Page 94 - RUSRptOct18

Each "Leader" ship costs between 70 and 100 million rubles ($1-1.5 billion). Rosatom wants three, as well as several less expensive ships. Putin himself picked the shipyard that will build the ships, Zvezda. The shipyard itself is still under construction, but delivery of the first ship is planned for 2027. The project is expected to receive just $500 million in federal funds. The shortfall will have to be made up with loans and private funding. Industry experts cited by Kommersant doubt the project's viability and utility. The "Leader" is untested and few ships are capable of using the Northern Sea Route year round.
The Russian part of the transportation corridor highway Europe-Western China spanning 8,000km will cost RUB825bn ($12bn ), Vedomosti d aily reported on September 4. The highway is part of the infrastructure plan to be approved within the framework of Vladimir Putin's RUB8 trillion May Decree spending drive . The highway has to be built by 2024, with the Belarusian, Kazakhstan and Chinese parts almost completed. However, on the Russian end there are four projects in the route's itinerary and six funding strategies reviewed by the government, according to unnamed official sources of the daily. The full cost of the highway is estimated at RUB1 trillion, out of, which RUB825bn is supposed to be financed from the federal budget. The main discussion centres around whether to build a new high-speed highway that could potentially host driverless trucks in the future, or to reconstruct the existing M5 and M7 highways that pass through large cities. Another option includes adding a private toll road Meridian to the itinerary. The Meridian project is being developed by Alexander Ryazanov of Russian Holding Company (RHK) since 2013, a former deputy head of gas giant Gazprom. Reportedly the project does not require state co-financing and could bring RUB594bn private investment.
The growth in rail transportation volumes accelerated back to 2% y/y in August , after the slowdown in July, when the World Cup caused certain restrictions.
The freight turnover growth rate was also strong in August, rising 4% y/y . Coal, one of the chief drivers for gondolas, retuned back to 9% y/y growth after the slow July, while oil and oil products volumes remained flattish. Construction materials were still weak, down 14% y/y, while cement transportation was the chief laggard (-16% y/y) over the last month. Daily lease rates for gondolas and oil tank cars were unchanged since July, staying at their 3-year highs: RUB 1,750-1,800 for gondolas and RUB 650 for the tank cars.
Coal . Coal volumes added 9% y/y last month after a slowdown to 4% y/y in July. In August, the CIF ARA price declined slightly to $98/t, while the FOB Newcastle price was flat at $117/t. Strong prices support the demand for coal exports, where transportation limitations (both infrastructure and railcar sufficiency) remain the key restrictions to boosting volumes further.
Oil & oil products . The segment kept demonstrating flattish volumes in August, while the average refining margin in Russia improved slightly to $12/t.
Building materials . The decline in transportation volumes for construction materials is deepening this year, and saw a 14% y/y drop in August. Building materials haulage is sensitive to the demand for gondolas, where it can hardly compete with the more expensive coal and metallurgical cargos. Gondola demand remains firm, and we estimate the current deficit at 2-3% of the fleet.
94 RUSSIA Country Report October 2018 www.intellinews.com