RZD wants subsidies to improve appeal of high-speed rail travel - paper
MOSCOW. July 15 (Interfax) - Russian Railways (RZD) is proposing to keep ticket prices on the future high-speed rail (HSR) line between Moscow and Kazan attractive with government support for the project for many years to come, national daily Kommersant reported on Monday, citing company materials prepared for government meetings on HSR services.
The HSR operator is expected to have revenue of 19.3 billion rubles and operating costs of 14.3 billion rubles in 2019. In order to recover investment in the project, it needs to generate revenue of 95.8 billion rubles. It is being proposed that the difference of 76 billion rubles be covered with government subsidies, the paper said.
The subsidies are supposed to exceed 55 billion rubles in 2025 and 38 billion rubles in 2030, and they will be needed until 2053, although by that time they will decrease to 3.6 billion rubles per year, Kommersant said.
RZD's calculations do not provide an overall figure for the government subsidies, but based on the existing figures, it is clear that the total will be several times more than the previously mentioned 179 billion rubles, the paper said.
The company's materials state that ticket prices could average 1,070 rubles from Moscow to Vladimir, 2,216 rubles to Nizhny Novgorod and 3,778 rubles to Kazan.
The cost of the project is estimated at 930 billion rubles, of which 70% is to come from the government (40% from the federal budget and 30% from the National Welfare Fund (NWF)). RZD's private partners are supposed to invest 55.9 billion rubles in the equity of High-Speed Rail Lines (HSRL), which will implement the project, including 9.4 billion rubles in 2014. RZD hopes to raise 223.4 billion rubles in loans.
Additional subsidies will also be needed at the construction stage in order to ensure a return for the private investors and the NWF, the paper said. This would be 9.4 billion rubles in 2015 and more than 100 billion rubles over the five years of the project. HSRL, however, said there is expected to be a five-year grace period and the project will only begin generating returns once the line is operational. Where and when the government will find the money for these subsidies, which by a rough extrapolation of RZD's data could total about 1 trillion rubles, is not stated in the company's materials.
RZD estimates that the new line will carry 7.46 million passengers in its first year of operation, only 1.59 million of whom will be travelling from Moscow to Kazan, while 2.28 million are expected to travel to Nizhny Novgorod, 1.78 million to Vladimir and 845,000 to Cheboksary. The remaining passengers are expected to be travelling between regional cities.
The chairman of passenger association Soyuz Passazhirov, Kirill Yankov told the paper that in addition to ticket prices, it is important for train arrivals in these cities to be convenient for passengers. At present, the company is considering having passengers to Nizhny Novgorod get off nearly 20 km from the city.
One of the key potential objectives of the Moscow-Kazan HSR line, to carry fans and participants for the World Cup football championships in 2018, remains in question. Calculations for the line operator's operating expenses and revenues are only given in the materials starting in 2019, which confirms the words of Transport Minister Maxim Sokolov, who said the project would be "realistic to carry out, say, by 2019," the paper said.
HSRL said that the line is to be built in time for the World Cup, the paper reported. But for now RZD's calculations for 2018 only include 196.4 billion rubles of investment in construction and no revenues from ticket sales.
The paper reported a source close to RZD as saying that "right now no one will say exactly on the timetable, much depends on the speed of decisions on financing, planning, selection of contractors." It is necessary to act quickly, but not in a panic, "otherwise serious mistakes could be made," he said.