New road agency to free up Russia’s transport routes

With Moscow's clogged arterial roads setting records for their traffic Jams, a New Government Road management company is being formed with a view to attracting private investors, and reducing transport times.

The long standing joke about Moscow’s traffic jams has ceased to be funny with Moscow setting a new record for traffic jams earlier this month, at over 700 kilometres. Poor road infrastructure costs the Russian economy an estimated 6% of GDP per year.

A new Government owned Transport infrastructure company is being created to manage major federal routes with investment potential, such as the Moscow -St Petersburg route.  Deputy prime minister, Sergey Ivanov, says the current agency responsible for managing infrastructure isn’t up to the task

“The main reason for the poor conditions of roads is bad management by the current controlling company – it's lack of initiative and its failure to attract private investment.”

Rusautodor will unite the function of several auto agencies, and will also handle Russia’s toll roads. Evgeny Bogdanov, Analyst, at A.T.Kearney, says that finding long term investors will be a major issue to be addressed.

“It is extremely difficult to find a Russian investor who will invest in the project with a pay back period of 20 30 years.  That’s why state participation is a must.”

Transportation accounts for up to a quarter of the on costs for many Russian exports.  And carriers say they would pay for improved road quality.  Aleksandr Pevtsov, President of Trans-Avto says paying for them is not a concern, provided quality means carriers can cut transport times.

“We support toll roads. It may even decrease the cost of our transportation. The expenses on the bad roads will be compensated with speed and therefore distance. Most important – they should be European quality, which still does not exist in Russia.”

The customers will pay around $1 per 10 kilometers. The first two toll roads will be the Moscow-St Petersburg route with another in the Odincovo region.