19 september 2012

Meeting on the Moscow transport hub


Dmitry Medvedev: Ladies and gentlemen, today we have a very important production meeting that is taking place on location, so to speak. We are here to talk about the development of the Moscow transport hub. This issue obviously concerns millions of people who live in the Moscow agglomeration and adjacent regions. Needless to say, this issue is always in the focus of attention of the public, the media and the expert community. The point at issue is the future of our transport infrastructure.

I’d like to say a few words, not to make things sound more dramatic, but merely to look at the situation in Moscow once again. Obviously, a comfortable city requires that its residents can move around easily – that they can walk, drive or ride municipal transport. According to available estimates, the residents of Moscow and the Moscow Region, including all those who come to the city, spend a little over an hour for one trip on the average – 65 minutes on municipal transport and 62 minutes by car.

The average speed of movement in the city is very low – 11 km for municipal transport and 30 km for cars. There is a huge number of cars parked in courtyards and on pavements. They have occupied virtually all space. Of course, traffic jams and smog have an extremely adverse effect on the flow of tourists and the investment climate in the city. More important, they damage the health of people. Unfortunately, the urban development policy has only made it all worse, until recently. There was no coordination – construction projects were isolated from transport links – new residential districts had not been provided with these links at the start of construction; large trade and entertainment centres were being built without relevant access roads, thereby creating a considerable additional burden on the motorway networks.

The situation in the Moscow Region is no better, because practically one million of its residents come to work in Moscow every day, and the other way round.

We must pool together all our efforts – the municipal, regional and federal authorities must improve transport connections and make Moscow, its individual districts and suburbs, more accessible to the people. In February of last year, a coordinating council was set up to develop the transport system of Moscow and the Moscow Region, and a programme to develop the transport complex of Moscow and the Moscow Region until 2020 is being carried out. The beginning of its implementation has not improved the situation dramatically, but it has somehow stabilised it.

The programme covers 12 areas. Maybe Mr Sobyanin will speak about this in more detail (Sergei Sobyanin – Moscow Mayor).The programme sets ambitious goals: to reduce the accident rate, a vital issue that concerns the health and lives of people, to 30%, to increase the average speed by about one third and to reduce the fuel consumption and toxic emissions by 15-20%. These figures reflect the goals that we announced.

Nevertheless, there are also problems with the implementation of this programme. It is badly short of funds, and we must think of how to find investors. In this context, and also with regard to the change of the borders of Moscow and the Moscow Region, we should step up the implementation of this programme. Clearly, we cannot hope for an instant solution to all these problems. So, let’s focus our attention on our priorities.

First of all, this refers to the development of public transport. It should be modern and convenient. This concerns the metro system and surface transport, including city and suburban buses and rapid tram.

Second, the passengers should be able to quickly transfer from one kind of transport to another, so it is very important to develop a network of transport transfer hubs. The creation of many hubs has been scheduled to take place by 2016: 107 single-level hubs and 23 multi-level hubs. This is crucial.

Third, according to expert evaluations (my colleagues and I have just seen this stand), the railway system has a significant potential which is currently being used quite ineffectively. The volume of railway transportation accounts for about 10% of the total volume of city transportation; that said, 50% of Russian Railways’ suburban transportation takes place at the Moscow railway hub. I hope that you will come up with certain proposals, that your reports (several of them have already been delivered) will include proposals on how to develop and fund this area, and will tell what results we can expect.

Fourth, we need a comprehensive modernisation of the existing infrastructure – reconstruction of the existing roads and construction of a network of new motorways (we are now in one such place), primarily outbound motorways. This  will require synchronisation of efforts, both in the capital and in the region, and will help address the issue of transport accessibility of the cities adjacent to Moscow. I am referring to Odintsovo, Krasnogorsk, Khimki, Mytishchi, Balashikha, Lyubertsy, Lytkarino and others.

The last issue I want to address perhaps does not concern public transport to such a great extent, but Moscow is a global metropolis and it will continue expanding and developing to turn into one of the world’s largest aviation hubs capable of handling up to 120 million passengers each year. So it is very important to have a coordinated policy related to the improvement of the Moscow airports' competitive capabilities, and the infrastructure capabilities of facilities adjacent to the airports, roads leading to airports and all other transport infrastructure facilities.

I have named the most critical issues. The topic is complicated and it has many aspects – it involves environmental issues, legal issues related to land, even buying land plots in some cases. We have just had a helicopter tour over a range of newly built facilities to see how they look. They look good, but I should say that most of the expenses involved are related not to the construction works, but to the need to purchase land plots. For that reason the issue should remain on the radar. Let’s proceed to the discussion. Please try to be as specific as possible. Let’s begin with the ministers. Mr Sokolov, please go ahead.

Maxim Sokolov (Minister of Transport): Thank you, Mr Medvedev. Colleagues, on your tables you have a presentation prepared by the Ministry of Transport, so I will not go into particular events and figures: you can see them on the pages of the presentations, I will tell you the page numbers during my presentation.

Over the course of the last two years, the Russian Ministry of Transport, the Moscow Government and the Moscow Region Government, and since February 2011 the coordination council also involving Russian Railways and Avtodor, have focused on the coordination of efforts to implement the programme for the development of the transport system, the Moscow transport hub. The Government Transport Commission drafted, considered and approved a programme for the development of the Moscow transport hub until 2020, along with an action plan and managing scheme for this project in order to remove problems facing all of the transport infrastructure facilities and create a comfortable and convenient transport system.

In brief, the programme is based on the following principles: compliance between the transport system and the level of socioeconomic urban development; speeding up the flow of freight transport; reducing transport expenses and improving transport accessibility; transition from the plans to develop individual kinds of transport (and I’d like to emphasise it) to synchronised and balanced development of the transport and relevant infrastructure – terminals and depots; forming a united transport and logistics complex in accordance with the plans for urban development; and implementing the programme using both public and private resources.

