The Supervisory Board of JSC "Ukrzaliznytsia" (UZ) has approved the indexing of freight transportation tariffs, reported the company's press service.
"Freight railway tariffs have not been indexed for nearly two years - since the summer of 2022, and the previous indexing did not bring the tariffs to an economically justified level. During this time, the index of producer prices for industrial products has already reached 176.4%. Meanwhile, the railway workers proposed to limit the tariff indexing to a much more moderate figure: only 37% or about 13% annually, considering that 2.5 years have passed since the last indexing," the press service stated.
It was noted that the proposals for tariff increases were approved by the UZ board on December 5, 2024.
The approved changes will subsequently be submitted for consideration by the Tariff Council at the Ministry of Community and Territorial Development of Ukraine, UZ clarified.
The company reminded that according to the Cabinet of Ministers' resolution dated December 16, 2009, No. 1392 "On Ensuring Transparency of State Tariff Policy for Freight Transportation by Railway within Ukraine," tariffs for freight transportation by railway within Ukraine must be indexed annually.
"Unfortunately, this norm has not been regularly fulfilled, and the dynamics of tariff indexing for freight railway transportation have significantly lagged behind the changes in prices for the main resources consumed by the railway," UZ stated, recalling that freight railway tariffs have not been indexed for nearly two years - since the summer of 2022, and the previous indexing did not bring the tariffs to an economically justified level. During this time, the index of producer prices for industrial products has already reached 176.4%.
In particular, since the last revision of freight tariffs, electricity prices have increased by 166%, diesel by 110%, spare parts for diesel locomotives by 217%, spare parts for electric locomotives by 22%, bearings by 37%, and solid-rolled wheels by 20%.
It was indicated that this has deprived the company of the opportunity to carry out necessary repairs of infrastructure and rolling stock, as well as to index the salaries of railway workers, more than 10,000 of whom are defending Ukraine in the ranks of the Armed Forces, and to fulfill social obligations to them.
"Indexing tariffs for freight transportation is vital for the sustainable operation of the Ukrainian railway and adherence to safety standards. The level of tariff indexing has been calculated to be minimally sufficient to finance operational expenses and conduct critically necessary repairs of infrastructure," quoted the UZ press service the chairman of the supervisory board of UZ, Hafer Gepard.
It is reported that the planned indexing will allow financing the repair of rolling stock and infrastructure at a minimally required level. Otherwise, there will be significant risks for the continuity of safe operation of the state's critical infrastructure.
UZ Chairman Oleksandr Pertzovsky promised to openly present and explain to clients the upcoming changes in freight tariffs.
"We will openly present the indexing proposals and explain them to our clients - both the largest and smaller shippers from all sectors of the economy, and we will also record what compensations and operational improvements they expect from 'Ukrzaliznytsia'," the press service quoted Pertzovsky.
He emphasized that railway workers continue to reliably deliver cargo despite daily shelling, restoring track and energy infrastructure in the shortest possible time to not let down clients and the entire Ukrainian economy.
"At the same time, we owe significantly to the railway workers themselves - their wage level is significantly lower than the industry average, and several social payments have been suspended. Tariff indexing is critically necessary to ensure that the working conditions of railway workers do not worsen," Pertzovsky stated.
It was previously reported that the Tariff Council at the Ministry of Community Development, Territories, and Infrastructure (Mivostroitelstva) approved a draft decision on the unification of tariffs for freight transportation by railway. As reported, "UZ" and representatives of Ukrainian businesses are working together on the unification of the tariff formation system for railway freight transportation proposed by "Ukrzaliznytsia" since October 2022.
Former UZ Chairman Yevhen Lyashenko stated in an interview that without unification, the company would not be able to finish the year with a profit. According to him, for 2024, it is planning not an increase in freight tariffs but their harmonization. This involves a complete change of their calculation model due to the simplification of the tariff formation system, which consists of five different classes and over 20 coefficients. Among the proposals is a unified tariff for the transportation of empty wagons and classification by classes linked to the transportation technology.
According to preliminary calculations, the harmonization of tariffs was expected to bring the company an additional 3-4 billion UAH by the end of the year, depending on when the government approves this decision.