Yakunin Has $4.3Bln Plan to Speed Up Trains

SOCHI, Krasnodar Region -- Russian Railways on Thursday signed up to a $4.3 billion project with Austria, Slovakia and Ukraine aimed at cutting down on delivery time for rail shipments between Asia and Europe.

Under the agreement, the four countries' railways will form a joint venture to develop a new railway line between Moscow and Vienna. The line will extend the 1,520 mm gauge line -- the common railway track width for all countries of the former Soviet Union, Finland and parts of Poland and Bulgaria -- to Slovakia and Austria, whose tracks have the standard 1,435 mm gauge. "Each party will contribute 2 million euros toward feasibility and research studies for this new transportation corridor," Russian Railways chief Vladimir Yakunin said after a signing ceremony between the four countries.

The project's management group, which will be set up by the four countries, will be looking to raise the $4.3 billion needed for the rail line both internally and abroad.

Yakunin said the project could prove to be an appealing investment for Japan, China and South Korea. A member of Austrian Railways' management board, Gustav Poschalko, said it would most likely interest Central European countries, Northern France and Italy, Germany and Switzerland.

The new line could significantly reduce shipping time for cargo traveling between Asia and Europe. Currently, trains have to stop when they encounter a different gauge for workers to either replace the bogies on the cars or transfer the cargo from one train to another.

Russia's 1,520 mm gauge is the second most popular in the world, accounting for about 220,000 kilometers of track. The most common is the standard gauge, covering 720,000 kilometers, or 60 percent of the world's railways.

Wednesday's rail deal was signed at the International Railway Business Forum in the Black Sea resort of Sochi, where hundreds of railway executives from 36 countries gathered to forge new business partnerships.

Russian Railways, the forum's host and main sponsor, rolled out a series of cooperation agreements with major European and Central Asian railways and supplier companies.

Siemens and the Russian Sinara Group, owned by steel pipe mogul Dmitry Pumpyansky, also revealed plans to form a joint venture for locomotive construction in Russia, three years after the Germany company signed a 276 million euro ($382 million) contract with Russian Railways for the delivery of eight high-speed trains, known in Russia as Sapsan. Siemens will bring the technology and know-how to produce about 100 double-decker locomotives in Russia annually, with the first prototype set for 2010, said Dietrich Mueller, head of Siemens in Russia.

Production will be based at Sinara's Ural transport machines factory near Yekaterinburg, in which Siemens will receive a 49 percent share, Mueller told journalists. Russian Railways will be the main buyer of the locomotives.

"We are not just making cosmetic repairs, but are localizing production," said Mueller, who added that Siemens' investment in the project includes "large sums" of money but would not reveal any specific figures.

In line with a Russian government push to get experienced foreign companies to collaborate with domestic manufacturers, French train builder Alstom has already begun working with Russian railway producer Transmashholding, or TMH, to produce modern electric locomotives for sale to Russian Railways. Alstom bought a stake of 25 percent plus one share in TMH in March.

The first electric locomotive produced under the TMH-Alstom partnership will be completed next year, Alstom president Philippe Mellier said on the sidelines of the forum. "It will be engineered in Russia, manufactured in Russia with Russian suppliers," he said.

"Of course, we will bring our technology, but everything will be made in Russia. That is our commitment to Transmash, that is our commitment to Yakunin, that is our commitment to Russia," he said.