Mr Medvedev, you already said that the programme involves 12 main areas. They are shown on page four. I will not list them. These are the main areas, and in your address you named the priorities. We will focus on them in greater detail a bit later, but first about the stages of the programme implementation.

It is scheduled for the programme to be implemented in three stages. The first stage has already been completed this year, it spanned two years and was designed to stabilise the situation and avoid traffic gridlock. The second stage, which is expected to take place between 2012 and 2016, seeks to achieve a turning point in the transport sphere thanks to a purposeful, coordinated and balanced policy in transport and urban development in Moscow and Moscow region and also through modernization, introducing intelligent systems and the development of new transport management technologies.

The objectives of the third stage, which begins in 2016 and ends in 2020, are to consolidate and develop these positive trends and to increase the public’s satisfaction with the transit system in the Moscow Region. Now we can say for sure that the implementation of this programme has started. In the first year, we succeeded in coordinating actions in some important areas not only from the point of view of approving the programme itself but also its components. Thus the concept of a comprehensive project for the reconstruction and development of the Moscow Railway’s Small Ring was approved; MKZhD, a specialised company, was created; and design work is underway. Mr Sobyanin talked to you about this in detail before the meeting.

We have begun to implement some projects to build links between motorways. In addition to the roads shown there, I can say that this is the Northern lateral road (which reaches Noginsk in the Moscow Region), Northwestern connecting loop road and Kutuzovsky Prospekt’s northern lateral road reaching the Odintsovo toll bypass route, where we happen to be right now.  

Design work has been completed, and the ground is being prepared for the Central Ring Road on the section between the M10 road (Rossiya) in the north and M7 road (Volga). We are renovating some road sections in need of repair in the Moscow Region, we are implementing the plan to improve transport access to the Skolkovo Innovation Centre, we saw this today too. We have implemented the decision to create bus lanes. And one more important point: in addition to renovating these infrastructure facilities, we are upgrading surface transport with new vehicles, and this fleet renewal has no precedent in modern Russian history. For example, about 50% of vehicles have been replaced in Moscow and so the speed and the volume of transport have increased. And the Moscow Region has recently decided to purchase over 700 buses (with federal support) that initially will operate in the Moscow Region and then will service the Olympic Games. Then they will go back to work in the Moscow Region.

The financial support for the programme is coming from the federal budget, the Moscow budget, the Moscow Region budget, and, importantly, from non-budgetary sources. The total funds supporting the programme to 2020 from all sources have reached some 7 trillion roubles – 7.2 trillion roubles, to be precise. A comprehensive approach to the implementation of all elements of the programme made it possible to optimise the resource support for these events. Last year saw an additional allocation of 32 billion roubles (to the funds allocated in the current budget), including 17 billion roubles for railway infrastructure and, in particular, for the development of the Moscow Ring Railway project, which we reported to you earlier.

As for non-budgetary sources, total investment to 2015 is expected to amount to some 1 trillion roubles, or 993 billion roubles. Meanwhile, the main current indicators for transport service are falling short of those included in the programme. This is primarily due to the fact that until now total funding has been at the level of 50% or even lower, between 47% and 48%. So the average travelling time by public transport is 65 minutes against 40 minutes according to the required standard and the public transport speed is 11 km/h, and individual transport has an average speed of 30 km/h. The standard for the number of places occupied in surface public transport is also exceeded, it accounts for 5-6 people per 1 square metre.

As I said, the regional transport sector has many shortcomings characteristic of large megalopolises worldwide; however, they have some peculiarities hindering their rapid development. These include the low density of the network of non-highway rapid transport, primarily the metro; the fact that rail does not play a significant role in passenger transport; underdeveloped surface public transport, and some other factors. I think we will discuss these in more detail today.

Now I’d like to highlight some key targets in the programme that should be met in the medium term, such as a 40% increase in traffic volume, a reduction in the average interval between buses at peak hours from eight minutes to five minutes and a 15-20% reduction in travelling time from residential areas to offices. You mentioned other [targets] in your speech. I want to say again that in order to achieve these results we need additional funding sources in all areas. 

Last year’s and this year’s well-known conceptual solutions for the newly incorporated territories in Moscow as well as for the development of Greater Domodedovo and the Skolkovo Innovation Centre have been taken, other fundamental documents have been formulated.

It is obvious that some measures and figures do not match the parameters of the programme that were determined in the beginning of its development in 2010. In this respect, we believe that we need to make a joint effort to update this programme, and the Ministry of Transport has begun this work jointly with the Moscow Government and the Moscow Region Government. We believe that the principles behind the programme will not see any significant alterations, the key statute of this programme similar to the current version should be an overwhelming focus on public transport, coordinated development of urban passenger transport, a unified network of buses and intercity coaches, the use of the Moscow Railway’s Small Ring. In general, this is in synch with the priorities that you mentioned in your speech. The foundation for implementing this principle will be a growing share of commuter and urban railway transport and the relocations of terminal yards beyond the Greater Moscow Ring Railway.

The construction of the metro remains a priority. As Mr Sobyanin said, Moscow plans to build some 145 kilometres of metro lines and 67 stations.

Special attention should be paid to improving logistics for lorry transport in order to move a significant part of cargo traffic beyond the Moscow Ring Road, to shut down goods terminals on railways and create distribution centres and organise a system of cargo traffic to reduce traffic within Moscow.  

