Planned rail link to boost ties with Chi­nese

The Star Early Edition - - BUSINESS REPORT INTERNATIONAL - Eka­te­rina Shat­alova

RUS­SIA is seek­ing to build a high-speed rail link to fur­ther bol­ster ties with China after agree­ing on the big­gest nat­u­ral gas sup­ply deal in his­tory.

Rus­sian Rail­ways plans a high-speed link from Moscow to Beijing that may re­quire as much as 2.8 tril­lion rou­bles (R668 bil­lion) of in­vest­ment to reach the bor­der, says Alexan­der Misharin, the vice-pres­i­dent at the state-run company.

It would cut the trip from Moscow to Beijing to 30 hours from more than five days presently, says Misharin.

As Rus­sia’s econ­omy slides to­wards re­ces­sion and re­la­tions with the US and Europe de­te­ri­o­rate amid the Ukraine con­flict, the world’s largest en­ergy ex­porter is turn­ing to China for trade and fi­nanc­ing.

Nat­u­ral gas ex­porter Gazprom reached a $400bn (R4.8 tril­lion) deal with China in May to build a pipe­line – sim­i­lar in cost to the rail link – and start sup­plies after more than a decade of talks.

“We are es­sen­tially cre­at­ing a new trans­port net­work that could be com­pared to build­ing the Suez Canal in terms of scale and sig­nif­i­cance,” Misharin said. Chi­nese banks and com­pa­nies had shown in­ter­est in the project, on a con­ces­sion ba­sis, to carry freight and pas­sen­gers from Asia to Europe, he said.

Last month, dur­ing Chi­nese Premier Li Ke­qiang’s visit to Moscow, a del­e­ga­tion signed ac­cords in­clud­ing high-speed rail co-op­er­a­tion, a three-year 150bn yuan (R267bn) lo­cal­cur­rency swop deal and a dou­ble-tax treaty.

In­creas­ing de­pen­dence on China may not bol­ster Rus­sia’s econ­omy. With the rou­ble near a record low and for­eign in­vest­ment dis­ap­pear­ing, lur­ing Chi­nese cash may deepen Rus­sia’s re­liance on nat­u­ral re­sources and de­rail gov­ern­ment ef­forts to di­ver­sify the econ­omy, while ne­go­ti­a­tions on oil and gas deals have stum­bled over pric­ing.

The rail route would stretch 7 800km to 8 000km, de­pend­ing on whether it ras through Kaza­khstan, Misharin said.

The Rus­sian sec­tion alone will cost 2.5 tril­lion to 2.8 tril­lion rou­bles, and the line will need as many as 170 spe­cialised freight and 400 pas­sen­ger trains. Rus­sian Rail­ways now plans to start work as early as next year and com­plete con­struc­tion in 2019. – Bloomberg

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