Ukraine plans to increase railway freight rates

Ukraine’s Infrastructure Ministry published on July 5
a draft resolution to increase freight railway rates for certain cargo types,
with the aim to increase the revenue of Ukrainian Railways (RAILUA) by UAH 1.78
bln in 2020 and UAH 10.09 bln in 2022. Among the most
remarkable changes, the ministry is going to increase the rates for the
transportation of 1st class goods (iron ore, coal, cement, mineral fertilizers)
by 8% from September and 20.4% from January, and 2nd class of goods (grains) by
8% from September and 6.5% from January.

Recall, according to Ukrainian Railways’ financial plan,
the company sees revenue from freight transportation at UAH 72.09 bln in 2021,
which is 10.8% more than UAH 65.02 bln reported in 2020, – mostly due to the
increase of freight rates (as cargo volumes were expected to increase by just
1.7% yoy).

Alexander Paraschiy: The
publishing of such an initiative ahead of possible placement of Ukrainian
Railways’ new Eurobond is good support for the placement. There is still a high
chance that the final version of the resolution (if any) will imply a lower
rates upgrade due to expected lobbying pressure from key railway customers
(iron ore and coal companies, grain traders). However, any increase of freight
rates will be beneficial for Ukrainian Railways.