Vedomosti, №65 (2335), 13.04.2009

Private rail operators are guilty themselves in their problems, say the managers of RZD, because nobody forced them to buy expensive wagons at the price $ 120 000 per unit.

DVTG —is the company to which this statement is addressed, and the chairwoman of the Board of Directors Raisa Parshina admits the mistake: it was necessary to stop it in time. But she thinks that the rules at the restricted market of rail transportation, including the cost of wagons are dictated by RZD itself, the private rail operators only have to accept this reality.

— You have been working at railways, in Ministry of Russian railways, and than you turned to private business? How does it happen?

— I liked the idea and my direct senior management were it’s initiators.

— Does it mean that initial capital was not necessary?

— As the matter of fact, there was no initial capital. The circumstances simply thus were formed — the problems of cargo transportations were acute. For example, the management of “ Rosneft “ at that time constantly were meeting with the management of the Ministry of Railways – seeking the solution of transporting their volumes. We took the responsibilities to transport the whole volume – if there were any failure – we paid the penalty. The cargo owner got rid of the headache, and we managed to do the job. And there were no difficulty to buy the wagons than – the factories were lacking orders, and nobody asked for advanced payment. When we formed our first rolling-stock, the banks took it as loans and give us funds to purchase new wagons.

— Nobody forced the private operator companies to buy wagons at the price of $ 120 000 per unit, declares RZD nowadays ……

— RZD made us to buy expensive wagons — it’s my direct answer. Who persuaded RZD artificially to raise the prices for wagons? Who determined the quality of wagons? Structures of RZD. The wagon should correspond to specific characteristics, but RZD determines these characteristics and constantly changes it, which leads to rise in price of the production, RZD – is an authority, and if RZD specialists say that the wagon is not suited, than it won’t be put on rails. The production of some parts of wagons is monopolized by structures close to RZD. Why did RZD purchase the wagons by itself? It should create the private rail operator companies as many as possible, and made them to buy wagons, and to spend the money by itself on infrastructure. I am not asking RZD : Who forced you not to construct railways, not to give permission for connection, not to develop infrastructure, do not take locomotives from private companies, but today to complain that the infrastructure is old. Wagon for $ 120 000 — it is simple. Certainly, we made some errors, some mistakes. In 2008 we stopped to buy wagons in July, but it was necessary to do it – in February. That’s why we got excessive debt load. And have some difficulties at the moment.

— RZD is keep saying that the market is full of cheap wagons, which banks and leasing companies are ready to give it for three kopecks

— I do not know who is ready to give back wagons for three kopeks. December and January were failing for us, at present the transportations are restoring. In order not to loose volumes, we gave time credit in payments, Koreans transport their cargoes with delay in payments up to 2-3 months. With RZD we always work with advanced payments. Because of changes in situation with banks there is a lack of funds. That’s why we couldn’t pay off leasing payments in previous volumes. With «Impomleasing» we couldn’t reach the agreement at the moment, — it doesn’t give us the concession in price. So to whom it would give the wagons for three kopeks?

— Mintrans predicts 19 % falling in transportation. What is the forecast for your company?

— We’ll keep the volumes of container transportation at the level of 2008. It would be hardly any growth. Three terminals – in Tuchkovo, Kazhakhstan and Uzbekistan – gives us the confidence that we ‘ll stay at the same level. Also we hope that we’ll launch at last our terminal in Zabaikalsk, than probably we’ll have the growth. China is huge country,the goods are cheap there, that’s why, in spite of everything , import will grow bit by bit. China has projects on transit via Russia. At the moment there are very interesting projects on transit via Far East. There are lots of production facilities at the North –Eastern part of China, they plan very cheap export to America and Japan. The railways in China are worse than in Russia. To go from North to South and than by sea — it’s very long and expensive way. And to go via our short route section and via our ports — it’s a good alternative. Asian direction is not less interesting — via Uzbekistan the route is shorter, and many people live there. There the goods turnover won’t decrease, and due to these two directions we’ll keep our volumes, or probably even increase it.

— But the transit is …

— Yes of course ! But I do not know what can happen in order this should not happen.If only Russia will not want it. But if Russia will hold the neutrality and at least not to interfere with this flow, it will go

— How the situation with transportation of other cargoes?

— We signed the contracts with ZKH ( Municipal community facilities). At first we were frightened of this crisis and run to sign the contract. We couldn’t say that it’s very profitable, but we have it and we will execute it. At least it’s a stable year volume – coal, fuel oil, diesel oil. If everything will be more or less normal we will prolong it. But ZKH is always a headache and nobody goes there of it’s own free will.

— Nowadays in spite of the falling in transportation, do you buy wagons. What for? Contract for 5000 wagons has been signed.

— Yes, with Altaiwagon. The price is 2,5 lower, than before crisis! And conditions are profitable: Altaiwagon attracts the funds by itself, and we buy wagons with one year credit. So we will transport the cargoes of ZKH in these wagons.

— How you settle the questions with banks on expensive leasing wagons taken earlier? 

— Here sometimes we have the wish to say : «Take your wagons — why we should pay for them?» But we together with banks have taken the risks upon ourselves, and now we have problems and banks too. So we need to share it. But on the other hand- it’s a business. Why should I operate the wagons by 3 mln.rubles., if I could take the same one by 1,5 мln?

— You’ll do this?

— If the life would force us to do this — we’ll do that. But for the time being — we are gradually coming to understanding with the banks, they are restructuring the debt. We as” the pioneer” business we’ll try to keep our responsibilities, if of course we would be able..

— To use the state guarantees, about which you are negotiating at the moment ?

— Probably, if it happen.

