Development Of Northern Latitudinal Railway Suspended For Three Years

Russian Vice-Prime Minister Vitaly Savelyev has stated that work on the proposed Northern Latitudinal Railway (NLR) is to be suspended for three years. The financing required, estimated at ₽800 billion (US$10.2 billion) has not yet been arranged, while the implementation deadlines and needs for the project have already shifted. A pause will allow the development of alternative funding, a revision of the financial model of the project, and further analysis of its required scope. Savelyev said that work on the NLR may be resumed after the pause.

The NLR is an Arctic railway corridor, which is envisaged to transport 23.9 million tonnes of cargo per annum from Russia’s Arctic ports to its interior and connect with the Trans-Siberian and BAM railways. For this, the infrastructure of the Northern and Sverdlovsk railways must be developed and a 700 km track from Salekhard to Nadym, including a bridge across the River Ob must be built. Much of this territory is difficult surface land to work on as it is subjected to undulation caused by the expanding and shrinking of permafrost during the year.

The NLR would also be used as logistics infrastructure necessary for the development of gas condensate and oil fields of the Yamalo-Nenets Autonomous Okrug (YNAO), shortening the cargo transit path by 200–730 km, and to speed up wagon turnover. It is designed to become a component of the development of the tanker fleet and the development of Arctic resources, and in the future — to provide the northern territories of the YNAO with access to the Northern Sea Route through the Sabetta Port on the Yamal Peninsula. However, the recent agreements with China over the Power of Siberia 2 pipeline mean that financing priorities have shifted while the proposed NLR route now needs revision.

Artem Svistunov, a senior lawyer involved in the NLR says that “The suspension mechanism indicates a compromise within the government. The project will probably be moved to a new restart date, ‘sewing’ these amounts into a new financial model.”

Mikhail Burmistrov, head of Russian economic analysts Infoline-Analytics says there are a number of questions that force a re-evaluation of the NLR project as a whole. He said that “There are questions concerning the current budgetary capabilities and potential participants of the project. There is the growth of railway tariffs, which along with the strengthening of the Russian ruble makes several export driven raw material industries uncompetitive on the world market. This cannot be resolved without an increase in world prices.”

He also mentioned that competition to the NLR is also expected, as a result of Russia adding to its icebreaker fleet and increasing export cargo flows by the Northern Sea Route instead of rail, also requiring a re-evaluation of the extent of the NLR capabilities.