Metallurgists, chemists, construction materials manufacturers, miners ask for moratorium on railway tariffs

The Ukrmetalurgprom association, the Union of Chemists of Ukraine, the National Association of Mining Industry of Ukraine, the Ukrainian Association of Ferroalloys and Other Electrometallurgical Products Manufacturers UkrFA and the All-Ukrainian Union of Construction Materials Manufacturers are asking for a moratorium on increasing freight railway tariffs until martial law is lifted and for a period of at least two years after the end of hostilities.

"In order to preserve the industrial complex and avoid negative consequences for the economy and defense capability of Ukraine, we believe that the tariff policy of state monopolies should be aimed at reducing the financial pressure on real production and be the basis for its restoration," they argue their request in a letter to President of Ukraine Volodymyr Zelenskyy, Prime Minister Denys Shmyhal, Deputy Prime Ministers Yulia Svyrydenko and Oleksiy Kuleba, and Finance Minister Serhiy Marchenko.

Moreover, according to a copy of the letter dated October 10, given to the agency on Monday, the authors of the appeal ask to reduce freight tariffs in 2025 by 15%. In their opinion, this could be achieved by establishing work to support and develop the freight base of Ukrzaliznytsia, optimizing its costs and increasing the efficiency of using the state monopoly's assets, including by transferring unprofitable assets to the State Property Fund or writing them off.

The letter states that in Ukraine, rail transport accounts for almost 82% of freight and 36% of passenger traffic. Its authors noted that in 2021 and 2022, tariffs for the transportation of coal, ore and limestone increased by 140%, metal by 70%, fertilizers by 70%, grain by 96%, and empty coal cars by 158%, while the expected loss from passenger transportation in 2024 will amount to UAH 20 billion.

According to the appeal, Ukrzaliznytsia will initiate an increase in the cost of transporting iron ore and coal by 19%, coke by 12%, and grain by 11%. According to the authors of the appeal, such a cross-subsidizing step will not solve the problem of unprofitability in the long term, and it is necessary to focus on reforming Ukrzaliznytsia's own structure and finding internal resources. In support of their opinion on the possibility of profitable operation of the state company, they cite the profit of Ukrzaliznytsia of UAH 5 billion for 2023 due to an increase in tariffs in 2022 and an increase in transportation volumes against the backdrop of the resumption of the sea corridor.

The letter notes that high logistics costs make Ukrainian products uncompetitive on the international market.