SCR: Passenger traffic is lossmaking almost everywhere

 

Aloyan says that the company covers 75% of the losses at its own expense, with the remaining 25% covered by the state. "We coordinate the density of passenger traffic, the routes and the frequency of 

operations with the Armenian Ministry of Transport and Communication, which can actually be considered a state order for passenger traffic," he says, adding that if in other countries - for instance, 

Russia or Germany - the matter concerns the taxpayers' funds, in Armenia we have a completely different situation, because under the concession agreement the company annually pays to the Armenian budget a concession fee worth 2% of the gross revenue. "The subsidies by the state (25%) cannot be bigger than the amount we transfer to the budget.  Over the past few years the concession payments to the Armenian budget amounted to 1 bln 913 mln 508 thsd AMD, and the passenger traffic subsidies subject to redemption totaled 1 bln 813 mln 774 thsd AMD. In addition, the South Caucasus Railway is one of the largest taxpayers in Armenia. In 2014 the company paid over 4 bln AMD to the budget of Armenia," Aloyan says. 

 

He notes that since 2011 the company has been operating at a profit. Due to that, the losses accumulated under the concession agreement in 2009-2010 are gradually decreasing. The losses were formed in the specified period because the Armenian railway infrastructure was in a critical condition and SCR CJSC had to invest $50 mln annually. In addition, in 2010 the dollar sharply rose and the company lost significant money. "In 2014-2015 SCR was inspected for 5-6 times. I can also say that the audit by the Russian Railways (the world famous PricewaterhouseCoopers audits us every year) has found nothing of what the media wrote.  The fact that the Russian Railways strictly controls its subsidiary has a very simple explanation. Under the concession agreement, no matter whether the SCR obtains profit or operates at a loss, investments in the Armenian Railways shall be made by the stockholder, i.e. by the Russian Railways in any case in the amount of investment expenses. For instance, though the passenger traffic has dropped by almost 20% as compared to 2014 and no tangible profit is expected, the investments in any case total 6.5 bln AMD as planned. The loss accumulated since 2008 amounted to 12 bln AMD in 2011 and dropped to 8.7 bln AMD as of 1 January 2015," Aloyan stresses. 

 

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.