RUSSIAN Railways (RZD) has significantly downsized its 2026 investment programme following a collapse in net profit last year. Spending this year will be down 20% on 2025 at Roubles 713.6bn ($US 9bn), with the lion's share allocated to routine maintenance and maintaining safety.
The figure has nearly halved compared with 2024, when RZD invested Roubles 1.28 trillion.
A significant reduction in RZD's investment programme was expected given the company’s worsening financial performance, its rising debt burden and the Russian Central Bank's tight fiscal policy, says Alexander Polikarpov, partner and co-founder of the Rolling Stock Agency, a Moscow-based think tank.
Based on the available data, RZD will purchase rolling stock in the quantities only necessary to maintain operations, Polikarpov says, forecasting that this could hit Russian wagon manufacturers hard.
RZD is the Russian economy's third-largest debtor, with net debt estimated at close to Roubles 2.8 trillion. In December RZD requested Roubles 200bn in emergency government assistance to cover a cash shortfall at its operating businesses.
The Russian government is reportedly considering several options to support RZD, including raising freight tariffs, changing tax payments, and using funds from the National Welfare Fund, a state rainy-day fund, to provide direct assistance.
According to the Russian news outlet Lenta, the Russian government also considered converting Roubles 400bn of RZD debt into shares, subject to purchase by the Russian largest state-owned bank. However, Lenta has also reported that this idea was eventually abandoned due to resistance from the Russian Central Bank, which warned of significant risks to the national economy.
As one of the options for dealing with the crisis, the government proposed that RZD management consider selling the Federal Freight Company (FGC), its largest freight operating subsidiary, managing 134,300 items of rolling stock.
However, the government is concerned that every proposed option may backfire. A rise in railway tariffs, for example, could inflict additional damage on shippers and particularly the coal industry which is already reeling from the economic impact of sanctions imposed following Russia’s invasion of Ukraine.
