still unknown.
There are no public companies similar to TransContainer in the world. Russian railway operators are often compared with American ones. However, the market assessment of the US railway companies-operators is also different. According to the data of Dow Jones, the ratio of capitalization and net profit (P/E) of the American railway infrastructure owner BNSF (OAO RZD owns rail infrastructure in Russia) exceeds 16.4. One third of JB Hunt Transport Services’s revenue is from multi-modal transportation, including container transportation. And the company’s PE is 19.4. Taking these figures into account, it turns out that before the end of 2006 OAO TransContainer cost USD 1.2 – 1.4 bln. Obviously, nobody knows the exact price, because OAO TransContainer has concluded no contracts. Some experts estimate the company at USD 2.5 – 3 bln: consequently, 49% shareholding may cost USD 1.5 bln. OAO RZD Senior Vice-President, Economic and Financial Policy Fedor Andreev said, referring to the data provided by assessors, that the capitalization of OAO TransContainer is USD 1.5 – 2 bln. And there is nothing to do but to take it on trust.
Skeptics and Cautious Optimists
Considering its assets, TransContainer is a tasty morsel for those who want to efficiently invest into container business. No other Russian transport company has such a large park of fitting platforms and containers, as well as terminals for servicing large-capacity containers, which, by the way, handle a significant share of the country’s throughput.
At first, the market was not eager to show its interest in the asset of OAO RZD. Investment companies and banks were especially cautious in their forecasts.
Nowadays, it is known that during the private placement one of the portfolio investors will be the European Bank for Reconstruction and Development (EBRD). It became known at the beginning of 2007 that OAO RZD negotiated with the EBRD about selling 10% of TransContainer shares. Such a contract, according to V. Yakunin, could help to evaluate TransContainer properly. Besides, the status of the EBRD will attract other serious companies that may purchase the remaining shares of OAO RZD’s daughter company.
Some analysts believe that VR Group Ltd may also participate in purchasing of the first shareholding. «We plan to negotiate with OAO RZD; however, I am not ready to comment on the amount of shares we might purchase», stated Henri Kuitunen, Head of VR Group Ltd.
It seems that from the very beginning Russian transport companies were not considered potential buyers, at least of the first shareholding, and they were not very eager to participate in the procedure. «In fact, to purchase shares of an unlisted company is a very risky investment», believes Head of Marketing Department of OOO Firma Transgarant Alexander Metyolkin.
«Until the controlling or at least blocking stake is being sold, there is no sense in participating in it», believes Director General of OOO TIS Pavel Lagov. «And nobody needs 10-15% shareholding. It may be interesting only for financial groups and banks, i.e. those who do not specialize in container business».
«We are not going to buy shares of TransContainer», said Valery Shpakov from Novaya Perevozochnaya Kompaniya (NPK). «Now we are trying to define the economic efficiency from container transportation, and we haven’t yet decided if it is worth going in for this business», he explained. «Shares of TransContainer can be interesting to financial institutes or large transport companies that want to go in for container transportation», highlighted Chairperson of the Board of Directors of OAO Far Eastern Transport Group (DVTG) Raisa Parshina. She added that DVTG would be interested in 51% shareholding only, so that the company could influence the operator business and management. DVTG does not want to be just an investor.
However, it seems that no real participation in managing the company and changing the Board members is reserved for the potential investor. Besides, OAO RZD is usually reluctant to share its power with anybody. «I believe, what is meant here is not management but investments into an asset on the dynamically developing market», CEO of OOO Transoil Andrey Gomon is sure. He suggested that the potential buyers would be Russian and foreign investment funds. «Undoubtedly, these will be portfolio investors as it happened with OAO First Cargo Company (FCC). Nowadays, I do not know any players on the market who would purchase, say, 25% shareholding with a strategic purpose», said A. Gomon.
However, V. Savchuk said in return that at the stage of 25-30% placement, it is the strategic investors who will find the offer interesting. In his words, among them there may be Russian, as well as foreign, transport and logistic structures whose business is somehow connected with container transportation on the RF territory. «For example, these may be the railway administrations of the transit states or freight consignees. One of the targets of the purchase may be control over the formation of a through tariff rate on transit transportation», he believes.
Sectoral analysts think that a lot of Russian, as well as foreign, companies will be eager to purchase the shares of TransContainer. «Most likely, it will be a well-known on the transport market company», believes Director General of the TIS-Region forwarding company Andrey Golubchik. «There are a few of them. Today Severstaltrans and the group of companies Industrial Investors are the most active in enlarging their carrying capacities».
«TransContainer is a very attractive asset, and the offer of OAO RZD would be interesting to our company», agreed press-secretary of OAO Severstaltrans Anna Vostrukhova. Representatives of Industrial Investors refused to comment on it.
Vice president of Investment-Banking Department of investment company Finam Roman Semchishin considers the asset interesting for developing logistic companies, in particular for the Far Eastern Shipping Company (FESCO), which has been very active lately (and its main shareholder is Industrial Investors). However, this is still a debatable viewpoint.
Resume
It is possible to say that the Russian transport market froze waiting for the future IPO of OAO TransContainer. In spite of all the negative statements, nobody doubts it will be a success.
«Taking into account the stable annual growth of container transportation volume, the company’s significant share on the market, the serious potential and resources for the business growth, the planned sale of OAO TransContainer shares will hardly fail», V. Savchuk is sure. «I wish that IPO of TransContainer, as well as the First Cargo Company, would be highly appreciated, which will enable other companies to use the experience», stated the Head of OOO Transoil. «And I am sure that TransContainer will succeed. Container transportation grows much faster than other segments of the freight transportation market. It has large prospects. And for us, it is partly an indicator of our investment attractiveness», summarized A. Gomon.
By Viktoriya Merkusheva
[~DETAIL_TEXT] => Interesting Shareholdings
In December of 2005, the TransContainer’s stock sale was planned as two bonds of 25% of the company’s authorized capital each in 2007 and 2009. The shares were to be sold to a large circle of investors through an auction. However, after the analysis and examination of the issue in cooperation with the largest investment banks and companies, such as UBS, Morgan Stanley, Deutsche UFG, Credit Suisse, Rothschild and IC Troika Dialogue, it was decided to change the scheme, and it became as follows: in 2007 private placing of 10-15% share by holding a tender is to take place; in 2008 holding the IPO for 25-30% of shares on Moscow Intercurrency Exchange and the Russian Trading System (RTS) is planned; and in 2009 - an additional share issue of TransContainer and of Russian Railways will be made on the Moscow Intercurrency Exchange.
The end of this final stage will reduce the shareholding of Russian Railways to 50+1% of the shares and attract considerable funds for the future development of TransContainer to be used for the purchase of additional assets for the business. In order to maximize the cost during this final stage, an additional issue may be made simultaneously on the London Stock Exchange.
It took long to make the decision on the shareholding for private placing. The top-managers of OAO RZD made contradictive announcements. For example, last February, President of OAO RZD Vladimir Yakunin said that up to 49% of shares would be sold. In April the shareholding reduced to 10-15%. And in June the figures changed again. In particular, V. Yakunin told about the offer made to the company’s Board of Directors, containing the market analysis, and proving that it is unreasonable to sell more than 10% of shares. Still, by the end of the month, the «reasonable» figure grew to 15%. The Board of OAO RZD held the tender on the choice of the banks to consult selling of TransContainer’s shares. 12 banks participated in it. And the winners of the tender are USB bank and investment company Troika Dialogue. They will be the company’s joint financial consultants on the contract.
Nobody Knows the Price
The possible ways of selling are also widely discussed. President of the Russian Association of Transporters Georgy Davydov approved the expediency of fulfilling all the stock exchange procedures, because this way enables to increase the capitalization of the daughter company, and it will help OAO RZD to evaluate the strategic investors thoroughly. He also stressed that the sale of TransContainer shares to several companies will enable to create a favourable economic situation on the railway transit transportation market. However, CEO of Management Technologies Agency Sergey Loparev believes that the sale should be direct: «Placing TransContainer shares on the stock exchange, OAO RZD will for sure get more money, but it will not find partners there. And such partners are necessary for the company».
At the beginning of 2007, Vladimir Yakunin declared that OAO RZD would like a strategic investor, who will invest into specialized rolling stock purchase, to buy the shareholding. However, now, as a close to OAO RZD source said, the priority is given to a portfolio investor – some international financial group or a fund or a bank. The idea is clear: if at the initial stage a 10-15% shareholding is purchased by a world-famous investor, then OAO TransContainer will have a better credit history, and consequently, its price will be much higher. President of National Container Company group Alena Ashurkova highlights that the chosen scheme of shares sale may be interesting only to a speculative capital. Head of the Railway Transport Researches Department of the Natural Monopolies’ Problems Institute Vladimir Savchuk agrees with her. «These may be the companies having an administrative resource that enables them to participate in strategic and current management of the company, even if they do not own the blocking shareholding». Specialists of Brunswick Rail Leasing company believe that if the option for prevalent purchase of share is announced during the additional issue, such a shareholding may attract only a portfolio investor, who will buy the asset to sell it later.
It is worth noting that potential investors face shortage of information and the problems caused by it. Notwithstanding the agent network abroad, long-term contracts, company’s basic assets, which include over 23 fitting platforms and 48 thousand large-capacity containers, the price of TransContainer is still unknown.
There are no public companies similar to TransContainer in the world. Russian railway operators are often compared with American ones. However, the market assessment of the US railway companies-operators is also different. According to the data of Dow Jones, the ratio of capitalization and net profit (P/E) of the American railway infrastructure owner BNSF (OAO RZD owns rail infrastructure in Russia) exceeds 16.4. One third of JB Hunt Transport Services’s revenue is from multi-modal transportation, including container transportation. And the company’s PE is 19.4. Taking these figures into account, it turns out that before the end of 2006 OAO TransContainer cost USD 1.2 – 1.4 bln. Obviously, nobody knows the exact price, because OAO TransContainer has concluded no contracts. Some experts estimate the company at USD 2.5 – 3 bln: consequently, 49% shareholding may cost USD 1.5 bln. OAO RZD Senior Vice-President, Economic and Financial Policy Fedor Andreev said, referring to the data provided by assessors, that the capitalization of OAO TransContainer is USD 1.5 – 2 bln. And there is nothing to do but to take it on trust.
Skeptics and Cautious Optimists
Considering its assets, TransContainer is a tasty morsel for those who want to efficiently invest into container business. No other Russian transport company has such a large park of fitting platforms and containers, as well as terminals for servicing large-capacity containers, which, by the way, handle a significant share of the country’s throughput.
At first, the market was not eager to show its interest in the asset of OAO RZD. Investment companies and banks were especially cautious in their forecasts.
Nowadays, it is known that during the private placement one of the portfolio investors will be the European Bank for Reconstruction and Development (EBRD). It became known at the beginning of 2007 that OAO RZD negotiated with the EBRD about selling 10% of TransContainer shares. Such a contract, according to V. Yakunin, could help to evaluate TransContainer properly. Besides, the status of the EBRD will attract other serious companies that may purchase the remaining shares of OAO RZD’s daughter company.
Some analysts believe that VR Group Ltd may also participate in purchasing of the first shareholding. «We plan to negotiate with OAO RZD; however, I am not ready to comment on the amount of shares we might purchase», stated Henri Kuitunen, Head of VR Group Ltd.
It seems that from the very beginning Russian transport companies were not considered potential buyers, at least of the first shareholding, and they were not very eager to participate in the procedure. «In fact, to purchase shares of an unlisted company is a very risky investment», believes Head of Marketing Department of OOO Firma Transgarant Alexander Metyolkin.
«Until the controlling or at least blocking stake is being sold, there is no sense in participating in it», believes Director General of OOO TIS Pavel Lagov. «And nobody needs 10-15% shareholding. It may be interesting only for financial groups and banks, i.e. those who do not specialize in container business».
«We are not going to buy shares of TransContainer», said Valery Shpakov from Novaya Perevozochnaya Kompaniya (NPK). «Now we are trying to define the economic efficiency from container transportation, and we haven’t yet decided if it is worth going in for this business», he explained. «Shares of TransContainer can be interesting to financial institutes or large transport companies that want to go in for container transportation», highlighted Chairperson of the Board of Directors of OAO Far Eastern Transport Group (DVTG) Raisa Parshina. She added that DVTG would be interested in 51% shareholding only, so that the company could influence the operator business and management. DVTG does not want to be just an investor.
However, it seems that no real participation in managing the company and changing the Board members is reserved for the potential investor. Besides, OAO RZD is usually reluctant to share its power with anybody. «I believe, what is meant here is not management but investments into an asset on the dynamically developing market», CEO of OOO Transoil Andrey Gomon is sure. He suggested that the potential buyers would be Russian and foreign investment funds. «Undoubtedly, these will be portfolio investors as it happened with OAO First Cargo Company (FCC). Nowadays, I do not know any players on the market who would purchase, say, 25% shareholding with a strategic purpose», said A. Gomon.
However, V. Savchuk said in return that at the stage of 25-30% placement, it is the strategic investors who will find the offer interesting. In his words, among them there may be Russian, as well as foreign, transport and logistic structures whose business is somehow connected with container transportation on the RF territory. «For example, these may be the railway administrations of the transit states or freight consignees. One of the targets of the purchase may be control over the formation of a through tariff rate on transit transportation», he believes.
Sectoral analysts think that a lot of Russian, as well as foreign, companies will be eager to purchase the shares of TransContainer. «Most likely, it will be a well-known on the transport market company», believes Director General of the TIS-Region forwarding company Andrey Golubchik. «There are a few of them. Today Severstaltrans and the group of companies Industrial Investors are the most active in enlarging their carrying capacities».
«TransContainer is a very attractive asset, and the offer of OAO RZD would be interesting to our company», agreed press-secretary of OAO Severstaltrans Anna Vostrukhova. Representatives of Industrial Investors refused to comment on it.
Vice president of Investment-Banking Department of investment company Finam Roman Semchishin considers the asset interesting for developing logistic companies, in particular for the Far Eastern Shipping Company (FESCO), which has been very active lately (and its main shareholder is Industrial Investors). However, this is still a debatable viewpoint.
Resume
It is possible to say that the Russian transport market froze waiting for the future IPO of OAO TransContainer. In spite of all the negative statements, nobody doubts it will be a success.
«Taking into account the stable annual growth of container transportation volume, the company’s significant share on the market, the serious potential and resources for the business growth, the planned sale of OAO TransContainer shares will hardly fail», V. Savchuk is sure. «I wish that IPO of TransContainer, as well as the First Cargo Company, would be highly appreciated, which will enable other companies to use the experience», stated the Head of OOO Transoil. «And I am sure that TransContainer will succeed. Container transportation grows much faster than other segments of the freight transportation market. It has large prospects. And for us, it is partly an indicator of our investment attractiveness», summarized A. Gomon.
By Viktoriya Merkusheva
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[DETAIL_TEXT] => Interesting Shareholdings
In December of 2005, the TransContainer’s stock sale was planned as two bonds of 25% of the company’s authorized capital each in 2007 and 2009. The shares were to be sold to a large circle of investors through an auction. However, after the analysis and examination of the issue in cooperation with the largest investment banks and companies, such as UBS, Morgan Stanley, Deutsche UFG, Credit Suisse, Rothschild and IC Troika Dialogue, it was decided to change the scheme, and it became as follows: in 2007 private placing of 10-15% share by holding a tender is to take place; in 2008 holding the IPO for 25-30% of shares on Moscow Intercurrency Exchange and the Russian Trading System (RTS) is planned; and in 2009 - an additional share issue of TransContainer and of Russian Railways will be made on the Moscow Intercurrency Exchange.
The end of this final stage will reduce the shareholding of Russian Railways to 50+1% of the shares and attract considerable funds for the future development of TransContainer to be used for the purchase of additional assets for the business. In order to maximize the cost during this final stage, an additional issue may be made simultaneously on the London Stock Exchange.
It took long to make the decision on the shareholding for private placing. The top-managers of OAO RZD made contradictive announcements. For example, last February, President of OAO RZD Vladimir Yakunin said that up to 49% of shares would be sold. In April the shareholding reduced to 10-15%. And in June the figures changed again. In particular, V. Yakunin told about the offer made to the company’s Board of Directors, containing the market analysis, and proving that it is unreasonable to sell more than 10% of shares. Still, by the end of the month, the «reasonable» figure grew to 15%. The Board of OAO RZD held the tender on the choice of the banks to consult selling of TransContainer’s shares. 12 banks participated in it. And the winners of the tender are USB bank and investment company Troika Dialogue. They will be the company’s joint financial consultants on the contract.
Nobody Knows the Price
The possible ways of selling are also widely discussed. President of the Russian Association of Transporters Georgy Davydov approved the expediency of fulfilling all the stock exchange procedures, because this way enables to increase the capitalization of the daughter company, and it will help OAO RZD to evaluate the strategic investors thoroughly. He also stressed that the sale of TransContainer shares to several companies will enable to create a favourable economic situation on the railway transit transportation market. However, CEO of Management Technologies Agency Sergey Loparev believes that the sale should be direct: «Placing TransContainer shares on the stock exchange, OAO RZD will for sure get more money, but it will not find partners there. And such partners are necessary for the company».
At the beginning of 2007, Vladimir Yakunin declared that OAO RZD would like a strategic investor, who will invest into specialized rolling stock purchase, to buy the shareholding. However, now, as a close to OAO RZD source said, the priority is given to a portfolio investor – some international financial group or a fund or a bank. The idea is clear: if at the initial stage a 10-15% shareholding is purchased by a world-famous investor, then OAO TransContainer will have a better credit history, and consequently, its price will be much higher. President of National Container Company group Alena Ashurkova highlights that the chosen scheme of shares sale may be interesting only to a speculative capital. Head of the Railway Transport Researches Department of the Natural Monopolies’ Problems Institute Vladimir Savchuk agrees with her. «These may be the companies having an administrative resource that enables them to participate in strategic and current management of the company, even if they do not own the blocking shareholding». Specialists of Brunswick Rail Leasing company believe that if the option for prevalent purchase of share is announced during the additional issue, such a shareholding may attract only a portfolio investor, who will buy the asset to sell it later.
It is worth noting that potential investors face shortage of information and the problems caused by it. Notwithstanding the agent network abroad, long-term contracts, company’s basic assets, which include over 23 fitting platforms and 48 thousand large-capacity containers, the price of TransContainer is still unknown.
There are no public companies similar to TransContainer in the world. Russian railway operators are often compared with American ones. However, the market assessment of the US railway companies-operators is also different. According to the data of Dow Jones, the ratio of capitalization and net profit (P/E) of the American railway infrastructure owner BNSF (OAO RZD owns rail infrastructure in Russia) exceeds 16.4. One third of JB Hunt Transport Services’s revenue is from multi-modal transportation, including container transportation. And the company’s PE is 19.4. Taking these figures into account, it turns out that before the end of 2006 OAO TransContainer cost USD 1.2 – 1.4 bln. Obviously, nobody knows the exact price, because OAO TransContainer has concluded no contracts. Some experts estimate the company at USD 2.5 – 3 bln: consequently, 49% shareholding may cost USD 1.5 bln. OAO RZD Senior Vice-President, Economic and Financial Policy Fedor Andreev said, referring to the data provided by assessors, that the capitalization of OAO TransContainer is USD 1.5 – 2 bln. And there is nothing to do but to take it on trust.
Skeptics and Cautious Optimists
Considering its assets, TransContainer is a tasty morsel for those who want to efficiently invest into container business. No other Russian transport company has such a large park of fitting platforms and containers, as well as terminals for servicing large-capacity containers, which, by the way, handle a significant share of the country’s throughput.
At first, the market was not eager to show its interest in the asset of OAO RZD. Investment companies and banks were especially cautious in their forecasts.
Nowadays, it is known that during the private placement one of the portfolio investors will be the European Bank for Reconstruction and Development (EBRD). It became known at the beginning of 2007 that OAO RZD negotiated with the EBRD about selling 10% of TransContainer shares. Such a contract, according to V. Yakunin, could help to evaluate TransContainer properly. Besides, the status of the EBRD will attract other serious companies that may purchase the remaining shares of OAO RZD’s daughter company.
Some analysts believe that VR Group Ltd may also participate in purchasing of the first shareholding. «We plan to negotiate with OAO RZD; however, I am not ready to comment on the amount of shares we might purchase», stated Henri Kuitunen, Head of VR Group Ltd.
It seems that from the very beginning Russian transport companies were not considered potential buyers, at least of the first shareholding, and they were not very eager to participate in the procedure. «In fact, to purchase shares of an unlisted company is a very risky investment», believes Head of Marketing Department of OOO Firma Transgarant Alexander Metyolkin.
«Until the controlling or at least blocking stake is being sold, there is no sense in participating in it», believes Director General of OOO TIS Pavel Lagov. «And nobody needs 10-15% shareholding. It may be interesting only for financial groups and banks, i.e. those who do not specialize in container business».
«We are not going to buy shares of TransContainer», said Valery Shpakov from Novaya Perevozochnaya Kompaniya (NPK). «Now we are trying to define the economic efficiency from container transportation, and we haven’t yet decided if it is worth going in for this business», he explained. «Shares of TransContainer can be interesting to financial institutes or large transport companies that want to go in for container transportation», highlighted Chairperson of the Board of Directors of OAO Far Eastern Transport Group (DVTG) Raisa Parshina. She added that DVTG would be interested in 51% shareholding only, so that the company could influence the operator business and management. DVTG does not want to be just an investor.
However, it seems that no real participation in managing the company and changing the Board members is reserved for the potential investor. Besides, OAO RZD is usually reluctant to share its power with anybody. «I believe, what is meant here is not management but investments into an asset on the dynamically developing market», CEO of OOO Transoil Andrey Gomon is sure. He suggested that the potential buyers would be Russian and foreign investment funds. «Undoubtedly, these will be portfolio investors as it happened with OAO First Cargo Company (FCC). Nowadays, I do not know any players on the market who would purchase, say, 25% shareholding with a strategic purpose», said A. Gomon.
However, V. Savchuk said in return that at the stage of 25-30% placement, it is the strategic investors who will find the offer interesting. In his words, among them there may be Russian, as well as foreign, transport and logistic structures whose business is somehow connected with container transportation on the RF territory. «For example, these may be the railway administrations of the transit states or freight consignees. One of the targets of the purchase may be control over the formation of a through tariff rate on transit transportation», he believes.
Sectoral analysts think that a lot of Russian, as well as foreign, companies will be eager to purchase the shares of TransContainer. «Most likely, it will be a well-known on the transport market company», believes Director General of the TIS-Region forwarding company Andrey Golubchik. «There are a few of them. Today Severstaltrans and the group of companies Industrial Investors are the most active in enlarging their carrying capacities».
«TransContainer is a very attractive asset, and the offer of OAO RZD would be interesting to our company», agreed press-secretary of OAO Severstaltrans Anna Vostrukhova. Representatives of Industrial Investors refused to comment on it.
Vice president of Investment-Banking Department of investment company Finam Roman Semchishin considers the asset interesting for developing logistic companies, in particular for the Far Eastern Shipping Company (FESCO), which has been very active lately (and its main shareholder is Industrial Investors). However, this is still a debatable viewpoint.
Resume
It is possible to say that the Russian transport market froze waiting for the future IPO of OAO TransContainer. In spite of all the negative statements, nobody doubts it will be a success.
«Taking into account the stable annual growth of container transportation volume, the company’s significant share on the market, the serious potential and resources for the business growth, the planned sale of OAO TransContainer shares will hardly fail», V. Savchuk is sure. «I wish that IPO of TransContainer, as well as the First Cargo Company, would be highly appreciated, which will enable other companies to use the experience», stated the Head of OOO Transoil. «And I am sure that TransContainer will succeed. Container transportation grows much faster than other segments of the freight transportation market. It has large prospects. And for us, it is partly an indicator of our investment attractiveness», summarized A. Gomon.
By Viktoriya Merkusheva
[~DETAIL_TEXT] => Interesting Shareholdings
In December of 2005, the TransContainer’s stock sale was planned as two bonds of 25% of the company’s authorized capital each in 2007 and 2009. The shares were to be sold to a large circle of investors through an auction. However, after the analysis and examination of the issue in cooperation with the largest investment banks and companies, such as UBS, Morgan Stanley, Deutsche UFG, Credit Suisse, Rothschild and IC Troika Dialogue, it was decided to change the scheme, and it became as follows: in 2007 private placing of 10-15% share by holding a tender is to take place; in 2008 holding the IPO for 25-30% of shares on Moscow Intercurrency Exchange and the Russian Trading System (RTS) is planned; and in 2009 - an additional share issue of TransContainer and of Russian Railways will be made on the Moscow Intercurrency Exchange.
The end of this final stage will reduce the shareholding of Russian Railways to 50+1% of the shares and attract considerable funds for the future development of TransContainer to be used for the purchase of additional assets for the business. In order to maximize the cost during this final stage, an additional issue may be made simultaneously on the London Stock Exchange.
It took long to make the decision on the shareholding for private placing. The top-managers of OAO RZD made contradictive announcements. For example, last February, President of OAO RZD Vladimir Yakunin said that up to 49% of shares would be sold. In April the shareholding reduced to 10-15%. And in June the figures changed again. In particular, V. Yakunin told about the offer made to the company’s Board of Directors, containing the market analysis, and proving that it is unreasonable to sell more than 10% of shares. Still, by the end of the month, the «reasonable» figure grew to 15%. The Board of OAO RZD held the tender on the choice of the banks to consult selling of TransContainer’s shares. 12 banks participated in it. And the winners of the tender are USB bank and investment company Troika Dialogue. They will be the company’s joint financial consultants on the contract.
Nobody Knows the Price
The possible ways of selling are also widely discussed. President of the Russian Association of Transporters Georgy Davydov approved the expediency of fulfilling all the stock exchange procedures, because this way enables to increase the capitalization of the daughter company, and it will help OAO RZD to evaluate the strategic investors thoroughly. He also stressed that the sale of TransContainer shares to several companies will enable to create a favourable economic situation on the railway transit transportation market. However, CEO of Management Technologies Agency Sergey Loparev believes that the sale should be direct: «Placing TransContainer shares on the stock exchange, OAO RZD will for sure get more money, but it will not find partners there. And such partners are necessary for the company».
At the beginning of 2007, Vladimir Yakunin declared that OAO RZD would like a strategic investor, who will invest into specialized rolling stock purchase, to buy the shareholding. However, now, as a close to OAO RZD source said, the priority is given to a portfolio investor – some international financial group or a fund or a bank. The idea is clear: if at the initial stage a 10-15% shareholding is purchased by a world-famous investor, then OAO TransContainer will have a better credit history, and consequently, its price will be much higher. President of National Container Company group Alena Ashurkova highlights that the chosen scheme of shares sale may be interesting only to a speculative capital. Head of the Railway Transport Researches Department of the Natural Monopolies’ Problems Institute Vladimir Savchuk agrees with her. «These may be the companies having an administrative resource that enables them to participate in strategic and current management of the company, even if they do not own the blocking shareholding». Specialists of Brunswick Rail Leasing company believe that if the option for prevalent purchase of share is announced during the additional issue, such a shareholding may attract only a portfolio investor, who will buy the asset to sell it later.
It is worth noting that potential investors face shortage of information and the problems caused by it. Notwithstanding the agent network abroad, long-term contracts, company’s basic assets, which include over 23 fitting platforms and 48 thousand large-capacity containers, the price of TransContainer is still unknown.
There are no public companies similar to TransContainer in the world. Russian railway operators are often compared with American ones. However, the market assessment of the US railway companies-operators is also different. According to the data of Dow Jones, the ratio of capitalization and net profit (P/E) of the American railway infrastructure owner BNSF (OAO RZD owns rail infrastructure in Russia) exceeds 16.4. One third of JB Hunt Transport Services’s revenue is from multi-modal transportation, including container transportation. And the company’s PE is 19.4. Taking these figures into account, it turns out that before the end of 2006 OAO TransContainer cost USD 1.2 – 1.4 bln. Obviously, nobody knows the exact price, because OAO TransContainer has concluded no contracts. Some experts estimate the company at USD 2.5 – 3 bln: consequently, 49% shareholding may cost USD 1.5 bln. OAO RZD Senior Vice-President, Economic and Financial Policy Fedor Andreev said, referring to the data provided by assessors, that the capitalization of OAO TransContainer is USD 1.5 – 2 bln. And there is nothing to do but to take it on trust.
Skeptics and Cautious Optimists
Considering its assets, TransContainer is a tasty morsel for those who want to efficiently invest into container business. No other Russian transport company has such a large park of fitting platforms and containers, as well as terminals for servicing large-capacity containers, which, by the way, handle a significant share of the country’s throughput.
At first, the market was not eager to show its interest in the asset of OAO RZD. Investment companies and banks were especially cautious in their forecasts.
Nowadays, it is known that during the private placement one of the portfolio investors will be the European Bank for Reconstruction and Development (EBRD). It became known at the beginning of 2007 that OAO RZD negotiated with the EBRD about selling 10% of TransContainer shares. Such a contract, according to V. Yakunin, could help to evaluate TransContainer properly. Besides, the status of the EBRD will attract other serious companies that may purchase the remaining shares of OAO RZD’s daughter company.
Some analysts believe that VR Group Ltd may also participate in purchasing of the first shareholding. «We plan to negotiate with OAO RZD; however, I am not ready to comment on the amount of shares we might purchase», stated Henri Kuitunen, Head of VR Group Ltd.
It seems that from the very beginning Russian transport companies were not considered potential buyers, at least of the first shareholding, and they were not very eager to participate in the procedure. «In fact, to purchase shares of an unlisted company is a very risky investment», believes Head of Marketing Department of OOO Firma Transgarant Alexander Metyolkin.
«Until the controlling or at least blocking stake is being sold, there is no sense in participating in it», believes Director General of OOO TIS Pavel Lagov. «And nobody needs 10-15% shareholding. It may be interesting only for financial groups and banks, i.e. those who do not specialize in container business».
«We are not going to buy shares of TransContainer», said Valery Shpakov from Novaya Perevozochnaya Kompaniya (NPK). «Now we are trying to define the economic efficiency from container transportation, and we haven’t yet decided if it is worth going in for this business», he explained. «Shares of TransContainer can be interesting to financial institutes or large transport companies that want to go in for container transportation», highlighted Chairperson of the Board of Directors of OAO Far Eastern Transport Group (DVTG) Raisa Parshina. She added that DVTG would be interested in 51% shareholding only, so that the company could influence the operator business and management. DVTG does not want to be just an investor.
However, it seems that no real participation in managing the company and changing the Board members is reserved for the potential investor. Besides, OAO RZD is usually reluctant to share its power with anybody. «I believe, what is meant here is not management but investments into an asset on the dynamically developing market», CEO of OOO Transoil Andrey Gomon is sure. He suggested that the potential buyers would be Russian and foreign investment funds. «Undoubtedly, these will be portfolio investors as it happened with OAO First Cargo Company (FCC). Nowadays, I do not know any players on the market who would purchase, say, 25% shareholding with a strategic purpose», said A. Gomon.
However, V. Savchuk said in return that at the stage of 25-30% placement, it is the strategic investors who will find the offer interesting. In his words, among them there may be Russian, as well as foreign, transport and logistic structures whose business is somehow connected with container transportation on the RF territory. «For example, these may be the railway administrations of the transit states or freight consignees. One of the targets of the purchase may be control over the formation of a through tariff rate on transit transportation», he believes.
Sectoral analysts think that a lot of Russian, as well as foreign, companies will be eager to purchase the shares of TransContainer. «Most likely, it will be a well-known on the transport market company», believes Director General of the TIS-Region forwarding company Andrey Golubchik. «There are a few of them. Today Severstaltrans and the group of companies Industrial Investors are the most active in enlarging their carrying capacities».
«TransContainer is a very attractive asset, and the offer of OAO RZD would be interesting to our company», agreed press-secretary of OAO Severstaltrans Anna Vostrukhova. Representatives of Industrial Investors refused to comment on it.
Vice president of Investment-Banking Department of investment company Finam Roman Semchishin considers the asset interesting for developing logistic companies, in particular for the Far Eastern Shipping Company (FESCO), which has been very active lately (and its main shareholder is Industrial Investors). However, this is still a debatable viewpoint.
Resume
It is possible to say that the Russian transport market froze waiting for the future IPO of OAO TransContainer. In spite of all the negative statements, nobody doubts it will be a success.
«Taking into account the stable annual growth of container transportation volume, the company’s significant share on the market, the serious potential and resources for the business growth, the planned sale of OAO TransContainer shares will hardly fail», V. Savchuk is sure. «I wish that IPO of TransContainer, as well as the First Cargo Company, would be highly appreciated, which will enable other companies to use the experience», stated the Head of OOO Transoil. «And I am sure that TransContainer will succeed. Container transportation grows much faster than other segments of the freight transportation market. It has large prospects. And for us, it is partly an indicator of our investment attractiveness», summarized A. Gomon.
By Viktoriya Merkusheva
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[DETAIL_TEXT] => Russia to Support World Boom
Against the background of permanent growth of oil and gas prices and the continuing intensive development of the world industry, coal became attractive for the energy companies again. Thus, according to the RF Federal Agency on Energy (Rosenergo), during the period of 2000 – 2006 the world production of thermal coal grew from 3.153 bln to 4.537 bln, and the general volume of coal production showed an increase from 4.521 bln to 6.105 bln. Over the last six years the world consumption of thermal coal has boosted by 30%. The world trade volume reached the rate of 800 mln tons. Coking coal export grew by 22.5 % and the thermal coal share increased by 34.1%. Russia controls about 10.8 % of the world coal export (92 mln tons): these data place the state on the third position after Australia and Indonesia.
During the period of 2001 – 2006, the volume of the Russian solid fuel export doubled. Starting from 1998, production volume grew by 32%; however, at the same time domestic consumption hasn’t reached the level recorded ten years ago. These very surpluses make it possible to enhance deliveries to foreign contractors.
Europe performs as the basic market for the Russian coal. According to Sergey Romanov, Deputy Director on Science of Moscow State School of Mines, in the last five years export to European states boosted by 185%, having reached the volume of 40 mln tons, to Asia by 60% (6 mln tons) and the CIS – by 46% (3 mln tons). Import leaders are Great Britain, Germany, Spain, Turkey and Finland. In various aspects, Russian coal shows better characteristics compared to those of South African, Columbian and Australian products. In the opinion of Nigel Yaxly, Managing Director of the Association of British Coal Importers, this is the very reason why Russian products take more than a half in the structure of coal import of Great Britain. One more positive factor is to be mentioned, i.e. preference for coal-dressing over coal mining: 64 % of mined coal is processed in order to improve consumption characteristics, and in 2000 this volume amounted to 49%.
Reappearance of coal energy generation
Russian mining companies seem to be ready to satisfy the growing demand of the global market; however, it is not excluded that the international trade may face a competitor in the form of Russian industry which needs more energy in the course of rapid economic development, and, consequently, more coal. This statement can be easily proved by the figures.
In 1995 about half of RAO UES (state monopoly producing energy) capacities were redundant, while now the situation has changed and there are no «idling» capacities in the state. Moreover, the national energy sector, having faced gas deficit and at the same time the necessity to satisfy a developing economy, took the course of enhancing coal power plants. This change of the fuel balance towards coal growth was recorded in «General scheme of objects of power industry for the period up to 2020» being worked out by the RF Government. According to the document, by 2026 only 25 - 30% thermoelectric power stations will work on natural gas and 36 – 47% on coal. Currently, these proportions are the opposite. Jeff Crocker, Chairman of the Board of SUEK AG, believes Russia fell behind the average international coal share in the energy sector. In 2005, this share amounted to 39% on average in the world and only 16.8% in Russia who possesses unlimited resources of solid fuel.
Speaking at the 3d international conference «CoalTrans Russia» in June 2007, Vladimir Schadov, Deputy Head of Rosenergo, stated that by 2020 the domestic market demand may grow three-fold (from 98.4 mln tons to 342 mln tons). At the same time, the technical, technological and infrastructure opportunities of the working deposits make it possible to develop about 390 mln tons of thermal coal by 2020. It is easy to see that the export share in this case amounts to 48 mln tons only. Igor Kozhukhovsky, Head of the Economic Policy of RAO UES of Russia, gives data where the average rate of growth for electric power consumption will amount to 3.7% per year by 2020. This requires a launch of new generating capacities, most of which will be equipped with coal turbines. Currently only 26% of new capacities work on coal, but by 2015 – 2020 the proportion will grow to 44% of launched capacities.
However, it should be mentioned that there are alternative opinions shared by the industry players. Some of them assert that the plans on changing fuel balance in the national energy sector won’t come true. Alexey Ivanushkin, Chief Executive of Mechel JSC, one of the biggest coal and metal producers in the country, believes that this process depends on the term of RAO UES final privatization and turning the monopoly into several independent companies. Privatization is unfolding in complicated conditions and it is quite hard to forecast what the market will look like after the final stage is completed.
Moreover, the figures demonstrate the following situation. In the European part of Russia, where the majority of the population is concentrated, the proportions of different sorts of fuel for electric and thermal energy are unequal and distributed as follows: gas takes 85%, fuel oil - 5% and coal takes only 10%. If one believes RAO UES forecasts in respect of coal consumption growth, then we face the necessity to construct 20 power plants of 1 thousand mWt capacity more. «Costs on re-construction of present- day power plants into coal stations are adequate to the expenditures on construction of new units. Now energy business forecasts are taken as unreal, Ivanushkin asserts, emphasizing the idea that in the near future the only way for the Russian coal is export deliveries.
Tariff Policy to Threaten Export
One of the most significant problems for export deliveries is poor transport infrastructure. In the opinion of Valery Artemchenko, First Deputy CEO of Mechel-Trans JSC, there are three basic aspects in this respect which have to do with rolling stock deficit, de-motivating tariff policy and inability of ports to function properly in winter period.
Nowadays, out of 250 thousand gondola cars in Russia 60 thousand belong to private companies, while the rest is controlled by OAO RZD. 75 thousand units belonging to OAO RZD are wear-and-tear; the average age of the unit is 18 years, which is close to ultimate. By 2010, about 70% of the present-day park is to be taken out of service. Thus, the company is to purchase 15-18 thousand units to break the tendency.
In V.Artemchenko’s opinion, the car component in the tariff worth 18.5% does not motivate private companies to invest into this type of rolling stock, and the uncertainty of locomotive and infrastructure components prevent turning operator companies into full-rights carriers who own not only cars but locomotive haulage as well.
