Creditors need transparency in the accounts of Ukrzaliznytsia - Interview With Resident Twinning Adviser Jose Samino

Was the direction of railway sector reforming in Ukraine chosen correctly?

In the Railways Sector of Ukraine, there is a situation of obsolescence of the Rolling stock and underinvestment in the network. The solution is to attract investment into the sector.

The investment can come mainly from two sources: (1) from the taxpayers or (2) from other sources. If we assume that the taxpayers do not want to subsidy the commercial activities of UZ, the investment can come in two forms: debt or equity. To increase the appealing for debt, the reforms should increase the transparency in the accounts of the railways company and the repayment capacity of UZ. To allow the equity to flow in, Ukraine has to create market niches for other players (among them, operators of locomotives).

The law that the MiU has proposed will be the first step to increase the investment attractiveness of the sector both for equity and for debt. Therefore, I think that the New law on Rail Transport is the first step in the right direction.   

How do you evaluate giving access to private locomotive traction in Ukraine?

I do not see the point of the word private here. It does not matter who owns the locomotives. A railway infrastructure is meant for being used by locomotives. Ukraine has a significant railways infrastructure, so locomotives and trains should run on it and as modern ones as the system can afford. 

The main point is that the management of the infrastructure and the locomotives should be separated.

According to your opinion, when private carriers will be able to appear in Ukraine?

From the technical point of view, as soon as you want. In fact, there are already locomotives that do not belong to UZ using the railways infrastructure of Ukraine

From a legal and economic point of view, I think that a transparent and non- discriminatory framework for using the infrastructure as well as a new safety management system should be created first. Once this framework is created, the government will decide when they want to let private operators in. It is a political decision that could be urged by the obsolescence of the rolling stock.

How do you evaluate the pace of rail transport reforms in Ukraine?

Ukraine committed last year with EU to make structural changes in the sector before 2022. Today, we have on the table a New Law on Rail Transport. I think Ukraine will be ready to fulfill its commitments if the law is approved by the parliament. 

Which steps could be done in order to speed up the liberalization process?

I would not focus on how to do it faster, but on how to do it better. I think that the wagon segment should be liberalized first and the tariff coefficients that discriminate certain types of cargo and favor the transport on long distances should be eliminated.  

Could you tell about the experience of railroad reforms in Spain? How long did reform take?

Nowadays Spain is one of the world top leaders in the Railways Sector regarding quality and reliable passenger transportation, high-speed lines, infrastructure building and trains producers.  

Since the first railways line built in Spain in 1837 (by the way in the island of Cuba) a lot of changes have occurred and a lot of reforms have been undertaken.

In 1986, Spain became a member of the European Union, which has the goal of creating a single market based on the free movement of people, goods, services and capital.  In the railways sector, due to a number of barriers (e.g. technical, linguistic, institutional…) the situation is far from being a single market. Therefore, the reforms are still on process after 30 years. These reforms have been a priority for Spanish Governments in the last 25 years.

If you are meaning the separation of infrastructure manager and the railways undertakings foreseen in the EU directive 2001/14, then the New Law on Rail Transport was approved on 2003 and the infrastructure manager and the state services operator were actually separated as of the 1^st January 2005.

How many goods are transported by Spanish railroads per year now?

In Spain the contribution of the railways to the freight transport is very small, representing 2,59% of the market and 7,5 billion ton-km per year.

To put these figures in perspective, you have to consider that Spain is the first country in the world in kilometers of highway per inhabitant and 3 of the top ten container ports in Europe are in Spain.

Do private carriers have access to the infrastructure?

Yes, there are around 15 operators.

Tell us about Talgo system in Spain. Why was it developed and which effect did it bring? Could it be applicable in Ukraine?

In Spain we have a network of 11.750 km with a track width of 1668 mm and a high speed network of 2.400 km (the second larger in the world after China) with the width of 1435 mm. In Spain we are using automatic gauge changeovers to allow the trains to adapt automatically to different gauge without stopping.

Regarding the manufacturers, I would like to point out that in Spain there are two manufacturers of trains with onboard systems for automatic gauge changeovers. One system was developed by TALGO and the other by CAF. In addition, ADIF, the infrastructure manager, has developed infrastructure systems for automatic gauge changeovers that can be used with trains of both TALGO and CAF.

In Ukraine, most of the network has a gauge of 1520 mm. Therefore, the system has no domestic use for Ukraine. If we talk about the borders of Ukraine with EU, then these systems could be useful, but the question should be extended to Poland, Hungary, Slovakia and Romania.