A separate issue is the outlook for the development of the aviation sector. I think that this perhaps deserves even a more detailed discussion. The basic measures that will make the Moscow aviation hub modern and convenient are related to the issues of developing surface infrastructure, to the creation of a rapid and convenient access by train or by car, and construction of new, spacious and ergonomic terminals. We should also conclude (luckily, the budget of the Ministry of Transport includes the basic funding for this) the renovation of airport infrastructure in the Vnukovo, Domodedovo and Sheremetyevo airports, including with non-budgetary sources and with the use of public-private partnership.

Today we will discuss several issues in more detail. But Ministry of Transport priorities are already reflected in the protocol – in the draft protocol of this meeting. This includes the implications of transport support in the immediate area around the project which should be part of applying for construction permits, expert reviews of urban development documents and of communications and utilities lines, parking fees and the procedure of organising bus routes and bus stops.

The implementation of the aforementioned approaches needs a set of interlinked solutions with respect to technological, financial, legal and organisational issues. I hope that in terms of our joint work, not only following the results of this meeting, we will be able to achieve all these results. Thank you.

Dmitry Medvedev: Thank you very much.

Mr Sobyanin, go ahead please.

Sergei Sobyanin: Mr Medvedev, ladies and gentlemen,

I will tell you what is being done to implement our common programme with the focus on Moscow, even though its problems are closely interlinked with others.

Moscow is a huge traffic centre – Europe’s largest, with 14 million passengers a day or more than five billion a year, and that’s just within the city limits. The metro, municipal surface transport and suburban trains are overloaded by 30% and even 40% in the rush hour. The city, its suburbs and the Moscow Region are expanding rapidly, and the transport system is going to collapse unless we do something.

The metro is the top priority of the Moscow transport improvement programme, especially given the last decade, when the metro was badly neglected and development of it virtually came to a standstill. The programme also includes the upgrading of the suburban railways, the construction of new motorways and car parks, the improvement of freight logistics and the creation of a smart transport network.

We have done a great deal over the last two years, particularly on projects that are due to be finished this year. Thirteen kilometres of metro lines have been laid and six new metro stations built, for which we have purchased 546 state-of-the-art carriages.

What matters even more, a programme has been drawn up to expand the Moscow Metro by 50%, with 150 kilometres of lines to be built, as Transport Minister Maxim Sokolov said. Work on this programme is underway on 80 sites. We are cooperating with all Russian-based underground and tunnel construction companies on this priority project. Budget funds have already been earmarked for the next three years. So the project is quite feasible and we are making it a point to meet all the deadlines.

Suburban transport is another of our top priorities. The volume of traffic has increased by 15% these past two years thanks to the efforts of the Moscow municipal authorities and their partner Russian Railways. A lot of the progress is down to fare policies – fares have only gone up by token amounts over the last two years – as well as logistics and new train carriages and locomotives having been purchased. All this was possible as a result of the federal Government deciding to consistently subsidise suburban transport by excluding infrastructure costs from the equation when setting fares. This has resulted in economic stability and extra investment. A rise of 15% is a huge increase, considering passenger numbers on the Moscow suburban railways.

Motorway construction and improvement is another priority. A project for the upgrading of most of Moscow’s roads is ready, and 100 kilometres of roads will be built over the next two years. Half of the municipal bus fleet is being replaced by new vehicles, as Mr Sokolov said. Car parks for more than 700,000 cars have been built in the last two years, and spaces for another 90,000 cars are currently under construction.

We regard the development of the suburban railway as essential for Moscow – the city and the region alike, as well as for the federal Ministry of Transport and Russian Railways. This project requires the utmost efforts from all the partners.

Our colleagues from Russian Railways will probably say that the railway hub development programme will cost about one trillion roubles – an unaffordable sum. That is why we are focussing on the most urgent targets, which are connected with passenger transport. Extra main tracks must be built on all radial suburban railways to cover the areas with the greatest congestion.

When the project is implemented, the number of passengers should rise to 846 million a year. Meanwhile, a majority of commuters take the bus, while 35-40% use their cars. No matter what kinds of road improvements we make, there is no way we can upgrade our motorways to cope with such huge traffic volumes, especially as the volumes are going up every year. The best way to address this problem is to persuade car owners to switch to the railway. That is why we need more railway reconstruction. To cope with passenger flows, railways need the average intervals between suburban trains to be shortened from the current eight minutes to three, which is what it is on the metro.

It is not only the radial lines that will be improved. The design stage of the project on the upgrading of the Smaller Moscow Belt Railway is nearing completion, and the real construction work will start later this year. The Smaller Moscow Belt Railway will connect the railway, the metro and surface transport into an integrated system. With 285 million passengers a year, it will bring the total annual capacity of Moscow’s suburban railways to one billion passengers. Mr Medvedev was right when he said that suburban railways will have an honourable place in the Moscow passenger transport system, comparable to the transport structure of the big cities around the world.

Dmitry Medvedev: So, Mr Sobyanin, how do you propose to finance the infrastructure for it?

Sergei Sobyanin: The creation of the relevant infrastructure will cost 236 billion roubles, plus compensation payments to landowners whose homes will be compulsorily purchased, outlays for the upgrading of railway crossings, etc. The federal budget has already allocated 52 billion roubles. The Moscow municipal budget can afford another 47 billion, even though the project has nothing to do with the urban infrastructure and we therefore have no right to fund it, according to the Budget Code. We are looking for a legal loophole so we can invest the money. As we know from talks and conferences with Russian Railways, the company can add 39 billion roubles of its own and from private investors. So we need another 96 billion for the project by 2020.

Our colleagues and I propose the following solution to the problem: The draft budget for the next three years, which I hope will shortly be submitted to the State Duma, is allocating 17.4 billion roubles for the development of the railway infrastructure. We think the funding should be extended until 2020 for the same amount that is planned for the next three-year period. That would cover the funding shortage so that this ambitious and socially important project can be implemented.

