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2 (18) april - september 2009

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РЖД-Партнер

Mechanical Engineering: Two More Years to Wait for Growth

 The effects of economic stagnation were felt first of all in those branches of mechanical engineering which directly depended on metallurgy and bank credit. Among the main victims were wagon-building enterprises whose orders in the current year have dropped by 30- 50%. As a result, some factories are now on the verge of closure.
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On the Verge of Recession

Last year became critical for heavy machinery. Analysts unanimously declared the first half of year to be “a seller’s market”. It meant that the demand for wagon-building in this industry considerably exceeded the supply on the market. As a result, wagon prices were growing like “mushrooms after rain”; operators accused factories of “twisting arms” and the situation continued. On the one hand, the reason was the shabby state of RZD’s rolling stock, which demanded constant replacement; on the other hand, there was a shortage of wagon-producing capacity because, after the collapse of the USSR’s economy, a significant number of heavy mechanical engineering plants were created outside Russia. So, looking at a geographical map of this industrial sector, one can see that most of the enterprises engaged in the production of specialised rolling stock (dump-cars, mineral hoppers, gas tanks, container flat wagons) and even gondola-type wagons, appeared in nearby foreign countries, mainly in Ukraine.
However, the economy managed to find a tool to break through even such a firm wall as the wagon-building lobby. It proved that even transport machinery could become “a house built on sand”. The world financial crisis took up the role that delivered the main blow to Russian economy and brought quite a considerable fall in its liquidity. In October, prices for wagon-building production started to drop and by November (on the Russian second-hand market) they were 15-20% cheaper than in the middle of the summer. The wagons were still selling but this was for a clear reason. A representative of a large operator explained it like this: “At the beginning of the year, production was contracted 6-12 months ahead because there was a shortage of capacity and, consequently, wagon-building plants were able to take payments well in advance. Therefore last year, from August to October, the production of new freight wagons gave positive figures on the graphs because contracts concluded at the beginning of 2008 were still being executed”.
However, last year’s problems for wagon-builders were resolved quite well in comparison with what happened in January and February 2009. At the beginning of February it became known that production at Ural Wagon-Building Plant (Uralvagonzavod) had been suspended. This plant is a key enterprise in this industrial sector. Before that news, during a meeting of industrialists with Nikolay Vinnichenko (the President’s Plenipotentiary Representative in the Ural Federal District), Nikolay Malykh, the head of the plant, had threatened to close the business on January 24. “The current market price for wagons is 2 to 2.2 million roubles,” explained this top manager. “However, OAO RZD does not make steps towards us. It is ready to buy our wagons only at 2005 prices. In such a situation plant losses will be about 300,000 roubles per wagon.” As a result, 1,300 units are sitting in warehouses. “We simply cannot store more production,” emphasised Mr Malykh. Moreover, according to available information, the plant administration does not exclude that, having fulfilled a large order and all obligations to The First Cargo Company in March, Uralvagonzavod will have to stop work again. “As of February 12th 2009, OAO NPK “Uralvagonzavod” had confirmed and signed agreements to deliver 6,000 units of rolling stock in 2009: only a third of its capacity. Considering that railway production is 70% of the whole corporation’s income, this created a very complicated economic situation for us. Before the end of February we had been compelled to send more than 11,000 people on unplanned holidays, which is one third of our labour force. The absence in the near future of any firm order for at least another 10-12,000 gondola-type wagons and tanks may lead to a complete halt in production and mass lay-offs of qualified experts in wagon building,” noted Boris Mineev, press-manager of Uralvagonzavod.
A similar situation is developing at other factories in the country too. OAO Altaivagon had been idle for two months and it renewed production only in the middle of February. At the plant they told us that they had plenty of orders and wagon supply contracts, indeed that the plant had in its portfolio contracts agreed earlier for 11,000 units, when the plant’s capacity is 8,000 units a year. These contracts were signed with many large Russian transport companies which, alas, can no longer find the resources to finance the purchase of rolling stock. As a result, the financing comes from the accounts of their managing company SDS-Mash. So, it means that, actually, the factory is just preserving its “know-how” and keeping qualified personnel from leaving.
The Armavir Heavy Machinery Plant’s press secretary, Boris Volkov, in his turn, informed us that so far the situation at this plant was gloomy. “We survive only due to the short-term credit which prolongs the life of the plant. The minimum quantity of wagons is being made, just ‘to hold our trousers up’, no more than that. We are still carrying out our obligations under earlier contracts, so we shall still remain afloat for some time,” noted Mr Volkov.
Specialised wagon-building is in the same unpromising situation. According to Artem Ledenev, ZAO Transmashholding’s PR director, this year the holding will see a 30% decline in orders from OAO RZD (in money terms) because of the reduction in the company’s investment program. “Recession in demand is noticeable. It also concerns our main customer, OAO RZD, and orders both for delivery abroad and to the commercial market sector,” he said.

Development of the Crisis: No Forecasts, Only Guesses

Heavy railway machinery today, if looking through investor’s eyes, shows ambiguous and often inconsistent tendencies. In crisis conditions in the real economy, industrial enterprise came close to the point of unprofitability, where management are compelled to undertake unpopular anti-recessionary measures, such as dismissing workers, putting them on unpaid leave, reducing the working week and so forth. All this brings a situation where long-term effort, applied over many years, to support and develop this complex and slow-return sector of the economy, has come to nothing. What can this sector expect, in both the short and long-term prospects? What will be its investment appeal?
Unfortunately, the rating made by The RZD-Partner magazine, together with INFOLine Information Agency, does not bring very optimistic conclusions. On the one hand, rolling stock in Russia is seriously worn out; therefore upgrading it is necessary anyway, regardless of the crisis. It allows the hope that most of the transport mechanical engineering plants will survive through these hard times, especially if the government undertakes vigorous action to refloat the economy. Also there are large-scale projects being developed in the sector to increase capacity. The building of a new wagon enterprise in the Leningrad Region promises to become the largest of these ventures. ZAO KTS, the Managing Company for ZAO Tikhvin Wagon-Building Plant, states that work on the creation of a hi-tech wagon-building plant, with a capacity of 10,000 technical units per year, is being carried out now. The metallurgical giant, Mechel, is also supposed to develop wagon-building at Nerungri Mechanical-Repair Plant. Planned capacities will be calculated in order to release 2,500 gondola wagons annually. Development of a few other projects is on agenda, too, but they may also be in doubt because of the crisis.
Analysing manufacturer ratings in the sphere of transport mechanical engineering, it is possible to note that this sector’s leading plants are keeping development rates steady and increasing production volumes. Although the majority of these enterprises are located outside Russia, production volume is highest first of all among domestic enterprises and, to a lesser degree, at Ukrainian plants. It should be noted that the share of production of some kinds of specialised rolling stock has noticeably decreased. In particular the production of hopper-mineral carriers, ballast hopper cars and dump cars fell considerably at all factories in 2008, in comparison with 2007. A similar situation developed in the acid-tank railcar and universal flat wagon manufacturing sectors, whose output in 2008 fell considerably compared with 2007. The reason for such re-structuring is that demand for this type of rolling stock decreased because universal gondola wagons have appeared, which are more convenient for a wider range of cargoes. Considerable growth in the production of gondola wagons has occurred for the same reason. The production of container flat wagons also grew because the volume of container transportation in the Russian Federation increased.
However, there are also disturbing aspects. An absolute priority today is to revise the development strategy for the near future and to optimise processes inside industrial enterprises in order to successfully save the resources which are necessary for the survival of companies. For example, the production range and volumes of such a leading enterprise as Uralvagonzavod show that dependence on only one customer can create difficulties for a plant during a crisis.
Also, although machine-building plants are engaged in the development and introduction of new products, these processes are extremely slow, which essentially influences the scientific and technical equipment of the companies. Moreover, even tested models are often released with many defects and sometimes even seriously damaged. A recent meeting at the Bryansk plant on diesel locomotive TEM18 (Transmashholding production) showed so many complaints in terms of technical defects that the list of corrections needed ran to about thirty pages.
Let us take another example. Currently, OAO RZD is making an off-schedule technical inspection of freight wagons produced by the Ukrainian holding Azovmash, which was caused by the high number of operational malfunctions in rolling stock made by this enterprise. There has been a high incidence of such cases over the last few years. Remember how expensive just one non-scheduled inspection and repair of gondola wagons made by Uralvagonzavod in 2007 was? Thus, it should be emphasised that, if production quality remains this low, and the development of new goods for mass production remains so unacceptably slow, then the crisis in this industry will hardly to be overcome, regardless of whether the national economy stays afloat or not. And then, instead of domestic production, trains and locomotives from Japan, China and European countries will appear.
Let us also note that, in spite of the fact that most of this sector’s companies are open joint-stock societies, it is extremely problematic to obtain transparent and authentic data from them about their production and other parameters. For not all of them are ready to reveal information about their capacity, production range, production types and ordered volumes. Generally, it is possible to say that such secrecy is just the consequence of the fact that, for a long time, the market was only guided by just one consumer’s production orders. Often the traditions of the Soviet period are still followed at the oldest heavy machinery plants: they assume closeness and have fixed modes of working. New management and new forms of dialogue with customers only recently appeared in this sector. The release of information about company activity and openness to the market, and also diversification of the portfolio of orders between many consumers, only started when private operators emerged on the market. The creation of the rating mentioned above is one more step in this direction.

What Will Another Two Years Bring?

Regardless of the complicated economic situation, RZD’s public park continues to grow old and the demand for updating and upgrading increases. It could partly stimulate operators to engage in purchasing rolling stock. Last year’s Transport Ministry forecasts were that, in 2009, the number of possible private trader purchases of Russian manufacturers’ rolling stock would be about 50,000 units (to compare: in 2008 private companies, including RZD’s affiliated daughter-company, bought almost 45,000 wagons). However, so far this figure is approximate, considering the fact that the needs of the largest private operators for new freight wagons are now only about 20,000 units. Currently, it is extremely difficult to obtain financing for these purchases.
On the other hand, analysts predict that the crisis in this sector will continue to the end of this year and that only in the middle of the next year will the mass restoration of all mechanical engineering enterprises commence. “Interest in the qualitative production of the wagon-building sector has been and still remains very high. It is possible to expect that, by the end of 2009 or the beginning of 2010, demand for this production will start growing and the full restoration of its volumes will be completed in 2011,” concludes Nikolay Molchanov, head of the strategic development department at the investment company RVM.
Maria Shevchenko
[~DETAIL_TEXT] =>

On the Verge of Recession

Last year became critical for heavy machinery. Analysts unanimously declared the first half of year to be “a seller’s market”. It meant that the demand for wagon-building in this industry considerably exceeded the supply on the market. As a result, wagon prices were growing like “mushrooms after rain”; operators accused factories of “twisting arms” and the situation continued. On the one hand, the reason was the shabby state of RZD’s rolling stock, which demanded constant replacement; on the other hand, there was a shortage of wagon-producing capacity because, after the collapse of the USSR’s economy, a significant number of heavy mechanical engineering plants were created outside Russia. So, looking at a geographical map of this industrial sector, one can see that most of the enterprises engaged in the production of specialised rolling stock (dump-cars, mineral hoppers, gas tanks, container flat wagons) and even gondola-type wagons, appeared in nearby foreign countries, mainly in Ukraine.
However, the economy managed to find a tool to break through even such a firm wall as the wagon-building lobby. It proved that even transport machinery could become “a house built on sand”. The world financial crisis took up the role that delivered the main blow to Russian economy and brought quite a considerable fall in its liquidity. In October, prices for wagon-building production started to drop and by November (on the Russian second-hand market) they were 15-20% cheaper than in the middle of the summer. The wagons were still selling but this was for a clear reason. A representative of a large operator explained it like this: “At the beginning of the year, production was contracted 6-12 months ahead because there was a shortage of capacity and, consequently, wagon-building plants were able to take payments well in advance. Therefore last year, from August to October, the production of new freight wagons gave positive figures on the graphs because contracts concluded at the beginning of 2008 were still being executed”.
However, last year’s problems for wagon-builders were resolved quite well in comparison with what happened in January and February 2009. At the beginning of February it became known that production at Ural Wagon-Building Plant (Uralvagonzavod) had been suspended. This plant is a key enterprise in this industrial sector. Before that news, during a meeting of industrialists with Nikolay Vinnichenko (the President’s Plenipotentiary Representative in the Ural Federal District), Nikolay Malykh, the head of the plant, had threatened to close the business on January 24. “The current market price for wagons is 2 to 2.2 million roubles,” explained this top manager. “However, OAO RZD does not make steps towards us. It is ready to buy our wagons only at 2005 prices. In such a situation plant losses will be about 300,000 roubles per wagon.” As a result, 1,300 units are sitting in warehouses. “We simply cannot store more production,” emphasised Mr Malykh. Moreover, according to available information, the plant administration does not exclude that, having fulfilled a large order and all obligations to The First Cargo Company in March, Uralvagonzavod will have to stop work again. “As of February 12th 2009, OAO NPK “Uralvagonzavod” had confirmed and signed agreements to deliver 6,000 units of rolling stock in 2009: only a third of its capacity. Considering that railway production is 70% of the whole corporation’s income, this created a very complicated economic situation for us. Before the end of February we had been compelled to send more than 11,000 people on unplanned holidays, which is one third of our labour force. The absence in the near future of any firm order for at least another 10-12,000 gondola-type wagons and tanks may lead to a complete halt in production and mass lay-offs of qualified experts in wagon building,” noted Boris Mineev, press-manager of Uralvagonzavod.
A similar situation is developing at other factories in the country too. OAO Altaivagon had been idle for two months and it renewed production only in the middle of February. At the plant they told us that they had plenty of orders and wagon supply contracts, indeed that the plant had in its portfolio contracts agreed earlier for 11,000 units, when the plant’s capacity is 8,000 units a year. These contracts were signed with many large Russian transport companies which, alas, can no longer find the resources to finance the purchase of rolling stock. As a result, the financing comes from the accounts of their managing company SDS-Mash. So, it means that, actually, the factory is just preserving its “know-how” and keeping qualified personnel from leaving.
The Armavir Heavy Machinery Plant’s press secretary, Boris Volkov, in his turn, informed us that so far the situation at this plant was gloomy. “We survive only due to the short-term credit which prolongs the life of the plant. The minimum quantity of wagons is being made, just ‘to hold our trousers up’, no more than that. We are still carrying out our obligations under earlier contracts, so we shall still remain afloat for some time,” noted Mr Volkov.
Specialised wagon-building is in the same unpromising situation. According to Artem Ledenev, ZAO Transmashholding’s PR director, this year the holding will see a 30% decline in orders from OAO RZD (in money terms) because of the reduction in the company’s investment program. “Recession in demand is noticeable. It also concerns our main customer, OAO RZD, and orders both for delivery abroad and to the commercial market sector,” he said.

Development of the Crisis: No Forecasts, Only Guesses

Heavy railway machinery today, if looking through investor’s eyes, shows ambiguous and often inconsistent tendencies. In crisis conditions in the real economy, industrial enterprise came close to the point of unprofitability, where management are compelled to undertake unpopular anti-recessionary measures, such as dismissing workers, putting them on unpaid leave, reducing the working week and so forth. All this brings a situation where long-term effort, applied over many years, to support and develop this complex and slow-return sector of the economy, has come to nothing. What can this sector expect, in both the short and long-term prospects? What will be its investment appeal?
Unfortunately, the rating made by The RZD-Partner magazine, together with INFOLine Information Agency, does not bring very optimistic conclusions. On the one hand, rolling stock in Russia is seriously worn out; therefore upgrading it is necessary anyway, regardless of the crisis. It allows the hope that most of the transport mechanical engineering plants will survive through these hard times, especially if the government undertakes vigorous action to refloat the economy. Also there are large-scale projects being developed in the sector to increase capacity. The building of a new wagon enterprise in the Leningrad Region promises to become the largest of these ventures. ZAO KTS, the Managing Company for ZAO Tikhvin Wagon-Building Plant, states that work on the creation of a hi-tech wagon-building plant, with a capacity of 10,000 technical units per year, is being carried out now. The metallurgical giant, Mechel, is also supposed to develop wagon-building at Nerungri Mechanical-Repair Plant. Planned capacities will be calculated in order to release 2,500 gondola wagons annually. Development of a few other projects is on agenda, too, but they may also be in doubt because of the crisis.
Analysing manufacturer ratings in the sphere of transport mechanical engineering, it is possible to note that this sector’s leading plants are keeping development rates steady and increasing production volumes. Although the majority of these enterprises are located outside Russia, production volume is highest first of all among domestic enterprises and, to a lesser degree, at Ukrainian plants. It should be noted that the share of production of some kinds of specialised rolling stock has noticeably decreased. In particular the production of hopper-mineral carriers, ballast hopper cars and dump cars fell considerably at all factories in 2008, in comparison with 2007. A similar situation developed in the acid-tank railcar and universal flat wagon manufacturing sectors, whose output in 2008 fell considerably compared with 2007. The reason for such re-structuring is that demand for this type of rolling stock decreased because universal gondola wagons have appeared, which are more convenient for a wider range of cargoes. Considerable growth in the production of gondola wagons has occurred for the same reason. The production of container flat wagons also grew because the volume of container transportation in the Russian Federation increased.
However, there are also disturbing aspects. An absolute priority today is to revise the development strategy for the near future and to optimise processes inside industrial enterprises in order to successfully save the resources which are necessary for the survival of companies. For example, the production range and volumes of such a leading enterprise as Uralvagonzavod show that dependence on only one customer can create difficulties for a plant during a crisis.
Also, although machine-building plants are engaged in the development and introduction of new products, these processes are extremely slow, which essentially influences the scientific and technical equipment of the companies. Moreover, even tested models are often released with many defects and sometimes even seriously damaged. A recent meeting at the Bryansk plant on diesel locomotive TEM18 (Transmashholding production) showed so many complaints in terms of technical defects that the list of corrections needed ran to about thirty pages.
Let us take another example. Currently, OAO RZD is making an off-schedule technical inspection of freight wagons produced by the Ukrainian holding Azovmash, which was caused by the high number of operational malfunctions in rolling stock made by this enterprise. There has been a high incidence of such cases over the last few years. Remember how expensive just one non-scheduled inspection and repair of gondola wagons made by Uralvagonzavod in 2007 was? Thus, it should be emphasised that, if production quality remains this low, and the development of new goods for mass production remains so unacceptably slow, then the crisis in this industry will hardly to be overcome, regardless of whether the national economy stays afloat or not. And then, instead of domestic production, trains and locomotives from Japan, China and European countries will appear.
Let us also note that, in spite of the fact that most of this sector’s companies are open joint-stock societies, it is extremely problematic to obtain transparent and authentic data from them about their production and other parameters. For not all of them are ready to reveal information about their capacity, production range, production types and ordered volumes. Generally, it is possible to say that such secrecy is just the consequence of the fact that, for a long time, the market was only guided by just one consumer’s production orders. Often the traditions of the Soviet period are still followed at the oldest heavy machinery plants: they assume closeness and have fixed modes of working. New management and new forms of dialogue with customers only recently appeared in this sector. The release of information about company activity and openness to the market, and also diversification of the portfolio of orders between many consumers, only started when private operators emerged on the market. The creation of the rating mentioned above is one more step in this direction.

What Will Another Two Years Bring?

Regardless of the complicated economic situation, RZD’s public park continues to grow old and the demand for updating and upgrading increases. It could partly stimulate operators to engage in purchasing rolling stock. Last year’s Transport Ministry forecasts were that, in 2009, the number of possible private trader purchases of Russian manufacturers’ rolling stock would be about 50,000 units (to compare: in 2008 private companies, including RZD’s affiliated daughter-company, bought almost 45,000 wagons). However, so far this figure is approximate, considering the fact that the needs of the largest private operators for new freight wagons are now only about 20,000 units. Currently, it is extremely difficult to obtain financing for these purchases.
On the other hand, analysts predict that the crisis in this sector will continue to the end of this year and that only in the middle of the next year will the mass restoration of all mechanical engineering enterprises commence. “Interest in the qualitative production of the wagon-building sector has been and still remains very high. It is possible to expect that, by the end of 2009 or the beginning of 2010, demand for this production will start growing and the full restoration of its volumes will be completed in 2011,” concludes Nikolay Molchanov, head of the strategic development department at the investment company RVM.
Maria Shevchenko
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src="/ufiles/image/rus/partner/2009/2/20.jpg" border="1" alt=" " hspace="5" width="160" height="120" align="left" />The effects of economic stagnation were felt first of all in those branches of mechanical engineering which directly depended on metallurgy and bank credit. Among the main victims were wagon-building enterprises whose orders in the current year have dropped by 30- 50%. As a result, some factories are now on the verge of closure. [ELEMENT_META_TITLE] => Mechanical Engineering: Two More Years to Wait for Growth [ELEMENT_META_KEYWORDS] => mechanical engineering: two more years to wait for growth [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2009/2/20.jpg" border="1" alt=" " hspace="5" width="160" height="120" align="left" />The effects of economic stagnation were felt first of all in those branches of mechanical engineering which directly depended on metallurgy and bank credit. Among the main victims were wagon-building enterprises whose orders in the current year have dropped by 30- 50%. As a result, some factories are now on the verge of closure. 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On the Verge of Recession

Last year became critical for heavy machinery. Analysts unanimously declared the first half of year to be “a seller’s market”. It meant that the demand for wagon-building in this industry considerably exceeded the supply on the market. As a result, wagon prices were growing like “mushrooms after rain”; operators accused factories of “twisting arms” and the situation continued. On the one hand, the reason was the shabby state of RZD’s rolling stock, which demanded constant replacement; on the other hand, there was a shortage of wagon-producing capacity because, after the collapse of the USSR’s economy, a significant number of heavy mechanical engineering plants were created outside Russia. So, looking at a geographical map of this industrial sector, one can see that most of the enterprises engaged in the production of specialised rolling stock (dump-cars, mineral hoppers, gas tanks, container flat wagons) and even gondola-type wagons, appeared in nearby foreign countries, mainly in Ukraine.
However, the economy managed to find a tool to break through even such a firm wall as the wagon-building lobby. It proved that even transport machinery could become “a house built on sand”. The world financial crisis took up the role that delivered the main blow to Russian economy and brought quite a considerable fall in its liquidity. In October, prices for wagon-building production started to drop and by November (on the Russian second-hand market) they were 15-20% cheaper than in the middle of the summer. The wagons were still selling but this was for a clear reason. A representative of a large operator explained it like this: “At the beginning of the year, production was contracted 6-12 months ahead because there was a shortage of capacity and, consequently, wagon-building plants were able to take payments well in advance. Therefore last year, from August to October, the production of new freight wagons gave positive figures on the graphs because contracts concluded at the beginning of 2008 were still being executed”.
However, last year’s problems for wagon-builders were resolved quite well in comparison with what happened in January and February 2009. At the beginning of February it became known that production at Ural Wagon-Building Plant (Uralvagonzavod) had been suspended. This plant is a key enterprise in this industrial sector. Before that news, during a meeting of industrialists with Nikolay Vinnichenko (the President’s Plenipotentiary Representative in the Ural Federal District), Nikolay Malykh, the head of the plant, had threatened to close the business on January 24. “The current market price for wagons is 2 to 2.2 million roubles,” explained this top manager. “However, OAO RZD does not make steps towards us. It is ready to buy our wagons only at 2005 prices. In such a situation plant losses will be about 300,000 roubles per wagon.” As a result, 1,300 units are sitting in warehouses. “We simply cannot store more production,” emphasised Mr Malykh. Moreover, according to available information, the plant administration does not exclude that, having fulfilled a large order and all obligations to The First Cargo Company in March, Uralvagonzavod will have to stop work again. “As of February 12th 2009, OAO NPK “Uralvagonzavod” had confirmed and signed agreements to deliver 6,000 units of rolling stock in 2009: only a third of its capacity. Considering that railway production is 70% of the whole corporation’s income, this created a very complicated economic situation for us. Before the end of February we had been compelled to send more than 11,000 people on unplanned holidays, which is one third of our labour force. The absence in the near future of any firm order for at least another 10-12,000 gondola-type wagons and tanks may lead to a complete halt in production and mass lay-offs of qualified experts in wagon building,” noted Boris Mineev, press-manager of Uralvagonzavod.
A similar situation is developing at other factories in the country too. OAO Altaivagon had been idle for two months and it renewed production only in the middle of February. At the plant they told us that they had plenty of orders and wagon supply contracts, indeed that the plant had in its portfolio contracts agreed earlier for 11,000 units, when the plant’s capacity is 8,000 units a year. These contracts were signed with many large Russian transport companies which, alas, can no longer find the resources to finance the purchase of rolling stock. As a result, the financing comes from the accounts of their managing company SDS-Mash. So, it means that, actually, the factory is just preserving its “know-how” and keeping qualified personnel from leaving.
The Armavir Heavy Machinery Plant’s press secretary, Boris Volkov, in his turn, informed us that so far the situation at this plant was gloomy. “We survive only due to the short-term credit which prolongs the life of the plant. The minimum quantity of wagons is being made, just ‘to hold our trousers up’, no more than that. We are still carrying out our obligations under earlier contracts, so we shall still remain afloat for some time,” noted Mr Volkov.
Specialised wagon-building is in the same unpromising situation. According to Artem Ledenev, ZAO Transmashholding’s PR director, this year the holding will see a 30% decline in orders from OAO RZD (in money terms) because of the reduction in the company’s investment program. “Recession in demand is noticeable. It also concerns our main customer, OAO RZD, and orders both for delivery abroad and to the commercial market sector,” he said.

Development of the Crisis: No Forecasts, Only Guesses

Heavy railway machinery today, if looking through investor’s eyes, shows ambiguous and often inconsistent tendencies. In crisis conditions in the real economy, industrial enterprise came close to the point of unprofitability, where management are compelled to undertake unpopular anti-recessionary measures, such as dismissing workers, putting them on unpaid leave, reducing the working week and so forth. All this brings a situation where long-term effort, applied over many years, to support and develop this complex and slow-return sector of the economy, has come to nothing. What can this sector expect, in both the short and long-term prospects? What will be its investment appeal?
Unfortunately, the rating made by The RZD-Partner magazine, together with INFOLine Information Agency, does not bring very optimistic conclusions. On the one hand, rolling stock in Russia is seriously worn out; therefore upgrading it is necessary anyway, regardless of the crisis. It allows the hope that most of the transport mechanical engineering plants will survive through these hard times, especially if the government undertakes vigorous action to refloat the economy. Also there are large-scale projects being developed in the sector to increase capacity. The building of a new wagon enterprise in the Leningrad Region promises to become the largest of these ventures. ZAO KTS, the Managing Company for ZAO Tikhvin Wagon-Building Plant, states that work on the creation of a hi-tech wagon-building plant, with a capacity of 10,000 technical units per year, is being carried out now. The metallurgical giant, Mechel, is also supposed to develop wagon-building at Nerungri Mechanical-Repair Plant. Planned capacities will be calculated in order to release 2,500 gondola wagons annually. Development of a few other projects is on agenda, too, but they may also be in doubt because of the crisis.
Analysing manufacturer ratings in the sphere of transport mechanical engineering, it is possible to note that this sector’s leading plants are keeping development rates steady and increasing production volumes. Although the majority of these enterprises are located outside Russia, production volume is highest first of all among domestic enterprises and, to a lesser degree, at Ukrainian plants. It should be noted that the share of production of some kinds of specialised rolling stock has noticeably decreased. In particular the production of hopper-mineral carriers, ballast hopper cars and dump cars fell considerably at all factories in 2008, in comparison with 2007. A similar situation developed in the acid-tank railcar and universal flat wagon manufacturing sectors, whose output in 2008 fell considerably compared with 2007. The reason for such re-structuring is that demand for this type of rolling stock decreased because universal gondola wagons have appeared, which are more convenient for a wider range of cargoes. Considerable growth in the production of gondola wagons has occurred for the same reason. The production of container flat wagons also grew because the volume of container transportation in the Russian Federation increased.
However, there are also disturbing aspects. An absolute priority today is to revise the development strategy for the near future and to optimise processes inside industrial enterprises in order to successfully save the resources which are necessary for the survival of companies. For example, the production range and volumes of such a leading enterprise as Uralvagonzavod show that dependence on only one customer can create difficulties for a plant during a crisis.
Also, although machine-building plants are engaged in the development and introduction of new products, these processes are extremely slow, which essentially influences the scientific and technical equipment of the companies. Moreover, even tested models are often released with many defects and sometimes even seriously damaged. A recent meeting at the Bryansk plant on diesel locomotive TEM18 (Transmashholding production) showed so many complaints in terms of technical defects that the list of corrections needed ran to about thirty pages.
Let us take another example. Currently, OAO RZD is making an off-schedule technical inspection of freight wagons produced by the Ukrainian holding Azovmash, which was caused by the high number of operational malfunctions in rolling stock made by this enterprise. There has been a high incidence of such cases over the last few years. Remember how expensive just one non-scheduled inspection and repair of gondola wagons made by Uralvagonzavod in 2007 was? Thus, it should be emphasised that, if production quality remains this low, and the development of new goods for mass production remains so unacceptably slow, then the crisis in this industry will hardly to be overcome, regardless of whether the national economy stays afloat or not. And then, instead of domestic production, trains and locomotives from Japan, China and European countries will appear.
Let us also note that, in spite of the fact that most of this sector’s companies are open joint-stock societies, it is extremely problematic to obtain transparent and authentic data from them about their production and other parameters. For not all of them are ready to reveal information about their capacity, production range, production types and ordered volumes. Generally, it is possible to say that such secrecy is just the consequence of the fact that, for a long time, the market was only guided by just one consumer’s production orders. Often the traditions of the Soviet period are still followed at the oldest heavy machinery plants: they assume closeness and have fixed modes of working. New management and new forms of dialogue with customers only recently appeared in this sector. The release of information about company activity and openness to the market, and also diversification of the portfolio of orders between many consumers, only started when private operators emerged on the market. The creation of the rating mentioned above is one more step in this direction.

What Will Another Two Years Bring?

