The rise in railway tariffs for freight transportation may increase the load on road transport and road infrastructure, as well as increase prices for final products in the energy and construction sectors.
This opinion was expressed by representatives of core business segments at a press conference at Interfax-Ukraine.
“Ukrzaliznytsia, as a monopoly carrier, is once again simply raising tariffs. What will this mean for the cement industry: firstly, the prices for the transportation of coal will rise, and secondly, the prices for the transportation of raw materials and additives to cement will rise. Thirdly, prices will rise directly for the final product for the consumer,” Executive Director of the Association of Cement Producers of Ukraine (Ukrcement) Liudmyla Kripka said.
According to preliminary estimates of the association, such an increase in tariffs will affect both the cost of cement and the final product for the consumer by about 5-8%, which, in turn, will increase the cost of construction projects.
At the same time, Kripka said that Ukrzaliznytsia may not receive the expected income from the increase in tariffs due to the transfer of enterprise logistics to the segment of road transportation.
“As a result, Ukrzaliznytsia will not receive income, but the load on road transport will increase,” she said.
Director General of the Federation of Transport Employers of Ukraine Volodymyr Husak agreed with this forecast. According to him, Ukrzaliznytsia will not be able to implement the plan to receive about UAH 2 billion by the end of this year from the increase in freight rates.
“This money will not be available, as we will see an accelerated withdrawal of Ukrzaliznytsia’s clients primarily to highways. This trend has been observed for several years… Due to the reorientation of goods to highways, there will be an additional load. Roads will collapse faster. There will be no effect from the implementation of the Big Construction program of the President of Ukraine,” he said.
In addition, Husak said that due to the rise in the cost of transportation of building materials – crushed stone, cement – the volume of the Big Construction program will also decrease.
At the same time, maintaining low prices in the passenger segment and an increase in the cost of cargo transportation will ultimately lead to an increase in tariffs in the energy sector, Deputy Chairman of the Federation of Employers of the Fuel and Energy Complex of Ukraine Serhiy Chekh said.
“What will the implementation of this order [of the Ministry of Infrastructure] mean for us, power engineers? This is extra UAH 40-50 per tonne of transported coal and about 3% growth in the cost of electricity at the exit from the thermal power station,” he said.
Experts emphasize that for the effective development of the rail transport market, it is necessary to ensure equal competitive conditions, introduce projects for the use of private locomotives, and update legislation in this area. In addition, it is necessary to update the management and supervisory board of Ukrzaliznytsia for effective governance, to carry out its reform in accordance with the government’s plans.
As reported, earlier in July, the Ministry of Infrastructure of Ukraine published a draft order on a two-stage increase in tariffs for cargo transportation of a group of goods of 1 and 2 tariff classes from September 2021 by 8%, and from January 2022 – by 20.4% and 6.5%.
The vast majority of Ukrainian citizens are concerned about infrastructure problems in their cities and villages, unemployment, housing and utility tariffs, as well as mass renaming of cities, villages and streets. Meanwhile, the issues of security and fight against corruption, which are being promoted by politicians, raise concern among fewer citizens.
This is shown by the results of a joint sociological survey, which was conducted by Active Group and the Expert Club and presented at a press conference hosted by the Interfax-Ukraine News Agency.
According to the survey, which was performed on July 10-12 via a phone interview, more than a half of citizens are concerned about quality of roads (54%), condition of public places (44.7%), condition of the infrastructure inside buildings (43.5%), unemployment (34.2%) and housing and utility tariffs (31.1%).
Almost a third of Ukrainian citizens (29.2%) are unhappy with mass renaming of streets, villages and cities all over the country.
Some 26.7% respondents are concerned about the lack of parking lots.
At the same time, the issues of security and corruption worry not more than one tenth of the population (10.6% and 8.7% respondents, respectively), while rural residents are not concerned about security and corruption at all.
While commenting on the results of the survey of Active Group and the Expert Club, co-founder of the Expert Club Danylo Bohatyriov said that he was not surprised by the fact that the population is concerned about infrastructure-related problems in the first place. It is a predictable response of people to broken roads and rotten communications. He added that while the authorities are at least trying to repair roads, the infrastructure of buildings lacks their attention even despite the fact that the housing and utility tariffs jumped by twelve times over the recent six years.
“The lack of jobs and the cost of utility services raise concern among almost equal number of respondents. And this is quite clear as the second problem originates from the first one. If they don’t have jobs, they are unable to pay for utility services. It also appeared that the issue of renaming streets and other objects is a matter of concern for 30% of respondents. Earlier, experts used to underestimate the level of concern with the issue among the population and disregard it,” the expert said.
Bohatyriov explained the loss of interest to the problem of corruption among the population by citizens’ exhaustion and disappointment.
“There has been a lot of reports on fight against corruption, but the key corrupt officials are still not imprisoned, and the hysterical background created around the issue especially during Poroshenko’s tenure simply made a significant number of our compatriots tired. Therefore, we recommend the political forces to stop exploiting this rotten topic and in fact take care of the infrastructure issues, creation of new jobs, revision of utility tariffs and stop this foolish campaign of renaming everything,” the expert said.
Additional information about the survey is available on the website of Active Group and on the Expert Club YouTube channel:
Ukraine in the memorandum to the International Monetary Fund (IMF) under the new Stand-By Arrangement has undertook by the end of August to review and approve all heating tariffs, linking them to the cost of gas and associated costs, including capital investments.