Konstantin Starkov, Technical Director of Ural mountain-metallurgic company JSC, states that OAO RZD does not have a definite plan of rail car deficit liquidation, since there is no clear view on what structure of the carriers will look like on the market in future. Now this problem is solved on the spot, while the most crucial problems are solved at the expense of the most interested structures, i.e. cargo owners.
A.Ivanushkin clarifies that coal is typically transported on very long distances. For Mechel JSC, the average distance makes 4 thousand kilometers for domestic deliveries and about 5 thousand kilometers for export supplies. For metallurgic cargo, railway tariffs amount to 9% from the prime cost and for coal from 40% to 48%. In other words, half of the price is the cost of domestic railway transportation. According to A.Ivanushkin, since 2000, railway tariffs have grown four-fold. Simultaneously with that ruble has been strengthening its positions since 2004. And one more aspect to consider is the dynamic inflation.
«If the tendency of tariff growth alongside national currency strengthening continues, thermal coal export will be impossible by 2010», -- Head of Mechel believes. The company expresses the idea that transportation tariffs are to be formed considering international market conditions.
Salman Babayev, OAO RZD Vice-President, emphasizes that under conditions of investment deficit the company took steps to motivate cargo owners to purchase rolling stock. Thus, to motivate customers to buy gondola cars, in 2007 differentiated tariff indexation was implemented for clause 2 of Tariff Regulation № 10-01 envisaging cargo transportation by gondola cars. Tariffs for cargo transported by gondola cars were increased by 10.9%, and tariffs for transportation by private and leased rolling stock were increased at a smaller proportion and in accordance with cargo type, which helped restore gondola cars deficit. At the same time, the car component rises for car owners and the terms of payback period are made similar for private companies and OAO RZD rail cars.
SummiNg Up
Sergey Romanov expresses his assurance that the world prices for coal will only be growing and, first of all, due to the unsatisfactory demand for energy carriers. For example, China, which was one of the biggest coal exporters, now purchases the product. Many experts share this idea. However, the growth of coal demand on the domestic market is obvious as well: the only thing to clarify is the exact volumes. Transport companies are to take steps to provide transportation of required volumes. First of all, European consumers are interested in it, since they will suffer seriously if Russia does not solve the problems with rolling stock, ports and tariffs.
By Alexey Lebedev
[~DETAIL_TEXT] => Russia to Support World Boom
Against the background of permanent growth of oil and gas prices and the continuing intensive development of the world industry, coal became attractive for the energy companies again. Thus, according to the RF Federal Agency on Energy (Rosenergo), during the period of 2000 – 2006 the world production of thermal coal grew from 3.153 bln to 4.537 bln, and the general volume of coal production showed an increase from 4.521 bln to 6.105 bln. Over the last six years the world consumption of thermal coal has boosted by 30%. The world trade volume reached the rate of 800 mln tons. Coking coal export grew by 22.5 % and the thermal coal share increased by 34.1%. Russia controls about 10.8 % of the world coal export (92 mln tons): these data place the state on the third position after Australia and Indonesia.
During the period of 2001 – 2006, the volume of the Russian solid fuel export doubled. Starting from 1998, production volume grew by 32%; however, at the same time domestic consumption hasn’t reached the level recorded ten years ago. These very surpluses make it possible to enhance deliveries to foreign contractors.
Europe performs as the basic market for the Russian coal. According to Sergey Romanov, Deputy Director on Science of Moscow State School of Mines, in the last five years export to European states boosted by 185%, having reached the volume of 40 mln tons, to Asia by 60% (6 mln tons) and the CIS – by 46% (3 mln tons). Import leaders are Great Britain, Germany, Spain, Turkey and Finland. In various aspects, Russian coal shows better characteristics compared to those of South African, Columbian and Australian products. In the opinion of Nigel Yaxly, Managing Director of the Association of British Coal Importers, this is the very reason why Russian products take more than a half in the structure of coal import of Great Britain. One more positive factor is to be mentioned, i.e. preference for coal-dressing over coal mining: 64 % of mined coal is processed in order to improve consumption characteristics, and in 2000 this volume amounted to 49%.
Reappearance of coal energy generation
Russian mining companies seem to be ready to satisfy the growing demand of the global market; however, it is not excluded that the international trade may face a competitor in the form of Russian industry which needs more energy in the course of rapid economic development, and, consequently, more coal. This statement can be easily proved by the figures.
In 1995 about half of RAO UES (state monopoly producing energy) capacities were redundant, while now the situation has changed and there are no «idling» capacities in the state. Moreover, the national energy sector, having faced gas deficit and at the same time the necessity to satisfy a developing economy, took the course of enhancing coal power plants. This change of the fuel balance towards coal growth was recorded in «General scheme of objects of power industry for the period up to 2020» being worked out by the RF Government. According to the document, by 2026 only 25 - 30% thermoelectric power stations will work on natural gas and 36 – 47% on coal. Currently, these proportions are the opposite. Jeff Crocker, Chairman of the Board of SUEK AG, believes Russia fell behind the average international coal share in the energy sector. In 2005, this share amounted to 39% on average in the world and only 16.8% in Russia who possesses unlimited resources of solid fuel.
Speaking at the 3d international conference «CoalTrans Russia» in June 2007, Vladimir Schadov, Deputy Head of Rosenergo, stated that by 2020 the domestic market demand may grow three-fold (from 98.4 mln tons to 342 mln tons). At the same time, the technical, technological and infrastructure opportunities of the working deposits make it possible to develop about 390 mln tons of thermal coal by 2020. It is easy to see that the export share in this case amounts to 48 mln tons only. Igor Kozhukhovsky, Head of the Economic Policy of RAO UES of Russia, gives data where the average rate of growth for electric power consumption will amount to 3.7% per year by 2020. This requires a launch of new generating capacities, most of which will be equipped with coal turbines. Currently only 26% of new capacities work on coal, but by 2015 – 2020 the proportion will grow to 44% of launched capacities.
However, it should be mentioned that there are alternative opinions shared by the industry players. Some of them assert that the plans on changing fuel balance in the national energy sector won’t come true. Alexey Ivanushkin, Chief Executive of Mechel JSC, one of the biggest coal and metal producers in the country, believes that this process depends on the term of RAO UES final privatization and turning the monopoly into several independent companies. Privatization is unfolding in complicated conditions and it is quite hard to forecast what the market will look like after the final stage is completed.
Moreover, the figures demonstrate the following situation. In the European part of Russia, where the majority of the population is concentrated, the proportions of different sorts of fuel for electric and thermal energy are unequal and distributed as follows: gas takes 85%, fuel oil - 5% and coal takes only 10%. If one believes RAO UES forecasts in respect of coal consumption growth, then we face the necessity to construct 20 power plants of 1 thousand mWt capacity more. «Costs on re-construction of present- day power plants into coal stations are adequate to the expenditures on construction of new units. Now energy business forecasts are taken as unreal, Ivanushkin asserts, emphasizing the idea that in the near future the only way for the Russian coal is export deliveries.
Tariff Policy to Threaten Export
One of the most significant problems for export deliveries is poor transport infrastructure. In the opinion of Valery Artemchenko, First Deputy CEO of Mechel-Trans JSC, there are three basic aspects in this respect which have to do with rolling stock deficit, de-motivating tariff policy and inability of ports to function properly in winter period.
Nowadays, out of 250 thousand gondola cars in Russia 60 thousand belong to private companies, while the rest is controlled by OAO RZD. 75 thousand units belonging to OAO RZD are wear-and-tear; the average age of the unit is 18 years, which is close to ultimate. By 2010, about 70% of the present-day park is to be taken out of service. Thus, the company is to purchase 15-18 thousand units to break the tendency.
In V.Artemchenko’s opinion, the car component in the tariff worth 18.5% does not motivate private companies to invest into this type of rolling stock, and the uncertainty of locomotive and infrastructure components prevent turning operator companies into full-rights carriers who own not only cars but locomotive haulage as well.
Konstantin Starkov, Technical Director of Ural mountain-metallurgic company JSC, states that OAO RZD does not have a definite plan of rail car deficit liquidation, since there is no clear view on what structure of the carriers will look like on the market in future. Now this problem is solved on the spot, while the most crucial problems are solved at the expense of the most interested structures, i.e. cargo owners.
A.Ivanushkin clarifies that coal is typically transported on very long distances. For Mechel JSC, the average distance makes 4 thousand kilometers for domestic deliveries and about 5 thousand kilometers for export supplies. For metallurgic cargo, railway tariffs amount to 9% from the prime cost and for coal from 40% to 48%. In other words, half of the price is the cost of domestic railway transportation. According to A.Ivanushkin, since 2000, railway tariffs have grown four-fold. Simultaneously with that ruble has been strengthening its positions since 2004. And one more aspect to consider is the dynamic inflation.
«If the tendency of tariff growth alongside national currency strengthening continues, thermal coal export will be impossible by 2010», -- Head of Mechel believes. The company expresses the idea that transportation tariffs are to be formed considering international market conditions.
Salman Babayev, OAO RZD Vice-President, emphasizes that under conditions of investment deficit the company took steps to motivate cargo owners to purchase rolling stock. Thus, to motivate customers to buy gondola cars, in 2007 differentiated tariff indexation was implemented for clause 2 of Tariff Regulation № 10-01 envisaging cargo transportation by gondola cars. Tariffs for cargo transported by gondola cars were increased by 10.9%, and tariffs for transportation by private and leased rolling stock were increased at a smaller proportion and in accordance with cargo type, which helped restore gondola cars deficit. At the same time, the car component rises for car owners and the terms of payback period are made similar for private companies and OAO RZD rail cars.
SummiNg Up
Sergey Romanov expresses his assurance that the world prices for coal will only be growing and, first of all, due to the unsatisfactory demand for energy carriers. For example, China, which was one of the biggest coal exporters, now purchases the product. Many experts share this idea. However, the growth of coal demand on the domestic market is obvious as well: the only thing to clarify is the exact volumes. Transport companies are to take steps to provide transportation of required volumes. First of all, European consumers are interested in it, since they will suffer seriously if Russia does not solve the problems with rolling stock, ports and tariffs.
By Alexey Lebedev
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[DETAIL_TEXT] => Russia to Support World Boom
Against the background of permanent growth of oil and gas prices and the continuing intensive development of the world industry, coal became attractive for the energy companies again. Thus, according to the RF Federal Agency on Energy (Rosenergo), during the period of 2000 – 2006 the world production of thermal coal grew from 3.153 bln to 4.537 bln, and the general volume of coal production showed an increase from 4.521 bln to 6.105 bln. Over the last six years the world consumption of thermal coal has boosted by 30%. The world trade volume reached the rate of 800 mln tons. Coking coal export grew by 22.5 % and the thermal coal share increased by 34.1%. Russia controls about 10.8 % of the world coal export (92 mln tons): these data place the state on the third position after Australia and Indonesia.
During the period of 2001 – 2006, the volume of the Russian solid fuel export doubled. Starting from 1998, production volume grew by 32%; however, at the same time domestic consumption hasn’t reached the level recorded ten years ago. These very surpluses make it possible to enhance deliveries to foreign contractors.
Europe performs as the basic market for the Russian coal. According to Sergey Romanov, Deputy Director on Science of Moscow State School of Mines, in the last five years export to European states boosted by 185%, having reached the volume of 40 mln tons, to Asia by 60% (6 mln tons) and the CIS – by 46% (3 mln tons). Import leaders are Great Britain, Germany, Spain, Turkey and Finland. In various aspects, Russian coal shows better characteristics compared to those of South African, Columbian and Australian products. In the opinion of Nigel Yaxly, Managing Director of the Association of British Coal Importers, this is the very reason why Russian products take more than a half in the structure of coal import of Great Britain. One more positive factor is to be mentioned, i.e. preference for coal-dressing over coal mining: 64 % of mined coal is processed in order to improve consumption characteristics, and in 2000 this volume amounted to 49%.
Reappearance of coal energy generation
Russian mining companies seem to be ready to satisfy the growing demand of the global market; however, it is not excluded that the international trade may face a competitor in the form of Russian industry which needs more energy in the course of rapid economic development, and, consequently, more coal. This statement can be easily proved by the figures.
In 1995 about half of RAO UES (state monopoly producing energy) capacities were redundant, while now the situation has changed and there are no «idling» capacities in the state. Moreover, the national energy sector, having faced gas deficit and at the same time the necessity to satisfy a developing economy, took the course of enhancing coal power plants. This change of the fuel balance towards coal growth was recorded in «General scheme of objects of power industry for the period up to 2020» being worked out by the RF Government. According to the document, by 2026 only 25 - 30% thermoelectric power stations will work on natural gas and 36 – 47% on coal. Currently, these proportions are the opposite. Jeff Crocker, Chairman of the Board of SUEK AG, believes Russia fell behind the average international coal share in the energy sector. In 2005, this share amounted to 39% on average in the world and only 16.8% in Russia who possesses unlimited resources of solid fuel.
Speaking at the 3d international conference «CoalTrans Russia» in June 2007, Vladimir Schadov, Deputy Head of Rosenergo, stated that by 2020 the domestic market demand may grow three-fold (from 98.4 mln tons to 342 mln tons). At the same time, the technical, technological and infrastructure opportunities of the working deposits make it possible to develop about 390 mln tons of thermal coal by 2020. It is easy to see that the export share in this case amounts to 48 mln tons only. Igor Kozhukhovsky, Head of the Economic Policy of RAO UES of Russia, gives data where the average rate of growth for electric power consumption will amount to 3.7% per year by 2020. This requires a launch of new generating capacities, most of which will be equipped with coal turbines. Currently only 26% of new capacities work on coal, but by 2015 – 2020 the proportion will grow to 44% of launched capacities.
However, it should be mentioned that there are alternative opinions shared by the industry players. Some of them assert that the plans on changing fuel balance in the national energy sector won’t come true. Alexey Ivanushkin, Chief Executive of Mechel JSC, one of the biggest coal and metal producers in the country, believes that this process depends on the term of RAO UES final privatization and turning the monopoly into several independent companies. Privatization is unfolding in complicated conditions and it is quite hard to forecast what the market will look like after the final stage is completed.
Moreover, the figures demonstrate the following situation. In the European part of Russia, where the majority of the population is concentrated, the proportions of different sorts of fuel for electric and thermal energy are unequal and distributed as follows: gas takes 85%, fuel oil - 5% and coal takes only 10%. If one believes RAO UES forecasts in respect of coal consumption growth, then we face the necessity to construct 20 power plants of 1 thousand mWt capacity more. «Costs on re-construction of present- day power plants into coal stations are adequate to the expenditures on construction of new units. Now energy business forecasts are taken as unreal, Ivanushkin asserts, emphasizing the idea that in the near future the only way for the Russian coal is export deliveries.
Tariff Policy to Threaten Export
One of the most significant problems for export deliveries is poor transport infrastructure. In the opinion of Valery Artemchenko, First Deputy CEO of Mechel-Trans JSC, there are three basic aspects in this respect which have to do with rolling stock deficit, de-motivating tariff policy and inability of ports to function properly in winter period.
Nowadays, out of 250 thousand gondola cars in Russia 60 thousand belong to private companies, while the rest is controlled by OAO RZD. 75 thousand units belonging to OAO RZD are wear-and-tear; the average age of the unit is 18 years, which is close to ultimate. By 2010, about 70% of the present-day park is to be taken out of service. Thus, the company is to purchase 15-18 thousand units to break the tendency.
In V.Artemchenko’s opinion, the car component in the tariff worth 18.5% does not motivate private companies to invest into this type of rolling stock, and the uncertainty of locomotive and infrastructure components prevent turning operator companies into full-rights carriers who own not only cars but locomotive haulage as well.
Konstantin Starkov, Technical Director of Ural mountain-metallurgic company JSC, states that OAO RZD does not have a definite plan of rail car deficit liquidation, since there is no clear view on what structure of the carriers will look like on the market in future. Now this problem is solved on the spot, while the most crucial problems are solved at the expense of the most interested structures, i.e. cargo owners.
A.Ivanushkin clarifies that coal is typically transported on very long distances. For Mechel JSC, the average distance makes 4 thousand kilometers for domestic deliveries and about 5 thousand kilometers for export supplies. For metallurgic cargo, railway tariffs amount to 9% from the prime cost and for coal from 40% to 48%. In other words, half of the price is the cost of domestic railway transportation. According to A.Ivanushkin, since 2000, railway tariffs have grown four-fold. Simultaneously with that ruble has been strengthening its positions since 2004. And one more aspect to consider is the dynamic inflation.
«If the tendency of tariff growth alongside national currency strengthening continues, thermal coal export will be impossible by 2010», -- Head of Mechel believes. The company expresses the idea that transportation tariffs are to be formed considering international market conditions.
Salman Babayev, OAO RZD Vice-President, emphasizes that under conditions of investment deficit the company took steps to motivate cargo owners to purchase rolling stock. Thus, to motivate customers to buy gondola cars, in 2007 differentiated tariff indexation was implemented for clause 2 of Tariff Regulation № 10-01 envisaging cargo transportation by gondola cars. Tariffs for cargo transported by gondola cars were increased by 10.9%, and tariffs for transportation by private and leased rolling stock were increased at a smaller proportion and in accordance with cargo type, which helped restore gondola cars deficit. At the same time, the car component rises for car owners and the terms of payback period are made similar for private companies and OAO RZD rail cars.
SummiNg Up
Sergey Romanov expresses his assurance that the world prices for coal will only be growing and, first of all, due to the unsatisfactory demand for energy carriers. For example, China, which was one of the biggest coal exporters, now purchases the product. Many experts share this idea. However, the growth of coal demand on the domestic market is obvious as well: the only thing to clarify is the exact volumes. Transport companies are to take steps to provide transportation of required volumes. First of all, European consumers are interested in it, since they will suffer seriously if Russia does not solve the problems with rolling stock, ports and tariffs.
By Alexey Lebedev
[~DETAIL_TEXT] => Russia to Support World Boom
Against the background of permanent growth of oil and gas prices and the continuing intensive development of the world industry, coal became attractive for the energy companies again. Thus, according to the RF Federal Agency on Energy (Rosenergo), during the period of 2000 – 2006 the world production of thermal coal grew from 3.153 bln to 4.537 bln, and the general volume of coal production showed an increase from 4.521 bln to 6.105 bln. Over the last six years the world consumption of thermal coal has boosted by 30%. The world trade volume reached the rate of 800 mln tons. Coking coal export grew by 22.5 % and the thermal coal share increased by 34.1%. Russia controls about 10.8 % of the world coal export (92 mln tons): these data place the state on the third position after Australia and Indonesia.
During the period of 2001 – 2006, the volume of the Russian solid fuel export doubled. Starting from 1998, production volume grew by 32%; however, at the same time domestic consumption hasn’t reached the level recorded ten years ago. These very surpluses make it possible to enhance deliveries to foreign contractors.
Europe performs as the basic market for the Russian coal. According to Sergey Romanov, Deputy Director on Science of Moscow State School of Mines, in the last five years export to European states boosted by 185%, having reached the volume of 40 mln tons, to Asia by 60% (6 mln tons) and the CIS – by 46% (3 mln tons). Import leaders are Great Britain, Germany, Spain, Turkey and Finland. In various aspects, Russian coal shows better characteristics compared to those of South African, Columbian and Australian products. In the opinion of Nigel Yaxly, Managing Director of the Association of British Coal Importers, this is the very reason why Russian products take more than a half in the structure of coal import of Great Britain. One more positive factor is to be mentioned, i.e. preference for coal-dressing over coal mining: 64 % of mined coal is processed in order to improve consumption characteristics, and in 2000 this volume amounted to 49%.
Reappearance of coal energy generation
Russian mining companies seem to be ready to satisfy the growing demand of the global market; however, it is not excluded that the international trade may face a competitor in the form of Russian industry which needs more energy in the course of rapid economic development, and, consequently, more coal. This statement can be easily proved by the figures.
In 1995 about half of RAO UES (state monopoly producing energy) capacities were redundant, while now the situation has changed and there are no «idling» capacities in the state. Moreover, the national energy sector, having faced gas deficit and at the same time the necessity to satisfy a developing economy, took the course of enhancing coal power plants. This change of the fuel balance towards coal growth was recorded in «General scheme of objects of power industry for the period up to 2020» being worked out by the RF Government. According to the document, by 2026 only 25 - 30% thermoelectric power stations will work on natural gas and 36 – 47% on coal. Currently, these proportions are the opposite. Jeff Crocker, Chairman of the Board of SUEK AG, believes Russia fell behind the average international coal share in the energy sector. In 2005, this share amounted to 39% on average in the world and only 16.8% in Russia who possesses unlimited resources of solid fuel.
Speaking at the 3d international conference «CoalTrans Russia» in June 2007, Vladimir Schadov, Deputy Head of Rosenergo, stated that by 2020 the domestic market demand may grow three-fold (from 98.4 mln tons to 342 mln tons). At the same time, the technical, technological and infrastructure opportunities of the working deposits make it possible to develop about 390 mln tons of thermal coal by 2020. It is easy to see that the export share in this case amounts to 48 mln tons only. Igor Kozhukhovsky, Head of the Economic Policy of RAO UES of Russia, gives data where the average rate of growth for electric power consumption will amount to 3.7% per year by 2020. This requires a launch of new generating capacities, most of which will be equipped with coal turbines. Currently only 26% of new capacities work on coal, but by 2015 – 2020 the proportion will grow to 44% of launched capacities.
However, it should be mentioned that there are alternative opinions shared by the industry players. Some of them assert that the plans on changing fuel balance in the national energy sector won’t come true. Alexey Ivanushkin, Chief Executive of Mechel JSC, one of the biggest coal and metal producers in the country, believes that this process depends on the term of RAO UES final privatization and turning the monopoly into several independent companies. Privatization is unfolding in complicated conditions and it is quite hard to forecast what the market will look like after the final stage is completed.
Moreover, the figures demonstrate the following situation. In the European part of Russia, where the majority of the population is concentrated, the proportions of different sorts of fuel for electric and thermal energy are unequal and distributed as follows: gas takes 85%, fuel oil - 5% and coal takes only 10%. If one believes RAO UES forecasts in respect of coal consumption growth, then we face the necessity to construct 20 power plants of 1 thousand mWt capacity more. «Costs on re-construction of present- day power plants into coal stations are adequate to the expenditures on construction of new units. Now energy business forecasts are taken as unreal, Ivanushkin asserts, emphasizing the idea that in the near future the only way for the Russian coal is export deliveries.
Tariff Policy to Threaten Export
One of the most significant problems for export deliveries is poor transport infrastructure. In the opinion of Valery Artemchenko, First Deputy CEO of Mechel-Trans JSC, there are three basic aspects in this respect which have to do with rolling stock deficit, de-motivating tariff policy and inability of ports to function properly in winter period.
Nowadays, out of 250 thousand gondola cars in Russia 60 thousand belong to private companies, while the rest is controlled by OAO RZD. 75 thousand units belonging to OAO RZD are wear-and-tear; the average age of the unit is 18 years, which is close to ultimate. By 2010, about 70% of the present-day park is to be taken out of service. Thus, the company is to purchase 15-18 thousand units to break the tendency.
In V.Artemchenko’s opinion, the car component in the tariff worth 18.5% does not motivate private companies to invest into this type of rolling stock, and the uncertainty of locomotive and infrastructure components prevent turning operator companies into full-rights carriers who own not only cars but locomotive haulage as well.
Konstantin Starkov, Technical Director of Ural mountain-metallurgic company JSC, states that OAO RZD does not have a definite plan of rail car deficit liquidation, since there is no clear view on what structure of the carriers will look like on the market in future. Now this problem is solved on the spot, while the most crucial problems are solved at the expense of the most interested structures, i.e. cargo owners.
A.Ivanushkin clarifies that coal is typically transported on very long distances. For Mechel JSC, the average distance makes 4 thousand kilometers for domestic deliveries and about 5 thousand kilometers for export supplies. For metallurgic cargo, railway tariffs amount to 9% from the prime cost and for coal from 40% to 48%. In other words, half of the price is the cost of domestic railway transportation. According to A.Ivanushkin, since 2000, railway tariffs have grown four-fold. Simultaneously with that ruble has been strengthening its positions since 2004. And one more aspect to consider is the dynamic inflation.
«If the tendency of tariff growth alongside national currency strengthening continues, thermal coal export will be impossible by 2010», -- Head of Mechel believes. The company expresses the idea that transportation tariffs are to be formed considering international market conditions.
Salman Babayev, OAO RZD Vice-President, emphasizes that under conditions of investment deficit the company took steps to motivate cargo owners to purchase rolling stock. Thus, to motivate customers to buy gondola cars, in 2007 differentiated tariff indexation was implemented for clause 2 of Tariff Regulation № 10-01 envisaging cargo transportation by gondola cars. Tariffs for cargo transported by gondola cars were increased by 10.9%, and tariffs for transportation by private and leased rolling stock were increased at a smaller proportion and in accordance with cargo type, which helped restore gondola cars deficit. At the same time, the car component rises for car owners and the terms of payback period are made similar for private companies and OAO RZD rail cars.
SummiNg Up
Sergey Romanov expresses his assurance that the world prices for coal will only be growing and, first of all, due to the unsatisfactory demand for energy carriers. For example, China, which was one of the biggest coal exporters, now purchases the product. Many experts share this idea. However, the growth of coal demand on the domestic market is obvious as well: the only thing to clarify is the exact volumes. Transport companies are to take steps to provide transportation of required volumes. First of all, European consumers are interested in it, since they will suffer seriously if Russia does not solve the problems with rolling stock, ports and tariffs.
By Alexey Lebedev
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[DETAIL_TEXT] => Air Transportation in the Baltic States
In H1 of 2007 Tallinn airport serviced 6,658 tons of cargoes (+13.3% year-on-year). The airports of Riga and Vilnius handled 4,179 tons (-28.7%) and 2,804 tons (+9.3%) respectively.
According to the amount of serviced flights, the airport of Riga is the leader among the Baltic airports. In six months of 2007, it serviced 22,213 flights (+19.2%). The airport of Tallinn and Vilnius serviced 17,935 (+6.2%) and 15,410 flights (+8.2%).
In H1 of 2007, the airport of Riga serviced 1,412,845 passengers (+24.8%), the airport of Tallinn – 803,738 passengers (+8.1%), and the airport of Vilnius – 756,896 thousand passengers (+14.8%).
To Create Unified Rules of Railways Exploitation
At its XXXVII conference, the Coordinating Transport Meeting of the CIS member states recognized as necessary a deeper unification of technical standards of railway transport exploitation on the CIS’ and Baltic states’ networks.
According to the railmen of the countries, the reason for it is the lack of unified technology and technological standards for transportation via adjusted international transport corridors, passing through the territory of member states of the Agreement on Joint Usage of Freight Wagons and Containers. The Coordinating Transport Meeting of the CIS member states revised the normative documents, regulating the common requirements to the maintenance and technical exploitation of the railway transport in the CIS and the Baltic states (150 mm wide gauge). The basic norms are admitted to be relative to safety (including ecological) demands. At the same time, it was noted at the Meeting that there are no unified rules of technical exploitation of railways in the framework of the Agreement. It was offered to develop an intergovernmental Agreement, defining Unified Rules of Technical Exploitation of Railways by member states of the Agreement.
It was recommended to the railway administrations of member states of the Agreement to develop and put amendments to the Rules of Railways Exploitation and to adopt «necessary requirements that meet the current conditions for railway transport workers».
Gorkovskaya Railway Speeds Up
Before 2009, the speed of passenger trains on the Gorkovskaya Railway (an affiliate of OAO RZD) will amount to 160 km/h; new rolling stock will be put into operation and the travel time from Nizhny Novgorod to Moscow will reduce to 3.5 hours.
«However, even this figure can be improved. The company has already set another target – to reduce the travel time on the route to 1.5 hours», said Senior Vice president of OAO RZD Boris Lapidus at the first scientific and practical Russian-Japanese conference on the project of high-speed railway construction to connect Nizhny Novgorod and Moscow.
Boris Lapidus stressed that OAO Russian Railways has started to create the high-speed railway network in Russia. The first project in the sector is the construction of high-speed railway line Moscow-Saint Petersburg, and the second priority destination is Moscow-Nizhny Novgorod.
The final choice of priorities will depend on the level of passenger flow and purchasing capacity necessary to make the project profitable and economically efficient.
«We hope that we will find economically reasonable forms of design, construction or reconstruction of the railway to increase the speed of transportation. That will enable Nizhny Novgorod, which is a regional economic centre of the Russian Federation, to become the most dynamically developing regional city in Russia», said the company’s Vice President.
Latvijas Dzelzcels: Oil Transportation Down
In six months of 2007, GAO Latvijas Dzelzcels (Latvian railway, LDz) transported 25.467 mln tons of cargo, 0.1% down year-on-year.
Transportation of oil and products decreased by 3.4% to 9.278 million tons. Besides, LDz carried 7.058 million tons of coal (-12.3%) and 3.031 million tons of mineral fertilizers (+30.4%).
During the period, the Latvian Railway transported 21.068 million tons of import freight (+2.9%), and 1.135 million tons of export cargo (+15.5%). Domestic transportation made 847 thousand tons (-19.9%).
2.417 million tons was carried as transit via the territory of Latvia to Estonian ports, 18.7% down year-on-year.
In 2006 the company’s throughput was 48.731 million tons.
TransLes Improves Logistics
OOO TransLes has started to create a network of timber terminals at the railways of Russia. Sergey Krivov, the company’s Director General said that nowadays a terminal is constructed in Irkutsk (East-Siberian Railway) with the area of almost 13 hectares.
The terminal is to be opened at the end of 2007. It will operate as a «dry port» – it will provide stevedoring, surveying, customs, sorting and other services. The length of railways will enable to dispatch one train daily. According to Sergey Krivov, for his company, organization of such terminals is a non-profile activity; however, it has to do it to optimize logistic schemes and reduce transport expenses.
In the words of Sergey Krivov, the specialists of TransLes are examining the possibility of construction of similar terminals at the Krasnoyarskaya and Dalnevostochnaya (Far-Eastern) Railways.
Air Transportation to Be Re-licensed
The Government of Russia approved the Decree on licensing passenger and freight air transportation, which comes in force on October 1, 2007. The Decree was signed by RF Prime Minister Mikhail Fradkov.
According to the new document, the order of formation, approval and publishing of the schedule of regular passenger and freight air transportation is to be adopted by the RF Ministry of Transport.
The Federal Agency of Air Transport is to license freight and passenger air transportation. The term of a license on air transportation of passengers and cargoes makes five years. However, it may be prolonged.
Russia to Increase Its Multimodal Capacities
«The total annual capacity of Russian multimodal transport and logistic terminals will exceed 100 million tons of freight by 2010,» stated Alexander Misharin, Deputy Minister of Transport of the Russian Federation.
He said that the measures to be taken to achieve this are envisaged by complex investment projects, including the construction of large logistic complexes in the Moscow region, Saint Petersburg, Novorossiysk and Murmansk transport junctions, as well as in Yekaterinburg and in the port of Nakhodka.
According to A.Misharin, the attempt to create competitive «through packs of transport services and integrate them into international logistic chains» will have success in Russia. He explained that at first large complexes will service Russian exporters and import freight flows. Later, a through complex of transport services will be created on the territory of the Russian Federation. It will service Asian-European freight flows on alternative international routes. «To achieve this, we are developing the concept of multimodal logistic centers in the RF, which will be targeted at the complex development of large transport corridors», highlighted Alexander Misharin. This year it is planned to take a number of measures that will enable to develop the system of large transport corridors. At first, the normative and legislative base will be developed for such sectors as public-private partnership, tax, tariff and investment policies. Later, the technical base of Russian transport system will be developed. Alexander Misharin expects that by 2010 the share of container transportation in the country will increase tenfold if «bottle-necks in logistics are destroyed».
Throughput of Russian Sea Ports Grew by 8.7% in H1 of 2007
The throughput of Russian sea ports was 218.1 million tons of cargo in H1 of 2007, 8.7% up year-on-year. The ports handled 89.7 million tons of solid bulk (+8.8% year-on-year) and 128.3 million tons of liquid bulk (+8.6%). The share of export in the total throughput was 78.3%, the ones of import and transit amounted to 8.2% and 8.6% respectively. The share of coastal trade was 4.8%. According to the specialists of the Association of Russian Commercial Sea Ports, export volume grew due to the increase of coal (+19.2%), containerized freight (+12%) and liquid bulk (+10%). The share of import increased mainly due to containerized cargo (+28.7%). Coastal trade grew by 7.3%, while transit reduced by 35%.
Russian ports handled 207.5 million tons of foreign trade cargoes (+9.2%).
The ports of the RF North-Western region increased their throughput by 12.5% to 100.4 million tons. The ports of the Southern region handled 79.8 million tons, 1.4% up year-on-year. The Far Eastern ports increased their throughput by 15.8% to 37.8 million ports.
The tendency of containerized cargo throughput growth continued in H1 of 2007. During the period, Russian sea ports handled 14.5 million tons (+23%) or 1,427 thousand TEU (+26.5%). The analysis of the ways cargo is carried to ports has shown that over 47% of freight is delivered there by pipelines, 45% - by railway, 4.8% by road haulages and 2.95% by water transport.
Will New Eurasian Canal Be Built?
President of Kazakhstan Nursultan Nazarbayev offers to construct a new Eurasian navigable canal to transit energy resources.
«Rich resources of the Caspian region and Central Asia are to be transported. We will look for different routes. The construction of a navigable canal Eurasia connecting the Caspian Sea and the Black Sea may become a key project», stated the President of Kazakhstan at the XII Saint-Petersburg International Economic Forum. He also mentioned expert data, according to which the canal may be shorter than the Volgo-Don by one thousand kilometers. Nursultan Nazarbayev highlighted that the states of Central Asia will choose transport corridors to carry goods based on their economic profitability.
Later, at a meeting with Kazakh investors, Nursultan Nazarbayev said, «Not only Kazakhstan, but all Central Asian states will be able to transport goods using the new canal, including by tankers and ferries. Nowadays this idea is being discussed. RF President Vladimir Putin and I agreed that experts of our states would analyze the ecology, economic efficiency and other aspects of the future project».
As a reminder, in April Vladimir Putin offered to establish an international consortium to construct the second line of the Volgo-Don canal that will enable «to improve the navigation between the Caspian and the Black Seas».
However, commenting on the offers of the Russian and Kazakh Presidents, Minister of Transport of Azerbaijan Ziya Mamedov said that Azerbaijan is not going to invest into the projects of new canals construction at the Caspian Sea.
«Azerbaijan’s attitude to realization of the projects is positive, because the existence of new transport corridors is profitable in any case. The main objective is that they should be competitive. And Azerbaijan could participate by transporting cargoes through the corridors. We are not going to invest into these projects», the Azerbaijan Minister said.
4.5 Million Tons of Oil in Six Months
Eastern-Siberian railway exported over 4.5 million tons of crude oil to China in H1 of 2007, 14.7% up year-on-year. Out of the volume, 4.495 million tons was transported via the Zabaikalsk station. 50 thousand tons was carried via the Naushki station.
[~DETAIL_TEXT] => Air Transportation in the Baltic States
In H1 of 2007 Tallinn airport serviced 6,658 tons of cargoes (+13.3% year-on-year). The airports of Riga and Vilnius handled 4,179 tons (-28.7%) and 2,804 tons (+9.3%) respectively.
According to the amount of serviced flights, the airport of Riga is the leader among the Baltic airports. In six months of 2007, it serviced 22,213 flights (+19.2%). The airport of Tallinn and Vilnius serviced 17,935 (+6.2%) and 15,410 flights (+8.2%).
In H1 of 2007, the airport of Riga serviced 1,412,845 passengers (+24.8%), the airport of Tallinn – 803,738 passengers (+8.1%), and the airport of Vilnius – 756,896 thousand passengers (+14.8%).
To Create Unified Rules of Railways Exploitation
At its XXXVII conference, the Coordinating Transport Meeting of the CIS member states recognized as necessary a deeper unification of technical standards of railway transport exploitation on the CIS’ and Baltic states’ networks.
According to the railmen of the countries, the reason for it is the lack of unified technology and technological standards for transportation via adjusted international transport corridors, passing through the territory of member states of the Agreement on Joint Usage of Freight Wagons and Containers. The Coordinating Transport Meeting of the CIS member states revised the normative documents, regulating the common requirements to the maintenance and technical exploitation of the railway transport in the CIS and the Baltic states (150 mm wide gauge). The basic norms are admitted to be relative to safety (including ecological) demands. At the same time, it was noted at the Meeting that there are no unified rules of technical exploitation of railways in the framework of the Agreement. It was offered to develop an intergovernmental Agreement, defining Unified Rules of Technical Exploitation of Railways by member states of the Agreement.
It was recommended to the railway administrations of member states of the Agreement to develop and put amendments to the Rules of Railways Exploitation and to adopt «necessary requirements that meet the current conditions for railway transport workers».
Gorkovskaya Railway Speeds Up
Before 2009, the speed of passenger trains on the Gorkovskaya Railway (an affiliate of OAO RZD) will amount to 160 km/h; new rolling stock will be put into operation and the travel time from Nizhny Novgorod to Moscow will reduce to 3.5 hours.
«However, even this figure can be improved. The company has already set another target – to reduce the travel time on the route to 1.5 hours», said Senior Vice president of OAO RZD Boris Lapidus at the first scientific and practical Russian-Japanese conference on the project of high-speed railway construction to connect Nizhny Novgorod and Moscow.
Boris Lapidus stressed that OAO Russian Railways has started to create the high-speed railway network in Russia. The first project in the sector is the construction of high-speed railway line Moscow-Saint Petersburg, and the second priority destination is Moscow-Nizhny Novgorod.
The final choice of priorities will depend on the level of passenger flow and purchasing capacity necessary to make the project profitable and economically efficient.
«We hope that we will find economically reasonable forms of design, construction or reconstruction of the railway to increase the speed of transportation. That will enable Nizhny Novgorod, which is a regional economic centre of the Russian Federation, to become the most dynamically developing regional city in Russia», said the company’s Vice President.
Latvijas Dzelzcels: Oil Transportation Down
In six months of 2007, GAO Latvijas Dzelzcels (Latvian railway, LDz) transported 25.467 mln tons of cargo, 0.1% down year-on-year.
Transportation of oil and products decreased by 3.4% to 9.278 million tons. Besides, LDz carried 7.058 million tons of coal (-12.3%) and 3.031 million tons of mineral fertilizers (+30.4%).
