Ukraine's Nibulon proposes reviewing indexation of Ukrainian Railways' railway transportation without routes to Danube ports

MOSCOW. Jan 21 (Interfax) - The shutdown of the Nikolayev seaport has resulted in a halt in the shipbuilding industry and cessation of navigation on the E-40 river routes (Dnepr and Southern Bug), therefore, the development of alternative export routes is an urgent necessity, Mikhail Rizak, director for interaction with the authorities at Nibulon, said.

"Nikolayev's port facilities stand ready to resume operations as soon as a political decision is made to reopen them, which will increase competition for transshipment and make export logistics cheaper," he was quoted by Ukrainian media as saying in a statement at a meeting with French Ambassador in Kiev Gael Veyssiere and which was issued by the agroholding's press service.

Nibulon representatives focused on Ukrainian Railways' tariff policy in the talks. They said that with the opening of Odessa deep-water ports the cost of transportation via the Danube ports became higher by at least $5 per tonne, and taking into account the announced indexation of tariffs, the difference may be up to $7.

Ukrainian Railways' tariff indexation will be either a lifeline for water shipping on the Danube River or an unsustainable dead anchor, the agricultural holding said.

Rizak mentioned the possibility to implement the indexation of rail transportation without applying it to routes to and from railway stations near the Danube ports.

"This will level the Danube's competition with deep-water seaports and promote further development of the Danube's infrastructure, which has gained support from USAID's Economic Support for Ukraine project and other international donor programs," Nibulon said.

JV Nibulon LLC was established in 1991. Prior to the crisis, the grain trader had 27 transshipment terminals and complexes for handling agricultural crops, capacity for one-time storage of 2.25 million tonnes of agricultural products, a fleet of 83 vessels, including 23 tugboats, and owned the Nikolayev Shipyard.

Prior to the crisis, Nibulon cultivated 82,000 hectares of land in 12 Ukrainian regions and exported agricultural products to more than 70 countries. The grain trader exported its maximum 5.64 million tonnes of agricultural products in 2021, reaching record volumes of shipments to foreign markets in August at 0.7 million tonnes, in Q4 at 1.88 million tonnes and in H2 at 3.71 million tonnes.

The grain trader is currently operating at 32% of its capacity and its head office has been moved from Nikolayev to Kiev.