Regardless of the complicated economic situation, RZD’s public park continues to grow old and the demand for updating and upgrading increases. It could partly stimulate operators to engage in purchasing rolling stock. Last year’s Transport Ministry forecasts were that, in 2009, the number of possible private trader purchases of Russian manufacturers’ rolling stock would be about 50,000 units (to compare: in 2008 private companies, including RZD’s affiliated daughter-company, bought almost 45,000 wagons). However, so far this figure is approximate, considering the fact that the needs of the largest private operators for new freight wagons are now only about 20,000 units. Currently, it is extremely difficult to obtain financing for these purchases.
On the other hand, analysts predict that the crisis in this sector will continue to the end of this year and that only in the middle of the next year will the mass restoration of all mechanical engineering enterprises commence. “Interest in the qualitative production of the wagon-building sector has been and still remains very high. It is possible to expect that, by the end of 2009 or the beginning of 2010, demand for this production will start growing and the full restoration of its volumes will be completed in 2011,” concludes Nikolay Molchanov, head of the strategic development department at the investment company RVM.
Maria Shevchenko
[~DETAIL_TEXT] =>

On the Verge of Recession

Last year became critical for heavy machinery. Analysts unanimously declared the first half of year to be “a seller’s market”. It meant that the demand for wagon-building in this industry considerably exceeded the supply on the market. As a result, wagon prices were growing like “mushrooms after rain”; operators accused factories of “twisting arms” and the situation continued. On the one hand, the reason was the shabby state of RZD’s rolling stock, which demanded constant replacement; on the other hand, there was a shortage of wagon-producing capacity because, after the collapse of the USSR’s economy, a significant number of heavy mechanical engineering plants were created outside Russia. So, looking at a geographical map of this industrial sector, one can see that most of the enterprises engaged in the production of specialised rolling stock (dump-cars, mineral hoppers, gas tanks, container flat wagons) and even gondola-type wagons, appeared in nearby foreign countries, mainly in Ukraine.
However, the economy managed to find a tool to break through even such a firm wall as the wagon-building lobby. It proved that even transport machinery could become “a house built on sand”. The world financial crisis took up the role that delivered the main blow to Russian economy and brought quite a considerable fall in its liquidity. In October, prices for wagon-building production started to drop and by November (on the Russian second-hand market) they were 15-20% cheaper than in the middle of the summer. The wagons were still selling but this was for a clear reason. A representative of a large operator explained it like this: “At the beginning of the year, production was contracted 6-12 months ahead because there was a shortage of capacity and, consequently, wagon-building plants were able to take payments well in advance. Therefore last year, from August to October, the production of new freight wagons gave positive figures on the graphs because contracts concluded at the beginning of 2008 were still being executed”.
However, last year’s problems for wagon-builders were resolved quite well in comparison with what happened in January and February 2009. At the beginning of February it became known that production at Ural Wagon-Building Plant (Uralvagonzavod) had been suspended. This plant is a key enterprise in this industrial sector. Before that news, during a meeting of industrialists with Nikolay Vinnichenko (the President’s Plenipotentiary Representative in the Ural Federal District), Nikolay Malykh, the head of the plant, had threatened to close the business on January 24. “The current market price for wagons is 2 to 2.2 million roubles,” explained this top manager. “However, OAO RZD does not make steps towards us. It is ready to buy our wagons only at 2005 prices. In such a situation plant losses will be about 300,000 roubles per wagon.” As a result, 1,300 units are sitting in warehouses. “We simply cannot store more production,” emphasised Mr Malykh. Moreover, according to available information, the plant administration does not exclude that, having fulfilled a large order and all obligations to The First Cargo Company in March, Uralvagonzavod will have to stop work again. “As of February 12th 2009, OAO NPK “Uralvagonzavod” had confirmed and signed agreements to deliver 6,000 units of rolling stock in 2009: only a third of its capacity. Considering that railway production is 70% of the whole corporation’s income, this created a very complicated economic situation for us. Before the end of February we had been compelled to send more than 11,000 people on unplanned holidays, which is one third of our labour force. The absence in the near future of any firm order for at least another 10-12,000 gondola-type wagons and tanks may lead to a complete halt in production and mass lay-offs of qualified experts in wagon building,” noted Boris Mineev, press-manager of Uralvagonzavod.
A similar situation is developing at other factories in the country too. OAO Altaivagon had been idle for two months and it renewed production only in the middle of February. At the plant they told us that they had plenty of orders and wagon supply contracts, indeed that the plant had in its portfolio contracts agreed earlier for 11,000 units, when the plant’s capacity is 8,000 units a year. These contracts were signed with many large Russian transport companies which, alas, can no longer find the resources to finance the purchase of rolling stock. As a result, the financing comes from the accounts of their managing company SDS-Mash. So, it means that, actually, the factory is just preserving its “know-how” and keeping qualified personnel from leaving.
The Armavir Heavy Machinery Plant’s press secretary, Boris Volkov, in his turn, informed us that so far the situation at this plant was gloomy. “We survive only due to the short-term credit which prolongs the life of the plant. The minimum quantity of wagons is being made, just ‘to hold our trousers up’, no more than that. We are still carrying out our obligations under earlier contracts, so we shall still remain afloat for some time,” noted Mr Volkov.
Specialised wagon-building is in the same unpromising situation. According to Artem Ledenev, ZAO Transmashholding’s PR director, this year the holding will see a 30% decline in orders from OAO RZD (in money terms) because of the reduction in the company’s investment program. “Recession in demand is noticeable. It also concerns our main customer, OAO RZD, and orders both for delivery abroad and to the commercial market sector,” he said.

Development of the Crisis: No Forecasts, Only Guesses

Heavy railway machinery today, if looking through investor’s eyes, shows ambiguous and often inconsistent tendencies. In crisis conditions in the real economy, industrial enterprise came close to the point of unprofitability, where management are compelled to undertake unpopular anti-recessionary measures, such as dismissing workers, putting them on unpaid leave, reducing the working week and so forth. All this brings a situation where long-term effort, applied over many years, to support and develop this complex and slow-return sector of the economy, has come to nothing. What can this sector expect, in both the short and long-term prospects? What will be its investment appeal?
Unfortunately, the rating made by The RZD-Partner magazine, together with INFOLine Information Agency, does not bring very optimistic conclusions. On the one hand, rolling stock in Russia is seriously worn out; therefore upgrading it is necessary anyway, regardless of the crisis. It allows the hope that most of the transport mechanical engineering plants will survive through these hard times, especially if the government undertakes vigorous action to refloat the economy. Also there are large-scale projects being developed in the sector to increase capacity. The building of a new wagon enterprise in the Leningrad Region promises to become the largest of these ventures. ZAO KTS, the Managing Company for ZAO Tikhvin Wagon-Building Plant, states that work on the creation of a hi-tech wagon-building plant, with a capacity of 10,000 technical units per year, is being carried out now. The metallurgical giant, Mechel, is also supposed to develop wagon-building at Nerungri Mechanical-Repair Plant. Planned capacities will be calculated in order to release 2,500 gondola wagons annually. Development of a few other projects is on agenda, too, but they may also be in doubt because of the crisis.
Analysing manufacturer ratings in the sphere of transport mechanical engineering, it is possible to note that this sector’s leading plants are keeping development rates steady and increasing production volumes. Although the majority of these enterprises are located outside Russia, production volume is highest first of all among domestic enterprises and, to a lesser degree, at Ukrainian plants. It should be noted that the share of production of some kinds of specialised rolling stock has noticeably decreased. In particular the production of hopper-mineral carriers, ballast hopper cars and dump cars fell considerably at all factories in 2008, in comparison with 2007. A similar situation developed in the acid-tank railcar and universal flat wagon manufacturing sectors, whose output in 2008 fell considerably compared with 2007. The reason for such re-structuring is that demand for this type of rolling stock decreased because universal gondola wagons have appeared, which are more convenient for a wider range of cargoes. Considerable growth in the production of gondola wagons has occurred for the same reason. The production of container flat wagons also grew because the volume of container transportation in the Russian Federation increased.
However, there are also disturbing aspects. An absolute priority today is to revise the development strategy for the near future and to optimise processes inside industrial enterprises in order to successfully save the resources which are necessary for the survival of companies. For example, the production range and volumes of such a leading enterprise as Uralvagonzavod show that dependence on only one customer can create difficulties for a plant during a crisis.
Also, although machine-building plants are engaged in the development and introduction of new products, these processes are extremely slow, which essentially influences the scientific and technical equipment of the companies. Moreover, even tested models are often released with many defects and sometimes even seriously damaged. A recent meeting at the Bryansk plant on diesel locomotive TEM18 (Transmashholding production) showed so many complaints in terms of technical defects that the list of corrections needed ran to about thirty pages.
Let us take another example. Currently, OAO RZD is making an off-schedule technical inspection of freight wagons produced by the Ukrainian holding Azovmash, which was caused by the high number of operational malfunctions in rolling stock made by this enterprise. There has been a high incidence of such cases over the last few years. Remember how expensive just one non-scheduled inspection and repair of gondola wagons made by Uralvagonzavod in 2007 was? Thus, it should be emphasised that, if production quality remains this low, and the development of new goods for mass production remains so unacceptably slow, then the crisis in this industry will hardly to be overcome, regardless of whether the national economy stays afloat or not. And then, instead of domestic production, trains and locomotives from Japan, China and European countries will appear.
Let us also note that, in spite of the fact that most of this sector’s companies are open joint-stock societies, it is extremely problematic to obtain transparent and authentic data from them about their production and other parameters. For not all of them are ready to reveal information about their capacity, production range, production types and ordered volumes. Generally, it is possible to say that such secrecy is just the consequence of the fact that, for a long time, the market was only guided by just one consumer’s production orders. Often the traditions of the Soviet period are still followed at the oldest heavy machinery plants: they assume closeness and have fixed modes of working. New management and new forms of dialogue with customers only recently appeared in this sector. The release of information about company activity and openness to the market, and also diversification of the portfolio of orders between many consumers, only started when private operators emerged on the market. The creation of the rating mentioned above is one more step in this direction.

What Will Another Two Years Bring?

Regardless of the complicated economic situation, RZD’s public park continues to grow old and the demand for updating and upgrading increases. It could partly stimulate operators to engage in purchasing rolling stock. Last year’s Transport Ministry forecasts were that, in 2009, the number of possible private trader purchases of Russian manufacturers’ rolling stock would be about 50,000 units (to compare: in 2008 private companies, including RZD’s affiliated daughter-company, bought almost 45,000 wagons). However, so far this figure is approximate, considering the fact that the needs of the largest private operators for new freight wagons are now only about 20,000 units. Currently, it is extremely difficult to obtain financing for these purchases.
On the other hand, analysts predict that the crisis in this sector will continue to the end of this year and that only in the middle of the next year will the mass restoration of all mechanical engineering enterprises commence. “Interest in the qualitative production of the wagon-building sector has been and still remains very high. It is possible to expect that, by the end of 2009 or the beginning of 2010, demand for this production will start growing and the full restoration of its volumes will be completed in 2011,” concludes Nikolay Molchanov, head of the strategic development department at the investment company RVM.
Maria Shevchenko
[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>  The effects of economic stagnation were felt first of all in those branches of mechanical engineering which directly depended on metallurgy and bank credit. Among the main victims were wagon-building enterprises whose orders in the current year have dropped by 30- 50%. As a result, some factories are now on the verge of closure. [~PREVIEW_TEXT] =>  The effects of economic stagnation were felt first of all in those branches of mechanical engineering which directly depended on metallurgy and bank credit. Among the main victims were wagon-building enterprises whose orders in the current year have dropped by 30- 50%. As a result, some factories are now on the verge of closure. 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src="/ufiles/image/rus/partner/2009/2/20.jpg" border="1" alt=" " hspace="5" width="160" height="120" align="left" />The effects of economic stagnation were felt first of all in those branches of mechanical engineering which directly depended on metallurgy and bank credit. 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РЖД-Партнер

What We Calculated And How We Did It

Every self-respecting branch of the economy has a way of rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia.
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    [DETAIL_TEXT] => Last autumn, our magazine, in cooperation with IA INFOLine, created a rating of rolling stock operators for the first time. Its publication and the reaction of our readers proved that such projects are very popular with a Russian and foreign audience that wants to get professionally formed, detailed and full information about the market.
In 2009, the magazine offers its readers four ratings –transport (railway) machine-building enterprises; leasing companies dealing with railway machinery; stevedoring companies; and rolling stock operators. The rating of railway machine-building enterprises is published in this issue, the rest will be published in the following issues of our Russian-language version in April-May, and in The RZD-Partner International and The RZD-Partner International China later in 2009. The ratings, created in cooperation with IA INFOLine, are based on the data given by the companies themselves. We decided not to interpret the information received from the market players. In case the analysts of IA INFOLine considered some data controversial, they negotiated with the enterprises to make the figures more exact. If companies did not fill in the form, the expert data of IA INFOLine were used. On the whole, it is worth mentioning that not all producers of rolling stock turned out to be ready for information transparency.

Methods for rating creation

The following parameters were applied to rate rolling stock producers:
• Production volume of rolling stock in 2008;
• Production volume of rolling stock according to type (wagons for car transportation; six-axial and four-axial dumping wagons; covered wagons with body space from 138 to 250 cubic metres; hoppers for cement transportation; hoppers for mineral fertilisers; ballast hopper cars, tank-wagons for LNG transportation; tank-wagons for acids and other chemicals, gondola cars, universal and special flat wagons, container flat railcars) in 2008;
• Production volume of pulling rolling stock (mainline freight and passenger diesel locomotives, mainline cargo and passenger electric locomotives, diesel shunters, industrial and mine electric locomotives) in 2008.
The total rating of wagon-building enterprises is formed according to the number of produced rolling stock in 2008 (there is also information about the production volume of the types of wagons and locomotives mentioned above in 2006-2007). The principle of ranking according to the number of types of rolling stock produced was the same. [~DETAIL_TEXT] => Last autumn, our magazine, in cooperation with IA INFOLine, created a rating of rolling stock operators for the first time. Its publication and the reaction of our readers proved that such projects are very popular with a Russian and foreign audience that wants to get professionally formed, detailed and full information about the market.
In 2009, the magazine offers its readers four ratings –transport (railway) machine-building enterprises; leasing companies dealing with railway machinery; stevedoring companies; and rolling stock operators. The rating of railway machine-building enterprises is published in this issue, the rest will be published in the following issues of our Russian-language version in April-May, and in The RZD-Partner International and The RZD-Partner International China later in 2009. The ratings, created in cooperation with IA INFOLine, are based on the data given by the companies themselves. We decided not to interpret the information received from the market players. In case the analysts of IA INFOLine considered some data controversial, they negotiated with the enterprises to make the figures more exact. If companies did not fill in the form, the expert data of IA INFOLine were used. On the whole, it is worth mentioning that not all producers of rolling stock turned out to be ready for information transparency.

Methods for rating creation

The following parameters were applied to rate rolling stock producers:
• Production volume of rolling stock in 2008;
• Production volume of rolling stock according to type (wagons for car transportation; six-axial and four-axial dumping wagons; covered wagons with body space from 138 to 250 cubic metres; hoppers for cement transportation; hoppers for mineral fertilisers; ballast hopper cars, tank-wagons for LNG transportation; tank-wagons for acids and other chemicals, gondola cars, universal and special flat wagons, container flat railcars) in 2008;
• Production volume of pulling rolling stock (mainline freight and passenger diesel locomotives, mainline cargo and passenger electric locomotives, diesel shunters, industrial and mine electric locomotives) in 2008.
The total rating of wagon-building enterprises is formed according to the number of produced rolling stock in 2008 (there is also information about the production volume of the types of wagons and locomotives mentioned above in 2006-2007). The principle of ranking according to the number of types of rolling stock produced was the same. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Every self-respecting branch of the economy has a way of rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia. [~PREVIEW_TEXT] => Every self-respecting branch of the economy has a way of rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia. 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rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia. [ELEMENT_META_TITLE] => What We Calculated And How We Did It [ELEMENT_META_KEYWORDS] => what we calculated and how we did it [ELEMENT_META_DESCRIPTION] => Every self-respecting branch of the economy has a way of rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia. 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    [DETAIL_TEXT] => Last autumn, our magazine, in cooperation with IA INFOLine, created a rating of rolling stock operators for the first time. Its publication and the reaction of our readers proved that such projects are very popular with a Russian and foreign audience that wants to get professionally formed, detailed and full information about the market.
In 2009, the magazine offers its readers four ratings –transport (railway) machine-building enterprises; leasing companies dealing with railway machinery; stevedoring companies; and rolling stock operators. The rating of railway machine-building enterprises is published in this issue, the rest will be published in the following issues of our Russian-language version in April-May, and in The RZD-Partner International and The RZD-Partner International China later in 2009. The ratings, created in cooperation with IA INFOLine, are based on the data given by the companies themselves. We decided not to interpret the information received from the market players. In case the analysts of IA INFOLine considered some data controversial, they negotiated with the enterprises to make the figures more exact. If companies did not fill in the form, the expert data of IA INFOLine were used. On the whole, it is worth mentioning that not all producers of rolling stock turned out to be ready for information transparency.

Methods for rating creation

The following parameters were applied to rate rolling stock producers:
• Production volume of rolling stock in 2008;
• Production volume of rolling stock according to type (wagons for car transportation; six-axial and four-axial dumping wagons; covered wagons with body space from 138 to 250 cubic metres; hoppers for cement transportation; hoppers for mineral fertilisers; ballast hopper cars, tank-wagons for LNG transportation; tank-wagons for acids and other chemicals, gondola cars, universal and special flat wagons, container flat railcars) in 2008;
• Production volume of pulling rolling stock (mainline freight and passenger diesel locomotives, mainline cargo and passenger electric locomotives, diesel shunters, industrial and mine electric locomotives) in 2008.
The total rating of wagon-building enterprises is formed according to the number of produced rolling stock in 2008 (there is also information about the production volume of the types of wagons and locomotives mentioned above in 2006-2007). The principle of ranking according to the number of types of rolling stock produced was the same. [~DETAIL_TEXT] => Last autumn, our magazine, in cooperation with IA INFOLine, created a rating of rolling stock operators for the first time. Its publication and the reaction of our readers proved that such projects are very popular with a Russian and foreign audience that wants to get professionally formed, detailed and full information about the market.
In 2009, the magazine offers its readers four ratings –transport (railway) machine-building enterprises; leasing companies dealing with railway machinery; stevedoring companies; and rolling stock operators. The rating of railway machine-building enterprises is published in this issue, the rest will be published in the following issues of our Russian-language version in April-May, and in The RZD-Partner International and The RZD-Partner International China later in 2009. The ratings, created in cooperation with IA INFOLine, are based on the data given by the companies themselves. We decided not to interpret the information received from the market players. In case the analysts of IA INFOLine considered some data controversial, they negotiated with the enterprises to make the figures more exact. If companies did not fill in the form, the expert data of IA INFOLine were used. On the whole, it is worth mentioning that not all producers of rolling stock turned out to be ready for information transparency.

Methods for rating creation

The following parameters were applied to rate rolling stock producers:
• Production volume of rolling stock in 2008;
• Production volume of rolling stock according to type (wagons for car transportation; six-axial and four-axial dumping wagons; covered wagons with body space from 138 to 250 cubic metres; hoppers for cement transportation; hoppers for mineral fertilisers; ballast hopper cars, tank-wagons for LNG transportation; tank-wagons for acids and other chemicals, gondola cars, universal and special flat wagons, container flat railcars) in 2008;
• Production volume of pulling rolling stock (mainline freight and passenger diesel locomotives, mainline cargo and passenger electric locomotives, diesel shunters, industrial and mine electric locomotives) in 2008.
The total rating of wagon-building enterprises is formed according to the number of produced rolling stock in 2008 (there is also information about the production volume of the types of wagons and locomotives mentioned above in 2006-2007). The principle of ranking according to the number of types of rolling stock produced was the same. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Every self-respecting branch of the economy has a way of rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia. [~PREVIEW_TEXT] => Every self-respecting branch of the economy has a way of rating itself. Usually, such a rating is done by media specialising in the sector, which guarantees the reliability of the data and independence from all the ranked companies. That is why The RZD-Partner magazine decided to form a rating of the largest rolling stock producers in the CIS, the Baltic States and Georgia. 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РЖД-Партнер

To Outlive the Crisis

Sergey MytarevSergey Mytarev, senior investment officer at the International Finance Corporation tells
the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund.
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Investment Needed As Before

– Mr Mytarev, how much has the transport sector suffered from an investment standpoint?
– I believe it is obvious that the financial crisis significantly impacted investment into the Russian transport sector. One of its consequences is that transport companies have concentrated on their internal problems, first of all, related to liquidity instead of modernization and growth, as they used to before the crisis. But they have to do this because of the lack of large, long-term financing in the financial market. Meanwhile, the need for investment remains the same. The longer the private and public sector delay investment in transport projects, the more acute the problems connected with a lack of high-quality transport infrastructure and rolling stock become. And these problems are a barrier to further economic growth.
– You have mentioned the problem of rolling stock deficit but nowadays there is a surplus of it because of the decline in transportation volume …
– That’s right. But I’m speaking about the long-term perspective. There had been a significant shortage of rolling stock before the crisis. Companies did not have enough railcars as well as sea and river vessels, as the large order books at shipyards prove. There was also a need for new planes and modern motor vehicles. I think that the current situation is not normal. When the crisis is over, the rolling stock idling now will be fully deployed, and I am sure the deficit will appear again, as it did last year. As soon as the situation becomes stable, large investments, including ones into expansion and modernization of the rolling stock, will be required for further economic growth of the country.
– As you said, the need for investment has not disappeared. Which part of the transport sector is most attractive for investors?
– Speaking of the present-day situation, I believe that investment in the transport sector is promising. I mean financing the needs of the leading market players to help them to survive during the crisis. An important thing here is to choose such players that have a critical mass of good transportation assets but have recently faced some problems with liquidity. When the crisis is over, such companies will be on the rise again and their activities, experience and assets will be in demand in the market in future. IFC is trying to work with such companies. We offer attractive financial instruments to help them to outlive the financial crisis and avoid certain risks in the next couple of years. At the same time, we can get an opportunity to earn a higher return than if we provide standard debts instruments. I consider such investments the most attractive at the moment.
Taking into account the Russia’s specifics, investments into railways and sea transport seem to be more promising. The air transportation sector is also attractive. The position of river transport is a bit weaker because of its pronounced seasonality that increases the payback period for investors.
– In what transport projects has IFC participated lately?
– In the railway transportation segment we took part in a number of projects involving rolling stock purchase by rail operators and leasing companies. Also, we participated in financing the renewal of the river-sea fleet. Speaking of infrastructure, IFC participated in such logistics-related projects as the construction of A class warehouses and inland terminals.

Financial Sources Are Almost Exhausted

– What are the basic sources of financing for transport projects nowadays?
– At the moment, there are few market players ready to provide long-term debt financing that most infrastructure projects typically require. First of all, the state can provide this type of finance, e. g. through the Investment fund, Vnesheconombank, Sberbank, and VTB. International financial institutions can also participate in such projects – the EBRD, Eurasian Development Bank, European Investment Bank, our orfanization and some others. Some commercial banks are ready to give money for projects with a long payback period but only to those companies with which they have had a long working relationship.
As for project financing, the situation is even tougher, and possible sources of such financing are limited to state banks and international financial institutions.
– What is your opinion on the opportunities for private investment? Are there any?
– Everything depends on the long-term attractiveness of the project and the position of private investors. If a project is promising in the long run and there are resources available, I think many of them will be ready to finance such project or purchase new assets, even during the crisis. It is a good time for companies that have their own financial resources – and there quite a few of them – to purchase assets of enterprises that have faced some difficulties. In such a case, the price will not be too high. Another question is whether a company has enough resources to buy the asset.
– Recently OAO RZD issued infrastructure bonds. Some other companies are also thinking about such a step. Will this way of attracting capital be efficient now, in your opinion?
– In a normal market – before a crisis or after it – infrastructure bonds play an important role in financing companies and infrastructure projects. There are a number of investors considering such instruments as very attractive. As a rule, they are long-term investors, requiring some definite degree of profitability, for example, pension funds.
Today, the situation is much more complex. There is inflation in the country and the rouble is devaluating. So, the question is how to make the projects profitable enough to make these infrastructure bonds interesting for investors. Will the issuer be able to provide the necessary profitability level during the crisis? I think that large companies such as OAO RZD can do it in the future. Although, it will be very difficult to do it during the crisis, i.e. in the next couple of years.
Moreover, infrastructure bonds should not be considered a panacea for the crisis. It is just one financial instrument and it may be applied only in those segments of the market where a sufficient level of rather stable profitability may be provided.

Global Approach

– As you said, nowadays international financial institutions are one of the major sources for financing transport projects. Has the current economic situation made these organizations change their approach to long-term financing?
– The crisis has led to certain changes in the activities of International Financial Corporation. We have decided that now the priority is to preserve the liquidity of strategic market players in order to retain the existing infrastructure backbone of the Russian transport sector. Another important priority is to finance those capital programmes and investment projects which cannot be stopped during the crisis and to support strategic initiatives, in particular, public-private partnerships.
– Can public-private partnerships be considered a way to increase investment attractiveness?
– Here, as well as in any other business, everything depends on the structuring. Some features that used to work before the crisis (e. g. standard proportions of equity and debt, currency of financing, etc.) may be ineffective now. That is why the allocation of risk becomes very important – i.e. the risk balance between the state and the private participant.
To make this mechanism attractive in the midst of a crisis, the risks should be distributed in such a way that the project remains attractive for the private investors.
The state, in its turn, could take higher risks to attract investors. On the whole, everything depends on the level of risk and return demanded by the private investor.
– Are there any successful examples of transport sector financing in the international market, that could be applied in Russia?
– I would like to mention one of the recent IFC’s initiatives – the global infrastructure fund. The idea is to attract financing from the states and international financial institutions to projects which must be carried out despite the crisis and to companies that have some liquidity problems now but are most essential for keeping the infrastructure sector alive in different countries.
We offered to create such a fund recently and now we are trying to fill it with financial resources.
By Olga Gorbunova [~DETAIL_TEXT] =>

Investment Needed As Before

– Mr Mytarev, how much has the transport sector suffered from an investment standpoint?
– I believe it is obvious that the financial crisis significantly impacted investment into the Russian transport sector. One of its consequences is that transport companies have concentrated on their internal problems, first of all, related to liquidity instead of modernization and growth, as they used to before the crisis. But they have to do this because of the lack of large, long-term financing in the financial market. Meanwhile, the need for investment remains the same. The longer the private and public sector delay investment in transport projects, the more acute the problems connected with a lack of high-quality transport infrastructure and rolling stock become. And these problems are a barrier to further economic growth.
– You have mentioned the problem of rolling stock deficit but nowadays there is a surplus of it because of the decline in transportation volume …
– That’s right. But I’m speaking about the long-term perspective. There had been a significant shortage of rolling stock before the crisis. Companies did not have enough railcars as well as sea and river vessels, as the large order books at shipyards prove. There was also a need for new planes and modern motor vehicles. I think that the current situation is not normal. When the crisis is over, the rolling stock idling now will be fully deployed, and I am sure the deficit will appear again, as it did last year. As soon as the situation becomes stable, large investments, including ones into expansion and modernization of the rolling stock, will be required for further economic growth of the country.
– As you said, the need for investment has not disappeared. Which part of the transport sector is most attractive for investors?
– Speaking of the present-day situation, I believe that investment in the transport sector is promising. I mean financing the needs of the leading market players to help them to survive during the crisis. An important thing here is to choose such players that have a critical mass of good transportation assets but have recently faced some problems with liquidity. When the crisis is over, such companies will be on the rise again and their activities, experience and assets will be in demand in the market in future. IFC is trying to work with such companies. We offer attractive financial instruments to help them to outlive the financial crisis and avoid certain risks in the next couple of years. At the same time, we can get an opportunity to earn a higher return than if we provide standard debts instruments. I consider such investments the most attractive at the moment.
Taking into account the Russia’s specifics, investments into railways and sea transport seem to be more promising. The air transportation sector is also attractive. The position of river transport is a bit weaker because of its pronounced seasonality that increases the payback period for investors.
– In what transport projects has IFC participated lately?
– In the railway transportation segment we took part in a number of projects involving rolling stock purchase by rail operators and leasing companies. Also, we participated in financing the renewal of the river-sea fleet. Speaking of infrastructure, IFC participated in such logistics-related projects as the construction of A class warehouses and inland terminals.

Financial Sources Are Almost Exhausted

– What are the basic sources of financing for transport projects nowadays?
– At the moment, there are few market players ready to provide long-term debt financing that most infrastructure projects typically require. First of all, the state can provide this type of finance, e. g. through the Investment fund, Vnesheconombank, Sberbank, and VTB. International financial institutions can also participate in such projects – the EBRD, Eurasian Development Bank, European Investment Bank, our orfanization and some others. Some commercial banks are ready to give money for projects with a long payback period but only to those companies with which they have had a long working relationship.
As for project financing, the situation is even tougher, and possible sources of such financing are limited to state banks and international financial institutions.
– What is your opinion on the opportunities for private investment? Are there any?
– Everything depends on the long-term attractiveness of the project and the position of private investors. If a project is promising in the long run and there are resources available, I think many of them will be ready to finance such project or purchase new assets, even during the crisis. It is a good time for companies that have their own financial resources – and there quite a few of them – to purchase assets of enterprises that have faced some difficulties. In such a case, the price will not be too high. Another question is whether a company has enough resources to buy the asset.
– Recently OAO RZD issued infrastructure bonds. Some other companies are also thinking about such a step. Will this way of attracting capital be efficient now, in your opinion?
– In a normal market – before a crisis or after it – infrastructure bonds play an important role in financing companies and infrastructure projects. There are a number of investors considering such instruments as very attractive. As a rule, they are long-term investors, requiring some definite degree of profitability, for example, pension funds.
Today, the situation is much more complex. There is inflation in the country and the rouble is devaluating. So, the question is how to make the projects profitable enough to make these infrastructure bonds interesting for investors. Will the issuer be able to provide the necessary profitability level during the crisis? I think that large companies such as OAO RZD can do it in the future. Although, it will be very difficult to do it during the crisis, i.e. in the next couple of years.
Moreover, infrastructure bonds should not be considered a panacea for the crisis. It is just one financial instrument and it may be applied only in those segments of the market where a sufficient level of rather stable profitability may be provided.

Global Approach

– As you said, nowadays international financial institutions are one of the major sources for financing transport projects. Has the current economic situation made these organizations change their approach to long-term financing?
– The crisis has led to certain changes in the activities of International Financial Corporation. We have decided that now the priority is to preserve the liquidity of strategic market players in order to retain the existing infrastructure backbone of the Russian transport sector. Another important priority is to finance those capital programmes and investment projects which cannot be stopped during the crisis and to support strategic initiatives, in particular, public-private partnerships.
– Can public-private partnerships be considered a way to increase investment attractiveness?
– Here, as well as in any other business, everything depends on the structuring. Some features that used to work before the crisis (e. g. standard proportions of equity and debt, currency of financing, etc.) may be ineffective now. That is why the allocation of risk becomes very important – i.e. the risk balance between the state and the private participant.
To make this mechanism attractive in the midst of a crisis, the risks should be distributed in such a way that the project remains attractive for the private investors.
The state, in its turn, could take higher risks to attract investors. On the whole, everything depends on the level of risk and return demanded by the private investor.
– Are there any successful examples of transport sector financing in the international market, that could be applied in Russia?
– I would like to mention one of the recent IFC’s initiatives – the global infrastructure fund. The idea is to attract financing from the states and international financial institutions to projects which must be carried out despite the crisis and to companies that have some liquidity problems now but are most essential for keeping the infrastructure sector alive in different countries.
We offered to create such a fund recently and now we are trying to fill it with financial resources.
By Olga Gorbunova [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Sergey MytarevSergey Mytarev, senior investment officer at the International Finance Corporation tells
the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund. [~PREVIEW_TEXT] => Sergey MytarevSergey Mytarev, senior investment officer at the International Finance Corporation tells
the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund. 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title="Sergey Mytarev" hspace="5" width="120" height="160" align="left" />Sergey Mytarev, senior investment officer at the International Finance Corporation tells <br />the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund. 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    [DETAIL_TEXT] => 

Investment Needed As Before

– Mr Mytarev, how much has the transport sector suffered from an investment standpoint?
– I believe it is obvious that the financial crisis significantly impacted investment into the Russian transport sector. One of its consequences is that transport companies have concentrated on their internal problems, first of all, related to liquidity instead of modernization and growth, as they used to before the crisis. But they have to do this because of the lack of large, long-term financing in the financial market. Meanwhile, the need for investment remains the same. The longer the private and public sector delay investment in transport projects, the more acute the problems connected with a lack of high-quality transport infrastructure and rolling stock become. And these problems are a barrier to further economic growth.
– You have mentioned the problem of rolling stock deficit but nowadays there is a surplus of it because of the decline in transportation volume …
– That’s right. But I’m speaking about the long-term perspective. There had been a significant shortage of rolling stock before the crisis. Companies did not have enough railcars as well as sea and river vessels, as the large order books at shipyards prove. There was also a need for new planes and modern motor vehicles. I think that the current situation is not normal. When the crisis is over, the rolling stock idling now will be fully deployed, and I am sure the deficit will appear again, as it did last year. As soon as the situation becomes stable, large investments, including ones into expansion and modernization of the rolling stock, will be required for further economic growth of the country.
– As you said, the need for investment has not disappeared. Which part of the transport sector is most attractive for investors?
– Speaking of the present-day situation, I believe that investment in the transport sector is promising. I mean financing the needs of the leading market players to help them to survive during the crisis. An important thing here is to choose such players that have a critical mass of good transportation assets but have recently faced some problems with liquidity. When the crisis is over, such companies will be on the rise again and their activities, experience and assets will be in demand in the market in future. IFC is trying to work with such companies. We offer attractive financial instruments to help them to outlive the financial crisis and avoid certain risks in the next couple of years. At the same time, we can get an opportunity to earn a higher return than if we provide standard debts instruments. I consider such investments the most attractive at the moment.
Taking into account the Russia’s specifics, investments into railways and sea transport seem to be more promising. The air transportation sector is also attractive. The position of river transport is a bit weaker because of its pronounced seasonality that increases the payback period for investors.
– In what transport projects has IFC participated lately?
– In the railway transportation segment we took part in a number of projects involving rolling stock purchase by rail operators and leasing companies. Also, we participated in financing the renewal of the river-sea fleet. Speaking of infrastructure, IFC participated in such logistics-related projects as the construction of A class warehouses and inland terminals.