During the period, the Latvian Railway transported 21.068 million tons of import freight (+2.9%), and 1.135 million tons of export cargo (+15.5%). Domestic transportation made 847 thousand tons (-19.9%).
2.417 million tons was carried as transit via the territory of Latvia to Estonian ports, 18.7% down year-on-year.
In 2006 the company’s throughput was 48.731 million tons.
TransLes Improves Logistics
OOO TransLes has started to create a network of timber terminals at the railways of Russia. Sergey Krivov, the company’s Director General said that nowadays a terminal is constructed in Irkutsk (East-Siberian Railway) with the area of almost 13 hectares.
The terminal is to be opened at the end of 2007. It will operate as a «dry port» – it will provide stevedoring, surveying, customs, sorting and other services. The length of railways will enable to dispatch one train daily. According to Sergey Krivov, for his company, organization of such terminals is a non-profile activity; however, it has to do it to optimize logistic schemes and reduce transport expenses.
In the words of Sergey Krivov, the specialists of TransLes are examining the possibility of construction of similar terminals at the Krasnoyarskaya and Dalnevostochnaya (Far-Eastern) Railways.
Air Transportation to Be Re-licensed
The Government of Russia approved the Decree on licensing passenger and freight air transportation, which comes in force on October 1, 2007. The Decree was signed by RF Prime Minister Mikhail Fradkov.
According to the new document, the order of formation, approval and publishing of the schedule of regular passenger and freight air transportation is to be adopted by the RF Ministry of Transport.
The Federal Agency of Air Transport is to license freight and passenger air transportation. The term of a license on air transportation of passengers and cargoes makes five years. However, it may be prolonged.
Russia to Increase Its Multimodal Capacities
«The total annual capacity of Russian multimodal transport and logistic terminals will exceed 100 million tons of freight by 2010,» stated Alexander Misharin, Deputy Minister of Transport of the Russian Federation.
He said that the measures to be taken to achieve this are envisaged by complex investment projects, including the construction of large logistic complexes in the Moscow region, Saint Petersburg, Novorossiysk and Murmansk transport junctions, as well as in Yekaterinburg and in the port of Nakhodka.
According to A.Misharin, the attempt to create competitive «through packs of transport services and integrate them into international logistic chains» will have success in Russia. He explained that at first large complexes will service Russian exporters and import freight flows. Later, a through complex of transport services will be created on the territory of the Russian Federation. It will service Asian-European freight flows on alternative international routes. «To achieve this, we are developing the concept of multimodal logistic centers in the RF, which will be targeted at the complex development of large transport corridors», highlighted Alexander Misharin. This year it is planned to take a number of measures that will enable to develop the system of large transport corridors. At first, the normative and legislative base will be developed for such sectors as public-private partnership, tax, tariff and investment policies. Later, the technical base of Russian transport system will be developed. Alexander Misharin expects that by 2010 the share of container transportation in the country will increase tenfold if «bottle-necks in logistics are destroyed».
Throughput of Russian Sea Ports Grew by 8.7% in H1 of 2007
The throughput of Russian sea ports was 218.1 million tons of cargo in H1 of 2007, 8.7% up year-on-year. The ports handled 89.7 million tons of solid bulk (+8.8% year-on-year) and 128.3 million tons of liquid bulk (+8.6%). The share of export in the total throughput was 78.3%, the ones of import and transit amounted to 8.2% and 8.6% respectively. The share of coastal trade was 4.8%. According to the specialists of the Association of Russian Commercial Sea Ports, export volume grew due to the increase of coal (+19.2%), containerized freight (+12%) and liquid bulk (+10%). The share of import increased mainly due to containerized cargo (+28.7%). Coastal trade grew by 7.3%, while transit reduced by 35%.
Russian ports handled 207.5 million tons of foreign trade cargoes (+9.2%).
The ports of the RF North-Western region increased their throughput by 12.5% to 100.4 million tons. The ports of the Southern region handled 79.8 million tons, 1.4% up year-on-year. The Far Eastern ports increased their throughput by 15.8% to 37.8 million ports.
The tendency of containerized cargo throughput growth continued in H1 of 2007. During the period, Russian sea ports handled 14.5 million tons (+23%) or 1,427 thousand TEU (+26.5%). The analysis of the ways cargo is carried to ports has shown that over 47% of freight is delivered there by pipelines, 45% - by railway, 4.8% by road haulages and 2.95% by water transport.
Will New Eurasian Canal Be Built?
President of Kazakhstan Nursultan Nazarbayev offers to construct a new Eurasian navigable canal to transit energy resources.
«Rich resources of the Caspian region and Central Asia are to be transported. We will look for different routes. The construction of a navigable canal Eurasia connecting the Caspian Sea and the Black Sea may become a key project», stated the President of Kazakhstan at the XII Saint-Petersburg International Economic Forum. He also mentioned expert data, according to which the canal may be shorter than the Volgo-Don by one thousand kilometers. Nursultan Nazarbayev highlighted that the states of Central Asia will choose transport corridors to carry goods based on their economic profitability.
Later, at a meeting with Kazakh investors, Nursultan Nazarbayev said, «Not only Kazakhstan, but all Central Asian states will be able to transport goods using the new canal, including by tankers and ferries. Nowadays this idea is being discussed. RF President Vladimir Putin and I agreed that experts of our states would analyze the ecology, economic efficiency and other aspects of the future project».
As a reminder, in April Vladimir Putin offered to establish an international consortium to construct the second line of the Volgo-Don canal that will enable «to improve the navigation between the Caspian and the Black Seas».
However, commenting on the offers of the Russian and Kazakh Presidents, Minister of Transport of Azerbaijan Ziya Mamedov said that Azerbaijan is not going to invest into the projects of new canals construction at the Caspian Sea.
«Azerbaijan’s attitude to realization of the projects is positive, because the existence of new transport corridors is profitable in any case. The main objective is that they should be competitive. And Azerbaijan could participate by transporting cargoes through the corridors. We are not going to invest into these projects», the Azerbaijan Minister said.
4.5 Million Tons of Oil in Six Months
Eastern-Siberian railway exported over 4.5 million tons of crude oil to China in H1 of 2007, 14.7% up year-on-year. Out of the volume, 4.495 million tons was transported via the Zabaikalsk station. 50 thousand tons was carried via the Naushki station.
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[DETAIL_TEXT] => Air Transportation in the Baltic States
In H1 of 2007 Tallinn airport serviced 6,658 tons of cargoes (+13.3% year-on-year). The airports of Riga and Vilnius handled 4,179 tons (-28.7%) and 2,804 tons (+9.3%) respectively.
According to the amount of serviced flights, the airport of Riga is the leader among the Baltic airports. In six months of 2007, it serviced 22,213 flights (+19.2%). The airport of Tallinn and Vilnius serviced 17,935 (+6.2%) and 15,410 flights (+8.2%).
In H1 of 2007, the airport of Riga serviced 1,412,845 passengers (+24.8%), the airport of Tallinn – 803,738 passengers (+8.1%), and the airport of Vilnius – 756,896 thousand passengers (+14.8%).
To Create Unified Rules of Railways Exploitation
At its XXXVII conference, the Coordinating Transport Meeting of the CIS member states recognized as necessary a deeper unification of technical standards of railway transport exploitation on the CIS’ and Baltic states’ networks.
According to the railmen of the countries, the reason for it is the lack of unified technology and technological standards for transportation via adjusted international transport corridors, passing through the territory of member states of the Agreement on Joint Usage of Freight Wagons and Containers. The Coordinating Transport Meeting of the CIS member states revised the normative documents, regulating the common requirements to the maintenance and technical exploitation of the railway transport in the CIS and the Baltic states (150 mm wide gauge). The basic norms are admitted to be relative to safety (including ecological) demands. At the same time, it was noted at the Meeting that there are no unified rules of technical exploitation of railways in the framework of the Agreement. It was offered to develop an intergovernmental Agreement, defining Unified Rules of Technical Exploitation of Railways by member states of the Agreement.
It was recommended to the railway administrations of member states of the Agreement to develop and put amendments to the Rules of Railways Exploitation and to adopt «necessary requirements that meet the current conditions for railway transport workers».
Gorkovskaya Railway Speeds Up
Before 2009, the speed of passenger trains on the Gorkovskaya Railway (an affiliate of OAO RZD) will amount to 160 km/h; new rolling stock will be put into operation and the travel time from Nizhny Novgorod to Moscow will reduce to 3.5 hours.
«However, even this figure can be improved. The company has already set another target – to reduce the travel time on the route to 1.5 hours», said Senior Vice president of OAO RZD Boris Lapidus at the first scientific and practical Russian-Japanese conference on the project of high-speed railway construction to connect Nizhny Novgorod and Moscow.
Boris Lapidus stressed that OAO Russian Railways has started to create the high-speed railway network in Russia. The first project in the sector is the construction of high-speed railway line Moscow-Saint Petersburg, and the second priority destination is Moscow-Nizhny Novgorod.
The final choice of priorities will depend on the level of passenger flow and purchasing capacity necessary to make the project profitable and economically efficient.
«We hope that we will find economically reasonable forms of design, construction or reconstruction of the railway to increase the speed of transportation. That will enable Nizhny Novgorod, which is a regional economic centre of the Russian Federation, to become the most dynamically developing regional city in Russia», said the company’s Vice President.
Latvijas Dzelzcels: Oil Transportation Down
In six months of 2007, GAO Latvijas Dzelzcels (Latvian railway, LDz) transported 25.467 mln tons of cargo, 0.1% down year-on-year.
Transportation of oil and products decreased by 3.4% to 9.278 million tons. Besides, LDz carried 7.058 million tons of coal (-12.3%) and 3.031 million tons of mineral fertilizers (+30.4%).
During the period, the Latvian Railway transported 21.068 million tons of import freight (+2.9%), and 1.135 million tons of export cargo (+15.5%). Domestic transportation made 847 thousand tons (-19.9%).
2.417 million tons was carried as transit via the territory of Latvia to Estonian ports, 18.7% down year-on-year.
In 2006 the company’s throughput was 48.731 million tons.
TransLes Improves Logistics
OOO TransLes has started to create a network of timber terminals at the railways of Russia. Sergey Krivov, the company’s Director General said that nowadays a terminal is constructed in Irkutsk (East-Siberian Railway) with the area of almost 13 hectares.
The terminal is to be opened at the end of 2007. It will operate as a «dry port» – it will provide stevedoring, surveying, customs, sorting and other services. The length of railways will enable to dispatch one train daily. According to Sergey Krivov, for his company, organization of such terminals is a non-profile activity; however, it has to do it to optimize logistic schemes and reduce transport expenses.
In the words of Sergey Krivov, the specialists of TransLes are examining the possibility of construction of similar terminals at the Krasnoyarskaya and Dalnevostochnaya (Far-Eastern) Railways.
Air Transportation to Be Re-licensed
The Government of Russia approved the Decree on licensing passenger and freight air transportation, which comes in force on October 1, 2007. The Decree was signed by RF Prime Minister Mikhail Fradkov.
According to the new document, the order of formation, approval and publishing of the schedule of regular passenger and freight air transportation is to be adopted by the RF Ministry of Transport.
The Federal Agency of Air Transport is to license freight and passenger air transportation. The term of a license on air transportation of passengers and cargoes makes five years. However, it may be prolonged.
Russia to Increase Its Multimodal Capacities
«The total annual capacity of Russian multimodal transport and logistic terminals will exceed 100 million tons of freight by 2010,» stated Alexander Misharin, Deputy Minister of Transport of the Russian Federation.
He said that the measures to be taken to achieve this are envisaged by complex investment projects, including the construction of large logistic complexes in the Moscow region, Saint Petersburg, Novorossiysk and Murmansk transport junctions, as well as in Yekaterinburg and in the port of Nakhodka.
According to A.Misharin, the attempt to create competitive «through packs of transport services and integrate them into international logistic chains» will have success in Russia. He explained that at first large complexes will service Russian exporters and import freight flows. Later, a through complex of transport services will be created on the territory of the Russian Federation. It will service Asian-European freight flows on alternative international routes. «To achieve this, we are developing the concept of multimodal logistic centers in the RF, which will be targeted at the complex development of large transport corridors», highlighted Alexander Misharin. This year it is planned to take a number of measures that will enable to develop the system of large transport corridors. At first, the normative and legislative base will be developed for such sectors as public-private partnership, tax, tariff and investment policies. Later, the technical base of Russian transport system will be developed. Alexander Misharin expects that by 2010 the share of container transportation in the country will increase tenfold if «bottle-necks in logistics are destroyed».
Throughput of Russian Sea Ports Grew by 8.7% in H1 of 2007
The throughput of Russian sea ports was 218.1 million tons of cargo in H1 of 2007, 8.7% up year-on-year. The ports handled 89.7 million tons of solid bulk (+8.8% year-on-year) and 128.3 million tons of liquid bulk (+8.6%). The share of export in the total throughput was 78.3%, the ones of import and transit amounted to 8.2% and 8.6% respectively. The share of coastal trade was 4.8%. According to the specialists of the Association of Russian Commercial Sea Ports, export volume grew due to the increase of coal (+19.2%), containerized freight (+12%) and liquid bulk (+10%). The share of import increased mainly due to containerized cargo (+28.7%). Coastal trade grew by 7.3%, while transit reduced by 35%.
Russian ports handled 207.5 million tons of foreign trade cargoes (+9.2%).
The ports of the RF North-Western region increased their throughput by 12.5% to 100.4 million tons. The ports of the Southern region handled 79.8 million tons, 1.4% up year-on-year. The Far Eastern ports increased their throughput by 15.8% to 37.8 million ports.
The tendency of containerized cargo throughput growth continued in H1 of 2007. During the period, Russian sea ports handled 14.5 million tons (+23%) or 1,427 thousand TEU (+26.5%). The analysis of the ways cargo is carried to ports has shown that over 47% of freight is delivered there by pipelines, 45% - by railway, 4.8% by road haulages and 2.95% by water transport.
Will New Eurasian Canal Be Built?
President of Kazakhstan Nursultan Nazarbayev offers to construct a new Eurasian navigable canal to transit energy resources.
«Rich resources of the Caspian region and Central Asia are to be transported. We will look for different routes. The construction of a navigable canal Eurasia connecting the Caspian Sea and the Black Sea may become a key project», stated the President of Kazakhstan at the XII Saint-Petersburg International Economic Forum. He also mentioned expert data, according to which the canal may be shorter than the Volgo-Don by one thousand kilometers. Nursultan Nazarbayev highlighted that the states of Central Asia will choose transport corridors to carry goods based on their economic profitability.
Later, at a meeting with Kazakh investors, Nursultan Nazarbayev said, «Not only Kazakhstan, but all Central Asian states will be able to transport goods using the new canal, including by tankers and ferries. Nowadays this idea is being discussed. RF President Vladimir Putin and I agreed that experts of our states would analyze the ecology, economic efficiency and other aspects of the future project».
As a reminder, in April Vladimir Putin offered to establish an international consortium to construct the second line of the Volgo-Don canal that will enable «to improve the navigation between the Caspian and the Black Seas».
However, commenting on the offers of the Russian and Kazakh Presidents, Minister of Transport of Azerbaijan Ziya Mamedov said that Azerbaijan is not going to invest into the projects of new canals construction at the Caspian Sea.
«Azerbaijan’s attitude to realization of the projects is positive, because the existence of new transport corridors is profitable in any case. The main objective is that they should be competitive. And Azerbaijan could participate by transporting cargoes through the corridors. We are not going to invest into these projects», the Azerbaijan Minister said.
4.5 Million Tons of Oil in Six Months
Eastern-Siberian railway exported over 4.5 million tons of crude oil to China in H1 of 2007, 14.7% up year-on-year. Out of the volume, 4.495 million tons was transported via the Zabaikalsk station. 50 thousand tons was carried via the Naushki station.
[~DETAIL_TEXT] => Air Transportation in the Baltic States
In H1 of 2007 Tallinn airport serviced 6,658 tons of cargoes (+13.3% year-on-year). The airports of Riga and Vilnius handled 4,179 tons (-28.7%) and 2,804 tons (+9.3%) respectively.
According to the amount of serviced flights, the airport of Riga is the leader among the Baltic airports. In six months of 2007, it serviced 22,213 flights (+19.2%). The airport of Tallinn and Vilnius serviced 17,935 (+6.2%) and 15,410 flights (+8.2%).
In H1 of 2007, the airport of Riga serviced 1,412,845 passengers (+24.8%), the airport of Tallinn – 803,738 passengers (+8.1%), and the airport of Vilnius – 756,896 thousand passengers (+14.8%).
To Create Unified Rules of Railways Exploitation
At its XXXVII conference, the Coordinating Transport Meeting of the CIS member states recognized as necessary a deeper unification of technical standards of railway transport exploitation on the CIS’ and Baltic states’ networks.
According to the railmen of the countries, the reason for it is the lack of unified technology and technological standards for transportation via adjusted international transport corridors, passing through the territory of member states of the Agreement on Joint Usage of Freight Wagons and Containers. The Coordinating Transport Meeting of the CIS member states revised the normative documents, regulating the common requirements to the maintenance and technical exploitation of the railway transport in the CIS and the Baltic states (150 mm wide gauge). The basic norms are admitted to be relative to safety (including ecological) demands. At the same time, it was noted at the Meeting that there are no unified rules of technical exploitation of railways in the framework of the Agreement. It was offered to develop an intergovernmental Agreement, defining Unified Rules of Technical Exploitation of Railways by member states of the Agreement.
It was recommended to the railway administrations of member states of the Agreement to develop and put amendments to the Rules of Railways Exploitation and to adopt «necessary requirements that meet the current conditions for railway transport workers».
Gorkovskaya Railway Speeds Up
Before 2009, the speed of passenger trains on the Gorkovskaya Railway (an affiliate of OAO RZD) will amount to 160 km/h; new rolling stock will be put into operation and the travel time from Nizhny Novgorod to Moscow will reduce to 3.5 hours.
«However, even this figure can be improved. The company has already set another target – to reduce the travel time on the route to 1.5 hours», said Senior Vice president of OAO RZD Boris Lapidus at the first scientific and practical Russian-Japanese conference on the project of high-speed railway construction to connect Nizhny Novgorod and Moscow.
Boris Lapidus stressed that OAO Russian Railways has started to create the high-speed railway network in Russia. The first project in the sector is the construction of high-speed railway line Moscow-Saint Petersburg, and the second priority destination is Moscow-Nizhny Novgorod.
The final choice of priorities will depend on the level of passenger flow and purchasing capacity necessary to make the project profitable and economically efficient.
«We hope that we will find economically reasonable forms of design, construction or reconstruction of the railway to increase the speed of transportation. That will enable Nizhny Novgorod, which is a regional economic centre of the Russian Federation, to become the most dynamically developing regional city in Russia», said the company’s Vice President.
Latvijas Dzelzcels: Oil Transportation Down
In six months of 2007, GAO Latvijas Dzelzcels (Latvian railway, LDz) transported 25.467 mln tons of cargo, 0.1% down year-on-year.
Transportation of oil and products decreased by 3.4% to 9.278 million tons. Besides, LDz carried 7.058 million tons of coal (-12.3%) and 3.031 million tons of mineral fertilizers (+30.4%).
During the period, the Latvian Railway transported 21.068 million tons of import freight (+2.9%), and 1.135 million tons of export cargo (+15.5%). Domestic transportation made 847 thousand tons (-19.9%).
2.417 million tons was carried as transit via the territory of Latvia to Estonian ports, 18.7% down year-on-year.
In 2006 the company’s throughput was 48.731 million tons.
TransLes Improves Logistics
OOO TransLes has started to create a network of timber terminals at the railways of Russia. Sergey Krivov, the company’s Director General said that nowadays a terminal is constructed in Irkutsk (East-Siberian Railway) with the area of almost 13 hectares.
The terminal is to be opened at the end of 2007. It will operate as a «dry port» – it will provide stevedoring, surveying, customs, sorting and other services. The length of railways will enable to dispatch one train daily. According to Sergey Krivov, for his company, organization of such terminals is a non-profile activity; however, it has to do it to optimize logistic schemes and reduce transport expenses.
In the words of Sergey Krivov, the specialists of TransLes are examining the possibility of construction of similar terminals at the Krasnoyarskaya and Dalnevostochnaya (Far-Eastern) Railways.
Air Transportation to Be Re-licensed
The Government of Russia approved the Decree on licensing passenger and freight air transportation, which comes in force on October 1, 2007. The Decree was signed by RF Prime Minister Mikhail Fradkov.
According to the new document, the order of formation, approval and publishing of the schedule of regular passenger and freight air transportation is to be adopted by the RF Ministry of Transport.
The Federal Agency of Air Transport is to license freight and passenger air transportation. The term of a license on air transportation of passengers and cargoes makes five years. However, it may be prolonged.
Russia to Increase Its Multimodal Capacities
«The total annual capacity of Russian multimodal transport and logistic terminals will exceed 100 million tons of freight by 2010,» stated Alexander Misharin, Deputy Minister of Transport of the Russian Federation.
He said that the measures to be taken to achieve this are envisaged by complex investment projects, including the construction of large logistic complexes in the Moscow region, Saint Petersburg, Novorossiysk and Murmansk transport junctions, as well as in Yekaterinburg and in the port of Nakhodka.
According to A.Misharin, the attempt to create competitive «through packs of transport services and integrate them into international logistic chains» will have success in Russia. He explained that at first large complexes will service Russian exporters and import freight flows. Later, a through complex of transport services will be created on the territory of the Russian Federation. It will service Asian-European freight flows on alternative international routes. «To achieve this, we are developing the concept of multimodal logistic centers in the RF, which will be targeted at the complex development of large transport corridors», highlighted Alexander Misharin. This year it is planned to take a number of measures that will enable to develop the system of large transport corridors. At first, the normative and legislative base will be developed for such sectors as public-private partnership, tax, tariff and investment policies. Later, the technical base of Russian transport system will be developed. Alexander Misharin expects that by 2010 the share of container transportation in the country will increase tenfold if «bottle-necks in logistics are destroyed».
Throughput of Russian Sea Ports Grew by 8.7% in H1 of 2007
The throughput of Russian sea ports was 218.1 million tons of cargo in H1 of 2007, 8.7% up year-on-year. The ports handled 89.7 million tons of solid bulk (+8.8% year-on-year) and 128.3 million tons of liquid bulk (+8.6%). The share of export in the total throughput was 78.3%, the ones of import and transit amounted to 8.2% and 8.6% respectively. The share of coastal trade was 4.8%. According to the specialists of the Association of Russian Commercial Sea Ports, export volume grew due to the increase of coal (+19.2%), containerized freight (+12%) and liquid bulk (+10%). The share of import increased mainly due to containerized cargo (+28.7%). Coastal trade grew by 7.3%, while transit reduced by 35%.
Russian ports handled 207.5 million tons of foreign trade cargoes (+9.2%).
The ports of the RF North-Western region increased their throughput by 12.5% to 100.4 million tons. The ports of the Southern region handled 79.8 million tons, 1.4% up year-on-year. The Far Eastern ports increased their throughput by 15.8% to 37.8 million ports.
The tendency of containerized cargo throughput growth continued in H1 of 2007. During the period, Russian sea ports handled 14.5 million tons (+23%) or 1,427 thousand TEU (+26.5%). The analysis of the ways cargo is carried to ports has shown that over 47% of freight is delivered there by pipelines, 45% - by railway, 4.8% by road haulages and 2.95% by water transport.
Will New Eurasian Canal Be Built?
President of Kazakhstan Nursultan Nazarbayev offers to construct a new Eurasian navigable canal to transit energy resources.
«Rich resources of the Caspian region and Central Asia are to be transported. We will look for different routes. The construction of a navigable canal Eurasia connecting the Caspian Sea and the Black Sea may become a key project», stated the President of Kazakhstan at the XII Saint-Petersburg International Economic Forum. He also mentioned expert data, according to which the canal may be shorter than the Volgo-Don by one thousand kilometers. Nursultan Nazarbayev highlighted that the states of Central Asia will choose transport corridors to carry goods based on their economic profitability.
Later, at a meeting with Kazakh investors, Nursultan Nazarbayev said, «Not only Kazakhstan, but all Central Asian states will be able to transport goods using the new canal, including by tankers and ferries. Nowadays this idea is being discussed. RF President Vladimir Putin and I agreed that experts of our states would analyze the ecology, economic efficiency and other aspects of the future project».
As a reminder, in April Vladimir Putin offered to establish an international consortium to construct the second line of the Volgo-Don canal that will enable «to improve the navigation between the Caspian and the Black Seas».
However, commenting on the offers of the Russian and Kazakh Presidents, Minister of Transport of Azerbaijan Ziya Mamedov said that Azerbaijan is not going to invest into the projects of new canals construction at the Caspian Sea.
«Azerbaijan’s attitude to realization of the projects is positive, because the existence of new transport corridors is profitable in any case. The main objective is that they should be competitive. And Azerbaijan could participate by transporting cargoes through the corridors. We are not going to invest into these projects», the Azerbaijan Minister said.
4.5 Million Tons of Oil in Six Months
Eastern-Siberian railway exported over 4.5 million tons of crude oil to China in H1 of 2007, 14.7% up year-on-year. Out of the volume, 4.495 million tons was transported via the Zabaikalsk station. 50 thousand tons was carried via the Naushki station.
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In April 2007, Gennady Fadeyev celebrated his 70-th birthday. Three times Head of a railway, Russian Minister of Railways for two terms, the first President of OAO Russian Railways, now he is a member of the company’s Board of Directors and an adviser of the RF Prime Minister.Array
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Gennady Fadeyev
Born on April 10, 1937 in Shimanovsk (Amurskaya region). Graduated from the Khabarovsk Institute of Railway Transport Engineers. In 1967-1977 was Head of the Nizhneudinsk, Taishet, and Krasnoyarsk Divisions of the East-Siberian railway. Then he was Senior Deputy Head of the railway. In 1979-1984 Mr. Fadeyev headed the newly created Krasnoyarsk railway. In 1984-1987 was Head of the Oktyabrskaya railway. In 1987 he was appointed Deputy Minister of Railways of the USSR, and in 1988 Senior Deputy Minister. From 1991 worked as acting Minister of Railways. On January 20, 1992 Gennady Fadeyev was appointed the RF Minister of Railways. In 1990 he was elected a Member of Parliament delegated from the Krasnoyarsk region of the Russian Soviet Federative Socialist Republic; later he was a member of the Supreme Council. In July 1996 he was dismissed from the post of the Minister. From July 1996 till March 1999 was the General Secretary of the International Coordinating Council of Transsiberian Transportation. Then, he headed the Moscow railway. In January 2002 was again appointed the Minister of Railways of the Russian Federation. From September 22, 2003 acted as the President of OAO RZD. Since June 14, 2005 – adviser to the Chairman of the RF Government.
It Was to Happen!
– Mr. Fadeyev, did you long for climbing up the ladder or was it just a twist of fate?
– Sometimes, a man deliberately creates conditions to be noted and to succeed, and asks top men to help him. I cannot say that I was such a person. And I climbed the ladder in accordance with the results of my work. I like to work a lot. While still a student I wanted to work at a railway station, to shunt, and to form trains. Using modern terminology, I felt even then I was an «antirecessionary manager». When I was young, I organized, for example, the new Taishet Division at the Transsiberian railway. Or another example… In 1982 (I was the Head of Krasnoyarsk Railway at that time) N.Konarev, who had just been appointed the USSR Minister of Railways, offered me to become his deputy. I refused his offer because I was not ready for the post at that time. Two years later I was offered to head the Oktyabrskaya railway, and I agreed. By that moment I was familiar with the railways of the Far East and Siberia, and I wanted to learn about the specifics of railways in the European part of Russia. In 1987 Mr.Konarev again offered me to become his deputy. And that time I felt that I was ready for the job. I believe that proves that I am not a careerist. Meanwhile, starting from my childhood, I have always been a leader – the captain of a school football team, a monitor in the institute etc. And even in the Government chaired by Viktor Chernomyrdin, the RF President Boris Yetsin called me «foreman».
– At the Oktyabrskaya railway (in Saint-Petersburg) people remembered your strictness, exactingness, and even inflexibility for a long time. How can you characterize your style of management?
– You know, I like people. All of us have different skills, but everyone should fit the position they occupy. And if someone shows that he can occupy a more important post, I always remember such a person. I have always demanded much from people, however, only if all the necessary conditions had been created. Sometimes I understood that wasn’t done, and then I told the worker, «My demands were too high, but you could do it, you can do it». The man who has experienced much will hardly take strict measures to an innocent person. I would like to stress it. Why am I not afraid to speak to any working team? Because I know that they know everything about me, and I am always ready to answer any question.
– Do you think that your style of work can be called «authoritarian»?
– There must have been some grounds to call my style of work authoritarian. I would rather say that I set tasks that are too big in the hope that they will be fulfilled. From the strategy viewpoint, all the decisions I made were correct. Let’s take, for example, the most important question – the fate of Russian railways. I kept them. What helped me to do it – authoritarian approach, persistence, competence, the ability to prove things, to find supporters? Perhaps, all of these qualities. If I had another position, the situation would also be different nowadays. Vitaly Efimov, who was the Transport Minister at that time, prepared the Decree on the Ministry of Railways liquidation at the end of 1991. 15 years later E.Gaidar said about it, «Working railways at that period of time was a feat, and there was no other such feat in the second half of the 20th century». When it seemed that nothing was reliable in the state any longer, I said to Mr. Yetsin, «You have an absolutely reliable and controlled sector. If you tell me to reverse all the trains, in an hour I will report to you that all of them are running in the opposite direction». Later he used to joke, «Where are the trains running today?» And I would answer, «In the correct direction». So the result we have achieved became possible due to preserving the sector at that time. I do not know if I was authoritarian, but the decisions I made were necessary at that time. It had to happen!
West Was Shocked
– In 1995 you adopted the law «On Railway Transport», which forbade much from the reform viewpoint, while in 1996 you organized the Congress of Railmen, which approved the conservative course, and in 2002 you took up the reform and carried out the stage at which the functions of state regulation and economic activities were separated. How can you explain such changes?
– The law adopted in 1995 ran as follows, «Railway transport is federal property, it cannot be privatized». And I – the Minister, who adopted that law, – supported a new one «On Specifics of Control and Management of Railway Transport Property», which described how privatization could be carried out. When I was asked a question about it at a session of the State Duma, I answered «Don’t you see the difference in time, policy, economy, and, which is most important, in the content of the law I support?» I explained that Article 8 of the new law prohibited to use in the turnover a number of railways’ assets, i.e. the group of basic assets (mainline tracks, stations, locomotive depots, strategic objects etc.) which were to remain controlled by the state to regulate transportation process.
If there are such statements in the law, I am sure that the consequences of the reform will be a success. That is why I said at that time that my principles of state property protection had not changed. You may ask why the previous law was so conservative. That was the demand of time. My position has always been to keep railways in the federal property.
– Could you give an example of how you struggled against railway transport privatization plans in the 1990-s?
– Since the launch of the RF Ministry of Railways in 1992, the issue was constantly discussed, especially in 1992-1995, when we developed the Law «On Railway Transport». It was very difficult to develop such a bill and get it approved by the Government, because young reformers had come. Meanwhile, when I presented the bill at a meeting of the State Duma in 1995, the audience applauded, and I offered to approve it in two readings at once. And they did it!
In fact, that period was full of such events, when everything hung by a thread. I will tell you about one of them. In 1995 Russia took large loans in the International Monetary Fund, but the state had to take some obligations. Once the Government was discussing one of such loans. The documents were given out at the meeting. I opened the report and read that the railway transport privatization was to start in September 1995. The more I read, the more I was shocked. The Chairman Viktor Chernomyrdin offered to approve the document without discussing it. I raised my hand, but he ignored me. Then I stood up and started to speak in a loud voice, «I will cry for the stenographers not to miss a single word of mine. I will speak up, because we are talking about the destruction of the country’s railways». «What destruction do you mean?» «Have you read the document? Open the page, where it is written that the privatization of railways is to be started. The law has just been approved! This can provoke a conflict between the Duma and the Government! I am against it!» As a result, the document was sent for a revision. By the way, many ministers supported me at that meeting.
– If you had not spoken, the obligations concerning privatizations would have been taken?
– Yes, of course. Well, they could say later: time has passed, and our approach must be corrected. But that was a juridical document! As for the West, they were gutted that I kept railways controlled by the state.
– I would like to speak of the Russian Congress of Railmen, held on May 17-18, 1996. For a long time, the official viewpoint was that the forum laid foundation of the reform. Another opinion runs that it was organized to strengthen the principle «anything for the sake of changing nothing». Why did you organize the Congress?
– The railway transport reform is an important decision, and it should be made not by a handful of people, but by such a congress, in which the best representatives of the sector participate. Speaking at the congress, I said that the main issue of the future reform was separation of transportation and infrastructure to create equal conditions for carriers to compete. Was it possible to do it at that time? I was against it in 1990, and in 1995, and in 1999 (when we started to develop the Programme of the structural reform), and in 2001 (when the Government adopted it). Even German Gref agreed with me then, and the Programme maintains that it is necessary to return to this issue only at the end of the third stage (in 2010) and evaluate whether the necessary conditions have been created for the separation. I said about it at the congress. I asked, if the Government was ready to subsidize the infrastructure. After a pause, I answered myself, «No, it is not ready to do it». It was a bold historical statement. Over ten years have passed since then, and the Government is still not ready to subsidize the infrastructure as it is done in the countries where similar reforms were held. So, I was right.
«I Worried About the Reform»
– Mr. Fadeyev, after the president elections in June 1996 you were not offered to become a member of the Government again. Did you expect it?
– The demission was out of the blue for me, since the congress had just finished, and the situation in the sector started to improve. I was full of pith and popular. I did not strive to find out the real reason, but the society treated it as a usual thing – staff rotation.
– In October 2001, a criminal investigation was opened against Minister of Railways N.Aksenenko, and soon after it he was dismissed. At the beginning of 2002 you were offered again to become the Minister. Was it also out of the blue?
– I did not expect that Aksenenko would be dismissed. I was on vacation in Saint-Petersburg, when I heard on TV about the President’s decree regarding the resignation of the Minister of Railways. Simultaneously, there was a phone call – I was told to come to Prime Minister Mikhail Kasyanov the next morning. And I left for Moscow. Naturally, I understood that my appointment was possible… When I came to Mr. Kasyanov, he asked, «Could you advise who can head the railway sector?» «Must he be a professional railman?» «Only a professional.» I told him about one person, and we discussed the candidacy, then another man… Suddenly he interrupted me, «Have you got more candidacies? There is no need to waste time, because I meant you». So, that is how I was appointed to the position.
– How did you treat the new appointment?
– I had been Head of the Moscow railway for three years by that time. So, I was not worried about the financial and economic management of the sector, only about the reform. Only six months passed when Decree № 384 on the reform had been approved. The reform started by then, and it was necessary to make decisions to carry out the adopted plans. After Mr. Kasyanov, I was received by the RF President Vladimir Putin, and we discussed the state of the sector and the issues regarding its reform in details.
– There is an opinion that your viewpoint on the efficient economy and its management coincides with the position of the so-called «red directors», i.e. that you see no significant advantages of market methods of work. Do you agree with it?
– We used to make and are still making decisions of such scale that it is impossible to estimate them from the standpoint of consequences. Time is needed. Still, it has already shown that the reforms held in the RF transport system (with the exception of the railway transport reform) were a mistake. Those reforms were held not by «red directors», but by «marketers». Nowadays, the role of the state in transport assets increases. And the legislative and normative basis is being changed for that.
When I was the Minister of Railways, the prices for transportation did not grow faster than the inflation. And we fulfilled the demand for transportation. We lacked much, still we sought for more – to renew, to purchase, to build… However, there is a balance of interests in any state, and first of all, the interests of the state itself. And this must be respected, and this should be considered when any reform is held. That is my position.
– How did you celebrate you jubilee? Were there many congratulations?
– I got plenty of congratulations from politicians, railmen, students, veterans... I greatly appreciate the assessment of my labour and attitude to people mentioned in them. On the eve of the jubilee, the RF President Vladimir Putin signed a Decree on rewarding me for the achievents in railway transport development. The following day he congratulated me. In particular, he said, «Your biography, your contribution to the development of Russian railway transport must be honoured. Your colleagues know and appreciate you as a real professional, energetic and loyal man. I am sure that your experience and competency will be required for the good of Russia. I wish you health and success!» These words are as an honest handshake.
– What can you advise young people?
– In order not to make mistakes, one should thoroughly examine the consequences of the decisions made. One should not make plans, the realization of which will set a stone rolling. The team is also very important. Members of the team should be chosen according to the principle of professionalism. It must be so in every sector, and especially in our work.
– Mr. Fadeyev, let me wish you a happy birthday. I wish you health and a lot of productive work!
Andrey Guriev
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Gennady Fadeyev
Born on April 10, 1937 in Shimanovsk (Amurskaya region). Graduated from the Khabarovsk Institute of Railway Transport Engineers. In 1967-1977 was Head of the Nizhneudinsk, Taishet, and Krasnoyarsk Divisions of the East-Siberian railway. Then he was Senior Deputy Head of the railway. In 1979-1984 Mr. Fadeyev headed the newly created Krasnoyarsk railway. In 1984-1987 was Head of the Oktyabrskaya railway. In 1987 he was appointed Deputy Minister of Railways of the USSR, and in 1988 Senior Deputy Minister. From 1991 worked as acting Minister of Railways. On January 20, 1992 Gennady Fadeyev was appointed the RF Minister of Railways. In 1990 he was elected a Member of Parliament delegated from the Krasnoyarsk region of the Russian Soviet Federative Socialist Republic; later he was a member of the Supreme Council. In July 1996 he was dismissed from the post of the Minister. From July 1996 till March 1999 was the General Secretary of the International Coordinating Council of Transsiberian Transportation. Then, he headed the Moscow railway. In January 2002 was again appointed the Minister of Railways of the Russian Federation. From September 22, 2003 acted as the President of OAO RZD. Since June 14, 2005 – adviser to the Chairman of the RF Government.
It Was to Happen!
– Mr. Fadeyev, did you long for climbing up the ladder or was it just a twist of fate?
