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2 (6) June - August 2006

2 (6) June - August 2006
USING ONE GAUGE: Many experts believe that in the near future Russia can become Finland's largest trade partner. Naturally,the transport sector, including railway, occupies one of the key positions in the process.

RUSSIAN TIMBER: RAW MATERIAL OR PRODUCT?: Russian timber transportation is on the rise nowadays. However, the tendency may turn out to be a temporary one, since timber producers face the growth of prices for energy carriers and raw timber, as well as tariff increase on transportation. Consequently, in the near future timber transportation volume can significantly reduce in Russia.

LOST ON THEIR OWN FIELD: The Board of OAO RZD set a target to increase their loading volume by 2.8% in 2006. However, in the first quarter of 2006, transportation volume increased by 1.4% only; thus, in the second quarter the task was corrected.
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РЖД-Партнер

Our Strategy Is Independence

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    [DETAIL_TEXT] => In its six-year period of functioning on the market Inpromleasing OJSC has managed to attract great volume of investment to implement its projects. Successful business secrets on the leasing services market are disclosed by Viktor Voitov, Chairman of the Board.

- Mr.Voitov, speaking of a leasing company what are the advantages of being an independent commercial structure?
- When our company was being established, many financial experts recommended us to attract a bank structure into the authorized capital stock, as it could become a basis for our business development. Our strategy in fact envisaged and still does envisage the development of an independent company that would provide our clients with maximally long and cheap financing for their businesses. This position is beneficial for clients, as besides the above-mentioned advantages, they get an optimized mode of cooperation (absence of prepayment, extra-pledges etc). Moreover, we offer our banks first-class loan dealers.
- How attractive is the absence of prepayment for potential clients?
- Basically we conclude contracts with the organizations of steady business structures (serious capital turnover, substantial profits etc.) or with new companies only entering the market independently, but possessing guarantees or contracts with the above-mentioned ones. As a rule in this situation clients attract credit resources into business on the security of their own money, part of which goes to prepayment on terms of leasing contracts. From our point of view, absence of prepayment, i.e. extra expenditures, is one of the most serious reasons to consider cooperation with Inpromleasing positively. It is no secret that most leasing companies affiliated with banks offer leasing agreements under condition of 10-20% prepayment. However, the tendency existing on the credit services market now shows priority of cash-flow when considering risks, while pledge and, consequently, discount is considered in the second turn. Actually, we would like to lead all the positive market tendencies that could help to improve our clients' business.
- How many factual contracts do you have now?
- At present we work on about 50 factual leasing contracts worth RUR 7.2 billion.
- Could you tell us about your experience of syndicated credits for large-scaled projects, in particular those with foreign banks participation?
- Nowadays there are plenty large-scaled projects in Russia that need syndicated credits. This especially concerns the energy sector which is currently a new field for us. In this respect, I'd like to mention our experience of cooperation with OAO RZD. To implement the contract of repayable leasing, we organized a syndicated credit worth USD 100 million with TransCreditBank, RosBank and Menatep-Spb banks participation. Later BCEN-Eurobank and Commerzbank (Eurasia) joined financing this project. It is worth mentioning that under the conditions of financing our clients with heavy loans via our company, foreign banks get access to first-class clients receiving the rates that exceed those they get when they finance clients directly. It is an attractive mode of cooperation for OAO RZD, as it is a leasing scheme with no prepayment and additional provision with terms of 6.5-10 years. In Russia, under conditions of equal cost of credit resources, leasing is much more efficient than bank credit due to the mechanism of speeded amortization and, consequently, the fact that all the expenditures are written off to prime-cost. Surely, dealing with a leasing company adds more risk with the company performing as an operator in the deal. However, the leasing payment pledge practically eliminates all risks, leaving credit rate higher anyway than it is when direct credit transaction is implemented. All this is the reason for banks' interest to deals of such sort.
- Inpromleasing is known to have become the first independent company to conclude a contract with OAO RZD in 2003 on purchasing new track and railway machinery. What are the volumes in which this cooperation continues?
- We plan to participate in annual tenders held by OAO RZD in volumes worth USD 100 million, offering more and more competitive conditions.
- How serious is the economic interest to shipbuilding with further vessels transfer to leasing?
- In our opinion, the whole complex of the Russian shipbuilding sector should head for leasing schemes, as it is the only way to sell this production. Under these conditions a client should have a contract that would provide the financing of vessel construction and further lease for the period of 10-15 years. Contracts concluded with our company envisaging construction of vessels at the Russian shipyards are financed by the Russian banks and cover the period of construction plus seven years of lease. The client has the right to break the contractual obligations when the vessel has been constructed, if he managed to find cheaper financing. Our clients believe our major market advantages are minimum prepayment and the long term of contractual agreement. I suppose, vessels construction financing can be interesting for foreign credit organizations. Now we are developing a contract with a foreign bank on vessels construction abroad for a large Russian oil-bulk port.
- How long does it take for a project to be considered by your company?
- This period takes two-three weeks for standard deals, i.e. contracts on railway machinery purchase for OAO RZD and independent operators, as well as shipbuilding contracts. This short period is explained by our wide experience and understanding of the essence of the business, as well as pledge liquidity. Projects of different sort take longer, as they need adequate financing scheme development.

Interviewed by Elena Ushkova [~DETAIL_TEXT] => In its six-year period of functioning on the market Inpromleasing OJSC has managed to attract great volume of investment to implement its projects. Successful business secrets on the leasing services market are disclosed by Viktor Voitov, Chairman of the Board.

- Mr.Voitov, speaking of a leasing company what are the advantages of being an independent commercial structure?
- When our company was being established, many financial experts recommended us to attract a bank structure into the authorized capital stock, as it could become a basis for our business development. Our strategy in fact envisaged and still does envisage the development of an independent company that would provide our clients with maximally long and cheap financing for their businesses. This position is beneficial for clients, as besides the above-mentioned advantages, they get an optimized mode of cooperation (absence of prepayment, extra-pledges etc). Moreover, we offer our banks first-class loan dealers.
- How attractive is the absence of prepayment for potential clients?
- Basically we conclude contracts with the organizations of steady business structures (serious capital turnover, substantial profits etc.) or with new companies only entering the market independently, but possessing guarantees or contracts with the above-mentioned ones. As a rule in this situation clients attract credit resources into business on the security of their own money, part of which goes to prepayment on terms of leasing contracts. From our point of view, absence of prepayment, i.e. extra expenditures, is one of the most serious reasons to consider cooperation with Inpromleasing positively. It is no secret that most leasing companies affiliated with banks offer leasing agreements under condition of 10-20% prepayment. However, the tendency existing on the credit services market now shows priority of cash-flow when considering risks, while pledge and, consequently, discount is considered in the second turn. Actually, we would like to lead all the positive market tendencies that could help to improve our clients' business.
- How many factual contracts do you have now?
- At present we work on about 50 factual leasing contracts worth RUR 7.2 billion.
- Could you tell us about your experience of syndicated credits for large-scaled projects, in particular those with foreign banks participation?
- Nowadays there are plenty large-scaled projects in Russia that need syndicated credits. This especially concerns the energy sector which is currently a new field for us. In this respect, I'd like to mention our experience of cooperation with OAO RZD. To implement the contract of repayable leasing, we organized a syndicated credit worth USD 100 million with TransCreditBank, RosBank and Menatep-Spb banks participation. Later BCEN-Eurobank and Commerzbank (Eurasia) joined financing this project. It is worth mentioning that under the conditions of financing our clients with heavy loans via our company, foreign banks get access to first-class clients receiving the rates that exceed those they get when they finance clients directly. It is an attractive mode of cooperation for OAO RZD, as it is a leasing scheme with no prepayment and additional provision with terms of 6.5-10 years. In Russia, under conditions of equal cost of credit resources, leasing is much more efficient than bank credit due to the mechanism of speeded amortization and, consequently, the fact that all the expenditures are written off to prime-cost. Surely, dealing with a leasing company adds more risk with the company performing as an operator in the deal. However, the leasing payment pledge practically eliminates all risks, leaving credit rate higher anyway than it is when direct credit transaction is implemented. All this is the reason for banks' interest to deals of such sort.
- Inpromleasing is known to have become the first independent company to conclude a contract with OAO RZD in 2003 on purchasing new track and railway machinery. What are the volumes in which this cooperation continues?
- We plan to participate in annual tenders held by OAO RZD in volumes worth USD 100 million, offering more and more competitive conditions.
- How serious is the economic interest to shipbuilding with further vessels transfer to leasing?
- In our opinion, the whole complex of the Russian shipbuilding sector should head for leasing schemes, as it is the only way to sell this production. Under these conditions a client should have a contract that would provide the financing of vessel construction and further lease for the period of 10-15 years. Contracts concluded with our company envisaging construction of vessels at the Russian shipyards are financed by the Russian banks and cover the period of construction plus seven years of lease. The client has the right to break the contractual obligations when the vessel has been constructed, if he managed to find cheaper financing. Our clients believe our major market advantages are minimum prepayment and the long term of contractual agreement. I suppose, vessels construction financing can be interesting for foreign credit organizations. Now we are developing a contract with a foreign bank on vessels construction abroad for a large Russian oil-bulk port.
- How long does it take for a project to be considered by your company?
- This period takes two-three weeks for standard deals, i.e. contracts on railway machinery purchase for OAO RZD and independent operators, as well as shipbuilding contracts. This short period is explained by our wide experience and understanding of the essence of the business, as well as pledge liquidity. Projects of different sort take longer, as they need adequate financing scheme development.

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    [DETAIL_TEXT] => In its six-year period of functioning on the market Inpromleasing OJSC has managed to attract great volume of investment to implement its projects. Successful business secrets on the leasing services market are disclosed by Viktor Voitov, Chairman of the Board.

- Mr.Voitov, speaking of a leasing company what are the advantages of being an independent commercial structure?
- When our company was being established, many financial experts recommended us to attract a bank structure into the authorized capital stock, as it could become a basis for our business development. Our strategy in fact envisaged and still does envisage the development of an independent company that would provide our clients with maximally long and cheap financing for their businesses. This position is beneficial for clients, as besides the above-mentioned advantages, they get an optimized mode of cooperation (absence of prepayment, extra-pledges etc). Moreover, we offer our banks first-class loan dealers.
- How attractive is the absence of prepayment for potential clients?
- Basically we conclude contracts with the organizations of steady business structures (serious capital turnover, substantial profits etc.) or with new companies only entering the market independently, but possessing guarantees or contracts with the above-mentioned ones. As a rule in this situation clients attract credit resources into business on the security of their own money, part of which goes to prepayment on terms of leasing contracts. From our point of view, absence of prepayment, i.e. extra expenditures, is one of the most serious reasons to consider cooperation with Inpromleasing positively. It is no secret that most leasing companies affiliated with banks offer leasing agreements under condition of 10-20% prepayment. However, the tendency existing on the credit services market now shows priority of cash-flow when considering risks, while pledge and, consequently, discount is considered in the second turn. Actually, we would like to lead all the positive market tendencies that could help to improve our clients' business.
- How many factual contracts do you have now?
- At present we work on about 50 factual leasing contracts worth RUR 7.2 billion.
- Could you tell us about your experience of syndicated credits for large-scaled projects, in particular those with foreign banks participation?
- Nowadays there are plenty large-scaled projects in Russia that need syndicated credits. This especially concerns the energy sector which is currently a new field for us. In this respect, I'd like to mention our experience of cooperation with OAO RZD. To implement the contract of repayable leasing, we organized a syndicated credit worth USD 100 million with TransCreditBank, RosBank and Menatep-Spb banks participation. Later BCEN-Eurobank and Commerzbank (Eurasia) joined financing this project. It is worth mentioning that under the conditions of financing our clients with heavy loans via our company, foreign banks get access to first-class clients receiving the rates that exceed those they get when they finance clients directly. It is an attractive mode of cooperation for OAO RZD, as it is a leasing scheme with no prepayment and additional provision with terms of 6.5-10 years. In Russia, under conditions of equal cost of credit resources, leasing is much more efficient than bank credit due to the mechanism of speeded amortization and, consequently, the fact that all the expenditures are written off to prime-cost. Surely, dealing with a leasing company adds more risk with the company performing as an operator in the deal. However, the leasing payment pledge practically eliminates all risks, leaving credit rate higher anyway than it is when direct credit transaction is implemented. All this is the reason for banks' interest to deals of such sort.
- Inpromleasing is known to have become the first independent company to conclude a contract with OAO RZD in 2003 on purchasing new track and railway machinery. What are the volumes in which this cooperation continues?
- We plan to participate in annual tenders held by OAO RZD in volumes worth USD 100 million, offering more and more competitive conditions.
- How serious is the economic interest to shipbuilding with further vessels transfer to leasing?
- In our opinion, the whole complex of the Russian shipbuilding sector should head for leasing schemes, as it is the only way to sell this production. Under these conditions a client should have a contract that would provide the financing of vessel construction and further lease for the period of 10-15 years. Contracts concluded with our company envisaging construction of vessels at the Russian shipyards are financed by the Russian banks and cover the period of construction plus seven years of lease. The client has the right to break the contractual obligations when the vessel has been constructed, if he managed to find cheaper financing. Our clients believe our major market advantages are minimum prepayment and the long term of contractual agreement. I suppose, vessels construction financing can be interesting for foreign credit organizations. Now we are developing a contract with a foreign bank on vessels construction abroad for a large Russian oil-bulk port.
- How long does it take for a project to be considered by your company?
- This period takes two-three weeks for standard deals, i.e. contracts on railway machinery purchase for OAO RZD and independent operators, as well as shipbuilding contracts. This short period is explained by our wide experience and understanding of the essence of the business, as well as pledge liquidity. Projects of different sort take longer, as they need adequate financing scheme development.

Interviewed by Elena Ushkova [~DETAIL_TEXT] => In its six-year period of functioning on the market Inpromleasing OJSC has managed to attract great volume of investment to implement its projects. Successful business secrets on the leasing services market are disclosed by Viktor Voitov, Chairman of the Board.

- Mr.Voitov, speaking of a leasing company what are the advantages of being an independent commercial structure?
- When our company was being established, many financial experts recommended us to attract a bank structure into the authorized capital stock, as it could become a basis for our business development. Our strategy in fact envisaged and still does envisage the development of an independent company that would provide our clients with maximally long and cheap financing for their businesses. This position is beneficial for clients, as besides the above-mentioned advantages, they get an optimized mode of cooperation (absence of prepayment, extra-pledges etc). Moreover, we offer our banks first-class loan dealers.
- How attractive is the absence of prepayment for potential clients?
- Basically we conclude contracts with the organizations of steady business structures (serious capital turnover, substantial profits etc.) or with new companies only entering the market independently, but possessing guarantees or contracts with the above-mentioned ones. As a rule in this situation clients attract credit resources into business on the security of their own money, part of which goes to prepayment on terms of leasing contracts. From our point of view, absence of prepayment, i.e. extra expenditures, is one of the most serious reasons to consider cooperation with Inpromleasing positively. It is no secret that most leasing companies affiliated with banks offer leasing agreements under condition of 10-20% prepayment. However, the tendency existing on the credit services market now shows priority of cash-flow when considering risks, while pledge and, consequently, discount is considered in the second turn. Actually, we would like to lead all the positive market tendencies that could help to improve our clients' business.
- How many factual contracts do you have now?
- At present we work on about 50 factual leasing contracts worth RUR 7.2 billion.
- Could you tell us about your experience of syndicated credits for large-scaled projects, in particular those with foreign banks participation?
- Nowadays there are plenty large-scaled projects in Russia that need syndicated credits. This especially concerns the energy sector which is currently a new field for us. In this respect, I'd like to mention our experience of cooperation with OAO RZD. To implement the contract of repayable leasing, we organized a syndicated credit worth USD 100 million with TransCreditBank, RosBank and Menatep-Spb banks participation. Later BCEN-Eurobank and Commerzbank (Eurasia) joined financing this project. It is worth mentioning that under the conditions of financing our clients with heavy loans via our company, foreign banks get access to first-class clients receiving the rates that exceed those they get when they finance clients directly. It is an attractive mode of cooperation for OAO RZD, as it is a leasing scheme with no prepayment and additional provision with terms of 6.5-10 years. In Russia, under conditions of equal cost of credit resources, leasing is much more efficient than bank credit due to the mechanism of speeded amortization and, consequently, the fact that all the expenditures are written off to prime-cost. Surely, dealing with a leasing company adds more risk with the company performing as an operator in the deal. However, the leasing payment pledge practically eliminates all risks, leaving credit rate higher anyway than it is when direct credit transaction is implemented. All this is the reason for banks' interest to deals of such sort.
- Inpromleasing is known to have become the first independent company to conclude a contract with OAO RZD in 2003 on purchasing new track and railway machinery. What are the volumes in which this cooperation continues?
- We plan to participate in annual tenders held by OAO RZD in volumes worth USD 100 million, offering more and more competitive conditions.
- How serious is the economic interest to shipbuilding with further vessels transfer to leasing?
- In our opinion, the whole complex of the Russian shipbuilding sector should head for leasing schemes, as it is the only way to sell this production. Under these conditions a client should have a contract that would provide the financing of vessel construction and further lease for the period of 10-15 years. Contracts concluded with our company envisaging construction of vessels at the Russian shipyards are financed by the Russian banks and cover the period of construction plus seven years of lease. The client has the right to break the contractual obligations when the vessel has been constructed, if he managed to find cheaper financing. Our clients believe our major market advantages are minimum prepayment and the long term of contractual agreement. I suppose, vessels construction financing can be interesting for foreign credit organizations. Now we are developing a contract with a foreign bank on vessels construction abroad for a large Russian oil-bulk port.
- How long does it take for a project to be considered by your company?
- This period takes two-three weeks for standard deals, i.e. contracts on railway machinery purchase for OAO RZD and independent operators, as well as shipbuilding contracts. This short period is explained by our wide experience and understanding of the essence of the business, as well as pledge liquidity. Projects of different sort take longer, as they need adequate financing scheme development.

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РЖД-Партнер

"Rates Are Very Interesting, Indeed"

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    [DETAIL_TEXT] => It is well known that a company engaged in international economic activities, for example export of production or import of equipment, needs a reliable and experienced financial partner. Oleg Panarin, Vice-Presidentof OAO TransCreditBank, Head of Structuredand Trade Finance Department, commentson the bank's opportunities in the sector.

FROM KALININGRAD TO SAKHALIN, FROM TRANSPORTER TO POWER ENGINEER
- Could you comment on the bank's basic activities you are responsible for?
- First of all, it is work with the corporate clients to finance their international economic activities. In this respect we cooperate with OAO RZD and with a large number of its partners-transport companies, machine-building plants, metallurgical works, petrochemical plants, power enterprises, large agriculture holding companies, traders and many others. We work everywhere in Russia.
Secondly, we provide external funding for the bank's active operations by drawing syndicated loans on the foreign market, placing the bank's debt instruments in the international capital market etc. I'd like to mention an absolutely new activity for the Russian banking sector that our company is also engaged in. This is securitization of assets (leasing payments, credits etc.), i.e. issue of asset-backed securities. This type of activities has been dynamically developing in Russia since the mid of last year.
The third important part of our responsibility is the relationship with Russian and foreign banks, as well as international rating agencies, to strengthen the bank's position abroad.
- Speaking of your clients, you mentioned a number of industries, whose output is exported. But transport companies, i.e. forwarders, operators etc., are not such large exporters as, for example, oil, coal and metallurgical companies are. Do they need your financial mediation?
- A lot of forwarding companies engaged in multimodal transportation export their services. So, we can organize pre-export financing for them. Or we can offer, for example, to credit purchase of rolling stock, where the proceeds from transit or export-import transportation forwarding will be pledged to the bank. A lot of export contracts for delivery of oil products, liquefied natural gas, metals and other goods are concluded on the franco-station or ex-works terms, i.e. a foreign customer orders the transportation on the territory of Russia and abroad, and Russian transport companies provide forwarding services. As a rule, such contracts are long-term signed for a year and envisage transportation of large volumes of goods. The bank acts as a financier, as well as an adviser. We provide for both funding of the contract and search of the most favorable terms of payment.

WE CAN CHOOSE
- Could you give more details about the financial products that OAO TransCreditBank offers to Russian companies, please?
- Let's start from the organization of clearing and settlements which are our daily routine. Besides, we provide current short-term financing of foreign trade contracts using the instruments which are alternative to the standard credit products, i.e. loans and overdrafts. Among them there can be letters of credit with deferred payment and post-financing, stand-by letters of credit, payment guarantees, sometimes guarantees of credit repayment. This is an attractive sector of financial instruments for companies actively involved in international economic activities, since they are much cheaper than traditional credit products. The difference makes up to 1.5%-2.5% per annum.
- Does the bank actively work with such popular instruments as leasing, factoring etc?
- As for leasing, the bank finances only the part of the contract connected with the purchase of the asset being leased, i.e. we extend a loan to the leasing company that works with the bank. Factoring is a product used, as a rule, for financing trade contracts inside the country, as for foreign trade, another instrument is used there. It is called forfeiting. It is an advance assignment and sale of the obligations in the form of a promissory note or a bill of exchange. We have such contracts as well.
However, the majority of our clients are interested in such a service as midium and long-term financing of foreign trade contracts for delivery of equipment, spares, machine parts for further assemblage, some types of semis etc. On the whole, as already mentioned, it is important for our clients that we can provide services based on relatively cheap western resources.
- The bank operates in a very competitive environment. What makes it operate successfully?
- The advantages of the bank are its financing technique, efficiency and, as I have already mentioned, price parameters. Since external funding is provided in the framework of the credit lines, set for us by the western financial institutions TransCreditBank's basic conditions are more attractive than those that can be reached in the internal market. Besides, we provide very flexible periods of contract financing - from two-three months up to eight years.
- How do you manage to get cheaper resources, thus providing more attractive conditions of financing for your clients, if it is no secret, of course?
- It is not a secret at all. In fact, a lot of factors work here. First of all, it is the name of TransCreditBank, which is already well-known enough on the international market, and its long positive credit history. The annual volume of deals of TransCreditBank with western counteragents amounts to USD 300-400 million on average. TransCreditBank has credit ratings of international agencies Standard&Poor's (long-term credit rating of counteragent B-; short-term one is C; outlook stable) and Moody's Investor Service (Long Term Rating: Ba3; ST Most Recent Rating NP; bank financial strength rating is E+; outlook stable). The bank regularly draws up and audits accounts in accordance with the International Financial Reporting Standards. Besides, TransCreditBank is a state bank. 75% of its shares are owned by the state and is managed by the RF Federal Property Management Agency. Another obvious market advantage of our bank is its strategic cooperation with OAO RZD, one of the largest Russian companies, and service of enormous financial flows in the railway sector. That means that, along with the bank's business diversification, we have a clear-cut market niche connected with servicing of the transport sector. Everything mentioned above enables one to evaluate the potential of the bank's further growth as a tremendous one. The cost of funding is formed from the aggregate of all the factors I have spoken of. As a result, the price we reached at the last syndicated loan facility - LIBOR +120 base points with the credit term of 364 days is quite aggressive for the Russian banks of our level.
- Is the number of your counteragents among western banks large or do you prefer a limited amount of reliable partners?
- For many years the partners of TransCreditBank have been first-class banks, such as Dresdner Bank and HypoVereinsbank (Germany), J.P.Morgan Bank ( USA), BNP Paribas (France), Standard Bank London (Great Britain) and others. On January 1, 2006, the total volume of trade finance credit lines of foreign banks for TransCreditBank, including the limits of transactions guaranteed by export credit agencies, exceeded USD 300 million. During the last four years, the bank has significantly developed its cooperation with western counterparties and acquired new business partners among the largest financial institutions of France, Switzerland, USA etc. Nowadays we can finance our clients in any place of the globe and choose optimum counteragent for any contract. We are experienced in mid-term and long-term financing of equipment and other capital goods delivery at the expense of foreign banks' credits guaranteed by export credit agencies of countries-members of Organization for Economic Cooperation and Development.
- What securities do you float today to enlarge resources?
- As for the rouble bonds floating, we plan to do it after privatization. Speaking of the so popular among the Russian banks euro bonds, we have discussed it, held preliminary negotiations with a number of leading world investing banks and confirmed the relevance of such a prospect for ourselves. However, we plan to issue euro bonds only after privatization. Last year we issued relatively short-term obligations in the form of credit notes with the volume of USD 80 million for two years with a floating interest rate.
- You said that TransCreditBank's strategic cooperation with OAO RZD is an advantage in the opinion of a western banker. As a rule, everyone likes banks. If such a large and politicized partner leaves, the bank will surely collapse.
- You are partly correct. In fact, when analysts examine the structure of assets and liabilities of our bank, they pay their attention to such a concentration of risks. I cannot but admit that the majority of our liabilities are based on the railway sector resources. However, firstly, as I have already mentioned, we do our best to reasonably diversify our client base. Secondly, the latest statistic data show that corporate and private clients are very loyal to the bank. For example, in summer 2004, when there was a large withdrawal of deposits from Russian banks, we increased their volume by 20-25%. It is a very indicative fact! Besides, the position of OAO RZD declared at the highest level also favors us. The corporation is interested in the development of TransCreditBank, so it tends to support and increase its cooperation with the bank.OAO RZD also believes that the bank is one of its largest financial partners.

POTENTIAL OF DEVELOPMENT
- Do you follow the process of railway reform?
- Yes, of course. I was a member of the working group that was engaged in the development of the Structural Reform Program in 2001-2002.
- Which situation would be better for a transport bank: OAO RZD remains a holding company or there are a number of independent markets of transportation, repair, railway facilities production etc.?
- You know, there is a certain conflict of interests here. From the institutional point of view, it would be easier for us to work not even with a holding company, but with a single managing subject. We have developed a number of bank technologies specially for a single company. For example, the activities of the TransCreditBank's settlement center are organized so as to provide the Treasury and other departments of OAO RZD an opportunity to manage cash flows in real-time mode to the best possible extent. The cash flows are controlled 24 hours a day on the whole territory of Russia. From this point of view, it is easier for us to work with one large client and with its network of affiliates that geographically corresponds to our regional network. From the point of view of market laws and securing the interests of railway services users, it would be correct to keep to the existing concept of the railway sector reform and to bring the formation of market competition in the economic sector to its logical end.
- What would you like to tell your potential clients at the end of our interview?
- I would like to stress once again that TransCreditBank has a very large potential for further growth. I believe, in the next years, when we carry out the strategy of the bank development to the full, it will become one of the leading Russian banks and among the top ten or twelve banks of Russia according to its financial figures. At the same time, TransCreditBank will follow its one-in-two strategy: to be a unique transport infrastructure bank in the Russian Federation and simultaneously to support its diversified business structure and universality of its product lines.

Interviewed by Andrey Guryev [~DETAIL_TEXT] => It is well known that a company engaged in international economic activities, for example export of production or import of equipment, needs a reliable and experienced financial partner. Oleg Panarin, Vice-Presidentof OAO TransCreditBank, Head of Structuredand Trade Finance Department, commentson the bank's opportunities in the sector.

FROM KALININGRAD TO SAKHALIN, FROM TRANSPORTER TO POWER ENGINEER
- Could you comment on the bank's basic activities you are responsible for?
- First of all, it is work with the corporate clients to finance their international economic activities. In this respect we cooperate with OAO RZD and with a large number of its partners-transport companies, machine-building plants, metallurgical works, petrochemical plants, power enterprises, large agriculture holding companies, traders and many others. We work everywhere in Russia.
Secondly, we provide external funding for the bank's active operations by drawing syndicated loans on the foreign market, placing the bank's debt instruments in the international capital market etc. I'd like to mention an absolutely new activity for the Russian banking sector that our company is also engaged in. This is securitization of assets (leasing payments, credits etc.), i.e. issue of asset-backed securities. This type of activities has been dynamically developing in Russia since the mid of last year.
The third important part of our responsibility is the relationship with Russian and foreign banks, as well as international rating agencies, to strengthen the bank's position abroad.
- Speaking of your clients, you mentioned a number of industries, whose output is exported. But transport companies, i.e. forwarders, operators etc., are not such large exporters as, for example, oil, coal and metallurgical companies are. Do they need your financial mediation?
- A lot of forwarding companies engaged in multimodal transportation export their services. So, we can organize pre-export financing for them. Or we can offer, for example, to credit purchase of rolling stock, where the proceeds from transit or export-import transportation forwarding will be pledged to the bank. A lot of export contracts for delivery of oil products, liquefied natural gas, metals and other goods are concluded on the franco-station or ex-works terms, i.e. a foreign customer orders the transportation on the territory of Russia and abroad, and Russian transport companies provide forwarding services. As a rule, such contracts are long-term signed for a year and envisage transportation of large volumes of goods. The bank acts as a financier, as well as an adviser. We provide for both funding of the contract and search of the most favorable terms of payment.

WE CAN CHOOSE
- Could you give more details about the financial products that OAO TransCreditBank offers to Russian companies, please?
- Let's start from the organization of clearing and settlements which are our daily routine. Besides, we provide current short-term financing of foreign trade contracts using the instruments which are alternative to the standard credit products, i.e. loans and overdrafts. Among them there can be letters of credit with deferred payment and post-financing, stand-by letters of credit, payment guarantees, sometimes guarantees of credit repayment. This is an attractive sector of financial instruments for companies actively involved in international economic activities, since they are much cheaper than traditional credit products. The difference makes up to 1.5%-2.5% per annum.
- Does the bank actively work with such popular instruments as leasing, factoring etc?
- As for leasing, the bank finances only the part of the contract connected with the purchase of the asset being leased, i.e. we extend a loan to the leasing company that works with the bank. Factoring is a product used, as a rule, for financing trade contracts inside the country, as for foreign trade, another instrument is used there. It is called forfeiting. It is an advance assignment and sale of the obligations in the form of a promissory note or a bill of exchange. We have such contracts as well.
However, the majority of our clients are interested in such a service as midium and long-term financing of foreign trade contracts for delivery of equipment, spares, machine parts for further assemblage, some types of semis etc. On the whole, as already mentioned, it is important for our clients that we can provide services based on relatively cheap western resources.
- The bank operates in a very competitive environment. What makes it operate successfully?
- The advantages of the bank are its financing technique, efficiency and, as I have already mentioned, price parameters. Since external funding is provided in the framework of the credit lines, set for us by the western financial institutions TransCreditBank's basic conditions are more attractive than those that can be reached in the internal market. Besides, we provide very flexible periods of contract financing - from two-three months up to eight years.
- How do you manage to get cheaper resources, thus providing more attractive conditions of financing for your clients, if it is no secret, of course?
- It is not a secret at all. In fact, a lot of factors work here. First of all, it is the name of TransCreditBank, which is already well-known enough on the international market, and its long positive credit history. The annual volume of deals of TransCreditBank with western counteragents amounts to USD 300-400 million on average. TransCreditBank has credit ratings of international agencies Standard&Poor's (long-term credit rating of counteragent B-; short-term one is C; outlook stable) and Moody's Investor Service (Long Term Rating: Ba3; ST Most Recent Rating NP; bank financial strength rating is E+; outlook stable). The bank regularly draws up and audits accounts in accordance with the International Financial Reporting Standards. Besides, TransCreditBank is a state bank. 75% of its shares are owned by the state and is managed by the RF Federal Property Management Agency. Another obvious market advantage of our bank is its strategic cooperation with OAO RZD, one of the largest Russian companies, and service of enormous financial flows in the railway sector. That means that, along with the bank's business diversification, we have a clear-cut market niche connected with servicing of the transport sector. Everything mentioned above enables one to evaluate the potential of the bank's further growth as a tremendous one. The cost of funding is formed from the aggregate of all the factors I have spoken of. As a result, the price we reached at the last syndicated loan facility - LIBOR +120 base points with the credit term of 364 days is quite aggressive for the Russian banks of our level.
- Is the number of your counteragents among western banks large or do you prefer a limited amount of reliable partners?
- For many years the partners of TransCreditBank have been first-class banks, such as Dresdner Bank and HypoVereinsbank (Germany), J.P.Morgan Bank ( USA), BNP Paribas (France), Standard Bank London (Great Britain) and others. On January 1, 2006, the total volume of trade finance credit lines of foreign banks for TransCreditBank, including the limits of transactions guaranteed by export credit agencies, exceeded USD 300 million. During the last four years, the bank has significantly developed its cooperation with western counterparties and acquired new business partners among the largest financial institutions of France, Switzerland, USA etc. Nowadays we can finance our clients in any place of the globe and choose optimum counteragent for any contract. We are experienced in mid-term and long-term financing of equipment and other capital goods delivery at the expense of foreign banks' credits guaranteed by export credit agencies of countries-members of Organization for Economic Cooperation and Development.
- What securities do you float today to enlarge resources?
- As for the rouble bonds floating, we plan to do it after privatization. Speaking of the so popular among the Russian banks euro bonds, we have discussed it, held preliminary negotiations with a number of leading world investing banks and confirmed the relevance of such a prospect for ourselves. However, we plan to issue euro bonds only after privatization. Last year we issued relatively short-term obligations in the form of credit notes with the volume of USD 80 million for two years with a floating interest rate.
- You said that TransCreditBank's strategic cooperation with OAO RZD is an advantage in the opinion of a western banker. As a rule, everyone likes banks. If such a large and politicized partner leaves, the bank will surely collapse.
- You are partly correct. In fact, when analysts examine the structure of assets and liabilities of our bank, they pay their attention to such a concentration of risks. I cannot but admit that the majority of our liabilities are based on the railway sector resources. However, firstly, as I have already mentioned, we do our best to reasonably diversify our client base. Secondly, the latest statistic data show that corporate and private clients are very loyal to the bank. For example, in summer 2004, when there was a large withdrawal of deposits from Russian banks, we increased their volume by 20-25%. It is a very indicative fact! Besides, the position of OAO RZD declared at the highest level also favors us. The corporation is interested in the development of TransCreditBank, so it tends to support and increase its cooperation with the bank.OAO RZD also believes that the bank is one of its largest financial partners.

