RUSSIAN FEDERATION
TRANSPORT STRATEGY
until 2020
Reviewed by the meeting of the State Council of the Russian Federation on October 29, 2003.
Approved by Government Directive No. _________, dated __________, 2004.
Contents
General 5
Section 1. public transport policy priorities 9
1.1. The Goal and Priority Tasks of Transport Sector Development 9
1.2. Public Regulation of Transport Operations: Basic Principles 10
1.2.1. Improving Public Regulation of Transport Operations: Principles and Priorities 10
1.2.2. Improving Financing and Investment in the Transport Sector 13
1.2.3. Public Property Management in the Transport Sector 15
1.3. Development of the Transport Service Market 16
1.3.1. Key Activities to Enhance Competition in the Transport Service Market: 16
1.3.2. Improving Antimonopoly Regulation 17
1.3.3. Tariff/Price Regulation 17
1.3.4. Public Participation in the Operation of Transport Service Market and State Support 19
1.4. Transport Infrastructure Development 20
1.4.1. General Principles of Transport Infrastructure Development 20
1.4.2. Baseline Transport Network Development 21
1.4.3. Transport Corridors and Regional Dimensions of Baseline Transport Network Development 22
1.4.4. Transport Infrastructure Development in Megacities 23
1.5. Russia in the Global Market of Transport Services 24
1.6. Vehicle and Transport Technology Improvement. Development of Transport Machine Building 27
1.7. Sustainable Development of the Transport Sector 31
Section 2. Major Structural Reforms in Specific Modes 34
2.1. Development and Further Restructuring of Railways 34
2.2. Civil Aviation Development. Reform of the Air Traffic Management System 36
2.3. Urban Public Transport Development and Reform 38
2.4. Sea Transport Development and Reform 39
2.5. Inland Water Transport Development; Reform of Inland Waterway Governance 41
2.6. Industrial Transport Development 42
2.7. Road Sector Development and Reform 43
2.8. Road Transport Development and Reform 45
Section 3. priorities of baseline transport network establishment and infrastructure development in specific transport modes 48
3.1. Establishment of the Baseline Transport Network; Priority Infrastructure Projects 48
3.2. Infrastructure Development in Specific Transport Modes 50
3.3. The Regional Dimension of Transport Strategy Implementation 53
Expected results and mechanisms of transport strategy implementation 58
General
Transport sector status and development are of exceptional importance to the Russian Federation. Similar to other infrastructure sectors, transport ensures that the society has basic conditions necessary for its functioning, and acts as an important tool for achieving social, economic, and external political objectives.
The transport sector development history has largely determined Russia’s economic and spatial development, facilitated its integrity, and enhanced its international influence. The establishment of the Russian fleet and seaports, the construction of the Trans-Siberian Railway, the formation of a deep-water system of waterways in European Russia, and the development of an extended national network of airways were important benchmarks not only for the transport sector, but also for the entire country. Transport has always been a key instrument in addressing the biggest political and economic challenges and supporting the nation’s defense capacity.
Russia’s choice of the market economy in the early 1990s and the ensuing commencement of reforms have largely changed the transport sector operation conditions and the pattern of the transport service demand. Ensuring the freedom of travel, the integrity of the economic space and a free flow of goods and services as guaranteed by the Constitution of the Russian Federation required a focused outstripping sustainable development of the transport sector.
Changes that took place during the first decade of the transport sector reorganization include basic structural and institutional reforms such as the establishment of the fundamental legal framework of the transport sector consistent with the new socioeconomic environment; the separation of the governance and business functions; the establishment of an adequate transport sector regulation system suitable in a market economy; and a substantive completion of privatization.
The transport sector is playing a more prominent system-forming role, and the linkage between the sector development tasks and the priority socioeconomic reforms is growing stronger. The sector as a whole has been meeting the growing demand for freight and passenger operations resulting in a reduced freight intensity of the economy and a higher mobility of the population. Since 2000, the average growth rate of transport operations has been 6.7% a year for passenger operations and 3.8% a year for freight operations while the mean economic growth rate has been about 6.1% a year.[1]
However, despite a general adaptation of the transport sector to market conditions, its current status can not be deemed optimal while the level of its development cannot be considered adequate.
