Tariffs Change

15.04.2008 (16:05)

The new tariff rates on cargo rail transportation come into force from April 1. The Government of the Russian Federation made decision on additional freight railway tariffs indexation by 1%. The order of Federal Tariffs Service was signed on March, 14th.

According to the president of OAO RZD Vladimir Yakunin, tariffs increasing by 1% allow to earn 25 bln rubles for three years. The company is going to finance three Olympic objects at the expense of these additional means. There will be Tuapse - Adler railway throughput increase, building of four warehouses for nonmetallic materials and construction of the railway from Sochi to Krasnaya Polyana.

Many consignors think that this decision is unreasonable. These three projects was not included in the company budget earlier, therefore they could be financed from other resources, the source reports on the condition of anonymity. If OAO RZD refuses to invest these objects, the Government would find the alternative solution. “It is impossible to make all people share your opinion. There are the Olympic Games today; there will be something new tomorrow. This indexation can become precedent for other similar actions in the future”, the Head of a large transport company commented.

At the same time though most participants of the cargo rail transportation market are dissatisfied by the tariff increase, many of them admit that it is not problem for them. The source from the large metallurgical enterprise said that this is predictable action. He added that it will not provoke crisis. However representative of other company noted that the price for this 1% increases constantly. And probably ultimate consumer will pay more.

We shall remind that previous unplanned additional indexation was carried out by OAO RZD in 2005. Then tariffs were increased by 4% due to inflation. OAO RZD carries out tariffs indexation reasoning from consumer inflation (according to Ministry of Economic Development and Trade) while the increasing prices of industrial manufacturers have affect on the company. According to OAO RZD, dynamics of tariffs increasing on railway freight transportation was two times less than tariffs increasing in a whole transport system of the country (8% and 16.7% respectively) in 2007. It was 1.5 times less than inflation rates (11.9%) and 3 times less than increase of industrial manufacturers’ prices (25.1%). Representatives of OAO RZD consider that real inflation parameters differ from official ones.

In January 2008 tariffs on railway transportation services were increased by 11%, it is 1.1 times than inflation rate 2.3 times less than increase of industrial manufacturers’ prices. Tariffs for all transport modes freight transportation increased by 31.8% in January.

According to OAO RZD its operational costs amounted to 67 bln rubles in 2008. Representatives of the Russian Railways think that revision of tariffs indexation is necessary. On the meeting of RF Transport Ministy board held on March, 24 the company proposed tariff indexation - 10% from July 1.

According to the Federal Tariffs Service there is no tariff request from OAO RZD. Opponents – clients and independent transport companies – disapprove this initiative. They consider that OAO RZD should increase cargo base instead of tariffs, it will be more effective action. Policy of maximal infrastructure tariffs containment is carried out in many countries. Business will develop correctly under these conditions only.

As to extraordinary indexation, solution of this question will depend on current level of inflation which is high now. However, if the prices increase, the Government will choose compromise decision. Precedent of 2005 has been based on the same principle: then additional freight tariffs indexation was aimed to fulfillment of net profit volume and investment program.
 
by Elena Ushkova

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