POTENTIAL OF DEVELOPMENT
- Do you follow the process of railway reform?
- Yes, of course. I was a member of the working group that was engaged in the development of the Structural Reform Program in 2001-2002.
- Which situation would be better for a transport bank: OAO RZD remains a holding company or there are a number of independent markets of transportation, repair, railway facilities production etc.?
- You know, there is a certain conflict of interests here. From the institutional point of view, it would be easier for us to work not even with a holding company, but with a single managing subject. We have developed a number of bank technologies specially for a single company. For example, the activities of the TransCreditBank's settlement center are organized so as to provide the Treasury and other departments of OAO RZD an opportunity to manage cash flows in real-time mode to the best possible extent. The cash flows are controlled 24 hours a day on the whole territory of Russia. From this point of view, it is easier for us to work with one large client and with its network of affiliates that geographically corresponds to our regional network. From the point of view of market laws and securing the interests of railway services users, it would be correct to keep to the existing concept of the railway sector reform and to bring the formation of market competition in the economic sector to its logical end.
- What would you like to tell your potential clients at the end of our interview?
- I would like to stress once again that TransCreditBank has a very large potential for further growth. I believe, in the next years, when we carry out the strategy of the bank development to the full, it will become one of the leading Russian banks and among the top ten or twelve banks of Russia according to its financial figures. At the same time, TransCreditBank will follow its one-in-two strategy: to be a unique transport infrastructure bank in the Russian Federation and simultaneously to support its diversified business structure and universality of its product lines.

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    [DETAIL_TEXT] => It is well known that a company engaged in international economic activities, for example export of production or import of equipment, needs a reliable and experienced financial partner. Oleg Panarin, Vice-Presidentof OAO TransCreditBank, Head of Structuredand Trade Finance Department, commentson the bank's opportunities in the sector.

FROM KALININGRAD TO SAKHALIN, FROM TRANSPORTER TO POWER ENGINEER
- Could you comment on the bank's basic activities you are responsible for?
- First of all, it is work with the corporate clients to finance their international economic activities. In this respect we cooperate with OAO RZD and with a large number of its partners-transport companies, machine-building plants, metallurgical works, petrochemical plants, power enterprises, large agriculture holding companies, traders and many others. We work everywhere in Russia.
Secondly, we provide external funding for the bank's active operations by drawing syndicated loans on the foreign market, placing the bank's debt instruments in the international capital market etc. I'd like to mention an absolutely new activity for the Russian banking sector that our company is also engaged in. This is securitization of assets (leasing payments, credits etc.), i.e. issue of asset-backed securities. This type of activities has been dynamically developing in Russia since the mid of last year.
The third important part of our responsibility is the relationship with Russian and foreign banks, as well as international rating agencies, to strengthen the bank's position abroad.
- Speaking of your clients, you mentioned a number of industries, whose output is exported. But transport companies, i.e. forwarders, operators etc., are not such large exporters as, for example, oil, coal and metallurgical companies are. Do they need your financial mediation?
- A lot of forwarding companies engaged in multimodal transportation export their services. So, we can organize pre-export financing for them. Or we can offer, for example, to credit purchase of rolling stock, where the proceeds from transit or export-import transportation forwarding will be pledged to the bank. A lot of export contracts for delivery of oil products, liquefied natural gas, metals and other goods are concluded on the franco-station or ex-works terms, i.e. a foreign customer orders the transportation on the territory of Russia and abroad, and Russian transport companies provide forwarding services. As a rule, such contracts are long-term signed for a year and envisage transportation of large volumes of goods. The bank acts as a financier, as well as an adviser. We provide for both funding of the contract and search of the most favorable terms of payment.

WE CAN CHOOSE
- Could you give more details about the financial products that OAO TransCreditBank offers to Russian companies, please?
- Let's start from the organization of clearing and settlements which are our daily routine. Besides, we provide current short-term financing of foreign trade contracts using the instruments which are alternative to the standard credit products, i.e. loans and overdrafts. Among them there can be letters of credit with deferred payment and post-financing, stand-by letters of credit, payment guarantees, sometimes guarantees of credit repayment. This is an attractive sector of financial instruments for companies actively involved in international economic activities, since they are much cheaper than traditional credit products. The difference makes up to 1.5%-2.5% per annum.
- Does the bank actively work with such popular instruments as leasing, factoring etc?
- As for leasing, the bank finances only the part of the contract connected with the purchase of the asset being leased, i.e. we extend a loan to the leasing company that works with the bank. Factoring is a product used, as a rule, for financing trade contracts inside the country, as for foreign trade, another instrument is used there. It is called forfeiting. It is an advance assignment and sale of the obligations in the form of a promissory note or a bill of exchange. We have such contracts as well.
However, the majority of our clients are interested in such a service as midium and long-term financing of foreign trade contracts for delivery of equipment, spares, machine parts for further assemblage, some types of semis etc. On the whole, as already mentioned, it is important for our clients that we can provide services based on relatively cheap western resources.
- The bank operates in a very competitive environment. What makes it operate successfully?
- The advantages of the bank are its financing technique, efficiency and, as I have already mentioned, price parameters. Since external funding is provided in the framework of the credit lines, set for us by the western financial institutions TransCreditBank's basic conditions are more attractive than those that can be reached in the internal market. Besides, we provide very flexible periods of contract financing - from two-three months up to eight years.
- How do you manage to get cheaper resources, thus providing more attractive conditions of financing for your clients, if it is no secret, of course?
- It is not a secret at all. In fact, a lot of factors work here. First of all, it is the name of TransCreditBank, which is already well-known enough on the international market, and its long positive credit history. The annual volume of deals of TransCreditBank with western counteragents amounts to USD 300-400 million on average. TransCreditBank has credit ratings of international agencies Standard&Poor's (long-term credit rating of counteragent B-; short-term one is C; outlook stable) and Moody's Investor Service (Long Term Rating: Ba3; ST Most Recent Rating NP; bank financial strength rating is E+; outlook stable). The bank regularly draws up and audits accounts in accordance with the International Financial Reporting Standards. Besides, TransCreditBank is a state bank. 75% of its shares are owned by the state and is managed by the RF Federal Property Management Agency. Another obvious market advantage of our bank is its strategic cooperation with OAO RZD, one of the largest Russian companies, and service of enormous financial flows in the railway sector. That means that, along with the bank's business diversification, we have a clear-cut market niche connected with servicing of the transport sector. Everything mentioned above enables one to evaluate the potential of the bank's further growth as a tremendous one. The cost of funding is formed from the aggregate of all the factors I have spoken of. As a result, the price we reached at the last syndicated loan facility - LIBOR +120 base points with the credit term of 364 days is quite aggressive for the Russian banks of our level.
- Is the number of your counteragents among western banks large or do you prefer a limited amount of reliable partners?
- For many years the partners of TransCreditBank have been first-class banks, such as Dresdner Bank and HypoVereinsbank (Germany), J.P.Morgan Bank ( USA), BNP Paribas (France), Standard Bank London (Great Britain) and others. On January 1, 2006, the total volume of trade finance credit lines of foreign banks for TransCreditBank, including the limits of transactions guaranteed by export credit agencies, exceeded USD 300 million. During the last four years, the bank has significantly developed its cooperation with western counterparties and acquired new business partners among the largest financial institutions of France, Switzerland, USA etc. Nowadays we can finance our clients in any place of the globe and choose optimum counteragent for any contract. We are experienced in mid-term and long-term financing of equipment and other capital goods delivery at the expense of foreign banks' credits guaranteed by export credit agencies of countries-members of Organization for Economic Cooperation and Development.
- What securities do you float today to enlarge resources?
- As for the rouble bonds floating, we plan to do it after privatization. Speaking of the so popular among the Russian banks euro bonds, we have discussed it, held preliminary negotiations with a number of leading world investing banks and confirmed the relevance of such a prospect for ourselves. However, we plan to issue euro bonds only after privatization. Last year we issued relatively short-term obligations in the form of credit notes with the volume of USD 80 million for two years with a floating interest rate.
- You said that TransCreditBank's strategic cooperation with OAO RZD is an advantage in the opinion of a western banker. As a rule, everyone likes banks. If such a large and politicized partner leaves, the bank will surely collapse.
- You are partly correct. In fact, when analysts examine the structure of assets and liabilities of our bank, they pay their attention to such a concentration of risks. I cannot but admit that the majority of our liabilities are based on the railway sector resources. However, firstly, as I have already mentioned, we do our best to reasonably diversify our client base. Secondly, the latest statistic data show that corporate and private clients are very loyal to the bank. For example, in summer 2004, when there was a large withdrawal of deposits from Russian banks, we increased their volume by 20-25%. It is a very indicative fact! Besides, the position of OAO RZD declared at the highest level also favors us. The corporation is interested in the development of TransCreditBank, so it tends to support and increase its cooperation with the bank.OAO RZD also believes that the bank is one of its largest financial partners.

POTENTIAL OF DEVELOPMENT
- Do you follow the process of railway reform?
- Yes, of course. I was a member of the working group that was engaged in the development of the Structural Reform Program in 2001-2002.
- Which situation would be better for a transport bank: OAO RZD remains a holding company or there are a number of independent markets of transportation, repair, railway facilities production etc.?
- You know, there is a certain conflict of interests here. From the institutional point of view, it would be easier for us to work not even with a holding company, but with a single managing subject. We have developed a number of bank technologies specially for a single company. For example, the activities of the TransCreditBank's settlement center are organized so as to provide the Treasury and other departments of OAO RZD an opportunity to manage cash flows in real-time mode to the best possible extent. The cash flows are controlled 24 hours a day on the whole territory of Russia. From this point of view, it is easier for us to work with one large client and with its network of affiliates that geographically corresponds to our regional network. From the point of view of market laws and securing the interests of railway services users, it would be correct to keep to the existing concept of the railway sector reform and to bring the formation of market competition in the economic sector to its logical end.
- What would you like to tell your potential clients at the end of our interview?
- I would like to stress once again that TransCreditBank has a very large potential for further growth. I believe, in the next years, when we carry out the strategy of the bank development to the full, it will become one of the leading Russian banks and among the top ten or twelve banks of Russia according to its financial figures. At the same time, TransCreditBank will follow its one-in-two strategy: to be a unique transport infrastructure bank in the Russian Federation and simultaneously to support its diversified business structure and universality of its product lines.

Interviewed by Andrey Guryev [~DETAIL_TEXT] => It is well known that a company engaged in international economic activities, for example export of production or import of equipment, needs a reliable and experienced financial partner. Oleg Panarin, Vice-Presidentof OAO TransCreditBank, Head of Structuredand Trade Finance Department, commentson the bank's opportunities in the sector.

FROM KALININGRAD TO SAKHALIN, FROM TRANSPORTER TO POWER ENGINEER
- Could you comment on the bank's basic activities you are responsible for?
- First of all, it is work with the corporate clients to finance their international economic activities. In this respect we cooperate with OAO RZD and with a large number of its partners-transport companies, machine-building plants, metallurgical works, petrochemical plants, power enterprises, large agriculture holding companies, traders and many others. We work everywhere in Russia.
Secondly, we provide external funding for the bank's active operations by drawing syndicated loans on the foreign market, placing the bank's debt instruments in the international capital market etc. I'd like to mention an absolutely new activity for the Russian banking sector that our company is also engaged in. This is securitization of assets (leasing payments, credits etc.), i.e. issue of asset-backed securities. This type of activities has been dynamically developing in Russia since the mid of last year.
The third important part of our responsibility is the relationship with Russian and foreign banks, as well as international rating agencies, to strengthen the bank's position abroad.
- Speaking of your clients, you mentioned a number of industries, whose output is exported. But transport companies, i.e. forwarders, operators etc., are not such large exporters as, for example, oil, coal and metallurgical companies are. Do they need your financial mediation?
- A lot of forwarding companies engaged in multimodal transportation export their services. So, we can organize pre-export financing for them. Or we can offer, for example, to credit purchase of rolling stock, where the proceeds from transit or export-import transportation forwarding will be pledged to the bank. A lot of export contracts for delivery of oil products, liquefied natural gas, metals and other goods are concluded on the franco-station or ex-works terms, i.e. a foreign customer orders the transportation on the territory of Russia and abroad, and Russian transport companies provide forwarding services. As a rule, such contracts are long-term signed for a year and envisage transportation of large volumes of goods. The bank acts as a financier, as well as an adviser. We provide for both funding of the contract and search of the most favorable terms of payment.

WE CAN CHOOSE
- Could you give more details about the financial products that OAO TransCreditBank offers to Russian companies, please?
- Let's start from the organization of clearing and settlements which are our daily routine. Besides, we provide current short-term financing of foreign trade contracts using the instruments which are alternative to the standard credit products, i.e. loans and overdrafts. Among them there can be letters of credit with deferred payment and post-financing, stand-by letters of credit, payment guarantees, sometimes guarantees of credit repayment. This is an attractive sector of financial instruments for companies actively involved in international economic activities, since they are much cheaper than traditional credit products. The difference makes up to 1.5%-2.5% per annum.
- Does the bank actively work with such popular instruments as leasing, factoring etc?
- As for leasing, the bank finances only the part of the contract connected with the purchase of the asset being leased, i.e. we extend a loan to the leasing company that works with the bank. Factoring is a product used, as a rule, for financing trade contracts inside the country, as for foreign trade, another instrument is used there. It is called forfeiting. It is an advance assignment and sale of the obligations in the form of a promissory note or a bill of exchange. We have such contracts as well.
However, the majority of our clients are interested in such a service as midium and long-term financing of foreign trade contracts for delivery of equipment, spares, machine parts for further assemblage, some types of semis etc. On the whole, as already mentioned, it is important for our clients that we can provide services based on relatively cheap western resources.
- The bank operates in a very competitive environment. What makes it operate successfully?
- The advantages of the bank are its financing technique, efficiency and, as I have already mentioned, price parameters. Since external funding is provided in the framework of the credit lines, set for us by the western financial institutions TransCreditBank's basic conditions are more attractive than those that can be reached in the internal market. Besides, we provide very flexible periods of contract financing - from two-three months up to eight years.
- How do you manage to get cheaper resources, thus providing more attractive conditions of financing for your clients, if it is no secret, of course?
- It is not a secret at all. In fact, a lot of factors work here. First of all, it is the name of TransCreditBank, which is already well-known enough on the international market, and its long positive credit history. The annual volume of deals of TransCreditBank with western counteragents amounts to USD 300-400 million on average. TransCreditBank has credit ratings of international agencies Standard&Poor's (long-term credit rating of counteragent B-; short-term one is C; outlook stable) and Moody's Investor Service (Long Term Rating: Ba3; ST Most Recent Rating NP; bank financial strength rating is E+; outlook stable). The bank regularly draws up and audits accounts in accordance with the International Financial Reporting Standards. Besides, TransCreditBank is a state bank. 75% of its shares are owned by the state and is managed by the RF Federal Property Management Agency. Another obvious market advantage of our bank is its strategic cooperation with OAO RZD, one of the largest Russian companies, and service of enormous financial flows in the railway sector. That means that, along with the bank's business diversification, we have a clear-cut market niche connected with servicing of the transport sector. Everything mentioned above enables one to evaluate the potential of the bank's further growth as a tremendous one. The cost of funding is formed from the aggregate of all the factors I have spoken of. As a result, the price we reached at the last syndicated loan facility - LIBOR +120 base points with the credit term of 364 days is quite aggressive for the Russian banks of our level.
- Is the number of your counteragents among western banks large or do you prefer a limited amount of reliable partners?
- For many years the partners of TransCreditBank have been first-class banks, such as Dresdner Bank and HypoVereinsbank (Germany), J.P.Morgan Bank ( USA), BNP Paribas (France), Standard Bank London (Great Britain) and others. On January 1, 2006, the total volume of trade finance credit lines of foreign banks for TransCreditBank, including the limits of transactions guaranteed by export credit agencies, exceeded USD 300 million. During the last four years, the bank has significantly developed its cooperation with western counterparties and acquired new business partners among the largest financial institutions of France, Switzerland, USA etc. Nowadays we can finance our clients in any place of the globe and choose optimum counteragent for any contract. We are experienced in mid-term and long-term financing of equipment and other capital goods delivery at the expense of foreign banks' credits guaranteed by export credit agencies of countries-members of Organization for Economic Cooperation and Development.
- What securities do you float today to enlarge resources?
- As for the rouble bonds floating, we plan to do it after privatization. Speaking of the so popular among the Russian banks euro bonds, we have discussed it, held preliminary negotiations with a number of leading world investing banks and confirmed the relevance of such a prospect for ourselves. However, we plan to issue euro bonds only after privatization. Last year we issued relatively short-term obligations in the form of credit notes with the volume of USD 80 million for two years with a floating interest rate.
- You said that TransCreditBank's strategic cooperation with OAO RZD is an advantage in the opinion of a western banker. As a rule, everyone likes banks. If such a large and politicized partner leaves, the bank will surely collapse.
- You are partly correct. In fact, when analysts examine the structure of assets and liabilities of our bank, they pay their attention to such a concentration of risks. I cannot but admit that the majority of our liabilities are based on the railway sector resources. However, firstly, as I have already mentioned, we do our best to reasonably diversify our client base. Secondly, the latest statistic data show that corporate and private clients are very loyal to the bank. For example, in summer 2004, when there was a large withdrawal of deposits from Russian banks, we increased their volume by 20-25%. It is a very indicative fact! Besides, the position of OAO RZD declared at the highest level also favors us. The corporation is interested in the development of TransCreditBank, so it tends to support and increase its cooperation with the bank.OAO RZD also believes that the bank is one of its largest financial partners.

POTENTIAL OF DEVELOPMENT
- Do you follow the process of railway reform?
- Yes, of course. I was a member of the working group that was engaged in the development of the Structural Reform Program in 2001-2002.
- Which situation would be better for a transport bank: OAO RZD remains a holding company or there are a number of independent markets of transportation, repair, railway facilities production etc.?
- You know, there is a certain conflict of interests here. From the institutional point of view, it would be easier for us to work not even with a holding company, but with a single managing subject. We have developed a number of bank technologies specially for a single company. For example, the activities of the TransCreditBank's settlement center are organized so as to provide the Treasury and other departments of OAO RZD an opportunity to manage cash flows in real-time mode to the best possible extent. The cash flows are controlled 24 hours a day on the whole territory of Russia. From this point of view, it is easier for us to work with one large client and with its network of affiliates that geographically corresponds to our regional network. From the point of view of market laws and securing the interests of railway services users, it would be correct to keep to the existing concept of the railway sector reform and to bring the formation of market competition in the economic sector to its logical end.
- What would you like to tell your potential clients at the end of our interview?
- I would like to stress once again that TransCreditBank has a very large potential for further growth. I believe, in the next years, when we carry out the strategy of the bank development to the full, it will become one of the leading Russian banks and among the top ten or twelve banks of Russia according to its financial figures. At the same time, TransCreditBank will follow its one-in-two strategy: to be a unique transport infrastructure bank in the Russian Federation and simultaneously to support its diversified business structure and universality of its product lines.

Interviewed by Andrey Guryev [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>
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РЖД-Партнер

Foreign Capital In Its Path To Russia

Nowadays one of the crucial issues for the Russian economy is attraction of private investment, which is both a natural result of the economy's strengthening anda "must" for its further development. More and more often expectations are laid upon not only Russian, but also foreign companies. In this respect the transport sector, which badly needs implementation of infrastructure projects of high capital capacity, receives special attention from both investors and officials.
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Pyramid to Be Turned Upside Down
Recently the investment image of Russia as seen by the global community has significantly improved. This fact is demonstrated by the numerous ratings in which Russia as an investment object keeps leading positions leaving behind many European states.
Thus, in 2005 Moody's and Fitch rating agencies promoted Russia's investment rating up to one level. According to А.Т.Kearney consulting agency, Russia moved from the 11th to the 6th place in respect of its attractiveness for direct foreign investment, giving way only to China, India, the USA, the UK and Poland. Foreign and Russian experts forecast investors' interest boom to the Russian assets which won't be stopped even by the reserved forecasts about the Russian stock market growth made for the current year. Moreover, according to some experts, in 2006 Russia can join the first three developing markets of the world.
At the same time negative tendencies can be found in the economy development. Thus, according to Alexey Kudrin, Minister of Finance, currently the following investment structure can be observed: 50% from the total volume of investment is made at the expense of enterprises own stock, 7% is covered by credit, and only 1-2% is attracted to the financial markets whereas in developed countries an opposite situation can be observed. That is the reason why the problem is so crucial: if this pyramid can be turned upside down, Russian economy will get a new great impulse for further development. There is only one way to achieve this, i.e. creating favorable conditions both for foreign and Russian investors.
A certain growth of investment activities can be seen even today, though such an obstacle as undeveloped legislative base slows it down a bit. This problem becomes of crucial sort for sea business enterprises, Shavkat Kara-Niyazov, President of National Container Company JSC (NCC JSC) believes. Business community has been looking forward to the approval of the Law "On Sea Ports", development of methodology of lease payment for hydro-technical constructions, and land property regulations. When all these legislative acts have been thoroughly developed and come into force, the Russian shipping companies, including container ones, will become quite attractive for foreign investors, president of NCC presumes.

Legistation base needed
Such facts as the launch of a special Consultative Committee on foreign investment (CCFI) under the RF Government, as well as the promoted by the RF Ministry of Economic Development and Trade idea of independent agency launch for this area of economy, shows the importance of investment issue for the state. Serious legislative work to improve terms for capital attraction is also carried out by experts of the Ministry of Transport, since it is precisely the transport sector that needs investors badly. According to Yuliya Zvorykina, deputy director of the economy and finance department of the Ministry, this is why a working group on transport is being created under the Consultative Committee of the RF. This group will be in charge of providing solutions on investment attraction into the transport sector. In particular this concerns customs, land and taxes regulation. Also, this group will be responsible for improvement of concession legislation, as well as development of normative documents envisaging investment risks control.
In general, great expectations are laid on improvement of legislative-and-normative area this year. Now auxiliary normative acts are developed that would make the legislative base created in 2005 function. The base provides the implementation of public-private partnership mechanisms leading to large-scaled infrastructure projects implementation.
In particular, according to Dmitry Levchenkov, deputy director of investment policy department of the Ministry of Economic Development and Trade, two investment directions are to be developed. They are concession agreements and support of the Investment Fund of the Russian Federation. The legislative base for long-term investment attraction into infrastructure, including transport, has already been created. The Law "On concession agreements" sets the optimal proportion of the risks, responsibility and profit in the process of investment projects implementation.
On the one hand, concession agreements give extra-guarantees to protect the investors' rights and provide strict control over the agreement liabilities fulfillment. This is a key factor for an investor making a decision to invest. On the other hand, this mechanism keeps efficient maintenance and safety of the object, which is of serious importance to the state.
Speaking of the second mechanism of investment attraction into transport infrastructure, i.e. the Investment Fund of the Russian Federation, it has to do with the state's co-financing investment projects that will make investors motivated to participate in large-scaled projects.

Top-managersFeel Optimistic
According to the RF Ministry of Transport, as a result of regional projects monitoring, a list of over 150 highly effective investment projects has been compiled. The following ones are among them: high-speed motor way Saint-Petersburg - Moscow, Central Ring Motor Road, high-speed railway Moscow-Saint-Petersburg, intermodal transport complexes Sheremetyevo and Domodedovo, Yemelyanovo and Koltsovo airports-hubs, large logistic terminals. Negotiations with foreign and Russian investors on each project are being held.
It should be said that foreign stock has been participating on the Russian transport market for a long time: banks actively credit different projects in shipping, railway sector, warehouse logistic both via the Russian affiliates and directly.
Transport companies are more reserved and prefer to implement projects on par with the Russian colleagues (with the exception of several projects by FM Logistics, DHL, Frans Maas implemented in logistic sector). Examples of such partnership can be found in port and airport market segments.
According to Vladimir Ashurkov, Vice-President of Industrial Investors Financial Group, investors being on alert can be explained by the fact that transport sector is "overregulated" at present. Currently construction of any infrastructure object requires a solution of the whole range of problems arising from the necessity to coordinate with governmental bodies and infrastructure companies, whose positions are often different. That is the reason why the private investor risks a lot having invested into a project and a set of permissions of different kinds if he does not get one of them he won't implement the project as a whole.
At the same time, this factor doesn't prevent foreign investors to consider the investment climate of Russia as a positive one. According to the results of research held by PBN company on CCFI request, 47% (against 39% last year) of Board feel optimistic about investment to Russia, as well as 61% top-managers, (48%), and 42% share-holders (27%). Over 90% of foreign companies intend to expand their business activities and increase investment volumes in Russia. 49% of potential investors claim they will enter the market next year and 15% of them are ready to start their activities within 3 years.
Nowadays investment into manufacturing industry dominates, while that into activities in raw-material sectors decreases. By the end of December 2005 the investment share in the volume of accumulated foreign investment in manufacturing industry amounted to 31.0%. Trade share in the investment structure grew up to 25.4%. Investment made into mineral resources extraction made 19.4%. Then comes transport and communication with 8.9% Foreign investors still focus on property market and financial sector - 7.4% и 5.0% respectively.

Ivan Denisenko [~DETAIL_TEXT] =>
Pyramid to Be Turned Upside Down
Recently the investment image of Russia as seen by the global community has significantly improved. This fact is demonstrated by the numerous ratings in which Russia as an investment object keeps leading positions leaving behind many European states.
Thus, in 2005 Moody's and Fitch rating agencies promoted Russia's investment rating up to one level. According to А.Т.Kearney consulting agency, Russia moved from the 11th to the 6th place in respect of its attractiveness for direct foreign investment, giving way only to China, India, the USA, the UK and Poland. Foreign and Russian experts forecast investors' interest boom to the Russian assets which won't be stopped even by the reserved forecasts about the Russian stock market growth made for the current year. Moreover, according to some experts, in 2006 Russia can join the first three developing markets of the world.
At the same time negative tendencies can be found in the economy development. Thus, according to Alexey Kudrin, Minister of Finance, currently the following investment structure can be observed: 50% from the total volume of investment is made at the expense of enterprises own stock, 7% is covered by credit, and only 1-2% is attracted to the financial markets whereas in developed countries an opposite situation can be observed. That is the reason why the problem is so crucial: if this pyramid can be turned upside down, Russian economy will get a new great impulse for further development. There is only one way to achieve this, i.e. creating favorable conditions both for foreign and Russian investors.
A certain growth of investment activities can be seen even today, though such an obstacle as undeveloped legislative base slows it down a bit. This problem becomes of crucial sort for sea business enterprises, Shavkat Kara-Niyazov, President of National Container Company JSC (NCC JSC) believes. Business community has been looking forward to the approval of the Law "On Sea Ports", development of methodology of lease payment for hydro-technical constructions, and land property regulations. When all these legislative acts have been thoroughly developed and come into force, the Russian shipping companies, including container ones, will become quite attractive for foreign investors, president of NCC presumes.

Legistation base needed
Such facts as the launch of a special Consultative Committee on foreign investment (CCFI) under the RF Government, as well as the promoted by the RF Ministry of Economic Development and Trade idea of independent agency launch for this area of economy, shows the importance of investment issue for the state. Serious legislative work to improve terms for capital attraction is also carried out by experts of the Ministry of Transport, since it is precisely the transport sector that needs investors badly. According to Yuliya Zvorykina, deputy director of the economy and finance department of the Ministry, this is why a working group on transport is being created under the Consultative Committee of the RF. This group will be in charge of providing solutions on investment attraction into the transport sector. In particular this concerns customs, land and taxes regulation. Also, this group will be responsible for improvement of concession legislation, as well as development of normative documents envisaging investment risks control.
In general, great expectations are laid on improvement of legislative-and-normative area this year. Now auxiliary normative acts are developed that would make the legislative base created in 2005 function. The base provides the implementation of public-private partnership mechanisms leading to large-scaled infrastructure projects implementation.
In particular, according to Dmitry Levchenkov, deputy director of investment policy department of the Ministry of Economic Development and Trade, two investment directions are to be developed. They are concession agreements and support of the Investment Fund of the Russian Federation. The legislative base for long-term investment attraction into infrastructure, including transport, has already been created. The Law "On concession agreements" sets the optimal proportion of the risks, responsibility and profit in the process of investment projects implementation.
On the one hand, concession agreements give extra-guarantees to protect the investors' rights and provide strict control over the agreement liabilities fulfillment. This is a key factor for an investor making a decision to invest. On the other hand, this mechanism keeps efficient maintenance and safety of the object, which is of serious importance to the state.
Speaking of the second mechanism of investment attraction into transport infrastructure, i.e. the Investment Fund of the Russian Federation, it has to do with the state's co-financing investment projects that will make investors motivated to participate in large-scaled projects.

