About the company Strategic report Performance overview Investment activities Investment programme approaches The Company’s investment programme The projects’ commercial efficiency Budget efficiency for projects is assessed is designed to: is assessed based on the net cash flow based on comparison of cash inflows (tax, • ensure uninterrupted transportation from investing and operating activities, customs and insurance payments) resulting service; with the resulting estimates taking into from railway infrastructure development • embrace the most promising projects consideration the financial aftermaths vs government-financed investments. in terms of both commercial and budget for the investment project owner assuming efficiency; that such owner fully covers the project • minimise federal government spending costs and reaps all of its benefits. on investment projects. Russian Railways has uniform guidelines in place to assess the efficiency All the investment projects have of investment projects1. With a payback commercial and budget efficiency period of up to 20 years and an IRR estimates in place and are ranked using of at least 10%, an investment project the cost/benefit analysis. is deemed to be sufficiently efficient. 1. In accordance with the Russian Government’s Order No. 2991-r dated 29 December 2017. 76 Russian Railways Sustainable development Corporate governance Appendices Investment highlights in 2019 As adjusted by the Board of Directors PROJECTS INCLUDED the target was met with 115.8 mt of cargo of Russian Railways, the Company’s INTO THE COMPREHENSIVE transported from the main deposits 2019 investment programme totalled PLAN FOR UPGRADING of the Eastern Operating Domain. RUB 688.7 bn2. AND EXPANDING CORE Development and renovation Expenses incurred in 2019 as part INFRASTRUCTURE UNTIL of the rail infrastructure serving of the Russian Railways investment 20243 ports of the Azov and Black Seas programme came in at RUB 674.1 bn, In 2019, the investment expenses including: 2019 investment expenses: amounted to RUB 14.3 bn (including • RUB 590.5 bn using the Company’s own RUB 6.2 bn allocated by the federal cash; government). • RUB 83.6 bn in government support. 164.5 In 2019, the service was launched On top of that, RUB 2.1 bn was raised RUB bn in the Krasnodar Transport Hub, from third-party investors. a 128.8 km two-track electrified Kozyrki– Upgrade of the rail infrastructure Grechanaya line was commissioned, of the Baikal–Amur the Kirpili station was built and a fire pump and the Trans-Siberian main lines station was set up at the Kuteynikovo (Eastern Operating Domain) station. In 2019, the investment expenses amounted to RUB 35.0 bn (including RUB 16.9 bn The aggregate carrying capacity sourced from the National Wealth Fund). of the sections serving ports of the Azov and Black Seas in 2019 stood at 93 mt The project is aimed at developing (up 10.7% vs 2018). and upgrading the rail infrastructure to increase the carrying capacity Freight transportation by rail on this route on routes to sea ports and Far East was 83.5 mt (down 0.6% vs 2018) due border crossings by 55–66.8 mt in 2020 to a decline in export of grain and ferrous vs 2012. It will facilitate transportation metals. of 113.2–124.9 mt of hard coal and various ores from the main mineral deposits Development of the Central of the Eastern Operating Domain in 2020. Transport Hub In 2019, the investment expenses The key highlights of 2019 include amounted to RUB 87.6 bn (including the commissioning of five railway bridges RUB 12.6 bn allocated by the federal (including a river crossing over the River government and RUB 44.6 bn allocated Zeya) and the Vladivostok tunnel. In 2019, by the Moscow government). 2. Meeting of the Board of Directors of Russian Railways of 25 October 2019 (Minutes No. 5). 3. The Russian Government’s Order No. 2101-r dated 30 September 2018. Annual report 2019 77 About the company Strategic report Performance overview 78 Russian Railways Sustainable development Corporate governance Appendices The project aims to increase suburban Development and renovation In the medium term, it is planned to be passenger traffic of the Central Transport of the rail infrastructure serving extended to Kazan and Yekaterinburg Hub to 850 m passengers annually by 2024. ports of the North-Western basin and then to Beijing in the east and Berlin 2019 investment expenses: RUB 13.5 bn. in the west. Under the project, the following milestones were completed in 2019: The project is designed Infrastructure expansion • launch of the Karacharovo station to facilitate 146.6 mt of projected and upgrade on the Severnaya (transfer from the Gorkovsky route freight transportation volume in 2020, and Sverdlovskaya Railways to the Moscow Central Circle was with subsequent rise to 192 mt by 2025. allowing for additional cargo reduced by 500 m); Activities under the project: traffic as part of the Northern • launch of Innovation Centre, a new • construction of the second track Latitudinal Railway project transport stop on the Smolensk route