I don’t want to speak about proposed supplementary protocol decisions at this point. If necessary, we will take stock of some of them after the discussion because they include not only financial issues but also legal and organisational ones.

I want to reiterate just one thing – we shouldn’t only deal with infrastructure development. We need also to limit the use of our infrastructure, particularly freight transport. At present, lorries make up 30% of all the vehicles on the Moscow Ring Road, and transit lorries make about a half of them. That is why we are planning to restrict the movement of transit lorries from next year, and eventually spread these restrictions to the radial motorways.

This arrangement will primarily concern daytime traffic, which is in fact what happens in most countries around the world: they impose time restrictions on freight transport. Meanwhile, the Moscow Ring Road, intended to connect the city with the provinces, is today mainly being used as an urban road. The area on both sides of it is heavily built up, and there is heavy traffic on it, both cars and lorries, both intra-city traffic and vehicles just passing through Moscow.

Dmitry Medvedev: Thank you, Mr Sobyanin. Mr Shoigu, you have the floor.

Sergei Shoigu: Thank you. Mr Medvedev, esteemed colleagues. We have also provided slides, a presentation of the road and transport sector of the Moscow Region. I don’t want to repeat what’s been said. But let me start with commuter railway traffic. We fully support what Sergei Sobyanin said: moreover, we are very involved in this, and we consider it to be a key part of the solution for all of Moscow’s and the Moscow Region’s transport problems.

All transit modes combined carry more than one billion passengers, and that’s only in the Moscow Region. Add to that the huge volume of cargo both delivered here and routed through here, as Sergei Sobyanin mentioned.

I need hardly speak about the importance and relevance of all these issues. Let me just say one thing. There are two big issues concerning railway transport. We are already addressing one issue, which has to do with intercept parking lots for those who come to Moscow by commuter train after leaving their cars at stations along the roads that lead to Moscow. That is a vast number of vehicles and naturally parking space needs to be provided. But the number one task, if we are to increase the speed and frequency of commuter trains, is, for all of us, the challenge of railway crossings. There are 18 key grade crossings and the total cost, until 2020, will be about 60 billion roubles. That is a challenging figure and naturally it has to be taken into account because today these crossings stop traffic for a cumulative 8-10 hours everyday. That means thousands and, overall, even millions of hours that drivers spend waiting at railway crossings, and we must of course keep this in mind. Naturally, we are working closely with the Transport Ministry and with our railways to solve this. Mr Medvedev, we will be seeking government support and your personal support in solving this problem.

I must also mention automotive transport. There are some problems and issues that have long been neglected. Now that the Transport Ministry recognises the tasks facing the Moscow Region, taking into account the development of Moscow and the huge amount of construction and population growth in the Moscow Region – we build more than any other area in the country, i.e. more than 8 million sq m of housing every year and our population has increased by 52,000 in the last six months alone just because of external migration (not to mention internal migration) – of course, the money allocated from the federal budget for the building of roads, interchanges, and road repair is not just insufficient, it is infinitesimal today. And I’m not counting the federal projects, the federal roads, I am speaking only about the regional network and the municipal network, and that’s more than 30,000 km of roads. We estimate that over the next three years, until 2015 inclusive, we will need annually an average of 32 billion roubles in subventions. This ties in with all the tasks that face Moscow. Mr Sobyanin mentioned that it would not be practicable to route all transit transport through Moscow and the Moscow Ring Road. That’s absolutely right, but unless we start building and have roads that link the radial roads, we won’t reduce any of that traffic, and 34% of the transport that goes through Moscow will have to continue going into Moscow. So, this problem must be addressed.

In addition, there is heavy congestion due to the volume of trucks. To deal with that problem, we must have major logistical centres to intercept trucks whose destination is Moscow. The centres would hold the trucks until night and then allow them to deliver their freight when traffic is lighter. That again requires considerable funding. We have not been doing enough to increase the road fund: we will bring it to 22 billion this year and expect to increase it to slightly over 24 billion next year, but in any case, that’s not enough.

This is the range of issues I would like to discuss today. I would ask you, Mr Medvedev, to address these problems somehow in the resolution that is going to be passed today and, most importantly, the ways we can solve these problems. Thank you.

Dmitry Medvedev:  Thank you. OK, for further general statements I would like to hear from Russian Railways. Mr Morozov, please.

Vadim Morozov (First Vice President of Russian Railways): Thank you. Ladies and gentlemen. The Moscow railway hub is the biggest railway hub in our country; it has unique radial-ring routes consisting of two rings, the Small and the Big Rings and 11 radial lines. One aspect of the hub is that commuter traffic accounts for more than 50%: the Moscow Railway Hub handles 23% of all long-distance passenger traffic; it comprises 22 top-category stations, ten freight yards, six marshaling yards and nine top-category stations within the city of Moscow. I will not bore you with all the figures, but it has to be added that the Moscow transport hub handles more than 77 million tons of cargo a year, of which the Moscow Region accounts for 60% and the city for 40%. The main freight handling activities revolve around accepting and unloading this large volume of cargo.

The problem of development has been under scrutiny since 2007 (I think that date should be mentioned) because in 2008 the Moscow government adopted a master plan for the development of the Moscow transport hub to 2020, which was endorsed by the Transport Ministry. That master plan was also approved by the management of Russian Railways. The plan was totally in harmony with the strategy for the development of railway transport for the period until 2030 and approved by the government.

Mr Sobyanin mentioned the figure 1.034 trillion. This is the amount of investment needed if the Moscow transport hub is to meet the requirements of a growing megalopolis. And I must say that to this day… I would not like to use the word “formally” because even today under the federal targeted programme approved by a government resolution (in December 2011) the figure for the period until 2015 is 217 billion. I am aware that this figure does not go down very well, but it confirms the need for development and it envisions investment as a component of the costs. It is important, Mr Medvedev, that on August 2, conducting a meeting in Vladivostok, you urged us to go back to that source again so that the Ministry of Economic Development and the Finance Ministry remember these opportunities.