Top-managersFeel Optimistic
According to the RF Ministry of Transport, as a result of regional projects monitoring, a list of over 150 highly effective investment projects has been compiled. The following ones are among them: high-speed motor way Saint-Petersburg - Moscow, Central Ring Motor Road, high-speed railway Moscow-Saint-Petersburg, intermodal transport complexes Sheremetyevo and Domodedovo, Yemelyanovo and Koltsovo airports-hubs, large logistic terminals. Negotiations with foreign and Russian investors on each project are being held.
It should be said that foreign stock has been participating on the Russian transport market for a long time: banks actively credit different projects in shipping, railway sector, warehouse logistic both via the Russian affiliates and directly.
Transport companies are more reserved and prefer to implement projects on par with the Russian colleagues (with the exception of several projects by FM Logistics, DHL, Frans Maas implemented in logistic sector). Examples of such partnership can be found in port and airport market segments.
According to Vladimir Ashurkov, Vice-President of Industrial Investors Financial Group, investors being on alert can be explained by the fact that transport sector is "overregulated" at present. Currently construction of any infrastructure object requires a solution of the whole range of problems arising from the necessity to coordinate with governmental bodies and infrastructure companies, whose positions are often different. That is the reason why the private investor risks a lot having invested into a project and a set of permissions of different kinds if he does not get one of them he won't implement the project as a whole.
At the same time, this factor doesn't prevent foreign investors to consider the investment climate of Russia as a positive one. According to the results of research held by PBN company on CCFI request, 47% (against 39% last year) of Board feel optimistic about investment to Russia, as well as 61% top-managers, (48%), and 42% share-holders (27%). Over 90% of foreign companies intend to expand their business activities and increase investment volumes in Russia. 49% of potential investors claim they will enter the market next year and 15% of them are ready to start their activities within 3 years.
Nowadays investment into manufacturing industry dominates, while that into activities in raw-material sectors decreases. By the end of December 2005 the investment share in the volume of accumulated foreign investment in manufacturing industry amounted to 31.0%. Trade share in the investment structure grew up to 25.4%. Investment made into mineral resources extraction made 19.4%. Then comes transport and communication with 8.9% Foreign investors still focus on property market and financial sector - 7.4% и 5.0% respectively.

Ivan Denisenko [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Nowadays one of the crucial issues for the Russian economy is attraction of private investment, which is both a natural result of the economy's strengthening anda "must" for its further development. More and more often expectations are laid upon not only Russian, but also foreign companies. In this respect the transport sector, which badly needs implementation of infrastructure projects of high capital capacity, receives special attention from both investors and officials.
[~PREVIEW_TEXT] => Nowadays one of the crucial issues for the Russian economy is attraction of private investment, which is both a natural result of the economy's strengthening anda "must" for its further development. More and more often expectations are laid upon not only Russian, but also foreign companies. In this respect the transport sector, which badly needs implementation of infrastructure projects of high capital capacity, receives special attention from both investors and officials.
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Pyramid to Be Turned Upside Down
Recently the investment image of Russia as seen by the global community has significantly improved. This fact is demonstrated by the numerous ratings in which Russia as an investment object keeps leading positions leaving behind many European states.
Thus, in 2005 Moody's and Fitch rating agencies promoted Russia's investment rating up to one level. According to А.Т.Kearney consulting agency, Russia moved from the 11th to the 6th place in respect of its attractiveness for direct foreign investment, giving way only to China, India, the USA, the UK and Poland. Foreign and Russian experts forecast investors' interest boom to the Russian assets which won't be stopped even by the reserved forecasts about the Russian stock market growth made for the current year. Moreover, according to some experts, in 2006 Russia can join the first three developing markets of the world.
At the same time negative tendencies can be found in the economy development. Thus, according to Alexey Kudrin, Minister of Finance, currently the following investment structure can be observed: 50% from the total volume of investment is made at the expense of enterprises own stock, 7% is covered by credit, and only 1-2% is attracted to the financial markets whereas in developed countries an opposite situation can be observed. That is the reason why the problem is so crucial: if this pyramid can be turned upside down, Russian economy will get a new great impulse for further development. There is only one way to achieve this, i.e. creating favorable conditions both for foreign and Russian investors.
A certain growth of investment activities can be seen even today, though such an obstacle as undeveloped legislative base slows it down a bit. This problem becomes of crucial sort for sea business enterprises, Shavkat Kara-Niyazov, President of National Container Company JSC (NCC JSC) believes. Business community has been looking forward to the approval of the Law "On Sea Ports", development of methodology of lease payment for hydro-technical constructions, and land property regulations. When all these legislative acts have been thoroughly developed and come into force, the Russian shipping companies, including container ones, will become quite attractive for foreign investors, president of NCC presumes.

Legistation base needed
Such facts as the launch of a special Consultative Committee on foreign investment (CCFI) under the RF Government, as well as the promoted by the RF Ministry of Economic Development and Trade idea of independent agency launch for this area of economy, shows the importance of investment issue for the state. Serious legislative work to improve terms for capital attraction is also carried out by experts of the Ministry of Transport, since it is precisely the transport sector that needs investors badly. According to Yuliya Zvorykina, deputy director of the economy and finance department of the Ministry, this is why a working group on transport is being created under the Consultative Committee of the RF. This group will be in charge of providing solutions on investment attraction into the transport sector. In particular this concerns customs, land and taxes regulation. Also, this group will be responsible for improvement of concession legislation, as well as development of normative documents envisaging investment risks control.
In general, great expectations are laid on improvement of legislative-and-normative area this year. Now auxiliary normative acts are developed that would make the legislative base created in 2005 function. The base provides the implementation of public-private partnership mechanisms leading to large-scaled infrastructure projects implementation.
In particular, according to Dmitry Levchenkov, deputy director of investment policy department of the Ministry of Economic Development and Trade, two investment directions are to be developed. They are concession agreements and support of the Investment Fund of the Russian Federation. The legislative base for long-term investment attraction into infrastructure, including transport, has already been created. The Law "On concession agreements" sets the optimal proportion of the risks, responsibility and profit in the process of investment projects implementation.
On the one hand, concession agreements give extra-guarantees to protect the investors' rights and provide strict control over the agreement liabilities fulfillment. This is a key factor for an investor making a decision to invest. On the other hand, this mechanism keeps efficient maintenance and safety of the object, which is of serious importance to the state.
Speaking of the second mechanism of investment attraction into transport infrastructure, i.e. the Investment Fund of the Russian Federation, it has to do with the state's co-financing investment projects that will make investors motivated to participate in large-scaled projects.

Top-managersFeel Optimistic
According to the RF Ministry of Transport, as a result of regional projects monitoring, a list of over 150 highly effective investment projects has been compiled. The following ones are among them: high-speed motor way Saint-Petersburg - Moscow, Central Ring Motor Road, high-speed railway Moscow-Saint-Petersburg, intermodal transport complexes Sheremetyevo and Domodedovo, Yemelyanovo and Koltsovo airports-hubs, large logistic terminals. Negotiations with foreign and Russian investors on each project are being held.
It should be said that foreign stock has been participating on the Russian transport market for a long time: banks actively credit different projects in shipping, railway sector, warehouse logistic both via the Russian affiliates and directly.
Transport companies are more reserved and prefer to implement projects on par with the Russian colleagues (with the exception of several projects by FM Logistics, DHL, Frans Maas implemented in logistic sector). Examples of such partnership can be found in port and airport market segments.
According to Vladimir Ashurkov, Vice-President of Industrial Investors Financial Group, investors being on alert can be explained by the fact that transport sector is "overregulated" at present. Currently construction of any infrastructure object requires a solution of the whole range of problems arising from the necessity to coordinate with governmental bodies and infrastructure companies, whose positions are often different. That is the reason why the private investor risks a lot having invested into a project and a set of permissions of different kinds if he does not get one of them he won't implement the project as a whole.
At the same time, this factor doesn't prevent foreign investors to consider the investment climate of Russia as a positive one. According to the results of research held by PBN company on CCFI request, 47% (against 39% last year) of Board feel optimistic about investment to Russia, as well as 61% top-managers, (48%), and 42% share-holders (27%). Over 90% of foreign companies intend to expand their business activities and increase investment volumes in Russia. 49% of potential investors claim they will enter the market next year and 15% of them are ready to start their activities within 3 years.
Nowadays investment into manufacturing industry dominates, while that into activities in raw-material sectors decreases. By the end of December 2005 the investment share in the volume of accumulated foreign investment in manufacturing industry amounted to 31.0%. Trade share in the investment structure grew up to 25.4%. Investment made into mineral resources extraction made 19.4%. Then comes transport and communication with 8.9% Foreign investors still focus on property market and financial sector - 7.4% и 5.0% respectively.

Ivan Denisenko [~DETAIL_TEXT] =>
Pyramid to Be Turned Upside Down
Recently the investment image of Russia as seen by the global community has significantly improved. This fact is demonstrated by the numerous ratings in which Russia as an investment object keeps leading positions leaving behind many European states.
Thus, in 2005 Moody's and Fitch rating agencies promoted Russia's investment rating up to one level. According to А.Т.Kearney consulting agency, Russia moved from the 11th to the 6th place in respect of its attractiveness for direct foreign investment, giving way only to China, India, the USA, the UK and Poland. Foreign and Russian experts forecast investors' interest boom to the Russian assets which won't be stopped even by the reserved forecasts about the Russian stock market growth made for the current year. Moreover, according to some experts, in 2006 Russia can join the first three developing markets of the world.
At the same time negative tendencies can be found in the economy development. Thus, according to Alexey Kudrin, Minister of Finance, currently the following investment structure can be observed: 50% from the total volume of investment is made at the expense of enterprises own stock, 7% is covered by credit, and only 1-2% is attracted to the financial markets whereas in developed countries an opposite situation can be observed. That is the reason why the problem is so crucial: if this pyramid can be turned upside down, Russian economy will get a new great impulse for further development. There is only one way to achieve this, i.e. creating favorable conditions both for foreign and Russian investors.
A certain growth of investment activities can be seen even today, though such an obstacle as undeveloped legislative base slows it down a bit. This problem becomes of crucial sort for sea business enterprises, Shavkat Kara-Niyazov, President of National Container Company JSC (NCC JSC) believes. Business community has been looking forward to the approval of the Law "On Sea Ports", development of methodology of lease payment for hydro-technical constructions, and land property regulations. When all these legislative acts have been thoroughly developed and come into force, the Russian shipping companies, including container ones, will become quite attractive for foreign investors, president of NCC presumes.

Legistation base needed
Such facts as the launch of a special Consultative Committee on foreign investment (CCFI) under the RF Government, as well as the promoted by the RF Ministry of Economic Development and Trade idea of independent agency launch for this area of economy, shows the importance of investment issue for the state. Serious legislative work to improve terms for capital attraction is also carried out by experts of the Ministry of Transport, since it is precisely the transport sector that needs investors badly. According to Yuliya Zvorykina, deputy director of the economy and finance department of the Ministry, this is why a working group on transport is being created under the Consultative Committee of the RF. This group will be in charge of providing solutions on investment attraction into the transport sector. In particular this concerns customs, land and taxes regulation. Also, this group will be responsible for improvement of concession legislation, as well as development of normative documents envisaging investment risks control.
In general, great expectations are laid on improvement of legislative-and-normative area this year. Now auxiliary normative acts are developed that would make the legislative base created in 2005 function. The base provides the implementation of public-private partnership mechanisms leading to large-scaled infrastructure projects implementation.
In particular, according to Dmitry Levchenkov, deputy director of investment policy department of the Ministry of Economic Development and Trade, two investment directions are to be developed. They are concession agreements and support of the Investment Fund of the Russian Federation. The legislative base for long-term investment attraction into infrastructure, including transport, has already been created. The Law "On concession agreements" sets the optimal proportion of the risks, responsibility and profit in the process of investment projects implementation.
On the one hand, concession agreements give extra-guarantees to protect the investors' rights and provide strict control over the agreement liabilities fulfillment. This is a key factor for an investor making a decision to invest. On the other hand, this mechanism keeps efficient maintenance and safety of the object, which is of serious importance to the state.
Speaking of the second mechanism of investment attraction into transport infrastructure, i.e. the Investment Fund of the Russian Federation, it has to do with the state's co-financing investment projects that will make investors motivated to participate in large-scaled projects.

Top-managersFeel Optimistic
According to the RF Ministry of Transport, as a result of regional projects monitoring, a list of over 150 highly effective investment projects has been compiled. The following ones are among them: high-speed motor way Saint-Petersburg - Moscow, Central Ring Motor Road, high-speed railway Moscow-Saint-Petersburg, intermodal transport complexes Sheremetyevo and Domodedovo, Yemelyanovo and Koltsovo airports-hubs, large logistic terminals. Negotiations with foreign and Russian investors on each project are being held.
It should be said that foreign stock has been participating on the Russian transport market for a long time: banks actively credit different projects in shipping, railway sector, warehouse logistic both via the Russian affiliates and directly.
Transport companies are more reserved and prefer to implement projects on par with the Russian colleagues (with the exception of several projects by FM Logistics, DHL, Frans Maas implemented in logistic sector). Examples of such partnership can be found in port and airport market segments.
According to Vladimir Ashurkov, Vice-President of Industrial Investors Financial Group, investors being on alert can be explained by the fact that transport sector is "overregulated" at present. Currently construction of any infrastructure object requires a solution of the whole range of problems arising from the necessity to coordinate with governmental bodies and infrastructure companies, whose positions are often different. That is the reason why the private investor risks a lot having invested into a project and a set of permissions of different kinds if he does not get one of them he won't implement the project as a whole.
At the same time, this factor doesn't prevent foreign investors to consider the investment climate of Russia as a positive one. According to the results of research held by PBN company on CCFI request, 47% (against 39% last year) of Board feel optimistic about investment to Russia, as well as 61% top-managers, (48%), and 42% share-holders (27%). Over 90% of foreign companies intend to expand their business activities and increase investment volumes in Russia. 49% of potential investors claim they will enter the market next year and 15% of them are ready to start their activities within 3 years.
Nowadays investment into manufacturing industry dominates, while that into activities in raw-material sectors decreases. By the end of December 2005 the investment share in the volume of accumulated foreign investment in manufacturing industry amounted to 31.0%. Trade share in the investment structure grew up to 25.4%. Investment made into mineral resources extraction made 19.4%. Then comes transport and communication with 8.9% Foreign investors still focus on property market and financial sector - 7.4% и 5.0% respectively.

Ivan Denisenko [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Nowadays one of the crucial issues for the Russian economy is attraction of private investment, which is both a natural result of the economy's strengthening anda "must" for its further development. More and more often expectations are laid upon not only Russian, but also foreign companies. In this respect the transport sector, which badly needs implementation of infrastructure projects of high capital capacity, receives special attention from both investors and officials.
[~PREVIEW_TEXT] => Nowadays one of the crucial issues for the Russian economy is attraction of private investment, which is both a natural result of the economy's strengthening anda "must" for its further development. More and more often expectations are laid upon not only Russian, but also foreign companies. In this respect the transport sector, which badly needs implementation of infrastructure projects of high capital capacity, receives special attention from both investors and officials.
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РЖД-Партнер

Panorama

Russia Ready to Build Railways in Algeria
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    [DETAIL_TEXT] => Russia is ready to help build railways and develop the rail infrastructure in Algeria, Russian Railways (OAO RZD) President Vladimir Yakunin announced.
"Algeria has planned financing that could be used to develop railways in Algeria estimated at more than USD 5 billion", V. Yakunin said. "We are holding talks and are in contact with the Algerian Transport Minister. We expect him to visit Russia in early summer. OAO RZD could cooperate with Western companies as it implements rail transport projects in Algeria", V. Yakunin stated. "Such cooperation might not only concern projects in Algeria, but projects in Saudi Arabia, Sudan, the United Arab Emirates and Kuwait", he said.

OAO RZD and Deutsche Bahn AG: Cooperation Agreement
On March 15, OAO RZD and Deutsche Bahn AG concluded a cooperation agreement. The agreement envisages parameters and directions of the companies' cooperation in the near future. The object of the agreement is the engineering-technical services provided by Deutsche Bahn AG regarding purchase, putting into operation and maintenance of new locomotives.
The agreement was signed by the first vice-president of OAO RZD Vadim Morozov and the Head of Deutsche Bahn Systemtechnik Hans-Peter Lang.
Vadim Morozov said that developing cooperation in technical policy is especially important for OAO RZD.
OAO RZD vice-president Valentin Gapanovich said that the signed contract "is a key document that opens large perspectives for joint work aimed at railway transport development". He also marked that the most important directions of cooperation are completing the contract for high-speed trains purchase and establishing their maintenance for the whole lifetime period. Besides, OAO RZD believes that further cooperation is possible in the systems for rolling-stock diagnostics, systems of communication and other spheres.

Customs Need to Improve Image
Russia's top railways official said on March 16 that the country has to improve its image for foreign freight companies. Speaking ahead of a conference on the future of the Trans-Siberian Railroad, Russian Railways President Vladimir Yakunin said Russia's railways and customs had to make foreign freight companies more aware of what the country has to offer.
He said much had already been done to establish the Trans-Siberian Railway as a major goods artery linking East and West, adding that rapid customs clearance had slashed door-to-door delivery times.
"This is the main reason behind rising interest in Asia in sending freight by the Trans-Siberian Railway, which is the shortest route between West and East", he said in Vladivostok on Russia's Pacific coast.

To Develop Transport Machine-Building Sector
"The development of transport machine-building sector is very important for us", the first vice-president of OAO RZD Vadim Morozov said opening the international conference "Transport Machine-Building. Structure of Demand and Opportunities of Supply" held in Moscow. He underlined that the company pays special attention to putting new equipment and technologies into operation in the railway transport sector.
Vadim Morozov spoke of the following main directions for the Russian railway machine-building development: expansion of already developed commercial models of production; taking measures to implement absolutely new technical solutions to produce machines; starting to service transport machinery; making and testing new models and reconstruction of the Russian enterprises' capacities to produce machinery of new generation.

Plans Come True
A plan to set up a joint venture between the railway systems of Germany, Belarus, Poland and Russia to transport freight along International Transport Corridor No. 2 was confirmed when Vladimir Yakunin, the President of Russian Railways met with Hartmut Mehdorn, CEO of Deutsche Bahn, during the Russian-German Economic Forum held in Tomsk.
The Forum was headed by Russian President Vladimir Putin and German Chancellor Angela Merkel. Members of the two countries governments also took part in the Forum, including German Gref, Russian Minister of Economic Development and Trade, Victor Khristenko, Russian Minister of Industry and Energy, and Mikhail Gloss, German Minister of Economics, as well as other ministers and the heads of German and Russian banks.
V. Yakunin and H. Mehdorn also discussed the feasibility of establishing a direct ferry route between the ports of Ust-Luga and the Kaliningrad Oblast, on the one hand, and Germany, on the other. Initially, a port project for Ust-Luga will be developed. The German side is prepared to participate in setting up a joint operating company and does not exclude joint investment in the project. A bilateral working group was set up and its composition and tasks in the near future decided.
As V.Yakunin noted, "through our joint efforts, we intend to take on a major part of the cargo flows between Europe and Asia which, in our opinion, should lead to the increasing competitiveness of our common transport space and in turn to the global competitiveness of the Russia and European economies".
In the last three to four years, cooperation between Russian Railways and Deutsche Bahn has seen the opening of direct routes linking towns in the Urals-Siberian region with the German capital and the re-launched connection between Kaliningrad and Berlin. In addition, the two companies are working on re-establishing direct international routes from Russia to Frankfurt-am-Main and other Central European cities.

Russian Railways Subsidiary to Hold IPO
Russian Railways plans to IPO 49% of its cargo subsidiary's shares, OAO RZD President Vladimir Yakunin stated at the Russian Economic Forum in London.
The money raised through the public offering is expected to go to revamping the railways transport infrastructure. Russian Railways plans to make an additional issue of shares of the cargo company within a year since its establishment. V. Yakunin estimates the cargo company's revenue to be around USD 3 billion, and EBITDA about USD 1 billion. The Russian Railways is currently working on creating a number of specialized cargo companies to transport cars, oil, and timber, among other things.

Sakhalin Energy Signs LNG Deal with Japan
On April 20, Sakhalin Energy, the operator for the massive Sakhalin II project, signed a contract with a leading Japanese firm to supply 210,000 metric tons of liquefied natural gas annually for the next 20 years.
The deal with Hiroshima Gas, a leading Japanese producer and supplier of natural gas and LNG, means deliveries will be carried out using small vessels with ice-breaking capability to transport about 20,000 cubic meters of LNG each.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is developing two vast offshore fields off the island of Sakhalin in Russia's Far East that hold estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas. It is also building Russia's first liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.
The first LNG supplies under the Sakhalin II project are scheduled to start in summer 2008.

RF Duma Passes Law on Equal Access to Oil Terminals
The RF State Duma passed at third reading amendments to 6 of the Law on Natural Monopolies which grants equal access to oil terminals.
The law is intended to broaden the concept of "transport infrastructure" applicable within the regime of "equal access" to transport infrastructure when exporting oil. The concept in the existing law is limited to "seaport terminals", although other forms of transport, like rail and river shipping, are widely used to export crude oil from Russia. Now, the law will omit the wording "seaport" from the concept.
The law currently grants equal access to seaport terminals only.
"Nearly all railway terminals are controlled by major oil companies and the amendments will change that situation", a Duma official said.
The official said the amendments would create market conditions for large and small oil companies alike. In addition, they ought to result in more crude being refined in Russia itself.

New Terminal by August 2007
In August 2007, OOO Promtransleasing plans to put into operation the first stage of the liquefied carbureted hydrogen gas terminal in Tuapse, Director General of the company Kamal Lebedev said at conference "Trade and Bunkering in the Southern Region" held in Sochi.
According to him, the annual capacity of the first stage of the terminal is to amount to 300,000 tons. In the framework of the first stage, a technical scheme will be realized. It will enable to transfer gas from tank-wagons directly to tankers without gas storages. Investment into the terminal's first stage is to amount to USD 25 million. The second stage of the terminal is to be put into operation in Q4 of 2008, the planned annual capacity is 500,000 tons of gas, using the technology of storing and transportation under pressure. Investments are to amount to USD 23 million. The terminal is to start working at the full capacity (1.5 million tons per annum) in 2009-2010. The total cost of the project is USD 90-100 million. American company Litwin MS in cooperation with some Russian and foreign companies will design the terminal and delivery equipment and construct the terminal.

Ukrzalyznitsya Fights for Assets Re-Estimation
Key assets of Ukrzaliznytsya (Ukrainian Railway) make EUR 3.66 billion. That is threefold (sixfold - according to some estimations) lower than the market cost, said the authorities of the State Administration of the Ukrainian Railway Transport.
The fall may cause redistribution of assets by lowered prices. Thus, railroad assets are estimated at USD 700 million. In particular, diesel locomotive balance cost is USD 2.4 thousand (for the sake of comparison: market cost is USD 2 million).
Ukrzaliznytsya seeks for main funds indexation. The point is included into the financial plan of the sector. The Ministry of Finance of Ukraine does not accept Ukrzaliznytsya's financial plan and particularly opposes this point. Ukrzaliznytsya's administration notifies that the lack of key assets reappointment may result in financial collapse of the Ukraine railroads. In 2004 Ukrzaliznytsya authorities announced the necessity of indexation of main funds for the first time. The Ukraine transport department took a decision for indexation in 2006.

OAO RZD and Deutsche Bahn to Form Logistics Subsidiary
OAO RZD and Deutsche Bahn have agreed to set up a joint logistics subsidiary, with the possibility of establishing joint logistics centres with rail access in Russia.
The new company is to be officially founded in the coming months.
The intention is for the new joint company to cover the entire logistics chain for rail freight transport, linking Russia with Deutsche Bahn's global logistics network.
Planning of the goods distribution and dispatch processes in Russia in order to meet the needs of the market should also improve the competitiveness of the rail companies in comparison with their rivals.
"Russia is a growing market, the exchange of goods with the EU is on the increase and Russia is also a land bridge to China", said Hartmut Mehdorn, Chairman of the Management Board of Deutsche Bahn. "These are the reasons why we want to boost our transport and logistics activities in this area". Deutsche Bahn subsidiary Schenker has been active in Russia for years with its own national corporations, and offers the entire range of land transport, air freight and sea freight, as well as the associated logistics services. It is currently also engaged in developing its own land transport network for the distribution of goods throughout the country.
[~DETAIL_TEXT] => Russia is ready to help build railways and develop the rail infrastructure in Algeria, Russian Railways (OAO RZD) President Vladimir Yakunin announced.
"Algeria has planned financing that could be used to develop railways in Algeria estimated at more than USD 5 billion", V. Yakunin said. "We are holding talks and are in contact with the Algerian Transport Minister. We expect him to visit Russia in early summer. OAO RZD could cooperate with Western companies as it implements rail transport projects in Algeria", V. Yakunin stated. "Such cooperation might not only concern projects in Algeria, but projects in Saudi Arabia, Sudan, the United Arab Emirates and Kuwait", he said.

OAO RZD and Deutsche Bahn AG: Cooperation Agreement
On March 15, OAO RZD and Deutsche Bahn AG concluded a cooperation agreement. The agreement envisages parameters and directions of the companies' cooperation in the near future. The object of the agreement is the engineering-technical services provided by Deutsche Bahn AG regarding purchase, putting into operation and maintenance of new locomotives.
The agreement was signed by the first vice-president of OAO RZD Vadim Morozov and the Head of Deutsche Bahn Systemtechnik Hans-Peter Lang.
Vadim Morozov said that developing cooperation in technical policy is especially important for OAO RZD.
OAO RZD vice-president Valentin Gapanovich said that the signed contract "is a key document that opens large perspectives for joint work aimed at railway transport development". He also marked that the most important directions of cooperation are completing the contract for high-speed trains purchase and establishing their maintenance for the whole lifetime period. Besides, OAO RZD believes that further cooperation is possible in the systems for rolling-stock diagnostics, systems of communication and other spheres.

Customs Need to Improve Image
Russia's top railways official said on March 16 that the country has to improve its image for foreign freight companies. Speaking ahead of a conference on the future of the Trans-Siberian Railroad, Russian Railways President Vladimir Yakunin said Russia's railways and customs had to make foreign freight companies more aware of what the country has to offer.
He said much had already been done to establish the Trans-Siberian Railway as a major goods artery linking East and West, adding that rapid customs clearance had slashed door-to-door delivery times.
"This is the main reason behind rising interest in Asia in sending freight by the Trans-Siberian Railway, which is the shortest route between West and East", he said in Vladivostok on Russia's Pacific coast.

To Develop Transport Machine-Building Sector
"The development of transport machine-building sector is very important for us", the first vice-president of OAO RZD Vadim Morozov said opening the international conference "Transport Machine-Building. Structure of Demand and Opportunities of Supply" held in Moscow. He underlined that the company pays special attention to putting new equipment and technologies into operation in the railway transport sector.
Vadim Morozov spoke of the following main directions for the Russian railway machine-building development: expansion of already developed commercial models of production; taking measures to implement absolutely new technical solutions to produce machines; starting to service transport machinery; making and testing new models and reconstruction of the Russian enterprises' capacities to produce machinery of new generation.

Plans Come True
A plan to set up a joint venture between the railway systems of Germany, Belarus, Poland and Russia to transport freight along International Transport Corridor No. 2 was confirmed when Vladimir Yakunin, the President of Russian Railways met with Hartmut Mehdorn, CEO of Deutsche Bahn, during the Russian-German Economic Forum held in Tomsk.
The Forum was headed by Russian President Vladimir Putin and German Chancellor Angela Merkel. Members of the two countries governments also took part in the Forum, including German Gref, Russian Minister of Economic Development and Trade, Victor Khristenko, Russian Minister of Industry and Energy, and Mikhail Gloss, German Minister of Economics, as well as other ministers and the heads of German and Russian banks.
V. Yakunin and H. Mehdorn also discussed the feasibility of establishing a direct ferry route between the ports of Ust-Luga and the Kaliningrad Oblast, on the one hand, and Germany, on the other. Initially, a port project for Ust-Luga will be developed. The German side is prepared to participate in setting up a joint operating company and does not exclude joint investment in the project. A bilateral working group was set up and its composition and tasks in the near future decided.
As V.Yakunin noted, "through our joint efforts, we intend to take on a major part of the cargo flows between Europe and Asia which, in our opinion, should lead to the increasing competitiveness of our common transport space and in turn to the global competitiveness of the Russia and European economies".
In the last three to four years, cooperation between Russian Railways and Deutsche Bahn has seen the opening of direct routes linking towns in the Urals-Siberian region with the German capital and the re-launched connection between Kaliningrad and Berlin. In addition, the two companies are working on re-establishing direct international routes from Russia to Frankfurt-am-Main and other Central European cities.

Russian Railways Subsidiary to Hold IPO
Russian Railways plans to IPO 49% of its cargo subsidiary's shares, OAO RZD President Vladimir Yakunin stated at the Russian Economic Forum in London.
The money raised through the public offering is expected to go to revamping the railways transport infrastructure. Russian Railways plans to make an additional issue of shares of the cargo company within a year since its establishment. V. Yakunin estimates the cargo company's revenue to be around USD 3 billion, and EBITDA about USD 1 billion. The Russian Railways is currently working on creating a number of specialized cargo companies to transport cars, oil, and timber, among other things.

Sakhalin Energy Signs LNG Deal with Japan
On April 20, Sakhalin Energy, the operator for the massive Sakhalin II project, signed a contract with a leading Japanese firm to supply 210,000 metric tons of liquefied natural gas annually for the next 20 years.
The deal with Hiroshima Gas, a leading Japanese producer and supplier of natural gas and LNG, means deliveries will be carried out using small vessels with ice-breaking capability to transport about 20,000 cubic meters of LNG each.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is developing two vast offshore fields off the island of Sakhalin in Russia's Far East that hold estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas. It is also building Russia's first liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.
The first LNG supplies under the Sakhalin II project are scheduled to start in summer 2008.

RF Duma Passes Law on Equal Access to Oil Terminals
The RF State Duma passed at third reading amendments to 6 of the Law on Natural Monopolies which grants equal access to oil terminals.
The law is intended to broaden the concept of "transport infrastructure" applicable within the regime of "equal access" to transport infrastructure when exporting oil. The concept in the existing law is limited to "seaport terminals", although other forms of transport, like rail and river shipping, are widely used to export crude oil from Russia. Now, the law will omit the wording "seaport" from the concept.
The law currently grants equal access to seaport terminals only.
"Nearly all railway terminals are controlled by major oil companies and the amendments will change that situation", a Duma official said.
The official said the amendments would create market conditions for large and small oil companies alike. In addition, they ought to result in more crude being refined in Russia itself.

New Terminal by August 2007
In August 2007, OOO Promtransleasing plans to put into operation the first stage of the liquefied carbureted hydrogen gas terminal in Tuapse, Director General of the company Kamal Lebedev said at conference "Trade and Bunkering in the Southern Region" held in Sochi.
According to him, the annual capacity of the first stage of the terminal is to amount to 300,000 tons. In the framework of the first stage, a technical scheme will be realized. It will enable to transfer gas from tank-wagons directly to tankers without gas storages. Investment into the terminal's first stage is to amount to USD 25 million. The second stage of the terminal is to be put into operation in Q4 of 2008, the planned annual capacity is 500,000 tons of gas, using the technology of storing and transportation under pressure. Investments are to amount to USD 23 million. The terminal is to start working at the full capacity (1.5 million tons per annum) in 2009-2010. The total cost of the project is USD 90-100 million. American company Litwin MS in cooperation with some Russian and foreign companies will design the terminal and delivery equipment and construct the terminal.

