The Association of Extractive Enterprises of Ukraine (NADPU) appealed to Prime Minister Denys Shmyhal to reconsider the plans to increase tariffs for freight rail transportation. According to their appeal, such a decision could deal a serious blow to the mining industry, which has already suffered due to the war, and negatively affect the country's defense capabilities.
The mining industry of Ukraine, as noted in NADPU, has already suffered serious losses due to the war. Many mining facilities and enterprises were under occupation or constant shelling, due to which about 40% of enterprises ceased their activities. In particular, the metallurgical industry lost at least 40% of its capacity, which significantly affected the economic condition of the industry.
In such a situation, as noted in the Association, any additional financial burden, in particular in the form of increased logistics costs, can lead to catastrophic consequences for mining enterprises. The increase in costs for the transportation of raw materials can reduce their competitiveness, which in turn will affect the state budget revenues and the stability of the national currency.
In the first half of 2024, "Ukrzaliznytsia" received significant revenue from freight transportation - 43 billion hryvnias, which is 17% more compared to the previous year, and recorded a profit of 3.1 billion hryvnias. However, despite the positive financial indicators, the company is planning another increase in tariffs for freight transportation, which causes concern among representatives of the mining industry.
NADPU emphasizes that the profitability of freight transportation in 2023 was +27%, while passenger transportation brought expected losses of 20 billion hryvnias. While tariff incentives are being implemented in EU countries to support rail transportation, the price of such services continues to rise in Ukraine.
The association draws attention to the fact that the current tariffs of "Ukrzaliznytsia" in dollar terms are already 1.5 times higher than the pre-war level. This leads to the fact that some enterprises cannot work at a break-even point, reduce production indicators, and therefore, "Ukrzaliznytsia" loses revenues from transportation.
In its letter, NADPU emphasizes the need to implement measures aimed at reducing costs and increasing the efficiency of Ukrzaliznytsia, and not at endless tariff increases. The association calls on the Prime Minister to instruct "Ukrzaliznytsia" to reduce the tariffs for cargo transportation due to the increase in the volume of transportation. Such a step, in their opinion, will help restore the country's economic potential and strengthen its defense capabilities.
NADPU emphasizes that reducing tariffs and optimizing costs can become effective tools for supporting domestic business, which, in turn, will have a positive effect on the state budget and the stability of the national currency.
