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20 August 2017
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Infrastructure Minister: The better the managers we think we have, the longer the trail of corruption behind them

Ukraine's Infrastructure Minister Vladimir Omelyan in an interview with UNIAN has told when high-quality roads will be laid in Ukraine and sea ports will stand competition. He also said who the nominees for the position of the Ukravtodor CEO were, and explained the situation with cargo transportation in the ATO zone.

Volodymyr Omelyan was appointed Minister of Infrastructure on April 14 by a quota of the People’s Front faction. Prior to that, for almost 18 months, he has worked as deputy minister of infrastructure under Andriy Pyvovarskiy. Omelyan has come to the civil service in 2000 and since then, he starred in various ministries, including the Foreign Ministry, the Economy Ministry, the Ministry of Environment, and the Ministry of Finance. He knows from experience how difficult it is for the member of the Government to work with the MPs. One of the priorities of his work the minister calls corporatization of Ukrzaliznytsia (Ukrainian Railways) and Ukrposhta (State Postal Service) and reform of road and maritime industries.

Omelyan If I don’t do my job, I’ll quit / Photo from UNIAN
Omelyan If I don’t do my job, I’ll quit / Photo from UNIAN

Have you completed the formation of your team? What difficulties have you encountered?

Forming a team is complete. All the deputies I wanted to see have been appointed. However, it took longer than I expected. I was worried that I was searching for the people I needed too long – it took me about seven to ten days, as I had interview nearly 50 candidates. Then the approval of candidates was discussed in the Cabinet for quite a while. Now the main thing is that we have the result.

Today’s agenda includes the issue of restructuring the ministry, setting a new work style. Together with the European Union, we have been working on a functional analysis of the ministry’s operations and only after it, can we move on to changing the structure. I hope this also will be successful. We expect that the new structure will start operating in September-October of this year.

Will there be layoffs in the framework of this restructuring?

The staff has already been reduced to its low, there’s no way we can cut more. That is, we have a little over 250 people and, believe me, it's a very small number of employees compared to other ministries.

How have you divided responsibilities between your deputies?

In addressing this question, I went the other way. My first deputy Yevhen Kravtsov is responsible for the overall reform, i.e. the railway reform. In particular, it’s the completion of corporatization of Ukrzaliznytsia, the reform of the maritime industry which we launched on June 10, the reform of Ukravtodor, including the Road Fund. In addition, Kravtsov will mediate between the Ministry, the State Aviation Service and the aviation market. He will also be responsible for a number of other segments, particularly river transport, legalization of taxi and car carriers, as well as for creating a unified system of electronic services.

Another deputy, Nadia Kaznacheyeva, will deal with the issue of privatization, because my goal is to get rid of most of state property and fake strategists who are only a burden to taxpayers.

The third area is the fight against corruption – a task entrusted to my deputy Yuriy Lavrenyuk. My vision is that this person should do real investigations and provide an objective picture of the offenses committed within the Ministry of Infrastructure and the subordinate state enterprises. Lavrenyuk has extensive operational experience, and he was highly acclaimed working at the ministry as an outside advisor last year and now. So I think he has a chance to prove his skills at his new position.

By the way, I decided to keep the post of a deputy for European integration, but I changed its functional range a bit. Now the primary task of Viktor Dovgan is not just going on foreign work trips, but the work within the ministry to ensure that we actually move to the European regulation directives.

And another deputy is a Chief of Staff, Dmytro Romenskyi, who has extensive experience of bureaucratic work, a certified lawyer. That is, a person who knows how to say "No" when others say "Yes." This is also a significant role and function.

Why did you decide to move away from the traditional division of responsibilities between the deputies?

We want to create the central bodies of executive power that will deal with certain industries. Unfortunately, so far, we’ve only had functional deputies, while all industries were managed manually, and this wrong. This is no systematic approach. There must be an effective system that does not nourish the heroes, but simply does its job.

