Information published on 1 March 2016 in the UIC electronic newsletter "UIC eNews" Nr 487.

Russia: “The Company is counting on a constructive dialogue with machine builders to develop and operate modern rolling stock,” says President of Russian Railways Oleg Belozerov

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“Transport engineering products accounted for 11% or 119 billion roubles of the total procurement of Russian Railways in 2015. The Company plans to increase this proportion to 20% or 186 billion roubles in 2016. The range of products is very wide - from individual components and spare parts to finished functional products,” said Oleg Belozerov, the President of Russian Railways, who was speaking at a meeting on the situation in the domestic engineering industry under the chairmanship of Russian Prime Minister Dmitry Medvedev in Tver on 9 February 2016.

Belozerov also emphasised in his address to the meeting that Russian Railways had declared 2016 “Year of the Passenger” and set itself the task of implementing a range of measures to improve significantly service quality and passenger comfort. Thus, the Federal Passenger Company, a subsidiary of Russian Railways, has allocated up to 85% of its investment programme to updating passenger rolling stock. In 2016, the Company plans to double its purchases of domestically produced carriages, including double-decker cars, to 186 units worth 10 billion roubles.

“The purchase of double-decker carriages not only represents the renewal of the following stock, but also an opportunity to reduce fares by 30%. This was made possible thanks to the decision of the Government of the Russian Federation to reduce the VAT rate from 18% to 10% on domestic passenger transportation,” said Oleg Belozerov.

He said that in 2016, Russian Railways will invest more than 15 billion roubles in upgrading commuter rolling stock. It is planned to buy 82 carriages produced by the OJSC Demikhovo Machine-building Plant and 150 carriages for the Lastochka train.
In this regard, the Company President stressed the need to consider longer-term plans to optimise the tax burden.

“A decision has been taken to reduce the VAT rate for 2016, but we need to have this decision extended for the long-term. If that occurs, we could establish a more precise joint programme with the manufacturers,” said Oleg Belozerov.

According to Belozerov, in the current economic conditions one of the most effective mechanisms that affect the pricing of the purchased products is the realisation of the import substitution programme.

The Company is examining long-term cooperation with innovative industrial enterprises, including the development of locomotive construction for the period to 2020.

One result of this activity is the inclusion of localisation targets in contracts for the supply of rolling stock. For example, the level of localisation in the production of Lastochka electric trains reached 60% in 2015. In the future, the aim is to increase that figure to 80% in 2018.

The President of Russian Railways also mentioned the existing problems with the quality of the rolling stock. Thus, according to the 2015 operational results, a number of indicators for the technical readiness of locomotives was less than planned.
“We have organised very good work with producers, and that is very important in the framework of contracts over the life cycle. In the course of this year, we will lift our cooperation with manufacturers to a good level,” said the Company head.

Oleg Belozerov expressed confidence that in accordance with the government’s goal, Russian Railways would increase the share of innovative and high-tech products in its purchases to 10% in 2018.

(Source: RZD)