September 25, 2013

Russian high-speed takes two steps back, one step forward

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WHAT a difference two years makes. In October 2011 Mr Denis Muratov, CEO of Russian Railways' (RZD) High Speed Rail Lines subsidiary, declared confidently to a room of British journalists in London that Russia would build a high-speed railway between Moscow and St Petersburg in time for the soccer World Cup which Russia is hosting in 2018.

He said that the business case was sound, the numbers added up and that four international consortia were preparing to bid for the project.

Fast forward to last month's Expo 1520 event in Shcherbinka: Muratov has gone and priorities have seemingly changed. No longer is there talk of linking Russia's two most important cities by high-speed, indeed there is no mention of it at all. Instead the project everyone is talking about is a high-speed railway from Moscow to Kazan.

"President Putin regards this as Russia's third most important infrastructure project," declared Mr Alexander Misharin, Muratov's replacement, to delegates assembled for a session dedicated to high-speed rail development in Russia.

Misharin is a former deputy railways minister and a long-term advocate of high-speed in Russia having lobbied hard for construction of a line to Yekaterinburg in his previous role as governor of Sverdlovsk region from which he resigned in May 2012.

sapsanFirst announced to the public in May, the project he is now leading encompasses building a 770km line to Kazan, via Vladimir, Nizhny Novgorod and Cheboksary at an estimated cost of $US 30bn. The precise alignment for the route has not yet been agreed, but it will include crossings over the Oka, Volga and Sura rivers and is being developed with a extension to Yekaterinburg in mind. It is hoped the line will offer a journey time of 3h 30min compared with 14h 7min today. Detailed design is due to start this year and conclude in 2014, when the first stage of the tender process will commence. RZD says it expects to start construction in 2015 and complete the project in 2018.

This is certainly ambitious and details remain sketchy about how this schedule might be realised. The conference seemed to emphasise what could or should be happening, rather than what is actually going on.

Indeed a number of the questions from the audience and local journalists focused on issues such as how many passenger classes there might be and who would be selected to provide the rolling stock, rather than how the line will actually get built.

One did though get the impression that the project is further along than it might appear - it would have to be to have any chance of fulfilling this timetable.

Misharin said that the project would be divided into three sections for development, and that the government has put up Roubles 7bn ($US 210m) this year towards its preliminary costs and he expects to receive a further Roubles 3bn next year, although this is yet to be confirmed. An RZD spokesman told IRJ that tenders for technical advice and a strategic consultant are in the works, but when these might be issued is yet to be made public.

Legal basis

It was during RZD's annual Sochi conference in May 2012 that it became apparent that the Moscow - St Petersburg project was dead. Muratov told IRJ then that a line from Nizhny Novgorod to Yekaterinburg was more likely to get the go-ahead from the government.

He said that the tender was ready to be issued on September 1 2012 after feasibility studies were completed, and construction was scheduled to start in 2014. But problems with its legal basis and financial structure, appeared to hold it back.

RZD was selling the project as a PPP, and both Muratov and RZD president Mr Vladimir Yakunin insisted during the Sochi event that international parties were keen to back the scheme. Yakunin later said at InnoTrans 2012 that while he had not given up on the project, the financing structure still had to be ironed out with changes to Russian law required. He said that he expected this to be resolved by the end of 2012. But with this resolution never seemingly taking place, it may have been this failure as much as Putin's desire to spread Moscow's wealth to the east that ultimately killed the scheme.

RZD's wish to attract private financial support for the project was reflected by the presence of journalists with their fingers on the pulse of Britain's financial sector at the 2011 press conference. As it did for Moscow - St Petersburg, Russia is again looking to private sector investment to support its high-speed programme; Misharin says that the Russian government is ready to commit 70% towards the new project - 40% in the form of a state grant and 30% as a loan from the National Welfare Fund or from pension funds - with the private sector picking up the remaining 30%.

While it is again unclear where this private finance might come from, Misharin is confident that a model which relies on public and private support is realistic, despite the failure of Moscow - St Petersburg, and that parties will come forward.

"We are not looking for a single investor but multiple investors for this project," he told IRJ. He also batted off suggestions that the project might prove to be too costly to realise.

"We can't say that it is too expensive at this stage because we're still planning," Misharin says. "We have got to get the expertise and the knowledge of people who are familiar with building these projects and to conduct competition in order to keep the price down. It is high-speed but there can be variations in cost when you build different types of infrastructure for high-speed projects like bridges and tunnels. We hope by utilising new technologies we will be able to keep costs under control. In Russia we have experience of building tunnels and bridges and we hope to use this in the development of the high-speed line."

International interest

The expected lack of new high-speed projects around the world in the second half of the decade means that companies are doing all they can to highlight their expertise and products to RZD, which the railway was only too happy to accommodate during the conference.

Siemens and Alstom were at the heart of this, reflecting the strides they have made into the CIS market through their successful collaborations with local manufacturers. The French case was even backed up by Mr Guillame Pepy, president of French National Railways (SNCF), who jetted in for the opening session to lend his support for France becoming RZD's chosen partner in high-speed.

National consortia were also lined up to bid for the Moscow - St Petersburg project, and Misharin says that these relationships are the legacy of this project.

"We have the expertise of developing a feasibility project for a high-speed line," he says. "We have established relationships with Systra, DB International and other international companies all of which will be very useful as we develop the Moscow - Kazan line."

The aborted project is certainly a heavy price to pay for a networking exercise. But with prospective partners enthusiastic and with RZD seemingly keen to learn from its mistakes and develop a financial model that is feasible and has the necessary political support, Russia may ultimately get the high-speed railway link that it has been flirting with building for the past 20 years.

RZD, in appearances at least, looks like it is willing to go the distance this time. So it will be interesting to see in another two years, when construction is due to start, whether this particular project has outlasted, and ultimately succeeded, where Moscow - St Petersburg could not.

Kevin Smith

Kevin Smith joined IRJ in 2009 as features editor and since then has travelled the world reporting on developments in the world's railways. Before joining IRJ, Kevin worked for several local newspapers in the United States and as a freelance technical writer for a university engineering magazine. Kevin graduated with a first class honours degree in American Studies from Lancaster University, Britain, in 2006, and with a Master's degree in American Studies from Purdue University, United States, in 2008.

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