Russian has approved US$2.5 billion to expand and modernize the Trans-Siberian and Baikal-Amur railways as part of a larger rail project to boost economic growth and exports from the country’s Far East region that borders the Pacific Ocean.

President Vladimir Putin has given the green light for the government to allocate money from the National Welfare Fund for this stage of the railway expansion project, which could eventually cost $9.5 billion.

Russian Railways (RZD) will cover $5.1 billion of the total cost of the project, which was first approved by the government’s transport commission back in 2014. The state will foot the rest of the bill.

About $1.7 billion will be allocated in 2017 and the rest next year to commission 580 kilometers of additional main lines and upgrade signaling on 680 km of railway and 43 crossings. It will include renovation of 90 railway stations.

“It is expected that the Russian budget over 30 years will receive $8.2 billion” from the added infrastructure, the rail operator said in a statement on its website.

“The project will allow additional cargo volume of up to 66 million tons a year, which will contribute to the development of industrial enterprises in the region, create new jobs, and the necessary economic conditions for effective and sustainable development of Siberia and the Far East.”

Modernization of the railways will increase Russia’s export opportunities, Mikhail Blinkin, director of the Transport Economics and Transport Policy Institute at the National Research University Higher School of Economics, said in an interview.

“There is an enormous volume of freight flowing between the Asia-Pacific countries and Europe. Only a tenth of this volume passes through Russia. The expansion of the capacity of the Trans-Siberian opens up great opportunities,” he said.

“The competition to attract this freight is cutthroat, so to be in there with a chance you need modern railways,” he said, adding that China alone sends hundreds of millions of containers a year to Europe.

Earlier this year, Putin approved the national Strategy for Economic Security for the period up to 2030.

The document outlines the task of developing the Northern Sea Route, the Baikal-Amur and Trans-Siberian Railways, the priority development of the economic potential of Eastern Siberia, the Far North, the Far East, the North Caucasus, Crimea and the Kaliningrad region.

The Trans-Siberian Railway is the longest railway in the world, running about 9,288 km to connect Moscow and Vladivostok.

It is an important part of the transport corridor between Europe and the countries of the Asia-Pacific region. The railroad was built over 25 years from 1891 to 1916. Converted to current prices, the total cost of building the Trans-Siberian Railway was about $75 billion.

The Baikal-Amur Railway is also one of the largest railway systems in the world and is almost 500 km shorter than the Trans-Siberian.

The main route runs between Taishet and Sovetskaya Gavan and it was built in many stages between 1938 to 1984. One of the most difficult areas, the Severomuisk tunnel, was only put into permanent operation in 2003. At present, its operating at its capacity.

Source: Asia Times