September 11th, 2012

What Putin didn’t say about Russian Railways at APEC summit

During APEC summit in Vladivostok, Vladimir Putin actively promoted railways as a convenient route for the Asian goods to the European markets: “Baikal-Amur Mainline and Trans-Siberian line allow to halve both cost and time of transportation”.

Old friends always have something to talk about

Meanwhile, the average speed of moving goods by Russian Railways decreased by 10% in 2011 and the monopoly faced numerous charges from its underserved clients. In 2012 it failed to transport flawlessly oil, the major Russian good. In 2003-2012 the total length of the main lines in Russia contracted; no new lines were constructed in 2011. At the same time, the average cost of moving of one tone of goods for one kilometer by railways in Russia is approximately two times higher than the cost of moving goods by railways in US.

However, the company is in good hands. Vladimir Putin’s old friend has been managing the monopoly since 2003 first as a senior vice president and since 2005 as a president. After more than ten years of reforms, the company still doesn’t control its costs, can’t attract private capital and depends on the government subsidies. Nevertheless, the board compensation grew by astonishing 37% in 2011.

The major achievements of the monopoly’s president Vladimir Yakunin are not in the company itself, but nearby. The business of Russian Railways privileged partners is thriving. According to the Reuters Special Report, Andrey Yakunin, the son of Russian Railways president, is one of such success stories. While Vladimir Putin keeps public attention on building new routes from Asia to Europe, his friends are safe to make their business.

US News

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