How did you manage to persuade these people to come to the ministry with such low wages? As we know, the issue of fair compensation for responsible work still remains unresolved ...

In fact, it’s easier to find deputies than a chief specialist. A deputy minister is, in fact, a high office, whatever you say. This is about the image, a nice record in the CV, which will facilitate finding a high-paying job in the future. Therefore, the primary motivation of these people is career growth. I hope that their work will be a success. But if they do not fulfill their obligations, then I say goodbye. The same requirements I put forward to myself.

As for the wages, I want to note that we are currently working with the European Commission on this issue, and I very much hope that the pilot project on creation of a special fund to pay market salaries will be launched based on our ministry. It is very difficult to work in such conditions when the chief specialist receives a little over UAH 3,000 per month. Such work leads us nowhere. It would be  self-deceptive to believe that people get low salaries and still work efficiently.

Meanwhile, your deputy Viktor Dovgan announced that in October-November this year, the ministry employees will receive salaries equivalent to EUR 1,000. It is so?

Let us finish the work of the European Union. Today, we are only at the beginning of cooperation in this area. Only in autumn will we be able to say whether we succeeded. I hope we will succeed.

Personnel changes have affected not only the staff of the ministry, but also subordinate enterprises, including the State Agency of the Ukrainian roads. Was resignation of the head of Ukravtodor, Andriy Batyshchev, unexpected for you, or was it a game ahead of the curve?

No, this resignation was not unexpected. This sector faces a lot of challenges set by the prime minister, among them is the reform of Ukravtodor, legislative work and quality use of a huge sum allocated for the road sector for the first time in the Ukrainian history totaling about UAH 19 billion.

Did I understand you correctly? Has Batyshchev fail to fulfill his tasks?

Batyschev did his job well, and we really appreciate that, but the country will constantly need new heroes until there is an adequate system.

I won’t deny, this decision was taken together with all stakeholders, so it was not exclusively my initiative. Now there is a key task on the agenda: to hold an open competition as soon as possible for the election of a worthy leader of Ukravtodor, who would be able to work systemically.

Will the new chief of Ukravtodor be elected by a Competition Commission at the Ministry of Economic Development?

No, it will be a little different system. Since Ukravtodor is a central executive body, the competition will be held according to the new law on civil service. The tender committee will consist of representatives of the Cabinet and the public. We are now waiting for it to become operational. For its part, the ministry will announce a competition immediately.

Are you part of this Commission?

I believe I’m not. There's only a representative of the Cabinet there – the chief of the National Agency for e-governance.

Is there a worthy candidate to head Ukravtodor?

I am working on it; there are some very interesting candidates. I hope that I can persuade them to submit their applications when the competition is announced. I’d say they have a very good chance to win it.

What kind of a candidate would fit this position?

I do not want to have a traditional type of manager. The better the managers we think we have, the longer the trail of problems and corruption stretches behind them.

Are these candidates from Ukraine or are they foreigners?

There are candidates both from Ukraine and abroad. Currently, there are three of them, of whose competence I am sure.

Whom would you personally prefer: a professional Ukrainian candidate or a successful foreign manager?

It all depends on professionalism. In Ukravtodor, as opposed to UZ, it is important that people understand the reality and speak Ukrainian or Russian.

Omelyan: MPs approach me, but they don’t offer shady deals / Photo from UNIAN
Omelyan: MPs approach me, but they don’t offer shady deals / Photo from UNIAN

Will Ukravtodor be able to finish all the patchwork on the Ukrainian roads of national importance before June 15, considering the change of top management?

We are trying to have everything done in time. But we have a real factor – the industry was almost destroyed, and there are really few companies in the market that construct quality roads. This is the reality – no equipment, no people, and no sufficient competence. But I hope that even in these difficult circumstances, we will fulfill the tasks set.

Only when we create the State Road Fund, will we be able to not only do the patchwork, but also to perform overhaul of the old roads and build the new ones.

