Ukraine moves towards liberalisation of rail freight sector 24/12/19
< Back to listUkraine moves towards liberalisation of rail freight sector
The Government of Ukraine plans to liberalise the country’s rail freight sector. To this end, a pilot project will be introduced on railways. Until 4 December 2021, the private enterprises will be able to provide haulage service on the main lines with their own locomotives. Currently, this option is under state monopoly, it is performed solely by state-owned company Ukrainian Railway (UZ).
To realise the pilot project, Ukraine’s Ministry of Infrastructure must implement the temporary regulations and choose the participants. Several industrial and logistics companies have already declared their intention to take part in this project. The final list has not been compiled yet. To get approval for haulage operations on the UZ’s main lines, the private companies must meet three main conditions.
“The requirements for project participants from the standpoint of Ukrainian Railway (Ukrzaliznytsia) should be reduced to four or five points. Three main ones are dealt with locomotives, train drivers and traffic safety,” said Anton Sabaleuski, Director for Strategic Development and Investment Policy at Ukrainian Railway, to ‘Magistral’ title, the company’s corporate media. This means that the private companies must certify their locomotives and train drivers as well as must have a safety management system.
Long-pending law
This move is a revolutionary milestone for Ukraine’s rail freight sector. As of today, there are no private rail freight carriers in Ukraine. This issue is not allowed by the current legislation. According to it, Ukrainian private companies are able to own wagons and locomotives as well as perform shunting operations only on the industrial spurs that are managed by them. To deliver some freight from one station to another even using their own wagons, they are obliged to order haulage service from Ukrainian Railway. In the recent past years, they are being suffered from periodical delays and other issues caused by an outdated locomotive fleet of Ukrainian Railway.
The Government of Ukraine expects that the pilot project will enhance the situation and will speed up the adoption of a new railway law that, in its turn, will allow the private haulage on a regular basis. For more than a decade, several projects of this document have been proposed and reviewed by the Ukrainian Members of Parliament. None of them has been approved. Currently, a new version of the railway law is under the scrutiny of the country’s legislative body.
Towards privatisation
Besides the pilot project on the main lines, the Government of Ukraine is also considering the privatisation of Ukrainian Railway (UZ). In early Autumn the Prime Minister of Ukraine Oleksiy Honcharuk declared an intention to split the state-owned company into three separate entities with different functions: passenger and freight transportation as well as maintenance of rail infrastructure. Later, the government has changed its mind and focused on the initial public offering (IPO) of the entire company. The UZ’s shares could be listed on the foreign stock exchange. Ukrainian Railway intends to accumulate at least 1.6-2.7 billion euros with the help of IPO.