Russian Railways invested 2.5b euros in suburban railways between 2008 - 2012

Russian Railways invested 2.5b euros in suburban railways between 2008 - 2012

Gennady Verkhovykh, Head of Passenger Transport Services at Russian Railways, presented a report to the round table “Passenger Transportation: Management Prescriptions and Increasing Profitability,” which took place at the VII International Railway Business Forum 1520 Strategic Partnership which began in Sochi at the end of May 2012.

Rising living standards in all countries and the increasing penetration and exchange of information make rail passengers the most demanding users of transport services.

Russian passengers nowadays also demand an advanced, wide-ranging product that delivers high-quality service from their initial enquiries to connections with other modes of transport, the development of transport hubs and the development of multi-modal routes.

The consumer characteristics of the services offered by suburban commuter travel are constantly evolving. Suburban passenger transport, for example, is becoming faster, commuter trains are becoming much more comfortable, and new types of season tickets and new technologies in self-service ticketing, including the purchase of tickets on the Internet, are becoming available.

All this points to the unrealised potential for new uses and applications offered by commuter rolling stock.

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Speaking about the development of passenger infrastructure, Gennady Verkhovykh noted that between 2008 and 2012, the Russian Railways Holding Company invested about 100 billion roubles, or some 2.5 billion euros, in the suburban railway complex - 6 times more than the depreciation and amortisation during the same period.

In particular, between 2008 and 2012, Russian Railways purchased about 4,500 carriages at a cost of 75.2 billion roubles and spent 5.2 billion roubles on modernising carriages.

In 2008-2011, the Company also constructed and reconstructed commuter train stations at a cost of 6.5 billion roubles and in 2012 plans to spend a further 1.9 billion roubles for such purposes. Russian Railways also spent 10.1 billion roubles on reconstructing its motor-wagon depots between 2008 and 2011 and has allocated another 1.1 billion roubles for the same purpose in 2012.

According to Verkhovykh, this situation encourages the Company to seek outside sources of funding.

In recent years, substantial progress has been made on regulating commuter transport as a result of the Russian government’s activities and the active position taken by a number of regional administrations.

In 2011-2012, solutions were implemented to reduce charges for the use of infrastructure to 1%, with the federal budget providing compensation for the revenues lost.

This government support is a big step towards improving financial sustainability when implementing these new measures in the future and raising the quality of services.

As a result, 22 regions broke even on commuter services in 2011 thanks to these changes, whereas in 2010, suburban travel made a loss in all parts of Russia.

“Further improvements in the quality and accessibility of commuter rail services can be achieved by the systemic development of the legal and regulatory framework and the expansion of subsidies for infrastructure services over the long term, as well by as the energetic involvement of all regions in the reform process. That applies above all to those regions which have not yet secured 50% compensation for the losses they incur from providing transportation services,” said Gennady Verkhovykh.