Levitin Says $600Bln in Upgrades Needed

The Cabinet approved a draft plan to spend 13.9 trillion rubles ($596 billion) on improving transportation infrastructure to boost the flow of people and goods in a country that spans 11 time zones.

The Transportation Ministry's blueprint for developing road, rail, air and port networks from 2010 to 2015 will cost the federal and regional governments 5.2 trillion rubles, according to a statement on the ministry's web site. The rest of the funding will come from "nonbudgetary" sources.

The spending may increase by 1.4 trillion rubles if the government decides against a steeper rise of regulated railway transportation rates for cargoes, the statement said.

A final decision is expected after May 15, when the ministry will reintroduce its plan to the Cabinet, Transportation Minister Igor Levitin said after the meeting, Interfax reported. The new version will also include some of the proposals made at the Thursday session, he said.

Levitin appeared to have scaled down his plan considerably over just two months. In February, he said the country could invest as much as 21 trillion rubles ($900 billion) to improve transportation infrastructure over the next seven years.

He said 70 percent of the transportation infrastructure in Russia, a country of 142 million people, was outdated, costing around 3 percent of gross domestic product. Around 3 million people in 40,000 settlements do not have year-round access to roads or railways, he added.

"As a result of this program, the mobility of the population will grow by one-third," Prime Minister Viktor Zubkov told ministers.

In a further blow to the economy, companies cannot develop 23 large deposits of natural resources because they lack access roads, Levitin said, according to his ministry's web site.

In addition to building new transportation links, the funds will be used to try to stop the decay of existing infrastructure. The number of airports has declined sharply from 1,302 in 1992 to 330 last year, he said.

In a report in November, Renaissance Capital said more than half of the country's railways, roads and airports "are fully depreciated."

Zubkov said the draft plan included building 7,300 kilometers of federal roads, 4,700 kilometers of railroads and 116 airport runways.

Levitin especially stressed congestion in and around Moscow. The capital, he said, needs at least 350 kilometers of roads. As a result of the shortage, Moscow has 650 traffic jams stranding hundreds of thousands of cars on any given work day, he said.

The ministry is already working on a development plan through 2030, Transportation Ministry spokesman Timur Khikmatov said by telephone.