Financial Sources Are Almost Exhausted

– What are the basic sources of financing for transport projects nowadays?
– At the moment, there are few market players ready to provide long-term debt financing that most infrastructure projects typically require. First of all, the state can provide this type of finance, e. g. through the Investment fund, Vnesheconombank, Sberbank, and VTB. International financial institutions can also participate in such projects – the EBRD, Eurasian Development Bank, European Investment Bank, our orfanization and some others. Some commercial banks are ready to give money for projects with a long payback period but only to those companies with which they have had a long working relationship.
As for project financing, the situation is even tougher, and possible sources of such financing are limited to state banks and international financial institutions.
– What is your opinion on the opportunities for private investment? Are there any?
– Everything depends on the long-term attractiveness of the project and the position of private investors. If a project is promising in the long run and there are resources available, I think many of them will be ready to finance such project or purchase new assets, even during the crisis. It is a good time for companies that have their own financial resources – and there quite a few of them – to purchase assets of enterprises that have faced some difficulties. In such a case, the price will not be too high. Another question is whether a company has enough resources to buy the asset.
– Recently OAO RZD issued infrastructure bonds. Some other companies are also thinking about such a step. Will this way of attracting capital be efficient now, in your opinion?
– In a normal market – before a crisis or after it – infrastructure bonds play an important role in financing companies and infrastructure projects. There are a number of investors considering such instruments as very attractive. As a rule, they are long-term investors, requiring some definite degree of profitability, for example, pension funds.
Today, the situation is much more complex. There is inflation in the country and the rouble is devaluating. So, the question is how to make the projects profitable enough to make these infrastructure bonds interesting for investors. Will the issuer be able to provide the necessary profitability level during the crisis? I think that large companies such as OAO RZD can do it in the future. Although, it will be very difficult to do it during the crisis, i.e. in the next couple of years.
Moreover, infrastructure bonds should not be considered a panacea for the crisis. It is just one financial instrument and it may be applied only in those segments of the market where a sufficient level of rather stable profitability may be provided.

Global Approach

– As you said, nowadays international financial institutions are one of the major sources for financing transport projects. Has the current economic situation made these organizations change their approach to long-term financing?
– The crisis has led to certain changes in the activities of International Financial Corporation. We have decided that now the priority is to preserve the liquidity of strategic market players in order to retain the existing infrastructure backbone of the Russian transport sector. Another important priority is to finance those capital programmes and investment projects which cannot be stopped during the crisis and to support strategic initiatives, in particular, public-private partnerships.
– Can public-private partnerships be considered a way to increase investment attractiveness?
– Here, as well as in any other business, everything depends on the structuring. Some features that used to work before the crisis (e. g. standard proportions of equity and debt, currency of financing, etc.) may be ineffective now. That is why the allocation of risk becomes very important – i.e. the risk balance between the state and the private participant.
To make this mechanism attractive in the midst of a crisis, the risks should be distributed in such a way that the project remains attractive for the private investors.
The state, in its turn, could take higher risks to attract investors. On the whole, everything depends on the level of risk and return demanded by the private investor.
– Are there any successful examples of transport sector financing in the international market, that could be applied in Russia?
– I would like to mention one of the recent IFC’s initiatives – the global infrastructure fund. The idea is to attract financing from the states and international financial institutions to projects which must be carried out despite the crisis and to companies that have some liquidity problems now but are most essential for keeping the infrastructure sector alive in different countries.
We offered to create such a fund recently and now we are trying to fill it with financial resources.
By Olga Gorbunova [~DETAIL_TEXT] =>

Investment Needed As Before

– Mr Mytarev, how much has the transport sector suffered from an investment standpoint?
– I believe it is obvious that the financial crisis significantly impacted investment into the Russian transport sector. One of its consequences is that transport companies have concentrated on their internal problems, first of all, related to liquidity instead of modernization and growth, as they used to before the crisis. But they have to do this because of the lack of large, long-term financing in the financial market. Meanwhile, the need for investment remains the same. The longer the private and public sector delay investment in transport projects, the more acute the problems connected with a lack of high-quality transport infrastructure and rolling stock become. And these problems are a barrier to further economic growth.
– You have mentioned the problem of rolling stock deficit but nowadays there is a surplus of it because of the decline in transportation volume …
– That’s right. But I’m speaking about the long-term perspective. There had been a significant shortage of rolling stock before the crisis. Companies did not have enough railcars as well as sea and river vessels, as the large order books at shipyards prove. There was also a need for new planes and modern motor vehicles. I think that the current situation is not normal. When the crisis is over, the rolling stock idling now will be fully deployed, and I am sure the deficit will appear again, as it did last year. As soon as the situation becomes stable, large investments, including ones into expansion and modernization of the rolling stock, will be required for further economic growth of the country.
– As you said, the need for investment has not disappeared. Which part of the transport sector is most attractive for investors?
– Speaking of the present-day situation, I believe that investment in the transport sector is promising. I mean financing the needs of the leading market players to help them to survive during the crisis. An important thing here is to choose such players that have a critical mass of good transportation assets but have recently faced some problems with liquidity. When the crisis is over, such companies will be on the rise again and their activities, experience and assets will be in demand in the market in future. IFC is trying to work with such companies. We offer attractive financial instruments to help them to outlive the financial crisis and avoid certain risks in the next couple of years. At the same time, we can get an opportunity to earn a higher return than if we provide standard debts instruments. I consider such investments the most attractive at the moment.
Taking into account the Russia’s specifics, investments into railways and sea transport seem to be more promising. The air transportation sector is also attractive. The position of river transport is a bit weaker because of its pronounced seasonality that increases the payback period for investors.
– In what transport projects has IFC participated lately?
– In the railway transportation segment we took part in a number of projects involving rolling stock purchase by rail operators and leasing companies. Also, we participated in financing the renewal of the river-sea fleet. Speaking of infrastructure, IFC participated in such logistics-related projects as the construction of A class warehouses and inland terminals.

Financial Sources Are Almost Exhausted

– What are the basic sources of financing for transport projects nowadays?
– At the moment, there are few market players ready to provide long-term debt financing that most infrastructure projects typically require. First of all, the state can provide this type of finance, e. g. through the Investment fund, Vnesheconombank, Sberbank, and VTB. International financial institutions can also participate in such projects – the EBRD, Eurasian Development Bank, European Investment Bank, our orfanization and some others. Some commercial banks are ready to give money for projects with a long payback period but only to those companies with which they have had a long working relationship.
As for project financing, the situation is even tougher, and possible sources of such financing are limited to state banks and international financial institutions.
– What is your opinion on the opportunities for private investment? Are there any?
– Everything depends on the long-term attractiveness of the project and the position of private investors. If a project is promising in the long run and there are resources available, I think many of them will be ready to finance such project or purchase new assets, even during the crisis. It is a good time for companies that have their own financial resources – and there quite a few of them – to purchase assets of enterprises that have faced some difficulties. In such a case, the price will not be too high. Another question is whether a company has enough resources to buy the asset.
– Recently OAO RZD issued infrastructure bonds. Some other companies are also thinking about such a step. Will this way of attracting capital be efficient now, in your opinion?
– In a normal market – before a crisis or after it – infrastructure bonds play an important role in financing companies and infrastructure projects. There are a number of investors considering such instruments as very attractive. As a rule, they are long-term investors, requiring some definite degree of profitability, for example, pension funds.
Today, the situation is much more complex. There is inflation in the country and the rouble is devaluating. So, the question is how to make the projects profitable enough to make these infrastructure bonds interesting for investors. Will the issuer be able to provide the necessary profitability level during the crisis? I think that large companies such as OAO RZD can do it in the future. Although, it will be very difficult to do it during the crisis, i.e. in the next couple of years.
Moreover, infrastructure bonds should not be considered a panacea for the crisis. It is just one financial instrument and it may be applied only in those segments of the market where a sufficient level of rather stable profitability may be provided.

Global Approach

– As you said, nowadays international financial institutions are one of the major sources for financing transport projects. Has the current economic situation made these organizations change their approach to long-term financing?
– The crisis has led to certain changes in the activities of International Financial Corporation. We have decided that now the priority is to preserve the liquidity of strategic market players in order to retain the existing infrastructure backbone of the Russian transport sector. Another important priority is to finance those capital programmes and investment projects which cannot be stopped during the crisis and to support strategic initiatives, in particular, public-private partnerships.
– Can public-private partnerships be considered a way to increase investment attractiveness?
– Here, as well as in any other business, everything depends on the structuring. Some features that used to work before the crisis (e. g. standard proportions of equity and debt, currency of financing, etc.) may be ineffective now. That is why the allocation of risk becomes very important – i.e. the risk balance between the state and the private participant.
To make this mechanism attractive in the midst of a crisis, the risks should be distributed in such a way that the project remains attractive for the private investors.
The state, in its turn, could take higher risks to attract investors. On the whole, everything depends on the level of risk and return demanded by the private investor.
– Are there any successful examples of transport sector financing in the international market, that could be applied in Russia?
– I would like to mention one of the recent IFC’s initiatives – the global infrastructure fund. The idea is to attract financing from the states and international financial institutions to projects which must be carried out despite the crisis and to companies that have some liquidity problems now but are most essential for keeping the infrastructure sector alive in different countries.
We offered to create such a fund recently and now we are trying to fill it with financial resources.
By Olga Gorbunova [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Sergey MytarevSergey Mytarev, senior investment officer at the International Finance Corporation tells
the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund. [~PREVIEW_TEXT] => Sergey MytarevSergey Mytarev, senior investment officer at the International Finance Corporation tells
the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund. 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title="Sergey Mytarev" hspace="5" width="120" height="160" align="left" />Sergey Mytarev, senior investment officer at the International Finance Corporation tells <br />the readers of The RZD-Partner International which transport projects are worth investing in, what opportunities for private investors exist today and considers a global infrastructure fund. 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РЖД-Партнер

Working in the Construction Industry in Russia: New Legislation

According to updated Russian legislation, State construction licences have
stopped being issued since January 1st, 2009, and from the beginning
of 2010 any licences that had been given before will become invalid. Instead,
companies (including foreign ones) working in the Russian building market
(including in railway construction) should show their new quality assurance,
that is an Admission Certificate of a Self-Regulated Organisation.
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A Licence is Not the Document Anymore

According to the Russian legislation, a self-regulated organisation is a non-commercial association created with the purpose of self-regulation, which unites companies together either by a single sphere of production (production of goods, works or services), or by a single type of activity.
The replacement of construction Licences by Admissions is regulated by the Russian Federal Law “On the Modification of the RF Town Planning Code and Additional Legislative Acts of the Russian Federation” of July 22, 2008. According to the RF Government’s Order, the RF Regional Development Ministry has been given the responsibility of establishing the list of works to be certified: engineering research work, preparation of design documentation, building, reconstruction and major capital construction objects where the safety of the object itself is involved. State control over self-regulating organisations in these areas, and the maintenance of the SRO Register, are given to the Federal Ecological, Technological and Nuclear Supervision Service.
In particular, The Railway Builders Union will take responsibility for the creation of the sector’s SROs in the transport market which deals directly with the railway. This union is uniting companies which render services in all aspects of railway site construction (research, design and building). The Supervisory Council of the Union is headed by Oleg Toni, RZD Vice-President.

Joining the SRO: Who and How?

Industry experts say those foreign companies working in the Russian market must join self-regulating organisations if they do any of the following works: engineering research, preparation of project design documentation and construction. Consulting companies are not engaged in this sort of work and are therefore not obliged to join the SRO in order to carry out their consulting activity, although they do have a right to join.
The mechanism for a foreign company to acquire SRO membership is as follows: the company submits the necessary documents to the SRO (see Our Reference) and a reply is sent within 30 days to advise whether the company is accepted or not.
However, the following situation exists at the moment: there are no SROs in Russia which specialise in railway construction. Now the question of creating such an SRO is being looked at, with RZD’s participation.
The head of RZD’s legal department, Jaroslav Smetankin, has explained the difficulty is that current Russian legislation categorises railways as especially dangerous, technically complex and unique objects; therefore the Russian Government is obliged to establish minimum necessary requirements for companies to obtain an Admission Certificate to work in their construction. According to Mr Smetankin, such specified requirements are not yet defined but there is hope that this will be done by autumn 2009. After that it will be possible to receive an Admission Certificate for construction, project design and research work on the railways in Russia.
By Anna Nezhinskaya

our reference

The following documents are necessary to obtain membership of a Self-Regulated Organisation (The Town Planning Code of the Russian Federation, Clause 55.6.):
1) Application for membership of the SRO (it is necessary to specify in this application the kind of work the company is doing);
2) A copy of the registration document confirming that the individual businessman or legal entity has been entered into the appropriate State Register; a copy of constituent documents (for the legal entity); a properly certified translation into Russian of a legal entity’s state registration certificates, completed according to the legislation of the respective country;
3) Documents confirming the company matches the requirements for admission to work on projects that involve the safety of capital construction works;
4) Copies of any certificates given out by other self-regulated organisations for admission to a certain kind of works, in case the individual businessman or the legal entity is a member of another, similar SRO. [~DETAIL_TEXT] =>

A Licence is Not the Document Anymore

According to the Russian legislation, a self-regulated organisation is a non-commercial association created with the purpose of self-regulation, which unites companies together either by a single sphere of production (production of goods, works or services), or by a single type of activity.
The replacement of construction Licences by Admissions is regulated by the Russian Federal Law “On the Modification of the RF Town Planning Code and Additional Legislative Acts of the Russian Federation” of July 22, 2008. According to the RF Government’s Order, the RF Regional Development Ministry has been given the responsibility of establishing the list of works to be certified: engineering research work, preparation of design documentation, building, reconstruction and major capital construction objects where the safety of the object itself is involved. State control over self-regulating organisations in these areas, and the maintenance of the SRO Register, are given to the Federal Ecological, Technological and Nuclear Supervision Service.
In particular, The Railway Builders Union will take responsibility for the creation of the sector’s SROs in the transport market which deals directly with the railway. This union is uniting companies which render services in all aspects of railway site construction (research, design and building). The Supervisory Council of the Union is headed by Oleg Toni, RZD Vice-President.

Joining the SRO: Who and How?

Industry experts say those foreign companies working in the Russian market must join self-regulating organisations if they do any of the following works: engineering research, preparation of project design documentation and construction. Consulting companies are not engaged in this sort of work and are therefore not obliged to join the SRO in order to carry out their consulting activity, although they do have a right to join.
The mechanism for a foreign company to acquire SRO membership is as follows: the company submits the necessary documents to the SRO (see Our Reference) and a reply is sent within 30 days to advise whether the company is accepted or not.
However, the following situation exists at the moment: there are no SROs in Russia which specialise in railway construction. Now the question of creating such an SRO is being looked at, with RZD’s participation.
The head of RZD’s legal department, Jaroslav Smetankin, has explained the difficulty is that current Russian legislation categorises railways as especially dangerous, technically complex and unique objects; therefore the Russian Government is obliged to establish minimum necessary requirements for companies to obtain an Admission Certificate to work in their construction. According to Mr Smetankin, such specified requirements are not yet defined but there is hope that this will be done by autumn 2009. After that it will be possible to receive an Admission Certificate for construction, project design and research work on the railways in Russia.
By Anna Nezhinskaya

our reference

The following documents are necessary to obtain membership of a Self-Regulated Organisation (The Town Planning Code of the Russian Federation, Clause 55.6.):
1) Application for membership of the SRO (it is necessary to specify in this application the kind of work the company is doing);
2) A copy of the registration document confirming that the individual businessman or legal entity has been entered into the appropriate State Register; a copy of constituent documents (for the legal entity); a properly certified translation into Russian of a legal entity’s state registration certificates, completed according to the legislation of the respective country;
3) Documents confirming the company matches the requirements for admission to work on projects that involve the safety of capital construction works;
4) Copies of any certificates given out by other self-regulated organisations for admission to a certain kind of works, in case the individual businessman or the legal entity is a member of another, similar SRO. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => According to updated Russian legislation, State construction licences have
stopped being issued since January 1st, 2009, and from the beginning
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companies (including foreign ones) working in the Russian building market
(including in railway construction) should show their new quality assurance,
that is an Admission Certificate of a Self-Regulated Organisation. [~PREVIEW_TEXT] => According to updated Russian legislation, State construction licences have
stopped being issued since January 1st, 2009, and from the beginning
of 2010 any licences that had been given before will become invalid. Instead,
companies (including foreign ones) working in the Russian building market
(including in railway construction) should show their new quality assurance,
that is an Admission Certificate of a Self-Regulated Organisation. 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A Licence is Not the Document Anymore

According to the Russian legislation, a self-regulated organisation is a non-commercial association created with the purpose of self-regulation, which unites companies together either by a single sphere of production (production of goods, works or services), or by a single type of activity.
The replacement of construction Licences by Admissions is regulated by the Russian Federal Law “On the Modification of the RF Town Planning Code and Additional Legislative Acts of the Russian Federation” of July 22, 2008. According to the RF Government’s Order, the RF Regional Development Ministry has been given the responsibility of establishing the list of works to be certified: engineering research work, preparation of design documentation, building, reconstruction and major capital construction objects where the safety of the object itself is involved. State control over self-regulating organisations in these areas, and the maintenance of the SRO Register, are given to the Federal Ecological, Technological and Nuclear Supervision Service.
In particular, The Railway Builders Union will take responsibility for the creation of the sector’s SROs in the transport market which deals directly with the railway. This union is uniting companies which render services in all aspects of railway site construction (research, design and building). The Supervisory Council of the Union is headed by Oleg Toni, RZD Vice-President.

Joining the SRO: Who and How?

Industry experts say those foreign companies working in the Russian market must join self-regulating organisations if they do any of the following works: engineering research, preparation of project design documentation and construction. Consulting companies are not engaged in this sort of work and are therefore not obliged to join the SRO in order to carry out their consulting activity, although they do have a right to join.
The mechanism for a foreign company to acquire SRO membership is as follows: the company submits the necessary documents to the SRO (see Our Reference) and a reply is sent within 30 days to advise whether the company is accepted or not.
However, the following situation exists at the moment: there are no SROs in Russia which specialise in railway construction. Now the question of creating such an SRO is being looked at, with RZD’s participation.
The head of RZD’s legal department, Jaroslav Smetankin, has explained the difficulty is that current Russian legislation categorises railways as especially dangerous, technically complex and unique objects; therefore the Russian Government is obliged to establish minimum necessary requirements for companies to obtain an Admission Certificate to work in their construction. According to Mr Smetankin, such specified requirements are not yet defined but there is hope that this will be done by autumn 2009. After that it will be possible to receive an Admission Certificate for construction, project design and research work on the railways in Russia.
By Anna Nezhinskaya

our reference

The following documents are necessary to obtain membership of a Self-Regulated Organisation (The Town Planning Code of the Russian Federation, Clause 55.6.):
1) Application for membership of the SRO (it is necessary to specify in this application the kind of work the company is doing);
2) A copy of the registration document confirming that the individual businessman or legal entity has been entered into the appropriate State Register; a copy of constituent documents (for the legal entity); a properly certified translation into Russian of a legal entity’s state registration certificates, completed according to the legislation of the respective country;
3) Documents confirming the company matches the requirements for admission to work on projects that involve the safety of capital construction works;
4) Copies of any certificates given out by other self-regulated organisations for admission to a certain kind of works, in case the individual businessman or the legal entity is a member of another, similar SRO. [~DETAIL_TEXT] =>

A Licence is Not the Document Anymore

According to the Russian legislation, a self-regulated organisation is a non-commercial association created with the purpose of self-regulation, which unites companies together either by a single sphere of production (production of goods, works or services), or by a single type of activity.
The replacement of construction Licences by Admissions is regulated by the Russian Federal Law “On the Modification of the RF Town Planning Code and Additional Legislative Acts of the Russian Federation” of July 22, 2008. According to the RF Government’s Order, the RF Regional Development Ministry has been given the responsibility of establishing the list of works to be certified: engineering research work, preparation of design documentation, building, reconstruction and major capital construction objects where the safety of the object itself is involved. State control over self-regulating organisations in these areas, and the maintenance of the SRO Register, are given to the Federal Ecological, Technological and Nuclear Supervision Service.
In particular, The Railway Builders Union will take responsibility for the creation of the sector’s SROs in the transport market which deals directly with the railway. This union is uniting companies which render services in all aspects of railway site construction (research, design and building). The Supervisory Council of the Union is headed by Oleg Toni, RZD Vice-President.

Joining the SRO: Who and How?

Industry experts say those foreign companies working in the Russian market must join self-regulating organisations if they do any of the following works: engineering research, preparation of project design documentation and construction. Consulting companies are not engaged in this sort of work and are therefore not obliged to join the SRO in order to carry out their consulting activity, although they do have a right to join.
The mechanism for a foreign company to acquire SRO membership is as follows: the company submits the necessary documents to the SRO (see Our Reference) and a reply is sent within 30 days to advise whether the company is accepted or not.
However, the following situation exists at the moment: there are no SROs in Russia which specialise in railway construction. Now the question of creating such an SRO is being looked at, with RZD’s participation.
The head of RZD’s legal department, Jaroslav Smetankin, has explained the difficulty is that current Russian legislation categorises railways as especially dangerous, technically complex and unique objects; therefore the Russian Government is obliged to establish minimum necessary requirements for companies to obtain an Admission Certificate to work in their construction. According to Mr Smetankin, such specified requirements are not yet defined but there is hope that this will be done by autumn 2009. After that it will be possible to receive an Admission Certificate for construction, project design and research work on the railways in Russia.
By Anna Nezhinskaya

our reference

The following documents are necessary to obtain membership of a Self-Regulated Organisation (The Town Planning Code of the Russian Federation, Clause 55.6.):
1) Application for membership of the SRO (it is necessary to specify in this application the kind of work the company is doing);
2) A copy of the registration document confirming that the individual businessman or legal entity has been entered into the appropriate State Register; a copy of constituent documents (for the legal entity); a properly certified translation into Russian of a legal entity’s state registration certificates, completed according to the legislation of the respective country;
3) Documents confirming the company matches the requirements for admission to work on projects that involve the safety of capital construction works;
4) Copies of any certificates given out by other self-regulated organisations for admission to a certain kind of works, in case the individual businessman or the legal entity is a member of another, similar SRO. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => According to updated Russian legislation, State construction licences have
stopped being issued since January 1st, 2009, and from the beginning
of 2010 any licences that had been given before will become invalid. Instead,
companies (including foreign ones) working in the Russian building market
(including in railway construction) should show their new quality assurance,
that is an Admission Certificate of a Self-Regulated Organisation. [~PREVIEW_TEXT] => According to updated Russian legislation, State construction licences have
stopped being issued since January 1st, 2009, and from the beginning
of 2010 any licences that had been given before will become invalid. Instead,
companies (including foreign ones) working in the Russian building market
(including in railway construction) should show their new quality assurance,
that is an Admission Certificate of a Self-Regulated Organisation. 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РЖД-Партнер

Local Improvement

In the first two months of 2009, the loading volume of OAO RZD was 154.4 million tons, a 30% decrease compared to the same period the previous year. The decline goes on but specialists at Russian Railways are paying more attention to the fact that the loading volume in February grew by 17.9% month-on-month.
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Small Hope

The growth curve has started to rise at last, and this positive tendency has become a reality for many cargoes. Some of the brightest examples are the growth of cement (+50%), ferrous metal scrap (+51.2%), and construction materials (143.5%).
Also, railwaymen noted that transportation volumes of the following cargoes increased: coal (+3.1%), coke (+21.2%), oil and oil products (+7.1%), iron and manganese ores (+21.8%), chemicals and mineral fertilisers (+40.4%), grain and cereals (+88.9%) and ferrous metals (+16.8%).
Such figures give hope to RZD that went through a freight collapse at the turn of 2008 and 2009 and the reduction of the investment programme by 1.5 times. Vladimir Yakunin, President of OAO RZD, also paid attention to the beginning stabilisation of transportation and “some revival”.
According to experts, the process took place due to the devaluation of the rouble and the increase of profitability of supplies to the external market. For example, the output in all ferrous metallurgy segments significantly grew in February in comparison with January 2009. This couldn’t but influence the intensiveness of the transport process.
In spite of the 33% year-on-year decline in domestic and export transportation of ferrous metals in January-February 2009, there appeared a positive trend. In February 2009, transportation of ferrous metals grew by 12.5% in comparison with November 2008. Domestic and export transportation of this cargo increased by 3.6% and 22.1% respectively.
The rise of prices on the international market is favourable for the profitable work of grain producers. Last February, the volume of this cargo increased significantly – by 1.5 times. Comparing grain transportation volume in the first two months of 2009, exports of grain in February grew by 2.1 times.
As for coal extraction, the rouble’s devaluation helped no one. The crisis that speeded up the decline in prices for coal and a fall in its production led to shrinking profitability for coal producers. In 2008, due to the growth of volumes extracted in the first three quarters, 326 million tons of coal was extracted in Russia, 3.9% up year-on-year. Meanwhile, in February 2009 coal transportation fell by 19.9%.

Tariffs Won’t Help

It is worth noting that no positive answer has been given to the question about reducing railway tariffs for representatives of all industries. Metallurgists, coalmen and grain producers, as well as many others, have asked several times for a reduction in the transportation fee. Both OAO RZD (which is quite clear) and the RF Government have said these suggestions would be unreasonable and even dangerous. Devaluation has already made the real cost of railway tariffs lower. That is why the state is not going to subside industrial enterprises at transport’s expense.
In spite of some positive trends, experts cannot forecast for sure what will happen in the next phase of the economic crisis. The RF Ministry of Economic Development forecasts that industrial production will decline by 14% in the first quarter and by 7.4% in 2009. Meanwhile, the investment level may decline by 15-18%. Igor Levitin, Russian Transport Minister, said recently that the railway transportation volume will fall by 20% in Russia in 2009.

Let’s Cooperate

OAO RZD is to solve the problem of loading its own capacities as well as optimising work with its neighbours and competitors.
The brightest example of non-flexible and slow interaction is the Kaliningrad Railway (an affiliate of OAO RZD), where the loading volume fell by 60-80%. The reason for it was the unbalanced tariff policy of neighbouring countries – Lithuania and Byelorussia, via which the cargo is transported to Russia. Last August, Lithuanian railways increased the tariff by 11%. And in January 2009, Byelorussian railways rose its tariff by 14% in dollar equivalent (in roubles the growth amounted to 60%).
Representatives of OAO RZD recognised the need to find actual tariff solutions reasonable for all transport process participants in the Baltic region.
Agreements on tariffs must be concluded for a long period of time, they should be stable and take into account the interests of all parties. Only in this case will it be possible to speak about the prospects for development of transport infrastructure in the Kaliningrad region as well as in Lithuania and Byelorussia, said Boris Lapidus, Senior Vice President of OAO RZD. He added that a pack of measures to harmonise tariff conditions is to be developed in a month’s time.
By Mika Malerin [~DETAIL_TEXT] =>

Small Hope

The growth curve has started to rise at last, and this positive tendency has become a reality for many cargoes. Some of the brightest examples are the growth of cement (+50%), ferrous metal scrap (+51.2%), and construction materials (143.5%).
Also, railwaymen noted that transportation volumes of the following cargoes increased: coal (+3.1%), coke (+21.2%), oil and oil products (+7.1%), iron and manganese ores (+21.8%), chemicals and mineral fertilisers (+40.4%), grain and cereals (+88.9%) and ferrous metals (+16.8%).
Such figures give hope to RZD that went through a freight collapse at the turn of 2008 and 2009 and the reduction of the investment programme by 1.5 times. Vladimir Yakunin, President of OAO RZD, also paid attention to the beginning stabilisation of transportation and “some revival”.
According to experts, the process took place due to the devaluation of the rouble and the increase of profitability of supplies to the external market. For example, the output in all ferrous metallurgy segments significantly grew in February in comparison with January 2009. This couldn’t but influence the intensiveness of the transport process.
In spite of the 33% year-on-year decline in domestic and export transportation of ferrous metals in January-February 2009, there appeared a positive trend. In February 2009, transportation of ferrous metals grew by 12.5% in comparison with November 2008. Domestic and export transportation of this cargo increased by 3.6% and 22.1% respectively.
The rise of prices on the international market is favourable for the profitable work of grain producers. Last February, the volume of this cargo increased significantly – by 1.5 times. Comparing grain transportation volume in the first two months of 2009, exports of grain in February grew by 2.1 times.
As for coal extraction, the rouble’s devaluation helped no one. The crisis that speeded up the decline in prices for coal and a fall in its production led to shrinking profitability for coal producers. In 2008, due to the growth of volumes extracted in the first three quarters, 326 million tons of coal was extracted in Russia, 3.9% up year-on-year. Meanwhile, in February 2009 coal transportation fell by 19.9%.

Tariffs Won’t Help

It is worth noting that no positive answer has been given to the question about reducing railway tariffs for representatives of all industries. Metallurgists, coalmen and grain producers, as well as many others, have asked several times for a reduction in the transportation fee. Both OAO RZD (which is quite clear) and the RF Government have said these suggestions would be unreasonable and even dangerous. Devaluation has already made the real cost of railway tariffs lower. That is why the state is not going to subside industrial enterprises at transport’s expense.
In spite of some positive trends, experts cannot forecast for sure what will happen in the next phase of the economic crisis. The RF Ministry of Economic Development forecasts that industrial production will decline by 14% in the first quarter and by 7.4% in 2009. Meanwhile, the investment level may decline by 15-18%. Igor Levitin, Russian Transport Minister, said recently that the railway transportation volume will fall by 20% in Russia in 2009.

