Vladimir Denisov

In September a new joint-stock company with a 100 % stake belonging to the State has been officially registered. Called Russian Railways JSC it has taken over all economic management at railroad transport from the Ministry of railways. The company becomes one of the world’s largest transport corporations and the country’s biggest carrier. It accounts for 39 % of Russia’s total freight turnover and 41 % of the passenger transportation. Gennady Fadeev has been appointed president of Russian Railways JSC by the Russian government.
Getting over the space has always been the major problem on Russia’s enormous territory. All rivers are flowing in the meridian direction, from the north to the south and from the south to the north. But the country itself stretches for 11,000 km from the west to the east, from the shore of the Baltic Sea to the Pacific Ocean. And only the extensive system of railroads could provide connection in this space and ensure a reliable communication between regions. Both Russian czars and Soviet leaders understood this task very well.

UNDER PATRONAGE OF THE CROWN
In October 1837 the first train set out by Russia’s first railroad from Saint Petersburg to Czarskoe Selo, the Emperor’s out-of-town residence. This event is regarded as historic and as the start of developing Russia’s railroad transport. Just for the sake of being fair, it should be noted that three years earlier in the Ural city of Nizhny Tagil a small private railroad was built at the Demidovs’ metallurgical plant. It was invented by Cherepanov and his son, who also constructed two first Russian steam locomotives. But, all the same, the wide use of this new kind of transport began in Saint Petersburg.
In 1842 Emperor Nikolai I signed an order to build a railroad from Saint Petersburg to Moscow stretching 650 km. In 1852 already 719,000 passengers and 164,000 tons of cargo were transported by this railroad.
Since then the country’s system of state and private railroads began expanding quickly and it required establishing a centralized management of the transport system. In 1865 the first Ministry of means of communication (MMC) was set up; its special department was in charge of railroads.
In different years MMC was headed by outstanding politicians, managers, economists, scientists. Pavel Melnikov became the first minister of means of communication. He wrote Russia’s first book "On railroads", many monographs and articles. Precisely these works marked the beginning of the Russian railroad science. Under his leadership a grand program of developing Russia’s railroad system was worked out and by 1871 already 8,125,3 km of railroads were built. Under Melnikov MMC became quite an authoritative body and work at the railroad transport was one of the most prestigious.
Melnikov’s disciple, engineer Konstantin Posiet was the minister of means of communication from 1874 to 1888. During those years the railroad system was developing in the southern direction: to the Donetsk coal basin, Russia’s western border, the Caucasus as well as to the Urals and Central Asia.
In 1891 works to build the Trans-Siberian Railway started. The ceremony of its laying in the city of Vladivostok was attended by heir to the throne, future Russian Emperor Nikolai II, who hammered in the first tie cotter. This main railroad over 7,000 km long was built in difficult Siberian conditions in 10 years.
All in all, czarist Russia built a solid railroad system about 60,000 km long.

