About the Company Vision ahead Strategic report 74/75 Investment activities Investment programme approaches The Company’s investment programme All the investment projects have consideration the financial aftermaths is designed to: commercial and budget efficiency for the investment project owner assuming › ensure uninterrupted transportation estimates in place and are ranked using that such owner fully covers the project service; the cost/benefit analysis. costs and reaps all of its benefits. › embrace the most promising projects in terms of both commercial and budget The projects’ commercial efficiency is With a payback period of up to 20 years efficiency; assessed based on the net cash flow and an IRR of at least 10%, an investment › minimise federal government spending from investing and operating activities, project is deemed to be sufficiently on investment projects. with the resulting estimates taking into efficient. Investment highlights in 2018 Russian Railways’ Investment Programme Out of total investment spending, ACTUAL EXPENSES UNDER RUSSIAN for 2018 was approved by the Company’s RUB 162.8 bn was allocated to support RAILWAYS’ INVESTMENT PROGRAMME Board of Directors (Minutes No. 4 dated projects implemented in pursuance TOTALLED 20 November 2018). of instructions of the President RUB and the Government of Russia, and Target volume of the Company’s the remaining RUB 367.2 bn was investment programme in 2018 was earmarked for the Russian Railways 530 RUB 547.4 bn, with the actual programme projects. bn costs amounting to RUB 530 bn (including RUB 14.6 bn in capitalised interest). The The Company’s investment programme investment expenses included: has seven key focus areas: › RUB 460.4 bn using the Company’s own › projects implemented in pursuance of cash; instructions of the President and the › RUB 66.7 bn in government support; Government of Russia; › RUB 2.9 bn raised to add certain non- › rail infrastructure development projects; public infrastructure assets to the › safety enhancement initiatives; infrastructure portfolio of Russian › infrastructure debottlenecking; Railways. › projects to enhance transportation accessibility; › rolling stock renewal initiatives; › other projects. Russian Railways Performance overview Sustainable development Corporate governance Appendices Projects implemented in pursuance of instructions of the President and the Government of Russia Those are comprehensive infrastructure projects financed by both Russian Railways and the federal government and governments of Russian regions. Development of the Central Transport Hub Development and renovation launch of the Dzheb–Shchetinkino section of the rail infrastructure serving ports of the second Dzhebsky Tunnel. After In 2018, the investment expenses of the Azov and Black Seas commissioning of the adjacent second amounted to RUB 50.1 bn (including track on the Dzheb–Shchetinkino section RUB 16.2 bn allocated by the federal In 2018, the investment expenses the throughput capacity of the Kuragino– government). amounted to RUB 39.9 bn (including Sayanskaya section in 2019 will increase RUB 21.7 bn allocated by the federal to 37 train pairs per day (up 6 train pairs). The Central Transport Hub is designed government). to ensure transport accessibility against Construction of the Moscow–Kazan the expected rise in passenger traffic, In 2018, 90.7 km of second tracks were High-Speed Railway reduce overall travel times and improve constructed. As planned, freight volumes the passenger experience. It will help transported to the ports of the Azov and In 2018, the investment expenses decrease traffic density on the highways, Black Seas totalled 84 mt. amounted to RUB 1.9 bn, (including subway and key stations of Moscow RUB 0.1 bn allocated by the federal and the Moscow Region, while also Development and renovation of the rail government). improving the quality of services (including infrastructure serving ports of the North- for passengers with reduced mobility). Western basin In 2018, the design and cost estimates and engineering surveys for the project The first stage of the Moscow Central In 2018, the investment expenses were completed, with Russia’s State Diameters project was launched, covering amounted to RUB 15.5 bn. Expert Review Board giving a green light the routes from Odintsovo to Lobnya for the Vladimir–Nizhny Novgorod section. (MCD 1) and from Nakhabino to Podolsk Authorised train mass metrics were (MCD 2). successfully increased in 2018, with Construction of the Prokhorovka– the carrying capacity of the operating Zhuravka–Chertkovo–Bataysk line (new rail Upgrade of rail infrastructure of the domain’s infrastructure rising to 147 mtpa line on the Zhuravka–Millerovo route) Baikal–Amur and Trans-Siberian main lines (up 9 