FTEU opposes a possible increase in UZ tariffs

Constant increases in railway tariffs do not take into account the general state of affairs in the economy of Ukraine

The Federation of Transport Employers of Ukraine (FTEU) opposes the likely increase in railway tariffs of Ukrainian Railways (UZ), approximately by 20% from the beginning of 2024. CEO of FTEU Volodymyr Husak stated about it.

«Ukrainians are used to martial law, which has been operating in our country for almost two years. And some state companies are trying to benefit from this provision. The state company Ukrainian Railways can be included among these. Since the beginning of the full-scale invasion, more than 70% of Ukrainian exporters use the railway. The company is actually irreplaceable and should be very successful, but for some reason it is constantly in losses. Unfortunately, few people can understand the nature of these losses. After all, UZ classified all its financial reports. And now, under conditions of secrecy, he is preparing another increase in railway tariffs,» he noted.

At the same time, during 2022, tariffs for railway transportation increased by more than 2 times. A significant increase took place on July 1 last year – by 70%, although the previous increase was on January 1.

«In the summer of 2022, the entire economy of Ukraine hoped that such a sharp unilateral increase was a «one-time action» to overcome the shock of the war. There was hope that in the future the UZ would return to work on the terms of transparency and dialogue with its clients. Unfortunately, this has not happened yet,» he added.

According to him, constant increases in railway tariffs do not take into account the general state of Ukraine’s economy and the critical situation of the main consumers of railway services. This may adversely affect the rail operator’s freight base.

The railway is currently the main route for the export of Ukrainian products. Since in peacetime about 90% of exports were sent through ports, as a result of the reorientation of logistics, the cost of transporting grain increased 3-5 times, steel – 4 times, and iron ore – 6 times. Accordingly, the specific weight of railway costs in the cost price of Ukrainian products has increased sharply.

«Constant increases in railway tariffs will take at least UAH 50 billion from Ukrainian business in 2022-2023. They plan to withdraw another UAH 10-15 billion in 2024. However, the efficiency of using this money raises serious doubts. And it is impossible to disprove the doubts – the UZ simply classified detailed data on the directions and volumes of its expenses. For some reason, they cannot be discussed, criticized, or improved,» Volodymyr Husak notes.

Thus, FTEU emphasizes the need for a transparent and open discussion of the results of UZ’s activities for 2023 and the company’s financial plan for 2024. Now there is no confidence in the effectiveness of investments, just as there is no confidence that the corresponding costs are not overstated several times, sums up the general director of FTEU.

The constant growth of railway tariffs may lead to the fact that some enterprises will simply close and will not be able to resume their work even after the victory of Ukraine.

As GMK Center reported earlier, the last time UZ increased tariffs in June 2022 – by 70%. From this, the company expected to receive UAH 11.3 billion by the end of the year – almost half of the amount was to be paid by the steel business and farmers. At the same time, the UZ called the increase in tariffs «planned indexation», but such a decision was not foreseen the financial plan of the Ukrainian Academy of Sciences for 2022.

In the near future, according to the head of UZ’s board Yevgen Lyashchenko, the railway operator plans to adjust tariffs for all classes of transportation in accordance with the level of inflation, but this requires a decision of the Cabinet of Ministers.