WATCHES WERE CHECKED BY TRAINS’ ARRIVALS AND DEPARTURES
After the October revolution the country’s new authorities had to strengthen the centralization of managing railroad transport. As a result of World War I and the civil war in Russia, over 60 % of the system as well as 90 % of the steam locomotive fleet and 80 % of the car fleet were destroyed. Only by 1928 Russia managed to fix the damage and bring railroad transport operations to the pre-war level.
In the1930s the reconstruction of railroads started. Heavier and stronger rails were laid, more powerful steam locomotives and high-capacity cars were constructed, automatic coupling, automatic brakes, interlock systems, power interlocking of switches and signals were put in operation.
During those years the people’s commissar (that is how ministers were called till 1946) of railways was Lazar Kaganovich, one of Stalin’s closest friends. Being a very demanding and tough person, he introduced a military discipline at railroads: those guilty of violating rules of technical maintenance and breaching train schedules were often prosecuted. But at the same time the whole transport system was functioning with an exceptional precision. During that period, as many eyewitnesses assert, it was a common practice to check watches by trains’ arrivals and departures.
One interesting fact proves the importance that the government attached to the railroad system. In 1936 the Railroad Men’s Day was officially introduced. It was Russia’s first state professional holiday, which is marked till now.
New railroads were actively built. In 1940 the operational length of the railroad system exceeded 100,000 km.
Under Kaganovich the Ministry of railways managed to successfully get itself prepared for the war that Hitler’s Germany started against the USSR in 1941. Sufficient reserves of rails, ties, spare parts for steam locomotives and cars were stored up. All these allowed to maintain a reliable operation of railroads and secure transportation of troops and cargo for the country’s defense during the hardest war in the history of Russia.
When the war ended, the Ministry restored the destroyed railroads and put forward a program of developing railroad transport. The program provided for an accelerated electrification of railroads and replacement of steam locomotives with the diesel ones. At the end of the Soviet era the development of the railroad system was based on high technologies. Trains’ weight was significantly raised, container haulage became widely used, auxiliary operations were automated.

P  R  O  F  I  L  E
Gennady Fadeev President of Russian Railways JSC, 66 years old. Born in the Far East. Graduated from the Khabarovsk Institute of Railroad Transport Engineers. Started his work at the East Siberian Railroad as an assistant railroad master. In two years became chief station engineer and later headed different divisions of the East Siberian Railroad, was its first deputy chief. Headed the Krasnoyarsk and Oktyabryaskaya Railroads. In 1987 became deputy minister of the USSR railways. From 1992 to 1996 was minister of Russia’s railways. After that worked as the general secretary of the International coordinating council on Trans-Siberian transportation. In 1999 Gennady Fadeev headed the Moscow Railroad. In January 2002 became minister of Russian railways. In September 2003 was relieved of the minister’s post by order of the Russian government and appointed president of Russian Railways JSC.

DISPUTE ABOUT REFORMING
The concept of reforming the Russian economy adopted at the beginning of 1990s provided, among other things, for privatization of railroads. It was demanded by the so-called "young reformers". In Russia with its vast territory it was fraught with disrupting ties not only between enterprises but between regions as well. Minister of railways Gennady Fadeev defended the principle of railroads’ state management and proposed to prepare reforming the system more thoroughly.
In 1996 president Yeltsin appointed Nikolai Aksenenko minister of railways. Two years later the Russian government adopted a program to structurally reform the federal railroad transport system, which did not envisage railroads’ privatization.
In January 2002 president Putin brought Gennady Fadeev back to the minister’s post. The first thing that Fadeev did was to start preparing for the railroad system’s reform and, later on, he began its implementation.
The reform’s main principles are: preservation of the railroad system’s indivisibility and separation of state regulatory functions from the management ones. From now on the Ministry should conduct the state policy in the railroad system and ensure standard-and-legal regulation of its operation.
The Ministry is forming seven territorial administrations, which will control compliance of the railroad system with laws of the Russian Federation and standard-setting acts of the Ministry, including those that deal with the safety of operation and ecology. They will also license some kinds of activity and interact with regional authorities. This will complete the first stage of reforming the system.
Today Russia has 17 territorial railroads, from the Kaliningrad railroad in the west to the Sakhalin railroad in the east. They will be kept intact for the time being.
At the second stage (till 2005) the reform provides for the withdrawal from the structure of Russian Railways JSC of those companies, which are engaged in long-distance and suburban passenger transportation, specialized cargo transportation, as well as those that make and repair section equipment and rolling stock, do development-and-exploration, scientific research, experimental-design, constructing-and-mounting works. Trade and service enterprises are also to be withdrawn.
At the third stage (from 2006 to 2010) the reform of the railroad system will lead to creating a competitive market. It provides for:
– expanding private property rights to rolling-stock, including main-line locomotives;
– setting up vertically integrated railroad companies, which will own spur tracks, lines and rolling stock;
– setting up private passenger transportation companies, in addition to Russian Railways JSC, at all directions of passenger transportation;
– increasing a number of companies, which are engaged in suburban transportation and which are partly or completely owned by Russian regions and municipal authorities.
As authors of the reform believe, by 2010 its implementation will permit to secure reduction of transportation costs and, thus, prices of Russian-made products as well as to raise the investment attractiveness of the country’s railroad transport.

