Deutsche Bahn and Ukrzaliznytsia partnership gives a start to Ukrainian railway modernization — opinion

Infographic guide Ukrainian Agribusiness 2018/19


Information about the possible strategic partnership between the largest German railway operator Deutsche Bahn and Ukrzaliznytsia (UZ) again appeared in the media. This is positive news for Ukraine's transport sector. This was stated by Valeriy Tkachev, expert in transport infrastructure and Ukrainian logistics, writes.

"Let's hope that these plans finally come true. At the moment the Ukrainian railway is in critical technical condition and is unable to meet the needs of the country's growing economy," stressed Valeriy Tkachev.

According to him, the depreciation of the locomotive fleet reaches 92-98%, of the railcar fleet — over 80%, of separate types of rolling stock — over 95%. The wear of Ukrainian railway infrastructure exceeds 70% (the upper structure of the track, alarm and automation means, contact group, etc.).

"There is a catastrophic shortage of locomotive fleet, about 200-300 units. Operating indicators are also depressing: since 2011, the volume of cargo transportation has been falling annually, during this time UZ lost about 150 mln t of cargo (-35%). At the same time, cargo transportation is the only profitable activity of Ukrzaliznytsia (it generates 81% of operating revenue and approximately UAH 16-18 bln of profit per segment). Transportation of passengers generates about UAH 12.6 bln of losses annually. The state does not compensate for these losses to UZ, it is a social burden. In this condition Ukrzaliznytsia is unable to overcome the long-lasting crisis," the expert believes.

Without significant capital investment in the railway infrastructure, Ukrzaliznytsia will stagnate, Valeriy Tkachev says. The economic situation in Ukraine and the size of the state budget do not allow to raise these funds.

"Therefore, cooperation with such a large transport operator as Deutsche Bahn is an attractive option. All the more, since it is mutually beneficial cooperation, we get investments and modern technologies, and the German giant gets additional cargo and passenger traffic," believes Valeriy Tkachev.

As a reminder, Deutsche Bahn, the Government of Ukraine and Ukrzaliznytsia (UZ) were considering variants for a strategic partnership.

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