– Sometimes, a man deliberately creates conditions to be noted and to succeed, and asks top men to help him. I cannot say that I was such a person. And I climbed the ladder in accordance with the results of my work. I like to work a lot. While still a student I wanted to work at a railway station, to shunt, and to form trains. Using modern terminology, I felt even then I was an «antirecessionary manager». When I was young, I organized, for example, the new Taishet Division at the Transsiberian railway. Or another example… In 1982 (I was the Head of Krasnoyarsk Railway at that time) N.Konarev, who had just been appointed the USSR Minister of Railways, offered me to become his deputy. I refused his offer because I was not ready for the post at that time. Two years later I was offered to head the Oktyabrskaya railway, and I agreed. By that moment I was familiar with the railways of the Far East and Siberia, and I wanted to learn about the specifics of railways in the European part of Russia. In 1987 Mr.Konarev again offered me to become his deputy. And that time I felt that I was ready for the job. I believe that proves that I am not a careerist. Meanwhile, starting from my childhood, I have always been a leader – the captain of a school football team, a monitor in the institute etc. And even in the Government chaired by Viktor Chernomyrdin, the RF President Boris Yetsin called me «foreman».
– At the Oktyabrskaya railway (in Saint-Petersburg) people remembered your strictness, exactingness, and even inflexibility for a long time. How can you characterize your style of management?
– You know, I like people. All of us have different skills, but everyone should fit the position they occupy. And if someone shows that he can occupy a more important post, I always remember such a person. I have always demanded much from people, however, only if all the necessary conditions had been created. Sometimes I understood that wasn’t done, and then I told the worker, «My demands were too high, but you could do it, you can do it». The man who has experienced much will hardly take strict measures to an innocent person. I would like to stress it. Why am I not afraid to speak to any working team? Because I know that they know everything about me, and I am always ready to answer any question.
– Do you think that your style of work can be called «authoritarian»?
– There must have been some grounds to call my style of work authoritarian. I would rather say that I set tasks that are too big in the hope that they will be fulfilled. From the strategy viewpoint, all the decisions I made were correct. Let’s take, for example, the most important question – the fate of Russian railways. I kept them. What helped me to do it – authoritarian approach, persistence, competence, the ability to prove things, to find supporters? Perhaps, all of these qualities. If I had another position, the situation would also be different nowadays. Vitaly Efimov, who was the Transport Minister at that time, prepared the Decree on the Ministry of Railways liquidation at the end of 1991. 15 years later E.Gaidar said about it, «Working railways at that period of time was a feat, and there was no other such feat in the second half of the 20th century». When it seemed that nothing was reliable in the state any longer, I said to Mr. Yetsin, «You have an absolutely reliable and controlled sector. If you tell me to reverse all the trains, in an hour I will report to you that all of them are running in the opposite direction». Later he used to joke, «Where are the trains running today?» And I would answer, «In the correct direction». So the result we have achieved became possible due to preserving the sector at that time. I do not know if I was authoritarian, but the decisions I made were necessary at that time. It had to happen!
West Was Shocked
– In 1995 you adopted the law «On Railway Transport», which forbade much from the reform viewpoint, while in 1996 you organized the Congress of Railmen, which approved the conservative course, and in 2002 you took up the reform and carried out the stage at which the functions of state regulation and economic activities were separated. How can you explain such changes?
– The law adopted in 1995 ran as follows, «Railway transport is federal property, it cannot be privatized». And I – the Minister, who adopted that law, – supported a new one «On Specifics of Control and Management of Railway Transport Property», which described how privatization could be carried out. When I was asked a question about it at a session of the State Duma, I answered «Don’t you see the difference in time, policy, economy, and, which is most important, in the content of the law I support?» I explained that Article 8 of the new law prohibited to use in the turnover a number of railways’ assets, i.e. the group of basic assets (mainline tracks, stations, locomotive depots, strategic objects etc.) which were to remain controlled by the state to regulate transportation process.
If there are such statements in the law, I am sure that the consequences of the reform will be a success. That is why I said at that time that my principles of state property protection had not changed. You may ask why the previous law was so conservative. That was the demand of time. My position has always been to keep railways in the federal property.
– Could you give an example of how you struggled against railway transport privatization plans in the 1990-s?
– Since the launch of the RF Ministry of Railways in 1992, the issue was constantly discussed, especially in 1992-1995, when we developed the Law «On Railway Transport». It was very difficult to develop such a bill and get it approved by the Government, because young reformers had come. Meanwhile, when I presented the bill at a meeting of the State Duma in 1995, the audience applauded, and I offered to approve it in two readings at once. And they did it!
In fact, that period was full of such events, when everything hung by a thread. I will tell you about one of them. In 1995 Russia took large loans in the International Monetary Fund, but the state had to take some obligations. Once the Government was discussing one of such loans. The documents were given out at the meeting. I opened the report and read that the railway transport privatization was to start in September 1995. The more I read, the more I was shocked. The Chairman Viktor Chernomyrdin offered to approve the document without discussing it. I raised my hand, but he ignored me. Then I stood up and started to speak in a loud voice, «I will cry for the stenographers not to miss a single word of mine. I will speak up, because we are talking about the destruction of the country’s railways». «What destruction do you mean?» «Have you read the document? Open the page, where it is written that the privatization of railways is to be started. The law has just been approved! This can provoke a conflict between the Duma and the Government! I am against it!» As a result, the document was sent for a revision. By the way, many ministers supported me at that meeting.
– If you had not spoken, the obligations concerning privatizations would have been taken?
– Yes, of course. Well, they could say later: time has passed, and our approach must be corrected. But that was a juridical document! As for the West, they were gutted that I kept railways controlled by the state.
– I would like to speak of the Russian Congress of Railmen, held on May 17-18, 1996. For a long time, the official viewpoint was that the forum laid foundation of the reform. Another opinion runs that it was organized to strengthen the principle «anything for the sake of changing nothing». Why did you organize the Congress?
– The railway transport reform is an important decision, and it should be made not by a handful of people, but by such a congress, in which the best representatives of the sector participate. Speaking at the congress, I said that the main issue of the future reform was separation of transportation and infrastructure to create equal conditions for carriers to compete. Was it possible to do it at that time? I was against it in 1990, and in 1995, and in 1999 (when we started to develop the Programme of the structural reform), and in 2001 (when the Government adopted it). Even German Gref agreed with me then, and the Programme maintains that it is necessary to return to this issue only at the end of the third stage (in 2010) and evaluate whether the necessary conditions have been created for the separation. I said about it at the congress. I asked, if the Government was ready to subsidize the infrastructure. After a pause, I answered myself, «No, it is not ready to do it». It was a bold historical statement. Over ten years have passed since then, and the Government is still not ready to subsidize the infrastructure as it is done in the countries where similar reforms were held. So, I was right.
«I Worried About the Reform»
– Mr. Fadeyev, after the president elections in June 1996 you were not offered to become a member of the Government again. Did you expect it?
– The demission was out of the blue for me, since the congress had just finished, and the situation in the sector started to improve. I was full of pith and popular. I did not strive to find out the real reason, but the society treated it as a usual thing – staff rotation.
– In October 2001, a criminal investigation was opened against Minister of Railways N.Aksenenko, and soon after it he was dismissed. At the beginning of 2002 you were offered again to become the Minister. Was it also out of the blue?
– I did not expect that Aksenenko would be dismissed. I was on vacation in Saint-Petersburg, when I heard on TV about the President’s decree regarding the resignation of the Minister of Railways. Simultaneously, there was a phone call – I was told to come to Prime Minister Mikhail Kasyanov the next morning. And I left for Moscow. Naturally, I understood that my appointment was possible… When I came to Mr. Kasyanov, he asked, «Could you advise who can head the railway sector?» «Must he be a professional railman?» «Only a professional.» I told him about one person, and we discussed the candidacy, then another man… Suddenly he interrupted me, «Have you got more candidacies? There is no need to waste time, because I meant you». So, that is how I was appointed to the position.
– How did you treat the new appointment?
– I had been Head of the Moscow railway for three years by that time. So, I was not worried about the financial and economic management of the sector, only about the reform. Only six months passed when Decree № 384 on the reform had been approved. The reform started by then, and it was necessary to make decisions to carry out the adopted plans. After Mr. Kasyanov, I was received by the RF President Vladimir Putin, and we discussed the state of the sector and the issues regarding its reform in details.
– There is an opinion that your viewpoint on the efficient economy and its management coincides with the position of the so-called «red directors», i.e. that you see no significant advantages of market methods of work. Do you agree with it?
– We used to make and are still making decisions of such scale that it is impossible to estimate them from the standpoint of consequences. Time is needed. Still, it has already shown that the reforms held in the RF transport system (with the exception of the railway transport reform) were a mistake. Those reforms were held not by «red directors», but by «marketers». Nowadays, the role of the state in transport assets increases. And the legislative and normative basis is being changed for that.
When I was the Minister of Railways, the prices for transportation did not grow faster than the inflation. And we fulfilled the demand for transportation. We lacked much, still we sought for more – to renew, to purchase, to build… However, there is a balance of interests in any state, and first of all, the interests of the state itself. And this must be respected, and this should be considered when any reform is held. That is my position.
– How did you celebrate you jubilee? Were there many congratulations?
– I got plenty of congratulations from politicians, railmen, students, veterans... I greatly appreciate the assessment of my labour and attitude to people mentioned in them. On the eve of the jubilee, the RF President Vladimir Putin signed a Decree on rewarding me for the achievents in railway transport development. The following day he congratulated me. In particular, he said, «Your biography, your contribution to the development of Russian railway transport must be honoured. Your colleagues know and appreciate you as a real professional, energetic and loyal man. I am sure that your experience and competency will be required for the good of Russia. I wish you health and success!» These words are as an honest handshake.
– What can you advise young people?
– In order not to make mistakes, one should thoroughly examine the consequences of the decisions made. One should not make plans, the realization of which will set a stone rolling. The team is also very important. Members of the team should be chosen according to the principle of professionalism. It must be so in every sector, and especially in our work.
– Mr. Fadeyev, let me wish you a happy birthday. I wish you health and a lot of productive work!
Andrey Guriev
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Mr. Fadeyev told The RZD-Partner International correspondent about his life and the railway reforms of the 1990-s as they were.
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Mr. Fadeyev told The RZD-Partner International correspondent about his life and the railway reforms of the 1990-s as they were.
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Gennady Fadeyev
Born on April 10, 1937 in Shimanovsk (Amurskaya region). Graduated from the Khabarovsk Institute of Railway Transport Engineers. In 1967-1977 was Head of the Nizhneudinsk, Taishet, and Krasnoyarsk Divisions of the East-Siberian railway. Then he was Senior Deputy Head of the railway. In 1979-1984 Mr. Fadeyev headed the newly created Krasnoyarsk railway. In 1984-1987 was Head of the Oktyabrskaya railway. In 1987 he was appointed Deputy Minister of Railways of the USSR, and in 1988 Senior Deputy Minister. From 1991 worked as acting Minister of Railways. On January 20, 1992 Gennady Fadeyev was appointed the RF Minister of Railways. In 1990 he was elected a Member of Parliament delegated from the Krasnoyarsk region of the Russian Soviet Federative Socialist Republic; later he was a member of the Supreme Council. In July 1996 he was dismissed from the post of the Minister. From July 1996 till March 1999 was the General Secretary of the International Coordinating Council of Transsiberian Transportation. Then, he headed the Moscow railway. In January 2002 was again appointed the Minister of Railways of the Russian Federation. From September 22, 2003 acted as the President of OAO RZD. Since June 14, 2005 – adviser to the Chairman of the RF Government.
It Was to Happen!
– Mr. Fadeyev, did you long for climbing up the ladder or was it just a twist of fate?
– Sometimes, a man deliberately creates conditions to be noted and to succeed, and asks top men to help him. I cannot say that I was such a person. And I climbed the ladder in accordance with the results of my work. I like to work a lot. While still a student I wanted to work at a railway station, to shunt, and to form trains. Using modern terminology, I felt even then I was an «antirecessionary manager». When I was young, I organized, for example, the new Taishet Division at the Transsiberian railway. Or another example… In 1982 (I was the Head of Krasnoyarsk Railway at that time) N.Konarev, who had just been appointed the USSR Minister of Railways, offered me to become his deputy. I refused his offer because I was not ready for the post at that time. Two years later I was offered to head the Oktyabrskaya railway, and I agreed. By that moment I was familiar with the railways of the Far East and Siberia, and I wanted to learn about the specifics of railways in the European part of Russia. In 1987 Mr.Konarev again offered me to become his deputy. And that time I felt that I was ready for the job. I believe that proves that I am not a careerist. Meanwhile, starting from my childhood, I have always been a leader – the captain of a school football team, a monitor in the institute etc. And even in the Government chaired by Viktor Chernomyrdin, the RF President Boris Yetsin called me «foreman».
– At the Oktyabrskaya railway (in Saint-Petersburg) people remembered your strictness, exactingness, and even inflexibility for a long time. How can you characterize your style of management?
– You know, I like people. All of us have different skills, but everyone should fit the position they occupy. And if someone shows that he can occupy a more important post, I always remember such a person. I have always demanded much from people, however, only if all the necessary conditions had been created. Sometimes I understood that wasn’t done, and then I told the worker, «My demands were too high, but you could do it, you can do it». The man who has experienced much will hardly take strict measures to an innocent person. I would like to stress it. Why am I not afraid to speak to any working team? Because I know that they know everything about me, and I am always ready to answer any question.
– Do you think that your style of work can be called «authoritarian»?
– There must have been some grounds to call my style of work authoritarian. I would rather say that I set tasks that are too big in the hope that they will be fulfilled. From the strategy viewpoint, all the decisions I made were correct. Let’s take, for example, the most important question – the fate of Russian railways. I kept them. What helped me to do it – authoritarian approach, persistence, competence, the ability to prove things, to find supporters? Perhaps, all of these qualities. If I had another position, the situation would also be different nowadays. Vitaly Efimov, who was the Transport Minister at that time, prepared the Decree on the Ministry of Railways liquidation at the end of 1991. 15 years later E.Gaidar said about it, «Working railways at that period of time was a feat, and there was no other such feat in the second half of the 20th century». When it seemed that nothing was reliable in the state any longer, I said to Mr. Yetsin, «You have an absolutely reliable and controlled sector. If you tell me to reverse all the trains, in an hour I will report to you that all of them are running in the opposite direction». Later he used to joke, «Where are the trains running today?» And I would answer, «In the correct direction». So the result we have achieved became possible due to preserving the sector at that time. I do not know if I was authoritarian, but the decisions I made were necessary at that time. It had to happen!
West Was Shocked
– In 1995 you adopted the law «On Railway Transport», which forbade much from the reform viewpoint, while in 1996 you organized the Congress of Railmen, which approved the conservative course, and in 2002 you took up the reform and carried out the stage at which the functions of state regulation and economic activities were separated. How can you explain such changes?
– The law adopted in 1995 ran as follows, «Railway transport is federal property, it cannot be privatized». And I – the Minister, who adopted that law, – supported a new one «On Specifics of Control and Management of Railway Transport Property», which described how privatization could be carried out. When I was asked a question about it at a session of the State Duma, I answered «Don’t you see the difference in time, policy, economy, and, which is most important, in the content of the law I support?» I explained that Article 8 of the new law prohibited to use in the turnover a number of railways’ assets, i.e. the group of basic assets (mainline tracks, stations, locomotive depots, strategic objects etc.) which were to remain controlled by the state to regulate transportation process.
If there are such statements in the law, I am sure that the consequences of the reform will be a success. That is why I said at that time that my principles of state property protection had not changed. You may ask why the previous law was so conservative. That was the demand of time. My position has always been to keep railways in the federal property.
– Could you give an example of how you struggled against railway transport privatization plans in the 1990-s?
– Since the launch of the RF Ministry of Railways in 1992, the issue was constantly discussed, especially in 1992-1995, when we developed the Law «On Railway Transport». It was very difficult to develop such a bill and get it approved by the Government, because young reformers had come. Meanwhile, when I presented the bill at a meeting of the State Duma in 1995, the audience applauded, and I offered to approve it in two readings at once. And they did it!
In fact, that period was full of such events, when everything hung by a thread. I will tell you about one of them. In 1995 Russia took large loans in the International Monetary Fund, but the state had to take some obligations. Once the Government was discussing one of such loans. The documents were given out at the meeting. I opened the report and read that the railway transport privatization was to start in September 1995. The more I read, the more I was shocked. The Chairman Viktor Chernomyrdin offered to approve the document without discussing it. I raised my hand, but he ignored me. Then I stood up and started to speak in a loud voice, «I will cry for the stenographers not to miss a single word of mine. I will speak up, because we are talking about the destruction of the country’s railways». «What destruction do you mean?» «Have you read the document? Open the page, where it is written that the privatization of railways is to be started. The law has just been approved! This can provoke a conflict between the Duma and the Government! I am against it!» As a result, the document was sent for a revision. By the way, many ministers supported me at that meeting.
– If you had not spoken, the obligations concerning privatizations would have been taken?
– Yes, of course. Well, they could say later: time has passed, and our approach must be corrected. But that was a juridical document! As for the West, they were gutted that I kept railways controlled by the state.
– I would like to speak of the Russian Congress of Railmen, held on May 17-18, 1996. For a long time, the official viewpoint was that the forum laid foundation of the reform. Another opinion runs that it was organized to strengthen the principle «anything for the sake of changing nothing». Why did you organize the Congress?
– The railway transport reform is an important decision, and it should be made not by a handful of people, but by such a congress, in which the best representatives of the sector participate. Speaking at the congress, I said that the main issue of the future reform was separation of transportation and infrastructure to create equal conditions for carriers to compete. Was it possible to do it at that time? I was against it in 1990, and in 1995, and in 1999 (when we started to develop the Programme of the structural reform), and in 2001 (when the Government adopted it). Even German Gref agreed with me then, and the Programme maintains that it is necessary to return to this issue only at the end of the third stage (in 2010) and evaluate whether the necessary conditions have been created for the separation. I said about it at the congress. I asked, if the Government was ready to subsidize the infrastructure. After a pause, I answered myself, «No, it is not ready to do it». It was a bold historical statement. Over ten years have passed since then, and the Government is still not ready to subsidize the infrastructure as it is done in the countries where similar reforms were held. So, I was right.
«I Worried About the Reform»
– Mr. Fadeyev, after the president elections in June 1996 you were not offered to become a member of the Government again. Did you expect it?
– The demission was out of the blue for me, since the congress had just finished, and the situation in the sector started to improve. I was full of pith and popular. I did not strive to find out the real reason, but the society treated it as a usual thing – staff rotation.
– In October 2001, a criminal investigation was opened against Minister of Railways N.Aksenenko, and soon after it he was dismissed. At the beginning of 2002 you were offered again to become the Minister. Was it also out of the blue?
– I did not expect that Aksenenko would be dismissed. I was on vacation in Saint-Petersburg, when I heard on TV about the President’s decree regarding the resignation of the Minister of Railways. Simultaneously, there was a phone call – I was told to come to Prime Minister Mikhail Kasyanov the next morning. And I left for Moscow. Naturally, I understood that my appointment was possible… When I came to Mr. Kasyanov, he asked, «Could you advise who can head the railway sector?» «Must he be a professional railman?» «Only a professional.» I told him about one person, and we discussed the candidacy, then another man… Suddenly he interrupted me, «Have you got more candidacies? There is no need to waste time, because I meant you». So, that is how I was appointed to the position.
– How did you treat the new appointment?
– I had been Head of the Moscow railway for three years by that time. So, I was not worried about the financial and economic management of the sector, only about the reform. Only six months passed when Decree № 384 on the reform had been approved. The reform started by then, and it was necessary to make decisions to carry out the adopted plans. After Mr. Kasyanov, I was received by the RF President Vladimir Putin, and we discussed the state of the sector and the issues regarding its reform in details.
– There is an opinion that your viewpoint on the efficient economy and its management coincides with the position of the so-called «red directors», i.e. that you see no significant advantages of market methods of work. Do you agree with it?
– We used to make and are still making decisions of such scale that it is impossible to estimate them from the standpoint of consequences. Time is needed. Still, it has already shown that the reforms held in the RF transport system (with the exception of the railway transport reform) were a mistake. Those reforms were held not by «red directors», but by «marketers». Nowadays, the role of the state in transport assets increases. And the legislative and normative basis is being changed for that.
When I was the Minister of Railways, the prices for transportation did not grow faster than the inflation. And we fulfilled the demand for transportation. We lacked much, still we sought for more – to renew, to purchase, to build… However, there is a balance of interests in any state, and first of all, the interests of the state itself. And this must be respected, and this should be considered when any reform is held. That is my position.
– How did you celebrate you jubilee? Were there many congratulations?
– I got plenty of congratulations from politicians, railmen, students, veterans... I greatly appreciate the assessment of my labour and attitude to people mentioned in them. On the eve of the jubilee, the RF President Vladimir Putin signed a Decree on rewarding me for the achievents in railway transport development. The following day he congratulated me. In particular, he said, «Your biography, your contribution to the development of Russian railway transport must be honoured. Your colleagues know and appreciate you as a real professional, energetic and loyal man. I am sure that your experience and competency will be required for the good of Russia. I wish you health and success!» These words are as an honest handshake.
– What can you advise young people?
– In order not to make mistakes, one should thoroughly examine the consequences of the decisions made. One should not make plans, the realization of which will set a stone rolling. The team is also very important. Members of the team should be chosen according to the principle of professionalism. It must be so in every sector, and especially in our work.
– Mr. Fadeyev, let me wish you a happy birthday. I wish you health and a lot of productive work!
Andrey Guriev
[~DETAIL_TEXT] => biography
Gennady Fadeyev
Born on April 10, 1937 in Shimanovsk (Amurskaya region). Graduated from the Khabarovsk Institute of Railway Transport Engineers. In 1967-1977 was Head of the Nizhneudinsk, Taishet, and Krasnoyarsk Divisions of the East-Siberian railway. Then he was Senior Deputy Head of the railway. In 1979-1984 Mr. Fadeyev headed the newly created Krasnoyarsk railway. In 1984-1987 was Head of the Oktyabrskaya railway. In 1987 he was appointed Deputy Minister of Railways of the USSR, and in 1988 Senior Deputy Minister. From 1991 worked as acting Minister of Railways. On January 20, 1992 Gennady Fadeyev was appointed the RF Minister of Railways. In 1990 he was elected a Member of Parliament delegated from the Krasnoyarsk region of the Russian Soviet Federative Socialist Republic; later he was a member of the Supreme Council. In July 1996 he was dismissed from the post of the Minister. From July 1996 till March 1999 was the General Secretary of the International Coordinating Council of Transsiberian Transportation. Then, he headed the Moscow railway. In January 2002 was again appointed the Minister of Railways of the Russian Federation. From September 22, 2003 acted as the President of OAO RZD. Since June 14, 2005 – adviser to the Chairman of the RF Government.
It Was to Happen!
– Mr. Fadeyev, did you long for climbing up the ladder or was it just a twist of fate?
– Sometimes, a man deliberately creates conditions to be noted and to succeed, and asks top men to help him. I cannot say that I was such a person. And I climbed the ladder in accordance with the results of my work. I like to work a lot. While still a student I wanted to work at a railway station, to shunt, and to form trains. Using modern terminology, I felt even then I was an «antirecessionary manager». When I was young, I organized, for example, the new Taishet Division at the Transsiberian railway. Or another example… In 1982 (I was the Head of Krasnoyarsk Railway at that time) N.Konarev, who had just been appointed the USSR Minister of Railways, offered me to become his deputy. I refused his offer because I was not ready for the post at that time. Two years later I was offered to head the Oktyabrskaya railway, and I agreed. By that moment I was familiar with the railways of the Far East and Siberia, and I wanted to learn about the specifics of railways in the European part of Russia. In 1987 Mr.Konarev again offered me to become his deputy. And that time I felt that I was ready for the job. I believe that proves that I am not a careerist. Meanwhile, starting from my childhood, I have always been a leader – the captain of a school football team, a monitor in the institute etc. And even in the Government chaired by Viktor Chernomyrdin, the RF President Boris Yetsin called me «foreman».
– At the Oktyabrskaya railway (in Saint-Petersburg) people remembered your strictness, exactingness, and even inflexibility for a long time. How can you characterize your style of management?
– You know, I like people. All of us have different skills, but everyone should fit the position they occupy. And if someone shows that he can occupy a more important post, I always remember such a person. I have always demanded much from people, however, only if all the necessary conditions had been created. Sometimes I understood that wasn’t done, and then I told the worker, «My demands were too high, but you could do it, you can do it». The man who has experienced much will hardly take strict measures to an innocent person. I would like to stress it. Why am I not afraid to speak to any working team? Because I know that they know everything about me, and I am always ready to answer any question.
– Do you think that your style of work can be called «authoritarian»?
– There must have been some grounds to call my style of work authoritarian. I would rather say that I set tasks that are too big in the hope that they will be fulfilled. From the strategy viewpoint, all the decisions I made were correct. Let’s take, for example, the most important question – the fate of Russian railways. I kept them. What helped me to do it – authoritarian approach, persistence, competence, the ability to prove things, to find supporters? Perhaps, all of these qualities. If I had another position, the situation would also be different nowadays. Vitaly Efimov, who was the Transport Minister at that time, prepared the Decree on the Ministry of Railways liquidation at the end of 1991. 15 years later E.Gaidar said about it, «Working railways at that period of time was a feat, and there was no other such feat in the second half of the 20th century». When it seemed that nothing was reliable in the state any longer, I said to Mr. Yetsin, «You have an absolutely reliable and controlled sector. If you tell me to reverse all the trains, in an hour I will report to you that all of them are running in the opposite direction». Later he used to joke, «Where are the trains running today?» And I would answer, «In the correct direction». So the result we have achieved became possible due to preserving the sector at that time. I do not know if I was authoritarian, but the decisions I made were necessary at that time. It had to happen!
West Was Shocked
– In 1995 you adopted the law «On Railway Transport», which forbade much from the reform viewpoint, while in 1996 you organized the Congress of Railmen, which approved the conservative course, and in 2002 you took up the reform and carried out the stage at which the functions of state regulation and economic activities were separated. How can you explain such changes?
– The law adopted in 1995 ran as follows, «Railway transport is federal property, it cannot be privatized». And I – the Minister, who adopted that law, – supported a new one «On Specifics of Control and Management of Railway Transport Property», which described how privatization could be carried out. When I was asked a question about it at a session of the State Duma, I answered «Don’t you see the difference in time, policy, economy, and, which is most important, in the content of the law I support?» I explained that Article 8 of the new law prohibited to use in the turnover a number of railways’ assets, i.e. the group of basic assets (mainline tracks, stations, locomotive depots, strategic objects etc.) which were to remain controlled by the state to regulate transportation process.
If there are such statements in the law, I am sure that the consequences of the reform will be a success. That is why I said at that time that my principles of state property protection had not changed. You may ask why the previous law was so conservative. That was the demand of time. My position has always been to keep railways in the federal property.
– Could you give an example of how you struggled against railway transport privatization plans in the 1990-s?
– Since the launch of the RF Ministry of Railways in 1992, the issue was constantly discussed, especially in 1992-1995, when we developed the Law «On Railway Transport». It was very difficult to develop such a bill and get it approved by the Government, because young reformers had come. Meanwhile, when I presented the bill at a meeting of the State Duma in 1995, the audience applauded, and I offered to approve it in two readings at once. And they did it!
In fact, that period was full of such events, when everything hung by a thread. I will tell you about one of them. In 1995 Russia took large loans in the International Monetary Fund, but the state had to take some obligations. Once the Government was discussing one of such loans. The documents were given out at the meeting. I opened the report and read that the railway transport privatization was to start in September 1995. The more I read, the more I was shocked. The Chairman Viktor Chernomyrdin offered to approve the document without discussing it. I raised my hand, but he ignored me. Then I stood up and started to speak in a loud voice, «I will cry for the stenographers not to miss a single word of mine. I will speak up, because we are talking about the destruction of the country’s railways». «What destruction do you mean?» «Have you read the document? Open the page, where it is written that the privatization of railways is to be started. The law has just been approved! This can provoke a conflict between the Duma and the Government! I am against it!» As a result, the document was sent for a revision. By the way, many ministers supported me at that meeting.
– If you had not spoken, the obligations concerning privatizations would have been taken?
– Yes, of course. Well, they could say later: time has passed, and our approach must be corrected. But that was a juridical document! As for the West, they were gutted that I kept railways controlled by the state.
– I would like to speak of the Russian Congress of Railmen, held on May 17-18, 1996. For a long time, the official viewpoint was that the forum laid foundation of the reform. Another opinion runs that it was organized to strengthen the principle «anything for the sake of changing nothing». Why did you organize the Congress?
– The railway transport reform is an important decision, and it should be made not by a handful of people, but by such a congress, in which the best representatives of the sector participate. Speaking at the congress, I said that the main issue of the future reform was separation of transportation and infrastructure to create equal conditions for carriers to compete. Was it possible to do it at that time? I was against it in 1990, and in 1995, and in 1999 (when we started to develop the Programme of the structural reform), and in 2001 (when the Government adopted it). Even German Gref agreed with me then, and the Programme maintains that it is necessary to return to this issue only at the end of the third stage (in 2010) and evaluate whether the necessary conditions have been created for the separation. I said about it at the congress. I asked, if the Government was ready to subsidize the infrastructure. After a pause, I answered myself, «No, it is not ready to do it». It was a bold historical statement. Over ten years have passed since then, and the Government is still not ready to subsidize the infrastructure as it is done in the countries where similar reforms were held. So, I was right.
«I Worried About the Reform»
– Mr. Fadeyev, after the president elections in June 1996 you were not offered to become a member of the Government again. Did you expect it?
– The demission was out of the blue for me, since the congress had just finished, and the situation in the sector started to improve. I was full of pith and popular. I did not strive to find out the real reason, but the society treated it as a usual thing – staff rotation.
– In October 2001, a criminal investigation was opened against Minister of Railways N.Aksenenko, and soon after it he was dismissed. At the beginning of 2002 you were offered again to become the Minister. Was it also out of the blue?
– I did not expect that Aksenenko would be dismissed. I was on vacation in Saint-Petersburg, when I heard on TV about the President’s decree regarding the resignation of the Minister of Railways. Simultaneously, there was a phone call – I was told to come to Prime Minister Mikhail Kasyanov the next morning. And I left for Moscow. Naturally, I understood that my appointment was possible… When I came to Mr. Kasyanov, he asked, «Could you advise who can head the railway sector?» «Must he be a professional railman?» «Only a professional.» I told him about one person, and we discussed the candidacy, then another man… Suddenly he interrupted me, «Have you got more candidacies? There is no need to waste time, because I meant you». So, that is how I was appointed to the position.
– How did you treat the new appointment?
– I had been Head of the Moscow railway for three years by that time. So, I was not worried about the financial and economic management of the sector, only about the reform. Only six months passed when Decree № 384 on the reform had been approved. The reform started by then, and it was necessary to make decisions to carry out the adopted plans. After Mr. Kasyanov, I was received by the RF President Vladimir Putin, and we discussed the state of the sector and the issues regarding its reform in details.
– There is an opinion that your viewpoint on the efficient economy and its management coincides with the position of the so-called «red directors», i.e. that you see no significant advantages of market methods of work. Do you agree with it?
– We used to make and are still making decisions of such scale that it is impossible to estimate them from the standpoint of consequences. Time is needed. Still, it has already shown that the reforms held in the RF transport system (with the exception of the railway transport reform) were a mistake. Those reforms were held not by «red directors», but by «marketers». Nowadays, the role of the state in transport assets increases. And the legislative and normative basis is being changed for that.
When I was the Minister of Railways, the prices for transportation did not grow faster than the inflation. And we fulfilled the demand for transportation. We lacked much, still we sought for more – to renew, to purchase, to build… However, there is a balance of interests in any state, and first of all, the interests of the state itself. And this must be respected, and this should be considered when any reform is held. That is my position.
– How did you celebrate you jubilee? Were there many congratulations?
– I got plenty of congratulations from politicians, railmen, students, veterans... I greatly appreciate the assessment of my labour and attitude to people mentioned in them. On the eve of the jubilee, the RF President Vladimir Putin signed a Decree on rewarding me for the achievents in railway transport development. The following day he congratulated me. In particular, he said, «Your biography, your contribution to the development of Russian railway transport must be honoured. Your colleagues know and appreciate you as a real professional, energetic and loyal man. I am sure that your experience and competency will be required for the good of Russia. I wish you health and success!» These words are as an honest handshake.
– What can you advise young people?
– In order not to make mistakes, one should thoroughly examine the consequences of the decisions made. One should not make plans, the realization of which will set a stone rolling. The team is also very important. Members of the team should be chosen according to the principle of professionalism. It must be so in every sector, and especially in our work.
– Mr. Fadeyev, let me wish you a happy birthday. I wish you health and a lot of productive work!
Andrey Guriev
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Mr. Fadeyev told The RZD-Partner International correspondent about his life and the railway reforms of the 1990-s as they were.
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Mr. Fadeyev told The RZD-Partner International correspondent about his life and the railway reforms of the 1990-s as they were.
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[SECTION_META_TITLE] => Gennady Fadeyev: «I Like Otherwise-Minded People»
[SECTION_META_KEYWORDS] => gennady fadeyev: «i like otherwise-minded people»
[SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2007/3/012.png" border="1" alt="Gennady Fadeyev" title="Gennady Fadeyev" hspace="5" width="110" height="140" align="left" />In April 2007, Gennady Fadeyev celebrated his 70-th birthday. Three times Head of a railway, Russian Minister of Railways for two terms, the first President of OAO Russian Railways, now he is a member of the company’s Board of Directors and an adviser of the RF Prime Minister.<br />Mr. Fadeyev told The RZD-Partner International correspondent about his life and the railway reforms of the 1990-s as they were.
[ELEMENT_META_TITLE] => Gennady Fadeyev: «I Like Otherwise-Minded People»
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[DETAIL_TEXT] => Very Attractive Asset
Saint-Petersburg and Leningrad region need a container port terminal equipped with a quality access to large motor ways badly, since their ports are not capable to handle the growing cargo volumes. «Nowadays we observe lack of resources to cope with container flows in Saint-Petersburg. If we do not find a solution, our neighbors will take away the market», – Yuri Yuryev, Head of Corporate Development department of OAO TransContainer, asserts.
One of the most favorably located container terminals is believed to be the enterprise belonging to the company Moby Dick, with handling capacities worth 500 thousand TEU. In its turn, Moby Dick is a daughter structure of the Finnish Containerships Oy. The terminal was launched in 2002 and is located on Kotlin island in the immediate harborage of the Sea Commercial Port of Saint-Petersburg. The island is linked with the mainland by motor way. Currently the dam complex is being constructed close to the terminal to protect the city from frequent floods.
According to Vladimir Blank, Deputy Head of the Federal Agency of Construction, Housing and Communial Services (Rosstroy), when the dam is completed, it will be three times faster to reach the city from Kotlin island than from the First Container Terminal of the port of Saint-Petersburg. Through traffic via the dam will be launched before 2011, and the construction of the whole complex is to be completed by 2012. Also, in Vladimir Blank’s words, construction period is likely to shorten. Having a significant geographic and infrastructure advantage, Moby Dick could contribute seriously to containerized cargo attraction to the North-West region of the RF. However, motor way construction makes it difficult to develop Moby Dick, since, to carry out construction work, Rosstroy needed part of the land rented by the stevedores and the latter refused to give it back. Now this matter is undergoing legal procedures.
Conflict as it is
In 2004 Moby Dick JSC and the Committee of State Property Control of Saint-Petersburg (CSPC) concluded the agreement on rent of the land (about 50 hectares) to construct a ferry-handling complex. The complex is to become the natural part of the terminal operating in two stages. According to Rosstroy, since 2004 the company has not implemented any construction. In fact the land was used for warehousing and storage of containers. Thus, the company did not follow the terms of construction that was the very reason why Rosstroy believed it was possible to take 5.5 hectares for dam construction.
On October 30, 2006, CSPC of Saint-Petersburg and Moby Dick concluded the additional agreement according to which the transport company fell under obligation to clear the land out and give it back to CSPC by October 1, 2006 to complete the dam construction. The city authorities, in their turn, confirmed their intention to return the land as early as January 1, 2009. In Rosstroy representatives’ opinion, that agreement performed as a legal guarantee assuring Moby Dick JSC that, while temporarily using the land, the city would not give it to the third persons, since the land would be used only for the purpose of the final stage of the dam construction. Saint-Petersburg Governess Valentina Matviyenko provided her oral assurance of the above-mentioned conditions. However, Moby Dick had doubts in received promises and refused to give Rosstroy the arguable land. State officials took this fact as a sign of disrespect for the city authorities. V.Matviyenko characterized Moby Dick’s behavior as inadequate, while V.Blank expressed his position in a more radical way. In his opinion, the company’s decision can be characterized as «arbitrariness and disrespect to the RF legislation».
In spring 2007, the city authorities tried to capture the land by force, but their effort failed. However, TV reports showing the terminal staff protecting their enterprise were shown on many European TV channels.
Currently sides discuss the matter in court. In March 2007, CSPC took Moby Dick into the court with the aim of removing the company from the land in question. Moby Dick, in its turn, headed for Arbitrage of Saint-Petersburg and Leningrad region. It is too early to draw any conclusions as to who stands a better chance for victory. Experts are not ready to comment on the matter until the final session takes place. Nevertheless, each of the conflict participants expresses its assurance of winning the trial.
To Invest or Not To Invest?
Thus, the question of who and in what volumes will handle containers on Kotlin island will be answered after the court session. Nevertheless, the local container terminal can not help attracting cargo carriers since it provides fast and jam -free access to the Ring Road of Saint-Petersburg and, in this respect, is out of competition with the route via the Russian-Finnish border check-points.
An active position taken by Moby Dick top-management stirred up significant resonance in European media, in particular in the Baltic media sources. Such reaction can be negative for Saint-Petersburg, since it can frighten off European companies, both stevedoring and transportation. The latter may prefer to transport containers via Finnish and Baltic ports.
Many experts believe that the reason for the conflict is actually hidden in the fact that state structures try to get control over the territory and start up business activities. In other words, this has to do with the state blackmail typical of relations patterns set between power and business in Russia. However, some experts are sure that the sides misunderstood each other, which is why there is no reason to expect another similar conflict in the sector. Thus, investors, including those from foreign countries, should not worry.
