Vladimir Denisov

U

ntil recently the town of Olia located on the northern coast of the Caspian Sea was not generally known. Now it has been a big cargo side port to connect Russia with Iran and other Asian countries. Owing to its advantageous geographical position the port can handle cargoes the whole year through to ensure access to all the traffic arteries including sea and river routes, motor trunk and railroads.

According to Igor Levitin, the Russian Minister of Transport, with the port of Olia set up the ancient "great silky way" has been resumed. This route provides for the shortest and cheapest deliveries between Asia and Europe. Now Russia has got a shorter access to markets with more than 1 bln. people. Thus, for example, time of delivery from Mumbai, an Indian city, to Moscow has been shortened by 10-15 days compared to the previous route through the Atlantic and the Baltic Sea with the delivery costs being reduced by more than 10%.

Considered by the RF Government as a most important object of category #1 the new Caspian port was included into a federal target oriented program on "Upgrading the RF Transport System". In summer 2004 when a branch railroad had been extended to the coast, a freight train delivered to the port of Olia the first set of cargoes destined for an Iranian consignee to mark the beginning of a regular transit along the North-South international transportation corridor.

Russian Railway (RZhD), an open joint stock state company, invested more than US$100 mln. into construction of the railroad branch line to the port. President of RZhD Gennady Fadeev considers the investment pretty effective. In his opinion putting the new branch railroad into operation will make it possible to reduce railroad rates applied for this direction by 20%. According to a new strategic program approved by the RF Government in autumn 2004 for RZhD the company shall also provide neighboring countries such as Iran, Azerbaijan, Armenia and Georgia with technical assistance in developing their transportation corridors.

In the opinion of Mr. Levitin to use effectively the transit potential available in Russia it is necessary as soon as possible to restore a through railroad traffic in Transcaucasia which was broken after collapse of the Soviet Union. This issue has already been discussed with governments of Armenia, Azerbaijan and Georgia. "Presidents of the countries have offered their support to the project targeted to reanimate interstate railroad traffic," – states the Russian Minister. In confirmation to his words a Russian-Armenian joint committee has recommended governments of Armenia, Georgia and Russia to be quick with signing a treatment on the interstate transportation corridor.
"As a transit state, - adds Mr. Levitin, - Russia has got a significant potential to enhance the volume of railroad traffic. Under the Soviet Union up to 15 million tones of cargoes used to be accumulated on this route. During that period the volume of railroad traffic between Russia and Georgia reached 8.8 mln. tones a year, out of which 6.6 tones were attributed to export cargoes."

In the Minister` s opinion opening of a through railroad traffic will give extra impetus to economic development of the region to create new jobs and actually facilitate solution of political problems.

Mr. Levitin also highlights a vital need of integration between CIS countries in the field of railway transport for which there are all required prerequisites e.g. the same railroad gauge, the same technology of railroad transportation and the same manufacturers of the railroad equipment. Another argument in favor of such integration is a stronger competition in the field of transportation services. Russia has narrowly watched creation of alternative Asia-Europe transit systems designed to bypass transport infrastructure of Russia and Transcaucasian republics. "If we don` t take to development of our own transportation corridors, - warns the Russian Minister, - we will loose significant traffic streams."

Recently an upgraded ferrying site was put into operation to connect the Crimea and the Caucuses. Now this site is deemed not only a key junction between Russia and Ukraine but also a major link in a prospective international ferry system to connect all the countries in Transcaucasia and the Black Sea area including Bulgaria, Georgia, Armenia and Azerbaijan. To date a test berthing has been successfully carried out to dock a ferry with the mooring infrastructure in the Georgian seaport of Poti and an experimental set of freight cars has been shipped from the seaport of Kavkaz in Russia’s Krasnodar Territory to the Ukrainian port of Krym (near Kerch in Crimea, Ukraine).

Transport corridors are also being developed in the North-West of Russia. In late 2004 a new bypass railroad was constructed towards a new oil export terminal at Visotsk on the seashore of the Baltic Sea. This 1.5 km long branch railroad is a very sophisticated engineering object. Built on piles with waterproof isolation the railway goes through a boggy area. Thus, freight trains loaded with oil products will bypass the town of Vyborg where St-Petersburg-Helsinki high-speed railway is planned to be built. This will ensure more safety for passenger railroad communication to give an opportunity to develop export of crude oil and oil products. The new branch railroad allows enhancing traffic through the terminal of Visotsk up to 7 mln. tones a year with a possibility of further increase up to 12 tones in perspective.

Development of similar terminals on the seashore of the Baltic Sea is in line with a strategic task to secure export of Russian oil without use of conventional transit routs through the Baltic countries. In the opinion of Mr. Fadeev Russia should trade in its oil only through its own terminals.

The railway branch line towards Visotsk was financed by LUKOIL oil company, which invested more than US$ 10 mln. into the project. This branch line is supposed to be operated by RZhD which case gives a good opportunity to set up a mechanism of effective cooperation between state and privately owned companies in the field of development of transport communication. Private business is waiting for a special legislation on this issue. President of LUKOIL Vagit Alekperov stated that the absence of such legislation was not an obstacle for his company. "In the port of St. Petersburg they charge us $20 for handling one tone of oil. Here we pay only $ 6.5 per tone. Our interest is obvious," – Mr. Alekperov explained his company` s decision to invest into construction of the branch line.

A mechanism of public-private cooperation like this is of interest for RZhD as well. Today this state owned company acts as a major investor in the field of railroad infrastructure development. Galina Kraft, the vice president of RZhD, stated that in 2005 70% of the company` s investment resources out of its budget would be used for that purpose. Moreover, the company is very serious about upgrading rolling stocks by purchasing more new locomotive engines, cargo and passenger cars of new generation. In 2004 expenditures for that purposes reached US$ 1 bln. including leasing.

At the same time ambitious tasks RZhD sets itself calls for investments which significantly exceed financial resources available with the company. In the opinion of RZhD` s leadership under such circumstances capital consumptive infrastructure projects could be based on concession agreements involving private partners. RZhD is intended to use the mechanism of public-private partnership specifically for development of railroad infrastructures in difficult-to-reach areas in Siberia and the Far East of Russia. Currently RZhD co-jointly with GAZPROM, LUKOIL and some other major investors is drafting a project on development of railroad infrastructure to transport oil and gas from the northern section of Western Siberia. Such an approach will not only give an extra impetus to development of oilfields in this region but will also allow diversifying risks of investors and reducing an infrastructure related component in the overall costs on each particular project.