JSC Ukrzaliznytsia and Deutsche Bahn Engineering & Consulting have entered into an agreement on consulting in the field of passenger transportation, according to a posting on the Facebook page of the Ministry of Infrastructure of Ukraine.
This is about improving the planning and development of passenger rail transport, optimizing purchases and renewing rolling stock.
Deutsche Bahn will help Ukrzaliznytsia to separate passenger from freight traffic and ensure efficient management. Consulting is the first stage of cooperation, which will be implemented by the end of 2021. After its successful implementation at the second stage, Ukrzaliznytsia will engage a team of Deutsche Bahn managers to directly manage passenger traffic in 2022.
“Transfer of Ukrzaliznytsia to the management of passenger transportation by DB Consulting is the first systematic step towards a complete transformation of railway transportation in Ukraine,” Minister of Infrastructure of Ukraine Oleksandr Kubrakov said.
According to him, with this project the state begins Big Construction project at Ukrzaliznytsia, which will impact the entire infrastructure, rolling stock fleet and service.
“The agreement signed today is the first stage of cooperation, and we expect that, based on its results, we will move on to the next stage already at the beginning of 2022, when the team of German managers will be delegated for the operational management of passenger traffic in Ukraine,” the Ministry of Infrastructure said, citing Member of the Management Board for Infrastructure at Deutsche Bahn AG Ronald Pofalla.
According to acting Board Chairman of JSC Ukrzaliznytsia Oleksandr Kamyshin, DB E&C is to develop a roadmap for the implementation of long-distance and suburban passenger transportation for the next five years and a model for financing passenger transportation.
“In the process of reforming the industry, we must change the long-standing practice of passenger transportation being financed by freight. These are separate areas of our company’s business, and they must be accounted for and financed separately. Therefore, we expect our consultant to develop an effective financial model for passenger transportation,” Kamyshin said.
In addition, DB E&C experts should determine the traffic volumes and the estimated capital investment needs of Ukrzaliznytsia to renew the rolling stock for use in Public Service Obligations (PSO) model.
The service provider will also provide an assessment of the prospects for the purchase and production of passenger rolling stock – regional electric trains, diesel trains, night train cars – and the possibility of producing such rolling stock within the framework of international cooperation with the participation of a Ukrainian manufacturer.
As reported, in August, Ukrzaliznytsia and DB Engineering & Consulting began cooperation to develop a new energy efficiency strategy for the company.
JSC Ukrzaliznytsia, the German national railway operator Deutsche Bahn AG and DB Engineering & Consulting GmbH (DB E&C) have signed a memorandum of understanding regarding strategic partnership for the development of Ukrzaliznytsia.
The document was signed in Kyiv on February 5 with the participation of Prime Minister of Ukraine Oleksiy Honcharuk and member of the board for infrastructure at Deutsche Bahn AG Ronald Pofalla, an Interfax-Ukraine correspondent reported.
“We emphasized that within the framework of our cooperation, we will primarily focus on consulting… And we are confident that our cooperation will be successful,” Pofalla said when signing the document.
According to the text of the memorandum, “the parties agreed to study and develop a concept and a plan in order to provide DB E&C with the opportunity of providing the critical managerial and technical assistance to Ukrzaliznytsia (except for issues related to military transportation).”
The memo does not contain the final conditions and all issues on which agreement should be reached between the companies for the purpose of strategic cooperation.
Moreover, according to the document, neither party is liable for any direct, indirect or consequence losses (loss of profit, inability to use or loss of business opportunities).
The memorandum is concluded for a period of three years. The estimated period of strategic cooperation is up to ten years.
“At the first stage, we are talking about cooperation in the consultation field. But we hope that over time we will come to deeper forms of cooperation… I hope this will be the next step in building reliable cooperation between Ukrzaliznytsia and Deutsche Bahn,” Honcharuk said.
In turn, the representative of Deutsche Bahn said that the German company went through the path of privatization, which allowed it to become a successful carrier.
On the part of Ukrzaliznytsia, the memorandum was signed by board members Željko Marček and Remigiusz Paszkiewicz, on the part of Deutsche Bahn – Pofalla, on the part of DB E&C – Chairman Niko Warbanoff.
Commenting on the difference between the memorandums – signed in Davos and the current one, Minister of Infrastructure Vladyslav Krykliy said that today’s document implies more specific options for interaction between the companies.
Ukrainian authorities want to pass JSC Ukrzaliznytsia to management of Deutsche Bahn AG (DB), Germany’s operator of railways, for 10 years, Ukrainian Prime Minister Oleksiy Honcharuk has said. “Yes, we want to pass our railways to the Germans to manage it for 10 years,” Honcharuk said at the Ukrainian Breakfast in Davos, Switzerland on Thursday morning.
He added that the authorities of Ukraine associate not only expectations about the development of Ukrzaliznytsia with this decision. “This is ecosystem-based issue, which should show that Ukraine is unprecedentedly open for investment, for the world, for new standards,” the prime minister said.
Honcharuk said that, despite the fact that it is still necessary to negotiate and agree on the details of the decision and documents, “a political decision on this has already been taken and this is a huge step.”
Later, at a briefing on the sidelines of the Ukrainian Breakfast, the prime minister said that the relevant agreement with DB will be “early February.”
As reported, on January 22, 2020, the Ministry of Infrastructure of Ukraine and Deutsche Bahn in Davos, Switzerland, signed a memorandum of understanding on strategic partnership in the industry and the development of Ukrzaliznytsia.
“This memorandum is not yet about privatization, and not about concession, but about strategic partnership. That’s great news,” Honcharuk said, when opening a meeting of the National Investment Council under the president of Ukraine in Davos.
He said that the country needs such assistance to improve the situation on the country’s railway and realize its logistics potential.
At the same time, speaking about the memorandum, in his Twitter account, Honcharuk said that German specialists will reform the management mechanisms of Ukrzaliznytsia, and Ukraine will retain full control over the enterprise.
“I hope that German operational efficiency and zero tolerance for corruption will become the basis for changing the situation in Ukrzaliznytsia,” the prime minister wrote.
According to the text of the memorandum, the parties will study the possibilities of creating a strategic partnership between Ukrzaliznytsia and DB.
Ukrzaliznytsia (Kyiv) has approved a concept of creating Station Company branch using a model of Germany’s Deutsche Bahn, Director for Strategic Development and Investment Policy at Ukrzaliznytsia Anton Sabolevsky has said in an interview with the Magistral news center.
He said that the implementation of the roadmap for the establishment of the branch will begin by the end of 2019.
“Our goal is to improve the station management system, to increase the efficiency of their activities, including by minimizing duplicate functions. The main goals include reducing financial costs,” Sabolevsky said.
At the same time, he recalled that the negative financial performance of the stations of the Passenger Company branch of JSC Ukrzaliznytsia in 2018 amounted to UAH 405 million.
The reorganization will take place in three stages. First, stations, which are now managed by the Passenger Company will be transferred to the new branch. Next, first-third class facilities of regional branches will be transferred in stages (in total, 106 stations at the first stage). Then the turn of fourth-fifth class facilities (around 1,200) will come. Subsequently, the flag stations will join them. There are almost 2,300 of them in Ukrzaliznytsia, Sabolevsky said, explaining the action plan for the near future.
According to him, the staff will also be transferred to the new branch.