Moreover, there is no need to forecast a drop of investment volumes directed to the infrastructure of the North- West region of the RF and construction of port handling capacities in particular. The average annual growth of cargo turnover in Russia made 32% in 2004–2006. In 2006 the general container turnover grew by 45.8% (to 3.9 mln TEU), while sea container terminals increased cargo turnover by 24.9% (to 2.4 mln TEU). According to experts, in the next ten years the volume of annual handling made by the Baltic ports will reach 16 mln TEU. Such bright prospects are attractive for foreign companies and one of them is Moby Dick owner, Containerships Oy. The ports of Saint-Petersburg will take 30-40% from the general volume.
Summing Up
Saint-Petersburg and Finland are highly interested in the development of cooperation. This fact is proved by the list of the Finnish companies who are engaged in business activities in the city. Finland joins the first three countries who invest heavily into Saint-Petersburg economy and performs as the leader in terms of sheer number of companies functioning in the city. Thus, against the background of profitable cooperation neither the Finnish nor the Russians are interested in conflicts.
our reference
Moby Dick. Daughter company of Containerships Ltd Oy (Finland).
Container terminal location: Saint-Petersburg, Kronshtadt, (Kotlin island, Litke base). Moby Dick container terminal: area with the arguable land totals 54380 square meters, projected capacities - 500 000 TEU per annum, general cost of construction – EUR 150 mln, wherein EUR 50 mln has already been invested. In 1997 two stages with projected capacity of 180 000 TEU per annum were launched.
Cargo turnover in 2006 reached 111 017 thousand TEU; for the first five months of 2007 the company achieved the results of 45 350 thousand TEU.
viewpoint
Tarya Tiirikainen, Director of the Finnish-Russian Chamber of Commerce in Saint-Petersburg:
– Moby Dick’s conflict hasn’t influenced and, in my opinion, it won’t influence in the future other Finnish investors’ plans to work in the RF. To solve the conflict both sides of investment agreement are to follow the agreement terms. The Government of the city gives significant investment opportunities to investors under certain terms. When the terms are broken, sanctions may follow. It would be much better if the sides were ready to share difficulties and problems which arise in contractual obligations fulfillment. In this case they will manage to agree on how to cooperate efficiently, in order to implement the project. A significant share of trust is needed to make the investment project function efficiently.
Alexey Skvortsov, Senior Associate, Ph.D.Law, DLA Piper Rus Limited - St. Petersburg Branch Office:
– Based on Rosstroy claim, the conclusion can be made that Moby Dick concluded the contract with Saint-Petersburg on investment terms. Agreements of this sort are agreements with subsequent conditions, i.e. the force of the agreement is defined by certain events occurring or measures taken. In this case Moby Dick hasn’t taken any steps dictated by the agreement, i.e. they have not started construction. Consequently, we can make the conclusion that CSPC, following respective norms set by Saint-Petersburg Government, broke the rent contract legally. Starting from that moment Moby Dick lost its rights for the land and was obliged to clear it. Consequently, CSPC chances to win in court are high, while legal trial initiated by Moby Dick seems unfavourable for the company.
[~DETAIL_TEXT] => Very Attractive Asset
Saint-Petersburg and Leningrad region need a container port terminal equipped with a quality access to large motor ways badly, since their ports are not capable to handle the growing cargo volumes. «Nowadays we observe lack of resources to cope with container flows in Saint-Petersburg. If we do not find a solution, our neighbors will take away the market», – Yuri Yuryev, Head of Corporate Development department of OAO TransContainer, asserts.
One of the most favorably located container terminals is believed to be the enterprise belonging to the company Moby Dick, with handling capacities worth 500 thousand TEU. In its turn, Moby Dick is a daughter structure of the Finnish Containerships Oy. The terminal was launched in 2002 and is located on Kotlin island in the immediate harborage of the Sea Commercial Port of Saint-Petersburg. The island is linked with the mainland by motor way. Currently the dam complex is being constructed close to the terminal to protect the city from frequent floods.
According to Vladimir Blank, Deputy Head of the Federal Agency of Construction, Housing and Communial Services (Rosstroy), when the dam is completed, it will be three times faster to reach the city from Kotlin island than from the First Container Terminal of the port of Saint-Petersburg. Through traffic via the dam will be launched before 2011, and the construction of the whole complex is to be completed by 2012. Also, in Vladimir Blank’s words, construction period is likely to shorten. Having a significant geographic and infrastructure advantage, Moby Dick could contribute seriously to containerized cargo attraction to the North-West region of the RF. However, motor way construction makes it difficult to develop Moby Dick, since, to carry out construction work, Rosstroy needed part of the land rented by the stevedores and the latter refused to give it back. Now this matter is undergoing legal procedures.
Conflict as it is
In 2004 Moby Dick JSC and the Committee of State Property Control of Saint-Petersburg (CSPC) concluded the agreement on rent of the land (about 50 hectares) to construct a ferry-handling complex. The complex is to become the natural part of the terminal operating in two stages. According to Rosstroy, since 2004 the company has not implemented any construction. In fact the land was used for warehousing and storage of containers. Thus, the company did not follow the terms of construction that was the very reason why Rosstroy believed it was possible to take 5.5 hectares for dam construction.
On October 30, 2006, CSPC of Saint-Petersburg and Moby Dick concluded the additional agreement according to which the transport company fell under obligation to clear the land out and give it back to CSPC by October 1, 2006 to complete the dam construction. The city authorities, in their turn, confirmed their intention to return the land as early as January 1, 2009. In Rosstroy representatives’ opinion, that agreement performed as a legal guarantee assuring Moby Dick JSC that, while temporarily using the land, the city would not give it to the third persons, since the land would be used only for the purpose of the final stage of the dam construction. Saint-Petersburg Governess Valentina Matviyenko provided her oral assurance of the above-mentioned conditions. However, Moby Dick had doubts in received promises and refused to give Rosstroy the arguable land. State officials took this fact as a sign of disrespect for the city authorities. V.Matviyenko characterized Moby Dick’s behavior as inadequate, while V.Blank expressed his position in a more radical way. In his opinion, the company’s decision can be characterized as «arbitrariness and disrespect to the RF legislation».
In spring 2007, the city authorities tried to capture the land by force, but their effort failed. However, TV reports showing the terminal staff protecting their enterprise were shown on many European TV channels.
Currently sides discuss the matter in court. In March 2007, CSPC took Moby Dick into the court with the aim of removing the company from the land in question. Moby Dick, in its turn, headed for Arbitrage of Saint-Petersburg and Leningrad region. It is too early to draw any conclusions as to who stands a better chance for victory. Experts are not ready to comment on the matter until the final session takes place. Nevertheless, each of the conflict participants expresses its assurance of winning the trial.
To Invest or Not To Invest?
Thus, the question of who and in what volumes will handle containers on Kotlin island will be answered after the court session. Nevertheless, the local container terminal can not help attracting cargo carriers since it provides fast and jam -free access to the Ring Road of Saint-Petersburg and, in this respect, is out of competition with the route via the Russian-Finnish border check-points.
An active position taken by Moby Dick top-management stirred up significant resonance in European media, in particular in the Baltic media sources. Such reaction can be negative for Saint-Petersburg, since it can frighten off European companies, both stevedoring and transportation. The latter may prefer to transport containers via Finnish and Baltic ports.
Many experts believe that the reason for the conflict is actually hidden in the fact that state structures try to get control over the territory and start up business activities. In other words, this has to do with the state blackmail typical of relations patterns set between power and business in Russia. However, some experts are sure that the sides misunderstood each other, which is why there is no reason to expect another similar conflict in the sector. Thus, investors, including those from foreign countries, should not worry.
Moreover, there is no need to forecast a drop of investment volumes directed to the infrastructure of the North- West region of the RF and construction of port handling capacities in particular. The average annual growth of cargo turnover in Russia made 32% in 2004–2006. In 2006 the general container turnover grew by 45.8% (to 3.9 mln TEU), while sea container terminals increased cargo turnover by 24.9% (to 2.4 mln TEU). According to experts, in the next ten years the volume of annual handling made by the Baltic ports will reach 16 mln TEU. Such bright prospects are attractive for foreign companies and one of them is Moby Dick owner, Containerships Oy. The ports of Saint-Petersburg will take 30-40% from the general volume.
Summing Up
Saint-Petersburg and Finland are highly interested in the development of cooperation. This fact is proved by the list of the Finnish companies who are engaged in business activities in the city. Finland joins the first three countries who invest heavily into Saint-Petersburg economy and performs as the leader in terms of sheer number of companies functioning in the city. Thus, against the background of profitable cooperation neither the Finnish nor the Russians are interested in conflicts.
our reference
Moby Dick. Daughter company of Containerships Ltd Oy (Finland).
Container terminal location: Saint-Petersburg, Kronshtadt, (Kotlin island, Litke base). Moby Dick container terminal: area with the arguable land totals 54380 square meters, projected capacities - 500 000 TEU per annum, general cost of construction – EUR 150 mln, wherein EUR 50 mln has already been invested. In 1997 two stages with projected capacity of 180 000 TEU per annum were launched.
Cargo turnover in 2006 reached 111 017 thousand TEU; for the first five months of 2007 the company achieved the results of 45 350 thousand TEU.
viewpoint
Tarya Tiirikainen, Director of the Finnish-Russian Chamber of Commerce in Saint-Petersburg:
– Moby Dick’s conflict hasn’t influenced and, in my opinion, it won’t influence in the future other Finnish investors’ plans to work in the RF. To solve the conflict both sides of investment agreement are to follow the agreement terms. The Government of the city gives significant investment opportunities to investors under certain terms. When the terms are broken, sanctions may follow. It would be much better if the sides were ready to share difficulties and problems which arise in contractual obligations fulfillment. In this case they will manage to agree on how to cooperate efficiently, in order to implement the project. A significant share of trust is needed to make the investment project function efficiently.
Alexey Skvortsov, Senior Associate, Ph.D.Law, DLA Piper Rus Limited - St. Petersburg Branch Office:
– Based on Rosstroy claim, the conclusion can be made that Moby Dick concluded the contract with Saint-Petersburg on investment terms. Agreements of this sort are agreements with subsequent conditions, i.e. the force of the agreement is defined by certain events occurring or measures taken. In this case Moby Dick hasn’t taken any steps dictated by the agreement, i.e. they have not started construction. Consequently, we can make the conclusion that CSPC, following respective norms set by Saint-Petersburg Government, broke the rent contract legally. Starting from that moment Moby Dick lost its rights for the land and was obliged to clear it. Consequently, CSPC chances to win in court are high, while legal trial initiated by Moby Dick seems unfavourable for the company.
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[PREVIEW_TEXT] => The conflict that flared early in 2007 between Containerships Oy container terminal in Saint-Petersburg and the local authorities together with the Federal Agency Rosstroy was the matter of great interest for European transport community. The RZD-Partner International has analyzed the basics of the dispute to evaluate how risky it is to invest into Russia.
[~PREVIEW_TEXT] => The conflict that flared early in 2007 between Containerships Oy container terminal in Saint-Petersburg and the local authorities together with the Federal Agency Rosstroy was the matter of great interest for European transport community. The RZD-Partner International has analyzed the basics of the dispute to evaluate how risky it is to invest into Russia.
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[DETAIL_TEXT] => Very Attractive Asset
Saint-Petersburg and Leningrad region need a container port terminal equipped with a quality access to large motor ways badly, since their ports are not capable to handle the growing cargo volumes. «Nowadays we observe lack of resources to cope with container flows in Saint-Petersburg. If we do not find a solution, our neighbors will take away the market», – Yuri Yuryev, Head of Corporate Development department of OAO TransContainer, asserts.
One of the most favorably located container terminals is believed to be the enterprise belonging to the company Moby Dick, with handling capacities worth 500 thousand TEU. In its turn, Moby Dick is a daughter structure of the Finnish Containerships Oy. The terminal was launched in 2002 and is located on Kotlin island in the immediate harborage of the Sea Commercial Port of Saint-Petersburg. The island is linked with the mainland by motor way. Currently the dam complex is being constructed close to the terminal to protect the city from frequent floods.
According to Vladimir Blank, Deputy Head of the Federal Agency of Construction, Housing and Communial Services (Rosstroy), when the dam is completed, it will be three times faster to reach the city from Kotlin island than from the First Container Terminal of the port of Saint-Petersburg. Through traffic via the dam will be launched before 2011, and the construction of the whole complex is to be completed by 2012. Also, in Vladimir Blank’s words, construction period is likely to shorten. Having a significant geographic and infrastructure advantage, Moby Dick could contribute seriously to containerized cargo attraction to the North-West region of the RF. However, motor way construction makes it difficult to develop Moby Dick, since, to carry out construction work, Rosstroy needed part of the land rented by the stevedores and the latter refused to give it back. Now this matter is undergoing legal procedures.
Conflict as it is
In 2004 Moby Dick JSC and the Committee of State Property Control of Saint-Petersburg (CSPC) concluded the agreement on rent of the land (about 50 hectares) to construct a ferry-handling complex. The complex is to become the natural part of the terminal operating in two stages. According to Rosstroy, since 2004 the company has not implemented any construction. In fact the land was used for warehousing and storage of containers. Thus, the company did not follow the terms of construction that was the very reason why Rosstroy believed it was possible to take 5.5 hectares for dam construction.
On October 30, 2006, CSPC of Saint-Petersburg and Moby Dick concluded the additional agreement according to which the transport company fell under obligation to clear the land out and give it back to CSPC by October 1, 2006 to complete the dam construction. The city authorities, in their turn, confirmed their intention to return the land as early as January 1, 2009. In Rosstroy representatives’ opinion, that agreement performed as a legal guarantee assuring Moby Dick JSC that, while temporarily using the land, the city would not give it to the third persons, since the land would be used only for the purpose of the final stage of the dam construction. Saint-Petersburg Governess Valentina Matviyenko provided her oral assurance of the above-mentioned conditions. However, Moby Dick had doubts in received promises and refused to give Rosstroy the arguable land. State officials took this fact as a sign of disrespect for the city authorities. V.Matviyenko characterized Moby Dick’s behavior as inadequate, while V.Blank expressed his position in a more radical way. In his opinion, the company’s decision can be characterized as «arbitrariness and disrespect to the RF legislation».
In spring 2007, the city authorities tried to capture the land by force, but their effort failed. However, TV reports showing the terminal staff protecting their enterprise were shown on many European TV channels.
Currently sides discuss the matter in court. In March 2007, CSPC took Moby Dick into the court with the aim of removing the company from the land in question. Moby Dick, in its turn, headed for Arbitrage of Saint-Petersburg and Leningrad region. It is too early to draw any conclusions as to who stands a better chance for victory. Experts are not ready to comment on the matter until the final session takes place. Nevertheless, each of the conflict participants expresses its assurance of winning the trial.
To Invest or Not To Invest?
Thus, the question of who and in what volumes will handle containers on Kotlin island will be answered after the court session. Nevertheless, the local container terminal can not help attracting cargo carriers since it provides fast and jam -free access to the Ring Road of Saint-Petersburg and, in this respect, is out of competition with the route via the Russian-Finnish border check-points.
An active position taken by Moby Dick top-management stirred up significant resonance in European media, in particular in the Baltic media sources. Such reaction can be negative for Saint-Petersburg, since it can frighten off European companies, both stevedoring and transportation. The latter may prefer to transport containers via Finnish and Baltic ports.
Many experts believe that the reason for the conflict is actually hidden in the fact that state structures try to get control over the territory and start up business activities. In other words, this has to do with the state blackmail typical of relations patterns set between power and business in Russia. However, some experts are sure that the sides misunderstood each other, which is why there is no reason to expect another similar conflict in the sector. Thus, investors, including those from foreign countries, should not worry.
Moreover, there is no need to forecast a drop of investment volumes directed to the infrastructure of the North- West region of the RF and construction of port handling capacities in particular. The average annual growth of cargo turnover in Russia made 32% in 2004–2006. In 2006 the general container turnover grew by 45.8% (to 3.9 mln TEU), while sea container terminals increased cargo turnover by 24.9% (to 2.4 mln TEU). According to experts, in the next ten years the volume of annual handling made by the Baltic ports will reach 16 mln TEU. Such bright prospects are attractive for foreign companies and one of them is Moby Dick owner, Containerships Oy. The ports of Saint-Petersburg will take 30-40% from the general volume.
Summing Up
Saint-Petersburg and Finland are highly interested in the development of cooperation. This fact is proved by the list of the Finnish companies who are engaged in business activities in the city. Finland joins the first three countries who invest heavily into Saint-Petersburg economy and performs as the leader in terms of sheer number of companies functioning in the city. Thus, against the background of profitable cooperation neither the Finnish nor the Russians are interested in conflicts.
our reference
Moby Dick. Daughter company of Containerships Ltd Oy (Finland).
Container terminal location: Saint-Petersburg, Kronshtadt, (Kotlin island, Litke base). Moby Dick container terminal: area with the arguable land totals 54380 square meters, projected capacities - 500 000 TEU per annum, general cost of construction – EUR 150 mln, wherein EUR 50 mln has already been invested. In 1997 two stages with projected capacity of 180 000 TEU per annum were launched.
Cargo turnover in 2006 reached 111 017 thousand TEU; for the first five months of 2007 the company achieved the results of 45 350 thousand TEU.
viewpoint
Tarya Tiirikainen, Director of the Finnish-Russian Chamber of Commerce in Saint-Petersburg:
– Moby Dick’s conflict hasn’t influenced and, in my opinion, it won’t influence in the future other Finnish investors’ plans to work in the RF. To solve the conflict both sides of investment agreement are to follow the agreement terms. The Government of the city gives significant investment opportunities to investors under certain terms. When the terms are broken, sanctions may follow. It would be much better if the sides were ready to share difficulties and problems which arise in contractual obligations fulfillment. In this case they will manage to agree on how to cooperate efficiently, in order to implement the project. A significant share of trust is needed to make the investment project function efficiently.
Alexey Skvortsov, Senior Associate, Ph.D.Law, DLA Piper Rus Limited - St. Petersburg Branch Office:
– Based on Rosstroy claim, the conclusion can be made that Moby Dick concluded the contract with Saint-Petersburg on investment terms. Agreements of this sort are agreements with subsequent conditions, i.e. the force of the agreement is defined by certain events occurring or measures taken. In this case Moby Dick hasn’t taken any steps dictated by the agreement, i.e. they have not started construction. Consequently, we can make the conclusion that CSPC, following respective norms set by Saint-Petersburg Government, broke the rent contract legally. Starting from that moment Moby Dick lost its rights for the land and was obliged to clear it. Consequently, CSPC chances to win in court are high, while legal trial initiated by Moby Dick seems unfavourable for the company.
[~DETAIL_TEXT] => Very Attractive Asset
Saint-Petersburg and Leningrad region need a container port terminal equipped with a quality access to large motor ways badly, since their ports are not capable to handle the growing cargo volumes. «Nowadays we observe lack of resources to cope with container flows in Saint-Petersburg. If we do not find a solution, our neighbors will take away the market», – Yuri Yuryev, Head of Corporate Development department of OAO TransContainer, asserts.
One of the most favorably located container terminals is believed to be the enterprise belonging to the company Moby Dick, with handling capacities worth 500 thousand TEU. In its turn, Moby Dick is a daughter structure of the Finnish Containerships Oy. The terminal was launched in 2002 and is located on Kotlin island in the immediate harborage of the Sea Commercial Port of Saint-Petersburg. The island is linked with the mainland by motor way. Currently the dam complex is being constructed close to the terminal to protect the city from frequent floods.
According to Vladimir Blank, Deputy Head of the Federal Agency of Construction, Housing and Communial Services (Rosstroy), when the dam is completed, it will be three times faster to reach the city from Kotlin island than from the First Container Terminal of the port of Saint-Petersburg. Through traffic via the dam will be launched before 2011, and the construction of the whole complex is to be completed by 2012. Also, in Vladimir Blank’s words, construction period is likely to shorten. Having a significant geographic and infrastructure advantage, Moby Dick could contribute seriously to containerized cargo attraction to the North-West region of the RF. However, motor way construction makes it difficult to develop Moby Dick, since, to carry out construction work, Rosstroy needed part of the land rented by the stevedores and the latter refused to give it back. Now this matter is undergoing legal procedures.
Conflict as it is
In 2004 Moby Dick JSC and the Committee of State Property Control of Saint-Petersburg (CSPC) concluded the agreement on rent of the land (about 50 hectares) to construct a ferry-handling complex. The complex is to become the natural part of the terminal operating in two stages. According to Rosstroy, since 2004 the company has not implemented any construction. In fact the land was used for warehousing and storage of containers. Thus, the company did not follow the terms of construction that was the very reason why Rosstroy believed it was possible to take 5.5 hectares for dam construction.
On October 30, 2006, CSPC of Saint-Petersburg and Moby Dick concluded the additional agreement according to which the transport company fell under obligation to clear the land out and give it back to CSPC by October 1, 2006 to complete the dam construction. The city authorities, in their turn, confirmed their intention to return the land as early as January 1, 2009. In Rosstroy representatives’ opinion, that agreement performed as a legal guarantee assuring Moby Dick JSC that, while temporarily using the land, the city would not give it to the third persons, since the land would be used only for the purpose of the final stage of the dam construction. Saint-Petersburg Governess Valentina Matviyenko provided her oral assurance of the above-mentioned conditions. However, Moby Dick had doubts in received promises and refused to give Rosstroy the arguable land. State officials took this fact as a sign of disrespect for the city authorities. V.Matviyenko characterized Moby Dick’s behavior as inadequate, while V.Blank expressed his position in a more radical way. In his opinion, the company’s decision can be characterized as «arbitrariness and disrespect to the RF legislation».
In spring 2007, the city authorities tried to capture the land by force, but their effort failed. However, TV reports showing the terminal staff protecting their enterprise were shown on many European TV channels.
Currently sides discuss the matter in court. In March 2007, CSPC took Moby Dick into the court with the aim of removing the company from the land in question. Moby Dick, in its turn, headed for Arbitrage of Saint-Petersburg and Leningrad region. It is too early to draw any conclusions as to who stands a better chance for victory. Experts are not ready to comment on the matter until the final session takes place. Nevertheless, each of the conflict participants expresses its assurance of winning the trial.
To Invest or Not To Invest?
Thus, the question of who and in what volumes will handle containers on Kotlin island will be answered after the court session. Nevertheless, the local container terminal can not help attracting cargo carriers since it provides fast and jam -free access to the Ring Road of Saint-Petersburg and, in this respect, is out of competition with the route via the Russian-Finnish border check-points.
An active position taken by Moby Dick top-management stirred up significant resonance in European media, in particular in the Baltic media sources. Such reaction can be negative for Saint-Petersburg, since it can frighten off European companies, both stevedoring and transportation. The latter may prefer to transport containers via Finnish and Baltic ports.
Many experts believe that the reason for the conflict is actually hidden in the fact that state structures try to get control over the territory and start up business activities. In other words, this has to do with the state blackmail typical of relations patterns set between power and business in Russia. However, some experts are sure that the sides misunderstood each other, which is why there is no reason to expect another similar conflict in the sector. Thus, investors, including those from foreign countries, should not worry.
Moreover, there is no need to forecast a drop of investment volumes directed to the infrastructure of the North- West region of the RF and construction of port handling capacities in particular. The average annual growth of cargo turnover in Russia made 32% in 2004–2006. In 2006 the general container turnover grew by 45.8% (to 3.9 mln TEU), while sea container terminals increased cargo turnover by 24.9% (to 2.4 mln TEU). According to experts, in the next ten years the volume of annual handling made by the Baltic ports will reach 16 mln TEU. Such bright prospects are attractive for foreign companies and one of them is Moby Dick owner, Containerships Oy. The ports of Saint-Petersburg will take 30-40% from the general volume.
Summing Up
Saint-Petersburg and Finland are highly interested in the development of cooperation. This fact is proved by the list of the Finnish companies who are engaged in business activities in the city. Finland joins the first three countries who invest heavily into Saint-Petersburg economy and performs as the leader in terms of sheer number of companies functioning in the city. Thus, against the background of profitable cooperation neither the Finnish nor the Russians are interested in conflicts.
our reference
Moby Dick. Daughter company of Containerships Ltd Oy (Finland).
Container terminal location: Saint-Petersburg, Kronshtadt, (Kotlin island, Litke base). Moby Dick container terminal: area with the arguable land totals 54380 square meters, projected capacities - 500 000 TEU per annum, general cost of construction – EUR 150 mln, wherein EUR 50 mln has already been invested. In 1997 two stages with projected capacity of 180 000 TEU per annum were launched.
Cargo turnover in 2006 reached 111 017 thousand TEU; for the first five months of 2007 the company achieved the results of 45 350 thousand TEU.
viewpoint
Tarya Tiirikainen, Director of the Finnish-Russian Chamber of Commerce in Saint-Petersburg:
– Moby Dick’s conflict hasn’t influenced and, in my opinion, it won’t influence in the future other Finnish investors’ plans to work in the RF. To solve the conflict both sides of investment agreement are to follow the agreement terms. The Government of the city gives significant investment opportunities to investors under certain terms. When the terms are broken, sanctions may follow. It would be much better if the sides were ready to share difficulties and problems which arise in contractual obligations fulfillment. In this case they will manage to agree on how to cooperate efficiently, in order to implement the project. A significant share of trust is needed to make the investment project function efficiently.
Alexey Skvortsov, Senior Associate, Ph.D.Law, DLA Piper Rus Limited - St. Petersburg Branch Office:
– Based on Rosstroy claim, the conclusion can be made that Moby Dick concluded the contract with Saint-Petersburg on investment terms. Agreements of this sort are agreements with subsequent conditions, i.e. the force of the agreement is defined by certain events occurring or measures taken. In this case Moby Dick hasn’t taken any steps dictated by the agreement, i.e. they have not started construction. Consequently, we can make the conclusion that CSPC, following respective norms set by Saint-Petersburg Government, broke the rent contract legally. Starting from that moment Moby Dick lost its rights for the land and was obliged to clear it. Consequently, CSPC chances to win in court are high, while legal trial initiated by Moby Dick seems unfavourable for the company.
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[PREVIEW_TEXT] => The conflict that flared early in 2007 between Containerships Oy container terminal in Saint-Petersburg and the local authorities together with the Federal Agency Rosstroy was the matter of great interest for European transport community. The RZD-Partner International has analyzed the basics of the dispute to evaluate how risky it is to invest into Russia.
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Economic and political aspects of 1520 gauge railway «export» to European countries, as well as competition and cooperation issues between railway, river and trucks, are commented upon by Fyodor Pekhterev, Director of GIPROTRANSTEI.Array
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[DETAIL_TEXT] => – Mr.Pekhterev, first of all, what is the aim of the new line to Vienna construction?
– The major tendency of the world development is globalization, which goes hand in hand with rapid enhancement and interrelation of the national economies. All this leads to the formation of the global economic, information space, as well as the world market of goods, services and labour forces. One of the most important directions for the world trade flows is container transportation from Asian-Pacific region to Europe. Nowadays a significant part of it is transported by sea. However, we have the TransSiberian railway, which could forward these cargoes. Unfortunately, its potential has not been used at full scale. The major reason for that is the fact that on the borders containers are to be reloaded from 1520 gauge platforms to rolling stock of 1435 mm gauge. This causes additional losses and delivery terms increase. Quite naturally this problem could be solved by the prolongation of 1520 mm gauge to Europe. The railway can be equipped with transport –logistic terminals alongside, where container load to 1435 mm line rolling stock, motor transport or river vessels will be implemented.
– Why Vienna was chosen as final destination?
– This decision was made due to the fact that Vienna is located in the center of Europe where many transport channels are crossed. Our institute has researched other European destinations and we came to the conclusion that Vienna’s suburbs are an ideal location for the biggest transport-logistic terminal in a European so-called «land port». By the way, Vienna operates a river port that provides shipping via the Danube and a big airport is also located in that area. Austria is an old European country with highly developed economy and quite predictable political system. Moreover, our project is interesting for Germany and Italy who realize pretty well that the 1520 gauge close to Vienna will be profitable for them as well. Among other tasks to be solved by the project are ecological problems. Now most part of cargo transportation in Europe is implemented by trucks, which causes an unfavorable ecological situation, while our line, of course, can become a great alternative in this respect.
– Several years ago a similar project concerning 1520 gauge line prolonging to Katovitse in Poland was discussed. Have you considered this option?
– Yes, it is true that in the 1990s the idea to prolong the line to Poland and further on to the Czech Republic was considered. A transport-logistic terminal was planned to be constructed in Slavkuv. By the way, this terminal is being built now, though without Russia’s participation. Speaking of the Polish line of wide gauge, which is called LHS, in case of its exploitation for transit transportation the work on strengthening and reconstruction is to be held.
A terminal was planned to be built in Zakhoni in Hungary as well. However, this location is situated far from the center of Europe and we could hardly benefit from that idea. 1520 line construction to Vienna and the construction of a terminal in the area is one of the projects aimed at improving the links between trade partners in Europe. It is important to mention that the European transport corridor №2 Moscow – Minsk – Brest – Warsaw – Berlin remains significant. Now ferry transportation linking Ust-Luga port with the German ports has been launched. This demonstrates the fact that trade is developing in many different directions and our transport projects provide new opportunities.
We have considered different variants and came to the conclusion that the optimal route should go via Slovakia. It should also be mentioned that in the Soviet era a wide gauge line was laid from Uzhgorod (Ukraine) to Koshitse and this railway is still exploited now. The new line will become the extension of the acting one, which will reduce construction costs. Another important fact to mention is that the national railway administrations of the Ukraine, Slovakia and Austria feel positive about our project and are ready to assist in its implementation.
– Do you plan to use the line for passenger transportation?
– Yes, we believe passenger trains are to run along the line. However, there are some problems with it. First of all, current passenger communication Moscow-Vienna is not very popular due to competition with airlines. Moreover, the route of the trip will be prolonged, though boogies change will be excluded. Here are the advantages for the Russian passengers. The situation is totally different for the passengers going from the Ukraine to Europe. Saving traveling time for them will be significant. We have analyzed the situation considering present day train speed, though the work on speed increase up to 160 km/h is being carried out in Ukraine and Russia. When the work on tailoring the lines for high speeds is completed, the new line will become more popular.
– What are the financial sources for the line construction?
– We haven’t reached the final agreement yet. It is clear that railway administrations of Russia, Ukraine, Slovakia and Austria are to participate. Moreover, this project seems prospective for Raiffeisen Bank of Austria. Quite probably, each country-participant will finance and construct the sector going via its territory with the attraction of the national capital, as well as financial resources of the interested countries.
– Are there opponents of the idea to prolong the line to Europe?
– When we held the round table in Bratislava, all participants supported the project. However, it does not mean there are no people with the opposite opinions. For example, in NATO and the EU this idea was not very welcome, compared with the positive reactions received from the national Governments. However, the project is purely of economic nature. Among those opposed are the motor companies who carry containers. On the one hand, it is understandable. In case our project is a success, they will lose a certain amount of cargo. On the other, they do not consider the fact that cargo flow will boost significantly, so there will be work for everybody. At the same time, shipping companies who operate on the Danube showed interest in the project. They realize they can receive additional cargo flow when a transport-logistic terminal near Vienna is constructed. Now we are promoting our project and persuading the adjusted sides they can benefit from it.
– What are the probable advantages Chinese companies can receive from the project, as well as their partnering companies?
– The major profit is speeding up containers delivery transported from China to Europe. Our calculations show that in case this line is constructed container transportation from the ports of the Far East to the center of Europe will reduce to 10 days. For the sake of comparison, the same transportation usually takes 20 - 27 days if transported by sea. It is quite realistic to make a block-train run with the speed of 1200 km per day. Thus, the line will be efficient for the cargo which requires high speed of delivery. Moreover, lack of reloading procedures and boogies change reduces the risk of cargo damage significantly.
[~DETAIL_TEXT] => – Mr.Pekhterev, first of all, what is the aim of the new line to Vienna construction?
– The major tendency of the world development is globalization, which goes hand in hand with rapid enhancement and interrelation of the national economies. All this leads to the formation of the global economic, information space, as well as the world market of goods, services and labour forces. One of the most important directions for the world trade flows is container transportation from Asian-Pacific region to Europe. Nowadays a significant part of it is transported by sea. However, we have the TransSiberian railway, which could forward these cargoes. Unfortunately, its potential has not been used at full scale. The major reason for that is the fact that on the borders containers are to be reloaded from 1520 gauge platforms to rolling stock of 1435 mm gauge. This causes additional losses and delivery terms increase. Quite naturally this problem could be solved by the prolongation of 1520 mm gauge to Europe. The railway can be equipped with transport –logistic terminals alongside, where container load to 1435 mm line rolling stock, motor transport or river vessels will be implemented.
– Why Vienna was chosen as final destination?
– This decision was made due to the fact that Vienna is located in the center of Europe where many transport channels are crossed. Our institute has researched other European destinations and we came to the conclusion that Vienna’s suburbs are an ideal location for the biggest transport-logistic terminal in a European so-called «land port». By the way, Vienna operates a river port that provides shipping via the Danube and a big airport is also located in that area. Austria is an old European country with highly developed economy and quite predictable political system. Moreover, our project is interesting for Germany and Italy who realize pretty well that the 1520 gauge close to Vienna will be profitable for them as well. Among other tasks to be solved by the project are ecological problems. Now most part of cargo transportation in Europe is implemented by trucks, which causes an unfavorable ecological situation, while our line, of course, can become a great alternative in this respect.
– Several years ago a similar project concerning 1520 gauge line prolonging to Katovitse in Poland was discussed. Have you considered this option?
– Yes, it is true that in the 1990s the idea to prolong the line to Poland and further on to the Czech Republic was considered. A transport-logistic terminal was planned to be constructed in Slavkuv. By the way, this terminal is being built now, though without Russia’s participation. Speaking of the Polish line of wide gauge, which is called LHS, in case of its exploitation for transit transportation the work on strengthening and reconstruction is to be held.
A terminal was planned to be built in Zakhoni in Hungary as well. However, this location is situated far from the center of Europe and we could hardly benefit from that idea. 1520 line construction to Vienna and the construction of a terminal in the area is one of the projects aimed at improving the links between trade partners in Europe. It is important to mention that the European transport corridor №2 Moscow – Minsk – Brest – Warsaw – Berlin remains significant. Now ferry transportation linking Ust-Luga port with the German ports has been launched. This demonstrates the fact that trade is developing in many different directions and our transport projects provide new opportunities.
We have considered different variants and came to the conclusion that the optimal route should go via Slovakia. It should also be mentioned that in the Soviet era a wide gauge line was laid from Uzhgorod (Ukraine) to Koshitse and this railway is still exploited now. The new line will become the extension of the acting one, which will reduce construction costs. Another important fact to mention is that the national railway administrations of the Ukraine, Slovakia and Austria feel positive about our project and are ready to assist in its implementation.
– Do you plan to use the line for passenger transportation?
– Yes, we believe passenger trains are to run along the line. However, there are some problems with it. First of all, current passenger communication Moscow-Vienna is not very popular due to competition with airlines. Moreover, the route of the trip will be prolonged, though boogies change will be excluded. Here are the advantages for the Russian passengers. The situation is totally different for the passengers going from the Ukraine to Europe. Saving traveling time for them will be significant. We have analyzed the situation considering present day train speed, though the work on speed increase up to 160 km/h is being carried out in Ukraine and Russia. When the work on tailoring the lines for high speeds is completed, the new line will become more popular.
– What are the financial sources for the line construction?
– We haven’t reached the final agreement yet. It is clear that railway administrations of Russia, Ukraine, Slovakia and Austria are to participate. Moreover, this project seems prospective for Raiffeisen Bank of Austria. Quite probably, each country-participant will finance and construct the sector going via its territory with the attraction of the national capital, as well as financial resources of the interested countries.
– Are there opponents of the idea to prolong the line to Europe?
– When we held the round table in Bratislava, all participants supported the project. However, it does not mean there are no people with the opposite opinions. For example, in NATO and the EU this idea was not very welcome, compared with the positive reactions received from the national Governments. However, the project is purely of economic nature. Among those opposed are the motor companies who carry containers. On the one hand, it is understandable. In case our project is a success, they will lose a certain amount of cargo. On the other, they do not consider the fact that cargo flow will boost significantly, so there will be work for everybody. At the same time, shipping companies who operate on the Danube showed interest in the project. They realize they can receive additional cargo flow when a transport-logistic terminal near Vienna is constructed. Now we are promoting our project and persuading the adjusted sides they can benefit from it.
– What are the probable advantages Chinese companies can receive from the project, as well as their partnering companies?
– The major profit is speeding up containers delivery transported from China to Europe. Our calculations show that in case this line is constructed container transportation from the ports of the Far East to the center of Europe will reduce to 10 days. For the sake of comparison, the same transportation usually takes 20 - 27 days if transported by sea. It is quite realistic to make a block-train run with the speed of 1200 km per day. Thus, the line will be efficient for the cargo which requires high speed of delivery. Moreover, lack of reloading procedures and boogies change reduces the risk of cargo damage significantly.
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[DETAIL_TEXT] => – Mr.Pekhterev, first of all, what is the aim of the new line to Vienna construction?
– The major tendency of the world development is globalization, which goes hand in hand with rapid enhancement and interrelation of the national economies. All this leads to the formation of the global economic, information space, as well as the world market of goods, services and labour forces. One of the most important directions for the world trade flows is container transportation from Asian-Pacific region to Europe. Nowadays a significant part of it is transported by sea. However, we have the TransSiberian railway, which could forward these cargoes. Unfortunately, its potential has not been used at full scale. The major reason for that is the fact that on the borders containers are to be reloaded from 1520 gauge platforms to rolling stock of 1435 mm gauge. This causes additional losses and delivery terms increase. Quite naturally this problem could be solved by the prolongation of 1520 mm gauge to Europe. The railway can be equipped with transport –logistic terminals alongside, where container load to 1435 mm line rolling stock, motor transport or river vessels will be implemented.
– Why Vienna was chosen as final destination?
– This decision was made due to the fact that Vienna is located in the center of Europe where many transport channels are crossed. Our institute has researched other European destinations and we came to the conclusion that Vienna’s suburbs are an ideal location for the biggest transport-logistic terminal in a European so-called «land port». By the way, Vienna operates a river port that provides shipping via the Danube and a big airport is also located in that area. Austria is an old European country with highly developed economy and quite predictable political system. Moreover, our project is interesting for Germany and Italy who realize pretty well that the 1520 gauge close to Vienna will be profitable for them as well. Among other tasks to be solved by the project are ecological problems. Now most part of cargo transportation in Europe is implemented by trucks, which causes an unfavorable ecological situation, while our line, of course, can become a great alternative in this respect.
