«High-speed Railway»
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18 june

A trillion for speed

Execution of a design contract for the Russia's first dedicated high-speed passenger transportation service from Moscow to Kazan is going to be a milestone on the way to the global high-speed club. Although experts are doubtful about Chinese capital entering the Russian market, the project is sure to help the domestic industry to deliver an overall technology upgrade and generate money on the recently largest government order. From words to deeds. A design contract for the Russia's first high-speed Moscow-Kazan railway should be executed today at the St. Petersburg International Economic Forum. A RUB20 bn worth contract will be signed by the project management office of High-Speed Rail Lines (a subsidiary of Russian Railways) and Russian-Chinese investment consortium. Finally the speculations on whether a HSR in Russia is feasible will be over and the large-scale project will be rolled out. Moscow-Kazan HSR is Russia's first high-speed railway project totalling 770 km, including 423 km on Nizhny Novgorod-Kazan section, and 643 km of Moscow-Cheboksary section. Maximum permitted train speed on the line is 400 km/h. The HSR construction will take four years. Its cost is RUB1.07 tn less VAT, including purchase of trains and construction of new stations. Once the new main line is operational, the travel time between Moscow and Kazan will cut from 14 hours to 3 h 30 min, and the travel time between Nizhny Novgorod and Kazan will cut seven times or from 10 h 30 min to 1 h 30 min. According to RZD information materials, average travel time between each two regional capitals on route Moscow-Vladimir-Nizhny Novgorod-Cheboksary-Kazan will be 1 hour. Alexander Misharin, First Vice President of Russian Railways and CEO of High-Speed Rail Lines, says that the project is of top priority for Russia in terms of mastering innovation technologies and processes. “Building an integrated high-speed communication network requires brand new railway technologies, transfer and localisation of key solutions with the assistance of global leaders in making and laying ballastless tracks, track switches, power supply and communication systems”, he underlines. “A big stand-alone challenge is to create industrial clusters to localise and organise production of a whole family of new high-speed trains fit for fault-free and reliable operation in Russian climate”. The fact that China, who has also committed itself to financial support, is Russia's general partner for the project to a large extent determines the future Eastward development of Russian high-speed rail. The HSR extension from Kazan to Yekaterinburg and further to Beijing through Kazakhstan has been confirmed by a Memorandum of Understanding executed with China. Total project cost is not yet clear and varies from $150 bn to almost $250 bn. The length of the world's largest HSR may total 7,000 km. Partnership technology. Experts say that the political situation around Russia has, to a large extent, defined China and East Asian countries as the inevitable option for development of foreign economic cooperation, including major infrastructure projects. Yuri Saakyan, Director General of the Institute for Natural Monopolies Research, however, does not exclude that Europeans may also join HSR projects “at certain phases”. “The main line design will be in progress until 2016, and many things may happen during this time, for example, the sanctions may be lifted. I do not think that the Europeans would wish to stay overboard this large-scale project”, assumes the expert. According to him, the project's legal and financial model has initially been based on foreign concessioners. “We will need foreign partners anyway, because we just don't have our own proven high-speed construction and operation technologies. And China is now literally the “planet leader”: as at the beginning of the year, Chinese HSRs overran the length of all other world's passenger high-speed rail networks. Although, initially they were based on borrowed West European technologies”, acknowledges Yuri Saakyan. He warns from a simplified understanding of the term “borrowed technologies” as the copying of existing innovations. “You can copy a technology and stay on that level, while other countries will be moving forward. Since technologies are always on the move, we need to create a centre of competence and accumulate own potential. Initially it may be through a JV with a powerful foreign partner, but then we would be able to go ahead on our own. China chose such path some time ago, and, to my knowledge, we are to repeat it on our HSR projects”, says Yuri Saakyan. New high-speed trains will largely be made up of Chinese technologies and equipment, as well as other HSR innovations, whatever the geographic origin, which Russia would anyway have to buy abroad due to lack of own developments. The share is, however, too small against the total project cost: according to estimates, train design and purchase will only cost RUB50 bn of over RUB1 tn of total costs, or about 4.5%. Technical and consumer properties of the 400 km/h train to run between Moscow and Kazan remain RZD's focus. “Currently, technical requirements are being developed for a train to serve our HSRs”, says Alexander Misharin. “We have set an ambitious goal to integrate all global practices in production and operation of HSR trains and develop an unpeered product to be enjoyed by both railwaymen and passengers”. According to RZD's information materials, a certain design will be selected under the provisional schedule as soon as this December. Production order. The share of foreign construction products, which cost will exceed 95% of the total project cost, will be much lower. According to RZD's estimates, the share of imported construction materials and equipment for Moscow-Kazan HSR (which totals RUB270 bn) will be only 15% and primarily include the cost of central blocking and signalling systems, extra strong track switches and a high-speed track construction technology. The latter is very important for the project since selection of basic infrastructure construction technology will predefine principal requirements to trains and construction technologies for other Russian high-speed rail projects. According to Alexander Misharin, the key option is ballastless tracks on all sections with operation speed over 200 km/h, which are 80% of the line's length. “Currently we have selected four ballastless track designs: MaxBogl, Alstom, LVT and Tines, and decided to carry durability tests on the test tracks of the Railway Research Institute (VNIIZhT). The durability tests will expectedly be carried in the end of 2015”, said Russian Railways' First Vice President. Other orders for construction materials will be placed with Russian manufacturers. The infrastructure construction will require 133 mn cubic metres of gravel and other rock materials, 200,000 tonnes of quality rails, 4 mn of railway sleepers, 1 mn tonnes of metal structures, and 300,000 km of cables, including 2,300 km of special wires for a brand new overhead contact system. The products and production technologies will be supplied by domestic factories thus localising the world's best high-speed practices in Russia. Generally, assuming development of urban and industrial agglomerations along the new high-speed passenger line, cumulative GDP growth in the 2019−2030 operation period will reach RUB11.7 tn, and budgetary taxes revenues will go up to RUB3.4 tn. Residents of the HSR area will also have a good opportunity to earn money: the project will create new jobs for about 370,000 people or 1.5% of the total population of Moscow, Vladimir and Nizhny Novgorod Regions, Tatarstan and Chuvashia. Laws to gain speed. However, according to Alexander Misharin, Russia is not yet 100% ready for the project. First of all, we need an improved and refined legal framework to support the country's infrastructure project of top priority. It is necessary to amend and supplement a number of laws and regulations to vest Russian Railways, as the most competent railway company, with investment project management and control functions, and improve the rail sector concession framework. “As to federal laws, it's primarily about amending and supplementing the effective Law on Concession Agreements so as to authorise RZD with the powers of concessor in railway projects, including high-speed railway construction”, tells Alexander Misharin. “There is a Law on Specifics of the Railway Property Administration and Disposal, which defines Russian Railways as a single business entity, and the said law should be modified to add up Russian Railways' scope of activities with that of an authorised concessor and define the appropriate financing procedure”. To govern the project land issues, namely to simplify the land withdrawal procedure, it is required to modify the Russian Land Code, while raising private investors appeal of the project will require modifications of the tax law, says Alexander Misharin and specifies that it may include property tax exemption for concessioned railway facilities and a zero VAT rate for the concessioner services provided at the operation phase.

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