Ukrzalyznitsya Fights for Assets Re-Estimation
Key assets of Ukrzaliznytsya (Ukrainian Railway) make EUR 3.66 billion. That is threefold (sixfold - according to some estimations) lower than the market cost, said the authorities of the State Administration of the Ukrainian Railway Transport.
The fall may cause redistribution of assets by lowered prices. Thus, railroad assets are estimated at USD 700 million. In particular, diesel locomotive balance cost is USD 2.4 thousand (for the sake of comparison: market cost is USD 2 million).
Ukrzaliznytsya seeks for main funds indexation. The point is included into the financial plan of the sector. The Ministry of Finance of Ukraine does not accept Ukrzaliznytsya's financial plan and particularly opposes this point. Ukrzaliznytsya's administration notifies that the lack of key assets reappointment may result in financial collapse of the Ukraine railroads. In 2004 Ukrzaliznytsya authorities announced the necessity of indexation of main funds for the first time. The Ukraine transport department took a decision for indexation in 2006.

OAO RZD and Deutsche Bahn to Form Logistics Subsidiary
OAO RZD and Deutsche Bahn have agreed to set up a joint logistics subsidiary, with the possibility of establishing joint logistics centres with rail access in Russia.
The new company is to be officially founded in the coming months.
The intention is for the new joint company to cover the entire logistics chain for rail freight transport, linking Russia with Deutsche Bahn's global logistics network.
Planning of the goods distribution and dispatch processes in Russia in order to meet the needs of the market should also improve the competitiveness of the rail companies in comparison with their rivals.
"Russia is a growing market, the exchange of goods with the EU is on the increase and Russia is also a land bridge to China", said Hartmut Mehdorn, Chairman of the Management Board of Deutsche Bahn. "These are the reasons why we want to boost our transport and logistics activities in this area". Deutsche Bahn subsidiary Schenker has been active in Russia for years with its own national corporations, and offers the entire range of land transport, air freight and sea freight, as well as the associated logistics services. It is currently also engaged in developing its own land transport network for the distribution of goods throughout the country.
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    [DETAIL_TEXT] => Russia is ready to help build railways and develop the rail infrastructure in Algeria, Russian Railways (OAO RZD) President Vladimir Yakunin announced.
"Algeria has planned financing that could be used to develop railways in Algeria estimated at more than USD 5 billion", V. Yakunin said. "We are holding talks and are in contact with the Algerian Transport Minister. We expect him to visit Russia in early summer. OAO RZD could cooperate with Western companies as it implements rail transport projects in Algeria", V. Yakunin stated. "Such cooperation might not only concern projects in Algeria, but projects in Saudi Arabia, Sudan, the United Arab Emirates and Kuwait", he said.

OAO RZD and Deutsche Bahn AG: Cooperation Agreement
On March 15, OAO RZD and Deutsche Bahn AG concluded a cooperation agreement. The agreement envisages parameters and directions of the companies' cooperation in the near future. The object of the agreement is the engineering-technical services provided by Deutsche Bahn AG regarding purchase, putting into operation and maintenance of new locomotives.
The agreement was signed by the first vice-president of OAO RZD Vadim Morozov and the Head of Deutsche Bahn Systemtechnik Hans-Peter Lang.
Vadim Morozov said that developing cooperation in technical policy is especially important for OAO RZD.
OAO RZD vice-president Valentin Gapanovich said that the signed contract "is a key document that opens large perspectives for joint work aimed at railway transport development". He also marked that the most important directions of cooperation are completing the contract for high-speed trains purchase and establishing their maintenance for the whole lifetime period. Besides, OAO RZD believes that further cooperation is possible in the systems for rolling-stock diagnostics, systems of communication and other spheres.

Customs Need to Improve Image
Russia's top railways official said on March 16 that the country has to improve its image for foreign freight companies. Speaking ahead of a conference on the future of the Trans-Siberian Railroad, Russian Railways President Vladimir Yakunin said Russia's railways and customs had to make foreign freight companies more aware of what the country has to offer.
He said much had already been done to establish the Trans-Siberian Railway as a major goods artery linking East and West, adding that rapid customs clearance had slashed door-to-door delivery times.
"This is the main reason behind rising interest in Asia in sending freight by the Trans-Siberian Railway, which is the shortest route between West and East", he said in Vladivostok on Russia's Pacific coast.

To Develop Transport Machine-Building Sector
"The development of transport machine-building sector is very important for us", the first vice-president of OAO RZD Vadim Morozov said opening the international conference "Transport Machine-Building. Structure of Demand and Opportunities of Supply" held in Moscow. He underlined that the company pays special attention to putting new equipment and technologies into operation in the railway transport sector.
Vadim Morozov spoke of the following main directions for the Russian railway machine-building development: expansion of already developed commercial models of production; taking measures to implement absolutely new technical solutions to produce machines; starting to service transport machinery; making and testing new models and reconstruction of the Russian enterprises' capacities to produce machinery of new generation.

Plans Come True
A plan to set up a joint venture between the railway systems of Germany, Belarus, Poland and Russia to transport freight along International Transport Corridor No. 2 was confirmed when Vladimir Yakunin, the President of Russian Railways met with Hartmut Mehdorn, CEO of Deutsche Bahn, during the Russian-German Economic Forum held in Tomsk.
The Forum was headed by Russian President Vladimir Putin and German Chancellor Angela Merkel. Members of the two countries governments also took part in the Forum, including German Gref, Russian Minister of Economic Development and Trade, Victor Khristenko, Russian Minister of Industry and Energy, and Mikhail Gloss, German Minister of Economics, as well as other ministers and the heads of German and Russian banks.
V. Yakunin and H. Mehdorn also discussed the feasibility of establishing a direct ferry route between the ports of Ust-Luga and the Kaliningrad Oblast, on the one hand, and Germany, on the other. Initially, a port project for Ust-Luga will be developed. The German side is prepared to participate in setting up a joint operating company and does not exclude joint investment in the project. A bilateral working group was set up and its composition and tasks in the near future decided.
As V.Yakunin noted, "through our joint efforts, we intend to take on a major part of the cargo flows between Europe and Asia which, in our opinion, should lead to the increasing competitiveness of our common transport space and in turn to the global competitiveness of the Russia and European economies".
In the last three to four years, cooperation between Russian Railways and Deutsche Bahn has seen the opening of direct routes linking towns in the Urals-Siberian region with the German capital and the re-launched connection between Kaliningrad and Berlin. In addition, the two companies are working on re-establishing direct international routes from Russia to Frankfurt-am-Main and other Central European cities.

Russian Railways Subsidiary to Hold IPO
Russian Railways plans to IPO 49% of its cargo subsidiary's shares, OAO RZD President Vladimir Yakunin stated at the Russian Economic Forum in London.
The money raised through the public offering is expected to go to revamping the railways transport infrastructure. Russian Railways plans to make an additional issue of shares of the cargo company within a year since its establishment. V. Yakunin estimates the cargo company's revenue to be around USD 3 billion, and EBITDA about USD 1 billion. The Russian Railways is currently working on creating a number of specialized cargo companies to transport cars, oil, and timber, among other things.

Sakhalin Energy Signs LNG Deal with Japan
On April 20, Sakhalin Energy, the operator for the massive Sakhalin II project, signed a contract with a leading Japanese firm to supply 210,000 metric tons of liquefied natural gas annually for the next 20 years.
The deal with Hiroshima Gas, a leading Japanese producer and supplier of natural gas and LNG, means deliveries will be carried out using small vessels with ice-breaking capability to transport about 20,000 cubic meters of LNG each.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is developing two vast offshore fields off the island of Sakhalin in Russia's Far East that hold estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas. It is also building Russia's first liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.
The first LNG supplies under the Sakhalin II project are scheduled to start in summer 2008.

RF Duma Passes Law on Equal Access to Oil Terminals
The RF State Duma passed at third reading amendments to 6 of the Law on Natural Monopolies which grants equal access to oil terminals.
The law is intended to broaden the concept of "transport infrastructure" applicable within the regime of "equal access" to transport infrastructure when exporting oil. The concept in the existing law is limited to "seaport terminals", although other forms of transport, like rail and river shipping, are widely used to export crude oil from Russia. Now, the law will omit the wording "seaport" from the concept.
The law currently grants equal access to seaport terminals only.
"Nearly all railway terminals are controlled by major oil companies and the amendments will change that situation", a Duma official said.
The official said the amendments would create market conditions for large and small oil companies alike. In addition, they ought to result in more crude being refined in Russia itself.

New Terminal by August 2007
In August 2007, OOO Promtransleasing plans to put into operation the first stage of the liquefied carbureted hydrogen gas terminal in Tuapse, Director General of the company Kamal Lebedev said at conference "Trade and Bunkering in the Southern Region" held in Sochi.
According to him, the annual capacity of the first stage of the terminal is to amount to 300,000 tons. In the framework of the first stage, a technical scheme will be realized. It will enable to transfer gas from tank-wagons directly to tankers without gas storages. Investment into the terminal's first stage is to amount to USD 25 million. The second stage of the terminal is to be put into operation in Q4 of 2008, the planned annual capacity is 500,000 tons of gas, using the technology of storing and transportation under pressure. Investments are to amount to USD 23 million. The terminal is to start working at the full capacity (1.5 million tons per annum) in 2009-2010. The total cost of the project is USD 90-100 million. American company Litwin MS in cooperation with some Russian and foreign companies will design the terminal and delivery equipment and construct the terminal.

Ukrzalyznitsya Fights for Assets Re-Estimation
Key assets of Ukrzaliznytsya (Ukrainian Railway) make EUR 3.66 billion. That is threefold (sixfold - according to some estimations) lower than the market cost, said the authorities of the State Administration of the Ukrainian Railway Transport.
The fall may cause redistribution of assets by lowered prices. Thus, railroad assets are estimated at USD 700 million. In particular, diesel locomotive balance cost is USD 2.4 thousand (for the sake of comparison: market cost is USD 2 million).
Ukrzaliznytsya seeks for main funds indexation. The point is included into the financial plan of the sector. The Ministry of Finance of Ukraine does not accept Ukrzaliznytsya's financial plan and particularly opposes this point. Ukrzaliznytsya's administration notifies that the lack of key assets reappointment may result in financial collapse of the Ukraine railroads. In 2004 Ukrzaliznytsya authorities announced the necessity of indexation of main funds for the first time. The Ukraine transport department took a decision for indexation in 2006.

OAO RZD and Deutsche Bahn to Form Logistics Subsidiary
OAO RZD and Deutsche Bahn have agreed to set up a joint logistics subsidiary, with the possibility of establishing joint logistics centres with rail access in Russia.
The new company is to be officially founded in the coming months.
The intention is for the new joint company to cover the entire logistics chain for rail freight transport, linking Russia with Deutsche Bahn's global logistics network.
Planning of the goods distribution and dispatch processes in Russia in order to meet the needs of the market should also improve the competitiveness of the rail companies in comparison with their rivals.
"Russia is a growing market, the exchange of goods with the EU is on the increase and Russia is also a land bridge to China", said Hartmut Mehdorn, Chairman of the Management Board of Deutsche Bahn. "These are the reasons why we want to boost our transport and logistics activities in this area". Deutsche Bahn subsidiary Schenker has been active in Russia for years with its own national corporations, and offers the entire range of land transport, air freight and sea freight, as well as the associated logistics services. It is currently also engaged in developing its own land transport network for the distribution of goods throughout the country.
[~DETAIL_TEXT] => Russia is ready to help build railways and develop the rail infrastructure in Algeria, Russian Railways (OAO RZD) President Vladimir Yakunin announced.
"Algeria has planned financing that could be used to develop railways in Algeria estimated at more than USD 5 billion", V. Yakunin said. "We are holding talks and are in contact with the Algerian Transport Minister. We expect him to visit Russia in early summer. OAO RZD could cooperate with Western companies as it implements rail transport projects in Algeria", V. Yakunin stated. "Such cooperation might not only concern projects in Algeria, but projects in Saudi Arabia, Sudan, the United Arab Emirates and Kuwait", he said.

OAO RZD and Deutsche Bahn AG: Cooperation Agreement
On March 15, OAO RZD and Deutsche Bahn AG concluded a cooperation agreement. The agreement envisages parameters and directions of the companies' cooperation in the near future. The object of the agreement is the engineering-technical services provided by Deutsche Bahn AG regarding purchase, putting into operation and maintenance of new locomotives.
The agreement was signed by the first vice-president of OAO RZD Vadim Morozov and the Head of Deutsche Bahn Systemtechnik Hans-Peter Lang.
Vadim Morozov said that developing cooperation in technical policy is especially important for OAO RZD.
OAO RZD vice-president Valentin Gapanovich said that the signed contract "is a key document that opens large perspectives for joint work aimed at railway transport development". He also marked that the most important directions of cooperation are completing the contract for high-speed trains purchase and establishing their maintenance for the whole lifetime period. Besides, OAO RZD believes that further cooperation is possible in the systems for rolling-stock diagnostics, systems of communication and other spheres.

Customs Need to Improve Image
Russia's top railways official said on March 16 that the country has to improve its image for foreign freight companies. Speaking ahead of a conference on the future of the Trans-Siberian Railroad, Russian Railways President Vladimir Yakunin said Russia's railways and customs had to make foreign freight companies more aware of what the country has to offer.
He said much had already been done to establish the Trans-Siberian Railway as a major goods artery linking East and West, adding that rapid customs clearance had slashed door-to-door delivery times.
"This is the main reason behind rising interest in Asia in sending freight by the Trans-Siberian Railway, which is the shortest route between West and East", he said in Vladivostok on Russia's Pacific coast.

To Develop Transport Machine-Building Sector
"The development of transport machine-building sector is very important for us", the first vice-president of OAO RZD Vadim Morozov said opening the international conference "Transport Machine-Building. Structure of Demand and Opportunities of Supply" held in Moscow. He underlined that the company pays special attention to putting new equipment and technologies into operation in the railway transport sector.
Vadim Morozov spoke of the following main directions for the Russian railway machine-building development: expansion of already developed commercial models of production; taking measures to implement absolutely new technical solutions to produce machines; starting to service transport machinery; making and testing new models and reconstruction of the Russian enterprises' capacities to produce machinery of new generation.

Plans Come True
A plan to set up a joint venture between the railway systems of Germany, Belarus, Poland and Russia to transport freight along International Transport Corridor No. 2 was confirmed when Vladimir Yakunin, the President of Russian Railways met with Hartmut Mehdorn, CEO of Deutsche Bahn, during the Russian-German Economic Forum held in Tomsk.
The Forum was headed by Russian President Vladimir Putin and German Chancellor Angela Merkel. Members of the two countries governments also took part in the Forum, including German Gref, Russian Minister of Economic Development and Trade, Victor Khristenko, Russian Minister of Industry and Energy, and Mikhail Gloss, German Minister of Economics, as well as other ministers and the heads of German and Russian banks.
V. Yakunin and H. Mehdorn also discussed the feasibility of establishing a direct ferry route between the ports of Ust-Luga and the Kaliningrad Oblast, on the one hand, and Germany, on the other. Initially, a port project for Ust-Luga will be developed. The German side is prepared to participate in setting up a joint operating company and does not exclude joint investment in the project. A bilateral working group was set up and its composition and tasks in the near future decided.
As V.Yakunin noted, "through our joint efforts, we intend to take on a major part of the cargo flows between Europe and Asia which, in our opinion, should lead to the increasing competitiveness of our common transport space and in turn to the global competitiveness of the Russia and European economies".
In the last three to four years, cooperation between Russian Railways and Deutsche Bahn has seen the opening of direct routes linking towns in the Urals-Siberian region with the German capital and the re-launched connection between Kaliningrad and Berlin. In addition, the two companies are working on re-establishing direct international routes from Russia to Frankfurt-am-Main and other Central European cities.

Russian Railways Subsidiary to Hold IPO
Russian Railways plans to IPO 49% of its cargo subsidiary's shares, OAO RZD President Vladimir Yakunin stated at the Russian Economic Forum in London.
The money raised through the public offering is expected to go to revamping the railways transport infrastructure. Russian Railways plans to make an additional issue of shares of the cargo company within a year since its establishment. V. Yakunin estimates the cargo company's revenue to be around USD 3 billion, and EBITDA about USD 1 billion. The Russian Railways is currently working on creating a number of specialized cargo companies to transport cars, oil, and timber, among other things.

Sakhalin Energy Signs LNG Deal with Japan
On April 20, Sakhalin Energy, the operator for the massive Sakhalin II project, signed a contract with a leading Japanese firm to supply 210,000 metric tons of liquefied natural gas annually for the next 20 years.
The deal with Hiroshima Gas, a leading Japanese producer and supplier of natural gas and LNG, means deliveries will be carried out using small vessels with ice-breaking capability to transport about 20,000 cubic meters of LNG each.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is developing two vast offshore fields off the island of Sakhalin in Russia's Far East that hold estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas. It is also building Russia's first liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.
The first LNG supplies under the Sakhalin II project are scheduled to start in summer 2008.

RF Duma Passes Law on Equal Access to Oil Terminals
The RF State Duma passed at third reading amendments to 6 of the Law on Natural Monopolies which grants equal access to oil terminals.
The law is intended to broaden the concept of "transport infrastructure" applicable within the regime of "equal access" to transport infrastructure when exporting oil. The concept in the existing law is limited to "seaport terminals", although other forms of transport, like rail and river shipping, are widely used to export crude oil from Russia. Now, the law will omit the wording "seaport" from the concept.
The law currently grants equal access to seaport terminals only.
"Nearly all railway terminals are controlled by major oil companies and the amendments will change that situation", a Duma official said.
The official said the amendments would create market conditions for large and small oil companies alike. In addition, they ought to result in more crude being refined in Russia itself.

New Terminal by August 2007
In August 2007, OOO Promtransleasing plans to put into operation the first stage of the liquefied carbureted hydrogen gas terminal in Tuapse, Director General of the company Kamal Lebedev said at conference "Trade and Bunkering in the Southern Region" held in Sochi.
According to him, the annual capacity of the first stage of the terminal is to amount to 300,000 tons. In the framework of the first stage, a technical scheme will be realized. It will enable to transfer gas from tank-wagons directly to tankers without gas storages. Investment into the terminal's first stage is to amount to USD 25 million. The second stage of the terminal is to be put into operation in Q4 of 2008, the planned annual capacity is 500,000 tons of gas, using the technology of storing and transportation under pressure. Investments are to amount to USD 23 million. The terminal is to start working at the full capacity (1.5 million tons per annum) in 2009-2010. The total cost of the project is USD 90-100 million. American company Litwin MS in cooperation with some Russian and foreign companies will design the terminal and delivery equipment and construct the terminal.

Ukrzalyznitsya Fights for Assets Re-Estimation
Key assets of Ukrzaliznytsya (Ukrainian Railway) make EUR 3.66 billion. That is threefold (sixfold - according to some estimations) lower than the market cost, said the authorities of the State Administration of the Ukrainian Railway Transport.
The fall may cause redistribution of assets by lowered prices. Thus, railroad assets are estimated at USD 700 million. In particular, diesel locomotive balance cost is USD 2.4 thousand (for the sake of comparison: market cost is USD 2 million).
Ukrzaliznytsya seeks for main funds indexation. The point is included into the financial plan of the sector. The Ministry of Finance of Ukraine does not accept Ukrzaliznytsya's financial plan and particularly opposes this point. Ukrzaliznytsya's administration notifies that the lack of key assets reappointment may result in financial collapse of the Ukraine railroads. In 2004 Ukrzaliznytsya authorities announced the necessity of indexation of main funds for the first time. The Ukraine transport department took a decision for indexation in 2006.

OAO RZD and Deutsche Bahn to Form Logistics Subsidiary
OAO RZD and Deutsche Bahn have agreed to set up a joint logistics subsidiary, with the possibility of establishing joint logistics centres with rail access in Russia.
The new company is to be officially founded in the coming months.
The intention is for the new joint company to cover the entire logistics chain for rail freight transport, linking Russia with Deutsche Bahn's global logistics network.
Planning of the goods distribution and dispatch processes in Russia in order to meet the needs of the market should also improve the competitiveness of the rail companies in comparison with their rivals.
"Russia is a growing market, the exchange of goods with the EU is on the increase and Russia is also a land bridge to China", said Hartmut Mehdorn, Chairman of the Management Board of Deutsche Bahn. "These are the reasons why we want to boost our transport and logistics activities in this area". Deutsche Bahn subsidiary Schenker has been active in Russia for years with its own national corporations, and offers the entire range of land transport, air freight and sea freight, as well as the associated logistics services. It is currently also engaged in developing its own land transport network for the distribution of goods throughout the country.
[DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Russia Ready to Build Railways in Algeria
[~PREVIEW_TEXT] => Russia Ready to Build Railways in Algeria
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РЖД-Партнер

Keep Track

Nowadays it becomes more and more important in international trade and logistics to find real-time solutions for monitoring goods transportation and safety, as well as facilitate co-operation in the Baltic Sea Region by developing new methods and systems.
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Started in mid-90s, the projects under TEDIM umbrella aim at developing common northern dimension information management platforms and supporting implementation of telematics in transport and logistics. Within the RailCom project, launched at the end of 2002 by Finnish Railways in cooperation with OAO RZD, electronic messaging in EDIFACT format has been introduced to exchange waybills on the Russian-Finnish border. The idea is that all the necessary information is typed into the system at the departure station, enabling customs service, as well as railway, logistic and forwarding companies, to receive the data even two weeks beforehand and plan their further actions. As both Russian and Finnish customs services use ARM system, which provides them with information about the number of wagons arriving, combining of both data helps to foresee which consignment is due to come and, thus, avoid delays. With the volume of international trade and transportation transactions increasing, it is obvious that electronic messaging should also be implemented with other international partners. So the same scheme is already used on the Byelorussian, Ukrainian and Latvian borders.
The final objective of the RailCom project is that all waybills are exchanged electronically between the Finnish and Russian railways. Currently VR Ltd and OAO RZD are expanding the electronic message to contain the correct full-size "electronic" waybill, which could then be used in customs procedures at the railway border crossing stations and meet also the demands of the Russian Customs service. This is known as the RailCust project aiming to speed up the border crossing formalities in railway traffic from Finland to Russia, as information received in advance would significantly reduce the turnaround time of the whole logistics chain and enhance the capacity of border stations.
Track and trace system between the EU and Russia has been under discussion since 1997, as it is obvious that frequent information exchange could minimize risks of loss and give an option of security services. The RailTrack project serves as a centralized data base, administrating and monitoring all information related to wagon and customer consignments. The RailTrack, which covers railway transportation from the European Union to Russia, is "smart" enough to distinguish which rolling stock is being utilized along the route, as well as recognize at least four types of waybills. Integrating and disseminating delivery management information from third parties, such as VR Ltd or any other European railway, logistics service companies, rolling stock or infrastructure owners, the RailTrack system, for instance, is able to compare the preliminary transportation schedule with the actual one, revising the estimated time of arrival.
As a result of the RailTrack project, a RailTrace service was created enabling all authorized parties to track their cargo online. The first notification, a status message, arrives just after the departure from a certain point. Following status datamessages are sent from agreed report points which the train is passing, e.g. a marshalling station. One very important report comes from border crossing and the final information is sent from the destination point.
Initially the RailTrace service was available only within Finland. However, since the beginning of 2004 real-time messages exchange has been tested on the selected Mukkala-St.Petersburg route, while expansion to Western traffic is going on with various partners.

ALEXANDRA PAVLOVA [~DETAIL_TEXT] =>
Started in mid-90s, the projects under TEDIM umbrella aim at developing common northern dimension information management platforms and supporting implementation of telematics in transport and logistics. Within the RailCom project, launched at the end of 2002 by Finnish Railways in cooperation with OAO RZD, electronic messaging in EDIFACT format has been introduced to exchange waybills on the Russian-Finnish border. The idea is that all the necessary information is typed into the system at the departure station, enabling customs service, as well as railway, logistic and forwarding companies, to receive the data even two weeks beforehand and plan their further actions. As both Russian and Finnish customs services use ARM system, which provides them with information about the number of wagons arriving, combining of both data helps to foresee which consignment is due to come and, thus, avoid delays. With the volume of international trade and transportation transactions increasing, it is obvious that electronic messaging should also be implemented with other international partners. So the same scheme is already used on the Byelorussian, Ukrainian and Latvian borders.
The final objective of the RailCom project is that all waybills are exchanged electronically between the Finnish and Russian railways. Currently VR Ltd and OAO RZD are expanding the electronic message to contain the correct full-size "electronic" waybill, which could then be used in customs procedures at the railway border crossing stations and meet also the demands of the Russian Customs service. This is known as the RailCust project aiming to speed up the border crossing formalities in railway traffic from Finland to Russia, as information received in advance would significantly reduce the turnaround time of the whole logistics chain and enhance the capacity of border stations.
Track and trace system between the EU and Russia has been under discussion since 1997, as it is obvious that frequent information exchange could minimize risks of loss and give an option of security services. The RailTrack project serves as a centralized data base, administrating and monitoring all information related to wagon and customer consignments. The RailTrack, which covers railway transportation from the European Union to Russia, is "smart" enough to distinguish which rolling stock is being utilized along the route, as well as recognize at least four types of waybills. Integrating and disseminating delivery management information from third parties, such as VR Ltd or any other European railway, logistics service companies, rolling stock or infrastructure owners, the RailTrack system, for instance, is able to compare the preliminary transportation schedule with the actual one, revising the estimated time of arrival.
As a result of the RailTrack project, a RailTrace service was created enabling all authorized parties to track their cargo online. The first notification, a status message, arrives just after the departure from a certain point. Following status datamessages are sent from agreed report points which the train is passing, e.g. a marshalling station. One very important report comes from border crossing and the final information is sent from the destination point.
Initially the RailTrace service was available only within Finland. However, since the beginning of 2004 real-time messages exchange has been tested on the selected Mukkala-St.Petersburg route, while expansion to Western traffic is going on with various partners.

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Started in mid-90s, the projects under TEDIM umbrella aim at developing common northern dimension information management platforms and supporting implementation of telematics in transport and logistics. Within the RailCom project, launched at the end of 2002 by Finnish Railways in cooperation with OAO RZD, electronic messaging in EDIFACT format has been introduced to exchange waybills on the Russian-Finnish border. The idea is that all the necessary information is typed into the system at the departure station, enabling customs service, as well as railway, logistic and forwarding companies, to receive the data even two weeks beforehand and plan their further actions. As both Russian and Finnish customs services use ARM system, which provides them with information about the number of wagons arriving, combining of both data helps to foresee which consignment is due to come and, thus, avoid delays. With the volume of international trade and transportation transactions increasing, it is obvious that electronic messaging should also be implemented with other international partners. So the same scheme is already used on the Byelorussian, Ukrainian and Latvian borders.
The final objective of the RailCom project is that all waybills are exchanged electronically between the Finnish and Russian railways. Currently VR Ltd and OAO RZD are expanding the electronic message to contain the correct full-size "electronic" waybill, which could then be used in customs procedures at the railway border crossing stations and meet also the demands of the Russian Customs service. This is known as the RailCust project aiming to speed up the border crossing formalities in railway traffic from Finland to Russia, as information received in advance would significantly reduce the turnaround time of the whole logistics chain and enhance the capacity of border stations.
Track and trace system between the EU and Russia has been under discussion since 1997, as it is obvious that frequent information exchange could minimize risks of loss and give an option of security services. The RailTrack project serves as a centralized data base, administrating and monitoring all information related to wagon and customer consignments. The RailTrack, which covers railway transportation from the European Union to Russia, is "smart" enough to distinguish which rolling stock is being utilized along the route, as well as recognize at least four types of waybills. Integrating and disseminating delivery management information from third parties, such as VR Ltd or any other European railway, logistics service companies, rolling stock or infrastructure owners, the RailTrack system, for instance, is able to compare the preliminary transportation schedule with the actual one, revising the estimated time of arrival.
As a result of the RailTrack project, a RailTrace service was created enabling all authorized parties to track their cargo online. The first notification, a status message, arrives just after the departure from a certain point. Following status datamessages are sent from agreed report points which the train is passing, e.g. a marshalling station. One very important report comes from border crossing and the final information is sent from the destination point.
Initially the RailTrace service was available only within Finland. However, since the beginning of 2004 real-time messages exchange has been tested on the selected Mukkala-St.Petersburg route, while expansion to Western traffic is going on with various partners.

ALEXANDRA PAVLOVA [~DETAIL_TEXT] =>
Started in mid-90s, the projects under TEDIM umbrella aim at developing common northern dimension information management platforms and supporting implementation of telematics in transport and logistics. Within the RailCom project, launched at the end of 2002 by Finnish Railways in cooperation with OAO RZD, electronic messaging in EDIFACT format has been introduced to exchange waybills on the Russian-Finnish border. The idea is that all the necessary information is typed into the system at the departure station, enabling customs service, as well as railway, logistic and forwarding companies, to receive the data even two weeks beforehand and plan their further actions. As both Russian and Finnish customs services use ARM system, which provides them with information about the number of wagons arriving, combining of both data helps to foresee which consignment is due to come and, thus, avoid delays. With the volume of international trade and transportation transactions increasing, it is obvious that electronic messaging should also be implemented with other international partners. So the same scheme is already used on the Byelorussian, Ukrainian and Latvian borders.
The final objective of the RailCom project is that all waybills are exchanged electronically between the Finnish and Russian railways. Currently VR Ltd and OAO RZD are expanding the electronic message to contain the correct full-size "electronic" waybill, which could then be used in customs procedures at the railway border crossing stations and meet also the demands of the Russian Customs service. This is known as the RailCust project aiming to speed up the border crossing formalities in railway traffic from Finland to Russia, as information received in advance would significantly reduce the turnaround time of the whole logistics chain and enhance the capacity of border stations.
Track and trace system between the EU and Russia has been under discussion since 1997, as it is obvious that frequent information exchange could minimize risks of loss and give an option of security services. The RailTrack project serves as a centralized data base, administrating and monitoring all information related to wagon and customer consignments. The RailTrack, which covers railway transportation from the European Union to Russia, is "smart" enough to distinguish which rolling stock is being utilized along the route, as well as recognize at least four types of waybills. Integrating and disseminating delivery management information from third parties, such as VR Ltd or any other European railway, logistics service companies, rolling stock or infrastructure owners, the RailTrack system, for instance, is able to compare the preliminary transportation schedule with the actual one, revising the estimated time of arrival.
As a result of the RailTrack project, a RailTrace service was created enabling all authorized parties to track their cargo online. The first notification, a status message, arrives just after the departure from a certain point. Following status datamessages are sent from agreed report points which the train is passing, e.g. a marshalling station. One very important report comes from border crossing and the final information is sent from the destination point.
Initially the RailTrace service was available only within Finland. However, since the beginning of 2004 real-time messages exchange has been tested on the selected Mukkala-St.Petersburg route, while expansion to Western traffic is going on with various partners.