– Several years ago a similar project concerning 1520 gauge line prolonging to Katovitse in Poland was discussed. Have you considered this option?
– Yes, it is true that in the 1990s the idea to prolong the line to Poland and further on to the Czech Republic was considered. A transport-logistic terminal was planned to be constructed in Slavkuv. By the way, this terminal is being built now, though without Russia’s participation. Speaking of the Polish line of wide gauge, which is called LHS, in case of its exploitation for transit transportation the work on strengthening and reconstruction is to be held.
A terminal was planned to be built in Zakhoni in Hungary as well. However, this location is situated far from the center of Europe and we could hardly benefit from that idea. 1520 line construction to Vienna and the construction of a terminal in the area is one of the projects aimed at improving the links between trade partners in Europe. It is important to mention that the European transport corridor №2 Moscow – Minsk – Brest – Warsaw – Berlin remains significant. Now ferry transportation linking Ust-Luga port with the German ports has been launched. This demonstrates the fact that trade is developing in many different directions and our transport projects provide new opportunities.
We have considered different variants and came to the conclusion that the optimal route should go via Slovakia. It should also be mentioned that in the Soviet era a wide gauge line was laid from Uzhgorod (Ukraine) to Koshitse and this railway is still exploited now. The new line will become the extension of the acting one, which will reduce construction costs. Another important fact to mention is that the national railway administrations of the Ukraine, Slovakia and Austria feel positive about our project and are ready to assist in its implementation.
– Do you plan to use the line for passenger transportation?
– Yes, we believe passenger trains are to run along the line. However, there are some problems with it. First of all, current passenger communication Moscow-Vienna is not very popular due to competition with airlines. Moreover, the route of the trip will be prolonged, though boogies change will be excluded. Here are the advantages for the Russian passengers. The situation is totally different for the passengers going from the Ukraine to Europe. Saving traveling time for them will be significant. We have analyzed the situation considering present day train speed, though the work on speed increase up to 160 km/h is being carried out in Ukraine and Russia. When the work on tailoring the lines for high speeds is completed, the new line will become more popular.
– What are the financial sources for the line construction?
– We haven’t reached the final agreement yet. It is clear that railway administrations of Russia, Ukraine, Slovakia and Austria are to participate. Moreover, this project seems prospective for Raiffeisen Bank of Austria. Quite probably, each country-participant will finance and construct the sector going via its territory with the attraction of the national capital, as well as financial resources of the interested countries.
– Are there opponents of the idea to prolong the line to Europe?
– When we held the round table in Bratislava, all participants supported the project. However, it does not mean there are no people with the opposite opinions. For example, in NATO and the EU this idea was not very welcome, compared with the positive reactions received from the national Governments. However, the project is purely of economic nature. Among those opposed are the motor companies who carry containers. On the one hand, it is understandable. In case our project is a success, they will lose a certain amount of cargo. On the other, they do not consider the fact that cargo flow will boost significantly, so there will be work for everybody. At the same time, shipping companies who operate on the Danube showed interest in the project. They realize they can receive additional cargo flow when a transport-logistic terminal near Vienna is constructed. Now we are promoting our project and persuading the adjusted sides they can benefit from it.
– What are the probable advantages Chinese companies can receive from the project, as well as their partnering companies?
– The major profit is speeding up containers delivery transported from China to Europe. Our calculations show that in case this line is constructed container transportation from the ports of the Far East to the center of Europe will reduce to 10 days. For the sake of comparison, the same transportation usually takes 20 - 27 days if transported by sea. It is quite realistic to make a block-train run with the speed of 1200 km per day. Thus, the line will be efficient for the cargo which requires high speed of delivery. Moreover, lack of reloading procedures and boogies change reduces the risk of cargo damage significantly.
[~DETAIL_TEXT] => – Mr.Pekhterev, first of all, what is the aim of the new line to Vienna construction?
– The major tendency of the world development is globalization, which goes hand in hand with rapid enhancement and interrelation of the national economies. All this leads to the formation of the global economic, information space, as well as the world market of goods, services and labour forces. One of the most important directions for the world trade flows is container transportation from Asian-Pacific region to Europe. Nowadays a significant part of it is transported by sea. However, we have the TransSiberian railway, which could forward these cargoes. Unfortunately, its potential has not been used at full scale. The major reason for that is the fact that on the borders containers are to be reloaded from 1520 gauge platforms to rolling stock of 1435 mm gauge. This causes additional losses and delivery terms increase. Quite naturally this problem could be solved by the prolongation of 1520 mm gauge to Europe. The railway can be equipped with transport –logistic terminals alongside, where container load to 1435 mm line rolling stock, motor transport or river vessels will be implemented.
– Why Vienna was chosen as final destination?
– This decision was made due to the fact that Vienna is located in the center of Europe where many transport channels are crossed. Our institute has researched other European destinations and we came to the conclusion that Vienna’s suburbs are an ideal location for the biggest transport-logistic terminal in a European so-called «land port». By the way, Vienna operates a river port that provides shipping via the Danube and a big airport is also located in that area. Austria is an old European country with highly developed economy and quite predictable political system. Moreover, our project is interesting for Germany and Italy who realize pretty well that the 1520 gauge close to Vienna will be profitable for them as well. Among other tasks to be solved by the project are ecological problems. Now most part of cargo transportation in Europe is implemented by trucks, which causes an unfavorable ecological situation, while our line, of course, can become a great alternative in this respect.
– Several years ago a similar project concerning 1520 gauge line prolonging to Katovitse in Poland was discussed. Have you considered this option?
– Yes, it is true that in the 1990s the idea to prolong the line to Poland and further on to the Czech Republic was considered. A transport-logistic terminal was planned to be constructed in Slavkuv. By the way, this terminal is being built now, though without Russia’s participation. Speaking of the Polish line of wide gauge, which is called LHS, in case of its exploitation for transit transportation the work on strengthening and reconstruction is to be held.
A terminal was planned to be built in Zakhoni in Hungary as well. However, this location is situated far from the center of Europe and we could hardly benefit from that idea. 1520 line construction to Vienna and the construction of a terminal in the area is one of the projects aimed at improving the links between trade partners in Europe. It is important to mention that the European transport corridor №2 Moscow – Minsk – Brest – Warsaw – Berlin remains significant. Now ferry transportation linking Ust-Luga port with the German ports has been launched. This demonstrates the fact that trade is developing in many different directions and our transport projects provide new opportunities.
We have considered different variants and came to the conclusion that the optimal route should go via Slovakia. It should also be mentioned that in the Soviet era a wide gauge line was laid from Uzhgorod (Ukraine) to Koshitse and this railway is still exploited now. The new line will become the extension of the acting one, which will reduce construction costs. Another important fact to mention is that the national railway administrations of the Ukraine, Slovakia and Austria feel positive about our project and are ready to assist in its implementation.
– Do you plan to use the line for passenger transportation?
– Yes, we believe passenger trains are to run along the line. However, there are some problems with it. First of all, current passenger communication Moscow-Vienna is not very popular due to competition with airlines. Moreover, the route of the trip will be prolonged, though boogies change will be excluded. Here are the advantages for the Russian passengers. The situation is totally different for the passengers going from the Ukraine to Europe. Saving traveling time for them will be significant. We have analyzed the situation considering present day train speed, though the work on speed increase up to 160 km/h is being carried out in Ukraine and Russia. When the work on tailoring the lines for high speeds is completed, the new line will become more popular.
– What are the financial sources for the line construction?
– We haven’t reached the final agreement yet. It is clear that railway administrations of Russia, Ukraine, Slovakia and Austria are to participate. Moreover, this project seems prospective for Raiffeisen Bank of Austria. Quite probably, each country-participant will finance and construct the sector going via its territory with the attraction of the national capital, as well as financial resources of the interested countries.
– Are there opponents of the idea to prolong the line to Europe?
– When we held the round table in Bratislava, all participants supported the project. However, it does not mean there are no people with the opposite opinions. For example, in NATO and the EU this idea was not very welcome, compared with the positive reactions received from the national Governments. However, the project is purely of economic nature. Among those opposed are the motor companies who carry containers. On the one hand, it is understandable. In case our project is a success, they will lose a certain amount of cargo. On the other, they do not consider the fact that cargo flow will boost significantly, so there will be work for everybody. At the same time, shipping companies who operate on the Danube showed interest in the project. They realize they can receive additional cargo flow when a transport-logistic terminal near Vienna is constructed. Now we are promoting our project and persuading the adjusted sides they can benefit from it.
– What are the probable advantages Chinese companies can receive from the project, as well as their partnering companies?
– The major profit is speeding up containers delivery transported from China to Europe. Our calculations show that in case this line is constructed container transportation from the ports of the Far East to the center of Europe will reduce to 10 days. For the sake of comparison, the same transportation usually takes 20 - 27 days if transported by sea. It is quite realistic to make a block-train run with the speed of 1200 km per day. Thus, the line will be efficient for the cargo which requires high speed of delivery. Moreover, lack of reloading procedures and boogies change reduces the risk of cargo damage significantly.
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[DETAIL_TEXT] => From Russia to Austria with the same boogies
According to Fyodor Pekhterev, Director of Scientific-Research Institute GIPROTRANSTEI, the new line will be a single-track railway electrified on the direct current of 3000 W. Big engineering buildings are to be constructed in such a way as to give the chance to lay down the second track. The line will allow cargo trains to run with the speed of 120 km/h and passenger units - 160 km/h. To simplify the servicing, exploitation repair both of cargo cars and locomotives will be implemented in the Ukraine and the line itself will host only car and locomotive technical inspection stations.
The idea to construct car repair depots close to ultimate terminal in Vienna has also been expressed. It is quite logical, since this is the very point where the train unit is to be prepared for the run. Other technical parameters are not developed yet and will be worked out in details at the next stages. At the initial stage there will be three transport-logistic terminals. The acting terminals in Cherna (Slovakian-Ukrainian border) and Koshitse will be in use. Moreover, another terminal is to be built close to Vienna. The major agreement between the sides of the joint-venture which is to exploit the line has been reached.
The exact cost of the project is early to discuss since the route has not been surveyed yet. Nevertheless, in F.Pekhterv’s opinion, construction may demand USD 1.3-1.5 bln. The cost of the line can also change depending on the technical parameters required. «About 25 mln tons of export cargo is to be transported from Russia and the CIS, as well as transit cargo from Asian-Pacific region, via the line annually, including 5 mln tons of containerized cargo. In this case the payback period will take 19-20 years. If the line attracts new cargo flows, the pay-back period may change», – GIPROTRANSTEI Head says.
Early in August a group of international experts will be formed joining railway specialists from Russia, Ukraine, Slovakia and Austria. Joint work of the experts will make it possible to define plenty of working issues, i.e. organization, financial and technical problems which are unsolved yet. Vienna as an ultimate destination and location of logistic center deserves special attention, since it is reasoned by several factors. First of all, it is located favourably in the heart of Europe, from where cargo can be delivered by other modes of transport to different countries of 1435 mm railway gauge. Quite probably such choice was made due to a distant location of the city from sea ports, as this helps to weaken competition with sea transport.
What about the EU
Despite the reasonable pros for this line construction, certain doubts arise that have to do with the economic basis for the project, as well as with the political aspect of its implementation. Railways going to land border check-points and sea ports demonstrate the fact that the majority of the cargo flow is formed form Russian export cargo, not transit. There are no serious beliefs to think the situation with the new line will fundamentally change. Containerized trains also have their peculiarities. It is quite clear that sea transport has a lesser prime-cost of transportation compared to that of railway. Thus, it is quite arguable that this railway route is cheaper than sea transportation. Considering this, railway can only head for cargo which is to be delivered fast. Taking into account the new line on the route Nakhodka – Vienna, the terms of delivery can theoretically be reduced twofold compared to those offered by sea transport. However, to achieve this is only possible by means of certain organizational procedures, since the major problem of this route is border and customs inspection that influence cargo delivery terms significantly. Moreover, the cargo owner is to have guarantees received from carriers both for subsequent delivery terms and cargo safety provision. If these issues are unsolved, the route is unlikely to take a leading position in containerized cargo transportation from the Asian-Pacific region to Europe.
Last but not least we can not ignore the political aspect. If the EU does not support the initiative to construct a 1520 gauge line, the chances to see it in reality decrease. Since the line will cross the EU territory, it will be regulated by the EU norms in competition development. This means that infrastructure and carriers are to be separated. Speaking of the line with the cargo flow in the process of formation, the infrastructure owner can find himself in a much worse situation compared to carriers whose interest are protected by the EU directives. Despite the above-mentioned doubts, the hope all this is possible to overcome under conditions of the states-participants support remains.
Summing Up
Besides its initiators, this project can also be profitable for Ukraine, Slovakia and Austria. Moreover, those countries via the territories of which transit transportation will go can easily see their advantage. The line will also service Southern Germany, Switzerland, Eastern France, Slovenia, Czechia, Hungary, Serbia, Northern Croatia, Northern Italy and South - Western Poland.
On average, about 20 mln tons of cargo of the Russian and the CIS foreign trade is transported via the above-mentioned regions annually. The annual growth of 5-6 % from the general volume can be forecasted. The mentioned volumes give hope that the planned transportation volume of 25 mln tons per year is grounded well enough.
By Yuri Ilyin
our reference
The gauge in the Russian Empire underwent the unified standard for the network due to the targeted policy carried out by two Russian Emperors, Nikolai I and Alexander II. The necessity to hold the above-mentioned policy was realized in the 1850ies. For the sake of comparison, certain large railway states, such as Australia and Argentina, for example, do not have the network with the single gauge standard even now.
The 1520 (or formal 1524 mm) gauge standard expansion took place in different periods of the world history. For example, by 1903-1904 two large railways in China were of wide gauge: Manchuria – Kharbin - Pogranichnaya and Kharbin – Port-Arthur with the branch to Dalniy city. In the West, the wide gauge was laid in the Kingdom of Poland and the Great Duchy of Finland. In the South, within a concession agreement, Russia constructed the railway Dzhulfa – Tebriz – to Iran. In the Soviet era, a wide gauge line was constructed in Mongolia from Naushki via Ulan-Bator and further on to the Chinese border. A short wide gauge line was laid in Afganistan as well.
During the Second World War, the European gauge was partially amended into the Russian gauge by the Russian soldiers, as a result the wide gauge spread from Berlin to Vienna. However, it existed only for several months. Soon afterwards all the European lines returned to their typical 1435 mm gauge.
The idea of the wide gauge was re-discovered by Eastern Europe, in particular, by Poland and Slovakia, in the 1970s when the policy of integration of Council for Mutual Economic Assistance members was carried out. During that period two large projects were implemented in Poland and Czechoslovakia.
The wide gauge line in Slovakia was built in the 1960s due to a metallurgic factory construction in Kosice. The line was aimed at iron ore transportation to the above-mentioned enterprise. The railway was launched on May 1, 1966. Later 1520 mm railway was constructed in Southern Poland due to the launch of a large metallurgic enterprise in Katovitse. Iron ore from Ukraine was to be transported via the line to the factory. Acting lines capacities were considered insufficient for iron ore transportation and on November 15, 1976, LHS was launched (Linia Hutniczo Siarkowa, i.e. Mettalurgic-Brimstone line).
After the USSR collapsed, cargo volumes transported via this line reduced significantly. In this respect new variants of cargo flow attraction were developed. Currently the transport-logistic terminal in Slavkov is being built to attract container cargo flow to the sector.
viewpoint
Georgy Davydov, President of the National Association of Transporters:
– In my opinion, from the economic point of view, the project of greater interest compared to Vienna route is the already acting so-called «brimstone-ore» line going via the border check-point Hrubeshov on Kativitse (Slavkuv) in Poland. There the 1520 line follows into the center of Europe and if this line is used investment can be reduced. Slavkuv location and its warehousing capacities will make it easier to accumulate import cargo flows to Russia, Ukraine and other CIS countries from Germany, Holland, Belgium and to provide their warehousing processing.
Objectively, the new line could be of use for private operators mainly. However, foreign partners can overestimate risks connected with cooperation with private companies. That is why OAO TransContainer is likely to become operator of such a logistic line. However, to guarantee a success for the project it would be much better to for a «collective operator» for this line with participation of all interested countries.
I feel optimistic about this railway construction. Considering the interest shown by Russia and the EU (first of all, Poland and Slovakia), we can hope for Ukraine’s agreement.
[~DETAIL_TEXT] => From Russia to Austria with the same boogies
According to Fyodor Pekhterev, Director of Scientific-Research Institute GIPROTRANSTEI, the new line will be a single-track railway electrified on the direct current of 3000 W. Big engineering buildings are to be constructed in such a way as to give the chance to lay down the second track. The line will allow cargo trains to run with the speed of 120 km/h and passenger units - 160 km/h. To simplify the servicing, exploitation repair both of cargo cars and locomotives will be implemented in the Ukraine and the line itself will host only car and locomotive technical inspection stations.
The idea to construct car repair depots close to ultimate terminal in Vienna has also been expressed. It is quite logical, since this is the very point where the train unit is to be prepared for the run. Other technical parameters are not developed yet and will be worked out in details at the next stages. At the initial stage there will be three transport-logistic terminals. The acting terminals in Cherna (Slovakian-Ukrainian border) and Koshitse will be in use. Moreover, another terminal is to be built close to Vienna. The major agreement between the sides of the joint-venture which is to exploit the line has been reached.
The exact cost of the project is early to discuss since the route has not been surveyed yet. Nevertheless, in F.Pekhterv’s opinion, construction may demand USD 1.3-1.5 bln. The cost of the line can also change depending on the technical parameters required. «About 25 mln tons of export cargo is to be transported from Russia and the CIS, as well as transit cargo from Asian-Pacific region, via the line annually, including 5 mln tons of containerized cargo. In this case the payback period will take 19-20 years. If the line attracts new cargo flows, the pay-back period may change», – GIPROTRANSTEI Head says.
Early in August a group of international experts will be formed joining railway specialists from Russia, Ukraine, Slovakia and Austria. Joint work of the experts will make it possible to define plenty of working issues, i.e. organization, financial and technical problems which are unsolved yet. Vienna as an ultimate destination and location of logistic center deserves special attention, since it is reasoned by several factors. First of all, it is located favourably in the heart of Europe, from where cargo can be delivered by other modes of transport to different countries of 1435 mm railway gauge. Quite probably such choice was made due to a distant location of the city from sea ports, as this helps to weaken competition with sea transport.
What about the EU
Despite the reasonable pros for this line construction, certain doubts arise that have to do with the economic basis for the project, as well as with the political aspect of its implementation. Railways going to land border check-points and sea ports demonstrate the fact that the majority of the cargo flow is formed form Russian export cargo, not transit. There are no serious beliefs to think the situation with the new line will fundamentally change. Containerized trains also have their peculiarities. It is quite clear that sea transport has a lesser prime-cost of transportation compared to that of railway. Thus, it is quite arguable that this railway route is cheaper than sea transportation. Considering this, railway can only head for cargo which is to be delivered fast. Taking into account the new line on the route Nakhodka – Vienna, the terms of delivery can theoretically be reduced twofold compared to those offered by sea transport. However, to achieve this is only possible by means of certain organizational procedures, since the major problem of this route is border and customs inspection that influence cargo delivery terms significantly. Moreover, the cargo owner is to have guarantees received from carriers both for subsequent delivery terms and cargo safety provision. If these issues are unsolved, the route is unlikely to take a leading position in containerized cargo transportation from the Asian-Pacific region to Europe.
Last but not least we can not ignore the political aspect. If the EU does not support the initiative to construct a 1520 gauge line, the chances to see it in reality decrease. Since the line will cross the EU territory, it will be regulated by the EU norms in competition development. This means that infrastructure and carriers are to be separated. Speaking of the line with the cargo flow in the process of formation, the infrastructure owner can find himself in a much worse situation compared to carriers whose interest are protected by the EU directives. Despite the above-mentioned doubts, the hope all this is possible to overcome under conditions of the states-participants support remains.
Summing Up
Besides its initiators, this project can also be profitable for Ukraine, Slovakia and Austria. Moreover, those countries via the territories of which transit transportation will go can easily see their advantage. The line will also service Southern Germany, Switzerland, Eastern France, Slovenia, Czechia, Hungary, Serbia, Northern Croatia, Northern Italy and South - Western Poland.
On average, about 20 mln tons of cargo of the Russian and the CIS foreign trade is transported via the above-mentioned regions annually. The annual growth of 5-6 % from the general volume can be forecasted. The mentioned volumes give hope that the planned transportation volume of 25 mln tons per year is grounded well enough.
By Yuri Ilyin
our reference
The gauge in the Russian Empire underwent the unified standard for the network due to the targeted policy carried out by two Russian Emperors, Nikolai I and Alexander II. The necessity to hold the above-mentioned policy was realized in the 1850ies. For the sake of comparison, certain large railway states, such as Australia and Argentina, for example, do not have the network with the single gauge standard even now.
The 1520 (or formal 1524 mm) gauge standard expansion took place in different periods of the world history. For example, by 1903-1904 two large railways in China were of wide gauge: Manchuria – Kharbin - Pogranichnaya and Kharbin – Port-Arthur with the branch to Dalniy city. In the West, the wide gauge was laid in the Kingdom of Poland and the Great Duchy of Finland. In the South, within a concession agreement, Russia constructed the railway Dzhulfa – Tebriz – to Iran. In the Soviet era, a wide gauge line was constructed in Mongolia from Naushki via Ulan-Bator and further on to the Chinese border. A short wide gauge line was laid in Afganistan as well.
During the Second World War, the European gauge was partially amended into the Russian gauge by the Russian soldiers, as a result the wide gauge spread from Berlin to Vienna. However, it existed only for several months. Soon afterwards all the European lines returned to their typical 1435 mm gauge.
The idea of the wide gauge was re-discovered by Eastern Europe, in particular, by Poland and Slovakia, in the 1970s when the policy of integration of Council for Mutual Economic Assistance members was carried out. During that period two large projects were implemented in Poland and Czechoslovakia.
The wide gauge line in Slovakia was built in the 1960s due to a metallurgic factory construction in Kosice. The line was aimed at iron ore transportation to the above-mentioned enterprise. The railway was launched on May 1, 1966. Later 1520 mm railway was constructed in Southern Poland due to the launch of a large metallurgic enterprise in Katovitse. Iron ore from Ukraine was to be transported via the line to the factory. Acting lines capacities were considered insufficient for iron ore transportation and on November 15, 1976, LHS was launched (Linia Hutniczo Siarkowa, i.e. Mettalurgic-Brimstone line).
After the USSR collapsed, cargo volumes transported via this line reduced significantly. In this respect new variants of cargo flow attraction were developed. Currently the transport-logistic terminal in Slavkov is being built to attract container cargo flow to the sector.
viewpoint
Georgy Davydov, President of the National Association of Transporters:
– In my opinion, from the economic point of view, the project of greater interest compared to Vienna route is the already acting so-called «brimstone-ore» line going via the border check-point Hrubeshov on Kativitse (Slavkuv) in Poland. There the 1520 line follows into the center of Europe and if this line is used investment can be reduced. Slavkuv location and its warehousing capacities will make it easier to accumulate import cargo flows to Russia, Ukraine and other CIS countries from Germany, Holland, Belgium and to provide their warehousing processing.
Objectively, the new line could be of use for private operators mainly. However, foreign partners can overestimate risks connected with cooperation with private companies. That is why OAO TransContainer is likely to become operator of such a logistic line. However, to guarantee a success for the project it would be much better to for a «collective operator» for this line with participation of all interested countries.
I feel optimistic about this railway construction. Considering the interest shown by Russia and the EU (first of all, Poland and Slovakia), we can hope for Ukraine’s agreement.
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[DETAIL_TEXT] => From Russia to Austria with the same boogies
According to Fyodor Pekhterev, Director of Scientific-Research Institute GIPROTRANSTEI, the new line will be a single-track railway electrified on the direct current of 3000 W. Big engineering buildings are to be constructed in such a way as to give the chance to lay down the second track. The line will allow cargo trains to run with the speed of 120 km/h and passenger units - 160 km/h. To simplify the servicing, exploitation repair both of cargo cars and locomotives will be implemented in the Ukraine and the line itself will host only car and locomotive technical inspection stations.
The idea to construct car repair depots close to ultimate terminal in Vienna has also been expressed. It is quite logical, since this is the very point where the train unit is to be prepared for the run. Other technical parameters are not developed yet and will be worked out in details at the next stages. At the initial stage there will be three transport-logistic terminals. The acting terminals in Cherna (Slovakian-Ukrainian border) and Koshitse will be in use. Moreover, another terminal is to be built close to Vienna. The major agreement between the sides of the joint-venture which is to exploit the line has been reached.
The exact cost of the project is early to discuss since the route has not been surveyed yet. Nevertheless, in F.Pekhterv’s opinion, construction may demand USD 1.3-1.5 bln. The cost of the line can also change depending on the technical parameters required. «About 25 mln tons of export cargo is to be transported from Russia and the CIS, as well as transit cargo from Asian-Pacific region, via the line annually, including 5 mln tons of containerized cargo. In this case the payback period will take 19-20 years. If the line attracts new cargo flows, the pay-back period may change», – GIPROTRANSTEI Head says.
Early in August a group of international experts will be formed joining railway specialists from Russia, Ukraine, Slovakia and Austria. Joint work of the experts will make it possible to define plenty of working issues, i.e. organization, financial and technical problems which are unsolved yet. Vienna as an ultimate destination and location of logistic center deserves special attention, since it is reasoned by several factors. First of all, it is located favourably in the heart of Europe, from where cargo can be delivered by other modes of transport to different countries of 1435 mm railway gauge. Quite probably such choice was made due to a distant location of the city from sea ports, as this helps to weaken competition with sea transport.
What about the EU
Despite the reasonable pros for this line construction, certain doubts arise that have to do with the economic basis for the project, as well as with the political aspect of its implementation. Railways going to land border check-points and sea ports demonstrate the fact that the majority of the cargo flow is formed form Russian export cargo, not transit. There are no serious beliefs to think the situation with the new line will fundamentally change. Containerized trains also have their peculiarities. It is quite clear that sea transport has a lesser prime-cost of transportation compared to that of railway. Thus, it is quite arguable that this railway route is cheaper than sea transportation. Considering this, railway can only head for cargo which is to be delivered fast. Taking into account the new line on the route Nakhodka – Vienna, the terms of delivery can theoretically be reduced twofold compared to those offered by sea transport. However, to achieve this is only possible by means of certain organizational procedures, since the major problem of this route is border and customs inspection that influence cargo delivery terms significantly. Moreover, the cargo owner is to have guarantees received from carriers both for subsequent delivery terms and cargo safety provision. If these issues are unsolved, the route is unlikely to take a leading position in containerized cargo transportation from the Asian-Pacific region to Europe.
Last but not least we can not ignore the political aspect. If the EU does not support the initiative to construct a 1520 gauge line, the chances to see it in reality decrease. Since the line will cross the EU territory, it will be regulated by the EU norms in competition development. This means that infrastructure and carriers are to be separated. Speaking of the line with the cargo flow in the process of formation, the infrastructure owner can find himself in a much worse situation compared to carriers whose interest are protected by the EU directives. Despite the above-mentioned doubts, the hope all this is possible to overcome under conditions of the states-participants support remains.
Summing Up
Besides its initiators, this project can also be profitable for Ukraine, Slovakia and Austria. Moreover, those countries via the territories of which transit transportation will go can easily see their advantage. The line will also service Southern Germany, Switzerland, Eastern France, Slovenia, Czechia, Hungary, Serbia, Northern Croatia, Northern Italy and South - Western Poland.
On average, about 20 mln tons of cargo of the Russian and the CIS foreign trade is transported via the above-mentioned regions annually. The annual growth of 5-6 % from the general volume can be forecasted. The mentioned volumes give hope that the planned transportation volume of 25 mln tons per year is grounded well enough.
By Yuri Ilyin
our reference
The gauge in the Russian Empire underwent the unified standard for the network due to the targeted policy carried out by two Russian Emperors, Nikolai I and Alexander II. The necessity to hold the above-mentioned policy was realized in the 1850ies. For the sake of comparison, certain large railway states, such as Australia and Argentina, for example, do not have the network with the single gauge standard even now.
The 1520 (or formal 1524 mm) gauge standard expansion took place in different periods of the world history. For example, by 1903-1904 two large railways in China were of wide gauge: Manchuria – Kharbin - Pogranichnaya and Kharbin – Port-Arthur with the branch to Dalniy city. In the West, the wide gauge was laid in the Kingdom of Poland and the Great Duchy of Finland. In the South, within a concession agreement, Russia constructed the railway Dzhulfa – Tebriz – to Iran. In the Soviet era, a wide gauge line was constructed in Mongolia from Naushki via Ulan-Bator and further on to the Chinese border. A short wide gauge line was laid in Afganistan as well.
During the Second World War, the European gauge was partially amended into the Russian gauge by the Russian soldiers, as a result the wide gauge spread from Berlin to Vienna. However, it existed only for several months. Soon afterwards all the European lines returned to their typical 1435 mm gauge.
The idea of the wide gauge was re-discovered by Eastern Europe, in particular, by Poland and Slovakia, in the 1970s when the policy of integration of Council for Mutual Economic Assistance members was carried out. During that period two large projects were implemented in Poland and Czechoslovakia.
The wide gauge line in Slovakia was built in the 1960s due to a metallurgic factory construction in Kosice. The line was aimed at iron ore transportation to the above-mentioned enterprise. The railway was launched on May 1, 1966. Later 1520 mm railway was constructed in Southern Poland due to the launch of a large metallurgic enterprise in Katovitse. Iron ore from Ukraine was to be transported via the line to the factory. Acting lines capacities were considered insufficient for iron ore transportation and on November 15, 1976, LHS was launched (Linia Hutniczo Siarkowa, i.e. Mettalurgic-Brimstone line).
After the USSR collapsed, cargo volumes transported via this line reduced significantly. In this respect new variants of cargo flow attraction were developed. Currently the transport-logistic terminal in Slavkov is being built to attract container cargo flow to the sector.
viewpoint
Georgy Davydov, President of the National Association of Transporters:
– In my opinion, from the economic point of view, the project of greater interest compared to Vienna route is the already acting so-called «brimstone-ore» line going via the border check-point Hrubeshov on Kativitse (Slavkuv) in Poland. There the 1520 line follows into the center of Europe and if this line is used investment can be reduced. Slavkuv location and its warehousing capacities will make it easier to accumulate import cargo flows to Russia, Ukraine and other CIS countries from Germany, Holland, Belgium and to provide their warehousing processing.
Objectively, the new line could be of use for private operators mainly. However, foreign partners can overestimate risks connected with cooperation with private companies. That is why OAO TransContainer is likely to become operator of such a logistic line. However, to guarantee a success for the project it would be much better to for a «collective operator» for this line with participation of all interested countries.
I feel optimistic about this railway construction. Considering the interest shown by Russia and the EU (first of all, Poland and Slovakia), we can hope for Ukraine’s agreement.
[~DETAIL_TEXT] => From Russia to Austria with the same boogies
According to Fyodor Pekhterev, Director of Scientific-Research Institute GIPROTRANSTEI, the new line will be a single-track railway electrified on the direct current of 3000 W. Big engineering buildings are to be constructed in such a way as to give the chance to lay down the second track. The line will allow cargo trains to run with the speed of 120 km/h and passenger units - 160 km/h. To simplify the servicing, exploitation repair both of cargo cars and locomotives will be implemented in the Ukraine and the line itself will host only car and locomotive technical inspection stations.
The idea to construct car repair depots close to ultimate terminal in Vienna has also been expressed. It is quite logical, since this is the very point where the train unit is to be prepared for the run. Other technical parameters are not developed yet and will be worked out in details at the next stages. At the initial stage there will be three transport-logistic terminals. The acting terminals in Cherna (Slovakian-Ukrainian border) and Koshitse will be in use. Moreover, another terminal is to be built close to Vienna. The major agreement between the sides of the joint-venture which is to exploit the line has been reached.
The exact cost of the project is early to discuss since the route has not been surveyed yet. Nevertheless, in F.Pekhterv’s opinion, construction may demand USD 1.3-1.5 bln. The cost of the line can also change depending on the technical parameters required. «About 25 mln tons of export cargo is to be transported from Russia and the CIS, as well as transit cargo from Asian-Pacific region, via the line annually, including 5 mln tons of containerized cargo. In this case the payback period will take 19-20 years. If the line attracts new cargo flows, the pay-back period may change», – GIPROTRANSTEI Head says.
Early in August a group of international experts will be formed joining railway specialists from Russia, Ukraine, Slovakia and Austria. Joint work of the experts will make it possible to define plenty of working issues, i.e. organization, financial and technical problems which are unsolved yet. Vienna as an ultimate destination and location of logistic center deserves special attention, since it is reasoned by several factors. First of all, it is located favourably in the heart of Europe, from where cargo can be delivered by other modes of transport to different countries of 1435 mm railway gauge. Quite probably such choice was made due to a distant location of the city from sea ports, as this helps to weaken competition with sea transport.
What about the EU
Despite the reasonable pros for this line construction, certain doubts arise that have to do with the economic basis for the project, as well as with the political aspect of its implementation. Railways going to land border check-points and sea ports demonstrate the fact that the majority of the cargo flow is formed form Russian export cargo, not transit. There are no serious beliefs to think the situation with the new line will fundamentally change. Containerized trains also have their peculiarities. It is quite clear that sea transport has a lesser prime-cost of transportation compared to that of railway. Thus, it is quite arguable that this railway route is cheaper than sea transportation. Considering this, railway can only head for cargo which is to be delivered fast. Taking into account the new line on the route Nakhodka – Vienna, the terms of delivery can theoretically be reduced twofold compared to those offered by sea transport. However, to achieve this is only possible by means of certain organizational procedures, since the major problem of this route is border and customs inspection that influence cargo delivery terms significantly. Moreover, the cargo owner is to have guarantees received from carriers both for subsequent delivery terms and cargo safety provision. If these issues are unsolved, the route is unlikely to take a leading position in containerized cargo transportation from the Asian-Pacific region to Europe.
Last but not least we can not ignore the political aspect. If the EU does not support the initiative to construct a 1520 gauge line, the chances to see it in reality decrease. Since the line will cross the EU territory, it will be regulated by the EU norms in competition development. This means that infrastructure and carriers are to be separated. Speaking of the line with the cargo flow in the process of formation, the infrastructure owner can find himself in a much worse situation compared to carriers whose interest are protected by the EU directives. Despite the above-mentioned doubts, the hope all this is possible to overcome under conditions of the states-participants support remains.
Summing Up
Besides its initiators, this project can also be profitable for Ukraine, Slovakia and Austria. Moreover, those countries via the territories of which transit transportation will go can easily see their advantage. The line will also service Southern Germany, Switzerland, Eastern France, Slovenia, Czechia, Hungary, Serbia, Northern Croatia, Northern Italy and South - Western Poland.
On average, about 20 mln tons of cargo of the Russian and the CIS foreign trade is transported via the above-mentioned regions annually. The annual growth of 5-6 % from the general volume can be forecasted. The mentioned volumes give hope that the planned transportation volume of 25 mln tons per year is grounded well enough.
By Yuri Ilyin
our reference
The gauge in the Russian Empire underwent the unified standard for the network due to the targeted policy carried out by two Russian Emperors, Nikolai I and Alexander II. The necessity to hold the above-mentioned policy was realized in the 1850ies. For the sake of comparison, certain large railway states, such as Australia and Argentina, for example, do not have the network with the single gauge standard even now.
The 1520 (or formal 1524 mm) gauge standard expansion took place in different periods of the world history. For example, by 1903-1904 two large railways in China were of wide gauge: Manchuria – Kharbin - Pogranichnaya and Kharbin – Port-Arthur with the branch to Dalniy city. In the West, the wide gauge was laid in the Kingdom of Poland and the Great Duchy of Finland. In the South, within a concession agreement, Russia constructed the railway Dzhulfa – Tebriz – to Iran. In the Soviet era, a wide gauge line was constructed in Mongolia from Naushki via Ulan-Bator and further on to the Chinese border. A short wide gauge line was laid in Afganistan as well.
During the Second World War, the European gauge was partially amended into the Russian gauge by the Russian soldiers, as a result the wide gauge spread from Berlin to Vienna. However, it existed only for several months. Soon afterwards all the European lines returned to their typical 1435 mm gauge.
The idea of the wide gauge was re-discovered by Eastern Europe, in particular, by Poland and Slovakia, in the 1970s when the policy of integration of Council for Mutual Economic Assistance members was carried out. During that period two large projects were implemented in Poland and Czechoslovakia.
The wide gauge line in Slovakia was built in the 1960s due to a metallurgic factory construction in Kosice. The line was aimed at iron ore transportation to the above-mentioned enterprise. The railway was launched on May 1, 1966. Later 1520 mm railway was constructed in Southern Poland due to the launch of a large metallurgic enterprise in Katovitse. Iron ore from Ukraine was to be transported via the line to the factory. Acting lines capacities were considered insufficient for iron ore transportation and on November 15, 1976, LHS was launched (Linia Hutniczo Siarkowa, i.e. Mettalurgic-Brimstone line).
After the USSR collapsed, cargo volumes transported via this line reduced significantly. In this respect new variants of cargo flow attraction were developed. Currently the transport-logistic terminal in Slavkov is being built to attract container cargo flow to the sector.
viewpoint
Georgy Davydov, President of the National Association of Transporters:
– In my opinion, from the economic point of view, the project of greater interest compared to Vienna route is the already acting so-called «brimstone-ore» line going via the border check-point Hrubeshov on Kativitse (Slavkuv) in Poland. There the 1520 line follows into the center of Europe and if this line is used investment can be reduced. Slavkuv location and its warehousing capacities will make it easier to accumulate import cargo flows to Russia, Ukraine and other CIS countries from Germany, Holland, Belgium and to provide their warehousing processing.
Objectively, the new line could be of use for private operators mainly. However, foreign partners can overestimate risks connected with cooperation with private companies. That is why OAO TransContainer is likely to become operator of such a logistic line. However, to guarantee a success for the project it would be much better to for a «collective operator» for this line with participation of all interested countries.
I feel optimistic about this railway construction. Considering the interest shown by Russia and the EU (first of all, Poland and Slovakia), we can hope for Ukraine’s agreement.
