Rail opportunities

An Expert's View about Non-Automobile Transport Equipment in Russia

Posted on: 23 Oct 2011

Russian Railways JSC (RZD) started its 28 year reinvestment and modernisation programme in 2002. It is planned to last until 2030 and during this period it is anticipated that some £276 billion investment will be injected into the company.

Sector briefing Rail opportunities in Russia Why Russia? The railway system is undoubtedly a fundamental fast-growing sector of the Russian economy which has an impact on the growth rates of almost all other sectors. With many parts of Russia provided with a less developed highways network, rail plays a crucial role in supporting the country?s growing free market economy, especially in the freight sector. Russia operates the world?s 2nd largest rail network, with 85,500 km of track across what is the world?s largest landmass. As such it has a very high commercial tonnage carried, Find general information on Russian market number and length of passenger journeys. conditions on UKTI?s website. The Doing Business Guide for Russia gives an overview of Russia is a world leader in the intensity of Russia?s economy, business culture, potential freight traffic and ranks second to China at 15 opportunities and an introduction to other million tonne-kilometres per kilometre of track. relevant issues. The intensity of Russia?s passenger rail traffic is similar to that of developed Western European ?The Russian rail countries. transportation market is Russian Railways JSC (RZD) started its 28 year entering the most interesting reinvestment and modernisation programme in phase since creation of the 2002. It is planned to last until 2030 and during this period it is anticipated that some Russian Railways in 2002? £276 billion investment will be injected into the company. UK Trade & Investment Sector briefing: Rail opportunities in Russia Safety and security Opportunities nd Russian Railways is actively striving to implement a Russian Railways JSC (RZD), the 2 largest rail th comprehensive programme of public safety in network in the world, owned by Russia?s 4 largest transportation. In 2011-2013 the company plans to joint stock company, is actually the largest transport allocate RUR 1.9 billion (GBP 39.5 million) to spend company in Europe. RZD has repeatedly emphasized on equipment and security systems for the most its interest in acquiring experience, technology and important public rail facilities. Public safety is a logistics solutions, and in upgrading its technology, priority for the Russian Government as well. In 2010 plant & equipment, rolling stock, its track and it allocated RUR 4 billion (GBP 83.3 million) to the locomotives, its stations and the quality of its staff?s sub-programme Rail Transport Security 2010-2013 skill base. It is at the same time determined that its from the Russian Federal budget. future operating status will not be solely dependent on funding from the Russian Federal Government, Energy Efficiency and Intelligent Transport and where possible RZD will be selectively seeking Systems to deploy private sector funding techniques (such as PPP), to introduce a growing spirit of Russian Railways is keen to implement energy- commercialization (particularly in property and saving technologies especially within the framework station development projects), and also in adopting of RZD Stations Modernisation Programme (mid- an ongoing programme of new commercial term investment budget for 2011-2013 is RUR 9.9 initiatives. Going forward RZD will selectively be billion (GBP 206.2 million). Russian Railways? looking at privatizing successful operations such as specialists are studying foreign expertise (project Hi-Speed operations. management) in the area of efficient use of complex intelligent systems providing comfort (temperature, Range of Opportunities Presented by RZD efficient ventilation, humidity, lighting, Investment and Development Programme: communication), safety (prevention of flooding and fire); security (stable electrical facilities, control over Station Modernisation and Property passenger traffic flow inside the building, alarm Development Programme systems), as well as reducing running costs. The opportunities for the UK companies in this area are There are some 350 stations in the Russian Railways (RZD) network and among them some 8 heritage enormous because there are not many companies type older stations in central Moscow. able to develop complex solutions on such a scale in Currently RZD are heavily involved in modernisation Russia. of Russia?s 81 major stations (at major cities and at all cities with population over 200,000 pop.) High speed rail and World Cup 2018 including development of facilities for Hi-Speed, of multi-modal hubs and rail hubs and also m Russian Railways supported by the Russian odernisation of Moscow?s 8 Heritage stations. The programme envisages modernisation of 332 Government plans to establish high-speed rail roads stations by 2015. Total investment is planned at between the cities which will host the games of the RUR30mn ($1bn, or ?736.4mn). football World Cup in 2018. The realisation of this project will cost RUR 5.5 trillion (GBP 114.5 billion) Finance and Legal and will by definition involve the introduction of innovative foreign technologies. At the moment RZD is preparing its assets for a partial sell-off of Russian Railways is striving to elaborate a complex 10-15% of the company with an estimated starting plan of transport system supply and interaction of price of $10-15 billion mooted to take place between different transport types during the event itself. 