Let’s Cooperate

OAO RZD is to solve the problem of loading its own capacities as well as optimising work with its neighbours and competitors.
The brightest example of non-flexible and slow interaction is the Kaliningrad Railway (an affiliate of OAO RZD), where the loading volume fell by 60-80%. The reason for it was the unbalanced tariff policy of neighbouring countries – Lithuania and Byelorussia, via which the cargo is transported to Russia. Last August, Lithuanian railways increased the tariff by 11%. And in January 2009, Byelorussian railways rose its tariff by 14% in dollar equivalent (in roubles the growth amounted to 60%).
Representatives of OAO RZD recognised the need to find actual tariff solutions reasonable for all transport process participants in the Baltic region.
Agreements on tariffs must be concluded for a long period of time, they should be stable and take into account the interests of all parties. Only in this case will it be possible to speak about the prospects for development of transport infrastructure in the Kaliningrad region as well as in Lithuania and Byelorussia, said Boris Lapidus, Senior Vice President of OAO RZD. He added that a pack of measures to harmonise tariff conditions is to be developed in a month’s time.
By Mika Malerin [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => In the first two months of 2009, the loading volume of OAO RZD was 154.4 million tons, a 30% decrease compared to the same period the previous year. The decline goes on but specialists at Russian Railways are paying more attention to the fact that the loading volume in February grew by 17.9% month-on-month. [~PREVIEW_TEXT] => In the first two months of 2009, the loading volume of OAO RZD was 154.4 million tons, a 30% decrease compared to the same period the previous year. The decline goes on but specialists at Russian Railways are paying more attention to the fact that the loading volume in February grew by 17.9% month-on-month. 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decrease compared to the same period the previous year. The decline goes on but specialists at Russian Railways are paying more attention to the fact that the loading volume in February grew by 17.9% month-on-month. [ELEMENT_META_TITLE] => Local Improvement [ELEMENT_META_KEYWORDS] => local improvement [ELEMENT_META_DESCRIPTION] => In the first two months of 2009, the loading volume of OAO RZD was 154.4 million tons, a 30% decrease compared to the same period the previous year. The decline goes on but specialists at Russian Railways are paying more attention to the fact that the loading volume in February grew by 17.9% month-on-month. 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    [DETAIL_TEXT] => 

Small Hope

The growth curve has started to rise at last, and this positive tendency has become a reality for many cargoes. Some of the brightest examples are the growth of cement (+50%), ferrous metal scrap (+51.2%), and construction materials (143.5%).
Also, railwaymen noted that transportation volumes of the following cargoes increased: coal (+3.1%), coke (+21.2%), oil and oil products (+7.1%), iron and manganese ores (+21.8%), chemicals and mineral fertilisers (+40.4%), grain and cereals (+88.9%) and ferrous metals (+16.8%).
Such figures give hope to RZD that went through a freight collapse at the turn of 2008 and 2009 and the reduction of the investment programme by 1.5 times. Vladimir Yakunin, President of OAO RZD, also paid attention to the beginning stabilisation of transportation and “some revival”.
According to experts, the process took place due to the devaluation of the rouble and the increase of profitability of supplies to the external market. For example, the output in all ferrous metallurgy segments significantly grew in February in comparison with January 2009. This couldn’t but influence the intensiveness of the transport process.
In spite of the 33% year-on-year decline in domestic and export transportation of ferrous metals in January-February 2009, there appeared a positive trend. In February 2009, transportation of ferrous metals grew by 12.5% in comparison with November 2008. Domestic and export transportation of this cargo increased by 3.6% and 22.1% respectively.
The rise of prices on the international market is favourable for the profitable work of grain producers. Last February, the volume of this cargo increased significantly – by 1.5 times. Comparing grain transportation volume in the first two months of 2009, exports of grain in February grew by 2.1 times.
As for coal extraction, the rouble’s devaluation helped no one. The crisis that speeded up the decline in prices for coal and a fall in its production led to shrinking profitability for coal producers. In 2008, due to the growth of volumes extracted in the first three quarters, 326 million tons of coal was extracted in Russia, 3.9% up year-on-year. Meanwhile, in February 2009 coal transportation fell by 19.9%.

Tariffs Won’t Help

It is worth noting that no positive answer has been given to the question about reducing railway tariffs for representatives of all industries. Metallurgists, coalmen and grain producers, as well as many others, have asked several times for a reduction in the transportation fee. Both OAO RZD (which is quite clear) and the RF Government have said these suggestions would be unreasonable and even dangerous. Devaluation has already made the real cost of railway tariffs lower. That is why the state is not going to subside industrial enterprises at transport’s expense.
In spite of some positive trends, experts cannot forecast for sure what will happen in the next phase of the economic crisis. The RF Ministry of Economic Development forecasts that industrial production will decline by 14% in the first quarter and by 7.4% in 2009. Meanwhile, the investment level may decline by 15-18%. Igor Levitin, Russian Transport Minister, said recently that the railway transportation volume will fall by 20% in Russia in 2009.

Let’s Cooperate

OAO RZD is to solve the problem of loading its own capacities as well as optimising work with its neighbours and competitors.
The brightest example of non-flexible and slow interaction is the Kaliningrad Railway (an affiliate of OAO RZD), where the loading volume fell by 60-80%. The reason for it was the unbalanced tariff policy of neighbouring countries – Lithuania and Byelorussia, via which the cargo is transported to Russia. Last August, Lithuanian railways increased the tariff by 11%. And in January 2009, Byelorussian railways rose its tariff by 14% in dollar equivalent (in roubles the growth amounted to 60%).
Representatives of OAO RZD recognised the need to find actual tariff solutions reasonable for all transport process participants in the Baltic region.
Agreements on tariffs must be concluded for a long period of time, they should be stable and take into account the interests of all parties. Only in this case will it be possible to speak about the prospects for development of transport infrastructure in the Kaliningrad region as well as in Lithuania and Byelorussia, said Boris Lapidus, Senior Vice President of OAO RZD. He added that a pack of measures to harmonise tariff conditions is to be developed in a month’s time.
By Mika Malerin [~DETAIL_TEXT] =>

Small Hope

The growth curve has started to rise at last, and this positive tendency has become a reality for many cargoes. Some of the brightest examples are the growth of cement (+50%), ferrous metal scrap (+51.2%), and construction materials (143.5%).
Also, railwaymen noted that transportation volumes of the following cargoes increased: coal (+3.1%), coke (+21.2%), oil and oil products (+7.1%), iron and manganese ores (+21.8%), chemicals and mineral fertilisers (+40.4%), grain and cereals (+88.9%) and ferrous metals (+16.8%).
Such figures give hope to RZD that went through a freight collapse at the turn of 2008 and 2009 and the reduction of the investment programme by 1.5 times. Vladimir Yakunin, President of OAO RZD, also paid attention to the beginning stabilisation of transportation and “some revival”.
According to experts, the process took place due to the devaluation of the rouble and the increase of profitability of supplies to the external market. For example, the output in all ferrous metallurgy segments significantly grew in February in comparison with January 2009. This couldn’t but influence the intensiveness of the transport process.
In spite of the 33% year-on-year decline in domestic and export transportation of ferrous metals in January-February 2009, there appeared a positive trend. In February 2009, transportation of ferrous metals grew by 12.5% in comparison with November 2008. Domestic and export transportation of this cargo increased by 3.6% and 22.1% respectively.
The rise of prices on the international market is favourable for the profitable work of grain producers. Last February, the volume of this cargo increased significantly – by 1.5 times. Comparing grain transportation volume in the first two months of 2009, exports of grain in February grew by 2.1 times.
As for coal extraction, the rouble’s devaluation helped no one. The crisis that speeded up the decline in prices for coal and a fall in its production led to shrinking profitability for coal producers. In 2008, due to the growth of volumes extracted in the first three quarters, 326 million tons of coal was extracted in Russia, 3.9% up year-on-year. Meanwhile, in February 2009 coal transportation fell by 19.9%.

Tariffs Won’t Help

It is worth noting that no positive answer has been given to the question about reducing railway tariffs for representatives of all industries. Metallurgists, coalmen and grain producers, as well as many others, have asked several times for a reduction in the transportation fee. Both OAO RZD (which is quite clear) and the RF Government have said these suggestions would be unreasonable and even dangerous. Devaluation has already made the real cost of railway tariffs lower. That is why the state is not going to subside industrial enterprises at transport’s expense.
In spite of some positive trends, experts cannot forecast for sure what will happen in the next phase of the economic crisis. The RF Ministry of Economic Development forecasts that industrial production will decline by 14% in the first quarter and by 7.4% in 2009. Meanwhile, the investment level may decline by 15-18%. Igor Levitin, Russian Transport Minister, said recently that the railway transportation volume will fall by 20% in Russia in 2009.

Let’s Cooperate

OAO RZD is to solve the problem of loading its own capacities as well as optimising work with its neighbours and competitors.
The brightest example of non-flexible and slow interaction is the Kaliningrad Railway (an affiliate of OAO RZD), where the loading volume fell by 60-80%. The reason for it was the unbalanced tariff policy of neighbouring countries – Lithuania and Byelorussia, via which the cargo is transported to Russia. Last August, Lithuanian railways increased the tariff by 11%. And in January 2009, Byelorussian railways rose its tariff by 14% in dollar equivalent (in roubles the growth amounted to 60%).
Representatives of OAO RZD recognised the need to find actual tariff solutions reasonable for all transport process participants in the Baltic region.
Agreements on tariffs must be concluded for a long period of time, they should be stable and take into account the interests of all parties. Only in this case will it be possible to speak about the prospects for development of transport infrastructure in the Kaliningrad region as well as in Lithuania and Byelorussia, said Boris Lapidus, Senior Vice President of OAO RZD. He added that a pack of measures to harmonise tariff conditions is to be developed in a month’s time.
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РЖД-Партнер

Panorama. Company

On March 19, 2009, OAO RZD and Ulan-Batorskaya Railway (Mongolia) concluded a cooperation agreement. The document was signed by Vadim Morozov, the First Vice-President of OAO RZD, and Vanchigdorzh Otgondambrel, Head of Ulan-Batorskaya Railway.
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OAO RZD and Ulan-Batorskaya Railway Conclude Agreement on Rolling Stock Supplies

On March 19, 2009, OAO RZD and Ulan-Batorskaya Railway (Mongolia) concluded a cooperation agreement. The document was signed by Vadim Morozov, the First Vice-President of OAO RZD, and Vanchigdorzh Otgondambrel, Head of Ulan-Batorskaya Railway.
According to the agreement, in 2009 the Russian party represented by OAO RZD Trading House is to export 1,000 gondola wagons and four diesel locomotives to Mongolia.
“Realisation of the agreement will improve the condition of the rolling stock park of Ulan-Batorskaya Railway. Nowadays, it is characterised by a high degree of deterioration– 70% of the wagons have been used for more than 35 years,” said Mr Morozov, the First Vice-President of OAO RZD.
Mr Morozov reminded us that OAO RZD used to deliver 300 gondola wagons and 50 boxcars to Ulan-Batorskaya Railway.
OAO RZD has previously developed offers targeted at the complex development of railways in Mongolia. The parties approved the project’s realisation, envisaging the launch of a Russian-Mongolian joint venture, 50% of which is to belong to OAO RZD. The JV will be responsible for design and construction of new railway lines as well as financing the whole project, including financing the modernisation of Ulan-Batorskaya Railway’s infrastructure.

RZD Issued Infrastructure Bonds

On March 12, OAO Russian Railways placed via open subscription at MICEX its series 10 and 13 infrastructure bond issues worth a total of RUR30 billion. The interest rate on the first coupon was 15% p.a. for both issues.
The deal was arranged by TransCreditBank, Sberbank of Russia, VTB, Gazprombank and IC Troika Dialog.
The series 10 RUR15 billion non-convertible bond issue matures in five years and carries 10 semi-annual coupons. The coupon rate is fixed for the entire life of the securities. The state registration number of the issue is 4-10-65045-D.
The series 13 non-convertible bond issue has the same size of RUR15 billion, the same lifetime of five years and also carries 10 semi-annual coupons. The issue terms and conditions provide for a put option after 2.5 years. The interest rate on the bond will be corrected every six months for the amount of change in the interest rate at CBR’s weekly REPO auctions. This issue carries number 4-13-65045-D.
Series 10 and 13 infrastructure bonds are included on the MICEX B list. Commencement of bond trading was scheduled for the following week. Proceeds of the offering will finance infrastructure projects under OAO RZD’s investment program and financial plan.

Construction of New Far East Seaport to Start in 2010

Rosneft will construct a new seaport in the area, where Primorsk Refinery is being built, in the Far East. According to Igor Levitin, Russia’s Transport Minister, construction of the port will start in 2010.
According to Sergei Bogdanchikov, head of Rosneft, the company plans construction of terminals capable of transshipping up to 30 million tonnes of oil products per year including 20 million tonnes within the framework of Primorsk Refinery and 10 million tonnes at the Black Sea Refinery near Tuapse.
The project to build the Primorsk Refinery is to be implemented in two phases. According to preliminary estimates the project is valued at $5-7 billion.
As of today, there are no refineries in the Primorsk region. The fuel is delivered from other regions, which influences retail prices.

Russian Railways Will Sell 50% -1 share of Roszheldorproject

OAO Russian Railways will sell 50% minus 1 share of OAO Roszheldorproject via an open auction on May 29, 2009.
The auction has been organised by OAO TransCreditBank.
The shareholding of OAO Roszheldorproject is to be sold in the framework of the railway transport structural reform and in accordance with a decision of OAO RZD’s board of directors taken on November 28, 2007.
The minimum bid is RUR 1.6 billion. Minimal incremental increase is RUR 40 million. Deposits for participation in the auction make up 7% of the minimum bid, i.e. RUR 112 million.

Sberbank extends RUR 13 billion loan to Transneft

At the end of March, Russia’s savings bank Sberbank extended a RUR 12.894 billion loan to oil pipeline company Transneft.
The credit resources will be invested into laying the East Siberia-Pacific Ocean pipeline system that will carry oil from Siberian fields to the promising markets of the Asia-Pacific region.
The first stage of the new pipeline is to be put into operation at the end of 2009.

TransContainer Sums Up the Results of 2008

In 2008, TransContainer transported 1.5 million TEU.
In 2008, the company increased its park by 3,000 wagons and 9,000 containers. But demand for container transit in 2008 fell owing to the drop in demand. Loading declined by 30%.
TransContainer was founded on the basis of OAO RZD as the centre for cargo transportation via containers. It was launched in 2006. It has 23,000 flat-wagons; 177,000 containers and 47 terminals.
The nine-month net profit (RAS) rose more than two-fold to RUR 2.366 billion, against RUR 1.009 billion the previous year. [~DETAIL_TEXT] =>

OAO RZD and Ulan-Batorskaya Railway Conclude Agreement on Rolling Stock Supplies

On March 19, 2009, OAO RZD and Ulan-Batorskaya Railway (Mongolia) concluded a cooperation agreement. The document was signed by Vadim Morozov, the First Vice-President of OAO RZD, and Vanchigdorzh Otgondambrel, Head of Ulan-Batorskaya Railway.
According to the agreement, in 2009 the Russian party represented by OAO RZD Trading House is to export 1,000 gondola wagons and four diesel locomotives to Mongolia.
“Realisation of the agreement will improve the condition of the rolling stock park of Ulan-Batorskaya Railway. Nowadays, it is characterised by a high degree of deterioration– 70% of the wagons have been used for more than 35 years,” said Mr Morozov, the First Vice-President of OAO RZD.
Mr Morozov reminded us that OAO RZD used to deliver 300 gondola wagons and 50 boxcars to Ulan-Batorskaya Railway.
OAO RZD has previously developed offers targeted at the complex development of railways in Mongolia. The parties approved the project’s realisation, envisaging the launch of a Russian-Mongolian joint venture, 50% of which is to belong to OAO RZD. The JV will be responsible for design and construction of new railway lines as well as financing the whole project, including financing the modernisation of Ulan-Batorskaya Railway’s infrastructure.

RZD Issued Infrastructure Bonds

On March 12, OAO Russian Railways placed via open subscription at MICEX its series 10 and 13 infrastructure bond issues worth a total of RUR30 billion. The interest rate on the first coupon was 15% p.a. for both issues.
The deal was arranged by TransCreditBank, Sberbank of Russia, VTB, Gazprombank and IC Troika Dialog.
The series 10 RUR15 billion non-convertible bond issue matures in five years and carries 10 semi-annual coupons. The coupon rate is fixed for the entire life of the securities. The state registration number of the issue is 4-10-65045-D.
The series 13 non-convertible bond issue has the same size of RUR15 billion, the same lifetime of five years and also carries 10 semi-annual coupons. The issue terms and conditions provide for a put option after 2.5 years. The interest rate on the bond will be corrected every six months for the amount of change in the interest rate at CBR’s weekly REPO auctions. This issue carries number 4-13-65045-D.
Series 10 and 13 infrastructure bonds are included on the MICEX B list. Commencement of bond trading was scheduled for the following week. Proceeds of the offering will finance infrastructure projects under OAO RZD’s investment program and financial plan.

Construction of New Far East Seaport to Start in 2010

Rosneft will construct a new seaport in the area, where Primorsk Refinery is being built, in the Far East. According to Igor Levitin, Russia’s Transport Minister, construction of the port will start in 2010.
According to Sergei Bogdanchikov, head of Rosneft, the company plans construction of terminals capable of transshipping up to 30 million tonnes of oil products per year including 20 million tonnes within the framework of Primorsk Refinery and 10 million tonnes at the Black Sea Refinery near Tuapse.
The project to build the Primorsk Refinery is to be implemented in two phases. According to preliminary estimates the project is valued at $5-7 billion.
As of today, there are no refineries in the Primorsk region. The fuel is delivered from other regions, which influences retail prices.

Russian Railways Will Sell 50% -1 share of Roszheldorproject

OAO Russian Railways will sell 50% minus 1 share of OAO Roszheldorproject via an open auction on May 29, 2009.
The auction has been organised by OAO TransCreditBank.
The shareholding of OAO Roszheldorproject is to be sold in the framework of the railway transport structural reform and in accordance with a decision of OAO RZD’s board of directors taken on November 28, 2007.
The minimum bid is RUR 1.6 billion. Minimal incremental increase is RUR 40 million. Deposits for participation in the auction make up 7% of the minimum bid, i.e. RUR 112 million.

Sberbank extends RUR 13 billion loan to Transneft

At the end of March, Russia’s savings bank Sberbank extended a RUR 12.894 billion loan to oil pipeline company Transneft.
The credit resources will be invested into laying the East Siberia-Pacific Ocean pipeline system that will carry oil from Siberian fields to the promising markets of the Asia-Pacific region.
The first stage of the new pipeline is to be put into operation at the end of 2009.

TransContainer Sums Up the Results of 2008

In 2008, TransContainer transported 1.5 million TEU.
In 2008, the company increased its park by 3,000 wagons and 9,000 containers. But demand for container transit in 2008 fell owing to the drop in demand. Loading declined by 30%.
TransContainer was founded on the basis of OAO RZD as the centre for cargo transportation via containers. It was launched in 2006. It has 23,000 flat-wagons; 177,000 containers and 47 terminals.
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OAO RZD and Ulan-Batorskaya Railway Conclude Agreement on Rolling Stock Supplies

On March 19, 2009, OAO RZD and Ulan-Batorskaya Railway (Mongolia) concluded a cooperation agreement. The document was signed by Vadim Morozov, the First Vice-President of OAO RZD, and Vanchigdorzh Otgondambrel, Head of Ulan-Batorskaya Railway.
According to the agreement, in 2009 the Russian party represented by OAO RZD Trading House is to export 1,000 gondola wagons and four diesel locomotives to Mongolia.
“Realisation of the agreement will improve the condition of the rolling stock park of Ulan-Batorskaya Railway. Nowadays, it is characterised by a high degree of deterioration– 70% of the wagons have been used for more than 35 years,” said Mr Morozov, the First Vice-President of OAO RZD.
Mr Morozov reminded us that OAO RZD used to deliver 300 gondola wagons and 50 boxcars to Ulan-Batorskaya Railway.
OAO RZD has previously developed offers targeted at the complex development of railways in Mongolia. The parties approved the project’s realisation, envisaging the launch of a Russian-Mongolian joint venture, 50% of which is to belong to OAO RZD. The JV will be responsible for design and construction of new railway lines as well as financing the whole project, including financing the modernisation of Ulan-Batorskaya Railway’s infrastructure.

RZD Issued Infrastructure Bonds

On March 12, OAO Russian Railways placed via open subscription at MICEX its series 10 and 13 infrastructure bond issues worth a total of RUR30 billion. The interest rate on the first coupon was 15% p.a. for both issues.
The deal was arranged by TransCreditBank, Sberbank of Russia, VTB, Gazprombank and IC Troika Dialog.
The series 10 RUR15 billion non-convertible bond issue matures in five years and carries 10 semi-annual coupons. The coupon rate is fixed for the entire life of the securities. The state registration number of the issue is 4-10-65045-D.
The series 13 non-convertible bond issue has the same size of RUR15 billion, the same lifetime of five years and also carries 10 semi-annual coupons. The issue terms and conditions provide for a put option after 2.5 years. The interest rate on the bond will be corrected every six months for the amount of change in the interest rate at CBR’s weekly REPO auctions. This issue carries number 4-13-65045-D.
Series 10 and 13 infrastructure bonds are included on the MICEX B list. Commencement of bond trading was scheduled for the following week. Proceeds of the offering will finance infrastructure projects under OAO RZD’s investment program and financial plan.

Construction of New Far East Seaport to Start in 2010

Rosneft will construct a new seaport in the area, where Primorsk Refinery is being built, in the Far East. According to Igor Levitin, Russia’s Transport Minister, construction of the port will start in 2010.
According to Sergei Bogdanchikov, head of Rosneft, the company plans construction of terminals capable of transshipping up to 30 million tonnes of oil products per year including 20 million tonnes within the framework of Primorsk Refinery and 10 million tonnes at the Black Sea Refinery near Tuapse.
The project to build the Primorsk Refinery is to be implemented in two phases. According to preliminary estimates the project is valued at $5-7 billion.
As of today, there are no refineries in the Primorsk region. The fuel is delivered from other regions, which influences retail prices.

Russian Railways Will Sell 50% -1 share of Roszheldorproject

OAO Russian Railways will sell 50% minus 1 share of OAO Roszheldorproject via an open auction on May 29, 2009.
The auction has been organised by OAO TransCreditBank.
The shareholding of OAO Roszheldorproject is to be sold in the framework of the railway transport structural reform and in accordance with a decision of OAO RZD’s board of directors taken on November 28, 2007.
The minimum bid is RUR 1.6 billion. Minimal incremental increase is RUR 40 million. Deposits for participation in the auction make up 7% of the minimum bid, i.e. RUR 112 million.

Sberbank extends RUR 13 billion loan to Transneft

At the end of March, Russia’s savings bank Sberbank extended a RUR 12.894 billion loan to oil pipeline company Transneft.
The credit resources will be invested into laying the East Siberia-Pacific Ocean pipeline system that will carry oil from Siberian fields to the promising markets of the Asia-Pacific region.
The first stage of the new pipeline is to be put into operation at the end of 2009.

TransContainer Sums Up the Results of 2008

In 2008, TransContainer transported 1.5 million TEU.
In 2008, the company increased its park by 3,000 wagons and 9,000 containers. But demand for container transit in 2008 fell owing to the drop in demand. Loading declined by 30%.
TransContainer was founded on the basis of OAO RZD as the centre for cargo transportation via containers. It was launched in 2006. It has 23,000 flat-wagons; 177,000 containers and 47 terminals.
The nine-month net profit (RAS) rose more than two-fold to RUR 2.366 billion, against RUR 1.009 billion the previous year. [~DETAIL_TEXT] =>

OAO RZD and Ulan-Batorskaya Railway Conclude Agreement on Rolling Stock Supplies

On March 19, 2009, OAO RZD and Ulan-Batorskaya Railway (Mongolia) concluded a cooperation agreement. The document was signed by Vadim Morozov, the First Vice-President of OAO RZD, and Vanchigdorzh Otgondambrel, Head of Ulan-Batorskaya Railway.
According to the agreement, in 2009 the Russian party represented by OAO RZD Trading House is to export 1,000 gondola wagons and four diesel locomotives to Mongolia.
“Realisation of the agreement will improve the condition of the rolling stock park of Ulan-Batorskaya Railway. Nowadays, it is characterised by a high degree of deterioration– 70% of the wagons have been used for more than 35 years,” said Mr Morozov, the First Vice-President of OAO RZD.
Mr Morozov reminded us that OAO RZD used to deliver 300 gondola wagons and 50 boxcars to Ulan-Batorskaya Railway.
OAO RZD has previously developed offers targeted at the complex development of railways in Mongolia. The parties approved the project’s realisation, envisaging the launch of a Russian-Mongolian joint venture, 50% of which is to belong to OAO RZD. The JV will be responsible for design and construction of new railway lines as well as financing the whole project, including financing the modernisation of Ulan-Batorskaya Railway’s infrastructure.

RZD Issued Infrastructure Bonds

On March 12, OAO Russian Railways placed via open subscription at MICEX its series 10 and 13 infrastructure bond issues worth a total of RUR30 billion. The interest rate on the first coupon was 15% p.a. for both issues.
The deal was arranged by TransCreditBank, Sberbank of Russia, VTB, Gazprombank and IC Troika Dialog.
The series 10 RUR15 billion non-convertible bond issue matures in five years and carries 10 semi-annual coupons. The coupon rate is fixed for the entire life of the securities. The state registration number of the issue is 4-10-65045-D.
The series 13 non-convertible bond issue has the same size of RUR15 billion, the same lifetime of five years and also carries 10 semi-annual coupons. The issue terms and conditions provide for a put option after 2.5 years. The interest rate on the bond will be corrected every six months for the amount of change in the interest rate at CBR’s weekly REPO auctions. This issue carries number 4-13-65045-D.
Series 10 and 13 infrastructure bonds are included on the MICEX B list. Commencement of bond trading was scheduled for the following week. Proceeds of the offering will finance infrastructure projects under OAO RZD’s investment program and financial plan.

Construction of New Far East Seaport to Start in 2010

Rosneft will construct a new seaport in the area, where Primorsk Refinery is being built, in the Far East. According to Igor Levitin, Russia’s Transport Minister, construction of the port will start in 2010.
According to Sergei Bogdanchikov, head of Rosneft, the company plans construction of terminals capable of transshipping up to 30 million tonnes of oil products per year including 20 million tonnes within the framework of Primorsk Refinery and 10 million tonnes at the Black Sea Refinery near Tuapse.
The project to build the Primorsk Refinery is to be implemented in two phases. According to preliminary estimates the project is valued at $5-7 billion.
As of today, there are no refineries in the Primorsk region. The fuel is delivered from other regions, which influences retail prices.

Russian Railways Will Sell 50% -1 share of Roszheldorproject

OAO Russian Railways will sell 50% minus 1 share of OAO Roszheldorproject via an open auction on May 29, 2009.
The auction has been organised by OAO TransCreditBank.
The shareholding of OAO Roszheldorproject is to be sold in the framework of the railway transport structural reform and in accordance with a decision of OAO RZD’s board of directors taken on November 28, 2007.
The minimum bid is RUR 1.6 billion. Minimal incremental increase is RUR 40 million. Deposits for participation in the auction make up 7% of the minimum bid, i.e. RUR 112 million.

Sberbank extends RUR 13 billion loan to Transneft

At the end of March, Russia’s savings bank Sberbank extended a RUR 12.894 billion loan to oil pipeline company Transneft.
The credit resources will be invested into laying the East Siberia-Pacific Ocean pipeline system that will carry oil from Siberian fields to the promising markets of the Asia-Pacific region.
The first stage of the new pipeline is to be put into operation at the end of 2009.

TransContainer Sums Up the Results of 2008

In 2008, TransContainer transported 1.5 million TEU.
In 2008, the company increased its park by 3,000 wagons and 9,000 containers. But demand for container transit in 2008 fell owing to the drop in demand. Loading declined by 30%.
TransContainer was founded on the basis of OAO RZD as the centre for cargo transportation via containers. It was launched in 2006. It has 23,000 flat-wagons; 177,000 containers and 47 terminals.
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РЖД-Партнер

Oil Products: Stable Growth Instead of Logical Decline

 The throughput of most Russian sea terminals has reduced. Only one cargo has escaped the crisis –
oil bulk. According to experts’ forecasts, the demand for oil products exported from Russia will either be the same as in 2008 or even increase. The ports of Russia’s North-West will play a special role in this process.
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Leaders and Outsiders

In 2008, the export of oil products via Russian sea ports amounted to approximately 80 million tons, 3% up year-on-year. A year earlier the growth was almost 9%. A significant share of oil products produced at Russian refineries is exported via Russia’s north-western sea terminals. Last year, almost 42 million tons of oil products was exported via the region, which is similar to the volume carried in 2007. In the first two months of 2009, sea exports of oil products in the region grew by 4% comparing with the same period of 2008, and amounted to 6.7 million tons.
Ports in the Russian North-West handle dark oil products mainly. For example, fuel oil makes 75% of the handling volume of ZAO Petersburg Oil Terminal, while the share of diesel oil is 25%. The ratio in the throughput of RPK-Vysotsk LUKOIL-II (Leningrad region) is practically the same. The terminal handles approximately 700,000 tons of fuel oil and vacuum gas oil and 400,000 tons of diesel oil per month. In the near future the situation may change due to the reform of oil sector taxation. Due to the reforms, which are already called a “tax revolution”, the structure of exports, as well as their volume, may change.
It may require a serious enlargement and modernisation of terminals. The Russian Government insists that oil companies must reconstruct operating refineries to increase oil processing capacity. As a result, the market will get more high-quality oil products and the owners of terminals will face the need to modernise and re-orient themselves. Managers of ZAO Petersburg Oil Terminal, for example, consider that in several years the demand for high-octane petrol exports may increase, which means they should already now be thinking about the construction of the necessary capacities for handling this cargo in the port.
Analysing the structure of oil products handling via north-western ports, one can mention the following tendency: the transit of oil bulk via Kaliningrad and Murmansk is falling, while the total oil bulk volume handled in the region is growing. The decrease in the volume handled via the terminals in Kola Bay, which used to handle up to 10 million tons of oil bulk, is especially evident: in 2008 the northern port handled approximately 900,000 tons of fuel oil and diesel oil delivered there by railway, but in 2007 this figure was 2.1 million tons.
There is a simple explanation: it is less profitable to transport cargo via Murmansk than via the private northern port of Vitino. Several years ago, the latter had a rather small capacity, and now its oil bulk handling volume is three times that of Murmansk sea port. Also, it takes railway tank wagons six hours less to get to Vitino than to Murmansk. So, in 2008 the throughput of this terminal was practically the same as a year earlier: in 2008 the Vitino sea port handled 3.7 million tons of export gas condensate and petrols, while in 2007 this figure was 3.9 million tons.
It is rather expensive and takes a lot of time to transport fuel oil to the ports at Kola Bay because the carrying capacity of the single-track railway section St. Petersburg – Murmansk is limiting and overloaded. No wonder – more and more freight is redirected to the oil terminals in St. Petersburg and Vysotsk. In future the northern all-weather deep sea port may fail to have any liquid bulk cargoes if new terminals at the Baltic Sea are built (for example, in Vistino or Ust-Luga), or the oil product ports of Vysotsk and Primorsk are enlarged. Nowadays, due to the logistics problems, the situation at the Kola Bay is worrying: the terminals Tangra-Oil and Kommandit Service, which used to handle several million tons of fuel oil per annum, service scant volumes of export oil bulk and their throughput continues to fall. Tangra-Oil reduced export cargo handling from 320,000 tons in 2007 to 67,000 tons in 2008. Moreover, the terminal stopped cargo handling in summer. Last year, Kommandt Service terminal (Mokhnatkina Pakhta cape) handled 360,000 tons of fuel oil, while in 2007 its throughput was 980,000 tons. But in the first two months of this year, the terminal managed to reach the figures of the same period of 2008 – 140,000 tons of dark oil products was handled.
The owners of OOO The First Murmansk Terminal are going to construct new handling capacities at the oil storage facilities of the fish port. Last year, the company’s throughput declined twice – to 480,000 tons – but in the first two months of 2009 the dynamics turned around. The terminal handled 143,000 tons of oil products, 60% up year-on-year.
At the same time, experts still doubt the viability of the project of Synthesis group to construct a terminal with a capacity of 25 million tons at Kola Bay.
Nobody understands how such volumes of freight can be delivered to the port – it means that loading on the railway will double, which is impossible without construction of a second track. There is only one other option: to process somewhere near Murmansk the oil extracted from the northern sea shelf, and Synthesis has such plans. In any case, the group of companies will have to negotiate with a large oil producer the load capacities at the refinery, so that the processed oil could be handled at the terminal. Meanwhile, for example, LUKOIL, working actively in the North, may prefer to build its own refinery and terminal. Also, the company’s head, Vagit Alekperov, said before the crisis that he would do this if the tax regime was favourable for investment in oil processing.
The crisis speeded up the measures taken by the RF Government to reform the tax system in the sector. At its meeting on February 13, 2009, the Government made a decision to discuss a new form of oil sector taxation. In particular, the Ministry of Economic Development and the Ministry of Finance was asked to analyse the issue of simplifying the mechanism of paying the returned tax on the VAT for oil processing equipment. The RF Ministry of Energy suggested state banks give oil companies RUR 10 billion to subside credit rates.
Consequently, the plans of LUKOIL may become a reality. Perhaps, these changes will breathe new life into Murmansk. Nevertheless, in future oil products exports from Kola Bay may increase due to oil extracted and processed in the region and not due to deliveries by railway.
Logistics problems also caused a reduction in oil and oil product exports via Kaliningrad, where the freight is delivered as a transit via Lithuania. The position of ZAO Baltic Oil handling company became weaker – the terminal handles less and less oil products.
Last year, the stevedoring company saw export volumes drop by a quarter – to 820,000 tons; and in January-February 2009, its throughput fell by 30%. The figures of LUKOIL are also falling – the company handles via its terminal in the Kaliningrad region oil and oil products delivered by railway via Lithuania. Last year, LUKOIL handled 1 million tons of oil (-27% year-on-year) and 2.7 million tons of oil products (-14%) and, in early 2009, the negative dynamics became even worse – a 30% decline. The oil terminal located on the territory of FGUP Kaliningrad Fish Port saw its throughput also fall. Last year, it handled 2.1 million tons of oil products (-14%) and in 2009 its throughput fell more than twice. All in all, Kaliningrad saw its oil bulk handling decrease by 40% to 1 million tons in the first two months of 2009.

