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Cabinet creates crisis management team for Ukrainian Railways

Cabinet creates crisis management team for Ukrainian Railways

13 September 2021

The Cabinet of Ministers approved the creation of a crisis
management team for the stabilization of Ukrainian Railways’ (RAILUA)
operations, the company reported on Sept. 9. The team, headed by Infrastructure
Minister Oleksandr Kubrakov, will include the acting CEO of Ukrainian Railways
Oleksandr Kamyshin, deputy infrastructure, economy and finance ministers, and
representatives of other central bodies and business associations. The team
will convene its debut meeting on Sept. 16 to discuss the situation with the
procurement of “critically important goods.” Ukrainian Railways has implemented
its annual procurement plan by only 34%, and the poor provision of supplies
threatens to interrupt rail transportation, the company reported, citing
Kubrakov.

 

The idea of creating a crisis management team for
Ukrainian Railways was approved by Ukraine’s Security and Defense Council
in late July after the council concluded that the situation in the company is
“critical.”

 

Alexander Paraschiy: Instead of
making attempts to strengthen Ukrainian Railways’ supervisory board, the
government decided to substitute the board with what they call “the anti-crisis
staff.” While another state-controlled company, Naftogaz, is on the radars of
Ukraine’s Western partners due to the Cabinet’s de facto implementation of
direct control in the company by bypassing its supervisory board, a similar
situation in Ukrainian Railways draws no such attention. There is no apparent
“crisis” in the company, which has resolved its liquidity issue and is
demonstrating improved operating and financial results. Problems with
procurements are permanent and we do not believe “the anti-crisis staff” will
be efficient in resolving it. Moreover, it looks very strange that many
high-ranked officials are spending their time studying procurement results in a
state-controlled company.

 

All in all, we believe that the activity of this
team is neutral for the company, and we interpret its creation as just an
illustration of poor corporate governance practices in Ukraine rather than a
company-specific issue.

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