Will Russia develop a high-speed railway network after all?

According to the Russian TV network RBK, the Moscow State University of Railway Engineering and the French National Railway Networks Association will open a joint center for the development of high-speed railway networks in Russia in September 2013. Russia’s high-speed railway network is currently limited to a single high-speed line, the „Sapsan“, connecting Moscow to St. Petersburg with a top speed of 200 km/h, significantly lower than the train’s maximum speed of 300 km/h. One of the reasons for this limitation is that “Sapsan” runs on regular railway tracks, while the high-speed trains in Europe use specially designed high-speed tracks. France alone has more than 2,000 kilometers of such tracks, while Russia doesn’t even envisage the construction of high-speed railway tracks in the near future.  

Mr. Vladimir Yakunin, President of the state-owned joint-stock company “Russian Railways”, stated that the management hasn’t reached the final decision regarding the development of high-speed railway network, which requires investments of approximately 100 billion rubles (USD 3.2 billion) per year during the next five years – investments that will clearly require some form of Government subsidy to “Russian Railways”. One of the options considered is the utilization of funds from the National Wealth Fund, with assets of approximately 2.69 trillion rubles (USD 86.5 billion) at the beginning of 2013.

Russia has no experience with railroad concession agreements, which presents obvious risks for any potential foreign operator. However, participation of foreign investors or operators is a prerequisite for the reliability of any such project. Even the local investors will be wary of participating in the construction of high-speed railway in Russia if it doesn’t include foreign know-how. Previously, Russia announced it would construct a high-speed railway network to connect the cities hosting the FIFA World Cup 2018 games, but decided to drop the project due to high costs. It is said that Hyundai, Siemens, Alstom, and Chinese CRCC expressed their interest to build and/or operate the network, and the Government’s decision not to pursue the project might have disappointed the investors.


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