Lion’s Share

Compared with Murmansk and Kaliningrad ports, the basic Russian terminals specialising in export oil products handling in St. Petersburg and Vysotsk are rather successful. Despite the overloaded railway, the lack of a river fleet and the problems with the technical condition of the Volgo-Baltic waterway, via which some of the fuel oil is transported during the summer, the oil bulk throughput in the both ports is increasing.
In 2008, Vysotsk sea port handled 13 million tons – which was a new record (in 2007 the port’s throughput was 12 million tons). Nowadays, the terminal of LUKOIL handles 1-1.2 million of oil products per month, and according to the company’s plans, this volume is stable until the end of 2009. The major cargoes handled at the terminal are diesel fuel and vacuum gas oil, the demand for which in Europe is very high, In the first two months of 2009, the total volume of these cargoes serviced by the port amounted to 2 million tons. In the near future the capacity of the port of Vysotsk may be enlarged to 15 and even 17 million tons, if a new railway line is built to the terminal. In addition, LUKOIL is considering the possible enlargement of the Ukhtinsky refinery to produce an extra 2.5 million tons of fuel oil there, which may be exported via Vysotsk. Finally, other oil companies, in particular OAO Rosneft and TNK-BP, may also use the capacities of the terminal more actively, leading to the need to enlarge it.
The plans of the St. Petersburg port are also ambitious. In 2008, the port handled more than 14 million tons of export oil products, and this year this figure may even increase by 15 million tons due to the growth of fuel oil volumes transported by river oil tankers from the Volga region and the Republics of Bashkiria and Tatarstan. Out of the total volume of oil products handled in the St. Petersburg port, the Petersburg Oil Terminal serviced 11.8 million tons. In the opinion of Igor Teleshev, CEO of the Petersburg Oil Terminal, this year the company will either keep throughput at the same level as in 2008 or increase it by 0.5 million tons, if the necessary contracts are concluded for oil product delivery to the port by river. Analysts from information and analytical agency PortNews think that in 2009 fuel oil transportation via the Volgo-Baltic waterway may grow due to the oil fleet’s turnover increase. This year, the off-shore handling of oil products in St. Petersburg may grow by up to 4 million tons.

A Look Forward

Nobody has officially given up projects to build new terminals on the Baltic Sea. The plans to build new berths for oil bulk handling in Ust-Luga, Vistino settlement, and Batareinaya bay are being discussed. If they are realised, export capacities may grow by several million tons. Meanwhile, the only project carried out is the terminal of OAO Transnefteproduct in Primorsk. Its annual capacity is 9.5 million tons of low-sulfur diesel fuel. The opening ceremony took place in May 2008 and before the end of the year the terminal – which is the final stage of “The North” pipeline project – handled 1.6 million tons of the fuel.
As soon as the transport and oil bulk handling capacities of the Primorsk port are enlarged and upgraded, it will increase the throughput of light oil products. Nevertheless, market analysts consider that a significant volume of freight will hardly be redirected to the new terminal from Vysotsk and St. Petersburg.
Meanwhile, the oil product handling volume at, for example, the Petersburg Oil Terminal may fall significantly in 2010, when the first stage of the oil terminal at Ust-Luga is put into operation in October-November 2009. According to the latest statements of Maxim Shirokov, CEO of OAO Ust-Luga, the port has no doubts that the terminal will be opened on time. In this case, a part of oil fuel flow carried by railway will be redirected from the Petersburg Oil Terminal and Estonian ports to Ust-Luga.
The share of light oil products in the total export throughput of Russian ports may grow due to the redirection of transport flows from Ventspils.
Oil product handling capacities in Russia’s North-West will continue to grow and the key factor behind this is not only an export increase but also redirection of cargo flows from the Baltic states’ ports to Russian terminals. This decision of the Russian Government perfectly coincides with the strategy for the country’s infrastructure development. The potential of north-western export capacities’ development is large but for these ports it depends on the possibility of delivering oil products.
If oil processing volumes in Russia remain the same as in 2008, oil products exports will be kept at a level similar to that of 2008. Consequently, the throughput of the stevedoring companies will remain the same or increase slightly. “Despite the crisis, the demand for oil products on the international market hasn’t become smaller,” said Igor Teleshev, CEO of Petersburg Oil Terminal. “On the Russian market, demand has slightly reduced recently. Also, payments for oil products in Russia are in roubles, but are in dollars for export supplies. That is why, even if the foreign fuel market starts to fall, Russian oil companies will benefit if the dollar rate goes up. This stimulates exporters to transport oil products abroad.”
By Nadezhda Malysheva,
PortNews, special for The RZD-Partner


our reference

Statistics of analytical agency InfoTEK-Consult
23 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2007.
3.8 million tons of this volume was exported via Latvian ports (2.978 million tons via Ventspils; 876,000 tons via Riga; 9,000 tons via Liepaja).
2.1 million tons was transported via Lithuanian ports (port of Klaipeda).
17.12 million tons was carried via Estonian ports (14.76 million tons via Muuga; 1.33 million tons via Tallinn; 220,000 tons via Sillamae; 476,000 tons via Paldiski; 329,000 tons via Miiduranna).
22.3 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2008.
5 million tons of this volume was exported via Latvian ports (2.546 million tons via Ventspils; 2.45 million tons via Riga; 70,000 tons via Liepaja).
2.19 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2009.
652,000 tons of this volume was exported via Latvian ports (333,000 tons via Ventspils; 319,000 tons via Riga).
198,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.34 million tons was carried via Estonian ports (1.33 million tons via Muuga; 2,000 tons via Tallinn; 7,000 tons via Sillamae).
2.39 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2008.
718,000 tons of this volume was exported via Latvian ports (507,000 tons via Ventspils; 211,000 tons via Riga).
289,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.386 million tons was carried via Estonian ports (1.312 million tons via Muuga; 73,000 tons via Tallinn; 1,000 tons via Sillamae). [~DETAIL_TEXT] =>

Leaders and Outsiders

In 2008, the export of oil products via Russian sea ports amounted to approximately 80 million tons, 3% up year-on-year. A year earlier the growth was almost 9%. A significant share of oil products produced at Russian refineries is exported via Russia’s north-western sea terminals. Last year, almost 42 million tons of oil products was exported via the region, which is similar to the volume carried in 2007. In the first two months of 2009, sea exports of oil products in the region grew by 4% comparing with the same period of 2008, and amounted to 6.7 million tons.
Ports in the Russian North-West handle dark oil products mainly. For example, fuel oil makes 75% of the handling volume of ZAO Petersburg Oil Terminal, while the share of diesel oil is 25%. The ratio in the throughput of RPK-Vysotsk LUKOIL-II (Leningrad region) is practically the same. The terminal handles approximately 700,000 tons of fuel oil and vacuum gas oil and 400,000 tons of diesel oil per month. In the near future the situation may change due to the reform of oil sector taxation. Due to the reforms, which are already called a “tax revolution”, the structure of exports, as well as their volume, may change.
It may require a serious enlargement and modernisation of terminals. The Russian Government insists that oil companies must reconstruct operating refineries to increase oil processing capacity. As a result, the market will get more high-quality oil products and the owners of terminals will face the need to modernise and re-orient themselves. Managers of ZAO Petersburg Oil Terminal, for example, consider that in several years the demand for high-octane petrol exports may increase, which means they should already now be thinking about the construction of the necessary capacities for handling this cargo in the port.
Analysing the structure of oil products handling via north-western ports, one can mention the following tendency: the transit of oil bulk via Kaliningrad and Murmansk is falling, while the total oil bulk volume handled in the region is growing. The decrease in the volume handled via the terminals in Kola Bay, which used to handle up to 10 million tons of oil bulk, is especially evident: in 2008 the northern port handled approximately 900,000 tons of fuel oil and diesel oil delivered there by railway, but in 2007 this figure was 2.1 million tons.
There is a simple explanation: it is less profitable to transport cargo via Murmansk than via the private northern port of Vitino. Several years ago, the latter had a rather small capacity, and now its oil bulk handling volume is three times that of Murmansk sea port. Also, it takes railway tank wagons six hours less to get to Vitino than to Murmansk. So, in 2008 the throughput of this terminal was practically the same as a year earlier: in 2008 the Vitino sea port handled 3.7 million tons of export gas condensate and petrols, while in 2007 this figure was 3.9 million tons.
It is rather expensive and takes a lot of time to transport fuel oil to the ports at Kola Bay because the carrying capacity of the single-track railway section St. Petersburg – Murmansk is limiting and overloaded. No wonder – more and more freight is redirected to the oil terminals in St. Petersburg and Vysotsk. In future the northern all-weather deep sea port may fail to have any liquid bulk cargoes if new terminals at the Baltic Sea are built (for example, in Vistino or Ust-Luga), or the oil product ports of Vysotsk and Primorsk are enlarged. Nowadays, due to the logistics problems, the situation at the Kola Bay is worrying: the terminals Tangra-Oil and Kommandit Service, which used to handle several million tons of fuel oil per annum, service scant volumes of export oil bulk and their throughput continues to fall. Tangra-Oil reduced export cargo handling from 320,000 tons in 2007 to 67,000 tons in 2008. Moreover, the terminal stopped cargo handling in summer. Last year, Kommandt Service terminal (Mokhnatkina Pakhta cape) handled 360,000 tons of fuel oil, while in 2007 its throughput was 980,000 tons. But in the first two months of this year, the terminal managed to reach the figures of the same period of 2008 – 140,000 tons of dark oil products was handled.
The owners of OOO The First Murmansk Terminal are going to construct new handling capacities at the oil storage facilities of the fish port. Last year, the company’s throughput declined twice – to 480,000 tons – but in the first two months of 2009 the dynamics turned around. The terminal handled 143,000 tons of oil products, 60% up year-on-year.
At the same time, experts still doubt the viability of the project of Synthesis group to construct a terminal with a capacity of 25 million tons at Kola Bay.
Nobody understands how such volumes of freight can be delivered to the port – it means that loading on the railway will double, which is impossible without construction of a second track. There is only one other option: to process somewhere near Murmansk the oil extracted from the northern sea shelf, and Synthesis has such plans. In any case, the group of companies will have to negotiate with a large oil producer the load capacities at the refinery, so that the processed oil could be handled at the terminal. Meanwhile, for example, LUKOIL, working actively in the North, may prefer to build its own refinery and terminal. Also, the company’s head, Vagit Alekperov, said before the crisis that he would do this if the tax regime was favourable for investment in oil processing.
The crisis speeded up the measures taken by the RF Government to reform the tax system in the sector. At its meeting on February 13, 2009, the Government made a decision to discuss a new form of oil sector taxation. In particular, the Ministry of Economic Development and the Ministry of Finance was asked to analyse the issue of simplifying the mechanism of paying the returned tax on the VAT for oil processing equipment. The RF Ministry of Energy suggested state banks give oil companies RUR 10 billion to subside credit rates.
Consequently, the plans of LUKOIL may become a reality. Perhaps, these changes will breathe new life into Murmansk. Nevertheless, in future oil products exports from Kola Bay may increase due to oil extracted and processed in the region and not due to deliveries by railway.
Logistics problems also caused a reduction in oil and oil product exports via Kaliningrad, where the freight is delivered as a transit via Lithuania. The position of ZAO Baltic Oil handling company became weaker – the terminal handles less and less oil products.
Last year, the stevedoring company saw export volumes drop by a quarter – to 820,000 tons; and in January-February 2009, its throughput fell by 30%. The figures of LUKOIL are also falling – the company handles via its terminal in the Kaliningrad region oil and oil products delivered by railway via Lithuania. Last year, LUKOIL handled 1 million tons of oil (-27% year-on-year) and 2.7 million tons of oil products (-14%) and, in early 2009, the negative dynamics became even worse – a 30% decline. The oil terminal located on the territory of FGUP Kaliningrad Fish Port saw its throughput also fall. Last year, it handled 2.1 million tons of oil products (-14%) and in 2009 its throughput fell more than twice. All in all, Kaliningrad saw its oil bulk handling decrease by 40% to 1 million tons in the first two months of 2009.

Lion’s Share

Compared with Murmansk and Kaliningrad ports, the basic Russian terminals specialising in export oil products handling in St. Petersburg and Vysotsk are rather successful. Despite the overloaded railway, the lack of a river fleet and the problems with the technical condition of the Volgo-Baltic waterway, via which some of the fuel oil is transported during the summer, the oil bulk throughput in the both ports is increasing.
In 2008, Vysotsk sea port handled 13 million tons – which was a new record (in 2007 the port’s throughput was 12 million tons). Nowadays, the terminal of LUKOIL handles 1-1.2 million of oil products per month, and according to the company’s plans, this volume is stable until the end of 2009. The major cargoes handled at the terminal are diesel fuel and vacuum gas oil, the demand for which in Europe is very high, In the first two months of 2009, the total volume of these cargoes serviced by the port amounted to 2 million tons. In the near future the capacity of the port of Vysotsk may be enlarged to 15 and even 17 million tons, if a new railway line is built to the terminal. In addition, LUKOIL is considering the possible enlargement of the Ukhtinsky refinery to produce an extra 2.5 million tons of fuel oil there, which may be exported via Vysotsk. Finally, other oil companies, in particular OAO Rosneft and TNK-BP, may also use the capacities of the terminal more actively, leading to the need to enlarge it.
The plans of the St. Petersburg port are also ambitious. In 2008, the port handled more than 14 million tons of export oil products, and this year this figure may even increase by 15 million tons due to the growth of fuel oil volumes transported by river oil tankers from the Volga region and the Republics of Bashkiria and Tatarstan. Out of the total volume of oil products handled in the St. Petersburg port, the Petersburg Oil Terminal serviced 11.8 million tons. In the opinion of Igor Teleshev, CEO of the Petersburg Oil Terminal, this year the company will either keep throughput at the same level as in 2008 or increase it by 0.5 million tons, if the necessary contracts are concluded for oil product delivery to the port by river. Analysts from information and analytical agency PortNews think that in 2009 fuel oil transportation via the Volgo-Baltic waterway may grow due to the oil fleet’s turnover increase. This year, the off-shore handling of oil products in St. Petersburg may grow by up to 4 million tons.

A Look Forward

Nobody has officially given up projects to build new terminals on the Baltic Sea. The plans to build new berths for oil bulk handling in Ust-Luga, Vistino settlement, and Batareinaya bay are being discussed. If they are realised, export capacities may grow by several million tons. Meanwhile, the only project carried out is the terminal of OAO Transnefteproduct in Primorsk. Its annual capacity is 9.5 million tons of low-sulfur diesel fuel. The opening ceremony took place in May 2008 and before the end of the year the terminal – which is the final stage of “The North” pipeline project – handled 1.6 million tons of the fuel.
As soon as the transport and oil bulk handling capacities of the Primorsk port are enlarged and upgraded, it will increase the throughput of light oil products. Nevertheless, market analysts consider that a significant volume of freight will hardly be redirected to the new terminal from Vysotsk and St. Petersburg.
Meanwhile, the oil product handling volume at, for example, the Petersburg Oil Terminal may fall significantly in 2010, when the first stage of the oil terminal at Ust-Luga is put into operation in October-November 2009. According to the latest statements of Maxim Shirokov, CEO of OAO Ust-Luga, the port has no doubts that the terminal will be opened on time. In this case, a part of oil fuel flow carried by railway will be redirected from the Petersburg Oil Terminal and Estonian ports to Ust-Luga.
The share of light oil products in the total export throughput of Russian ports may grow due to the redirection of transport flows from Ventspils.
Oil product handling capacities in Russia’s North-West will continue to grow and the key factor behind this is not only an export increase but also redirection of cargo flows from the Baltic states’ ports to Russian terminals. This decision of the Russian Government perfectly coincides with the strategy for the country’s infrastructure development. The potential of north-western export capacities’ development is large but for these ports it depends on the possibility of delivering oil products.
If oil processing volumes in Russia remain the same as in 2008, oil products exports will be kept at a level similar to that of 2008. Consequently, the throughput of the stevedoring companies will remain the same or increase slightly. “Despite the crisis, the demand for oil products on the international market hasn’t become smaller,” said Igor Teleshev, CEO of Petersburg Oil Terminal. “On the Russian market, demand has slightly reduced recently. Also, payments for oil products in Russia are in roubles, but are in dollars for export supplies. That is why, even if the foreign fuel market starts to fall, Russian oil companies will benefit if the dollar rate goes up. This stimulates exporters to transport oil products abroad.”
By Nadezhda Malysheva,
PortNews, special for The RZD-Partner


our reference

Statistics of analytical agency InfoTEK-Consult
23 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2007.
3.8 million tons of this volume was exported via Latvian ports (2.978 million tons via Ventspils; 876,000 tons via Riga; 9,000 tons via Liepaja).
2.1 million tons was transported via Lithuanian ports (port of Klaipeda).
17.12 million tons was carried via Estonian ports (14.76 million tons via Muuga; 1.33 million tons via Tallinn; 220,000 tons via Sillamae; 476,000 tons via Paldiski; 329,000 tons via Miiduranna).
22.3 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2008.
5 million tons of this volume was exported via Latvian ports (2.546 million tons via Ventspils; 2.45 million tons via Riga; 70,000 tons via Liepaja).
2.19 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2009.
652,000 tons of this volume was exported via Latvian ports (333,000 tons via Ventspils; 319,000 tons via Riga).
198,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.34 million tons was carried via Estonian ports (1.33 million tons via Muuga; 2,000 tons via Tallinn; 7,000 tons via Sillamae).
2.39 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2008.
718,000 tons of this volume was exported via Latvian ports (507,000 tons via Ventspils; 211,000 tons via Riga).
289,000 tons was transported via Lithuanian ports (port of Klaipeda).
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Leaders and Outsiders

In 2008, the export of oil products via Russian sea ports amounted to approximately 80 million tons, 3% up year-on-year. A year earlier the growth was almost 9%. A significant share of oil products produced at Russian refineries is exported via Russia’s north-western sea terminals. Last year, almost 42 million tons of oil products was exported via the region, which is similar to the volume carried in 2007. In the first two months of 2009, sea exports of oil products in the region grew by 4% comparing with the same period of 2008, and amounted to 6.7 million tons.
Ports in the Russian North-West handle dark oil products mainly. For example, fuel oil makes 75% of the handling volume of ZAO Petersburg Oil Terminal, while the share of diesel oil is 25%. The ratio in the throughput of RPK-Vysotsk LUKOIL-II (Leningrad region) is practically the same. The terminal handles approximately 700,000 tons of fuel oil and vacuum gas oil and 400,000 tons of diesel oil per month. In the near future the situation may change due to the reform of oil sector taxation. Due to the reforms, which are already called a “tax revolution”, the structure of exports, as well as their volume, may change.
It may require a serious enlargement and modernisation of terminals. The Russian Government insists that oil companies must reconstruct operating refineries to increase oil processing capacity. As a result, the market will get more high-quality oil products and the owners of terminals will face the need to modernise and re-orient themselves. Managers of ZAO Petersburg Oil Terminal, for example, consider that in several years the demand for high-octane petrol exports may increase, which means they should already now be thinking about the construction of the necessary capacities for handling this cargo in the port.
Analysing the structure of oil products handling via north-western ports, one can mention the following tendency: the transit of oil bulk via Kaliningrad and Murmansk is falling, while the total oil bulk volume handled in the region is growing. The decrease in the volume handled via the terminals in Kola Bay, which used to handle up to 10 million tons of oil bulk, is especially evident: in 2008 the northern port handled approximately 900,000 tons of fuel oil and diesel oil delivered there by railway, but in 2007 this figure was 2.1 million tons.
There is a simple explanation: it is less profitable to transport cargo via Murmansk than via the private northern port of Vitino. Several years ago, the latter had a rather small capacity, and now its oil bulk handling volume is three times that of Murmansk sea port. Also, it takes railway tank wagons six hours less to get to Vitino than to Murmansk. So, in 2008 the throughput of this terminal was practically the same as a year earlier: in 2008 the Vitino sea port handled 3.7 million tons of export gas condensate and petrols, while in 2007 this figure was 3.9 million tons.
It is rather expensive and takes a lot of time to transport fuel oil to the ports at Kola Bay because the carrying capacity of the single-track railway section St. Petersburg – Murmansk is limiting and overloaded. No wonder – more and more freight is redirected to the oil terminals in St. Petersburg and Vysotsk. In future the northern all-weather deep sea port may fail to have any liquid bulk cargoes if new terminals at the Baltic Sea are built (for example, in Vistino or Ust-Luga), or the oil product ports of Vysotsk and Primorsk are enlarged. Nowadays, due to the logistics problems, the situation at the Kola Bay is worrying: the terminals Tangra-Oil and Kommandit Service, which used to handle several million tons of fuel oil per annum, service scant volumes of export oil bulk and their throughput continues to fall. Tangra-Oil reduced export cargo handling from 320,000 tons in 2007 to 67,000 tons in 2008. Moreover, the terminal stopped cargo handling in summer. Last year, Kommandt Service terminal (Mokhnatkina Pakhta cape) handled 360,000 tons of fuel oil, while in 2007 its throughput was 980,000 tons. But in the first two months of this year, the terminal managed to reach the figures of the same period of 2008 – 140,000 tons of dark oil products was handled.
The owners of OOO The First Murmansk Terminal are going to construct new handling capacities at the oil storage facilities of the fish port. Last year, the company’s throughput declined twice – to 480,000 tons – but in the first two months of 2009 the dynamics turned around. The terminal handled 143,000 tons of oil products, 60% up year-on-year.
At the same time, experts still doubt the viability of the project of Synthesis group to construct a terminal with a capacity of 25 million tons at Kola Bay.
Nobody understands how such volumes of freight can be delivered to the port – it means that loading on the railway will double, which is impossible without construction of a second track. There is only one other option: to process somewhere near Murmansk the oil extracted from the northern sea shelf, and Synthesis has such plans. In any case, the group of companies will have to negotiate with a large oil producer the load capacities at the refinery, so that the processed oil could be handled at the terminal. Meanwhile, for example, LUKOIL, working actively in the North, may prefer to build its own refinery and terminal. Also, the company’s head, Vagit Alekperov, said before the crisis that he would do this if the tax regime was favourable for investment in oil processing.
The crisis speeded up the measures taken by the RF Government to reform the tax system in the sector. At its meeting on February 13, 2009, the Government made a decision to discuss a new form of oil sector taxation. In particular, the Ministry of Economic Development and the Ministry of Finance was asked to analyse the issue of simplifying the mechanism of paying the returned tax on the VAT for oil processing equipment. The RF Ministry of Energy suggested state banks give oil companies RUR 10 billion to subside credit rates.
Consequently, the plans of LUKOIL may become a reality. Perhaps, these changes will breathe new life into Murmansk. Nevertheless, in future oil products exports from Kola Bay may increase due to oil extracted and processed in the region and not due to deliveries by railway.
Logistics problems also caused a reduction in oil and oil product exports via Kaliningrad, where the freight is delivered as a transit via Lithuania. The position of ZAO Baltic Oil handling company became weaker – the terminal handles less and less oil products.
Last year, the stevedoring company saw export volumes drop by a quarter – to 820,000 tons; and in January-February 2009, its throughput fell by 30%. The figures of LUKOIL are also falling – the company handles via its terminal in the Kaliningrad region oil and oil products delivered by railway via Lithuania. Last year, LUKOIL handled 1 million tons of oil (-27% year-on-year) and 2.7 million tons of oil products (-14%) and, in early 2009, the negative dynamics became even worse – a 30% decline. The oil terminal located on the territory of FGUP Kaliningrad Fish Port saw its throughput also fall. Last year, it handled 2.1 million tons of oil products (-14%) and in 2009 its throughput fell more than twice. All in all, Kaliningrad saw its oil bulk handling decrease by 40% to 1 million tons in the first two months of 2009.

Lion’s Share

Compared with Murmansk and Kaliningrad ports, the basic Russian terminals specialising in export oil products handling in St. Petersburg and Vysotsk are rather successful. Despite the overloaded railway, the lack of a river fleet and the problems with the technical condition of the Volgo-Baltic waterway, via which some of the fuel oil is transported during the summer, the oil bulk throughput in the both ports is increasing.
In 2008, Vysotsk sea port handled 13 million tons – which was a new record (in 2007 the port’s throughput was 12 million tons). Nowadays, the terminal of LUKOIL handles 1-1.2 million of oil products per month, and according to the company’s plans, this volume is stable until the end of 2009. The major cargoes handled at the terminal are diesel fuel and vacuum gas oil, the demand for which in Europe is very high, In the first two months of 2009, the total volume of these cargoes serviced by the port amounted to 2 million tons. In the near future the capacity of the port of Vysotsk may be enlarged to 15 and even 17 million tons, if a new railway line is built to the terminal. In addition, LUKOIL is considering the possible enlargement of the Ukhtinsky refinery to produce an extra 2.5 million tons of fuel oil there, which may be exported via Vysotsk. Finally, other oil companies, in particular OAO Rosneft and TNK-BP, may also use the capacities of the terminal more actively, leading to the need to enlarge it.
The plans of the St. Petersburg port are also ambitious. In 2008, the port handled more than 14 million tons of export oil products, and this year this figure may even increase by 15 million tons due to the growth of fuel oil volumes transported by river oil tankers from the Volga region and the Republics of Bashkiria and Tatarstan. Out of the total volume of oil products handled in the St. Petersburg port, the Petersburg Oil Terminal serviced 11.8 million tons. In the opinion of Igor Teleshev, CEO of the Petersburg Oil Terminal, this year the company will either keep throughput at the same level as in 2008 or increase it by 0.5 million tons, if the necessary contracts are concluded for oil product delivery to the port by river. Analysts from information and analytical agency PortNews think that in 2009 fuel oil transportation via the Volgo-Baltic waterway may grow due to the oil fleet’s turnover increase. This year, the off-shore handling of oil products in St. Petersburg may grow by up to 4 million tons.

A Look Forward

Nobody has officially given up projects to build new terminals on the Baltic Sea. The plans to build new berths for oil bulk handling in Ust-Luga, Vistino settlement, and Batareinaya bay are being discussed. If they are realised, export capacities may grow by several million tons. Meanwhile, the only project carried out is the terminal of OAO Transnefteproduct in Primorsk. Its annual capacity is 9.5 million tons of low-sulfur diesel fuel. The opening ceremony took place in May 2008 and before the end of the year the terminal – which is the final stage of “The North” pipeline project – handled 1.6 million tons of the fuel.
As soon as the transport and oil bulk handling capacities of the Primorsk port are enlarged and upgraded, it will increase the throughput of light oil products. Nevertheless, market analysts consider that a significant volume of freight will hardly be redirected to the new terminal from Vysotsk and St. Petersburg.
Meanwhile, the oil product handling volume at, for example, the Petersburg Oil Terminal may fall significantly in 2010, when the first stage of the oil terminal at Ust-Luga is put into operation in October-November 2009. According to the latest statements of Maxim Shirokov, CEO of OAO Ust-Luga, the port has no doubts that the terminal will be opened on time. In this case, a part of oil fuel flow carried by railway will be redirected from the Petersburg Oil Terminal and Estonian ports to Ust-Luga.
The share of light oil products in the total export throughput of Russian ports may grow due to the redirection of transport flows from Ventspils.
Oil product handling capacities in Russia’s North-West will continue to grow and the key factor behind this is not only an export increase but also redirection of cargo flows from the Baltic states’ ports to Russian terminals. This decision of the Russian Government perfectly coincides with the strategy for the country’s infrastructure development. The potential of north-western export capacities’ development is large but for these ports it depends on the possibility of delivering oil products.
If oil processing volumes in Russia remain the same as in 2008, oil products exports will be kept at a level similar to that of 2008. Consequently, the throughput of the stevedoring companies will remain the same or increase slightly. “Despite the crisis, the demand for oil products on the international market hasn’t become smaller,” said Igor Teleshev, CEO of Petersburg Oil Terminal. “On the Russian market, demand has slightly reduced recently. Also, payments for oil products in Russia are in roubles, but are in dollars for export supplies. That is why, even if the foreign fuel market starts to fall, Russian oil companies will benefit if the dollar rate goes up. This stimulates exporters to transport oil products abroad.”
By Nadezhda Malysheva,
PortNews, special for The RZD-Partner


our reference

Statistics of analytical agency InfoTEK-Consult
23 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2007.
3.8 million tons of this volume was exported via Latvian ports (2.978 million tons via Ventspils; 876,000 tons via Riga; 9,000 tons via Liepaja).
2.1 million tons was transported via Lithuanian ports (port of Klaipeda).
17.12 million tons was carried via Estonian ports (14.76 million tons via Muuga; 1.33 million tons via Tallinn; 220,000 tons via Sillamae; 476,000 tons via Paldiski; 329,000 tons via Miiduranna).
22.3 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2008.
5 million tons of this volume was exported via Latvian ports (2.546 million tons via Ventspils; 2.45 million tons via Riga; 70,000 tons via Liepaja).
2.19 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2009.
652,000 tons of this volume was exported via Latvian ports (333,000 tons via Ventspils; 319,000 tons via Riga).
198,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.34 million tons was carried via Estonian ports (1.33 million tons via Muuga; 2,000 tons via Tallinn; 7,000 tons via Sillamae).
2.39 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2008.
718,000 tons of this volume was exported via Latvian ports (507,000 tons via Ventspils; 211,000 tons via Riga).
289,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.386 million tons was carried via Estonian ports (1.312 million tons via Muuga; 73,000 tons via Tallinn; 1,000 tons via Sillamae). [~DETAIL_TEXT] =>

Leaders and Outsiders

In 2008, the export of oil products via Russian sea ports amounted to approximately 80 million tons, 3% up year-on-year. A year earlier the growth was almost 9%. A significant share of oil products produced at Russian refineries is exported via Russia’s north-western sea terminals. Last year, almost 42 million tons of oil products was exported via the region, which is similar to the volume carried in 2007. In the first two months of 2009, sea exports of oil products in the region grew by 4% comparing with the same period of 2008, and amounted to 6.7 million tons.
Ports in the Russian North-West handle dark oil products mainly. For example, fuel oil makes 75% of the handling volume of ZAO Petersburg Oil Terminal, while the share of diesel oil is 25%. The ratio in the throughput of RPK-Vysotsk LUKOIL-II (Leningrad region) is practically the same. The terminal handles approximately 700,000 tons of fuel oil and vacuum gas oil and 400,000 tons of diesel oil per month. In the near future the situation may change due to the reform of oil sector taxation. Due to the reforms, which are already called a “tax revolution”, the structure of exports, as well as their volume, may change.
It may require a serious enlargement and modernisation of terminals. The Russian Government insists that oil companies must reconstruct operating refineries to increase oil processing capacity. As a result, the market will get more high-quality oil products and the owners of terminals will face the need to modernise and re-orient themselves. Managers of ZAO Petersburg Oil Terminal, for example, consider that in several years the demand for high-octane petrol exports may increase, which means they should already now be thinking about the construction of the necessary capacities for handling this cargo in the port.
Analysing the structure of oil products handling via north-western ports, one can mention the following tendency: the transit of oil bulk via Kaliningrad and Murmansk is falling, while the total oil bulk volume handled in the region is growing. The decrease in the volume handled via the terminals in Kola Bay, which used to handle up to 10 million tons of oil bulk, is especially evident: in 2008 the northern port handled approximately 900,000 tons of fuel oil and diesel oil delivered there by railway, but in 2007 this figure was 2.1 million tons.
There is a simple explanation: it is less profitable to transport cargo via Murmansk than via the private northern port of Vitino. Several years ago, the latter had a rather small capacity, and now its oil bulk handling volume is three times that of Murmansk sea port. Also, it takes railway tank wagons six hours less to get to Vitino than to Murmansk. So, in 2008 the throughput of this terminal was practically the same as a year earlier: in 2008 the Vitino sea port handled 3.7 million tons of export gas condensate and petrols, while in 2007 this figure was 3.9 million tons.
It is rather expensive and takes a lot of time to transport fuel oil to the ports at Kola Bay because the carrying capacity of the single-track railway section St. Petersburg – Murmansk is limiting and overloaded. No wonder – more and more freight is redirected to the oil terminals in St. Petersburg and Vysotsk. In future the northern all-weather deep sea port may fail to have any liquid bulk cargoes if new terminals at the Baltic Sea are built (for example, in Vistino or Ust-Luga), or the oil product ports of Vysotsk and Primorsk are enlarged. Nowadays, due to the logistics problems, the situation at the Kola Bay is worrying: the terminals Tangra-Oil and Kommandit Service, which used to handle several million tons of fuel oil per annum, service scant volumes of export oil bulk and their throughput continues to fall. Tangra-Oil reduced export cargo handling from 320,000 tons in 2007 to 67,000 tons in 2008. Moreover, the terminal stopped cargo handling in summer. Last year, Kommandt Service terminal (Mokhnatkina Pakhta cape) handled 360,000 tons of fuel oil, while in 2007 its throughput was 980,000 tons. But in the first two months of this year, the terminal managed to reach the figures of the same period of 2008 – 140,000 tons of dark oil products was handled.
The owners of OOO The First Murmansk Terminal are going to construct new handling capacities at the oil storage facilities of the fish port. Last year, the company’s throughput declined twice – to 480,000 tons – but in the first two months of 2009 the dynamics turned around. The terminal handled 143,000 tons of oil products, 60% up year-on-year.
At the same time, experts still doubt the viability of the project of Synthesis group to construct a terminal with a capacity of 25 million tons at Kola Bay.
Nobody understands how such volumes of freight can be delivered to the port – it means that loading on the railway will double, which is impossible without construction of a second track. There is only one other option: to process somewhere near Murmansk the oil extracted from the northern sea shelf, and Synthesis has such plans. In any case, the group of companies will have to negotiate with a large oil producer the load capacities at the refinery, so that the processed oil could be handled at the terminal. Meanwhile, for example, LUKOIL, working actively in the North, may prefer to build its own refinery and terminal. Also, the company’s head, Vagit Alekperov, said before the crisis that he would do this if the tax regime was favourable for investment in oil processing.
The crisis speeded up the measures taken by the RF Government to reform the tax system in the sector. At its meeting on February 13, 2009, the Government made a decision to discuss a new form of oil sector taxation. In particular, the Ministry of Economic Development and the Ministry of Finance was asked to analyse the issue of simplifying the mechanism of paying the returned tax on the VAT for oil processing equipment. The RF Ministry of Energy suggested state banks give oil companies RUR 10 billion to subside credit rates.
Consequently, the plans of LUKOIL may become a reality. Perhaps, these changes will breathe new life into Murmansk. Nevertheless, in future oil products exports from Kola Bay may increase due to oil extracted and processed in the region and not due to deliveries by railway.
Logistics problems also caused a reduction in oil and oil product exports via Kaliningrad, where the freight is delivered as a transit via Lithuania. The position of ZAO Baltic Oil handling company became weaker – the terminal handles less and less oil products.
Last year, the stevedoring company saw export volumes drop by a quarter – to 820,000 tons; and in January-February 2009, its throughput fell by 30%. The figures of LUKOIL are also falling – the company handles via its terminal in the Kaliningrad region oil and oil products delivered by railway via Lithuania. Last year, LUKOIL handled 1 million tons of oil (-27% year-on-year) and 2.7 million tons of oil products (-14%) and, in early 2009, the negative dynamics became even worse – a 30% decline. The oil terminal located on the territory of FGUP Kaliningrad Fish Port saw its throughput also fall. Last year, it handled 2.1 million tons of oil products (-14%) and in 2009 its throughput fell more than twice. All in all, Kaliningrad saw its oil bulk handling decrease by 40% to 1 million tons in the first two months of 2009.

