The Ukrainian Railways joint-stock company (Ukrzaliznytsia) has announced plans to upgrade its fleet of passenger cars in 2020, the CFTS portal reports, citing information from Ukrzaliznytsia.

The company intends to spend UAH 500 million on modernization of 40 cars and UAH 600 million on purchase of 26 new railcars. Ukrzaliznytsia expects to generate part of the funds for financing this investment program (about UAH 700 million) from indexation of passenger transport tariffs.

As the CFTS portal previously reported, Ukrzaliznytsia’s draft financial plan for 2020 provides for indexation of passenger tariffs. In particular, it provides for monthly indexation of passenger tariffs by 2% from March 1.

If the financial plan is approved as proposed, then the company’s passenger tariffs will be raised by 22% in December 2020, compared with January 2020.

According to Ukrzaliznytsia, the company plans phased indexation of its passenger tariffs for all categories of railcars, except first-class railcars in Intercity+ trains.

The company attributed the need for tariff indexation to the fact that its passenger tariffs were last revised in the fall of 2018. Since then, prices of solid-rolled wheels for passenger cars have risen by 64% and prices of spare parts for railcars by 35% while prices of other industrial products necessary for passenger transportation have risen significantly.

In addition, according to Ukrzaliznytsia, passenger transportation is unprofitable for the company. It is financed through cross-subsidization with income from freight transportation. Losses from passenger transportation could reach UAH 14.3 billion in 2020, according to the company.

As reported earlier, Minister of Infrastructure Vladyslav Kryklyi announced plans for purchase of 26 passenger cars next year during a visit to Kharkiv on November 12. He also announced plans to purchase 2,000 freight cars.

Ukrzaliznytsia has acquired 70 new passenger cars and upgraded 200 in the past four years.

The company planned to overhaul over 50 wagons in 2019.

According to Ukrzaliznytsia, 2,864 wagons were involved in passenger transportation as of the first half of 2019. The average age of the wagons is 32 years, compared with the standard 28 years.