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РЖД-Партнер

Kotka and Hamina Grasped Leadership

Ports of Kotka and Hamina tell us a modern-day story of success. It is no wonder that these fast growing enterprises are not threatened in the least by their Russian competitors in the Baltic region. Their key strategy is to provide good service with reasonable value for money. Their developed infrastructure and equal approach to every client and partner are other reasons why customers keep coming back.
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Location is the Key
The port of Kotka is the leading transit and container port in Finland and the second largest after Helsinki. It covers 500 hectares of land, with current permission granted for this to be expanded by further 300 hectares. In 2005 the port's turnover amounted to 8.4 million tons wherein 4.3 million tons of export cargo, 2.2 million tons of import and 1.9 million tons of transit freight traffic.
Kotka, along with Hamina, are the only private ports in Finland. The Port of Kotka Ltd managers four harbors - Mussalo, Hietanen, Central Harbour (City Terminal) and Poland Quay. Collectively, the harbours offer a Ro-Ro terminal, a dry and liquid bulk terminal and a 900,000 TEU container terminal.
Mussalo harbour handles more than a half of the total traffic passing through the port of Kotka. Since its container terminal was launched in 2001, containerized traffic through the port has been constantly growing at the annual rate of 21.3% and achieved all-time record in container handling of over 360,000 TEU last year. The terminal is mainly operated by three major container operators: Steveco Oy, Finnsteve Oy Ab and Containerships, which works through Multi Link Terminals Oy, while the total amount of companies providing logistic and forwarding services to the terminal clients is around 50 firms. There is 200,000 square metres of covered storage space available in the immediate vicinity and 1,772m of quays, with ten berths and eight cranes of 40-50 tons uplift capability each. Most warehouses are "all weather" buildings with railway lines operated by VR Cargo. The rail company operates around 25 daily trains across the Russian border in addition to services inside Finland. Mussalo's Bulk terminal offers 60,000 square metres of covered storage space and 600m quays with four berths and 215,500 square metres of storage tank volume.
Heitanen is home to the Ro-Ro and Car Terminals. Ro-Ro facilities cover 80 hectares and provide clients with 103,000 square metres of heated, unheated and coldstore space, while car storage area occupies 95 hectares, with 20 hectares leveled and covered with asphalt.
Car traffic through the port of Kotka started in 2003, reaching the modest amount of 4000 second-hand cars delivered from the USA in transit to Russia. However, in 2004 nearly 38,000 brand new vehicles and approximately 15,500 used vehicles were shipped from Asia, Europe and the US through the port, making it the largest car port after Hanko. Last year the volume of new cars increased by 55% to around 58,000 vehicles. The current goal for 2006 is to handle 100,000 cars, which could be fulfilled as soon as the new car storage areas are completed. However, there is enough room to expand the "car parks" and carry 300,000 vehicles annually. Unlike the port of Hanko, which is interested both in import and transit, Kotka focuses only on the latter. Due to the fact that cars are taken from the storage area and across the border into Russia mostly by road transporters, Kotka is even more convenient for road carriers than Hanko, which is located 500 km farther from the Russian border. The constantly growing amount of cars arriving at Kotka enables the port to implement direct transportations by rail to a destination in Russia.
In 2004 the port of Kotka consolidated its position as a leading forest industry port. Following Stora Enso's decision to move its paper terminal from Hamina to Kotka, the port can handle over one million annual tones of additional traffic. Today Kotka is the country's largest forest industry port with over four million tones of swan goods, wood pulp, plywood, paper, and cardboard passing through annually and amounting to over 50% of the port's total throughput. The port companies have invested significant sums to cater for this traffic resulting in over 100,000 square metres of buildings and dedicated warehouses for bales, reels and timber.
City Terminal is where the port of Kotka started over 130 years ago. Nowadays it is a small, covering only 30 hectares, multipurpose harbour used for loading and unloading of lo-lo, sto-ro and project cargo vessels. Kotka has retained its status as a gateway for exporting forest products from mills of southeast Finland and swan timber, paper and pulp products are mainly shipped out in ro-ro vessels from City Terminal.
Within the project for IT and security development, the port of Kotka started implementing a new access control system, regarded as the most advanced and sophisticated, able to recognize vehicles and their cargo at security barriers. Access control and traffic management will be based on "open system" that will be compatible with programmes used both by operators and their clients. The system is due to be fully operational in the first quarter of 2007. The current system was installed 10 years ago and has been upgraded several times, most recently in 2001 after the terrorist attacks in the USA.

Strategic Junctionin International Trade
The port of Hamina is the fifth biggest port in Finland, occupying 315 hectares and handling around 5 millions tons of freight per year. Regarded as the most efficient port in Finland, Hamina adopted a multi-modal policy in its widest sense and offers smooth and fast customs services as well. It has regular liner services with around 20 ports in Germany, Belgium, Denmark, Great Britain, Russia, Spain, Netherlands and the USA.
Moreover, Hamina is the EU's most easterly port, located just 35 km away from Russia, and thus handling over 50% of container traffic from the Far East to Russia and the EU, which was initially carried via TSR and switched to deep sea following the change in tariff rates. According to the statistics, last year the port of Hamina handled 3.2 million tons of foreign cargo, 1.3 million tons of transit cargo and 0.39 million tons of domestic cargo. Comparing to 2004, the total amount declined by 13.4% from 3.8 million tons, 1.5 and 0.41 respectively.
Nevertheless, container transportation rose by 16% to 215,000 TEU and the upward trend is expected to continue in future, as the port of Hamina plans to invest over EUR 100 millions into its infrastructure development and container terminals expansion in particular. The rise in container throughput was assisted by the arrival of the French line CMA-CGM establishing a new weekly feeder link with Hamburg. The completion of the Hamina Ro-Ro and container terminal project in 2010 will give the port a box facility of some 50 hectares at the container terminal with more than a kilometre of container quay able to accommodate ships of up to 13 metres draft. These will also double the terminal's box capacity to 1 million TEU per year.
Most of the port's trade moves in and out of its Liquid Bulk Port, whose storage volume reaches 580,000 cubic metres, which is, for instance, almost twice as big in comparison to Kotka. Hamina's Liquid Bulk Port handled some 1.5 million tons in 2005 and has good prospects to boost the volume when the deepening of the port's approach channel doubles the size of vessels and cargoes that can be handled, which is particularly vital in view of oil and chemical cargo traffic enhancement.
Although at the end of 2005 Hamina lost a part of Stora Enso cargo to Kotka, another world's major forest industry player UPM-Kymmene signed a contract with Hamina, giving the port additional volumes. Accounting for the daily arrival of as many as three block trains of 23 four axle wagons, with each rail car carrying 60 tons of paper from the company's mills in Eastern Finland, UPM became Hamina's biggest forest products customer. The trains are operated by VR Cargo, setting stevedores Steveco Oy a further operational challenge. Besides rail transportation, a new generation of large feeder sto-ro and ro-ro ships by Transfennica came just in time to handle UPM-Kymmene's additional produce. Transfennica plans to introduce eight ships during 2006-2008. With the speed of 22+knots, they will be able to make one round trip a week to any of the line's destination, which will undoubtedly put additional pressure on landside services provided by Steveco and Hamina Multimodal Terminal.
The port of Hamina has more than 40 km of rail tracks serving over 80 platforms for loading and unloading international freight. These tracks also enable the port to carry 60% of cargo by rail, even though some 500,000 trucks move goods in and out of the port annually. As well as Kotka, the port of Hamina plays a significant role in transit transportation of motor vehicles and competes successfully with the port of Hanko. With VR Cargo service center operating in Hamina, the port is a key partner in the project for attracting car transportation to railways. As the company is eyeing the potential new trade from the west, the port of Hamina is a strategic junction for international trade.

ALEXANDRA PAVLOVA [~DETAIL_TEXT] =>
Location is the Key
The port of Kotka is the leading transit and container port in Finland and the second largest after Helsinki. It covers 500 hectares of land, with current permission granted for this to be expanded by further 300 hectares. In 2005 the port's turnover amounted to 8.4 million tons wherein 4.3 million tons of export cargo, 2.2 million tons of import and 1.9 million tons of transit freight traffic.
Kotka, along with Hamina, are the only private ports in Finland. The Port of Kotka Ltd managers four harbors - Mussalo, Hietanen, Central Harbour (City Terminal) and Poland Quay. Collectively, the harbours offer a Ro-Ro terminal, a dry and liquid bulk terminal and a 900,000 TEU container terminal.
Mussalo harbour handles more than a half of the total traffic passing through the port of Kotka. Since its container terminal was launched in 2001, containerized traffic through the port has been constantly growing at the annual rate of 21.3% and achieved all-time record in container handling of over 360,000 TEU last year. The terminal is mainly operated by three major container operators: Steveco Oy, Finnsteve Oy Ab and Containerships, which works through Multi Link Terminals Oy, while the total amount of companies providing logistic and forwarding services to the terminal clients is around 50 firms. There is 200,000 square metres of covered storage space available in the immediate vicinity and 1,772m of quays, with ten berths and eight cranes of 40-50 tons uplift capability each. Most warehouses are "all weather" buildings with railway lines operated by VR Cargo. The rail company operates around 25 daily trains across the Russian border in addition to services inside Finland. Mussalo's Bulk terminal offers 60,000 square metres of covered storage space and 600m quays with four berths and 215,500 square metres of storage tank volume.
Heitanen is home to the Ro-Ro and Car Terminals. Ro-Ro facilities cover 80 hectares and provide clients with 103,000 square metres of heated, unheated and coldstore space, while car storage area occupies 95 hectares, with 20 hectares leveled and covered with asphalt.
Car traffic through the port of Kotka started in 2003, reaching the modest amount of 4000 second-hand cars delivered from the USA in transit to Russia. However, in 2004 nearly 38,000 brand new vehicles and approximately 15,500 used vehicles were shipped from Asia, Europe and the US through the port, making it the largest car port after Hanko. Last year the volume of new cars increased by 55% to around 58,000 vehicles. The current goal for 2006 is to handle 100,000 cars, which could be fulfilled as soon as the new car storage areas are completed. However, there is enough room to expand the "car parks" and carry 300,000 vehicles annually. Unlike the port of Hanko, which is interested both in import and transit, Kotka focuses only on the latter. Due to the fact that cars are taken from the storage area and across the border into Russia mostly by road transporters, Kotka is even more convenient for road carriers than Hanko, which is located 500 km farther from the Russian border. The constantly growing amount of cars arriving at Kotka enables the port to implement direct transportations by rail to a destination in Russia.
In 2004 the port of Kotka consolidated its position as a leading forest industry port. Following Stora Enso's decision to move its paper terminal from Hamina to Kotka, the port can handle over one million annual tones of additional traffic. Today Kotka is the country's largest forest industry port with over four million tones of swan goods, wood pulp, plywood, paper, and cardboard passing through annually and amounting to over 50% of the port's total throughput. The port companies have invested significant sums to cater for this traffic resulting in over 100,000 square metres of buildings and dedicated warehouses for bales, reels and timber.
City Terminal is where the port of Kotka started over 130 years ago. Nowadays it is a small, covering only 30 hectares, multipurpose harbour used for loading and unloading of lo-lo, sto-ro and project cargo vessels. Kotka has retained its status as a gateway for exporting forest products from mills of southeast Finland and swan timber, paper and pulp products are mainly shipped out in ro-ro vessels from City Terminal.
Within the project for IT and security development, the port of Kotka started implementing a new access control system, regarded as the most advanced and sophisticated, able to recognize vehicles and their cargo at security barriers. Access control and traffic management will be based on "open system" that will be compatible with programmes used both by operators and their clients. The system is due to be fully operational in the first quarter of 2007. The current system was installed 10 years ago and has been upgraded several times, most recently in 2001 after the terrorist attacks in the USA.

Strategic Junctionin International Trade
The port of Hamina is the fifth biggest port in Finland, occupying 315 hectares and handling around 5 millions tons of freight per year. Regarded as the most efficient port in Finland, Hamina adopted a multi-modal policy in its widest sense and offers smooth and fast customs services as well. It has regular liner services with around 20 ports in Germany, Belgium, Denmark, Great Britain, Russia, Spain, Netherlands and the USA.
Moreover, Hamina is the EU's most easterly port, located just 35 km away from Russia, and thus handling over 50% of container traffic from the Far East to Russia and the EU, which was initially carried via TSR and switched to deep sea following the change in tariff rates. According to the statistics, last year the port of Hamina handled 3.2 million tons of foreign cargo, 1.3 million tons of transit cargo and 0.39 million tons of domestic cargo. Comparing to 2004, the total amount declined by 13.4% from 3.8 million tons, 1.5 and 0.41 respectively.
Nevertheless, container transportation rose by 16% to 215,000 TEU and the upward trend is expected to continue in future, as the port of Hamina plans to invest over EUR 100 millions into its infrastructure development and container terminals expansion in particular. The rise in container throughput was assisted by the arrival of the French line CMA-CGM establishing a new weekly feeder link with Hamburg. The completion of the Hamina Ro-Ro and container terminal project in 2010 will give the port a box facility of some 50 hectares at the container terminal with more than a kilometre of container quay able to accommodate ships of up to 13 metres draft. These will also double the terminal's box capacity to 1 million TEU per year.
Most of the port's trade moves in and out of its Liquid Bulk Port, whose storage volume reaches 580,000 cubic metres, which is, for instance, almost twice as big in comparison to Kotka. Hamina's Liquid Bulk Port handled some 1.5 million tons in 2005 and has good prospects to boost the volume when the deepening of the port's approach channel doubles the size of vessels and cargoes that can be handled, which is particularly vital in view of oil and chemical cargo traffic enhancement.
Although at the end of 2005 Hamina lost a part of Stora Enso cargo to Kotka, another world's major forest industry player UPM-Kymmene signed a contract with Hamina, giving the port additional volumes. Accounting for the daily arrival of as many as three block trains of 23 four axle wagons, with each rail car carrying 60 tons of paper from the company's mills in Eastern Finland, UPM became Hamina's biggest forest products customer. The trains are operated by VR Cargo, setting stevedores Steveco Oy a further operational challenge. Besides rail transportation, a new generation of large feeder sto-ro and ro-ro ships by Transfennica came just in time to handle UPM-Kymmene's additional produce. Transfennica plans to introduce eight ships during 2006-2008. With the speed of 22+knots, they will be able to make one round trip a week to any of the line's destination, which will undoubtedly put additional pressure on landside services provided by Steveco and Hamina Multimodal Terminal.
The port of Hamina has more than 40 km of rail tracks serving over 80 platforms for loading and unloading international freight. These tracks also enable the port to carry 60% of cargo by rail, even though some 500,000 trucks move goods in and out of the port annually. As well as Kotka, the port of Hamina plays a significant role in transit transportation of motor vehicles and competes successfully with the port of Hanko. With VR Cargo service center operating in Hamina, the port is a key partner in the project for attracting car transportation to railways. As the company is eyeing the potential new trade from the west, the port of Hamina is a strategic junction for international trade.

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Location is the Key
The port of Kotka is the leading transit and container port in Finland and the second largest after Helsinki. It covers 500 hectares of land, with current permission granted for this to be expanded by further 300 hectares. In 2005 the port's turnover amounted to 8.4 million tons wherein 4.3 million tons of export cargo, 2.2 million tons of import and 1.9 million tons of transit freight traffic.
Kotka, along with Hamina, are the only private ports in Finland. The Port of Kotka Ltd managers four harbors - Mussalo, Hietanen, Central Harbour (City Terminal) and Poland Quay. Collectively, the harbours offer a Ro-Ro terminal, a dry and liquid bulk terminal and a 900,000 TEU container terminal.
Mussalo harbour handles more than a half of the total traffic passing through the port of Kotka. Since its container terminal was launched in 2001, containerized traffic through the port has been constantly growing at the annual rate of 21.3% and achieved all-time record in container handling of over 360,000 TEU last year. The terminal is mainly operated by three major container operators: Steveco Oy, Finnsteve Oy Ab and Containerships, which works through Multi Link Terminals Oy, while the total amount of companies providing logistic and forwarding services to the terminal clients is around 50 firms. There is 200,000 square metres of covered storage space available in the immediate vicinity and 1,772m of quays, with ten berths and eight cranes of 40-50 tons uplift capability each. Most warehouses are "all weather" buildings with railway lines operated by VR Cargo. The rail company operates around 25 daily trains across the Russian border in addition to services inside Finland. Mussalo's Bulk terminal offers 60,000 square metres of covered storage space and 600m quays with four berths and 215,500 square metres of storage tank volume.
Heitanen is home to the Ro-Ro and Car Terminals. Ro-Ro facilities cover 80 hectares and provide clients with 103,000 square metres of heated, unheated and coldstore space, while car storage area occupies 95 hectares, with 20 hectares leveled and covered with asphalt.
Car traffic through the port of Kotka started in 2003, reaching the modest amount of 4000 second-hand cars delivered from the USA in transit to Russia. However, in 2004 nearly 38,000 brand new vehicles and approximately 15,500 used vehicles were shipped from Asia, Europe and the US through the port, making it the largest car port after Hanko. Last year the volume of new cars increased by 55% to around 58,000 vehicles. The current goal for 2006 is to handle 100,000 cars, which could be fulfilled as soon as the new car storage areas are completed. However, there is enough room to expand the "car parks" and carry 300,000 vehicles annually. Unlike the port of Hanko, which is interested both in import and transit, Kotka focuses only on the latter. Due to the fact that cars are taken from the storage area and across the border into Russia mostly by road transporters, Kotka is even more convenient for road carriers than Hanko, which is located 500 km farther from the Russian border. The constantly growing amount of cars arriving at Kotka enables the port to implement direct transportations by rail to a destination in Russia.
In 2004 the port of Kotka consolidated its position as a leading forest industry port. Following Stora Enso's decision to move its paper terminal from Hamina to Kotka, the port can handle over one million annual tones of additional traffic. Today Kotka is the country's largest forest industry port with over four million tones of swan goods, wood pulp, plywood, paper, and cardboard passing through annually and amounting to over 50% of the port's total throughput. The port companies have invested significant sums to cater for this traffic resulting in over 100,000 square metres of buildings and dedicated warehouses for bales, reels and timber.
City Terminal is where the port of Kotka started over 130 years ago. Nowadays it is a small, covering only 30 hectares, multipurpose harbour used for loading and unloading of lo-lo, sto-ro and project cargo vessels. Kotka has retained its status as a gateway for exporting forest products from mills of southeast Finland and swan timber, paper and pulp products are mainly shipped out in ro-ro vessels from City Terminal.
Within the project for IT and security development, the port of Kotka started implementing a new access control system, regarded as the most advanced and sophisticated, able to recognize vehicles and their cargo at security barriers. Access control and traffic management will be based on "open system" that will be compatible with programmes used both by operators and their clients. The system is due to be fully operational in the first quarter of 2007. The current system was installed 10 years ago and has been upgraded several times, most recently in 2001 after the terrorist attacks in the USA.

Strategic Junctionin International Trade
The port of Hamina is the fifth biggest port in Finland, occupying 315 hectares and handling around 5 millions tons of freight per year. Regarded as the most efficient port in Finland, Hamina adopted a multi-modal policy in its widest sense and offers smooth and fast customs services as well. It has regular liner services with around 20 ports in Germany, Belgium, Denmark, Great Britain, Russia, Spain, Netherlands and the USA.
Moreover, Hamina is the EU's most easterly port, located just 35 km away from Russia, and thus handling over 50% of container traffic from the Far East to Russia and the EU, which was initially carried via TSR and switched to deep sea following the change in tariff rates. According to the statistics, last year the port of Hamina handled 3.2 million tons of foreign cargo, 1.3 million tons of transit cargo and 0.39 million tons of domestic cargo. Comparing to 2004, the total amount declined by 13.4% from 3.8 million tons, 1.5 and 0.41 respectively.
Nevertheless, container transportation rose by 16% to 215,000 TEU and the upward trend is expected to continue in future, as the port of Hamina plans to invest over EUR 100 millions into its infrastructure development and container terminals expansion in particular. The rise in container throughput was assisted by the arrival of the French line CMA-CGM establishing a new weekly feeder link with Hamburg. The completion of the Hamina Ro-Ro and container terminal project in 2010 will give the port a box facility of some 50 hectares at the container terminal with more than a kilometre of container quay able to accommodate ships of up to 13 metres draft. These will also double the terminal's box capacity to 1 million TEU per year.
Most of the port's trade moves in and out of its Liquid Bulk Port, whose storage volume reaches 580,000 cubic metres, which is, for instance, almost twice as big in comparison to Kotka. Hamina's Liquid Bulk Port handled some 1.5 million tons in 2005 and has good prospects to boost the volume when the deepening of the port's approach channel doubles the size of vessels and cargoes that can be handled, which is particularly vital in view of oil and chemical cargo traffic enhancement.
Although at the end of 2005 Hamina lost a part of Stora Enso cargo to Kotka, another world's major forest industry player UPM-Kymmene signed a contract with Hamina, giving the port additional volumes. Accounting for the daily arrival of as many as three block trains of 23 four axle wagons, with each rail car carrying 60 tons of paper from the company's mills in Eastern Finland, UPM became Hamina's biggest forest products customer. The trains are operated by VR Cargo, setting stevedores Steveco Oy a further operational challenge. Besides rail transportation, a new generation of large feeder sto-ro and ro-ro ships by Transfennica came just in time to handle UPM-Kymmene's additional produce. Transfennica plans to introduce eight ships during 2006-2008. With the speed of 22+knots, they will be able to make one round trip a week to any of the line's destination, which will undoubtedly put additional pressure on landside services provided by Steveco and Hamina Multimodal Terminal.
The port of Hamina has more than 40 km of rail tracks serving over 80 platforms for loading and unloading international freight. These tracks also enable the port to carry 60% of cargo by rail, even though some 500,000 trucks move goods in and out of the port annually. As well as Kotka, the port of Hamina plays a significant role in transit transportation of motor vehicles and competes successfully with the port of Hanko. With VR Cargo service center operating in Hamina, the port is a key partner in the project for attracting car transportation to railways. As the company is eyeing the potential new trade from the west, the port of Hamina is a strategic junction for international trade.

ALEXANDRA PAVLOVA [~DETAIL_TEXT] =>
Location is the Key
The port of Kotka is the leading transit and container port in Finland and the second largest after Helsinki. It covers 500 hectares of land, with current permission granted for this to be expanded by further 300 hectares. In 2005 the port's turnover amounted to 8.4 million tons wherein 4.3 million tons of export cargo, 2.2 million tons of import and 1.9 million tons of transit freight traffic.
Kotka, along with Hamina, are the only private ports in Finland. The Port of Kotka Ltd managers four harbors - Mussalo, Hietanen, Central Harbour (City Terminal) and Poland Quay. Collectively, the harbours offer a Ro-Ro terminal, a dry and liquid bulk terminal and a 900,000 TEU container terminal.
Mussalo harbour handles more than a half of the total traffic passing through the port of Kotka. Since its container terminal was launched in 2001, containerized traffic through the port has been constantly growing at the annual rate of 21.3% and achieved all-time record in container handling of over 360,000 TEU last year. The terminal is mainly operated by three major container operators: Steveco Oy, Finnsteve Oy Ab and Containerships, which works through Multi Link Terminals Oy, while the total amount of companies providing logistic and forwarding services to the terminal clients is around 50 firms. There is 200,000 square metres of covered storage space available in the immediate vicinity and 1,772m of quays, with ten berths and eight cranes of 40-50 tons uplift capability each. Most warehouses are "all weather" buildings with railway lines operated by VR Cargo. The rail company operates around 25 daily trains across the Russian border in addition to services inside Finland. Mussalo's Bulk terminal offers 60,000 square metres of covered storage space and 600m quays with four berths and 215,500 square metres of storage tank volume.
Heitanen is home to the Ro-Ro and Car Terminals. Ro-Ro facilities cover 80 hectares and provide clients with 103,000 square metres of heated, unheated and coldstore space, while car storage area occupies 95 hectares, with 20 hectares leveled and covered with asphalt.
Car traffic through the port of Kotka started in 2003, reaching the modest amount of 4000 second-hand cars delivered from the USA in transit to Russia. However, in 2004 nearly 38,000 brand new vehicles and approximately 15,500 used vehicles were shipped from Asia, Europe and the US through the port, making it the largest car port after Hanko. Last year the volume of new cars increased by 55% to around 58,000 vehicles. The current goal for 2006 is to handle 100,000 cars, which could be fulfilled as soon as the new car storage areas are completed. However, there is enough room to expand the "car parks" and carry 300,000 vehicles annually. Unlike the port of Hanko, which is interested both in import and transit, Kotka focuses only on the latter. Due to the fact that cars are taken from the storage area and across the border into Russia mostly by road transporters, Kotka is even more convenient for road carriers than Hanko, which is located 500 km farther from the Russian border. The constantly growing amount of cars arriving at Kotka enables the port to implement direct transportations by rail to a destination in Russia.
In 2004 the port of Kotka consolidated its position as a leading forest industry port. Following Stora Enso's decision to move its paper terminal from Hamina to Kotka, the port can handle over one million annual tones of additional traffic. Today Kotka is the country's largest forest industry port with over four million tones of swan goods, wood pulp, plywood, paper, and cardboard passing through annually and amounting to over 50% of the port's total throughput. The port companies have invested significant sums to cater for this traffic resulting in over 100,000 square metres of buildings and dedicated warehouses for bales, reels and timber.
City Terminal is where the port of Kotka started over 130 years ago. Nowadays it is a small, covering only 30 hectares, multipurpose harbour used for loading and unloading of lo-lo, sto-ro and project cargo vessels. Kotka has retained its status as a gateway for exporting forest products from mills of southeast Finland and swan timber, paper and pulp products are mainly shipped out in ro-ro vessels from City Terminal.
Within the project for IT and security development, the port of Kotka started implementing a new access control system, regarded as the most advanced and sophisticated, able to recognize vehicles and their cargo at security barriers. Access control and traffic management will be based on "open system" that will be compatible with programmes used both by operators and their clients. The system is due to be fully operational in the first quarter of 2007. The current system was installed 10 years ago and has been upgraded several times, most recently in 2001 after the terrorist attacks in the USA.

Strategic Junctionin International Trade
The port of Hamina is the fifth biggest port in Finland, occupying 315 hectares and handling around 5 millions tons of freight per year. Regarded as the most efficient port in Finland, Hamina adopted a multi-modal policy in its widest sense and offers smooth and fast customs services as well. It has regular liner services with around 20 ports in Germany, Belgium, Denmark, Great Britain, Russia, Spain, Netherlands and the USA.
Moreover, Hamina is the EU's most easterly port, located just 35 km away from Russia, and thus handling over 50% of container traffic from the Far East to Russia and the EU, which was initially carried via TSR and switched to deep sea following the change in tariff rates. According to the statistics, last year the port of Hamina handled 3.2 million tons of foreign cargo, 1.3 million tons of transit cargo and 0.39 million tons of domestic cargo. Comparing to 2004, the total amount declined by 13.4% from 3.8 million tons, 1.5 and 0.41 respectively.
Nevertheless, container transportation rose by 16% to 215,000 TEU and the upward trend is expected to continue in future, as the port of Hamina plans to invest over EUR 100 millions into its infrastructure development and container terminals expansion in particular. The rise in container throughput was assisted by the arrival of the French line CMA-CGM establishing a new weekly feeder link with Hamburg. The completion of the Hamina Ro-Ro and container terminal project in 2010 will give the port a box facility of some 50 hectares at the container terminal with more than a kilometre of container quay able to accommodate ships of up to 13 metres draft. These will also double the terminal's box capacity to 1 million TEU per year.
Most of the port's trade moves in and out of its Liquid Bulk Port, whose storage volume reaches 580,000 cubic metres, which is, for instance, almost twice as big in comparison to Kotka. Hamina's Liquid Bulk Port handled some 1.5 million tons in 2005 and has good prospects to boost the volume when the deepening of the port's approach channel doubles the size of vessels and cargoes that can be handled, which is particularly vital in view of oil and chemical cargo traffic enhancement.
Although at the end of 2005 Hamina lost a part of Stora Enso cargo to Kotka, another world's major forest industry player UPM-Kymmene signed a contract with Hamina, giving the port additional volumes. Accounting for the daily arrival of as many as three block trains of 23 four axle wagons, with each rail car carrying 60 tons of paper from the company's mills in Eastern Finland, UPM became Hamina's biggest forest products customer. The trains are operated by VR Cargo, setting stevedores Steveco Oy a further operational challenge. Besides rail transportation, a new generation of large feeder sto-ro and ro-ro ships by Transfennica came just in time to handle UPM-Kymmene's additional produce. Transfennica plans to introduce eight ships during 2006-2008. With the speed of 22+knots, they will be able to make one round trip a week to any of the line's destination, which will undoubtedly put additional pressure on landside services provided by Steveco and Hamina Multimodal Terminal.
The port of Hamina has more than 40 km of rail tracks serving over 80 platforms for loading and unloading international freight. These tracks also enable the port to carry 60% of cargo by rail, even though some 500,000 trucks move goods in and out of the port annually. As well as Kotka, the port of Hamina plays a significant role in transit transportation of motor vehicles and competes successfully with the port of Hanko. With VR Cargo service center operating in Hamina, the port is a key partner in the project for attracting car transportation to railways. As the company is eyeing the potential new trade from the west, the port of Hamina is a strategic junction for international trade.

ALEXANDRA PAVLOVA [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Ports of Kotka and Hamina tell us a modern-day story of success. It is no wonder that these fast growing enterprises are not threatened in the least by their Russian competitors in the Baltic region. Their key strategy is to provide good service with reasonable value for money. Their developed infrastructure and equal approach to every client and partner are other reasons why customers keep coming back.
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РЖД-Партнер

Northern Lights To Shine Brightly

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    [DETAIL_TEXT] => Finnish Railways (VR) and OAO RZD share not only four border check-points. Now the companies plan to launch several joint projects among which are containerized train Northern Lights and speeded passenger transportation between Helsinki, Moscow and Saint-Petersburg.Tapio Simos, Managing Director of VR Ltd, comments on these projects and Russia-Finnish transportation development.

- Mr.Simos, which last year events do you believe are the most important for the Finnish Railways?
- Last year was of crucially important character for the Finnish Railways for the whole 140 history of the company as all possible records were hit: 63.5 mln. passenger trips were implemented by train in Finland (+5.6% year-on-year).
Investment made into the passenger complex last year was a record as well. Total volume of investment amounted to EUR 178 mln. from which over EUR 150 mln. went to rolling stock purchase. New sleeping-cars, car-carriers, rail buses, the last party of train sets of our procurement deal of 17 Pendolino trains, 20 new double-deck passenger and 15 specially heated Talgo car-carriers for transportation of passangers' cars were purchased.
I'd like to mention one more event of a revolutionary sort. In September a new line of Kerava-Lahti route will be launched which will shorten traveling time for East Finland direction by 30-60 minutes. This project costs EUR 331 mln. and it is financed from the state budget.
Due to this very reason the train schedule will fundamentally change, the occasion of unprecedented sort for Finland.
- Did the strike called by workers of timber and paper industries influence VR results?
- Last spring strike lasted for two months. It influenced functioning of all adjacent sectors negatively for almost half a year. The Finnish Railways suffered losses worth EUR 17 mln. Cargo transportation volume decreased by 4.6% and amounted to 40.7 mln.tons last year. Now the situation is normalised. Raw materials, woodworking industry production together with cellulose and paper industry production make up 70% of the whole volume of our domestic transportation and a significant part of import-export cargo.
Tariff rate growth by 30-600% for containers negatively impacted cargo transportation via the Transsib. For the sake of comparison, the price of 40ft container grew twice. The major loss is that our clients have switched their cargo flows to shipping lines.
- Could you please tell us about "Northern Lights" containerized train?
- Railways do not usually give names to freight trains. However, this firm containerized express got its name. Trial run from Helsinki to Moscow has already been held. The target of this regular speeded route is to switch to railways container flow which now floats to Russia by the motor trucks: over 200 thousand containers destined for St.Petersburg and Moscow are transported from the Finnish ports to Russia by trucks now.
We have sent proposals to over 40 Finnish and international forwarding companies and shippings lines and hope that as many as possible will switch their containers from road to rail.
The most crucial issues of cooperation with the Russian colleagues have already been solved. Negotiations ended in signing a protocol of intentions with OAO "TransContainer". The decision to join efforts in order to launch this sort of transportation and solve quetions on customs declaration has been made. In summer "Northern Lights" will start regular service on Helsiniki-Moscow route: in the beginning - once a week, then daily. In the market there are cargo volumes to provide this line with.
In the future we plan to launch speeded container train traffic from China to Finland. Now we start negotiations with Russian and Chinese experts, consider variants of getting preliminary customs clearance in electronic mode that will help to shorten handling time from 3 to 1 days. Thus, with joint efforts of Finland, Russia and China a unique cargo express can be launched which is going to become the fastest and the longest one in the world. On the way back containers empty from Asian cargo will carry production of woodworking and paper industry of the Finnish enterprises and metallurgical plants of Sweden.
- Plenty of road-trains loaded with motor cars can be found on the motor ways from the ports of Finland towards the Russian border. How possible do you think it is to switch this flow to railways?
- It is true that motor cars destined for Russia are shipped to the Finnish ports firstly and after that transported by trucks via the Russian-Finnish border. 340 thousand of motors cars were transported to Russia in 2005. For the sake of comparison within domestic market of Finland this number for the same period amounted to 150 thousand cars. Daily 400 motor trucks leave for Russia from the port of Hanko only. The port of Kotka receives 86 thousand cars per year and 10,000 road-trains will be needed to transport this amount.
Only 5 thousand cars were transported by rail last year, and their destination was Central Asia. Our task is to switch to railways one third of this transportation. At present we are ready to form such trains but in Russia there should be special terminals with developed infrastructure, customs posts for handling them. In addition to this, a proper amount of special rolling stock is aslo needed.
- What changes will transport complex of Finland undergo in near future?
- Since January of 2007 cargo transport market will be open for everybody to participate in European Union area. Finnish railways are prepared to meet this competition.

