Increase in tariffs of UZ will create critical pressure on enterprises – NAEIU

The National Association of Extractive Industries of Ukraine (NAEIU) expresses serious concern over another planned increase in Ukrainian Railways (UZ) freight transportation tariffs by 37%.

According to the association, if the decision comes into force (for example, on May 1), it could lead to additional costs of UAH 17.5 billion for the industry by the end of the year.

“In this case, the cost of rail transportation will have increased by more than 100% over the last three years of the war. Such a tariff increase will put critical pressure on companies, especially in the mining and metals and coal mining sectors: The iron and steel industry may lose UAH 6.4 billion in additional costs, and coal mining companies may lose another UAH 1.6 billion,” the statement said.

The National Tax Administration also listed the consequences for the economy and business. These include an increase in production costs, which will lead to a decrease in competitiveness in global markets, a reduction in production and transportation volumes, and possible downtime of enterprises. In addition, UZ faces the risk of losing cargo turnover, as companies will have to look for alternative logistics routes. The EBA also points to the likelihood of a deterioration in the socio-economic situation in the regions, as thousands of jobs will be at risk.

“We do not deny the need to stabilize Ukrzaliznytsia, but we believe that such a sharp increase in tariffs is not the only way,” the NAEIU emphasized.

The Association is initiating a working meeting with the management of Ukrainian Railways to find a balanced solution that will ensure the financial stability of UZ, will not destroy the competitiveness of the Ukrainian industry and will help to avoid massive layoffs and economic losses in the regions.

The National Association of Extractive Industries emphasized that this issue concerns not only the mining industry but the entire Ukrainian economy.

Earlier, Ksenia Orynchak, Executive Director of the National Association of Extractive Industries of Ukraine, noted that a 37% increase in Ukrainian Railways’ tariffs could destroy the mining industry. Already last year, due to the increase in logistics and electricity tariffs, companies in the industry stopped their operations.