Lion’s Share

Compared with Murmansk and Kaliningrad ports, the basic Russian terminals specialising in export oil products handling in St. Petersburg and Vysotsk are rather successful. Despite the overloaded railway, the lack of a river fleet and the problems with the technical condition of the Volgo-Baltic waterway, via which some of the fuel oil is transported during the summer, the oil bulk throughput in the both ports is increasing.
In 2008, Vysotsk sea port handled 13 million tons – which was a new record (in 2007 the port’s throughput was 12 million tons). Nowadays, the terminal of LUKOIL handles 1-1.2 million of oil products per month, and according to the company’s plans, this volume is stable until the end of 2009. The major cargoes handled at the terminal are diesel fuel and vacuum gas oil, the demand for which in Europe is very high, In the first two months of 2009, the total volume of these cargoes serviced by the port amounted to 2 million tons. In the near future the capacity of the port of Vysotsk may be enlarged to 15 and even 17 million tons, if a new railway line is built to the terminal. In addition, LUKOIL is considering the possible enlargement of the Ukhtinsky refinery to produce an extra 2.5 million tons of fuel oil there, which may be exported via Vysotsk. Finally, other oil companies, in particular OAO Rosneft and TNK-BP, may also use the capacities of the terminal more actively, leading to the need to enlarge it.
The plans of the St. Petersburg port are also ambitious. In 2008, the port handled more than 14 million tons of export oil products, and this year this figure may even increase by 15 million tons due to the growth of fuel oil volumes transported by river oil tankers from the Volga region and the Republics of Bashkiria and Tatarstan. Out of the total volume of oil products handled in the St. Petersburg port, the Petersburg Oil Terminal serviced 11.8 million tons. In the opinion of Igor Teleshev, CEO of the Petersburg Oil Terminal, this year the company will either keep throughput at the same level as in 2008 or increase it by 0.5 million tons, if the necessary contracts are concluded for oil product delivery to the port by river. Analysts from information and analytical agency PortNews think that in 2009 fuel oil transportation via the Volgo-Baltic waterway may grow due to the oil fleet’s turnover increase. This year, the off-shore handling of oil products in St. Petersburg may grow by up to 4 million tons.

A Look Forward

Nobody has officially given up projects to build new terminals on the Baltic Sea. The plans to build new berths for oil bulk handling in Ust-Luga, Vistino settlement, and Batareinaya bay are being discussed. If they are realised, export capacities may grow by several million tons. Meanwhile, the only project carried out is the terminal of OAO Transnefteproduct in Primorsk. Its annual capacity is 9.5 million tons of low-sulfur diesel fuel. The opening ceremony took place in May 2008 and before the end of the year the terminal – which is the final stage of “The North” pipeline project – handled 1.6 million tons of the fuel.
As soon as the transport and oil bulk handling capacities of the Primorsk port are enlarged and upgraded, it will increase the throughput of light oil products. Nevertheless, market analysts consider that a significant volume of freight will hardly be redirected to the new terminal from Vysotsk and St. Petersburg.
Meanwhile, the oil product handling volume at, for example, the Petersburg Oil Terminal may fall significantly in 2010, when the first stage of the oil terminal at Ust-Luga is put into operation in October-November 2009. According to the latest statements of Maxim Shirokov, CEO of OAO Ust-Luga, the port has no doubts that the terminal will be opened on time. In this case, a part of oil fuel flow carried by railway will be redirected from the Petersburg Oil Terminal and Estonian ports to Ust-Luga.
The share of light oil products in the total export throughput of Russian ports may grow due to the redirection of transport flows from Ventspils.
Oil product handling capacities in Russia’s North-West will continue to grow and the key factor behind this is not only an export increase but also redirection of cargo flows from the Baltic states’ ports to Russian terminals. This decision of the Russian Government perfectly coincides with the strategy for the country’s infrastructure development. The potential of north-western export capacities’ development is large but for these ports it depends on the possibility of delivering oil products.
If oil processing volumes in Russia remain the same as in 2008, oil products exports will be kept at a level similar to that of 2008. Consequently, the throughput of the stevedoring companies will remain the same or increase slightly. “Despite the crisis, the demand for oil products on the international market hasn’t become smaller,” said Igor Teleshev, CEO of Petersburg Oil Terminal. “On the Russian market, demand has slightly reduced recently. Also, payments for oil products in Russia are in roubles, but are in dollars for export supplies. That is why, even if the foreign fuel market starts to fall, Russian oil companies will benefit if the dollar rate goes up. This stimulates exporters to transport oil products abroad.”
By Nadezhda Malysheva,
PortNews, special for The RZD-Partner


our reference

Statistics of analytical agency InfoTEK-Consult
23 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2007.
3.8 million tons of this volume was exported via Latvian ports (2.978 million tons via Ventspils; 876,000 tons via Riga; 9,000 tons via Liepaja).
2.1 million tons was transported via Lithuanian ports (port of Klaipeda).
17.12 million tons was carried via Estonian ports (14.76 million tons via Muuga; 1.33 million tons via Tallinn; 220,000 tons via Sillamae; 476,000 tons via Paldiski; 329,000 tons via Miiduranna).
22.3 million tons of export oil products was transported by railway to the Baltic states’ ports in January-December 2008.
5 million tons of this volume was exported via Latvian ports (2.546 million tons via Ventspils; 2.45 million tons via Riga; 70,000 tons via Liepaja).
2.19 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2009.
652,000 tons of this volume was exported via Latvian ports (333,000 tons via Ventspils; 319,000 tons via Riga).
198,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.34 million tons was carried via Estonian ports (1.33 million tons via Muuga; 2,000 tons via Tallinn; 7,000 tons via Sillamae).
2.39 million tons of export oil products was transported by railway to the Baltic states’ ports in January 2008.
718,000 tons of this volume was exported via Latvian ports (507,000 tons via Ventspils; 211,000 tons via Riga).
289,000 tons was transported via Lithuanian ports (port of Klaipeda).
1.386 million tons was carried via Estonian ports (1.312 million tons via Muuga; 73,000 tons via Tallinn; 1,000 tons via Sillamae). [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>  The throughput of most Russian sea terminals has reduced. Only one cargo has escaped the crisis –
oil bulk. According to experts’ forecasts, the demand for oil products exported from Russia will either be the same as in 2008 or even increase. The ports of Russia’s North-West will play a special role in this process. [~PREVIEW_TEXT] =>  The throughput of most Russian sea terminals has reduced. Only one cargo has escaped the crisis –
oil bulk. According to experts’ forecasts, the demand for oil products exported from Russia will either be the same as in 2008 or even increase. The ports of Russia’s North-West will play a special role in this process. 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src="/ufiles/image/rus/partner/2009/2/18.jpg" border="1" alt=" " hspace="5" width="120" height="160" align="left" />The throughput of most Russian sea terminals has reduced. Only one cargo has escaped the crisis – <br />oil bulk. According to experts’ forecasts, the demand for oil products exported from Russia will either be the same as in 2008 or even increase. The ports of Russia’s North-West will play a special role in this process. [ELEMENT_META_TITLE] => Oil Products: Stable Growth Instead of Logical Decline [ELEMENT_META_KEYWORDS] => oil products: stable growth instead of logical decline [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2009/2/18.jpg" border="1" alt=" " hspace="5" width="120" height="160" align="left" />The throughput of most Russian sea terminals has reduced. Only one cargo has escaped the crisis – <br />oil bulk. According to experts’ forecasts, the demand for oil products exported from Russia will either be the same as in 2008 or even increase. The ports of Russia’s North-West will play a special role in this process. 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РЖД-Партнер

Russian Airports: Hoping for the Best

 It seems a paradox but it is a fact that in spite of the economic crisis, many Russian airports have not given up their development plans, or at least their declarations of what is to be realised over the next few years have remained the same. The fact that these plans not only exist but also are being implemented, is a positive factor – even if some of the plans only look one year ahead.
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Ministry Corrects Plans

The following statement has been made by Igor Levitin, the Head of the RF Transport Ministry, in his Report “About the Main Results of the Transport Complex Social - Economic Development in 2008 and Problems for 2009”: “In air transport, we are mainly directing finances towards the development of airport ground infrastructure. The volume of financing (in 2008) was 23 billion roubles, 18% more than last year”. Analytical materials to this report say: “Works on the reconstruction (and construction) of runways were completed in 2008 at the following eight airports: Astrakhan, Vnukovo, Tolmachevo, Koltsovo, Irkutsk, Mineralnye Vody, Penza and Vladikavkaz; signal lighting sytems were replaced at eight airports: Vnukovo, Gelendzik, Ufa, Cheboksary, Syktyvkar, Bratsk, Novokuznetsk and Mendeleevo; and Ground-Based Augmentation Systems (GBAS) were installed at the airports of Krasnoyarsk and Samara. Reconstruction of 11 airports, including Sochi, Vladivostok and Ekaterinburg is planned for 2009. In his other speeches earlier this year Igor Levitin also emphasised that the Transport Ministry’s priority is to realise “The Concept for The Russian Federation’s Airfields (Airports) Network Development to 2020 “.
Gennady Kurzenkov, the head of Rosaviation, has expanded on the situation at Russian airports. He noted in his report that now only 62% of airfields have a runway with a man-made surface, while other airfields have only soil runways. 70% of runways with a man-made surface were created more than 20 years ago and only 24% of them have been reconstructed in the past 10 years. 12% of runways with a man-made surface need reconstruction urgently and 18% of runways with a soil surface need a major overhaul. Only 65% of airfields are equipped with signal lighting systems.
More than 90% of airports are equipped with devices that have run 85% of their service life and in fact should be written off. The head of Rosaviation considers that insufficient funding of airfield maintenance and development is the main cause of such a situation. He said that The Federal Target Program “Modernisation of Transport System in Russia (from 2002 to 2010)” was amended in 2008. Accordingly, 11 airfields are to be upgraded in 2009 and “The Civil Aircraft” sub-program assumes reconstruction of 107 runways from 2010 to 2015.

A Glance into 2009 and a Little Further

The largest working airports have not given up their plans and the main Russian strategic projects (Sochi and Vladivostok) have not been abandoned.
In the middle of March the State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO “International Airport of Sochi” signed an agreement on opening a 5.4 billion rouble line of credit for a 10-years period. Also, according to the Russian Federation Government Order “On the Olympic Sites Construction Program and the Development of Sochi City as a Mountain and Climatic Resort”, the Sochi reconstruction project has received the status of an Olympic Site, which is the best guarantee for all these plans to be fulfilled.
In March 2009, the Dutch company Netherlands Airport Consultants B.V (NACO, construction and future development adviser for “Vladivostok International Airport” Complex), should submit the Concept and Engineering Design for the new terminal. The competition to choose the contractor will finish in April. We should remind you that construction is planned to be completed by the end of 2011; and the new Air-Terminal Complex in Vladivostok – which has an area of 50,000 sq.m – is to start working by the APEC Summit 2012.
At the same time it became known that the St. Petersburg Pulkovo Airport Reconstruction Project would have a chance at a quick completion. Formally, the State is not participating in its financing but Vnesheconombank, the European Reconstruction and Development Bank and the IFC have promised to give about 25 billion roubles to the contract winner from a number of private consortia. This is more than half the minimum investment of 40.2 billion roubles required.
The winner of the competition will receive the airport concession for 30 years, with an opportunity to prolong the contract. In exchange, the winner will take up an obligation to invest 40.2 billion roubles in the development of Pulkovo. After pre-qualifying selection, seven participants were admitted to the competition. Among them two foreign airport operators (GMR Infrastructure from India and TAV Airport Holding from Turkey) and five consortia, which include Russian companies (“The Base Element” with Singapore’s Changi Airports (OOO “Neva Airport”), VTB with Frankfurt Airport operator Fraport (OOO “Financial & Industrial Company “Forvater”), Managing Company “Leader” with Vienna Airport Group (OAO “Petroport Concessi”), “Renova” and Hochtief (OOO “The International Airport of St. Petersburg”), and also Macquarie Renaissance (OOO “Neva Sky”).
By the beginning of 2009, “Sheremetyevo” (Moscow) had overcome the negative consequences connected with Lufthansa’s departure, with other carriers picking up the lost passenger traffic. The main investment project of this company in 2009 is Terminal E (or 2А), which will link the second and third terminals and also the railway station. Two years have been assigned for the construction and commissioning of this site. Construction of the terminal is now in its final stage; double-glazed windows have already been installed; electricity and heating provided; the ventilation system is almost finished; inner interior walls have been built and the ceilings are ready, etc. The project cost is $240 million, rising to $280 million when the infrastructure costs have been added. $220 million of this amount is covered by the 12-year credit line, which was opened by Sheremetyevo by Sberbank and Nordbank. Construction will be finished by the end of 2009 and commissioning will take place at the beginning of 2010.
The second large reconstruction project “Sheremetyevo” was completed at the beginning of this year and the railway link to Moscow put into operation. Now the airport and OAO RZD are working together to improve service quality. The project was initiated by International Sheremetyevo Airport and realised on the principle of design financing. “Sheremetyevo” made an initial capital investment and, after railway traffic started, its share in “Aeroexpress train” was gradually reduced to 0%.

Regions Are Not Lagging Behind

There is positive news coming from regional airports too. In March 2009, Kazan continued the realisation of its airport’s approved technical development plan from 2007 to 2010, by updating its special equipment. In summer 2009, the construction of a hangar-terminal complex with a separate parking area for business aircraft and a business-class passenger service terminal began at “Tolmachevo”.
Kirill Shubin, the General Director of the Ekaterinburg airport “Koltsovo” says that this airport is one of several Russian aviation enterprises that are continuing the successful realisation of development projects in crisis conditions, in spite of a drastic fall in passenger traffic. This was possible due to public-private partnerships. Mr Shubin declared that additional financing of 2.261 billion roubles was expected soon; private business would invest 785 million and the State would provide 1.476 billion roubles.
In August 2008, the Scientific Research Institute “RF Aviaprom” started work on the “Big Savino” Airport Development Plan in Perm, which German experts predict will see 5 million passengers a year pass through in 20 years’ time. Also, at the end of January 2009, the Federal State Unitary Enterprise “Perm Airlines” and “Avialeasing” Company, supported by the Permsky Krai Government, agreed to sign an agreement creating a service centre for civilian aircraft maintenance in Perm, within the project of leasing 24 Sukhoi Superjet 100s. This agreement will create the necessary infrastructure at the airport Big Savino to maintain new local planes in operational condition.
During Igor Levitin’s working visits to Russian regions, the situation with other regional airports became known. On February 17th, 2009, Mr Levitin held a meeting in Yuzhno-Sakhalinsk regarding upgrading the airport network on this island. This led to confirmation of the construction of a parking area for aircraft, taxiways, reconstruction of the intra-airfield roads, the patrol road and the “Khomutovo” airfield protection walls in Yuzhno-Sakhalinsk, all with the support of the Federal Budget. All these works are planned to be finished by 2011. Total financing will be 4.286 billion roubles.
The day before his visit to Sakhalin, Mr Levitin held a meeting on the development of Magadan Airport. During that meeting the question of reconstruction of Magadan Airport, which should be completed in 2014, was considered. 440 million roubles have been allocated this year for the reconstruction of the airport and, by 2015, this sum will be 4.5 billion roubles. As a result, the runway, which has a man-made surface, will be modernised; the water drainage system organised; aprons, taxiways and intra-airfield roads reconstructed; airfield protection walls installed and the signal lighting equipment system replaced. Reconstruction of the airport will give an opportunity to increase aviation traffic and remove the negative influences of infrastructural restrictions on the quality of aviation service. This will remove the threat of excluding Magadan Airport from the national airports network.
Regular flights from the cities of the Siberian Federal District and Moscow to Gorno-Altaisk Airport will begin in March 2010, Altai Republic Head Alexander Berdnikov, has declared. The Governor said that reconstruction of the airport is now taking place. The 200 million roubles provided from the Federal Budget 2009 will give the opportunity to finish lengthening the runway in order to enlarge the number of aircraft categories able to land there. It was reported that 1 billion roubles of Federal funds would be allocated for the reconstruction of the runway, aprons, signal lighting system and navigation equipment. According to the project, as a result of the reconstruction, the runway will be extended by 2.3 km and then this airport will be able to accept large-size aircraft.
By Alexey Strigin [~DETAIL_TEXT] =>

Ministry Corrects Plans

The following statement has been made by Igor Levitin, the Head of the RF Transport Ministry, in his Report “About the Main Results of the Transport Complex Social - Economic Development in 2008 and Problems for 2009”: “In air transport, we are mainly directing finances towards the development of airport ground infrastructure. The volume of financing (in 2008) was 23 billion roubles, 18% more than last year”. Analytical materials to this report say: “Works on the reconstruction (and construction) of runways were completed in 2008 at the following eight airports: Astrakhan, Vnukovo, Tolmachevo, Koltsovo, Irkutsk, Mineralnye Vody, Penza and Vladikavkaz; signal lighting sytems were replaced at eight airports: Vnukovo, Gelendzik, Ufa, Cheboksary, Syktyvkar, Bratsk, Novokuznetsk and Mendeleevo; and Ground-Based Augmentation Systems (GBAS) were installed at the airports of Krasnoyarsk and Samara. Reconstruction of 11 airports, including Sochi, Vladivostok and Ekaterinburg is planned for 2009. In his other speeches earlier this year Igor Levitin also emphasised that the Transport Ministry’s priority is to realise “The Concept for The Russian Federation’s Airfields (Airports) Network Development to 2020 “.
Gennady Kurzenkov, the head of Rosaviation, has expanded on the situation at Russian airports. He noted in his report that now only 62% of airfields have a runway with a man-made surface, while other airfields have only soil runways. 70% of runways with a man-made surface were created more than 20 years ago and only 24% of them have been reconstructed in the past 10 years. 12% of runways with a man-made surface need reconstruction urgently and 18% of runways with a soil surface need a major overhaul. Only 65% of airfields are equipped with signal lighting systems.
More than 90% of airports are equipped with devices that have run 85% of their service life and in fact should be written off. The head of Rosaviation considers that insufficient funding of airfield maintenance and development is the main cause of such a situation. He said that The Federal Target Program “Modernisation of Transport System in Russia (from 2002 to 2010)” was amended in 2008. Accordingly, 11 airfields are to be upgraded in 2009 and “The Civil Aircraft” sub-program assumes reconstruction of 107 runways from 2010 to 2015.

A Glance into 2009 and a Little Further

The largest working airports have not given up their plans and the main Russian strategic projects (Sochi and Vladivostok) have not been abandoned.
In the middle of March the State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO “International Airport of Sochi” signed an agreement on opening a 5.4 billion rouble line of credit for a 10-years period. Also, according to the Russian Federation Government Order “On the Olympic Sites Construction Program and the Development of Sochi City as a Mountain and Climatic Resort”, the Sochi reconstruction project has received the status of an Olympic Site, which is the best guarantee for all these plans to be fulfilled.
In March 2009, the Dutch company Netherlands Airport Consultants B.V (NACO, construction and future development adviser for “Vladivostok International Airport” Complex), should submit the Concept and Engineering Design for the new terminal. The competition to choose the contractor will finish in April. We should remind you that construction is planned to be completed by the end of 2011; and the new Air-Terminal Complex in Vladivostok – which has an area of 50,000 sq.m – is to start working by the APEC Summit 2012.
At the same time it became known that the St. Petersburg Pulkovo Airport Reconstruction Project would have a chance at a quick completion. Formally, the State is not participating in its financing but Vnesheconombank, the European Reconstruction and Development Bank and the IFC have promised to give about 25 billion roubles to the contract winner from a number of private consortia. This is more than half the minimum investment of 40.2 billion roubles required.
The winner of the competition will receive the airport concession for 30 years, with an opportunity to prolong the contract. In exchange, the winner will take up an obligation to invest 40.2 billion roubles in the development of Pulkovo. After pre-qualifying selection, seven participants were admitted to the competition. Among them two foreign airport operators (GMR Infrastructure from India and TAV Airport Holding from Turkey) and five consortia, which include Russian companies (“The Base Element” with Singapore’s Changi Airports (OOO “Neva Airport”), VTB with Frankfurt Airport operator Fraport (OOO “Financial & Industrial Company “Forvater”), Managing Company “Leader” with Vienna Airport Group (OAO “Petroport Concessi”), “Renova” and Hochtief (OOO “The International Airport of St. Petersburg”), and also Macquarie Renaissance (OOO “Neva Sky”).
By the beginning of 2009, “Sheremetyevo” (Moscow) had overcome the negative consequences connected with Lufthansa’s departure, with other carriers picking up the lost passenger traffic. The main investment project of this company in 2009 is Terminal E (or 2А), which will link the second and third terminals and also the railway station. Two years have been assigned for the construction and commissioning of this site. Construction of the terminal is now in its final stage; double-glazed windows have already been installed; electricity and heating provided; the ventilation system is almost finished; inner interior walls have been built and the ceilings are ready, etc. The project cost is $240 million, rising to $280 million when the infrastructure costs have been added. $220 million of this amount is covered by the 12-year credit line, which was opened by Sheremetyevo by Sberbank and Nordbank. Construction will be finished by the end of 2009 and commissioning will take place at the beginning of 2010.
The second large reconstruction project “Sheremetyevo” was completed at the beginning of this year and the railway link to Moscow put into operation. Now the airport and OAO RZD are working together to improve service quality. The project was initiated by International Sheremetyevo Airport and realised on the principle of design financing. “Sheremetyevo” made an initial capital investment and, after railway traffic started, its share in “Aeroexpress train” was gradually reduced to 0%.

Regions Are Not Lagging Behind

There is positive news coming from regional airports too. In March 2009, Kazan continued the realisation of its airport’s approved technical development plan from 2007 to 2010, by updating its special equipment. In summer 2009, the construction of a hangar-terminal complex with a separate parking area for business aircraft and a business-class passenger service terminal began at “Tolmachevo”.
Kirill Shubin, the General Director of the Ekaterinburg airport “Koltsovo” says that this airport is one of several Russian aviation enterprises that are continuing the successful realisation of development projects in crisis conditions, in spite of a drastic fall in passenger traffic. This was possible due to public-private partnerships. Mr Shubin declared that additional financing of 2.261 billion roubles was expected soon; private business would invest 785 million and the State would provide 1.476 billion roubles.
In August 2008, the Scientific Research Institute “RF Aviaprom” started work on the “Big Savino” Airport Development Plan in Perm, which German experts predict will see 5 million passengers a year pass through in 20 years’ time. Also, at the end of January 2009, the Federal State Unitary Enterprise “Perm Airlines” and “Avialeasing” Company, supported by the Permsky Krai Government, agreed to sign an agreement creating a service centre for civilian aircraft maintenance in Perm, within the project of leasing 24 Sukhoi Superjet 100s. This agreement will create the necessary infrastructure at the airport Big Savino to maintain new local planes in operational condition.
During Igor Levitin’s working visits to Russian regions, the situation with other regional airports became known. On February 17th, 2009, Mr Levitin held a meeting in Yuzhno-Sakhalinsk regarding upgrading the airport network on this island. This led to confirmation of the construction of a parking area for aircraft, taxiways, reconstruction of the intra-airfield roads, the patrol road and the “Khomutovo” airfield protection walls in Yuzhno-Sakhalinsk, all with the support of the Federal Budget. All these works are planned to be finished by 2011. Total financing will be 4.286 billion roubles.
The day before his visit to Sakhalin, Mr Levitin held a meeting on the development of Magadan Airport. During that meeting the question of reconstruction of Magadan Airport, which should be completed in 2014, was considered. 440 million roubles have been allocated this year for the reconstruction of the airport and, by 2015, this sum will be 4.5 billion roubles. As a result, the runway, which has a man-made surface, will be modernised; the water drainage system organised; aprons, taxiways and intra-airfield roads reconstructed; airfield protection walls installed and the signal lighting equipment system replaced. Reconstruction of the airport will give an opportunity to increase aviation traffic and remove the negative influences of infrastructural restrictions on the quality of aviation service. This will remove the threat of excluding Magadan Airport from the national airports network.
Regular flights from the cities of the Siberian Federal District and Moscow to Gorno-Altaisk Airport will begin in March 2010, Altai Republic Head Alexander Berdnikov, has declared. The Governor said that reconstruction of the airport is now taking place. The 200 million roubles provided from the Federal Budget 2009 will give the opportunity to finish lengthening the runway in order to enlarge the number of aircraft categories able to land there. It was reported that 1 billion roubles of Federal funds would be allocated for the reconstruction of the runway, aprons, signal lighting system and navigation equipment. According to the project, as a result of the reconstruction, the runway will be extended by 2.3 km and then this airport will be able to accept large-size aircraft.
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border="1" alt=" " hspace="5" width="160" height="120" align="left" />It seems a paradox but it is a fact that in spite of the economic crisis, many Russian airports have not given up their development plans, or at least their declarations of what is to be realised over the next few years have remained the same. 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Ministry Corrects Plans

The following statement has been made by Igor Levitin, the Head of the RF Transport Ministry, in his Report “About the Main Results of the Transport Complex Social - Economic Development in 2008 and Problems for 2009”: “In air transport, we are mainly directing finances towards the development of airport ground infrastructure. The volume of financing (in 2008) was 23 billion roubles, 18% more than last year”. Analytical materials to this report say: “Works on the reconstruction (and construction) of runways were completed in 2008 at the following eight airports: Astrakhan, Vnukovo, Tolmachevo, Koltsovo, Irkutsk, Mineralnye Vody, Penza and Vladikavkaz; signal lighting sytems were replaced at eight airports: Vnukovo, Gelendzik, Ufa, Cheboksary, Syktyvkar, Bratsk, Novokuznetsk and Mendeleevo; and Ground-Based Augmentation Systems (GBAS) were installed at the airports of Krasnoyarsk and Samara. Reconstruction of 11 airports, including Sochi, Vladivostok and Ekaterinburg is planned for 2009. In his other speeches earlier this year Igor Levitin also emphasised that the Transport Ministry’s priority is to realise “The Concept for The Russian Federation’s Airfields (Airports) Network Development to 2020 “.
Gennady Kurzenkov, the head of Rosaviation, has expanded on the situation at Russian airports. He noted in his report that now only 62% of airfields have a runway with a man-made surface, while other airfields have only soil runways. 70% of runways with a man-made surface were created more than 20 years ago and only 24% of them have been reconstructed in the past 10 years. 12% of runways with a man-made surface need reconstruction urgently and 18% of runways with a soil surface need a major overhaul. Only 65% of airfields are equipped with signal lighting systems.
More than 90% of airports are equipped with devices that have run 85% of their service life and in fact should be written off. The head of Rosaviation considers that insufficient funding of airfield maintenance and development is the main cause of such a situation. He said that The Federal Target Program “Modernisation of Transport System in Russia (from 2002 to 2010)” was amended in 2008. Accordingly, 11 airfields are to be upgraded in 2009 and “The Civil Aircraft” sub-program assumes reconstruction of 107 runways from 2010 to 2015.

