Russian Rail Revolution Enters Final Phase

Russian Railways (RZD) is now in the third and final phase of Russia's 10-year program for rail reform, launched in 2001. Reform was instituted so that growing passenger and freight traffic demand could be met and the rail network revitalized as RZD changed from being a part of the Ministry of Railways (now the Federal Railway Transport Agency) to being a decentralized commercial venue with sufficient investment to meet its funding needs. The first phase involved separation from the Ministry of Railways. In the second phase, which took place in September 2003, RZD assumed all railway operational activities and railway assets and became an open joint-stock company, with the government as sole shareholder and holder of some board seats. A major issue has been covering passenger service losses without cross-subsidies from freight service gains (an estimated annual sum of Roubles 53 billion ($1.98 billion US) is needed to do so) without sacrificing service to passengers. Now, in the third stage, commercial operations of the new Federal Passenger Agency, one of the stage's most important elements, began on July 1, and, if successful, the agency will be converted into a company which may have private partners among its shareholders. The agency will be split by long-distance passenger rail definitions into two categories: regulated and social services, responsible for 45% of revenue and 66% of passengers, and competitive and commercial, responsible for 55% of revenue and 34% of journeys. A general railfreight subsidiary will be created in January in order to: allocate funds raised through an initial public offering of a minority stake for sale for rail infrastructure renewal; increase freight company investment attractiveness to raise needed rolling stock renewal funds; end cross subsidies to other types of transport, increase financial efficiency, and guarantee transparency; and offer similar tariff conditions to other freight transport market players in order to guarantee freight business competitiveness. Other plans for third stage reform include: allow private investor access to and promote competition in businesses not related to transportation; sell RZD's maintenance and repair subsidiary interests; increase local authority-owned local passenger operator numbers; transfer to private ownership some locomotives and most freight wagons; and open markets to foreign carriers and develop freight sector competition.


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Media Info

  • Media Type: Print
  • Features: Photos;
  • Pagination: pp 17-18, 20
  • Serial:

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Filing Info

  • Accession Number: 01049893
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 18 2007 1:45PM