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[DETAIL_TEXT] => Leader of Liberalization
Opening the congress, its organizer, Piotr Faryna, Director of Railway Market Media editorship, named European private railway carriers «the avant-guarde of changes», thus defining their place in the complicated process of the EU attempts to make their railways more efficient. «State railways must support independent transporters, because the latter are the motivating force of the progress. Private operators push the market forward to a better quality and competitiveness», argued P. Farina.
The necessity of holding meetings between independent operators, infrastructure owners and their main partners – national carriers is reasoned by a number of important facts. In spite of the difficulties and violation of the EU directives, there appears real liberalization of the railway services market and an access to the national infrastructure of the EU member states becomes a reality for all the licensed operators regardless whether they are state or private. Besides, according to P. Farina, nowadays the former communist countries face similar problems in the sector. Finally, competition in Europe develops, as well as further integration processes. All this requires analysis, discussion and making different managing decisions or recommendations.
«We need to acquire information, discuss various issues, highlight the key points and identify the problems. I believe that we will hold such congresses annually in different countries», said P. Farina.
It should be noted that the initiative got an eager response from the European railway carriers. Representatives of Poland, Germany, Romania, Czechia, Hungary, Slovenia and Latvia participated in the Congress. Strangely enough, there were no representatives of transport or operator businesses from Russia, Ukraine and Byelorussia. Perhaps, they do not consider themselves European transporters. Thus, the participants of the Congress could obtain the information about the Russian railway market development only from the two reports of the RZD-Partner magazine First Deputy Editor-in-Chief.
The European Commission Stands for Market
A representative of the Energy and Transport Directorate of the European Committee Yan Scherp told about Brussels’ position in the railway sector. «Our target is to increase the competitiveness of railway systems in comparison with other transport modes. And we want to create an integrated area without any inner borders with high quality transport products. It can be reached by putting into operation certain principles of business activities organization and is possible only if there is liberalization and open market, and support for domestic competition», said Y. Scherp.
He highlighted that much work should be held to provide an equal access to infrastructure for all the licensed carriers and simplify the entrance to the market for them. «The European Union implemented several legislative documents making for opening the market. However, in practice there is a large difference between the extent to which these rules are implemented in different states, and to reach the target, the rules are to be observed everywhere. I’d like to stress that the key moment is a non-discriminating access to the railway networks. New countries claim that the old EU members discriminate them», stressed the EU official.
Besides, according to Y. Scherp, everyone should concentrate on the reduction of railway services prime cost today. «This activity is often detrimental instead of being profitable. Especially, in the new states, where railway enterprises have debts, very deteriorated basic assets and very expensive infrastructure with the high fee for the network», stated the representative of the European Committee. An important issue is the necessity of a joint long-term strategy of the railway market development. J. Scherp explained that he means not only the hierarchy of certain investment projects, but also the answer to the question «how do we intend to gain profit in future?» «We should think over the plans of national railways further restructuring and make the choice, notwithstanding the public antagonism», claimed Y. Scherp, though he added that it would be reasonable to fulfill obligations on provision of cheap social services for people. Finally, Y. Scherp highlighted that nowadays railways constantly have to think about the implementation of new technologies on the basis of advanced scientific and technical elaborations. He reminded about the existing relative funds of the European Union, which are available for everyone with proper business plans. For example, Poland has received such support – EUR 5 mln.
«On the whole, the European Committee wants to support competition. Market is the mode to overcome the monopoly, as well as the low quality of products and high expenses. If we fail to achieve it, how can we attract clients? How can we become more efficient and competitive in comparison with other transport modes? That is why we need new players, and a lot of operators», summed up Yan Scherp.
Competition Must Be Fair
Among the problems discussed by the representatives of the railway market, one of the most urgent was the «unfair» competition of road hauliers. Dr. Johannes Ludewig, executive director of CER (London), made the following announcement, «The amount of members of our association grew from 12 in 1980 to 63. The share of private business on the railway transportation market exceeds 15%, and the average share of railway transportation in the total throughput was 14% lately. Meanwhile, it is East European countries where it is twofold larger. I’d like to remind that our target was to prevent the downward tendency for the share, which stopped in the West and still continues in Eastern Europe. The most important problem nowadays is competition with road hauliers, and there are no fair conditions in it. The prices for services must reflect the expenses – it is the basic rule for business. And the level of rates on road transportation cannot compensate for the expenses of a railway carrier. Road hauliers have prices that are too low, and it should be changed. We must control the demand and keep relative tariffs».
A number of participants of the Congress supported the representative of the European railway society. «We are still able to form joint international routes, but honest competition with road hauliers is really impossible nowadays», said a representative of a small private company from Romania.
«Deregulation and liberalization of railways has not resulted in new competitiveness. Road transport grows by 3.2% annually, and the railway one – only by 0.9%. Why are we not competitive? We have a very expensive access to infrastructure, while road hauliers and shipping companies do not have such problems», highlighted President of PCC Rail Mieczyslaw Olender.
«There are still line transportations, but few wagon dispatches. There is nobody who could prevent it, not even ideas about a possible way out. Railway is practically unable to offer the services required by the client on the transportation market. This is the problem», recognized Prof. Wojciech Paprocki from Warsaw School of Economics, Board Member of the Union of Private Employers in the Railway Sector.
«Nowadays issues of road transport are strongly lobbied. And we must lobby the railway transport», summed up Chairman of PCC Rail, Zbigniew Szafranski, and it seemed to be the only real suggestion.
Call the Police
Among other «enemies» of a private railway carrier there are state infrastructure companies and national transporters. «PKP’s attitude to a private company is bad. It is constantly creating obstacles to our work! For example, we have no contract with them so far. There is no cooperation with PKP Cargo either. Most potential solutions disappear during negotiations. A private carrier always has problems with repair, lack of its own approach lines etc.», claimed a representative of a small company-operator specializing in coal transportation from Polish mines.
«When the Law on Railway Transport was adopted in 1997, we thought we would have more opportunities. However, the competition with a large company turned to be impossible, and it is too complicated to adjust our relations, so that we could at least complement their work, transporting cargoes from industrial and extracting enterprises to mainlines. Thus, the cooperation everybody speaks about is also hardly possible», said a businessman from Rybnik.
«The share of private operators on our market is 35%, and the figure is one of the largest in Europe. Still, the main problem is the monopoly of the railway and the full set of its consequences unpleasant to us», told a representative of a Romanian company-operator.
Consequently, there could not but arise the question about the current market structure and the possible ways to regulate it. Mieczyslaw Olender criticized the existing institutes, «Today we still have a monopolistic structure in this transport sector. National carriers dominate and are regulated by the state, which does not make for their efficiency growth and defaces market mechanisms. And if a private company wins a tender, it is treated as if he entrenched upon the power. However, it is a private company-operator who risks and thinks twice before acting». The Head of PCC Rail also stressed that if there is no normal competition in the West of Europe, it can hardly take place between Eastern and Western European railway companies. «It is just talks. In fact, our governments have no political will to implement real competition», summed up M. Olender.
The structure of the transportation market in Poland was described by Prof. Wlodzimierz Rydzkowski from the University of Gdansk. He told that the share of PKP Cargo is 77% and the rest belongs to private companies. There are 18 carriers, but the transportation volume of only 6 of them excesses 1%. «However, targeting at a better competition will lead railway operators to tariffs reduction, and, consequently, a decrease of revenues. Are you sure you need it?» the professor asked the public ironically. Soon he recognized that his wish was to provoke the participants of the discussion to think, but not to stop the reforms.
Zbigniew Szafranski, PKP chairman’s plenipotentiary for foreign relations, stood for the interests of the monopolies at the Congress. «Fight or cooperation? Cooperation is better than competition. Fight is not the aim, it is the means to reach it. Nowadays, transportation volume is being increased by PKP Cargo, as well as by private companies, and it is our aim», explained Z. Szafranski. And he paid attention to the following paradox: «If PKP Cargo denies access to someone, there will be a scandal. And if someone denies PKP Cargo access to a mine, it is considered normal. We must be fair. Today we have heard several times that private companies asked for some guarantees. But if you have such a simple mentality requiring guarantees, it is not market. And enclosures of all types are not market either», said Z. Szafranski.
The speech of another famous expert, Matthias Raith from CTL Logistics was even more metaphorical, «Railway market can be compared to apple market. If I go to the market I want to be able to choose who I will buy apples from and what kind of them. But if someone grabs my hand and tells me to buy only one kind of apples and only from one seller, it is not right. The same applies to railways. When we speak about the competition, we do not mean war made by everybody against everyone. Competition must be like a game, a sport, like the will to live. But the largest barrier is today in the minds of people working in the railway sector. And what shall we do if we have no market? Shall we call the police?»
Does Railway Business Have Chances to Survive?
Naturally, different themes were discussed at the Congress, but the most important question, formulated by one of the European speakers, was «Will our business survive?»
It is interesting that the answer is far from obvious. Railway is more expensive than road transport. The cost of a motorway and a railway maintenance differs greatly. All the operators claim that the infrastructure tariffs are non-competitive, even notwithstanding the fact that they are subsidized from the budgets of the European states.
The second problem is that a freight railway is a bureaucratic and inflexible transport mode, and, according to European standards, it can even be considered morally obsolete. Even when you ask a road haulier, if he is afraid of competition with some container train, he will just grin in response and tell, «They will nuzzle into their papers, and that’s all!» Nowadays European logistic companies, which are also railway carriers, have to use their vehicles actively to provide a complex service. Still, cargoes «strive» for being re-oriented to the road, if the capacity of the road network is sufficient.
The railway transportation according to the European model is not a market business in the proper sense of the word. There is no efficiency, which is a characteristic feature of the classical model – with competing «vertically-integrated» railway companies (Northern and partly Southern America, Russia before the revolution in 1917). Europe, which is still influenced by its former enthusiasm about socialism and state regulation in the 20th century before the «Thatcher revolution», «builds the market without constructing it» or constructing just a half of it. The non-market mentality of the national railways’ staff, who threaten to go on strike if they hear about the necessity to make the manufacture meet the economic realities, as well as the consumers of services, especially passengers, prevent the market from further development.
What does the fate have in store for them? Real inner competition within a demonopolized market structure or lobbying of all large subsidies? Or will the European freight railway transport in the near future be represented only by special lines that transport ore and do not need any competition? Possibly. But this will hardly take place before the Second Congress of Independent Rail Operators.
By Andrey Guryev
[~DETAIL_TEXT] => Leader of Liberalization
Opening the congress, its organizer, Piotr Faryna, Director of Railway Market Media editorship, named European private railway carriers «the avant-guarde of changes», thus defining their place in the complicated process of the EU attempts to make their railways more efficient. «State railways must support independent transporters, because the latter are the motivating force of the progress. Private operators push the market forward to a better quality and competitiveness», argued P. Farina.
The necessity of holding meetings between independent operators, infrastructure owners and their main partners – national carriers is reasoned by a number of important facts. In spite of the difficulties and violation of the EU directives, there appears real liberalization of the railway services market and an access to the national infrastructure of the EU member states becomes a reality for all the licensed operators regardless whether they are state or private. Besides, according to P. Farina, nowadays the former communist countries face similar problems in the sector. Finally, competition in Europe develops, as well as further integration processes. All this requires analysis, discussion and making different managing decisions or recommendations.
«We need to acquire information, discuss various issues, highlight the key points and identify the problems. I believe that we will hold such congresses annually in different countries», said P. Farina.
It should be noted that the initiative got an eager response from the European railway carriers. Representatives of Poland, Germany, Romania, Czechia, Hungary, Slovenia and Latvia participated in the Congress. Strangely enough, there were no representatives of transport or operator businesses from Russia, Ukraine and Byelorussia. Perhaps, they do not consider themselves European transporters. Thus, the participants of the Congress could obtain the information about the Russian railway market development only from the two reports of the RZD-Partner magazine First Deputy Editor-in-Chief.
The European Commission Stands for Market
A representative of the Energy and Transport Directorate of the European Committee Yan Scherp told about Brussels’ position in the railway sector. «Our target is to increase the competitiveness of railway systems in comparison with other transport modes. And we want to create an integrated area without any inner borders with high quality transport products. It can be reached by putting into operation certain principles of business activities organization and is possible only if there is liberalization and open market, and support for domestic competition», said Y. Scherp.
He highlighted that much work should be held to provide an equal access to infrastructure for all the licensed carriers and simplify the entrance to the market for them. «The European Union implemented several legislative documents making for opening the market. However, in practice there is a large difference between the extent to which these rules are implemented in different states, and to reach the target, the rules are to be observed everywhere. I’d like to stress that the key moment is a non-discriminating access to the railway networks. New countries claim that the old EU members discriminate them», stressed the EU official.
Besides, according to Y. Scherp, everyone should concentrate on the reduction of railway services prime cost today. «This activity is often detrimental instead of being profitable. Especially, in the new states, where railway enterprises have debts, very deteriorated basic assets and very expensive infrastructure with the high fee for the network», stated the representative of the European Committee. An important issue is the necessity of a joint long-term strategy of the railway market development. J. Scherp explained that he means not only the hierarchy of certain investment projects, but also the answer to the question «how do we intend to gain profit in future?» «We should think over the plans of national railways further restructuring and make the choice, notwithstanding the public antagonism», claimed Y. Scherp, though he added that it would be reasonable to fulfill obligations on provision of cheap social services for people. Finally, Y. Scherp highlighted that nowadays railways constantly have to think about the implementation of new technologies on the basis of advanced scientific and technical elaborations. He reminded about the existing relative funds of the European Union, which are available for everyone with proper business plans. For example, Poland has received such support – EUR 5 mln.
«On the whole, the European Committee wants to support competition. Market is the mode to overcome the monopoly, as well as the low quality of products and high expenses. If we fail to achieve it, how can we attract clients? How can we become more efficient and competitive in comparison with other transport modes? That is why we need new players, and a lot of operators», summed up Yan Scherp.
Competition Must Be Fair
Among the problems discussed by the representatives of the railway market, one of the most urgent was the «unfair» competition of road hauliers. Dr. Johannes Ludewig, executive director of CER (London), made the following announcement, «The amount of members of our association grew from 12 in 1980 to 63. The share of private business on the railway transportation market exceeds 15%, and the average share of railway transportation in the total throughput was 14% lately. Meanwhile, it is East European countries where it is twofold larger. I’d like to remind that our target was to prevent the downward tendency for the share, which stopped in the West and still continues in Eastern Europe. The most important problem nowadays is competition with road hauliers, and there are no fair conditions in it. The prices for services must reflect the expenses – it is the basic rule for business. And the level of rates on road transportation cannot compensate for the expenses of a railway carrier. Road hauliers have prices that are too low, and it should be changed. We must control the demand and keep relative tariffs».
A number of participants of the Congress supported the representative of the European railway society. «We are still able to form joint international routes, but honest competition with road hauliers is really impossible nowadays», said a representative of a small private company from Romania.
«Deregulation and liberalization of railways has not resulted in new competitiveness. Road transport grows by 3.2% annually, and the railway one – only by 0.9%. Why are we not competitive? We have a very expensive access to infrastructure, while road hauliers and shipping companies do not have such problems», highlighted President of PCC Rail Mieczyslaw Olender.
«There are still line transportations, but few wagon dispatches. There is nobody who could prevent it, not even ideas about a possible way out. Railway is practically unable to offer the services required by the client on the transportation market. This is the problem», recognized Prof. Wojciech Paprocki from Warsaw School of Economics, Board Member of the Union of Private Employers in the Railway Sector.
«Nowadays issues of road transport are strongly lobbied. And we must lobby the railway transport», summed up Chairman of PCC Rail, Zbigniew Szafranski, and it seemed to be the only real suggestion.
Call the Police
Among other «enemies» of a private railway carrier there are state infrastructure companies and national transporters. «PKP’s attitude to a private company is bad. It is constantly creating obstacles to our work! For example, we have no contract with them so far. There is no cooperation with PKP Cargo either. Most potential solutions disappear during negotiations. A private carrier always has problems with repair, lack of its own approach lines etc.», claimed a representative of a small company-operator specializing in coal transportation from Polish mines.
«When the Law on Railway Transport was adopted in 1997, we thought we would have more opportunities. However, the competition with a large company turned to be impossible, and it is too complicated to adjust our relations, so that we could at least complement their work, transporting cargoes from industrial and extracting enterprises to mainlines. Thus, the cooperation everybody speaks about is also hardly possible», said a businessman from Rybnik.
«The share of private operators on our market is 35%, and the figure is one of the largest in Europe. Still, the main problem is the monopoly of the railway and the full set of its consequences unpleasant to us», told a representative of a Romanian company-operator.
Consequently, there could not but arise the question about the current market structure and the possible ways to regulate it. Mieczyslaw Olender criticized the existing institutes, «Today we still have a monopolistic structure in this transport sector. National carriers dominate and are regulated by the state, which does not make for their efficiency growth and defaces market mechanisms. And if a private company wins a tender, it is treated as if he entrenched upon the power. However, it is a private company-operator who risks and thinks twice before acting». The Head of PCC Rail also stressed that if there is no normal competition in the West of Europe, it can hardly take place between Eastern and Western European railway companies. «It is just talks. In fact, our governments have no political will to implement real competition», summed up M. Olender.
The structure of the transportation market in Poland was described by Prof. Wlodzimierz Rydzkowski from the University of Gdansk. He told that the share of PKP Cargo is 77% and the rest belongs to private companies. There are 18 carriers, but the transportation volume of only 6 of them excesses 1%. «However, targeting at a better competition will lead railway operators to tariffs reduction, and, consequently, a decrease of revenues. Are you sure you need it?» the professor asked the public ironically. Soon he recognized that his wish was to provoke the participants of the discussion to think, but not to stop the reforms.
Zbigniew Szafranski, PKP chairman’s plenipotentiary for foreign relations, stood for the interests of the monopolies at the Congress. «Fight or cooperation? Cooperation is better than competition. Fight is not the aim, it is the means to reach it. Nowadays, transportation volume is being increased by PKP Cargo, as well as by private companies, and it is our aim», explained Z. Szafranski. And he paid attention to the following paradox: «If PKP Cargo denies access to someone, there will be a scandal. And if someone denies PKP Cargo access to a mine, it is considered normal. We must be fair. Today we have heard several times that private companies asked for some guarantees. But if you have such a simple mentality requiring guarantees, it is not market. And enclosures of all types are not market either», said Z. Szafranski.
The speech of another famous expert, Matthias Raith from CTL Logistics was even more metaphorical, «Railway market can be compared to apple market. If I go to the market I want to be able to choose who I will buy apples from and what kind of them. But if someone grabs my hand and tells me to buy only one kind of apples and only from one seller, it is not right. The same applies to railways. When we speak about the competition, we do not mean war made by everybody against everyone. Competition must be like a game, a sport, like the will to live. But the largest barrier is today in the minds of people working in the railway sector. And what shall we do if we have no market? Shall we call the police?»
Does Railway Business Have Chances to Survive?
Naturally, different themes were discussed at the Congress, but the most important question, formulated by one of the European speakers, was «Will our business survive?»
It is interesting that the answer is far from obvious. Railway is more expensive than road transport. The cost of a motorway and a railway maintenance differs greatly. All the operators claim that the infrastructure tariffs are non-competitive, even notwithstanding the fact that they are subsidized from the budgets of the European states.
The second problem is that a freight railway is a bureaucratic and inflexible transport mode, and, according to European standards, it can even be considered morally obsolete. Even when you ask a road haulier, if he is afraid of competition with some container train, he will just grin in response and tell, «They will nuzzle into their papers, and that’s all!» Nowadays European logistic companies, which are also railway carriers, have to use their vehicles actively to provide a complex service. Still, cargoes «strive» for being re-oriented to the road, if the capacity of the road network is sufficient.
The railway transportation according to the European model is not a market business in the proper sense of the word. There is no efficiency, which is a characteristic feature of the classical model – with competing «vertically-integrated» railway companies (Northern and partly Southern America, Russia before the revolution in 1917). Europe, which is still influenced by its former enthusiasm about socialism and state regulation in the 20th century before the «Thatcher revolution», «builds the market without constructing it» or constructing just a half of it. The non-market mentality of the national railways’ staff, who threaten to go on strike if they hear about the necessity to make the manufacture meet the economic realities, as well as the consumers of services, especially passengers, prevent the market from further development.
What does the fate have in store for them? Real inner competition within a demonopolized market structure or lobbying of all large subsidies? Or will the European freight railway transport in the near future be represented only by special lines that transport ore and do not need any competition? Possibly. But this will hardly take place before the Second Congress of Independent Rail Operators.
By Andrey Guryev
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[SECTION_META_DESCRIPTION] => «Competition and partnership, not war» – this was the official motto of the First Central and Eastern European Congress of Independent Rail Operators held in Warsaw in summer. «Cooperation is better than fight», the participants of the forum said.
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[DETAIL_TEXT] => Leader of Liberalization
Opening the congress, its organizer, Piotr Faryna, Director of Railway Market Media editorship, named European private railway carriers «the avant-guarde of changes», thus defining their place in the complicated process of the EU attempts to make their railways more efficient. «State railways must support independent transporters, because the latter are the motivating force of the progress. Private operators push the market forward to a better quality and competitiveness», argued P. Farina.
The necessity of holding meetings between independent operators, infrastructure owners and their main partners – national carriers is reasoned by a number of important facts. In spite of the difficulties and violation of the EU directives, there appears real liberalization of the railway services market and an access to the national infrastructure of the EU member states becomes a reality for all the licensed operators regardless whether they are state or private. Besides, according to P. Farina, nowadays the former communist countries face similar problems in the sector. Finally, competition in Europe develops, as well as further integration processes. All this requires analysis, discussion and making different managing decisions or recommendations.
«We need to acquire information, discuss various issues, highlight the key points and identify the problems. I believe that we will hold such congresses annually in different countries», said P. Farina.
It should be noted that the initiative got an eager response from the European railway carriers. Representatives of Poland, Germany, Romania, Czechia, Hungary, Slovenia and Latvia participated in the Congress. Strangely enough, there were no representatives of transport or operator businesses from Russia, Ukraine and Byelorussia. Perhaps, they do not consider themselves European transporters. Thus, the participants of the Congress could obtain the information about the Russian railway market development only from the two reports of the RZD-Partner magazine First Deputy Editor-in-Chief.
The European Commission Stands for Market
A representative of the Energy and Transport Directorate of the European Committee Yan Scherp told about Brussels’ position in the railway sector. «Our target is to increase the competitiveness of railway systems in comparison with other transport modes. And we want to create an integrated area without any inner borders with high quality transport products. It can be reached by putting into operation certain principles of business activities organization and is possible only if there is liberalization and open market, and support for domestic competition», said Y. Scherp.
He highlighted that much work should be held to provide an equal access to infrastructure for all the licensed carriers and simplify the entrance to the market for them. «The European Union implemented several legislative documents making for opening the market. However, in practice there is a large difference between the extent to which these rules are implemented in different states, and to reach the target, the rules are to be observed everywhere. I’d like to stress that the key moment is a non-discriminating access to the railway networks. New countries claim that the old EU members discriminate them», stressed the EU official.
Besides, according to Y. Scherp, everyone should concentrate on the reduction of railway services prime cost today. «This activity is often detrimental instead of being profitable. Especially, in the new states, where railway enterprises have debts, very deteriorated basic assets and very expensive infrastructure with the high fee for the network», stated the representative of the European Committee. An important issue is the necessity of a joint long-term strategy of the railway market development. J. Scherp explained that he means not only the hierarchy of certain investment projects, but also the answer to the question «how do we intend to gain profit in future?» «We should think over the plans of national railways further restructuring and make the choice, notwithstanding the public antagonism», claimed Y. Scherp, though he added that it would be reasonable to fulfill obligations on provision of cheap social services for people. Finally, Y. Scherp highlighted that nowadays railways constantly have to think about the implementation of new technologies on the basis of advanced scientific and technical elaborations. He reminded about the existing relative funds of the European Union, which are available for everyone with proper business plans. For example, Poland has received such support – EUR 5 mln.
«On the whole, the European Committee wants to support competition. Market is the mode to overcome the monopoly, as well as the low quality of products and high expenses. If we fail to achieve it, how can we attract clients? How can we become more efficient and competitive in comparison with other transport modes? That is why we need new players, and a lot of operators», summed up Yan Scherp.
Competition Must Be Fair
Among the problems discussed by the representatives of the railway market, one of the most urgent was the «unfair» competition of road hauliers. Dr. Johannes Ludewig, executive director of CER (London), made the following announcement, «The amount of members of our association grew from 12 in 1980 to 63. The share of private business on the railway transportation market exceeds 15%, and the average share of railway transportation in the total throughput was 14% lately. Meanwhile, it is East European countries where it is twofold larger. I’d like to remind that our target was to prevent the downward tendency for the share, which stopped in the West and still continues in Eastern Europe. The most important problem nowadays is competition with road hauliers, and there are no fair conditions in it. The prices for services must reflect the expenses – it is the basic rule for business. And the level of rates on road transportation cannot compensate for the expenses of a railway carrier. Road hauliers have prices that are too low, and it should be changed. We must control the demand and keep relative tariffs».
A number of participants of the Congress supported the representative of the European railway society. «We are still able to form joint international routes, but honest competition with road hauliers is really impossible nowadays», said a representative of a small private company from Romania.
«Deregulation and liberalization of railways has not resulted in new competitiveness. Road transport grows by 3.2% annually, and the railway one – only by 0.9%. Why are we not competitive? We have a very expensive access to infrastructure, while road hauliers and shipping companies do not have such problems», highlighted President of PCC Rail Mieczyslaw Olender.
«There are still line transportations, but few wagon dispatches. There is nobody who could prevent it, not even ideas about a possible way out. Railway is practically unable to offer the services required by the client on the transportation market. This is the problem», recognized Prof. Wojciech Paprocki from Warsaw School of Economics, Board Member of the Union of Private Employers in the Railway Sector.
«Nowadays issues of road transport are strongly lobbied. And we must lobby the railway transport», summed up Chairman of PCC Rail, Zbigniew Szafranski, and it seemed to be the only real suggestion.
Call the Police
Among other «enemies» of a private railway carrier there are state infrastructure companies and national transporters. «PKP’s attitude to a private company is bad. It is constantly creating obstacles to our work! For example, we have no contract with them so far. There is no cooperation with PKP Cargo either. Most potential solutions disappear during negotiations. A private carrier always has problems with repair, lack of its own approach lines etc.», claimed a representative of a small company-operator specializing in coal transportation from Polish mines.
«When the Law on Railway Transport was adopted in 1997, we thought we would have more opportunities. However, the competition with a large company turned to be impossible, and it is too complicated to adjust our relations, so that we could at least complement their work, transporting cargoes from industrial and extracting enterprises to mainlines. Thus, the cooperation everybody speaks about is also hardly possible», said a businessman from Rybnik.
«The share of private operators on our market is 35%, and the figure is one of the largest in Europe. Still, the main problem is the monopoly of the railway and the full set of its consequences unpleasant to us», told a representative of a Romanian company-operator.
Consequently, there could not but arise the question about the current market structure and the possible ways to regulate it. Mieczyslaw Olender criticized the existing institutes, «Today we still have a monopolistic structure in this transport sector. National carriers dominate and are regulated by the state, which does not make for their efficiency growth and defaces market mechanisms. And if a private company wins a tender, it is treated as if he entrenched upon the power. However, it is a private company-operator who risks and thinks twice before acting». The Head of PCC Rail also stressed that if there is no normal competition in the West of Europe, it can hardly take place between Eastern and Western European railway companies. «It is just talks. In fact, our governments have no political will to implement real competition», summed up M. Olender.
The structure of the transportation market in Poland was described by Prof. Wlodzimierz Rydzkowski from the University of Gdansk. He told that the share of PKP Cargo is 77% and the rest belongs to private companies. There are 18 carriers, but the transportation volume of only 6 of them excesses 1%. «However, targeting at a better competition will lead railway operators to tariffs reduction, and, consequently, a decrease of revenues. Are you sure you need it?» the professor asked the public ironically. Soon he recognized that his wish was to provoke the participants of the discussion to think, but not to stop the reforms.
Zbigniew Szafranski, PKP chairman’s plenipotentiary for foreign relations, stood for the interests of the monopolies at the Congress. «Fight or cooperation? Cooperation is better than competition. Fight is not the aim, it is the means to reach it. Nowadays, transportation volume is being increased by PKP Cargo, as well as by private companies, and it is our aim», explained Z. Szafranski. And he paid attention to the following paradox: «If PKP Cargo denies access to someone, there will be a scandal. And if someone denies PKP Cargo access to a mine, it is considered normal. We must be fair. Today we have heard several times that private companies asked for some guarantees. But if you have such a simple mentality requiring guarantees, it is not market. And enclosures of all types are not market either», said Z. Szafranski.
The speech of another famous expert, Matthias Raith from CTL Logistics was even more metaphorical, «Railway market can be compared to apple market. If I go to the market I want to be able to choose who I will buy apples from and what kind of them. But if someone grabs my hand and tells me to buy only one kind of apples and only from one seller, it is not right. The same applies to railways. When we speak about the competition, we do not mean war made by everybody against everyone. Competition must be like a game, a sport, like the will to live. But the largest barrier is today in the minds of people working in the railway sector. And what shall we do if we have no market? Shall we call the police?»
Does Railway Business Have Chances to Survive?
Naturally, different themes were discussed at the Congress, but the most important question, formulated by one of the European speakers, was «Will our business survive?»
It is interesting that the answer is far from obvious. Railway is more expensive than road transport. The cost of a motorway and a railway maintenance differs greatly. All the operators claim that the infrastructure tariffs are non-competitive, even notwithstanding the fact that they are subsidized from the budgets of the European states.
The second problem is that a freight railway is a bureaucratic and inflexible transport mode, and, according to European standards, it can even be considered morally obsolete. Even when you ask a road haulier, if he is afraid of competition with some container train, he will just grin in response and tell, «They will nuzzle into their papers, and that’s all!» Nowadays European logistic companies, which are also railway carriers, have to use their vehicles actively to provide a complex service. Still, cargoes «strive» for being re-oriented to the road, if the capacity of the road network is sufficient.
The railway transportation according to the European model is not a market business in the proper sense of the word. There is no efficiency, which is a characteristic feature of the classical model – with competing «vertically-integrated» railway companies (Northern and partly Southern America, Russia before the revolution in 1917). Europe, which is still influenced by its former enthusiasm about socialism and state regulation in the 20th century before the «Thatcher revolution», «builds the market without constructing it» or constructing just a half of it. The non-market mentality of the national railways’ staff, who threaten to go on strike if they hear about the necessity to make the manufacture meet the economic realities, as well as the consumers of services, especially passengers, prevent the market from further development.
What does the fate have in store for them? Real inner competition within a demonopolized market structure or lobbying of all large subsidies? Or will the European freight railway transport in the near future be represented only by special lines that transport ore and do not need any competition? Possibly. But this will hardly take place before the Second Congress of Independent Rail Operators.
By Andrey Guryev
[~DETAIL_TEXT] => Leader of Liberalization
Opening the congress, its organizer, Piotr Faryna, Director of Railway Market Media editorship, named European private railway carriers «the avant-guarde of changes», thus defining their place in the complicated process of the EU attempts to make their railways more efficient. «State railways must support independent transporters, because the latter are the motivating force of the progress. Private operators push the market forward to a better quality and competitiveness», argued P. Farina.
The necessity of holding meetings between independent operators, infrastructure owners and their main partners – national carriers is reasoned by a number of important facts. In spite of the difficulties and violation of the EU directives, there appears real liberalization of the railway services market and an access to the national infrastructure of the EU member states becomes a reality for all the licensed operators regardless whether they are state or private. Besides, according to P. Farina, nowadays the former communist countries face similar problems in the sector. Finally, competition in Europe develops, as well as further integration processes. All this requires analysis, discussion and making different managing decisions or recommendations.
«We need to acquire information, discuss various issues, highlight the key points and identify the problems. I believe that we will hold such congresses annually in different countries», said P. Farina.
It should be noted that the initiative got an eager response from the European railway carriers. Representatives of Poland, Germany, Romania, Czechia, Hungary, Slovenia and Latvia participated in the Congress. Strangely enough, there were no representatives of transport or operator businesses from Russia, Ukraine and Byelorussia. Perhaps, they do not consider themselves European transporters. Thus, the participants of the Congress could obtain the information about the Russian railway market development only from the two reports of the RZD-Partner magazine First Deputy Editor-in-Chief.
The European Commission Stands for Market
A representative of the Energy and Transport Directorate of the European Committee Yan Scherp told about Brussels’ position in the railway sector. «Our target is to increase the competitiveness of railway systems in comparison with other transport modes. And we want to create an integrated area without any inner borders with high quality transport products. It can be reached by putting into operation certain principles of business activities organization and is possible only if there is liberalization and open market, and support for domestic competition», said Y. Scherp.
He highlighted that much work should be held to provide an equal access to infrastructure for all the licensed carriers and simplify the entrance to the market for them. «The European Union implemented several legislative documents making for opening the market. However, in practice there is a large difference between the extent to which these rules are implemented in different states, and to reach the target, the rules are to be observed everywhere. I’d like to stress that the key moment is a non-discriminating access to the railway networks. New countries claim that the old EU members discriminate them», stressed the EU official.
Besides, according to Y. Scherp, everyone should concentrate on the reduction of railway services prime cost today. «This activity is often detrimental instead of being profitable. Especially, in the new states, where railway enterprises have debts, very deteriorated basic assets and very expensive infrastructure with the high fee for the network», stated the representative of the European Committee. An important issue is the necessity of a joint long-term strategy of the railway market development. J. Scherp explained that he means not only the hierarchy of certain investment projects, but also the answer to the question «how do we intend to gain profit in future?» «We should think over the plans of national railways further restructuring and make the choice, notwithstanding the public antagonism», claimed Y. Scherp, though he added that it would be reasonable to fulfill obligations on provision of cheap social services for people. Finally, Y. Scherp highlighted that nowadays railways constantly have to think about the implementation of new technologies on the basis of advanced scientific and technical elaborations. He reminded about the existing relative funds of the European Union, which are available for everyone with proper business plans. For example, Poland has received such support – EUR 5 mln.
«On the whole, the European Committee wants to support competition. Market is the mode to overcome the monopoly, as well as the low quality of products and high expenses. If we fail to achieve it, how can we attract clients? How can we become more efficient and competitive in comparison with other transport modes? That is why we need new players, and a lot of operators», summed up Yan Scherp.
Competition Must Be Fair
Among the problems discussed by the representatives of the railway market, one of the most urgent was the «unfair» competition of road hauliers. Dr. Johannes Ludewig, executive director of CER (London), made the following announcement, «The amount of members of our association grew from 12 in 1980 to 63. The share of private business on the railway transportation market exceeds 15%, and the average share of railway transportation in the total throughput was 14% lately. Meanwhile, it is East European countries where it is twofold larger. I’d like to remind that our target was to prevent the downward tendency for the share, which stopped in the West and still continues in Eastern Europe. The most important problem nowadays is competition with road hauliers, and there are no fair conditions in it. The prices for services must reflect the expenses – it is the basic rule for business. And the level of rates on road transportation cannot compensate for the expenses of a railway carrier. Road hauliers have prices that are too low, and it should be changed. We must control the demand and keep relative tariffs».
A number of participants of the Congress supported the representative of the European railway society. «We are still able to form joint international routes, but honest competition with road hauliers is really impossible nowadays», said a representative of a small private company from Romania.
«Deregulation and liberalization of railways has not resulted in new competitiveness. Road transport grows by 3.2% annually, and the railway one – only by 0.9%. Why are we not competitive? We have a very expensive access to infrastructure, while road hauliers and shipping companies do not have such problems», highlighted President of PCC Rail Mieczyslaw Olender.
«There are still line transportations, but few wagon dispatches. There is nobody who could prevent it, not even ideas about a possible way out. Railway is practically unable to offer the services required by the client on the transportation market. This is the problem», recognized Prof. Wojciech Paprocki from Warsaw School of Economics, Board Member of the Union of Private Employers in the Railway Sector.
«Nowadays issues of road transport are strongly lobbied. And we must lobby the railway transport», summed up Chairman of PCC Rail, Zbigniew Szafranski, and it seemed to be the only real suggestion.
Call the Police
Among other «enemies» of a private railway carrier there are state infrastructure companies and national transporters. «PKP’s attitude to a private company is bad. It is constantly creating obstacles to our work! For example, we have no contract with them so far. There is no cooperation with PKP Cargo either. Most potential solutions disappear during negotiations. A private carrier always has problems with repair, lack of its own approach lines etc.», claimed a representative of a small company-operator specializing in coal transportation from Polish mines.
«When the Law on Railway Transport was adopted in 1997, we thought we would have more opportunities. However, the competition with a large company turned to be impossible, and it is too complicated to adjust our relations, so that we could at least complement their work, transporting cargoes from industrial and extracting enterprises to mainlines. Thus, the cooperation everybody speaks about is also hardly possible», said a businessman from Rybnik.
«The share of private operators on our market is 35%, and the figure is one of the largest in Europe. Still, the main problem is the monopoly of the railway and the full set of its consequences unpleasant to us», told a representative of a Romanian company-operator.
Consequently, there could not but arise the question about the current market structure and the possible ways to regulate it. Mieczyslaw Olender criticized the existing institutes, «Today we still have a monopolistic structure in this transport sector. National carriers dominate and are regulated by the state, which does not make for their efficiency growth and defaces market mechanisms. And if a private company wins a tender, it is treated as if he entrenched upon the power. However, it is a private company-operator who risks and thinks twice before acting». The Head of PCC Rail also stressed that if there is no normal competition in the West of Europe, it can hardly take place between Eastern and Western European railway companies. «It is just talks. In fact, our governments have no political will to implement real competition», summed up M. Olender.
The structure of the transportation market in Poland was described by Prof. Wlodzimierz Rydzkowski from the University of Gdansk. He told that the share of PKP Cargo is 77% and the rest belongs to private companies. There are 18 carriers, but the transportation volume of only 6 of them excesses 1%. «However, targeting at a better competition will lead railway operators to tariffs reduction, and, consequently, a decrease of revenues. Are you sure you need it?» the professor asked the public ironically. Soon he recognized that his wish was to provoke the participants of the discussion to think, but not to stop the reforms.
