Ukrzaliznytsia 15% freight rate hike gets green light, CEO says

The State Regulatory Service has approved a 15% hike
in freight railway rates, Interfax-Ukraine reported on Oct. 18, citing a social
media post by the acting CEO of Ukrzaliznytsia (RAILUA), Ukraine’s state railway
monopoly. He wrote the approval was the result of a compromise reached in “an
open dialogue with business.” No other details of the decision were provided.

Recall, Ukrzaliznytsia was earlier expecting that
freight rates would be increased
by 22.5% as of October, which would allow the company to generate additional
revenue of UAH 2.9 bln in 2017. But the corresponding draft resolution from the
Infrastructure Ministry was blocked by the State Regulatory
Service in late September. Last week, Ukrzaliznytsia reported
it was discussing a 15% rate hike as of November
with “members of the transport market.”

Alexander Paraschiy: The chances
now look high that a freight rate hike of 15% will take effect as of Nov. 1.
This is better than nothing, but it means Ukrzaliznytsia will generate UAH 1.2
bln in additional revenue/income from the rate hike this year, or 60% less than
it initially planned. If it happens, the rate hike may affect positively RAILUA
Eurobonds, though we are sticking to our neutral recommendation on it.