But this is not an easy task. This year, the MPs have already failed to vote for the creation of a trust fund. Why do you think this is happening?

In fact, there was a misconception of the idea. I now tend to explain it patiently to each MP. And I am already seeing understanding as soon as they hear the arguments.

At the time when the deputies failed to pass the bill, there was a lack of political will and the difficult financial situation in Ukraine. Of course, these factors have affected the vote, since the establishment of the road fund means a reduction of the state budget. But I am very pleased that the prime minister understands the need to build roads. He also understands that without the Road Fund, annual allocation from the state budget by the finance ministry in manual mode does not facilitate the development of the industry. So I hope that the Law on Road Fund will be adopted as early as this year.

Earlier, the Ministry of Finance opposed the creation of a trust fund in the structure of the budget. Has the ministry changed its mind?

Let's just say it is now going with a reserved "Yes."

And what is the position on this matter of the country’s key creditor, the International Monetary Fund?

We have channeled our arguments to the IMF, and I have heard no objections. Their only requirement, and our, too, is maximum transparency of the allocation of funds and tender procedures. This is a key requirement to me as well, because I do not want to create another kind of feeder for someone or adjusted to someone.

How much money would the fund accumulate?

It would be nearly UAH 40 billion from the proceeds of the excise fees from imports of petroleum products. But we expect a slightly higher amount when we have a fully functional Ukrtransbezpeka, the agency which will have weight controls installed on highways that will accumulate funds from the collection of fines for overloading the trucks. Another source of funding may become the tolling system we want to launch. It provides for the payment by foreign trucks a fee for maintaining the roads. There may be other sources if we succeed to lobby their introduction.

All in all, we are talking about a somewhere between UAH 40-50 billion. We will work in a proportion scheme, not to affect the budget. In 2017, there will be a 50% filling of the Road Fund, in 2018 it will be 75%, and starting 2019, 100% of revenues from excise taxes and other fees will be going there.

Obviously, your People's Front faction will support this bill. Will you be seeking support from other political parties and personally the president?

Of course, I will. I have had the opportunity to talk with the president: I see support. Moreover, I’ve had conversations with the leaders of many parliamentary factions – there is support but, of course, we need to work with members of different political parties individually, in order to explain why we need all this. I think that the issue of the Ukrainian roads comes right after the issues of war and healthcare.

You previously wrote on Facebook of serious difficulties in working with the MPs and their attempts to appoint people to key "road" positions in exchange for supporting your initiatives in parliament. Was it an emotional move on your part? Has anything changed since then?

Of course, people change, but the pressure still remains. It is still within the normal range for my position. I don’t see any extremes.

What do you perceive as normal pressure? Do people come to your office and offer their shady schemes?

They do come to me but, thank God, no one is offering any schemes. Perhaps they realize that in this case, our conversation would be over. There are attempts of delicate lobbying of certain appointments, but I always answer one thing – if a person is qualified, I am ready to tell everyone proudly that this candidate was recommended by a certain person. If the candidate is frankly weak, which is evident both from the CV and from the interview, I say that this person is better not to even be recommended.

A few months ago, Ukravtodor said the courts blocked the accounts of its regional units, therefore, it could not pay debts to contractors and salaries to its employees. What accounts were arrested? Is this situation resolved?

The accounts were blocked because the companies that were performing road works in 2012-2013 were not paid for their job. They went to court, and the court ruled in their favor. Last week, a rightful decision was taken at the Cabinet meeting that the funds be reimbursed to the companies whom Ukravtodor owes, confirmed by the findings of the courts, SBU checks and those of the state fiscal inspection regarding quality of the work performed. The move returns the trust of the businesses in the authorities – the State pays off its debt, belatedly and with some losses, but it still does.

How many regional units’ accounts were blocked?

Approximately 10 regional services. But the Cabinet resolution has been passed, now technicalities remain – for the document to be forwarded from the Government secretariat. Then, the work will begin on debt repayment and the unlocking of the accounts.

