SCR achieves profitability due to rigid balance between revenues and expenses and launch of resource - saving projects

ArmInfo. It is not correct to directly compare the railways of Armenia and Russia, Vardan Aloyan, head of the Public Relations Department of the South Caucasus Railway (SCR) CJSC, says in an interview with ArmInfo when commenting on the remarks that the transportation tariffs in Armenia are much higher than in Russia.   

Aloyan thinks that it would be more correct to compare the situation with Georgia, which has a similar terrain as Armenia. The farther and more you transport cargoes, the lower the freight prime cost is. "In Russia, the average daily loading on the Russian Railway is more than 3 mln tons, while in Armenia it is the annual loading. The average weight of a train in Russia is about 7000 tons versus 1490 tons in Armenia.  The average carrying distance in Russia is 1900 km versus 250-300 km in Armenia. In the Soviet times, there were certain standards. For instance, there were restrictive tariffs for the cargo traffic with a carrying distance of up to 300 km. The thing is that the traffic becomes profitable when the carrying distance is more than 300 km. Moreover, the distances in Armenia are not large and the road is not simple. We have a lot of sharp turns, which are professionally called short radius curves (up to 300 meters), and steep slopes, where the elevation difference is 32 meters per 1 km. Just believe me, the number of such parts in the Yerevan- Ayrum section is more than in the Vladivostok-Moscow section. So, according to the logic, our tariffs should be significantly different. Meanwhile, the tariffs should be compared if the distances are commensurable," Aloyan says. 

Thus, Aloyan notes that in case of foreign traffic at a distance of 250 km, the tariff for 1 ton per km (import to Armenia) is 5.6 cents, in Georgia - 7.5 cents, in Russia - 4.7 cents. In case of export from Armenia, the tariff is 4.5 cents, in Georgia - 6.3 cents, in Russia - 4.3 cents for 1 ton per km. As regards the local traffic, the tariffs of sugar and flour transportation in Russia are by 46% higher than in Armenia, with those for other goods being by 63% higher than in Armenia. Where do you see a fivefold growth in prices?" Aloyan says, adding that only 10% of the total transportation cost of 1 car from Yerevan to Moscow (about 10 thsd USD - editor's note) is transferred to the budget of the railway. The rest of the amount goes to Georgia and Russia, including the ferry service expenses. "So, the growth or decline in the SCR tariffs by 10%, for instance, affects the total transportation cost by 1-2% only," Aloyan says. 

He points out that the company achieves profitability due to a rigid balance between the revenues and expenditures, launch of resource-saving projects, and cost-effective production. Aloyan refutes the rumors that the company fires the employees, reduces the wages and that the company has switched to a 4-day working week. "We have not received bonuses over the past few months. But where can we get money if the traffic has dropped by 20% and the companys revenues have fallen, too? Now the company has 3,300 employees. That figure is lower than in 2008, but the number of the employees has dropped due to the natural outflow - we do not hire new people to replace those who retire. We look for candidates from our own personnel, and the drop in the number of employees is the result of economic processes and it complies with the actual volume of work," he says.  

To note, SCR CJSC is a 100% subsidiary of the Russian Railways JSC and the concessional manager of the Armenian Railways under the 13 Feb 2008 agreement, which was signed for 30 years and can be prolonged for 10 more years.