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. Last Updated: 07/27/2016

Aksyonenko to Transfer Control of Rail Tariffs

The Railways Ministry plans to voluntarily turn over responsibility for rail freight tariffs to the Anti-Monopoly Ministry, according to new rail transport reform plans obtained by Vedomosti.

The reform plan calls for the present monopoly to be divided up into a state body — essentially the Railways Ministry — and a new economic entity: the Russian Railways Co.

Property of state enterprises and rail transport organizations currently controlled by the Railways Ministry, including all 17 regional railways, are to be transferred to the RRC. The RRC will be 100 percent state owned and will not be subject to sale.

The reform plan was several months in the making and was unveiled at an extended meeting of the Railways Ministry last month with the participation of other ministries with vested interests. The participating ministries supported the general strategy for reform laid out by the Railways Ministry, but expressed a number of fundamental concerns. As a result, Railways Minister Nikolai Aksyonenko last week submitted an amended version to the government.

The main point of conflict between the Railways Ministry and the Anti-Monopoly Ministry was connected with tariffs and, in particular, the international transport tariffs that the Railways Ministry sets itself.

Although tariffs within Russia are set by the Railways Ministry, changes must be approved by the Anti-Monopoly Ministry, which has been a point of contention in the past. For example, the Anti-Monopoly Ministry denied the Railways Ministry’s recent request to raise freight tariffs by 26 percent, allowing instead an increase of just 18.5 percent.

The railways, however, still insist they should be allowed to set tariff rates themselves — an apparently convincing argument as "state regulation of tariffs" was removed from the new "Function of Railways Ministry" charter.

Aksyonenko’s spokesman, Valery Zudin, said Railways Ministry experts believe that "tariffs ideally should be established by a renewed Transport Ministry," and not just tariffs for the railways but for other forms of transport as well.

The Anti-Monopoly Ministry is insisting that "tariff regulation be carried out by a non-industrial organ that must be capable of establishing a balance between the interests of natural monopolies and those who use their services," Deputy Anti-Monopoly Minister Anatoly Golomozin said.

"Only the Anti-Monopoly Ministry fits this description," Golomozin said, adding that he will insist on this concept being included in the new reforms.

If the Anti-Monopoly Ministry gets its way, then the Railways Ministry will have few functions left and could become merely a bureaucratic appendage of the RRC.

Also being debated is the State Property Ministry’s insistence that a supervisory board of 11 persons be created to oversee the new RRC.

It is unclear how the board will be formed but it may comprise the representatives of other departments within the Railways Ministry, which is the case with other monopolies such as UES and Gazprom, where the state participates through a presidential representative, the State Property Ministry and the Anti-Monopoly Ministry.

The government plans to consider the proposals next month.