JSC Ukrzaliznytsia is interested in deepening its local content policy and plans to revise its investment program to support Ukrainian manufacturers.
The press service of Ukrzaliznytsia said that such plans were disclosed by member of the company’s board Frantisek Bures.
According to him, the company intends to reduce excess costs and non-core assets for this purpose. “This will free the required sources of funding and turn blocked assets into liquid ones. At the same time, the company’s investment program will be maximally refocused on cooperation with internal producers. Thus, the Ukrainian economy will receive not only the benefits of reliable logistics services provided by Ukrzaliznytsia, but also additional support,” the press service said in the statement, citing Bures.
Ukrzaliznytsia expressed the hope that as a result, the share of production of new locomotives, spare parts, key components, repair services and modernization projects on the basis of Ukrainian enterprises will increase. Deepening the level of the local content policy for investments will support the Ukrainian economy through employment growth, technological development and the introduction of innovative know-how.
Bures said that at present, the company makes extensive use of industrial products from internal manufacturers, in particular, welding structures, transformers, electric motors and equipment, gear structures and systems, axial pins and wheel sets, construction equipment, power electronics, control systems and radio engineering, traffic safety systems, airborne alarm and security systems, light and sound systems, fire protection systems, sensors, video and communication systems, cables and conditioning systems, accumulators and batteries, installation and commissioning works. The company also uses the testing and certification, warranty and after-sales services, and other services.
“Based on my long experience working with international and domestic manufacturers of rolling stock, I am absolutely convinced that Ukrainian manufacturers are able to meet the highest quality requirements,” he said.
Bures also said that in order to fulfill the order of President of Ukraine Volodymyr Zelensky regarding the promotion of investment and strengthening the protection of foreign investment in the country, the industry needs to get government’s strong support and clear rules of the game on the market. “It is necessary to adopt the national local content strategy for large national investment projects with transparent rules, calculations and a monitoring methodology. This will involve more foreign partners in investing in Ukraine, contributing to the creation of new jobs and the development of the national economy,” he said.
Ukraine’s Minister of Infrastructure Vladyslav Krykliy expects provision of financial support to Ukrzaliznytsia in the amount of UAH 4-5 billion from the funds received from Gazprom, he said in an exclusive interview with Interfax-Ukraine.
According to the minister, financial support on behalf of the state will be the most liquid aid for Ukrzaliznytsia in the current situation, taking into account the previously downgraded rating of the company by S&P Global Ratings to “CCC” with a negative outlook.
“Part of funds from Gazprom, which goes to Naftogaz, will be transferred to the budget in the form of dividends, we expect to receive a certain amount that will be provided to support Ukrzaliznytsia. But not just to close the current problems, but to order wagons, trains, etc. in the domestic market,” the minister emphasized.
Krykliy also said that the Ministry of Infrastructure plans to receive about UAH 4-5 billion of targeted financing for Ukrzaliznytsia.
“We expect that these funds will arrive this year, and will be distributed by the end of the year,” he stressed.
The State Agency of Automobile Roads of Ukraine (Ukravtodor) and JSC Ukrzaliznytsia have agreed to coordinate the logistics of construction materials deliveries to facilities being built as part of the government’s Big Construction program, the Ukravtodor Telegram channel reported.
The parties agreed on an optimal model for the information exchange to ensure timely delivery of raw materials to the Big Construction facilities.
“Ukravtodor assumes a coordinating role for the proper planning of freight traffic along the Ukrzaliznytsia routes. Ambitious plans require well-coordinated work of public and private institutions, so with reasonable coordination, we will avoid delays and breakdowns in repairs,” Oleksandr Kubrakov, the head of Ukravtodor, said.
The information exchange on the volumes of raw materials needed to be transported and maintenance of the repair schedule will take place on the basis of Ukravtodor for the purpose of centralized planning of all work.
Remigiusz Paszkiewicz, a member of the board of Ukrzaliznytsia, in turn, said that using Ukrzaliznytsia railways are important for freight transportation, as it unloads roads and reduces transportation cost.
The Cabinet of Ministers of Ukraine has temporarily appointed board member Željko Marček acting board chairman of JSC Ukrzaliznytsia (Kyiv).
Government decree No. 65-r dated February 5, 2020 has been posted on its website.
Earlier the government approved the dismissal of Ukrzaliznytsia Board Chairman Yevhen Kravtsov without transferring him to a new position.
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.
JSC Ukrzaliznytsia (Kyiv) is considering the possibility of repairing 300-500 passenger cars in 2020 if the developed model of repairs is supported by the government, the company’s press service has reported, with reference to company head Yevhen Kravtsov.
“Ukrzaliznytsia has invented a model according to which in 2020 overhauls of up to 500 passenger cars could be carried out … According to experts, under the formula one car can be updated for UAH 1 million. For comparison: a completely new wagon costs UAH 25 million today, overhauls cost UAH 11-12 million,” the company said.
According to Kravtsov, the company receives most complaints about the quality of passenger cars because of old windows, worn toilets and heating systems.
“We found a model of how to make overhauls on these items with minimal resources. This is replacing windows with new double-glazed windows, replacing toilets and heating,” Kravtsov said.
He said that the possibility of repairing 300-500 cars is foreseen for 2020.
“If we can maintain such a pace, then in about three years we will forget about the problem of cars in the economy segment. I hope this initiative is supported at the government level, and we can start this program,” the head of Ukrzaliznytsia said.
As reported, Ukrzaliznytsia expects profit at the level of UAH 2.5-3 billion over 2019.
In 2018, Ukrzaliznytsia saw net profit rise by 78% compared to 2017, to UAH 203.9 million
