ESSEL: See Russian Train Run. Run, train, run!

See Russian Train Run. Run, train, run!

Dave Essel

Grani.ru is currently carrying a short article about the start of a new high-speed train service between St. Petersburg and Nizhny Novgorod. This made me curious as I didn’t think Russia had any fast trains. (Not that it is that fast: it covers the 1100 kilometres in 8 hours 25 minutes, which is 129 kph or 80 mph. European high speed trains do 300 kph.)

Grani goes on to say that the train, called the Sapsan, is a joint venture between Russian Railways and Siemens under which Russia is buying 8 trains for 276 million Euro. As this sounded more like a purchase contract than a joint venture, my curiosity was sparked and I followed up on Russian Wikipedia.

There I discovered that the joint venture part of this project is that Siemens is converting its standard Velaro trains to Russia’s track gauge and voltage requirements and giving the product a Russian name – Sapsan (“Peregrine Falcon” [I had to look that up!]). Siemens’ semi-advertisement entry in English Wikipedia says: “Development and construction is being carried out at Erlangen and Krefeld in Germany.”

So much for a joint venture: Russia’s contribution consists of Euros and nothing more! It would seem that RZhD Russian Railways’ PR department has got one over on Grani.

Meanwhile, back in Russian Wikipedia, I learn that the initial plan was for 60 trains to be jointly built in Russia in a project worth €1.5 billion but that this later reviewed down to 8 trains from Germany for €600 million (€276 million for the trains and a €354 million for a 30-year (or 14 million kilometre) service contract.

The rails will be purchased from Japan Steel Works. What, Russia’s steel industry can’t even make proper rails?! Even I find that hard to believe. What is easier to understand is how much simpler it is to extract a backhander from payments that have first gone abroad and bounced to and fro through a few banks.

In order to make track space for these trains, tickets for which are several times more expensive than than for standard trains, a number of standard services have had to be cancelled, causing hardship for the majority of Russian who are not super-rich. Mail.ru’s travel comments’ site has a 15 March 2010 entry about how plain people hate the Sapsan and chuck such things as stones, re-bar, and blocks of ice at it whenever possible to a total of nine reported incidents so far, the best being placing snowmen on the track, forcing the engine drivers to carry out emergency braking.

Due to lack of safety procedures along Russia’s railway tracks, since December 2009 the trains have already killed 5 people in 5 separate incidents. According to the report in Svobodnaya Pressa on the death of a 15-year old boy run over by the train, at speed, the train’s vortex, which can suck in luggage and people, reaches out about 5 metres while the standard width of Russian platforms is 4.6 metres.

The €630 million spent on buying the trains from Siemens would have gone a long way towards upgrading Russian train production.

The Russian internet publication Promyshlennye Vedomosti (Industry News) carried an article in its Jan/Feb 2010 issue asking how it could be that Russia was buying to all intents and purposes the same train that China has acquired but for 7 times the price the Chinese paid for theirs. On top of that, the version sold to China – along with a manufacturing licence – is a more recent model that can reach up to 394 kph as compared to the made-for-Russia version that can only reach a theoretical 250 kph. (Mind you, whilst I would be prepared to travel in a Chinese-made Siemens train, I would have some reservations about being a passenger in a Russian-made one!).

Promyshlennye Vedomosti in the same article also makes an amusing remark about the rails imported from Japan: “[…] no special track is being laid for the Sapsan train; only rails are being replaced with Japanese one as our industry, it is being claimed – although it is difficult to believe – cannot make suitable ones. Maybe we ought to buy the gravel in which to lay the sleepers from abroad as well?”

Sexiest of all is the money involved. Russian Wikipedia says: “According to Infra-News, the fact that Russia paid 7 times more than China did for its InterCity Express leads one inevitably to think of possible corruption in RZHD Russian Railways’ top management”. [www.infra-news.com is a subscription-only website so I have not been able to see the quote for myself – D.E.]. The Sapsan must have been a nice little earner for all involved.

And that’s how it goes in Russia…

PS. Siemens does a great deal of business in Russia and all over the CIS. Siemens would also appear to be the current record holder in the USA for the largest fine ever handed out for violating anti-corruption laws – $800 million dollars. The British newspaper the Guardian reported as follows:

US authorities fined the German engineering group Siemens a record $800m (£523m) yesterday to settle a long-running bribery and corruption scandal.

Siemens also agreed to pay a fine of €395m (£354m) to settle a case in Munich, its home town, over the failure of its former board to fulfil its supervisory duties. It was fined €201m there a year ago over bribery by its former telecoms division.

Yesterday’s fines, in the biggest corporate scandal in post-war Germany, bring the total cost to Siemens so far to €2.5bn, including €850m in lawyers’ and accountants’ fees, officials in Munich said. These include Debevoise & Plimpton, Deloittes and PricewaterhouseCoopers.

The US settlement, after a year of negotiations and plea bargaining, sees Siemens pay the US department of justice about $450m (€350m) to settle charges of bribery and trying to falsify corporate books.

The securities and exchange commission (SEC), the market regulator, will receive another $350m (€270m) on similar charges under the Foreign Corrupt Practices Act. The DoJ said it was the biggest such case it had ever seen in “scope and magnitude”.