OREANDA-NEWS. April 02, 2012. Vadim Morozov, First Vice-President of Russian Railways, spoke at an enlarged meeting of the Board of Russia’s Ministry of Transport and gave a report on the Company’s 2011 results and development prospects for 2012, reported the press-centre of Russian Railways.

According to Morozov, Russian Railways finished the year with a profit of 16.8 billion roubles and contributed around 1.8% to the country's GDP.

Effective cost management held the increase in spending on transportation to 6.9%. The Company managed to hold cost increases to 12.5% despite increasing price pressures by optimising expenditures in accordance with instructions from the President of the Russian Federation.

However, Vadim Morozov also emphasised that the Company could not compensate indefinitely for the rise in charges levied by subcontractors by relying on its own internal resources and improving procedures on competitive tenders.

Support from the Ministry of Transport, said Morozov, was needed to prevent unjustified and uncompensated price rises, as well as active cooperation with the Ministry of Economic Development, the Ministry of Trade and Industry, the Federal Tariff Service and the Federal Antimonopoly Service.

In 2011, Russian Railways increased its investment programme to a record 396 billion roubles and implemented priority projects with government support.

An airport terminal and passenger link with Sochi airport have been commissioned, and a series of major projects aimed at removing infrastructure constraints continue to be implemented.

Increasing investment and ensuring the Company’s financial balance were made possible by the successful sale of shares in subsidiaries amounting to more than 149 billion roubles.

But this source of financing for development has run its course this year, and from 2013 the budget at Russian Railways could run up a deficit. In these circumstances, the Company, jointly with the Ministry of Transport, has to seek solutions regarding government support and regulation for the next three years.

The subsidy of 25 billion roubles a year for infrastructure services on suburban commuter traffic should be retained, but so far a decision had only be taken for 2011-2012, said Morozov.

In response to instructions from Russian Deputy Prime Minister Igor Shuvalov, the Company will propose the inclusion of an investment component of at least 4% in fares and tariffs from 2013.