Ukrzaliznytsia to sue Russia for its losses in Crimea

Ukrainian railway monopoly Ukrzaliznytsia (UZ, RAILUA) is preparing legal claims against Russia aimed at compensating its losses from the illegal annexation of Crimea, Deputy Infrastructure Minister Volodymyr Omelyan told the UNIAN news agency on Jan. 12. He said that the legal action may start in 1-2 months, after the ministry and cabinet approves the monopoly’s claim.

Alexander Paraschiy: This is the right approach for Ukrainian companies to take. However, it would bring little to Ukrzaliznytsia, even if it succeeds. Its Crimean division was never important as it contributed to total revenue less than 2%. Overall, its Crimean operations were loss-making, we estimate. UZ’s total claims to Russia are unlikely to exceed UAH 1.1 bln, which is the total book value of its Crimea-related assets as of end-2014, based on its annual report. This is roughly 1.5% of UZ’s total assets and 2.8% of its financial debt as of end-1H15. UZ generated far more losses from the warfare in Donbas: in 9M15, the EBITDA of its Donbas-based division was almost zero, compared to UAH 1.1 bln (or 18% of UZ’s total) in 9M13.