So, what has Russian Railways done during this period? I have to report to you that in 2009-2011 45 billion roubles were provided by Russian Railways sources, and our strategic financial-investment plan until 2015 envisages 73.8 billion. That sum does not take into account the money mentioned by Mr Sobyanin who cited our figure of 39 billion. This is our traditional contribution to these investment programmes.

What have we accomplished? In your opening remarks you asked, “What has been done?” If you were to rank these accomplishments, the top of the list would be the launching of express train service to the airports, a public-private project which today… there are three huge airports that handled 14.5 million passengers this year. This global task for delivering passengers to airports has been addressed and the target for 2020 is 30 million. This is the situation today and this is how it will develop.

Reconstruction of long-distance train stations. During the past three years about 9 billion of the sum that I mentioned has been going into the development of the Rizhsky, Leningradsky, Savyolovsky and Paveletsky railway stations. The previous situation was intolerable, and transport safety was at stake. When you visited the Kievsky Station, Mr Medvedev, you emphasised the issues of safety and all these issues are being addressed: injuries, transport safety and the acquisition of rolling stock. I must say that in spite of everything, the Central Commuter Passenger Company (CCPC) which has been formed has not quite put its act together. We had, over the past three years, set aside money to procure 3,000 units of rolling stock, that’s 100 new trains, each costing around 200-250 million roubles. Nobody but us could tackle that task during this period.

So, we have fulfilled our commitments, but it is not by chance that we are meeting here today. Thanks are due to Sergei Sobyanin and Sergei Shoigu because they understand that beginning from 2013 we will be unable to meet the parameters of the general development scheme, and first of all we have ordered and are today modernising and revising the Master Scheme of the Development of the Moscow Railway Hub. This represents a voluminous document, but then the previous scheme did not include New Moscow and it did not set the target, for example, of Domodedovo and the development of the railcar fleet. Of course by the first half of 2013 we will provide the funding and a new master plan for the development of Moscow rail transport. But at the current stage we have identified the priority measures and estimated the cost at 236 billion… That figure has been thoroughly considered and it takes everything into account: the projects we are implementing at Novoperedelkino, Skolkovo, and the final stretch of the Domodedovo Railway and the Small Ring are being finished. We appreciate the decision that has been taken: 52.6 billion, i.e. 17 billion every year, have been earmarked for the next three years. We understand that further progress is impossible without this support. Most importantly 145.9 billion for the development of radial lines, all lines without exception are still in question. There are of course priority lines, including the Kursk, Yaroslavl and other lines. I will not bore you with the figures, slide 9 shows that we have contributed 39 billion of our own, Moscow as a constituent entity of the federation contributes 47.5 billion, something that was not the case before this new plan. And of course 96.7 billion, under all circumstances, we see that this is a shortfall that needs to be addressed.

I would like to assure you, Mr Medvedev, once again that we keep all the issues connected with the development of Moscow’s rail transport under review. Ten cargo yards were mentioned today, five of which are slated for closure and two of which, the Riga and Yaroslavl cargo yards (which used to be fairly large) have, for all intents and purposes, been shut down. The architectural and urban planning work there has been completed this year and we are basically leaving these freight yards for new construction by the city.

What are our requests?  First of all, to recognize the deficit figure. But I would like to make a reservation. Without 33 billion in assistance made available to the constituent entities of the Federation in the form of compensation (this is the assumed cost of the infrastructure, the use of infrastructure which has stood at 25 billion in recent years). Without that nothing will happen because under the new programme… Beginning from this year the private capital of the Central Commuter Passenger Company includes its profits in the programmes for acquiring railway stock, and we release that money for the development, for example, of infrastructure. I would also ask you to pay attention to long-distance railway service which is not the subject of our discussion today (the figure there is over 30 billion) and how to develop it further is a pivotal issue… We reported it just last week to the Transport Minister Maxim Sokolov and your deputy Arkady Dvorkovich during the course of special meetings. We hope that these issues will be solved in a positive way. Thank you.   

Dmitry Medvedev: Thank you, Mr Morozov. I would just like to clarify, are you going to contribute 39 billion out of the 138 billion allocated by Russian Railways?

Vadim Morozov: We are going to use 118 billion under the programme. The 39 billion is not included in that sum. These are newly formed parameters of the investment programme that we have added to what we had.  

Dmitry Medvedev: In other words, you added the 39 billion now?

Vadim Morozov: Yes, that was added.  

Dmitry Medvedev: OK. Thank you. The floor is open to anyone who wishes to speak. But we have major banks here and some private investors. Would anyone like to speak? Andrei Kostin, please.

Andrei Kostin (President and Chairman of the Board of VTB Bank): Just a couple of words. I would like to say that we have experience with public-private partnerships, including in road construction. This year we launched the construction of the Western high-speed diameter to which private capital will contribute 140 billion roubles, i.e. investments in capital and as a debt towards this project. Major Russian and foreign banks are involved. I think the format, which took years to streamline, could be applied in Moscow and the Moscow Region. We are talking about a long-term concession where the bulk of financing is provided by private investors, but there are also elements of state support from the federal and regional governments. I think this precedent could be the basis for such partnerships and it could also be spread to toll roads. I think it would be very useful.

We are ready. We discussed with Sergei Sobyanin the building of the northern road parallel to Kutuzovsky Avenue. But we believe that it would be hard to implement it as a purely private project, but it is quite possible if we adopt the PPP formula. Thank you.

Dmitry Medvedev: Thank you, Mr Kostin. Vladimir Dmitriyev, please.

