Russian railways up freight rates

Russian Railways will raise freight rates by approximately 10 percent in the coming year and index increase to inflation starting from 2014 in an effort to break even.

The state company received permission from Russian Prime Minister Vladimir Putin to raise prices on Thursday April 27. Putin conceded to a only a 7.4 per cent price rise saying “otherwise we would crush economic development.” This year Putin agreed to a 6 percent raise to cover last year?s 6.1 percent inflation and granted the company a RUB 40 bln (USD 1.47 bln) subsidy.

Vladimir Yakunin, the chief of Russian Railways, explained the company needs to raise tariffs to match inflation in order to break even. Further, the company will need to invest RUB 5 trln in the next decade to modernize the rail lines and to match growing demand of expansion of the network and ports in Siberia and the Far East, where demand for Russian resources is expected to grow three-fold by 2020.

“The Trans-Siberian and Baikul-Amur railroads are operating at the limits of their capacity.” Putin agreed with Yakunin that ?Russian business is forced to postpone interesting ideas and development projects in the Eastern direction. The modernization of he rail lines and the development of high-speed rail lines will draw massive allocations from the federal budget in coming years.”