The State Regulatory Service of Ukraine has refused to register the Ministry of Infrastructure’s draft order entitled "On Amendments to the Coefficients that Apply to the Collection of Tariffs for Cargo Transportation by Rail within Ukraine and Related Services," the Interfax Ukraine news agency reports, citing a press release by the State Regulatory Service.

The Ministry of Infrastructure drafted the order on increase of railway tariffs because of the difficult financial situation of the State Railway Administration (Ukrzaliznytsia).

"Despite numerous comments by business entities, which are one of the key reasons for the State Regulatory Service’s decision to refuse to approve the Ministry of Infrastructure’s draft order, we need to find a compromise solution to the existing problem in the area of freight transportation by rail," a press release by the State Regulatory Service’s head Ksenia Liapina states.

According to her, a mechanical increase of tariffs alone without structural changes within Ukrzaliznytsia cannot be an effective measure to improve profitability of the industry and it will again be necessary to increase tariffs with time. "Therefore, substantial structural reforms of the industry as a whole are necessary," said Liapina.

In addition, according to the press release, during a meeting with representatives of the State Regulatory Service, the Ministry of Economic Development, the Ministry of Infrastructure, the Antimonopoly Committee, and Ukrzaliznytsia, as well as representatives of public associations and business entities, participants in the meeting decided to propose that the Ministry of Infrastructure, the Ministry of Economic Development, and the management of Ukrzaliznytsia to publicly discuss Ukrzaliznytsia’s draft financial plan and intensify the joint work on creation of an independent body for regulating the operations of natural monopolies in the transport sector and business entities operating in related markets.

The participants in the meeting also recommended that Ukrzaliznytsia analyze the efficiency of the use of funds the received from the latest increase of railway freight tariffs (including the 30% increase in January 2015) and publish the results of the analysis on its website.

As reported, Ukrzaliznytsia submitted a proposal to raise tariffs for freight transportation by about 25% to the Ministry of Infrastructure in February. Ukrzaliznytsia’s acting head Maksym Blank attributed this to the devaluation of the hryvnia and the increase of fuel prices. Railway freight tariffs also increased by 30% in February (excluding railway freight tariffs for coal, which increased by 10% in February and by a further 18.2% in April). The Ministry of Infrastructure expected the latest increase to take place before May.