OREANDA-NEWS. March 02, 2010. Prime Minister Vladimir Putin chaired a meeting in Sochi on the implementation and financing sources of Russian Railways’ investment programme. Discussing the company’s activities, RZD President Vladimir Yakunin noted that according to a conservative forecast, the pre-crisis level of domestic freight will be reached by 2015, and that growth in deliveries to ports – totaling 50-100% - will exceed the 2008 level, reported the press-centre of RZD.

Under an optimistic scenario, this will occur as early as 2013. Vladimir Yakunin noted during the meeting that the total volume of funds set out in the company’s investment budget for 2010-2011 is 555 billion rubles (more than 18.5 billion dollars). Of these funds, the company’s own investment projects for this period total 435.5 billion rubles (around 14.5 billion dollars), or 78% of the total investment budget. 120 billion rubles (4 billion dollars) will be used for the construction of a combined road/rail link between Adler and the Alpika-Service mountain resort.

The RZD president said that in view of the current condition of core assets, the main priority for the company during the near future is to renew them. In particular, five bridges will be put into operation 2010-2011, major repairs and reconstruction work will be carried out on more than 20,000 km of track (including the reconstruction of 3200 km), and around 800 km of overhead lines will be renewed, as well as about 1700 power switches. A total of 72 billion rubles (2.4 billion dollars) will be used to buy new rolling stock.

In considering the investment programme, an important factor is that at present, RZD’s sources of financing are severely restricted. The company’s profit is currently entirely dependent on the tariff indexing level, and on the company’s plans to reduce costs. The cost-cutting programme has already been taken in to account in drawing up a forecast finance plan, so the possibility of increasing profit – as an essential source of financing for the investment programme – depends entirely on the position of state regulating bodies on the issue of tariff indexation.

"The only possible sources of financing for increasing the size of the investment budget are targeted contributions to the company’s authorized capital," the RZD president said.