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Railroads to remain state property

23 May, 00:00
Photo by Anatoliy MEDZYK

Plans are afoot to submit the Ukrainian railways corporatization scheme to the Verkhovna Rada in October, said Vasyl Hladkykh, director general of the Ukrainian State Railroad Authority (Ukrzaliznytsia) at a Kyiv press conference. The sale of shares will leave the state with 100-percent-ownership of shares in this public limited company. “Even if there is some kind of privatization, the state must still own the largest block of shares,” the director general said, noting that only certain loss-making entities may be privatized.

Hladkykh attaches great importance to reevaluating Ukrzaliznytsia’s fixed assets. He says that the company’s financial plan for 2006, recently approved by the government, envisages “only a partial” reevaluation: additional depreciation costs, with due account of the Finance Ministry’s objections, will run to a mere UAH 700 million instead of the projected 1.1 billion. (According to Interfax-Ukraine, the railroads’ current fixed assets are estimated at UAH 22 billion, or about $4.4 billion, which is three, and in some cases six, times lower than the market value.)

Ukrzaliznytsia will also urge the Cabinet of Ministers to raise transportation tariffs for certain types of cargo. Hladkykh said that freight tariffs in Ukraine are much lower than in Europe and the CIS. However, he did not specify whether Ukrzaliznytsia’s proposals will affect the mining and steel-producing sector, which accounts for a major part of total railway freight. Nor did he say when the tariffs might be increased. The government has rejected Ukrzaliznytsia’s earlier assessments. So far, no new proposals have been finalized, the director of Ukrzaliznytsia said.

In Hladkykh’s view, the Antimonopoly Committee’s statement that the June 1 increase in passenger tariffs is unfounded was politically motivated. “The Antimonopoly Committee has the right to demand that the documents submitted by Ukrzaliznytsia be transparent,” says the railway chief.

“The Antimonopoly Committee should work with figures; it was supposed to announce some figures. I respect Kostusiev, but he should not be making political statements because he is the committee chairman.” Hladkykh claims that increasing passenger tariffs is “a forced step. The 500 million hryvnias that Ukrzaliznytsia expects to earn as a result of the tariff increase will allow it to carry out its fixed asset modernization plans.”

As part of the fixed assets modernization scheme, Ukrzaliznytsia’s financial plan for 2006 calls for purchasing 100 passenger cars, 17 standard-gauge electric locomotives, 99 cars for diesel and electric suburban trains, 8 inter-city buses, and 3,500 freight cars. Hladkykh notes that 40 percent of the expenses — UAH 1.5 billion — will be earmarked for the purchase of passenger cars. “Of course, this is not enough,” he says.

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