Ukraine's economy ministry proposes 30% increase in rail freight tariffs

KYIV, June 23 ------ Ukraine's economy ministry has proposed raising state railway Ukrzaliznytsia's freight tariffs by 30% from August 1 to help stabilize the company's financial position, although steelmakers and agricultural producers warned this could make them less competitive.

With the war with Russia now in its fifth year, rail remains a vital part of Ukraine's logistics network, carrying both freight and passengers. But increased spending on security and infrastructure maintenance is pressuring the government's cash flow at a time when it is trying to restructure its debt. Ukrzaliznytsia CEO Oleksandr ⁠Pertsovskyi told Reuters this month that the firm needed to increase its tariffs by at least 45% this year to help restore its finances.

The economy ministry said in a note over the weekend that the proposed 30% increase is expected to generate additional revenue for Ukrzaliznytsia, increasing the company's financial capacity to partly cover its funding shortfall in 2026 by 8.6 billion hryvnias ($191.50 million). The ministry will consult with industry but has the power to implement the increase itself.

The company described the 30% tariff increase as a "compromise", but steelmakers and agricultural producers opposed the rise in freight costs, saying it could reduce the competitiveness of their goods on foreign markets. Pertsovskyi said an increase in tariffs by 45% ⁠would cover about half of the company's projected $587 million cash shortfall. The ministry did not specify in the note whether further tariff increases could follow to reach the 45% level. Ukrzaliznytsia said a decision on a further tariff increase from January 1 "will be made separately."

Source: reuters.com