RUSSIA’s Federal Antimonopoly Service (FAS) has published a draft order that will allow for substantial increases in railway tariffs.
FAS has supported Russian Railways’ (RZD) initiative to abandon the existing formula whereby annual railway tariff indexation is tied to the Consumer Price Index (CPI), calculated by the Russian state statistical service Rosstat, which is generally dependent on the rate of inflation in the country.
FAS now intends to raise railway tariffs based on the Composite Price Pressure Index which takes account of changes in RZD’s operating costs such as wages, social security contributions, materials, fuel and electricity as well as depreciation.
RZD supports the FAS move, emphasising that it will positively impact the railway's financial health. “The new rail tariff indexation model takes into account all factors of price and inflationary pressure on the company's finances, not just consumer inflation,” RZD said in a statement on October 13.
In 2024, RZD’s net profit plummeted nearly tenfold to Roubles 13.9bn ($US 171.4m) compared with Roubles 118.3bn in the previous year. In the first half of 2025, RZD saw its net profit collapse by 95% compared with 2024 to Roubles 2.7bn.
The Russian business community, on the other hand, is not entirely happy with the change. Russian business publication Expert claims that the new model lacks transparency, and RZD no longer has incentives to reduce its operating costs.
Pavel Ivankin, president of the National Research Centre for Transport and Infrastructure, estimates that rail freight tariffs in Russia will jump by 10% on average in 2026. As a result, coal mining companies will pay Roubles 25bn more than they would have paid if the existing formula were maintained.
According to another source in a shipping company, the principal decision to switch to a new formula was made back in November 2024. Freight customers are surprised that the transition is being made at a time when freight volumes have declined, and in some segments have even collapsed.
Maria Nikitina, director of N.Trans Lab, a transport industry consultancy, says that abandoning the inflation minus principle in favour of the price pressure index undermines the fundamental principles of setting rail freight tariffs. The price cap principle is applied to natural monopolies worldwide precisely to encourage cost reduction, Nikitina notes.