A Glance into 2009 and a Little Further

The largest working airports have not given up their plans and the main Russian strategic projects (Sochi and Vladivostok) have not been abandoned.
In the middle of March the State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO “International Airport of Sochi” signed an agreement on opening a 5.4 billion rouble line of credit for a 10-years period. Also, according to the Russian Federation Government Order “On the Olympic Sites Construction Program and the Development of Sochi City as a Mountain and Climatic Resort”, the Sochi reconstruction project has received the status of an Olympic Site, which is the best guarantee for all these plans to be fulfilled.
In March 2009, the Dutch company Netherlands Airport Consultants B.V (NACO, construction and future development adviser for “Vladivostok International Airport” Complex), should submit the Concept and Engineering Design for the new terminal. The competition to choose the contractor will finish in April. We should remind you that construction is planned to be completed by the end of 2011; and the new Air-Terminal Complex in Vladivostok – which has an area of 50,000 sq.m – is to start working by the APEC Summit 2012.
At the same time it became known that the St. Petersburg Pulkovo Airport Reconstruction Project would have a chance at a quick completion. Formally, the State is not participating in its financing but Vnesheconombank, the European Reconstruction and Development Bank and the IFC have promised to give about 25 billion roubles to the contract winner from a number of private consortia. This is more than half the minimum investment of 40.2 billion roubles required.
The winner of the competition will receive the airport concession for 30 years, with an opportunity to prolong the contract. In exchange, the winner will take up an obligation to invest 40.2 billion roubles in the development of Pulkovo. After pre-qualifying selection, seven participants were admitted to the competition. Among them two foreign airport operators (GMR Infrastructure from India and TAV Airport Holding from Turkey) and five consortia, which include Russian companies (“The Base Element” with Singapore’s Changi Airports (OOO “Neva Airport”), VTB with Frankfurt Airport operator Fraport (OOO “Financial & Industrial Company “Forvater”), Managing Company “Leader” with Vienna Airport Group (OAO “Petroport Concessi”), “Renova” and Hochtief (OOO “The International Airport of St. Petersburg”), and also Macquarie Renaissance (OOO “Neva Sky”).
By the beginning of 2009, “Sheremetyevo” (Moscow) had overcome the negative consequences connected with Lufthansa’s departure, with other carriers picking up the lost passenger traffic. The main investment project of this company in 2009 is Terminal E (or 2А), which will link the second and third terminals and also the railway station. Two years have been assigned for the construction and commissioning of this site. Construction of the terminal is now in its final stage; double-glazed windows have already been installed; electricity and heating provided; the ventilation system is almost finished; inner interior walls have been built and the ceilings are ready, etc. The project cost is $240 million, rising to $280 million when the infrastructure costs have been added. $220 million of this amount is covered by the 12-year credit line, which was opened by Sheremetyevo by Sberbank and Nordbank. Construction will be finished by the end of 2009 and commissioning will take place at the beginning of 2010.
The second large reconstruction project “Sheremetyevo” was completed at the beginning of this year and the railway link to Moscow put into operation. Now the airport and OAO RZD are working together to improve service quality. The project was initiated by International Sheremetyevo Airport and realised on the principle of design financing. “Sheremetyevo” made an initial capital investment and, after railway traffic started, its share in “Aeroexpress train” was gradually reduced to 0%.

Regions Are Not Lagging Behind

There is positive news coming from regional airports too. In March 2009, Kazan continued the realisation of its airport’s approved technical development plan from 2007 to 2010, by updating its special equipment. In summer 2009, the construction of a hangar-terminal complex with a separate parking area for business aircraft and a business-class passenger service terminal began at “Tolmachevo”.
Kirill Shubin, the General Director of the Ekaterinburg airport “Koltsovo” says that this airport is one of several Russian aviation enterprises that are continuing the successful realisation of development projects in crisis conditions, in spite of a drastic fall in passenger traffic. This was possible due to public-private partnerships. Mr Shubin declared that additional financing of 2.261 billion roubles was expected soon; private business would invest 785 million and the State would provide 1.476 billion roubles.
In August 2008, the Scientific Research Institute “RF Aviaprom” started work on the “Big Savino” Airport Development Plan in Perm, which German experts predict will see 5 million passengers a year pass through in 20 years’ time. Also, at the end of January 2009, the Federal State Unitary Enterprise “Perm Airlines” and “Avialeasing” Company, supported by the Permsky Krai Government, agreed to sign an agreement creating a service centre for civilian aircraft maintenance in Perm, within the project of leasing 24 Sukhoi Superjet 100s. This agreement will create the necessary infrastructure at the airport Big Savino to maintain new local planes in operational condition.
During Igor Levitin’s working visits to Russian regions, the situation with other regional airports became known. On February 17th, 2009, Mr Levitin held a meeting in Yuzhno-Sakhalinsk regarding upgrading the airport network on this island. This led to confirmation of the construction of a parking area for aircraft, taxiways, reconstruction of the intra-airfield roads, the patrol road and the “Khomutovo” airfield protection walls in Yuzhno-Sakhalinsk, all with the support of the Federal Budget. All these works are planned to be finished by 2011. Total financing will be 4.286 billion roubles.
The day before his visit to Sakhalin, Mr Levitin held a meeting on the development of Magadan Airport. During that meeting the question of reconstruction of Magadan Airport, which should be completed in 2014, was considered. 440 million roubles have been allocated this year for the reconstruction of the airport and, by 2015, this sum will be 4.5 billion roubles. As a result, the runway, which has a man-made surface, will be modernised; the water drainage system organised; aprons, taxiways and intra-airfield roads reconstructed; airfield protection walls installed and the signal lighting equipment system replaced. Reconstruction of the airport will give an opportunity to increase aviation traffic and remove the negative influences of infrastructural restrictions on the quality of aviation service. This will remove the threat of excluding Magadan Airport from the national airports network.
Regular flights from the cities of the Siberian Federal District and Moscow to Gorno-Altaisk Airport will begin in March 2010, Altai Republic Head Alexander Berdnikov, has declared. The Governor said that reconstruction of the airport is now taking place. The 200 million roubles provided from the Federal Budget 2009 will give the opportunity to finish lengthening the runway in order to enlarge the number of aircraft categories able to land there. It was reported that 1 billion roubles of Federal funds would be allocated for the reconstruction of the runway, aprons, signal lighting system and navigation equipment. According to the project, as a result of the reconstruction, the runway will be extended by 2.3 km and then this airport will be able to accept large-size aircraft.
By Alexey Strigin [~DETAIL_TEXT] =>

Ministry Corrects Plans

The following statement has been made by Igor Levitin, the Head of the RF Transport Ministry, in his Report “About the Main Results of the Transport Complex Social - Economic Development in 2008 and Problems for 2009”: “In air transport, we are mainly directing finances towards the development of airport ground infrastructure. The volume of financing (in 2008) was 23 billion roubles, 18% more than last year”. Analytical materials to this report say: “Works on the reconstruction (and construction) of runways were completed in 2008 at the following eight airports: Astrakhan, Vnukovo, Tolmachevo, Koltsovo, Irkutsk, Mineralnye Vody, Penza and Vladikavkaz; signal lighting sytems were replaced at eight airports: Vnukovo, Gelendzik, Ufa, Cheboksary, Syktyvkar, Bratsk, Novokuznetsk and Mendeleevo; and Ground-Based Augmentation Systems (GBAS) were installed at the airports of Krasnoyarsk and Samara. Reconstruction of 11 airports, including Sochi, Vladivostok and Ekaterinburg is planned for 2009. In his other speeches earlier this year Igor Levitin also emphasised that the Transport Ministry’s priority is to realise “The Concept for The Russian Federation’s Airfields (Airports) Network Development to 2020 “.
Gennady Kurzenkov, the head of Rosaviation, has expanded on the situation at Russian airports. He noted in his report that now only 62% of airfields have a runway with a man-made surface, while other airfields have only soil runways. 70% of runways with a man-made surface were created more than 20 years ago and only 24% of them have been reconstructed in the past 10 years. 12% of runways with a man-made surface need reconstruction urgently and 18% of runways with a soil surface need a major overhaul. Only 65% of airfields are equipped with signal lighting systems.
More than 90% of airports are equipped with devices that have run 85% of their service life and in fact should be written off. The head of Rosaviation considers that insufficient funding of airfield maintenance and development is the main cause of such a situation. He said that The Federal Target Program “Modernisation of Transport System in Russia (from 2002 to 2010)” was amended in 2008. Accordingly, 11 airfields are to be upgraded in 2009 and “The Civil Aircraft” sub-program assumes reconstruction of 107 runways from 2010 to 2015.

A Glance into 2009 and a Little Further

The largest working airports have not given up their plans and the main Russian strategic projects (Sochi and Vladivostok) have not been abandoned.
In the middle of March the State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and OAO “International Airport of Sochi” signed an agreement on opening a 5.4 billion rouble line of credit for a 10-years period. Also, according to the Russian Federation Government Order “On the Olympic Sites Construction Program and the Development of Sochi City as a Mountain and Climatic Resort”, the Sochi reconstruction project has received the status of an Olympic Site, which is the best guarantee for all these plans to be fulfilled.
In March 2009, the Dutch company Netherlands Airport Consultants B.V (NACO, construction and future development adviser for “Vladivostok International Airport” Complex), should submit the Concept and Engineering Design for the new terminal. The competition to choose the contractor will finish in April. We should remind you that construction is planned to be completed by the end of 2011; and the new Air-Terminal Complex in Vladivostok – which has an area of 50,000 sq.m – is to start working by the APEC Summit 2012.
At the same time it became known that the St. Petersburg Pulkovo Airport Reconstruction Project would have a chance at a quick completion. Formally, the State is not participating in its financing but Vnesheconombank, the European Reconstruction and Development Bank and the IFC have promised to give about 25 billion roubles to the contract winner from a number of private consortia. This is more than half the minimum investment of 40.2 billion roubles required.
The winner of the competition will receive the airport concession for 30 years, with an opportunity to prolong the contract. In exchange, the winner will take up an obligation to invest 40.2 billion roubles in the development of Pulkovo. After pre-qualifying selection, seven participants were admitted to the competition. Among them two foreign airport operators (GMR Infrastructure from India and TAV Airport Holding from Turkey) and five consortia, which include Russian companies (“The Base Element” with Singapore’s Changi Airports (OOO “Neva Airport”), VTB with Frankfurt Airport operator Fraport (OOO “Financial & Industrial Company “Forvater”), Managing Company “Leader” with Vienna Airport Group (OAO “Petroport Concessi”), “Renova” and Hochtief (OOO “The International Airport of St. Petersburg”), and also Macquarie Renaissance (OOO “Neva Sky”).
By the beginning of 2009, “Sheremetyevo” (Moscow) had overcome the negative consequences connected with Lufthansa’s departure, with other carriers picking up the lost passenger traffic. The main investment project of this company in 2009 is Terminal E (or 2А), which will link the second and third terminals and also the railway station. Two years have been assigned for the construction and commissioning of this site. Construction of the terminal is now in its final stage; double-glazed windows have already been installed; electricity and heating provided; the ventilation system is almost finished; inner interior walls have been built and the ceilings are ready, etc. The project cost is $240 million, rising to $280 million when the infrastructure costs have been added. $220 million of this amount is covered by the 12-year credit line, which was opened by Sheremetyevo by Sberbank and Nordbank. Construction will be finished by the end of 2009 and commissioning will take place at the beginning of 2010.
The second large reconstruction project “Sheremetyevo” was completed at the beginning of this year and the railway link to Moscow put into operation. Now the airport and OAO RZD are working together to improve service quality. The project was initiated by International Sheremetyevo Airport and realised on the principle of design financing. “Sheremetyevo” made an initial capital investment and, after railway traffic started, its share in “Aeroexpress train” was gradually reduced to 0%.

Regions Are Not Lagging Behind

There is positive news coming from regional airports too. In March 2009, Kazan continued the realisation of its airport’s approved technical development plan from 2007 to 2010, by updating its special equipment. In summer 2009, the construction of a hangar-terminal complex with a separate parking area for business aircraft and a business-class passenger service terminal began at “Tolmachevo”.
Kirill Shubin, the General Director of the Ekaterinburg airport “Koltsovo” says that this airport is one of several Russian aviation enterprises that are continuing the successful realisation of development projects in crisis conditions, in spite of a drastic fall in passenger traffic. This was possible due to public-private partnerships. Mr Shubin declared that additional financing of 2.261 billion roubles was expected soon; private business would invest 785 million and the State would provide 1.476 billion roubles.
In August 2008, the Scientific Research Institute “RF Aviaprom” started work on the “Big Savino” Airport Development Plan in Perm, which German experts predict will see 5 million passengers a year pass through in 20 years’ time. Also, at the end of January 2009, the Federal State Unitary Enterprise “Perm Airlines” and “Avialeasing” Company, supported by the Permsky Krai Government, agreed to sign an agreement creating a service centre for civilian aircraft maintenance in Perm, within the project of leasing 24 Sukhoi Superjet 100s. This agreement will create the necessary infrastructure at the airport Big Savino to maintain new local planes in operational condition.
During Igor Levitin’s working visits to Russian regions, the situation with other regional airports became known. On February 17th, 2009, Mr Levitin held a meeting in Yuzhno-Sakhalinsk regarding upgrading the airport network on this island. This led to confirmation of the construction of a parking area for aircraft, taxiways, reconstruction of the intra-airfield roads, the patrol road and the “Khomutovo” airfield protection walls in Yuzhno-Sakhalinsk, all with the support of the Federal Budget. All these works are planned to be finished by 2011. Total financing will be 4.286 billion roubles.
The day before his visit to Sakhalin, Mr Levitin held a meeting on the development of Magadan Airport. During that meeting the question of reconstruction of Magadan Airport, which should be completed in 2014, was considered. 440 million roubles have been allocated this year for the reconstruction of the airport and, by 2015, this sum will be 4.5 billion roubles. As a result, the runway, which has a man-made surface, will be modernised; the water drainage system organised; aprons, taxiways and intra-airfield roads reconstructed; airfield protection walls installed and the signal lighting equipment system replaced. Reconstruction of the airport will give an opportunity to increase aviation traffic and remove the negative influences of infrastructural restrictions on the quality of aviation service. This will remove the threat of excluding Magadan Airport from the national airports network.
Regular flights from the cities of the Siberian Federal District and Moscow to Gorno-Altaisk Airport will begin in March 2010, Altai Republic Head Alexander Berdnikov, has declared. The Governor said that reconstruction of the airport is now taking place. The 200 million roubles provided from the Federal Budget 2009 will give the opportunity to finish lengthening the runway in order to enlarge the number of aircraft categories able to land there. It was reported that 1 billion roubles of Federal funds would be allocated for the reconstruction of the runway, aprons, signal lighting system and navigation equipment. According to the project, as a result of the reconstruction, the runway will be extended by 2.3 km and then this airport will be able to accept large-size aircraft.
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РЖД-Партнер

Posture Towards New Circumstances

Six months ago Russian road hauliers had nothing to complain about – the problems of their competitors in the Ukraine and Byelorussia as well as the crisis in Europe allowed them to hope for the best. Today, however, the volume of freight to be carried is falling and a lot of Russian companies have to reduce expenses by selling their vehicle fleet and reducing staff numbers.
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Tax on Profitability

The profitability margin of international road transport services provided by Russian carriers is rather small. Analysis of the accounting reports of the RF road transport companies specialising in international transportation shows that their profitability has remained the same in the past two years and did not exceed 5-10%. However, the level of charter rates and cargo transportation volumes reduced recently because of the economic crisis. According to the Russian Federal Statistics Service (Rosstat), more than half of road transport companies in the country are unprofitable. Antonina Kamchatova, chief editor of “International Road Transportation” magazine, considers that the main reasons for the low profitability of Russian international road hauliers are the rapid growth of exploitation expenses and tough competition in the international services market. The major competitors to Russian companies are from Byelorussia, Ukraine, Poland, Lithuania, Latvia etc. Since supply in the domestic market in these countries exceeds demand, the transport companies have started to target the sector in which mainly road hauliers from the RF used to operate.
According to ASMAP, the Association of International Road Transporters, the share of expenditure on fuel amounts to 40% of the prime cost of transportation. Also, road charges in some foreign states increased because, for example, some countries started to charge according to distance run instead of time taken. Expenditure on insurance, visas, vehicle parks, idling at border crossings etc. also grew. The existing order of auto transport enterprises taxation is also being debated now. In fact, vehicles are subject to dual taxation – property and transport. “Considering the right of the Russian Federation’s subjects to increase or reduce five-fold the transport tax basic rates, in different Russian regions the rates of transport tax on heavy haulages amounts to 85 roubles for 1 horsepower,” says Ms Kamchatova. “The sum of the transport tax, calculated using the maximum rate, on a vehicle with 400hp engine is RUR 34,000 per annum (approximately USD 1,000), which is a rather large sum in comparison with those in European states,” she says.

Disappointed Expectations

The structure of foreign trade road transport turnover has been stable in recent years. The largest trade partner of Russia is the European Union, whose share amounts to 35%. This figure is reached due to the goods turnover with Finland and Germany (these states provide more than 90% of export dispatches by road haulage and 70% of import ones). Traditionally, road transport provides 20% of the RF’s foreign trade with neighbour states. According to the transportation volume, two Russian regions – Central and the North-West – are the leaders in foreign trade transportation volume: their share is 80%.
In the first half of 2008, the major sectors in the Russian international transportation market were growing. At the end of the third quarter, transportation volume fell rapidly, which negatively influenced the position of Russian road hauliers. A lot of them had to give up providing international services, which impacted the timeliness of leasing payments, so some companies started to give back the leased vehicles. Road carriers had to optimise their activities by reducing expenditures – giving up investment projects, cutting employees’ salaries and increasing vehicle mileage between maintenance services, etc.
The consequences of the financial crisis became especially vivid in the fourth quarter, when the demand for manufactured products started to fall, taking domestic and international road transportation demand with it. In Q4 of 2008, international freight transportation by road haulage reduced by 17.3% year-on-year and the total volume of transportation provided by Russian carriers decreased by 18%. In the federal regions of the Russian Federation, the reduction was between 25% and 30%. In 2008, the volume of international freight transportation by road haulage fell by 2.5% year-on-year to 35.7 million tons. It is worth mentioning that exports fell by 18% (2.1 million tons), while imports rose by 5% (1.2 million tons). The reduction of export transportation was caused by a decrease in timber transportation of 1.4 million tons (25% of the total volume), metals (-20.8%) and mineral fertilisers (-33.8%).
According to ASMAP, in 2008 the major destinations for transporting goods were: Finland (22.5%), the Republic of Belarus (13.8%), Lithuania (9.5%), Poland (8.6%), Ukraine (8.3%). Export freight transportation in the following directions fell: China (40%), the Baltic states (35%), Germany (30%), Italy (26%), Poland (12%), the Republic of Belarus (10%)…

What Does 2009 Hold in Store for Us?

According to the logistics department of Sovtransavto company, a year-on-year decrease in transportation volume amounted to 5-7% in January 2009. There is hardly any product where the transportation volume has not reduced; the crisis has especially impacted transportation of construction materials, equipment and home appliances. The companies specialising in transportation inside Russia have suffered most of all. According to Alexander Kotov, Chairman of the Inter-regional Professional Union of Professional Drivers, the crisis caused an 80% decrease in cargo transportation volume by road haulage and small transport companies and individual entrepreneurs servicing trading networks and specialising in fruit and vegetable transportation suffered most of all.
“Where smaller players used to earn a living from transporting these cargoes, nowadays they do not have such an opportunity,” says Mr Kotov. “Owners of a small park of lorries will hardly be able to survive without work for a long time, so they will have to leave the market… And it is going on right now,” he says. Specialists at the union say that nobody has exact statistics on the reduction – neither the transport inspectorate, nor tax authorities. The reason for it is that illegal payments in cash were used before the crisis. In addition, there are mass job cuts of drivers as well as mechanics; whole teams, formed over many years, are being destroyed. Large businesses will also face problems.
However, the players in this business sector had problems before the crisis started. Experts think that Russia loses millions of dollars because of the import of road transport services. Last year, 60% of cargo transported by road on the Russia – Europe route was delivered by foreign road hauliers – Ukrainian, Byelorussian, and Baltic ones. The simple reason for this is the 20% VAT paid by Russian road transporters, but not foreign ones, which makes Russian companies less competitive.
The crisis has also sparked another trend – acute competition between different transport modes in the international transportation sector. Now the state is taking action to support the railway, thus making for a re-orientation of freight flows from other transport modes to rail.

viewpoint

Andrey GolubevAndrey Golubev,
Head of Information Systems and Technical Policy Department, ASMAP:

– Transportation by road haulage is not included on the list of natural monopoly subjects’ activities, which is why there is no legal basis for state regulation of tariffs on road transportation, including international ones. There are similar conditions on the territory of other states providing some of Russia’s foreign trade turnover. That is why the market sets its own rules in the international transportation sphere, and the parties agree on the transportation cost, every time taking into account a number of different conditions.
There are a number of factors influencing the situation on some directions. Most important are the volume of freight flows which can be carried by vehicles and their regularity, terms of transportation (urgency, the required type of rolling stock, payment procedure, visa requirements, country’s geographical position, etc.), the level of competition, and competitiveness of a specific international Russian road haulier.

 Antonina KamchatovaAntonina Kamchatova,
Chief Editor of “International Road Transportation” magazine:

– Recently, there has appeared a tendency to increase transport tax rates significantly in the Russian Federation. Their growth exceeds the level of inflation in the country. Frequent increases in the tax rates for large-capacity vehicles do not coincide with the financial abilities of most enterprises providing international road transportation. In our opinion, transport tax rates should be differentiated according to the environmental credentials of the vehicles, which would stimulate the companies to renew their parks, thus improving the environmental situation in the country. There is acute competition with foreign transport companies. The competitiveness of Russian companies could increase if the prime cost of transportation became lower. The state should take measures to solve the most important problems and work out a long-term state policy targeted at improving the competitiveness of Russian international road hauliers, increasing their financial resources and destroying other barriers hindering efficient activity. 

[~DETAIL_TEXT] =>

Tax on Profitability

The profitability margin of international road transport services provided by Russian carriers is rather small. Analysis of the accounting reports of the RF road transport companies specialising in international transportation shows that their profitability has remained the same in the past two years and did not exceed 5-10%. However, the level of charter rates and cargo transportation volumes reduced recently because of the economic crisis. According to the Russian Federal Statistics Service (Rosstat), more than half of road transport companies in the country are unprofitable. Antonina Kamchatova, chief editor of “International Road Transportation” magazine, considers that the main reasons for the low profitability of Russian international road hauliers are the rapid growth of exploitation expenses and tough competition in the international services market. The major competitors to Russian companies are from Byelorussia, Ukraine, Poland, Lithuania, Latvia etc. Since supply in the domestic market in these countries exceeds demand, the transport companies have started to target the sector in which mainly road hauliers from the RF used to operate.
According to ASMAP, the Association of International Road Transporters, the share of expenditure on fuel amounts to 40% of the prime cost of transportation. Also, road charges in some foreign states increased because, for example, some countries started to charge according to distance run instead of time taken. Expenditure on insurance, visas, vehicle parks, idling at border crossings etc. also grew. The existing order of auto transport enterprises taxation is also being debated now. In fact, vehicles are subject to dual taxation – property and transport. “Considering the right of the Russian Federation’s subjects to increase or reduce five-fold the transport tax basic rates, in different Russian regions the rates of transport tax on heavy haulages amounts to 85 roubles for 1 horsepower,” says Ms Kamchatova. “The sum of the transport tax, calculated using the maximum rate, on a vehicle with 400hp engine is RUR 34,000 per annum (approximately USD 1,000), which is a rather large sum in comparison with those in European states,” she says.

Disappointed Expectations

The structure of foreign trade road transport turnover has been stable in recent years. The largest trade partner of Russia is the European Union, whose share amounts to 35%. This figure is reached due to the goods turnover with Finland and Germany (these states provide more than 90% of export dispatches by road haulage and 70% of import ones). Traditionally, road transport provides 20% of the RF’s foreign trade with neighbour states. According to the transportation volume, two Russian regions – Central and the North-West – are the leaders in foreign trade transportation volume: their share is 80%.
In the first half of 2008, the major sectors in the Russian international transportation market were growing. At the end of the third quarter, transportation volume fell rapidly, which negatively influenced the position of Russian road hauliers. A lot of them had to give up providing international services, which impacted the timeliness of leasing payments, so some companies started to give back the leased vehicles. Road carriers had to optimise their activities by reducing expenditures – giving up investment projects, cutting employees’ salaries and increasing vehicle mileage between maintenance services, etc.
The consequences of the financial crisis became especially vivid in the fourth quarter, when the demand for manufactured products started to fall, taking domestic and international road transportation demand with it. In Q4 of 2008, international freight transportation by road haulage reduced by 17.3% year-on-year and the total volume of transportation provided by Russian carriers decreased by 18%. In the federal regions of the Russian Federation, the reduction was between 25% and 30%. In 2008, the volume of international freight transportation by road haulage fell by 2.5% year-on-year to 35.7 million tons. It is worth mentioning that exports fell by 18% (2.1 million tons), while imports rose by 5% (1.2 million tons). The reduction of export transportation was caused by a decrease in timber transportation of 1.4 million tons (25% of the total volume), metals (-20.8%) and mineral fertilisers (-33.8%).
According to ASMAP, in 2008 the major destinations for transporting goods were: Finland (22.5%), the Republic of Belarus (13.8%), Lithuania (9.5%), Poland (8.6%), Ukraine (8.3%). Export freight transportation in the following directions fell: China (40%), the Baltic states (35%), Germany (30%), Italy (26%), Poland (12%), the Republic of Belarus (10%)…

What Does 2009 Hold in Store for Us?

According to the logistics department of Sovtransavto company, a year-on-year decrease in transportation volume amounted to 5-7% in January 2009. There is hardly any product where the transportation volume has not reduced; the crisis has especially impacted transportation of construction materials, equipment and home appliances. The companies specialising in transportation inside Russia have suffered most of all. According to Alexander Kotov, Chairman of the Inter-regional Professional Union of Professional Drivers, the crisis caused an 80% decrease in cargo transportation volume by road haulage and small transport companies and individual entrepreneurs servicing trading networks and specialising in fruit and vegetable transportation suffered most of all.
“Where smaller players used to earn a living from transporting these cargoes, nowadays they do not have such an opportunity,” says Mr Kotov. “Owners of a small park of lorries will hardly be able to survive without work for a long time, so they will have to leave the market… And it is going on right now,” he says. Specialists at the union say that nobody has exact statistics on the reduction – neither the transport inspectorate, nor tax authorities. The reason for it is that illegal payments in cash were used before the crisis. In addition, there are mass job cuts of drivers as well as mechanics; whole teams, formed over many years, are being destroyed. Large businesses will also face problems.
However, the players in this business sector had problems before the crisis started. Experts think that Russia loses millions of dollars because of the import of road transport services. Last year, 60% of cargo transported by road on the Russia – Europe route was delivered by foreign road hauliers – Ukrainian, Byelorussian, and Baltic ones. The simple reason for this is the 20% VAT paid by Russian road transporters, but not foreign ones, which makes Russian companies less competitive.
The crisis has also sparked another trend – acute competition between different transport modes in the international transportation sector. Now the state is taking action to support the railway, thus making for a re-orientation of freight flows from other transport modes to rail.

viewpoint

Andrey GolubevAndrey Golubev,
Head of Information Systems and Technical Policy Department, ASMAP:

– Transportation by road haulage is not included on the list of natural monopoly subjects’ activities, which is why there is no legal basis for state regulation of tariffs on road transportation, including international ones. There are similar conditions on the territory of other states providing some of Russia’s foreign trade turnover. That is why the market sets its own rules in the international transportation sphere, and the parties agree on the transportation cost, every time taking into account a number of different conditions.
There are a number of factors influencing the situation on some directions. Most important are the volume of freight flows which can be carried by vehicles and their regularity, terms of transportation (urgency, the required type of rolling stock, payment procedure, visa requirements, country’s geographical position, etc.), the level of competition, and competitiveness of a specific international Russian road haulier.

 Antonina KamchatovaAntonina Kamchatova,
Chief Editor of “International Road Transportation” magazine:

– Recently, there has appeared a tendency to increase transport tax rates significantly in the Russian Federation. Their growth exceeds the level of inflation in the country. Frequent increases in the tax rates for large-capacity vehicles do not coincide with the financial abilities of most enterprises providing international road transportation. In our opinion, transport tax rates should be differentiated according to the environmental credentials of the vehicles, which would stimulate the companies to renew their parks, thus improving the environmental situation in the country. There is acute competition with foreign transport companies. The competitiveness of Russian companies could increase if the prime cost of transportation became lower. The state should take measures to solve the most important problems and work out a long-term state policy targeted at improving the competitiveness of Russian international road hauliers, increasing their financial resources and destroying other barriers hindering efficient activity. 

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Tax on Profitability

The profitability margin of international road transport services provided by Russian carriers is rather small. Analysis of the accounting reports of the RF road transport companies specialising in international transportation shows that their profitability has remained the same in the past two years and did not exceed 5-10%. However, the level of charter rates and cargo transportation volumes reduced recently because of the economic crisis. According to the Russian Federal Statistics Service (Rosstat), more than half of road transport companies in the country are unprofitable. Antonina Kamchatova, chief editor of “International Road Transportation” magazine, considers that the main reasons for the low profitability of Russian international road hauliers are the rapid growth of exploitation expenses and tough competition in the international services market. The major competitors to Russian companies are from Byelorussia, Ukraine, Poland, Lithuania, Latvia etc. Since supply in the domestic market in these countries exceeds demand, the transport companies have started to target the sector in which mainly road hauliers from the RF used to operate.
According to ASMAP, the Association of International Road Transporters, the share of expenditure on fuel amounts to 40% of the prime cost of transportation. Also, road charges in some foreign states increased because, for example, some countries started to charge according to distance run instead of time taken. Expenditure on insurance, visas, vehicle parks, idling at border crossings etc. also grew. The existing order of auto transport enterprises taxation is also being debated now. In fact, vehicles are subject to dual taxation – property and transport. “Considering the right of the Russian Federation’s subjects to increase or reduce five-fold the transport tax basic rates, in different Russian regions the rates of transport tax on heavy haulages amounts to 85 roubles for 1 horsepower,” says Ms Kamchatova. “The sum of the transport tax, calculated using the maximum rate, on a vehicle with 400hp engine is RUR 34,000 per annum (approximately USD 1,000), which is a rather large sum in comparison with those in European states,” she says.

Disappointed Expectations

The structure of foreign trade road transport turnover has been stable in recent years. The largest trade partner of Russia is the European Union, whose share amounts to 35%. This figure is reached due to the goods turnover with Finland and Germany (these states provide more than 90% of export dispatches by road haulage and 70% of import ones). Traditionally, road transport provides 20% of the RF’s foreign trade with neighbour states. According to the transportation volume, two Russian regions – Central and the North-West – are the leaders in foreign trade transportation volume: their share is 80%.
In the first half of 2008, the major sectors in the Russian international transportation market were growing. At the end of the third quarter, transportation volume fell rapidly, which negatively influenced the position of Russian road hauliers. A lot of them had to give up providing international services, which impacted the timeliness of leasing payments, so some companies started to give back the leased vehicles. Road carriers had to optimise their activities by reducing expenditures – giving up investment projects, cutting employees’ salaries and increasing vehicle mileage between maintenance services, etc.
The consequences of the financial crisis became especially vivid in the fourth quarter, when the demand for manufactured products started to fall, taking domestic and international road transportation demand with it. In Q4 of 2008, international freight transportation by road haulage reduced by 17.3% year-on-year and the total volume of transportation provided by Russian carriers decreased by 18%. In the federal regions of the Russian Federation, the reduction was between 25% and 30%. In 2008, the volume of international freight transportation by road haulage fell by 2.5% year-on-year to 35.7 million tons. It is worth mentioning that exports fell by 18% (2.1 million tons), while imports rose by 5% (1.2 million tons). The reduction of export transportation was caused by a decrease in timber transportation of 1.4 million tons (25% of the total volume), metals (-20.8%) and mineral fertilisers (-33.8%).
According to ASMAP, in 2008 the major destinations for transporting goods were: Finland (22.5%), the Republic of Belarus (13.8%), Lithuania (9.5%), Poland (8.6%), Ukraine (8.3%). Export freight transportation in the following directions fell: China (40%), the Baltic states (35%), Germany (30%), Italy (26%), Poland (12%), the Republic of Belarus (10%)…

What Does 2009 Hold in Store for Us?