How many road maintenance companies have gone bankrupt due to untimely payments for work performed? Most of them attracted money from the banks…

I didn’t analyze it, but I will say frankly: my position is that, after passing the appropriate legislative changes, we should require from companies that win tenders to perform their work in full. That’s because now, we have cases when shell companies are established with a one-day lifespan. Therefore, we can’t be confident in the quality of their work.

The Cabinet approved the repayment of a UAH 500 million debt to contractors. How much is it remaining to be paid?

In general, there is a sum of UAH 1.5 billion, but we have all reason to believe that most of it has been made up from nowhere. In those years, there was actually a conspiracy between certain officials in Ukravtodor or other officials. The works were not actually been performed or were far from the quality stated in the documents, or the documents were nonexistent. Only when we get the confirmation of the quality of work performed, we will proceed to the repayment of debt.

Will the new roads be built this year?

No. This year, we will only be restoring old roads.

By the way, has the idea of building concrete roads been forgotten?

It is alive. This is the only correct approach both in the south of Ukraine and in the east. But the idea is not being developed, because now we are actually not building roads. We are only constructing sections of roads financed by international financial institutions. By the way, one of them is made of concrete.

Which of them is it?

It’s the road from the south to the west Ukraine. We will only talk about concrete roads when we are able to move to a systemic work, when the Road Fund is established and when we build 100-200 km of roads annually.

Fierce debate has been ongoing for several years over the direction in which our maritime industry should develop: whether we should privatize ports, lease them or give them in concession, or leave everything as it is. Have you decided what form of public-private cooperation will be most effective for ports in Ukrainian reality?

I am a person who likes collective decisions. We are now holding discussions on this matter. I don’t want to impose my will. Of course, I do have my vision, but I want to listen to the market. I hope that market participants will be able to work out the correct model. And if it is not quite so, we will definitely adjust it. But there will be the reform of the maritime industry this year anyway.

Omelyan: The issue of restructuring the ministry is on the agenda / Photo from UNIAN
Omelyan: The issue of restructuring the ministry is on the agenda / Photo from UNIAN

Speaking of concession, has the ministry rejected the idea to implement this form of public-private cooperation in ports Oktyabrsk or Yuzhniy?

We see Oktyabrsk as a pilot port. We stick to this position.

Shipowners complain that Ukraine has one of the world’s most expensive vessel entries. Where do the revenues from port fees disappear and what steps does the ministry take to reduce tariffs?

This is true. But we must understand that the reduction of income affects the overall picture of the budget. So we want to approach this issue more carefully. Ukrainian ports are export-oriented, so, first of all, we must review toward reducing rates the fees related to the transit or import of goods. As for exports, I’m not ready to comment at the moment. Undoubtedly, there are high rates, but on the other hand, if all exporters paid full taxes in Ukraine, it would be possible to speak of reduction. I don’t want to accuse anyone, but I have data from the tax service and the customs office which give reason to doubt the transparency of payments in Ukraine. So if the businesses are ready to form the basic tax base here in Ukraine, then we’ll have a practical discussion.

Maybe you would move with reducing the number of fees?

Fees should be simplified and optimized: ideally, this should be cheaper. But we must understand what the cost will be. If a successful naval reform, and I believe it will be successful, we can significantly increase the effectiveness of the Maritime Administration we set to create, then we will be able to consider the reduction of the number and size of port fees and rates.

You said that you want to both create a maritime administration and reform the current administration of seaports. That is, the maritime administration will be established on the basis of the existing organization, won’t it?

No, I have an idea – and I am its fan – for the maritime administration to take over partially the functions of the ministry, partly of the State Service for Transportation Safety, and partly – of the administration of seaports. Actually, it would be most efficient in this form, being able to reform the industry. I would really wish that the head of this administration were a qualified official coming from the maritime circles.

