It is reported that loss making passenger services have been a constant headache for Russian Railways since 2005. The government may double subsidies to Russian Railways next year in a bid to stave off reductions of passenger services.

Mr Arkady Dvorkovich Deputy Prime Minister said at the Baikal Economic Forum on Thursday that subsidies to the monopoly in 2012 amounted to RUB 100 billion.

He said that "If we exclude the Moscow and northwest transportation hubs, one third of all rail routes are loss-making. He added that the government would seek to resolve the deficit in order to avoid reducing passenger services, possibly doubling the amount of subsidies next year.”

In August, Russian Railways announced cuts to commuter services in a number of regions because regional governments had failed to provide the subsidies that make loss making routes sustainable.

Analysts said at the time that the move was more of a warning shot than a genuine plan since slashing essential commuter services that are relied on by millions of Russians carries such political risk that the government cannot allow it to happen.

Russian Railways President Mr Vladimir Yakunin said at the forum that failure to invest in upgrading rail infrastructure by 2020 could knock 1.5% off annual GDP.

Source - The Moscow Times

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