Daniil Shabashov and Yekaterina Godlevskaya
Tariff increase of 12.4% for rail cargo in 2009
Yesterday Prime Minister Vladimir Putin virtually put an end to a heated debate about the tariffs for Russian Railways next year. He announced that tariffs on railway cargo transportation will be increased by 5% on January 1 and the average yearly growth will be 12.4%. Earlier in the week Russian Railways hoped for an 8% increase. In addition, the state will give the rail monopoly 50 billion roubles and will buy the company's additional stock issue for 41 billion roubles. Experts say the Government has to meet the railway halfway because of a sharp decline in freight traffic. To ease the burden, tariffs will be raised in stages.
The tariffs on railway freight transportation in 2009 will rise by 12.4% on average, in spite of an earlier plan for an 18.7% increase, Mr Putin said yesterday. Previously tariffs were to be raised by 14% on the first day of the year, now the increase will be no more than 5% and in July another 5.7%. The state will compensate Russian Railways for the lower than planned tariff increase by allocating an additional 50 billion roubles, Mr Putin said.
On December 16 the Government decided that the capital stock of Russian Railways should be increased by 41.5 billion roubles requiring an additional stock issue to be purchased by the state.
Earlier this week Russian Railways had hoped for an average yearly tariff increase of 8%. Russian Railways President Vladimir Yakunin told reporters that instead of a 14% freight tariff increase the monopoly had been allowed to raise tariffs by only 8%. With a 14% tariffs increase, Russian Railways hoped to see an additional 116 billion rubles in revenue next year. But even with that increase, the company could only have financed 60% of its investment program in 2009 estimated at 432 billion rubles. Russian Railways has indicated that any tariff decrease would lead to a reevaluation of its investment program.
Analysts say the government met Russian Railways halfway because of a sharp decline in freight traffic. Earlier estimates indicated that a 6% decline in freight transport in 2009 would result in loss of 75 billion rubles. Until recently this estimate was being used for planning purposes, but the economic downturn has forced a reevaluation. In October Russian Railways freight car loads dropped by 4.4%, in November it fell by 30% and in December the decline may be even deeper.
According to Kirill Tachennikov of FK Otkritie the tariff decision is a compromise between the interests of Russian Railways and its shippers. Meanwhile, officials have reserved room to maneuver: the tariff increases will be carried out in stages. First Deputy Prime Minister Igor Shuvalov says further changes in tariff rates for natural monopolies are possible if the economic recession worsens. General Director of AKG Finekspertiza Agvan Mikaelian points out that the planned tariff increase next year is lower than inflation because its effect on cargo transportation will be neutral. "Raising the tariff next year by 5% is unlikely to have a strong impact on cargo transportation and by the middle of the year the situation may change," says Kirill Tachennikov. Yevgeny Alekseyev from the Institute of Problems of Natural Monopolies warns that without additional state support Russian Railways can only finance its investment program within amortization expenses which are no more than 210 billion-215 billion rubles.