2013 and 2015. Observers forecast enormous Overall, the government has already spent over RUR interest from investors. The specific approach to the 330 billion (GBP 6.8 billion) on the development of sale will be determined later. At the moment, the the railway industry over the last three years. The following options are being discussed: selling to a project envisages the modernization of the railway strategic investor, an Initial Public Offering on a network and the development of high speed rail designated exchange/ combination of these two services. options. Either of these options would require a colossal amount of work on the part of government Nanotechnologies officials and the management of RZD that could potentially provide a pipeline of new projects for UK RZD is also seeking to introduce the innovative use finance and legal sector firms. of nanotechnologies. The company plans to start implementing nanotechnology on railroad transport UK Trade & Investment Sector briefing: Rail opportunities in Russia that will help to enhance the quality of transport services, as well as increase volumes of traffic and travelling speeds. Nanotechnology products are planned to be used in the construction of new railways stations (heat insulating, non-combustible materials). In 2011 the company plans to increase investment in nanotechnology studies by almost 20% to RUR 5.75 billion (GBP 119.8 million). At the moment Rosnanotech (Russian Corporation of Nanotechnologies) consults RZD in this area on an experimental basis. Further information on the results of the co-operation between RosNano and RZD will be produced as soon as it is available. Corporate Education As a socially responsible company, Russian Railways bases its human resources policy on a long-term investment in personnel. Leading business schools and providers of educational services (such as Imperial) are already involved in the corporate training of RZD staff. The programmes include such subjects as financial management and operational efficiency, change and innovation and the external environment. As per the latest development plan of RZD, RUR 1 billion (GBP 20.8 million) or 0.46% of planned revenues will be invested in corporate education in 2011. By 2015 the company plans to increase this figure to 1%. Business opportunities aimed specifically at UK companies are added daily to UKTI?s website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets. You can be alerted to business opportunities on a regular basis by registering on the UKTI website. Find out more on UKTI?s business opportunities service on the UKTI website. UK Trade & Investment Sector briefing: Rail opportunities in Russia Major events and activities UKTI contacts Transport Week 2011 UKTI Russia, Engineering Team: All major business and cultural events of the industry OLGA MAKARCHUK 22 ? 26 November 2011 Team Leader Moscow British Consulate General, St-Petersburg: www.transweek.ru/en/index.htm Tel: 007 (812) 320 3200/23 Email: olga.makarchuk@fco.gov.uk Exporail 2012 www.ukti.gov.uk VI International Railway Technology Exhibition March 2012 SVETLANA BONDARKO Moscow, Expocenter Senior Trade & Investment Adviser www.exporailrussia.com British Embassy, Moscow Tel: 007 (495) 956 7452 TransRussia 2012 Email: svetlana.bondarko@fco.gov.uk 17th Moscow International Transport & Logistics www.ukti.gov.uk Exhibition 24 ? 27 April 2012 ANASTASIA BADINA Moscow, Expocenter Trade & Investment Adviser www.transrussia.ru/Default.aspx?lang=en-GB British Embassy, Moscow Tel: 007 (495) 956 7389 ITS Congress 2012 Email: anastasia.badina@fco.gov.uk IV Russian International Congress on Intelligent www.ukti.gov.uk Transport Systems May 2012 ELENA PASHINA Venue TBC Trade & Investment Adviser www.pibd.ru/etr2011 British Embassy, Moscow Tel: 007 (495) 956 7229 New export events are added daily to the site Email: elena.pashina@fco.gov.uk and you can register to be alerted to them on a www.ukti.gov.uk daily, weekly or monthly basis GALINA MOVCHAN UKTI?s Tradeshow Access Programme (TAP) Senior Trade & Investment Adviser provides grant support for eligible Small & British Consulate General, Ekaterinburg Medium Sized Enterprises (SME's) to attend Tel: 007 (343) 379 4931; 253 5622 trade shows overseas. Find out more about Email: galina.movchan@fco.gov.uk UKTI support for attendance at overseas www.ukti.gov.uk events ALEXANDER PETROV Senior Trade and Investment Adviser British Consulate General, St-Petersburg Tel: 007 (812) 320 3228 Email: alexander.petrov@fco.gov.uk www.ukti.gov.uk UK Trade & Investment Sector briefing: Rail opportunities in Russia Next steps - ? Arranging appointments How UKTI can help ? Organise seminars or other events for you to meet contacts and promote your British companies wishing to develop their company in the Russian market business in the Russian market are advised to undertake as much market research and This work is available via our Overseas Market planning as possible in the UK. UKTI?s team in Introduction Service (OMIS) a chargeable Russia, with its wide local knowledge and service which assists British-based companies experience, can provide a range of services to wishing to enter or expand their business in British-based companies wishing to grow their overseas markets. business in global markets. To find out more about commissioning this This can include: work, or accessing other UKTI services and ? Provision of market information specialist advice, please visit the UKTI website ? Validated lists of agents/distributors to find contact details for your local UKTI ? Key market players or potential office. customers in the Russian market ? Establishment of interest of such contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright © You may reuse this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk This publication is also available from our website at www.ukti.gov.uk or for more information please telephone +44 (0)20 7215 8000. UK Trade & Investment Sector briefing: Rail opportunities in Russia
Posted: 23 October 2011

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