Information published on 21 July 2010 in the UIC electronic newsletter "UIC eNews" Nr 197.

Russia: Russian Railways meets obligations in Ulan-Bator Railway development work

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Russian Railways Vice President Vadim Morozov said in his speech that the Mongolian government’s decision in 2009 to transfer a stake in Ulan Bator Railway to the beneficial ownership of Russian Railways represented an important step in work to improve the efficiency of Ulan Bator Railway.

“Russian Railways rigorously fulfills all its obligations in terms of technical support for the Ulan Bator Railway. At the end of 2009, Russian and Mongolian specialists finished work ahead of schedule on laying 108 km of continuous welded rail track on the Mandal – Davaany line, which will allow train speeds to be increased to 120 km/h”, Vadim Morozov said.

Since 2007, 1,350 goods wagons have been delivered to Mongolia, 20 locomotives have been leased, and materials for repair work have been delivered.

“As a result of efforts to stabilize the financial situation of Ulan Bator Railway, we achieved significant positive results for the first time in the first half of 2010. By increasing freight flows by 20% and passenger turnover by 16.8% in this period, year-on-year, the company managed to generate a profit of 4.3 million dollars. The goal now is to develop this trend, and to end 2010 with a net profit”, Vadim Morozov said.

The Russian Railways first vice president noted that last year, on the company’s initiative, Russian engineering companies carried out a full inspection of the current state of the Ulan Bator Railway network, and found there to be a high level of wear and tear, insufficient carrying capacity of infrastructure, and significant degradation of rolling stock.

To carry out a large-scale project to modernize Mongolia’s existing infrastructure and build rail lines to potential natural deposits, Russian Railways and the Mongolian government created the Russian-Mongolian joint venture Infrastructure Development in May 2009. The purpose of the venture is to provide an effective platform for attracting investment in the development of Mongolia’s railway network.

The Russian Railways vice president said that in line with the strategy, investment in the modernization of the existing Ulan Bator Railway network is estimated at 1.7 billion dollars, along with 1.8 billion dollars for the construction of a new rail line to the Tavan Tolgoi coal mine, and $500 million dollars for the modernization and purchase of rolling stock up to 2015.

The scheme for creating the Infrastructure Development company’s equity capital, with the contribution of Russian Railways financial resources and the granting by Mongolia of rights to develop the mine, will enable an integrated approach to railway infrastructure and mining development. Analysts from Boston Consulting Group, along with several other international experts, have recognized this scheme to be effective.