Comprehensive modernisation of the Trans-Siberian railway is one three big projects, together with construction of a high-speed Moscow-Kazan rail link and a central ring road in Moscow Region, that the President proposed at the St Petersburg International Economic Forum in June. The projects aim to develop transport infrastructure as one of the key factors in Russia’s economic development.
At the meeting, Mr Putin instructed the Government to draft a programme and timetable for work to modernise the Trans-Siberian and Baikal-Amur railways.
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President of Russia Vladimir Putin: Good afternoon colleagues.
At the economic forum in St Petersburg, as you may recall, we talked about the need to resolve Russia’s infrastructure problems and spoke about how essential it is for our country to have quality, reliable transport links, modern roads and railways. This is important for any country, but it is doubly so for Russia with its huge territory.
It was with this goal in mind that we announced the launch of promising big projects such as modernising the Trans-Siberian railway, building a high-speed rail link between Moscow and Kazan, and building a central ring road in Moscow Region, circling the capital. We will return to this matter soon and discuss it in more detail.
Let me note that all of these projects are open for investors. The government is willing to share the risks with project participants and be a co-investor. We will invest 450 billion roubles [around $14 billion] from the National Prosperity Fund in the initial stage.
”We announced the launch of promising big projects such as modernising the Trans-Siberian railway, building a high-speed rail link between Moscow and Kazan, and building a central ring road in Moscow Region. All of these projects are open for investors. The government is willing to share the risks with project participants and be a co-investor.“
We realise that 450 billion roubles is absolutely not enough to finance projects as big as these. Essentially, this money is start-up capital, but I think it will make investors feel more confident to see the government taking on a share of the risk and taking the first steps in these projects.
Today is our first meeting on these ambitious plans. Colleagues, I hope very much that the plans we agree on at big events such as the St Petersburg Economic Forum do not then just vanish from the radar afterwards. We need to realise that these are our common goals, and that we need to work together to carry out these important, large-scale and very concrete projects. We need to work step by step, consistently and not letting up the pace, and we must not overlook all of the different stages involved.
Today, we will discuss modernising the Trans-Siberian railway, our country’s strategically vital transport artery. Rail freight traffic to our Far East ports has increased by 55 percent over the last 5 years and now comes to around 110 million tons a year – a record figure for this part of the transport network. [President of OAO Russian Railways] Mr Yakunin is here. I think that even during the Soviet period freight volumes were not so high on this route.
President of OAO Russian Railways Vladimir Yakunin: Today’s figure is 10 times higher.
Vladimir Putin: So, we have reached a level higher than during the best of the Soviet years.
But at the same time, this is straining the railway network to its limits, and bottlenecks have emerged on the route. This is holding back business activity in Eastern Siberia and the Far East and is limiting our potential as a transit country.
By comprehensively developing the Trans-Siberian we aim to open up the potential of our eastern regions, help them modernise their industrial base, develop new natural resource deposits, and strengthen Russia’s position as a key link in the continental transport system.
It is clear that at the same time we also need to substantially increase the Baikal-Amur [BAM] railway’s throughput capacity. I remind you that expanding these two railways is part of the Russian railway general development plan.
I know that there are a number of ideas on specific mechanisms for modernising the Trans-Siberian and the BAM, and we will discuss these proposals today.
But before we begin the discussion, let me draw a few points in particular to your attention.
”Rail freight traffic to our Far East ports has increased by 55 percent over the last 5 years and now comes to around 110 million tons a year – a record figure for this part of the transport network.“
First, we need to clearly calculate freight volumes and destinations for future traffic on the two railways. New transport capacity has to meet actual needs and be able to satisfy in full the Russian economy’s growing demand.
Raw materials companies are currently the main freight senders in the eastern regions. For the railways to operate effectively and be able to meet the demands of developing new fields and deposits, we need to coordinate the work of all the different players here, all of the participants in this project.
Let me stress again that we need to have a clear idea of future freight transport costs, volumes and destinations now, at the planning stage.
What are the legal mechanisms and agreements we will need here? This is another very important area and we will need to discuss it today, too.
Second, comprehensive development of the Trans-Siberian and the BAM is impossible without also developing the support infrastructure. I am talking about building new energy production units and transmission networks, ports, border crossings, approach roads and so on. All of this work also requires careful planning and calculation.
In this respect, I ask you to draft an updated plan for developing the Trans-Siberian, BAM, and support infrastructure, and have an independent technical audit of the model carried out.
”By comprehensively developing the Trans-Siberian we aim to open up the potential of our eastern regions, help them modernise their industrial base, develop new natural resource deposits, and strengthen Russia’s position as a key link in the continental transport system.“
Third, carrying out this project will require a rigorous business plan and realistic financial and economic model. Obviously, our ambitious plans to modernise the Trans-Siberian and the BAM will require not just considerable public investment but also a big inflow of private capital. As I said, one of our main tasks is to get investors involved in these big infrastructure projects.
But investors need to know the projects’ key parameters in order to make a decision. Everything must be transparent here: the expected operating flows, volumes and sources of financing, and the conditions under which investment will be raised, including from the National Prosperity Fund.
I stress that we need to structure and set out in detail the organisational model for modernising the two railways, and calculate carefully the project’s ability to pay itself off, the return on investment, and the time it will take to get a return on investment.
I propose that we call in an independent financial consultant for this work, to be chosen by the Government through a tender.
I also ask the Government, based on the meeting’s conclusions, to draft a detailed programme and timetable for our next steps on these projects.
Let’s begin work.