The draft ownership policy of JSC Ukrzaliznytsia does not envisage a possibility of holding an initial public offering (IPO) for the company, Ukrzaliznytsia Director for Strategic Development and Investment Policy Anton Sabolevsky told reporters on the sidelines of the third International Conference “Railways of Ukraine: Developments & Investments” held in Kyiv. “The draft ownership policy, which is now being considered, does not mention the possibility of an IPO. This is not a question of a year or three, it is more distant. It will definitely not be held in the next five years,” he said.
According to Sabolevsky, in Europe the only successful transaction for holding an IPO for a part of a cargo carrier was in Poland. “Also, there is an example of Doicebahn, which was bought freight operators in the Netherlands, Denmark and partly in Sweden,” he said.
At the same time, according to Sabolevsky, for the next five years, Ukrzaliznytsia needs an additional investment of $6 billion to maintain its assets at current levels.
“If we look at the ratio of capital investment and company revenues, then, to a large extent, we will come to the conclusion that Ukrzaliznytsia must spend about $ 1billion on its capital investment a year. These are the sums which the company announces in its financial plan every year. For example, in 2018, we had a little more than UAH 26 billion of capital investment,” he said.
Ukrzaliznytsia is currently considering the possibility of entering foreign markets for the purchase of diesel fuel from direct producers, according to a press release from the company.
“In addition to expanding the circle of suppliers, this will allow removing significant pressure on domestic prices in Ukraine, which often takes place when the company purchases diesel fuel,” chairman of the board Yevhen Kravtsov said.
He noted that Ukrzaliznytsia consumes 10% of the total volume of this oil product, currently sold in Ukraine.
Kravtsov stressed that in order to avoid sharp price fluctuations in the domestic market of petroleum products, Ukrzaliznytsia should have foreign alternative supply channels, in particular, for diesel fuel.
“Our purchase of even 100,000 or 200,000 tonnes is not so decisive to cause price fluctuations [in the external market] as it is happening in Ukraine now,” he said.
JSC Ukrzaliznytsia has received the last five locomotive made by General Electric Transportation (the United States), Ukrzaliznytsia Board Chairman Yevhen Kravtsov has said on its Facebook page.
Ukrzaliznytsia received all 30 contracted locomotives GE. The last five met in Chornomorsk on Friday [February 1],” he said.
The received locomotives will be sent to Kriukov Car Building Works (KCBW, Poltava region) for retrofitting, where 10 more U.S. locomotives are already in work.
According to Kravtsov, GE locomotives show themselves to be extremely effective.
“As an example, we save fuel by 30% in the Zaporizhia-Kamysh-Zoria-Volnovakha section. In addition, the locomotives of the old fleet run an average of 360 km per day, and GE diesel locomotives – 540 km,” he said.
According to the head of Ukrzaliznytsia, 15 new locomotives now ensure a quarter of diesel locomotive traction in the three regional branches where they operate: Prydniprovska, Donetsk and Odesa.
The Kyiv-Riga train launched by Ukrzaliznytsia, also passing through Minsk (Belarus) and Vilnius (Lithuania), from January 30, 2019 will make more trips – once in four days instead of once a week as it is done today, Ukrzaliznytsia Board Chairman Yevhen Kravtsov has written on his Facebook page.
“The occupancy rate from Kyiv to Riga is 49% and backwards – 40%. These are good figures, which are evidence of popularity of the train going to European capitals and its economic feasibility for the Ukrainian railways,” he said on Friday.
The weekly Kyiv-Minsk-Vilnius-Riga train was launched on September 28, 2018. At the end of Nov, Ukrzaliznytsia said that then the train was running at about zero cost effectiveness. However, given the “low season” and only the recent launch, Ukrzaliznytsia considered the launch of this train successful.
According to the company, after eight trips the train carried 2,100 passengers, of which 1,000 – to/from Lithuania and 950 – to/from Latvia.
In January, it is planned to hold talks with Estonian railways Eesti Raudtee on the extension of the train’s route to Tallinn.
JSC Ukrzaliznytsia in 2018 transported 55.9 million passengers in long-haul trains, which is 7.7%, or almost 4 million people, more than in 2017. According to the company’s website, the company managed to increase railroad passenger traffic despite the decrease in the number of cars. “We used many trains after the night trip as day trains. And then again on a night trip. First of all, it concerns the period of peak traffic, long weekends. We put on about 40 additional trains for these Christmas and New Year holidays, more than 300 trips,” acting head of Ukrzaliznytsia Yevhen Kravtsov said.
At the same time, he stressed that to preserve the traffic volume, the company must annually update the passenger car fleet with at least 200 cars. “Unfortunately, due to low tariffs and unprofitability of this transportation, in this matter we need support from the state, namely, the allocation of funds from the budget of Ukraine for the purchase of passenger wagons as provided for by the law on railway transport,” he stressed.
JSC Ukrzaliznytsia plans to reconstruct a railway stations located in Vydubychi and integrate the new platform for the railway express train running from the Kyiv Pasazhyrsky station through Darnytsia to Boryspil International Airport.
“The Kyiv Boryspil Express stop on Vydubychi will appear this year after the reconstruction of the railway station,” acting Board Chairman of Ukrzaliznytsia Yevhen Kravtsov said on the company’s website.
The company has set itself the task of creating a single logistic space by integrating the Vydubychi railway station with the subway and bus station, for which it is planned to build a new high platform for stopping the Kyiv Boryspil Express train, equip crossings, reconstruct two existing platforms and build a shed over them.
“Pre-design works are underway and three options for the reconstruction of this transport hub are being considered, where various types of transport will be integrated. The optimal one will be chosen in the near future,” Kravtsov said.
He also said that all reconstruction options imply high standards of security and modern elements of logistics, including for people with limited mobility.