Transport System Close to Collapse

Transport System Close to Collapse

Published: April 20, 2011 (Issue # 1652)

MOSCOW — Travelers driving to Sheremetyevo Airport dread the short stretch just beyond the Moscow Ring Road near the sprawling Mega shopping mall.

“Things are getting worse and worse,” said Georgy Idrisov, who regularly flies as part of his research work on national economic development. “I spent 1 1/2 hours driving these couple of kilometers last month.”

One of the reasons for the growing traffic — in addition to shoppers — may be the swelling numbers of airline passengers as the economy rebounds.

Predicting further expansion of the airline business, the government announced recently that it would finally invest an estimated hundreds of millions of dollars in building another runway at the state-owned airport in the next few years.

The resurrected runway plan, which sank into oblivion as the economy slumped worldwide, signals that the federal coffers are ready to open wider for spending on transportation in an attempt to facilitate further economic growth.

“Airports are in the worst situation,” said Vadim Dubovik, a Deloitte infrastructure expert in Moscow. “This very much inhibits traffic between regions.”

In the next five to seven years, the government needs to invest more than it has done since the Soviet collapse to upgrade the airports of the world’s largest country, he added.

There is reason to hurry. Sheremetyevo and the two other airports around Moscow — Domodedovo and Vnukovo — handled more passengers last year than they did in the last record year of 2008, said industry researcher Oleg Panteleyev. The rapid buildup in passenger traffic means that the new, third Sheremetyevo runway has to be operational in 2015, he said.

If the government wants to support airlines and its own ambitions to position Moscow as a global financial center, it has to spend its own money — rather than attract private capital — to finance the new runway because by law, runways have to remain state property.

Prime Minister Vladimir Putin warned that the airports would soon approach their cumulative capacity of 65 million passengers a year. They need to be able to handle a combined 100 million passengers by 2020 — double  what they served last year, he said.

Most transportation and infrastructure projects were put on ice during the crisis, as the government rerouted funds toward bailing out banks and other measures to stave off a full-blown social and economic collapse.

Runway to Subway

The federal government is buying 75 percent of Vnukovo Airport from the Moscow city government for at least 45 billion rubles, or $1.5 billion, as part of a strategy to ensure better coordination of airport development.

New Mayor Sergei Sobyanin is counting on the money in order to put his subway expansion plans on a fast track. The busy subway is bursting at the seams, carrying significantly more people than it was designed for.

Sobyanin wants 53 kilometers of new lines by 2015, or almost as much as the city has built since the Soviet collapse in 1991 — the time when the capital’s population began to swell as mobility restrictions eased.

This year alone, City Hall is spending 56 billion rubles on the work — a more than twofold increase from last year.

Famed for its palatial stations decked out with mosaics and chandeliers, the subway will lose much of its architectural luster with the new stations, which will have a standardized design.

City officials hope the subway expansion will alleviate the congestion above ground that has become damaging to businesses.

“I have to use the subway in Moscow increasingly more often,” Dubovik said. “Otherwise, one appointment may take as long as three to four hours.”

Moscow’s traffic jams are the longest among the world’s 20 biggest cities, a study by International Business Machines found last year. The Kremlin ordered Sobyanin to deal with the problem when appointing him mayor at the end of 2010.

In addition to subway expansion, City Hall plans to spend 126 billion rubles in 2011 on road construction.

Mandatory Roads

More testimony of the resolve to make driving a less grueling experience came with the establishment of the Federal Road Fund this year. Under a law that President Dmitry Medvedev signed in April, the government can’t re-allocate the fund’s money for purposes other than road construction.

The fund will draw 254 billion rubles, or $9 billion, from the 2011 federal budget. An additional 80 billion rubles, according to Transportation Minister Igor Levitin, will come from a new gasoline tax that came into force this year.

But the overall federal spending on roads this year will be even higher — up to 453.4 billion rubles — if the government fulfills several ancillary programs. Should that happen, road spending will set a new record in Russia.

According to the government, it spent 186.3 billion rubles on roads last year.

Idrisov, an infrastructure expert at the Gaidar Institute for Economic Policy, attributed the planned massive expenditures across the country to the State Duma and presidential elections coming up in December and March, respectively.

“It’s more about politics than the economy,” he said.

If it happens in the intended proportions, the spending would also benefit Siberia and other eastern regions, where the absence of roads cuts off at least 30,000 settlements from the rest of the country.

Inadequate roads in the regions are a restraint to private businesses, including those helped by the International Financial Corporation, the World Bank’s private-sector lending arm. As companies grow, they need a link to the bigger market of the rest of the country or abroad, said Snezana Stoiljkovic, IFC director for Eastern Europe and Central Asia.

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