Ukrzaliznytsia seeks to boost capital investment by 2.4 times in 2017, hopes for tariff increase

Public joint-stock company Ukrzaliznytsia seeks to boost capital investment by 2.4 times in 2017, to UAH 27.4 billion from UAH 11.2 billion expected in 2016, according to a company presentation shown during the phone conference with investors on November 22.

According to the document, Ukrzaliznytsia plans to send 46% of funds to purchase property assets, 33% for major construction works (mainly modernization of power lines), 19% for modernization of rolling stock and 2% for other needs.

Capital investment will be financed using own funds by 66%, thanks to attraction of new loans by 33% and funds of investors by 1%.

Ukrzaliznytsia board member Remigiusz Paszkiewicz said at the conference that the government should approve the plan to increase cargo shipment tariffs to reach the capital investment goal.

The enterprise plans the increase of cargo transportation tariffs by 25% in the capital investment target for 2017, passenger transportation tariffs by 35%. Paszkiewicz said that this takes into account not only growth of spending due to weakening of the hryvnia exchange rate and inflation, but also growing demand on transportation by rail.

If the government does not approve the tariffs increase plan Ukrzaliznytsia could revise the capital investment program and divide it into two parts, implementing the second one in 2018.

Paszkiewicz said that the latter is undesirable.

"As you know Ukraine faces a shortage of rolling stock to transport grain. According to our studies conducted jointly with the World Bank, grain production is growing every year and it would continue expanding in coming years. We would like to modernize a part of rolling stock and buy new one. We cannot do this without increasing the tariffs," he said.

Paszkiewicz also said that in 10 months of 2016 Ukrzaliznytsia has boosted grain transportation by 10% year-over-year.