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Editor in chief: Angelo Scorza
23/03/20 11:11

Russia to give financial support to transport companies

COVID-19 causes grave financial losses, but the government is introducing measures through an Action Plan. Energy companies not harmed so far

By Anastasia Levchenko


Even though the number of officially registered COVID-19 cases in Russia has so far been rather low, transport companies, aviation and railway primarily, have been forced to suspend services on major directions and are now facing unprecedented financial losses, but have a prospect to be supported by the government.

On March 20, Russian Prime Minister Mikhail Mishustin approved the Action Plan “on supporting sustainable growth of economy in the context of the worsening situation caused by coronavirus.” The text, which has not been published officially yet but was obtained by Russian news agencies, reads that measures of financial support for transport companies, including compensation for losses, will be introduced by April 5. Ministries of transport, finance and economic development are working on them.

Russian airline companies may lose over 100 billion RUR (1.2 billion euros) as a result of the crisis caused by the spread of coronavirus, head of the Russian Federal Air Navigation Agency (Rosaviation) Alexander Neradko said on March 17.

Rosaviation, alongside three ministries that have now obliged many of their employees to work remotely, is also developing a support plan and already proposed to cancel air navigation charges in the far Eastern Federal District and in the Arctic, and to reduce them by 50% in other regions.

Since March 16, all passenger flights from Russia to the European Union, Switzerland and Norway, excluding some regular flights to the capitals, have been halted in accordance with the decision by the Government Coordination Council to control the incidence of coronavirus infection in Russia. Charter flights were instructed to suspend services after having brough home Russian citizens remaining abroad.

All major companies - Aeroflot, its low-cost affiliate Pobeda, S7, Utair – announced suspension of flights to most of the European cities.

“Civil aviation, almost all of its enterprises (airlines, airports, air traffic control companies, maintenance, handling, flight catering, fueling companies) suffer losses in revenue, cash flow and profit,” Interstate Council on Aviation uniting post-soviet countries said on Thursday.

“Obviously, aviation enterprises have already started the implementation of usual anti-crisis measures … and they request support from Governments. However, the current situation on its global scale is unprecedented and requires different approaches and measures, and most importantly, the daily joint work and coordination of all the heads of airlines in each country,” the statement read.

As for the Russian railways giant RZD (Russian Railways), on Friday the company suspended the last direct train to Estonia, thus having officially stopped all direct passenger traffic between Russia and Europe.

In addition, connection with Azerbaijan, Kyrgyzstan, Tajikistan, Kazakhstan and Uzbekistan has been put on pause. Routes between Belarus and Russia have been suspended partially. 

Meanwhile, RZD International, affiliate of the Russian Railways, engineering company offering railway construction services and technologies, is going to continue implementation of its projects abroad despite the COVID-19 crisis, RIA Novosti agency reported. Its employees, however, will avoid work trips.

The Sea Port of Saint-Petersburg, the largest operator providing dry cargo transshipment in Saint-Petersburg port and the North-West of Russia, said in a statement on Friday that it “continues work as usual and fulfils its obligations to the partners providing high-quality services.”

The statement added that the port is taking precautionary measures: personal contacts of coastal servicemen with ship crews are limited, all communication takes place via mobile devices, and staff is wearing face masks.

The board of directors of the Novorossiysk Commercial Sea Port (NCSP Group), operating two of the largest Russian ports – Port of Novorossiysk on the Black Sea coast, and Port of Primorsk on the Baltic Sea – as well as Port of Baltiysk in Kaliningrad region, is meeting on March 20 to discuss how to protect its staff from coronavirus; so far there have been no alterations of work.

Energy companies, unlike transport, have not changed operations amid COVID-19; the only step so far has been allowing employees to work from home and canceling foreign business trips.

Gazprom announced on March 16 that 80% of its administration would work remotely. Its subsidiary Gazprom Neft, the third largest oil producer in Russia, also stated its employees would partially work from home and avoid foreign trips.

Tatneft and Transneft, as well as En+ Group, energy and metals company that has a controlling stake in Rusal, introduced same measures. Rusal said most of its employees would start to work remotely. Novatek and Lukoil said they were taking all necessary precautions.

SIBUR, leader in the Russian petrochemicals industry, canceled foreign trips and limited domestic trips for its employees and authorized 70% of its staff to work from home.

“As of now, SIBUR is delivering on all of its contractual obligations and taking active steps to mitigate the risk of non-performance due to imposed restrictions, including by altering its supply routes to overcome logistic limitations in certain regions. The Company’s vertical integration and vast footprint help respond promptly and flexibly to the majority of market changes,” the company said in a statement on March 17.

“We are following the situation closely and considering various scenarios for different products. No matter how the situation unfolds, SIBUR will do its best to fulfil its obligations and to notify its external counterparties regarding any possible changes,” the statement added.

In turn, Severstal, one of the world’s leading steel mining companies, published a list of measures against COVID-19 on March 20, which include restrictions on business travels,  mandatory sanitation and disinfection at all premises, remote working when possible, suspension of all activities involving 20 people or more and others.

At the same time, its joint project with Italy’s steel pipe maker Tenaris in Siberia (Khanty-Mansi Autonomous District, or Ugra) to produce welded pipes will remain intact, Director General of the Ugra Development Fund Roman Genkel told RIA Novosti on March 12.

“The situation with coronavirus in Italy does not have any impact now on the implementation of the joint venture of Tenaris and Severstal to build a welded pipe plant in the Surgut region of western Siberia,” he said, noting that Russian and Italian partners communicate remotely.

According to the official Russian statistics, there have been 253 confirmed COVID-19 cases around the country as of March 20, 54 of them registered in the last 24 hours. There have been no deaths caused by the virus yet, according to the coronavirus response center, since the death of the first patient with COVID-19 diagnosis on March 19 was caused by thrombosis.