“We have eliminated the cap on household heating tariffs by revoking cabinet resolution No. 560 of June 26, 2019. We will ensure that, by the end of August 2020, all heating tariffs under the jurisdiction of both the NEURC (the National Energy and Utilities Regulatory Commission of Ukraine) and local authorities are reviewed and officially enacted to fully reflect gas and non-gas costs (including capex),” the document says.
“Starting with the 2020/2021 heating season, heating tariffs will be reviewed and set at least once per year before the start of the heating season to ensure that changes in gas and non-gas costs (including capex) are adequately reflected in heating tariffs. To that end, prior to the start of the 2020/2021 heating season, we will rescind cabinet resolution No. 1082 of December 24, 2019, which allows for the asymmetric changes in heating bills without the need to address heating tariffs when the price of input gas changes. In order to mitigate the risk of future arrears we will develop in consultation with the World Bank mechanisms to provide buffers for district heating companies to deal with the volatility in the wholesale gas price,” according to the report.
“By the end of June we will legislate an October 1, 2020 deadline for all new utility service contracts incorporating the revised heating tariffs to be concluded,” it says.
Tariffs for sea freight and air cargo have increased, while the cost of international road haulage has stabilized, but there may be queues at the key automobile checkpoints, Viktor Shevchenko, the co-owner of Zammler logistics group, has told Interfax-Ukraine. “Compared to the beginning of the year, now due to coronavirus [COVID-19] epidemic spread, tariffs for sea freight have risen by an average of $150-200 per TEU. A jump in prices occurred in March, as China began to recover production activity, demand for cargo departures increased, there was a shortage of places, respectively, the cost increased,” he said.
According to Shevchenko, due to the following sanitary and hygienic safety rules, procedures for processing goods in ports are delayed.
According to him, in connection with the epidemic, there is no air traffic now, thus, cargo carried earlier by passenger flights is delivered by cargo planes.
“Accordingly, there are not enough places for cargo departures. Airlines that continue to fly to Ukraine with cargo planes have increased tariffs. Now a place for departure should be booked a few days before departure, tariffs are provided in the mode for today,” the co-owner of Zammler said.
Shevchenko also said that over the past week, the situation with international trucking has changed dramatically.
“If last week tariffs on imported freight were 40-50% higher than pre-quarantined, to date the price situation has stabilized. Last week there was a shortage of transport in Europe due to high demand (recipients tried to replenish stocks of goods). But now we see a shortage of goods, namely enterprises are suspending operations, the volume of exports and imports is declining,” he said.
According to Zammler’s forecasts, the queues at key automobile checkpoints will soon resume again due to the closure of the Hrebenne-Rava-Ruska checkpoint.
Shevchenko said that the cost of freight traffic in the territory of Ukraine due to the epidemic has not yet changed.
“There is a slight decline in volumes, to 10%. It is difficult to predict the further value, since it directly depends on the stability of the exchange rate,” he said.
Zammler Group is a Ukrainian group of logistics companies with offices in Europe and Asia. The group companies provide all types of logistics services for the B2B segment.
President of Ukraine Volodymyr Zelensky has held a meeting at which he set the task for heating tariffs to be reduced in Ukrainians’ utility bills in December, since gas prices for the population had previously been reduced. “Gas prices have decreased, but tariffs have not. Why so? We are looking for ways to reduce the price and make Ukrainians receive lower heating bills in December,” he said on his Facebook page, where a video was also posted about the meeting attended by Prime Minister Oleksiy Honcharuk, Energy Minister Oleksiy Orzhel, Head of the Presidential Office Andriy Bohdan and his deputy Yulia Kovaliv.
At the meeting, it was said that after lowering gas prices, Ukrainians should receive lower tariffs, but legislatively, it is impossible today to change heating tariffs until May 2020.
“We’ve coped with the gas price. In order for the heat tariff to go down this winter, we have a very short bill, which can be introduced by the president as urgent, and the adoption of this law will lead to the fact that our tariff for the population will decrease. This winter we have already protected consumers from tariff growth, because it has traditionally grown. It will not grow anymore,” Honcharuk said.
Kovaliv, in turn, noted that the National Commission for Energy, Housing and Utilities Services Regulation (NCER) is authorized to change the tariffs and this issue should also be discussed with the regulator.
Kyivstar mobile operator starting from October 1, 2019 launches four tariff plans for new customers within the Kyivstar All Together line.
According to the company’s press service, all new tariff plans include home Internet with a speed of 100 Mbps, unlimited calls within the Kyivstar network and unlimited non-tariff Internet for using 42 applications. Among them are Google Maps, Snapchat, Pinterest, Google Play Music, SoundCloud, Spotify, Netflix, as well as the online games Minecraft, World of Tanks BLITZ, the Steam service, etc.
The new Kyivstar All Together Basic tariff, in particular, provides subscribers with 120 minutes to the numbers of other telecom operators, as well as 12GB of mobile Internet.
Within the Kyivstar All Together Favorable tariff, subscribers will have unlimited mobile Internet and 180 minutes for calls to other mobile operators and abroad, as well as 180 SMS for sending within Ukraine.
The Kyivstar All Together Generous tariff includes unlimited mobile Internet and 300 minutes for calls to other mobile numbers in Ukraine and abroad.
The Kyivstar All Together Gaming tariff is designed for fans of the World of Tanks online game. It has additional gaming advantages. In addition, this package includes 300 minutes for calls to other mobile operators in Ukraine and abroad, as well as 300 SMS within Ukraine.