Translated material
President's horn
Vladimir Putin gave an interview on reforming the railways
Vladimir Putin gave his first interview during his second presidential term to a Russian print publication. Answers to five questions under the heading “Railways are a symbol of the unity of Russia” (last Sunday was Railway Worker’s Day) were published yesterday in the Gudok newspaper, the official press organ of Russian Railways. The railway company, as you know, is headed by a friend of the country's president, Vladimir Yakunin.The interview talks mainly about reforming the industry. However, Vladimir Putin believes that for now it is only possible to evaluate the results of the first two stages of transformation. “I consider them positive,” the president said. However, he chose not to talk about the third stage: its implementation was stopped at the end of last year and, obviously, will resume no earlier than the end of next summer.
Vladimir Putin traditionally divides the business of Russian Railways into two parts - the transportation of goods and the cost of tickets for passenger trains. The president has no questions regarding the first part, but the prospects for passenger transportation, in the president’s opinion, were completely undeveloped. At the end of last year, Vladimir Putin, at a meeting with members of the government, said that due to the unresolved problem of cross-subsidization (when losses from passenger transportation are de facto covered by highly profitable freight traffic), it is necessary to stop the reform. “I am concerned about plans to create a separate company, separate from JSC Russian Railways, which will be associated with passenger transportation,” the president said then. - The budget of the next year (2006 - Ed. ) does not provide for the necessary subsidies or financial assistance from the federation. What will this mean for passengers? Either this plan needs to be adjusted, or money needs to be allocated there. Money, as I understand it, can no longer be allocated - which means the plan needs to be adjusted... I consider it unacceptable to enter into this reform without providing it with the appropriate finances. If the government is not ready to do this today, then the deadlines must be adjusted. We should not shift to passengers those issues that we are able and must resolve in a timely manner ourselves.”
The fact is that the government was going to create the Federal Passenger Company this year; next year it would begin its activities, and the problem of cross-subsidization would force them to raise tariffs for the population. In terms of time, all the negative consequences of the railway reform for passengers would have occurred during the 2007-2008 election campaigns. And Vladimir Yakunin is one of the most promising candidates for the post of President of Russia. As a result, it was decided to create the Federal Passenger Directorate (FPD) from July 1 of this year, which at first will exist as a branch of Russian Railways. And when a way to eliminate cross-subsidies is found, it will be transformed into the Federal Passenger Company, which will become a joint-stock company with 100 percent state participation.
In an interview published yesterday, Vladimir Putin once again emphasized: “Yes, the problem of unprofitability of passenger transportation and their cross-financing through cargo transportation is now widely discussed. Sooner or later this subsidization mechanism will have to be eliminated. But I repeat again: not at the expense of passengers. It is necessary to look for other sources of financing, including budget ones. It is obvious that the state has its own responsibility here and the government will have to solve this difficult task.”
However, even the railway workers themselves have different views on the mechanisms for eliminating cross-subsidization in the railway industry. At recent conferences dedicated to the development of passenger transportation in Russia, the company's senior vice president, Boris Lapidus, stated that until the government fully compensates for losses from passenger transportation from the budget, separating FPD from Russian Railways is pointless. And the head of the FPD, Valery Shataev, believes that it is impossible to always demand full compensation for losses from the budget. He refers to foreign experience: the United States took the path of full budget compensation, and as a result, “they found themselves in a vicious circle from which they cannot get out” - the company ceased to be interested in cutting costs, the quality of service began to decline, costs began to rise, and As a result, the state received even larger bills. Also, according to him, it is impossible to completely liberalize the passenger transportation market, since in this case passengers will suffer - operators will work exclusively on highly profitable routes, and no one will travel to the provinces. Therefore, Mr. Shataev believes, it is necessary to follow a “mixed” path: not only ask the budget to subsidize transportation, but also try to find mechanisms to reduce costs through the development of highly profitable services. In particular, he proposes that the state make state orders for social transportation - in passenger kilometers, in places or in anything else. At the same time, money should be allocated not based on the fact, but according to a plan developed by the Ministry of Economic Development and Trade or the Ministry of Transport - in this case, the company will know what amount to expect and will strive to optimize its activities. Accordingly, passengers will be guaranteed travel at a social fare in appropriate conditions, and the cost of more comfortable transportation will be on a market basis. After all, there are already private operators operating on the highly profitable Moscow-St. Petersburg route, who purchase rolling stock and find their price niche.
Mr. Shataev is supported by the Ministry of Economic Development. Deputy director of the relevant department of the ministry, Evgeniy Mikhailov, argues that the state must first determine the volume of services subject to compensation from the state budget, and then determine the cost of a unit of service. After this, it is necessary to hold competitions among operators for government contracts for social transportation of passengers among transport companies. “This is the only mechanism for truly reducing government costs and increasing transportation efficiency,” he believes. A similar mechanism is now being implemented in the communications industry, thanks to which remote settlements are being provided with telephones. The state created the so-called universal communication service, determined its cost for a specific region and began to hold competitions, the winners of which are the operators who requested the smallest amount of compensation for the costs of telephone installation.
However, all these plans are stalled by the Federal Tariff Service. For more than two years, the FTS has not been able to develop a new price list for passenger transportation, in which, on the one hand, the payment for various components of transportation (locomotive fee, station fee, etc.) would be divided, and on the other hand, classes would be regulated trains depending on the services provided. At the end of June, the deputy head of the FTS, who oversees railway tariffs, Vitaly Evdokimenko, said that his department did not have enough proposals to draw up such a price list, and called on participants in the discussion on the development of passenger transportation to more actively express proposals. It was planned that the price list would be developed by the end of this year, however, as Mr. Shataev recently said, according to his information, government bodies are already trying to postpone the completion of work to the beginning of next year. In addition, as Deputy Head of the FAS Anatoly Golomolzin said, in order for new companies to come only to highly profitable areas, it is necessary to introduce flexible regulation of tariffs for the use of infrastructure, taking into account the conditions of a particular area. And Mr. Mikhailov pointed out that the conditions for non-discriminatory access to the railway infrastructure have not yet been formed: “Whoever agrees on anything with Russian Railways is in luck.”
All this means that the separation of the Federal Passenger Company from Russian Railways, which was planned to be carried out before August 1 next year, is being delayed even more. This means that the completion of industry reform is also delayed. In these conditions, Vladimir Putin, in an interview with Gudk, identified the following tasks for the development of Russian Railways: “One of the most important areas, of course, is the rapid development of the infrastructure of Russian railways. It is known that investments in railway infrastructure have a significant multiplier effect on the GDP growth of the entire country. That is why capital investments in transport infrastructure and in the development of specialized mechanical engineering - regardless of the stage of industry reform - are a government priority. It is also obvious that the development of such economically important areas as Siberia and the Far East is only possible if new sections of the railway network are built.” Another task set by the president is the implementation of the rolling stock production program: “I would like to note that it is going quite successfully... In this regard, I cannot help but remember my visit to the experimental site in Shcherbinka, where I was shown the Peresvet mainline locomotive.” . Without a doubt, this modern new generation diesel locomotive, like similar breakthrough projects in the field of mechanical engineering, is extremely important for the country’s economy.”