Cabinet Approves Ukrzaliznytsia’s Financial Plan With 10% Average Annual Increase Of Freight Rates

The Cabinet of Ministers has approved the Ukrzaliznytsia public railway company’s financial plan, which provides for a 10% average annual increase of freight rates, the Interfax Ukraine news agency reports.

The draft financial plan that was presented at a Cabinet of Ministers on 2 March provided for increase freight rates by 15% from 1 March. However, the State Regulatory Service’s head Ksenia Liapyna told the Cabinet of Ministers meeting that the service was ready to approve only a 10% average annual increase of freight rates, following consultations with businesses.

Infrastructure Minister Andrii Pyvovarskyi added that the Infrastructure Ministry was ready to accept this just to obtain a letter of approval to enable it to start tender and investment procedures. As a result, the government decided to approve Ukrzaliznytsia’s financial plan with a 10% average annual increase in freight rates and instructed that the document should be finalized and agreed with all relevant agencies.

During the cabinet meeting, Ukrzaliznytsia’s acting head Oleksandr Zavhorodnyi said that the rate increase was expected to be postponed for coal and low-margin goods.

He added that the financial plan did not provide for raising passenger rates in addition to a 5% increase in prices for first-class compartments on Intercity+ high-speed trains, as well as for upgraded carriages and improved services on some trains.

According to earlier reports, Ukrzaliznytsia’s financial plan for 2016 provided for a net profit of UAH 96.4 million. The company’s operating revenues are projected at UAH 77.369 billion and net sales revenue at UAH 74.897 billion, including UAH 67.654 billion in revenue from transportation of goods and passengers, UAH 7.243 billion in revenue from auxiliary production (including revenues from services rendered to other companies), and UAH 2.472 billion in revenue from other operations. 

Ukrzaliznytsia’s operating costs in 2016 are projected at UAH 77.272 billion. Its transportation costs are projected at UAH 60.433 billion or 78.9% of the total project costs.

Ukrzaliznytsia’s gross profit is projected at UAH 9.363 billion, its operating profit or loss at UAH 4.8 billion, its EBITDA at UAH 27.5 billion, and its EBITDA profitability at 36.8%.

The document also provides for borrowing UAH 23.1 billion and repayment of loans totaling UAH 26.57 billion. It also provides for capital investment of UAH 13.817 billion, which is 37.1% of the capital investment needs for this year.