Russian Railways needed station company to prevent debt growth - exec
SOCHI. Oct 29 (Interfax) - The head of Russian Railways' (RZD) Directorate of Railway Stations (DZV), Sergei Abramov said the company needed RZD-Passenger Station Development (RZD-RV), which it only briefly controlled, to raise investment without burdening its own budget.
"The primary objective is to raise investment for the development of passenger infrastructure without recourse to the parent company. The objective, in conditions where the country's leadership emphasizes attention on attracting investment for infrastructure development, was to create an instrument to organize the raising of investment and not burden the budget of the state company," Abramov said in response to questions from reporters in Sochi on Monday.
He said that under the company's initial development model RZD invested up to 30% of funds. "Now we invest no more than 10%, and these investments are primarily directed into ensuring safety. Therefore, we are essentially developing the infrastructure project at the expense of private investment resources," Abramov said.
RZD-RV was founded in 2009 on the initiative of DZV to facilitate the modernization and reconstruction of train stations, as well as develop new projects with "network operators" of services. RZD-RV was initially wholly owned by RZD subsidiary Baminvest. In 2011 it was reported that the Blagosostoyanie pension fund acquired about 75% of RZD-RV, however, business daily Vedomosti reported that this stake is owned by Sistema-Service, a company controlled by RZD-RV chief executive Sergei Pak.
Pak is a long-time acquaintance of DZV head Sergei Abramov and his wife Alla Kalashnik. The paper reported Pak as saying that he acquired control of the company after his joint venture with Kalashnik, Integratsiya Svyazi invested about 350 million rubles in security systems at train stations and waited to be paid, but RZD-RV did not have any money in 2011-2012 so he invested his own money in the company and Sistema-Service acquired 74.97% of RZD-RV.
However, in the middle of October RZD president Vladimir Yakunin said that his company intended to regain control of RZD-RV. The buyback of shares will be occurring at a time when RZD's leverage has almost reached the "comfort level" of 2.5. The figure has been far lower in the past few years and prior to 2011 the consolidated debt to EBITDA ratio was less than 1.
RZD-RV's investments are not limited to railway stations. DZV told Interfax that RZD-RV is forming a joint venture with the Moscow Metro to build transfer hubs and develop adjoining property. The list of hubs is not limited to subway stations that connect to the railway. They include Bibirevo, Medvedkovo, Molodezhnaya, Domodedovo, Bulvar Dmitriya Donskogo, Yasenevo, Polezhayevskaya and Pyatnitskaya.
