RUSSIA: Proposals for the reform of Russian Railways’ long-distance passenger business and the creation of a new operating company have been agreed in principle by the RZD management team. The detailed proposals will now be presented to the board of directors for formal approval.

Restructuring of the long-distance passenger business is seen as ‘one of the most important issues’ in the ongoing reform of RZD, according to Vice-President Mikhail Akulov. He told the management meeting on October 7 that in establishing a new operating company, ‘the goal is to create an effective business, based on co-operation between the new company and government authorities.

According to RZD, the Federal Passenger Company will function as ‘an independent market entity’ with an equity capital of 136·8bn roubles. It will be 100% owned by RZD, minus one share. As part of its equity contribution, RZD plans to transfer assets to FCP from its existing Federal Passenger Directorate. This wholly-owned subsidiary currently has 16 regional business units, 15 agencies, 43 rolling stock depots, 29 coach stabling yards, and two passenger service directorates. FPD has 98 200 staff and a fleet of 24 691 vehicles.

In its proposals for the evolution of the new company, RZD has drawn up two development scenarios, with the investment programmes to handle the projected traffic volumes. The baseline scenario envisages investment totalling 257·4bn roubles in 2010-20, compared with 442·5bn for the ‘ambitious’ scenario. The bulk of this would go on rolling stock renewal. The baseline scenario envisages the purchase of 1 540 vehicles over the next three years and 4 080 carriages in 2013-20. Under the ambitious scenario, 1 698 vehicles would be bought in the first three years, and 6 864 by 2020. RZD has already announced plans to buy 200 RIC-standard vehicles for international services between 2011 and 2014.

According to Akulov, FPC would follow different strategies in each market segment. In the international sector, the aim would be to increase the range of destinations within an optimised route network able to react flexibly to changing demand. ‘Under the business plan that we have developed, FPC will be able to gain a stable position in the market for long-distance passenger transport, and will be able to conduct independent economic activities in all target areas, yielding an aggregate profit’, he emphasised.