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NEWS / 03.12.2008


Moscow Metro can be privatized

Moscow metro can be privatized. What will this cause to the passengers?

The head of the Moscow Metropolitan Dmitri Gaev recently stated that the subway will be corporatized. According to estimates of some analysts, in fact, it will be privatization.

Roads - the second serious problem in Russia, at least according to well-known saying. And Government has resolved its original way - to hand over all roads into private hands, to handle with all the accumulated difficulties. All overburdened roads were given to private management, and it gave impetus to the assumptions that the subway will be privatized. Moreover, the underground transport is quite profitable, much more profitable than the on-ground in fact, and this is another reason why the subway will be a sweet spot for business.

On the one hand it is good, analysts believe. According to «Real Estate Market Indicators» Analysis Centre, Moscow authorities invest by 50 billion rubles annually in the development of subway, but the subway is constantly overloaded and is not in very good condition at least from a technical point of view. As officials believe, there is a need to spend 2 times more to improve the situation. But neither the federal nor the city budget has the money for that. In the context of the crisis, the administration is trying to cut costs of coffers, and the subway is not a priority project for the State. So, most likely they will tighten the purse stripes for the subway.

But if the subway will become a private, business will obviously find funds for investment and development. Not even the crisis could interfere: investment into car industry, or real estate, is not profitable while investing in Metro is ideal in terms of stability. After all, people will always use the subway, as they will always buy salt and matches.

A great plus of this scenario is that more money brings the development. The new investments will help to dig and build faster, and for the passengers to travel with more comfort, analysts believe. Moreover, according to experts, it is not necessary for the Moscow Metro to completely go into private hands in order to survive. Even the privatization of 10% stake would give sufficient funds to compensate the reduction of budgetary infusions. That means no management decisions will be accepted by the oligarchs, unloved by most subway passengers - and Muscovites may fear not the increasing of cost of travel, at least for this reason.