The population mobility in Russia is almost 2.5 times lower than in the developed economies because the absence of a baseline transport network covering the entire country prevents the development of single economic space and the improvement of personal mobility.
A significant interregional disparity in transport network development prevents the equalization of the economic development of Russian regions. The greatest differences are observed between European Russia, on the one hand, and Siberia and Far East, on the other. Besides, about 28 thousand settlements with the aggregate population in excess of 12 million have no all-year-round access to major surface-based communication links because of the bottlenecks in the communication systems of well-developed central areas and large cities.
The growth of personal mobility and the development of small and medium businesses, which are impossible without a high motorization level in a market economy, are inhibited by the underdeveloped highway network.
The share of transport costs in the product cost value is rather high and amounts to 15-20% vs. 7-8% in the developed market economies. In addition to objective factors such as large distances and difficult nature conditions, it is related to the underdeveloped system of goods transfer.
A growing demand for high-quality transport services cannot be met in full due to an inadequate technical level of the transport system and a technological backlog.
A rapid growth of freight traffic, including the export of coal, bulk oil cargo, chemical and petrochemical products, and other cargos is inhibited by the lack of the carrying capacity and throughput.
Opportunities for GDP growth due to transport service exports cannot be used to the fullest possible extent because Russia’s transit potential is underutilized while the position of Russian carriers in the international market of transport services is not consistent with their actual capacity.
Foreign trade remains partly dependent on foreign communication links and carriers because a large share of the fleet controlled by Russian ship owners is registered with foreign ship registers; the port infrastructure capacity allows handling not more than 75% of foreign trade cargos; and the existing system of trunk pipelines is not fully consistent with the current and potential structure of the export freight traffic.
The transport process safety level, first and foremost, road safety does not meet the international standards. The death rate per 1,000 vehicles is 4 times higher than in the developed economies.
The transport’s share in environmental pollution is 33%, which is more than 1.7 times higher than in the developed economies.
The transport sector as a whole and its individual segments are still facing a number of pending internal issues against the background of a growing demand for transport services and a still higher projected demand growth.
Transport sector restructuring is not completed.
The fixed asset ageing trend has not been eliminated. Not all transport sector segments have modern mechanisms of sustainable reproduction and state-of-the-art business models of transport operator development.
Transport machinery and equipment are characterized by an inadequate engineering and technological development.
The potential for interaction between the transport sector, on the one hand, and domestic machine building, petrochemical, instrument building and communication industries, on the other, is not used to the fullest possible extent.
Governance of transport sector development and operation, as well as intermodal coordination and interaction do not have the required comprehensiveness.
Passenger service by various modes does not provide efficient mechanisms of financial compensation for fare reductions and exemptions, which makes transport companies suffer significant losses.
Transport sector development problems enhance infrastructure limitations, and threaten to inhibit social development and the establishment of single economic space. Their prompt resolution acquires a special importance when the national economy is moving into the sustainable growth phase.
In 1998-2003, the gross domestic product increased by more than 30%. The output increased significantly in major freight-forming industries and, in particular, in the fuel sector (by 30%), ferrous metal production (by 28%), and construction (by more than 40%). The output growth in agriculture was about 30%, in forest industry 32%, and in machine building and metal processing almost 50%. Foreign trade increased by 35%, export by 50%, and import by 15%.
The country leaders posed a task of economic growth acceleration, GDP doubling within a decade, and a significant improvement of the households’ living standard.
The most dynamic changes would take place in the economy under the “accelerated diversification scenario” to which the Transport Strategy is oriented (economic development scenarios for Russia covering the Transport Strategy time horizon are given in Annex 3). That scenario assumes a mean annual GDP growth rate of 5-6% with a subsequent increase to 6-8% in 2007-2015, to be accompanied by a more intensive investment activity and a rapid growth of the household real income. The share of the manufacturing industries shall increase in the GDP structure, the export of goods shall grow 1.3 times while the import of goods shall more than double. Investment in fixed assets shall grow sevenfold by 2020. The aforementioned scenario is characterized by a favorable development of trade, economic and political cooperation with foreign partners, including the prevalence of positive trends in the international integration process, and the WTO accession in a context that is favorable for Russia.
