Railway Rates Might Rise 7% in 2013

8 August 2012 (09:12)

Russia’s Transport Ministry suggests raising the railway transportation rates by 7% in 2013. According to Minister Maxim Sokolov, the increase in the rates will let Russian Railways break even.

‘Given the lack of additional funding from the federal budget, the decision to raise the rates in 2013 (we propose 7%) and further indexation in accordance with the inflation rate will make it possible for Russian Railways to break even. In terms of investments, other sources of funding are needed. One should also bear in mind that this 7% rise does not account for the extra expenses stemming from the property tax that will be launched next year. This comes to about 0.7% and will reach about 2.7% of the rate figure by 2019,’ Sokolov said at a meeting dedicated to the railway transport long-term rate policy.

The freight turnover rose by about 3% a year over the last six months. This more or less meets our target figures. We have also established the inter-connection between the promising network expansion directions and the growing demand for these directions. By 2020, our network is expected to nearly double in some of the destinations in the Far East, for example, in the Vanino-Sovgavan section,’ the Minister added.

‘Most of the railway vehicles are in desperate need of replacement: the company now operates about 20,500 locomotives (about 50% electric locos and 50% diesel ones), 85% of which were purchases over twenty years ago. There was a decade between 1995and 2003 when virtually no new locos were bought for the railways, so some of them are 70% and even 80% worn out, while the diesel-locomotive shunters are hardly fit for use. We need to buy some 700 locos of all types every year, but for now we can only plan for slightly more than 400 locos,’ Sokolov said.

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