Interviewed by Evstolia Chuvashova [~DETAIL_TEXT] => Finnish Railways (VR) and OAO RZD share not only four border check-points. Now the companies plan to launch several joint projects among which are containerized train Northern Lights and speeded passenger transportation between Helsinki, Moscow and Saint-Petersburg.Tapio Simos, Managing Director of VR Ltd, comments on these projects and Russia-Finnish transportation development.

- Mr.Simos, which last year events do you believe are the most important for the Finnish Railways?
- Last year was of crucially important character for the Finnish Railways for the whole 140 history of the company as all possible records were hit: 63.5 mln. passenger trips were implemented by train in Finland (+5.6% year-on-year).
Investment made into the passenger complex last year was a record as well. Total volume of investment amounted to EUR 178 mln. from which over EUR 150 mln. went to rolling stock purchase. New sleeping-cars, car-carriers, rail buses, the last party of train sets of our procurement deal of 17 Pendolino trains, 20 new double-deck passenger and 15 specially heated Talgo car-carriers for transportation of passangers' cars were purchased.
I'd like to mention one more event of a revolutionary sort. In September a new line of Kerava-Lahti route will be launched which will shorten traveling time for East Finland direction by 30-60 minutes. This project costs EUR 331 mln. and it is financed from the state budget.
Due to this very reason the train schedule will fundamentally change, the occasion of unprecedented sort for Finland.
- Did the strike called by workers of timber and paper industries influence VR results?
- Last spring strike lasted for two months. It influenced functioning of all adjacent sectors negatively for almost half a year. The Finnish Railways suffered losses worth EUR 17 mln. Cargo transportation volume decreased by 4.6% and amounted to 40.7 mln.tons last year. Now the situation is normalised. Raw materials, woodworking industry production together with cellulose and paper industry production make up 70% of the whole volume of our domestic transportation and a significant part of import-export cargo.
Tariff rate growth by 30-600% for containers negatively impacted cargo transportation via the Transsib. For the sake of comparison, the price of 40ft container grew twice. The major loss is that our clients have switched their cargo flows to shipping lines.
- Could you please tell us about "Northern Lights" containerized train?
- Railways do not usually give names to freight trains. However, this firm containerized express got its name. Trial run from Helsinki to Moscow has already been held. The target of this regular speeded route is to switch to railways container flow which now floats to Russia by the motor trucks: over 200 thousand containers destined for St.Petersburg and Moscow are transported from the Finnish ports to Russia by trucks now.
We have sent proposals to over 40 Finnish and international forwarding companies and shippings lines and hope that as many as possible will switch their containers from road to rail.
The most crucial issues of cooperation with the Russian colleagues have already been solved. Negotiations ended in signing a protocol of intentions with OAO "TransContainer". The decision to join efforts in order to launch this sort of transportation and solve quetions on customs declaration has been made. In summer "Northern Lights" will start regular service on Helsiniki-Moscow route: in the beginning - once a week, then daily. In the market there are cargo volumes to provide this line with.
In the future we plan to launch speeded container train traffic from China to Finland. Now we start negotiations with Russian and Chinese experts, consider variants of getting preliminary customs clearance in electronic mode that will help to shorten handling time from 3 to 1 days. Thus, with joint efforts of Finland, Russia and China a unique cargo express can be launched which is going to become the fastest and the longest one in the world. On the way back containers empty from Asian cargo will carry production of woodworking and paper industry of the Finnish enterprises and metallurgical plants of Sweden.
- Plenty of road-trains loaded with motor cars can be found on the motor ways from the ports of Finland towards the Russian border. How possible do you think it is to switch this flow to railways?
- It is true that motor cars destined for Russia are shipped to the Finnish ports firstly and after that transported by trucks via the Russian-Finnish border. 340 thousand of motors cars were transported to Russia in 2005. For the sake of comparison within domestic market of Finland this number for the same period amounted to 150 thousand cars. Daily 400 motor trucks leave for Russia from the port of Hanko only. The port of Kotka receives 86 thousand cars per year and 10,000 road-trains will be needed to transport this amount.
Only 5 thousand cars were transported by rail last year, and their destination was Central Asia. Our task is to switch to railways one third of this transportation. At present we are ready to form such trains but in Russia there should be special terminals with developed infrastructure, customs posts for handling them. In addition to this, a proper amount of special rolling stock is aslo needed.
- What changes will transport complex of Finland undergo in near future?
- Since January of 2007 cargo transport market will be open for everybody to participate in European Union area. Finnish railways are prepared to meet this competition.

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    [DETAIL_TEXT] => Finnish Railways (VR) and OAO RZD share not only four border check-points. Now the companies plan to launch several joint projects among which are containerized train Northern Lights and speeded passenger transportation between Helsinki, Moscow and Saint-Petersburg.Tapio Simos, Managing Director of VR Ltd, comments on these projects and Russia-Finnish transportation development.

- Mr.Simos, which last year events do you believe are the most important for the Finnish Railways?
- Last year was of crucially important character for the Finnish Railways for the whole 140 history of the company as all possible records were hit: 63.5 mln. passenger trips were implemented by train in Finland (+5.6% year-on-year).
Investment made into the passenger complex last year was a record as well. Total volume of investment amounted to EUR 178 mln. from which over EUR 150 mln. went to rolling stock purchase. New sleeping-cars, car-carriers, rail buses, the last party of train sets of our procurement deal of 17 Pendolino trains, 20 new double-deck passenger and 15 specially heated Talgo car-carriers for transportation of passangers' cars were purchased.
I'd like to mention one more event of a revolutionary sort. In September a new line of Kerava-Lahti route will be launched which will shorten traveling time for East Finland direction by 30-60 minutes. This project costs EUR 331 mln. and it is financed from the state budget.
Due to this very reason the train schedule will fundamentally change, the occasion of unprecedented sort for Finland.
- Did the strike called by workers of timber and paper industries influence VR results?
- Last spring strike lasted for two months. It influenced functioning of all adjacent sectors negatively for almost half a year. The Finnish Railways suffered losses worth EUR 17 mln. Cargo transportation volume decreased by 4.6% and amounted to 40.7 mln.tons last year. Now the situation is normalised. Raw materials, woodworking industry production together with cellulose and paper industry production make up 70% of the whole volume of our domestic transportation and a significant part of import-export cargo.
Tariff rate growth by 30-600% for containers negatively impacted cargo transportation via the Transsib. For the sake of comparison, the price of 40ft container grew twice. The major loss is that our clients have switched their cargo flows to shipping lines.
- Could you please tell us about "Northern Lights" containerized train?
- Railways do not usually give names to freight trains. However, this firm containerized express got its name. Trial run from Helsinki to Moscow has already been held. The target of this regular speeded route is to switch to railways container flow which now floats to Russia by the motor trucks: over 200 thousand containers destined for St.Petersburg and Moscow are transported from the Finnish ports to Russia by trucks now.
We have sent proposals to over 40 Finnish and international forwarding companies and shippings lines and hope that as many as possible will switch their containers from road to rail.
The most crucial issues of cooperation with the Russian colleagues have already been solved. Negotiations ended in signing a protocol of intentions with OAO "TransContainer". The decision to join efforts in order to launch this sort of transportation and solve quetions on customs declaration has been made. In summer "Northern Lights" will start regular service on Helsiniki-Moscow route: in the beginning - once a week, then daily. In the market there are cargo volumes to provide this line with.
In the future we plan to launch speeded container train traffic from China to Finland. Now we start negotiations with Russian and Chinese experts, consider variants of getting preliminary customs clearance in electronic mode that will help to shorten handling time from 3 to 1 days. Thus, with joint efforts of Finland, Russia and China a unique cargo express can be launched which is going to become the fastest and the longest one in the world. On the way back containers empty from Asian cargo will carry production of woodworking and paper industry of the Finnish enterprises and metallurgical plants of Sweden.
- Plenty of road-trains loaded with motor cars can be found on the motor ways from the ports of Finland towards the Russian border. How possible do you think it is to switch this flow to railways?
- It is true that motor cars destined for Russia are shipped to the Finnish ports firstly and after that transported by trucks via the Russian-Finnish border. 340 thousand of motors cars were transported to Russia in 2005. For the sake of comparison within domestic market of Finland this number for the same period amounted to 150 thousand cars. Daily 400 motor trucks leave for Russia from the port of Hanko only. The port of Kotka receives 86 thousand cars per year and 10,000 road-trains will be needed to transport this amount.
Only 5 thousand cars were transported by rail last year, and their destination was Central Asia. Our task is to switch to railways one third of this transportation. At present we are ready to form such trains but in Russia there should be special terminals with developed infrastructure, customs posts for handling them. In addition to this, a proper amount of special rolling stock is aslo needed.
- What changes will transport complex of Finland undergo in near future?
- Since January of 2007 cargo transport market will be open for everybody to participate in European Union area. Finnish railways are prepared to meet this competition.

Interviewed by Evstolia Chuvashova [~DETAIL_TEXT] => Finnish Railways (VR) and OAO RZD share not only four border check-points. Now the companies plan to launch several joint projects among which are containerized train Northern Lights and speeded passenger transportation between Helsinki, Moscow and Saint-Petersburg.Tapio Simos, Managing Director of VR Ltd, comments on these projects and Russia-Finnish transportation development.

- Mr.Simos, which last year events do you believe are the most important for the Finnish Railways?
- Last year was of crucially important character for the Finnish Railways for the whole 140 history of the company as all possible records were hit: 63.5 mln. passenger trips were implemented by train in Finland (+5.6% year-on-year).
Investment made into the passenger complex last year was a record as well. Total volume of investment amounted to EUR 178 mln. from which over EUR 150 mln. went to rolling stock purchase. New sleeping-cars, car-carriers, rail buses, the last party of train sets of our procurement deal of 17 Pendolino trains, 20 new double-deck passenger and 15 specially heated Talgo car-carriers for transportation of passangers' cars were purchased.
I'd like to mention one more event of a revolutionary sort. In September a new line of Kerava-Lahti route will be launched which will shorten traveling time for East Finland direction by 30-60 minutes. This project costs EUR 331 mln. and it is financed from the state budget.
Due to this very reason the train schedule will fundamentally change, the occasion of unprecedented sort for Finland.
- Did the strike called by workers of timber and paper industries influence VR results?
- Last spring strike lasted for two months. It influenced functioning of all adjacent sectors negatively for almost half a year. The Finnish Railways suffered losses worth EUR 17 mln. Cargo transportation volume decreased by 4.6% and amounted to 40.7 mln.tons last year. Now the situation is normalised. Raw materials, woodworking industry production together with cellulose and paper industry production make up 70% of the whole volume of our domestic transportation and a significant part of import-export cargo.
Tariff rate growth by 30-600% for containers negatively impacted cargo transportation via the Transsib. For the sake of comparison, the price of 40ft container grew twice. The major loss is that our clients have switched their cargo flows to shipping lines.
- Could you please tell us about "Northern Lights" containerized train?
- Railways do not usually give names to freight trains. However, this firm containerized express got its name. Trial run from Helsinki to Moscow has already been held. The target of this regular speeded route is to switch to railways container flow which now floats to Russia by the motor trucks: over 200 thousand containers destined for St.Petersburg and Moscow are transported from the Finnish ports to Russia by trucks now.
We have sent proposals to over 40 Finnish and international forwarding companies and shippings lines and hope that as many as possible will switch their containers from road to rail.
The most crucial issues of cooperation with the Russian colleagues have already been solved. Negotiations ended in signing a protocol of intentions with OAO "TransContainer". The decision to join efforts in order to launch this sort of transportation and solve quetions on customs declaration has been made. In summer "Northern Lights" will start regular service on Helsiniki-Moscow route: in the beginning - once a week, then daily. In the market there are cargo volumes to provide this line with.
In the future we plan to launch speeded container train traffic from China to Finland. Now we start negotiations with Russian and Chinese experts, consider variants of getting preliminary customs clearance in electronic mode that will help to shorten handling time from 3 to 1 days. Thus, with joint efforts of Finland, Russia and China a unique cargo express can be launched which is going to become the fastest and the longest one in the world. On the way back containers empty from Asian cargo will carry production of woodworking and paper industry of the Finnish enterprises and metallurgical plants of Sweden.
- Plenty of road-trains loaded with motor cars can be found on the motor ways from the ports of Finland towards the Russian border. How possible do you think it is to switch this flow to railways?
- It is true that motor cars destined for Russia are shipped to the Finnish ports firstly and after that transported by trucks via the Russian-Finnish border. 340 thousand of motors cars were transported to Russia in 2005. For the sake of comparison within domestic market of Finland this number for the same period amounted to 150 thousand cars. Daily 400 motor trucks leave for Russia from the port of Hanko only. The port of Kotka receives 86 thousand cars per year and 10,000 road-trains will be needed to transport this amount.
Only 5 thousand cars were transported by rail last year, and their destination was Central Asia. Our task is to switch to railways one third of this transportation. At present we are ready to form such trains but in Russia there should be special terminals with developed infrastructure, customs posts for handling them. In addition to this, a proper amount of special rolling stock is aslo needed.
- What changes will transport complex of Finland undergo in near future?
- Since January of 2007 cargo transport market will be open for everybody to participate in European Union area. Finnish railways are prepared to meet this competition.

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РЖД-Партнер

Using One Gauge

According to the official data, during the last three years the export flow from Russia to Finland grew by 50%, and import from Finland to Russia increased by 39%. These figures prove that the relations are being strengthened between the two countries. Many experts believe that in the near future Russia can become Finland's largest trade partner. Naturally, the transport sector, including railway communication, occupies one of the key positions in the process.
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The Russian and the Finnish railways have been cooperating for as long as the two countries have. So, it is not surprising that the gauge used in Finland since the time of the Russian Empire is of the Russian "size" , i.e. its width is 1,522 mm. Needless to say, this fact unites the interests of the two countries. When crossing the Russian-Finnish border, there is no need to change wheel pairs, as it is done at the border with Europe, so it simplifies freight transportation by railway. According to the data presented by Finnish specialists, nowadays 17 million tons of different cargoes is transported by railway between Finland and Russia. In 2005, over 250 thousand people were transported by railway. Such a stable passenger route and impressive figures of freight flow reinforce the necessity for infrastructure development, purchase of modern rolling stock, and implementation of new IT technologies. That is why much attention is paid to the modernization of the Russian-Finnish railway communication.

Fast TrainsMoving Forward
One of the joint projects is the launch of speeded up railway communication on the route St.-Petersburg-Helsinki. The project is coordinated by the Governments of the two countries. It was initiated in 2001 by the President of the Russian Federation Vladimir Putin and the President of Finland Tarja Halonen. The Heads of the two countries set the following task for the railmen: to reduce delivery time of passengers on the St.-Petersburg-Helsinki route to three or three-and-a-half hours.
Currently, it takes a train 5 hours and 40 minutes to get from St.-Petersburg to Helsinki, wherein 2 hours and 40 minutes is required to get to the Finnish border. In the framework of the project, OAO Russian Railways plans to reduce travel time along the Russian territory to one hour and a half. There will be several stages. Thus, in the words of the first vice-president of OAO RZD Vadim Morozov, transportation time along the Russian territory can be reduced by 30-35 minutes by changing transportation technology and use of new locomotives. No substantial financing will be necessary. To do it, a number of measures are planned. In particular, starting from May 28, 2006, when the summer schedule comes in force, trains servicing the route St.-Petersburg-Helsinki will depart from the Finnish Station instead of the Ladoga Station. This will enable to reduce travel time by 17 minutes. Besides, it is planned that this year a two-way feed locomotive of new generation of ЭП10 type will service the route; thus, travel time will reduce by another 17 minutes. Currently, passengers travelling from Russia to Finland or vice versa are serviced by a Finnish train called "Sibelius" and two trains belonging to OAO RZD, "Repin" (St.-Petersburg-Helsinki) and "Leo Tolstoy" (Moscow-Helsinki).
However, in the near future, OAO RZD and VR Group Ltd (the Finnish Railways) are to launch a joint venture, one of the functions of which will be purchase of rolling stock to service the speeded up passenger railway communication between the Russian and the Finnish capitals. The new company is to hold an international tender among rolling stock producers. Some data show that six speeded-up trains are required to service the route. The results of the tender will be announced at the end of 2006; however, the main candidates for trains supply are already known. They are the French company Alstom and AnsaldoBreda, a transport subdivision of the Italian company Finmeccanica. Alstom has been cooperating with VR Group Ltd for several years. It supplies Finland with speeded-up trains at the cost of about EUR 11 million per unit/item. Taking into account the special power-plant for alternating and direct current, a train for Russian-Finnish passenger communication will cost EUR 1.5 million more.
"According to our calculations, such a speeded-up train can be put into operation in 2009. As for speeded communication at the speed of 200 kilometers per hour, it can be carried out in 2008", claims vice president of OAO RZD Mikhail Akulov. Specialists of OAO RZD forecast that the Russian-Finnish passenger transportation volume will double.
However, not only new rolling stock is important to reduce the travel time. Railway infrastructure in both countries needs to be reconstructed. Besides, border and customs formalities will take place while the train is running. To carry out all the measures planned in the framework of the project, significant investments (according to some data, up to RUR 50 billion) will be required. Since the project is important for the whole country, and in particular for the development of the economy of the North-Western region, OAO RZD believes that this sum will be obtained from the state's investment fund. Analysts believe that the company has all the chances to secure state funding for the project.

Finnish TransContainer
Another example of cooperation between the Russian and the Finnish railways is the joint venture providing container transportation, which will be launched by OAO TransContainer (a subsidiary of OAO RZD) and VR Cargo (a subdivision of VR Group Ltd). The company is to develop export, import and transit transportation between Finland and Russia, in particular to service container routes Moscow-Finland and Finland-China. A working group was formed to develop the basic documents and a system to manage the joint venture. In particular, the Russian side insist that they should control the largest part of the joint venture, at least 50% plus one share. All the problems are to be solved by the end of May, and at the end of the summer the joint venture will start working, the General Director of TransContainer Petr Baskakov forecasts. The new company will not own a containers and fitting platforms park. The launch of the Russian-Finnish joint venture does not envisage that special representative offices will be opened on the territory of the two countries. As for the Russian side, the work will be carried out on the basis of agencies and representative offices of TransContainer (in Europe, in Russia, and soon in China). The Finnish side is to act in the same way.
Such a joint venture is undoubtedly profitable. Statistics show that in 2005 container transportation volumes between Finland and Russia amounted to 125 thousand TEU.
This is not the first example of TransContainer's cooperation with the Finnish Railways. At the end of 2005, a contract for a block train "Northern Lights" on the route Finland-Moscow was concluded. In accordance with the contract, the first block train departed on December 21, 2005. It transported thirty four 40-feet containers from the ports of Kotka, Hamina and Helsinki to the station Moscow-Tovarnaya-Oktyabrskaya. The travel time of the train was 32 hours and 17 minutes, which is 7 hours less than it had been planned. Initially, the Russian and the Finnish participants of the project planned that the train will run weekly. The forecasted freight volume, planned to be transported by the train in 2006, is four million TEUs.
The point of the project is that a full pack of transport and forwarding services is provided while transporting freight by train. In particular, the sides are responsible for safety of the cargo transported and just in time delivery, for providing unhampered block-train running along the country's territory in accordance with the schedule and supplying the other side with up-to-date information about the train's progress. Other specific characteristics of "The Northern Lights" are simplified customs procedures and special tariff terms for clients. Besides, three more block trains carry cargoes between Russia and Finland: Nakhodka-Vostochnaya - Buslovskaya, Finland - Moscow, and Zabaikalsk - Buslovskaya.
It is obvious that the joint projects of the Russian and the Finnish railways are broader than the frames of standard two-sided cooperation. Both countries are equally economically and politically interested in the projects.

ALEXANDRA PAVLOVA [~DETAIL_TEXT] =>
The Russian and the Finnish railways have been cooperating for as long as the two countries have. So, it is not surprising that the gauge used in Finland since the time of the Russian Empire is of the Russian "size" , i.e. its width is 1,522 mm. Needless to say, this fact unites the interests of the two countries. When crossing the Russian-Finnish border, there is no need to change wheel pairs, as it is done at the border with Europe, so it simplifies freight transportation by railway. According to the data presented by Finnish specialists, nowadays 17 million tons of different cargoes is transported by railway between Finland and Russia. In 2005, over 250 thousand people were transported by railway. Such a stable passenger route and impressive figures of freight flow reinforce the necessity for infrastructure development, purchase of modern rolling stock, and implementation of new IT technologies. That is why much attention is paid to the modernization of the Russian-Finnish railway communication.

Fast TrainsMoving Forward
One of the joint projects is the launch of speeded up railway communication on the route St.-Petersburg-Helsinki. The project is coordinated by the Governments of the two countries. It was initiated in 2001 by the President of the Russian Federation Vladimir Putin and the President of Finland Tarja Halonen. The Heads of the two countries set the following task for the railmen: to reduce delivery time of passengers on the St.-Petersburg-Helsinki route to three or three-and-a-half hours.
Currently, it takes a train 5 hours and 40 minutes to get from St.-Petersburg to Helsinki, wherein 2 hours and 40 minutes is required to get to the Finnish border. In the framework of the project, OAO Russian Railways plans to reduce travel time along the Russian territory to one hour and a half. There will be several stages. Thus, in the words of the first vice-president of OAO RZD Vadim Morozov, transportation time along the Russian territory can be reduced by 30-35 minutes by changing transportation technology and use of new locomotives. No substantial financing will be necessary. To do it, a number of measures are planned. In particular, starting from May 28, 2006, when the summer schedule comes in force, trains servicing the route St.-Petersburg-Helsinki will depart from the Finnish Station instead of the Ladoga Station. This will enable to reduce travel time by 17 minutes. Besides, it is planned that this year a two-way feed locomotive of new generation of ЭП10 type will service the route; thus, travel time will reduce by another 17 minutes. Currently, passengers travelling from Russia to Finland or vice versa are serviced by a Finnish train called "Sibelius" and two trains belonging to OAO RZD, "Repin" (St.-Petersburg-Helsinki) and "Leo Tolstoy" (Moscow-Helsinki).
However, in the near future, OAO RZD and VR Group Ltd (the Finnish Railways) are to launch a joint venture, one of the functions of which will be purchase of rolling stock to service the speeded up passenger railway communication between the Russian and the Finnish capitals. The new company is to hold an international tender among rolling stock producers. Some data show that six speeded-up trains are required to service the route. The results of the tender will be announced at the end of 2006; however, the main candidates for trains supply are already known. They are the French company Alstom and AnsaldoBreda, a transport subdivision of the Italian company Finmeccanica. Alstom has been cooperating with VR Group Ltd for several years. It supplies Finland with speeded-up trains at the cost of about EUR 11 million per unit/item. Taking into account the special power-plant for alternating and direct current, a train for Russian-Finnish passenger communication will cost EUR 1.5 million more.
"According to our calculations, such a speeded-up train can be put into operation in 2009. As for speeded communication at the speed of 200 kilometers per hour, it can be carried out in 2008", claims vice president of OAO RZD Mikhail Akulov. Specialists of OAO RZD forecast that the Russian-Finnish passenger transportation volume will double.
However, not only new rolling stock is important to reduce the travel time. Railway infrastructure in both countries needs to be reconstructed. Besides, border and customs formalities will take place while the train is running. To carry out all the measures planned in the framework of the project, significant investments (according to some data, up to RUR 50 billion) will be required. Since the project is important for the whole country, and in particular for the development of the economy of the North-Western region, OAO RZD believes that this sum will be obtained from the state's investment fund. Analysts believe that the company has all the chances to secure state funding for the project.

Finnish TransContainer
Another example of cooperation between the Russian and the Finnish railways is the joint venture providing container transportation, which will be launched by OAO TransContainer (a subsidiary of OAO RZD) and VR Cargo (a subdivision of VR Group Ltd). The company is to develop export, import and transit transportation between Finland and Russia, in particular to service container routes Moscow-Finland and Finland-China. A working group was formed to develop the basic documents and a system to manage the joint venture. In particular, the Russian side insist that they should control the largest part of the joint venture, at least 50% plus one share. All the problems are to be solved by the end of May, and at the end of the summer the joint venture will start working, the General Director of TransContainer Petr Baskakov forecasts. The new company will not own a containers and fitting platforms park. The launch of the Russian-Finnish joint venture does not envisage that special representative offices will be opened on the territory of the two countries. As for the Russian side, the work will be carried out on the basis of agencies and representative offices of TransContainer (in Europe, in Russia, and soon in China). The Finnish side is to act in the same way.
Such a joint venture is undoubtedly profitable. Statistics show that in 2005 container transportation volumes between Finland and Russia amounted to 125 thousand TEU.
This is not the first example of TransContainer's cooperation with the Finnish Railways. At the end of 2005, a contract for a block train "Northern Lights" on the route Finland-Moscow was concluded. In accordance with the contract, the first block train departed on December 21, 2005. It transported thirty four 40-feet containers from the ports of Kotka, Hamina and Helsinki to the station Moscow-Tovarnaya-Oktyabrskaya. The travel time of the train was 32 hours and 17 minutes, which is 7 hours less than it had been planned. Initially, the Russian and the Finnish participants of the project planned that the train will run weekly. The forecasted freight volume, planned to be transported by the train in 2006, is four million TEUs.
The point of the project is that a full pack of transport and forwarding services is provided while transporting freight by train. In particular, the sides are responsible for safety of the cargo transported and just in time delivery, for providing unhampered block-train running along the country's territory in accordance with the schedule and supplying the other side with up-to-date information about the train's progress. Other specific characteristics of "The Northern Lights" are simplified customs procedures and special tariff terms for clients. Besides, three more block trains carry cargoes between Russia and Finland: Nakhodka-Vostochnaya - Buslovskaya, Finland - Moscow, and Zabaikalsk - Buslovskaya.
It is obvious that the joint projects of the Russian and the Finnish railways are broader than the frames of standard two-sided cooperation. Both countries are equally economically and politically interested in the projects.

ALEXANDRA PAVLOVA [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => According to the official data, during the last three years the export flow from Russia to Finland grew by 50%, and import from Finland to Russia increased by 39%. These figures prove that the relations are being strengthened between the two countries. Many experts believe that in the near future Russia can become Finland's largest trade partner. Naturally, the transport sector, including railway communication, occupies one of the key positions in the process.
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The Russian and the Finnish railways have been cooperating for as long as the two countries have. So, it is not surprising that the gauge used in Finland since the time of the Russian Empire is of the Russian "size" , i.e. its width is 1,522 mm. Needless to say, this fact unites the interests of the two countries. When crossing the Russian-Finnish border, there is no need to change wheel pairs, as it is done at the border with Europe, so it simplifies freight transportation by railway. According to the data presented by Finnish specialists, nowadays 17 million tons of different cargoes is transported by railway between Finland and Russia. In 2005, over 250 thousand people were transported by railway. Such a stable passenger route and impressive figures of freight flow reinforce the necessity for infrastructure development, purchase of modern rolling stock, and implementation of new IT technologies. That is why much attention is paid to the modernization of the Russian-Finnish railway communication.

Fast TrainsMoving Forward
One of the joint projects is the launch of speeded up railway communication on the route St.-Petersburg-Helsinki. The project is coordinated by the Governments of the two countries. It was initiated in 2001 by the President of the Russian Federation Vladimir Putin and the President of Finland Tarja Halonen. The Heads of the two countries set the following task for the railmen: to reduce delivery time of passengers on the St.-Petersburg-Helsinki route to three or three-and-a-half hours.
Currently, it takes a train 5 hours and 40 minutes to get from St.-Petersburg to Helsinki, wherein 2 hours and 40 minutes is required to get to the Finnish border. In the framework of the project, OAO Russian Railways plans to reduce travel time along the Russian territory to one hour and a half. There will be several stages. Thus, in the words of the first vice-president of OAO RZD Vadim Morozov, transportation time along the Russian territory can be reduced by 30-35 minutes by changing transportation technology and use of new locomotives. No substantial financing will be necessary. To do it, a number of measures are planned. In particular, starting from May 28, 2006, when the summer schedule comes in force, trains servicing the route St.-Petersburg-Helsinki will depart from the Finnish Station instead of the Ladoga Station. This will enable to reduce travel time by 17 minutes. Besides, it is planned that this year a two-way feed locomotive of new generation of ЭП10 type will service the route; thus, travel time will reduce by another 17 minutes. Currently, passengers travelling from Russia to Finland or vice versa are serviced by a Finnish train called "Sibelius" and two trains belonging to OAO RZD, "Repin" (St.-Petersburg-Helsinki) and "Leo Tolstoy" (Moscow-Helsinki).
However, in the near future, OAO RZD and VR Group Ltd (the Finnish Railways) are to launch a joint venture, one of the functions of which will be purchase of rolling stock to service the speeded up passenger railway communication between the Russian and the Finnish capitals. The new company is to hold an international tender among rolling stock producers. Some data show that six speeded-up trains are required to service the route. The results of the tender will be announced at the end of 2006; however, the main candidates for trains supply are already known. They are the French company Alstom and AnsaldoBreda, a transport subdivision of the Italian company Finmeccanica. Alstom has been cooperating with VR Group Ltd for several years. It supplies Finland with speeded-up trains at the cost of about EUR 11 million per unit/item. Taking into account the special power-plant for alternating and direct current, a train for Russian-Finnish passenger communication will cost EUR 1.5 million more.
"According to our calculations, such a speeded-up train can be put into operation in 2009. As for speeded communication at the speed of 200 kilometers per hour, it can be carried out in 2008", claims vice president of OAO RZD Mikhail Akulov. Specialists of OAO RZD forecast that the Russian-Finnish passenger transportation volume will double.
However, not only new rolling stock is important to reduce the travel time. Railway infrastructure in both countries needs to be reconstructed. Besides, border and customs formalities will take place while the train is running. To carry out all the measures planned in the framework of the project, significant investments (according to some data, up to RUR 50 billion) will be required. Since the project is important for the whole country, and in particular for the development of the economy of the North-Western region, OAO RZD believes that this sum will be obtained from the state's investment fund. Analysts believe that the company has all the chances to secure state funding for the project.

