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Dec 21, 2016

Russian Railways to pay state 290 billion roubles in taxes and insurance premiums in 2016

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The President of Russian Railways Oleg Belozerov has appeared before the visiting session of the faction United Russia from the VII Convocation of Russia's State Duma.

Under discussion was the development of the transportation industry in 2016 and the prospects for 2017.

"We have actively cooperated with lawmakers on many issues, but I would especially like to highlight the resetting of the VAT rate to zero on long-distance and suburban passenger transport up to 2030," said Oleg Belozerov. "This will allow us to acquire more actively new comfortable carriages, renew the rolling stock and, most important of all, create a sustainable rail development model."

Today, rail plays a significant role in Russia's economy, accounting for 45.5% of freight turnover, a figure which rises to 87% if pipeline transportation is excluded.

Rail also accounts for 27.8% of passenger turnover.

In addition, Russian Railways is the country's largest consumer of products across a wide range of sectors, including metallurgy, energy, mechanical engineering, instrument making and the construction sector. The Company accounts for about 2.7% of Russia's total investment.

Speaking about the results of 2016, the President of Russian Railways said that for the first time ever, the Company had fully balanced its financial results without government subsidies.

"On the passenger side, we have broken the negative trend of the last three years and plan to carry 1.027 billion passengers. The previous three years saw declines in both long-distance and suburban passenger numbers, but we reversed the trend this year and are growing actively. Suburban passenger volumes have stabilised. The volume of freight traffic is also increasing and will amount to 1.219 billion tons. At the same time the cost of transportation, a key parameter for us, increased by only 2%," said Oleg Belozerov.

Turning to the development of passenger traffic, the President of Russian Railways said that 2016 was declared the Year of the Passenger.

The task was set to increase service quality solely by gains in internal efficiency. The companies in the RZD Holding have developed services for passengers and renewed the rolling stock. The result of this programme was to increase passenger demand, including for high-speed train services and the Daily Express trains, while the number of passengers who preferred double-decker cars witnessed a more than twofold increase.

The Sapsan train also set a new record - 17,833 passengers were carried in 24 hours on 3 November 2016.

As of the end of 2016, the Company had successfully carried out the instructions of the Russian President to increase productivity by more than 5%.

At the same time, the RZD Holding is Russia's largest employer and accounts for 1.1% of Russians in total employment across the country.

"During the year we twice indexed wages: by 2.9% in March and by 3.5% in October. Wages are now on average 46,700 roubles. In order to maintain our guarantees and social obligations to the workforce, veterans and retirees, we have signed a new Collective Agreement for 2017-2019. The Company will pay the state 290 billion roubles in taxes and insurance premiums in 2016," said Oleg Belozerov.

Speaking about the prospects for the development of the railway sector in 2017, the President of Russian Railways reminded the parliamentarians that every rouble invested in the railways gives a return of almost 3 roubles to Russia's budget.

The Company will continue to implement major infrastructure projects. Among key areas, Oleg Belozerov cited the development of passenger infrastructure, including for citizens with limited mobility, the construction of multi-level crossings, level crossings across the railways in the Russian regions and the implementation of the Moscow - Vladimir - Nizhny Novgorod - Cheboksary - Kazan high-speed railway project.

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