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The topics discussed at the meeting included the company’s involvement in implementing the Comprehensive Modernisation and Mainline Capacity Infrastructure Expansion Plan, including the development of the Eastern Operating Domain, the Central Transit Hub and access routes to the ports in the Azov and Black Sea basin.

The participants had a detailed discussion on sources of funding for Russian Railways’ capital expenses, with due consideration for the need to balance corporate finance while avoiding an excessive debt burden.

In this context, they also considered the possibility of selling non-core corporate assets. Commenting on a proposal to look into the possibility of selling, among other things, medical infrastructure facilities, the President urged everyone to approach this matter very carefully because the Russian Railways’ healthcare system was functioning efficiently, and some cities lacked alternative medical clinics providing high-quality treatment.

The meeting was attended by First Deputy Prime Minister Andrei Belousov, deputy prime ministers Yury Borisov and Marat Khusnullin, presidential aides Igor Levitin and Maxim Oreshkin, Minister of Industry and Trade Denis Manturov, Minister of Economic Development Maxim Reshetnikov, Minister of Transport Vitaly Savelyev, Minister of Finance Anton Siluanov, Deputy Minister of Transport – Head of the Federal Agency for Railway Transport Vladimir Tokarev, and Russian Railways General Director – Chairman of the Management Board Oleg Belozerov.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

I know that you have repeatedly discussed various aspects of the Russian Railways investment programme, both at the corporate level and at the government level.

As agreed, today we will talk about the investment programme proper and the company’s financial plan for the coming years, as well as the details of our largest infrastructure company’s development goals and sources of funding for its capital investments.

I would like to stress right away: Russian Railways’ sustainable and steady development undoubtedly influences the dynamics of many sectors of the domestic economy and sets the pace and quality of growth in mining, manufacturing, agriculture, and other industries, and forms a solid basis for increasing Russian companies’ export potential. And of course, the expansion of the railway network and upgrading of rolling stock play a special role in maintaining transport connectivity across our vast country. This is also very important for increasing the speed and quality of passenger transportation.

Russian Railways has prepared an investment programme. One of its priorities is the reliability and stability of railway service.

In this regard, I would like to highlight the current maintenance of the infrastructure, the timely repair of railway tracks to ensure that they are safe. I know that the number of railway facilities requiring repairs is decreasing, but is still higher than the 2015 level, I think, so there is something to work on. I look forward to hearing from you today how work in these areas will be structured in the coming years.

A separate task is Russian Railways’ involvement in the implementation of the Comprehensive Modernisation and Mainline Capacity Infrastructure Expansion Plan. I would like to remind you that it involves large and important projects such as the development of the Central Transport Hub, railway exits to seaports of the Azov and Black Sea basin, and others. There is also a project to extend the so-called Eastern Operating Domain (upgrade of the Baikal-Amur and Trans-Siberian railways). I would like to underscore again that these projects are definitely strategic in nature, and will have a long-term comprehensive effect for individual regions and territories, and for the entire country. They should also provide work for the construction industry, ensuring contracts for domestic suppliers and contractors, and creating new high-quality jobs.

In the next few years we plan to increase investment in the Eastern Operating Domain several times over. Today it is certainly one of the main elements, a railway bottleneck we must deal with. Everyone attending this meeting is well aware of this. We need to export products to the promising Asian markets. We plan to invest substantial funds. I am aware of the limitations due to the current developments in the economy; this is an obvious, understandable and objective thing. However, we must analyse all our development and investment plans thoroughly with due regard for previous instructions and, of course, for the current situation in the economy and future possibilities.

I would like to point out that the carrying capacity of our railways is a resource that hundreds and even thousands of Russian companies need, as all of us are aware. It is with a view to clear development forecasts for the transport infrastructure that our economic operators, our companies coordinate their investment projects, business expansion plans, the hiring of new workers, etc.

I would like to ask you to report in detail on the readiness of Russian Railways and our construction industry to launch an active phase of the expansion of the Baikal-Amur and Trans-Siberian railways. I am referring to personnel, technological and organisational matters.

Of course, we also need to determine the sources of funding for Russian Railways’ capital expenditures in the amount needed to attain these goals. At the same time, it is important to ensure a balance of corporate finance. You must avoid an excessive debt load on the company.

As we all are aware, and I have cited this example from RZD operations, last summer Russian Railways, using the assistance of the Government and the Central Bank, issued an instrument that is new for our securities market, the so-called perpetual bonds. This has ensured support for the company’s investment programme this year and has given it access to the necessary resources. However, we must not forget about the relevant bond payments. Mr Belozerov will tell us how much this amounts to, but as far as I remember it is up to 28 billion rubles.

We obviously need other effective solutions that take into account the specifics of Russian Railways and allow us to use modern mechanisms for attracting investment.

In this connection, I would like to ask the meeting participants to share their views and ideas about our railway tariff policy for the period up to 2024. This is extremely important for market players. I would also like to ask the Government to analyse these proposals in detail.

Let us start working.

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