Finnish TransContainer
Another example of cooperation between the Russian and the Finnish railways is the joint venture providing container transportation, which will be launched by OAO TransContainer (a subsidiary of OAO RZD) and VR Cargo (a subdivision of VR Group Ltd). The company is to develop export, import and transit transportation between Finland and Russia, in particular to service container routes Moscow-Finland and Finland-China. A working group was formed to develop the basic documents and a system to manage the joint venture. In particular, the Russian side insist that they should control the largest part of the joint venture, at least 50% plus one share. All the problems are to be solved by the end of May, and at the end of the summer the joint venture will start working, the General Director of TransContainer Petr Baskakov forecasts. The new company will not own a containers and fitting platforms park. The launch of the Russian-Finnish joint venture does not envisage that special representative offices will be opened on the territory of the two countries. As for the Russian side, the work will be carried out on the basis of agencies and representative offices of TransContainer (in Europe, in Russia, and soon in China). The Finnish side is to act in the same way.
Such a joint venture is undoubtedly profitable. Statistics show that in 2005 container transportation volumes between Finland and Russia amounted to 125 thousand TEU.
This is not the first example of TransContainer's cooperation with the Finnish Railways. At the end of 2005, a contract for a block train "Northern Lights" on the route Finland-Moscow was concluded. In accordance with the contract, the first block train departed on December 21, 2005. It transported thirty four 40-feet containers from the ports of Kotka, Hamina and Helsinki to the station Moscow-Tovarnaya-Oktyabrskaya. The travel time of the train was 32 hours and 17 minutes, which is 7 hours less than it had been planned. Initially, the Russian and the Finnish participants of the project planned that the train will run weekly. The forecasted freight volume, planned to be transported by the train in 2006, is four million TEUs.
The point of the project is that a full pack of transport and forwarding services is provided while transporting freight by train. In particular, the sides are responsible for safety of the cargo transported and just in time delivery, for providing unhampered block-train running along the country's territory in accordance with the schedule and supplying the other side with up-to-date information about the train's progress. Other specific characteristics of "The Northern Lights" are simplified customs procedures and special tariff terms for clients. Besides, three more block trains carry cargoes between Russia and Finland: Nakhodka-Vostochnaya - Buslovskaya, Finland - Moscow, and Zabaikalsk - Buslovskaya.
It is obvious that the joint projects of the Russian and the Finnish railways are broader than the frames of standard two-sided cooperation. Both countries are equally economically and politically interested in the projects.

ALEXANDRA PAVLOVA [~DETAIL_TEXT] =>
The Russian and the Finnish railways have been cooperating for as long as the two countries have. So, it is not surprising that the gauge used in Finland since the time of the Russian Empire is of the Russian "size" , i.e. its width is 1,522 mm. Needless to say, this fact unites the interests of the two countries. When crossing the Russian-Finnish border, there is no need to change wheel pairs, as it is done at the border with Europe, so it simplifies freight transportation by railway. According to the data presented by Finnish specialists, nowadays 17 million tons of different cargoes is transported by railway between Finland and Russia. In 2005, over 250 thousand people were transported by railway. Such a stable passenger route and impressive figures of freight flow reinforce the necessity for infrastructure development, purchase of modern rolling stock, and implementation of new IT technologies. That is why much attention is paid to the modernization of the Russian-Finnish railway communication.

Fast TrainsMoving Forward
One of the joint projects is the launch of speeded up railway communication on the route St.-Petersburg-Helsinki. The project is coordinated by the Governments of the two countries. It was initiated in 2001 by the President of the Russian Federation Vladimir Putin and the President of Finland Tarja Halonen. The Heads of the two countries set the following task for the railmen: to reduce delivery time of passengers on the St.-Petersburg-Helsinki route to three or three-and-a-half hours.
Currently, it takes a train 5 hours and 40 minutes to get from St.-Petersburg to Helsinki, wherein 2 hours and 40 minutes is required to get to the Finnish border. In the framework of the project, OAO Russian Railways plans to reduce travel time along the Russian territory to one hour and a half. There will be several stages. Thus, in the words of the first vice-president of OAO RZD Vadim Morozov, transportation time along the Russian territory can be reduced by 30-35 minutes by changing transportation technology and use of new locomotives. No substantial financing will be necessary. To do it, a number of measures are planned. In particular, starting from May 28, 2006, when the summer schedule comes in force, trains servicing the route St.-Petersburg-Helsinki will depart from the Finnish Station instead of the Ladoga Station. This will enable to reduce travel time by 17 minutes. Besides, it is planned that this year a two-way feed locomotive of new generation of ЭП10 type will service the route; thus, travel time will reduce by another 17 minutes. Currently, passengers travelling from Russia to Finland or vice versa are serviced by a Finnish train called "Sibelius" and two trains belonging to OAO RZD, "Repin" (St.-Petersburg-Helsinki) and "Leo Tolstoy" (Moscow-Helsinki).
However, in the near future, OAO RZD and VR Group Ltd (the Finnish Railways) are to launch a joint venture, one of the functions of which will be purchase of rolling stock to service the speeded up passenger railway communication between the Russian and the Finnish capitals. The new company is to hold an international tender among rolling stock producers. Some data show that six speeded-up trains are required to service the route. The results of the tender will be announced at the end of 2006; however, the main candidates for trains supply are already known. They are the French company Alstom and AnsaldoBreda, a transport subdivision of the Italian company Finmeccanica. Alstom has been cooperating with VR Group Ltd for several years. It supplies Finland with speeded-up trains at the cost of about EUR 11 million per unit/item. Taking into account the special power-plant for alternating and direct current, a train for Russian-Finnish passenger communication will cost EUR 1.5 million more.
"According to our calculations, such a speeded-up train can be put into operation in 2009. As for speeded communication at the speed of 200 kilometers per hour, it can be carried out in 2008", claims vice president of OAO RZD Mikhail Akulov. Specialists of OAO RZD forecast that the Russian-Finnish passenger transportation volume will double.
However, not only new rolling stock is important to reduce the travel time. Railway infrastructure in both countries needs to be reconstructed. Besides, border and customs formalities will take place while the train is running. To carry out all the measures planned in the framework of the project, significant investments (according to some data, up to RUR 50 billion) will be required. Since the project is important for the whole country, and in particular for the development of the economy of the North-Western region, OAO RZD believes that this sum will be obtained from the state's investment fund. Analysts believe that the company has all the chances to secure state funding for the project.

Finnish TransContainer
Another example of cooperation between the Russian and the Finnish railways is the joint venture providing container transportation, which will be launched by OAO TransContainer (a subsidiary of OAO RZD) and VR Cargo (a subdivision of VR Group Ltd). The company is to develop export, import and transit transportation between Finland and Russia, in particular to service container routes Moscow-Finland and Finland-China. A working group was formed to develop the basic documents and a system to manage the joint venture. In particular, the Russian side insist that they should control the largest part of the joint venture, at least 50% plus one share. All the problems are to be solved by the end of May, and at the end of the summer the joint venture will start working, the General Director of TransContainer Petr Baskakov forecasts. The new company will not own a containers and fitting platforms park. The launch of the Russian-Finnish joint venture does not envisage that special representative offices will be opened on the territory of the two countries. As for the Russian side, the work will be carried out on the basis of agencies and representative offices of TransContainer (in Europe, in Russia, and soon in China). The Finnish side is to act in the same way.
Such a joint venture is undoubtedly profitable. Statistics show that in 2005 container transportation volumes between Finland and Russia amounted to 125 thousand TEU.
This is not the first example of TransContainer's cooperation with the Finnish Railways. At the end of 2005, a contract for a block train "Northern Lights" on the route Finland-Moscow was concluded. In accordance with the contract, the first block train departed on December 21, 2005. It transported thirty four 40-feet containers from the ports of Kotka, Hamina and Helsinki to the station Moscow-Tovarnaya-Oktyabrskaya. The travel time of the train was 32 hours and 17 minutes, which is 7 hours less than it had been planned. Initially, the Russian and the Finnish participants of the project planned that the train will run weekly. The forecasted freight volume, planned to be transported by the train in 2006, is four million TEUs.
The point of the project is that a full pack of transport and forwarding services is provided while transporting freight by train. In particular, the sides are responsible for safety of the cargo transported and just in time delivery, for providing unhampered block-train running along the country's territory in accordance with the schedule and supplying the other side with up-to-date information about the train's progress. Other specific characteristics of "The Northern Lights" are simplified customs procedures and special tariff terms for clients. Besides, three more block trains carry cargoes between Russia and Finland: Nakhodka-Vostochnaya - Buslovskaya, Finland - Moscow, and Zabaikalsk - Buslovskaya.
It is obvious that the joint projects of the Russian and the Finnish railways are broader than the frames of standard two-sided cooperation. Both countries are equally economically and politically interested in the projects.

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РЖД-Партнер

"Single Transport Area Is Our Common Property"

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    [DETAIL_TEXT] => After the forum "Strategic Partnership 1520", held in May in Sochi, we asked senior vice-presidentof OAO RZD, Boris Lapidus Ph.D. to comment on his vision of cooperation between the railways in the post-Soviet territories.

From Policyto Commerce
- Mr.Lapidus, it is well known that, after the dissolution of the USSR, the railway transport was the most active sector of the economy, aiming to support the connections between all the newly established states. Could you evaluate the current level of cooperation between the railway administrations of the CIS and the Baltic states?
- In 1992 Railway Transport Council of the CIS and its constantly acting body Direction were established. The main tasks of the Council are the coordination of railway transport work on the interstate level and working out adjusted principles for its activities, as well as coordinating joint exploitation of freight wagons and containers etc. The efficiency of the Council's work has been shown by life itself. The main result is stable work of the railway transport and reliable and timely international passenger and freight transportation.
At the same time, under the current conditions, cooperation issues require the commercial and business basis development, since almost all the railways of the CIS and the Baltic states, as well as Mongolia, have faced the necessity of complete modernization and increase of competitiveness. So, the countries continue to improve their normative base, optimize and increase the efficiency of rolling stock, as well as start to use modern technologies, providing the growth of railways and their investors' revenue, the increase of competitiveness of these countries' railway transport as a system on the global transport market and as managing subjects on the markets of their countries.
- Is this the reason for holding the Forum "Strategic Partnership 1520" as a new form of cooperation?
- Yes, it is. On the one hand, today we can confirm that for fifteen years the single transport area uniting the countries with the rail gauge of 1520 mm functions successfully, and the necessary technological and commercial problems are solved in time. However, during this period, there has accumulated a number of problems in the system, the solution of which should become the basis for an increase of competitiveness for railways with the gauge of 1520 as a single technological and business-system. What do I mean here? The thing is that recently, the railway transport of the CIS and the Baltic states has not been technologically modernized and it failed to develop to the same degree as sea routes, road vehicles, and alternative railway routes. Nowadays, the technical base of our railways needs a complete reconstruction and switching to new technological principles in order to increase their efficiency and our competitiveness on the global transport market.
In spite of the, so to speak, geographically static and fixed nature of "1520 area", our railways struggle for freight flows. Nowadays world transport systems set high standards for the quality of services provided to cargo owners and possess mechanisms of expenses reduction. To compete with each of these railways, as well as the whole system, we need to solve the problem of quality, decrease our delivery time, reduce expenses etc. It is obvious that it is much easier and more effective to solve the problems together. We must form single or harmonized demands to the rolling stock, management systems, construction of new railway lines, corporate standards of services provided to clients etc. These are the problems we need to discuss together.
- You have mentioned the necessity of discussing the joint construction of new lines. What are the main "stumbling blocks" in the sector? What other directions of cooperation could you point out?
- The main problem impending the development of railways is the low attractiveness of railway construction for business. Such a situation can be explained by the imperfect legislation, lack of private enterprises experience in the sphere of railways construction in the last eighty years, and a number of other reasons. We also need to discuss it with businessmen, investors, bankers - people who know how to solve the problems in the sphere.
High efficiency of transport work cannot be achieved without creating integrated IT systems, sharing a single base with friendly protocols and interfaces. We understand that if such conditions can be achieved, each of the railways with the gauge of 1520, as well as the whole system, can improve the quality of transit, export and import services fast, taking into account new services, such as providing a client with the information about current cargo location, e-document turnover, e-customs procedures, modern digital communication etc.
Undoubtedly, we get closer and closer to the idea of integrated logistic systems, the launch of which will be efficient only on the basis of cooperation and integration. We must use a single technology for building a logistic chain from the places where freight flows appear to the destination points. To do it, we need single logistic technologies, and we need to create such conditions, in which logistic centers of each country will be available for all the clients. We also understand that the construction of these systems is impossible without investors' participation and attraction of modern efficient financing systems.
We believe that the system of passenger tourism, in which railways participate, develops unsatisfactorily. However, Europe "strives" to get to China and other countries of the Asian-Pacific region. We must create conditions for this business.
Another problem is staff training. We understand that the demand for specialists is very high on the railways of the CIS, since the majority of transport higher education institutions are still on the territory of Russia. So, the hopes of our partners are not a secret to us, and we are ready to satisfy them, at the same time, giving more opportunities for new solutions to our universities and scientific research institutes.
Thus, we consider this forum to be the first meeting, the first deep initiative discussion of all aspects of our cooperation not politically speaking, but on the basis of technological and commercial interests. We are sure that the current opportunities of interstate relations development enable the railways to integrate better into the each other's production processes. At the same time, Russia joining the WTO opens better opportunities for rolling stock and companies-operators integration; all this should be done on the basis of pragmatic calculations and commercial effects.

Sound Competition and "Childhood Diseases"
- Do you think that the route to integration and cooperation of railway systems with the 1520 mm gauge envisages that they will not compete with each other?
- No. A competitive "1520 area" for export transport services on the global market can appear only if inner competition is developed. We must give each participant an opportunity to increase his competitiveness, in order to enlarge our inner market and achieve high quality of its parameters. Only in this case, expenses will reduce and the quality of service will improve, which, in its turn, will lead to the increase of competitiveness of our countries' economies. It is very important.
Besides, in the framework of economic instruments development, we must closely examine the mechanism of clustered principles of business organization, and the railway transport sector is the most suitable for it. Production and consumption, technologies and science and education - all spheres can be integrated in their respective clusters, where competition and mutual dependence of producing units are in the best ratio.
- The management of OAO RZD have several times expressed their anxiety about the project of building railway lines with a gauge different from the Russian standard on the post-Soviet territory. Do you think that we are facing "infrastructure competition" usual for the market?
- Firstly, I would like to comment on the term "Russian gauge". The thing is that even the first railway lines were projected as interregional transport corridors, many of which became international later. For example, the rail lines St.-Petersburg-Warsaw, Moscow-Kharkov, Poti-Baku were the pioneers of railway construction. I mean that for us the term "Russian gauge" is not an ideological one. The gauge with the width of 1524 mm, and the current standard gauge of 1520 mm was the means of international cooperation from the very beginning, and nowadays about half of the lines lie beyond the boundaries of the Russian Federation. Our attitude to the project of the European gauge implementation on the "1520 area" is based on the experience of the railway sector development. It is common knowledge that without some unification of infrastructure standards, railways can service only local routes, and in this case they are not able to compete with other transport modes. At the same time, it is obvious that it is economically unprofitable to change the size of the gauge in the whole railway network, thus such ideas can hardly be considered a progressive tendency. Progress chose a different way, i.e. the construction of rolling stock able to run along different gauges, the launch of modern logistic centers, terminals, railway land ports etc.
At the same time, we can't but admit that the "1520 area" has been functioning as a single technological system for more than a century, and the "1435 area" has not appeared yet. For example, we know that multi-system is a characteristic feature of the EU's railways. Moreover, taking into account the geographical and natural specifics of the states lying on the "1520 area", freight transportation by railway will be important for a long time, while in Europe rail passenger transportation is widely spread. That is why we believe that the most important target of railways-partners is to use and develop competition advantages provided by the single gauge and the existing cooperation mechanisms instead of splitting "1520 network" up by putting new standards into operation. Moreover, since it is a more integrated area than the neighbouring railway systems, it would be more reasonable to enlarge the "1520 area" so that the European railways become integrated into it.
On the whole, we believe that the projects of constructing railways with other technical standards on the "1520 area" have no real economic grounds, i.e. they are not market "infrastructure competition", as you said, but projects caused by the policy. We are afraid that such plans of our partners may attract investments to the long and inefficient railway construction instead of actual and prospective projects for the development of existing railway infrastructure. Instead of developing the competition advantages we have because of the technological unity of "1520 area", such plans turn the railway sector back to the period of its "childhood diseases".
- The projects of creating land corridors West-East, parallel to the Transsib, are treated negatively in Russia. Do you think that such projects are also caused by political reasons, not economic ones?
- We consider the Transsib and all the railways connected with it, including the Baikalo-Amurskaya railway, as a unique competitive advantage of the Russian economy, created by the effort of many generations. Realization of its transit potential gives a powerful impulse to the development of railway transport, as well as the whole Russian economy. Our special attention to this corresponds with the Transport strategy of the Russian Federation, the main targets of which include an increase of transport services export. That is why we are suspicious of any attempts to form transit corridors bypassing our "national property".
Foe example, let's take the TRACECA corridor actively supported by the European Union. The economic grounds for the development of this route that crosses many state borders are quite vague. It seems that the main reason for its construction is that the corridor bypasses the territory of the Russian Federation. Recently, the launch of an integrated route along the central part of the Transasian railway via the tunnel under the Bosporus, crossing the territory of Turkey, Iran, countries of Middle Asia and further to China, has become a reality. If we examine the geopolitical, climatic and technical conditions in this corridor, we will find no clear advantages in comparison with the Transsib. A version of this direction development is the project for a Transkazakh railway with the European size of gauge. Its target is non-stop railway transportation between China and the European states. However, this project has no proper economic basis either, since the scale of carrying capacities development requires enormous investments, which will hardly be compensated by the revenue from transit transportation. Besides, the domestic and the international situation is tense in those regions. And this means additional risks.
Nowadays we consider the Transsib to be a part of a huge transport corridor East-West, which has a lot of branches; thus, loading of the Transsib is not only a consequence of the increase of carrying capacities to master cargo flows, but also a result of its quality improvement to form a competitive transport service on the global East-West market.
- Is it connected with the so popular today "export of transport services"?
- Export of transport services is, in particular, transit transportation of foreign freight along the territory of Russia. It is impossible without the participation of neighbouring railways of China, Mongolia, Finland, Byelorussia, Ukraine, the Baltic states and West European countries. Besides, this long logistic chain, consisting of railways, road haulers and sea carriers, ports and terminals, should have no unprofitable links. This is our joint business, which is to be profitable for all the participants. That is why cooperation in the development of the most prospective sector - transit transportation by railway - is to be created and coordinated between the participants who are to plan their activities together and sustain parity commercial relations.
To stir up the development of transit transportation business in the "1520 area", a joint strategy of container business development should be worked out. Its basis is modernization of our container assets to improve the quality of transportation, the technology of service and management. Our position is absolutely pragmatic and suggested by the market: it is necessary to attract clients by a proper service pack, keep them by means of a correspondent quality of the transport service, and bring them profit by well thought-out tariff rates.
Joint efforts are required from our partners operating in the "1520 area", in order to reach the targets. I am sure that a balanced development of these key directions will bring positive economic results for everybody.

Frankly Speaking
- Will OAO RZD prefer to purchase locomotives and wagons produced by Russian enterprises, or will it put an emphasis on the quality of rolling stock, not taking into account the country that produced it, in the near future?
- The most important thing for us, when we purchase rolling stock, is its quality accompanied by a competitive level of price. That is why OAO RZD invites both Russian and foreign rolling stock suppliers to participate in tenders. We are sure that nowadays modern machinery cannot be produced without using the latest achievements in the world machine building sector. At the same time, we know that the Russian engineering school is one of the best in the transport machine building sector, and it can develop prospective production, meeting Russian as well as world standards. However, time should not be spent in vain.
- Do you think there are many differences between the CIS railway systems in terms of market structural reforms? Do they have an influence on technological and commercial relations?
- The structural reforms of railways located on the post-Soviet territory was caused by the following reasons: changes in the political and social-economic systems, reduction of railway transportation, ageing of the main funds and impossibility of their renewal because of the investment shortage etc. The reforms held on the railways of the CIS and the Baltic states have their own specifics. Thus, railway transport reforms are held by means of changing the form of property for the state railways in Russia, Armenia, Georgia, Kazakhstan, Uzbekistan and the Baltic states. In Azerbaijan, Byelorussia, Kirgizia, Moldavia, Tajikistan, Turkmenistan and Ukraine, they take measures to improve the management; however, railway transport is still regulated by the state in the market economy conditions.
As I have already said, we want to create such conditions that will give an impulse for switching our relations to a more commercialized system, which will be more attractive for private investments. Still, it is obvious that many of the problems can be solved by reforming the railways. So, it is necessary to share opinions and experience, whether positive or negative. We must be open and frank with each other and learn from each other's mistakes.
OAO RZD follows the structural railway transport reforms in different countries, analyses them and uses the positive experience. In particular, I would like to stress that special attention should be paid to the experience of passenger transportation in Kazakhstan, especially when selecting mechanisms of state support for socially important transportation.
- What would you wish the railmen of the CIS and their business partners?
- Our nations, as well as the railways of our countries, were historically developing with the idea of unification, to create a common geopolitical, economic and infrastructural space. In the recent decades - a short historical term - common economic and political values were reviewed, which led to a disintegration. Under these conditions, the railways with the standard gauge of 1520 mm provided and still provide reliable and regular passenger and freight transportation, keeping our economic and social ties strong.
I would like to wish all the railmen, machine builders, forwarders, operators, investors, and bankers to be successful in strengthening the ties between our railways and our businesses. This is one of the most important targets of transport, and a pledge for strengthening of intergovernmental relations.

Interviewed by Andrey Guryev [~DETAIL_TEXT] => After the forum "Strategic Partnership 1520", held in May in Sochi, we asked senior vice-presidentof OAO RZD, Boris Lapidus Ph.D. to comment on his vision of cooperation between the railways in the post-Soviet territories.

From Policyto Commerce
- Mr.Lapidus, it is well known that, after the dissolution of the USSR, the railway transport was the most active sector of the economy, aiming to support the connections between all the newly established states. Could you evaluate the current level of cooperation between the railway administrations of the CIS and the Baltic states?
- In 1992 Railway Transport Council of the CIS and its constantly acting body Direction were established. The main tasks of the Council are the coordination of railway transport work on the interstate level and working out adjusted principles for its activities, as well as coordinating joint exploitation of freight wagons and containers etc. The efficiency of the Council's work has been shown by life itself. The main result is stable work of the railway transport and reliable and timely international passenger and freight transportation.
At the same time, under the current conditions, cooperation issues require the commercial and business basis development, since almost all the railways of the CIS and the Baltic states, as well as Mongolia, have faced the necessity of complete modernization and increase of competitiveness. So, the countries continue to improve their normative base, optimize and increase the efficiency of rolling stock, as well as start to use modern technologies, providing the growth of railways and their investors' revenue, the increase of competitiveness of these countries' railway transport as a system on the global transport market and as managing subjects on the markets of their countries.
- Is this the reason for holding the Forum "Strategic Partnership 1520" as a new form of cooperation?
- Yes, it is. On the one hand, today we can confirm that for fifteen years the single transport area uniting the countries with the rail gauge of 1520 mm functions successfully, and the necessary technological and commercial problems are solved in time. However, during this period, there has accumulated a number of problems in the system, the solution of which should become the basis for an increase of competitiveness for railways with the gauge of 1520 as a single technological and business-system. What do I mean here? The thing is that recently, the railway transport of the CIS and the Baltic states has not been technologically modernized and it failed to develop to the same degree as sea routes, road vehicles, and alternative railway routes. Nowadays, the technical base of our railways needs a complete reconstruction and switching to new technological principles in order to increase their efficiency and our competitiveness on the global transport market.
In spite of the, so to speak, geographically static and fixed nature of "1520 area", our railways struggle for freight flows. Nowadays world transport systems set high standards for the quality of services provided to cargo owners and possess mechanisms of expenses reduction. To compete with each of these railways, as well as the whole system, we need to solve the problem of quality, decrease our delivery time, reduce expenses etc. It is obvious that it is much easier and more effective to solve the problems together. We must form single or harmonized demands to the rolling stock, management systems, construction of new railway lines, corporate standards of services provided to clients etc. These are the problems we need to discuss together.
- You have mentioned the necessity of discussing the joint construction of new lines. What are the main "stumbling blocks" in the sector? What other directions of cooperation could you point out?
- The main problem impending the development of railways is the low attractiveness of railway construction for business. Such a situation can be explained by the imperfect legislation, lack of private enterprises experience in the sphere of railways construction in the last eighty years, and a number of other reasons. We also need to discuss it with businessmen, investors, bankers - people who know how to solve the problems in the sphere.
High efficiency of transport work cannot be achieved without creating integrated IT systems, sharing a single base with friendly protocols and interfaces. We understand that if such conditions can be achieved, each of the railways with the gauge of 1520, as well as the whole system, can improve the quality of transit, export and import services fast, taking into account new services, such as providing a client with the information about current cargo location, e-document turnover, e-customs procedures, modern digital communication etc.
Undoubtedly, we get closer and closer to the idea of integrated logistic systems, the launch of which will be efficient only on the basis of cooperation and integration. We must use a single technology for building a logistic chain from the places where freight flows appear to the destination points. To do it, we need single logistic technologies, and we need to create such conditions, in which logistic centers of each country will be available for all the clients. We also understand that the construction of these systems is impossible without investors' participation and attraction of modern efficient financing systems.
We believe that the system of passenger tourism, in which railways participate, develops unsatisfactorily. However, Europe "strives" to get to China and other countries of the Asian-Pacific region. We must create conditions for this business.
Another problem is staff training. We understand that the demand for specialists is very high on the railways of the CIS, since the majority of transport higher education institutions are still on the territory of Russia. So, the hopes of our partners are not a secret to us, and we are ready to satisfy them, at the same time, giving more opportunities for new solutions to our universities and scientific research institutes.
Thus, we consider this forum to be the first meeting, the first deep initiative discussion of all aspects of our cooperation not politically speaking, but on the basis of technological and commercial interests. We are sure that the current opportunities of interstate relations development enable the railways to integrate better into the each other's production processes. At the same time, Russia joining the WTO opens better opportunities for rolling stock and companies-operators integration; all this should be done on the basis of pragmatic calculations and commercial effects.

Sound Competition and "Childhood Diseases"
- Do you think that the route to integration and cooperation of railway systems with the 1520 mm gauge envisages that they will not compete with each other?
- No. A competitive "1520 area" for export transport services on the global market can appear only if inner competition is developed. We must give each participant an opportunity to increase his competitiveness, in order to enlarge our inner market and achieve high quality of its parameters. Only in this case, expenses will reduce and the quality of service will improve, which, in its turn, will lead to the increase of competitiveness of our countries' economies. It is very important.
Besides, in the framework of economic instruments development, we must closely examine the mechanism of clustered principles of business organization, and the railway transport sector is the most suitable for it. Production and consumption, technologies and science and education - all spheres can be integrated in their respective clusters, where competition and mutual dependence of producing units are in the best ratio.
- The management of OAO RZD have several times expressed their anxiety about the project of building railway lines with a gauge different from the Russian standard on the post-Soviet territory. Do you think that we are facing "infrastructure competition" usual for the market?
- Firstly, I would like to comment on the term "Russian gauge". The thing is that even the first railway lines were projected as interregional transport corridors, many of which became international later. For example, the rail lines St.-Petersburg-Warsaw, Moscow-Kharkov, Poti-Baku were the pioneers of railway construction. I mean that for us the term "Russian gauge" is not an ideological one. The gauge with the width of 1524 mm, and the current standard gauge of 1520 mm was the means of international cooperation from the very beginning, and nowadays about half of the lines lie beyond the boundaries of the Russian Federation. Our attitude to the project of the European gauge implementation on the "1520 area" is based on the experience of the railway sector development. It is common knowledge that without some unification of infrastructure standards, railways can service only local routes, and in this case they are not able to compete with other transport modes. At the same time, it is obvious that it is economically unprofitable to change the size of the gauge in the whole railway network, thus such ideas can hardly be considered a progressive tendency. Progress chose a different way, i.e. the construction of rolling stock able to run along different gauges, the launch of modern logistic centers, terminals, railway land ports etc.
At the same time, we can't but admit that the "1520 area" has been functioning as a single technological system for more than a century, and the "1435 area" has not appeared yet. For example, we know that multi-system is a characteristic feature of the EU's railways. Moreover, taking into account the geographical and natural specifics of the states lying on the "1520 area", freight transportation by railway will be important for a long time, while in Europe rail passenger transportation is widely spread. That is why we believe that the most important target of railways-partners is to use and develop competition advantages provided by the single gauge and the existing cooperation mechanisms instead of splitting "1520 network" up by putting new standards into operation. Moreover, since it is a more integrated area than the neighbouring railway systems, it would be more reasonable to enlarge the "1520 area" so that the European railways become integrated into it.
On the whole, we believe that the projects of constructing railways with other technical standards on the "1520 area" have no real economic grounds, i.e. they are not market "infrastructure competition", as you said, but projects caused by the policy. We are afraid that such plans of our partners may attract investments to the long and inefficient railway construction instead of actual and prospective projects for the development of existing railway infrastructure. Instead of developing the competition advantages we have because of the technological unity of "1520 area", such plans turn the railway sector back to the period of its "childhood diseases".
- The projects of creating land corridors West-East, parallel to the Transsib, are treated negatively in Russia. Do you think that such projects are also caused by political reasons, not economic ones?
- We consider the Transsib and all the railways connected with it, including the Baikalo-Amurskaya railway, as a unique competitive advantage of the Russian economy, created by the effort of many generations. Realization of its transit potential gives a powerful impulse to the development of railway transport, as well as the whole Russian economy. Our special attention to this corresponds with the Transport strategy of the Russian Federation, the main targets of which include an increase of transport services export. That is why we are suspicious of any attempts to form transit corridors bypassing our "national property".
Foe example, let's take the TRACECA corridor actively supported by the European Union. The economic grounds for the development of this route that crosses many state borders are quite vague. It seems that the main reason for its construction is that the corridor bypasses the territory of the Russian Federation. Recently, the launch of an integrated route along the central part of the Transasian railway via the tunnel under the Bosporus, crossing the territory of Turkey, Iran, countries of Middle Asia and further to China, has become a reality. If we examine the geopolitical, climatic and technical conditions in this corridor, we will find no clear advantages in comparison with the Transsib. A version of this direction development is the project for a Transkazakh railway with the European size of gauge. Its target is non-stop railway transportation between China and the European states. However, this project has no proper economic basis either, since the scale of carrying capacities development requires enormous investments, which will hardly be compensated by the revenue from transit transportation. Besides, the domestic and the international situation is tense in those regions. And this means additional risks.
Nowadays we consider the Transsib to be a part of a huge transport corridor East-West, which has a lot of branches; thus, loading of the Transsib is not only a consequence of the increase of carrying capacities to master cargo flows, but also a result of its quality improvement to form a competitive transport service on the global East-West market.
- Is it connected with the so popular today "export of transport services"?
- Export of transport services is, in particular, transit transportation of foreign freight along the territory of Russia. It is impossible without the participation of neighbouring railways of China, Mongolia, Finland, Byelorussia, Ukraine, the Baltic states and West European countries. Besides, this long logistic chain, consisting of railways, road haulers and sea carriers, ports and terminals, should have no unprofitable links. This is our joint business, which is to be profitable for all the participants. That is why cooperation in the development of the most prospective sector - transit transportation by railway - is to be created and coordinated between the participants who are to plan their activities together and sustain parity commercial relations.
To stir up the development of transit transportation business in the "1520 area", a joint strategy of container business development should be worked out. Its basis is modernization of our container assets to improve the quality of transportation, the technology of service and management. Our position is absolutely pragmatic and suggested by the market: it is necessary to attract clients by a proper service pack, keep them by means of a correspondent quality of the transport service, and bring them profit by well thought-out tariff rates.
Joint efforts are required from our partners operating in the "1520 area", in order to reach the targets. I am sure that a balanced development of these key directions will bring positive economic results for everybody.

