United transport company for Single Economic Space in H1 2014

The idea of setting up a united transportation and logistics company was approved by the heads of government of Belarus, Kazakhstan, and Russia in Saint Petersburg in summer 2012. Before the meeting on 11 May Vladimir Yakunin told mass media: "Today we have come to report that the part concerning railway administrations, relevant ministries has been accomplished. We have prepared the entire scheme. In Russia we have obtained the document that allows OAO Russian Railways to do its part of the work to create the united transportation and logistics company".

Vladimir Yakunin pointed out that the project to create the united transportation company goes beyond the sphere of interest of the railroads. The project's scale is unparalleled either in the Commonwealth of Independent States or the Single Economic Space. The world's largest logistics company DHL shows its interest in the project. The product to be created by the national railway operators of Belarus, Kazakhstan, and Russia will be competitive and quite profitable for the railway infrastructure of the three countries and their logistic companies, BelTA reports.

Participants of the project have approved the draft charter and internal documents of the United Transportation and Logistics Company, the draft business plan has been agreed, noted Mikhail Myasnikovich. In his words, it is time to make decisions.

Representatives of the Belarus government told BelTA that three stages of the formation of the company's charter capital had been agreed in advance. The establishment of the company will be the first step. Contributions of each participant of the project have been determined. OAO Russian Railways will make a non-monetary contribution in the form of shares of OAO TransContainer (50% plus 2 shares) and OAO Russian Railways Logistics (100% minus 1 share). Belarusian Railways and the Kazakh railway operator KTZ will contribute $1 million each.

For the next two years the assets of the United Transportation and Logistics Company will be formed with shares of relevant companies of the Belarusian and Kazakh railway operators. All the necessary permissions will be obtained, said the source. The model of the future United Transportation and Logistics Company is based on the Brest-based joint venture involving OAO TransContainer. The business plan for the venture project is being developed.

As the final step of the establishment of the United Transportation and Logistics Company the sides are supposed to equalize their shares in order for each party to keep 33.3%. Plans have been made to reach this parity within seven years after the company is founded.

Speaking about the future of the project to create the United Transportation and Logistics Company, representatives of the Belarus government said that plans had been made to enable the transit of container cargoes primarily between China and the European Union by 2021 to the tune of roughly 1.1 million containers.

As for benefits for Belarus, the country plans to increase transit container traffic by 4.5 times. The processing of containers at the Brest North station will increase by 6.8 times, with about $25 million in investments earmarked for the development of the terminal and warehouse infrastructure. The overall multiplicative effect for Belarus in the forecast period may be close to $1 billion, specified the source.

Apart from the United Transportation and Logistics Company matters concerning other strategic projects were discussed on 11 May. In particular, the sides discussed the major project for transportation along the route the European Union - Belarus - Russia - Kazakhstan - Turkmenistan - the Persian Gulf. The project had been earlier initiated by Mikhail Myasnikovich and involves Russia, Kazakhstan, and Turkmenistan.