Page 92 - RusRPTSept20

Outlook. In July, most restrictions in Russia were lifted. The decline of 4% YoY in volumes was better than RZD’s expectation of 6% YoY, and the same as in June. Coal prices might see short-term support from operations at mines being temporarily halted, but brings little to no support for gondolas, which see less volumes. Oil volumes are to remain depressed under the OPEC+ agreement. In addition, RZD’s forecast of the 2020 rate of drop being 2pp below our expectations means a downside risk for our projections.
● Cars
Why are Russia’s roads so bad? A report by the country’s Accounts
Chamber has one anticlimactic answer: there’s not enough money.
Broadly speaking, the nearly 600,000 kilometers of roads weaving the Russian
territory are divided between federal (57,000 kilometers) and regional roads
(508,000 kilometers). It’s the latter that is unsurprisingly the hardest to
maintain, with the Account Chambers finding that 84.8% of federal roads and
just 44.2% of regional roads fulfill “normative requirements.” According to a
previous report, the country’s best roads can be found in Moscow, the oil-rich
Khanty-Mansi Autonomous Okrug and the Stavropol region, while the worst
are located in the Mari El Republic (with less than 2% of the roads meeting the
requirements), Saratov Region and Kalmykia Republic.
One key issue found by the Accounts Chamber is that budgets for regional
roads is on average 8 times lower than for federal roads: 2.2mn rubles
($30,000) was, on average, spent to maintain one kilometer of federal roads in
2019, but only 288,000 rubles ($3,900) for the same distance of regional road.
Federal roads tend to be larger and have more traffic, explaining part of the
disparity, but opaque criteria also make budget allocation vary wildly
depending on the region.
Enthusiastic government reports about the start of the construction of the
Moscow-Kazan highway highlights how important road infrastructure remains
in state policy: initially planned to be finished in 2027, the 800 km long road
should be done by 2024, Prime Minister Mikhail Mishustin said this spring.
92 RUSSIA Country Report September 2020 www.intellinews.com