Ukrzaliznytsia considers 15% freight railway rate hike as of November

Ukraine’s railway monopoly Ukrzaliznytsia (RAILUA) is
now considering the possibility of hiking freight rates by 15% as of November,
the company’s press service reported. The company has discussed an
Infrastructure Ministry draft resolution raising rates with “members of the
transport market” on Oct. 9, according to Ukrzaliznytsia report.

Recall, Ukrzaliznytsia’s 2017 business plan approved
last month by Ukraine’s Cabinet assumed a 22.5% freight rate hike as of October.
However, the initiative was blocked by State
Regulatory Service Head Kseniya Lyapina, who suggested the railway company
discuss the rate revision with its clients.

Alexander Paraschiy: All this is fully in line with our expectation that the freight rate
hike will diverge from what Ukrzaliznytsia assumed in its business plan, in
both delayed timing and smaller increase. While there is nothing positive in
such a development, it won’t hurt the company’s solvency and liquidity this
year as most of the money from the rate hike was planned to be directed to
CapEx programs. All this allows us to confirm our neutral view on RAILUA
Eurobonds.