Frankly Speaking
- Will OAO RZD prefer to purchase locomotives and wagons produced by Russian enterprises, or will it put an emphasis on the quality of rolling stock, not taking into account the country that produced it, in the near future?
- The most important thing for us, when we purchase rolling stock, is its quality accompanied by a competitive level of price. That is why OAO RZD invites both Russian and foreign rolling stock suppliers to participate in tenders. We are sure that nowadays modern machinery cannot be produced without using the latest achievements in the world machine building sector. At the same time, we know that the Russian engineering school is one of the best in the transport machine building sector, and it can develop prospective production, meeting Russian as well as world standards. However, time should not be spent in vain.
- Do you think there are many differences between the CIS railway systems in terms of market structural reforms? Do they have an influence on technological and commercial relations?
- The structural reforms of railways located on the post-Soviet territory was caused by the following reasons: changes in the political and social-economic systems, reduction of railway transportation, ageing of the main funds and impossibility of their renewal because of the investment shortage etc. The reforms held on the railways of the CIS and the Baltic states have their own specifics. Thus, railway transport reforms are held by means of changing the form of property for the state railways in Russia, Armenia, Georgia, Kazakhstan, Uzbekistan and the Baltic states. In Azerbaijan, Byelorussia, Kirgizia, Moldavia, Tajikistan, Turkmenistan and Ukraine, they take measures to improve the management; however, railway transport is still regulated by the state in the market economy conditions.
As I have already said, we want to create such conditions that will give an impulse for switching our relations to a more commercialized system, which will be more attractive for private investments. Still, it is obvious that many of the problems can be solved by reforming the railways. So, it is necessary to share opinions and experience, whether positive or negative. We must be open and frank with each other and learn from each other's mistakes.
OAO RZD follows the structural railway transport reforms in different countries, analyses them and uses the positive experience. In particular, I would like to stress that special attention should be paid to the experience of passenger transportation in Kazakhstan, especially when selecting mechanisms of state support for socially important transportation.
- What would you wish the railmen of the CIS and their business partners?
- Our nations, as well as the railways of our countries, were historically developing with the idea of unification, to create a common geopolitical, economic and infrastructural space. In the recent decades - a short historical term - common economic and political values were reviewed, which led to a disintegration. Under these conditions, the railways with the standard gauge of 1520 mm provided and still provide reliable and regular passenger and freight transportation, keeping our economic and social ties strong.
I would like to wish all the railmen, machine builders, forwarders, operators, investors, and bankers to be successful in strengthening the ties between our railways and our businesses. This is one of the most important targets of transport, and a pledge for strengthening of intergovernmental relations.

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    [DETAIL_TEXT] => After the forum "Strategic Partnership 1520", held in May in Sochi, we asked senior vice-presidentof OAO RZD, Boris Lapidus Ph.D. to comment on his vision of cooperation between the railways in the post-Soviet territories.

From Policyto Commerce
- Mr.Lapidus, it is well known that, after the dissolution of the USSR, the railway transport was the most active sector of the economy, aiming to support the connections between all the newly established states. Could you evaluate the current level of cooperation between the railway administrations of the CIS and the Baltic states?
- In 1992 Railway Transport Council of the CIS and its constantly acting body Direction were established. The main tasks of the Council are the coordination of railway transport work on the interstate level and working out adjusted principles for its activities, as well as coordinating joint exploitation of freight wagons and containers etc. The efficiency of the Council's work has been shown by life itself. The main result is stable work of the railway transport and reliable and timely international passenger and freight transportation.
At the same time, under the current conditions, cooperation issues require the commercial and business basis development, since almost all the railways of the CIS and the Baltic states, as well as Mongolia, have faced the necessity of complete modernization and increase of competitiveness. So, the countries continue to improve their normative base, optimize and increase the efficiency of rolling stock, as well as start to use modern technologies, providing the growth of railways and their investors' revenue, the increase of competitiveness of these countries' railway transport as a system on the global transport market and as managing subjects on the markets of their countries.
- Is this the reason for holding the Forum "Strategic Partnership 1520" as a new form of cooperation?
- Yes, it is. On the one hand, today we can confirm that for fifteen years the single transport area uniting the countries with the rail gauge of 1520 mm functions successfully, and the necessary technological and commercial problems are solved in time. However, during this period, there has accumulated a number of problems in the system, the solution of which should become the basis for an increase of competitiveness for railways with the gauge of 1520 as a single technological and business-system. What do I mean here? The thing is that recently, the railway transport of the CIS and the Baltic states has not been technologically modernized and it failed to develop to the same degree as sea routes, road vehicles, and alternative railway routes. Nowadays, the technical base of our railways needs a complete reconstruction and switching to new technological principles in order to increase their efficiency and our competitiveness on the global transport market.
In spite of the, so to speak, geographically static and fixed nature of "1520 area", our railways struggle for freight flows. Nowadays world transport systems set high standards for the quality of services provided to cargo owners and possess mechanisms of expenses reduction. To compete with each of these railways, as well as the whole system, we need to solve the problem of quality, decrease our delivery time, reduce expenses etc. It is obvious that it is much easier and more effective to solve the problems together. We must form single or harmonized demands to the rolling stock, management systems, construction of new railway lines, corporate standards of services provided to clients etc. These are the problems we need to discuss together.
- You have mentioned the necessity of discussing the joint construction of new lines. What are the main "stumbling blocks" in the sector? What other directions of cooperation could you point out?
- The main problem impending the development of railways is the low attractiveness of railway construction for business. Such a situation can be explained by the imperfect legislation, lack of private enterprises experience in the sphere of railways construction in the last eighty years, and a number of other reasons. We also need to discuss it with businessmen, investors, bankers - people who know how to solve the problems in the sphere.
High efficiency of transport work cannot be achieved without creating integrated IT systems, sharing a single base with friendly protocols and interfaces. We understand that if such conditions can be achieved, each of the railways with the gauge of 1520, as well as the whole system, can improve the quality of transit, export and import services fast, taking into account new services, such as providing a client with the information about current cargo location, e-document turnover, e-customs procedures, modern digital communication etc.
Undoubtedly, we get closer and closer to the idea of integrated logistic systems, the launch of which will be efficient only on the basis of cooperation and integration. We must use a single technology for building a logistic chain from the places where freight flows appear to the destination points. To do it, we need single logistic technologies, and we need to create such conditions, in which logistic centers of each country will be available for all the clients. We also understand that the construction of these systems is impossible without investors' participation and attraction of modern efficient financing systems.
We believe that the system of passenger tourism, in which railways participate, develops unsatisfactorily. However, Europe "strives" to get to China and other countries of the Asian-Pacific region. We must create conditions for this business.
Another problem is staff training. We understand that the demand for specialists is very high on the railways of the CIS, since the majority of transport higher education institutions are still on the territory of Russia. So, the hopes of our partners are not a secret to us, and we are ready to satisfy them, at the same time, giving more opportunities for new solutions to our universities and scientific research institutes.
Thus, we consider this forum to be the first meeting, the first deep initiative discussion of all aspects of our cooperation not politically speaking, but on the basis of technological and commercial interests. We are sure that the current opportunities of interstate relations development enable the railways to integrate better into the each other's production processes. At the same time, Russia joining the WTO opens better opportunities for rolling stock and companies-operators integration; all this should be done on the basis of pragmatic calculations and commercial effects.

Sound Competition and "Childhood Diseases"
- Do you think that the route to integration and cooperation of railway systems with the 1520 mm gauge envisages that they will not compete with each other?
- No. A competitive "1520 area" for export transport services on the global market can appear only if inner competition is developed. We must give each participant an opportunity to increase his competitiveness, in order to enlarge our inner market and achieve high quality of its parameters. Only in this case, expenses will reduce and the quality of service will improve, which, in its turn, will lead to the increase of competitiveness of our countries' economies. It is very important.
Besides, in the framework of economic instruments development, we must closely examine the mechanism of clustered principles of business organization, and the railway transport sector is the most suitable for it. Production and consumption, technologies and science and education - all spheres can be integrated in their respective clusters, where competition and mutual dependence of producing units are in the best ratio.
- The management of OAO RZD have several times expressed their anxiety about the project of building railway lines with a gauge different from the Russian standard on the post-Soviet territory. Do you think that we are facing "infrastructure competition" usual for the market?
- Firstly, I would like to comment on the term "Russian gauge". The thing is that even the first railway lines were projected as interregional transport corridors, many of which became international later. For example, the rail lines St.-Petersburg-Warsaw, Moscow-Kharkov, Poti-Baku were the pioneers of railway construction. I mean that for us the term "Russian gauge" is not an ideological one. The gauge with the width of 1524 mm, and the current standard gauge of 1520 mm was the means of international cooperation from the very beginning, and nowadays about half of the lines lie beyond the boundaries of the Russian Federation. Our attitude to the project of the European gauge implementation on the "1520 area" is based on the experience of the railway sector development. It is common knowledge that without some unification of infrastructure standards, railways can service only local routes, and in this case they are not able to compete with other transport modes. At the same time, it is obvious that it is economically unprofitable to change the size of the gauge in the whole railway network, thus such ideas can hardly be considered a progressive tendency. Progress chose a different way, i.e. the construction of rolling stock able to run along different gauges, the launch of modern logistic centers, terminals, railway land ports etc.
At the same time, we can't but admit that the "1520 area" has been functioning as a single technological system for more than a century, and the "1435 area" has not appeared yet. For example, we know that multi-system is a characteristic feature of the EU's railways. Moreover, taking into account the geographical and natural specifics of the states lying on the "1520 area", freight transportation by railway will be important for a long time, while in Europe rail passenger transportation is widely spread. That is why we believe that the most important target of railways-partners is to use and develop competition advantages provided by the single gauge and the existing cooperation mechanisms instead of splitting "1520 network" up by putting new standards into operation. Moreover, since it is a more integrated area than the neighbouring railway systems, it would be more reasonable to enlarge the "1520 area" so that the European railways become integrated into it.
On the whole, we believe that the projects of constructing railways with other technical standards on the "1520 area" have no real economic grounds, i.e. they are not market "infrastructure competition", as you said, but projects caused by the policy. We are afraid that such plans of our partners may attract investments to the long and inefficient railway construction instead of actual and prospective projects for the development of existing railway infrastructure. Instead of developing the competition advantages we have because of the technological unity of "1520 area", such plans turn the railway sector back to the period of its "childhood diseases".
- The projects of creating land corridors West-East, parallel to the Transsib, are treated negatively in Russia. Do you think that such projects are also caused by political reasons, not economic ones?
- We consider the Transsib and all the railways connected with it, including the Baikalo-Amurskaya railway, as a unique competitive advantage of the Russian economy, created by the effort of many generations. Realization of its transit potential gives a powerful impulse to the development of railway transport, as well as the whole Russian economy. Our special attention to this corresponds with the Transport strategy of the Russian Federation, the main targets of which include an increase of transport services export. That is why we are suspicious of any attempts to form transit corridors bypassing our "national property".
Foe example, let's take the TRACECA corridor actively supported by the European Union. The economic grounds for the development of this route that crosses many state borders are quite vague. It seems that the main reason for its construction is that the corridor bypasses the territory of the Russian Federation. Recently, the launch of an integrated route along the central part of the Transasian railway via the tunnel under the Bosporus, crossing the territory of Turkey, Iran, countries of Middle Asia and further to China, has become a reality. If we examine the geopolitical, climatic and technical conditions in this corridor, we will find no clear advantages in comparison with the Transsib. A version of this direction development is the project for a Transkazakh railway with the European size of gauge. Its target is non-stop railway transportation between China and the European states. However, this project has no proper economic basis either, since the scale of carrying capacities development requires enormous investments, which will hardly be compensated by the revenue from transit transportation. Besides, the domestic and the international situation is tense in those regions. And this means additional risks.
Nowadays we consider the Transsib to be a part of a huge transport corridor East-West, which has a lot of branches; thus, loading of the Transsib is not only a consequence of the increase of carrying capacities to master cargo flows, but also a result of its quality improvement to form a competitive transport service on the global East-West market.
- Is it connected with the so popular today "export of transport services"?
- Export of transport services is, in particular, transit transportation of foreign freight along the territory of Russia. It is impossible without the participation of neighbouring railways of China, Mongolia, Finland, Byelorussia, Ukraine, the Baltic states and West European countries. Besides, this long logistic chain, consisting of railways, road haulers and sea carriers, ports and terminals, should have no unprofitable links. This is our joint business, which is to be profitable for all the participants. That is why cooperation in the development of the most prospective sector - transit transportation by railway - is to be created and coordinated between the participants who are to plan their activities together and sustain parity commercial relations.
To stir up the development of transit transportation business in the "1520 area", a joint strategy of container business development should be worked out. Its basis is modernization of our container assets to improve the quality of transportation, the technology of service and management. Our position is absolutely pragmatic and suggested by the market: it is necessary to attract clients by a proper service pack, keep them by means of a correspondent quality of the transport service, and bring them profit by well thought-out tariff rates.
Joint efforts are required from our partners operating in the "1520 area", in order to reach the targets. I am sure that a balanced development of these key directions will bring positive economic results for everybody.

Frankly Speaking
- Will OAO RZD prefer to purchase locomotives and wagons produced by Russian enterprises, or will it put an emphasis on the quality of rolling stock, not taking into account the country that produced it, in the near future?
- The most important thing for us, when we purchase rolling stock, is its quality accompanied by a competitive level of price. That is why OAO RZD invites both Russian and foreign rolling stock suppliers to participate in tenders. We are sure that nowadays modern machinery cannot be produced without using the latest achievements in the world machine building sector. At the same time, we know that the Russian engineering school is one of the best in the transport machine building sector, and it can develop prospective production, meeting Russian as well as world standards. However, time should not be spent in vain.
- Do you think there are many differences between the CIS railway systems in terms of market structural reforms? Do they have an influence on technological and commercial relations?
- The structural reforms of railways located on the post-Soviet territory was caused by the following reasons: changes in the political and social-economic systems, reduction of railway transportation, ageing of the main funds and impossibility of their renewal because of the investment shortage etc. The reforms held on the railways of the CIS and the Baltic states have their own specifics. Thus, railway transport reforms are held by means of changing the form of property for the state railways in Russia, Armenia, Georgia, Kazakhstan, Uzbekistan and the Baltic states. In Azerbaijan, Byelorussia, Kirgizia, Moldavia, Tajikistan, Turkmenistan and Ukraine, they take measures to improve the management; however, railway transport is still regulated by the state in the market economy conditions.
As I have already said, we want to create such conditions that will give an impulse for switching our relations to a more commercialized system, which will be more attractive for private investments. Still, it is obvious that many of the problems can be solved by reforming the railways. So, it is necessary to share opinions and experience, whether positive or negative. We must be open and frank with each other and learn from each other's mistakes.
OAO RZD follows the structural railway transport reforms in different countries, analyses them and uses the positive experience. In particular, I would like to stress that special attention should be paid to the experience of passenger transportation in Kazakhstan, especially when selecting mechanisms of state support for socially important transportation.
- What would you wish the railmen of the CIS and their business partners?
- Our nations, as well as the railways of our countries, were historically developing with the idea of unification, to create a common geopolitical, economic and infrastructural space. In the recent decades - a short historical term - common economic and political values were reviewed, which led to a disintegration. Under these conditions, the railways with the standard gauge of 1520 mm provided and still provide reliable and regular passenger and freight transportation, keeping our economic and social ties strong.
I would like to wish all the railmen, machine builders, forwarders, operators, investors, and bankers to be successful in strengthening the ties between our railways and our businesses. This is one of the most important targets of transport, and a pledge for strengthening of intergovernmental relations.

Interviewed by Andrey Guryev [~DETAIL_TEXT] => After the forum "Strategic Partnership 1520", held in May in Sochi, we asked senior vice-presidentof OAO RZD, Boris Lapidus Ph.D. to comment on his vision of cooperation between the railways in the post-Soviet territories.

From Policyto Commerce
- Mr.Lapidus, it is well known that, after the dissolution of the USSR, the railway transport was the most active sector of the economy, aiming to support the connections between all the newly established states. Could you evaluate the current level of cooperation between the railway administrations of the CIS and the Baltic states?
- In 1992 Railway Transport Council of the CIS and its constantly acting body Direction were established. The main tasks of the Council are the coordination of railway transport work on the interstate level and working out adjusted principles for its activities, as well as coordinating joint exploitation of freight wagons and containers etc. The efficiency of the Council's work has been shown by life itself. The main result is stable work of the railway transport and reliable and timely international passenger and freight transportation.
At the same time, under the current conditions, cooperation issues require the commercial and business basis development, since almost all the railways of the CIS and the Baltic states, as well as Mongolia, have faced the necessity of complete modernization and increase of competitiveness. So, the countries continue to improve their normative base, optimize and increase the efficiency of rolling stock, as well as start to use modern technologies, providing the growth of railways and their investors' revenue, the increase of competitiveness of these countries' railway transport as a system on the global transport market and as managing subjects on the markets of their countries.
- Is this the reason for holding the Forum "Strategic Partnership 1520" as a new form of cooperation?
- Yes, it is. On the one hand, today we can confirm that for fifteen years the single transport area uniting the countries with the rail gauge of 1520 mm functions successfully, and the necessary technological and commercial problems are solved in time. However, during this period, there has accumulated a number of problems in the system, the solution of which should become the basis for an increase of competitiveness for railways with the gauge of 1520 as a single technological and business-system. What do I mean here? The thing is that recently, the railway transport of the CIS and the Baltic states has not been technologically modernized and it failed to develop to the same degree as sea routes, road vehicles, and alternative railway routes. Nowadays, the technical base of our railways needs a complete reconstruction and switching to new technological principles in order to increase their efficiency and our competitiveness on the global transport market.
In spite of the, so to speak, geographically static and fixed nature of "1520 area", our railways struggle for freight flows. Nowadays world transport systems set high standards for the quality of services provided to cargo owners and possess mechanisms of expenses reduction. To compete with each of these railways, as well as the whole system, we need to solve the problem of quality, decrease our delivery time, reduce expenses etc. It is obvious that it is much easier and more effective to solve the problems together. We must form single or harmonized demands to the rolling stock, management systems, construction of new railway lines, corporate standards of services provided to clients etc. These are the problems we need to discuss together.
- You have mentioned the necessity of discussing the joint construction of new lines. What are the main "stumbling blocks" in the sector? What other directions of cooperation could you point out?
- The main problem impending the development of railways is the low attractiveness of railway construction for business. Such a situation can be explained by the imperfect legislation, lack of private enterprises experience in the sphere of railways construction in the last eighty years, and a number of other reasons. We also need to discuss it with businessmen, investors, bankers - people who know how to solve the problems in the sphere.
High efficiency of transport work cannot be achieved without creating integrated IT systems, sharing a single base with friendly protocols and interfaces. We understand that if such conditions can be achieved, each of the railways with the gauge of 1520, as well as the whole system, can improve the quality of transit, export and import services fast, taking into account new services, such as providing a client with the information about current cargo location, e-document turnover, e-customs procedures, modern digital communication etc.
Undoubtedly, we get closer and closer to the idea of integrated logistic systems, the launch of which will be efficient only on the basis of cooperation and integration. We must use a single technology for building a logistic chain from the places where freight flows appear to the destination points. To do it, we need single logistic technologies, and we need to create such conditions, in which logistic centers of each country will be available for all the clients. We also understand that the construction of these systems is impossible without investors' participation and attraction of modern efficient financing systems.
We believe that the system of passenger tourism, in which railways participate, develops unsatisfactorily. However, Europe "strives" to get to China and other countries of the Asian-Pacific region. We must create conditions for this business.
Another problem is staff training. We understand that the demand for specialists is very high on the railways of the CIS, since the majority of transport higher education institutions are still on the territory of Russia. So, the hopes of our partners are not a secret to us, and we are ready to satisfy them, at the same time, giving more opportunities for new solutions to our universities and scientific research institutes.
Thus, we consider this forum to be the first meeting, the first deep initiative discussion of all aspects of our cooperation not politically speaking, but on the basis of technological and commercial interests. We are sure that the current opportunities of interstate relations development enable the railways to integrate better into the each other's production processes. At the same time, Russia joining the WTO opens better opportunities for rolling stock and companies-operators integration; all this should be done on the basis of pragmatic calculations and commercial effects.

Sound Competition and "Childhood Diseases"
- Do you think that the route to integration and cooperation of railway systems with the 1520 mm gauge envisages that they will not compete with each other?
- No. A competitive "1520 area" for export transport services on the global market can appear only if inner competition is developed. We must give each participant an opportunity to increase his competitiveness, in order to enlarge our inner market and achieve high quality of its parameters. Only in this case, expenses will reduce and the quality of service will improve, which, in its turn, will lead to the increase of competitiveness of our countries' economies. It is very important.
Besides, in the framework of economic instruments development, we must closely examine the mechanism of clustered principles of business organization, and the railway transport sector is the most suitable for it. Production and consumption, technologies and science and education - all spheres can be integrated in their respective clusters, where competition and mutual dependence of producing units are in the best ratio.
- The management of OAO RZD have several times expressed their anxiety about the project of building railway lines with a gauge different from the Russian standard on the post-Soviet territory. Do you think that we are facing "infrastructure competition" usual for the market?
- Firstly, I would like to comment on the term "Russian gauge". The thing is that even the first railway lines were projected as interregional transport corridors, many of which became international later. For example, the rail lines St.-Petersburg-Warsaw, Moscow-Kharkov, Poti-Baku were the pioneers of railway construction. I mean that for us the term "Russian gauge" is not an ideological one. The gauge with the width of 1524 mm, and the current standard gauge of 1520 mm was the means of international cooperation from the very beginning, and nowadays about half of the lines lie beyond the boundaries of the Russian Federation. Our attitude to the project of the European gauge implementation on the "1520 area" is based on the experience of the railway sector development. It is common knowledge that without some unification of infrastructure standards, railways can service only local routes, and in this case they are not able to compete with other transport modes. At the same time, it is obvious that it is economically unprofitable to change the size of the gauge in the whole railway network, thus such ideas can hardly be considered a progressive tendency. Progress chose a different way, i.e. the construction of rolling stock able to run along different gauges, the launch of modern logistic centers, terminals, railway land ports etc.
At the same time, we can't but admit that the "1520 area" has been functioning as a single technological system for more than a century, and the "1435 area" has not appeared yet. For example, we know that multi-system is a characteristic feature of the EU's railways. Moreover, taking into account the geographical and natural specifics of the states lying on the "1520 area", freight transportation by railway will be important for a long time, while in Europe rail passenger transportation is widely spread. That is why we believe that the most important target of railways-partners is to use and develop competition advantages provided by the single gauge and the existing cooperation mechanisms instead of splitting "1520 network" up by putting new standards into operation. Moreover, since it is a more integrated area than the neighbouring railway systems, it would be more reasonable to enlarge the "1520 area" so that the European railways become integrated into it.
On the whole, we believe that the projects of constructing railways with other technical standards on the "1520 area" have no real economic grounds, i.e. they are not market "infrastructure competition", as you said, but projects caused by the policy. We are afraid that such plans of our partners may attract investments to the long and inefficient railway construction instead of actual and prospective projects for the development of existing railway infrastructure. Instead of developing the competition advantages we have because of the technological unity of "1520 area", such plans turn the railway sector back to the period of its "childhood diseases".
- The projects of creating land corridors West-East, parallel to the Transsib, are treated negatively in Russia. Do you think that such projects are also caused by political reasons, not economic ones?
- We consider the Transsib and all the railways connected with it, including the Baikalo-Amurskaya railway, as a unique competitive advantage of the Russian economy, created by the effort of many generations. Realization of its transit potential gives a powerful impulse to the development of railway transport, as well as the whole Russian economy. Our special attention to this corresponds with the Transport strategy of the Russian Federation, the main targets of which include an increase of transport services export. That is why we are suspicious of any attempts to form transit corridors bypassing our "national property".
Foe example, let's take the TRACECA corridor actively supported by the European Union. The economic grounds for the development of this route that crosses many state borders are quite vague. It seems that the main reason for its construction is that the corridor bypasses the territory of the Russian Federation. Recently, the launch of an integrated route along the central part of the Transasian railway via the tunnel under the Bosporus, crossing the territory of Turkey, Iran, countries of Middle Asia and further to China, has become a reality. If we examine the geopolitical, climatic and technical conditions in this corridor, we will find no clear advantages in comparison with the Transsib. A version of this direction development is the project for a Transkazakh railway with the European size of gauge. Its target is non-stop railway transportation between China and the European states. However, this project has no proper economic basis either, since the scale of carrying capacities development requires enormous investments, which will hardly be compensated by the revenue from transit transportation. Besides, the domestic and the international situation is tense in those regions. And this means additional risks.
Nowadays we consider the Transsib to be a part of a huge transport corridor East-West, which has a lot of branches; thus, loading of the Transsib is not only a consequence of the increase of carrying capacities to master cargo flows, but also a result of its quality improvement to form a competitive transport service on the global East-West market.
- Is it connected with the so popular today "export of transport services"?
- Export of transport services is, in particular, transit transportation of foreign freight along the territory of Russia. It is impossible without the participation of neighbouring railways of China, Mongolia, Finland, Byelorussia, Ukraine, the Baltic states and West European countries. Besides, this long logistic chain, consisting of railways, road haulers and sea carriers, ports and terminals, should have no unprofitable links. This is our joint business, which is to be profitable for all the participants. That is why cooperation in the development of the most prospective sector - transit transportation by railway - is to be created and coordinated between the participants who are to plan their activities together and sustain parity commercial relations.
To stir up the development of transit transportation business in the "1520 area", a joint strategy of container business development should be worked out. Its basis is modernization of our container assets to improve the quality of transportation, the technology of service and management. Our position is absolutely pragmatic and suggested by the market: it is necessary to attract clients by a proper service pack, keep them by means of a correspondent quality of the transport service, and bring them profit by well thought-out tariff rates.
Joint efforts are required from our partners operating in the "1520 area", in order to reach the targets. I am sure that a balanced development of these key directions will bring positive economic results for everybody.

Frankly Speaking
- Will OAO RZD prefer to purchase locomotives and wagons produced by Russian enterprises, or will it put an emphasis on the quality of rolling stock, not taking into account the country that produced it, in the near future?
- The most important thing for us, when we purchase rolling stock, is its quality accompanied by a competitive level of price. That is why OAO RZD invites both Russian and foreign rolling stock suppliers to participate in tenders. We are sure that nowadays modern machinery cannot be produced without using the latest achievements in the world machine building sector. At the same time, we know that the Russian engineering school is one of the best in the transport machine building sector, and it can develop prospective production, meeting Russian as well as world standards. However, time should not be spent in vain.
- Do you think there are many differences between the CIS railway systems in terms of market structural reforms? Do they have an influence on technological and commercial relations?
- The structural reforms of railways located on the post-Soviet territory was caused by the following reasons: changes in the political and social-economic systems, reduction of railway transportation, ageing of the main funds and impossibility of their renewal because of the investment shortage etc. The reforms held on the railways of the CIS and the Baltic states have their own specifics. Thus, railway transport reforms are held by means of changing the form of property for the state railways in Russia, Armenia, Georgia, Kazakhstan, Uzbekistan and the Baltic states. In Azerbaijan, Byelorussia, Kirgizia, Moldavia, Tajikistan, Turkmenistan and Ukraine, they take measures to improve the management; however, railway transport is still regulated by the state in the market economy conditions.
As I have already said, we want to create such conditions that will give an impulse for switching our relations to a more commercialized system, which will be more attractive for private investments. Still, it is obvious that many of the problems can be solved by reforming the railways. So, it is necessary to share opinions and experience, whether positive or negative. We must be open and frank with each other and learn from each other's mistakes.
OAO RZD follows the structural railway transport reforms in different countries, analyses them and uses the positive experience. In particular, I would like to stress that special attention should be paid to the experience of passenger transportation in Kazakhstan, especially when selecting mechanisms of state support for socially important transportation.
- What would you wish the railmen of the CIS and their business partners?
- Our nations, as well as the railways of our countries, were historically developing with the idea of unification, to create a common geopolitical, economic and infrastructural space. In the recent decades - a short historical term - common economic and political values were reviewed, which led to a disintegration. Under these conditions, the railways with the standard gauge of 1520 mm provided and still provide reliable and regular passenger and freight transportation, keeping our economic and social ties strong.
I would like to wish all the railmen, machine builders, forwarders, operators, investors, and bankers to be successful in strengthening the ties between our railways and our businesses. This is one of the most important targets of transport, and a pledge for strengthening of intergovernmental relations.

Interviewed by Andrey Guryev [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>
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107749:94 [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] => 107749:95 [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] => 107749:110 [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] => 107749:324 [DESCRIPTION] => [~DESCRIPTION] => [~VALUE] => ) ) [DISPLAY_PROPERTIES] => Array ( ) [IPROPERTY_VALUES] => Array ( [SECTION_META_TITLE] => "Single Transport Area Is Our Common Property" [SECTION_META_KEYWORDS] => "single transport area is our common property" [SECTION_META_DESCRIPTION] => <TABLE cellSpacing=0 cellPadding=2 width="150" height="200" border=0 align="left"><TR><TD><IMG border=0 src="/ufiles/image/rus/partner/2006/02/1.gif"></TD></TR></TABLE> [ELEMENT_META_TITLE] => "Single Transport Area Is Our Common Property" [ELEMENT_META_KEYWORDS] => "single transport area is our common property" [ELEMENT_META_DESCRIPTION] => <TABLE cellSpacing=0 cellPadding=2 width="150" height="200" border=0 align="left"><TR><TD><IMG border=0 src="/ufiles/image/rus/partner/2006/02/1.gif"></TD></TR></TABLE> [SECTION_PICTURE_FILE_ALT] => "Single Transport Area Is Our Common Property" [SECTION_PICTURE_FILE_TITLE] => "Single Transport Area Is Our Common Property" [SECTION_DETAIL_PICTURE_FILE_ALT] => "Single Transport Area Is Our Common Property" [SECTION_DETAIL_PICTURE_FILE_TITLE] => "Single Transport Area Is Our Common Property" [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => "Single Transport Area Is Our Common Property" [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => "Single Transport Area Is Our Common Property" [ELEMENT_DETAIL_PICTURE_FILE_ALT] => "Single Transport Area Is Our Common Property" [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => "Single Transport Area Is Our Common Property" ) )



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