“Russian Railways’ near-term plans provide for the implementation of capital-intensive projects such as the development of railway approaches to the ports of the South and North-West Russia, the modernisation of the infrastructure in East Russia and the acquisition of new locomotives,” said Vadim Mikhailov, Senior Vice President of RZD said.
When RZD began implementing such projects, it used the most advanced tools available to finance its investment activity. Between 2013 and 2015, Russian Railways issued infrastructure bonds, obtained funds from the National Welfare Fund by issuing preference shares and raised debt on the capital markets.
In future, the company will “focus on off-budget sources for financing for our investment programme and, in particular the main mechanism may be concession schemes to finance major infrastructure projects.”
The second source remains raising funds on the public capital market, including from private pension funds. The potential of this source will allow RZD to attract a significant amount of long-term financing at mutually beneficial conditions.
For example, since the beginning of 2016, the RZD has raised loans in the amount of RUB 25 billion (USD 3.8 billion). A significant amount of these funds was invested by private pension funds. The rate for all placements was significantly lower than the rates from the National Welfare Fund in 2016.
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