Siemens Wins 2.5 Billion-Euro of Locomotive Orders From Russia

Siemens AG (SIE), Europe’s largest engineering company, won an order for 675 locomotives from OAO Russian Railways valued at about 2.5 billion euros ($3.18 billion) as the state rail monopoly boosts spending to upgrade Soviet-era infrastructure.

Siemens Chief Executive Officer Peter Loescher signed a framework agreement in the Kremlin with the head of Russian Railways today, coinciding with a visit by German Chancellor Angela Merkel to Russian President Vladimir Putin.

The 675 locomotives will be produced at Siemens’s joint venture in Russia with the Sinara Group and delivery from 2016 through 2020, said Dmitry Pumpansky, the CEO of Sinara Group

Russian Rail plans to spend 1.1 trillion rubles ($31.5 billion) in the next three years, raising investments in refurbishing its aging park. The program includes purchases of 770 locomotives a year in 2013 to 2015, according to a statement this month, compared with 2,200 locomotives bought in the previous five years for about 164 billion rubles.

In May 2010, Russian Railways awarded Siemens a contract to deliver 221 locomotives for about 42 billion rubles, and orders for high-speed Sapsan passenger trains.

The German engineering company, based in Munich, has expressed interest in potentially building and operating a $21 billion rail link between Moscow and St. Petersburg before Russia hosts the 2018 World Cup soccer tournament, Russian Rail’s unit for high-speed lines said in February.

To contact the reporters on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Ekaterina Shatalova in Moscow at eshatalova@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net

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