Ukrainian Railways
The Ukrainian Infrastructure Ministry plans to increase rail freight charges by 30% next year, the move which is believed to affect the Ukrainian construction market, according to Chairman of the Board of Directors of the Builders Confederation of Ukraine Oleksandr Rotov.
The Confederation and other representatives of the construction industry will demand transparency in the principle for establishing transportation rates, Rotov said.
"This is our domestic market and domestic producers. Of course, 30% [increase in the rate] is a disaster. Obviously, in case of a 5-7% increase, which is proven by certain estimates and is not done behind closed doors, and when market participants and trade unions are provided with reasons for such an increase, then it may be deemed as logical. Some insignificant increase, within the limits of inflation, is understandable. However, a 30% [hike] is neither transparent, nor right. And we will demand explanations and actively oppose this," Rotov said.
He noted Ukrzaliznytsia, the State Rail Transport Administration, should learn to solve its financial problems with the help of internal resources rather than by means of other market participants.
"They have to deal with their own costs, analyze causes of losses and damages, but they cannot compensate their own inefficiency by increasing rates," Rotov said.
With the improvement in the performance, Ukrzaliznytsia would be able to reduce its freight charges, Rotov stressed.
"It is necessary to operate properly, recruit professional managers and then, I think, the price of [tariff] may even be lower, because it has already been overstated beyond any limits," Rotov said.
As reported earlier, in late November Infrastructure Minister Andriy Pyvovarsky announced plans to increase railway freight transportation charges by 30% during 2016. It is planned that the charges will rise by 15% from January 1, and additionally by 15% from July 1.
Head of the Ukrainian Union of Manufacturers of Building Materials and Products Ivan Saliy urged the government to prevent the planned increase in rates in freight transportation by rail, because a 30% increase could be critical for manufacturers of building materials, primarily of crushed stone, cement, brick, which would eventually lead to an increase in construction costs of new housing.