Ukrzaliznytsia is wholly owned by the state / Photo from UNIAN
The memorandum foresees strategic cooperation between the companies for up to 10 years.
Ukraine's joint-stock company Ukrzaliznytsia has signed a memorandum of cooperation with the German rail operator Deutsche Bahn and its subsidiary, DB Engineering & Consulting GmbH (DB E&C).
"We hope that your expertise and experts will help reform Ukrzaliznytsia as soon as possible," Ukrainian Prime Minister Oleksiy Honcharuk said before an official ceremony to sign the document on February 5, 2020, according to an UNIAN correspondent.
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At the first stage, the German side is to provide advisory services for the Ukrainian company's reform, he said, adding that he hoped it would become the first step towards deeper cooperation between the two companies in future.
In turn, Ronald Pofalla, a member of Deutsche Bahn AG's management board for infrastructure, expressed confidence that this cooperation would be successful, as it has great prospects.
The memorandum foresees strategic cooperation between the companies for up to 10 years.
"The goal of this memorandum is to outline the fundamentals of planned strategic cooperation between Ukrzaliznytsia and DB E&C, as well as introduce a procedure for interaction between the parties regarding the conclusion of an agreement on cooperation... The estimated period of strategic cooperation, which is considered by the parties as possible, is up to ten years," the text of the memorandum says.
The document comes into force from the moment of signing and remains valid for three years with a possible extension of the term subject to the parties' consent, but no longer than the period of strategic cooperation (up to ten years).
The parties may terminate the memorandum at any time, but they must inform each other about such a decision one month before. In this case, the signatories are not liable for direct or indirect losses and damage.
As for the current cooperation of the companies, its several stages are stipulated in the memorandum.
At the initial stage, the parties must agree and conclude an agreement on the evaluation of Ukrzaliznytsia's performance, as well as develop a roadmap for its improvement. This stage is expected to take up to three months.
The implementation phase of the project will begin if the previous process is successfully completed, and involves the drafting of an agreement, within the framework of which it is planned to hire experienced personnel to implement the roadmap of reforms.
"This stage can begin after the successful completion of the initial stage, and it is expected to continue until December 31, 2020 the latest," the memorandum says.
The management phase should begin on January 1, 2021; it includes support to be provided by DB E&C in the field of Ukrzaliznytsia's management.
As was reported, PM Honcharuk earlier announced that the sides on January 22 signed a memorandum of understanding, which foresees that the German company would provide services to reform Ukrzaliznytsia's management mechanisms.
According to him, the Ukrainian government is going to transfer Ukrzaliznytsia to Deutsche Bahn for 10-year management and such cooperation does not involve the sale or concession of Ukrzaliznytsia.
UNIAN memo. Ukrzaliznytsia is a joint-stock company wholly owned by the state. The company is included in the list of state enterprises that are not subject to privatization. The Ukrainian railways account for 82% of freight transportation and for about 50% of passenger traffic by all types of transport.