Infrastructure Ministry Proposes Raising Lockage Fee On River Dnipro By 64.5%

05 July 2017 10:27

The Ministry of Infrastructure has proposed raising the lockage fee for vessels on River Dnipro by 64.5%, followed by introduction of a uniform set of rates instead of separate sets of rates for international and coastal traffic. According to calculations by the Ministry of Infrastructure, this will ensure a cumulative revenue growth of UAH 19.5 million per year, the Interfax Ukraine news agency reports.

Such initiatives are outlined in the explanatory note to the draft Cabinet of Ministers resolution "On Changing the Fees for Passage of Vessels through the Dniprovskyi Cascade’s Locks."

According to Ukraine’s Transport Strategy for the period until 2020, is one of the basic principles of operations of transport enterprises is for them to be self-financing. Maintenance of shipping locks is financed with state budget funds and revenues from fees for passage of ships through locks.

The explanatory note states that the system for preventive repair of shipping locks has virtually been destroyed by lack of funding, as mentioned in the conclusions of the board of the Ukrainian Accounting Chamber in 2008.

"The results of constant instrumental observations of shipping locks in 2016 confirmed the findings of an independent technical assessment conducted by experts from the United States Army Corps of Engineers with the support of the Ministry of Infrastructure of Ukraine. Specifically, an examination of six of the seven locks determined that it was necessary to invest USD 8.7-16.2 million in technical upgrade in priority areas," the document states. 

Based on these expert opinions, UAH 108.4 million in state budget funds was expected to be allocated for financing overhaul and reconstruction of shipping locks in the period of 2016-2017. However, since the Cabinet of Ministers did not support the relevant Infrastructure Ministry proposal during the drafting of the 2017 state budget, the only way to provide additional state support is to use tariff regulation to generate additional financial resources from the real sector of the economy.

As a result, it is proposed to increase the lockage fee by 64.5%.

Several versions of the draft law "On Inland Water Transport" have been prepared in in Ukraine in recent years. These draft laws provide for, among other things, introduction of a targeted river charge, financing of maintenance and repair of shipping locks by power generating companies, and abolition of lockage fee. However, the draft law has still not been approved.