Publication: Eurasia Daily Monitor Volume: 4 Issue: 233

Russia has unveiled a sizable investment program to improve the Baikal-Amur Railway line (BAM), which was originally designed to become an alternative route to the Trans-Siberian Railway. However, after years of operation, BAM is yet to prove its economic viability, and the railway may eventually face challenges from climate change.

Russian Railways plans to invest at 73.2 billion rubles (about $3 billion) to develop the BAM between 2008 and 2030, RZD subsidiary Eastern Siberian Railways announced earlier this month. The first stage of the project involves investing 15.2 billion rubles ($626 million) to allow the line to nearly double its traffic capacity from eight up to 14 pairs of trains per day by 2010. The second stage implies raising the BAM capacity up to 24 pairs of trains per day by 2013, as well as upgrading the Korshunovsky and Baikalsky tunnels, at an estimated cost of 14 billion rubles ($574 million).

The next stage involves spending 16.5 billion rubles ($676 million) to build electricity supply lines along Ust-Ilimsk-Yakurim and Yakurim-Severobaikalsk. The final stage would require 27.5 billion rubles ($1.13 billion) through 2030 to allow for funneling more freight and to partially substitute for the Trans-Siberian railway. However, Eastern Siberian Railways conceded that the ambitious investment program would require government funding (Interfax, RIA-Novosti, December 4).

The upgrade would involve significant improvement of electricity supplies. The third stage of BAM development should be accompanied by completion of the Bureyskaya hydropower plant, and possibly the Boguchanskaya and Mokskaya plants, Alexei Vorotilkin, head of Eastern Siberian Railways, announced on December 3 (Interfax, December 3).

The BAM route crosses Eastern Siberia and the Russian Far East, running some 450 kilometers north of and parallel to the Trans-Siberian railway. In the early 1970s, the Soviet leadership declared BAM to be a priority Komsomol project. Construction of the nearly 4,000-kilometer rail system began in July 1974 as a strategic alternative route to the Trans-Siberian Railway, with the advantage of being 480 kilometers shorter.

The railroad starts in Taishet, bends around Lake Baikal’s north extremity, and goes farther eastward to Sovetskaya Gavan at the Pacific coast. The BAM was finally declared complete in 1991 at an estimated cost of $10 billion. However, in reality BAM will not be completed until the Novomuisk tunnel, a 16-kilometer shaft beset by countless engineering challenges, was finished.

However, these days the BAM runs well below capacity. According to the RZD, about 8-10 million tons of cargo is funneled via the BAM each year, well below advertised capacity of 18 million tons of cargo per year. The BAM single track stretches through the taiga, but power poles are not everywhere, and diesel-powered carriages are more expensive to operate.

The main part of the BAM is located in a permafrost area, and it runs through swamps, mountain ranges, and over hundreds of rivers, thus making maintenance expensive. Subsequently, the cost of BAM freight is nearly twice as high compared with the Trans-Siberian Railway. The BAM remains priced out of the cargo market and its current revenues cover less than 50% of the maintenance costs.

The BAM planned new major industrial and mining centers along the Baikal-Amur corridor to process its timber, coal, gold, copper, iron, titanium, and other resources, including those in Southern Yakutiya. However, development of deposits in Yakutiya would require completion of the Berkakit-Tommot-Yakutsk railway, an offshoot from the BAM.

Since the early 1990s, Russia has been building an 820-kilometer-long railway between Yakutsk and the BAM. Although it was originally expected to be completed by 1998, now its completion is tentatively slated for 2008. Yakutiya Railway was launched in 1995 to operate the Yakutsk-Tommot-Berkakit line. Last year, it funneled 1.7 million tons of freight and reported losses, as turnover was down year-on-year.

The RZD program to upgrade the BAM appears to be part of the Kremlin’s plans for the economic revival of the Far East, which include development of infrastructure and local industries. Since early this year, the government has repeatedly pledged to spend trillions of rubles (tens of billion of dollars) to develop its Far Eastern regions to raise the gross regional product by 12-fold by 2020. However, these ambitious plans were announced despite an apparent lack of evidence on whether these programs could prove economically viable, as the experience of BAM arguably indicates.

In the meantime, the BAM now seems to face yet another challenge – global climate changes. Russia could be forced to commit significant additional investments in order to accommodate the BAM to the changed climate situation, notably melting permafrost, the official Rossiiskaya gazeta daily wrote on November 28. Therefore, in the long term the BAM may find itself dependent not only on domestic economic factors, but also on global climate developments.