On July 5, 2021, the Draft Order “On Amending the Coefficients Applied to the Tariffs of the Collection of Tariffs for the Carriage of Goods by Rail within Ukraine and Related Services” (the Draft Order) was published on the official website of the Ministry of Infrastructure of Ukraine (the Ministry).
Member companies of the American Chamber of Commerce in Ukraine (the Chamber) do not support the current version of the Draft Order, proposed by the Ministry, and emphasize the inadmissibility of increasing tariffs for rail transportation, given the following:
- currently, the profitability of cargo transportation is at a reasonably high level since the operating result of the freight transportation segment in 2019 was 27%, and 17% - in 2020, which significantly exceeds the indicators of neighboring countries
- the goal of increasing tariffs, provided for by the Draft Order, remains unclear given the absence of a financial plan for cargo transportation by Ukrzaliznytsia, which would indicate losses and explain the need for an increase in tariffs
- repeated cost increase of rail transportation over the past years, as a rule, led to a decrease in volume of cargo transportation by rail, as well as to a transition to the alternative modes of transportation
- increase in tariffs for cargo transportation is inexpedient without resolving the problem of the unprofitableness of passenger transportation
- an independent regulator, like the National Commission for State Regulation in the Field of Transport, should deal with issues of establishing economically justified tariffs for the implementation of cargo transportation by rail
Given the above, the business community thinks that the primary purpose of the Draft Order is not a tariff policy improvement in railway transport or the search for economically justified tariffs but another increase in the cost of railway transportation.
The American Chamber of Commerce in Ukraine calls upon the Ministry of Infrastructure to finalize the Draft Order taking into account the business community’s proposals.