Russia's UGC focuses on infrastructure development

Russia's state-run grain trader, the United Grain Co (UGC) estimates US$1.79 billion investment in infrastructure is needed by 2015 if the country is to achieve its goal of higher grain capacities.

"The total volume of investments in developing export-oriented grain trade channels of grain is estimated at RUB52 billion (US$1.79 billion)," a report by UGC CEO Sergei Levin prepared for a conference of the International Grain Council in London said.

Russia aims to eventually double its export capacity to 40-50 million tonnes of grain a year, but to achieve this it has to modernise its obsolete infrastructure, a process in which UGC plans to play a key part.

The report retains the target of increasing Russia's export capacities, including through building new export terminals, by 18-20 million tonnes by 2015 from an estimated 21.6 million tonnes in the current 2009/10 crop year.

UGC also plans to build modern junction silos and organise the shipping of grain in long trains.

"The increased efficiency and competition on the infrastructure services market will allow to cut grain costs by up to US$20 per tonne," the report said. Cheaper grain will make Russia a more competitive player on the global market where it is seeking to increase its presence.

UGC estimates total investments in the port infrastructure development at RUB22 billion (US$755.7 million). The Russian government has already agreed to subsidise construction of some grain infrastructure and UGC invited foreign investors to participate in such projects.

"UGC as a state agent is ready to act as the coordinator of works of modernising Russian grain market infrastructure, as well as the conductor and the guarantor of foreign investments into the Russian grain branch," Levin said.