Ukrainian metallurgical companies urge authorities to put freeze on Ukrainian Railways tariffs

MOSCOW. Jan 15 (Interfax) - Major metallurgical companies, including ArcelorMittal Krivoi Rog, Zaporozhstal and six mining and processing plants, are urging Ukrainian Economic Development Minister Alexei Kuleba to reject Ukrainian Railways' proposal to raise freight transportation tariffs by 37% and impose a moratorium on their growth until the end of this year.

"The current situation is extremely unfavorable for raising freight railroad tariffs, because the impact of the crisis on the mining and metallurgical plants and the already existing high logistics costs are constantly bringing closer the time when the consequences for the industry will become irreversible," Ukrainian media quoted a letter signed by the CEOs of companies in the industry.

Ukrainian Railways and the Economic Development Ministry have already started drawing up a draft order to provide for a 37% increase in tariffs for cargo transportation by rail, the letter said.

In this regard, the metallurgical companies said that during the years of crisis their condition has sharply deteriorated, including due to electricity blackouts and its price hikes, staff shortage, falling prices and production volumes.

In addition, mining and metallurgical plants' share of GDP has fallen from 10% in 2021 to 5.7% in 2023, export revenue from $22 billion in 2021 to $5 billion in 2023 and $4 billion in the first eight months of 2024, and the number of people employed from over 130,000 to over 60,000.

At the same time, the industry still accounts for around 40% of Ukrainian Railways' freight transportation and transshipment at the seaports, it said.

The letter's authors urged the Economic Development Ministry to help Ukrainian Railways to find internal reserves to optimize costs and improve efficiency, as well as to ask the government to review the list of expectations put forward by the owner to prevent the adoption of the state railway monopoly's financial plan with an increase in tariffs.

"Currently, Ukrainian Railways has every opportunity to maintain the current level of freight transportation tariffs by optimizing costs and restoring the freight base and still remain profitable. We urge the minister to take into account that the increase of railway tariffs for freight transportation in the current conditions is inadmissible, and [urge him] to impose a moratorium on the increase in tariffs for Ukrainian Railways' freight transportation until the end of the crisis," it said.