The American engineers have recently completed their assessment of the shipping locks in Ukraine. What are the results of the audit and how much money needs to be allocated for the overhaul and modernization of these facilities?

Gateways on the Dnieper River are in a pretty poor condition. That was a preliminary assessment of U.S. experts; they are to finish their work this week. This factor has been underestimated and the repairs have not been performed for a long time. I hope that this year, we will hold a competition and begin the repairs on the most problematic gateways. First of all, it depends on uninterrupted funding. This year, we want to use the money from the so-called European sectoral funds and begin repairs during the winter navigation, when the locks are not in operation.

There is another sore issue. Dredging in seaports is conducted each year, albeit in a slow pace. When will the Dnieper River dredging be performed to make it fully navigable?

I can cautiously say that we will do the dredging. Just last week, I met with Ukrvodshlyakh, I asked about their operational readiness. I also met with NIBULON. They reiterated that they were ready to engage in dredging. So I hope that we will start the work next spring. The most important thing is for the companies to take part the tender. We have already held two tenders in a row, which was attended only by one company, but we must have competition.

Why has the agricultural holding NIBULON, which had ordered the draft plan of the Dnieper dredging in 2013, didn’t want to participate in the competition?

For some reason, they have not yet applied for the tender. But they promised me that they would participate.

In late December 2015, the Cabinet of Ministers for six months has lowered twice the rates of port fees for the transit of cargo in all seaports. Nothing is known of the results of this experiment… Has it shown its effectiveness and does it make sense to extend this initiative to other types of cargo?

We do know that the transit volumes decreased. But we keep doing it. We have now put forward the initiative to continue this experiment, possibly even for an indefinite period. There are certain Ukrainian businesses that are not OK with this, but on the other hand, we have to reduce tariffs and to attract maximum amount of transit through Ukraine. Our railway and seaport tariffs are yet not competitive on the world market, so we need to optimize the whole tariff scale, including that on the railway.

Besides reviewing tariffs, are you planning to introduce any new passenger services at Ukrzaliznytsia?

This is a question for Mr. Wojciech Balczun. I would not like to comment on my own. We have an excellent tandem, but he is head of the Ukrainian Railways, and this is he who should offer the public the improvements he is ready to implement. People expect a lot from him. I think he will meet these expectations, and time will tell.

Prime Minister Volodymyr Groysman said that the action plan of the new management of Ukrzaliznytsia will save at least UAH 7 billion in expenditures annually. How will they be able to achieve such performance and what are the pillars of the development of Ukrzaliznytsia?

That will be due to a 10% cost reduction, not due to the job cuts. I should note that much greater savings could be achieved by increasing the efficiency of the enterprise and eliminating corruption. There are substantial reserves. UAH 7 billion is the effect that can be seen immediately. I think that Mr. Balczun will be able to come up with the offer of greater savings in a month of implementing his action plan.

Obviously, there is a need to file lawsuits en masse against the aggressor-state, Russia, over property lost in Crimea. What is the ministry doing in this regard?

We are drafting lawsuits, not only regarding UZ. But I will refrain from commenting on the issue at the moment. This is not only a legal decision but also a political one.

What is the current situation with cargo transportation in the ATO zone? Cargo owners complain of problems with logistics in the region ...

This is an artificially provoked situation that arose in connection with the fact that workers of Donetsk Railway in the occupied territories, who did not move to the staff of Ukrzaliznytsia, are on strike. This led to significant restrictions in the movement of goods in the ATO zone. We want to transfer all these people as soon as possible into Ukrzaliznytsia. I hope that the situation will be settled and the blockade will be suspended.

Are these workers ready to move to UZ?

Yes, they are ready. They are simply being intimidated, and conditions are created for then not to do so. They are being set up against Ukraine. We know about it, but we’ll succeed with time.

So, would it be right to say that the cargo traffic in the ATO zone continues, with certain obstacles?

Yes, it does, with obstacles.

Oleksandra Danko (UNIAN)

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