Vladimir Dmitriyev (Chairman of Vnesheconombank Board): Mr Medvedev, esteemed colleagues. I would like to add something to what Andrei Kostin said. The first thing of course is that public-private partnership can accomplish major infrastructure projects and they can and must be launched, especially since we are talking about private investors who are ready to bring in long-term money. Regarding long-term money, the place where we are is in itself an example of how pension savings – and we are talking about infrastructure bonds which have long been under discussion and which are not yet sealed in legislation – are already used to implement the current Odintsovo bypass project. Discussing this project we considered, jointly with Leader, bringing in pension savings, but unfortunately it did not work out that way. Luckily, I stress again, pension savings are being used in this project.

Regarding Vnesheconombank as a state managing company. Even now we see no serious problems if, without waiting for the relevant legislation to be passed, pension savings are used to implement infrastructure projects, that’s when a project company is set up and issues bonds, especially since, given regional government support, this company is put on the class A list which enables us to use pension savings to invest in infrastructure bonds.

As regards the problems of Moscow transport we and the Moscow government… Sergei Sobyanin supports us and we report to him regularly… We are considering a project, the first major project which has to do with parking structures, about eight parking centres into which major investment, about 30 billion roubles, need to be made. We are also considering jointly the question of the Small Ring Railway. And here, in addressing the issue of commuter train service, there is every reason to use the public-private partnership approach and attract private investment because this is not just about widening railway arteries, it’s about the possibility of developing infrastructure and building residential stock in the adjacent territories along with various logistic centres, which provide additional opportunities for the investor to derive a profit and ensure that the projects pay a return. Thank you.

Dmitry Medvedev: Thank you. Andrei Bokarev, please.

Andrei Bokarev (Chairman of the Board of Directors of the Closed Joint Stock Company Transmashholding): Mr Medvedev, esteemed colleagues. As part of the development of the Moscow transport hub, we, a group of companies including Transmashholding, Aeroexpress, and the Central Commuter Passenger Company, engage in two main types of activities: first, we are operators carrying passengers (CCPC, Aeroexpress) and second, we produce rolling stock (Transmashholding).

The main message we would like to get across here at this meeting is that we are ready to invest in modernisation, the building of modern rolling stock if we get assistance from the state either at the federal level or in the framework of private-public partnership when it comes to investing in infrastructure because we are unable to finance it alone. The experience that we have had over the past few years (the development of the Aeroexpress system) has largely been positive: we have brought the number of passengers carried by the express trains to the airports to 20 million and expect to increase it to 25 million by 2020. So, we back everything that has been proposed here today, especially the possibility to legislate the current mechanism for subsidising the cost of commuter traffic infrastructure. That will make it possible to invest about 5-6 billion annually in renewing rolling stock through a single channel, the CCPC. Similarly, when the infrastructure part of the Moscow Ring Railway project is ready, we have an understanding with city authorities that as operators we can invest in providing the necessary railway carriages for regular passenger service on that ring railway. Thank you. 

Dmitry Medvedev: Thank you. Anatoly Artamonov, please.

Anatoly Artamonov (Governor of the Kaluga Region): Sergei Sobyanin correctly stated that the huge number of cargo transport vehicles creates problems in Moscow today. It is no secret that a large amount of cargo is first sent to Moscow and then is carried by smaller vehicles to adjacent regions. I think we would be doing the right thing if we include in the programme of the development of the Moscow transport hub the possible creation of transport-logistical complexes on the outskirts of Moscow. And this would not require federal financing, there are investors who are ready to implement these projects. Perhaps the Kaluga Region which has a common boundary with Moscow may well be given priority. We have started to implement such a project. We would like it to be put on paper to avoid any unnecessary complications, the need for approvals and connecting to the railway system.

Second. At the previous meeting of our commission we said that this project was already going ahead full steam: to study the possibility of reconstruction of the Yermolino airport through PPP (again, private money will be used) with a view to including it in the overall network of Moscow airports. I understand that Sergei Sobyanin supports the idea, including the extension of the express train to that airport. Why? When Domodedovo, Vnukovo and Sheremetyevo airports are overloaded, it could be very helpful because it is located nearby.

And thirdly, I would like to mention a long-festering issue: it is necessary to speed up the reconstruction of federal roads that link the capital with Europe and head west and perhaps also in other directions. Thank you. 

Dmitry Medvedev: Thank you. Please you have the floor.

Anatoly Gavrilenko (General Director of management company Lider): Let me add a few words about the possibility of funding from non-government sources. It appears to us that there is insufficient demand for the accumulated funds in the Russian pension funds, non-government pension funds above all, and they are not that highly valued. In our view, the accumulated funds will enable us to invest up to 200 billion roubles in the infrastructure over the next two years. According to our estimates, for the period until 2020, we can invest more than 1.5 trillion roubles from the pension funds into infrastructure projects by using public-private partnerships and concessions. This is in addition to the funds that can be upgraded on a parity basis by our major infrastructure banking organisations, especially those who have already talked about this.

Dmitry Medvedev: Thank you. Over to you, but please be brief.

Mikhail Blinkin (Director of the Institute for Transport Economy and Transport Policy at the National Research University “Higher School of Economics”): A few points of principle. The first concerns the Budget Code and coordinating structures in our big cities and large urban centres, above all Moscow. It seems such a simple thing that in terms of transport impact it is more profitable for the city to build a link road in remote parts of the Moscow Region or move rail crossings outside the city than to pursue their own construction within the city boundaries. Under the current Budget Code this is impossible. It took our foreign colleagues a long time to establish such coordinating structures. The report by the Transport Minister makes mention of so-called “coordinating structures in metropolitan areas.” It is only recently that they were granted budget powers, including powers to accumulate money both at the federal level and in the regions and cities – a mere 20 years ago. We desperately need such things, I believe.