and electrification of the Vyborg– In 2019, the investment expenses to provide transport accessibility Primorsk–Ermilovo section; amounted to RUB 1.5 bn. for residents of Skolkovo Technopark; • comprehensive upgrade of the Mga– • opening of a second exit Gatchina–Weimarn–Ivangorod section The project aims to put in place a latitudinal at the Streshnevo station and rail infrastructure serving ports railway connecting the Severnaya of the Moscow Central Circle providing on the southern shore of the Gulf and Sverdlovskaya Railways as an essential a weather-protected transfer of Finland; element in the Arctic Transport System to the Leningradskaya transport stop, • launch of high-speed passenger and associated infrastructure. which was previously moved; transportation at the St Petersburg– • completion of work Buslovskaya section; The project will help reduce the length to construct the fourth main track • improved throughput capacity of transportation routes linking mineral of the Karacharovo–Zheleznodorozhnaya of the Volkhovstroy–Murmansk deposits in the northern part of West Siberia section; and Dmitrov–Sonkovo–Mga routes. to the ports of the Baltic, White, Barents • opening of the Severyanin transport and Kara Seas and thereby contribute stop upgraded as part of a project By the end of 2019, the project helped to the development of the Russian Arctic. to integrate the Yaroslavl route, marking the Company reach its 2020 target the final stage of an effort to integrate and transport 152.5 mt of freight against Construction of a western radial routes and the Moscow Central the plan of 138 mt (up 10.5% against the plan). bypass at the Saratov Transport Circle; Hub of the Privolzhskaya • launch of first priority diameter routes: First stage of the Moscow–Kazan Railway with the expansion MCD 1 from Odintsovo to Lobnya High-Speed Railway of the Lipovsky–Kurdyum section and MCD 2 from Nakhabino to Podolsk; 2019 investment expenses: RUB 0.1 bn. 2019 investment expenses: RUB 0.8 bn. • transition to a four-minute interval service at the Moscow Central Circle The construction of the first stage The main aim of this investment project during peak hours; of the Moscow–Kazan High-Speed Railway is to expand the railway infrastructure • completion of bulk of the work (Zheleznodorozhnaya–Gorokhovets High- with a view to enhancing the carrying capacity to construct the fifth main track Speed Railway) with the commissioning on the approaches to the Saratov Transport from the Moscow-Passazhirskaya- of route from Moscow to Nizhny Hub and increasing freight volumes by at least Yaroslavskaya station to the Mytishchi Novgorod is the pilot project of high-speed 49.2 mt compared to 2015. The initiative station and launch of additional electric transportation in Russia. The railway is linked to the Development and Renovation trains. is expected to become the first section of the Rail Infrastructure Serving Ports of the new Eurasian transit corridor. of the Azov and Black Seas project. Annual report 2019 79 About the company Strategic report Performance overview Electrification of the Rtishchevo– The project is designed and use EP-20 dual-system locomotives Kochetovka section to accommodate rising freight volumes at the Moscow–Rostov-on-Don– 2019 investment expenses: RUB 0.5 bn. from the Bereznikovsko-Solikamsky Novorossiysk–Adler section. industrial hub by providing the Solikamsk– The project aims to reduce operating Perm Sortirovochnaya route for freight Upgrade of the Baikal–Amur costs by cutting down on fuel and energy trains with a weight of 6 kt and a length and Trans-Siberian main lines expenses, decrease running times of 71 standard cars. (phase 2) of freight trains and deliver freight In 2019, the investment expenses faster, improve carrying capacity Development of the Perm Railway amounted to RUB 4.6 bn. of the Rtishchevo–Kochetovka section Hub and the construction taking into account plans to increase of a river crossing The Company continued its work the volume of freight trains, as well 2019 investment expenses: RUB 0.3 bn. on designing facilities. The freight volumes as deliver savings in operating costs in the Eastern Operating Domain were associated with locomotive maintenance The project aims to divert railway traffic updated and the points of origination and repairs, operations of locomotive from the Perm II–Levshino section, and termination of freight flows were crews, and train downtime at stations ensure safe operation of hydraulic identified. As a result, the list of activities when changing traction. In 2019, drafting structures, protect local residents was adjusted accordingly. of design documents was underway. and territories from emergencies, and accommodate rising freight volumes Throughput increase Reconstruction of the Bereznikovsko-Solikamsky industrial at the Artyshta– of the Morozovskaya– hub. Mezhdurechensk–Tayshet section Volgodonskaya railway section 2019 investment expenses: RUB 1.5 bn of the North Caucasus Railway Following the work completed in 2019, 2019 investment expenses: RUB 0.7 bn.