Within the framework of the above scenario, the transport sector shall not only meet the growing demand for transport services but also become a catalyst of the development and enhanced competitiveness of the Russian economy, an important factor of living standard improvement and development in regions, and an instrument of Russia’s active geostrategic positioning. The transport sector would require large investment for the elimination of infrastructure limitations and technological modernization.
The Public Transport Policy Concept approved by the Russian Government in 1997[2] and formulated during the crisis-driven development of the economy was partly implemented and partly lost its significance in a new socioeconomic context.
The new socioeconomic context required the specification of the transport sector development priorities and the government’s tasks relating to transport sector development.
The Transport Strategy of the Russian Federation was prepared and approved by the Government of the Russian Federation pursuant to the President’s instruction given after the review of the issue by the State Council meeting on October 29, 2003.
The Transport Strategy of the Russian Federation builds upon the Constitution of the Russian Federation, Addresses by the President of the Russian Federation to the Federal Assembly, the Development Strategy of the Russian Federation until 2010, and other program documents[3]. Quantitative assessments are based on the indicators of the current status of the economy, as well as on mid- and long-term socioeconomic development projections for Russia and its regions, and on respective research.
The Transport Strategy of the Russian Federation establishes the priorities of the public transport policy, major development directions of the national baseline transport infrastructure, priority institutional reforms in the transport sector, as well as major tasks relating to transport sector development and their mode-specific solutions until 2020.
The Transport Strategy is a framework for developing targeted programs in the transport sector and related sectors of the economy, addressing social, defense and other transport-dependent development issues in specific sectors, regions and the economy as a whole.
The Transport Strategy is a basis for common understanding of the transport sector role and development prospects by various executive and legislative authorities, business community, transport service users, and all segments of the society.
Section 1. public transport policy priorities
1.1. The Goal and Priority Tasks of Transport Sector Development
The strategic goal of transport sector development and operation is to ensure the transport-driven economic growth, improve the quality of life for the present and future generations of Russian citizens, and meet other vital interests of the country.
To achieve the strategic goal Russia has to implement the following priority tasks relating to transport sector development:
- To establish a baseline transport network without any gaps or “bottlenecks”, which shall ensure the development of single economic space, speed up the flow of goods, allow the transport affordability level that would guarantee social stability, and provide for the development of interregional relations and the national labor market;
- To diversify export-related transport infrastructure with a view to enhancing Russia’s global competitiveness, strengthening its positions in the traditional markets, and giving it an independent access to new markets. Making foreign trade more independent transportwise should go parallel to the development of mutually beneficial international cooperation in that area. In the near term, it is especially important to address that issue in respect of energy exports;
- To increase the export of transport services, enhance the competitiveness of domestic carriers, and ensure a better utilization of the transit potential with a view to making the transport sector a GDP growth point;
- To reduce the gap between the growing motorization of the country and the level of road network development. An accelerated development of the road network would facilitate the growth of the road transport share in the transport balance, which is required for market development. It would also enhance the mobility of the population and transport accessibility of different areas; improve the living standard due to a better accessibility of educational, medical and cultural services; improve the efficiency of small and medium businesses; and increase the value of land and real estate;
- To implement the principle of a sustainable development of the transport sector, which assumes an equal treatment of the cost effectiveness, safety and environmental criteria. The implementation of the above principle involves transport policy humanization and an enhanced responsibility for transport-related decision-making to future generations;
- To accelerate the freight traffic and reduce unit transport costs, which would promote the reduction of nonproductive losses in the economy, acceleration of capital turnover, and a higher competitiveness of domestic products; and
- To improve the reliability of the transport sector as a component of the national security, with a special emphasis on improving the anti-terrorist safety of the transport system.