Ukrainian Railways proposes 37% hike for freight tariffs

MOSCOW. Dec 10 (Interfax) - The Supervisory Board of JSC Ukrainian Railways has approved a proposal to increase freight tariffs, Ukrainian media said, citing the company's press service.

"Rail freight rates have not been indexed for nearly two years, since the summer of 2022. And the previous indexation did not make the tariffs economically profitable. The index of industrial producers' prices has already reached 176.4% over this period. At the same time, the railway sector has proposed limiting the tariff indexation to a far more moderate figure of only 37% or about 13% in annual terms, given that 2.5 years have passed since the last indexation," the press service said in a statement.

The proposed tariff hike was approved by the Ukrainian Railways board on December 5, 2024, it said. These changes will now be submitted to the Tariff Council of Ukraine's Communities and Territories Development Ministry for consideration.

The government's December 16, 2009 decree "On ensuring the transparency of state tariff policy for cargo transportation by rail within Ukraine" requires the annual indexation of these rail freight tariffs, it said.

"Unfortunately, this requirement has not been fulfilled regularly and the dynamics of indexing the rail freight tariffs lags far behind the changes in prices for the main resources consumed by the railroad," the company said, repeating that there has been no indexation of the rail freight tariffs for nearly two years, since the summer of 2022.

In particular, since then electricity prices have increased 166%, diesel prices have gone up 110%, prices for diesel locomotive spare parts have risen 217%, prices for electric locomotive spare parts have increased 22%, and prices for bearings and whole-rolled wheels have gone up 37% and 20%, respectively.

This circumstance has dented the company's capability to maintain infrastructure and trains in the required amount, raise its employees' wages and fulfill other social obligations, it said.

The planned indexation will enable the minimum required level of financing for maintenance of trains and infrastructure, the company said. Otherwise, there will be serious risks to the uninterrupted safe operations of Ukraine's critical infrastructure.