Russian Railway Coaches Sold for Scrap

Russian Railway Coaches Sold for Scrap


The agreement between the Russian Railways (RZD) state railway corporation and Translom company, one of the largest suppliers of ferrous and nonferrous metal scrap in Russia, under which the latter purchased 2,000 written-off coaches for dismantling, will be the subject of an inspection. Earlier, the State Duma deputies called the price paid by Translom for the coaches understated.

Deputy Prime Minister Dmitry Kozak, who is in charge of the transport industries sector, initiated an audit of the agreements signed by RZD and Translom. In accordance with them, RZD has transferred written-off couches to a private company for disposal. Experts of the Federal Antimonopoly Service, the Ministry of Industry and Trade and the Ministry of Economic Development will check the economic feasibility of the transaction. By February10, the auditors will have to report on the audit results. With reference to documents and informed sources in the government, RBC writes that the audit itself was approved back on December 27, 2019. The total amount of checked transactions equals to 110 mln rubles.

There are no comments on the situation on the part of Kozak's office. The Ministry of Industry and Trade claimed it is guided by the instructions of the antitrust authority that has taken interest in some contracts involving the RZD and Translom. The press service of the Ministry of Industry and Trade said that the agency will provide support within the framework of its area of competence and will closely scrutinize the results of the audit. Officially, three agreements with Translom were signed by Federal Passenger Company, an RZD subsidiary. Under the terms of the agreements, the Federal Passenger Company will hand over 2,000 written-off couches for dismantling. By the end of 2022, Translom is obliged to fulfill its obligations.

Andrey Lugovoy, a State Duma deputy and a member of the Liberal Democrats faction, was the first to doubt the economic feasibility of the transaction. He petitioned to Kozak for appointing an audit. A similar letter was sent to Andrey Kurnosenko, head of economic security and anti-corruption department of the Interior Ministry, and to Oleg Belozerov, the head of RZD. In an interview with the agency, Lugovoy confirmed the transfer of all three appeals.

According to Lugovoy, the terms of the agreements are extremely unprofitable for the Federal Passenger Company, which loses at least 1 mln rubles per couch. Since Translom will pay 110 miln rubles for 2,000 cars, the cost per coach is 55,000 rubles. However, much larger sums can be received for its parts. The weight of the passenger couch is 48 tonnes, of which the metal part accounts for 29.5 tonnes, aluminum and steel make up 250 kg each and copper, 50 kg. Within the current prices of scrap one can get 383,000 rubles for this mass of metal. Moreover, metallurgical enterprises are ready to buy this amount of scrap for 442,000 rubles. The scrap of non-ferrous metals may bring in another 52,000 rubles.

It should be taken into account that selling the used-up wheel sets is also possible. Even if their condition is unsatisfactory, they are quoted at 120,000 per unit. Since each couch has 4 wheel sets, their total price increases to 480,000 rubles. Therefore, a disassembled car can be sold for 916,000 rubles. Previously used shock absorbers, springs and other elements are the subjects to resale, too. Deputy Lugovoy believes that they will be bought at a bigger price than scrap of the same weight.

The law enforcement agency, RZD and Translom are not offering any information on the situation. In autumn 2016, the contractor company was privatized. Before that, it was a part of the RZD group of companies. Three years ago, it was bought out by Kronos group, owned by Alexey Zolotarev. Previously, he ran a common business with Igor Levitin, the former head of the Ministry of Transport and a current assistant to the head of state. Translom focuses on selling scrap that comes from railway companies and the Defense Ministry.

According to RBC sources, today, Translom is related to the business empire of the Rotenberg brothers. In 2004-2005, one of them, Igor Rotenberg, was the chief of RZD property department, occupying the position of vice-president of the company at the same time. This department is responsible for scrap metal issues. In addition, Rotenberg holds a 50% stake in NSC, a producer of metals and all types of scrap. At the same time, Sergey Astakhov, the head of Translom, and representatives of the Rotenberg family insist on the absence of a connection between the company and the businessmen.

The RZD is implementing a large-scale overhaul of its fleet of coaches. A year ago, the company signed an agreement to purchase 3,700 passenger couches by 2030. They will be supplied by JSC Transmashholding.