My second point is price balance and its implications for journeys on public transport and by car. Currently, a car trip from somewhere here, Lesnoi Gorodok or, from the other directiron, say from Naro-Fominsk or Balashikha, is cheaper than travelling by a combination of commuter train and metro. I mean out-of-pocket expenses – I either buy petrol or a ticket. In principle, nobody lives that way. How is the price balance achieved? To begin with, the situation when a person from Lesnoi Gorodok or Balashikha can travel to the Boulvard Ring and park their car for free is outdated and one that cities in other countries abandoned 80 years ago. We, for our part, are only now grappling with this issue. And secondly, whatever we build into the price of a car journey can and must be used as a targeted resource in infrastructure projects. Today, this is an extreme case and very clunky from the point of view of the Budget and Tax codes, we need something better here.

And lastly the most sensitive issue. All travel in this region – both passengers and freight – follows the same pattern: we reach the Moscow Ring Road and drive along it or in the opposite direction. This is how we transport freight, although my opposite numbers who dealt with such matters back in Soviet times said these flows should have been separated near Vyazma or Vyshny Volochek, and never taken to the direct suburbs of Moscow. So moving cargo logistics as far away from Moscow as possible and building connecting loop roads away from the Moscow Ring Road is vital and concerns Moscow as much as it does the Moscow Region.

Last but not least: transport problems are not solved by transport means. We have a a giant pendulum swing where over a million people from the distant parts of the Moscow Region (I’m not talking about the distant periphery of Moscow) travel to locations near the Kremlin just to work. The appalling misbalance between the resident population and the distribution of jobs across the Moscow agglomeration as a whole seems to be the main source of the problem. Thank you.

Dmitry Medvedev: Thank you very much. Mr Siluanov, do you have any financial comments to make?

Anton Siluanov: Thank you, Mr Medvedev. As regards the last speaker, I would like to tell him that the problem as it appears in principle according to the Budget Code is this: Moscow cannot provide money for the Moscow Region to build a crossing. Actually, this is perfectly possible and can be done through a subsidy to the federal centre, while the federal centre can pass the subsidy on to the Moscow Region, or directly to the developer. The Budget Code allows relationships to be maintained between constituent members of the Russian Federation and even municipal formations.

Dmitry Medvedev: If I understand you correctly, the Budget Code does not need to be updated in this respect? Or would be it better to make some amendments? It’s just that giving a subsidy through a subsidy to the budget of the Russian Federation looks very odd.

Anton Siluanov: No, I am merely outlining the existing options. It is possible to do so both through the federal centre or directly – there are no restrictions here. That was my first point.

The second point I would like to make is about contributions to the road funds. In reality, the introduction of new technical regulations on Euro-4 and Euro-5 petrol grades from 2014 means that contributions to the road funds will become an issue. We therefore believe that either this or next year we should make clear our stand on the taxation of these petrol grades since they are currently taxed well below the rates applied to Euro-2 and Euro-3 grades and accordingly this may reduce the contributions paid into the road funds in 2014-2015, which in our view is wrong and unacceptable.

My next point concerns prioritising budget spending on the development of the transport system. Our budget investments for transport in 2013 alone come to 375 billion roubles. However, the Moscow transport hub (roads, rail services and the entire infrastructure) require about 60 billion roubles, or 16%. Since in our view it is here that all the main problems are concentrated and where the key decisions need to be taken, it is possible to prioritise state expenditure on the transport system. To our mind, this percentage, the share the Moscow transport hub takes of the total amount of allocated resources needs to be increased. This is clear, because this is a priority area.

We also believe it is necessary to take into account any potential for saving money when the Transport Ministry distributes its resources.

We are aware that the Ministry of Transport expects to save 18 billion roubles this year. It is therefore our opinion that this amount can be redistributed. Above all, these resources should be used to solve key problems.The use of the public-private partnership is the next issue, which has been discussed here. Indeed, I believe that the public-private partnership has a future in it. This implies construction of roads and railways. We consider it possible to take part and to involve the business community in building airport runways. We already implement such projects, which are really quite promising.

Mr Medvedev, as for infrastructure bonds, we are currently drafting proposals to expand the pension savings portfolio. We believe that pension savings should, among other things, be invested in infrastructure bonds. This is a substantial resource for developing the infrastructure, and pension savings should be used to implement this project. Thank you.

Dmitry Medvedev: Thank you.

You have the floor (Addressing Sergei Sobyanin).

Sergei Sobyanin: I would like to say a few words about the protocol and to specify our proposals to some extent. I agree with Mr Siluanov that the Transport Strategy of the Russian Federation should devote more attention to the Moscow transport hub, because, even in previous years, we had posted 90 billion, rather than 60 billion. As for the 60 billion figure, this means a 33% decline, rather than maintaining such rates. To my mind, we should formulate a separate sub-programme regarding the development of the Moscow transport hub, in line with the Transport Strategy of the Russian Federation. This will make it possible to channel these expenses into the Moscow transport hub. Consequently, it would become possible to avoid these debates. We will clearly perceive our targets, and we will also clarify specific forecasts together with our colleagues. This is the first thing.

Second, I believe that the protocol should formalise our proposal on financing issues. Starting in 2016, the railway infrastructure should receive 17 billion annually. We already have received these sums, I repeat that they are stipulated by the three-year budget, for 2013-2014-2015. We should simply formalise a provision that financing will continue in subsequent years. As a result, it will become possible to finance our entire infrastructure project, because we are unable to finance it during the three-year period without assessing subsequent developments. I believe that this is very important, and that this will become a key solution for expanding suburban traffic.

