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. Last Updated: 07/27/2016

Railways Ministry to Be Shut 'By January'

MTDeputy Prime Minister Vladimir Yakovlev
By the end of 2003, for the first time in 138 years, Russia will no longer have a Railways Ministry, Deputy Prime Minister Vladimir Yakovlev said Sunday.

"In principle this issue has already been resolved," news agencies quoted Yakovlev as saying on national Railway Worker's Day.

He said the ministry's regulatory functions will be absorbed by the Transportation Ministry after the new Russian Railroads Co., which will take over its commercial operations, is up and running.

In June, President Vladimir Putin made Yakovlev, who was then governor of St. Petersburg, his sixth deputy prime minister, tasking him with overseeing construction, transportation and the overhaul of the troubled housing sector.

The government has long planned to unite the two ministries, but the sheer scale of the task and an ongoing revamp of the railways have delayed the project.

The reform of the Railways Ministry, one of the so-called natural monopolies, involves splitting up the ministry's regulatory and commercial operations to foster competition in the industry, with the government retaining direct control of the former.

"Sometime in September the Cabinet will have a hearing and in October the Russian Railways Co. will most likely [begin operating]," Yakovlev said. "The second part of the Railways Ministry will most likely be transformed into a department of the Transportation Ministry, just like the waterways department and the sea department."

Yakovlev's remarks surprised officials at both ministries.

"It is obvious that the Railways Ministry and the Transportation Ministry will eventually merge. However, I have never heard the exact terms and timing of the merger," Transportation Ministry spokesman Alexander Filimonov said.

"The railroads are such an important part of Russia that any haste regarding this issue might be harmful."

A Railways Ministry spokesman said nothing had changed since last month, when Deputy Railways Minister Vadim Morozov last suggested that his ministry would not be dissolved any time soon.

"The information about a possible merger of the Railways Ministry with the Transportation Ministry after the creation of the Russian Railways Co. does not correspond to the facts," he said.

Deputy Railways Minister Anna Belova, who is spearheading the industry's restructure, has said the ministry will continue to exist for as long as is needed to get the Russian Railways Co. up and running properly.

The company, whose charter capital of 1.7 trillion rubles ($56 billion) has already been approved, will officially begin operating in the fourth quarter of the year, she said last week.

Deputy Prime Minister Viktor Khristenko earlier this year called the merger of the ministries "expedient and absolutely logical" and said that it would happen in "the near future."

At the time, Transportation Minister Sergei Frank and his railways counterpart, Gennady Fadeyev, both said that the merger was not a top priority.

Fadeyev said the merger would happen in the first quarter of next year at the earliest. "We'll wait and see," he said.