OREANDA-NEWS. March 25, 2010. Russian Railways, the executive authorities involved and representatives of the business community are drafting a bill "On the Particularities of Investing in Infrastructure Using Infrastructure Bonds".

Vladimir Yakunin, the President of Russian Railways, today took part in a meeting of the Federation Council Working Group to prepare legislative proposals aimed at improving the situation in the economy and the labour market.

"The concept of "infrastructure bonds" is of strategic importance for the modernisation of Russia’s infrastructure," said the Company President. According to Yakunin, introducing such an institution will enhance the mechanism of attracting private investment in important sectors such as rail, road and air transportation and will make better use of investment resources.

Using infrastructure bonds will also help expedite implementation of the Strategy of Development of Rail Transport in the Russian Federation until 2030 and the target market model of freight rail traffic to 2015, which Russian Railways has developed in conjunction with the consulting firm McKinsey.

The Working Group recommended expediting the approval of the task market model. In accordance with this document, in 2010 it is necessary to complete the formation of a competitive market of freight cars and start setting up the Second Freight Company, which will establish a level playing field for all car owners and will attract investment to upgrade rolling stock. As participants in the meeting noted, the position of setting up the Second Freight Company has been coordinated by the Ministry of Transport, Russian Railways and participants in the rail transport market.

"Reform of the rail industry also implies the development of competition in freight transport. The basic model for Russia is competition between carriers for the route," said Vladimir Yakunin. This model assumes that in some parts of infrastructure owned by Russian Railways, all cargo will be transferred to another carrier for a longer period based on public competitive selection.

The participants at the meeting agreed that it was necessary to reform the system of rail tariff regulation and ensure guaranteed funding for the maintenance and development of railway infrastructure as envisaged by the Strategy for the Development of Rail Transport in Russia until 2030.

The long-term systemic solution for that funding, as confirmed by international experience, is the formation and statutory approval of the "network contract" model. Such a document will become a formalised system of relationships between the owner of the rail infrastructure for public use on the one hand and the state as the customer who commissions the required level of rail capacity on the other.

The meeting resolved that the Federation Council Working Group will now prepare appropriate recommendations for the development of the necessary regulations and will forward them to the Russian government, the constituent parts of the Russian Federation and the State Duma.