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The Plan calls for the termination of cross subsidy from freight to passengers through adoption of PSO 32 REGULATORY REFORM OF RAILWAYS IN RUSSIA – ISBN 92-821-2309-X – © ECMT 2004 3. THE GOVERNMENT’S RAILWAY REFORM PROGRAMME arrangements. It also discusses eliminating differences between the tariffs for domestic and international cargo en route to and from ports or land border crossing points. The advantages and disadvantages of the approach outlined in the Plan have been thoroughly and professionally debated.

Source: Arthur Andersen. 38 REGULATORY REFORM OF RAILWAYS IN RUSSIA – ISBN 92-821-2309-X – © ECMT 2004 4. KEY REGULATORY CHALLENGES It is important to complete the switch to international accounting standards and independent external accountants should be employed to audit the accounts of the joint stock company RZhD to IAS standards. This is essential to the framework for negotiations between the company and the government over support from public budgets for public services and for providing a transparent framework in which private business can enter rail markets in competition or co-operation with Russian Railways.

Non-discrimination in the formulation of tariffs is not, however, sufficient to achieve the full benefits of competition (higher standards of service, services better matched to the demands of the market and REGULATORY REFORM OF RAILWAYS IN RUSSIA – ISBN 92-821-2309-X – © ECMT 2004 43 4. KEY REGULATORY CHALLENGES better value for money). Carriers must have control of as many of their costs as possible. They must be free to find more efficient ways of organising their operations and sourcing supplies.

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