Generally, tariffs which apply to the services provided by OAO Russian Railways (RZD) are established by the Federal Tariff Services (FST). The freight rail transport service tariff includes the following two main components: the infrastructure together with locomotive traction tariff and the railcar tariff. The infrastructure and locomotive traction tariff is set by the FST for all market participants. As result of the reform of Russian rail transportation market, however, private freight rail operators may independently set the railcar element of their prices to customers. Accordingly, the overall price of freight rail services to end users continues to be influenced to an extent by the regulatory environment.

The freight rail transportation tariff depends on a number of factors, including weight of cargo, distance travelled, destination (i.e. whether the freight is being transported to or from abroad through land border crossings or within Russia, including to or from sea ports) and cargo Class (where Class 1 cargo attracts the lowest tariff and Class 3 cargo attracts the highest tariff). Set forth below are some examples of the types of cargoes falling into each tariff class.

• Class 1 cargoes include thermal and coking coal, iron ore, natural construction materials (including crushed stone and sand), cement and wood.
• Class 2 cargoes include crude oil, gasoline, kerosene, diesel fuel, heating oil and fertilisers.
• Class 3 cargoes include ferrous and non-ferrous metals, scrap metal, construction materials for industrial production, metal construction products, lubricants and oils, automobiles and soft goods.

Railcar prices charged by private operators (like Globaltrans) are not regulated. However, in addition to its role as provider of infrastructure services at regulated tariffs, RZD and its subsidiaries remain the largest providers of freight rail transportation and related services. As a result, the regulated freight railcar tariffs charged by RZD often serve as an effective benchmark for the unregulated prices charged by privately owned freight rail transportation services providers.

Regulated freight rail transportation tariff growth (2003-2010)

Source: Federal State Statistics Service of the Russian Federation, FST