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Ministry of Transportation to discuss draft decree on regulatory environment for railcar operators


Today, the Ministry of Transportation is to discuss a draft decree on the regulatory environment for railcar operators, Kommersant writes this morning. The document was prepared earlier and has been discussed for a while, but was criticised by the Ministry for the Economy. The reason is that the current version mentions the possibility for private companies to use their own locomotive traction in particular cases (so-called ‘own train forms’), but in practice this requires approval from a number of regulatory bodies (a non-transparent process weighed down by red tape). Currently own train forms are used by Globaltrans, Transoil (of Gennady Timchenko), Neftetransservice and Acrontrans. The Ministry is insisting that this term be eliminated as the industry is toswitch to liberalising locomotive traction by 2015. The paper also mentions that both MinTrans and Russian Railways are opposed to liberalisation as the monopoly giant already loses out on USD 30mn per annum due to lower infrastructure payments from private companies using their own locomotive traction. 

We would prefer to see progress towards liberalising locomotive traction, which would eventually lead to a higher scale of locomotives usage by private operators. Still, given the opposition from Russian Railways and the Ministry of Transportation, delays are highly likely and we do not expect any clarity soon.

Last year, Globaltrans guided that liberalisation might occur in 2013. The company would be the key beneficiary among public companies from the liberalisation of locomotive traction, but we are still cautious about the timing. 

Elena Sakhnova, CFA Olga Doronina
VTB Capital analyst

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