Wojciech Balchun, the Chairman of the Board of “Ukrzaliznytsya” (Ukrainian Railways) presented a strategy for the development of the company for 2017-2021 for the regional branch of “Southern Railway”. The strategy covers the entire industry and defines the main development vectors for the next five years.
The development strategy envisages the continuation of the sector reform process through the construction of a vertically integrated structure. In particular, companies will be established in terms of activities, rather than on a regional basis, as it was before. The business model of “Ukrzaliznytsya” will be built on five business verticals: freight transport and logistics, passenger transport, infrastructure, rail traction services, production and service. By market segments, all companies will be established during 2017-2019 timeframe. “A lot of hard work on the strategy development was carried out. We carefully analysed the state of rail activities, weak and critical points and for the first time created a single document that will become a guide for “Ukrzaliznytsya” for the next five years. The company’s results for the second half of 2016 and the first quarter of 2017 show that Ukrzaliznytsya is improving, considering all the key indicators. The company has great potential, but the industry needs investment. The strategy provides for 130-150 billion UAH (EUR 4.2 – 5 billion) for the five years”, Balchun stated.
Reform is on the way
In the rail freight sector, the emphasis is on implementing a clear and transparent model of interaction with cargo owners and expanding the range of services. For that, in addition to the traditional ones, individual companies will establish freight terminal services, forwarding and contact logistics, intermodal transport, as well as a company that will be engaged in the transport of goods outside Ukraine. It is envisaged that by 2021 the share of the container transport market by rail will increase from 29 to 45%. Also, to improve the quality of service, it is planned to increase the speed of freight delivery by 15% and improve the turnover of the rolling stock by 20%. Such measures will allow 100% to satisfy the demand for freight traffic, taking into account the current forecast of freight traffic growth. The transit potential will be more actively developed. Investments in the freight transport sector will amount to over UAH 28 billion (EUR 917 million), for which 20.000 new freight cars will be purchased and 50.000 of the existing freight cars will be modernised. For 2017, the strategy foresees the purchase of 8.9 thousand new freight cars, which is the largest annual batch of freight cars for the entire history of Ukrzaliznytsia! The three factories-subsidiares of Ukrzaliznytsia (Darnytsky, Stryj and Paniutinsky) plan to build 3000 freight cars, of which 134 cars were already built in the first quarter of 2017. Also, in the near future, it is planned to re-announce a tender for the purchase of 2,400 freight cars and an additional order for such cars is being considered. Moreover, it is foreseen that EBRD loan funds will facilitate, in 2017, the manufacturing of another 2,890 rail freight cars. Regarding the rail passenger sector, six regional regional transport companies and a high speed rail transport operator will be established in 2018. In order to improve the quality of passenger service, it is planned to purchase new rolling stock, expand the network of high-speed trains of the categories “Intercity”, “Intersti +”, “Night Express”, to optimise their use, and introduce new standards for passenger service.
UAH 9 billion (EUR 300 million) will be directed for the purchase of 400 rail passenger cars, UAH 11 billion (EUR 360 million) for the purchase of electric trains, UAH 3.5 billion (EUR 115 million) for the purchase of diesel trains and more than UAH 10 billion (EUR 327 million) to modernise and repair the existing rolling stock. It is important to note that these investments will only be possible through the development of effective mechanisms of state support. There will also be a separate company – a traction operator. Within five years, Ukrzaliznytsia will acquire more than 200 new locomotives and will modernize the existing ones. The total investments for rolling stock traction equipment will amount to more than UAH 40 billion (EUR 1.3 billion), of which UAH 30 billion (EUR 982 million) – for the purchase of new locomotives and UAH 9.5 billion (EUR 311 million) for modernization and overhaul activities. Due to the improved planning and allocation of traction resources, the use of rolling stock will be increased by 15%. It is expected that in 2017 capital investments will amount to UAH 22.7 billion (EUR 743 million), of which UAH 8.1 billion (EUR 625 million) – for the purchase of rolling stock, UAH 4.3 billion (EUR 140 million)- for rail infrastructure modernisation, UAH 5.06 billion (EUR 165 million) – for capital construction, UAH 0, 8 billion (EUR 26 million) – for the modernization of the overhead rail network and for the control and centralization systems. Also for 2017, Ukrainian Railways plan to purchase 50 passenger cars – this is the largest batch over the past 9 years. The rail state company has already purchased 12 new passenger cars. In addition, in 2017, Ukrzaliznytsya plans to carry out major repairs of 157 passenger cars. The tender for the purchase of 6 diesel trains continues. According to the Chairman of the Board, ambitious plans for attracting investment include updating of rolling stock and traction, infrastructure projects. “We planned to upgrade and modernize 30% of the freight rolling stock and locomotives, to renew 45% of the passenger cars rolling stock and to launch rail modernization and electrification projects, all investments being estimated at EUR 14.4 billion,” Wojciech Balchun explained.
by Elena Ilie
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