Zbigniew Szafranski, PKP chairman’s plenipotentiary for foreign relations, stood for the interests of the monopolies at the Congress. «Fight or cooperation? Cooperation is better than competition. Fight is not the aim, it is the means to reach it. Nowadays, transportation volume is being increased by PKP Cargo, as well as by private companies, and it is our aim», explained Z. Szafranski. And he paid attention to the following paradox: «If PKP Cargo denies access to someone, there will be a scandal. And if someone denies PKP Cargo access to a mine, it is considered normal. We must be fair. Today we have heard several times that private companies asked for some guarantees. But if you have such a simple mentality requiring guarantees, it is not market. And enclosures of all types are not market either», said Z. Szafranski.
The speech of another famous expert, Matthias Raith from CTL Logistics was even more metaphorical, «Railway market can be compared to apple market. If I go to the market I want to be able to choose who I will buy apples from and what kind of them. But if someone grabs my hand and tells me to buy only one kind of apples and only from one seller, it is not right. The same applies to railways. When we speak about the competition, we do not mean war made by everybody against everyone. Competition must be like a game, a sport, like the will to live. But the largest barrier is today in the minds of people working in the railway sector. And what shall we do if we have no market? Shall we call the police?»
Does Railway Business Have Chances to Survive?
Naturally, different themes were discussed at the Congress, but the most important question, formulated by one of the European speakers, was «Will our business survive?»
It is interesting that the answer is far from obvious. Railway is more expensive than road transport. The cost of a motorway and a railway maintenance differs greatly. All the operators claim that the infrastructure tariffs are non-competitive, even notwithstanding the fact that they are subsidized from the budgets of the European states.
The second problem is that a freight railway is a bureaucratic and inflexible transport mode, and, according to European standards, it can even be considered morally obsolete. Even when you ask a road haulier, if he is afraid of competition with some container train, he will just grin in response and tell, «They will nuzzle into their papers, and that’s all!» Nowadays European logistic companies, which are also railway carriers, have to use their vehicles actively to provide a complex service. Still, cargoes «strive» for being re-oriented to the road, if the capacity of the road network is sufficient.
The railway transportation according to the European model is not a market business in the proper sense of the word. There is no efficiency, which is a characteristic feature of the classical model – with competing «vertically-integrated» railway companies (Northern and partly Southern America, Russia before the revolution in 1917). Europe, which is still influenced by its former enthusiasm about socialism and state regulation in the 20th century before the «Thatcher revolution», «builds the market without constructing it» or constructing just a half of it. The non-market mentality of the national railways’ staff, who threaten to go on strike if they hear about the necessity to make the manufacture meet the economic realities, as well as the consumers of services, especially passengers, prevent the market from further development.
What does the fate have in store for them? Real inner competition within a demonopolized market structure or lobbying of all large subsidies? Or will the European freight railway transport in the near future be represented only by special lines that transport ore and do not need any competition? Possibly. But this will hardly take place before the Second Congress of Independent Rail Operators.
By Andrey Guryev
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[DETAIL_TEXT] => New Port to Be Built in Black Sea Region
The RF Ministry of Transport drafted the documents to define the borders of a new port of Taman (Krasnodar region, the Black Sea) and a border check-point and passed it to the Russian Government for agreement.
It is planned to invest RUR 60.4 billion into the development of the Taman port. In his speech at a meeting in the RF State Duma, Petr Parinov, director of the port, highlighted that the project of construction and exploitation of a port in the Krasnodar region will be carried out in the framework of public-private partnership. It is expected to start functioning at its full capacity by 2012.
The port of Taman will specialize in handling of oil bulk, coal and liquefied hydrocarbon gases. According to Igor Levitin, RF Minister of Transport, in Russia there is no port capable to handle liquefied hydrocarbon gases. However, the desire of foreign states to purchase this product urges the RF Government and private investors to construct terminals to service the cargo. The first stage of the terminal is to be launched in 2008; its capacity is to make 1.5 million tons.
In his annual message to the Federal Assembly, Russian President Vladimir Putin touched upon the issue of construction of the second line of the Volga-Don canal, so that it was connected with the port of Taman at the Black Sea. Vladimir Katrenko, Deputy Chairperson of the State Duma of the Russian Federation, said that the port will be able to service vessels with the carrying capacity of 100 thousand tons. «After the collapse of the USSR, many ports at the Black Sea became Ukrainian and Georgian. And now the South of Russia suffers from the shortage of port capacities», said V.Katrenko.
By way of a reminder, the bill «On Sea Ports in the Russian Federation» and the bill on creation of special economic port zones were given their first reading. They passed the RF State Duma in spring. According to V.Katrenko, in autumn, the development of the bills concerning ports will continue.
Is Russia Ready to Leave Ports of Baltic States?
«The development of the RF ports at the Baltic sea means a lot for Russia from the economic standpoint. Thus, we will export less and less production of Russian enterprises via the ports of the Baltic states, and load the Russian Federation’s ports more and more, and pay salary to Russian, not to foreign citizens,» stated First Vice Prime Minister of the RF Sergey Ivanov when he visited the oil port of Primorsk in the Leningrad region.
The Vice Prime Minister highlighted that Russian ports of Primorsk and Vysotsk are well equipped and have a significant potential. Thus, in the port of Primorsk the handling volume of oil and products was 17 million tons in 2001. This figure was already 70 million tons in 2006. Meanwhile, the design capacity will enable to handle up to 120-130 million tons of oil and products annually. «We can easily deliver additional volumes of oil and products to the port. There is everything here for that», stressed S. Ivanov. Besides, the Vice Prime Minister noted that «the second project of the Baltic Pipeline System can be carried out in the near future; then the export of oil will increase».
The RF Government is developing the plan of constructing a railway to the port of Primorsk, so that it does not cross the main line of Saint-Petersburg – Helsinki railway, to separate off passenger and freight flows. Besides, the project to construct a plant for liquefaction of gases in the port of Primorsk is under discussion. In case of its realization, it will enable export transportation of gas by liquefied gas vessels. «From the standpoint of ecological safety, all the norms of environmental protection legislation are observed in the port», said S.Ivanov.
Russia and Turkmenistan Will Update Communication
Russia and Turkmenistan decided to update the Agreement on railway-ferry communication between the two states. It envisages the work of two lines Turkmenbashi – port of Olya and Turkmenbashi – Makhachkala. Besides, the Agreement of transportation by road haulages is also to be drafted, said Vice Prime Minister, Head of the RF Government Office Sergey Naryshkin commenting on the results of the Russian-Turkmen intergovernmental committee meeting held in early July.
In his words, the main theme of the meeting was development of cooperation in the fuel and energy sector. «We discussed the drafting of the agreement on Caspian gas pipeline construction and the development of the gas transporting system in Central Asia, as well as the possible participation of Russian companies in development of new gas and oil fields on the Caspian shelf and on land», noted S.Naryshkin.
He also said that «the current trade and legislative base was analyzed and a directive was given to update some important documents and submit them for approval. The list of the documents includes the agreement on mutual protection of capital investments». According to S.Naryshkin, these documents «must become an addition to the acting agreement and they will be a good basis for mutual business development».
Russia and Turkmenistan to hold a joint business-forum in December 2007.
The next meeting of the intergovernmental committee for economic cooperation will take place in Moscow in Q2 of 2008.
Latvia Signed Memorandum with Estonia in Framework of Rail Baltica Project
In early July, Minister of Communications of Latvia Ainars Slesers signed Memorandum with Estonia to develop border crossings and transborder sectors in the framework of Rail Baltica project.
The document envisages modernization of the existing railway infrastructure in the two states, and intergovernmental cooperation at the border sectors where it is connected.
A week earlier A.Slesers signed a similar agreement with Lithuanian Minister of Transport and Communication Algardas Butkyavichus. Rail Baltica project envisages connection of the Baltic states, Finland and Poland by a speeded up railway line. It is to provide a more efficient integration of the Baltic states into Europe.
The existing railway network of the Baltic states is technically incompatible with the railways of Poland and Germany because of the different gauge size.
Rail Baltica is a priority project of the European Union.
Ring for Black Sea
The RF Ministry of Transport proposes to construct a railway-ferry ring round the Black Sea, said Deputy Minister of Transport Evgeny Moskvichev in his speech at the meeting of the Ministers of Transport of the Organization of the Black Sea Economic Cooperation (BSEC) in Istanbul.
«We propose to discuss the idea of construction of a railway-ferry ring, similar to the project of building a high-speed road round the Black Sea. The realization of the project will reduce the load on road haulages and road infrastructure in the region, and help avoid transport idling at border crossings», he said.
Evgeny Moskvichev stressed that the realization of transport projects that are being carried out now and will be developed in the framework of the BSEC will help reach one of the main targets of the BSEC, i.e. to improve the conditions of business activities in the Black Sea region.
Providing Through Service
The First Vice President of OAO RZD Vadim Morozov believes that being the largest railway system in Eurasia, the throughput of which exceeds the throughput of the EU railways, JSC Russian railways is already able to provide stability, high-quality services, and acceptable for cargo owners economic terms in the sector of international transportation.
This was the key idea of his speech at RailTechRussia 2007 exhibition in Moscow. The event was focused on the role of Russian Railways in the development of freight and passenger transportation in Eurasia.
Nowadays OAO RZD modernizes the railway infrastructure, renews rolling stock, implements new IT technologies, enabling to control on-line freight and wagons on the whole route, and simplifies the technology of transportation using the principle of «one window». «Besides, together with other companies, OAO RZD launches enterprises that will provide through service for transportation of cargoes between Europe and Asia».
Oil Terminal in Skovorodino
In Q3 of 2008, an oil terminal with the annual capacity of 15 million tons will be opened at the Skovorodino station (Zabaikalskaya railway – affiliate of OAO RZD). The terminal will be part of the project to create the pipeline system Eastern Siberia – the Pacific Ocean. In 2007, about RUR 200 million will be invested into the development of the station. The works on the terminal construction and creation of the receiving and dispatching park, as well as the adjacent infrastructure, are already being held.
At the first stage, the West-Siberian oil will be carried by pipeline from Taishet to Skovorodino, where it will be loaded into tank wagons for further transportation to Perevoznaya Bay (the Primorsk region). The receiving and dispatching park will have five railway tracks, each of them able to service a train 71 relative wagons long. At the stage of the park construction, 14 km of station tracks will be built, the overhead contact system and the facilities of electric centralization and communication will be constructed.
FESCO to Establish Feeder Container Line Operator in Baltic Sea
On June 26, 2007 FESCO Transport Group and ESF group of companies reached the final agreement to create a joint venture FESCO ESF Limited, where FESCO holds a 70% interest. The new company will own assets of ESF and its affiliates that relate to ESF Euroservices - Baltic feeder services between Continental Europe and Russia.
«The establishment of FESCO ESF Limited is yet another step in the implementation of the Group’s strategy to create a national leader in container operations, able to offer a full spectrum of integrated services. By completing this transaction, we made a strategically important entry into the Baltic line container shipping market», said Evgeny Ambrosov, FESCO President and CEO. In his opinion, «…this, combined with FESCO’s access to stevedoring assets in the region and our rail transportation capacity, will allow FESCO to offer its clients an intermodal service «short sea - port - transportation» in the strategically important Baltic region - Russia’s main gateway for containerized imports».
ESF Euroservices is a feeder line container operator working since 1995 which offers fully integrated container shipping and handling services between ports in the Netherlands, Belgium and Germany on one side and Russia, Finland and Baltic States on the other side. ESF Euroservices currently operates three container lines:
• Rotterdam/Hamburg/Antwerp - St.Petersburg
• Hamburg - Kotka/Helsinki
• Hamburg - Klaipeda/Riga
ESF Euroservices has representative offices in the ports of Rotterdam, Antwerp and St.-Petersburg, as well as a network of agencies in Hamburg, Helsinki, Hull, Riga, Klaipeda, and Tallinn to name just a few. ESF total 2006 container operations volume exceeded 130 thousand TEU.
[~DETAIL_TEXT] => New Port to Be Built in Black Sea Region
The RF Ministry of Transport drafted the documents to define the borders of a new port of Taman (Krasnodar region, the Black Sea) and a border check-point and passed it to the Russian Government for agreement.
It is planned to invest RUR 60.4 billion into the development of the Taman port. In his speech at a meeting in the RF State Duma, Petr Parinov, director of the port, highlighted that the project of construction and exploitation of a port in the Krasnodar region will be carried out in the framework of public-private partnership. It is expected to start functioning at its full capacity by 2012.
The port of Taman will specialize in handling of oil bulk, coal and liquefied hydrocarbon gases. According to Igor Levitin, RF Minister of Transport, in Russia there is no port capable to handle liquefied hydrocarbon gases. However, the desire of foreign states to purchase this product urges the RF Government and private investors to construct terminals to service the cargo. The first stage of the terminal is to be launched in 2008; its capacity is to make 1.5 million tons.
In his annual message to the Federal Assembly, Russian President Vladimir Putin touched upon the issue of construction of the second line of the Volga-Don canal, so that it was connected with the port of Taman at the Black Sea. Vladimir Katrenko, Deputy Chairperson of the State Duma of the Russian Federation, said that the port will be able to service vessels with the carrying capacity of 100 thousand tons. «After the collapse of the USSR, many ports at the Black Sea became Ukrainian and Georgian. And now the South of Russia suffers from the shortage of port capacities», said V.Katrenko.
By way of a reminder, the bill «On Sea Ports in the Russian Federation» and the bill on creation of special economic port zones were given their first reading. They passed the RF State Duma in spring. According to V.Katrenko, in autumn, the development of the bills concerning ports will continue.
Is Russia Ready to Leave Ports of Baltic States?
«The development of the RF ports at the Baltic sea means a lot for Russia from the economic standpoint. Thus, we will export less and less production of Russian enterprises via the ports of the Baltic states, and load the Russian Federation’s ports more and more, and pay salary to Russian, not to foreign citizens,» stated First Vice Prime Minister of the RF Sergey Ivanov when he visited the oil port of Primorsk in the Leningrad region.
The Vice Prime Minister highlighted that Russian ports of Primorsk and Vysotsk are well equipped and have a significant potential. Thus, in the port of Primorsk the handling volume of oil and products was 17 million tons in 2001. This figure was already 70 million tons in 2006. Meanwhile, the design capacity will enable to handle up to 120-130 million tons of oil and products annually. «We can easily deliver additional volumes of oil and products to the port. There is everything here for that», stressed S. Ivanov. Besides, the Vice Prime Minister noted that «the second project of the Baltic Pipeline System can be carried out in the near future; then the export of oil will increase».
The RF Government is developing the plan of constructing a railway to the port of Primorsk, so that it does not cross the main line of Saint-Petersburg – Helsinki railway, to separate off passenger and freight flows. Besides, the project to construct a plant for liquefaction of gases in the port of Primorsk is under discussion. In case of its realization, it will enable export transportation of gas by liquefied gas vessels. «From the standpoint of ecological safety, all the norms of environmental protection legislation are observed in the port», said S.Ivanov.
Russia and Turkmenistan Will Update Communication
Russia and Turkmenistan decided to update the Agreement on railway-ferry communication between the two states. It envisages the work of two lines Turkmenbashi – port of Olya and Turkmenbashi – Makhachkala. Besides, the Agreement of transportation by road haulages is also to be drafted, said Vice Prime Minister, Head of the RF Government Office Sergey Naryshkin commenting on the results of the Russian-Turkmen intergovernmental committee meeting held in early July.
In his words, the main theme of the meeting was development of cooperation in the fuel and energy sector. «We discussed the drafting of the agreement on Caspian gas pipeline construction and the development of the gas transporting system in Central Asia, as well as the possible participation of Russian companies in development of new gas and oil fields on the Caspian shelf and on land», noted S.Naryshkin.
He also said that «the current trade and legislative base was analyzed and a directive was given to update some important documents and submit them for approval. The list of the documents includes the agreement on mutual protection of capital investments». According to S.Naryshkin, these documents «must become an addition to the acting agreement and they will be a good basis for mutual business development».
Russia and Turkmenistan to hold a joint business-forum in December 2007.
The next meeting of the intergovernmental committee for economic cooperation will take place in Moscow in Q2 of 2008.
Latvia Signed Memorandum with Estonia in Framework of Rail Baltica Project
In early July, Minister of Communications of Latvia Ainars Slesers signed Memorandum with Estonia to develop border crossings and transborder sectors in the framework of Rail Baltica project.
The document envisages modernization of the existing railway infrastructure in the two states, and intergovernmental cooperation at the border sectors where it is connected.
A week earlier A.Slesers signed a similar agreement with Lithuanian Minister of Transport and Communication Algardas Butkyavichus. Rail Baltica project envisages connection of the Baltic states, Finland and Poland by a speeded up railway line. It is to provide a more efficient integration of the Baltic states into Europe.
The existing railway network of the Baltic states is technically incompatible with the railways of Poland and Germany because of the different gauge size.
Rail Baltica is a priority project of the European Union.
Ring for Black Sea
The RF Ministry of Transport proposes to construct a railway-ferry ring round the Black Sea, said Deputy Minister of Transport Evgeny Moskvichev in his speech at the meeting of the Ministers of Transport of the Organization of the Black Sea Economic Cooperation (BSEC) in Istanbul.
«We propose to discuss the idea of construction of a railway-ferry ring, similar to the project of building a high-speed road round the Black Sea. The realization of the project will reduce the load on road haulages and road infrastructure in the region, and help avoid transport idling at border crossings», he said.
Evgeny Moskvichev stressed that the realization of transport projects that are being carried out now and will be developed in the framework of the BSEC will help reach one of the main targets of the BSEC, i.e. to improve the conditions of business activities in the Black Sea region.
Providing Through Service
The First Vice President of OAO RZD Vadim Morozov believes that being the largest railway system in Eurasia, the throughput of which exceeds the throughput of the EU railways, JSC Russian railways is already able to provide stability, high-quality services, and acceptable for cargo owners economic terms in the sector of international transportation.
This was the key idea of his speech at RailTechRussia 2007 exhibition in Moscow. The event was focused on the role of Russian Railways in the development of freight and passenger transportation in Eurasia.
Nowadays OAO RZD modernizes the railway infrastructure, renews rolling stock, implements new IT technologies, enabling to control on-line freight and wagons on the whole route, and simplifies the technology of transportation using the principle of «one window». «Besides, together with other companies, OAO RZD launches enterprises that will provide through service for transportation of cargoes between Europe and Asia».
Oil Terminal in Skovorodino
In Q3 of 2008, an oil terminal with the annual capacity of 15 million tons will be opened at the Skovorodino station (Zabaikalskaya railway – affiliate of OAO RZD). The terminal will be part of the project to create the pipeline system Eastern Siberia – the Pacific Ocean. In 2007, about RUR 200 million will be invested into the development of the station. The works on the terminal construction and creation of the receiving and dispatching park, as well as the adjacent infrastructure, are already being held.
At the first stage, the West-Siberian oil will be carried by pipeline from Taishet to Skovorodino, where it will be loaded into tank wagons for further transportation to Perevoznaya Bay (the Primorsk region). The receiving and dispatching park will have five railway tracks, each of them able to service a train 71 relative wagons long. At the stage of the park construction, 14 km of station tracks will be built, the overhead contact system and the facilities of electric centralization and communication will be constructed.
FESCO to Establish Feeder Container Line Operator in Baltic Sea
On June 26, 2007 FESCO Transport Group and ESF group of companies reached the final agreement to create a joint venture FESCO ESF Limited, where FESCO holds a 70% interest. The new company will own assets of ESF and its affiliates that relate to ESF Euroservices - Baltic feeder services between Continental Europe and Russia.
«The establishment of FESCO ESF Limited is yet another step in the implementation of the Group’s strategy to create a national leader in container operations, able to offer a full spectrum of integrated services. By completing this transaction, we made a strategically important entry into the Baltic line container shipping market», said Evgeny Ambrosov, FESCO President and CEO. In his opinion, «…this, combined with FESCO’s access to stevedoring assets in the region and our rail transportation capacity, will allow FESCO to offer its clients an intermodal service «short sea - port - transportation» in the strategically important Baltic region - Russia’s main gateway for containerized imports».
ESF Euroservices is a feeder line container operator working since 1995 which offers fully integrated container shipping and handling services between ports in the Netherlands, Belgium and Germany on one side and Russia, Finland and Baltic States on the other side. ESF Euroservices currently operates three container lines:
• Rotterdam/Hamburg/Antwerp - St.Petersburg
• Hamburg - Kotka/Helsinki
• Hamburg - Klaipeda/Riga
ESF Euroservices has representative offices in the ports of Rotterdam, Antwerp and St.-Petersburg, as well as a network of agencies in Hamburg, Helsinki, Hull, Riga, Klaipeda, and Tallinn to name just a few. ESF total 2006 container operations volume exceeded 130 thousand TEU.
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[DETAIL_TEXT] => New Port to Be Built in Black Sea Region
The RF Ministry of Transport drafted the documents to define the borders of a new port of Taman (Krasnodar region, the Black Sea) and a border check-point and passed it to the Russian Government for agreement.
It is planned to invest RUR 60.4 billion into the development of the Taman port. In his speech at a meeting in the RF State Duma, Petr Parinov, director of the port, highlighted that the project of construction and exploitation of a port in the Krasnodar region will be carried out in the framework of public-private partnership. It is expected to start functioning at its full capacity by 2012.
The port of Taman will specialize in handling of oil bulk, coal and liquefied hydrocarbon gases. According to Igor Levitin, RF Minister of Transport, in Russia there is no port capable to handle liquefied hydrocarbon gases. However, the desire of foreign states to purchase this product urges the RF Government and private investors to construct terminals to service the cargo. The first stage of the terminal is to be launched in 2008; its capacity is to make 1.5 million tons.
In his annual message to the Federal Assembly, Russian President Vladimir Putin touched upon the issue of construction of the second line of the Volga-Don canal, so that it was connected with the port of Taman at the Black Sea. Vladimir Katrenko, Deputy Chairperson of the State Duma of the Russian Federation, said that the port will be able to service vessels with the carrying capacity of 100 thousand tons. «After the collapse of the USSR, many ports at the Black Sea became Ukrainian and Georgian. And now the South of Russia suffers from the shortage of port capacities», said V.Katrenko.
By way of a reminder, the bill «On Sea Ports in the Russian Federation» and the bill on creation of special economic port zones were given their first reading. They passed the RF State Duma in spring. According to V.Katrenko, in autumn, the development of the bills concerning ports will continue.
Is Russia Ready to Leave Ports of Baltic States?
«The development of the RF ports at the Baltic sea means a lot for Russia from the economic standpoint. Thus, we will export less and less production of Russian enterprises via the ports of the Baltic states, and load the Russian Federation’s ports more and more, and pay salary to Russian, not to foreign citizens,» stated First Vice Prime Minister of the RF Sergey Ivanov when he visited the oil port of Primorsk in the Leningrad region.
The Vice Prime Minister highlighted that Russian ports of Primorsk and Vysotsk are well equipped and have a significant potential. Thus, in the port of Primorsk the handling volume of oil and products was 17 million tons in 2001. This figure was already 70 million tons in 2006. Meanwhile, the design capacity will enable to handle up to 120-130 million tons of oil and products annually. «We can easily deliver additional volumes of oil and products to the port. There is everything here for that», stressed S. Ivanov. Besides, the Vice Prime Minister noted that «the second project of the Baltic Pipeline System can be carried out in the near future; then the export of oil will increase».
The RF Government is developing the plan of constructing a railway to the port of Primorsk, so that it does not cross the main line of Saint-Petersburg – Helsinki railway, to separate off passenger and freight flows. Besides, the project to construct a plant for liquefaction of gases in the port of Primorsk is under discussion. In case of its realization, it will enable export transportation of gas by liquefied gas vessels. «From the standpoint of ecological safety, all the norms of environmental protection legislation are observed in the port», said S.Ivanov.
Russia and Turkmenistan Will Update Communication
Russia and Turkmenistan decided to update the Agreement on railway-ferry communication between the two states. It envisages the work of two lines Turkmenbashi – port of Olya and Turkmenbashi – Makhachkala. Besides, the Agreement of transportation by road haulages is also to be drafted, said Vice Prime Minister, Head of the RF Government Office Sergey Naryshkin commenting on the results of the Russian-Turkmen intergovernmental committee meeting held in early July.
In his words, the main theme of the meeting was development of cooperation in the fuel and energy sector. «We discussed the drafting of the agreement on Caspian gas pipeline construction and the development of the gas transporting system in Central Asia, as well as the possible participation of Russian companies in development of new gas and oil fields on the Caspian shelf and on land», noted S.Naryshkin.
He also said that «the current trade and legislative base was analyzed and a directive was given to update some important documents and submit them for approval. The list of the documents includes the agreement on mutual protection of capital investments». According to S.Naryshkin, these documents «must become an addition to the acting agreement and they will be a good basis for mutual business development».
Russia and Turkmenistan to hold a joint business-forum in December 2007.
The next meeting of the intergovernmental committee for economic cooperation will take place in Moscow in Q2 of 2008.
Latvia Signed Memorandum with Estonia in Framework of Rail Baltica Project
In early July, Minister of Communications of Latvia Ainars Slesers signed Memorandum with Estonia to develop border crossings and transborder sectors in the framework of Rail Baltica project.
The document envisages modernization of the existing railway infrastructure in the two states, and intergovernmental cooperation at the border sectors where it is connected.
A week earlier A.Slesers signed a similar agreement with Lithuanian Minister of Transport and Communication Algardas Butkyavichus. Rail Baltica project envisages connection of the Baltic states, Finland and Poland by a speeded up railway line. It is to provide a more efficient integration of the Baltic states into Europe.
The existing railway network of the Baltic states is technically incompatible with the railways of Poland and Germany because of the different gauge size.
Rail Baltica is a priority project of the European Union.
Ring for Black Sea
The RF Ministry of Transport proposes to construct a railway-ferry ring round the Black Sea, said Deputy Minister of Transport Evgeny Moskvichev in his speech at the meeting of the Ministers of Transport of the Organization of the Black Sea Economic Cooperation (BSEC) in Istanbul.
«We propose to discuss the idea of construction of a railway-ferry ring, similar to the project of building a high-speed road round the Black Sea. The realization of the project will reduce the load on road haulages and road infrastructure in the region, and help avoid transport idling at border crossings», he said.
Evgeny Moskvichev stressed that the realization of transport projects that are being carried out now and will be developed in the framework of the BSEC will help reach one of the main targets of the BSEC, i.e. to improve the conditions of business activities in the Black Sea region.
Providing Through Service
The First Vice President of OAO RZD Vadim Morozov believes that being the largest railway system in Eurasia, the throughput of which exceeds the throughput of the EU railways, JSC Russian railways is already able to provide stability, high-quality services, and acceptable for cargo owners economic terms in the sector of international transportation.
This was the key idea of his speech at RailTechRussia 2007 exhibition in Moscow. The event was focused on the role of Russian Railways in the development of freight and passenger transportation in Eurasia.
Nowadays OAO RZD modernizes the railway infrastructure, renews rolling stock, implements new IT technologies, enabling to control on-line freight and wagons on the whole route, and simplifies the technology of transportation using the principle of «one window». «Besides, together with other companies, OAO RZD launches enterprises that will provide through service for transportation of cargoes between Europe and Asia».
Oil Terminal in Skovorodino
In Q3 of 2008, an oil terminal with the annual capacity of 15 million tons will be opened at the Skovorodino station (Zabaikalskaya railway – affiliate of OAO RZD). The terminal will be part of the project to create the pipeline system Eastern Siberia – the Pacific Ocean. In 2007, about RUR 200 million will be invested into the development of the station. The works on the terminal construction and creation of the receiving and dispatching park, as well as the adjacent infrastructure, are already being held.
At the first stage, the West-Siberian oil will be carried by pipeline from Taishet to Skovorodino, where it will be loaded into tank wagons for further transportation to Perevoznaya Bay (the Primorsk region). The receiving and dispatching park will have five railway tracks, each of them able to service a train 71 relative wagons long. At the stage of the park construction, 14 km of station tracks will be built, the overhead contact system and the facilities of electric centralization and communication will be constructed.
FESCO to Establish Feeder Container Line Operator in Baltic Sea
On June 26, 2007 FESCO Transport Group and ESF group of companies reached the final agreement to create a joint venture FESCO ESF Limited, where FESCO holds a 70% interest. The new company will own assets of ESF and its affiliates that relate to ESF Euroservices - Baltic feeder services between Continental Europe and Russia.
«The establishment of FESCO ESF Limited is yet another step in the implementation of the Group’s strategy to create a national leader in container operations, able to offer a full spectrum of integrated services. By completing this transaction, we made a strategically important entry into the Baltic line container shipping market», said Evgeny Ambrosov, FESCO President and CEO. In his opinion, «…this, combined with FESCO’s access to stevedoring assets in the region and our rail transportation capacity, will allow FESCO to offer its clients an intermodal service «short sea - port - transportation» in the strategically important Baltic region - Russia’s main gateway for containerized imports».
ESF Euroservices is a feeder line container operator working since 1995 which offers fully integrated container shipping and handling services between ports in the Netherlands, Belgium and Germany on one side and Russia, Finland and Baltic States on the other side. ESF Euroservices currently operates three container lines:
• Rotterdam/Hamburg/Antwerp - St.Petersburg
• Hamburg - Kotka/Helsinki
• Hamburg - Klaipeda/Riga
ESF Euroservices has representative offices in the ports of Rotterdam, Antwerp and St.-Petersburg, as well as a network of agencies in Hamburg, Helsinki, Hull, Riga, Klaipeda, and Tallinn to name just a few. ESF total 2006 container operations volume exceeded 130 thousand TEU.
[~DETAIL_TEXT] => New Port to Be Built in Black Sea Region
The RF Ministry of Transport drafted the documents to define the borders of a new port of Taman (Krasnodar region, the Black Sea) and a border check-point and passed it to the Russian Government for agreement.
It is planned to invest RUR 60.4 billion into the development of the Taman port. In his speech at a meeting in the RF State Duma, Petr Parinov, director of the port, highlighted that the project of construction and exploitation of a port in the Krasnodar region will be carried out in the framework of public-private partnership. It is expected to start functioning at its full capacity by 2012.
The port of Taman will specialize in handling of oil bulk, coal and liquefied hydrocarbon gases. According to Igor Levitin, RF Minister of Transport, in Russia there is no port capable to handle liquefied hydrocarbon gases. However, the desire of foreign states to purchase this product urges the RF Government and private investors to construct terminals to service the cargo. The first stage of the terminal is to be launched in 2008; its capacity is to make 1.5 million tons.
In his annual message to the Federal Assembly, Russian President Vladimir Putin touched upon the issue of construction of the second line of the Volga-Don canal, so that it was connected with the port of Taman at the Black Sea. Vladimir Katrenko, Deputy Chairperson of the State Duma of the Russian Federation, said that the port will be able to service vessels with the carrying capacity of 100 thousand tons. «After the collapse of the USSR, many ports at the Black Sea became Ukrainian and Georgian. And now the South of Russia suffers from the shortage of port capacities», said V.Katrenko.
By way of a reminder, the bill «On Sea Ports in the Russian Federation» and the bill on creation of special economic port zones were given their first reading. They passed the RF State Duma in spring. According to V.Katrenko, in autumn, the development of the bills concerning ports will continue.
Is Russia Ready to Leave Ports of Baltic States?
«The development of the RF ports at the Baltic sea means a lot for Russia from the economic standpoint. Thus, we will export less and less production of Russian enterprises via the ports of the Baltic states, and load the Russian Federation’s ports more and more, and pay salary to Russian, not to foreign citizens,» stated First Vice Prime Minister of the RF Sergey Ivanov when he visited the oil port of Primorsk in the Leningrad region.
The Vice Prime Minister highlighted that Russian ports of Primorsk and Vysotsk are well equipped and have a significant potential. Thus, in the port of Primorsk the handling volume of oil and products was 17 million tons in 2001. This figure was already 70 million tons in 2006. Meanwhile, the design capacity will enable to handle up to 120-130 million tons of oil and products annually. «We can easily deliver additional volumes of oil and products to the port. There is everything here for that», stressed S. Ivanov. Besides, the Vice Prime Minister noted that «the second project of the Baltic Pipeline System can be carried out in the near future; then the export of oil will increase».
The RF Government is developing the plan of constructing a railway to the port of Primorsk, so that it does not cross the main line of Saint-Petersburg – Helsinki railway, to separate off passenger and freight flows. Besides, the project to construct a plant for liquefaction of gases in the port of Primorsk is under discussion. In case of its realization, it will enable export transportation of gas by liquefied gas vessels. «From the standpoint of ecological safety, all the norms of environmental protection legislation are observed in the port», said S.Ivanov.
Russia and Turkmenistan Will Update Communication
Russia and Turkmenistan decided to update the Agreement on railway-ferry communication between the two states. It envisages the work of two lines Turkmenbashi – port of Olya and Turkmenbashi – Makhachkala. Besides, the Agreement of transportation by road haulages is also to be drafted, said Vice Prime Minister, Head of the RF Government Office Sergey Naryshkin commenting on the results of the Russian-Turkmen intergovernmental committee meeting held in early July.
In his words, the main theme of the meeting was development of cooperation in the fuel and energy sector. «We discussed the drafting of the agreement on Caspian gas pipeline construction and the development of the gas transporting system in Central Asia, as well as the possible participation of Russian companies in development of new gas and oil fields on the Caspian shelf and on land», noted S.Naryshkin.
He also said that «the current trade and legislative base was analyzed and a directive was given to update some important documents and submit them for approval. The list of the documents includes the agreement on mutual protection of capital investments». According to S.Naryshkin, these documents «must become an addition to the acting agreement and they will be a good basis for mutual business development».
Russia and Turkmenistan to hold a joint business-forum in December 2007.
The next meeting of the intergovernmental committee for economic cooperation will take place in Moscow in Q2 of 2008.
Latvia Signed Memorandum with Estonia in Framework of Rail Baltica Project
In early July, Minister of Communications of Latvia Ainars Slesers signed Memorandum with Estonia to develop border crossings and transborder sectors in the framework of Rail Baltica project.
The document envisages modernization of the existing railway infrastructure in the two states, and intergovernmental cooperation at the border sectors where it is connected.
A week earlier A.Slesers signed a similar agreement with Lithuanian Minister of Transport and Communication Algardas Butkyavichus. Rail Baltica project envisages connection of the Baltic states, Finland and Poland by a speeded up railway line. It is to provide a more efficient integration of the Baltic states into Europe.
The existing railway network of the Baltic states is technically incompatible with the railways of Poland and Germany because of the different gauge size.
Rail Baltica is a priority project of the European Union.
Ring for Black Sea
The RF Ministry of Transport proposes to construct a railway-ferry ring round the Black Sea, said Deputy Minister of Transport Evgeny Moskvichev in his speech at the meeting of the Ministers of Transport of the Organization of the Black Sea Economic Cooperation (BSEC) in Istanbul.
«We propose to discuss the idea of construction of a railway-ferry ring, similar to the project of building a high-speed road round the Black Sea. The realization of the project will reduce the load on road haulages and road infrastructure in the region, and help avoid transport idling at border crossings», he said.
Evgeny Moskvichev stressed that the realization of transport projects that are being carried out now and will be developed in the framework of the BSEC will help reach one of the main targets of the BSEC, i.e. to improve the conditions of business activities in the Black Sea region.
Providing Through Service
The First Vice President of OAO RZD Vadim Morozov believes that being the largest railway system in Eurasia, the throughput of which exceeds the throughput of the EU railways, JSC Russian railways is already able to provide stability, high-quality services, and acceptable for cargo owners economic terms in the sector of international transportation.
This was the key idea of his speech at RailTechRussia 2007 exhibition in Moscow. The event was focused on the role of Russian Railways in the development of freight and passenger transportation in Eurasia.
Nowadays OAO RZD modernizes the railway infrastructure, renews rolling stock, implements new IT technologies, enabling to control on-line freight and wagons on the whole route, and simplifies the technology of transportation using the principle of «one window». «Besides, together with other companies, OAO RZD launches enterprises that will provide through service for transportation of cargoes between Europe and Asia».
Oil Terminal in Skovorodino
In Q3 of 2008, an oil terminal with the annual capacity of 15 million tons will be opened at the Skovorodino station (Zabaikalskaya railway – affiliate of OAO RZD). The terminal will be part of the project to create the pipeline system Eastern Siberia – the Pacific Ocean. In 2007, about RUR 200 million will be invested into the development of the station. The works on the terminal construction and creation of the receiving and dispatching park, as well as the adjacent infrastructure, are already being held.
At the first stage, the West-Siberian oil will be carried by pipeline from Taishet to Skovorodino, where it will be loaded into tank wagons for further transportation to Perevoznaya Bay (the Primorsk region). The receiving and dispatching park will have five railway tracks, each of them able to service a train 71 relative wagons long. At the stage of the park construction, 14 km of station tracks will be built, the overhead contact system and the facilities of electric centralization and communication will be constructed.
FESCO to Establish Feeder Container Line Operator in Baltic Sea
On June 26, 2007 FESCO Transport Group and ESF group of companies reached the final agreement to create a joint venture FESCO ESF Limited, where FESCO holds a 70% interest. The new company will own assets of ESF and its affiliates that relate to ESF Euroservices - Baltic feeder services between Continental Europe and Russia.
«The establishment of FESCO ESF Limited is yet another step in the implementation of the Group’s strategy to create a national leader in container operations, able to offer a full spectrum of integrated services. By completing this transaction, we made a strategically important entry into the Baltic line container shipping market», said Evgeny Ambrosov, FESCO President and CEO. In his opinion, «…this, combined with FESCO’s access to stevedoring assets in the region and our rail transportation capacity, will allow FESCO to offer its clients an intermodal service «short sea - port - transportation» in the strategically important Baltic region - Russia’s main gateway for containerized imports».
ESF Euroservices is a feeder line container operator working since 1995 which offers fully integrated container shipping and handling services between ports in the Netherlands, Belgium and Germany on one side and Russia, Finland and Baltic States on the other side. ESF Euroservices currently operates three container lines:
• Rotterdam/Hamburg/Antwerp - St.Petersburg
• Hamburg - Kotka/Helsinki
• Hamburg - Klaipeda/Riga
ESF Euroservices has representative offices in the ports of Rotterdam, Antwerp and St.-Petersburg, as well as a network of agencies in Hamburg, Helsinki, Hull, Riga, Klaipeda, and Tallinn to name just a few. ESF total 2006 container operations volume exceeded 130 thousand TEU.
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