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Raising rail freight rates usually does not lead to increased investment in infrastructure
Transparent hint: business requires clear rules for tariff setting for UZ
Raising rail freight rates usually does not lead to increased investment in infrastructure
The state is once again trying to raise tariffs for rail freight. This time, almost without discussion with shippers and, as always, without guarantees that at least something will change for the better in the work of Ukrzaliznytsia.
At the end of 2020, the management of Ukrzaliznytsia promised that this year they would not offer an increase in tariffs for cargo transportation. However, on July 5, the Ministry of Infrastructure released a draft order on a two-stage increase in railway tariffs from September 1. Formally, everything is fair: it was the Ministry of Infrastructure, and not Ukrzaliznytsia, who proposed to increase tariffs, and if Ukrzaliznytsia is in business, then this is its new leadership, and not the one that promised not to revise tariffs.
The essence of the proposal
The intention of MIU to raise railway tariffs as part of the convergence of cargo classes did not come as a surprise. This has been discussed for a long time, and even the ex-head of UZ Vladimir Zhmak, which promised not to revise railway tariffs in 2021, admitted that sooner or later the unification of classes would occur. The arrival of a new team at the Ministry of Infrastructure has only accelerated this process.
The MIU says that the current tariff system involves cross-subsidization of various types of cargo transportation. In particular, underestimated are the tariffs for the transportation of goods of the out-of-class group and the 1st tariff class, which account for about 70% of the total volume. At the same time, transportation of goods of an out-of-class group is carried out with negative profitability. Another reason for the growth of tariffs, according to the Ministry of Foreign Affairs, should be the backlog of their indexation from the increase in the costs of Ukrzaliznytsia for cargo transportation.
MIU proposes to begin to bring together the tariffs of cargo classes as follows:
- establish tariffs for goods of the out-of-class group (now – coefficient 1.346) at the current level for goods of the 1st tariff class (coefficient 1.695);
- increase tariffs for 1st class cargo by 8% from September 1 and by another 20.4% from January 1, 2022;
- increase tariffs for 2nd class cargo (coefficient 2.419) by 8% from September 1 and by another 6.5% from January 1, 2022, etc.
The current attempt to increase tariffs is only the first step. The explanatory documents to the draft order of the MIU indicate that this will only “reduce cross-subsidization between cargoes” and “bring to a break-even level of transportation of goods of the out-of-class group and the 1st tariff class.” The final chord, the timing of which has not yet been discussed at the MIU and UZ, is the introduction of a single tariff for all classes of cargo.
The question remains open whether there will be a decrease in tariffs for goods of the 3rd class (coefficient 3.722). After all, if you follow the logic of the MIU, earlier, due to the tariff for goods of the 3rd class, the transportation of goods of the extracurricular group and the 1st class was subsidized.
the main objective
The authors of the initiative expect that thanks to the innovations of the UZ will receive additional income in the amount of UAH 1.8 billion already this year and 10.1 billion UAH in 2022. The actual goal of raising tariffs is to finance capital investments. The received funds in the amount of UAH 11.9 billion want to be launched for reconstruction in 2021-2022. 365 km of tracks and 95 turnouts, overhaul of 68 km of tracks, updating energy networks, substations and artificial structures, as well as modernization of locomotives.
It is obvious that the number of capinentrations of UAH 27 billion UAH is unrealistic in the financial plan of Ukrzaliznitzi for 2021. The SP agency predicts that in 2021, Ukrzaliznitsa will master only 10-15 billion UAH. In addition, according to the Provisional Investigation Commission of the Verkhovna Rada, to verify and assess the state of Ukrzaliznitsi, the income of the UZ from cargo transportation in the Finnish Plan of 2021 is artificially overstated by 18.6%, or by UAH 13.4 billion. And the reconstruction and overhaul of the above 365 km and 68 km of ways will not significantly improve the state of infrastructure. Indeed, 9.8 thousand km of railway tracks need repairs.
An increase in the tariff will hardly lead to an increase in capital investments of the state -owned company, because the practice of mastering funds is too far from those plans that are recorded on paper.
“Each time with an increase in the tariffs of Ukrzaliznitsa, it says that this will allow you to receive funds for capital investments. This, to put it mildly, is not true. In 2019, an increase in freight tariffs was agreed on by 14%, as a result of which the UZ was additionally received 7 billion UAH. But in the same 2019, the implementation of the Capinths of UZ was only 51%. Over the past five years, the implementation of the Capinthvesting Plan has never exceeded 70%, ”he explains Vladimir Gusak, General Director of the Federation of Employers of Transport of Ukraine (FRTU).