mtpa y-o-y) thanks to the deployment designed to enhance the throughput and of heavy-duty trains. The throughput In 2018, the investment expenses carrying capacity of the railways capacity reached 120 pairs of trains per amounted to RUB 1.7 bn. day (up 5 train pairs y-o-y). In 2018, the investment expenses In 2017, the Company completed amounted to RUB 48.5 bn. Comprehensive development of the construction of the two-track electrified Krasnoyarsk Railway’s Mezhdurechensk– Zhuravka–Millerovo line (137.5 km), with The project seeks to boost freight Tayshet section the line put into operation on a permanent transportation volumes from the key basis. mineral deposits of the Eastern Operating In 2018, the investment expenses Domain by removing infrastructure amounted to RUB 3.7 bn, (including 2018 saw the issuance of preliminary constraints on the Baikal–Amur and Trans- RUB 2.5 bn allocated by the federal permits. Siberian Railways. Implementation of this government). project will help increase the carrying capacity of the main lines to 180 mt 2018 saw commissioning of even-numbered by 2024 and 210 mt by 2025. tracks at the Ilanskaya Station and Annual Report 2018 About the Company Vision ahead Strategic report 76/77 Construction of a western bypass at the Infrastructure expansion and upgrade on To that end, a concession agreement was Saratov Transport Hub of the Privolzhskaya the Severnaya and Sverdlovskaya Railways signed between the Federal Agency for Rail Railway with the expansion of the allowing for additional cargo traffic as part of Transport (Roszheldor) and SShKh in 2018. Lipovsky–Kurdyum section the Northern Latitudinal Railway project In 2018, the investment expenses In 2018, the investment expenses amounted to RUB 0.9 bn. amounted to RUB 0.6 bn. The main aim of this project is to expand The project aims to put INVESTMENT EXPENSES UNDER the railway infrastructure with a view in place a latitudinal railway connecting PROJECTS IMPLEMENTED to enhancing the carrying capacity the Severnaya and Sverdlovskaya Railways IN PURSUANCE OF INSTRUCTIONS on the approaches to the Saratov as an essential element in the Arctic OF THE PRESIDENT AND Transport Hub and increasing freight Transport System and associated THE GOVERNMENT OF RUSSIA volumes by at least 49.2 mt compared infrastructure. The project will help reduce TOTALLED to 2015. This initiative is designed the length of transportation routes linking RUB to complement the Development and mineral deposits in the northern part Renovation of the Rail Infrastructure of West Siberia to the ports of the Baltic, Serving Ports of the Azov and Black White, Barents and Kara Seas and 162.8 Seas project. In 2018, drafting of design thereby contribute to the development bn in 2018 documents was underway. of the Russian Arctic. Rail infrastructure development projects Those are priority projects requiring (adjustments required for passenger › RUB 0.1 bn for the reconstruction of the accelerated financing to ensure planned transportation); Morozovskaya–Volgodonskaya section of freight and passenger transportation › RUB 0.9 bn for the throughput increase the North Caucasus Railway volumes. In 2018, expenses under these on the Artyshta–Mezhdurechensk– projects were as follows: Tayshet section; INVESTMENT EXPENSES UNDER RAIL › RUB 2.1 bn for upgrade of the Baikal– › RUB 1 bn for the construction of the INFRASTRUCTURE DEVELOPMENT Amur and Trans-Siberian Railways (Stage Selikhin–Nysh railway line with a passage PROJECTS TOTALLED 2); across the Nevelsky Strait; RUB › RUB 0.7 bn for electrification of the › RUB 0.2 bn for the development of the Rtishchevo–Kochetovka section; Perm–Solikamsk connection; › RUB 0.7 bn for electrification of the › RUB 0.1 bn for the development of the 5.9 Ozherelye–Uzlovaya–Yelets section Perm Railway Hub and the construction bn in 2018 of a river crossing; Safety enhancement initiatives As part of the Transportation Safety As part of the Transport Safety INVESTMENT EXPENSES UNDER investment project, the Company of Infrastructure Projects initiative, SAFETY ENHANCEMENT INITIATIVES implemented a set of initiatives Russian Railways completed engineering TOTALLED in the run-up to the 2018 FIFA World surveys for infrastructural development RUB Cup and the 2019 Winter Universiade in restricted areas involving installation in Krasnoyarsk. of transport safety equipment at four bridges on a railway route bypassing 92.8 Ukraine and five facilities on a route bn in 2018 bypassing Krasnodar. Russian Railways Performance overview Sustainable development Corporate governance Appendices Infrastructure debottlenecking This category includes projects to: In 2018, the following pieces of The project aims to ensure › construct second tracks; infrastructure were put into operation: