Despite the Economy Minister Aivaras Abromavicius's willingness to privatize as many state-controlled assets as possible, government-run railway monopolist Ukrzaliznytsya won't be sold to a private investor any time soon, according to its interim head Maksym Blank.
As a natural monopoly, Ukrzaliznytsya controls
100 percent of the track in a country.
Due to the ongoing
war in the Donbas, company had to cut its spending with capital investments falling by 40 percent, down to $305
million. In July, Blank told
the Kyiv Post company
needs $20 billion for modernization.
The war also
brought down the freight deliveries by 12 percent, so they didn’t exceed 400
million tons. Passenger traffic reached 440 million people, 9
percent down.
So
far, Ukrzaliznytsya keeps making most of its revenue from freight
transportation, while prices for the passenger tickets stay below the market price
and have to be subsidized.
However,
price policy will be changed, given almost 25-percent inflation last year.
Passengers travelling with Ukrzaliznytsya will have to pay 7 percent more,
while the list of subsidized groups of population will be cut significantly.
Company
also plans to raise the freight tariffs by 30 percent starting Feb. 1. As
country feels a critical shortage of coal, prices for delivering it will grow
only by 10 percent.
Impact of war
In
the east of the country, some 1,400 infrastructure objects, mostly railroads
and bridges, were damaged, some quite severely. Losses are estimated at $58
million. Ukrzaliznytsya doesn’t plan to restore transportation links with
Crimea and Donbas, regions that are a target of the Russian aggression, in the
nearest future.
However,
company tries to keep a normal regime of cooperation with its Russian
counterpart – Rossiyskie Zheleznye Dorogi (RZD). Though it mentions, if there
will be proven facts of Russian railroad’s cooperation with the separatists –
joint operations will be halted.
“Now,
RZD sticks to the neutral position as they understand that otherwise they might
not only get problems with us, but also face international sanctions,” Ukrzaliznytsya’s
Blank said.
Changes in Ukrzaliznytsya’s management
Ukrzaliznytsya
previous chief executive officer Borys Ostapyuk was fired in September, as
Prime Minister Arseniy Yatsenyuk accused him of “possible power abuse in
financial and business activity.”
Blank,
41-year-old former investment banker, became interim head of the company,
though he refused to apply for a position of a full-time CEO. Work at
Ukrzaliznytsya “brought me nothing but troubles so far – rummage, criminal
case where I’m a witness,” he said during the Jan. 22 news conference in Kyiv.
“To
participate in an open competition (for the CEO position) you have to be liked.
You have to be liked by the industry, by the members of parliament, by the city
mayors and governors, by the industrial lobby, by the members of Cabinet of
ministers,” he wrote in a Jan. 17 Facebook post. “And to present a
program that everyone would like. But the program that I’m implementing in fact
– it doesn’t contain any points that (people) like.”
Therefore,
competition goes on. The Insider, a news website, published a list of potential
candidates for the top position at Ukrzaliznytsya. It includes mostly
current and former company executives. Roman Bondar, a head hunter involved in
finding the best candidate, says
Ukrzaliznytsya needs Steve Jobs in order to be managed effectively.
Kyiv Post staff
writer Olena Gordiienko can be reached at [email protected].
