Prime Minister Julia Tymoshenko promises increasing railway tariffs for passengers to help struggling Ukrainian Railways (UR). Tymoshenko also said that there will be no privatization of railways. Strategic plans to reform UR have long been on the table, but once cross-subsidization of passanger traffic by industrial tariffs was working nobody cared. Currently, industry is no able to cover the rift in tariffs and cost for passenger transportation and UR is struggling on the brink and starts to miss on external debt payments, just as it did with USD 110 mln that it had but failed to transfer to Barclays earlier this year. It is forecasted that with UAH 38 bn of income there will be UAH 9 bn losses for the UR in 2009.
Cabinet of Ministers adopted 16 decisions on reforming Ukrainian railways by 2011. Quality of this reform should be further evaluated, but it is expected that there will be no speedy improvement in the UR situation. The program of reforms does not require corporatization of UR as the first step - a step long ago requested by donors and creditors of UR. It is likely that UR is on the road of becoming another Naftogaz in the portfolio of state assets.
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