Ukrainian Railways plans to purchase new GE locomotives

Ukrainian Railways (RAILUA) is going to order up to 40 new diesel locomotives from General Electric (GE US), the company’s CEO Yevhen Kravtsov told unian.ua news agency on Aug. 12. He says that the new batch of locomotives could be ordered in late 2019 or early 2020, depending on GE’s order backlog. Recall, the company signed a memorandum for board cooperation on diesel locomotives, as well as ordered a first batch of 30 locomotives that were supplied to Ukraine in late 2018 and early 2019. On top of that, Ukrainian Railways is in active negotiations with France's Alstom (ALO FP) and China's CRRC on potential orders of new electric locomotives that will be financed in the countries of the producers’ origin.

 

Answering a question on Ukrainian Railways’ plans to attract an international investor to the company, Kravtsov said that he supports the idea of its partial privatization via IPO or the placement of shares among some of its peers.

 

Alexander Paraschiy: Ukrainian Railways’ leverage allows the company to expand its orders for new locomotives, while the poor condition of its existing fleet underscores the necessity for such moves. We expect the new orders will improve the company’s operating efficiency in the mid-term. Kravtsov’s vision on a possible share placement of Ukrainian Railways is line with the position of the new Ukrainian power brokers that the company is at the top of the list for a possible partial privatization, as voiced in late July by Oleksiy Honcharuk, deputy head of the presidential office and one of the top candidates for the prime minister's position. That said, we keep our neutral position on RAILUA bonds.