Board of Directors of Russian Railways JSC

RUSSIAN RAILWAYS JSC: NO CLAIM TO MONOPOLY
President of Russian Railways JSC Gennady Fadeev insists that his company has been facing severe competition since the very first months of its existence. Over 70 % of Russian railroads are duplicated by motor vehicle roads of federal importance. At the same time railroad shipments are outdone by motor vehicle transportation, when cargo is to be delivered within 800 km. River transport and pipeline transportation are also competing with Russian Railways JSC.
There is a competition in the market of railroad shipments as well. Over 200,000 freight cars, i.e. about one third of the car fleet, are owned by private oil, chemical and engineering companies. They transport 40 % of oil products, 25 % of fertilizers, 22 % of motor vehicles. And these shipments bring the most profit.

R  E  F  E  R  E  N  C  E
As is well known, the Russian railroad track is wider than the European one. There are a lot of guesses and jokes on this score. But in reality the history of it is as follows. By the start of building Russia’s first big railroad between Saint Petersburg and Moscow the Institute of Railroad Engineers was already functioning. The railroad was being built according to parameters provided by its graduates, who took into consideration the growth of passenger and cargo transportation, economic expediency, climate and soil peculiarities. The road bed was arranged simultaneously for two tracks. By estimates of the institute’s graduate, professor Pavel Melnikov, who headed works on building the northern part of the railroad, the width of the track was set at 5 feet or 1,524 mm. This is still the standard for all Russian railroads and it is by 89 mm wider than George Stephenson’s track that is prevalent in Western Europe.

Russian Railways JSC is facing the need to implement a large-scale technological modernization. Russia’s railroad transport has a big share of morally outdated basic assets, which cause high operating costs. The technical resources of repair enterprises do not correspond to present-day requirements either. The new corporation needs a qualitative development of the production base through an effective investment policy.
As Gennady Fadeev stresses, accomplishing these tasks contributes to long-term loading of enterprises of the metallurgy, engineering and other industries. After getting orders enterprises start making energy-efficient locomotives, comfortable passenger cars and electric trains, high-quality rails, wheel pairs. In particular, the Vyksa Steel Works became proficient in the latest technologies and started production of high-quality wheel pairs, the company Promtractor (city of Cheboksary) began car casting and the Kolomensky Heavy Engineering Plant took up making modern diesel engines.
While preserving the existing infrastructure, Russian Railways JSC welcomes building new private railroads and attracting capital to joint ventures. In September 2003 a railroad to Novy Urengoi, one of the natural gas production centers, was put in operation. Works to build it were equally financed by the Ministry of railways and the administration of the Yamal-Nenetsk autonomous district. The company SUAL has already started operating its private railroad, by which bauxites are brought from the Tyman field to Ural aluminum mills. As Gennady Fadeev believes, this is just the beginning of using non-governmental mechanisms to develop the railroad infrastructure.
When the present evolutionary version of the reform was being prepared, its opponents were saying that with the State keeping its 100% ownership intact foreigners would hardly want to make investments. They were wrong. Foreign banks, investment and financial corporations are already offering Russian Railways JSC their cooperation in technical re-equipment of railroads and the company’s enterprises. Foreign partners show interest in setting up with Russian Railways joint companies in the international transport market. In particular, transport companies of Germany, Poland, Finland, Iran and other countries are actively seeking cooperation. In the first place, the case in point is joint development of the north-south and west-east transport corridors. That is why one of the strategic goals of Russian Railways JSC has been defined as a deep integration in the Eurasian transport system.