Business assessment
The carriers have already expressed their many claims to the draft order on raising tariffs. To judge the need to increase tariffs, you need to understand the level of cost and costs of the UZ for cargo transportation. But there is no such understanding.
“In the analysis of the regulatory influence of the project, the cost and profitability of cargo transportation by types and classes of goods are not displayed. Theses about the loss-making of railway transportation are doubtful, since due to them there is a cross-subsidization of unprofitable passenger transportation, ”the letter of metallurgists of Ukraine and the trade union of metallurgists and miners of Ukraine to the President of Ukraine notes in a letter Vladimir Zelensky.
According to business representatives, a unilateral increase in tariffs will lead to the following consequences:
one.Growth in the cost of industrial products
According to Lyudmila Crying, the executive director of the Ukrcement Association, according to preliminary calculations, the increase in the railway tariffs will affect both the cost of cement and the price of the final product. For the consumer, it will grow by about 5-8%. And this, in turn, will increase the prices of construction objects.
2. Failure to fulfill the plans of the program Big Construction
According to FRTU estimates, as a result of an increase in the cost of transportation of basic building materials (sand, crushed stone, cement), the volume of construction will decrease, including within the framework of “large construction”. There is something: according to Uz, in the first half of 2021, internal transportation of building materials increased by 21.5% to 23.3 million tons.
3. Peremnet of goods to vehicles
“The UZ talk about the receipt of an additional 2 billion UAH this year and 10 billion UAH in 2022, but it will not receive this money. We will see the accelerated outflow of customers Ukrzaliznitzі, primarily for vehicles. This trend has been observed for several years, and we have, thus, a vicious circle: UZ increases tariffs, loses customers, income is growing at the level below the expected, tariffs are increasing again, ”Vladimir Gusak emphasizes.4. Continuation of subsidizing passenger transportation at the expense of freight
“Passenger transportation in Ukraine is unprofitable, and the costs of their implementation are covered by crossing at the expense of profitable cargo. This negatively affects the financial condition of the railway industry and its development and, in fact, is an additional financial burden for business with the aim of blocking the losses of ties, ”the European Business Association notes.
According to Alexandra Kalenkov, the president of OP Ukrmetallurgprom, even in the last crisis year, the profit of the cargo transportation segment amounted to more than 11 billion UAH, and the level of profitability – 17%. Increase in cargo transportation tariffs without resolving the issue of passenger transportation (UAH 13 billion in 2020) presents an ineffective business model for the work of the UZ.
What to do?
The business is sure that the UZ once again just chooses the easiest way – it raises tariffs, using its status of a monopolist. No guarantees for improving the service and increasing investment in infrastructure, as well as prerequisites for optimizing their own activities of Ukrzaliznitzі as usual.
According to consignors, first you need to optimize and improve the work of Ukrzaliznitsi. Without this, the funds from raising tariffs will, as before, be used inappropriately and will not give an effect for the country's railway infrastructure.
In the Federation of Metallurgists of Ukraine, it is noted that the UZ must concentrate primarily on reducing current costs, reducing excess financial load and searching for reserves for increasing efficiency within the companies itself. There are reserves.In FRTU, they are estimated at least at at least 20 billion UAH per year. For example, the detectives of the National Anti -Corruption Bureau estimated the losses of UZ from corruption during purchasing in 2020 at 8 billion UAH.
However, the priority step should be the appointment of a full -fledged professional supervisory board and the leadership of Ukrzaliznitsi.
“Over the past six years, 11 managers have changed on the UZ. The average period of work is a little more than six months. Moreover, most of them were in the status of acting. This is unacceptable for an enterprise with a long planning cycle. Therefore, first of all, it is necessary to appoint a professional leadership of the UZ, ”says Vladimir Gusak.
And also, according to the business, the UZ should focus on the reform with the subsequent division of the vertical: cargo, passenger, infrastructure. In addition, it is necessary to accelerate the creation of a national commission carrying out state regulation in the field of transport (NCC).
“Railway tariff formation in Ukraine requires systemic reform, not selective solutions. The current system of tariffs of the Uz is outdated and should be revised in the complex, ”they say in FRTU.
The tasks of reforming the UZ and tariff formation on the railway are laid down in numerous documents: presidential decrees, government decrees, the national economic strategy until 2030, the national transport strategy until 2030, etc. However, in reality, both key for the industry of railway transport and “on railway transport” and About NKRT – hung without movement in parliament.
The business agrees that the tariffs for the transportation of goods need to be reviewed, but this process should be open, understandable and with qualitative changes in the work of Ukrzaliznitzi itself. In the meantime, the prerequisites are not visible so that after increasing the tariffs for the railway transportation, the quality of the services provided by Ukrzaliznitsa has improved at least the iot.