Transport infrastructure subsidies are the second aspect associated with suburban traffic. Our colleagues have already mentioned this issue. Transport infrastructure costs are not included in the fare prices being stipulated by the metro and road networks and at airports. As far as we are concerned, transport infrastructure costs are included in commuter fares and account for 30% of these fares. It was decided two years ago that such infrastructure costs will be virtually eliminated. These infrastructure costs are purely symbolic. To my mind, this should be a long-term, rather than short-term, decision. We will be able to attract private investment and to ensure a public-private partnership, and so on. We should simply extend and clearly stipulate those initial current developments.

I would now like to discuss the next decision, which has nothing to do with the financing of this project. We are facing a problem in which value-added tax (VAT) has to be paid during the awarding of state contracts as regards transport services for the population. I would like Mr Siluanov to pay attention to this issue because we consider this to be very important. We have never awarded state contracts in the area of transport services. Surface transport was financed in line with different principles. In effect, we had organised tenders, and our private agents, our state unitary enterprises, had collected payments, etc. Today, we want to change the financing procedure and to award state contracts for transport services. But we have to address the issue of VAT payments in this regard. The metro network does not have to make VAT payments when awarding state contracts. However, surface transport is supposed to make these payments. As a result, we are unable to convert to a normal state contract concept regarding surface transits. Although this is a technical aspect, we would like our colleagues to help us resolve this issue. Otherwise the price of local surface transit would go up by the relevant VAT amount during the awarding of state contracts. And this would be simply unrealistic.

I would like to discuss a number of issues that are small, but that we think are rather important. Apart from the surface transport network, which comprises regular intra-city bus routes and inter-city bus routes, we have a lot of so-called chartered buses. Their number is not regulated by anyone. We would like to ask you to draft and include a clause stipulating licenses for chartered bus traffic. This clause should be drafted in conjunction with the Ministry of Transport. Otherwise these chartered buses simply wreck the entire passenger transport system.

As for inter-regional routes, we would like you to instruct us and the Ministry of Transport to allow Russian regions to choose specific bus terminals. Right now, inter-city bus drivers stop wherever and whenever they want. This has to do with safety and transport logistics issues.

And now I would like to discuss the last issue. I would like you to include this issue in the protocol for subsequent examination. Moscow’s river transport network is virtually dying. In the near future, all substantial freight volumes, now being carried by river transport, including dry cargo and other construction materials, will be delivered by motor vehicles. With regard to this, we would like to examine the issue of transferring the Western River Port’s piers under Moscow’s jurisdiction, so that we could work and invest in the port’s subsequent development. Consequently, the port would not wither on the vine, as is the case today. In reality, I don’t think that the Ministry of Transport needs this port. For its part, Moscow could ensure the development of this port, so that some freight shipments could be delivered by river-going ships.

There are some other issues, but I believe that we will work on these together with our colleagues.

Dmitry Medvedev: All right. Thank you very much.

So, let’s sum up the results of this discussion. What are these results? This is a very specific, highly important and costly issue. Naturally, apart from the initial draft instructions, I suggest assessing various aspects mentioned in my report and by other speakers here.

First, I would like to say a few words about a proposal to finance the railway infrastructure. I believe that this is a highly important aspect for the development of the Moscow transport hub. Considering the present-day complicated situation, I believe that it would be correct to examine this issue with regard to financing additional requirements worth 97.3 billion roubles as of 2016. We could allocate this sum total over the 2016-2020 period, as had initially been planned. But, of course, we should realise that the allocated 138 billion roubles will be spent in those areas that are probably not part of Moscow’s direct jurisdiction, but that are in the interests of Moscow, including this 47 billion and 39 billion, part of the Russian Railways investment programme. This also includes the relevant budget obligations.

Furthermore, regarding Mr Sobyanin’s statement, I suggest discussing issues of limiting freight traffic, and with regard to drafting a separate sub-programme for the development of the Moscow transport hub. As for VAT payments on surface transits, this subject is still somewhat unclear, I don’t quite understand the causes of all this, and I would like our colleagues, including Mr Dvrkovich and Mr Siluanov, to submit their considerations on the issue as well.

As for lorries parking  wherever they feel like, I don’t know whether this issue can be resolved in line with current regulations. If possible, let’s try and do this.

Indeed, chartered buses and the licensing of chartered buses should not be chaotic processes because we are unable to control them in any way and the drivers of those buses go wherever they want. And we don’t know who is responsible for all this.

As for the piers, Mr Sokolov and I have had a brief discussion here … This is part of the entire infrastructure hub. Is this the Volga-Baltic Canal or the Volga-Don Canal? On the other hand, there should be some development. So, I would like my government colleagues to submit their considerations. Mr Shoigu has noted the inclusion of additional clauses as regards current and future financing opportunities. And, so, I would also like this aspect to be analysed.

Colleagues representing the business community here, namely, the banking sector and national industrialists … I would like our colleagues to assess specific opportunities that were mentioned by Mr Kostin, Mr Dmitriyev and Mr Bokarev, and to submit their considerations.

As for the transport-logistics complex near Moscow and near the Moscow Region, Mr Artamonov is probably right, we should examine these issues together, especially in view of the fact that the Kaluga Region now borders Moscow. Right now, it is impossible to separate one aspect from another, with due consideration for specific decisions regarding the administrative borders of Russian regions.

As for the Yermolino airport, I don’t know whether this facility has any commercial future or not. I would like the Ministry of Transport to assess this issue and to submit its findings.

Our colleagues have mentioned some other items, including the need to amend the Budget Code. This was Mr Blinkin's proposal. Let’s not make any amendments if there is no need for them. But if it’s necessary, why should we focus on the current text? On the whole, all amendments to the draft instruction should be finalised as soon as possible. I will be waiting for the document. And I hope that we will see all this beauty in its final form throughout 2013, with all the required parameters and with reasonable and affordable funding. Thank you.

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