— But it delays …

— I do not know — probably we have to speak about it, but… We have business And why the state should support it? It should not support nether commercial banks nor us. Of course our business is state orientated.- we provide transportation. But there are other support resources. Transsib it’s a serious resource. Why we do not consider it ? It’s the most convenient route, аnd everyone counts money. Of Course, if we are so stubborn and say : «I do not want it, I’ ll not do it !» — so what can we do, do not want — it’s ok, its your business. It’s necessary to get rid of bureaucratic barriers, to simplify documentation process.

— What is your opinion about the rise of the rail tariff for 8%?

— I can’t explain it. It’s probably some high economic categories.

— You think they should be left at the same level ?

— Yes, at minimum at the same level, but sometimes it’s necessary to decrease it.

— But they increased it only by 8% instead of 14% — RZD was provided with 50 bln roubles.: Its not enough.?

— Yes in RZD work more than million people. It’s serious. And when they say to the state : «We have 1,2 mln people — what if we would stop?» — of course in panic it would infuse 50 bln. roubles. I do not know. They gave 50 bln. roubles. – nothing has changed. Now the are asking for next 100 bln. roubles. It seems that nobody wants to give them now. May be it’s for the better. It is necessary not to ask the state for the help but , to attract cargo to railways, to offer new routes, good service and to reduce expenses. For example Finish ports are half empty because of the crisis. I get three letters from Finish partners everyday with the offer to rent the warehouses from them at best price. Moreover, they say: would you like to have here the terminal ? We, local authorities, we’ll construct it for you! 300 000 euro — use it. But here how much does it cost the kilometer of the road ? $ 6 мln! But there is the Europe, and probably the labor cost is more expensive there! It’s because the construction market here is monopolized. The route can be constructed only by Vasya and Petya, but not by Kolya, he doesn’t have access.

— From RZD structures the main competitor to you is Transcontainer?

— Yes, and Pervaya Gruzovaya is becoming to be the competitor. The Idea to create such companies is the right one. But they should be separate structures from RZD. Now these branches with the huge free of charge capacities, but to say, that these «affiliated branches» compete equally with us would be an exaggeration. There is an order for transportation – this is the access to the infrastructure : to give access. «Transcontainer» must also, as we do, to get approval of such order. But no— there is the industry department instruction , according to which «Transcontainer» decides, to accept or not to accept my order. And it turns out that I have to go with my order to the competitor, — but what for it will approve it ?

— How often it happens?

— It happens, of course, and very often. For example, Zabaikalsk, we got the permission only last month— we couldn’t be able to get there with our flat cars, because there is the unloading place which belongs to «Тranscontainer». Its clear that the permission they should give — the situation is absolutely unreal. But in order to get the permission we have to go through lots of levels, to get to the Vise president of RZD. As the result they gave us the permission because the should do that

— You can apply to the Federal Antimonopoly Service.

— Yes of course , but such questions we settle with RZD in working order, trying to prove them. Today’s crisis situation is positive and negative to some extent — it makes the officials to change their attitude towards us.

— Because of the crisis you’ll get revenue with minus this year ?

— No, in 2008 we’ve got profit — and for 2009 г. It’s also in our plans. We’ll keep the volumes, even if new projects would be delayed. We want to diminish the credit mass. And we try to realize almost unreal task to prolong the credits and to preserve the interest rate.16% would be a good rate.There are some as,VTB for example — their rate is 32%! It’s a state bank — it doesn’t care much? Its not possible for us to service such credits on these rates and we couldn’t repay it also — we have there 1 bln roubles of credit.

— And what to do if you get state guarantees, you can put it only to State banks?

— Sberbank has much more reasonable rates, with bank Globax we started to cooperate.

— How did you get to the strategic list of enterprises ? From railways companies there are only RZD and DVTG.

— I do not know. Our documents were held by VTB, Sberbank, and Ministry of Economic Development, so we were included there. Yes we are private company, but we are directed for creation of infrastructure, attraction of cargo traffic. We have technologies, jobs, etc. We of course applied necessary documents but didn’t know that we would be included there.

The History of DVTG creation
In 2000 MPS initiated the program of creation of private operators. In that period there was the scarcity of rolling stock, and for MPS it was necessary to search for the possibilities to draw investment into the development of railroad car construction. I participated in the preparation of business- plans with respect to this program. MPS for the short period of time provided it’s wagons for rent in order then the companies would gradually return railroad cars they used and substitute them by new ones. Into this project MPS allured all due to big discounts for the rolling stock, and people very actively participated in the tenders. In the Far East we [with the partners] created two companies for the transportation of petroleum products and timber. Later we didn’t received any discounts promised, we were deceived. However, since people went into this business, there was no longer the way back . Bank “Centrokredit” gave to us our first credit in 2001 for the acquisition of cisterns. the Company- operators “Dalneftetrans” and “Dallestrans” provided the transportation of petroleum products and timber for the enterprises of Far-Eastern region. In 2001 to develop container transportation via Far-Eastern ports was created forwarding company “Vostoktranskompany”. Other routes appeared, container business began to develop. By that time banks already willingly started to give money for railroad cars. We began to buy platforms for the transportation of containers. In order to ensure the turnover, it was necessary to have a good infrastructure in the destination points of the route. By that time RZD already began to see the competitors in private operators. Our first infrastructural project - container terminal in Zabaykalsk- appeared in 2006 ; and terminal has not yet launched. Only recently RZD approved to us the connection of our rails to the station. We began to build the second terminal in Moscow area - this is our joint project with the Korean affiliated company of LG. Third infrastructural project - in port Nakhodka. Taking into account present crisis situation, we will, of course, make emphasis on the Korean investments (0 million). Now we develop Central-Asian container flow, there has been built joint terminal with the Uzbek railroads in Tashkent.

Gleb Stolyarov
Vedomosti №65 (2335)