Key Points Of the New Ukrzaliznytsia Director’s Agenda

Acting General Director of the State Railway Administration (Ukrzaliznytsia) Oleksandr Zavhorodnyi discusses corruption, lustration, his ambitions, cargoes, tariffs, buses, and other issues at his first ever press conference.
Olga Bystritska 28 July 2015 15:42

There is an opinion that Facebook is not just a social network in post-Maidan Ukraine, but also a social elevator. In one way or another, many of the current top officials in the country initially "came to light" and received offers to join the civil service or achieved promotion in the civil service thanks to their activities in social networks. If Minister of Infrastructure Andrii Pyvovarskyi is to be believed, he met the future head of Ukrzaliznytsia Oleksandr Zavhorodnyi on Facebook "I was not familiar with Oleksandr Zavhorodnyi before my appointment as minister. I learned about him six months ago, when Zavhorodnyi created a Facebook community that harshly criticized me as a minister. We met and decided to channel all this energy in a constructive direction," Pyvovarskyi said during the presentation of the new acting head of Ukrzaliznytsia.

However, there is another opinion on his appointment. The people that hold this opinion do not believe that Facebook has such huge powers and see it as part of a struggle by influential people for control of the country's railways. Accordingly, there exists the opinion that the new head of Ukrzaliznytsia is not an independent figure. One of Zavhorodnyi’s main tasks in his new position is to prove the opposite, especially considering the fact that the question of whether Zavhorodnyi is a transitional figure at the head of Ukrzaliznytsia (there are two months remaining before a new competition) or whether he is there for the long term is also important now. Zavhorodnyi himself would like to remain at the top, and he has declared his intention to participate in a competition for the post of general director of Ukrzaliznytsia after its corporatization if such a competition is held.

Zavhorodnyi’s first public address took place on 14 July. We recorded the most interesting statements by the new head of Ukrzaliznytsia.

On the future of the reform of Ukrzaliznytsia

At this point, there is already a clear vision of how Ukrzaliznytsia will be reformed. Therefore, we understand our action plan for the coming months. Our reform steps are planned to 10-day periods, and I believe that the deadlines set by the minister will be met. We will create the Ukrzaliznytsia Public Joint-Stock Company this year.

On Corruption

There are “stuffing and sucking” schemes and frequent cases of purchases at inflated prices in the industry. All these must be eradicated.

Ukrzaliznytsia will perform lustration screening of "all our people." I myself have not yet undergone such screening. As a civil servant, I have been served documents on lustration screening. This is absolutely right. I will undergo lustration as a civil servant, who is responsible for the work of the state.

"There are ‘stuffing and sucking’ schemes and frequent cases of purchases at inflated prices in the industry. All these must be eradicated"

No companies are receiving railway contracts from me. There is a company registered in the names of my brother and my son. It is a construction company, but it has never worked on Ukrainian railways.

Was there corruption in those years (when Zavhorodnyi was the first deputy head of the Pridneprovskaya Railway (2010-2011))? The case in those years was very far from us. We worked "in the field" (construction of a station in Dnepropetrovsk) practically all the time and we were not particularly interested in this issue.

On competition

A competition could have been scheduled, but we are beginning the final stage of reform in August and a competition for the post of general director of the Ukrzaliznytsia Public Joint-Stock Company will be announced in September. Where is the logic in that? Why schedule a competition today in order to block it again tomorrow? There are regulations under which I was appointed. Therefore, Andrii Pyvovarskyi did not violate the legislation in any way. I participated in the previous competition for the post of general director of Ukrzaliznytsia and I intend to participate in the competition for the post of head of the Ukrzaliznytsia Public Joint-Stock Company.

On personnel policy

The team should be professional and it should ensure efficient and safe operation of railways. Unfortunately, we will make major personnel changes, which will affect only heads of departments and heads of structural units. It will not affect the managements of railways at this stage. Regarding personnel decisions, this information will be open. There will be 3-4 candidates for each position. The candidates will be considered by a personnel commission, which will appoint the candidate that demonstrates the best understanding of the need to implement reform.

On cargoes

We are preparing a procedure for detailed analysis and preparation of measures aimed at increasing the volume of cargo transportation. There are many ways. The first of them is normal work with clients, meeting their needs, and ensuring technical removal of railcars. The second is introduction of regulation on organization of safe transportation by road to ensure that vehicles weighing 100 tons do not destroy our roads. Ukrzaliznytsia loses large volumes of highly profitable cargo today because there is no control over transportation of goods by road.

On reducing losses

One of our tasks is to bring intercity, urban, and suburban rail transport to a break-even level. It is proposed to address this problem by introducing buses, among other things. We have a number of routes on which two railcars operate two or three times a week, carrying five passengers. That notwithstanding, a locomotive has to be provided for them, and we spend a lot of money on maintenance and fuel for them. However, it is cheaper to buy three or four buses for transporting passengers. Such a mechanism works in France and Germany.

On tariffs

We have a situation in which transportation costs are much lower than the costs of organizing transportation. Tariffs should be justified and level the situation.

Any mode of transport should compete with something. Therefore, there should be a tariff component determined by the government. For example, we currently have a cost of UAH 356 passengers per kilometer while the planned cost is UAH 116 passengers per kilometer. We are incurring losses from such a situation. However, not only the economy, but also the operational component, is also to blame for this. When we bring trains into a state of normal operation, we will see what the figure will be in terms of the tariff. If we raise tariffs for passenger transportation at this stage, we will lose in a competitive environment.

As for cargoes, I believe that tariffs for cargo transportation should definitely be increased. Increase of tariffs for cargo transportation will be objective.

"I participated in the previous competition for the post of general director of Ukrzaliznytsia and I intend to participate in the competition for the post of head of the Ukrzaliznytsia Public Joint-Stock Company"

On upgrade of rolling stock

Provision is made for purchase of a Ukrainian diesel train produced by the Kryukov Railcar Building Works this year, using credits that do not currently exist.

Negotiations on purchase of new locomotives are currently being held with a major Chinese state company, as well as with the manufacturers Bombardier, Siemens, etc. As of today, we badly need dual-system electric locomotives, AC and DC, for passenger and freight transportation. They will enable us to perform many tasks.

As for freight cars, they are currently sufficient to meet the needs of shippers.

On the Crimea and the Donbas

Restoration of links with the Crimea is technically possible, but there is a problem inspection of trains and customs control. These are for the government to decide. If there is an order to restore links, we can do it in one hour.

The railroad has performed the full range of work aimed at switching control of the Donetsk railway to itself. There are three models for address the situation, and the issue will be resolved at the government level after the return of a government delegation. For now, everything is working as it worked before. All the loading work is performed by the CD department, but the network has not been disconnected in reality.

The issue of normalization of railway links in the direction of Mariupol is also currently being addressed. We have held talks with Metinvest and ISD, and we are negotiating with Energougol and the Ministry of Fuel and Energy. Each of the entities interested in the work of these corridors is providing very strong support.

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