Winds of change at Ukraine’s national railway

It appears that Ukraine’s new government replaced middle-level managers only for a short while. Of course, it is still too early to speak of a general trend. Yet it is already being felt at the Ukrainian railway operator Ukrzaliznytsia, if a recent statement by newly appointed general director Vasyl Hladkykh is anything to go by. The new railway chief, who served as deputy general director of Ukrzaliznytsia under the late Heorhiy Kirpa, marked his second appointment to the same position with the announcement that he intends to bring back the people from his former team. After all, he says, they are professionals.

One of the general director’s main priorities will be the social rights of railway employees and efforts to restore the company’s former good name by restoring good passenger service. The railway chief is running for parliament at the head of the Vidrodzhennia [Revival] Party, and these efforts are guaranteed to meet with passenger support, since rail service has deteriorated in the last while. Hladkykh informed journalists of his plans to proclaim 2006 as the “year of railway routes” in order to facilitate their construction and repairs, start the refurbishment of railway terminals in raion centers, and finally address the needs of the physically challenged by building access ramps and convenient platforms, and providing special train cars. The railway operator also plans to replenish its fleet of trains, refurbish commuter trains, and provide free transportation to underage children during the winter holidays. The plans also include the construction of a railway bridge in Kyiv and the introduction of high-speed electrical trains to the Crimea and western Ukraine. Most importantly, Hladkykh says that beginning next year there will no longer be any problems with train tickets.

His predecessor constantly complained about the lack of funds. The new chief has not overlooked this issue either. According to Hladkykh, the state budget absorbed six billion of Ukrzaliznytsia’s hryvnias, whereas its cost and profit margin is UAH 961 million. The transport ministry’s transit policy is also decreasing the railway operator’s profitability, cutting into last year’s profit by 3 percent. Hladkykh believes that by leveling the difference between tariffs for domestic and international shipments, the ministry deprived the transit tariff of its flexibility. The new railway management plans to restore this flexibility next year. The managers realize that by indiscriminately raising transit tariffs, the ministry runs the risk of losing Ukraine’s competitive edge afforded by its status as a transit country. Still, other tariffs will be raised in view of the complaints about the plight of this sector. According to Hladkykh, prices for cargo shipments will increase gradually, rising by 1-2 percent each month to eventually reach a 12 percent increase in the domestic market. Private owners — a reference to metal combine owners, the railway operator’s main clients — must share with the state. Hladkykh says that prices for passengers will also rise. Buses fueled by expensive gasoline charge UAH 0.15 per kilometer, whereas trains, which run on relatively cheap electricity, charge a mere UAH 0.01 per kilometer. Hladkykh says that Ukrzaliznytsia’s losses from passenger transportation in 2005 amount to UAH 2.4 billion. Still, budget funding is not Hladkykh’s only hope. Investors represent a second main source of funding. At least the railway operator hopes to attract investors to finish the Darnytsia railway terminal in Kyiv.