According to the logistics department of Sovtransavto company, a year-on-year decrease in transportation volume amounted to 5-7% in January 2009. There is hardly any product where the transportation volume has not reduced; the crisis has especially impacted transportation of construction materials, equipment and home appliances. The companies specialising in transportation inside Russia have suffered most of all. According to Alexander Kotov, Chairman of the Inter-regional Professional Union of Professional Drivers, the crisis caused an 80% decrease in cargo transportation volume by road haulage and small transport companies and individual entrepreneurs servicing trading networks and specialising in fruit and vegetable transportation suffered most of all.
“Where smaller players used to earn a living from transporting these cargoes, nowadays they do not have such an opportunity,” says Mr Kotov. “Owners of a small park of lorries will hardly be able to survive without work for a long time, so they will have to leave the market… And it is going on right now,” he says. Specialists at the union say that nobody has exact statistics on the reduction – neither the transport inspectorate, nor tax authorities. The reason for it is that illegal payments in cash were used before the crisis. In addition, there are mass job cuts of drivers as well as mechanics; whole teams, formed over many years, are being destroyed. Large businesses will also face problems.
However, the players in this business sector had problems before the crisis started. Experts think that Russia loses millions of dollars because of the import of road transport services. Last year, 60% of cargo transported by road on the Russia – Europe route was delivered by foreign road hauliers – Ukrainian, Byelorussian, and Baltic ones. The simple reason for this is the 20% VAT paid by Russian road transporters, but not foreign ones, which makes Russian companies less competitive.
The crisis has also sparked another trend – acute competition between different transport modes in the international transportation sector. Now the state is taking action to support the railway, thus making for a re-orientation of freight flows from other transport modes to rail.

viewpoint

Andrey GolubevAndrey Golubev,
Head of Information Systems and Technical Policy Department, ASMAP:

– Transportation by road haulage is not included on the list of natural monopoly subjects’ activities, which is why there is no legal basis for state regulation of tariffs on road transportation, including international ones. There are similar conditions on the territory of other states providing some of Russia’s foreign trade turnover. That is why the market sets its own rules in the international transportation sphere, and the parties agree on the transportation cost, every time taking into account a number of different conditions.
There are a number of factors influencing the situation on some directions. Most important are the volume of freight flows which can be carried by vehicles and their regularity, terms of transportation (urgency, the required type of rolling stock, payment procedure, visa requirements, country’s geographical position, etc.), the level of competition, and competitiveness of a specific international Russian road haulier.

 Antonina KamchatovaAntonina Kamchatova,
Chief Editor of “International Road Transportation” magazine:

– Recently, there has appeared a tendency to increase transport tax rates significantly in the Russian Federation. Their growth exceeds the level of inflation in the country. Frequent increases in the tax rates for large-capacity vehicles do not coincide with the financial abilities of most enterprises providing international road transportation. In our opinion, transport tax rates should be differentiated according to the environmental credentials of the vehicles, which would stimulate the companies to renew their parks, thus improving the environmental situation in the country. There is acute competition with foreign transport companies. The competitiveness of Russian companies could increase if the prime cost of transportation became lower. The state should take measures to solve the most important problems and work out a long-term state policy targeted at improving the competitiveness of Russian international road hauliers, increasing their financial resources and destroying other barriers hindering efficient activity. 

[~DETAIL_TEXT] =>

Tax on Profitability

The profitability margin of international road transport services provided by Russian carriers is rather small. Analysis of the accounting reports of the RF road transport companies specialising in international transportation shows that their profitability has remained the same in the past two years and did not exceed 5-10%. However, the level of charter rates and cargo transportation volumes reduced recently because of the economic crisis. According to the Russian Federal Statistics Service (Rosstat), more than half of road transport companies in the country are unprofitable. Antonina Kamchatova, chief editor of “International Road Transportation” magazine, considers that the main reasons for the low profitability of Russian international road hauliers are the rapid growth of exploitation expenses and tough competition in the international services market. The major competitors to Russian companies are from Byelorussia, Ukraine, Poland, Lithuania, Latvia etc. Since supply in the domestic market in these countries exceeds demand, the transport companies have started to target the sector in which mainly road hauliers from the RF used to operate.
According to ASMAP, the Association of International Road Transporters, the share of expenditure on fuel amounts to 40% of the prime cost of transportation. Also, road charges in some foreign states increased because, for example, some countries started to charge according to distance run instead of time taken. Expenditure on insurance, visas, vehicle parks, idling at border crossings etc. also grew. The existing order of auto transport enterprises taxation is also being debated now. In fact, vehicles are subject to dual taxation – property and transport. “Considering the right of the Russian Federation’s subjects to increase or reduce five-fold the transport tax basic rates, in different Russian regions the rates of transport tax on heavy haulages amounts to 85 roubles for 1 horsepower,” says Ms Kamchatova. “The sum of the transport tax, calculated using the maximum rate, on a vehicle with 400hp engine is RUR 34,000 per annum (approximately USD 1,000), which is a rather large sum in comparison with those in European states,” she says.

Disappointed Expectations

The structure of foreign trade road transport turnover has been stable in recent years. The largest trade partner of Russia is the European Union, whose share amounts to 35%. This figure is reached due to the goods turnover with Finland and Germany (these states provide more than 90% of export dispatches by road haulage and 70% of import ones). Traditionally, road transport provides 20% of the RF’s foreign trade with neighbour states. According to the transportation volume, two Russian regions – Central and the North-West – are the leaders in foreign trade transportation volume: their share is 80%.
In the first half of 2008, the major sectors in the Russian international transportation market were growing. At the end of the third quarter, transportation volume fell rapidly, which negatively influenced the position of Russian road hauliers. A lot of them had to give up providing international services, which impacted the timeliness of leasing payments, so some companies started to give back the leased vehicles. Road carriers had to optimise their activities by reducing expenditures – giving up investment projects, cutting employees’ salaries and increasing vehicle mileage between maintenance services, etc.
The consequences of the financial crisis became especially vivid in the fourth quarter, when the demand for manufactured products started to fall, taking domestic and international road transportation demand with it. In Q4 of 2008, international freight transportation by road haulage reduced by 17.3% year-on-year and the total volume of transportation provided by Russian carriers decreased by 18%. In the federal regions of the Russian Federation, the reduction was between 25% and 30%. In 2008, the volume of international freight transportation by road haulage fell by 2.5% year-on-year to 35.7 million tons. It is worth mentioning that exports fell by 18% (2.1 million tons), while imports rose by 5% (1.2 million tons). The reduction of export transportation was caused by a decrease in timber transportation of 1.4 million tons (25% of the total volume), metals (-20.8%) and mineral fertilisers (-33.8%).
According to ASMAP, in 2008 the major destinations for transporting goods were: Finland (22.5%), the Republic of Belarus (13.8%), Lithuania (9.5%), Poland (8.6%), Ukraine (8.3%). Export freight transportation in the following directions fell: China (40%), the Baltic states (35%), Germany (30%), Italy (26%), Poland (12%), the Republic of Belarus (10%)…

What Does 2009 Hold in Store for Us?

According to the logistics department of Sovtransavto company, a year-on-year decrease in transportation volume amounted to 5-7% in January 2009. There is hardly any product where the transportation volume has not reduced; the crisis has especially impacted transportation of construction materials, equipment and home appliances. The companies specialising in transportation inside Russia have suffered most of all. According to Alexander Kotov, Chairman of the Inter-regional Professional Union of Professional Drivers, the crisis caused an 80% decrease in cargo transportation volume by road haulage and small transport companies and individual entrepreneurs servicing trading networks and specialising in fruit and vegetable transportation suffered most of all.
“Where smaller players used to earn a living from transporting these cargoes, nowadays they do not have such an opportunity,” says Mr Kotov. “Owners of a small park of lorries will hardly be able to survive without work for a long time, so they will have to leave the market… And it is going on right now,” he says. Specialists at the union say that nobody has exact statistics on the reduction – neither the transport inspectorate, nor tax authorities. The reason for it is that illegal payments in cash were used before the crisis. In addition, there are mass job cuts of drivers as well as mechanics; whole teams, formed over many years, are being destroyed. Large businesses will also face problems.
However, the players in this business sector had problems before the crisis started. Experts think that Russia loses millions of dollars because of the import of road transport services. Last year, 60% of cargo transported by road on the Russia – Europe route was delivered by foreign road hauliers – Ukrainian, Byelorussian, and Baltic ones. The simple reason for this is the 20% VAT paid by Russian road transporters, but not foreign ones, which makes Russian companies less competitive.
The crisis has also sparked another trend – acute competition between different transport modes in the international transportation sector. Now the state is taking action to support the railway, thus making for a re-orientation of freight flows from other transport modes to rail.

viewpoint

Andrey GolubevAndrey Golubev,
Head of Information Systems and Technical Policy Department, ASMAP:

– Transportation by road haulage is not included on the list of natural monopoly subjects’ activities, which is why there is no legal basis for state regulation of tariffs on road transportation, including international ones. There are similar conditions on the territory of other states providing some of Russia’s foreign trade turnover. That is why the market sets its own rules in the international transportation sphere, and the parties agree on the transportation cost, every time taking into account a number of different conditions.
There are a number of factors influencing the situation on some directions. Most important are the volume of freight flows which can be carried by vehicles and their regularity, terms of transportation (urgency, the required type of rolling stock, payment procedure, visa requirements, country’s geographical position, etc.), the level of competition, and competitiveness of a specific international Russian road haulier.

 Antonina KamchatovaAntonina Kamchatova,
Chief Editor of “International Road Transportation” magazine:

– Recently, there has appeared a tendency to increase transport tax rates significantly in the Russian Federation. Their growth exceeds the level of inflation in the country. Frequent increases in the tax rates for large-capacity vehicles do not coincide with the financial abilities of most enterprises providing international road transportation. In our opinion, transport tax rates should be differentiated according to the environmental credentials of the vehicles, which would stimulate the companies to renew their parks, thus improving the environmental situation in the country. There is acute competition with foreign transport companies. The competitiveness of Russian companies could increase if the prime cost of transportation became lower. The state should take measures to solve the most important problems and work out a long-term state policy targeted at improving the competitiveness of Russian international road hauliers, increasing their financial resources and destroying other barriers hindering efficient activity. 

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РЖД-Партнер

Panorama. Transportation

A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days.
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Container train traverses Siberia in less than seven days

A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days.
A time-saving feature of the pilot train is guaranteed travel without breakdowns, thus dispensing with the usual regular technical inspection checks necessary over such a large distance. The rolling stock was made ready at the Technical Inspection Point at Nakhodka East. After arriving at the platform in Nahodka for loading, it proceeded to Vladivostok Commercial Sea Port and, following the technical inspection check (on February 21), left for Moscow, arriving at its destination in the evening of February 28.
The pilot train included an experimental wagon laboratory to test the train’s brakes. The data collected will help decide whether to introduce regular services on the route.

Lietuvos Gelezinkeliai Drops Transportation Volume by 30%

In January-February 2009, Lietuvos Gelezinkeliai (Lithuanian Railways) transported 6.6 million tons, 30.5% less in comparison with the same period last year.
The company saw international transportation drop by 40.2% to 4.5 million tons, while domestic transportation fell by 5.2% to 2.1 million tons.

Russian Ports Increased Throughput by 5.2% in January and February

According to the Association of Commercial Sea Ports, during the first two months of 2009, cargo trans-shipment volumes through Russian sea ports grew by 5.2% to 71.58 million tons in comparison with the same months last year. This included 25.63 million tons of dry cargo (-7.1%) and 45.95 million tons of liquid bulk (+13.6%).
North-West sea terminal operators handled 32.94 million tons of cargo (+0.7%), including 10.55 million tons of dry cargo (-17.5%) and 22.39 million tons of liquid bulk (+12.3%). The throughput in Southern ports was 27.39 million tons (+19.3%), which included 8.18 million tons (+27.9%) of dry cargo and 19.21 million tons of liquid bulk (+16%). In the Russian Far East 11.25 million tons of cargo were handled (-9.1%), including 6.90 million tons of dry cargo (-18%) and4.35 million tons of liquid bulk (+9.7%).
The reduction in dry cargo transshipment volumes was caused, first of all, by a decrease in container transportation of 33.7% (export by 28.7%, import by 44.1%, transit by 56.3%); and then in exports (wood cargoes by 49.9%, chemical mineral fertilisers by 46%, ferrous metals by 10%); and also in imports (bulk cargoes by 22.5%, bulk solids by 31.5% and general cargoes by 40.5%).

LDz Cargo: Optimistic Despite a Fall

LDz Cargo, a daughter company of Latvijas dzelzcels (Latvian Railway), carried 9.46 million tons of cargo in the first two months of 2009, 1.9% down in comparison with the same period last year.
Oil and oil products made the larger share of the total volume transported by the company – 4 million tons (a 2.9% increase year-on-year). Also, LDz Cargo carried 3.5 million tonnes of coal (+25.5%), and 434,000 tonnes of chemicals (+10.7%). Transportation volume of mineral fertilisers reduced significantly: from 955,000 tons in January-February 2008 to 484,000 tons in the first two months of 2009.
Ugis Magonis, the Chairman of the company’s Board, said that the company was optimistic about its activities in 2009. “The first months of the year were positive for the company, taking into account the fact that our freight transportation volume fell by 2% only, while that of neighbouring states reduced much more significantly. For example, there was a 30% decline in Russia and Lithuania and a 10% decline in Estonia,” he said.

Procedures on Russia’s accession to COTIF to be completed in late 2009

On February 26, Boris Lapidus, Senior Vice-President of Russian Railways, said that the procedures on Russia’s accession to COTIF would be completed in late 2009.
According to Mr Lapidus, the transportation community asked Russia’s Ministry of Transport to speed up Russia’s accession to COTIF (Convention concerning International Carriage by Rail) because it was one of the main obstacles hindering the growth of traffic on the rail-ferry link between Baltiysk and Sassnitz.
“The rail-ferry link can reach its planned volumes and attract new freight flows, after Russia joins COTIF,” said Boris Lapidus. Russia’s accession to COTIF should therefore increase significantly the volume of rail freight between Europe and the CIS countries through Kaliningrad’s transport hub.

No Tariffs Regulation for Ports?

Russian Federal Tariff Service (FTS) is discussing the scrapping of regulation of tariffs on loading and unloading works in some RF ports, stated Sergey Novikov, Head of the FTS. In his words, nowadays the Federal Tariff Service is developing amendments to the legislation, which will monitor the activity of monopolists in the ports after the deregulation and pave the way for regulation if necessary.
Meanwhile, Mr Novikov said that the FTS feels there is no need to deregulate prices for services provided by monopolists in all ports. He said that, nowadays, tariff rates on loading and unloading works in ports are at a maximum.
“In fact, any organisation may give a discount. The present-day norms have only one function: they protect the consumer limiting the maximum level of the cost of the service,” emphasised Mr Novikov. [~DETAIL_TEXT] =>

Container train traverses Siberia in less than seven days

A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days.
A time-saving feature of the pilot train is guaranteed travel without breakdowns, thus dispensing with the usual regular technical inspection checks necessary over such a large distance. The rolling stock was made ready at the Technical Inspection Point at Nakhodka East. After arriving at the platform in Nahodka for loading, it proceeded to Vladivostok Commercial Sea Port and, following the technical inspection check (on February 21), left for Moscow, arriving at its destination in the evening of February 28.
The pilot train included an experimental wagon laboratory to test the train’s brakes. The data collected will help decide whether to introduce regular services on the route.

Lietuvos Gelezinkeliai Drops Transportation Volume by 30%

In January-February 2009, Lietuvos Gelezinkeliai (Lithuanian Railways) transported 6.6 million tons, 30.5% less in comparison with the same period last year.
The company saw international transportation drop by 40.2% to 4.5 million tons, while domestic transportation fell by 5.2% to 2.1 million tons.

Russian Ports Increased Throughput by 5.2% in January and February

According to the Association of Commercial Sea Ports, during the first two months of 2009, cargo trans-shipment volumes through Russian sea ports grew by 5.2% to 71.58 million tons in comparison with the same months last year. This included 25.63 million tons of dry cargo (-7.1%) and 45.95 million tons of liquid bulk (+13.6%).
North-West sea terminal operators handled 32.94 million tons of cargo (+0.7%), including 10.55 million tons of dry cargo (-17.5%) and 22.39 million tons of liquid bulk (+12.3%). The throughput in Southern ports was 27.39 million tons (+19.3%), which included 8.18 million tons (+27.9%) of dry cargo and 19.21 million tons of liquid bulk (+16%). In the Russian Far East 11.25 million tons of cargo were handled (-9.1%), including 6.90 million tons of dry cargo (-18%) and4.35 million tons of liquid bulk (+9.7%).
The reduction in dry cargo transshipment volumes was caused, first of all, by a decrease in container transportation of 33.7% (export by 28.7%, import by 44.1%, transit by 56.3%); and then in exports (wood cargoes by 49.9%, chemical mineral fertilisers by 46%, ferrous metals by 10%); and also in imports (bulk cargoes by 22.5%, bulk solids by 31.5% and general cargoes by 40.5%).

LDz Cargo: Optimistic Despite a Fall

LDz Cargo, a daughter company of Latvijas dzelzcels (Latvian Railway), carried 9.46 million tons of cargo in the first two months of 2009, 1.9% down in comparison with the same period last year.
Oil and oil products made the larger share of the total volume transported by the company – 4 million tons (a 2.9% increase year-on-year). Also, LDz Cargo carried 3.5 million tonnes of coal (+25.5%), and 434,000 tonnes of chemicals (+10.7%). Transportation volume of mineral fertilisers reduced significantly: from 955,000 tons in January-February 2008 to 484,000 tons in the first two months of 2009.
Ugis Magonis, the Chairman of the company’s Board, said that the company was optimistic about its activities in 2009. “The first months of the year were positive for the company, taking into account the fact that our freight transportation volume fell by 2% only, while that of neighbouring states reduced much more significantly. For example, there was a 30% decline in Russia and Lithuania and a 10% decline in Estonia,” he said.

Procedures on Russia’s accession to COTIF to be completed in late 2009

On February 26, Boris Lapidus, Senior Vice-President of Russian Railways, said that the procedures on Russia’s accession to COTIF would be completed in late 2009.
According to Mr Lapidus, the transportation community asked Russia’s Ministry of Transport to speed up Russia’s accession to COTIF (Convention concerning International Carriage by Rail) because it was one of the main obstacles hindering the growth of traffic on the rail-ferry link between Baltiysk and Sassnitz.
“The rail-ferry link can reach its planned volumes and attract new freight flows, after Russia joins COTIF,” said Boris Lapidus. Russia’s accession to COTIF should therefore increase significantly the volume of rail freight between Europe and the CIS countries through Kaliningrad’s transport hub.

No Tariffs Regulation for Ports?

Russian Federal Tariff Service (FTS) is discussing the scrapping of regulation of tariffs on loading and unloading works in some RF ports, stated Sergey Novikov, Head of the FTS. In his words, nowadays the Federal Tariff Service is developing amendments to the legislation, which will monitor the activity of monopolists in the ports after the deregulation and pave the way for regulation if necessary.
Meanwhile, Mr Novikov said that the FTS feels there is no need to deregulate prices for services provided by monopolists in all ports. He said that, nowadays, tariff rates on loading and unloading works in ports are at a maximum.
“In fact, any organisation may give a discount. The present-day norms have only one function: they protect the consumer limiting the maximum level of the cost of the service,” emphasised Mr Novikov. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days. [~PREVIEW_TEXT] => A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days. 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Container train traverses Siberia in less than seven days

A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days.
A time-saving feature of the pilot train is guaranteed travel without breakdowns, thus dispensing with the usual regular technical inspection checks necessary over such a large distance. The rolling stock was made ready at the Technical Inspection Point at Nakhodka East. After arriving at the platform in Nahodka for loading, it proceeded to Vladivostok Commercial Sea Port and, following the technical inspection check (on February 21), left for Moscow, arriving at its destination in the evening of February 28.
The pilot train included an experimental wagon laboratory to test the train’s brakes. The data collected will help decide whether to introduce regular services on the route.

Lietuvos Gelezinkeliai Drops Transportation Volume by 30%

In January-February 2009, Lietuvos Gelezinkeliai (Lithuanian Railways) transported 6.6 million tons, 30.5% less in comparison with the same period last year.
The company saw international transportation drop by 40.2% to 4.5 million tons, while domestic transportation fell by 5.2% to 2.1 million tons.

Russian Ports Increased Throughput by 5.2% in January and February

According to the Association of Commercial Sea Ports, during the first two months of 2009, cargo trans-shipment volumes through Russian sea ports grew by 5.2% to 71.58 million tons in comparison with the same months last year. This included 25.63 million tons of dry cargo (-7.1%) and 45.95 million tons of liquid bulk (+13.6%).
North-West sea terminal operators handled 32.94 million tons of cargo (+0.7%), including 10.55 million tons of dry cargo (-17.5%) and 22.39 million tons of liquid bulk (+12.3%). The throughput in Southern ports was 27.39 million tons (+19.3%), which included 8.18 million tons (+27.9%) of dry cargo and 19.21 million tons of liquid bulk (+16%). In the Russian Far East 11.25 million tons of cargo were handled (-9.1%), including 6.90 million tons of dry cargo (-18%) and4.35 million tons of liquid bulk (+9.7%).
The reduction in dry cargo transshipment volumes was caused, first of all, by a decrease in container transportation of 33.7% (export by 28.7%, import by 44.1%, transit by 56.3%); and then in exports (wood cargoes by 49.9%, chemical mineral fertilisers by 46%, ferrous metals by 10%); and also in imports (bulk cargoes by 22.5%, bulk solids by 31.5% and general cargoes by 40.5%).

LDz Cargo: Optimistic Despite a Fall

LDz Cargo, a daughter company of Latvijas dzelzcels (Latvian Railway), carried 9.46 million tons of cargo in the first two months of 2009, 1.9% down in comparison with the same period last year.
Oil and oil products made the larger share of the total volume transported by the company – 4 million tons (a 2.9% increase year-on-year). Also, LDz Cargo carried 3.5 million tonnes of coal (+25.5%), and 434,000 tonnes of chemicals (+10.7%). Transportation volume of mineral fertilisers reduced significantly: from 955,000 tons in January-February 2008 to 484,000 tons in the first two months of 2009.
Ugis Magonis, the Chairman of the company’s Board, said that the company was optimistic about its activities in 2009. “The first months of the year were positive for the company, taking into account the fact that our freight transportation volume fell by 2% only, while that of neighbouring states reduced much more significantly. For example, there was a 30% decline in Russia and Lithuania and a 10% decline in Estonia,” he said.

Procedures on Russia’s accession to COTIF to be completed in late 2009

On February 26, Boris Lapidus, Senior Vice-President of Russian Railways, said that the procedures on Russia’s accession to COTIF would be completed in late 2009.
According to Mr Lapidus, the transportation community asked Russia’s Ministry of Transport to speed up Russia’s accession to COTIF (Convention concerning International Carriage by Rail) because it was one of the main obstacles hindering the growth of traffic on the rail-ferry link between Baltiysk and Sassnitz.
“The rail-ferry link can reach its planned volumes and attract new freight flows, after Russia joins COTIF,” said Boris Lapidus. Russia’s accession to COTIF should therefore increase significantly the volume of rail freight between Europe and the CIS countries through Kaliningrad’s transport hub.

No Tariffs Regulation for Ports?

Russian Federal Tariff Service (FTS) is discussing the scrapping of regulation of tariffs on loading and unloading works in some RF ports, stated Sergey Novikov, Head of the FTS. In his words, nowadays the Federal Tariff Service is developing amendments to the legislation, which will monitor the activity of monopolists in the ports after the deregulation and pave the way for regulation if necessary.
Meanwhile, Mr Novikov said that the FTS feels there is no need to deregulate prices for services provided by monopolists in all ports. He said that, nowadays, tariff rates on loading and unloading works in ports are at a maximum.
“In fact, any organisation may give a discount. The present-day norms have only one function: they protect the consumer limiting the maximum level of the cost of the service,” emphasised Mr Novikov. [~DETAIL_TEXT] =>

Container train traverses Siberia in less than seven days

A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days.
A time-saving feature of the pilot train is guaranteed travel without breakdowns, thus dispensing with the usual regular technical inspection checks necessary over such a large distance. The rolling stock was made ready at the Technical Inspection Point at Nakhodka East. After arriving at the platform in Nahodka for loading, it proceeded to Vladivostok Commercial Sea Port and, following the technical inspection check (on February 21), left for Moscow, arriving at its destination in the evening of February 28.
The pilot train included an experimental wagon laboratory to test the train’s brakes. The data collected will help decide whether to introduce regular services on the route.

Lietuvos Gelezinkeliai Drops Transportation Volume by 30%

In January-February 2009, Lietuvos Gelezinkeliai (Lithuanian Railways) transported 6.6 million tons, 30.5% less in comparison with the same period last year.
The company saw international transportation drop by 40.2% to 4.5 million tons, while domestic transportation fell by 5.2% to 2.1 million tons.

Russian Ports Increased Throughput by 5.2% in January and February

According to the Association of Commercial Sea Ports, during the first two months of 2009, cargo trans-shipment volumes through Russian sea ports grew by 5.2% to 71.58 million tons in comparison with the same months last year. This included 25.63 million tons of dry cargo (-7.1%) and 45.95 million tons of liquid bulk (+13.6%).
North-West sea terminal operators handled 32.94 million tons of cargo (+0.7%), including 10.55 million tons of dry cargo (-17.5%) and 22.39 million tons of liquid bulk (+12.3%). The throughput in Southern ports was 27.39 million tons (+19.3%), which included 8.18 million tons (+27.9%) of dry cargo and 19.21 million tons of liquid bulk (+16%). In the Russian Far East 11.25 million tons of cargo were handled (-9.1%), including 6.90 million tons of dry cargo (-18%) and4.35 million tons of liquid bulk (+9.7%).
The reduction in dry cargo transshipment volumes was caused, first of all, by a decrease in container transportation of 33.7% (export by 28.7%, import by 44.1%, transit by 56.3%); and then in exports (wood cargoes by 49.9%, chemical mineral fertilisers by 46%, ferrous metals by 10%); and also in imports (bulk cargoes by 22.5%, bulk solids by 31.5% and general cargoes by 40.5%).

LDz Cargo: Optimistic Despite a Fall

LDz Cargo, a daughter company of Latvijas dzelzcels (Latvian Railway), carried 9.46 million tons of cargo in the first two months of 2009, 1.9% down in comparison with the same period last year.
Oil and oil products made the larger share of the total volume transported by the company – 4 million tons (a 2.9% increase year-on-year). Also, LDz Cargo carried 3.5 million tonnes of coal (+25.5%), and 434,000 tonnes of chemicals (+10.7%). Transportation volume of mineral fertilisers reduced significantly: from 955,000 tons in January-February 2008 to 484,000 tons in the first two months of 2009.
Ugis Magonis, the Chairman of the company’s Board, said that the company was optimistic about its activities in 2009. “The first months of the year were positive for the company, taking into account the fact that our freight transportation volume fell by 2% only, while that of neighbouring states reduced much more significantly. For example, there was a 30% decline in Russia and Lithuania and a 10% decline in Estonia,” he said.

Procedures on Russia’s accession to COTIF to be completed in late 2009

On February 26, Boris Lapidus, Senior Vice-President of Russian Railways, said that the procedures on Russia’s accession to COTIF would be completed in late 2009.
According to Mr Lapidus, the transportation community asked Russia’s Ministry of Transport to speed up Russia’s accession to COTIF (Convention concerning International Carriage by Rail) because it was one of the main obstacles hindering the growth of traffic on the rail-ferry link between Baltiysk and Sassnitz.
“The rail-ferry link can reach its planned volumes and attract new freight flows, after Russia joins COTIF,” said Boris Lapidus. Russia’s accession to COTIF should therefore increase significantly the volume of rail freight between Europe and the CIS countries through Kaliningrad’s transport hub.

No Tariffs Regulation for Ports?

Russian Federal Tariff Service (FTS) is discussing the scrapping of regulation of tariffs on loading and unloading works in some RF ports, stated Sergey Novikov, Head of the FTS. In his words, nowadays the Federal Tariff Service is developing amendments to the legislation, which will monitor the activity of monopolists in the ports after the deregulation and pave the way for regulation if necessary.
Meanwhile, Mr Novikov said that the FTS feels there is no need to deregulate prices for services provided by monopolists in all ports. He said that, nowadays, tariff rates on loading and unloading works in ports are at a maximum.
“In fact, any organisation may give a discount. The present-day norms have only one function: they protect the consumer limiting the maximum level of the cost of the service,” emphasised Mr Novikov. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days. [~PREVIEW_TEXT] => A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days. 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110034:94 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) [BLOG_COMMENTS_CNT] => Array ( [ID] => 95 [IBLOCK_ID] => 25 [NAME] => Количество комментариев [ACTIVE] => Y [SORT] => 500 [CODE] => BLOG_COMMENTS_CNT [DEFAULT_VALUE] => [PROPERTY_TYPE] => N [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 1 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Количество комментариев [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 110034:95 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) [MORE_PHOTO] => Array ( [ID] => 98 [IBLOCK_ID] => 25 [NAME] => Дополнительные фотографии [ACTIVE] => Y [SORT] => 500 [CODE] => MORE_PHOTO [DEFAULT_VALUE] => [PROPERTY_TYPE] => F [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => Y [XML_ID] => [FILE_TYPE] => jpg, gif, bmp, png, jpeg [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Дополнительные фотографии [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) [PUBLIC_ACCESS] => Array ( [ID] => 110 [IBLOCK_ID] => 25 [NAME] => Открытый доступ [ACTIVE] => Y [SORT] => 500 [CODE] => PUBLIC_ACCESS [DEFAULT_VALUE] => [PROPERTY_TYPE] => L [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => C [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Открытый доступ [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 110034:110 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => [VALUE_ENUM_ID] => ) [ATTACHED_PDF] => Array ( [ID] => 324 [IBLOCK_ID] => 25 [NAME] => Прикрепленный PDF [ACTIVE] => Y [SORT] => 500 [CODE] => ATTACHED_PDF [DEFAULT_VALUE] => [PROPERTY_TYPE] => F [ROW_COUNT] => 1 [COL_COUNT] => 30 [LIST_TYPE] => L [MULTIPLE] => N [XML_ID] => [FILE_TYPE] => pdf [MULTIPLE_CNT] => 5 [LINK_IBLOCK_ID] => 0 [WITH_DESCRIPTION] => N [SEARCHABLE] => N [FILTRABLE] => N [IS_REQUIRED] => N [VERSION] => 2 [USER_TYPE] => [USER_TYPE_SETTINGS] => [HINT] => [~NAME] => Прикрепленный PDF [~DEFAULT_VALUE] => [VALUE_ENUM] => [VALUE_XML_ID] => [VALUE_SORT] => [VALUE] => [PROPERTY_VALUE_ID] => 110034:324 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) ) [DISPLAY_PROPERTIES] => Array ( ) [IPROPERTY_VALUES] => Array ( [SECTION_META_TITLE] => Panorama. Transportation [SECTION_META_KEYWORDS] => panorama. transportation [SECTION_META_DESCRIPTION] => A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days. [ELEMENT_META_TITLE] => Panorama. Transportation [ELEMENT_META_KEYWORDS] => panorama. transportation [ELEMENT_META_DESCRIPTION] => A pilot container train operated by Russian Railways covered the 9,244 km of the Trans-Siberian route between Vladivostok and Bekasovo station near Moscow in less than seven days, taking just six days, 20 hours and 35 minutes. The normal transit time for fast container trains on this route is 12 days. [SECTION_PICTURE_FILE_ALT] => Panorama. Transportation [SECTION_PICTURE_FILE_TITLE] => Panorama. Transportation [SECTION_DETAIL_PICTURE_FILE_ALT] => Panorama. Transportation [SECTION_DETAIL_PICTURE_FILE_TITLE] => Panorama. Transportation [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => Panorama. Transportation [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => Panorama. Transportation [ELEMENT_DETAIL_PICTURE_FILE_ALT] => Panorama. Transportation [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => Panorama. Transportation ) )



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