Gazeta: “Yakunin Hits the Breaks”
Konstantin Smirnov
Freight transportation in 2009 to decrease by 6%
Experts from Russian Railways (RZD) are predicting that freight turnover in 2009 may decrease by 6%. This prognosis differs from the 3.5% GDP growth predicted by World Bank experts. The latter view is also shared by the Russian Finance Ministry.
This is the most pessimistic forecast out of the three presented to the Government on Thursday (the other two are a bit more positive). Nevertheless, Prime Minister Vladimir Putin believes that freight turnover reduction is unavoidable during the world financial crisis, as the demand for many goods has been decreasing since September 2008. Freight has been growing at a higher rate than production and GDP in recent years. Still, the latter is unlikely to increase even by a tenth of a percentage point, considering that the expected freight turnover decline. Furthermore, the Government is predicting that the crisis will reach its bottom only by March-April of 2009.
Despite the expected turnover decline, the RZD will not be cutting its financial plans or the investment program. The 6% turnover reduction will result in substantial investment losses amounting to 75 billion roubles (with the total investment plan of 430 billion roubles). To compensate for the losses, the RZD will be issuing infrastructure development bonds. The plan has been approved for some time now, but on Thursday, the Government decided to expedite its implementation.
According to RZD president Vladimir Yakunin, the first batch of bonds, worth 15 billion roubles, will be issued on November 18. An equal amount will be dispersed on November 25, with the total amount of bonds to be issued reaching 60 billion roubles. Originally, the RZD was planning to issue 100 billion roubles worth of bonds, but the amount may be revised, taking into account the company' strong credit history, said Mr Yakunin.
During the meeting on Thursday, Prime Minister Putin said that metal and cement prices would drop by at least 20% in 2009; consequently the RZD will not need to cut its acquisitions from domestic producers. The plan for purchasing at least 50,000 cargo cars in 2009 was also confirmed. However, they should be purchased not just by the RZD subsidiary, The First Freight Company, but also by independent freight operators. The Government will need to assist the latter by reducing their leasing rates, Transport Minister Igor Levitin said. The Government has also decided to create an RZD subsidiary to operate long distance passenger transportation. Previously, it was considering setting up an independent operator.
