Russian Railways asks for a 1% tariff surcharge to ensure transport security

JSC Russian Railways, in preparation for the tariff campaign for 2024, is asking the government to give a surcharge to the tariff of 1% in order to raise funds for transport security. Interlocutors close to the monopoly say that in 2022, spending on transport security exceeded 45 billion rubles, which is significantly higher than 1% of indexation, and there are no sources to cover them. Analysts believe that the request of Russian Railways is justified by the growth of the terrorist threat and the need to provide anti-drone protection for key facilities and telemetry surveillance as soon as possible. But market participants do not agree that these should be financed by them, given the already rapid growth in tariffs.

Russian Railways is asking the government to provide an additional 1% surcharge to the freight rate to ensure transport security, two sources familiar with the discussion told Kommersant. In the office of First Deputy Prime Minister Andrei Belousov, Kommersant’s request was forwarded to Russian Railways, where they declined to comment.

Transport security is “an expensive thing,” Oleg Belozerov, head of Russian Railways, said back in 2018. Then he estimated the costs of the monopoly only for compliance with the introduced law on transport security at 600 billion rubles.

With the outbreak of hostilities in Ukraine, the situation escalated. So, on May 1, 2022, the bridge across the Smerditsa River between Sudzha and Sosnovy Bor in the Kursk region was blown up, it partially collapsed, restoration work took three days. In July 2022, railway tracks were blown up with a freight train following them in the Unechsky district of the Bryansk region. No one was hurt, the rolling stock was damaged. Over a year and a half, there have been more than a dozen cases of arson of relay cabinets on railways, including in regions far from the combat zone in Ukraine, for example, in the Kemerovo region.

The head of the Investigative Committee Alexander Bastrykin, commenting on the terrorist attacks on the railway, emphasized that “today there are no objective grounds to assert that the number of such crimes has increased.”

However, a source familiar with the position of Russian Railways claims that the cost of transport security in 2022 exceeded 45 billion rubles. (1% tariff indexation is less than half of this amount). “All activities in this area, including the involvement of special forces to protect facilities and equipping with technical means, are financed from the own funds of Russian Railways,” he said. “This is a rather large financial burden on the company, especially given the recent increase in the number of illegal interventions.” The proposed indexation of 1% will only partially cover the increase in the company’s costs, he concludes.

The basic indexation of the tariff for cargo transportation for 2024, in accordance with the forecast of socio-economic development, was planned at the level of 7.1%. By another 2%, the tariff should increase due to an increase in the allowance for overhaul (from 5% to 7%). Vedomosti wrote in February about the discussion of the possibility of additional tariff indexation by 1% in 2024 and by 2% in 2025 to ensure transport security, among other tariff initiatives.

The interlocutor of Kommersant among shippers, meanwhile, notes a serious increase in tariffs of Russian Railways in recent years, significantly exceeding the indicators laid down in the long-term development program of the monopoly (inflation minus 0.1%).

Indeed, in 2022, indexation was significant – by 6.8% at the beginning of the year and by 11% since June, giving a total to the level of 2021 of 18.6%. And this is without taking into account targeted tariff increases, including the abolition of benefits for coal exports (see Kommersant dated November 15, 2022). In 2023, the tariff increased by 8% plus an additional 1% for overhaul, and the abolition of reduction factors for export transportation of coal was extended, and the tariff for long-distance transportation of ores and railroad concentrates for export through border stations was increased (see “Kommersant” from 3 November 2022).

One of the shippers emphasizes that “the increase in the financial burden on Russian Railways in the field of transport security does not explain in itself why these costs should be financed by tariff growth, and not direct state support.” But the head of Infoline-Analytics, Mikhail Burmistrov, believes that this is “one of the rare cases when an indexation request is justified.” The terrorist threat has noticeably increased, he explains, “the need for protective measures, the costs of which are not provided for in the financial plan of Russian Railways, is more acute than ever.”

It is important, experts specify, that the allowance should be “one-time, targeted and not saved in the basic indexation, like the previous ones.” Due to it, it is necessary to provide, first of all, measures of physical anti-drone protection – at a minimum, anti-drone guns and training of personnel in their use, telematic and insurance protection measures, he believes, which can also be used in the interests of shippers.

Natalya Skorlygina